NEW YORK HEALTH CARE, INC.
AND
RAS SECURITIES CORP.
-----------
REPRESENTATIVE'S
WARRANT AGREEMENT
Dated as of __________, 1996
REPRESENTATIVE'S WARRANT AGREEMENT dated as of ___________ , 1996 between
NEW YORK HEALTH CARE, INC., a New York corporation (the "Company") and RAS
SECURITIES CORP., its successors, designees and assigns (hereinafter referred to
as the "Representative").
W I T N E S S E T H:
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WHEREAS, the Company proposes to issue to the Representative warrants
("Warrants") to purchase up to an aggregate of 125,000 shares of common stock,
$.01 par value, of the Company's ("Common Stock") and/or up to 250,000 warrants
("Underlying Warrants"), with two Underlying Warrants entitling the holder to
purchase one share of Common Stock. (One share of Common Stock and Underlying
Warrant are each hereinafter referred to as a "Warrant Security" and more than
one collectively referred to as the "Warrant Securities"); and
WHEREAS, the Representative has agreed pursuant to the underwriting
agreement (the "Underwriting Agreement") dated as of the date hereof among the
underwriters named therein ("Underwriters") and the Company to act as the
representative of such underwriters in connection with the Company's proposed
public offering of up to 1,250,000 shares of Common Stock and 2,500,000
redeemable warrants ("Redeemable Warrants") at a public offering price of $4.00
per share of Common Stock and $.10 per Redeemable Warrant (the "Public
Offering"); and
WHEREAS, the Warrants to be issued pursuant to this Agreement will be
issued on the Closing Date (as such term is defined in the Underwriting
Agreement) by the Company to the Representative in consideration for, and as
part of the Representative's compensation in connection with, the Representative
acting as the representative pursuant to the Underwriting Agreement;
NOW, THEREFORE, in consideration of the premises, the payment by the
Representative to the Company of an aggregate thirty-seven dollars and fifty
cents ($37.50), the agreements
herein set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Grant The Representative is hereby granted the right to purchase, at any
time from __________________, 1997 until 5:00 P.M., New York time, on
___________, 2001, up to an aggregate of 125,000 shares of Common Stock (the
"Shares") and/or 250,000 Underlying Warrants at an initial exercise price
(subject to adjustment as provided in Section 8 hereof) of $4.80 per Share and
$.12 per Underlying Warrant, subject to the terms and conditions of this
Agreement. Two Underlying Warrants are exercisable to purchase one additional
share of Common Stock at an initial exercise price of $ 4.00 from __________,
1997 until 5:00 P.M. New York time on February ______________, 2001 at which
time the Underlying Warrants will expire. Except as set forth herein, the
Underlying Warrants issuable upon exercise of the Warrants are in all respects
identical to the Redeemable Warrants being purchased by the Underwriters for
resale to the public pursuant to the terms and provisions of the Underwriting
Agreement and the Redeemable Warrant Agreement dated ______________ 1996 between
the Company and Continental Stock Transfer & Trust Company ("Redeemable Warrant
Agreement"). Except as set forth herein, the shares issuable upon exercise of
the Warrants are in all respects identical to the shares of Common Stock being
purchased by the Underwriters for resale to the public pursuant to the terms and
provisions of the Underwriting Agreement.
2. Warrant Certificates. The warrant certificates (the "Warrant
Certificates") delivered and to be delivered pursuant to this Agreement shall be
(i) in the form set forth in Exhibit A, with respect to Warrants to purchase
Shares and (ii) in the form set forth in Exhibit B with respect to Warrants to
purchase Underlying Warrants, each attached hereto and made a part hereof, with
such appropriate insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
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3. Exercise of Warrant.
-------------------
3.1 Method of Exercise. The Warrants initially are exercisable at the
initial exercise prices (subject to adjustment as provided in Section 8 hereof)
per Share and per Underlying Warrant as set forth in Section 6 hereof payable by
certified or official bank check in New York Clearing House funds, subject to
adjustment as provided in Section 8 hereof. Upon surrender of a Warrant
Certificate with the annexed Form of Election to Purchase duly executed,
together with payment of the Exercise Price (as hereinafter defined) for the
Warrant Securities purchased at the Company's principal offices (presently
located at 0000 Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx, 00000) the registered
holder of a Warrant Certificate ("Holder" or "Holders") shall be entitled to
receive a certificate or certificates for the shares of Common Stock so
purchased and/or a certificate or certificates for the Underlying Warrants so
purchased. The purchase rights represented by each Warrant Certificate are
exercisable at the option of the Holders thereof, in whole or part (but not as
to fractional shares of the Common Stock and/or Underlying Warrants). In the
case of the purchase of less than all Warrant Securities purchasable under any
Warrant Certificate, the Company shall cancel said Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the Warrant Securities purchasable thereunder.
3.2 Exercise by Surrender of Warrant. In addition to the method of payment
set forth in Section 3.1 and in lieu of any cash payment required thereunder,
the Holder(s) of the Warrants shall have the right at any time and from time to
time to exercise the Warrants in full or in part by surrendering the applicable
Warrant Certificates in the manner specified in Section 3.1. The number of
shares of Common Stock to be issued pursuant to this Section 3.2 shall be equal
to the difference between (a) the number of shares of Common Stock in respect of
which the Warrants are exercised and (b) a fraction, the numerator of which
shall be the number of shares of Common Stock in respect of which the Warrants
are exercised multiplied by the Exercise Price (as hereinafter defined) and the
denominator of which shall be the Market Price. The number of Underlying
Warrants to be issued pursuant to this Section 3.2 shall be equal to the
difference between (a) the number of Underlying Warrants in respect of which the
Warrants are exercised and (b) a fraction, the numerator of which shall be the
number of Underlying Warrants in respect of which the Warrants are
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exercised multiplied by the Exercise Price (as hereinafter defined) and the
denominator of which shall be the Market Price.
3.3 Definition of Market Price. As used herein, the phrase "Market Price"
at any date shall be deemed to be (i) when referring to the Common Stock, the
last reported sale price, or, in case no such reported sale takes place on such
day, the average of the last reported sale prices for the last three (3) trading
days, in either case as officially reported by the principal securities exchange
on which the Common Stock is listed or admitted to trading or by the Nasdaq
National Market ("NNM"), or, if the Common Stock is not listed or admitted to
trading on any national securities exchange or quoted by NNM, the average
closing bid price as furnished by the National Association of Securities
Dealers, Inc. ("NASD") through Nasdaq or similar organization if Nasdaq is no
longer reporting such information, or if the Common Stock is not quoted on
Nasdaq, or such similar organization as determined in good faith by resolution
of the Board of Directors of the Company, based on the best information
available to it or (ii) when referring to an Underlying Warrant, the last
reported sale price, or, in the case no such reported sale takes place on such
day, the average of the last reported sale prices for the last three (3) trading
days, in either case as officially reported by the principal securities exchange
on which the Underlying Warrants are listed or admitted to trading or by NNM,
or, if the Underlying Warrants are not listed or admitted to trading on any
national securities exchange or quoted by NNM, the average closing bid price as
furnished by the NASD through Nasdaq or similar organization if Nasdaq is no
longer reporting such information, or if the Underlying Warrant is not quoted on
Nasdaq or such similar organization, the Market Price of an Underlying Warrant
shall equal the difference between the Market Price of the Common Stock and the
Exercise Price (as hereinafter defined) of the Underlying Warrant.
