NY HEALTH
and
X.X. XXXXXX & CO., INC.
Dated as of _______________________ __, 1996
UNDERWRITER'S WARRANT AGREEMENT
THIS UNDERWRITER'S WARRANT AGREEMENT (the "Agreement"), dated as of
___________ ___, 1996, is made and entered into by and between NEW YORK HEALTH
CARE, INC. a New York corporation (the "Company"), and X.X. XXXXXX & CO., INC.,
a Delaware corporation (the "Warrantholder").
The Company agrees to issue and sell, and the Warrantholder agrees to
purchase, for an aggregate purchase price of $5.00, warrants, as hereinafter
described (the "Warrants"), to purchase up to an aggregate of 125,000 (subject
to adjustment pursuant to Section 8 hereof) shares (the "Shares") of the
Company's Common Stock, $.01 par value (the "Common Stock"), in connection with
a public offering by the Company of 1,250,000 shares of Common Stock (the
"Public Shares") pursuant to an underwriting agreement (the "Underwriting
Agreement"), dated ___________ ___, 1996, between the Company and the
Warrantholder, as underwriter (the "Underwriter"). The purchase and sale of the
Warrants shall occur on the First Closing Date, as defined in the Underwriting
Agreement, and shall be subject to the conditions to the Underwriter's
obligations to purchase Public Shares thereunder.
In consideration of the foregoing and for the purpose of defining the terms
and provisions of the Warrants and the respective rights and obligations
thereunder, the Company and the Warrantholder, for value received, hereby agree
as follows:
Section 1. Transferability and Form of Warrants.
1.1 Registration. The Warrants shall be numbered and registered on the
books of the Company when issued.
1.2 Transfer. The Warrants shall be transferable only on the books of
the Company maintained at its principal office, wherever its principal office
may then be located, upon delivery thereof duly endorsed by the Warrantholder or
by its duly authorized attorney or Underwriter, accompanied by proper evidence
of succession, assignment or authority to transfer. Upon any registration of
transfer, the Company shall execute and deliver new Warrants to the person
entitled thereto.
1.3 Limitations on Transfer of the Warrants. Subject to the provisions
of Section 11, the Warrants shall not be sold, transferred, assigned or
hypothecated by the Warrantholder until ____________. 1997 except to (i) one or
more persons, each of whom on the date of transfer is an officer of the
Warrantholder; (ii) any of the members of the selling group and/or the officers
or partners thereof; (iii) a successor to the Warrantholder in merger or
consolidation; (iv) a purchaser of all or substantially all of the
Warrantholder's assets; or (v) any person receiving the Warrants from one or
more of the persons listed in this subsection 1.3 at such person's or persons'
death pursuant to will, trust or the laws of intestate succession. The Warrants
may be divided or combined, upon request to the Company by the Warrantholder,
into a certificate or certificates representing the right
to purchase the same aggregate number of Shares. Unless the context indicates
otherwise, the term "Warrantholder" shall include any transferee or transferees
of the Warrants pursuant to this subsection 1.3, and the term "Warrants" shall
include any and all warrants outstanding pursuant to this Agreement, including
those evidenced by a certificate or certificates issued upon division, exchange,
substitution or transfer pursuant to this Agreement.
1.4 Form of Warrants. The text of the Warrants and of the form of
election to purchase Shares shall be substantially as set forth in Exhibit "A"
attached hereto. The number of shares issuable upon exercise of the Warrants is
subject to adjustment upon the occurrence of certain events, all as hereinafter
provided. The Warrants shall be executed on behalf of the Company by its Chief
Executive Officer or by a Vice President, attested to by its Secretary or an
Assistant Secretary. A Warrant bearing the signature of an individual who was at
any time the proper officer of the Company shall bind the Company
notwithstanding that such individual shall have ceased to hold such office prior
to the delivery of such Warrant or did not hold such office on the date of this
Agreement.
The Warrants shall be dated as of the date of signature thereof by the
Company either upon initial issuance or upon division, exchange, substitution or
transfer.
1.5 Legend on Shares. Each certificate for Shares initially issued upon
exercise of the Warrants or a Unit Warrant shall bear the following legend,
unless, at the time of exercise, such Shares are subject to a currently
effective Registration Statement under the Act:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES
LAWS AND MAY NOT BE SOLD, EXCHANGED, HYPOTHECATED OR TRANSFERRED IN
ANY MANNER EXCEPT IN COMPLIANCE WITH SECTION 11 OF THE AGREEMENT
PURSUANT TO WHICH THEY WERE ISSUED."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution pursuant to a registration statement under the
Securities Act of 1933 (the "Act"), of the securities represented thereby) shall
also bear the above legend unless, in the opinion of the Company's counsel, the
securities represented thereby need no longer be subject to such restrictions.
Section 2. Exchange of Warrant Certificate. Any Warrant certificate may be
exchanged for another certificate or certificates entitling the Warrantholder to
purchase a like aggregate number of Shares as the certificate or certificates
surrendered then entitled such Warrantholder to purchase. Any Warrantholder
desiring to exchange a Warrant certificate shall make such request in writing
delivered to the Company, and shall surrender, properly endorsed, with
signatures guaranteed, the certificate evidencing the Warrant to be so
exchanged. Thereupon, the Company shall execute and deliver to the person
entitled thereto a new Warrant certificate as so requested.
