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EXHIBIT 4.5
THESE SECURITIES AND THE SECURITIES ISSUABLE UPON THEIR EXERCISE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED UNLESS
COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT, A "NO ACTION"
LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO SUCH
TRANSFER, A TRANSFER MEETING THE REQUIREMENTS OF RULE 144 OF THE SECURITIES AND
EXCHANGE COMMISSION, OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT ANY SUCH TRANSFER IS EXEMPT FROM SUCH REGISTRATION.
ESCALON MEDICAL CORP.
COMMON STOCK PURCHASE WARRANT
1. Issuance; Certain Definitions.
In consideration of good and valuable consideration,
the receipt of which is hereby acknowledged by ESCALON MEDICAL CORP., a
California corporation (the "Company"), COMBINATION, INC. or registered assigns
(the "Holder") is hereby granted the right to purchase at any time until 5:00
P.M., New York City time, on December 31, 2002 (the "Expiration Date"), Forty
Thousand (40,000) fully paid and nonassessable shares of the Company's Common
Stock, no par value per share (the "Common Stock"), at an initial exercise price
per share (the "Exercise Price") specified in the schedule below subject to
further adjustment as set forth in Section 6 hereof:
(a) Warrants for 10,000 shares of Common Stock shares at $8.6125 per
share.
(b) Warrants for 10,000 shares of Common Stock shares at $9.904375 per
share.
(c) Warrants for 10,000 shares of Common Stock shares at $10.335 per
share.
(d) Warrants for 10,000 shares of Common Stock shares at $11.626875 per
share.
2. Exercise of Warrants.
2.1 General. This Warrant is exercisable in whole or
in part at the Exercise Price per share of Common Stock payable hereunder,
payable in cash or by certified or official bank check, or by "cashless
exercise," by means of tendering this Warrant Certificate to the Company to
receive a number of shares of Common Stock equal in Market Value to the
difference between the Market Value of the shares of Common Stock issuable upon
exercise of this Warrant and the total cash exercise price thereof. Upon
surrender of this Warrant Certificate with the annexed Notice of Exercise Form
duly executed, together with payment of the Exercise Price for the shares of
Common Stock purchased, the Holder shall be entitled to receive a certificate or
certificates for the shares of Common Stock so purchased. For the purposes of
this Section 2, "Market Value" shall be an amount equal to the average closing
bid price of a share of Common Stock, as reported, at the option of the Buyer,
by Bloomberg, LP or the National Association of Securities Dealers, for the ten
(10) days preceding the Company's receipt of the Notice of Exercise Form duly
executed multiplied by the number of shares of Common Stock to be issued upon
surrender of this Warrant Certificate.
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2.2 Maximum Share Amount Issuable Upon Exercise.
Notwithstanding anything to the contrary herein, if at any time the aggregate
number of shares of Common Stock then issued upon exercise of this Warrant, plus
the aggregate number of shares of Common Stock then issued upon conversion of
the Series A Preferred Stock plus the aggregate number of shares of Common Stock
then issued upon the exercise of the Common Stock Purchase Warrants issued
December 31, 1997 to Trautman Kramer & Company, Incorporated and its designees
and their respective assignees (the "Distributor Warrants") equals 19.9% of the
"Outstanding Common Amount" (as hereinafter defined), then this Warrant shall,
from that time forward, cease to be exercisable into Common Stock in accordance
with the terms of this Section 2 (although the cashless exercise right shall
remain in effect), unless the Company (i) has obtained approval of the issuance
of the Common Stock issuable under this Warrant by the requisite vote, in person
or by proxy, by the holders of the then outstanding Common Stock (not including
any of the shares of Common Stock held by present or former holders of this
Warrant, the Distributor Warrants or Series A Preferred Stock, to the extent
that such shares were issued upon conversion of Series A Preferred Stock or
exercise of such Warrants) ("Shareholder Approval"), or (ii) shall have
otherwise obtained permission to allow such issuances from the NASDAQ Stock
Market in accordance with NASDAQ Rule 4460(i). For purposes of this paragraph,
"Outstanding Common Amount" means (x) the number of shares of the Common Stock
outstanding on the date of issuance of this Warrant pursuant to the Securities
Purchase Agreement, plus (y) any additional shares of Common Stock issued
thereafter in respect of such shares pursuant to a stock dividend, stock split
or similar event. The maximum number of shares of Common Stock issuable as a
result of the 19.9% limitation set forth herein is hereinafter referred to as
the "Maximum Share Amount." In the event the Company obtains Shareholder
Approval or the approval of The NASDAQ Stock Market or otherwise conclude that
it is able to increase the number of shares which can be issued in excess of the
Maximum Share Amount (such increased number being referred to as the "New
Maximum Share Amount"), then the references to the Maximum Share Amount above
shall be deemed to refer instead to the New Maximum Share Amount. If the Company
is limited in the number of shares of Common Stock it may issue upon exercise of
this Warrant as contemplated by the provisions of this Section 2.2, then the
Company will take all steps reasonably necessary to be in a position to issue
shares of Common Stock upon exercise of this Warrant without violating any rules
or regulations covering the number of shares of Common Stock that may be issued
by the Company, including, but not necessarily limited to, obtaining Shareholder
Approval.
