Exhibit 1.02
COMMUNITY CARE SERVICES, INC.
AND
MAIDSTONE FINANCIAL, INC.
UNDERWRITERS'
WARRANT AGREEMENT
UNDERWRITERS' WARRANT AGREEMENT dated as of _______________,
1996 by and between COMMUNITY CARE SERVICES, INC. (the "Company") and MAIDSTONE
FINANCIAL, INC. ("Maidstone" or the "Representative"), as the Representative of
the underwriting group. The underwriting group is referred to collectively
herein as the "Underwriters."
W I T N E S S E T H:
WHEREAS, the Company proposes to issue to the Underwriters
warrants (the "Underwriters' Warrants") to purchase up to 130,000 shares of the
Company's common stock, par value $.01 per share (the "Common Stock") and/or up
to 130,000 Class A Redeemable Common Stock Purchase Warrants (the "Redeemable
Warrants") each exercisable to purchase one share of Common Stock.
WHEREAS, the Underwriters have agreed, pursuant to the
underwriting agreement (the "Underwriting Agreement") dated __________, 1996, by
and between the Underwriters and the Company, to act as the underwriters in
connection with the Company's proposed initial public offering (the "Initial
Public Offering") of 1,300,000 shares of Common Stock and 1,300,000 Redeemable
Warrants (the "Offering Securities"), such Offering Securities being identical
to the securities issuable upon exercise of the Underwriters' Warrants (the
"Securities"); and
1
WHEREAS, the Underwriters' Warrants to be issued pursuant to
this Agreement will be issued on the First Closing Date (as such term is defined
in the Underwriting Agreement) by the Company to the Underwriters in
consideration for, and as part of, the Underwriters' compensation in connection
with the Underwriters acting as the underwriters pursuant to the Underwriting
Agreement;
NOW, THEREFORE, in consideration of the promises, the payment
by the Underwriters to the Company of Ten Dollars ($10.00), 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 Holder (as defined in Section 3 below) is hereby
granted the right to purchase, at any time from ________________, 1997 until
5:00 p.m., New York time, on ____________, 2001, an aggregate of up to 130,000
shares of Common Stock and/or 130,000 Redeemable Warrants, at an initial
purchase price (subject to adjustment as provided in Section 8 hereof) of $5.61
per share of Common Stock and $.11 per Redeemable Warrant (110% of the Initial
Public Offering price per Offering Security), subject to the terms and
conditions of this Agreement. The Securities issuable upon exercise of the
Underwriters' Warrants are sometimes referred to herein as the "Underwriters'
Securities."
2. Warrant Certificates. The warrant certificate (the
"Underwriters' Warrant Certificate") to be delivered pursuant to this Agreement
shall be in the form set forth in Exhibit A attached hereto and made a part
hereof, with such appropriate insertions, omissions, substitutions, and other
variations as required or permitted by this Agreement.
2
3. Exercise of Underwriters' Warrants. The Underwriters'
Warrants are exercisable during the term set forth in Section 1 hereof payable
by certified or cashier's check or money order in lawful money of the United
States. Upon surrender of an Underwriter's Warrant Certificate with the annexed
Form of Election to Purchase duly executed, together with payment of the
Purchase Price (as defined in Section 6 hereof) for the Underwriter's Securities
(and such other amounts, if any, arising pursuant to Section 4 hereof) at the
Company's principal office in New York located at 00 Xxxxxxx Xxxxx, Xx. Xxxxxx,
Xxx Xxxx 00000, the registered holder of an Underwriters' Warrant Certificate
("Holder" or "Holders") shall be entitled to receive a certificate or
certificates for the Underwriters' Securities so purchased. The purchase rights
represented by each Underwriters' Warrant Certificate are exercisable at the
option of the Holder or Holders thereof, in whole or in part as to Underwriters'
Securities. The Underwriters' Warrants may be exercised to purchase all or any
part of the Underwriters' Securities represented thereby. In the case of the
purchase of less than all the Underwriters' Securities purchasable on the
exercise of the Underwriters' Warrants represented by an Underwriters' Warrant
Certificate, the Company shall cancel the Underwriters' Warrant Certificate
represented thereby upon the surrender thereof and shall execute and deliver a
new Underwriters' Warrant Certificate of like tenor for the balance of the
Underwriters' Securities purchasable thereunder.
