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EXHIBIT 99.1
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE HEREUNDER HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAWS AND MUST BE HELD INDEFINITELY UNLESS
SUBSEQUENTLY REGISTERED UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR DISPOSED OF PURSUANT TO AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS.
WARRANT
Company: Allied Healthcare Products, Inc., a Delaware corporation
Number of Shares: 25,000
Class of Stock: Common Stock
Initial Exercise Price: $7.025 per share
Issued as of: August 7, 1997
Expiration Date: August 7, 2002
FOR VALUE RECEIVED, the adequacy and receipt of which is hereby
acknowledged, ALLIED HEALTHCARE PRODUCTS, INC., a Delaware corporation, hereby
certifies that WOODBOURNE PARTNERS, L.P., a Missouri limited partnership
("Woodbourne"), and its successors and assigns, are entitled to purchase from
the Company at any time and from time to time on and after August 7, 1998, until
12:00 midnight California local time on the Expiration Date at an initial
exercise price of SEVEN AND 025/1000 DOLLARS ($7.025) per share of Common Stock
Twenty Five Thousand (25,000) fully paid and nonassessable shares of Common
Stock of the Company on the terms and conditions hereinafter set forth.
The number of such shares of Common Stock and the Exercise Price are
subject to adjustment as provided in this Warrant. Anything contained in this
Warrant to the contrary notwithstanding, the number of shares of Common Stock
which may be issued upon exercise of this Warrant by any Regulated Warrantholder
shall never exceed such amount (the "Maximum Amount") as may be permitted under
the Bank Holding Company Act, or any successor statute, or under any other
federal or state banking laws or regulations to which such Regulated
Warrantholder may be subject at the time of such exercise. If the number of
shares of Common Stock which may be issued upon exercise of this Warrant exceeds
the Maximum Amount, the number of shares of Common Stock into which this Warrant
may be exercised will be reduced to the Maximum Amount
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and the Company will pay to Foothill by check or in cash such amount that equals
the Exercise Price multiplied by the number of shares of Common Stock by which
the Warrant is reduced pursuant to this paragraph.
1. CERTAIN DEFINITIONS. As used in this Warrant, the following terms
have the following definitions:
"Additional Shares of Common Stock" means all shares of Common Stock
issued or issuable by the Company after the date of this Warrant.
"Common Stock" means the Company's Common Stock, par value $.01 per
share, and includes any common stock of the Company of any class or classes
resulting from any reclassification or reclassifications thereof which is not
limited to a fixed sum or percentage of par value in respect of the rights of
the holders thereof to participate in dividends and in the distribution of
assets upon the voluntary or involuntary liquidation, dissolution or winding up
of the Company.
"Company" means Allied Healthcare Products, Inc., a Delaware
corporation.
"Convertible Securities" means evidence of indebtedness, shares of
stock or other securities which are at any time directly or indirectly
convertible into or exchangeable for Additional Shares of Common Stock.
"Current Market Price" of a share of Common Stock or of any other
security as of a relevant date means: (i) the Fair Value thereof as determined
in accordance with clause (ii) of the definition of Fair Value with respect to
Common Stock or any other security that is not listed on a national securities
exchange or traded on the over-the-counter market or quoted on NASDAQ, and (ii)
the average of the daily closing prices for the ten (10) trading days before
such date (excluding any trades which are not bona fide arm's length
transactions) with respect to Common Stock or any other security that is listed
on a national securities exchange or traded on the over-the-counter market or
quoted on NASDAQ. The closing price for each day shall be (i) the last sale
price of shares of Common Stock or such other security, regular way, on such
date or, if no such sale takes place on such date, the average of the closing
bid and asked prices thereof on such date, in each case as officially reported
on the principal national securities exchange on which the same are then listed
or admitted to trading, or (ii) if no shares of Common Stock or if no securities
of the same class as such other security are then listed or admitted to trading
on any national securities exchange, the average of the reported closing bid and
asked prices thereof on such date in the over-the-counter market as shown by the
National Association of Securities Dealers automated quotation system or, if no
shares of Common Stock or if no securities of the same class as such other
security are then quoted in such system, as published by the National Quotation
Bureau, Incorporated or any similar successor organization, and in either case
as reported by any member firm of the New York Stock Exchange selected by the
Warrantholders.
"Exchange Act" means the Securities Act of 1934.
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"Exercise Period" means the period commencing on August 7, 1998 and
ending at 12:00 midnight California local time on the Expiration Date.
"Exercise Price" means initially Seven and 025/1000 Dollars ($7.025)
per share, subject to adjustment as provided in this Warrant.
"Expiration Date" means August 7, 2002.
"Fair Value" means: (i) with respect to a share of Common Stock or any
other security, the Current Market Price thereof, and (ii) with respect to any
other property, assets, business or entity, an amount determined in accordance
with the following procedure: the Company and the holders of the Warrants and
Warrant Shares, as applicable, shall use their best efforts to mutually agree to
a determination of Fair Value within ten (10) days of the date of the event
requiring that such a determination be made. If the Company and such holders are
unable to reach agreement within said ten (10) day period, the Company and such
holders shall within ten (10) days of the expiration of the ten (10) day period
referred to above each retain a separate independent investment banking firm
(which firm shall not be the investment banking firm regularly retained by the
Company). If either the Company or such holders fails to retain such an
investment banking firm during such period, then the independent investment
banking firm retained by such holders or the Company, as the case may be, acting
along, shall take the actions outlined below. Such firms shall determine (within
thirty (30) days of their being retained) the Fair Value of the security,
property, assets, business or entity, as the case may be, in question and
deliver their opinion in writing to the Company and to such holders. If such
firms cannot jointly make the determination, then, unless otherwise directed by
agreement of the Company and such holders, such firms, in their sole discretion,
shall choose another investment banking firm independent of the Company and such
holders, which firm shall make the determination and render an opinion as
promptly as practicable. In either case, the determination so made shall be
conclusive and binding on the Company and such holders. The fees and expenses of
any such determination made by any and all such independent investment banking
firms shall be paid by the Company. If there is more than one holder of
Warrants, and/or Warrant Shares entitled to a determination of Fair Value in any
particular instance, each action to be taken by the holders of such Warrants
and/or Warrant Shares under this Section shall be taken by a majority in
interest of such holders and the action taken by such majority (including as to
any mutual agreement with the Company with respect to Fair Value and as to any
selection of investment banking firms) shall be binding upon all such holders.
In the case of a determination of the Fair Value per share of Common Stock, the
Company and such holders shall not take into consideration, and shall instruct
all such investment banking firms not to take into consideration, any premium
for shares representing control of the Company, any discount for any minority
interest therein or any restrictions on transfer under applicable federal and
state securities laws or otherwise.
"Foothill" means Foothill Capital Corporation, a California
corporation.
"Indemnified Party" and "Indemnifying Party" have the meanings set
forth in Section 11(e)(iii).
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"Loan Agreement" means that certain Loan and Security Agreement of even
date herewith among the Company, its subsidiaries named therein and Foothill.
"Registrable Stock" means: (i) all Warrant Shares which are issuable to
the Warrantholders pursuant to the Warrants, whether or not the Warrants have in
fact been exercised and whether or not such Warrant Shares have in fact been
issued, (ii) all Warrant Shares acquired by the Warrantholders pursuant to the
Warrants, (iii) any shares of Common Stock, whether or not such shares of Common
Stock have in fact been issued, and stock or other securities of the Company
issued upon conversion of, in a stock split or reclassification of, or a stock
dividend or other distribution on, or in substitution or exchange for, or
otherwise in connection with, such Warrant Shares. For purposes of Section 11, a
Warrantholder of record shall be treated as the record holder of the related
Warrant Shares and other securities issuable pursuant to the Warrants.
