EXHIBIT 10.17
AMENDMENT TO CALLABLE WARRANT
This AMENDMENT TO CALLABLE WARRANT ("Amendment") is made as of this 28th
day of April, 2004 by and between FONAR CORPORATION, a Delaware corporation (the
"Company"), and THE TAIL WIND FUND LTD. ("Holder").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Purchase Agreement ("Purchase Agreement")
dated as of May 24, 2001 by and between the Company and the Holder, the Company
sold and issued to the Holder on May 24, 2001, among other securities, a
callable warrant ("Initial Callable Warrant") expiring May 24, 2004 to purchase
2,000,000 shares of the Company's Common Stock, par value $0.0001 per share
("Common Stock");
WHEREAS, pursuant to those certain First and Second Amendments to Callable
Warrant dated as of June 21, 2002 and August 15, 2002 by and between the Company
and the Holder, the Holder exercised the Initial Callable Warrant in full and
the Company issued to the Holder on August 30, 2002 a new callable warrant
("Warrant") expiring August 30, 2005 to purchase 2,000,000 shares of Common
Stock, which Warrant provides for adjustment of the Warrant Price and number of
unexercised Warrant Shares remaining under the Warrant due to issuances of
Common Stock by the Company under the circumstances described therein;
capitalized terms used herein and not otherwise defined herein shall have the
meanings ascribed thereto in the Warrant;
WHEREAS, the 2,000,000 Warrant Shares initially underlying the Warrant were
registered for resale pursuant to a registration statement originally filed with
the SEC under the Securities Act of 1933, as amended ("Securities Act"), on
October 22, 2002 and declared effective November 1, 2002 ("Registration
Statement"); and
WHEREAS, the parties wish to amend the Warrant Price and the number of
unexercised Warrant Shares remaining under the Warrant in exchange for the
Holder exercising the Warrant under such new terms in full;
NOW THEREFORE, in consideration of the foregoing premises and the mutual
covenants set forth in this Amendment, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Amendment. Notwithstanding anything contained in the Warrant, the
Warrant Price under the Warrant shall equal $1.00 per share of the Company's
Common Stock and the number of unexercised Warrant Shares remaining under the
Warrant shall equal 3,000,000 Warrant Shares as of the date of this Amendment.
It is understood that the new Warrant Price and increased number of Warrant
Shares reflect an agreement reached by the parties after discussions concerning
the effect of the applicable provisions of the Warrant relating to the
adjustment of the number and price of Warrant Shares, and that Holder has
previously exercised its rights to purchase 400,000 Warrant Shares under the
Warrant. Consequently, the Holder acknowledges that 1,400,000 of the 3,000,000
Warrant Shares are not covered by the Registration Statement or otherwise yet
registered under the Securities Act, and Holder agrees to accept such
unregistered 1,400,000 Warrant Shares (the "Unregistered Warrant Shares") upon
Holder's exercise of the Warrant for all the remaining Warrant Shares pursuant
to Section 2 of this Amendment. The Company represents and warrants to the
Holder that the 400,000 Warrant Shares previously issued were duly authorized,
validly issued, fully paid and non-assessable shares of Common Stock, free and
clear of any liens, claims and encumbrances, and the Holder is not aware of any
claim against or liability of the Company arising out of the issuance of such
400,000 Warrant Shares previously issued. The issuance and prices paid for the
400,000 Warrant Shares previously issued are ratified and approved by Holder and
the Company. In addition, the Company shall have no liability to the Holder for
not notifying the Holder of any adjustment to the price or number of Warrant
Shares that may have resulted from past issuance of Common Stock by the Company,
whether under the terms of the Warrant, the Purchase Agreement, the Registration
Rights Agreement or otherwise. Under no circumstances shall the number of
Warrant Shares be increased or the price of the Warrant Shares be lowered by
reason of any provision of the Warrant, the Purchase Agreement or the
Registration Rights Agreement or otherwise beyond the number and price set forth
herein (assuming all the Warrant Shares are issued contemporaneously with the
execution hereof, otherwise the adjustment provisions contained in Section 9 of
the Warrant shall apply for any stock split, stock dividends, distributions,
stock issuances, and similar events covered by such Section 9 which occur after
execution hereof).
2. Exercise. The Holder hereby exercises the Warrant, pursuant to the
Warrant Exercise Form attached hereto, for the remaining 3,000,000 Warrant
Shares underlying the Warrant at the $1.00 Warrant Price for an aggregate price
of $3,000,000. Upon the delivery of said remaining Warrant Shares to Holder in
accordance with Holder's written instructions, the Company will have no further
obligation to issue shares under the Warrant, and the Warrant shall be deemed
exercised in full. Holder shall pay such aggregate price by wire transfer to the
account designated by the Company immediately following full execution and
delivery of this Amendment. It is understood, however, that said shares will not
be issued and released to Holder until payment is received.