3. Reservation of Shares. The Company hereby agrees that
at all times during the term of this Warrant there shall be reserved for
issuance upon exercise of this Warrant such number of shares of its Common Stock
as shall be required for issuance upon exercise of this Warrant (the "Warrant
Shares").
4. Mutilation or Loss of Warrant. Upon receipt by the
Company of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction)
receipt of reasonably satisfactory indemnification, and (in the case of
mutilation) upon surrender and cancellation of this Warrant, the Company will
execute and deliver a new
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Warrant of like tenor and date and any such lost, stolen, destroyed or mutilated
Warrant shall thereupon become void.
5. Rights of the Holder. The Holder shall not, by virtue
hereof, be entitled to any rights of a stockholder in the Company, either at law
or equity, and the rights of the Holder are limited to those expressed in this
Warrant and are not enforceable against the Company except to the extent set
forth herein.
6. Protection Against Dilution.
6.1 Adjustment Mechanism. If an adjustment of the
Exercise Price is required pursuant to this Section 6, the Holder shall be
entitled to purchase such number of additional shares of Common Stock as will
cause (i) the total number of shares of Common Stock Holder is entitled to
purchase pursuant to this Warrant, multiplied by (ii) the adjusted purchase
price per share, to equal (iii) the dollar amount of the total number of shares
of Common Stock Holder is entitled to purchase before adjustment multiplied by
the total purchase price before adjustment.
6.2 Capital Adjustments. In case of any stock split
or reverse stock split, stock dividend, reclassification of the Common Stock,
recapitalization, merger or consolidation, or like capital adjustment affecting
the Common Stock of the Company, the provisions of this Section 6 shall be
applied as if such capital adjustment event had occurred immediately prior to
the date of this Warrant and the original purchase price had been fairly
allocated to the stock resulting from such capital adjustment; and in other
respects the provisions of this Section shall be applied in a fair, equitable
and reasonable manner so as to give effect, as nearly as may be, to the purposes
hereof. A rights offering to stockholders shall be deemed a stock dividend to
the extent of the bargain purchase element of the rights.
6.3 Adjustment for Spin Off. If, for any reason,
prior to the exercise of this Warrant in full, the Company spins off or
otherwise divests itself of a part of its business or operations or disposes all
or of a part of its assets in a transaction (the "Spin Off") in which the
Company does not receive compensation for such business, operations or assets,
but causes securities of another entity (the "Spin Off Securities") to be issued
to security holders of the Company, then
(a) the Company shall cause (i) to be reserved Spin Off
Securities equal to the number thereof which would have been issued to
the Holder had all of the Holder's unexercised Warrants outstanding on
the record date (the "Record Date") for determining the amount and
number of Spin Off Securities to be issued to security holders of the
Company (the "Outstanding Warrants") been exercised as of the close of
business on the trading day immediately before the Record Date (the
"Reserved Spin Off Shares"), and (ii) to be issued to the Holder on the
exercise of all or any of the Outstanding Warrants, such amount of the
Reserved Spin Off Shares equal to (x) the Reserved Spin Off Shares
multiplied by (y) a fraction, of which (I) the numerator is the amount
of the Outstanding
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Warrants then being exercised, and (II) the denominator is the amount
of the Outstanding Warrants; and
(b) the Exercise Price on the Outstanding Warrants shall be
adjusted immediately after consummation of the Spin Off by multiplying
the Exercise Price by a fraction (if, but only if, such fraction is
less than 1.0), the numerator of which is the average Market Price of
the Common Stock (as defined in the Securities Purchase Agreement,
dated December 31, 1997, between the Company and the Holder or the
Holder's predecessor in interest with respect to this Warrant) on the
five (5) trading days immediately following the fifth trading day after
the Record Date, and the denominator of which is the average Market
Price of the Common Stock on the five (5) trading days immediately
preceding the Record Date; and such adjusted Exercise Price shall be
deemed to be the Exercise Price with respect to the Outstanding
Warrants after the Record Date.