"Regulated Warrantholder" means any Warrantholder which is, or the part
of which is, subject to the Bank Holding Company Act, or any successor statute,
or any other federal or state banking laws and regulations.
"Securities Act" means the Securities Act of 1933, as amended.
"Warrant(s)" means this Warrant and any warrants issued in exchange or
replacement of this Warrant or upon transfer hereof.
"Warrantholder(s)" means Woodbourne and its successors and assigns.
"Warrant Share" means shares of Common Stock issuable to Warrantholders
pursuant to the Warrants.
2. EXERCISE OF WARRANT. This Warrant may be exercised, in whole or in
part, at any time and from time to time during the Exercise Period by written
notice to the Company and upon payment to the Company of the Exercise Price
(subject to adjustment as provided herein) for the shares of Common Stock in
respect of which the Warrant is exercised.
3. FORM OF PAYMENT OF EXERCISE PRICE. Anything contained herein to
the contrary notwithstanding, at the option of the Warrantholders, the Exercise
Price may be paid in any one or a combination of the following forms: (a) by
wire transfer to the Company, (b) by the Warrantholder's check to the Company,
(c) by the cancellation of any indebtedness owed by the Company and/or any
subsidiaries of the Company to the Warrantholder, and/or (d) by the surrender to
the Company of Warrants, Warrant Shares, Common Stock and/or other securities of
the Company and/or any subsidiaries of the Company having a Fair Value equal to
the Exercise Price.
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4. CASHLESS EXERCISE/CONVERSION; APPRECIATION RIGHTS.
(a) Cashless Exercise/Conversion. In lieu of exercising this
Warrant as specified in Sections 2 and 3 above, the Warrantholders may from time
to time at the Warrantholders' option convert this Warrant, in whole or in part,
into a number of shares of Common Stock of the Company determined by dividing
(A) the aggregate Fair Value of such shares or other securities otherwise
issuable upon exercise of this Warrant minus the aggregate Exercise Price of
such shares by (B) the Fair Value of one such share.
(b) Appreciation Right. At any time on or after August 7,
2000, in lieu of exercising this Warrant as specified in Sections 2 and 3 above,
the Warrantholders may from time to time at the Warrantholders' option require
the Company to purchase this Warrant or any portion hereof, for cash, at a price
equal to the then Fair Value of the Common Stock issuable upon exercise of this
Warrant less the Exercise Price. Upon the Warrantholders' exercise of this
option, the Company shall promptly wire transfer to the Warrantholders such
amount in immediately available funds as is required under this Section 4(b),
but in no event later than five (5) business days after the exercise of such
option, in immediately available funds.
5. CERTIFICATES FOR WARRANT SHARES; NEW WARRANT. The Company agrees
that the Warrant Shares shall be deemed to have been issued to the
Warrantholders as the record owner of such Warrant Shares as of the close of
business on the date on which payment for such Warrant Shares has been made (or
deemed to be made by conversion) in accordance with the terms of this Warrant.
Certificates for the Warrant Shares shall be delivered to the Warrantholders
within a reasonable time, not exceeding five (5) days, after this Warrant has
been exercised or converted. A new Warrant representing the number of shares, if
any, with respect to which this Warrant remains exercisable also shall be issued
to the Warrantholders within such time so long as this Warrant has been
surrendered to the Company at the time of exercise.
6. ADJUSTMENT OF EXERCISE PRICE, NUMBER OF SHARES AND NATURE OF
SECURITIES ISSUABLE UPON EXERCISE OF WARRANTS.
(a) Exercise Price; Adjustment of Number of Shares. The
Exercise Price shall be subject to adjustment from time to time as hereinafter
provided. Upon each adjustment of the Exercise Price, the Warrantholders shall
thereafter be entitled to purchase, at the Exercise Price resulting from such
adjustment, a number of shares determined by multiplying the Exercise Price in
effect immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior t such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.
(b) Adjustment of Exercise Price Upon Issuance of Common
Stock. If and whenever after the date hereof the Company shall issue or sell
Additional Shares of Common Stock without consideration or for a consideration
per share less than the Current Market Price or the Exercise Price then in
effect immediately prior to the issuance or sale of such shares, then the
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Exercise Price in effect immediately prior to such issuance or sale of such
shares shall be reduced to a number which shall be calculated by dividing (A) an
amount equal to the sum of (1) the number of shares of Common Stock outstanding
immediately prior to such issue or sale multiplied by the then existing Exercise
Price plus (2) the aggregate consideration, if any, received by the Company upon
such issue or sale, by (B) the total number of shares of Common Stock
outstanding immediately after such issue or sale.
No adjustment of the Exercise Price, however, shall be made in an
amount less than $.01 per share, but any such lesser adjustment shall be carried
forward and shall be made at the time and together with the next subsequent
adjustment which, together with any adjustments so carried forward, shall amount
to $.01 per share or more.
The provisions of this Section 6(b) shall not apply to (i) any
Additional Shares of Common Stock which are distributed to holders of Common
Stock pursuant to a stock split for which an adjustment is provided for under
Section 6(f), or (ii) any additional shares of Common Stock which are issued
upon exercise of options to purchase Common Stock outstanding as of the date of
issuance of this Warrant.
(c) Further Provisions for Adjustment of Exercise Price Upon
Issuance of Additional Shares of Common Stock and Convertible Securities. For
purposes of Section 6(b), the following provisions shall also be applicable:
(i) in case at any time on or after the date hereof,
the Company shall declare any dividend, or authorize any other distribution,
upon any stock of the Company of any class, payable in Additional Shares of
Common Stock or by the issuance of Convertible Securities, such declaration or
distribution shall be deemed to have been issued or sold (as of the record date)
without consideration and shall thereby cause an adjustment in the Exercise
Price as required by Section 6(b).
(ii) (A) In case at any time on or after the date
hereof, the Company shall in any manner issue or sell any Convertible
Securities, whether or not the rights to exchange or convert thereunder are
immediately exercisable, there shall be determined the price per share for which
Additional Shares of Common Stock are issuable upon the conversion or exchange
thereof, such determination to be made by dividing (a) the total amount received
or receivable by the Company as consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the conversion or exchange
thereof by (b) the maximum aggregate number of Additional Shares of Common Stock
issuable upon conversion or exchange of all such Convertible Securities for such
minimum aggregate amount of additional consideration; and such issue or sale
shall be deemed to be an issue or sale for cash (as of the date of issue or sale
of such Convertible Securities) of such maximum number of Additional Shares of
Common Stock at the price per share so determined, and shall thereby cause an
adjustment in the Exercise Price, if such an adjustment is required by Section
6(b) hereof.
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(B) If such Convertible Securities shall by
their terms provide for an increase or increases, withe passage of time, in the
amount of additional consideration, if any, payable to the Company, or in the
rate of exchange upon the conversion or exchange thereof, the adjusted Exercise
Price shall, upon any such increase becoming effective, be increased to such
Exercise Price as would have been in effect had the adjustments made upon the
issuance of such Convertible Securities been made upon the basis of (and the
total consideration received therefor) (a) the issuance of the number of shares
of Common Stock theretofore actually delivered upon the exercise of such
Convertible Securities, (b) the issuance of all Common Stock, all Convertible
Securities and all rights and options to purchase Common Stock issued after the
issuance of such Convertible Securities, and (c) the original issuance at the
time of such change of such Convertible Securities then still outstanding;
provided, however, that any such increase or increases shall not exceed, in the
aggregate, the amount of the original reduction of the Exercise Price
attributable to the Convertible Securities.
