Exhibit 4.7
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR UNDER ANY STATE SECURITIES LAWS, IN RELIANCE UPON
EXEMPTIONS FROM REGISTRATION FOR NON-PUBLIC OFFERINGS. THIS SECURITY MAY NOT BE
SOLD OR TRANSFERRED UNLESS IT IS REGISTERED UNDER THE ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR UNLESS FONAR RECEIVES AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO IT THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE (UNLESS
WAIVED).
VOID AFTER 5:00 P.M. EASTERN TIME ON AUGUST 30, 2005 ("EXPIRATION DATE").
FONAR CORPORATION
CALLABLE WARRANT
WARRANT ("WARRANT") TO PURCHASE SHARES OF
COMMON STOCK, $0.0001 PAR VALUE PER SHARE
This is to certify that, for VALUE RECEIVED, The Tail Wind Fund, Ltd.
("Warrantholder"), is entitled to purchase, subject to the provisions of this
Warrant, from Fonar Corporation, a corporation organized under the laws of
Delaware ("Company"), at any time after the issuance hereof, but not later than
5:00 P.M., Eastern time, on the third (3rd) anniversary of such issuance date
("Expiration Date"), 2,000,000 shares ("Warrant Shares") of Common Stock,
$0.0001 par value ("Common Stock"), of the Company, at an exercise price per
share equal to the average closing bid price of the Common Stock on the
Principal Market for the full calendar month immediately preceding the date of
exercise, provided that such exercise price shall be no less than $2.00 and no
more than $6.00 (as such figures, shall be appropriately and equitably adjusted
as provided herein) (the exercise price in effect from time to time hereafter
being herein called the "Warrant Price"). The number of Warrant Shares
purchasable upon exercise of this Warrant and the Warrant Price shall be subject
to adjustment from time to time as described herein.
This Warrant has been issued pursuant to the terms of the First Amendment
to Callable Warrant ("Amendment") dated as of June 21, 2002 and the Second
Amendment to Callable Warrant dated as of August 15, 2002, each between the
Company and Warrantholder. Capitalized terms used herein and not defined shall
have the meaning specified in the Purchase Agreement ("Purchase Agreement")
dated as of May 24, 2002 between the Company and the Warrantholder.
Section 1. Registration. The Company shall maintain books for the transfer
and registration of the Warrant. Upon the initial issuance of the Warrant, the
Company shall issue and register the Warrant in the name of the Warrantholder.
Section 2. Transfers. As provided herein, this Warrant may be transferred
only pursuant to a registration statement filed under the Securities Act of
1933, as amended ("Securities Act") or an exemption from registration
thereunder. Subject to such restrictions, the Company shall transfer this
Warrant from time to time, upon the books to be maintained by the Company for
that purpose, upon surrender thereof for transfer properly endorsed or
accompanied by appropriate instructions for transfer upon any such transfer, and
a new Warrant shall be issued to the transferee and the surrendered Warrant
shall be canceled by the Company.
Section 3.
(a) Exercise of Warrant. Subject to the provisions hereof, the
Warrantholder may exercise this Warrant in whole or in part, at any time and
from time to time after the issuance hereof, upon delivery of the duly executed
Warrant exercise form attached hereto (the "Exercise Agreement") to the Company
during normal business hours on any business day at the Company's principal
executive offices (or such other office or agency of the Company as it may
designate by notice to the holder hereof), and upon payment to the Company in
cash, by certified or official bank check or by wire transfer for the account of
the Company of the Warrant Price for the Warrant Shares specified in the
Exercise Agreement. The Warrant Shares so purchased shall be deemed to be issued
to the holder hereof or such holder's designee, as the record owner of such
shares, as of the close of business on the date on which this Warrant (or
evidence of loss, theft or destruction thereof) shall have been surrendered, the
completed Exercise Agreement shall have been delivered. Certificates for the
Warrant Shares so purchased, representing the aggregate number of shares
specified in the Exercise Agreement, shall be delivered to the holder hereof
within a reasonable time, not exceeding three (3) business days, after this
Warrant shall have been so exercised. The certificates so delivered shall be in
such denominations as may be requested by the holder hereof and shall be
registered in the name of such holder or such other name as shall be designated
by such holder. If this Warrant shall have been exercised only in part, then,
unless this Warrant has expired, the Company shall, at its expense, at the time
of delivery of such certificates, deliver to the holder a new Warrant
representing the number of shares with respect to which this Warrant shall not
then have been exercised.
