Contract
EXHIBIT
4.5
THIS
WARRANT AND THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR WITH ANY STATE
SECURITIES COMMISSION, AND MAY NOT BE TRANSFERRED OR DISPOSED OF BY THE HOLDER
IN THE ABSENCE OF A REGISTRATION STATEMENT WHICH IS EFFECTIVE UNDER THE
SECURITIES ACT AND APPLICABLE STATE LAWS AND RULES, OR, UNLESS, IMMEDIATELY
PRIOR TO THE TIME SET FOR TRANSFER, SUCH TRANSFER MAY BE EFFECTED WITHOUT
VIOLATION OF THE SECURITIES ACT AND OTHER APPLICABLE STATE LAWS AND
RULES.
DOBI
MEDICAL INTERNATIONAL, INC.
WARRANT
|
Warrant
No. 2006-W-1-A
|
Dated: March
__, 2006
|
DOBI
Medical International, Inc., a Delaware corporation (the “Company”),
hereby certifies that, for value received, ___________________________,
or its
registered assigns (including permitted transferees, the “Holder”),
is
entitled to purchase from the Company up to a total of ___________ shares
(as
adjusted from time to time as provided in Section 9) of Common Stock (as
defined
below) (each such share, a “Warrant
Share”
and
all
such shares, the “Warrant
Shares”)
at an
exercise price equal to $.15 per share (as adjusted from time to time as
provided in Section 9, the “Exercise
Price”),
at
any time and from time to time from and after March __, 2006 (the “Initial
Exercise Date”)
through and including March __, 2009 (the “Expiration
Date”),
and
subject to the following terms and conditions. This Warrant is one of a series
of similar warrants (the “Warrants”)
issued
pursuant to an offer described in a notice dated March 20, 2006 (the
“Notice”)
by the
Company to its existing warrant holders, enabling such warrant holders to
exercise their current warrants and receive the Warrants in exchange
therefor.
1. Definitions.
The
capitalized terms used herein and not otherwise defined shall have the meanings
set forth below:
“Affiliate”
of
any
specified Person means any other person or entity directly or indirectly
controlling, controlled by or under direct or indirect common control with
such
specified Person. For purposes of this definition, “control”
means
the power to direct the management and policies of such Person or firm, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise.
“Common
Stock”
means
the common stock of the Company, par value $.0001 per share, as constituted
on
the Original Issue Date.
“Company
Offer”
means
any tender offer (including exchange offer), as amended from time to time,
made
by the Company or any of its subsidiaries for the purchase (including the
acquisition pursuant to an exchange offer) of all or any portion of the
outstanding shares of Common Stock, except as permitted pursuant to Rule
10b-18
promulgated under the Securities Exchange Act of 1934, as amended.
“Eligible
Market”
means
any of the New York Stock Exchange, the American Stock Exchange or
Nasdaq.
“Excluded
Stock”
means
(A) any Common Stock issued, or stock options granted to, employees, officers,
directors of or consultants or advisors to the Company, in each case, pursuant
to a stock-based plan duly approved by the Company’s board of directors; (B)
Common Stock issued upon an exercise, a conversion or an exchange of any
outstanding Common Stock Equivalents (provided that such exercise or conversion
occurs in accordance with the terms thereof, without amendment or modification);
(C) securities issued in connection with a joint venture or development
agreement or strategic partnership or similar agreement approved by the
Company’s board of directors, a primary purpose of which is not to raise equity
capital; (D) securities issued in connection with a bona fide underwritten
public offering of at least $15,000,000 with a regionally recognized
underwriter; and (E) securities issued in connection with the Company’s
currently contemplated private placement transaction, for which X.X. Xxxxxxxxx,
Towbin, LLC is acting as financial advisor; provided,
that,
in such private placement, all Common Stock Equivalents (as defined below)
are
issued at a price of $.08 or higher and all warrants are issued with an exercise
price of $.15 or higher.
“Market
Price”
shall
mean (i) if the principal trading market for such securities is an exchange,
the
average of the last reported sale prices per share for the last five previous
Trading Days in which a sale was reported, as officially reported on any
consolidated tape, (ii) if clause (i) is not applicable, the average of the
closing bid price per share for the last five previous Trading Days as set
forth
by Nasdaq or (iii) if clauses (i) and (ii) are not applicable, the average
of
the closing bid price per share for the last five previous Trading Days as
set
forth in the National Quotation Bureau sheet listing for such securities.
Notwithstanding the foregoing, if there is no reported sales price or closing
bid price, as the case may be, on any of the ten Trading Days preceding the
event requiring a determination of Market Price hereunder, then the Market
Price
shall be determined in good faith by resolution of the Board of Directors
of the
Company, based on the best information available to it.