4. Issuance of Certificates. Upon the exercise of the
Underwriters' Warrants and payment of the Purchase Price therefor, the issuance
of certificates representing the Underwriters' Securities or other securities,
properties or rights underlying such Underwriters' Warrants, shall be made
forthwith (and in any event within five (5) business days thereafter) without
further
3
charge to the Holder 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 Underwriters' Warrant Certificates and the certificates
representing the Underwriters' Securities or other securities, property or
rights (if such property or rights are represented by certificates) 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, attested to by the manual or facsimile signature
of the then present Secretary or Assistant Secretary or Treasurer or Assistant
Treasurer of the Company. Underwriters' Warrant Certificates shall be dated the
date of issuance thereof by the Company upon initial issuance, transfer or
exchange.
5. Restriction On Transfer of Underwriters' Warrants. The
Holder of an Underwriters' Warrant Certificate (and its Permitted Transferee, as
defined below), by its acceptance thereof, covenants and agrees that the
Underwriters' Warrants are being acquired as an investment and not with a view
to the distribution thereof; that the Underwriters' Warrants may be sold,
transferred, assigned, hypothecated or otherwise disposed of, in whole or in
part, to any person (a "Permitted Transferee"), provided such transfer,
assignment, hypothecation or other disposition is made in accordance with the
provisions of the Securities Act of 1933, as amended (the "Act"); and provided,
further, that until ____________, 1997 (one year following the effective
4
date of the Initial Public Offering), only officers and partners of the
Underwriters, or any Initial Public Offering selling group member and their
respective officers and partners, shall be Permitted Transferees.
6. Purchase Price.
(a) Initial and Adjusted Purchase Price. Except as
otherwise provided in Section 8 hereof, the initial purchase price of the
Underwriters' Securities shall be $5.61 per share of Common Stock and $.11 per
Redeemable Warrant. The adjusted purchase price shall be the price which shall
result from time to time from any and all adjustments of the initial purchase
price in accordance with the provisions of Section 8 hereof.
(b) Purchase Price. The term "Purchase Price" herein
shall mean the initial purchase price or the adjusted purchase price, depending
upon the context.
7. Registration Rights.
(a) Registration Under the Securities Act of 1933.
The Underwriters' Warrants have not been registered under the Act. The
Underwriters' Warrant Certificates shall bear the following legend:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"), and may not be offered for sale or sold except
pursuant to (i) an effective registration statement under the
Act, or (ii) an opinion of counsel, if such opinion and
counsel shall be reasonably satisfactory to counsel to the
issuer, that an exemption from registration under the Act is
available.
(b) Demand Registration. (1) At any time commencing
on the first anniversary of and expiring on the fifth anniversary of the
effective date of the Company's Registration Statement relating to the Initial
Public Offering (the "Effective Date"), the Holders of a Majority (as
hereinafter defined) in interest of the Underwriters' Warrants, or the Majority
5
in interest of the Underwriters' Securities (assuming the exercise of all of the
Underwriters' Warrants) shall have the right, exercisable by written notice to
the Company, to have the Company prepare and file with the U.S. Securities and
Exchange Commission (the "Commission"), solely on one (1) occasion, a
registration statement on Form SB-2 (or other appropriate form), 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, for a period
of nine (9) months, of the Underwriters' Securities by such Holders and any
other Holders of the Underwriters' Warrants and/or the Underwriters' Securities
who notify the Company within fifteen (15) business days after receipt of the
notice described in Section 7(b)(2). The Holders of the Underwriters' Warrants
may demand registration without exercising the Underwriters' Warrants, and are
never required to exercise same.