(C) If any rights of conversion or exchange
evidenced by such Convertible Securities shall expire without having been
exercised, the adjusted Exercise Price shall forthwith be readjusted to such
Exercise Price as would have been in effect had an adjustment with respect to
such Convertible Securities been made on the basis that the only Additional
shares of Common Stock issued or sold were those issued upon the conversion or
exchange of such Convertible Securities, and that they were issued or sold for
the consideration actually received by the Company upon such exercise, plus the
consideration, if any, actually received by the Company for the granting of such
Convertible Securities.
(iii) (A) In case at any time on or after the date
hereof, the Company shall in any manner grant or issue any rights or options to
subscribe for purchase or otherwise acquire Additional Shares of Common Stock,
whether or not such rights or options are immediately exercisable, there shall
be determined the price per share for such Additional Shares of Common Stock are
issuable upon the exercise of such rights or options, such determination to be
made by dividing (a) the total amount, if any, received or receivable by the
Company as consideration for the granting of such rights or options, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the exercise of such rights or options if the maximum number of
Additional Shares were issued pursuant to such rights or options for such
minimum aggregate amount of additional consideration, by (b) the maximum number
of Additional Shares of Common Stock of the Company issuable upon the exercise
of all such rights or options for such minimum aggregate amount of additional
consideration; and the granting of such rights or options shall be deemed to be
an issue or sale for cash (as of the date of the granting of such rights or
options) of such maximum number of Additional Shares of Common Stock at the
price per share so determined, and shall thereby cause an adjustment in the
Exercise Price, if such an adjustment is required by Section 6(b) hereof.
(B) If such rights or options shall by their
terms provide for an increase or increases, with passage of time, in the amount
of additional consideration payable to the Company upon the exercise thereof,
the adjusted Exercise Price shall, upon any such increases
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becoming effective, be increased to such Exercise Price as would have been in
effect had the adjustments made upon the issuance of such rights or options been
made upon the basis of (and the total consideration received therefor) (a) the
issuance of the number of shares of Common Stock theretofore actually delivered
upon the exercise of such rights or options, (b) the issuance of all Common
Stock, all rights and options and all Convertible Securities issued after the
issuance of such rights and options, and (c) the original issuance at the time
of such change of any such rights or options then still outstanding; provided,
however, that any such increase or increases in the Exercise Price shall not
exceed, in the aggregate, the amount of the original reduction of the Exercise
Price attributable to the grant of such rights or options.
(C) If any such rights or options shall
expire without having been exercised, the adjusted Exercise Price shall
forthwith be readjusted to such Exercise Price as xxxx have been in effect had
an adjustment with respect to such rights or options been made on the basis that
the only Additional Shares of Common Stock so issued or sold were those issued
or sold upon the exercise of such rights or options and that they were issued or
sold for the consideration actually received by the Company upon such exercise,
plus the consideration, if any, actually received by the Company for the
granting of such rights or options.
(iv) (A) In case at any time on or after the date
hereof, the Company shall grant any rights or options to subscribe for, purchase
or otherwise acquire Convertible Securities, there shall be determined the price
per share for which Additional Shares of Common Stock are issuable upon the
exchange or conversion of such Convertible Securities if such rights or options
were exercised, such determination to be made by dividing (a) the total amount,
if any, received or receivable by the Company as consideration for the issuance
of such rights or options, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the exercise of such rights
or options if the maximum number of Convertible Securities were issued pursuant
to such rights or options for such minimum aggregate amount of additional
consideration, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the exchange or conversion of such Convertible
Securities if the maximum number of Additional Shares were issued pursuant to
such Convertible Securities for such minimum aggregate amount of additional
consideration, by (b) the maximum aggregate number of Additional Shares of
Common Stock issuable upon the exchange or conversion of the Convertible
Securities for such minimum aggregate amount of additional consideration; and
the issue or sale of such rights or options shall be deemed to be an issue or
sale for cash (as of the date of the granting of such rights or options) of such
minimum number of Additional Shares of Common Stock at the price per share so
determined, and thereby shall cause an adjustment in the Exercise Price, if such
an adjustment is required by Section 6(b).
(B) If such rights or options to subscribe for
or otherwise acquire Convertible Securities shall by their terms provide for an
increase or increases, with the passage of time, in the amount of additional
consideration payable to the Company upon the exercise, exchange or conversion
thereof, the adjusted Exercise Price shall, forthwith upon any such increase
becoming effective, be increased to such Exercise Price as would have been in
effect had the adjustments made
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upon the issuances of such rights or options been made upon the basis of (and
the total consideration received therefor) (a) the issuance of the number of
shares of Common Stock therefore actually delivered upon the exchange or
conversion of such Convertible Securities, (b) the issuances of all Common Stock
and all rights, options and Convertible Securities issued after the issuance of
such rights and options and (c) the original issuances at the time of such
change of any such rights, options and Convertible Securities issued upon
exercise of such rights or options which are then still outstanding; provided,
however, that any such increase or increases shall not exceed, in the aggregate,
the amount of the original reduction of the Exercise Price attributable to the
grant of such rights or options.
(C) If any such rights, options or rights of
conversion or exchange of such convertible Securities shall expire without
having been exercised, exchanged or converted, the adjusted Exercise Price shall
forthwith be readjusted to such Exercise Price as would have been in effect had
an adjustment been made with respect to such rights, options or rights of
conversion or exchange of such Convertible Securities on the basis that the only
Additional Shares of Common Stock so issued or sold were those issued or sold
upon the exercise of such rights or options and exchange or conversion of such
Convertible Securities and that they were issued or sold for the consideration
actually received by the Company upon exercise of such rights and options and
exchange or conversion of such Convertible Securities, plus the consideration if
any, actually received by the Company for the granting of such rights, options
or Convertible Securities.
(v) In any case where an adjustment has been made in
the Exercise Price upon the issuance of Convertible Securities or any rights or
options to purchase Convertible Securities or Additional Shares of Common Stock
pursuant to this Section 6(c), no further adjustment shall be made at the time
of the conversion of any such Convertible Securities or at the time of the
exercise of any such rights or options.
(vi) In case at any time on or after the issuance of
this Warrant any shares of Common Stock or Convertible Securities shall be
issued or sold for a consideration other than cash, the amount of the
consideration other than cash payable to the company shall be deemed to be the
Fair Value of such consideration. Whether or not the consideration so received
is cash, the amount thereof shall be determined after deducting therefrom any
expenses incurred or any underwriting commissions or concessions or discounts
paid or allowed by the Company in connection therewith.
(vii) In case at any time the company shall fix a
record date of the holders of its Common Stock for the purpose of entitling them
(a) to receive a dividend or other distribution payable in Common Stock,
Convertible Securities or rights or options to purchase either thereof, or (b)
to subscribe for or purchase Common Stock, Convertible Securities or rights or
options to purchase either thereof, then such record date shall be deemed to be
the date of the issue or sale of the shares of Common Stock deemed, pursuant to
this Section 6(c), to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the granting of
such right of subscription or purchase, as the case may be.
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(viii) The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Company, and the disposition of any such shares shall be
considered an issue or sale of Common Stock for the purposes of this Section
6(c).
