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EXHIBIT 4.8
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED UNLESS REGISTERED UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.
WARRANT
CORPORATION: UNISON HEALTHCARE CORPORATION, A DELAWARE CORPORATION
NUMBER OF SHARES: 100,464
CLASS OF STOCK: COMMON STOCK
INITIAL EXERCISE PRICE: $12.80 PER SHARE
ISSUED AS OF: October 1, 1996
EXPIRATION DATE: FIVE (5) YEARS AFTER THE DATE THAT ALL OBLIGATIONS
UNDER THE LOAN AGREEMENT HAVE BEEN PAID IN FULL
FOR VALUE RECEIVED, the adequacy and receipt of which is hereby
acknowledged, UNISON HEALTHCARE CORPORATION, a Delaware corporation, hereby
certifies that IMPERIAL BANK, a California banking corporation, and its
successors and assigns, are entitled to purchase from the Company at any time
and from time to time on and after the date hereof until 12:00 midnight
California local time on the Expiration Date at an initial exercise price of
TWELVE DOLLARS AND EIGHTY CENTS ($12.80) per share of Common Stock ONE
HUNDRED THOUSAND FOUR HUNDRED SIXTY-FOUR (100,464) fully paid and nonassessable
shares of Common Stock of the Company, on the terms and conditions hereinafter
set forth.
The number of such shares of Common Stock and the Exercise Price are
subject to adjustment as provided in this Warrant. Anything contained in this
Warrant to the contrary notwithstanding, the number of shares of Common Stock
which may be issued upon exercise of this Warrant by any Regulated Warrantholder
shall never exceed such amount as may be permitted under the Bank Holding
Company Act, or any successor statute, or under any other federal or state
banking laws or regulations to which such Regulated Warrantholder may be subject
at the time of such exercise.
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1. Certain Definitions. As used in this Warrant, the following terms
have the following definitions:
"Additional Shares of Common Stock" means all shares of Common Stock
issued or issuable by the Company after the date of this Warrant.
"Bank" means IMPERIAL BANK, a California banking corporation, and its
successors and assigns.
"Common Stock" means the Company's Common Stock, par value $.001 per
share, and includes any common stock of the Company of any class or classes
resulting from any reclassification or reclassifications thereof which is not
limited to a fixed sum or percentage of par value in respect of the rights of
the holders thereof to participate in dividends and in the distribution of
assets upon the voluntary or involuntary liquidation, dissolution or winding up
of the Company.
"Company" means UNISON HEALTHCARE CORPORATION, a Delaware corporation.
"Commission" means the Securities and Exchange Commission.
"Convertible Securities" means evidence of indebtedness, shares of
stock or other securities which are at any time directly or indirectly
convertible into or exchangeable for Additional Shares of Common Stock.
"Current Market Price" of a share of Common Stock or of any other
security as of a relevant date means: (i) the Fair Value thereof as determined
in accordance with clause (ii) of the definition of Fair Value with respect to
Common Stock or any other security that is not listed on a national securities
exchange or traded on the over-the-counter market or quoted on NASDAQ, and (ii)
the average of the daily closing prices for the ten (10) trading days before
such date (excluding any trades which are not bona fide arm's length
transactions) with respect to Common Stock or any other security that is listed
on a national securities exchange or traded on the over-the-counter market or
quoted on NASDAQ. The closing price for each day shall be (i) the last sale
price of shares of Common Stock or such other security, regular way, on such
date or, if no such sale takes place on such date, the average of the closing
bid and asked prices thereof on such date, in each case as officially reported
on the principal national securities exchange on which the same are then listed
or admitted to trading, or (ii) if no shares of Common Stock or if no securities
of the same class as such other security are then listed or admitted to trading
on any national securities exchange, the average of the reported closing bid and
asked prices thereof on such date in the over-the-counter market as shown by the
National Association of Securities Dealers automated quotation system or, if no
shares of Common Stock or if no securities of the same class as such other
security are then
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quoted in such system, as published by the National Quotation Bureau,
Incorporated or any similar successor organization, and in either case as
reported by any member firm of the New York Stock Exchange selected by the
Warrantholders.
"Exchange Act" means the Securities Exchange Act of 1934.
"Exercise Period" means the period commencing on the date hereof and
ending at 12:00 midnight California local time on the Expiration Date.
"Exercise Price" means initially Thirteen Dollars and Eighty Eight
Cents ($13.88) per share, subject to adjustment as provided in this Warrant.
"Expiration Date" means the date that is five (5) years after the date
that all "Obligations" under the Loan Agreement have been paid in full. As used
in this definition, the term "Obligations" has the meaning as defined in the
Loan Agreement.
"Fair Value" means: (i) with respect to a share of Common Stock or any
other security, the Current Market Price thereof, and (ii) with respect to any
other property, assets, business or entity, an amount determined in accordance
with the good faith judgment of the Board of Directors of the Company.
"Indemnified Party" and "Indemnifying Party" have the meanings set
forth in Section 11(e)(iii).
"Loan" has the meaning as defined in the Loan Agreement.
"Loan Agreement" means that certain Loan Agreement of even date
herewith between the Company and the Bank.
"Registrable Stock" means: (i) all Warrant Shares which are issuable to
the Warrantholders pursuant to the Warrants, whether or not the Warrants have in
fact been exercised and whether or not such Warrant Shares have in fact been
issued, (ii) all Warrant Shares acquired by the Warrantholders pursuant to the
Warrants, (iii) any shares of Common Stock, whether or not such shares of Common
Stock have in fact been issued, and stock or other securities of the Company
issued upon conversion of, in a stock split or reclassification of, or a stock
dividend or other distribution on, or in substitution or exchange for, or in a
merger or consolidation involving the Company or its assets, or otherwise in
connection with, such Warrant Shares, and (iv) any shares of Common Stock which
are issuable to the Bank pursuant to the Loan Agreement, whether or not such
shares of Common Stock have in fact been issued and any stock or other
securities of the Company issued upon conversion of, in a stock split or
reclassification of, or a stock dividend or other distribution on, or in
substitution or exchange for, or in a merger or consolidation involving the
Company
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or its assets, or otherwise in connection with, such shares of Common Stock. For
purposes of Section 11: (i) a Warrantholder of record shall be treated as the
record holder of the related Warrant Shares and other securities issuable
pursuant to the Warrants, and (ii) the Bank shall be treated as the record
holder of the Common Stock and other securities issuable pursuant to the Loan
Agreement.
"Regulated Warrantholder" means any Warrantholder which is, or the
parent of which is, subject to the Bank Holding Company Act, or any successor
statute, or any other federal or state banking laws and regulations.
"Securities Act" means the Securities Act of 1933, as amended.
"Warrant(s)" means this Warrant and any warrants issued in exchange or
replacement of this Warrant or upon transfer hereof.
"Warrantholder(s)" means the Bank and its successors and assigns.
"Warrant Shares" means shares of Common Stock issuable to
Warrantholders pursuant to the Warrants.
2. Exercise of Warrant. This Warrant may be exercised, in whole or in
part, at any time and from time to time during the Exercise Period by written
notice to the Company and upon payment to the Company of the Exercise Price
(subject to adjustment as provided herein) for the shares of Common Stock in
respect of which the Warrant is exercised.