(2) The Company covenants and agrees to give written
notice of any registration request under this Section 7(b) by any Holders to all
other registered Holders of the Underwriters' Warrants and the Underwriters'
Securities within ten (10) calendar days from the date of the receipt of any
such registration request.
(3) For purposes of this Agreement, the term
"Majority" in reference to the Holders of the Underwriters' Warrants or
Underwriters' Securities, shall mean in excess of fifty percent (50%) of the
then outstanding Underwriters' Warrants or Underwriters' Securities that (i) are
not held by the Company, an affiliate, officer, employee or agent thereof or any
of their respective affiliates, members of their family, persons acting as
nominees or in conjunction therewith, or (ii) have not been resold to the public
pursuant to a registration statement filed with the Commission under the Act.
6
(c) Piggyback Registration. (1) If, at any time within the
period commencing on the first anniversary and expiring on the fifth anniversary
of the Effective Date, the Company should file a registration statement with the
Commission under the Act (other than in connection with a merger or other
business combination transaction or pursuant to Form S-8) it will give written
notice at least thirty (30) calendar days prior to the filing of each such
registration statement to the Underwriters and to all other Holders of the
Underwriters' Warrants and/or the Underwriters' Securities of its intention to
do so. If either of the Underwriters or other Holders of the Underwriters'
Warrants and/or the Underwriters' Securities notify the Company within twenty
(20) calendar days after receipt of any such notice of its or their desire to
include any Underwriters' Securities in such proposed registration statement,
the Company shall afford the Underwriters and such Holders of the Underwriters'
Warrants and/or Underwriters' Securities the opportunity to have any such
Underwriters' Securities registered under such registration statement.
Notwithstanding the provisions of this Section 7(c)(1) and the provisions of
Section 7(d), the Company shall have the right at any time after it shall have
given written notice pursuant to this Section 7(c)(1) (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.
(2) If the underwriter of an offering to which the
above piggyback rights apply objects to such rights, such objection shall
preclude such inclusion. However, in such event, the Company will, within nine
(9) months of completion of such subsequent underwriting, file at the expense of
the Company, a registration statement so as to permit a public offering and
sale, for a period of nine (9) months, of such excluded Underwriters'
Securities, which shall be in addition to any registration statement required to
be filed pursuant to Section 7(b).
7
(d) Covenants of the Company With Respect to Registration. In
connection with any registrations under Sections 7(b) and 7(c) hereof, the
Company covenants and agrees as follows:
(1) The Company shall use its best efforts to file a
registration statement within forty-five (45) calendar days of receipt of any
demand therefor pursuant to Section 7(b); provided, however, that the Company
shall not be required to produce audited or unaudited financial statements for
any period prior to the date such financial statements are required to be filed
in a report on Form 10-KSB or Form 10-QSB, as the case may be. The Company shall
use its best efforts to have any registration statement declared effective at
the earliest possible time, and shall furnish each Holder desiring to sell
Underwriters' Securities such number of prospectuses as shall reasonably be
requested.
(2) The Company shall pay all costs (excluding fees
and expenses of Holders' counsel and any underwriting discounts or selling fees,
expenses or commissions), fees and expenses in connection with the first
registration statement filed pursuant to Sections 7(b) and 7(c) hereof
including, without limitation, the Company's legal and accounting fees, printing
expenses, blue sky fees and expenses.
(3) The Company will use its best efforts to qualify
or register the Underwriters' 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 Holders, 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.
8
(4) The Company shall indemnify the Holders of the
Underwriters' 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
(the "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
provisions pursuant to which the Company has agreed to indemnify the
Underwriters contained in Section 8 of the Underwriting Agreement.
(5) The Holders of the Underwriters' Securities to be
sold pursuant to a registration statement, and their successors and assigns,
shall 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 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 8 of the Underwriting Agreement pursuant to which the
Underwriters have agreed to indemnify the Company.