(d) Reorganization, Reclassification, Consolidation,
Merger or Sale. If any capital reorganization or reclassification of the capital
stock of the Company, or any consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets to another
corporation shall be effected in such a way that holders of Common Stock shall
be entitled to receive cash, stock, securities or assets with respect to or in
exchange for Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate provisions
shall be made whereby the Warrantholders shall thereafter have the right to
purchase and receive upon the basis and upon the terms and conditions specified
in this Warrant upon exercise of this Warrant and in lieu of the shares of the
Common Stock of the Company immediately therefore purchasable and receivable
upon the exercise of the rights represented hereby, such cash, shares of stock,
securities or assets as may be issued or payable with respect to or in exchange
for a number of outstanding shares of Common Stock equal to the number of shares
of such Common Stock immediately therefore purchasable and receivable upon the
exercise of the rights represented hereby, and in any such case appropriate
provision shall be made with respect to the rights and interest of the
Warrantholders to the end that the provisions hereof (including, without
limitation, provisions for adjustments of the Exercise Price and of the number
of shares purchasable and receivable upon the exercise of this Warrant) shall
thereafter be applicable, as nearly as may be, in relation to any shares of
stock, securities or assets thereafter deliverable upon the exercise hereof. The
Company shall not effect any consolidation, merger or sale of all or
substantially all of the assets of the Company unless prior to or simultaneous
with the consummation thereof the successor corporation (if other than the
Company) resulting from such consolidation, merger or purchase of such assets
shall assume, by written instrument executed and mailed or delivered to the
Warrantholders, the obligation to deliver to such Warrantholders such cash (or
cash equivalent), shares of stock, securities or assets as, in accordance with
the foregoing provisions, the Warrantholders may be entitled to receive and
containing the express assumption of such successor corporation of the due and
punctual performance and observance of each provision of this Warrant to be
performed and observed by the Company and of all liabilities and obligations of
the Company hereunder; provided, however, in the case of any consolidation or
merger of the Company with another corporation or the sale of all or
substantially all of its assets to another corporation effected in such a manner
that the holders of Common Stock shall be entitled to receive stock, securities
or assets with respect to or in exchange for Common Stock, then, at the election
of each Warrantholder, in lieu of receiving such stock, securities or assets,
such Warrantholder shall receive cash equal to the Fair Value of the Common
Stock issuable upon exercise of the Warrant, less the Exercise Price payable
upon exercise thereof.
In case any Additional Shares of Common Stock or
Convertible Securities or any rights or options to purchase any Additional
Shares of Common Stock or Convertible Securities shall be issued in connection
with any merger of another corporation into the Company,
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the amount of consideration therefor shall be deemed to be the Fair Value of
such portion of the assets of such merged corporation as the Board of Directors
of the Company shall in good faith determine to be attributable to such
Additional Shares of Common Stock, Convertible Securities or rights or options,
as the case may be, and the Exercise Price shall be adjusted in accordance with
this Section 6(d).
(e) Company to Prevent Dilution. In case at any time or from
time to time conditions arise by reason of action taken by the Company which are
not adequately covered by the provisions of this Section 6, and which might
materially and adversely affect the exercise rights of the Warrantholders under
any provision of this Warrant, unless the adjustment necessary shall be agreed
upon by the Company and the Warrantholders, the Board of Directors of the
Company shall appoint a firm of independent certified public accountants of
recognized national standing (who have not been employed by the Company within
the last five years), acceptable to the Warrantholders, what the Company's
expense shall give their opinion upon the adjustment, if any, on a basis
consistent with the standards established in the other provisions of this
Section 6, necessary with respect to the Exercise Price and the number of shares
purchasable upon exercise of the Warrants, so as to preserve, without dilution,
the exercise rights of the Warrantholders. Upon receipt of such opinion, such
Board of Directors shall forthwith make the adjustments described therein.
(f) Stock Splits and Reverse Splits. In case at any time the
Company shall subdivide its outstanding shares of Common Stock into a greater
number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of shares of Common
Stock purchasable pursuant to this Warrant immediately prior to such subdivision
shall be proportionately increased, and conversely, in case at any time the
Company shall combine its outstanding shares of Common Stock into a smaller
number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased and the number of shares of
Common Stock purchasable upon the exercise of this Warrant immediately prior to
such combination shall be proportionately reduced.
(g) Dissolution, Liquidation and Winding-Up. In case the
Company shall, at any time prior to the expiration of this Warrant, dissolve,
liquidate or wind up its affairs, the Warrantholders shall be entitled, upon the
exercise of this Warrant, to receive, in lieu of the shares of Common Stock of
the Company which such Warrantholders would have been entitled to receive, the
same kind and amount of assets as would have been issued, distributed or paid to
such Warrantholders upon any such dissolution, liquidation or winding up with
respect to such shares of Common Stock of the Company, had such Warrantholders
been the holders of record of the Warrant Shares receivable upon the exercise of
this Warrant on the record date for the determination of those persons entitled
to receive any such liquidating distribution. After any such dissolution,
liquidation or winding up which shall result in any cash distribution in excess
of the Exercise Price provided for by this Warrant, the Warrantholders may, at
each such Warrantholder's option, exercise the same without making payment of
the Exercise Price, and in such case the Company shall, upon the distribution to
said Warrantholders, consider that said Exercise Price has been paid in full to
it and
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in making settlement to said Warrantholders, shall deduct from the amount
payable to such Warrantholders an amount equal to such Exercise Price.
(h) Noncash Consideration. In case any Additional Shares of
Common Stock or Convertible Securities or any rights or options to purchase any
Additional Shares of Common Stock or Convertible Securities shall be issued for
a consideration in a form other than cash, the amount of such consideration
shall be deemed to be the Fair Value thereof.
(i) Accountants' Certificate. In each case of an adjustment in
the number of shares of Common Stock or other stock, securities or property
receivable on the exercise of the Warrants, the Company at its expense shall
cause independent public accountants of recognized standing selected by the
Company and acceptable to the Warrantholders to compute such adjustment in
accordance with the terms of this Warrant and prepare a certificate setting
forth such adjustment and showing in detail the facts upon which such adjustment
is based, including a statement of (a) the consideration received or to be
received by the Company for any Additional Shares of Common Stock, rights,
options or Convertible Securities issued or sold or deemed to have been issued
or sold, (b) the number of shares of Common Stock of each class outstanding or
deemed to be outstanding, (c) the adjusted Exercise Price and (d) the number of
shares issuable upon exercise of this Warrant. The Company will forthwith mail a
copy of each such certificate to each Warrantholder.
7. SPECIAL AGREEMENTS OF THE COMPANY.
(a) Reservation of Shares. The Company covenants and agrees
that all Warrant Shares will, upon issuance, be validly issued, fully paid and
nonassessable and free from all preemptive rights of any stockholder and from
all taxes, liens and charges with respect to the issue thereof. The Company
further covenants and agrees that during the period within which the rights
represented by this Warrant may be exercised, the Company will at all times have
authorized, and reserved, a sufficient number of shares of Common Stock to
provide for the exercise of the rights represented by this Warrant. The Company
hereby covenants and agrees to take all such action as may be necessary to
assure that the par value per share of the Common Stock is at all times equal to
or less than the Exercise Price.
(b) Avoidance of Certain Actions. The Company will not, by
amendment of its Certificate of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, issue or sale of securities or
otherwise, avoid or take any action which would have the effect of avoiding the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in carrying
out all of the provisions of this Warrant and in taking all of such action as
may be necessary or appropriate in order to protect the rights of the
Warrantholders against dilution or other impairment of their rights hereunder.
(c) Securing Governmental Approvals. If any shares of Common
Stock required to be reserved for the purposes of exercise of this Warrant
require registration with or approval of any governmental authority under any
federal law (other than the Securities Act) or under any state
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law before such shares may be issued upon exercise of this Warrant, the Company
will, at its expense, as expeditiously as possible, cause such shares to be duly
registered or approved, as the case may be.
(d) Listing on Securities Exchanges; Registration. If, and so
long as, any class of the Company's Common Stock shall be listed on any national
securities exchange (as defined in the Exchange Act), the Company will, at its
expense, obtain and maintain the approval for listing upon official notice of
issuance of all Warrant Shares and maintain the listing of Warrant Shares after
their issuance; and the Company will so list on such national securities
exchange, will register under the Exchange Act (or any similar statute then in
effect), and will maintain such listing of, any other securities that at any
time are issuable upon exercise of this Warrant if and at the time any
securities of the same class shall be listed on such national securities
exchange by the Company.