3. Form of Payment of Exercise Price. Anything contained herein to the
contrary notwithstanding, at the option of the Warrantholders, the Exercise
Price may be paid in any one or a combination of the following forms: (a) by
wire transfer to the Company, (b) by the Warrantholder's check to the Company,
(c) by the cancellation of any indebtedness owed by the Company and/or any
subsidiaries of the Company to the Warrantholder, and/or (d) by the surrender to
the Company of Warrants, Warrant Shares, Common Stock and/or other securities of
the Company and/or any subsidiaries of the Company having a Fair Value equal to
the Exercise Price.
4. Conversion/Cashless Exercise. In lieu of exercising this Warrant as
specified in Sections 2 and 3 above, the Warrantholders may from time to time at
the Warrantholders' option convert this Warrant, in whole or in part, into a
number of shares of Common Stock of the Company determined by dividing (A) the
aggregate Fair Value of such shares or other securities otherwise issuable upon
exercise of this Warrant minus the aggregate Exercise Price of such shares by
(B) the Fair Value of one such share.
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5. Certificates for Warrant Shares; New Warrant. The Company agrees
that the Warrant Shares shall be deemed to have been issued to the
Warrantholders as the record owner of such Warrant Shares as of the close of
business on the date on which payment for such Warrant Shares has been made (or
deemed to be made by conversion) in accordance with the terms of this Warrant.
Certificates for the Warrant Shares shall be delivered to the Warrantholders
within a reasonable time, not exceeding five (5) days, after this Warrant has
been exercised or converted. A new Warrant representing the number of shares, if
any, with respect to which this Warrant remains exercisable also shall be issued
to the Warrantholders within such time so long as this Warrant has been
surrendered to the Company at the time of exercise.
6. Adjustment of Exercise Price, Number of Shares and Nature of
Securities Issuable Upon Exercise of Warrants.
(a) Exercise Price: Adjustment of Number of Shares. The
Exercise Price shall be subject to adjustment from time to time as hereinafter
provided. Upon each adjustment of the Exercise Price, the Warrantholders shall
thereafter be entitled to purchase, at the Exercise Price resulting from such
adjustment, a number of shares determined by multiplying the Exercise Price in
effect immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.
(b) Adjustment of Exercise Price Upon Issuance of Common
Stock. If and whenever after the date hereof the Company shall issue or sell
Additional Shares of Common Stock without consideration or for a consideration
per share less than the Current Market Price or the Exercise Price then in
effect immediately prior to the issuance or sale of such shares, then the
Exercise Price in effect immediately prior to such issuance or sale of such
shares shall be reduced to a number which shall be calculated by dividing (A) an
amount equal to the sum of (1) the number of shares of Common Stock outstanding
immediately prior to such issue or sale multiplied by the then existing Exercise
Price plus (2) the aggregate consideration, if any, received by the Company upon
such issue or sale, by (B) the total number of shares of Common Stock
outstanding immediately after such issue or sale.
No adjustment of the Exercise Price, however, shall
be made in an amount less than $.01 per share, but any such lesser adjustment
shall be carried forward and shall be made at the time and together with the
next subsequent adjustment which, together with any adjustments so carried
forward, shall amount to $.01 per share or more.
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The provisions of this Section 6(b) shall not apply
to any Additional Shares of Common Stock which are distributed to holders of
Common Stock pursuant to a stock split for which an adjustment is provided for
under Section 6(f).
(c) Further Provisions for Adjustment of Exercise Price Upon
Issuance of Additional Shares of Common Stock and Convertible Securities. For
purposes of Section 6(b), the following provisions shall also be applicable:
(i) In case at any time on or after the date hereof,
the Company shall declare any dividend, or authorize any other distribution,
upon any stock of the Company of any class, payable in Additional Shares of
Common Stock or by the issuance of Convertible Securities, such declaration or
distribution shall be deemed to have been issued or sold (as of the record date)
without consideration and shall thereby cause an adjustment in the Exercise
Price as required by Section 6(b).
(ii) (A) In case at any time on or after the date
hereof, the Company shall in any manner issue or sell any Convertible
Securities, whether or not the rights to exchange or convert thereunder are
immediately exercisable, there shall be determined the price per share for which
Additional Shares of Common Stock are issuable upon the conversion or exchange
thereof, such determination to be made by dividing (a) the total amount received
or receivable by the Company as consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the conversion or exchange
thereof by (b) the maximum aggregate number of Additional Shares of Common Stock
issuable upon conversion or exchange of all such Convertible Securities for such
minimum aggregate amount of additional consideration; and such issue or sale
shall be deemed to be an issue or sale for cash (as of the date of issue or sale
of such Convertible Securities) of such maximum number of Additional Shares of
Common Stock at the price per share so determined, and shall thereby cause an
adjustment in the Exercise Price, if such an adjustment is required by Section
6(b) hereof.
(B) If such Convertible Securities shall by
their terms provide for an increase or increases, with the passage of time, in
the amount of additional consideration, if any, payable to the Company, or in
the rate of exchange upon the conversion or exchange thereof, the adjusted
Exercise Price shall, upon any such increase becoming effective, be
appropriately increased to take into consideration such increase or increases;
provided, however, that any such increase or increases in the Exercise Price
shall not exceed, in the aggregate, the amount of the original reduction of the
Exercise Price attributable to the Convertible Securities.
(C) If any rights of conversion or exchange
evidenced by such Convertible Securities shall expire without having been
exercised,
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the adjusted Exercise Price shall forthwith be readjusted to such Exercise Price
as would have been in effect had an adjustment with respect to such Convertible
Securities been made on the basis that the only Additional Shares of Common
Stock issued or sold were those issued upon the conversion or exchange of such
Convertible Securities, and that they 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 granting of such Convertible
Securities.
(iii) (A) In case at any time on or after the date
hereof, the Company shall in any manner grant or issue any rights or options to
subscribe for, purchase or otherwise acquire Additional Shares of Common Stock,
whether or not such rights or options are immediately exercisable, there shall
be determined the price per share for which Additional Shares of Common Stock
are issuable upon the exercise of such rights or options, such determination to
be made by dividing (a) the total amount, if any, received or receivable by the
Company as consideration for the granting of such rights or options, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the exercise of such rights or options if the maximum number of
Additional Shares were issued pursuant to such rights or options for such
minimum aggregate amount of additional consideration, by (b) the maximum number
of Additional Shares of Common Stock of the Company issuable upon the exercise
of all such rights or options for such minimum aggregate amount of additional
consideration; and the granting of such rights or options shall be deemed to be
an issue or sale for cash (as of the date of the granting of such rights or
options) of such maximum number of Additional Shares of Common Stock at the
price per share so determined, and shall thereby cause an adjustment in the
Exercise Price, if such an adjustment is required by Section 6(b) hereof.
(B) If such rights or options shall by their
terms provide for an increase or increases, with passage of time, in the amount
of additional consideration payable to the Company upon the exercise thereof,
the adjusted Exercise Price shall, upon any such increases becoming effective,
be appropriately increased to take into consideration such increase or
increases; provided, however, that any such increase or increases in the
Exercise Price shall not exceed, in the aggregate, the amount of the original
reduction of the Exercise Price attributable to the grant of such rights or
options.