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Section 3. Term of Warrants; Exercise of Warrants.
(a) Subject to the terms of this Agreement, the Warrantholder shall
have the right, at any time during the period commencing at 9:00 a.m., New York
City Time, on ____________, 1997 and ending at 5:00 p.m., New York City Time, on
____________, 2001 (the "Termination Date"), to purchase from the Company up to
the number of fully paid and nonassessable Shares which the Warrantholder may at
the time be entitled to purchase pursuant to this Agreement, upon surrender to
the Company, at its principal office, of the certificate evidencing the Warrants
to be exercised, together with the purchase form on the reverse thereof duly
filled in and signed, with signatures guaranteed, and upon payment to the
Company of the Warrant Price (as defined in and determined in accordance with
the provisions of this Section 3 and Sections 7 and 8 hereof), for the number of
Shares in respect of which such Warrants are then exercised, but in no event for
less than 100 Shares (unless less than an aggregate of 100 Shares are then
purchasable under all outstanding Warrants held by a Warrantholder).
(b) Except as otherwise provided for in this Section 3, payment of the
aggregate Warrant Price shall be made in cash or by check, or any combination
thereof. No Warrant may be exercised by the Warrantholder after 5:00 p.m., New
York City Time, on |____________, 2001. Subject to the terms of this agreement,
each Warrant may be exercised to purchase one Unit at a price of $__________
[120% of the Public Share offering price].
Upon such surrender of the Warrants and payment of such Warrant Price as
aforesaid, the Company shall issue and cause to be delivered with all reasonable
dispatch to or upon the written order of the Warrantholder and in such name or
names as the Warrantholder may designate a certificate or certificates for the
number of full Shares so purchased upon the exercise of the Warrant, together
with cash, as provided in Section 9 hereof, in respect of any fractional Shares
otherwise issuable upon such surrender. Such certificate or certificates shall
be deemed to have been issued and any person so designated to be named therein
shall be deemed to have become a holder of record of such securities as of the
date of surrender of the Warrants and payment of the Warrant Price, as
aforesaid, notwithstanding that the certificate or certificates representing
such securities shall not actually have been delivered or that the stock
transfer books of the Company shall then be closed. The Warrants shall be
exercisable, at the election of the Warrantholder, either in full or from time
to time in part and, in the event that a certificate evidencing the Warrants is
exercised in respect of less than all of the Shares specified therein at any
time prior to the Termination Date, a new certificate evidencing the remaining
portion of the Warrants will be issued by the Company.
(c) Notwithstanding the provisions of Section 1(b) with respect to the
payment of the aggregate Warrant Price to the contrary, the Holder may elect to
exercise this Warrant, in whole or in part, by receiving Shares equal to the
value (as herein determined) of the portion of this Warrant then being
exercised, in which event the Company shall issue to the Holder the number of
Shares determined by using the following formula:
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X = Y(A-B)
-----
A
where: X = the number of Shares to be issued to the Holder under the
provisions of this Section 1(c).
Y = the number of Shares that would otherwise be issued upon
such exercise.
A = the Current Fair Market Value (as hereinafter defined) of
one Share calculated as of the last trading day immediately
preceding such exercise.
B = the Exercise Price
As used herein, the "Current Fair Market Value" of the Shares as of a
specified date shall mean with respect to each Share, (i) the aggregate of the
average of the last reported sales price regular way of the Common Stock sold on
all securities exchanges on which such securities may at the time be listed, or
(ii) if there have been no sales on any such exchange on such day, the average
of the highest bid and lowest asked prices on all such exchanges at the end of
such day, or (iii) if on such day such securities are not so listed, the average
of the representative bid and asked prices quoted in the NASDAQ System as of
4:00 p.m., New York time, or (iv) if on such day such securities are not quoted
in the NASDAQ System, the average of the highest bid and lowest asked prices on
such day in the domestic over-the-counter market as reported by the National
Quotation Bureau, Incorporated or any similar successor organization, in each
such case averaged over a period of 21 days consisting of the day as of which
the Current Fair Market Value is being determined and the 20 consecutive
business days prior to such day. If on the date for which Current Fair Market
Value is to be determined such securities are not listed on any securities
exchange or quoted in the NASDAQ System or the over-the-counter market, then
Current Fair Market Value of such securities shall be the highest price per
share and per warrant which the Company could then obtain from a willing buyer
(not a current employee or director) for such securities sold by the Company for
such securities, as determined in good faith by the Board of Directors of the
Company, unless prior to such date the Company has become subject to a merger,
consolidation, reorganization, acquisition or other similar transaction pursuant
to which the Company is not the surviving entity, in which case the Current Fair
Market Value of the securities shall be deemed to be the per share value
received or to be received in such transaction by the holder of such securities.
