EXHIBIT 10.11
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY ANALOGOUS STATE SECURITIES LAWS, AND MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT OR LAWS, THE RULES AND REGULATIONS THEREUNDER OR THE
PROVISIONS OF THIS WARRANT.
PRIMEDEX HEALTH SYSTEMS, INC.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
(Void after 5:00 p.m. Pacific time, on July 30, 2009)
THIS CERTIFICATE is issued in connection with the entry into the
Subordination Agreement dated July 30, 2004, between Jeffrey L. Linden (the
"Holder"), WELLS FARGO FOOTHILL, INC. and a subsidiary and affiliate of PRIMEDEX
HEALTH SYSTEMS, INC., a New York corporation (the "Company"), and certifies that
the Holder is entitled to purchase from the Company, prior to 5:00 p.m., Pacific
time, on July 30, 2009 (the "Expiration Date"), Two Hundred Thousand (200,000)
shares ("Warrant Shares") of fully paid and nonassessable shares of common
stock, par value $.01 per share, of the Company ("Common Stock") at a price of
$.30 per share (the "Warrant Price"), or as otherwise provided herein, subject
to the provisions and upon the terms and conditions hereinafter set forth.
This Warrant is subject to the following additional terms and
conditions.
18. EXERCISABILITY. After July 30, 2004, and until the Expiration Date,
the purchase rights represented by this Warrant are exercisable at the option of
the Holder, either as an entirety, or from time to time for any part of the
Warrant Shares which may be purchased hereunder.
19. RESERVATION OF WARRANT SHARES. The Company agrees at all times to
reserve a sufficient number of shares of authorized but unissued Common Stock,
when and as required for the purpose of complying with the terms of this
Warrant.
20. NO RIGHTS AS SHAREHOLDER; NOTICES TO HOLDER. Nothing contained in
this Warrant shall be construed as conferring upon the Holder the right to vote
or to receive dividends or to consent or to receive notice as a shareholder in
respect of any meeting of shareholders for the election of directors of the
Company or any other matter, or any rights whatsoever as a shareholder of the
Company.
If, however, at any time prior to the expiration of this Warrant and
prior to its exercise, any of the following events shall occur:
a) the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend (other than a cash
dividend payable out of earnings or earned surplus legally available for the
payment of dividends under the laws of the jurisdiction of incorporation of
Company) or other distribution, or any right to subscribe for or purchase any
evidences of its indebtedness, any shares of stock of any class or any other
securities or property, or to receive any other right, or
b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
consolidation or merger of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of the
Company to another corporation, or
c) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation, merger, or sale of all or substantially
all of its property, assets and business as an entirety) shall be proposed, then
in any one or more of said events, the Company shall give to the Holder (1) at
least thirty (30) days' prior written notice of the date on which a record date
shall be selected for such dividend, distribution or right for determining
rights to vote in respect of any such reorganization, reclassification, merger,
liquidation or winding up, and (2) in the case of any such transfer,
disposition, dissolution, liquidation or winding up at least thirty (30) days'
prior written notice of the date when the same shall take place. Such notice in
accordance with the foregoing clause also shall specify ii) the date on which
any such record is to be taken for the purpose of such dividend, distribution or
right, the date on which the holders of Common Stock shall be entitled to any
such dividend, distribution or right, and the amount and character thereof, and
iii) the date on which any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, proposed dissolution, liquidation or
winding up is to take place and the time, if any such time is to be fixed, as of
which the holders of Common Stock shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such
reorganization, reclassification, merger, consolidation, sale, transfer,
proposed disposition, dissolution, liquidation or winding up. Each such written
notice shall be sufficiently given if addressed to the Holder at the last
address of Holder appearing on the books of the Company and delivered in
accordance with Section 11.
