Exhibit 4.3
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 MAY 24, 2004 ("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 Purchase
Agreement ("Purchase Agreement") dated on or about the date hereof between the
Company and the Warrantholder. Capitalized terms used herein and not defined
shall have the meaning specified in the Purchase Agreement.
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 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) The holder covenants at all times on each day (each such day being referred
to as a "Covenant Day") as follows: During the balance of such Covenant Day
and the succeeding sixty-one (61) days (the balance of such Covenant Day
and the succeeding 61 days being referred to as the "Covenant Period") such
holder will not acquire shares of Common Stock pursuant to any right
(including exercise of Warrants) existing at the commencement of the
Covenant Period to the extent the number of shares so acquired by such
holder and its Aggregation Parties (ignoring all dispositions) would
exceed:
(x) the Restricted Ownership Percentage of the total number of shares of Common
Stock outstanding at the commencement of the Covenant Period, minus
(y) the number of shares of Common Stock actually owned by such holder and its
Aggregation Parties at the commencement of the Covenant Period.
A new and independent covenant will be deemed to be given by the holder as
of each moment of each Covenant Day. No covenant will terminate, diminish or
modify any other covenant. The holder agrees to comply with each such covenant.
This Section 18 controls in the case of any conflict with any other provision of
the Purchase Agreement or any agreement entered into in connection therewith.
The Corporation's obligation to issue Common Stock which would exceed such
limits referred to in this Section 18 shall be suspended to the extent necessary
until such time, if any, as shares of Common Stock may be issued in compliance
with such restrictions.
(c) 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 the
Purchase Agreement (including Underlying Shares and Warrant Shares) will be
included in determining whether the limitation contained herein would be
exceeded for purposes of this Section 18(c).
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
(i) the Warrantholder may assign or transfer this Warrant to any of such
Warrantholder's affiliates without the consent of the Company and (ii) upon
any Event of Default (as defined in the Debentures), the Warrantholder may
assign or transfer this Warrant 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 May 24, 2001.
FONAR CORPORATION
By: /s/
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Name:
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Title:
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Attest:
Sign: /s/
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Print Name:
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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:
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
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Name (please print)
Address
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* 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.