Section 4. Payment of Taxes. The Company will pay all documentary stamp
taxes, if any, attributable to the initial issuance of the Warrants or the
securities comprising the Shares; provided, however, the Company shall not be
required to pay any tax which may be payable in respect of any secondary
transfer of the Warrants or the Shares.
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Section 5. Mutilated or Missing Warrants. In case the certificate or
certificates evidencing the Warrants shall be mutilated, lost, stolen or
destroyed, the Company shall, at the request of the Warrantholder, issue and
deliver in exchange and substitution for and upon cancellation of the mutilated
certificate or certificates, or in lieu of and substitution for the certificate
or certificates lost, stolen or destroyed, a new Warrant certificate or
certificates of like tenor and representing an equivalent right or interest, but
only upon receipt of evidence satisfactory to the Company of such loss, theft or
destruction of such Warrant and a bond of indemnity, if requested, also
satisfactory in form and amount at the applicant's cost. Applicants for such
substitute Warrants certificates shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company may prescribe.
Section 6. Reservation of Shares. There have been reserved, and the Company
shall at all times keep reserved so long as the Warrants remain outstanding, out
of its authorized Common Stock, such number of shares of Common Stock as shall
be subject to purchase under the Warrants. Every transfer agent for the Common
Stock and other securities of the Company, if any, issuable upon the exercise of
the Warrants will be irrevocably authorized and directed at all times to reserve
such number of authorized shares and other securities as shall be requisite for
such purpose. The Company will keep a copy of this Agreement on file with every
transfer agent for the Common Stock and other securities of the Company issuable
upon the exercise of the Warrants. The Company will supply every such transfer
agent with duly executed stock and other certificates, as appropriate, for such
purpose and will provide or otherwise make available any cash which may be
payable as provided in Section 9 hereof.
Section 7. Warrant Price. The price per Share at which Shares shall be
purchasable upon the exercise of the Warrants (the "Warrant Price") shall be
$_______ [120% of the Public Share offering price], subject to further
adjustment pursuant to Section 8 hereof.
Section 8. Adjustment of Number of Shares. The number and kind of
securities purchasable upon the exercise of the Warrants and the Warrant Price
shall be subject to adjustment from time to time upon the happening of certain
events, as follows:
8.1 Adjustments. The number of Shares purchasable upon the exercise of the
Warrants shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in Common Stock or
make a distribution in Common Stock, (ii) subdivide its outstanding Common
Stock, (iii) combine its outstanding Common Stock into a smaller number of
shares of Common Stock, or (iv) issue by reclassification of its Common Stock
other securities of the Company, the number of Shares purchasable upon exercise
of the Warrants immediately prior thereto shall be adjusted so that the
Warrantholder shall be entitled to receive the kind and number of shares of
Common Stock or other securities of the Company which it would have owned or
would have been entitled to receive immediately after the happening of any of
the events described above, had the Warrants been exercised immediately prior to
the happening of such event or any record date with respect thereto.
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Any
adjustment made pursuant to this subsection 8.l(a) shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
(b) In case the Company shall fix a record date for the issuance of
rights or warrants to all holders of its Common Stock entitling them to
subscribe for or purchase shares of Common Stock (or securities convertible into
Common Stock) at a price (or having a conversion price per share) less than the
Initial Price (defined as $______ per share of Common Stock), the Warrant Price
shall be adjusted so that it shall equal the price determined by multiplying the
Warrant Price in effect immediately prior to the date of such issuance by a
fraction, the numerator of which shall be the sum of the number of shares of
Common Stock outstanding on the record date mentioned below plus the number of
additional shares of Common Stock which the aggregate offering price of the
total number of shares of Common Stock so offered (or the aggregate conversion
price of the convertible securities so offered) would purchase at the Initial
Price, and the denominator of which shall be the sum of the number of shares of
Common Stock outstanding on such record date and the number of additional shares
of Common Stock offered for subscription or purchase (or into which the
convertible securities so offered are convertible). Such adjustment shall be
made successively whenever such rights or warrants are issued and shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such rights or warrants; and to the extent that
shares of Common Stock are not delivered (or securities convertible into Common
Stock are not delivered) after the expiration of such rights or warrants, the
Warrant Price shall be readjusted to the Warrant Price which would then be in
effect had the adjustments made upon the issuance of such rights or warrants
been made upon the basis of delivery of only the number of shares of Common
Stock (or securities convertible into Common Stock) actually delivered.
(c) In case the Company shall hereafter distribute to all holders of
its Common Stock evidences of its indebtedness or assets (excluding cash
dividends or distributions and dividends or distributions referred to in
Subsection (a) above) or subscription rights or warrants (excluding those
referred to in Subsection (b) above), then in each such case the Warrant Price
in effect thereafter shall be determined by multiplying the Warrant Price in
effect immediately prior thereto by a fraction, the numerator of which shall be
the total number of shares of Common Stock then outstanding multiplied by the
Initial Price, less the fair market value (as determined by the Company's Board
of Directors) of said assets, or evidences of indebtedness so distributed or of
such rights or warrants, and the denominator of which shall be the total number
of shares of Common Stock outstanding multiplied by such Initial Price. Such
adjustment shall be made whenever any such distribution is made and shall become
effective immediately after the record date for the determination of
shareholders entitled to receive such distribution.