21. METHOD OF EXERCISE; PAYMENT; ISSUANCE OF NEW WARRANT.
a) This Warrant may be exercised by the Holder, in whole or in
part, by the surrender of this Warrant together with a duly executed Purchase
Form in the form attached hereto as Exhibit A-I at the principal office of the
Company at 1510 Cotner Avenue, Los Angeles, California 90025-3303, or at such
other office designated by the Company in writing to the Holder, and by payment
to the Company in cash or by check (as defined in and determined in accordance
with the provisions of Section 9 hereof) multiplied by the number of Warrant
Shares being purchased (the "Total Exercise Price").
2
b) As a complete alternative to an exercise of this Warrant
pursuant to subsection (a) hereof, the Holder may elect to exercise this Warrant
in whole, but not in part, without being required to pay the Aggregate Warrant
Price (a "Cashless Exercise") in accordance with the terms of this subsection
(the "Net Issuance Right"). Upon electing a Cashless Exercise, the Holder shall
be entitled to receive that number of Warrant Shares equal to the quotient
obtained as the result of dividing i) the product of (A) the excess of (1) the
Fair Market Value of a Warrant Share on such date over (2) the then current
Warrant Price (as determined in accordance with the provisions of Section 9
hereof) multiplied by (b) the number of Warrant Shares then issuable under this
Warrant on such date (the "Purchasable Shares") by ii) the Fair Market Value of
a Warrant Share on such date. An election to make a Cashless Exercise shall be
made by surrender of this Warrant together with a duly executed Net Issuance
Form in the form attached hereto as Exhibit A-2 in the manner specified in
subsection (a) hereof. For the purpose of any computation under this subsection,
the Fair Market Value of a Warrant Share shall be deemed to be the price
determined pursuant to the first applicable of the methods set forth in
subsection (b) (1), (b) (2) or (b) (3) hereof.
i) If shares of Common Stock are traded on a national
securities exchange, in the over-the-counter market, or on a foreign national
exchange, the Fair Market Value of a Warrant Share shall be deemed to be an
amount equal to the quotient determined by dividing (1) the sum of (x) an amount
equal to the average of the daily closing market prices (i.e., the average of
the closing bid and asked prices) for thirty (30) consecutive Trading Days prior
to such determination multiplied by the then outstanding number of shares and
(y) an amount equal to the then current Warrant Price (as determined in
accordance with the provisions of Section 9 hereof) multiplied by the
Purchasable Shares by (2) the sum of (a) the then outstanding number of shares
and (b) the number of Purchasable Shares.
ii) If the Company is subject to a "Material Transaction" (as
defined below in this subsection), the Fair Market Value of a Warrant Share
shall be deemed to be an amount equal to the quotient determined by dividing (1)
the sum of (x) an amount equal to the then current Warrant Price (as determined
in accordance which the provisions of Section 9 hereof) multiplied by the
Purchasable Shares and (y) the total price or consideration to be paid in the
Material Transaction (or in the case of a sale of all or substantially all of
the Company's assets, all of the outstanding number of shares, on an as
Converted basis, other than the Purchasable Shares) and (b) the number of
Purchasable Shares. For purposes of this section, on, a "Material Transaction"
shall include an initial public offering of Common Stock, a tender offer for
shares of Common Stock, a merger, or a sale of all or substantially all of the
Company's assets.
3
iii) If the Fair Market Value per share of Common Stock
cannot be ascertained by any of the methods set forth in subsections b(1) or
b(2) immediately above, the Fair Market Value per share of Outstanding Common
Stock shall be the value determined by the Company's board of directors in its
sole discretion.
c) In the event of any exercise of this Warrant, certificates for
the shares of the number of full Warrant Shares so purchased shall be in the
name of, and delivered to, the Holder, or as the Holder may direct (subject to
restrictions upon transfer contained herein or under federal or state securities
laws). Such delivery shall be made within ten (10) days after exercise of this
Warrant and at the Company's expense and, unless this Warrant has been fully
exercised or has expired, a new warrant expressing the number of shares of
Common Stock, if any, with respect to which this Warrant shall not then have
been exercised shall also be issued to the Holder within ten (10) days after
exercise of this Warrant.
