1
EXHIBIT 4.10
FORM OF CAPITAL STOCK PURCHASE WARRANT
TO SUBSCRIBE FOR AND PURCHASE CAPITAL STOCK OF
BALANCED CARE CORPORATION
--------------------------------------------------
THIS CERTIFIES that, for value received, ____________________________
(together with any subsequent transferees of all or any portion of this Warrant,
the "Holder"), is entitled, upon the terms and subject to the conditions
hereinafter set forth, to subscribe for and purchase from Balanced Care
Corporation, a Delaware corporation (hereinafter called the "Company"), at the
Warrant Purchase Price as defined in Section 3, up to that number of fully paid
and non-assessable shares of the Company's Capital Stock as set forth in Section
2.
1. Definitions. As used herein the following terms shall have the
following meanings:
"Act" means the Securities Act of 1933 as amended, or a similar Federal
statute and the rules and regulations of the Commission issued under that Act,
as they each may, from time to time be in effect.
"Capital Stock" means each and every class or series of authorized
capital stock and Convertible Securities of the Company, including but not
limited to common stock, preferred stock or any form of convertible capital
stock, regardless of voting, dividend and liquidation rights and regardless of
any other powers, preferences and relative participating, optional or other
special rights, qualifications, limitations or restrictions.
"Commission" means the Securities and Exchange Commission, or any other
Federal agency at the time administering the securities laws of the United
States.
"Common Stock" means all stock of any class or classes (however
designated) of the Company, authorized upon the date hereof or thereafter, the
holders of which shall have the right, without limitation as to amount, either
to all or to a share of the balance of current dividends and liquidating
dividends after the payment of dividends and distributions on any shares
entitled to preference, and the holders of which shall ordinarily, in the
absence of contingencies, be entitled to vote for the election of a majority of
directors of the Company (even though the right so to vote has been suspended
by the happenings of such a contingency).
"Convertible Securities" means any evidences of indebtedness, shares
(other than shares of Capital Stock) or other securities convertible into or
exchangeable for Capital Stock.
"Exchange Act" means the Securities Exchange Act of 1934 as amended, or
a similar Federal statute and the rules and regulations
2
of the Commission issued under the Exchange Act, as they each may, from time to
time, be in effect.
"Options" means rights, options or warrants to subscribe for, purchase
or otherwise acquire either Capital Stock or Convertible Securities.
"Other Securities" means any stock (other than Common Stock) and other
securities of the Company or any other Person (corporate or other) which the
Holder of this Warrant at any time shall be entitled to receive, or shall have
received, upon the exercise of this Warrant, in lieu of or in addition to
Common Stock, or which at any time shall be issuable or shall have been issued
in exchange for or in replacement of Common Stock or Other Securities pursuant
to Section 8.2 hereof or otherwise.
"Person" means, without limitation, an individual, a partnership, a
corporation, a limited liability company, a trust, a joint venture, an
incorporated organization, a government or any department or agency thereof or
any other entity.
"Registration Statement" means a registration statement on Form S-1,
Form S-2, Form S-3, Form S-11 Or Form S-18 or any successor form or forms used
for the purpose specified by such forms filed by the Company with the
Commission under the Act for a public offering and sale of securities of the
Company.
"Shares" means the shares of the Company's Capital Stock as set forth
in Section 2 issued or issuable to the Holder upon the exercise of this Warrant
and any other shares of capital stock of the Company issued with respect to
such shares (because of stock splits, stock dividends, reclassifications,
recapitalizations, mergers, consolidations, or similar events); provided,
however, that any shares previously sold by the Holder to the public pursuant to
a registered public offering or Rule 144 under the Act shall cease to be within
the definition of "Shares" as used herein.
2. The Shares Subject to this Warrant. This Warrant shall be exercisable
for up to ( ) shares of Common Stock,
as the same may be adjusted pursuant to the terms of this Warrant. The Company
certifies that the only Capital Stock or Options outstanding on the date hereof
are set forth in Exhibit A attached hereto.