(d) Whenever the Warrant Price payable upon exercise of the
Underwriter's Warrant is adjusted pursuant to Subsections (a), (b) or (c) above,
the number of Shares purchasable upon exercise of this Underwriter's Warrant
shall simultaneously be adjusted by multiplying the number of Shares issuable
upon exercise of this Underwriter's Warrant by the Warrant Price in effect on
the date hereof and dividing the product so obtained by the Warrant Price, as
adjusted.
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(e) Whenever the number of Shares purchasable upon the exercise of the
Warrants is adjusted as herein provided, the Company shall cause to be promptly
mailed to the Warrantholder by first class mail, postage prepaid, notice of such
adjustment and a certificate of the chief financial officer of the Company
setting forth the number of Shares purchasable upon the exercise of the Warrants
after such adjustment, a brief statement of the facts requiring such adjustment
and the computation by which such adjustment was made.
(f) For the purpose of this subsection 8.1 the term "Common Stock"
shall mean (i) the class of stock designated as the Common Stock of the Company
at the date of this Agreement, or (ii) any other class of stock resulting from
successive changes or reclassifications of such Common Stock consisting solely
of changes in par value, or from par value to no par value, or from no par value
to par value. In the event that at any time, as a result of an adjustment made
pursuant to this Section 8, the Warrantholder shall become entitled to purchase
any securities of the Company other than Common Stock, (i) if the
Warrantholder's right to purchase is on any other basis than that available to
all holders of the Company's Common Stock, the Company shall obtain an opinion
of an independent investment banking firm valuing such other securities and (ii)
thereafter the number of such other securities so purchasable upon exercise of
the Warrants shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Shares contained in this Section 8.
(i) Upon the expiration of any rights, options, warrants or conversion
privileges, if such shall not have been exercised, the number of Shares
purchasable upon exercise of the Warrants, to the extent the Warrants have not
then been exercised, shall, upon such expiration, be readjusted and shall
thereafter be such as they would have been had they been originally adjusted (or
had the original adjustment not been required, as the case may be) on the basis
of (A) the fact that the only shares of Common Stock so issued were the shares
of Common Stock, if any, actually issued or sold upon the exercise of such
rights, options, warrants or conversion privileges, and (B) the fact that such
shares of Common Stock, if any, were issued or sold for the consideration
actually received by the Company upon such exercise plus the consideration, if
any, actually received by the Company for the issuance, sale or grant of all
such rights, options, warrants or conversion privileges whether or not
exercised; provided, however, that no such readjustment shall have the effect of
decreasing the number of Shares purchasable upon exercise of the Warrants by an
amount in excess of the amount of the adjustment initially made in respect of
the issuance, sale or grant of such rights, options, warrants or conversion
privileges.
8.2 No Adjustment for Dividends. Except as provided in subsection 8.1, no
adjustment in respect of any dividends or distributions out of earnings shall be
made during the terms of the Warrants or upon the exercise of Warrants.
8.3 No Adjustment in Certain Cases. No adjustment shall be made pursuant to
Sections 3 or 8 hereof in connection with the issuance of Public Shares sold as
part of the public sale and issuance of Shares pursuant to the Underwriting
Agreement or the issuance of Shares upon exercise of the Warrants. No adjustment
in the Warrant Price shall be required if such adjustment is
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less than $.05; provided, however, that any adjustments which by reason of this
Section 8.3 are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 8
shall be made to the nearest cent or to the nearest one-thousandth of a share,
as the case may be.
8.4 Preservation of Purchase Rights upon Reclassification, Consolidations.
In case of any consolidation of the Company with, or merger of the Company into,
another corporation or in case of any sale or conveyance to another corporation
of the property, assets or business of the Company as an entirety or
substantially as an entirety, the Company or such successor or purchasing
corporation, as the case may be, shall execute with the Warrantholder an
agreement that the Warrantholder shall have the right thereafter upon payment of
the Warrant Price in effect immediately prior to such action to purchase, upon
exercise of the Warrants, the kind and amount of shares and other securities and
property which it would have owned or have been entitled to receive after the
happening of such consolidation, merger, sale or conveyance had the Warrants
(and each underlying security) been exercised immediately prior to such action.
In the event of a merger described in Section 368(a)(2)(E) of the Internal
Revenue Code of 1986, as amended, in which the Company is the surviving
corporation, the right to purchase Shares under the Warrants shall terminate on
the date of such merger and thereupon the Warrants shall become null and void,
but only if the controlling corporation shall agree to substitute for the
Warrants its warrant which entitles the holder thereof to purchase upon its
exercise the kind and amount of shares and other securities and property which
it would have owned or been entitled to receive had the Warrants been exercised
immediately prior to such merger. Any such agreements referred to in this
subsection 8.4 shall provide for adjustment, which shall be as nearly equivalent
as may be practicable to the adjustments provided for in Section 8 hereof. The
provisions of this subsection 8.4 shall similarly apply to successive
consolidations, mergers, sales or conveyances.