(e) Information Rights. So long as the Warrantholders hold
this Warrant and/or any of the Warrant Shares, the Company shall deliver to the
Warrantholders (i) promptly after mailing, copies of all communications to the
shareholders of the Company, (ii) within ninety (90) days after the end of each
fiscal year of the Company, the annual audited financial statements of the
Company certified by the independent public accountants of recognized standing,
and (iii) within forty-five (45) days after the end of each of the first three
quarters of each fiscal year, the Company's quarterly, unaudited financial
statements.
(f) Restrictions on Public Sale by the Company. In the event
of an underwritten offering by the Company made pursuant to a registration
statement filed pursuant to Sections 11(a) or 11(b) the Company will not effect
any public or private sale or distribution of its convertible debt or equity
securities, including a sale under Regulation D of the Securities Act, for such
period of time (not to exceed 90 days) as may be requested by the underwriters
subject to customary exceptions; and the Company shall cause each holder of its
privately placed convertible debt or equity securities issued by it at any time
on or after the date of this Warrant to agree not to effect any public sale or
distribution of any such securities during such period, including a sale
pursuant to Rule 144 or Rule 144A under the Securities Act.
(g) Preemptive Rights. In the event the Company offers to the
Company's shareholders the right to purchase any securities of the Company, then
all shares of Common Stock issuable pursuant to the Warrants shall be deemed to
be issued and outstanding and held by the Warrantholders and the Warrantholders
shall be entitled to participate in such rights offering.
(h) Compliance with Law. The Company shall comply with all
applicable laws, rules and regulations of the Untied States and of all states,
municipalities and agencies and of any other jurisdiction applicable to the
Company and shall do all things necessary to preserve, renew and keep in full
force and effect and in good standing its corporate existence and authority
necessary to continue its business.
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8. FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon exercise hereof, the Company
shall pay to the Warrantholder an amount in cash equal to such fraction
multiplied by the Current Market Value of one share of Common Stock.
9. NOTICES OF STOCK DIVIDENDS, SUBSCRIPTIONS, RECLASSIFICATIONS,
CONSOLIDATIONS, MERGERS, ETC. If at any time: (i) the Company shall declare a
cash dividend (or an increase in the then existing dividend rate), or declare a
dividend on Common Stock payable otherwise than in cash out of its net earnings
after taxes for the prior fiscal year; or (ii) the Company shall authorize the
granting to the holders of Common Stock of rights to subscribe for or purchase
any shares of capital stock of any class or of any other rights; or (iii) there
shall be any capital reorganization, or reclassification, or redemption of the
capital stock of the Company, or consolidation or merger of the Company with or
sale of all or substantially all of its assets to, another corporation or firm;
or (iv) there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Company, then the Company shall give to the Warrantholders at
the addresses of such Warrantholders as shown on the books of the Company, at
least twenty (20) days prior to the applicable record date hereinafter
specified, a written notice summarizing such action or event and stating the
record date for any such dividend or rights (or, if a record date is not to be
selected, the date as of which the holders of Common Stock of record entitled to
such dividend or rights are to be determined), the date on which any such
reorganization, reclassification, consolidation, merger, sale of assets,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected the holders of Common Stock of record shall be
entitled to effect any exchange of their shares of Common Stock for cash (or
cash equivalent), securities or other property deliverable upon any such
reorganization, reclassification, consolidation, merger, sale of assets,
dissolution, liquidation or winding up.
10. REGISTERED HOLDER; TRANSFER OF WARRANTS OR WARRANT SHARES.
(a) Maintenance of Registered books; Ownership of this
Warrant. The Company shall keep at its principal office a register in which the
Company shall provide for the registration, transfer and change of this Warrant.
The Company shall not at any time, except upon the dissolution, liquidation or
winding-up of the Company, close such register so as to result in preventing or
delaying the exercise or transfer of this Warrant.
(b) Exchange and Replacement. This Warrant is exchangeable
upon surrender hereof by the registered holder to the Company at its principal
office for new Warrants of like tenor and date representing in the aggregate the
right to purchase the number of shares purchasable hereunder, each of such new
Warrants to represent the right to purchase such number of shares as shall be
designated by said registered holder at the time of surrender. This Warrant and
all rights hereunder are transferable in whole or in part upon the books of the
Company by the registered holder hereof in person or by duly authorized
attorney, and new Warrants shall be made and delivered by the Company, of the
same tenor and date as this Warrant bu registered in the name of the
transferee(s) upon surrender of this Warrant, duly endorsed, to said office of
the Company.
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Upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant, and upon surrender and
cancellation of this Warrant, if mutilated, the Company will make and deliver a
new Warrant of like tenor, in lieu of this Warrant, without requiring the
posting of any bond or the giving of any other security. This Warrant shall be
promptly canceled by the Company upon the surrender hereof in connection with
any exchange, transfer or replacement. The Company shall pay all expenses, taxes
and other charges payable in connection with the preparation, execution and
delivery of Warrants pursuant to this Section 10.
(c) Warrants and Warrant Shares Not Registered. The holder of
this Warrant, by accepting this Warrant, represents and acknowledges that this
Warrant and the Warrant Shares are not being registered under the Securities Act
on the grounds that the issuance of this Warrant and the offering and sale of
such Warrant Shares are exempt from registration under Section 4(2) of the
Securities Act as not involving any public offering.
11. REGISTRATION.
(a) Required Registration. Whenever the Company shall receive
a written request therefor from any holder or holders of at least 50% of the
Registrable Stock, the Company shall promptly prepare and file a registration
statement under the Securities Act covering the Registrable Stock which is the
subject of such request and shall use its best efforts to cause such
registration statement to become effective as expeditiously as possible;
provided that the Company's obligations under this Section 11(a) shall be
limited to one required registration only. Upon the receipt of such request, the
Company shall promptly give written notice to all holders of Registrable Stock
that such registration is to be effected. The Company shall include in such
registration statement such Registrable Stock for which it has received written
requests to register such shares by the holders thereof within thirty (30) days
after the effectiveness of the Company's written notice to such other holders.
Except as hereinafter expressly provided, without the written consent of the
holders of a majority of the shares of Registrable Stock for which registration
has been requested pursuant to this Section, neither the Company nor any other
holder of securities of the Company may include securities in such registration.
(b) Incidental Registration. Each time the Company shall
determine to file a registration statement under the Securities Act (other than
on From S-8 or Form S-4) in connection with the proposed offer and sale for
money of any of its securities by it or by any of its securities holders, the
company will give written notice of its determination to all holders of
Registrable Stock. Upon written request of a holder of any Registrable Stock,
the Company will cause all such Registrable Stock, the holders of which have so
requested registration thereof, to be included in such registration statement,
all to the extent requisite to permit the sale or other disposition by the
prospective seller or sellers of the Registrable Stock to be so registered in
accordance with the terms of the proposed offering. If the registration
statement is to cover an underwritten distribution, the Company shall use its
best efforts to cause the Registrable Stock requested for inclusion pursuant to
this Section 11(b) to be included in the underwriting on the same terms and
conditions as the securities otherwise being sold through the underwriters. If,
in the good faith judgment of the
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managing underwriter of such public offering, the inclusion of all the
Registrable Stock requested to be registered would materially and adversely
affect the successful marketing of the other shares proposed to be offered, then
the amount of the Registrable Stock to be included in the offering shall be
reduced and the Registrable Stock and the other shares to be offered shall
participate in such offering as follows: the shares to be sold by the company,
the Registrable Stock to be included in such offering and the other shares of
Common Stock to be included in such offering shall each be reduced pr rata in
proportion to the number of shares of Common Stock proposed to be included in
such offering by each holder of such shares and by the Company.