3. The Warrant Purchase Price. The aggregate purchase price for all of
the Shares shall be Dollars ($ ) (the "Warrant Purchase
Price").
4. Term. The purchase rights represented by this Warrant are exercisable
by the Holder, in whole or in part, at any time and from time to time commencing
on the date hereof and ending on .
-2-
3
5. Method of Exercise, Payment and Issuance. Subject to Section 4
above, the purchase rights represented by this Warrant may be exercised, in
whole or in part and from time to time, by (a) the surrender of this Warrant
and the duly executed Notice of Exercise (the form of which is attached hereto
as Exhibit B) at the principal office of the Company and by the payment to the
Company, by check or wire transfer, in an amount equal to the Warrant Purchase
Price multiplied by the percentage which the number of Shares then being
purchased bears to the total number of Shares subject to this Warrant, or (b)
if in connection with a registered public offering of the Company's securities,
the surrender of this Warrant and the duly executed Notice of Exercise (the
form of which is attached as Exhibit B-1) at the principal office of the
Company together with notice of arrangements reasonably satisfactory to the
Company for payment to the Company either by check or wire transfer or from the
proceeds received from the sale of Shares to be sold by the Holder in such
public offering of an amount equal to the then applicable Warrant Purchase Price
multiplied by the percentage which the number of Shares then being purchased
bears to the total number of Shares subject to this Warrant. Upon exercise, the
Holder shall be entitled to receive, within a reasonable time, and in any event
within thirty (30) days of receipt of such Notice, a certificate or
certificates, issued in the Holder's name or in such name or names as the
Holder may direct, for the number of Shares so purchased, and, unless this
Warrant has been fully exercised or expired, a new Warrant representing the
portion of the Shares, if any, with respect to which this Warrant shall not
then have been exercised shall also be issued to the Holder as soon as possible
and in any event within such thirty (30) day period. The Shares so purchased
shall be deemed to be issued as of the close of business on the date on which
this Warrant shall have been exercised.
6. Shares to be Issued; Reservation of Shares. The Company covenants
that all Shares that may be issued upon the exercise of the purchase rights
represented by this Warrant will, upon issuance, be fully paid in
non-assessable, and free from all taxes, liens and charges with respect to the
issue thereof. During the period within which the purchase rights represented by
this warrant may be exercised, the Company will at all times have authorized and
reserved, for the purpose of issuance upon exercise of the purchase rights
represented by this Warrant, a sufficient number of shares of its Capital Stock
to provide for the exercise of the rights represented by this Warrant. The
Company represents to the Holder that Xxxx Xxxxxxx has consented to the issuance
of this Warrant and the Shares issuable upon exercise of this Warrant and has
waived any right of first offer, first refusal or preemption that he might have
pursuant to that certain Shareholders' Agreement dated September 20, 1995 among
the shareholders of the Company (the "Shareholders' Agreement").
7. No Fractional Shares. No fractional shares shall be issued upon the
exercise of this Warrant. In lieu thereof, a cash
-3-
4
payment shall be made equal to such fraction multiplied by the fair market
value of such shares of Capital Stock, as determined in good faith by the
Company's Board of Directors.
8. Adjustments of Number of Shares.
8.1 Adjustments for Stock Splits, Etc. If the Company shall at any time
after the date hereof subdivide its outstanding Common Stock or Other
Securities, by split-up or otherwise, or combine its outstanding Common Stock
or Other Securities, or issue additional shares of its Capital Stock in payment
of a stock dividend in respect of its Common Stock or Other Securities, the
number of shares issuable on the exercise of the unexercised portion of this
Warrant shall forthwith be proportionately increased in the case of a
subdivision or stock dividend, or proportionately decreased in the case of
combination, but the Warrant Purchase Price then applicable to Shares covered
by the unexercised portion of this Warrant shall not be changed. The issuance
of Capital Stock as a dividend or other payment on shares of the Company's
Series A Preferred Stock or as a dividend in lieu of a preferred cash dividend
or interest payment on any class of Capital Stock or Other Security shall not
result in an increase in the number of shares issuable upon exercise of this
Warrant.