Notwithstanding the foregoing, for purposes of Section 8, the Market Price of a
share of Common Stock or an Underlying Warrant shall be determined by reference
to the relevant information set forth above during the thirty (30) trading days
immediately preceding the date of the event requiring the determination of the
Market Price (except that, in the event of a public offering of shares of Common
Stock, the Market Price of a share of Common Stock or an Underlying Warrant
shall be determined by reference to the trading day immediately preceding the
effective date of the public offering and not such thirty (30) trading day
period).
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4. Issuance of Certificates. Upon the exercise of the Warrants, the
issuance of certificates for shares of Common Stock and Underlying Warrants
and/or other securities, properties or rights underlying such Warrants and, upon
the exercise of the Underlying Warrants, the issuance of certificates for shares
of Common Stock and/or other securities, properties or rights underlying such
Underlying Warrants, shall be made forthwith (and in any event within five (5)
business days thereafter) without charge to the Holder thereof including,
without limitation, any tax which may be payable in respect of the issuance
thereof, and such certificates shall (subject to the provisions of Sections 5
and 7 hereof) be issued in the name of, or in such names as may be directed by,
the Holder thereof; provided, however, that the Company shall not be required to
pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any such certificates in a name other than that of the
Holder and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the Shares,
Underlying Warrants and the shares of Common Stock underlying such Underlying
Warrants (and/or other securities, property or rights issuable upon the exercise
of the Warrants or the Underlying Warrants) shall be executed on behalf of the
Company by the manual or facsimile signature of the then present Chairman or
Vice Chairman of the Board of Directors or President or Vice President of the
Company under its corporate seal reproduced thereon, attested to by the manual
or facsimile signature of the then present Secretary or Assistant Secretary of
the Company. Warrant Certificates shall be dated the date of execution by the
Company upon initial issuance, division, exchange, substitution or transfer.
5. Restriction On Transfer of Warrants. The Holder of a Warrant
Certificate, by its acceptance thereof, covenants and agrees that the Warrants
are being acquired as an investment and not with a view to the distribution
thereof. Neither the Warrants or the Warrant Securities may be sold,
transferred, assigned, hypothecated or otherwise disposed of, in whole or in
part, for a period of one (1) year from the date hereof, except that they may be
transferred to successors
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of the Representative, and may be assigned in whole or in part to any person who
is an officer of the Representative, any participant in the underwriting
syndicate or selling group relating to the Public Offering or any officer of
such syndicate or selling group member. Any such assignment shall be effected by
the Holder (i) executing the form of assignment at the end hereof and (ii)
surrendering the Warrant certificate for cancellation at the office or agency of
the Company referred to in Section 3 hereof, accompanied by a certificate
(signed by an officer of the Holder if the Holder is a corporation), stating
that each transferee is a permitted transferee under this Section 5 hereof;
whereupon the Company shall issue, in the name or names specified by the Holder
(including the Holder) a new Warrant certificate or certificates of like tenor
and representing in the aggregate rights to purchase the same number of Warrant
Securities as are purchasable hereunder.
6. Exercise Price.
6.1 Initial and Adjusted Exercise Price. Except as otherwise provided in
Section 8 hereof, the initial exercise price of each Warrant to purchase Common
Stock shall be $4.80 per share of Common Stock and the initial exercise price of
each Warrant to purchase Underlying Warrants shall be $.12 per Underlying
Warrant. The adjusted exercise price shall be the price which shall result from
time to time from any and all adjustments of the initial exercise price in
accordance with the provisions of Section 8 hereof and/or in accordance with a
reduction by the Company, in its sole discretion, of the exercise price of each
Warrant to purchase Common Stock.
6.2 Exercise Price. The term "Exercise Price" herein shall mean the
applicable initial exercise price or with respect to Warrants to purchase Common
Stock the adjusted exercise price, depending upon the context.
7. Registration Rights.
7.1 Current Registration Under the Securities Act of 1933. The Warrants,
the Shares, the Underlying Warrants issuable upon exercise of the applicable
Warrants and the shares of Common Stock issuable upon exercise of such
Underlying Warrants have been registered under the Securities Act of 1933, as
amended (the "Act"), pursuant to the Company's Registration Statement
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on Form SB-2 (Registration No.333- 08155) (the "Registration Statement"). The
Company covenants andagrees to use its best efforts to maintain the
effectiveness of the Registration Statement for a period of five (5) years from
its effective date.
7.2 Contingent Registration Rights. In the event that, for any reason
whatsoever, the Company shall fail to maintain the effectiveness of the
registration Statement for a period of five (5) years from its effective date
and, in any event, from and after the fifth (5th) anniversary of the effective
date of the Registration Statement, the Representative shall have commencing the
date of any such occasion, the contingent registration rights ("Registration
Rights") set forth in Sections 7.3 and 7.4 hereof.
7.3 Piggyback Registration. (a) If, at any time commencing after the
effective date of the Registration Rights and expiring on the seventh (7th)
anniversary of the effective date of the Registration Statement, the Company
proposes to register any of its securities under the Act, either for its own
account or the account of any other security holder or holders of the Company
possessing registration rights ("Other Stockholders") (other than pursuant to
Form S-4, Form S-8 or comparable registration statement), it shall give written
notice, at least thirty (30) days prior to the filing of each such registration
statement, to the Representative and to all other Holders of Warrants, Shares,
Underlying Warrants and/or shares of Common Stock issuable upon exercise of the
Underlying Warrants (collectively, "Registrable Securities") of its intention to
do so. If the Representative or other Holders of Registrable Securities notify
the Company within twenty-one (21) days after the receipt of any such notice of
its or their desire to include any such securities in such proposed registration
statement, the Company shall afford the Representative and such other Holders of
such securities the opportunity to have any such securities registered under
such registration statement.
(b) If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company shall so
advise the Representative and such other Holders as part of the written notice
given pursuant to Section 7.3(a) hereof. The right of the Representative or any
such other Holder to registration pursuant to this Section 7.3 shall be
conditioned upon their participation in such underwriting and the inclusion of
their Registrable Securities in the underwriting to the extent hereinafter
provided. The Representative and all other
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Holders proposing to distribute their securities through such underwriting shall
(together with the Company and any officer, directors or Other Stockholders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the representative of the
underwriter or underwriters selected by the Company. Notwithstanding any other
provision of this Section 7.3, if the representative of the underwriter or
underwriters advises the Company in writing that marketing factors require a
limitation or elimination of the number of shares of Common Stock or other
securities to be underwritten, the representative may limit the number of shares
of Common Stock or other securities to be included in the registration and
underwriting. The Company shall so advise the Representative and all other
Holders of Registrable Securities requesting registration, and the number of
shares of Common Stock or other securities that are entitled to be included in
the registration and underwriting shall be allocated among the Representative
and other Holders requesting registration, in each case, in proportion, as
nearly as practicable, to the respective amounts of securities which they had
requested to be included in such registration at the time of filing the
registration statement.