“Nasdaq”
means
the Nasdaq Capital Market or Nasdaq National Market.
“Original
Issue Date”
means
March __, 2006.
“Other
Securities”
refers
to any capital stock (other than Common Stock) and other securities of the
Company or any other Person which the Holder of this Warrant at any time
shall
be entitled to receive, or shall have received, upon the exercise of this
Warrant, in lieu of or in addition to Common Stock, or which at any time
shall
be issuable or shall have been issued in exchange for or in replacement of
Common Stock or Other Securities pursuant to Section 9 hereof or
otherwise.
“Person”
means
any court or other federal, state, local or other governmental authority
or
other individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other
entity
of any kind.
“Registration
Rights Agreement”
means
the registration rights agreement to be executed by the Company and the Holder
in connection with the warrant exercise described in the Notice.
“Registration
Statement”
shall
have the meaning set forth in the Registration Rights Agreement.
“Trading
Day”
means
(a) any day on which the Common Stock is listed or quoted and traded on any
Eligible Market or (b) if the Common Stock is not then quoted and traded
on any
Eligible Market, then a day on which trading occurs on the Nasdaq National
Market (or any successor thereto).
“Transfer
Agent”
shall
mean The Nevada Agency and Trust Company Limited or such other Person as
the
Company may appoint from time to time.
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“Warrant
Shares”
shall
initially mean shares of Common Stock and in addition may include Other
Securities and Distributed Property (as defined in Section 9(e)) issued or
issuable from time to time upon exercise of this Warrant.
2. Registration
of Warrant.
The
Company shall register this Warrant, upon records to be maintained by the
Company for that purpose (the “Warrant
Register”),
in
the name of the record Holder hereof from time to time. The Company may deem
and
treat the registered Holder of this Warrant as the absolute owner hereof
for the
purpose of any exercise hereof or any distribution to the Holder, and for
all
other purposes, absent actual notice to the contrary.
3. Registration
of Transfers.
The
Company shall register the transfer of any portion of this Warrant in the
Warrant Register, upon surrender of this Warrant, with the Form of Assignment
attached hereto as Appendix A duly completed and signed, to the Company at
its
address specified herein. Upon any such registration and transfer, a new
warrant
in substantially the form of a Warrant (any such new warrant, a “New
Warrant”),
evidencing the portion of this Warrant so transferred shall be issued to
the
transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance by such transferee of all of the rights and obligations of a holder
of a Warrant.
4. Exercise
and Duration of Warrant.
(a) This
Warrant shall be exercisable by the registered Holder at any time and from
time
to time on and after March ___, 2006, to and including the Expiration Date;
provided,
however,
that no
such exercise shall be made until the Company has obtained the approval of
the
holders of a majority of its outstanding shares of Common Stock of an amendment
to the Company’s Certificate of Incorporation increasing the number of its
authorized shares of Common Stock to 340,000,000 shares, and the Company
has
filed such amendment with the Secretary of State of the State of Delaware
following the giving of notices and expiration of waiting periods imposed
by the
State of Delaware and the U.S. Securities and Exchange Commission. At 5:00
p.m.,
New York City time on the Expiration Date, the portion of this Warrant not
exercised prior thereto shall be and become void and of no value.
(b) A
Holder
may exercise this Warrant by delivering to the Company (i) an exercise notice,
in the form attached hereto as Appendix B (the “Exercise
Notice”),
appropriately completed and duly signed, and (ii) payment of the Exercise
Price
for the number of Warrant Shares as to which this Warrant is being exercised
(as
set forth in Section 4(c) below), and the date such items are received by
the
Company is an “Exercise
Date.”
Execution and delivery of the Exercise Notice shall have the same effect
as
cancellation of the original Warrant and issuance of a New Warrant evidencing
the right to purchase the remaining number of Warrant Shares.
(c) The
Holder shall pay the Exercise Price (i) in cash, by certified bank check
payable
to the order of the Company or by wire transfer of immediately available
funds
in accordance with the Company’s instructions or (ii) if at any time on or after
the Initial Exercise Date (x) there is no effective Registration Statement
registering the resale of the Warrant Shares by the Holder and (y) the Market
Price exceeds the Exercise Price, by means of a “cashless exercise,” by
presenting and surrendering to the Company this Warrant, in which event the
Company shall issue to the Holder the number of Warrant Shares determined
as
follows:
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X
= Y
[(A-B)/A]
where:
X
= the
number of Warrant Shares to be issued to the Holder upon such cashless
exercise;
Y
= the
number of Warrant Shares with respect to which this Warrant is being
exercised;
A
= the
Market Price on the Exercise Date; and
B
= the
Exercise Price.
