SUNSTAR HEALTHCARE, INC. AND SUBSIDIARIES
Exhibit 10.12
WARRANT
TO PURCHASE 422,021 SHARES
THIS WARRANT (this "Warrant") is made and entered into as of April 22,
1999, between SUNSTAR HEALTHCARE, INC., a Delaware corporation (the "Company")
and BROOKSTREET SECURITIES CORPORATION ("Holder").
R E C I T A L S
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WHEREAS, the Company proposes to issue to Holder this Warrant
entitling Holder to purchase 422,021 shares of Common Stock, $.001 par value, of
the Company (the "Exercise Shares," "Shares," or the "Common Stock"); and
WHEREAS, this Warrant is being issued by the Company to Holder as part
of consideration payable to Holder in connection with a financial consulting and
investment banking agreement of even date herewith.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
A G R E E M E N T
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15. Right to Exercise Warrants. This Warrant may be exercised only from
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the first anniversary of the date hereof until the fifth anniversary of the date
hereof (the "Expiration Date"). If this Warrant is not exercised on or before
the Expiration Date, it shall expire immediately following the Expiration Date.
This Warrant shall entitle Holder to purchase from the Company 422,021
shares of Common Stock at an exercise price of $4.00 per share, subject to
adjustment as set forth below ("Exercise Price").
The Company shall not be required to issue fractional shares of
capital stock upon the exercise of this Warrant. In the event that a fraction
of an Exercise Share would, except for the provisions of this Section 1, be
issuable upon the exercise of this Warrant, the Company shall pay to Holder
exercising the Warrant an amount in cash equal to such fraction multiplied by
the current market value of the Exercise Share. For purposes of this Warrant,
the current market value shall be determined as follows:
(1) if the Exercise Shares are traded in the over-the-counter market
and not on any national securities exchange and not in the NASDAQ Reporting
System, the average of the mean between the last bid and asked prices per share,
as reported by the National Quotation Bureau, Inc., or an equivalent generally
accepted reporting service, for the last business day prior to the date on which
this Warrant is exercised, or, if not so reported, the average of the closing
bid and asked prices for an Exercise Share as furnished to the Company by any
member of the National Association of Securities Dealers, Inc., selected by the
Company for that purpose.
(2) if the Exercise Shares are listed or traded on a national
securities exchange or in the NASDAQ Reporting System, the closing price on the
principal national securities exchange on which they are so
SUNSTAR HEALTHCARE, INC. AND SUBSIDIARIES
listed or traded or in the NASDAQ Reporting System, as the case may be, on the
last business day prior to the date of the exercise of this Warrant. The closing
price referred to in this Clause (b) shall be the last reported sales price or,
in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices, in either case on the national securities
exchange on which the Exercise Shares are then listed or in the NASDAQ Reporting
System; or
(3) if no such closing price or closing bid and asked prices are
available, as determined in any reasonable manner as may be prescribed by the
Board of Directors of the Company.
16. Registration of Exercise. Notwithstanding the foregoing, this Warrant
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shall not be exercisable unless (a) a registration statement under the
Securities Act of 1933, as amended (the "Securities Act") with respect to the
shares of Common Stock to be received upon the exercise of the Warrant shall be
effective and current at the time of exercise or (b) there is an exemption from
registration under the Securities Act for the issuance of the shares of Common
Stock upon exercise. At the request of the Company, the Holder shall execute and
deliver to the Company its representation and warranty, in form and substance
satisfactory to the Company, that the shares of Common Stock to be issued upon
the exercise of this Warrant are being acquired by the Holder for its own
account, for investment only and not with a view to the resale or distribution
thereof. In addition, the Company may require the Holder to represent and
warrant to the Company in writing that any subsequent resale or distribution of
shares of Common Stock by it will be made only pursuant to (i) a registration
statement under the Securities Act which is effective and current with respect
to the Exercise Shares being sold, or (ii) a specific exemption from the
registration requirements of the Securities Act, but in claiming such exemption,
the Holder shall prior to any offer of sale or sale of such shares of Common
Stock provide the Company with a favorable written opinion of counsel, in form
and substance satisfactory to the Company, as to the applicability of such
exemption to the proposed sale or distribution.
17. Rights of Holder. The Holder shall not, by virtue of anything
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contained in this Warrant or otherwise, prior to exercise of this Warrant, be
entitled to any right whatsoever, either in law or equity, of a stockholder of
the Company, including without limitation, the right to receive dividends or to
vote or to consent or to receive notice as a shareholder in respect of the
meetings of shareholders or the election of directors of the Company of any
other matter.
18. Investment Intent. Holder represents and warrants to the Company that
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the Holder is acquiring this Warrant for investment and with no present
intention of distributing or reselling the Warrant or any of the Exercise Shares
for which this Warrant may be exercisable.