(6) Nothing contained in this Agreement shall be
construed as requiring the Holders to exercise their Underwriters' Warrants
prior to the initial filing of any registration statement or the effectiveness
thereof.
(7) The Company shall not be entitled to include any
securities other than the Underwriters' Securities in any registration statement
filed pursuant to Section 7(b)
9
hereof without the prior written consent, which consent shall not be
unreasonably withheld, of the Holders of the Underwriters' Warrants and
Underwriters' Securities representing a Majority of such securities (assuming
exercise of all of the Underwriters' Warrants). Except that the Company may
include the 220,000 shares registered on behalf of certain individuals included
in the Registration Statement without the consent of the Representative.
(8) The Company shall furnish to a designated
representative of the Holders participating in the offering and to each
underwriter, if any, a signed counterpart, addressed to the Company or the
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) if such registration includes an underwritten
public offering a copy of the "cold comfort" letter dated the effective date of
such registration statement signed by each independent public accountant who has
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' letters, 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, 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.
(9) The Company shall as soon as practicable after
the effective date of the registration statement, 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
10
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.
(10) The Company shall deliver promptly to each
Holder participating in the offering requesting the correspondence described
below and any managing underwriter copies of all correspondence between the
Commission and the Company, its counsel or auditors with respect to the
registration statement and permit each Holder and underwriter 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 National
Association of Securities Dealers, Inc. ("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
shall reasonably request.
(11) The Company shall enter into an underwriting
agreement with the managing underwriter selected for such underwriting by
Holders holding a Majority of the Underwriters' Securities requested to be
included in such underwriting, provided, however that (i) such managing
underwriter shall be reasonably acceptable to the Company, except that in
connection with an offering for which the Holders have piggyback rights, the
Company shall have the sole right to select the managing underwriter or
underwriters, and (ii) the Holders shall be responsible for any selling fees or
commissions in connection with such underwriting. Such underwriting agreement
shall be satisfactory in form and substance to the Company, a Majority of such
Holders (in respect of a registration under Section 7(b) only) and such managing
11
underwriter, 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 Underwriters'
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.
e. Further Registrations. The Company will cooperate
with the Holders of the Underwriters' Warrants and Underwriters' Securities in
preparing and signing any registration statement, in addition to the
registration statements discussed above, required in order to sell or transfer
the Underwriters' Securities and will supply all information required therefor,
but all of such additional registration statement expenses including legal and
accounting fees will be prorated between the Company and the Holders of the
Underwriters' Warrants and Underwriters' Securities according to the aggregate
sales price of the securities being issued. The provisions of Section 7(d) other
than subsection (2) shall apply to any such registration statement.
8. Adjustments to Purchase Price and Number of Securities.
(a) Computation of Adjusted Purchase Price. Except as
hereinafter provided, in case the Company shall at any time after the date
hereof issue or sell any shares of Common Stock (other than the issuances
referred to in Section 8(g) hereof), including shares held in the Company's
treasury, for a consideration per share less than the lesser of the Purchase
Price in effect immediately prior to the issuance or sale of such shares or the
"Market Price" (as defined in Section 8(a)(6) hereof) per share of Common Stock
on the date immediately prior to the
12
issuance or sale of such shares, or without consideration, then forthwith upon
any such issuance or sale, the Purchase Price shall (until another such issuance
or sale) be reduced to the price (calculated to the nearest full cent)
determined by dividing (1) the product of (a) the Purchase Price in effect
immediately before such issuance or sale and (b) the sum of (i) the total number
of shares of Common Stock outstanding immediately prior to such issuance or
sale, and (ii) the number of shares determined by dividing (A) the aggregate
consideration, if any, received by the Company upon such sale or issuance, by
(B) the lesser of (x) the Market Price, and (y) the Purchase Price, in effect
immediately prior to such issuance or sale; by (2) the total number of shares of
Common Stock outstanding immediately after such issuance or sale provided,
however, that in no event shall the Purchase Price be adjusted pursuant to this
computation to an amount in excess of the Purchase 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(c) hereof.