(d) If
an
exercise of this Warrant is to be made in connection with a registered public
offering or sale of the Company, such exercise may, at the election of the
Holder, be conditioned on the consummation of the public offering or sale
of the
Company, in which case such exercise shall not be deemed effective until
the
consummation of such transaction.
5. Delivery
of Warrant Shares.
(a) Upon
exercise of this Warrant, the Company shall promptly (but in no event later
than
three Trading Days after the Exercise Date) issue or cause to be issued and
cause to be delivered to or upon the written order of the Holder and in such
name or names as the Holder may designate, a certificate for the Warrant
Shares
issuable upon such exercise, free of restrictive legends unless a registration
statement covering the resale of the Warrant Shares and naming the Holder
as a
selling stockholder thereunder is not then effective and the Warrant Shares
are
not freely transferable without volume restrictions pursuant to Rule 144
under
the Securities Act. The Holder, or any Person so designated by the Holder
to
receive Warrant Shares, shall be deemed to have become the holder of record
of
such Warrant Shares as of the Exercise Date. The Company shall, upon request
of
the Holder, use its best efforts to deliver Warrant Shares hereunder
electronically through the Depository Trust Corporation or another established
clearing corporation performing similar functions.
(b) This
Warrant is exercisable, either in its entirety or, from time to time, for
a
portion of the number of Warrant Shares. Upon surrender of this Warrant
following one or more partial exercises, the Company shall issue or cause
to be
issued, at its expense, a New Warrant evidencing the right to purchase the
remaining number of Warrant Shares.
6. Charges,
Taxes and Expenses.
Issuance and delivery of certificates for shares of Common Stock upon exercise
of this Warrant shall be made without charge to the Holder for any issue
or
transfer tax, withholding tax, transfer agent fee or other incidental tax
or
expense in respect of the issuance of such certificates, all of which taxes
and
expenses shall be paid by the Company; provided, however, that the Company
shall
not be required to pay any tax which may be payable in respect of any transfer
involved in the registration of any certificates for Warrant Shares or Warrant
in a name other than that of the Holder. The Holder shall be responsible
for all
other tax liability that may arise as a result of holding or transferring
this
Warrant or receiving Warrant Shares upon exercise hereof.
7. Replacement
of Warrant.
If this
Warrant is mutilated, lost, stolen or destroyed, the Company shall issue
or
cause to be issued in exchange and substitution for and upon cancellation
hereof, or in lieu of and in substitution for this Warrant, a New Warrant,
but
only upon receipt of evidence reasonably satisfactory to the Company of such
loss, theft or destruction and customary and reasonable indemnity, if
requested.
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8. Reservation
of Warrant Shares.
The
Company covenants that it will at all times reserve and keep available out
of
the aggregate of its authorized but unissued and otherwise unreserved Common
Stock, solely for the purpose of enabling it to issue Warrant Shares upon
exercise of this Warrant as herein provided, the number of Warrant Shares
which
are then issuable and deliverable upon the exercise of this entire Warrant,
free
from all taxes, liens, claims, encumbrances with respect to the issuance
of such
Warrant Shares and will not be subject to any pre-emptive rights or similar
rights (taking into account the adjustments and restrictions of Section 9
hereof). The Company covenants that all Warrant Shares so issuable and
deliverable shall, upon issuance and the payment of the applicable Exercise
Price in accordance with the terms hereof, be duly and validly authorized,
issued, fully paid and non-assessable. The Company will take all such action
as
may be necessary to assure that such shares of Common Stock may be issued
as
provided herein without violation of any applicable law or regulation, or
of any
requirements of any securities exchange or automated quotation system upon
which
the Common Stock may be listed or quoted, as the case may be.
9. Certain
Adjustments.
The
Exercise Price and number of Warrant Shares issuable upon exercise of this
Warrant are subject to adjustment from time to time as set forth in this
Section
9.
(a) Stock
Dividends.
If the
Company, at any time while this Warrant is outstanding, pays a dividend on
its
Common Stock payable in additional shares of Common Stock or otherwise makes
a
distribution on any class of capital stock that is payable in shares of Common
Stock (other than regularly scheduled dividends in accordance with the terms
of
the Company’s outstanding shares of Series A Convertible Preferred Stock), then
in each such case the Exercise Price shall be multiplied by a fraction, (A)
the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to the opening of business on the day after the record
date
for the determination of stockholders entitle to receive such dividend or
distribution and (B) the denominator of which shall be the number of shares
of
Common Stock outstanding immediately after such event. Any adjustment made
pursuant to this Section 9(a) shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
dividend or distribution.
(b) Stock
Splits.