Book-Entry. Notwithstanding anything to the contrary set forth herein, upon
exercise or redemption of any portion of this Warrant in accordance with the
terms hereof, the Warrantholder shall not be required to physically surrender
this Warrant to the Company unless such holder is purchasing the full amount of
Warrant Shares represented by this Warrant. The Warrantholder and the Company
shall maintain records showing the number of Warrant Shares so purchased or
redeemed hereunder and the dates of such purchases or shall use such other
method, reasonably satisfactory to the Warrantholder and the Company, so as not
to require physical surrender of this Warrant upon each such exercise or
redemption. The Warrantholder and any assignee, by acceptance of this Warrant or
a new Warrant, acknowledge and agree that, by reason of the provisions of this
paragraph, following exercise of any portion of this Warrant, the number of
Warrant Shares which may be purchased upon exercise of this Warrant may be less
than the number of Warrant Shares set forth on the face hereof.
(b) Redemption of Warrant. Subject to the Purchase Agreement, in the event
that the average closing bid price of the Company's Common Stock (as reported by
the Nasdaq Stock Market) is greater than 115% of the then applicable Warrant
Price hereunder for a five (5) consecutive trading day period in any calendar
month (i.e., June 1 to June 30, July 1 to July 31, etc.) ("Pre-Call Period"),
the Company shall have the right, upon at least five (5) trading days' prior
written notice to the Warrantholder ("Redemption Notice"), to redeem up to
200,000 shares underlying this Warrant (not previously exercised), at a
redemption price equal to $.01 per Warrant Share issuable hereunder for the
portion hereof being redeemed, provided that (1) the Company may not exercise
such redemption right more than once in any calendar month, and (2) the Company
may reduce the then applicable Warrant Price to any lower Warrant Price
hereunder which was previously in effect hereunder, by delivering to the
Warrantholder an irrevocable written notice ("Reduction Notice") at least five
(5) days prior to any such reduction. Any such Reduction Notice shall specify a
reduction date which is on or prior to the twentieth day of such calendar month
(but at least 5 days after such notice) and shall specify the new reduced
Warrant Price hereunder. For clarification purposes, (a) the Pre-Call Period (or
the new Pre-Call Period if there was a prior redemption during such calendar
month) shall commence as of the date of such reduction, (b) the aggregate number
of shares that may be redeemed in any calendar month shall not exceed 200,000
shares regardless of any such reduction, (c) any Warrant Price so reduced by the
Company shall remain at such reduced Warrant Price for the remainder of such
calendar month for all purposes hereunder, including without limitation for
purchases of shares of Common Stock hereunder by the Warrantholder upon exercise
hereof, and (d) the Company may deliver a Redemption Notice following a Warrant
Price reduction hereunder only after the applicable Pre-Call Period has expired
with the average closing bid price of the Company's Common Stock for such
Pre-Call Period exceeding 115% of the new reduced Warrant Price.
Any redemption hereunder shall occur on the date specified in the
Redemption Notice ("Redemption Date"), provided that such Redemption Date may
not occur until at least five (5) trading days following the date on which the
Warrantholder received the Redemption Notice (the "Redemption Notice Date"). The
Company may not deliver the Redemption Notice unless and until the average
closing bid price of the Company's Common Stock (as reported by the Nasdaq Stock
Market) is greater than 115% of the applicable Warrant Price (as may be reduced
hereunder) over a five (5) consecutive trading day period occurring in any one
calendar month. The period from the Redemption Notice Date to the Redemption
Date shall be referred to herein as the "Post-Call Period". The Warrantholder
may exercise this Warrant, including any portion subject to a Redemption Notice,
at any time and from time to time during the period from the Redemption Notice
Date through the date on which the redemption price for such Warrants is paid by
the Company (and thereafter if such redemption price is not paid), and the
Company shall honor all tendered Exercise Agreements during such period. Any
Redemption Notice under this Section shall be irrevocable. If the Company
intends (or is only permitted) to redeem less than all of the then outstanding
Warrants issued to Purchasers under the Purchase Agreement, it shall do so on a
pro rata basis among such holders in accordance with this Section. Failure by
the Company to redeem this Warrant on a timely basis after delivering a
Redemption Notice shall result in the Company being prohibited from exercising
such right pursuant to this Section again.