(C) If any such rights or options shall
expire without having been exercised, the adjusted Exercise Price shall
forthwith be readjusted to such Exercise Price as would have been in effect had
an adjustment with respect to such rights or options been made on the basis that
the only Additional Shares of Common Stock so issued or sold were those issued
or sold upon the exercise of such rights or options and that they were issued or
sold for the consideration actually received by the Company upon such exercise,
plus the
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consideration, if any, actually received by the Company for the granting of such
rights or options.
(iv) (A) In case at any time on or after the date
hereof, the Company shall grant any rights or options to subscribe for, purchase
or otherwise acquire Convertible Securities, there shall be determined the price
per share for which Additional Shares of Common Stock are issuable upon the
exchange or conversion of such Convertible Securities if such rights or options
were exercised, such determination to be made by dividing (a) the total amount,
if any, received or receivable by the Company as consideration for the issuance
of such rights or options, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the exercise of such rights
or options if the maximum number of Convertible Securities were issued pursuant
to such rights or options for such minimum aggregate amount of additional
consideration, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the exchange or conversion of such Convertible
Securities if the maximum number of Additional Shares were issued pursuant to
such Convertible Securities for such minimum aggregate amount of additional
consideration, by (b) the maximum aggregate number of Additional Shares of
Common Stock issuable upon the exchange or conversion of the Convertible
Securities for such minimum aggregate amount of additional consideration; and
the issue or sale of such rights or options shall be deemed to be an issue or
sale for cash (as of the date of the granting of such rights or options) of such
maximum number of Additional Shares of Common Stock at the price per share so
determined, and thereby shall cause an adjustment in the Exercise Price, if such
an adjustment is required by Section 6(b).
(B) If such rights or options to subscribe
for or otherwise acquire Convertible Securities shall by their terms provide for
an increase or increases, with the passage of time, in the amount of additional
consideration payable to the Company upon the exercise, exchange or conversion
thereof, the adjusted Exercise Price shall, forthwith upon any such increase
becoming effective, be appropriately increased to take into consideration such
increase or increases; provided, however, that any such increase or increases in
the Exercise Price shall not exceed, in the aggregate, the amount of the
original reduction of the Exercise Price attributable to the grant of such
rights or options.
(C) If any such rights, options or rights of
conversion or exchange of such Convertible Securities shall expire without
having been exercised, exchanged or converted, the adjusted Exercise Price shall
forthwith be readjusted to such Exercise Price as would have been in effect had
an adjustment been made with respect to such rights, options or rights of
conversion or exchange of such Convertible Securities on the basis that the only
Additional Shares of Common Stock so issued or sold were those issued or sold
upon the exercise of such rights or options and exchange or conversion of such
Convertible Securities and that they were
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issued or sold for the consideration actually received by the Company upon
exercise of such rights and options and exchange or conversion of such
Convertible Securities, plus the consideration, if any, actually received by the
Company for the granting of such rights, options or Convertible Securities.
(v) In any case where an adjustment has been made in
the Exercise Price upon the issuance of Convertible Securities or any rights or
options to purchase Convertible Securities or Additional Shares of Common Stock
pursuant to this Section 6(c), no further adjustment shall be made at the time
of the conversion of any such Convertible Securities or at the time of the
exercise of any such rights or options.
(vi) In case at any time on or after the issuance of
this Warrant any shares of Common Stock or Convertible Securities shall be
issued or sold for a consideration other than cash, the amount of the
consideration other than cash payable to the Company shall be deemed to be the
Fair Value of such consideration. Whether or not the consideration so received
is cash, the amount thereof shall be determined after deducting therefrom any
expenses incurred or any underwriting commissions or concessions or discounts
paid or allowed by the Company in connection therewith.
(vii) In case at any time the Company shall fix a
record date of the holders of its Common Stock for the purpose of entitling them
(a) to receive a dividend or other distribution payable in Common Stock,
Convertible Securities or rights or options to purchase either thereof, or (b)
to subscribe for or purchase Common Stock, Convertible Securities or rights or
options to purchase either thereof, then such record date shall be deemed to be
the date of the issue or sale of the shares of Common Stock deemed, pursuant to
this Section 6(c), to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the granting of
such right of subscription or purchase, as the case may be.
(viii) 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 for the purposes of this Section
6(c).
(d) Reorganization, Reclassification, Consolidation, Merger or
Sale. If any capital reorganization or reclassification of the capital stock of
the Company, or any consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets to another
corporation shall be effected in such a way that holders of Common Stock shall
be entitled to receive cash, stock, securities or assets with respect to or in
exchange for Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful
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and adequate provisions shall be made whereby the Warrantholders shall
thereafter have the right to purchase and receive upon the basis and upon the
terms and conditions specified in this Warrant upon exercise of this Warrant and
in lieu of the shares of the Common Stock of the Company immediately theretofore
purchasable and receivable upon the exercise of the rights represented hereby,
such cash, shares of stock, securities or assets as may be issued or payable
with respect to or in exchange for a number of outstanding shares of Common
Stock equal to the number of shares of such Common Stock immediately theretofore
purchasable and receivable upon the exercise of the rights represented hereby,
and in any such case appropriate provision shall be made with respect to the
rights and interest of the Warrantholders to the end that the provisions hereof
(including, without limitation, provisions for adjustments of the Exercise Price
and of the number of shares purchasable and receivable upon the exercise of this
Warrant) shall thereafter be applicable, as nearly as may be, in relation to any
shares of stock, securities or assets thereafter deliverable upon the exercise
hereof. The Company shall not effect any consolidation, merger or sale of all or
substantially all of the assets of the Company unless prior to or simultaneous
with the consummation thereof the successor corporation (if other than the
Company) resulting from such consolidation, merger or purchase of such assets
shall assume, by written instrument executed and mailed or delivered to the
Warrantholders, the obligation to deliver to such Warrantholders such cash (or
cash equivalent), shares of stock, securities or assets as, in accordance with
the foregoing provisions, the Warrantholders may be entitled to receive and
containing the express assumption of such successor corporation of the due and
punctual performance and observance of each provision of this Warrant to be
performed and observed by the Company and of all liabilities and obligations of
the Company hereunder.
(e) Company to Prevent Dilution. In case at any time or from
time to time conditions arise by reason of action taken by the Company which are
not adequately covered by the provisions of this Section 6, and which might
materially and adversely affect the exercise rights of the Warrantholders under
any provision of this Warrant, an appropriate adjustment shall be made by the
Company on a basis consistent with the standards established in the other
provisions of this Section 6, with respect to the Exercise Price and the number
of shares purchasable upon exercise of the Warrants, so as to preserve, without
dilution, the exercise rights of the Warrantholders.
(f) Stock Splits and Reverse Splits. In case at any time the
Company shall subdivide its outstanding shares of Common Stock into a greater
number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of shares of Common
Stock purchasable pursuant to this Warrant immediately prior to such subdivision
shall be proportionately increased, and conversely, in case at any time the
Company shall combine its outstanding shares of Common Stock into a smaller
number of shares, the Exercise Price in effect immediately prior to such
combination shall be
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proportionately increased and the number of shares of Common Stock purchasable
upon the exercise of this Warrant immediately prior to such combination shall be
proportionately reduced.