If the
Company, at any time while this Warrant is outstanding, (i) subdivides
outstanding shares of Common Stock into a larger number of shares, or (ii)
combines outstanding shares of Common Stock into a smaller number of shares,
then in each such case the Exercise Price shall be multiplied by a fraction,
(A)
the numerator of which shall be the number of shares of Common Stock outstanding
immediately before such event and (B) the denominator of which shall be the
number of shares of Common Stock outstanding immediately after such event.
Any
adjustment pursuant to this Section 9(b) shall become effective immediately
after the effective date of such subdivision or combination.
(c) Reclassifications.
A
reclassification of the Common Stock (other than any such reclassification
in
connection with a merger or consolidation to which Section 9(f) applies)
into
shares of any other class of stock shall be deemed:
(i) a
distribution by the Company to the holders of its Common Stock of such shares
of
such other class of stock for the purposes and within the meaning of this
Section 9; and
(ii) if
the
outstanding shares of Common Stock shall be changed into a larger or smaller
number of shares of Common Stock as part of such reclassification, such change
shall be deemed a subdivision or combination, as the case may be, of the
outstanding shares of Common Stock for the purposes and within the meaning
of
Section 9(b).
(d) Self-Tender
Offers.
In the
event, at any time or from time to time after the Original Issue Date while
the
Warrants remain outstanding and unexpired, in whole or in part, a Company
Offer
shall be made and expire, then and in each such event the Exercise Price
in
effect immediately prior to close of business on the date of the last time
(the
“Expiration
Time”)
tenders could have been made pursuant to such Company Offer shall be decreased
by multiplying such Exercise Price by a fraction (not to be greater than
1):
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(i) the
numerator of which shall be equal to (A) the product of (1) the Market Price
per
share of the Common Stock on the date of the Expiration Time and (2) the
number
of shares of Common Stock outstanding (including any tendered shares) at
the
Expiration Time less (B) the fair market value (as determined in good faith
by
the Board of Directors of the Company) of the aggregate consideration payable
to
stockholders based on the acceptance (up to any maximum specified in the
terms
of the Company Offer) of all shares validly tendered and not withdrawn as
of the
Expiration Time (the shares deemed so accepted, up to any maximum amount
provided for in connection with such Company Offer, being referred to as
the
“Purchased
Shares”);
and
(ii) the
denominator of which shall be equal to the product of (A) the Market Price
per
share of the Common Stock on the date of the Expiration Time and (B) the
number
of shares of Common Stock outstanding (including any tendered shares) on
the
Expiration Time less the number of Purchased Shares.
Any
adjustment under this Section 9(d) shall become effective immediately prior
to
the opening of business on the day after the Expiration Time.
(e) Other
Distributions.
If the
Company, at any time while this Warrant is outstanding, distributes to holders
of Common Stock (i) evidences of its indebtedness, (ii) any security (other
than
a distribution of Common Stock covered by Section 9(a)), (iii) rights or
warrants to subscribe for or purchase any security or (iv) any other asset
(other than regularly scheduled distributions in accordance with the terms
of
the Company’s outstanding shares of Series A Convertible Preferred Stock) (in
each case, “Distributed
Property”),
then
in each such case the Exercise Price in effect immediately prior to the record
date fixed for determination of stockholders entitled to receive such
distribution (and the Exercise Price thereafter applicable) shall be adjusted
(effective on and after such record date) to equal the product of such Exercise
Price multiplied by a fraction, (A) the numerator of which shall be Market
Price
on such record date less the then fair market value per share of the Distributed
Property distributed in respect of one outstanding share of Common Stock,
which,
if the Distributed Property is other than cash or marketable securities,
shall
be as determined in good faith by the Board of Directors of the Company,
and (B)
the denominator of which shall be the Market Price on such record
date.
(f) Fundamental
Transactions.