8.2 Adjustment for Reclassification, Reorganization, Etc. In case of
any reclassification, capital reorganization, or change of the outstanding
Common Stock or Other Securities (other than as a result of a subdivision,
combination or stock dividend), or in the case of any consolidation of the
Company with, or merger of the Company into, another Person (other than a
consolidation or merger in which the Company is the continuing corporation and
which does not result in any reclassification or change of the outstanding
Common Stock or Other Securities of the Company), or in case of any sale or
conveyance to one or more Persons of the property of the Company as an entirety
or substantially as an entirety at any time prior to the expiration of this
Warrant, then, as a condition of such reclassification, reorganization, change,
consolidation, merger, sale or conveyance, lawful provision shall be made, and
duly executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder of this Warrant, so that the Holder of this
Warrant shall have the right at any time prior to the expiration of this
Warrant to purchase, at a total price not to exceed that payable upon the
exercise of the unexercised portion of this Warrant, the kind and amount of
shares of stock and other securities and property receivable upon such
reclassification, reorganization, change, consolidation, merger, sale or
conveyance by a holder of the number of shares of Common Stock or Other
Securities of the Company as to which this Warrant was exercisable immediately
prior to such reclassification, reorganization, change, consolidation, merger,
sale or conveyance, and in any such case appropriate provision shall be made
with respect to the rights and interests of the Holder of this Warrant to the
end that the
-4-
5
provisions hereof (including, without limitation, the number of shares
purchasable upon exercise of this Warrant) shall thereafter be applicable in
relation to any shares of stock, and other securities and property, thereafter
deliverable upon exercise hereof.
8.3 Certificate of Adjustment. Whenever the number of shares
issuable hereunder is adjusted, as herein provided, the Company shall promptly
deliver to the registered Holder of this Warrant a certificate of the Treasurer
of the Company, which certificate shall state (i) the number of shares of Common
Stock (or Other Securities) issuable hereunder after such adjustment, (ii) the
facts requiring such adjustment, and (iii) the method of calculation for such
adjustment and increase or decrease.
9. No Dilution of Impairment. The Company will not, by amendment
of its Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Warrant, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all such action as may
be necessary or appropriate in order to protect the rights of the Holder
against dilution or other impairment. Without limiting the generality of the
foregoing, the Company (a) will not increase the par value of any shares of
Capital Stock receivable on the exercise of the warrant above the amount
payable therefor on such exercise, (b) will take all such action as may be
necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Capital Stock on the exercise of
the Warrant from time to time, and (c) will not transfer all or substantially
all of its properties and assets to any other Person (corporate or otherwise),
or consolidate with or merge into any other Person or permit any such Person to
consolidate with or merge into the Company (if the Company is not the surviving
Person), unless such other Person shall expressly assume in writing and agree
to be bound by all the terms of this Warrant.
10. Right of First Refusal.
(a) Subject to the rights of Xxxx Xxxxxxx existing on the date
hereof, the Company hereby grants to the Holder a right of first refusal to
purchase, on a pro rata basis, all or any part of New Securities (as defined
below) which the Company may, from time to time, propose to sell and
issue, subject to the terms and conditions set forth below. The Holder's pro
rata share, for purposes of this Section 10, shall equal a fraction, the
numerator of which is the number of shares of Common Stock then held by the
Holder as a result of the exercise of this Warrant and/or issuable
-5-
6
upon exercise of this Warrant, and the denominator of which is the total number
of shares of Common Stock then outstanding, plus the number of shares of Common
Stock issuable upon conversion or exercise of then outstanding Capital Stock.