Notwithstanding anything to the contrary herein, the Company shall be
prohibited from exercising its right to redeem this Warrant pursuant to this
Section unless at all times during the Pre-Call Period and Post-Call Period (i)
all the Warrant Shares with respect to this Warrant are covered by an effective
registration statement under the Securities Act and a deliverable prospectus,
(ii) the Warrant Shares with respect to this Warrant are listed and traded on
the Nasdaq Stock Market, (iii) the Company is not in breach of any provisions of
this Warrant or the other Agreements, and (iv) the average closing bid price of
the Company's Common Stock (as reported by the Nasdaq Stock Market) is greater
than 115% of the applicable Warrant Price (as may be reduced hereunder).
Section 4. Compliance with the Securities Act of 1933. Neither this Warrant
nor the Common Stock issued upon exercise hereof nor any other security issued
or issuable upon exercise of this Warrant may be offered or sold except as
provided in this agreement and in conformity with the Securities Act of 1933, as
amended, and then only against receipt of an agreement of such person to whom
such offer of sale is made to comply with the provisions of this Section 4 with
respect to any resale or other disposition of such security. The Company may
cause the legend set forth on the first page of this Warrant to be set forth on
each Warrant or similar legend on any security issued or issuable upon exercise
of this Warrant until the Warrant Shares have been registered for resale under
the Registration Rights Agreement or until Rule 144 is available, unless counsel
for the Company is of the opinion as to any such security that such legend is
unnecessary.
Section 5. Payment of Taxes. The Company will pay any documentary stamp
taxes attributable to the initial issuance of Warrant Shares issuable upon the
exercise of the 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 shares are issued, and in such case, the Company shall not be
required to issue or deliver any certificate for Warrant Shares or any Warrant
until the person requesting the same has paid to the Company the amount of such
tax or has established to the Company's satisfaction that such tax has been
paid. The holder shall be responsible for income taxes due under federal or
state law, if any such tax is due.
Section 6. Mutilated or Missing Warrants. In case this Warrant shall be
mutilated, lost, stolen, or destroyed, the Company shall issue in exchange and
substitution of and upon cancellation of the mutilated Warrant, or in lieu of
and substitution for the Warrant lost, stolen or destroyed, a new Warrant of
like tenor and for the purchase of a like number of Warrant Shares, but only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction of the Warrant, and with respect to a lost, stolen or
destroyed Warrant, reasonable indemnity or bond with respect thereto, if
requested by the Company.
Section 7. Reservation of Common Stock. The Company hereby represents and
warrants that there have been reserved, and the Company shall at all applicable
times keep reserved, out of the authorized and unissued Common Stock, a number
of shares sufficient to provide for the exercise of the rights of purchase
represented by the Warrant, and the transfer agent for the Common Stock
("Transfer Agent"), and every subsequent transfer agent for the Common Stock or
other shares of the Company's capital stock issuable upon the exercise of any of
the right of purchase aforesaid, shall be irrevocably authorized and directed at
all times to reserve such number of authorized and unissued shares of Common
Stock as shall be requisite for such purpose. The Company agrees that all
Warrant Shares issued upon exercise of the Warrant shall be, at the time of
delivery of the certificates for such Warrant Shares, duly authorized, validly
issued, fully paid and non-assessable shares of Common Stock of the Company. The
Company will keep a conformed copy of this Warrant on file with the Transfer
Agent and with every subsequent transfer agent for the Common Stock or other
shares of the Company's capital stock issuable upon the exercise of the rights
of purchase represented by the Warrant. The Company will supply from time to
time the Transfer Agent with duly executed stock certificates required to honor
the outstanding Warrant.