If, at
any time while this Warrant is outstanding, (i) the Company effects any merger
or consolidation of the Company with or into another Person, (ii) the Company
effects any sale of all or substantially all of its assets in one or a series
of
related transactions or (iii) there shall occur any merger of another Person
into the Company whereby the Common Stock is cancelled, converted or
reclassified into or exchanged for other securities, cash or property (in
any
such case, a “Fundamental
Transaction”),
then,
as a condition to the consummation of such Fundamental Transaction, the Company
shall (or, in the case of any Fundamental Transaction in which the Company
is
not the surviving entity, the Company shall take all reasonable steps to
cause
such other Person to) execute and deliver to each Holder of Warrants a written
instrument providing that:
(x) so
long
as any Warrant remains outstanding on such terms and subject to such conditions
as shall be nearly equivalent as may be practicable to the provisions set
forth
in this Warrant, each Warrant, upon the exercise thereof at any time on or
after
the consummation of such Fundamental Transaction, shall be exercisable into,
in
lieu of Common Stock issuable upon such exercise prior to such consummation,
the
securities or other property (the “Substituted
Property”)
that
would have been received in connection with such Fundamental Transaction
by a
holder of the number of shares of Common Stock into which such Warrant was
exercisable immediately prior to such Fundamental Transaction, assuming such
holder of Common Stock:
6
(A) is
not a
Person with which the Company consolidated or into which the Company merged
or
which merged into the Company or to which such sale or transfer was made,
as the
case may be (a “Constituent
Person”),
or an
Affiliate of a Constituent Person; and
(B) failed
to
exercise such Holder’s rights of election, if any, as to the kind or amount of
securities, cash and other property receivable in connection with such
Fundamental Transaction (provided,
however,
that if
the kind or amount of securities, cash or other property receivable in
connection with such Fundamental Transaction is not the same for each share
of
Common Stock held immediately prior to such Fundamental Transaction by a
Person
other than a Constituent Person or an Affiliate thereof and in respect of
which
such rights of election shall not have been exercised (a “Non-Electing
Share”),
then,
for the purposes of this Section 9(f), the kind and amount of securities,
cash
and other property receivable in connection with such Fundamental Transaction
by
each Non-Electing Share shall be deemed to be the kind and amount so receivable
per share by a plurality of the Non-Electing Shares); and
(y) the
rights and obligations of the Company (or, in the event of a transaction
in
which the Company is not the surviving Person, such other Person) and the
Holders in respect of Substituted Property shall be as nearly equivalent
as may
be practicable to the rights and obligations of the Company and Holders in
respect of Common Stock hereunder.
Such
written instrument shall provide for adjustments which, for events subsequent
to
the effective date of such written instrument, shall be as nearly equivalent
as
may be practicable to the adjustments provided for in Section 9. The above
provisions of this Section 9(f) shall similarly apply to successive Fundamental
Transactions.
(g) Subsequent
Equity Sales.
(i) If,
at
any time while this Warrant is outstanding, the Company issues additional
shares
of Common Stock or rights, warrants, options or other securities or debt
convertible, exercisable or exchangeable for shares of Common Stock or otherwise
entitling any Person to acquire shares of Common Stock (collectively,
“Common
Stock Equivalents”)
at an
effective net price to the Company per share of Common Stock (the “Effective
Price”)
less
than the Exercise Price (as adjusted hereunder to such date), then the Exercise
Price shall be reduced to equal the Effective Price. For purposes of this
paragraph, in connection with any issuance of any Common Stock Equivalents,
(A)
the maximum number of shares of Common Stock potentially issuable at any
time
upon conversion, exercise or exchange of such Common Stock Equivalents (the
“Deemed
Number”)
shall
be deemed to be outstanding upon issuance of such Common Stock Equivalents,
(B)
the Effective Price applicable to such Common Stock shall equal the minimum
dollar value of consideration payable to the Company to purchase such Common
Stock Equivalents and to convert, exercise or exchange them into Common Stock
(net of any discounts, fees, commissions and other expenses), divided by
the
Deemed Number, and (C) no further adjustment shall be made to the Exercise
Price
upon the actual issuance of Common Stock upon conversion, exercise or exchange
of such Common Stock Equivalents.
(ii) If,
at
any time while this Warrant is outstanding, the Company issues Common Stock
Equivalents with an Effective Price or a number of underlying shares that
floats
or resets or otherwise varies or is subject to adjustment based (directly
or
indirectly) on market prices of the Common Stock (a “Floating
Price Security”),
then
for purposes of applying the preceding paragraph in connection with any
subsequent exercise, the Effective Price will be determined separately on
each
Exercise Date and will be deemed to equal the lowest Effective Price at which
any holder of such Floating Price Security is entitled to acquire Common
Stock
on such Exercise Date (regardless of whether any such holder actually acquires
any shares on such date).
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(iii) Notwithstanding
the foregoing, no adjustment will be made under this paragraph (g) in respect
of
Excluded Stock.
(h) Adjustment
of Exercise Price.
Simultaneously with any adjustment to the Exercise Price pursuant to paragraphs
(a) through (e) or (g) of this Section 9, the number of Warrant Shares that
may
be purchased upon exercise of this Warrant shall be increased or decreased
proportionately, so that after such adjustment the aggregate Exercise Price
payable hereunder for the increased or decreased number of Warrant Shares
shall
be the same as the aggregate Exercise Price payable for the Warrant Shares
immediately prior to such adjustment.
(i) Calculations.
All
calculations under this Section 9 shall be made to the nearest cent or the
nearest 1/100th of a share, as applicable. The number of shares of Common
Stock
outstanding at any given time shall not include shares owned or held by or
for
the account of the Company, and the disposition of any such shares shall
be
considered an issue or sale of Common Stock.