(c) Registration Procedures. If and whenever the Company is
required by the provisions of Section 11(a) or 11(b) to effect the registration
of Registrable Stock under the Securities Act, the Company will, at its expense,
expeditiously as possible:
(i) In accordance with the Securities Act and the
rules and regulations of the Commission, prepare and file with the Commission a
registration statement on the form of registration statement appropriate with
respect to such securities and use its best efforts to cause such registration
statement to become and remain effective until the securities covered by such
registration statement have been sold, and prepare and file with the Commission
such amendments to such registration statement and supplements to the prospectus
contained therein as may be necessary to keep such registration statement
effective and such registration statement and prospectus accurate and complete
until the securities covered by such registration statement have been sold;
(ii) If the offering is to be underwritten, in whole or
in part, enter into a written underwriting agreement with the holders of the
Registrable Stock participating in such offering and the underwriter in form and
substance reasonably satisfactory to the managing underwriter of the public
offering and the holders of the Registrable Stock participating in such
offering;
(iii) Furnish to the holders of securities participating
in such registration and to the underwriters of the securities being registered
such reasonable number of copies of the registration statement, preliminary
prospectus and such other documents as such underwriters and holders may
reasonably request in order to facilitate the public offering of such
securities;
(iv) Use its best efforts to register or qualify the
securities covered by such registration statement under such state securities or
blue sky laws of such jurisdictions as such participating holders and
underwriters may reasonably request.
(v) Notify the holders participating in such
registration, promptly after it shall receive notice thereof, of the date and
time when such registration statement and each post-effective amendment thereto
has become effective or a supplement to any prospectus forming a part of such
registration statement has been filed;
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(vi) Notify such holders promptly of any request by
the Commission for the amending or supplementing of such registration statement
or prospectus or for additional information;
(vii) Prepare and file with the Commission, promptly
upon the request of any such holders, any amendments or supplements to such
registration statement or prospectus which, in the opinion of counsel for such
holders, is required under the Securities Act or the rules and regulations
thereunder in connection with the distribution or the Registrable Stock by such
holders;
(viii) Prepare and promptly file with the Commission,
and promptly notify such holders of the filing of, such amendments or
supplements to such registration statement or prospectus as may be necessary to
correct any statements or omissions if, at the time when a prospectus relating
to such securities is required to be delivered under the Securities Act, any
event has occurred as the result of which any such prospectus or any other
prospectus is then in effect may include an untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading;
(ix) In case any of such holders or any underwriter for
any such holders is required to deliver a prospectus at a time when the
prospectus then in circulation is not in compliance with the Securities Act or
the rules and regulations of the Commission, prepare promptly upon request such
amendments or supplements to such registration statement and such prospectus as
may be necessary in order for such prospectus to comply with the requirements of
the Securities Act and such rules and regulations;
(x) Advise such holders, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop order by
the Commission suspending the effectiveness of such registration statement or
the initiation or threatening of any proceeding for that purpose and promptly
use its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued;
(xi) If requested by the managing underwriter or
underwriters or a holder of Registrable Stock being sold in connection with an
underwritten offering, immediately incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriters and the
holders of a majority of the Registrable Stock being sold agree should be
included therein relating to the plan of distribution with respect to such
Registrable Stock, including information with respect to the Registrable Stock
being sold to such underwriters, the purchase price being paid for by such
underwriters and with respect to any other terms of the underwritten (or best
efforts underwritten) offering of the Registrable Stock to be sold in such
offering; and make all required filings of such prospectus supplement or
post-effective amendment as soon as notified of the matters to be incorporated
in such prospectus supplement or post-effective amendment;
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(xii) Cooperate with the selling holders of
Registrable Stock and the managing underwriters, if any, to facilitate the
timely preparation and delivery of certificates representing Registrable Stock
to be sold and not bearing any restrictive legends; and enable such Registrable
Stock to be in such denominations and registered in such names as the managing
underwriters may request at least two business days prior to any sale of
Registrable Securities to the underwriters;
(xiii) Prepare a prospectus supplement or
post-effective amendment to the registration statement or the related prospectus
or any document incorporated therein by reference or file any other required
documents so that, as thereafter delivered to the purchasers of the Registrable
Stock, the prospectus will not contain an untrue statement of material fact or
omit to state any material fact necessary to make the statements therein not
misleading;
(xiv) Enter into such agreements (including an
underwriting agreement) and take all such other actions in connection therewith
in order to expedite or facilitate the disposition of such Registrable
Securities and in such connection, whether or not an underwriting agreement is
entered into and whether or not the registration is an underwritten
registration:
(A) make such representations and
warranties to the holders of such Registrable Stock and the underwriters, if
any, in form, substance and scope as are customarily made by issuers to
underwriters in primary underwritten offerings;
(B) If an underwriting agreement is
entered into, the same shall set forth in full the indemnification provisions
and procedures of Section 11(e) hereof with respect to all parties to be
indemnified pursuant to said Section; and
(C) The Company shall deliver such
documents and certificates as may be requested by the holders of the majority of
the Registrable Stock being sold and the managing underwriters, if any, to
evidence compliance with the terms of this Section 11(c) and with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company.
The above shall be done at each
closing under such underwriting or similar agreement or as and to the extend
required thereunder;
(xv) Make available for inspection by a
representative of the holders of a majority of the Registrable Stock, any
underwriter participating in any disposition pursuant to a registration
statement, and any attorney or accountant retained by the sellers or
underwriter, all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such
representative, underwriter, attorney or accountant in connection with the
preparation of the registration statement; provided, that any records,
information or documents that are designated
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by the Company in writing as confidential shall be kept confidential by such
persons unless disclosure of such records, information or documents is required
by court or administrative order;
(xvi) Otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and make generally
available to the Company's security holders, earning statements satisfying the
provisions of Section 11(a) of the Securities Act, no later than forty-five (45)
days after the end of any twelve (12) month period (or ninety (90) days, if such
a period is a fiscal year) (i) commencing at the end of any fiscal quarter in
which Registrable Stock is sold to underwriters in an underwritten offering, or,
if not sold to underwriters in such an offering, (ii) beginning with the first
month of the Company's first fiscal quarter commencing after the effective date
of the registration statement;
(xvii) Not file any amendment or supplement to such
registration statement or prospectus to which a majority in interest of such
holders has objected on the grounds that such amendment or supplement does not
comply in all material respects with the requirements of the Securities Act or
the rules and regulations thereunder, after having been furnished with a copy
thereof at least five (5) business days prior to the filing thereof; provided,
however, that the failure of such holders or their counsel to review or object
to any amendment or supplement to such registration statement or prospectus
shall not affect the rights of such holders or any controlling person or persons
thereof or any underwriter or underwriters therefor under Section 11(e) hereof;
and
(xviii) At the request of any such holder (i) furnish
to such holder on the effective date of the registration statement or, if such
registration includes an underwritten public offering, at the closing provided
for in the underwriting agreement; an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, addressed to the
underwriters, if any, and to the holder or holders making such request, covering
such matters with respect to the registration statement, the prospectus and each
amendment or supplement thereto, proceedings under state and federal securities
laws, other matters relating to the Company, the securities being registered and
the offer and sale of such securities as are customarily the subject of opinions
of issuer's counsel provided to underwriters in underwritten public offerings,
and such opinion of counsel shall additionally cover such legal and factual
matters with respect to the registration as such requesting holder or holders
may reasonably request, and (ii) use its best efforts to furnish to such holder
letters dated each such effective date and such closing date, from the
independent certified public accountants of the Company, addressed to the
underwriters, if any, and to the holder or holders making such request, stating
that they are independent certified public accountants within the meaning of the
Securities Act and dealing with such matters as the underwriters may request,
or, if the offering is not underwritten, that in the opinion of such accountants
the financial statements and other financial data of the Company included in the
registration statement or the prospectus or any amendment or supplement thereto
comply in all material respects with the applicable accounting requirements of
the Securities Act, and additionally covering such other financial matters,
including information as to the period ending immediately
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prior to the date of such letter with respect to the registration statement and
prospectus, as such requesting holder or holders may reasonably request.
