Exhibit 10.4
LOCK-UP AGREEMENT
The undersigned is the holder of shares of the common stock, $0.001 par
value ("Common Stock"), and/or shares of the Class A Convertible Preferred
Stock, and/or Common Stock Purchase Warrants ("Class A Preferred Stock") issued
in connection with the sale of the Class A Convertible Preferred Stock, and/or
the Series 1 Convertible 8% Convertible Subordinated Notes, and/or the Series 1
Common Stock Purchase Warrants, and/or the Series 2 Subordinated Convertible 12%
Notes and/or the Series 2 Common Stock Purchase Warrants issued by DOBI Medical
Systems, Inc., a Delaware corporation, or its predecessor, DOBI Medical Systems,
LLC, a Delaware limited liability company (collectively, the "Company"). Each of
the aforesaid classes and series of securities of the Company is hereinafter
referred to as "Company Securities."
The undersigned hereby acknowledges receipt from the Company of the
following documents:
1. Letter to Holders of the Class A Preferred Stock and Common Stock
dated October 28, 2003; and
2. The Company's Information Statement dated October 23, 2003 (the
"Information Statement").
The undersigned understands that if the Merger (as defined in the
Information Statement) is consummated, the undersigned's Company Securities will
be converted into Pubco common stock or Pubco common stock purchase warrants
(the "Merger Securities," which term includes the Pubco common stock acquirable
upon exercise of the Pubco common stock purchase warrants).
To induce Pubco and the Company to enter into and carry out the Merger,
the undersigned hereby agrees not to, directly or indirectly, publicly sell,
contract to sell or otherwise transfer any of the Merger Securities beneficially
owned by the undersigned (unless the proposed transferee agrees to be bound by
the restrictions on transfer contained herein); provided, however, that (a) from
6 months through 12 months after the closing of the Merger, the undersigned may
sell or otherwise transfer up to five percent (5%) of the initial amount of the
Merger Securities beneficially owned by the undersigned in each calendar month
(calculated at the date of the closing of the Merger, and (b) from 13 months
through 24 months after the closing of the Merger, the undersigned may sell or
otherwise transfer Merger Securities at a rate of ten percent (10%) of the
initial amount of the Merger Securities beneficially owned by the undersigned
(calculated at the date of the closing of the Merger) in each calendar month, on
a cumulative basis, subject to applicable securities laws.
In addition, if the Company engages an underwriter or placement agent
during the 12 months after the Closing to raise a minimum of $5.0 million
through the sale of the Company's common stock and/or other equity securities,
in a public offering or private placement, upon commencing such public offering
or private placement, all holders of shares subject to lock-up agreements will,
if required by the underwriter or placement agent, refrain from making any
sales, transfers or other dispositions in the course of such offering, but, in
any event, for not more than 90 days.
Notwithstanding any contrary or inconsistent provision hereof, all
restrictions on the undersigned under this Lock-Up Agreement shall expire in
full not later than two years after the date of closing of the Merger.
Pubco may waive in writing any provision of this Lock-Up Agreement if
and only if (i) any such waiver is simultaneously applicable to the holders of
all other Merger Securities,
and (ii) at least 5 business days' advance written notice of such waiver is
provided to all holders of the Merger Securities. In the event that a particular
waiver applies to only a percentage of the Merger Securities, then the
percentage shall be identical for each holder of Merger Securities.
THE UNDERSIGNED UNDERSTANDS THAT IF THE UNDERSIGNED DOES NOT EXECUTE
AND RETURN THIS LOCK-UP AGREEMENT TO THE COMPANY ON OR BEFORE NOVEMBER 5, 2003,
THE COMPANY MAY NOT BE ABLE TO CONSUMMATE THE MERGER. IF THE MERGER IS
NEVERTHELESS CONSUMMATED NOTWITHSTANDING THE UNDERSIGNED'S FAILURE TO EXECUTE
AND RETURN THIS LOCK-UP AGREEMENT TO THE COMPANY, THE MERGER SECURITIES OWNED BY
THE UNDERSIGNED WILL NOT BE INCLUDED IN THE REGISTRATION STATEMENT TO BE FILED
IN CONNECTION WITH THE MERGER AS DESCRIBED IN THE INFORMATION STATEMENT.
The undersigned hereby (i) represents that the undersigned has full
power and authority to enter into this Lock-Up Agreement, (ii) agrees, upon
request, to execute any additional documents necessary or desirable in
connection with this Lock-Up Agreement and its enforcement; and (iii) agrees
that this Lock-Up Agreement is irrevocable by the undersigned, and shall survive
the undersigned's death or incapacity, (iv) the obligations of the undersigned
hereunder shall be binding on the heirs, personal representatives, successors
and assigns of the undersigned, and (v) consents to the placing of a legend on
the certificates evidencing the Merger Securities and/or stop-transfer orders
with the transfer agent of Pubco Common Stock with respect to any of the Merger
Securities registered in the name of the undersigned or beneficially owned by
the undersigned.
If the Merger is not consummated for any reason whatsoever on or before
December 31, 2003, this Lock-up Agreement shall expire on such date.
Yours very truly,
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Signature of Holder
Print name and address of Holder:
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RETURN TO THE COMPANY BY FAX: AT (000) 000-0000
-AND-
BY THE FEDERAL EXPRESS SELF-ADDRESSED ENVELOP ENCLOSED OR COURIER TO:
DOBI Medical Systems, Inc.
0000 XxxXxxxxx Xxxxxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Att'n: Xxxxx X. Xxxxxxx, Esq.,
General Counsel and Secretary
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