(j) Adjustments.
Notwithstanding any provision of this Section 9, no adjustment of the Exercise
Price shall be required if such adjustment is less than $0.01; provided,
however, that any adjustments which by reason of this Section 9(j) are not
required to be made shall be carried forward and taken into account for purposes
of any subsequent adjustment.
(k) Notice
of Adjustments.
Upon
the occurrence of each adjustment pursuant to this Section 9, the Company
will
promptly deliver to the Holder a certificate executed by the Company’s Chief
Financial Officer setting forth, in reasonable detail, the event requiring
such
adjustment and the method by which such adjustment was calculated, the adjusted
Exercise Price and the adjusted number or type of Warrant Shares or other
securities issuable upon exercise of this Warrant (as applicable). The Company
will retain at its office copies of all such certificates and cause the same
to
be available for inspection at said office during normal business hours by
the
Holder or any prospective purchaser of the Warrant designated by the
Holder.
(l) Notice
of Corporate Events.
If the
Company (i) declares a dividend or any other distribution of cash, securities
or
other property in respect of its Common Stock, including, without limitation,
any granting of rights or warrants to subscribe for or purchase any capital
stock of the Company or any subsidiary of the Company, (ii) authorizes,
approves, enters into any agreement contemplating, or solicits stockholder
approval for, any Fundamental Transaction or (iii) authorizes the voluntary
dissolution, liquidation or winding up of the affairs of the Company, then
the
Company shall deliver to the Holder a notice describing the material terms
and
conditions of such transaction at least 15 calendar days prior to the applicable
record or effective date on which a Person would need to hold Common Stock
in
order to participate in or vote with respect to such transaction, and the
Company will take all steps reasonably necessary in order to ensure that
the
Holder is given the practical opportunity to exercise this Warrant prior
to such
time so as to participate in or vote with respect to such transaction; provided,
however, that the failure to deliver such notice or any defect therein shall
not
affect the validity of the corporate action required to be described in such
notice.
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10. Limitation
on Exercise.
Notwithstanding anything to the contrary contained herein, the number of
shares
of Common Stock that may be acquired by a Holder upon any exercise of Warrants
(or otherwise in respect hereof) shall be limited to the extent necessary
to
ensure that, following such exercise (or other issuance), the total number
of
shares of Common Stock then beneficially owned by such Holder and its Affiliates
and any other Persons whose beneficial ownership of Common Stock would be
aggregated with such Holder’s for purposes of Section 13(d) of the Exchange Act,
does not exceed 9.99% (the “Maximum
Percentage”)
of the
total number of issued and outstanding shares of Common Stock (including
for
such purpose the shares of Common Stock issuable upon such exercise). For
such
purposes, beneficial ownership shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
Each delivery of an Exercise Notice hereunder will constitute a representation
by the Holder that it has evaluated the limitations set forth in this paragraph
and determined that issuance of the full number of Warrant Shares requested
in
such Exercise Notice is permitted under this paragraph. The Company’s obligation
to issue shares of Common Stock in excess of the limitation referred to in
this
Section 10 shall be suspended (and shall not terminate or expire notwithstanding
any contrary provisions hereof) until such time, if any, as such shares of
Common Stock may be issued in compliance with such limitation. By written
notice
to the Company, the Holder shall have the right at any time and from time
to
time to reduce its Maximum Percentage immediately upon notice to the Company
in
the event and only to the extent that Section 16 of the Exchange Act or the
rules promulgated thereunder (or any successor statute or rules) is changed
to
reduce the beneficial ownership percentage threshold thereunder to a percentage
less than 9.99%; provided,
however,
that
(i) any such waiver, increase or decrease will not be effective until the
61st
day after such notice is delivered to the Company, and (ii) any such waiver
or
increase or decrease will apply only to the Holder and not to any other holder
of Warrants. Notwithstanding the foregoing, the limitation referred to in
this
Section 10 shall not apply to executive officers or directors of the Company
and
their respective affiliates.
11. Redemption.
(a)
This
Warrant may be called by the Company with respect to 100% of the Warrant
Shares
at a price of $.01 per Warrant Share on thirty (30) days’ notice (the
“Redemption
Notice”)
to the
Holder if all of the following shall have occurred:
(i) the
average closing bid price of the Company’s Common Stock for twenty (20)
consecutive trading days exceeds $.50 per Share, at least ten days’ prior to the
Company sending the Notice to the Holder;
(ii) the
Common Stock of the Company is trading on an Eligible Market or the OTC Bulletin
Board; and
(iii) a
registration statement covering the Warrant Shares remains effective on the
date
of the Redemption Notice and is expected to remain effective by the Company
for
at least 60 days after the date of the Redemption Notice.