For the purposes of this Section 8, the term "Purchase Price"
shall mean the Purchase Price of the Underwriters' Securities 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(a), the following provisions shall be applicable:
(1) 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), before
deducting therefrom any compensation paid or discount allowed in the sale or
purchase thereof
13
by underwriters or dealers or others performing similar services, or any
expenses incurred in connection therewith.
(2) In case of the issuance or sale (otherwise 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.
(3) 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.
(4) 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 other than cash immediately prior to the close of business on
the date fixed for the determination of security holders entitled to receive
such shares, and the value of the consideration allocable to such shares of
Common Stock shall be determined as provided in Section 8(a)(2).
(5) The number of shares of Common Stock at any one
time deemed to be issued and outstanding, as determined for the purposes of
Sections 8(b)(1) and 8(b)(2) hereof, shall include the aggregate number of
shares of Common Stock 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.
14
(6) As used herein, the phrase "Market Price" at any
date shall be deemed to be the last reported sale price, or, in the case no such
reported sale takes place on such day, the average of the last reported sales
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, if the Common Stock is not listed or admitted
to trading on any national securities exchange, the average closing bid price as
furnished by the NASD through the NASD Automated Quotation System ("NASDAQ") or
similar organization if NASDAQ is no longer reporting such information, or if
the Common Stock is not quoted on NASDAQ, as determined in good faith by
resolution of the Board of Directors of the Company, based on the best
information available to it.
(b) Options, Rights, Warrants and Convertible and Exchangeable
Securities. Except in the case of the Company issuing rights to subscribe for
shares of Common Stock distributed to all the stockholders of the Company and
Holders of Underwriters' Warrants, if the Company shall at any time after the
date hereof issue options, rights or warrants to purchase shares of Common
Stock, or issue any securities convertible into or exchangeable for shares of
Common Stock (other than the issuances referred to in Section 8(g) hereof), (i)
for a consideration per share less than the lessor of (a) the Purchase Price in
effect immediately prior to the issuance of such options, rights or warrants, or
such convertible or exchangeable securities or (b) the Market Price, or (ii)
without consideration, the Purchase 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(a) hereof, provided that:
15
(1) The aggregate maximum number of shares of Common
Stock 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 Underwriters'
Warrants), if any, received by the Company for such options, rights or warrants;
provided, however, that upon the expiration or other termination of such
options, rights or warrants, if any thereof shall not have been exercised, the
number of shares of Common Stock deemed to be issued and outstanding pursuant to
this Section 8(b)(1) (and for the purposes of Section 8(a)(5) hereof) shall be
reduced by such number of shares as to which options, warrants and/or rights
shall have expired or terminated unexercised, and such number of shares shall no
longer be deemed to be issued and outstanding, and the Purchase Price then in
effect shall forthwith be readjusted and thereafter be the price which it would
have been had adjustment been made on the basis of the issuance only of shares
actually issued or issuable upon the exercise of those options, rights or
warrants as to which the exercise rights shall not be expired or terminated
unexercised.
(2) 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 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 Underwriters'
Warrants) received by the Company for such securities, plus the minimum
consideration, if any, receivable by the Company upon the conversion or exchange
thereof; provided, however, that
16
upon the termination of the right to convert or exchange such convertible or
exchangeable securities (whether by reason of redemption or otherwise), the
number of shares deemed to be issued and outstanding pursuant to this Section
8(b)(2) (and for the purpose of Section 8(a)(5) hereof) shall be reduced by such
number of shares as to which the conversion or exchange rights shall have
expired or terminated unexercised, and such number of shares shall no longer be
deemed to be issued and outstanding and the Purchase Price then in effect shall
forthwith be readjusted and thereafter be the price which it would have been had
adjustment been made on the basis of the issuance only of the shares actually
issued or issuable upon the conversion or exchange of those convertible or
exchangeable securities as to which the conversion or exchange rights shall not
have expired or terminated unexercised.