(g) Dissolution, Liquidation and Wind-Up. In case the Company
shall, at any time prior to the expiration of this Warrant, dissolve, liquidate
or wind up its affairs, the Warrantholders shall be entitled, upon the exercise
of this Warrant, to receive, in lieu of the shares of Common Stock of the
Company which such Warrantholders would have been entitled to receive, the same
kind and amount of assets as would have been issued, distributed or paid to such
Warrantholders upon any such dissolution, liquidation or winding up with respect
to such shares of Common Stock of the Company, had such Warrantholders been the
holders of record of the Warrant Shares receivable upon the exercise of this
Warrant on the record date for the determination of those persons entitled to
receive any such liquidating distribution. After any such dissolution,
liquidation or winding up which shall result in any cash distribution in excess
of the Exercise Price provided for by this Warrant, the Warrantholders may, at
each such Warrantholder's option, exercise the same without making payment of
the Exercise Price, and in such case the Company shall, upon the distribution to
said Warrantholders, consider that said Exercise Price has been paid in full to
it and in making settlement to said Warrantholders, shall deduct from the amount
payable to such Warrantholders an amount equal to such Exercise Price.
(h) Noncash Consideration. In case any Additional Shares of
Common Stock or Convertible Securities or any rights or options to purchase any
Additional Shares of Common Stock or Convertible Securities shall be issued for
a consideration in a form other than cash, the amount of such consideration
shall be deemed to be the Fair Value thereof.
(i) Accountants' Certificate. In each case of an adjustment in
the number of shares of Common Stock or other stock, securities or property
receivable on the exercise of the Warrants, the Company shall prepare a
certificate setting forth such adjustment and showing in detail the facts upon
which such adjustment is based, including a statement of (a) the consideration
received or to be received by the Company for any Additional Shares of Common
Stock, rights, options or Convertible Securities issued or sold or deemed to
have been issued or sold, (b) the number of shares of Common Stock of each class
outstanding or deemed to be outstanding, (c) the adjusted Exercise Price and (d)
the number of shares issuable upon exercise of this Warrant. The Company will
forthwith mail a copy of each such certificate to each Warrantholder.
7. Special Agreements of the Company.
(a) Reservation of Shares. The Company covenants and agrees
that all Warrant Shares will, upon issuance, be validly issued, fully paid and
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nonassessable and free from all preemptive rights of any stockholder, and from
all taxes. liens and charges with respect to the issue thereof. The Company
further covenants and agrees that during the period within which the rights
represented by this Warrant may be exercised, the Company will at all times have
authorized, and reserved, a sufficient number of shares of Common Stock to
provide for the exercise of the rights represented by this Warrant. The Company
hereby covenants and agrees to take all such action as may be necessary to
assure that the par value per share of the Common Stock is at all times equal to
or less than the Exercise Price.
(b) Avoidance of Certain Actions. The Company will not, by
amendment of its Articles or Certificates of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, issue or sale of
securities or otherwise, avoid or take any action which would have the effect of
avoiding the observance or performance of any of the terms to be observed or
performed hereunder by the Company, but will at all times in good faith assist
in carrying out all of the provisions of this Warrant and in taking all of such
action as may be necessary or appropriate in order to protect the rights of the
Warrantholders against dilution or other impairment of their rights hereunder.
(c) Securing Governmental Approvals. If any shares of Common
Stock required to be reserved for the purposes of exercise of this Warrant
require registration with or approval of any governmental authority under any
federal law (other than the Securities Act) or under any state law before such
shares may be issued upon exercise of this Warrant, the Company will, at its
expense, as expeditiously as possible, cause such shares to be duly registered
or approved, as the case may be.
(d) Listing on Securities Exchanges: Registration. If, and so
long as, any class of the Company's Common Stock shall be listed on any national
securities exchange (as defined in the Exchange Act), the Company will, at its
expense, obtain and maintain the approval for listing upon official notice of
issuance of all Warrant Shares and maintain the listing of Warrant Shares after
their issuance; and the Company will so list on such national securities
exchange, will register under the Exchange Act (or any similar statute then in
effect), and will maintain such listing of, any other securities that at any
time are issuable upon exercise of this Warrant if and at the time any
securities of the same class shall be listed on such national securities
exchange by the Company.
(e) Information Rights. So long as the Warrantholders hold
this Warrant and/or any of the Warrant Shares, the Company shall deliver to the
Warrantholders (i) promptly after mailing, copies of all communications to the
shareholders of the Company, (ii) within ninety (90) days after the end of each
fiscal year of the Company, the annual audited financial statements of the
Company certified by the independent public accountants of recognized standing,
and (iii) within
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forty-five (45) days after the end of each of the first three quarters of each
fiscal year, the Company's quarterly, unaudited financial statements.
(f) Restrictions on Public Sale by the Company. Unless
otherwise consented to by the Bank, the Company will not effect any public or
private sale or distribution of its convertible debt or equity securities,
including a sale pursuant to Regulation D under the Securities Act, during the
ten (10) day period prior to, and during the ninety (90) day period beginning
on, the closing date of each underwritten offering by the Company made pursuant
to a registration statement filed pursuant to Sections 11(a) or 11(b); and the
Company shall use its best efforts to cause each holder of its privately placed
convertible debt or equity securities issued by it at any time on or after the
date of this Warrant to agree not to effect any public sale or distribution of
any such securities during such period, including a sale pursuant to Rule 144 or
Rule 144A under the Securities Act.
(g) Preemptive Rights. In the event the Company offers to the
Company's shareholders the right to purchase any securities of the Company, then
all shares of Common Stock issuable pursuant to the Warrants shall be deemed to
be issued and outstanding and held by the Warrantholders and the Warrantholders
shall be entitled to participate in such rights offering.
(h) Compliance with Law. The Company shall comply with all
applicable laws, rules and regulations of the United States and of all states,
municipalities and agencies and of any other jurisdiction applicable to the
Company and shall do all things necessary to preserve, renew and keep in full
force and effect and in good standing its corporate existence and authority
necessary to continue its business.
8. Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon exercise hereof, the Company
shall pay to the Warrantholder an amount in cash equal to such fraction
multiplied by the Current Market Value of one share of Common Stock.
9. Notices of Stock Dividends, Subscriptions, Reclassifications,
Consolidations, Mergers, etc. If at any time: (i) the Company shall declare a
cash dividend (or an increase in the then existing dividend rate), or declare a
dividend on Common Stock payable otherwise than in cash out of its net earnings
after taxes for the prior fiscal year; or (ii) the Company shall authorize the
granting to the holders of Common Stock of rights to subscribe for or purchase
any shares of capital stock of any class or of any other rights; or (iii) there
shall be any capital reorganization, or reclassification, or redemption of the
capital stock of the Company, or consolidation or merger of the Company with, or
sale of all or substantially all of its assets to, another corporation or firm;
or (iv) there shall be a voluntary or involuntary
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dissolution, liquidation or winding up of the Company, then the Company shall
give to the Warrantholders at the addresses of such Warrantholders as shown on
the books of the Company, at least twenty (20) days prior to the applicable
record date hereinafter specified, a written notice summarizing such action or
event and stating the record date for any such dividend or rights (or, if a
record date is not to be selected, the date as of which the holders of Common
Stock of record entitled to such dividend or rights are to be determined), the
date on which any such reorganization, reclassification, consolidation, merger,
sale of assets, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected the holders of Common Stock
of record shall be entitled to effect any exchange of their shares of Common
Stock for cash (or cash equivalent), securities or other property deliverable
upon any such reorganization, reclassification, consolidation, merger, sale of
assets, dissolution, liquidation or winding up.