(b) "New Securities" shall mean any Capital Stock, whether or not now
authorized, and Options; provided, however, that the term "New Securities" does
not include (i) the Shares issuable under this Warrant; (ii) securities issued
as a result of any stock split, stock dividend or reclassification of Common
Stock, distributable on a pro rata basis to all holders of Common Stock or
(iii) Capital Stock issued to employees of the Company pursuant to any
compensatory stock option plan or pursuant to an employee stock purchase plan.
(c) In the event the Company intends to issue New Securities, it shall
give the Holder written notice of such intention, describing the type of New
Securities to be issued, the price thereof and the terms upon which the Company
proposes to effect such issuance. The Holder shall have thirty (30) days from
the date of any such notice to agree to purchase all or part of its pro rata
share of such New Securities for the price and upon the terms and conditions
specified in the Company's notice by giving written notice to the Company
stating the quantity of New Securities to be so purchased.
(d) In the event the Holder fails to exercise the foregoing right of
first refusal with respect to any New Securities within such thirty (30)-day
period, the Company may within one hundred twenty (120) days thereafter sell any
or all of such New Securities not agreed to be purchased by the Holder, at a
price and upon terms no more favorable to the purchasers thereof than specified
in the notice given to the Holder pursuant to paragraph (c) above. In the event
the Company has not sold such New Securities within such one hundred twenty
(120)-day period, the Company shall not thereafter issue or sell any New
Securities, without first offering such New Securities to the Holder in the
manner provided above.
(e) The provisions of this Section 10 shall expire on, and shall not be
available in connection with, the occurrence of the initial public offering of
the Company.
11. Notices of Record Date Etc. In the event of:
(a) any taking by the Company of a record of the holders of any Capital
Stock for the purpose of determining the holders thereof who are entitled to
receive any dividend or other distribution, or any right to subscribe for,
purchase, or otherwise acquire any shares of Capital Stock or any other
securities or property, or to receive any other right; or
-6-
7
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the Capital Stock or any transfer of all or substantially
all of the assets of the Company to or consolidation or merger of the Company
with or into any other Person; or
(c) any voluntary or involuntary dissolution, liquidation or winding-up
of the Company; or
(d) any proposed issue or grant by the Company of any shares of Capital
Stock, or any right or option to subscribe for, purchase or otherwise acquire
any shares of stock of any class or any other securities of the Company (other
than (i) the issue of Common Stock (or Other Securities) on the exercise of this
Warrant, (ii) stock options to purchase shares of Common Stock which may be
granted to employees of the Company or the issuance of such shares pursuant to
the exercise of such options, and (iii) any shares issued in transactions to
which Sections 8.1 or 8.2 of this Warrant applies);
then and in each such event the Company will mail or cause to be mailed to the
Holder of this Warrant a notice specifying (i) the date on which any such record
is to be taken for the purpose of such dividend, distribution or right, and
stating the amount and character of such dividend, distribution or right, (ii)
the date on which any such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up is to
take place, and the time, if any is to be fixed, as of which the holders of
record of Common Stock (or Other Securities) shall be entitled to exchange their
shares of Common Stock (or Other Securities) for securities or other property
deliverable upon such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up, and
(iii) the amount and character of any stock of any class or other securities of
the Company, or rights or options with respect thereto, proposed to be issued or
granted, the date of such proposed issue or grant and the persons or class of
persons to whom such proposed issue or grant is to be offered or made. Such
notice shall be mailed at least twenty (20) days prior to the date therein
specified.
12. Registration.
12.1 Registration of Shares. If at any time the Company proposes to
register any shares of its Capital Stock under the Act (other than pursuant to a
registration statement on Forms S-8, S-4 or similar or successor forms) for its
own account or the account of any security holders, it shall promptly (but not
less than thirty (30) days prior to and no more than sixty (60) days prior to
the filing date of such registration statement pursuant to this Section 12) give
written notice to the Holder, or if this Warrant has been exercised in full or
in part, to the Holder and to the
-7-
8
record holder of the Shares issued upon exercise of this Warrant, of its
intention to do so (which notice shall include a list of the jurisdictions in
which the Company intends to attempt to qualify such securities under the
applicable blue sky, or other state securities laws and the estimated filing
date for the registration statement). For purposes of this Section 12, the
Holder and the record holder of such Shares are referred to as the "Holder".