(3) If any change shall occur in the price per share
provided for in any of the options, rights or warrants referred to in Section
8(b)(1), or in the price per share at which the securities referred to in
Section 8(b)(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.
(c) Subdivision and Combination. In case the Company shall at
any time issue any shares of Common Stock in connection with a stock dividend in
shares of Common Stock or subdivide or combine the outstanding shares of Common
Stock, the Purchase Price shall
17
forthwith be proportionately decreased in the case of a stock dividend or a
subdivision or increased in the case of a combination.
(d) Adjustment in Number of Securities. Upon each adjustment
of the Purchase Price pursuant to the provisions of this Section 8, the number
of Underwriters' Securities issuable upon the exercise of the Underwriters'
Warrant shall be adjusted to the nearest whole share by multiplying a number
equal to the Purchase Price in effect immediately prior to such adjustment by
the number of Underwriters' Securities issuable upon exercise of the
Underwriters' Warrants immediately prior to such adjustment and dividing the
product so obtained by the adjusted Purchase Price.
(e) Definition of Common Stock. For the purpose of this
Agreement, the term "Common Stock" shall mean the class of stock designated as
Common Stock in the Articles of Incorporation, of the Company as it may be
amended as of the date hereof.
(f) Reclassification, Merger or Consolidation. The Company
will not merge, reorganize or take any other action which would terminate the
Underwriters' Warrants without first making adequate provision for the
Underwriters' Warrants. In case of any reclassification or change of the
outstanding shares of Common Stock (other than a change in par value to no par
value, or from nor par value to par value, or as a result of a subdivision or
combination), or 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 in which the Company is the continuing corporation and
which does not result in any reclassification or change of the outstanding
Common Stock except a change as a result of a subdivision or combination of such
shares or a change in par value, as aforesaid), or in the case of a sale or
conveyance to another corporation or other entity of the property of the Company
as
18
an entirety, the Holders of each Underwriters' Warrant then outstanding or to be
outstanding shall have the right thereafter (until the expiration of such
Underwriters' Warrant) to purchase, upon exercise of such Underwriters' Warrant,
the kind and number of shares of stock and other securities and property
receivable upon such reclassification, change, consolidation, merger, sale or
conveyance as if the Holders were the owner of the shares of Common Stock
underlying the Underwriters' Warrants immediately prior to any such events at a
price equal to the product of (x) the number of shares issuable upon exercise of
the Underwriters' Warrants and (y) the Purchase Price in effect immediately
prior to the record date for such reclassification, change, consolidation,
merger, sale or conveyance, as if such Holders had exercised the Underwriters'
Warrants. In the event of a consolidation, merger, sale or conveyance of
property, the corporation formed by such consolidation or merger, or acquiring
such property, shall execute and deliver to the Holders a supplemental
underwriter's warrant agreement to such effect. Such supplemental underwriter's
warrant agreement shall provide for adjustments which shall be identical to the
adjustments provided for in this Section 8. The provisions of this Section 8(f)
shall similarly apply to successive consolidations or mergers.
(g) No Adjustment of Purchase Price in Certain Cases.
Notwithstanding any provision to the contrary contained herein, no adjustment of
the Purchase Price shall be made:
(1) Upon the issuance or sale of (i) the
Underwriters' Warrants or the securities underlying the Underwriters' Warrants,
(ii) the securities sold pursuant to the Initial Public Offering or securities
underlying securities sold in the Initial Public Offering or securities to be
sold in a bona fide public offering pursuant to a firm commitment underwriting
or securities underlying securities sold in such firm commitment underwriting,
(iii) the shares
19
issuable pursuant to the options, warrants, rights, stock purchase agreements or
convertible or exchangeable securities outstanding or in effect on the date
hereof as described in the prospectus relating to the Initial Public Offering,
(iv) up to an aggregate of 603,000 shares of Common Stock issuable pursuant to
the Company's stock plans, described in such prospectus, or Shares to be issued
upon exercise of options granted by the Company under stock option plans
subsequently adopted by the Company and (v) securities issued in connection with
the acquisition of, or merger with, any entity by the Company.