12. Fractional
Shares.
The
Company shall not be required to issue or cause to be issued fractional Warrant
Shares on the exercise of this Warrant. If any fraction of a Warrant Share
would, except for the provisions of this Section, be issuable upon exercise
of
this Warrant, the Company shall make a cash payment to the Holder equal to
(a)
such fraction multiplied by (b) the Market Price on the Exercise Date of
one
full Warrant Share.
13. Restricted
Securities.
The
Holder represents and warrants that it (i) understands that the Warrant and
the
Warrant Shares have not been registered under the Securities Act and (ii)
understands the restrictions set forth on the legend printed on the face
of this
Warrant. Notwithstanding the above, the Company represents that the Warrant
Shares are subject to the Registration Rights Agreement.
14. Listing
on Securities Exchanges.
In
furtherance and not in limitation of any other provision of this Warrant,
if the
Company at any time shall list any Common Stock on any Eligible Market, the
Company will, at its expense, simultaneously list the Warrant Shares (and
maintain such listing) on such Eligible Market, upon official notice of issuance
following the exercise of this Warrant; and the Company will so list, register
and maintain such listing on any Eligible Market any Other Securities, if
and at
the time that any securities of like class or similar type shall be listed
on
such Eligible Market by the Company.
9
15. Remedies.
The
Company stipulates that the remedies at law of the Holder of this Warrant
in the
event of any default or threatened default by the Company in the performance
of
or compliance with any of the terms of this Warrant are not and will not
be
adequate, and that such terms may be specifically enforced by a decree for
the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
16. Notices.
Any and
all notices or other communications or deliveries hereunder (including without
limitation any Exercise Notice) shall be in writing and shall be mailed by
certified mail, return receipt requested, or by a nationally recognized courier
service or delivered (in person or by facsimile), against receipt to the
party
to whom such notice or other communication is to be given. The address of
the
Company for such notices or communications shall be DOBI Medical International,
Inc., 0000 XxxXxxxxx Xxxxxxxxx, Xxxxxx, Xxx Xxxxxx 00000, Attn: Xxxxxxx X.
Xxxxxx, Chief Executive Officer. The address of the Holder for such notices
or
communications shall be the address for such Holder on file with the Company.
Any notice or other communication given by means permitted by this Section
16
shall be deemed given at the time of receipt thereof.
17. Warrant
Agent.
The
Company shall serve as warrant agent under this Warrant. Upon 30 days’ notice to
the Holder, the Company may appoint a new warrant agent. Any Person into
which
any new warrant agent may be merged, any Person resulting from any consolidation
to which any new warrant agent shall be a party or any Person to which any
new
warrant agent transfers substantially all of its corporate trust or shareholders
services business shall be a successor warrant agent under this Warrant without
any further act. Any such successor warrant agent shall promptly cause notice
of
its succession as warrant agent to be mailed (by first class mail, postage
prepaid) to the Holder at the Holder’s last address as shown on the Warrant
Register.
18. Miscellaneous.
(a) This
Warrant may be assigned by the Holder. This Warrant may not be assigned by
the
Company, except to a successor in the event of a Fundamental Transaction.
This
Warrant shall be binding on and inure to the benefit of the parties hereto
and
their respective successors and assigns. Subject to the preceding sentence,
nothing in this Warrant shall be construed to give to any Person other than
the
Company and the Holder any legal or equitable right, remedy or cause of action
under this Warrant. This Warrant may be amended only in writing signed by
the
Company and the Holder and their successors and assigns.
(b) The
Company will not, by amendment of its governing documents or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or
sale of securities or any other voluntary action, avoid or seek to avoid
the
observance or performance of any of the terms of this Warrant, but will at
all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to
protect
the rights of the Holder against impairment. Without limiting the generality
of
the foregoing, the Company (i) will not increase the par value of any Warrant
Shares above the amount payable therefor upon exercise thereof, (ii) will
take
all such action as may be reasonably necessary or appropriate in order that
the
Company may validly and legally issue fully paid and nonassessable Warrant
Shares on the exercise of this Warrant, free from all taxes, liens, claims
and
encumbrances and (iii) will not close its shareholder books or records in
any
manner which interferes with the timely exercise of this Warrant.
10
(c) This
Warrant shall be governed by and construed and enforced in accordance with
the
laws of the State of New York without regard to conflicts of laws principles
thereof. Each party hereby irrevocably submits to the exclusive jurisdiction
of
the state and Federal courts sitting in the City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein,
and
hereby irrevocably waives, and agrees not to assert any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction
of
any such court, that such suit, action or proceeding is improper. Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof
via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under
this
Warrant and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be
deemed
to limit in any way any right to serve process in any manner permitted by
law.