Upon the written request, given within thirty (30) days after receipt of any
such notice, of each Holder (the "Selling Shareholders") to register any Shares
(which request shall specify the Shares intended to be sold or disposed of by
such Holders and shall state the intended method of disposition of such Shares
by the prospective seller), the Company shall use its best efforts to cause all
such Shares to be registered under the Act promptly upon receipt of the written
request of such Holders for the registration, all to the extent required to
permit the sale or other disposition (in accordance with the intended methods
thereof, as aforesaid) by the prospective seller or sellers of the Shares so
registered. However, the Company shall not be required to include such Shares in
any such registration if and to the extent that, in the opinion of the managing
underwriter for such offering, in the event that the proposed registration under
this Subsection 12.1 is, in whole or in part, an underwritten public offering,
the inclusion of such Shares would adversely affect the marketing of such
proposed offering or if the Selling Shareholders have not agreed to enter into
an underwriting agreement in customary form with the underwriters and to refrain
from selling any additional Shares for such reasonable period following the
effective date of the offering as such managing underwriter may request. If the
number of Shares to be offered by the Selling Shareholders is so reduced (but
the Selling Shareholders are permitted to include some Shares in such
registration), then the Shares that may be included by the Selling Stockholders
shall be allocated in proportion, as nearly as practicable, to the respective
amounts of Shares initially sought to be registered by such Selling Shareholders
in connection with such registration statement.
12.2. Registration Mechanics. If and whenever the Company is required to
use its best efforts to effect or cause the registration of any Shares under the
Act as provided in this Warrant, the Company shall, as expeditiously as
possible:
12.2.1. use its best efforts to prepare and file with the Commission
within ninety (90) days after receipt of a request for registration with respect
to such Shares, a registration statement on any form for which the Company then
qualifies or which counsel for the Company shall deem appropriate and which form
shall be available for the sale of the Shares in accordance with the intended
methods of distribution thereof, and use its best efforts to cause such
registration statement to become effective; provided that before filing with the
Commission a registration statement or prospectus or any amendments or
-8-
9
supplements thereto, the Company will (i) furnish to one counsel selected
by such Selling Shareholders copies of all such documents proposed to be filed,
which documents will be subject to the review of such counsel and (ii) notify
each Selling Shareholder of any stop order issued or threatened by the
Commission and take all reasonable actions required to prevent the entry of such
stop order or to remove it if entered;
12.2.2 prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for a period
of not less than one hundred twenty (120) days or such shorter period which will
terminate when all Shares covered by such registration statement have been sold
(but not before the expiration of the applicable prospectus delivery period
referred to in Section 4(3) of the Act and Rule 174, or any successor thereto,
thereunder, if applicable), and comply with the provisions of the Act with
respect to the disposition of all Shares covered by such registration statement
during such period in accordance with the intended methods of disposition by the
Selling Shareholders set forth in such registration statement;
12.2.3. furnish to each Selling Shareholder and each underwriter, if any,
of Shares covered by such registration statement such number of copies of such
registration statement, each amendment and supplement thereto (in each case
including all exhibits thereto), and the prospectus included in such
registration statement (including each preliminary prospectus), in conformity
with the requirements of the Act, and such other documents as such Selling
Shareholder may reasonably request in order to facilitate the disposition of the
shares owned by such Selling Shareholder;
12.2.4 use its best efforts to register or qualify such shares under such
other state securities or "blue sky" laws of such jurisdictions as any Selling
Shareholder and underwriter, if any, of Shares covered by such registration
statement reasonably requests, including without limitation Massachusetts, and
do any and all other acts and things which may be reasonably necessary or
advisable to enable such Selling Shareholder and each underwriter, if any, to
consummate the disposition in such jurisdiction of the Shares owned by such
Selling Shareholder; provided that the Company will not be required to (i)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph 12.2.4; (ii) subject
itself to taxation in any such jurisdiction or (iii) consent to general service
of process in any such jurisdiction;
12.2.5. use its best efforts to cause the Shares covered by such
registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of the
business and operations of the
-9-
10