19. Certificates to Bear Language. The Exercise Shares for which this
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Warrant may be exercisable and the certificate or certificates therefor shall
bear the following legend by which each holder shall be bound:
"THE SHARES (OR OTHER SECURITIES) REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES MAY
NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE."
20. Piggyback Registration.
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(a) (i) Subject to Section 6(d), if the Company at any time
proposes to register any of its securities under the Securities Act by
registration on Forms SB-2, X-0, X-0, X-0 (but not Forms S-4 or S-8) or any
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SUNSTAR HEALTHCARE, INC. AND SUBSIDIARIES
successor or similar form(s) (except registrations of securities in connection
with (a) an employee benefit plan, including any stock option plan, or dividend
reinvestment plan or a merger, consolidation or other business combination, or
(b) debt securities), whether or not for sale for its own account, it shall,
each such time, give written notice to the Holder of its intention to do so and
of the Holder's rights under this Section 6 at least 10 days prior to the filing
of a registration statement with respect to such registration with the United
States Securities and Exchange Commission (the "Commission"). Upon the written
request of the Holder made within 5 days after the receipt of that notice, which
request shall specify the Exercise Shares purchased through exercise of this
Warrant intended to be registered and disposed of by the Holder, the Company
shall, subject to the provisions hereof, use its best efforts to effect the
registration under the Securities Act of all such Exercise Shares that the
Company has been so requested to register by the Holder.
(ii) If, at any time after giving written notice of its
intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to each Holder and upon giving that notice (a) in the case of a
determination not to register, the Company shall be relieved of its obligation
to register any Exercise Shares in connection therewith), without prejudice; and
(b) in the case of a determination to delay registering, the Company shall be
permitted to delay registering any Exercise Shares for the same period as the
delay in registering such other securities.
(iii) The Company shall pay all Registration Expenses (as defined
below) in connection with registration of Exercise Shares requested pursuant to
this Section 6.
(1) Exercise Shares shall cease to be registrable hereunder when (i)
a registration statement with respect to its public sale shall have become
effective under the Securities Act, (ii) it has been disposed of as permitted
by, and in compliance with, Rule 144 (or successor provision) promulgated under
the Securities Act, (iii) it may be disposed of as permitted by, and in
compliance with, subsection (k) of such Rule 144 (or successor provision) or
(iv) they shall have ceased to be outstanding.
(2) As used in this agreement, "Registration Expenses" means all
expenses incident to the Company's performance of or compliance with the
provisions of the Section 6 including, without limitation, all registration and
filing fees, all listing fees, all fees and expenses of complying with
securities or blue sky laws (including, without limitation, reasonable fees and
disbursements of counsel for the underwriters in connection with blue sky
qualifications of the Exercise Shares), all printing expenses, the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of "comfort" letters required by or incident
to such performance and compliance, and any fees and disbursements of
underwriters customarily paid by issuers or sellers of securities; provided,
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however, that Registration Expenses shall exclude, and the Holder shall pay,
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underwriters fees and underwriting discounts and commissions and transfer taxes
in respect of the Exercise Shares being registered as well as any fees and
expenses of counsel or other advisors to the Holder relating to the Exercise
Shares.
(3) Anything in Section 6(a) to the contrary notwithstanding, if the
managing underwriter or underwriters of any underwritten offering shall inform
the Company in writing of its belief that the number or type of securities
requested to be included in such registration would materially and adversely
affect such offering, then the Company shall include the Exercise Shares in such
registration only to the extent of the number and type that the Company is so
advised can be sold in (or during the time of) such offering, only after all
securities proposed by the Company to be sold for its own account or by or for
the account of any other present or future securityholders of the Company shall
have been so included.
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SUNSTAR HEALTHCARE, INC. AND SUBSIDIARIES
(4) If the Company at any time shall register Exercise Shares under
the Securities Act as contemplated hereunder, then the Holder shall not sell
pursuant to an effective registration statement, publicly make any short sale
of, publicly grant any option for the purchase of, or otherwise publicly dispose
of any shares of Common Stock (other than those Exercise Shares included in such
registration pursuant to this Section 6) without the prior written consent of
the managing underwriter for a period required by the underwriters and
designated by the Company, which period shall not begin more than thirty (30)
days prior to the effectiveness of the registration statement pursuant to which
such public offering shall be made and shall not last more than one hundred
eighty (180) days after the effective date of such registration statement in the
case of the Company's initial public offering, or ninety (90) days after the
effective date of such registration statement in the case of any such other
offering. The Company may legend and impose stop transfer instructions on any
certificate evidencing Exercise Shares relating to the restrictions provided in
this Section 6(e).
21. Adjustment of Number of Exercise Shares and Class of Capital Stock
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Purchasable. The Number of Exercise Shares purchasable under this Warrant
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Agreement are subject to adjustment from time to time as set forth in this
Section 7.