(c) Notwithstanding the provisions of this Section 7.3, the Company
shall have the right at any time after it shall have given written notice
pursuant to Section 7.3(a) hereof (irrespective of whether a written request for
inclusion of any such securities shall have been made) to elect not to file any
such proposed registration statement, or to withdraw the same after the filing
but prior to the effective date thereof.
7.4 Demand Registration. (a) At any time commencing after the effective
date of the Registration Rights and ending on the fifth (5th) anniversary of the
effective date of the Registration Statement, the Representative and Holders of
Registrable Securities representing a "Majority" (as hereinafter defined) of
such securities (assuming the exercise of all of the Warrants and Underlying
Warrants) (the "Initiating Holders") shall have the right (which right is in
addition to the registration rights under Section 7.3 hereof), exercisable by
written notice to the Company, to have the Company prepare and file with the
Commission, on one occasion, a registration statement and such other documents,
including a prospectus, as may be necessary in the opinion of both counsel for
the Company and counsel for the Holders, in order to comply with the provisions
of the Act, so as to permit a public offering and sale of their respective
Registrable Securities for up
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to two hundred and seventy (270) days by such Holders and any other Holders of
Registrable Securities, as well as anyother security holders possessing similar
registration rights, who notify the Company within twenty-one (21) days after
receiving notice from the Company of such request.
(b) The Company covenants and agrees to give written notice of any
registration request under this Section 7.4 by any Holder or Holders to all
other registered Holders of Registrable Securities, as well as any other
security holders possessing similar registration rights, within ten (10) days
after the date of the receipt of any such registration request.
(c) If the Initiating Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to Section 7.4(a)
hereof. The right of any Holder to registration pursuant to this Section 7.4
shall be conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the underwriting to the
extent and subject to the limitations provided herein. A Holder may elect to
include in such underwriting all or a part of the Registrable Securities it
holds.
(d) The Company shall (together with all Holders, officers, directors and
Other Stockholders proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary form with the
representative of the underwriter of underwriters selected for such underwriting
by the Initiating Holders, which underwriter(s) shall be reasonably acceptable
to the Representative. Notwithstanding any other provision of this Section 7.4,
if the representative of the underwriter or underwriters advises the Initiating
Holders in writing that marketing factors require a limitation or elimination of
the number of shares of Common Stock or other securities to be underwritten, the
representative may limit the number of shares of Common Stock or other
securities to be included in the registration and underwriting. The Company
shall so advise the Representative and all Holders of Registrable Securities
requesting registration, and the number of shares of Common Stock or other
securities that are entitled to be included in the registration and underwriting
shall be allocated among the Representative and other Holders requesting
registration, in each case, in proportion, as nearly as practicable, to the
respective amounts of securities which they had requested to be included in such
registration at the time of filing the registration statement. If the Company or
any Holder of Registrable Securities who has
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requested inclusion in such registration as provided above disapproves of the
terms of any such underwriting,such person may elect to withdraw its securities
therefrom by written notice to the Company, the underwriter and the Initiating
Holders. Any securities so excluded shall be withdrawn from such registration.
No securities excluded from such registration by reason of such underwriters'
marketing limitations shall be included in such registration. To facilitate the
allocation of shares in accordance with this Section 7.4(d), the Company or
underwriter or underwriters selected as provided above may round the number of
securities of any holder which may be included in such registration to the
nearest 100 shares.
(e) In the event that the Initiating Holders are unable to sell all of the
Registrable Securities for which they have requested registration due to the
provisions of Section 7.4(d) hereof and if, at that time, the Initiating Holders
are not permitted to sell Registrable Securities under Rule 144(k), the
Initiating Holders shall be entitled to require the Company to afford the
Initiating Holders an opportunity to effect one additional demand registration
under this Section 7.4.
(f) In addition to the registration rights under Section 7.3 and subsection
(a) of Section 7.4 hereof, at any time commencing on the date hereof and
expiring five (5) years thereafter any Holder of Registrable Securities shall
have the right, exercisable by written request to the Company, to have the
Company prepare and file, on one occasion, with the Commission a registration
statement so as to permit a public offering and sale for 270 days by any such
Holder of its Registrable Securities provided, however, that the provisions of
Section 7.5(b) hereof, shall not apply to any such registration request and
registration and all costs incident thereto shall be at the expense of the
Holder or Holder's making such request.
(g) Notwithstanding anything to the contrary contained herein, if the
Company shall not have filed a registration statement for the Registrable
Securities of the Initiating Holders or the Holder(s) referred to in Section
7.5(f) above (the "Paying Holders"), within the time period specified in Section
7.5(a) below, the Company shall upon the written notice of election of the
Initiating Holders or the Paying Holders, as the case may be, repurchase (i) any
and all Shares and/or Underlying Warrants at the higher of the Market Price per
share of Common Stock or per Underlying Warrant, as the case may be, on (x) the
date of the notice sent to the Company under Section 7.4(a) or (f), as the case
may be, or (y) the expiration of the period specified in Section
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7.5(a) and (ii) any and all Warrants at such Market Price less the Exercise
Price of such Warrant. Such repurchase shallbe in immediately available funds
and shall close within five (5) business days after the expiration of the period
specified in Section 7.5(a).
7.5 Covenants of the Company With Respect to Registration. In connection
with any registration under Sections 7.3 and 7.4 hereof, the Company covenants
and agrees as follows:
(a) The Company shall use its best efforts to file a registration statement
within thirty (30) days of receipt of any demand therefor, shall use its best
efforts to have any registration statements declared effective at the earliest
possible time, and shall furnish each Holder desiring to sell Registrable
Securities such number of prospectuses as shall reasonably be requested.
(b) The Company shall pay all costs (excluding fees and expenses of
Holder(s)' counsel and any underwriting or selling commissions), fees and
expenses in connection with all registration statements filed pursuant to
Sections 7.3 and 7.4 hereof including, without limitation, the Company's legal
and accounting fees, printing expenses, blue sky fees and expenses. If the
Company shall fail to comply with the provisions of Section 7.5(a), the Company
shall, in addition to any other equitable or other relief available to the
Holder(s), extend the exercise period of the Warrants by such number of days as
shall equal the delay caused by the Company's failure.
(c) The Company will take all necessary action which may be required in
qualifying or registering the Registrable Securities included in a registration
statement for offering and sale under the securities or blue sky laws of such
states as reasonably are requested by the Holder(s); provided that the Company
shall not be obligated to execute or file any general consent to service of
process or to qualify as a foreign corporation to do business under the laws of
any such jurisdiction.