(2) If the amount of said adjustments shall aggregate
less than five ($.05) cents for one (1) share of Common Stock; 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 aggregate at least five ($.05) cents for one (1) share
of Common Stock.
9. Exchange and Replacement of Warrant Certificates. Each
Underwriters' Warrant Certificate is exchangeable without expense, upon the
surrender thereof by the registered Holders at the principal executive office of
the Company, for a new Underwriters' Warrant Certificate of like tenor and date
representing in the aggregate the right to purchase the same number of
Underwriters' Securities in such denominations as shall be designated by the
Holders 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
Underwriters' 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
20
of the Underwriters' Warrant Certificates, if mutilated, the Company will make
and deliver a new Underwriters' Warrant Certificate of like tenor, in lieu
thereof.
10. Elimination of Fractional Interests. The Company shall not
be required to issue certificates representing fractions of shares of Common
Stock and/or Redeemable Warrants upon the exercise of the Underwriters'
Warrants, nor shall it be required to issue scrip or pay cash in lieu of
fractional interests; provided, however, that if a Holder exercises all
Underwriters' Warrants held of record by such Holder the fractional interests
shall be eliminated by rounding any fraction to the nearest whole number of
shares of Common Stock or other securities, properties or rights.
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 Underwriters'
Warrants, such number of shares of Common Stock or other securities, properties
or rights as shall be issuable upon the exercise thereof and the exercise of the
Redeemable Warrants. The Company covenants and agrees that, upon exercise of the
Underwriters' Warrants and payment of the Purchase Price therefor, all the
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. As long as the Underwriters' Warrants
shall be outstanding, the Company shall use its best efforts to cause the Common
Stock to be listed (subject to official notice of issuance) on all securities
exchanges on which the Common Stock issued in the Initial Public Offering may
then be listed or quoted.
12. Notices to Underwriters' 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
21
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 Underwriters' 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 otherwise than in cash, or a cash
dividend or distribution payable otherwise 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) calendar 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
books, 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 such dividend, or the issuance
of any convertible
22
or exchangeable securities, or subscription rights, options or
warrants, or any proposed dissolution, liquidation, winding up or sale.
13. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
duly made when delivered, or mailed by registered or certified mail, return
receipt requested:
(a) If to the registered Holders of the Underwriters'
Warrants, to the address of such Holders 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.
14. Supplements and Amendments. The Company and the
Underwriters may from time to time supplement or amend this Agreement without
the approval of any Holders of Underwriters' Warrant Certificates (other than
the Underwriters) 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 Underwriters may deem
necessary or desirable and which the Company and the Underwriters deem shall not
adversely affect the interests of the Holders of Underwriters' Warrant
Certificates.
15. Binding Effect; Successors. All the covenants and
provisions of this Agreement shall be binding upon and inure to the benefit of
the Company, the Underwriters, the Holders and their respective successors and
assigns hereunder.
16. Termination. This Agreement shall terminate at the close
of business on
23
_______________, 2001. Notwithstanding the foregoing, the indemnification
provisions of Section 7 shall survive such termination until the close of
business on the expiration of any applicable statute of limitations.
17. Governing Law; Submission to Jurisdiction. This Agreement
and each Underwriters' 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 Underwriters and the Holders hereby each 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 Underwriters and the 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 Underwriters 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 13 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.
18. Entire Agreement; Modification. This Agreement (including
the Underwriting 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 thereof. Subject to Section 14, this
Agreement may not be modified or amended except by a writing duly signed by
24
the Company and the Holders of a Majority in Interest of the Underwriters'
Securities (for this purpose, treating all then outstanding Underwriters'
Warrants as if they had been exercised).
19. 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.
20. 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.
21. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company
and the Underwriters and any other registered Holders of the Underwriters'
Warrant Certificates or Underwriters' Securities any legal or equitable right,
remedy or claim under this Agreement; and this Agreement shall be for the sole
and exclusive benefit of the Company and the Underwriters and any other Holders
of the Underwriter's Warrant Certificates or Underwriters' Securities.
22. 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.
25
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
COMMUNITY CARE SERVICES, INC.
By:______________________________
Xxxx X. Xxxxxxxxx, President
MAIDSTONE FINANCIAL, INC.
By:____________________________
Name:
Title:
26
EXHIBIT A
COMMUNITY CARE SERVICES, INC.
WARRANT CERTIFICATE
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED FOR
SALE OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT, OR (ii) AN OPINION OF COUNSEL, IF SUCH OPINION AND COUNSEL SHALL BE
REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM
REGISTRATION UNDER THE 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 COMMENCING __________, 1997 THROUGH
5:00 P.M., NEW YORK TIME ON ________, 2001
No. UW- _______ Warrants
This Warrant Certificate certifies that ___________, or
registered assigns, is the registered holder of ___________ Warrants to purchase
initially, at any time from December 13, 1996, until 5:00 p.m., New York time on
___________, 2001 (the "Expiration Date"), up to 130,000 shares of Community
Care Services, Inc.'s (the "Company") Common Stock, $.01 par value (the "Common
Stock"), and/or up to 130,000 Redeemable Warrants each exercisable to purchase
one share of Common Stock (the "Common Stock Warrants"), at a purchase price of
$8.25 per share of Common Stock and $.165 per Redeemable Warrant (the "Purchase
Price"), upon the surrender of this Warrant Certificate and payment of the
applicable Purchase Price at an office or agency of the Company, but subject to
the conditions set forth herein and in the underwriters' warrant agreement,
dated as of ___________, 1996 (the "Warrant Agreement"), by and between the
Company and Maidstone Financial, Inc. ("Maidstone" or the "Representative"), as
the Representative of the several underwriters (the "Underwriting Group") named
in the Underwriting Agreement, dated ___________, 1996 between the Company and
Maidstone. The Underwriting Group is collectively referred to herein as the
"Underwriters." Payment of the Purchase Price shall be made by certified or
cashier's check or money order payable to the order of the Company.
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, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants issued pursuant to the Warrant Agreement
between the Company and the Underwriters, which 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 Warrant Agreement provides that upon the occurrence of
certain events the respective Purchase Prices and the type and/or number of the
Company's securities issuable upon the exercise of these Warrants, 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 Purchase 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 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 or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
exchange as provided herein, 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 number of 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 Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
[THE REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, the undersigned has executed this
certificate this ______ day of _________________, 1996.
COMMUNITY CARE SERVICES, INC.
By:_____________________________
Xxxx X. Xxxxxxxxx, President
ATTEST:
By:_________________________
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 transfers unto _____________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _____________________
Attorney, to transfer the within Warrant Certificate on the books of Community
Care Services, Inc., with full power of substitution.
Dated:_______________________________
Signature_____________________
(Signature must conform in
all respects to the name of
holder as specified on the
face of the Warrant
Certificate.)
________________________________
(Insert Social Security or Other
Identifying Number of Holders)
FORM OF ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise the right, represented by
this Warrant Certificate, to purchase shares of Common Stock and/or Redeemable
Warrants and herewith tenders in payment for such securities a certified or
cashier's check or money order payable to the order of Community Care Services,
Inc. in the amount of $______, all in accordance with the terms hereof. The
undersigned requests that certificates for such securities be registered in the
name of ___________________________ whose address is _____________________ and
that such certificates be delivered to_______________________________________
____________________________________________________ whose address is
_____________________________________________________________.
Dated:
Signature_______________________
(Signature must conform in
all respects to the name of
holder as specified on the
face of the Warrant
Certificate.)
________________________________
(Insert Social Security or Other
Identifying Number of Holders)