8.5 Par Value of Shares of Common Stock. Before taking any action which
would cause an adjustment effectively reducing the portion of the Warrant Price
allocable to each Share below the then par value per share of the Common Stock
issuable upon exercise of the Warrants, the Company will take any corporate
action which, in the opinion of its counsel, may be necessary in order that the
Company may validly and legally issue fully paid and nonassessable Common Stock
upon exercise of the Warrants.
8.6 Independent Public Accountants. The Company may retain a firm of
independent public accountants of recognized national standing (which may be any
such firm regularly employed by the Company) to make any computation required
under this Section 8, and a certificate signed by such firm shall be conclusive
evidence of the correctness of any computation made under this Section 8.
8.7 Statement on Warrant Certificates. Irrespective of any adjustments in
the number of securities issuable upon exercise of Warrants, Warrant
certificates theretofore or thereafter issued may continue to express the same
number of securities as are stated in the similar Warrant certificates initially
issuable pursuant to this Agreement. However, the Company, at any time in its
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sole discretion (which shall be conclusive), may make any change in the form of
Warrant certificate that it may deem appropriate and that does not affect the
substance thereof and any Warrant certificate thereafter issued, whether upon
registration of transfer of, or in exchange or substitution for, an outstanding
Warrant certificate, may be in the form so changed.
Section 9. Fractional Interests; Current Market Price. The Company shall
not be required to issue fractional Shares on the exercise of the Warrants. If
any fraction of a Share would, except for the provisions of this Section 9, be
issuable on the exercise of the Warrants (or specified portion thereof), the
Company shall pay an amount in cash equal to the then Current Market Price
multiplied by such fraction. For purposes of this Agreement, the term "Current
Market Price" shall mean (i) if the Common Stock is traded in the NASDAQ Small
Cap Market and not in the NASDAQ National Market System nor on any national
securities exchange, the average, of the per share closing bid prices of the
Common Stock on the thirty (30) consecutive trading days immediately preceding
the date in question, as reported by NASDAQ or an equivalent generally accepted
reporting service, or (ii) if the Common Stock is traded in the NASDAQ National
Market System or on a national securities exchange, the average for the thirty
(30) consecutive trading days immediately preceding the date in question, of the
daily per share closing prices of the Common Stock in the NASDAQ National Market
System or on the principal stock exchange on which it is listed, as the case may
be. For purposes of clause (i) above, if trading in the Common Stock is not
reported by NASDAQ, the bid price referred to in said clause shall be the lowest
bid price as reported in the "pink sheets" published by National Quotation
Bureau, Incorporated. The closing price referred to in clause (ii) above shall
be the last reported sale price or, in case no such reported sale takes place on
such day, the average of the reported closing bid and asked prices, in either
case in the NASDAQ National Market System or on the national securities exchange
on which the Common Stock is then listed.
Section 10. No Rights as Stockholder; Notices to Warrantholder. Nothing
contained in this Agreement or in the Warrants shall be construed as conferring
upon the Warrantholder or its transferees any rights as a stockholder of the
Company, including the right to vote, receive dividends, consent or receive
notices as a stockholder in respect of any meeting of stockholders for the
election of directors of the Company or any other matter. If, however, at any
time prior to the expiration of the Warrants and prior to their exercise, any
one or more of the following events shall occur:
(a) any action which would require an adjustment pursuant to Section
8.1; or
(b) a dissolution, liquidation or winding up of the Company (other than
in connection with a consolidation, merger or sale of its property, assets and
business as an entirety or substantially as an entirety) shall be proposed;
then the Company shall give notice in writing of such event to the
Warrantholder, as provided in Section 14 hereof, at least twenty (20) days prior
to the date fixed as a record date or the date of closing the transfer books for
the determination of the stockholders entitled to any relevant dividend,
distribution, subscription rights or other rights or for the determination of
stockholders entitled to vote on such proposed dissolution, liquidation or
winding up. Such notice shall specify such record
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date or date of closing the transfer books, as the case may be. Failure to mail
or receive such notice or any defect therein shall not affect the validity of
any action taken with respect thereto.
Section 11. Restrictions on Transfer; Registration Rights.
(a) The Warrantholder agrees that prior to making any disposition of
the Warrants or the Shares, other than to persons or entities identified in
clauses (i) through (v), inclusive, of Section 1.3, the Warrantholder shall give
written notice to the Company describing briefly the manner in which any such
proposed disposition is to be made; and no such disposition shall be made if the
Company has notified the Warrantholder that in the opinion of counsel reasonably
satisfactory to the Warrantholder a registration statement or other notification
or post-effective amendment thereto (hereinafter collectively a "Registration
Statement") under the Act is required with respect to such disposition and no
such Registration Statement has been filed by the Company with, and declared
effective, if necessary, by the Securities and Exchange Commission (the
"Commission").