(d) The Company shall indemnify the Holder(s) of the Registrable Securities
to be sold pursuant to any registration statement and each person, if any, who
controls such Holders within the meaning of Section 15 of the Act or Section
20(a) of the Securities Exchange Act of 1934, as amended ("Exchange Act"),
against all loss, claim, damage, expense or liability (including all expenses
reasonably incurred in investigating, preparing or defending against any claim
whatsoever) to which any of them may become subject under the Act, the Exchange
Act or otherwise, arising from such registration statement but only to the same
extent and with the same effect as the
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provisions pursuant to which the Company has agreed to indemnify each of the
Underwriters contained in Section 7 of the Underwriting Agreement.
(e) The Holder(s) of the Registrable Securities to be sold pursuant to a
registration statement, and their successors and assigns, shall severally, and
not jointly, indemnify the Company, its officers and directors and each person,
if any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, against all loss, claim, damage or expense or
liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which they may become
subject under the Act, the exchange Act or otherwise, arising from information
furnished by or on behalf of such Holders, or their successors or assigns, for
specific inclusion in such registration statement to the same extent and with
the same effect as the provisions contained in Section 7 of the Underwriting
Agreement pursuant to which the Underwriters have agreed to indemnify the
Company.
(f) For a period of one hundred eighty (180) days after the effectiveness
of any registration statement filed pursuant to Section 7.4 hereof, the Company
shall not permit any other registration statement (other than (1) a registration
statement relating to the securities for which the Company has granted demand
registration rights, as described in the Prospectus included in the Registration
Statement, (2) a registration statement relating to the shares of Common Stock
issuable upon exercise of the Redeemable Warrants issued to the public pursuant
to the Registration Statement, (3) a registration statement relating to the
securities for which the Company has granted piggyback registration rights, as
described in the Prospectus included in the Registration Statement and (4) a
registration statement filed on Forms S-4 or S-8) to be or remain effective
during the effectiveness of a registration statement filed pursuant to Section
7.4 hereof, without the prior written consent of the Holders of the Registrable
Securities representing a Majority of such securities.
(g) The Company shall furnish to each Holder participating in the offering
and to each underwriter, if any, a signed counterpart, addressed to such Holder
or underwriter, of (i) an opinion of counsel to the Company, dated the effective
date of such registration statement (and, if such registration includes an
underwritten public offering, an opinion dated the date of the closing under the
underwriting agreement), and (ii) a "cold comfort" letter dated the effective
date of such
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registration statement (and, if such registration includes an underwritten
public offering, a letter dated the date of the closing under the underwriting
agreement) signed by the independent public accountants who have issued a report
on the Company's financial statements included in such registration statement,
in each case covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in the case of
such accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to underwriters in underwritten public
offerings of securities.
(h) The Company shall as soon as practicable after the effective date of
any registration statement filed pursuant to Sections 7.3 and 7.4 hereof, and in
any event within 15 months thereafter, make "generally available to its security
holders" (within the meaning of Rule 158 under the Act) an earnings statement
(which need not be audited) complying with Section 11(a) of the act and covering
a period of at least 12 consecutive months beginning after the effective date of
the registration statement.
(i) The Company shall deliver promptly to each Holder participating in the
offering requesting the correspondence and memoranda described below and to the
managing underwriters, copies of all written correspondence between the
Commission and the Company, its counsel or auditors and all memoranda relating
to discussions with the Commission or its staff with respect to the registration
statement and permit each Holder and underwriters to do such investigation, upon
reasonable advance notice, with respect to information contained in or omitted
from the registration statement as it deems reasonably necessary to comply with
applicable securities laws or rules of the NASD. Such investigation shall
include access to books, records and properties and opportunities to discuss the
business of the Company with its officers and independent auditors, all to such
reasonable extent and at such reasonable times and as often as any such Holder
or underwriter shall reasonably request.
(j) With respect to any registration under Section 7.4 hereof, the Company
shall enter into an underwriting agreement with the managing underwriter
selected for such underwriting by the Initiating Holders or the Paying Holders,
as the case may be, which may be the Representative. Such agreement shall be
satisfactory in form and substance to the Company, each
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Holder and such managing underwriters, and shall contain such representations,
warranties and covenants by the Company and such other terms as are customarily
contained in agreements of that type used by the managing underwriter. The
Holders shall be parties to any underwriting agreement relating to an
underwritten sale of their Registrable Securities and may, at their option,
require that any or all the representations, warranties and covenants of the
Company to or for the benefit of such underwriters shall also be made to and for
the benefit of such Holders. Such Holders shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters, except as they may relate to such Holders and their intended
methods of distribution.
(k) For purposes of this Agreement, the term "Majority" in reference to the
Holders of Registrable Securities, shall mean in excess of fifty percent (50%)
of the then outstanding Warrants, Shares, Underlying Warrants and/or shares of
Common Stock issued upon exercise of the Underlying Warrants that (i) are not
held by the Company, an affiliate, officer, creditor, employee or agent thereof
or any of their respective affiliates, members of their family, persons acting
as nominees or in conjunction therewith and (ii) have not been resold to the
public pursuant to a registration statement filed with the Commission under the
Act.
(l) Nothing contained in this Agreement shall be construed as requiring the
Holder(s) to exercise their Warrants or Underlying Warrants prior to the initial
filing of any registration statement or the effectiveness thereof.
(m) In addition to the Registrable Securities, upon the written request
therefor, by any Holder(s), the Company shall include in the registration
statement any other securities of the Company held by such Holder(s) as of the
date of filing of such registration statement, including without limitation
restricted shares of Common Stock, options, warrants or any other securities
convertible into shares of Common Stock.
7.6 Restrictive Legends. In the event that the Company fails to maintain
the effectiveness of the Registration Statement, such that the exercise, in part
or in whole, of the Warrants and/or the Underlying Warrants are not, at the time
of such exercise, registered under the Act, any certificates representing the
Shares underlying the Warrants, the Underlying Warrants underlying the Warrants
and/or the shares of Common Stock underlying the Underlying Warrants,
- 14 -
and any of the other securities issuable upon exercise of the Warrants shall
bear the following restrictive legend:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended ("Act"), and may not be offered or
sold except pursuant to (i) an effective registration statement under the Act,
(ii) to the extent applicable, Rule 144 under the Act (or any similar rule under
such Act relating to the disposition of securities), or (iii) an opinion
ofcounsel, if such opinion shall be reasonably satisfactory to counsel to the
issuer, that an exemption from registration under such Act is available.