22. PAYMENT OF TAXES. The Company will pay all documentary stamp taxes,
if any, attributable to the initial issuance of Warrant Shares upon the exercise
of this Warrant; provided, however, that the Company shall not be required to
pay any tax or taxes which may be payable in respect of any transfer involved in
the issuance or delivery of any certificates for Warrant Shares in a name other
than that of the registered Holder of this Warrant in respect of which such
Warrant shares are issued.
23. MUTILATED OR MISSING WARRANT. In case the certificate evidencing
this Warrant shall be mutilated, lost, stolen or destroyed, the Company may in
its discretion issue, and deliver in exchange and substitution for and upon
cancellation of the mutilated Warrant certificate, or in lieu of and in
Substitution for this Warrant certificate lost, stolen or destroyed, a new
Warrant certificate of like tenor and representing an equivalent right or
interest; but only upon receipt of evidence satisfactory to the Company of such
loss, theft or destruction of this Warrant and indemnity, if requested, also
satisfactory to the Company. The Holder shall also comply with such other
reasonable regulations and pay such other reasonable charges as the Company may
prescribe.
24. EXCHANGE OF WARRANT CERTIFICATES FOR OTHER WARRANTS. This Warrant
certificate, when surrendered properly endorsed at the principal offices of the
Company set forth in Section 4 hereof, or at such other office designated by the
Company in writing to the Holder, may be exchanged for another certificate or
certificates of different denominations, of like tenor and representing in the
aggregate the right to Purchase a like number of Warrant Shares.
25. TRANSFERABILITY. This Warrant is not transferable or assignable, in
whole or in part.
26. WARRANT PRICE. The price per share at which Warrant Shares shall be
purchasable upon exercise of this Warrant (the "Warrant Price") shall be $.30
subject to adjustment pursuant to Section 10 hereof.
4
27. ADJUSTMENT IN WARRANT PRICE. In the event of changes in the
outstanding Common Stock of the Company by reason of stock dividends, split-ups,
recapitalization, reclassifications, combinations or exchanges of shares,
separations, reorganizations, liquidations, or the like, the number and class of
shares available under this Warrant in the aggregate and the Warrant Price,
shall be correspondingly adjusted to give the holder of this Warrant, in
exercises for the same aggregate Warrant Price, the total number, class, and
kind of shares as the holder would have owned had this Warrant been exercised
prior to the event and had the holder continued to hold such shares until after
the event requiring adjustment.
a) NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares
Purchasable upon the exercise of this Warrant or Warrant Price of such Warrant
Shares is adjusted, as herein provided, the Company shall promptly mail by
first-class mail, postage prepaid, to the Holder notice of such adjustment or
adjustments and shall deliver to the Holder a certificate of a firm of
independent public accountants selected by the Board of Directors of the Company
(who may be the regular accountants employed by the Company) setting forth the
number of Warrant Shares purchasable upon the exercise of this Warrant and the
Call Price and Warrant Price of such Warrant Shares after such adjustment,
setting forth a brief statement of the facts requiring such adjustment and
setting forth the computation by which such adjustment was made. Such
certificate shall be conclusive evidence of the correctness of such adjustment.
b) NO ADJUSTMENT FOR DIVIDENDS. Except as provided in this Section
10 hereof, no adjustment in respect of any dividend shall be made during the
term of a Warrant or upon the exercise of a Warrant.
c) PRESERVATION OF PURCHASE RIGHTS UPON RECLASSIFICATION,
CONSOLIDATION, ETC. In case of any consolidation of the Company with a merger of
the Company into another corporation, such successor corporation shall execute
with the Holder a Warrant providing that such Holder shall have the right
thereafter upon payment of the Warrant Price in effect immediately prior to such
action to purchase upon exercise of this Warrant the kind and amount of shares
and/or other consideration which he would have owned or have been entitled to
receive after the happening of such consolidation, merger, sale or conveyance
had such Warrant been exercised immediately prior to such action. The Company
shall mail by first class mail, postage prepaid, to the Holder, notice of the
execution of any such agreement. Such Warrant shall provide for adjustments,
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in Section 10 hereof. The provisions of this subsection 10(c) shall
similarly apply to successive consolidations, mergers, sales or conveyances.