10. Registered Holder: Transfer of Warrants or Warrant Shares.
(a) Maintenance of Registration Books: Ownership of this
Warrant. The Company shall keep at its principal office a register in which the
Company shall provide for the registration, transfer and exchange of this
Warrant. The Company shall not at any time, except upon the dissolution,
liquidation or winding-up of the Company, close such register so as to result in
preventing or delaying the exercise or transfer of this Warrant.
(b) Exchange and Replacement. This Warrant is exchangeable
upon surrender hereof by the registered holder to the Company at its principal
office for new Warrants of like tenor and date representing in the aggregate the
right to purchase the number of shares purchasable hereunder, each of such new
Warrants to represent the right to purchase such number of shares as shall be
designated by said registered holder at the time of surrender. Subject to
compliance with applicable securities laws, this Warrant and all rights
hereunder are transferable in whole or in part upon the books of the Company by
the registered holder hereof in person or by duly authorized attorney, and new
Warrants shall be made and delivered by the Company, of the same tenor and date
as this Warrant but registered in the name of the transferee(s), upon surrender
of this Warrant, duly endorsed, to said office of the Company. The Company
acknowledges that the Bank intends to transfer this Warrant to the Bank's
parent, subsidiaries, affiliates and/or participant under the Loan Agreement.
Upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant, and upon surrender and
cancellation of this Warrant, if mutilated, the Company will make and deliver a
new Warrant of like tenor, in lieu of this Warrant, without requiring the
posting of any bond or the giving of any other security. This Warrant shall be
promptly cancelled by the Company upon the surrender hereof in connection with
any exchange, transfer or replacement. The Company shall pay all expenses, taxes
and
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other charges payable in connection with the preparation, execution and delivery
of Warrants pursuant to this Section 10.
(c) Warrants and Warrant Shares Not Registered. The holder of
this Warrant, by accepting this Warrant, represents and acknowledges that this
Warrant and the Warrant Shares are not being registered under the Securities Act
on the grounds that the issuance of this Warrant and the offering and sale of
such Warrant Shares are exempt from registration under Section 4(2) of the
Securities Act as not involving any public offering.
11. Registration.
(a) Required Registration. Whenever the Company shall receive
a written request therefor from any holder or holders of at least 10% of the
Registrable Stock, the Company shall promptly prepare and file a registration
statement under the Securities Act covering the Registrable Stock which is the
subject of such request and shall use its best efforts to cause such
registration statement to become effective as expeditiously as possible. Upon
the receipt of such request, the Company shall promptly give written notice to
all holders of Registrable Stock that such registration is to be effected. The
Company shall include in such registration statement such Registrable Stock for
which it has received written requests to register such shares by the holders
thereof within thirty (30) days after the effectiveness of the Company's written
notice to such other holders. Notwithstanding the foregoing, the Company may
delay the filing of a registration statement under this Section 11(a) (other
than a registration statement required to be filed pursuant to Section 2.9 of
the Loan Agreement) for a period of up to sixty (60) days, if in the good faith
judgment of the Board of Directors of the Company such filing would interfere
with pending confidential, nonpublic material negotiations that the Company is
engaged in. The Company shall not be obligated to prepare, file and cause to
become effective more than two (2) registration statements pursuant to this
Section 11(a) (excluding therefrom any registration statement which is withdrawn
prior to effectiveness or otherwise and excluding therefrom any registration
statement pursuant to Section 2.9 of the Loan Agreement). If, in the good faith
judgment of the managing underwriter, if any, of such public offering, the
inclusion of all of the Registrable Stock covered by requests for registration
pursuant to this Section 11(a) would materially and adversely affect the
successful marketing of a lesser amount of Registrable Stock, after giving
priority to the shares of Registrable Stock over all other persons who may
participate in such registration, the number of shares of Registrable Stock
otherwise to be included in the underwritten public offering shall be reduced to
the required level with the participation in such offering to be pro rata among
the holders of Registrable Stock requesting such registration, based upon the
number of shares of Registrable Stock owned by such holders; and those shares
which are excluded from the underwritten public offering shall be withheld from
the market by the holders thereof for a period, not to exceed ninety (90) days,
which the managing underwriter
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reasonably determines is necessary in order to effect the underwritten public
offering. Anything contained herein to the contrary notwithstanding, neither the
Company nor any other holder of securities of the Company may include securities
in any registration statement filed pursuant to Section 2.9 of the Loan
Agreement without the written consent of the Bank.
(b) Incidental Registration. Each time the Company shall
determine to file a registration statement under the Securities Act (other than
on Form S-8 or Form S-4) in connection with the proposed offer and sale for
money of any of its securities by it or by any of its security holders, the
Company will give written notice of its determination to all holders of
Registrable Stock. Upon the written request of a holder of any Registrable
Stock, the Company will cause all such Registrable Stock, the holders of which
have so requested registration thereof, to be included in such registration
statement, all to the extent requisite to permit the sale or other disposition
by the prospective seller or sellers of the Registrable Stock to be so
registered in accordance with the terms of the proposed offering. If the
registration statement is to cover an underwritten distribution, the Company
shall use its best efforts to cause the Registrable Stock requested for
inclusion pursuant to this Section 11(b) to be included in the underwriting on
the same terms and conditions as the securities otherwise being sold through the
underwriters. If, in the good faith judgment of the managing underwriter of such
public offering, the inclusion of all of the Registrable Stock requested to be
registered would materially and adversely affect the successful marketing of the
other shares proposed to be offered, then the amount of the Registrable Stock to
be included in the offering shall be reduced and the Registrable Stock and the
other shares to be offered shall participate in such offering as follows: the
shares to be sold by the Company shall receive priority along with, if the
registration statement is filed because of the exercise of demand registration
rights by one or more shareholders, the shares to be sold by such
shareholder(s), and the Registrable Stock and any other shares of Common Stock
to be included in such offering shall be reduced pro rata in proportion to the
number of shares of Common Stock proposed to be included in such offering by
each holder of such shares.