8. Adjustments to Exercise Price and Number of Securities.
8.1 Computation of Adjusted Exercise Price. Except as hereinafter provided,
in the event the Company shall at any time after the date hereof issue or sell
any shares of Common Stock (other than the issuances or sales referred to in
Section 8.7 hereof), including shares held in the Company's treasury and shares
of Common Stock issued upon the exercise of any options, rights or warrants to
subscribe for shares of Common Stock and shares of Common Stock issued upon the
direct or indirect conversion or exchange of securities for shares of Common
Stock, for a consideration per share less than the Market Price in effect
immediately prior to the issuance or sale of such shares, or without
consideration, then forthwith upon such issuance or sale, the Exercise Price
shall (until another such issuance or sale) be reduced to the price (calculated
to the nearest full cent) equal to the quotient derived by dividing (i) an
amount equal to the sum of (a) the total number of shares of Common Stock
outstanding immediately prior to the issuance or sale of such shares, multiplied
by the Exercise Price in effect immediately prior to such issuance or sale, and
(b) the aggregate of the amount of all consideration, if any, received by the
Company upon such issuance or sale, by (ii) the total number of shares of Common
Stock outstanding immediately after such issuance or sale; provided, however,
that in no event shall the Exercise Price be adjusted pursuant to this
computation to an amount in excess of the Exercise Price in effect immediately
prior to such computation, except in the case of a combination of outstanding
shares of Common Stock, as provided by Section 8.3 hereof.
- 15 -
For the purposes of this Section 8 the term Exercise Price shall mean
the Exercise Price per share of Common Stock set forth in Section 6 hereof, as
adjusted from time to time pursuant to the provisions of this Section 8.
For the purposes of any computation to be made in accordance with this
Section 8.1, the following provisions shall be applicable:
(i) In case of the issuance or sale of shares of Common Stock for a
consideration part or all of which shall be cash, the amount of the cash
consideration therefor shall be deemed to be the amount of cash received by the
Company for such shares (or, if shares of Common Stock are offered by the
Company for subscription, the subscription price, or, if either of such
securities shall be sold to underwriters or dealers for public offering without
a subscription offering, the initial public offering price) before deducting
therefrom any compensation paid or discount allowed in the sale, underwriting or
purchase thereof by underwriters or dealers or other performing similar
services, or any expenses incurred in connection therewith.
(ii) In case of the issuance or sale (other than as a dividend or other
distribution on any stock of the Company) of shares of Common Stock for a
consideration part or all of which shall be other than cash, the amount of the
consideration therefor other than cash shall be deemed to be the value of such
consideration as determined in good faith by the Board of Directors of the
Company and shall include any amounts payable to security holders or any
affiliates thereof, including without limitation, pursuant to any employment
agreement, royalty, consulting agreement, covenant not to compete, earnout or
contingent payment right or similar arrangement, agreement or understanding,
whether oral or written; all such amounts being valued for the purposes hereof
at the aggregate amount payable thereunder, whether such payments are absolute
or contingent, and irrespective of the period or uncertainty of payment, the
rate of interest, if any, or the contingent nature thereof; provided, however,
that if any Holder(s) does not agree with such evaluation, a mutually acceptable
independent appraiser shall make such evaluation, the cost of which shall be
borne by the Company.
(iii) Shares of Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have been issued
immediately after the opening of business on the day following the record date
for the determination of stockholders entitled to receive such dividend or other
distribution and shall be deemed to have been issued without consideration.
- 16 -
(iv) The reclassification of securities of the Company other than
shares of Common Stock into securities including shares of Common Stock shall be
deemed to involve the issuance of such shares of Common Stock for a
consideration and the value of the consideration allocable to such shares of
Common Stock shall be determined as provided in subsection (ii) of this Section
8.1.
(v) The number of shares of Common Stock at any one time outstanding
shall include the aggregate number of shares issued or issuable (subject to
readjustment upon the actual issuance thereof) upon the exercise of options,
rights, warrants and upon the conversion or exchange of convertible or
exchangeable securities.
8.2 Options, Rights, Warrants and Convertible and Exchangeable Securities.
In case the Company shall at any time after the date hereof issue options,
rights or warrants to subscribe for shares of Common Stock, or issue any
securities convertible into or exchangeable for shares of Common Stock, for a
consideration per share less than the Market Price in effect immediately prior
to the issuance of such options, rights or warrants, or such convertible or
exchangeable securities, or without consideration, the Exercise Price in effect
immediately prior to the issuance of such options, rights or warrants, or such
convertible or exchangeable securities, as the case may be, shall be reduced to
a price determined by making a computation in accordance with the provisions of
Section 8.1 hereof, provided that:
(a) The aggregate maximum number of shares of Common Stock, as
the case may be, issuable under such options, rights or warrants shall be deemed
to be issued and outstanding at the time such options, rights or warrants were
issued, and for a consideration equal to the minimum purchase price per share
provided for in such options, rights or warrants at the time of issuance, plus
the consideration (determined in the same manner as consideration received on
the issue or sale of shares in accordance with the terms of the Warrants), if
any, received by the Company for such options, rights or warrants.
(b) The aggregate maximum number of shares of Common Stock
issuable upon conversion or exchange of any convertible or exchangeable
securities shall be deemed to be issued and outstanding at the time of issuance
of such securities, and for a consideration equal
- 17 -
to the consideration (determined in the same manner as consideration received on
the issue or sale of shares of Common Stock in accordance with the terms of the
Warrants) received by the Company for such securities, plus the minimum
consideration, if any, receivable by the Company upon the conversion or exchange
thereof.
(c) If any change shall occur in the price per share provided for in any of
the options, rights or warrants referred to in subsection (a) of this Section
8.2, or in the price per share at which the securities referred to in subsection
(b) of this Section 8.2 are convertible or exchangeable, such options, rights or
warrants or conversion or exchange rights, as the case may be, shall be deemed
to have expired or terminated on the date when such price change became
effective in respect of shares not theretofore issued pursuant to the exercise
or conversion or exchange thereof, and the Company shall be deemed to have
issued upon such date new options, rights or warrants or convertible or
exchangeable securities at the new price in respect of the number of shares
issuable upon the exercise of such options, rights or warrants or the conversion
or exchange of such convertible or exchangeable securities.
8.3 Subdivision and Combination. In case the Company shall at any time
subdivide or combine the outstanding shares of Common Stock, the Exercise Price
shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.
8.4 Adjustment in Number of Securities. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Section 8, the number of
Warrant Securities issuable upon the exercise at the adjusted exercise price of
each Warrant shall be adjusted to the nearest full amount by multiplying a
number equal to the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Securities issuable upon exercise of the
Warrants immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
8.5 Definition of Common Stock. For the purpose of this Agreement, the term
"Common Stock" shall mean (i) the class of stock designated as Common Stock in
the Certificate of Incorporation of the Company as amended as of the date
hereof, 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. The
Company covenants that so long as any of the Warrants are outstanding, the
Company shall not
- 18 -
without the prior written consent of the Representative issue any securities
whatsoever other than Common Stock. In the event that the Company shall, upon
the consent of the Representative, after the date hereof issue securities with
greater or superior voting rights than the shares of Common Stock outstanding as
of the date hereof, the Holder, at its option, may receive upon exercise of any
Warrant either shares of Common Stock or a like number of such securities with
greater or superior voting rights.