(d) Expenses of Registration. All expenses incident to the
Company's performance of or compliance with this Warrant, including, without
limitation, the following shall be borne by the Company, regardless of whether
the registration statement becomes effective:
(i) All registration and filing fees (including those
with respect to filings required to be made with the National Association of
Securities Dealers, Inc.);
(ii) Fees and expenses of compliance with all
securities or blue sky laws (including fees and disbursements of counsel for the
underwriters or selling holders in connection with blue sky qualifications of
the Registrable Stock and in determination of their eligibility for investment
under the laws of such jurisdictions as the managing underwriters or holders of
a majority of the Registrable Stock being sold may designate);
(iii) Printing, messenger, telephone and delivery
expenses;
(iv) Fees and disbursements of counsel for the Company
and for the sellers of the Registrable Stock as hereinafter provided;
(v) Fees and disbursements of all independent
certified public accountants of the Company (including the expenses of any
special audit and "comfort" letters required by or incident to such
performance); and
(vi) Fees and expenses of other persons retained by
the Company.
The Company will, in any event, pay its internal
expenses (including without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit, the fees and expenses incurred in connection with the listing
of securities to be registered on each securities exchange on which similar
securities issued by the Company are then listed, rating agency fees and the
fees and expenses of any person, including special experts, retained by the
Company.
In connection with the registration statement
required hereunder, the Company will reimburse the holders of Registrable Stock
being registered pursuant to the registration statement for the reasonable fees
and disbursements of not more than one counsel (or more than one counsel if
conflict exists among such selling holders in the exercise of the reasonable
judgment of counsel for the selling holders and counsel for the Company) chosen
by the holders of a majority of such Registrable Stock.
(e) Indemnification.
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(i) The Company hereby agrees to indemnify each of the
holders of Registrable Stock against all claims, losses, damages and liabilities
(or actions in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any registration
statement, preliminary or final prospectus, or other document incident to any
such registration, qualification or compliance (or in any related registration
statement, notification or the like) or any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or any violation by the Company of any
rule or regulation promulgated under the Securities Act applicable to the
Company and relating to action or inaction required of the Company in connection
with any such registration, qualification or compliance, and to reimburse the
holders of Registrable Stock (including officers and directors of the same and
controlling persons) for any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action,provided, however, that the Company will not be liable in
any such case to the extent that any such claim, loss, damage or liability
arises out of or is based on any untrue statement or omission based upon written
information furnished to the Company by the holders of the Registrable Stock in
an instrument duly executed by Warrantholders and stated to be specifically for
use therein.
(ii) The holders of the Registrable Stock severally and
not jointly agree to indemnify the Company and its officers and directors and
each person, if any, who controls any thereof within the meaning of Section 15
of the Securities Act and their respective successors against all claims,
losses, damages and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement of a material fact contained in any prospectus,
offering circular or document incident to any registration, qualification or
compliance relating to securities purchased pursuant to the Warrants (or in any
related registration statement, notification or the like) or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading and will reimburse
the Company and each other person indemnified pursuant to this subsection (ii)
for any legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action;
provided, however, that this subsection (ii) shall apply only if (and only to
the extent that) such statement or omission was made in reliance upon
information (including, without limitation, written negative responses to
inquiries) furnished to the Company by an instrument duly executed by
Warrantholders and stated to be specifically for use in such prospectus, or
other document (or related registration statement, notification or the like) or
any amendment or supplement thereto.
(iii) Each party entitled to indemnification
hereunder (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party (as such Indemnifying Party's
expense) to assume the defense of any claim or litigation resulting therefrom,
provided that counsel for the Indemnifying Party, who shall conduct the defense
of such claim or litigation, shall be satisfactory to the Indemnified Party, and
the Indemnified Party may participate in such defense at such party's
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expense, and provided, further, that the omission by any Indemnified Party of
its obligations under this Section 11(e) expect to the extent that the omission
results in a failure of actual notice to the Indemnifying Party and such
Indemnifying Party is materially damaged solely as a result of the failure to
give notice. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
the entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(iv) If the indemnification provided for in this
Section 11(e) is unavailable or insufficient to hold harmless an Indemnified
Party in respect of any losses, claims, damages, liabilities, expenses or
actions in respect thereof referred to herein, then the Indemnifying Party shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages, liabilities, expenses or actions in such
proportion a is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand, and the Indemnified Party on the other, in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities, expenses or actions as well as any other relevant equitable
considerations, including the failure to give the notice required hereunder. The
relative fault of the Indemnifying Party and the Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact relates to information supplied by the
Indemnifying Party or the Indemnified Party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Warrantholders agree that it would
not be just and equitable if contributions pursuant to this Section 11(e) were
determined by pro rata allocation or by any other method of allocation which did
not take account of the equitable considerations referred to above. The amount
paid or payable to an Indemnified Party as a result of the losses, claims,
damages, liabilities, or actions in respect thereof, referred to above, shall be
deemed to include any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending any such action
or claim. Notwithstanding the contribution provisions of this Section 11(e), in
no event shall the amount contributed by any seller of Registrable Stock exceed
the aggregate net offering proceeds received by such seller from the sale of
Registrable Stock to which such contribution or indemnification claim relates.
No person guilty of fraudulent misrepresentations (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who is not guilty of such fraudulent misrepresentations.
(v) The indemnification required by this Section 11(e)
shall be made by periodic payments during the course of the investigation or
defense, as and when bills are received or expenses incurred. Anything contained
herein to the contrary notwithstanding, the maximum aggregate liability of any
holder of Registrable Stock under this Section 11(e) shall not exceed the amount
of the net proceeds actually received by such holder from the sale of its
Registrable Stock pursuant to the registration, qualification, notification or
compliance in respect of which such liability arose.
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(f) Reporting Requirements Under Exchange Act. The Company
shall maintain the registration of its Common Stock under Section 12 of the
Exchange Act and shall keep effective such registration and shall timely file
such information, documents and reports as the Commission may require or
prescribe under Section 13 of the Exchange Act, or otherwise. The Company under
the Securities Act, the Company shall (whether or not it shall then be required
to do so) timely file such information, documents and reports as the Commission
may require or prescribe under Section 13 or 15(d) (whichever is applicable) of
the Exchange Act. The Company shall forthwith upon request furnish any holder of
Registrable Stock (i) a written statement by the Company that it has complied
with such reporting requirements; (ii) a copy of the most recent annual or
quarterly report of the Company; and (iii) such other reports and documents
filed by the Company that it has complied with the Commission as such holder may
reasonably request in availing itself of an exemption for the sale of
Registrable Stock without registration under the Securities Act. The Company
acknowledges and agrees that the purpose of the requirements contained in this
Section 11(f) is to enable any such holder to comply with the current public
information requirement contained in Rule 144 (or any other similar exemptive
provision). In addition, the Company shall take such other measures and file
such other information, documents and reports as shall hereafter be required by
the Commission as a condition to the availability of Rule 144 and Rule 144A
under the Securities Act (or any similar exemptive provision hereafter in
effect).
(g) Stockholder Information. The Company may require each
holder of Registrable Stock as to which any registration is to be effected
pursuant to this Section 11 to furnish the Company such information with respect
to such holder and the distribution of such Registrable Stock as shall be
required by law or by the Commission in connection therewith.