(1) Adjustment for Change in Capital Stock. If the Company:
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(1) pays a dividend or makes a distribution on its Common Stock,
in each case, in shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock into a
greater number of shares;
(3) combines its outstanding shares of Common Stock into a
smaller number of shares;
(4) makes a distribution on its Common Stock in shares of its
capital stock other than Common Stock; or
(5) issues by reclassification of its shares of Common Stock any
shares of its capital stock;
then the number and classes of shares purchasable upon exercise of this Warrant
in effect immediately prior to such action shall be adjusted so that the holder
of this Warrant thereafter exercised may receive the number and classes of
shares of capital stock of the Company which such holder would have owned
immediately following such action if such holder had exercised the Warrant
immediately prior to such action.
For a dividend or distribution the adjustment shall become effective
immediately after the record date for the dividend or distribution. For a
subdivision, combination or reclassification, the adjustment shall become
effective immediately after the effective date of the subdivision, combination
or reclassification.
If after an adjustment the holder of this Warrant upon exercise of it
may receive shares of two or more classes of capital stock of the Company, the
Board of Directors of the Company shall in good faith determine the allocation
of the adjusted Exercise Price between or among the classes of capital stock.
After such allocation, that portion of the Exercise Price applicable to each
share of each such class of capital stock shall thereafter be subject to
adjustment on terms comparable to those applicable to Common Stock in this
Agreement. Notwithstanding the allocation of the Exercise Price between or among
shares of capital stock as provided by this Section 7(a), this Warrant may only
be exercised in full by payment of the entire Exercise Price currently in
effect.
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SUNSTAR HEALTHCARE, INC. AND SUBSIDIARIES
(2) Consolidation, Merger or Sale of the Company. If the Company is
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a party to a consolidation, merger or transfer of assets which reclassifies or
changes its outstanding Common Stock, the successor corporation (or corporation
controlling the successor corporation or the Company, as the case may be) shall
by operation of law assume the Company's obligations under this Warrant. Upon
consummation of such transaction this Warrant shall automatically become
exercisable for the kind and amount of securities, cash or other assets which
the holder of this Warrant would have owned immediately after the consolidation,
merger or transfer if the holder had exercised this Warrant immediately before
the effective date of such transaction.
22. Successors. All the covenants and provisions of this Warrant by or
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for the benefit of the Company or Holder shall bind and inure to the benefit of
their respective successor and assigns hereunder.
23. Counterparts. This Warrant may be executed in any number of
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counterparts and each of such counterparts shall for all proposes be deemed to
be an original, and such counterparts shall together constitute by one and the
same instrument.
24. Notices. All notices or other communications under this Warrant
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shall be in writing and shall be deemed to have been given if delivered by hand
or mailed by certified mail, postage prepaid, return receipt requested,
addressed as follows: if to the Company: SunStar Healthcare, Inc., 000
Xxxxxxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxx, 00000, Attention:
President, and to the Holder: Brookstreet Securities Corporation, 0000 Xxxxxx
Xxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000.
Either the Company or the Holder may from time to time change the
address to which notices to it are to be mailed hereunder by notice in
accordance with the provisions of this Section 10.
25. Supplements and Amendments. The Company may from time to time
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supplement or amend this Warrant without the approval of the Holder in order to
cure any ambiguity or to be correct or supplement any provision contained herein
which may be defective or inconsistent with any other provision, or to make any
other provisions in regard to matters or questions herein arising hereunder
which the Company may deem necessary or desirable and which shall not materially
adversely affect the interest of the Holder.
26. Severability. If for any reason any provision, paragraph or term of
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this Warrant Agreement is held to be invalid or unenforceable, all other valid
provisions herein shall remain in full force and effect and all terms,
provisions and paragraphs of this Warrant shall be deemed to be severable.
27. Governing Law and Venue. This Warrant shall be deemed to be a contract
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made under the laws of the State of New York and for all purposes shall be
governed and construed in accordance with the laws of said State. Any proceeding
arising under this Warrant shall be instituted in the State of New York.
28. Headings. Sections and subsection headings, used herein are included
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herein for convenience of reference only and shall not affect the construction
of this Warrant nor constitute a part of this Warrant for any other purpose.
IN WITNESS WHEREOF, the parties hereto have caused this to be duly
executed, as of the date and year first above written.
SUNSTAR HEALTHCARE, INC. BROOKSTREET SECURITIES CORPORATION
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SUNSTAR HEALTHCARE, INC. AND SUBSIDIARIES
_____________________________ _________________________________
By: Xxxxxx X. Xxxxxxx By:
Its: President
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SUNSTAR HEALTHCARE, INC. AND SUBSIDIARIES
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