28. NOTICES. Any notice pursuant to this Warrant by the Company to the
Holder or by the Holder to the Company, shall be in writing and shall be mailed
first-class, postage prepaid, or delivered a) to the Company at 1510 Cotner
Avenue, Los Angeles, California 90225-3303, Attention to President, or b) to the
Holder at 17956 Lake Vista Drive, Encino, California 91316. Each party hereto
may from time to time change the address to which notices to it are to be
delivered or mailed hereunder by notice in writing to the other party.
29. SUCCESSORS. All the covenants and provisions of this Warrant by or
for the benefit of the Company or the Holder shall bind and inure to the benefit
of the Company and the Holder.
5
30. MERGER OR CONSOLIDATION OF THE COMPANY. The Company will not merge
or consolidate with or into any other corporation unless the corporation
resulting from such merger or consolidation (if not the Company) shall expressly
assume by supplemental agreement satisfactory in form to the holder of record of
this Warrant and executed and delivered to such holder, the due and punctual
performance and observance of each and every covenant and condition of this
Warrant to be performed and observed by the Company.
31. APPLICABLE LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of California without giving effect to
principles of conflict of laws.
32. BENEFITS OF THIS WARRANT. Nothing in this Warrant shall be
construed to give to any person or corporation other than the Company and the
Holder any legal or equitable right, remedy or claim under this Warrant; but
this Warrant shall be for the sole and exclusive benefit of the Company and the
Holder.
33. COUNTERPARTS. This Warrant may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
34. CAPTIONS. The captions of the Sections and subsections of this
Warrant have been inserted for convenience only and shall have no substantive
effect.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed and its corporate seal to be impressed hereon and attested by its
President, as of this 30th day of July, 2004.
PRIMEDEX HEALTH SYSTEMS, INC.
By:_________________________________
Howard G. Berger, M.D., President
6
EXHIBIT A-1
PRIMEDEX HEALTH SYSTEMS, INC.
PURCHASE FORM
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant for, and to purchase thereunder,
___________________ shares of the stock provided for therein and request that
certificates for such shares be issued in the name of:
(PLEASE PRINT NAME, ADDRESS AND SOCIAL SECURITY NO. OR TAXPAYER
IDENTIFICATION NO.)
and, if said number of shares shall not be all the shares purchasable
thereunder, that a new Warrant Certificate for the balance remaining of the
shares Purchasable under the within Warrant Certificate be registered in the
name of the undersigned Warrantholder as below indicated and delivered to the
address stated below.
DATED: ________________________, 200_
Name of Warrantholder:____________________________________________
(Please Print)
Address:
Signature:
Signature Guaranteed NOTE: The above Signature must correspond with the
name as written upon the face of this
Warrant Certificate in every particular,
without alteration or enlargement or change
whatever.
7
PRIMEDEX HEALTH SYSTEMS, INC.
NET ISSUANCE FORM
The undersigned hereby irrevocably elects to exercise the Net Issuance
Right represented by the within Warrant for, and to purchase thereunder, shares
of the stock provided for therein and request that certificates for such shares
be issued in the name of:
(PLEASE PRINT NAME, ADDRESS AND SOCIAL SECURITY NO. OR TAXPAYER
IDENTIFICATION NO.)
and authorizes the Company to calculate the number of shares issuable following
such exercise, as determined in accordance within Section 4(b) of the within
Warrant.
DATED: ________________________, 200_
Name of Warrantholder:_____________________________________________
(Please Print)
Address:
Signature:
Signature Guaranteed NOTE: The above Signature must correspond with the
name as written upon the face of this
Warrant Certificate in every particular,
without alteration or enlargement or change
whatever.
8