THE PARTIES HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.
(d) Neither
party shall be deemed in default of any provision of this Warrant, to the
extent
that performance of its obligations or attempts to cure a breach hereof are
delayed or prevented by any event reasonably beyond the control of such party,
including, without limitation, war, hostilities, acts of terrorism, revolution,
riot, civil commotion, national emergency, strike, lockout, unavailability
of
supplies, epidemic, fire, flood, earthquake, force of nature, explosion,
embargo, or any other Act of God, or any law, proclamation, regulation,
ordinance, or other act or order of any court, government or governmental
agency, provided that such party gives the other party written notice thereof
promptly upon discovery thereof and uses reasonable efforts to cure or mitigate
the delay or failure to perform.
(e) The
headings herein are for convenience only, do not constitute a part of this
Warrant and shall not be deemed to limit or affect any of the provisions
hereof.
(f) In
case
any one or more of the provisions of this Warrant shall be deemed invalid
or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon
a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
(g) No
provision of this Warrant may be waived or amended except in a written
instrument signed, in the case of an amendment, by the Company and the holders
of Warrants representing a majority in interest of the Warrants, based on
the
number of Warrant Shares or, in the case of a waiver, by such majority in
interest. No waiver of any default with respect to any provision, condition
or
requirement of this Warrant shall be deemed to be a continuing waiver in
the
future or a waiver of any subsequent default or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of either
party
to exercise any right hereunder in any manner impair the exercise of any
such
right.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE
PAGE FOLLOWS]
11
IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
by its
authorized officer as of the date first indicated above.
DOBI
MEDICAL INTERNATIONAL, INC.
By:
______________________
Xxxxxxx
X. Xxxxxx
Chief
Executive Officer
APPENDIX
A
FORM
OF
ASSIGNMENT
(to
be
completed and signed only upon transfer of Warrant)
FOR
VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________________ the right represented by the within
Warrant to purchase _____________ shares of Common Stock of DOBI Medical
International, Inc. to which the within warrant relates and appoints
__________________________ attorney to transfer said right on the books of
DOBI
Medical International, Inc. with full power of substitution in the
premises.
Dated:____________
(Signature
must conform in all respects to name of Holder as specified on face of the
Warrant)
Address
of Transferee:
Telephone:
Facsimile:
E-mail:
SSN/EIN#:
In
the
presence of:
APPENDIX
B
FORM
OF
EXERCISE NOTICE
(To
be
executed by the Holder to exercise the right to purchase shares of Common
Stock
under the foregoing Warrant)
To: DOBI
Medical International, Inc.
The
undersigned is the Holder of Warrant No. 2006-W-1-A (the “Warrant”) issued by
DOBI Medical International, Inc., a Delaware corporation (the “Company”).
Capitalized terms used herein and not otherwise defined have the respective
meanings set forth in the Warrant.
|
1.
|
The
Warrant is currently exercisable to purchase a total of _________
Warrant
Shares.
|
|
2.
|
The
undersigned Holder hereby exercises its right to purchase __________
Warrant Shares pursuant to the
Warrant.
|
|
3.
|
The
Holder intends that payment of the Exercise Price, in accordance
with the
terms of Section 4(c) of the Warrant, shall be made as (check
one):
|
Cash
Exercise _______
Cashless
Exercise _______
|
4.
|
If
the Holder has elected a Cash Exercise, the Holder shall pay the
sum of
$________ to the Company in accordance with the terms of the
Warrant.
|
|
5.
|
If
the Holder has elected a Cashless Exercise, a certificate shall
be issued
to the Holder for the number of shares equal to the whole number
portion
of the product of the calculation set forth below, which is ____________.
The Company shall pay a cash adjustment in respect of the fractional
portion of the product of the calculation set forth below in an
amount
equal to the product of the fractional portion of such product
and the
Market Price on the Exercise Day, which product is
____________.
|
X
=
Y[(A-B)/A]
X
= the
number of Warrant Shares to be issued to the Holder.
Number
of
Warrant Shares being exercised: __________ (“Y”).
Market
Price on the Exercise Day: __________ (“A”).
Exercise
Price: __________ (“B”)
|
6.
|
Pursuant
to this exercise, the Company shall deliver to the Holder Warrant
Shares
in accordance with the terms of the
Warrant.
|
|
7.
|
Following
this exercise, the Warrant shall be exercisable to purchase a total
of
__________ Warrant Shares.
|
Dated:
_________
Name
of
Holder:
(Print)_______________________
By:__________________________
Name:________________________
Title:_________________________
(Signature
must conform in all respects to name of holder as specified on the face of
the
Warrant)