12. REPRESENTATION AND WARRANTIES. The Company hereby represents and
warrants to and covenants with Foothill, each Warrantholder, and each holder of
Warrant Shares that:
(a) Organization and Capitalization of the Company. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. As of the date hereof, the authorized
capital of the Company consists of 30,000,000 shares of Common Stock and
1,500,000 shares of Preferred Stock, of which 7,801,682 shares of Common Stock
and no shares of Preferred Stock are issued and outstanding. The Company has,
and at all times during the Exercise Period will have, reserved for issuance
pursuant to the Warrants that number of shares of Common Stock that are issuable
pursuant to the Warrants. No unissued shares of Common Stock are reserved for
any purpose other than for issuance upon the exercise of the Warrants. As of the
date hereof, the Company has not issued or agreed to issue any stock purchase
rights, options, convertible securities, warrants (other than this Warrant) or
any other securities or indebtedness convertible into shares of Common Stock,
and there are no preemptive rights in effect with respect to the issuance of any
shares of Common Stock. All the outstanding shares of Common Stock and Preferred
Stock have been validly issued without violation of any preemptive or similar
rights, are fully paid and nonassessable and have been issued in compliance with
all federal and applicable state securities laws.
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(b) Authority. The Company has full corporate power and
authority to execute and deliver this Warrant, to issue the shares of Common
Stock issuable upon exercise of this Warrant, and to perform all of its
obligations hereunder, and the execution, delivery and performance hereof has
been duly authorized by all necessary corporate action on its part. This Warrant
has been duly executed on behalf of t he Company and constitutes the legal,
valid and binding obligation of the Company enforceable in accordance with its
terms.
(c) No Legal Bar. Neither the execution, delivery or
performance of this Warrant nor the issuance of the shares of Common Stock
issuable upon exercise of this Warrant will (a) conflict with or result in a
violation of the Certificate of Incorporation or By-Laws of the Company, (b)
conflict with or result in a violation of any law, statue, regulation, order or
decree applicable to the Company or any affiliate, (c) require any consent or
authorization or filing with, or other act by or in respect of any governmental
authority or (d) result in a breach of, constitute a default under or constitute
an event creating rights of acceleration, termination or cancellation under any
mortgage, lease, contract, franchise, instrument or other agreement to which the
Company is a party or by which it is bound.
(d) Validity of Shares. When issued upon the exercise of this
Warrant as contemplated herein, the shares of Common Stock so issued will have
been validly issued and will be fully paid and nonassessable. On the date
hereof, the par value of the Common Stock is less than the Exercise Price per
share of Common Stock.
13. Continuing Validity. Woodbourne and each holder of Warrant Shares
shall continue to be entitled to all rights to which a Warrantholder is entitled
pursuant to the provisions of this Warrant except such rights as by their terms
apply solely to a Warrantholder, notwithstanding the fact that this Warrant has
been exercised or the period of exercisability has expired. The Company will, at
any time upon the request of Woodbourne or a holder of the Warrant Shares,
acknowledge in writing, in form reasonably satisfactory to Woodbourne or such
holder, the Company's continuing obligation to be entitled in accordance with
the provisions of this Warrant; provided, however, that if Woodbourne or such
holder shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to Woodbourne and such holder all
such rights.
14. Redemption.
(a) This Warrant may be redeemed, at the option of the
Company, at any time after August 7, 2000 until the Expiration Date, for a
redemption price equal to two times the then current Exercise Price, as adjusted
as provided in this Warrant. This Warrant must be redeemed in whole and not in
part if the Company exercises such right of redemption. All rights to exercise
this Warrant shall terminate at 12:00 midnight California local time on the
business day immediately preceding the date fixed for redemption.
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(b) In the event the Company shall exercise its right to
redeem this Warrant, it shall give notice to the Warrantholders by mailing a
notice of redemption in accordance with the provisions stated herein, not less
than 30 days prior to the redemption date.
(c) The notice of redemption shall specify the redemption
price, the date fixed for redemption, the place where this Warrant shall be
delivered and the redemption price shall be paid, and that the right to exercise
this Warrant shall terminate at 12:00 midnight California local time on the
business day immediately preceding the date fixed for redemption.
(d) Appropriate adjustment shall be made to the redemption
price on the same basis as provided in Section 6 hereof with respect to
adjustment of the Exercise Price.
(e) Effective on the date of the notice of redemption, the
appreciation right set forth in Section 4(b), and all rights of Warrantholders
under such Section 4(b), shall automatically terminate.
15. Miscellaneous Provisions.
(a) Notice of Expiration. The Company shall give written
notice to the Warrantholders specifically advising them of the Expiration Date
and of their right to exercise the Warrants not more than one hundred eighty
(180) days and not less than ninety (90) days before the Expiration Date. If
such written notice is not so given, the Expiration Date shall automatically be
extended until ninety (90) days after the date that the Company gives the
Warrantholders such written notice.
(b) Notices. All notices hereunder shall be in writing and
shall be deemed to have been given five (5) days after being mailed by certified
mail, addressed to the address below stated of the party to which notice is
given, or to such changed address as such party may have fixed by notice:
To the Company: Allied Healthcare Products, Inc.
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Mr. Xxxxx Xxxxx
Fax No.: (000) 000-0000
With copies to: Disckstein, Xxxxxxx, Xxxxx & Oskinsky, LLP
0000 X Xxxxxx XX
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Fax No.: (000) 000-0000
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To the Xxxxxxx Management Company
Warrantholders 000 Xxxxx Xxxxxxxx; Suite 825
or holder of Xx. Xxxxx, Xxxxxxxx 00000
Warrant Shares: Fax No.: (000) 000-0000
With a copy (which Xxxxxxxxxxxx, Xxxxxx & Xxxx, P.C.
shall not constitute 00 Xxxxx Xxxxxxxx; Suite 2000
notice) to: Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Fax No.: (000) 000-0000
provided, however, that any notice of change of address shall be effective only
upon receipt.
(c) Successors and Assigns. This Warrant shall be binding upon
and inure to the benefit of the Company, Foothill, the Warrantholders and the
holders of Warrant shares and the successors, assigns and transferees of the
Company, Woodbourne, the Warrantholders and the holders of Warrant Shares.
(d) Attorneys' Fees. The Company agrees to pay, on demand, all
attorneys' fees (including attorneys' fees incurred pursuant to proceedings
arising under the Bankruptcy Code) and all other costs and expenses which may be
incurred by Woodbourne, the Warrantholders and the holders of Warrant Shares in
connection with any amendment to this Warrant and/or in connection with the
enforcement of this Warrant or in any way arising out of, or consequential to
the protection, assertion, or enforcement of the Obligations under the Loan
Agreement (or any security therefor), whether or not suit is brought.
(e) Entire Agreement: Amendments and Waivers. This Warrant
sets forth the entire understanding of the parties with respect to the
transactions contemplated hereby. The failure of any party to seek redress for
the violation or to insist upon the strict performance of any term of this
Warrant shall not constitute a waiver of such term and such party shall be
entitled to enforce such term without regard to such forbearance. This Warrant
may be amended, the Company may take any action herein prohibited or omit to
take action herein required to be performed by it, and any breach of or
compliance with any covenant, agreement, warranty or representation may be
waived, only if the Company has obtained the written consent or written waiver
of the majority in interest of the Warrantholders, and then such consent or
waiver shall be effective only in the specific instance and for the specific
purpose for which given.
(f) Severability. If any term of this Warrant as applied to
any person or to any circumstance is prohibited, void, invalid or unenforceable
in any jurisdiction, such term shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or invalidity without in any way affecting any
other term of this Warrant or affecting the validity or enforceability of this
Warrant or of such provision in any other jurisdiction.
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(g) Headings. The headings in this Warrant are inserted only
for convenience of reference and shall not be used in the construction of any of
its terms.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officers as of the date first set forth above.
ALLIED HEALTHCARE PRODUCTS, INC.,
a Delaware corporation
By: __________________________________
Name: Xxxxx X. Xxxxx
Title: Vice President-Finance
0203870.02
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