3. Registration Rights.
a) Prospectus Supplement. Within three (3) business days following the date
hereof, the Company, at its sole cost and expense and in accordance with
the Securities Act, shall file a prospectus supplement to the prospectus
under the Registration Statement previously filed with the SEC, covering
the changes to the Warrant described herein.
b) Registration Rights. The Company shall, at its sole cost and expense and
in accordance with the Securities Act, use its best efforts (1) to promptly
file and have declared effective a resale registration statement on the
appropriate form under the Securities Act with the SEC covering the
1,400,000 Unregistered Warrant Shares to be issued upon exercise of the
Warrant hereunder, and (2) to keep such registration statement current and
effective until all such shares covered thereby are available for resale
pursuant to Rule 144(k) under the Securities Act, or until such earlier
date as all such shares covered thereby shall have been sold ("Registration
Period"). All the terms and conditions of the Registration Rights Agreement
dated as of May 24, 2001 by and between the Company and the Holder
("Registration Rights Agreement"), shall apply mutatis mutandis to the
registration of such Unregistered Warrant Shares and the continued
registration of Warrant Shares under the Registration Statement, including
without limitation the indemnification and contribution provisions
contained therein, and all such terms are incorporated by reference herein,
provided that (a) the Registration Date with respect to the Unregistered
Warrant Shares shall mean the date which is six (6) months following the
date hereof, (b) the "Registration Period" with respect to the Warrant
Shares registered under the Registration Statement shall continue from the
date hereof until all such shares covered thereby are available for resale
pursuant to Rule 144(k) under the Securities Act or until such earlier date
as all such shares covered thereby shall have been sold, and (c) the
"Registration Period" with respect to the Unregistered Warrant Shares shall
have the meaning set forth in the previous sentence.
4. Condition Precedent. This Amendment is being executed concurrently with
a First Amendment to Purchase Warrant dated the date hereof, which Purchase
Warrant was issued pursuant to the Purchase Agreement, and this Amendment will
not be effective until such First Amendment to Purchase Warrant is also
effective.
5. Miscellaneous.
(a) Full Force and Effect. Except as otherwise expressly provided herein,
each of the Purchase Agreement, the Registration Rights Agreement, the Warrant,
the First and Second Amendments to Callable Warrant, and the other agreements
and transactions contemplated thereby shall remain in full force and effect, to
the extent they are presently in force, provided, however, that to the extent
any provision thereof is inconsistent with any of the terms of this Amendment,
the provisions of this Amendment will apply.
(b) Consent to Jurisdiction, Etc. Each of the Company and Holder agree that
any legal action or proceeding relating to or arising out of or under this
Amendment may be brought in the state or federal courts in the State of New
York, County of New York, and each party accepts with regard to any such action
or proceeding for itself and in respect to its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. To the fullest extent
permitted by applicable law, each party hereby waives, and agrees not to assert,
by way of motion, defense, counterclaim or otherwise, in any such suit, action
or proceeding any claim that (i) it is not personally subject to the
jurisdiction of any of the above-named courts by reason of any immunity or
otherwise, (ii) its properties are exempt or immune from setoff, execution or
attachment, either prior to judgment or in aid of execution or (iii) any suit,
action or proceeding so brought is in an inconvenient forum or that the venue of
the suit, action or proceeding is improper or that the subject matter hereof may
not be enforced in or by such courts.
(c) Authority. Each party hereto hereby represents and warrants to the
other party that the execution and delivery by such party of this Amendment, and
the performance by such party of its obligations hereunder, have been duly and
validly authorized by such party, with no other action on the part of such party
being necessary. This Amendment has been duly and validly executed and delivered
by such party and constitutes a legal, valid and binding obligation of such
party enforceable against such party in accordance with its terms.
(d) Governing Law. This Amendment shall be governed by and construed in
accordance with the internal laws of the State of New York.
(e) Notices. All notices, requests and other communications hereunder must
be in writing and will be deemed to have been duly given only if delivered
personally, by courier or by facsimile transmission or mailed (first class
postage prepaid) to the parties at the addresses or facsimile numbers set forth
in the Purchase Agreement.
(f) Counterparts. This Amendment may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. This Amendment may be
executed by facsimile.
(g) Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Amendment and the consummation of the
transactions contemplated hereby.
(h) Expenses. Upon execution hereof the Company shall pay to Tail Wind
Advisory & Management Ltd. the non-accountable sum of $10,000 as and for legal
and due diligence expenses in connection with the transactions contemplated
hereby and by the amendment of the purchase warrant issued to the Holder under
the Purchase Agreement.
(i) Assignment; Successors. Neither Holder nor the Company may assign this
Agreement or its respective rights or obligations hereunder without the prior
written consent of the other, which may not be unreasonably withheld or delayed.
This Amendment shall be binding upon the Company's successors.
*** Signatures Appear on the Next Page***
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
be duly executed as of the date first written above.
FONAR CORPORATION
By:/s/Xxxxxxx X. Xxxxxxxx, M.D., Pres.
Xxxxxxx Xxxxxxxx, M.D., President
THE TAIL WIND FUND LTD.
By: TAIL WIND ADVISORY AND
MANAGEMENT LTD., as
investment manager
By: /s/Xxxxx Xxxxx
Name: Xxxxx Xxxxx
Title: CEO
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, as amended on the date hereof
("Warrant"), for, and to purchase thereunder payment in the aggregate amount of
U.S. $3,000,000, by cash, wire transfer or certified check 3,000,000 shares of
Common Stock* ("Warrant Shares") provided for therein, and requests that
certificates for the Warrant Shares be issued as follows:
Name: THE TAIL WIND FUND LTD.
Address for shares to be sent:
c/x Xxxxxx Xxxxx & Co.
000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
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, if convenient, 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: April ___, 2004 Signature: THE TAIL WIND FUND LTD.
By: TAIL WIND ADVISORY AND
MANAGEMENT LTD., as
investment manager
By: _________________________
Name: Xxxxx Xxxxx
Title: CEO
Address: c/o Tail Wind Advisory
& Mgmt. Ltd.
0 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx XX0X 0XX Xxxxxxx
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.