7. Transfer to Comply with the Securities Act;
Registration Rights.
(a) This Warrant has not been registered under the Securities
Act of 1933, as amended (the "Act") and has been issued to the Holder for
investment and not with a view to the distribution of either the Warrant or the
Warrant Shares. Neither this Warrant nor any of the Warrant Shares or any other
security issued or issuable upon exercise of this Warrant may be sold,
transferred, pledged or hypothecated in the absence of an effective registration
statement under the Act relating to such security or an opinion of counsel
satisfactory to the Company that registration is not required under the Act.
Each certificate for the Warrant, the Warrant Shares and any other security
issued or issuable upon exercise of this Warrant shall contain a legend on the
face thereof, in form and substance satisfactory to counsel for the Company,
setting forth the restrictions on transfer contained in this Section.
(b) The Company agrees to file a registration statement, which
shall include the Warrant Shares, on Form S-3 or another available form (the
"Registration Statement"), pursuant to the Act, by the 30th calendar day after
the date this Warrant was issued (the "Original Issuance Date") and to have the
registration of the Warrant Shares completed and effective by the 90th calendar
day after the Original Issuance Date (the "Effective Date").
8. Notices. Any notice or other communication required
or permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered or express mail, postage pre-paid. Any such notice shall be deemed
given when so delivered personally, telegraphed, telexed or sent by facsimile
transmission, or, if mailed, two days after the date of deposit in the United
States mails, as follows:
(i) if to the Company, to:
ESCALON MEDICAL CORP.
351 East Conestoga Road
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Wayne, PA 19087
ATTN: President
Telephone No.: (610) 688-6830
Telecopier No.: (610) 254-8958
(ii) if to the Holder, to:
COMBINATION, INC.
c/o ISRC
310 Madison Avenue, Suite 503
New York, NY 10017
ATTN:
Telecopier No.: ( ) -
Telephone No.: ( ) -
with a copy to:
Krieger & Prager, Esqs.
319 Fifth Avenue
New York, New York 10016
Telecopier No. (212) 213-2077
Telephone No.: (212) 689-3322
Any party may be notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices hereunder.
9. Supplements and Amendments; Whole Agreement. This
Warrant may be amended or supplemented only by an instrument in writing signed
by the parties hereto. This Warrant of even date herewith contain the full
understanding of the parties hereto with respect to the subject matter hereof
and thereof and there are no representations, warranties, agreements or
understandings other than expressly contained herein and therein.
10. Governing Law. This Warrant shall be deemed to be a
contract made under the laws of the State of New York and for all purposes shall
be governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such State.
11. Counterparts. This Warrant may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
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12. Descriptive Headings. Descriptive headings of the
several Sections of this Warrant are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
the 31st day of December, 1997.
ESCALON MEDICAL CORP.
By: /s/ Richard J. DePiano
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Name: Richard J. DePiano
Its: Chairman and C.E.O.
Attest:
/s/ Richard J. DePiano, Jr.
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Name: Richard J. DePiano, Jr.
Title: Assistant Secretary
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NOTICE OF EXERCISE OF WARRANT
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate dated as of _________________, 1997, to
purchase _____ shares of the Common Stock, no par value per share, of ESCALON
MEDICAL CORP. and tenders herewith payment in accordance with Section 1 of said
Common Stock Purchase Warrant.
Please deliver the stock certificate to:
Dated:______________________
By:__________________________________
/ / CASH: $ _______________________
/ / CASHLESS EXERCISE