(c) Registration Procedures. If and whenever the Company is
required by the provisions of Section 11(a) or 11(b) to effect the registration
of Registrable Stock under the Securities Act, the Company will, at its expense,
as expeditiously as possible:
(i) In accordance with the Securities Act and the
rules and regulations of the Commission, prepare and file with the Commission a
registration statement on the form of registration statement appropriate with
respect to such securities and use its best efforts to cause such registration
statement to become and remain effective until the securities covered by such
registration statement have been sold, and prepare and file with the Commission
such amendments to such registration statement and supplements to the prospectus
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contained therein as may be necessary to keep such registration statement
effective and such registration statement and prospectus accurate and complete
until the securities covered by such registration statement have been sold;
(ii) If the offering is to be underwritten, in whole
or in part, enter into a written underwriting agreement with the holders of the
Registrable Stock participating in such offering and the underwriter in form and
substance reasonably satisfactory to the managing underwriter of the public
offering and the holders of the Registrable Stock participating in such
offering;
(iii) Furnish to the holders of securities
participating in such registration and to the underwriters of the securities
being registered such reasonable number of copies of the registration statement,
preliminary prospectus, final prospectus and such other documents as such
underwriters and holders may reasonably request in order to facilitate the
public offering of such securities;
(iv) Use its best efforts to register or qualify the
securities covered by such registration statement under such state securities or
blue sky laws of such jurisdictions as such participating holders and
underwriters may reasonably request;
(v) Notify the holders participating in such
registration, promptly after it shall receive notice thereof, of the date and
time when such registration statement and each post-effective amendment thereto
has become effective or a supplement to any prospectus forming a part of such
registration statement has been filed;
(vi) Notify such holders promptly of any request by
the Commission for the amending or supplementing of such registration statement
or prospectus or for additional information;
(vii) Prepare and file with the Commission, promptly
upon the request of any such holders, any amendments or supplements to such
registration statement or prospectus which, in the opinion of counsel for such
holders, is required under the Securities Act or the rules and regulations
thereunder in connection with the distribution of the Registrable Stock by such
holders;
(viii) Prepare and promptly file with the Commission,
and promptly notify such holders of the filing of, such amendments or
supplements to such registration statement or prospectus as may be necessary to
correct any statements or omissions if, at the time when a prospectus relating
to such securities is required to be delivered under the Securities Act, any
event has occurred as the result of which any such prospectus or any other
prospectus as then in effect may include an
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untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading;
(ix) In case any of such holders or any underwriter
for any such holders is required to deliver a prospectus at a time when the
prospectus then in circulation is not in compliance with the Securities Act or
the rules and regulations of the Commission, prepare promptly upon request such
amendments or supplements to such registration statement and such prospectus as
may be necessary in order for such prospectus to comply with the requirements of
the Securities Act and such rules and regulations;
(x) Advise such holders, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop order by
the Commission suspending the effectiveness of such registration statement or
the initiation or threatening of any proceeding for that purpose and promptly
use its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued;
(xi) If requested by the managing underwriter or
underwriters or a holder of Registrable Stock being sold in connection with an
underwritten offering, immediately incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriters and the
holders of a majority of the Registrable Stock being sold agree should be
included therein relating to the plan of distribution with respect to such
Registrable Stock, including information with respect to the Registrable Stock
being sold to such underwriters, the purchase price being paid therefor by such
underwriters and with respect to any other terms of the underwritten (or best
efforts underwritten) offering of the Registrable Stock to be sold in such
offering; and make all required filings of such prospectus supplement or
post-effective amendment as soon as notified of the matters to be incorporated
in such prospectus supplement or post-effective amendment;
(xii) Cooperate with the selling holders of
Registrable Stock and the managing underwriters, if any, to facilitate the
timely preparation and delivery of certificates representing Registrable Stock
to be sold and not bearing any restrictive legends; and enable such Registrable
Stock to be in such denominations and registered in such names as the managing
underwriters may request at least two business days prior to any sale of
Registrable Stock to the underwriters;
(xiii) So long as Registrable Stock is being sold
pursuant to the registration statement, prepare a prospectus supplement or
post-effective amendment to the registration statement or the related prospectus
or any document incorporated therein by reference or file any other required
documents so that, as thereafter delivered to the purchasers of the Registrable
Stock, the prospectus will not
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contain an untrue statement of material fact or omit to state any material fact
necessary to make the statements therein not misleading;
(xiv) Use its best efforts to enter into such
agreements (including an underwriting agreement) and take all such other actions
in connection therewith in order to expedite or facilitate the disposition of
such Registrable Stock and in such connection, whether or not an underwriting
agreement is entered into and whether or not the registration is an underwritten
registration:
(A) make such representations and warranties
to the holders of such Registrable Stock and the underwriters, if any, in form,
substance and scope as are customarily made by issuers to underwriters in
primary underwritten offerings;
(B) If an underwriting agreement is entered
into, the same shall set forth in full the indemnification provisions and
procedures of Section 11(e) hereof with respect to all parties to be indemnified
pursuant to said Section; and
(C) The Company shall deliver such documents
and certificates as may be requested by the holders of the majority of the
Registrable Stock being sold and the managing underwriters, if any, to evidence
compliance with the terms of this Section 11(c) and with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company.
The above shall be done at each closing under such underwriting or similar
agreement or as and to the extent required thereunder;
(xv) Make available for inspection by a
representative of the holders of a majority of the Registrable Stock, any
underwriter participating in any disposition pursuant to a registration
statement, and any attorney or accountant retained by the sellers or
underwriter, all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such
representative, underwriter, attorney or accountant in connection with the
preparation of the registration statement; provided, that any records,
information or documents that are designated by the Company in writing as
confidential shall be kept confidential by such persons unless disclosure of
such records, information or documents is required by court or administrative
order;
(xvi) Otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and as soon as
practicable after the effective date of a registration statement make generally
available to the Company's security holders, an earnings statement of the
Company, conforming with
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the requirements of Section 11(a) of the Securities Act and Rule 158 under the
Securities Act, covering a period of at least twelve (12) months beginning after
the effective date of the registration statement;
(xvii) Not file any amendment or supplement to such
registration statement or prospectus to which a majority in interest of such
holders has objected on the grounds that such amendment or supplement does not
comply in all material respects with the requirements of the Securities Act or
the rules and regulations thereunder, after having been furnished with a copy
thereof at least five (5) business days prior to the filing thereof; provided,
however, that the failure of such holders or their counsel to review or object
to any amendment or supplement to such registration statement or prospectus
shall not affect the rights of such holders or any controlling person or persons
thereof or any underwriter or underwriters therefor under Section 11(e) hereof;
and
(xviii) At the request of any such holder (i) furnish
to such holder on the effective date of the registration statement or, if such
registration includes an underwritten public offering, at the closing provided
for in the underwriting agreement, an opinion in usual and customary form, dated
such date, of the counsel representing the Company for the purposes of such
registration, addressed to the underwriters, if any, and to the holder or
holders making such request, and (ii) use its best effort to furnish to such
holder letters dated each such effective date and such closing date, from the
independent certified public accountants of the Company, addressed to the
underwriters, if any, and to the holder or holders making such request, stating
that they are independent certified public accountants within the meaning of the
Securities Act and dealing with such matters as the underwriters may request,
or, if the offering is not underwritten, that in the opinion of such accountants
the financial statements and other financial data of the Company included in the
registration statement or the prospectus or any amendment or supplement thereto
comply in all material respects with the applicable accounting requirements of
the Securities Act, and additionally covering such other financial matters,
including information as to the period ending immediately prior to the date of
such letter with respect to the registration statement and prospectus, as such
requesting holder or holders may reasonably request.