(b) The Company shall be obligated to the owners of the Warrants and
the Shares to file a Registration Statement as follows:
(i) Whenever during the four-year period beginning on
___________, 1997 and ending on ___________, 2001, the Company proposes to file
with the Commission a Registration Statement (other than as to securities issued
pursuant to an employee benefit plan or as to a transaction subject to Rule 145
promulgated under the Act or which a Form S-4 Registration Statement could be
used), it shall, at least twenty (20) days prior to each filing, give written
notice of such proposed filing to the Warrantholder and each holder of Shares,
at their respective addresses as they appear on the records of the Company, and
shall offer to include and shall include in such filing any proposed disposition
of the Shares upon receipt by the Company, not less than ten (10) days prior to
the proposed filing date, of a request therefor setting forth the facts with
respect to such proposed disposition and all other information with respect to
such person reasonably necessary to be included in such Registration Statement.
In the event that the managing underwriter, if any, for said offering advises
the Company in writing that the inclusion of such securities in the offering
would be detrimental to the offering, such securities shall nevertheless be
included in the Registration Statement provided that the Warrantholder and each
holder of Warrants and Shares desiring to have such securities included in the
Registration Statement agrees in writing, for a period of ninety (90) days
following such offering not to sell or otherwise dispose of such securities
pursuant to such Registration Statement, which Registration Statement the
Company shall keep effective for a period of at least nine (9) months following
the expiration of such ninety (90) day period.
(ii) In addition to any Registration Statement pursuant to
subparagraph (i) above, during the four-year period beginning on
_______________, 1997 and ending on ________, 2001, the Company, as promptly as
practicable (but in any event within sixty (60) days), after written request
(the "Request") by X.X. XXXXXX & CO., INC., or by a person or persons holding
(or having the right to acquire by virtue of holding the Warrants) at least 50%
of the shares of Common Stock which have been (or may be) issued upon exercise
of the Warrants, will prepare
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and file at its own expense a Registration Statement with the Commission and
appropriate Blue Sky authorities sufficient to permit the public offering of the
Shares, and will use its best efforts at its own expense through its officers,
directors, auditors and counsel, in all matters necessary or advisable, to cause
such Registration Statement to become effective as promptly as practicable and
to maintain such effectiveness so as to permit resale of the Shares covered by
the Request until the earlier of the time that all such securities have been
sold or the expiration of ninety (90) days from the effective date of the
Registration Statement; provided, however, that the Company shall only be
obligated to file a Registration Statement under this Section 11(b)(ii) on two
occasions.
(c) Except as set forth in the last sentence of this paragraph, all
fees, disbursements and out-of-pocket expenses (other than Warrantholder's
brokerage fees and commissions and legal fees of counsel to the Warrantholder,
if any) in connection with the filing of any Registration Statement under
Section 11) (or obtaining the opinion of counsel and any no-action position of
the Commission with respect to sales under Rule 144) and in complying with
applicable securities and Blue Sky laws shall be borne by the Company. The
Company at its expense will supply any Warrantholder and any holder of Shares
with copies of such Registration Statement and the prospectus included therein
and other related documents and opinions and no-action letters in such
quantities as may be reasonably requested by the Warrantholder or holder of
Shares. Notwithstanding the foregoing, all costs and expenses of a second
Registration Statement filed pursuant to Section 11(b)(ii) shall be borne by the
holders of the securities included therein.
(d) The Company shall not be required by this Section 11 to file such
Registration Statement if, in the opinion of counsel for the Warrantholders and
holders of Shares, and the Company (or, should they not agree, in the opinion of
another counsel experienced in securities law matters acceptable to counsel for
such holders and the Company), the proposed public offering or other transfer as
to which such Registration Statement is requested is exempt from applicable
federal and state securities laws and would result in all purchasers or
transferees obtaining securities which are not "restricted securities," as
defined in Rule 144 under the Act.
(e) The Company agrees that until all Shares have been sold under a
Registration Statement or pursuant to Rule 144 under the Act, it will keep
current in filing all materials required to be filed with the Commission in
order to permit the holders of such securities to sell the same under Rule 144.
Section 12. Indemnification.
(a) In the event of the filing of any Registration Statement with
respect to Warrants or Shares pursuant to Section 11 hereof, the Company agrees
to indemnify and hold harmless the Warrantholder or any holder of such Shares
and each person, if any, who controls the Warrantholder or any holder of any
Shares, within the meaning of the Act, against any losses, claims, damages or
liabilities, joint or several (which shall, for all purposes of this Agreement,
include, but not be limited to, all costs of defense and investigation and all
reasonable attorneys' fees), to which the Warrantholder or any holder of such
Shares or such controlling person may become subject,
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under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any such Registration Statement, or any related preliminary prospectus, final
prospectus, or amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances in which they were made; provided, however, that
the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
such Registration Statement, preliminary prospectus, final prospectus or
amendment or supplement thereto in reliance upon, and in conformity with,
written information furnished to the Company by such Warrantholder or the holder
of such Shares specifically for use in the preparation thereof. This indemnity
will be in addition to any liability which the Company may otherwise have.