8.6 Merger or Consolidation. In case of any consolidation of the Company
with, or merger of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger which does not result in any
reclassification or change of the outstanding Common Stock), the corporation
formed by such consolidation or merger shall execute and deliver to the Holder a
supplemental warrant agreement providing that the holder of each Warrant then
outstanding or to be outstanding shall have the right thereafter (until the
expiration of such Warrant) to receive, upon exercise of such warrant, the kind
and amount of shares of stock and other securities and property receivable upon
such consolidation or merger, by a holder of the number of shares of Common
Stock of the Company for which such warrant might have been exercised
immediately prior to such consolidation, merger, sale or transfer. Such
supplemental warrant agreement shall provide for adjustments which shall be
identical to the adjustments provided in Section 8. The above provision of this
subsection shall similarly apply to successive consolidations or mergers.
8.7 No Adjustment of Exercise Price in Certain Cases. No adjustment of the
Exercise Price shall be made:
(a) Upon the issuance or sale of the Warrants, Underlying Warrants,
Redeemable Warrants or the shares of Common Stock issuable upon the exercise of
(i) the Warrants, (ii) the Underlying Warrants, or (iii) the Redeemable
Warrants; or
(b) If the amount of said adjustment shall be less than two cents (2) per
Warrant Security, provided, however, that in such case any adjustment that would
otherwise be required then to be made shall be carried forward and shall be made
at the time of and together with the next subsequent adjustment which, together
with any adjustment so carried forward, shall amount to at least two cents
($.02) per Warrant Security.
- 19 -
8.8 Dividends and Other Distributions. In the event that the Company shall
at any time prior to the exercise of all Warrants declare a dividend (other than
a dividend consisting solely of shares of Common Stock) or otherwise distribute
to its stockholders any assets, property, rights, evidences of indebtedness,
securities (other than shares of Common Stock), whether issued by the Company or
by another, or any other thing of value, the Holders of the unexercised Warrants
shall
9. Exchange and Replacement of Warrant Certificates. Each Warrant
Certificate is exchangeable without expense, upon the surrender thereof by the
registered Holder at the principal executive office of the Company, for a new
Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Warrant Securities in such denominations as
shall be designed by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of any Warrant Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
10. Elimination of Fractional Interests. The Company shall not be required
to issue fractional shares of Common Stock or Underlying Warrants upon the
exercise of Warrants. Warrants may only be exercised in such multiples as are
required to permit the issuance by the Company of one or more whole shares of
Common Stock and/or Underlying Warrants. If one or
- 20 -
more Warrants shall be presented for exercise in full at the same time by the
same Holder, the number of whole shares of Common Stock or Underlying Warrants
which shall be issuable upon such exercise thereof shall be computed on the
basis of the aggregate number of shares of Common Stock and/or Underlying
Warrants purchasable on exercise of the Warrants so presented. If any fraction
of a share of Common Stock or Underlying Warrants would, except for the
provisions provided herein, be issuable on the exercise of any Warrant (or
specified portion thereof), the Company shall pay an amount in cash equal to
such fraction multiplied by the then current market value of a share of Common
Stock or Underlying Warrants, determined as follows:
(1) If the Common Stock or Underlying Warrant, as the case may
be, is listed, or admitted to unlisted trading privileges on the New York Stock
Exchange ("NYSE") or the American Stock Exchange ("AMEX"), or is traded on the
NNM, the current market value of a share of Common Stock or Underlying Warrant,
as the case may be, shall be the closing sale price of the Common Stock or the
Underlying Warrant, as the case may be, at the end of the regular trading
session on the last business day prior to the date of exercise of the Warrants
on whichever of such exchanges or NNM had the highest average daily trading
volume for the Common Stock or the Underlying Warrant, as the case may be, on
such day; or
(2) If the Common Stock or the Underlying Warrant, as the case
may be, is not listed or admitted to unlisted trading privileges, on either the
NYSE or the AMEX and is not traded on NNM, but is quoted or reported on Nasdaq,
the current market value of a share of Common Stock or the Underlying Warrant,
as the case may be, shall be the average of the representative closing bid and
asked prices (or the last sale price, if then reported by Nasdaq) of the Common
Stock or the Underlying Warrant, as the case may be, at the end of the regular
trading session on the last business day prior to the date of exercise of the
Warrants as quoted or reported on Nasdaq, as the case may be; or
(3) If the Common Stock or the Underlying Warrant, as the case
may be, is not listed, or admitted to unlisted trading privileges, on either of
the NYSE or the AMEX, and is not traded on NNM or quoted or reported on Nasdaq,
but is listed or admitted to unlisted trading privileges on the BSE or another
national securities exchange (other than the NYSE or the AMEX), the current
market value of a share of Common Stock or Underlying Warrant, as the case may
be, shall be the
- 21 -
closing sale price of the Common Stock or the Underlying Warrant, as the case
may be, at the end of the regular trading session on the last business day prior
to the date of exercise of the Warrants on whichever of such exchanges has the
highest average daily trading volume for the Common Stock or the Underlying
Warrant, as the case may be, on such day; or
(4) If the Common Stock or the Underlying Warrant, as the case may be,
is not listed or admitted to unlisted trading privileges on any national
securities exchange, or listed for trading on NNM or quoted or reported on
Nasdaq, but is traded in the over-the-counter market, the current market value
of a share of Common Stock or the Underlying Warrant, as the case may be, shall
be the average of the last reported bid and asked prices of the Common Stock or
the Underlying Warrant, as the case may be, reported by the National Quotation
Bureau, Inc. on the last business day prior to the date of exercise of the
Warrants; or
(5) If the Common Stock or the Underlying Warrant, as the case may be,
is not listed, admitted to unlisted trading privileges on any national
securities exchange, or listed for trading on NNM or quoted or reported on
Nasdaq, and bid and asked prices of the Common Stock or the Underlying Warrant,
as the case may be, are not reported by the National Quotation Bureau, Inc., the
current market value of a share of Common Stock or the Underlying Warrant, as
the case may be, shall be an amount, not less than the book value thereof as of
the end of the most recently completed fiscal quarter of the Company ending
prior to the date of exercise, determined in accordance with generally
acceptable accounting principles, consistently applied.