Section 8. Warrant Price. The Warrant Price, subject to adjustment as
provided in Section 9, shall, if payment is made in cash or by certified check,
be payable in lawful money of the United States of America.
Section 9. Adjustments. Subject and pursuant to the provisions of this
Section 9, the Warrant Price and number of Warrant Shares subject to this
Warrant shall be subject to adjustment from time to time as set forth
hereinafter. For purposes hereof, the term Warrant Price shall include the $2.00
minimum and $6.00 maximum exercise prices and the closing bid prices used in
determining the Warrant Price which occurred prior to the applicable event.
(a) If the Company shall at any time or from time to time while the Warrant
is outstanding, pay a dividend or make a distribution on its Common Stock in
shares of Common Stock, subdivide its outstanding shares of Common Stock into a
greater number of shares or combine its outstanding shares into a smaller number
of shares or issue by reclassification of its outstanding shares of Common Stock
any shares of its capital stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
corporation), then the number of Warrant Shares purchasable upon exercise of the
Warrant and the Warrant Price in effect immediately prior to the date upon which
such change shall become effective, shall be adjusted by the Company so that the
Warrantholder thereafter exercising the Warrant shall be entitled to receive the
number of shares of Common Stock or other capital stock which the Warrantholder
would have received if the Warrant had been exercised immediately prior to such
event. Such adjustment shall be made successively whenever any event listed
above shall occur.
(b) If any capital reorganization, reclassification of the capital stock of
the Company, consolidation or merger of the Company with another corporation, or
sale, transfer or other disposition of all or substantially all of the Company's
assets to another corporation shall be effected, then, as a condition of such
reorganization, reclassification, consolidation, merger, sale, transfer or other
disposition, lawful and adequate provision shall be made whereby each
Warrantholder shall thereafter have the right to purchase and receive upon the
basis and upon the terms and conditions herein specified and in lieu of the
Warrant Shares immediately theretofore issuable upon exercise of the Warrant,
such shares of stock, securities or assets as would have been issuable or
payable with respect to or in exchange for a number of Warrant Shares equal to
the number of Warrant Shares immediately theretofore issuable upon exercise of
the Warrant, had such reorganization, reclassification, consolidation, merger,
sale, transfer or other disposition not taken place, and in any such case
appropriate provision shall be made with respect to the rights and interests of
each Warrantholder to the end that the provisions hereof (including, without
limitations, provision for adjustment of the Warrant Price) shall thereafter be
applicable, as nearly equivalent as may be practicable in relation to any shares
of stock, securities or properties thereafter deliverable upon the exercise
hereof. The Company shall not effect any such consolidation, merger, sale,
transfer or other disposition unless prior to or simultaneously with the
consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger, or the corporation purchasing or
otherwise acquiring such assets or other appropriate corporation or entity shall
assume, by written instrument executed and delivered to the Company, the
obligation to deliver to the holder of the Warrant such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to purchase and the other obligations under this Warrant.
The provisions of this paragraph (b) shall similarly apply to successive
reorganizations, reclassifications, consolidations, mergers, sales, transfers or
other dispositions.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness or assets (other than cash
dividends or cash distributions payable out of consolidated earnings or earned
surplus or dividends or distributions referred to in Section 9(a)), or
subscription rights or warrants, the Warrant Price to be in effect after such
record date shall be determined by multiplying the Warrant Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the total number of shares of Common Stock outstanding multiplied by
the Fair Market Value per share of Common Stock (as defined below), less the
fair market value (as determined by the Company's Board of Directors in good
faith) of said assets or evidences of indebtedness so distributed, or of such
subscription rights or warrants, and the denominator of which shall be the total
number of shares of Common Stock outstanding multiplied by such current Fair
Market Value per share of Common Stock. Such adjustment shall be made
successively whenever such a record date is fixed. For this purpose, the "Fair
Market Value" of the Common Stock shall be the closing price of the Common Stock
as reported by the Nasdaq Stock Market for the thirty (30) trading days
immediately preceding the date of the Exercise Agreement.