(d) Expenses of Registration. All expenses incident to the
Company's performance of or compliance with this Warrant, including, without
limitation, the following shall be borne by the Company, regardless of whether
the registration statement becomes effective:
(i) All registration and filing fees (including those
with respect to filings required to be made with the National Association of
Securities Dealers, Inc.);
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(ii) Fees and expenses of compliance with all
securities or blue sky laws (including fees and disbursements of counsel for the
underwriters or selling holders in connection with blue sky qualifications of
the Registrable Stock and in determination of their eligibility for investment
under the laws of such jurisdictions as the managing underwriters or holders of
a majority of the Registrable Stock being sold may designate);
(iii) Printing, messenger, telephone and delivery
expenses;
(iv) Fees and disbursements of counsel for the
Company, the underwriters and for the sellers of the Registrable Stock as
hereinafter provided;
(v) Fees and disbursements of all independent
certified public accountants of the Company (including the expenses of any
special audit and "comfort" letters required by or incident to such
performance);
(vi) Fees and disbursements of underwriters engaged
by the Company (excluding discounts, commissions or fees of underwriters,
selling brokers, dealer managers or similar securities industry professionals
relating to the distribution of the Registrable Stock or legal expenses of any
person other than the Company and the selling holders); and
(vii) Fees and expenses of other persons retained by
the Company.
Notwithstanding the foregoing, in the event the
holders of Registrable Stock request a registration pursuant to Section 11(a)
and such registration is withdrawn at the request of such holders for reasons
other than a material problem with the Company, such holders shall reimburse the
Company for reasonable expenses incurred by the Company in connection with such
registration.
The Company will, in any event, pay its internal
expenses (including without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit, the fees and expenses incurred in connection with the listing
of the securities to be registered on each securities exchange on which similar
securities issued by the Company are then listed, rating agency fees and the
fees and expenses of any person, including special experts, retained by the
Company.
In connection with each registration statement
hereunder, the Company will reimburse the holders of Registrable Stock being
registered pursuant to the registration statement for the reasonable fees and
disbursements of
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not more than one counsel (or more than one counsel if conflict exists among
such selling holders in the exercise of the reasonable judgment of counsel for
the selling holders and counsel for the Company) chosen by the holders of a
majority of such Registrable Stock; provided, however, that the Company shall
not be obligated to reimburse the holders for fees and disbursements in excess
of $10,000 per registration statement or $42,500 in the aggregate.
(e) Indemnification.
(i) The Company hereby agrees to indemnify each of
the holders of Registrable Stock against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any registration statement, preliminary or final prospectus, or other document
incident to any such registration, qualification or compliance (or in any
related registration statement, notification or the like) or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or any violation by
the Company of any rule or regulation promulgated under the Securities Act
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, qualification or compliance,
and to reimburse the holders of Registrable Stock (including officers and
directors of the same and controlling persons) for any legal and any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, provided, however, that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage or liability arises out of or is based on any untrue statement or
omission based upon written information furnished to the Company by
Warrantholders in an instrument duly executed by Warrantholders and stated to be
specifically for use therein.
(ii) The Warrantholders severally and not jointly
agree to indemnify the Company and its officers and directors and each person,
if any, who controls any thereof within the meaning of Section 15 of the
Securities Act and their respective successors against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement of a material fact contained in any prospectus, offering
circular or other document incident to any registration, qualification or
compliance relating to securities purchased pursuant to the Warrants (or in any
related registration statement, notification or the like) or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading and will reimburse
the Company and each other person indemnified pursuant to this subsection (ii)
for any legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action;
provided, however, that this subsection (ii) shall apply only if (and only to
the extent that) such statement or omission was made in reliance upon
information (including, without limitation, written
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negative responses to inquiries) furnished to the Company by an instrument duly
executed by Warrantholders and stated to be specifically for use in such
prospectus, or other document (or related registration statement, notification
or the like) or any amendment or supplement thereto.
(iii) Each party entitled to indemnification
hereunder (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party (at such Indemnifying Party's
expense) to assume the defense of any claim or any litigation resulting
therefrom, provided that counsel for the Indemnifying Party, who shall conduct
the defense of such claim or litigation, shall be satisfactory to the
Indemnified Party, and the Indemnified Party may participate in such defense at
such party's expense, and provided, further, that the omission by any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 11(e) except to the
extent that the omission results in a failure of actual notice to the
Indemnifying Party and such Indemnifying Party is materially damaged solely as a
result of the failure to give notice. No Indemnifying Party, in the defense of
any such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation.
(iv) If the indemnification provided for in this
Section 11(e) is unavailable or insufficient to hold harmless an Indemnified
Party in respect of any losses, claims, damages, liabilities, expenses or
actions in respect thereof referred to herein, then the Indemnifying Party shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages, liabilities, expenses or actions in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand, and the Indemnified Party on the other, in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities, expenses or actions as well as any other relevant equitable
considerations, including the failure to give the notice required hereunder. The
relative fault of the Indemnifying Party and the Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact relates to information supplied by the
Indemnifying Party or the Indemnified Party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Warrantholders agree that it would
not be just and equitable if contributions pursuant to this Section 11(e) were
determined by pro rata allocation or by any other method of allocation which did
not take account of the equitable considerations referred to above. The amount
paid or payable to an Indemnified Party as a result of the losses, claims,
damages, liabilities or actions in respect thereof,
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referred to above, shall be deemed to include any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. Notwithstanding the contribution
provisions of this Section 11(e), in no event shall the amount contributed by
any seller of Registrable Stock exceed the aggregate net offering proceeds
received by such seller from the sale of Registrable Stock to which such
contribution or indemnification claim relates. No person guilty of fraudulent
misrepresentations (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation.
(v) The indemnification required by this Section
11(e) shall be made by periodic payments during the course of the investigation
or defense, as and when bills are received or expenses incurred. Anything
contained herein to the contrary notwithstanding, the liability of any holder of
Registrable Stock under this Section 11(e) shall not exceed the amount of the
net proceeds actually received by such holder from the sale of its Registrable
Stock pursuant to the registration, qualification, notification or compliance in
respect of which such liability arose.
(f) Reporting Requirements Under Exchange Act. The Company
shall maintain the registration of its Common Stock under Section 12 of the
Exchange Act and shall keep effective such registration and shall timely file
such information, documents and reports as the Commission may require or
prescribe under Section 13 of the Exchange Act, or otherwise. The Company shall
forthwith upon request furnish any holder of Registrable Stock (i) a written
statement by the Company that it has complied with such reporting requirements,
(ii) a copy of the most recent annual or quarterly report of the Company, and
(iii) such other reports and documents filed by the Company with the Commission
as such holder may reasonably request in availing itself of an exemption for the
sale of Registrable Stock without registration under the Securities Act. The
Company acknowledges and agrees that the purpose of the requirements contained
in this Section 11(f) is to enable any such holder to comply with the current
public information requirement contained in Rule 144 under the Securities Act
should such holder ever wish to dispose of any of the securities of the Company
acquired by it without registration under the Securities Act in reliance upon
Rule 144 (or any other similar exemptive provision). In addition, the Company
shall take such other measures and file such other information, documents and
reports as shall hereafter be required by the Commission as a condition to the
availability of Rule 144 and Rule 144A under the Securities Act (or any similar
exemptive provision hereafter in effect).