11. Reservation and Listing of Securities. The Company shall at all times
reserve and keep available out of its authorized shares of Common Stock, solely
for the purpose of issuance upon the exercise of the Warrants and the Underlying
Warrants, such number of shares of Common Stock or other securities, properties
or rights as shall be issuable upon the exercise thereof. The Company covenants
and agrees that, upon exercise of the Warrants and payment of the Exercise Price
therefor, all shares of Common Stock and other Securities issuable upon such
exercise shall be duly and validly issued, fully paid, non-assessable and not
subject to the preemptive rights of any stockholder. The Company further
covenants and agrees that upon exercise of the Underlying Warrants underlying
the Warrants and payment of the respective Underlying Warrant exercise price
- 22 -
therefor, all shares of Common Stock and other securities issuable upon such
exercises shall be duly and validly issued, fully paid, non- assessable and not
subject to the preemptive rights of any stockholder. As long as the Warrants
shall be outstanding, the Company shall use its best efforts to cause all shares
of Common Stock issuable upon the exercise of the Warrants and Underlying
Warrants and all Underlying Warrants underlying the Warrants to be listed
(subject to official notice of issuance) on all securities exchanges on which
the Common Stock or the Underlying Warrants issued to the public in connection
herewith may then be listed and/or quoted on NNM.
12. Notices to Warrant Holders. Nothing contained in this Agreement shall
be construed as conferring upon the Holders the right to vote or to consent or
to receive notice as a stockholder in respect of any meetings of stockholders
for the election of directors or any other matter, or as having any rights
whatsoever as a stockholder of the Company. If, however, at any time prior to
the expiration of the Warrants and their exercise, any of the following events
shall occur:
(a) the Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable other than in cash, or a cash dividend or distribution
payable other than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company; or
(b) the Company shall offer to all the holders of its Common Stock any
additional shares of capital stock of the Company or securities convertible into
or exchangeable for shares of capital stock of the Company, or any option, right
or warrant to subscribe therefor; or (c) a dissolution, liquidation or winding
up of the Company (other than in connection with a consolidation or merger) or a
sale of all or substantially all of its property, assets and business as an
entirety shall be proposed; then, in any one or more of said events, the Company
shall give written notice of such event at least fifteen (15) 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 such dividend, distribution,
convertible or exchangeable securities or subscription rights, or entitled to
vote on such proposed dissolution, liquidation, winding up or sale. Such notice
shall specify such record date or the date of closing the transfer book, as the
case may be. Failure to give such notice or any defect therein shall not affect
the validity of any action taken in connection with the declaration or payment
of any
- 23 -
such dividend, or the issuance of any convertible or exchangeable securities, or
subscription rights, options or warrants, or any proposed dissolution,
liquidation, winding up or sale.
13. Underlying Warrants.
The form of the certificate representing Underlying Warrants (and the form
of election to purchase shares of Common Stock upon the exercise of Underlying
Warrants and the form of assignment printed on the reverse thereof) shall be
substantially as set forth in Exhibit "A" to the Redeemable Warrant Agreement
provided, however, that the Underlying Warrants will be subject to redemption
only after the Warrants have been exercised and the Underlying Warrants are
outstanding. Two Underlying Warrants shall entitle the Holder to purchase one
fully paid and non-assessable share of Common Stock at an initial purchase price
of $4.00 from ___________, 1997 until 5:00 P.M. New York time on ___________,
2001 at which time the Underlying Warrants shall expire. The exercise price of
the Underlying Warrants and the number of shares of Common Stock issuable upon
the exercise of the Underlying Warrants are subject to adjustment, whether or
not the Warrants have been exercised and the Underlying Warrants have been
issued, in the manner and upon the occurrence of the events set forth in Section
8 of the Redeemable Warrant Agreement, which is hereby incorporated herein by
reference and made a part hereof as if set forth in its entirety herein. Subject
to the provisions of this Agreement and upon issuance of the Underlying
Warrants, each registered holder of such Underlying Warrants shall have the
right to purchase from the Company (and the Company shall issue to such
registered holders) up to the number of fully paid and non-assessable shares of
Common Stock (subject to adjustment as provided herein and in the Redeemable
Warrant Agreement), free and clear of all preemptive rights of stockholders,
provided that such registered holder complies with the terms governing exercise
of the Underlying Warrants set forth in the Redeemable Warrant Agreement, and
pays the applicable exercise price, determined in accordance with the terms of
the Redeemable Warrant Agreement. Upon exercise of the Underlying Warrants, the
Company shall forthwith issue to the registered holder of any such Underlying
Warrants in his name or in such name as may be directed by him, certificates for
the number of shares of Common Stock so purchased. Except as otherwise provided
herein and in Section 6.1 hereof, the Underlying Warrants shall be governed in
all respects by the terms of the
- 24 -
Redeemable Warrant Agreement, except that any notice of redemption that the
Company may issue with respect to the Redeemable Warrants shall be applicable to
the Underlying Warrants subject to the first sentence of this Section 13. The
Underlying Warrants shall be transferable in the manner provided in the
Redeemable Warrant Agreement, and upon any such transfer, a new Underlying
Warrant to, and agrees with, the Holder(s) that without the prior written
consent of the Holder(s), which will not be unreasonably withheld, the
Redeemable Warrant Agreement will not be modified, amended, canceled, altered or
superseded, and that the company will send to each Holder, irrespective of
whether or not the Warrants have been exercised, any and all notices required by
the Redeemable Warrant Agreement to be sent to holders of Underlying Warrants.
14. Notices.
All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed to have been duly made and sent when delivered,
or mailed by registered or certified mail, return receipt requested:
(a) If to the registered Holder of the Warrants, to the address of
such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3 hereof or
to such other address as the Company may designate by notice to the Holders.
15. Supplements and Amendments. The Company and the Representative may from
time to time supplement or amend this Agreement without the approval of any
Holders of Warrant Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or inconsistent
with any provisions herein, or to make any other provisions in regard to matters
or questions arising hereunder which the Company and the Representative may deem
necessary or desirable and which the Company and the Representative deem shall
not adversely affect the interests of the Holders of Warrant Certificates.
- 25 -
16. Successors. All the covenants and provisions of this Agreement shall be
binding upon and inure to the benefit of the Company, the Holders and their
respective successors and assigns hereunder.
17. Termination. This Agreement shall terminate at the close of business on
________________, 2003. Notwithstanding the foregoing, the indemnification
provisions of Section 7 shall survive such termination until the close of
business on _____________, 2005.
18. Governing Law; Submission to Jurisdiction. This Agreement and each
Warrant Certificate issued hereunder 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 without giving effect to the rules of
said State governing the conflicts of laws.
The Company, the Representative and any other registered Holders hereby
agree that any action, proceeding or claim against it arising out of, or
relating in any way to, this Agreement shall be brought and enforced in the
courts of the State of New York or of the United States of America for the
Southern District of New York, and irrevocably submits to such jurisdiction,
which jurisdiction shall be exclusive. The Company, the Representative and any
other registered Holders hereby irrevocably waive any objection to such
exclusive jurisdiction or inconvenient forum. Any such process or summons to be
served upon any of the Company, the Representative and the Holders (at the
option of the party bringing such action, proceeding or claim) may be served by
transmitting a copy thereof, by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address set forth in Section
14 hereof. Such mailing shall be deemed personal service and shall be legal and
binding upon the party so served in any action, proceeding or claim. The
Company, the Representative and any other registered Holders agree that the
prevailing party(ies) in any such action or proceeding shall be entitled to
recover from the other party(ies) all of its'/their reasonable legal costs and
expenses relating to such action or proceeding and/or incurred in connection
with the preparation therefor.