(d) For the duration of the term of this Warrant, if the Company shall at
any time or from time to time issue or sell securities for a Per Share Selling
Price (as such term is defined in the Debentures) less than the Warrant Price
(other than issuances of Underlying Shares pursuant to Debentures and Warrants
under the Purchase Agreement, issuances described in and permitted under Section
7.2(b)(iii) of the Purchase Agreement and other than issuances of Common Stock
under the Company's duly adopted stock option and bonus plans for employees and
directors), then the Warrant Price shall be automatically reset (if it would
result in a reduction of such price) to a price equal to such Per Share Selling
Price. For clarification purposes, the foregoing reset only applies to
adjustment of the $2.00 minimum Warrant Price and the $6.00 maximum Warrant
Price (as such figures may have been previously adjusted hereunder). The number
of Warrant Shares shall be proportionally increased in the event of any
adjustments pursuant to this paragraph. Such adjustments shall be made
successively whenever such sales are made. If an adjustment (the "Adjustment")
of the Warrant Price is required pursuant hereto, the Company shall deliver to
the Warrantholder, within eight business days of the closing of the transaction
giving rise to the Adjustment ("Delivery Date"), a notice ("Adjustment Notice")
stating that such Warrant Price has been automatically adjusted as of the
Delivery Date, and such notice shall constitute an amendment to this Warrant. In
the event the Company fails to deliver the Adjustment Notice by the applicable
Delivery Date, the Company shall be liable to the Warrantholder for a delay
payment, as liquidated damages, equal to 2% of (x) the number of Warrant Shares
issuable hereunder times (y) the Fair Market Value per share, per month payable
in Common Stock or cash, at the Warrantholder's election (provided, that such
failure to notify shall not affect automatic adjustment of the Warrant Price).
The Company shall give to the Warrantholder written notice of any such sale of
Common Stock within 24 hours of the closing of any such sale and shall within
such 24 hour period issue a press release announcing such sale.
(e) An adjustment shall become effective immediately after the record date
in the case of each dividend or distribution and immediately after the effective
date of each other event which requires an adjustment.
(f) In the event that, as a result of an adjustment made pursuant to
Section 9, the holder of this Warrant shall become entitled to receive any
shares of capital stock of the Company other than shares of Common Stock, the
number of such other shares so receivable upon exercise of this Warrant shall be
subject thereafter to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Warrant
Shares contained in this Warrant.
(g) In the event of any adjustment in the number of Warrant Shares issuable
hereunder upon exercise, the Warrant Price shall be inversely proportionately
increased or decreased, as the case may be, such that the aggregate purchase
price for Warrant Shares upon full exercise of this Warrant shall remain the
same. Similarly, in the event of any adjustment in the Warrant Price, the number
of Warrant Shares issuable hereunder upon exercise shall be inversely
proportionately increased or decreased, as the case may be, such that the
aggregate purchase price for Warrant Shares upon full exercise of this Warrant
shall remain the same.
Section 10. Fractional Interest. The Company shall not be required to issue
fractions of Warrant Shares upon the exercise of the Warrant. If any fraction of
a Warrant Share would, except for the provisions of this Section, be issuable
upon the exercise of the Warrant (or specified portions thereof), the Company
shall round such calculation to the nearest whole number and disregard the
fraction.
Section 11. Benefits. Nothing in this Warrant shall be construed to give
any person, firm or corporation (other than the Company and the Warrantholder)
any legal or equitable right, remedy or claim, it being agreed that this Warrant
shall be for the sole and exclusive benefit of the Company and the
Warrantholder.
Section 12. Notices to Warrantholder. Upon the happening of any event
requiring an adjustment of the Warrant Price, the Company shall forthwith give
written notice thereof to the Warrantholder at the address appearing in the
records of the Company, stating the adjusted Warrant Price and the adjusted
number of Warrant Shares resulting from such event and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. In the event of a dispute with respect to any such
calculation, the certificate of the Company's independent certified public
accountants shall be conclusive evidence of the correctness of any computation
made, absent manifest error. Failure to give such notice to the Warrantholder or
any defect therein shall not affect the legality or validity of the subject
adjustment. At the Warrantholder's request, the Company shall deliver to the
Warrantholder as of a requested date a notice specifying the Warrant Price and
the number of Warrant Shares into which this Warrant is exercisable as of such
date.