Company to enable the Selling Shareholders thereof to consummate the
disposition of such Shares;
12.2.6. immediately notify each Selling Shareholder of such
Shares during a time when a registration statement relating thereto is
effective under the Act of the happening of any event which comes to the
Company's attention if as a result of such event the prospectus included in
such registration statement contains any untrue statement of a material fact or
omits to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, and the
Company will promptly prepare and furnish to such Selling Shareholder and file
with the Commission a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Shares, such prospectus will not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading;
12.2.7. enter into such customary agreements (including an
underwriting agreement in customary form) and take all such other actions as
the Selling Shareholders of a majority (by number of Shares) of the Shares
being sold or the underwriters, if any, reasonably request in order to expedite
or facilitate the disposition of such Shares, including customary
indemnification;
12.2.8. make available for inspection by any Selling
Shareholder, any underwriter participating in any disposition pursuant to such
registration statement, and any attorney, accountant or other agent retained by
such Selling Shareholder or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information and respond to all inquiries reasonably requested by any
such Person in connection with such registration statement;
12.2.9. use its best efforts to obtain a "cold comfort" letter
from the Company's independent public accountants in customary form and
covering such matters of the type customarily covered by "cold comfort" letters
as the Selling Shareholders who hold a majority of the Shares being sold or the
underwriter reasonably request; and
12.2.10. otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its shareholders, as soon as reasonably practicable, an earnings
statement covering a period of at least twelve (12) months, beginning with the
first fiscal quarter ending after the effective date of the registration
statement (as the term "effective date" is defined in Rule 158(c) under the
Act), which
-10-
11
earnings statement shall satisfy the provisions of Section 11(a) of the Act and
Rule 158 thereunder.
12.3. Expenses. The Company shall pay all expenses incurred in
connection with each registration pursuant to this Section 12, including,
without limitation, all Commission and blue sky registration and filing fees,
underwriting discounts, commissions and expenses, printing expenses, transfer
agents' and registrars' fees, the fees and disbursements of the Company's legal
counsel and accountants used by the Company in connection with said
registration and the fees and disbursements for one legal counsel representing
all of the Selling Shareholders; except that the Selling Shareholder shall pay
all underwriting discounts and commissions attributable to the inclusion in the
offering of the Shares being sold by such Selling Shareholder, and the fees and
disbursements of any additional legal counsel.
12.4. Restrictions on Public Sale.
12.4.1. Each Selling Shareholder, if requested by the managing
underwriter or underwriters in connection with any initial public offering of
Shares of the Company, agrees not to effect any public sale or distribution of
Shares during the five (5) business days prior to, and during the 180-day
period beginning on, the effective date of such initial public offering.
12.4.2. If the Company has previously filed a Registration
Statement, with respect to Shares, and if such previous registration has not
been withdrawn or abandoned, the Company will not file or cause to be effected
any other registration of any of its Shares under the Act (except on Forms S-4
or S-8 or such other forms as shall be prescribed under the Act for the same
purpose) until a period of at least ninety (90) days has elapsed from the
effective date of such previous registration.
12.5. Indemnification.
12.5.1. The Company will indemnify, to the full extent
permitted by law, each Selling Shareholder, its officers and directors and each
person who controls such Selling Shareholder (within the meaning of the Act and
the Exchange Act) against all losses, claims, damages, liabilities and expenses
caused by any untrue or alleged untrue statement of a material fact contained
in any registration statement, Prospectus or Preliminary Prospectus or any
omission or alleged omission to state therein a material fact necessary to make
the statements therein (in the case of the Prospectus or any Preliminary
Prospectus, in light of the circumstances under which they were made) not
misleading, except insofar as the same are caused by or contained in any
information with respect to such Selling Shareholder furnished in writing to
the Company by such Selling Shareholder expressly for use therein. The Company
will also indemnify underwriters, selling brokers,
-11-
12
dealer managers and similar securities industry professionals participating in
the distribution, their officers and directors and each person who controls
such persons (within the meaning of the Act) to the same extent as provided
above with respect to the indemnification of the holders of the Company.