- 26 -
19. Entire Agreement; Modification. This Agreement (including the
Underwriting Agreement and the Redeemable Warrant Agreement to the extent
portions thereof are referred to herein) contains the entire understanding
between the parties hereto with respect to the subject matter hereof and may not
be modified or amended except by a writing duly signed by the party against whom
enforcement of the modification or amendment is sought.
20. Severability. If any provision of this Agreement shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Agreement.
21. Captions. The caption headings of the Sections of this Agreement are
for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
22. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Representative and any other registered Holder(s) of the Warrant Certificates or
Warrants Securities any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole benefit of the Company and
the Representative and any other registered Holders of Warrant Certificates or
Warrant Securities.
- 27 -
23. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
NEW YORK HEALTH CARE, INC.
By:_______________________________
Name: Xxxxx Xxxxx
Title: President
Attest:
-------------------------
Name:
Title:
RAS SECURITIES CORP.
By:_______________________________
Name:
Title:
- 28 -
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., NEW YORK TIME, _________, 2001
No. W- Warrants to Purchase
_______ Shares of Common Stock
WARRANT CERTIFICATE
This Warrant Certificate certifies that ___________, or registered
assigns, is the registered holder of ^____Warrants to purchase initially, at any
time from __________, 1997 until 5:00 p.m. New York time on ___________, 2001
("Expiration Date"), up to ______ fully-paid and non-assessable shares of common
stock, $.01 par value ("Common Stock") of New York Health Care, Inc., a New York
corporation (the "Company"), at the initial exercise price, subject to
adjustment in certain events (the "Exercise Price"), of $4.80 per share of
Common Stock upon surrender of this Warrant Certificate and payment of the
Exercise Price at an office or agency of the Company, but subject to the
conditions set forth herein and in the Representative's Warrant Agreement dated
as of ______________, 1996 between the Company and RAS SECURITIES CORP. (the
"Representative's Warrant Agreement"). Payment of the Exercise Price shall be
made by certified or official bank check in New York Clearing House funds
payable to the order of the Company or by surrender of this Warrant Certificate.
No Warrant may be exercised after 5:00 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, hereby shall thereafter be void.
- 29 -
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Representative's Warrant
Agreement, which Representative's Warrant Agreement is hereby incorporated by
reference in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of the Warrants.
The Representative's Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price and the type and/or number of the Company's
securities issuable thereupon may, subject to certain conditions, be adjusted.
In such event, the Company will, at the request of the holder, issue a new
Warrant Certificate evidencing the adjustment in the Exercise Price and the
number and/or type of securities issuable upon the exercise of the Warrants;
provided, however, that the failure of the Company to issue such new Warrant
Certificates shall not in any way change, alter, or otherwise impair, the rights
of the holder as set forth in the Representative's Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate of
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the
Representative's Warrant Agreement, without any charge except for any tax or
other governmental charge imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such numbered unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Representative's Warrant Agreement shall have the meanings assigned to them in
the Representative's Warrant Agreement.
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IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated as of , 1996
NEW YORK HEALTH CARE, INC.
By:________________________________
Name: Xxxxx Xxxxx
Title: President
Attest:
-------------------------
Name: Xxxxx Xxxxxxxxx
Title: Secretary
- 31 -
EXHIBIT B
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., NEW YORK TIME, __________, 2001
No. W- Warrants to Purchase
Underlying Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that ___________, or registered assigns,
is the registered holder of _________ Warrants to purchase initially, at any
time from ___________, 1997 until 5:00 p.m. New York time on _________, 2001
("Expiration Date"), up to _______ warrants ^(two such Underlying Warrants
entitling the owner to purchase one fully-paid and non-assessable share of
common stock, $.01 par value ("Common Stock") of New York Health Care, Inc., a
New York corporation (the "Company")), at the initial exercise price, subject to
adjustment in certain events (the "Exercise Price"), of $.12 per Underlying
Warrant upon surrender of this Warrant Certificate and payment of the Exercise
Price at an office or agency of the Company, but subject to the conditions set
forth herein and in the Representative's Warrant Agreement dated as of
________________, 1996 between the Company and RAS SECURITIES CORP. (the
"Representative's Warrant Agreement"). Payment of the Exercise Price shall be
made by certified or official bank check in New York Clearing House funds
payable to the order of the Company or by surrender of this Warrant Certificate.
No Warrant may be exercised after 5:00 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, hereby shall thereafter be void.
- 32 -
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Representative's Warrant
Agreement, which Representative's Warrant Agreement is hereby incorporated by
reference in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of the Warrants.
The Representative's Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price and the type and/or number of the Company's
securities issuable thereupon may, subject to certain conditions, be adjusted.
In such event, the Company will, at the request of the holder, issue a new
Warrant Certificate evidencing the adjustment in the Exercise Price and the
number and/or type of securities issuable upon the exercise of the Warrants;
provided, however, that the failure of the Company to issue such new Warrant
Certificates shall not in any way change, alter, or otherwise impair, the rights
of the holder as set forth in the Representative's Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate of
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the
Representative's Warrant Agreement, without any charge except for any tax or
other governmental charge imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such numbered unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Representative's Warrant Agreement shall have the meanings assigned to them in
the Representative's Warrant Agreement.
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IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated as of ______________, 1996
NEW YORK HEALTH CARE, INC.
By:____________________________
Name: Xxxxx Xxxxx
Title: President
Attest:
-------------------------------
Name:
Title:
RAS SECURITIES CORP.
By:____________________________
Name:
Title:
- 34 -
[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.1]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase:
______________ Shares
______________ Underlying Warrants
and herewith tenders in payment for such securities a certified or official bank
check payable in New York Clearing House Funds to the order of New York Health
Care, Inc., in the amount of $_________, all in accordance with the terms of
Section 3.1 of the Representative's Warrant Agreement dated as of
___________________, 1996 between New York Health Care, Inc., and RAS Securities
Corp. The undersigned request that a certificate for such Securities be
registered in the name of _______________________________________ whose address
is ______________________________________________ and that such Certificate be
delivered to ^__________________whose address is
-----------------------------------------------.
Signature _________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the Warrant
Certificate.)
--------------------------------
(Insert Social Security or Other Identifying Number of Holder)
- 35 -
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED _____________________________ hereby sells, assigns and
____________ unto
(Please print name and address of transferee)
_________ Warrant Certificate, together with all right, title and interest
therein, and does hereby reasonably constitute and appoint ________________ as
Attorney, to transfer the within Warrant Certificate on the books of the
within-named Company, with full power of substitution.
Date: ___________________
Signature:__________________________
(Signature must conform in all respects to name
of holder as specified on the face of the Warrant
Certificate.)
-----------------------------------
(Insert Social Security or Other Identifying
Number of Assignee)
- 36 -