Section 13. Identity of Transfer Agent. The Transfer Agent for the Common
Stock is:
Computershare (f/k/a Securities Transfer Trust, Inc.)
00000 X. Xxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Forthwith upon the appointment of any subsequent transfer agent for the
Common Stock or other shares of the Company's capital stock issuable upon the
exercise of the rights of purchase represented by the Warrant, the Company will
fax to the Warrantholder a statement setting forth the name and address of such
transfer agent.
Section 14. Notices. Any notice pursuant hereto to be given or made by the
Warrantholder to or on the Company shall be sufficiently given or made
personally or if sent by an internationally recognized courier by next day or
two day delivery service, addressed as follows:
Fonar Corporation
000 Xxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attention: President
or such other address as the Company may specify in writing by notice to the
Warrantholder complying as to delivery with the terms of this Section 14.
Any notice pursuant hereto to be given or made by the Company to or on the
Warrantholder shall be sufficiently given or made if personally delivered or if
sent by an internationally recognized courier service by overnight or two-day
service, to the address set forth on the books of the Company or, as to each of
the Company and the Warrantholder, at such other address as shall be designated
by such party by written notice to the other party complying as to delivery with
the terms of this Section 14.
All such notices, requests, demands, directions and other communications
shall, when sent by courier, be effective two (2) days after delivery to such
courier as provided and addressed as aforesaid.
Section 15. Registration Rights. The initial holder of this Warrant is
entitled to the benefit of certain registration rights in respect of the Warrant
Shares as provided in the Amendment, which references the Registration Rights
Agreement.
Section 16. Successors. All the covenants and provisions hereof by or for
the benefit of the Warrantholder shall bind and inure to the benefit of its
respective successors and assigns hereunder.
Section 17. Governing Law. This Warrant shall be deemed to be a contract
made under the laws of the State of New York, without giving effect to its
conflict of law principles, and for all purposes shall be construed in
accordance with the laws of said State.
Section 18. 9.9% and 19.9% Limitations.
(a) Notwithstanding anything to the contrary contained herein, the number
of shares of Common Stock that may be acquired by the holder upon exercise
pursuant to the terms hereof shall not exceed a number that, when added to the
total number of shares of Common Stock deemed beneficially owned by such holder
(other than by virtue of the ownership of securities or rights to acquire
securities (including the Warrant Shares) that have limitations on the holder's
right to convert, exercise or purchase similar to the limitation set forth
herein), together with all shares of Common Stock deemed beneficially owned
(other than by virtue of the ownership of securities or rights to acquire
securities that have limitations on the right to convert, exercise or purchase
similar to the limitation set forth herein) by the holder's "affiliates" (as
defined in Rule 144 of the Act) ("Aggregation Parties") that would be aggregated
for purposes of determining whether a group under Section 13(d) of the
Securities Exchange Act of 1934 as amended, exists, would exceed 9.9% of the
total issued and outstanding shares of the Common Stock (the "Restricted
Ownership Percentage"). Each holder shall have the right (w) at any time and
from time to time to reduce its Restricted Ownership Percentage immediately upon
notice to the Corporation and (x) (subject to waiver) at any time and from time
to time, to increase its Restricted Ownership Percentage immediately in the
event of the announcement as pending or planned, of a change of control
transaction (including without limitation a transaction that would result in a
transfer of more than 50% of the Company's voting power or equity, or a
transaction that would result in a person or "group" being deemed the beneficial
owner of 50% or more of the Company's voting power or equity).
(b) Notwithstanding anything contained herein, in the event that the
Warrantholder has timely exercised this Warrant and the issuance of all or a
portion of the Warrant Shares to be issued pursuant to such exercise would
constitute a breach of the Company's obligations under the rules or regulations
of the Nasdaq Stock Market as they apply to the Company, or any other principal
securities exchange or market ("Principal Market") upon which the Common Stock
is or becomes traded (the "Cap Regulations"), then the Company shall not be
obligated to issue any such Warrant Shares to the extent such shares are in
excess of the maximum permissible amount under such Cap Regulations ("Excess
Shares"). Within five (5) days following any occurrence of Excess Shares, the
Company shall promptly pay to the Purchaser, in lieu of the Purchaser's right to
receive such Excess Shares, an amount equal to 120% of the difference between
(a) the number of Excess Shares multiplied by the closing sale price per share
of Common Stock on the Principal Market on the trading day immediately preceding
the date of the exercise of this Warrant, and (b) the aggregate exercise price
for such Excess Shares. Only shares of Common Stock acquired pursuant to this
Warrant and the Purchase Agreement (including Underlying Shares and Warrant
Shares as defined therein) will be included in determining whether the
limitation contained herein would be exceeded for purposes of this Section
18(b).