12.5.2. In connection with any registration hereunder, each
Selling Shareholder will furnish to the Company in writing such information and
affidavits with respect to such Selling Shareholder as the Company reasonably
requests for use in connection with any registration statement or Prospectus
and agrees to indemnify, to the full extent permitted by law, the Company, its
directors and officers, and each person who controls such persons (within the
meaning of the Act and the Exchange Act) against any losses, claims, damages,
liabilities and expenses resulting from any untrue or alleged untrue statement
of a material fact or any omission or alleged omission to state a material fact
necessary to make the statements in the registration statement or Prospectus or
Preliminary Prospectus (in the case of the Prospectus or any Preliminary
Prospectus, in light of the circumstances under which they were made) not
misleading, to the extent, but only to the extent, that such untrue statement or
omission is contained in any information or affidavit with respect to such
Selling Shareholder so furnished in writing by such Selling Shareholder. In no
event shall the liability of any Selling Shareholder hereunder be greater in
amount than the dollar amount of the net proceeds received by such holder upon
the sale of the Shares giving rise to such indemnification obligation. The
Company shall be entitled to receive indemnities from underwriters, selling
brokers, dealer managers and similar securities industry professionals
participating in the distribution, to the same extent as provided above with
respect to information with respect to such persons so furnished in writing by
such persons specifically for inclusion in any Prospectus or registration
statement.
12.5.3. Any Person entitled to indemnification hereunder will
(x) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification, and (y) unless in such indemnified
party's reasonable judgment a conflict of interest may exist between such
indemnified and indemnifying parties with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. Whether or not such defense is assumed
by the indemnifying party, the indemnifying party will not be subject to any
liability for any settlement made without its consent (but such consent will
not be unreasonably withheld). No indemnifying party will consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation. An indemnifying party who is not entitled to, or elects not, to,
assume the defense of a claim
-12-
13
will not be obligated to pay the fees and expenses of more than one counsel for
all parties indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgement of any indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim, in which event the indemnifying
party shall be obligated to pay the fees and expenses of such additional
counsel or counsels.
12.5.4. if for any reason the indemnification provided for in
clauses 12.5.1 and 12.5.2 is unavailable to an indemnified party as contemplated
by clauses 12.5.1 and 12.5.2, then the indemnifying party shall contribute to
the amount paid or payable by the indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect not
only the relative benefits received by the indemnified party and the
indemnifying party, but also the relative fault of the indemnified party and the
indemnifying party, as well as any other relevant equitable considerations,
provided that no Selling Shareholder shall be required to contribute in an
amount greater than the difference between the net proceeds received by such
Selling Shareholder with respect to the sale of any Shares and the sum of the
cost to the Selling Shareholders of such Shares and all amounts already expended
by such Selling Shareholder with respect to such claims.
12.6. Co-ordination with Shareholders' Agreement. The provisions
of this Section 12 are intended to work in an identical manner as the similar
provisions set forth in the Shareholders' Agreement and for that purpose the
term "Selling Shareholders" as used herein shall include all Persons who
exercise registration rights under the Shareholders' Agreement.
13. Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit
the sale of the Shares to the public without registration, at all times after
ninety (90) days after any Registration Statement shall have become effective,
the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Act;
(b) use its best efforts to file with the Commission in a timely manner
all reports and other documents required of the Company under the Act and the
Exchange Act; and
(c) furnish to each Holder, promptly upon request, a written statement
by the Company as to its compliance with the reporting requirements of Rule
144, the Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents so filed
by the Company as such holder
-13-
14
may reasonably request in availing itself of any rule or regulation of the
Commission allowing such Holder to sell any Shares without registration.