(b) The Warrantholders and the holder of the Shares agree that they
will indemnify and hold harmless the Company, each other person referred to in
subparts (1), (2) and (3) of Section 11(a) of the Act in respect of the
Registration Statement and each person, if any, who controls the Company within
the meaning of the Act, against any losses, claims, damages or liabilities
(which shall, for all purposes of this Agreement, include but not be limited to,
all costs of defense and investigation and all attorneys' fees) to which the
Company or any such director, officer or controlling person may become subject
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
such Registration Statement, or any related preliminary prospectus, final
prospectus or amendment or supplement thereto, or arise out of or are based upon
the omission or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances in which they were made, but in each case only to
the extent that such untrue statement or alleged untrue statement or omission or
alleged omission was made in such Registration Statement, preliminary
prospectus, final prospectus or amendment or supplement thereto in reliance
upon, and in conformity with, written information furnished to the Company by
the Warrantholder or such holder of Shares specifically for use in the
preparation thereof. This indemnity agreement will be in addition to any
liability which the Warrantholder or such holder of Shares may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
12 of notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against the indemnifying party under
this Section 12, notify the indemnifying party of the commencement thereof, but
the omission so to notify the indemnifying party will not relieve the
indemnifying party from any liability which it may have to any indemnified party
otherwise than as to the particular item as to which indemnification is then
being sought solely pursuant to this Section 12. In case any such action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
in, and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, reasonably assume the defense thereof, subject to the
provisions herein stated, and upon a notice from the
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indemnifying party to such indemnified party of its election to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section 12 for any legal or other expenses, subsequently
incurred by such indemnified party in connection with the defense thereof, other
than reasonable costs of investigation, unless the indemnifying party shall not
pursue the action to its final conclusion. The indemnified party shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall not be at the
expense of the indemnifying party if the indemnifying party has assumed the
defense of the action with counsel reasonably satisfactory to the indemnified
party; provided that if the indemnified party shall have been advised by its
counsel that there may be one or more legal defenses available to the
indemnifying party which differ from those available to the indemnified party
the indemnifying party shall be liable for reasonable legal and other expense
incurred by the indemnified party in connection with the defense of the action
(in which case the indemnifying party shall not have the right to assume the
defense of such action on behalf of the indemnified party, it being understood,
however, that the indemnifying party shall not, in connection with any one such
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys for the indemnified party, which firm shall be designated in writing
by a majority in interest of such holders and controlling persons based upon the
value of the securities included in the Registration Statement. No settlement of
any action against an indemnified party shall be made without the consent of the
indemnified and the indemnifying parties, which shall not be unreasonably
withheld in light of all factors of importance to such parties.
Section 13. Contribution. In order to provide for just and equitable
contribution under the Act in any case in which it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal) that
indemnification may not be enforced in such case notwithstanding the fact that
the express provisions of Section 12 hereof provide for indemnification in such
case or (ii) contribution under the Act may be required on the part of any
Warrantholder or any holder of the Shares or controlling person, then the
Company and any Warrantholder or any such holder of Shares or controlling person
shall contribute to the aggregate losses, claims, damages or liabilities to
which they may be subject (which shall, for all purposes of this Agreement,
include, but not be limited to, all costs of defense and investigation and all
attorneys' fees), in either such case (after contribution from others) on the
basis of relative fault as well as any other relevant equitable considerations.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact related to information
supplied by the Company on the one hand or a Warrantholder or holder of Shares
or controlling person on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and such holders of such securities and such
controlling persons agree that it would not be just and equitable if
contribution pursuant to this Section 13 were determined by pro rata allocation
or by any other method which does not take account of the equitable
considerations referred to in this Section 13. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this Section 13 shall be deemed
to include
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any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
Section 14. Notices. Any notice pursuant to this Agreement by the Company
or by a Warrantholder or a holder of Shares shall be in writing and shall be
deemed to have been duly given if delivered or mailed by certified mail, return
receipt requested:
(a) If to a Warrantholder or a holder of Shares, addressed to X.X.
XXXXXX & CO., INC., 0000 Xx. Xxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000; Attention:
Corporate Finance Department.
(b) If to the Company addressed to it at 0000 XxXxxxxx Xxxxxx,
Xxxxxxxx, Xxx Xxxx 00000, Attention: Chief Executive Officer.
Each party may from time to time change the address to which notices to
it are to be delivered or mailed hereunder by notice in accordance herewith to
the other party.
Section 15. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company, the Warrantholders or the holders of the
Shares shall bind and inure to the benefit of their respective successors and
assigns hereunder.
Section 16. Merger or Consolidation of the Company. The Company will not
merge or consolidate with or any other corporation or sell all or substantially
all of its property to another corporation, unless the provisions of Section 8.4
are complied with.
Section 17. Survival of Representations and Warranties. All statements
contained in any schedule, exhibit, certificate or other instrument delivered by
or on behalf of the parties hereto, or in connection with the transactions
contemplated by this Agreement, shall be deemed to be representations and
warranties hereunder. Notwithstanding any investigations made by or on behalf of
the parties to this Agreement, all representations, warranties and agreements
made by the parties to this Agreement or pursuant hereto shall survive.
Section 18. Applicable Law. This Agreement shall be deemed to be a contract
made under the laws of the State of New York and for all purposes shall be
construed in accordance with the laws of said State.