(g) Stockholder Information. The Company may require each
holder of Registrable Stock as to which any registration is to be effected
pursuant to this Section 11 to furnish the Company such information with respect
to such holder and the distribution of such Registrable Stock as shall be
required by law or by the Commission in connection therewith.
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12. Representation and Warranties. The Company hereby represents and
warrants to and covenants with the Bank, each Warrantholder, and each holder of
Warrant Shares that:
(a) Organization and Capitalization of the Company. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of California. As of the date hereof, the authorized
capital of the Company consists of 10,000,000 shares of Common Stock and
1,000,000 shares of Preferred Stock, of which 3,989,815 shares of Common Stock
and no shares of Preferred Stock are issued and outstanding. The Company has,
and at all times during the Exercise Period will have, reserved for issuance
pursuant to the Warrants and the Loan Agreement that number of shares of Common
Stock that are issuable pursuant to the Warrants and the Loan Agreement. All the
outstanding shares of Common Stock and Preferred Stock have been validly issued
without violation of any preemptive or similar rights, are fully paid and
nonassessable and have been issued in compliance with all federal and applicable
state securities laws.
(b) Authority. The Company has full corporate power and
authority to execute and deliver this Warrant, to issue the shares of Common
Stock issuable upon exercise of this Warrant and pursuant to the Loan Agreement,
and to perform all of its obligations hereunder, and the execution, delivery and
performance hereof has been duly authorized by all necessary corporate action on
its part. This Warrant has been duly executed on behalf of the Company and
constitutes the legal, valid and binding obligation of the Company enforceable
in accordance with its terms.
(c) No Legal Bar. Neither the execution, delivery or
performance of this Warrant nor the issuance of the shares of Common Stock
issuable upon exercise of this Warrant or pursuant to the Loan Agreement will
(a) conflict with or result in a violation of the Certificate of Incorporation
or By-Laws of the Company, (b) conflict with or result in a violation of any
law, statute, regulation, order or decree applicable to the Company or any
affiliate, (c) require any consent or authorization or filing with, or other act
by or in respect of any governmental authority or (d) result in a breach of,
constitute a default under or constitute an event creating rights of
acceleration, termination or cancellation under any mortgage, lease, contract,
franchise, instrument or other agreement to which the Company is a party or by
which it is bound.
(d) Validity of Shares. When issued upon the exercise of this
Warrant as contemplated herein or pursuant to the Loan Agreement, the shares of
Common Stock so issued will have been validly issued and will be fully paid and
nonassessable. On the date hereof, the par value of the Common Stock is less
than the Exercise Price per share of Common Stock.
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13. Continuing Validity. The Company will, at any time upon the request
of the Bank or a holder of the Warrant Shares, acknowledge in writing, in form
reasonably satisfactory to Bank or such holder, the Company's continuing
obligation to afford to the Bank or such holder all rights to which the Bank or
such holder shall continue to be entitled in accordance with the provisions of
this Warrant, including those which survive any exercise of this Warrant;
provided, however, that if the Bank or such holder shall fail to make any such
request, such failure shall not affect the continuing obligation of the Company
to afford to the Bank and such holder all such rights.
14. Miscellaneous Provisions.
(a) Notice of Expiration. The Company shall give written
notice to the Warrantholders, specifically advising them of the Expiration Date
and of their right to exercise the Warrants not more than one hundred eighty
(180) days and not less than ninety (90) days before the Expiration Date. If
such written notice is not so given, the Expiration Date shall automatically be
extended until ninety (90) days after the date that the Company gives the
Warrantholders such written notice.
(b) Governing Law; Arbitration. The validity of this Warrant,
the construction, interpretation, and enforcement thereof, and the rights of the
parties thereto shall be determined under, governed by, and construed in
accordance with the internal laws of the State of Delaware, without regard to
principles of conflicts of law. Any dispute arising out of or relating to this
Warrant shall be resolved by binding arbitration in Los Angeles, California in
accordance with the rules and regulations of the American Arbitration
Association.
(c) Notices. All notices hereunder shall be in writing and
shall be deemed to have been given five (5) days after being mailed by certified
mail, or one (1) business day after being sent by a reputable overnight delivery
service, addressed to the address below stated of the party to which notice is
given, or to such changed address as such party may have fixed by notice:
To the Company: Unison HealthCare Corporation
0000 Xxxx Xxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
With a copy (which
shall not constitute
notice) to: P. Xxxxxx Xxxx, Esq.
Xxxxxxx & Xxxxx
One East Camelback Road
Suite 400
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Xxxxxxx, Xxxxxxx 00000
To the
Warrantholders
or holder of
Warrant Shares: Imperial Bank
000 Xxxxx Xxxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx
With a copy (which
shall not constitute
notice) to: Xxxxxxx X. Xxxxx, Esq.
Senior Vice President and General Counsel
IMPERIAL BANK
0000 Xxxxx Xx Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
provided, however, that any notice of change of address shall be effective only
upon receipt.
(d) Successors and Assigns. This Warrant shall be binding upon
and inure to the benefit of the Company, the Bank, the Warrantholders and the
holders of Warrant Shares and the successors, assigns and transferees of the
Company, the Bank, the Warrantholders and the holders of Warrant Shares.
(e) Attorneys' Fees. If any legal action or other proceeding
is brought for the enforcement of this Warrant, or because of an alleged
dispute, breach, default, or misrepresentation in connection with any of the
provisions of this Warrant, the successful or prevailing party or parties shall
be entitled to recover such reasonable attorneys' fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it or
they may be entitled, as may be ordered in connection with such proceeding.
(f) Entire Agreement: Amendments and Waivers. This Warrant
sets forth the entire understanding of the parties with respect to the
transactions contemplated hereby. The failure of any party to seek redress for
the violation or to insist upon the strict performance of any term of this
Warrant shall not constitute a waiver of such term and such party shall be
entitled to enforce such term without regard to such forbearance. This Warrant
may be amended, the Company may take any action herein prohibited or omit to
take action herein required to be performed by it, and any breach of or
compliance with any covenant, agreement, warranty or representation may be
waived, only if the Company has obtained the
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written consent or written waiver of the majority in interest of the
Warrantholders, and then such consent or waiver shall be effective only in the
specific instance and for the specific purpose for which given.
(g) Severability. If any term of this Warrant as applied to
any person or to any circumstance is prohibited, void, invalid or unenforceable
in any jurisdiction, such term shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or invalidity without in any way affecting any
other term of this Warrant or affecting the validity or enforceability of this
Warrant or of such provision in any other jurisdiction.
(h) Headings. The headings in this Warrant are inserted only
for convenience of reference and shall not be used in the construction of any of
its terms.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officers effective as of the date first set forth above.
UNISON HEALTHCARE CORPORATION,
a Delaware corporation
By /s/ Xxxxx X. Xxxxx
---------------------------------
Name: Xxxxx X. Xxxxx
----------------------------
Title: EVP & CFO
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