14. Rights and Obligations Survive Exercise and Expiration of Warrant.
The rights and obligations of the Company and the Holder set forth in Sections
12 and 13 shall survive the exercise and expiration of this Warrant.
15. No Rights as Stockholder. This Warrant does not entitle the Holder
to any voting rights or other rights as a stockholder of the Company prior to
exercise of this Warrant and the payment for the shares of Capital Stock so
purchased. Notwithstanding the foregoing, the Company agrees to transmit to the
Holder such information, documents and reports as are distributed to holders of
the Capital Stock of the Company concurrently with the distribution thereof to
the stockholders. Upon valid exercise of this Warrant and payment for the
shares of Capital Stock so purchased in accordance with the terms of the
Warrant, the Holder or the Holder's designee, as the case may be, shall be
deemed a stockholder of the Company.
16. Modifications and Waivers. This Warrant may not be changed, waived,
discharged or terminated except by an instrument in writing signed by the party
against which enforcement of the same is sought.
17. Notices. Any notice, request or other document required or permitted
to be given or delivered to the Holder hereof or the Company shall be
delivered, or shall be sent by certified or registered mail, postage prepaid,
if to the Holder, at its address shown on the books of the Company and if to
the Company, at the address indicated therefor on the signature page of this
Warrant.
18. Loss, Theft, Destruction or Mutilation of Warrant. The Company
covenants with the Holder that upon its receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and of an indemnity or security reasonably satisfactory to it, and
upon reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this Warrant, if mutilated, the
Company will make and deliver a new warrant, or like tenor, in lieu of the
lost, stolen, destroyed or mutilated Warrant.
19. Binding Effect on Successors. This Warrant shall be binding upon
any corporation succeeding the Company by merger, consolidation or acquisition
of all or substantially all of the Company's assets, and all of the obligations
of the Company relating to the Shares issuable upon exercise of this Warrant
shall survive the exercise and termination of this Warrant and all of the
covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the Holder. This Warrant is fully
-14-
15
transferable and the Company may treat the registered Holder of this Warrant
as such Xxxxxx appears on the Company's books at any time as the Holder for all
purposes.
20. Remedies. The Company stipulates that the remedies at law of the
Holder of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
21. Governing Law. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws
of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, Balanced Care Corporation has caused this Warrant
to be executed under seal by its officer thereunto duly authorized.
DATED:
BALANCED CARE CORPORATION
CORPORATE
SEAL
By: /s/ Xxxxx X. Xxxxx
------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
WITNESS:
/s/ Xxxxx X. Xxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxx
-15-
16
SCHEDULE TO EXHIBIT 4.10 FILED PURSUANT TO INSTRUCTION 2 TO
ITEM 601(a) OF REGULATION S-K
CAPITAL STOCK WARRANT
______________________________________________________________________________
Holder Transaction Shares Date/Term Purchase Price
-------- ----------- ------ --------- --------------
Meditrust Mortgage Harmony Manor 61,237 5/2/96; $100.00/aggregate
Investments, Inc. 10 years
Meditrust Mortgage Xxxxxx 552,439 8/30/96; $600.00/aggregate
Investments, Inc. as ascribed
to the Loan
Agreement
Meditrust State College 82,820 8/2/96; $100.00/aggregate
Acquisition & Altoona as ascribed
Corporation, II to the State
College Lease
Meditrust Arkansas 213,997 11/1/96; $214.00/aggregate
Acquisition as ascribed
Corporation, II to the Facility
Lease between
Holder and
Balanced Care
at Blytheville,
Inc.
Meditrust Reading 41,804 2/27/97; $42.00/aggregate
Acquisition as ascribed
Corporation, II to the Facility
Lease between
Holder and
BCC at Reading,
Inc.