-14-
Section 19. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company, the
Warrantholders and the holders of Shares any legal or equitable right, remedy or
claim under this Agreement. This Agreement shall be for the sole and exclusive
benefit of the Company, the Warrantholders and the holders of Shares.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, all as of the date and year first above written.
NEW YORK HEALTH CARE, INC.
By:_______________________________
Chief Executive Officer
X.X. XXXXXX & CO., INC.
By:_______________________________
-15-
EXHIBIT A
Warrant Certificate No. HJ-1
UNDERWRITER'S WARRANTS TO PURCHASE
125,000 SHARES OF COMMON STOCK
VOID AFTER 5:00 P.M.,
NEW YORK CITY TIME, ON _______________, 2001
NEW YORK HEALTH CARE, INC.
This certifies that, for value received, X.X. XXXXXX & CO., INC. the
registered holder hereof or its assigns (the "Warrantholder"), is entitled to
purchase from NEW YORK HEALTH CARE, INC. (the "Company"), at any time during the
period commencing at 9:00 a.m., Eastern Standard Time, on ____________, 1997,
and before 5:00 p.m., Eastern Standard Time, on ____________, 2001, at the
purchase price per Share of $_____ (the "Warrant Price"), the number of Shares
of the Company set forth above (the "Shares"). The number of shares of Common
Stock of the Company purchasable upon exercise of each Warrant evidenced hereby
shall be subject to adjustment from time to time as set forth in the
Underwriter's Warrant Agreement referred to below.
The Warrants evidenced hereby may be exercised in whole or in part by
presentation of this Warrant Certificate with the Purchase Form attached hereto
duly executed (with a signature guarantee as provided thereon) and simultaneous
payment of the Warrant Price at the principal office of the Company. Payment of
such price shall be made at the option of the Warrantholder in cash, by check or
as provided for in Section 3(c) of the Underwriter's Warrant Agreement.
The Warrants evidenced hereby are one of a series representing the right to
purchase an aggregate of up to 125,000 Shares and are issued under and in
accordance with a Underwriter's Warrant Agreement, dated as of ___________ ___,
1996 (the "Underwriter's Warrant Agreement"), between the Company and X.X.
XXXXXX & CO., INC., and are subject to the terms and provisions contained in the
Underwriter's Warrant Agreement, to all of which the Warrantholder by acceptance
hereof consents.
Upon any partial exercise of the Warrants evidenced hereby, there shall be
signed and issued to the Warrantholder a new Warrant Certificate in respect of
the Shares as to which the Warrants evidenced hereby shall not have been
exercised. These Warrants may be exchanged at the office of the Company by
surrender of this Warrant Certificate properly endorsed for one or more new
Warrants of the same aggregate number of Shares as here evidenced by the Warrant
or Warrants exchanged. No fractional Shares will be issued upon the exercise of
rights to purchase hereunder, but the Company shall pay the cash value of any
fraction upon the exercise of one or more Warrants. These Warrants are
transferable at the office of the Company in the manner and subject to the
limitations set forth in the Underwriter's Warrant Agreement.
-16-
This Warrant Certificate does not entitle any Warrantholder to any of the
rights of a stockholder of the Company.
NEW YORK HEALTH CARE, INC.
By:_______________________________
Dated: ___________ ___, 1996
ATTEST:
--------------------------------
________________, Secretary
[Corporate Seal]
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PURCHASE FORM
NEW YORK HEALTH CARE, INC.
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant Certificate for, and to purchase thereunder,
__ __ Shares (the "Shares") provided for therein, and requests that certificates
for the Shares be issued in the name of:
------------------------------------------------
(Please Print or Type Name, Address and Social Security Number)
-----------------------------------------------
-----------------------------------------------
and, if said number of Shares shall not be all the Shares purchasable hereunder,
that a new Warrant Certificate for the balance of the Shares purchasable under
the within Warrant Certificate be registered in the name of the undersigned
Warrantholder or his Assignee as below indicated and delivered to the address
stated below.
Dated: ______________
Name of Warrantholder
or Assignee:________________________________________
(Please Print)
Address:____________________________________________
____________________________________________
Signature:__________________________________________
__________________________________________
Note: The above signature must correspond with the name as written upon the face
of this Warrant Certificate in every particular, without alteration or
enlargement or any change whatever, unless these Warrants have been assigned.
Signature Guaranteed:_______________________________________
(Signature must be guaranteed by a member of the Medallion Stamp Program)
-18-
ASSIGNMENT
(To be signed only upon assignment of Warrants)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
(Name and Address of Assignee Must Be Printed or Typewritten)
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
The within Warrants, hereby irrevocably constituting and appointing
_________________ Attorney to transfer said Warrants on the books of the
Company, with full power of substitution in the premises.
Dated:________ ____________________________________________
Signature or Registered Holder
Note: The signature on this assignment must correspond with the name as it
appears upon the face of the within Warrant Certificate in every
particular, without alteration or enlargement or any change whatever
Signature Guaranteed:___________________________________________
(Signature must be guaranteed by a member of the Medallion Stamp Program)
-19-