Section 19. Replacement Warrants. The Company agrees that within ten (10)
business days after any request from time to time of the Warrantholder, it shall
deliver to such holder a new Warrant in substitution of this Warrant which is
identical in all respects except that the then Warrant Price shall be
appropriately specified in the Warrant, and the Warrant shall specify the fixed
number of Warrant Shares into which the Warrants are then exercisable. Such
changes are intended not as amendments to the Warrant but only as clarification
of the foregoing numbers for convenience purposes, and such changes shall not
affect any provisions concerning adjustments to the Warrant Price or number of
Warrant Shares contained herein.
Section 20. Absolute Obligation to Issue Warrant Shares. The Company's
obligations to issue and deliver Warrant Shares in accordance with the terms
hereof are absolute and unconditional, irrespective of any action or inaction by
the holder hereof to enforce the same, any waiver or consent with respect to any
provision hereof, the recovery of any judgment against any Person or any action
to enforce the same, or any setoff, counterclaim, recoupment, limitation or
termination, or any breach or alleged breach by the holder hereof or any other
Person of any obligation to the Company or any violation or alleged violation of
law by the holder or any other Person, and irrespective of any other
circumstance which might otherwise limit such obligation of the Company to the
holder hereof in connection with the issuance of Warrant Shares. The Company
will at no time close its shareholder books or records in any manner which
interferes with the timely exercise of this Warrant.
Section 21. Assignment, Etc. The Warrantholder may assign or transfer this
Warrant to any transferee only with the prior written consent of the Company,
which may not be unreasonably withheld or delayed, provided that the
Warrantholder may assign or transfer this Warrant to any of such Warrantholder's
affiliates without the consent of the Company. The Warrantholder shall notify
the Company of any such assignment or transfer promptly. This Warrant shall be
binding upon the Company and its successors and shall inure to the benefit of
the Warrantholder and its successors and permitted assigns.
[Signature Page Follows]
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
as of August 30, 2002.
FONAR CORPORATION
By:/s/Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title: President
Attest:
Sign: /s/ Xxxxx X. Xxxxx
Print Name: Xxxxx X. Xxxxx
FONAR CORPORATION
WARRANT EXERCISE FORM
Fonar Corporation
000 Xxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attention: President
This undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant ("Warrant") for, and to purchase
thereunder payment by cash, wire transfer or certified check, _______________
shares of Common Stock* ("Warrant Shares") provided for therein, and requests
that certificates for the Warrant Shares be issued as follows:
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Name
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Address
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and, if the number of Warrant Shares shall not be all the Warrant Shares
purchasable upon exercise of the Warrant, that a new Warrant for the balance of
the Warrant Shares (subject to book-entry).
In lieu of delivering physical certificates representing the Warrant Shares
purchasable upon exercise of this Warrant, provided the Company's transfer agent
is participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer ("FAST") program, upon request of the Holder, the Company
shall use its best efforts to cause its transfer agent to electronically
transmit the Warrant Shares issuable upon conversion or exercise to the
undersigned, by crediting the account of the undersigned's prime broker with DTC
through its Deposit Withdrawal Agent Commission ("DWAC") system.
Dated:_______________________ Signature:
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Name (please print)
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Address
* NOTE: If exercise of the Warrant is made by surrender of the Warrant and
the number of shares indicated exceeds the maximum number of shares to
which a holder is entitled, the Company will issue such maximum number of
shares purchasable upon exercise of the Warrant registered in the name of
the undersigned Warrantholder or the undersigned's Assignee as below
indicated and deliver same to the address stated below.
