EXHIBIT 4.2
VERTICAL HEALTH SOLUTIONS, INC.
XXXXXXX XXXXXXXX SECURITIES CORPORATION
UNDERWRITER'S
WARRANT AGREEMENT
UNDERWRITER'S WARRANT AGREEMENT dated as of _________, 2002 by
and between VERTICAL HEALTH SOLUTIONS, INC. (the "Company") and XXXXXXX DAVIDSON
SECURITIES CORPORATION ("Underwriter" or "Xxxxxxx")
W I T N E S S E T H:
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WHEREAS, the Company proposes to issue to the Underwriter 160,000
warrants (each an "Underwriter's Warrant") each to purchase a Unit, each Unit
consisting of one share of the Company's common stock, par value $.001 per share
(the "Common Stock") and one warrant to purchase one share of Common Stock (the
"Public Warrants").
WHEREAS, the Underwriter has agreed, pursuant to the underwriting
agreement (the "Underwriting Agreement") dated ______, 2002, by and between the
Underwriter and the Company, to act as the Underwriter in connection with the
Company's proposed public offering (the "Public Offering") of 1,600,000 units
(the "Offering Securities"); and
WHEREAS, the Underwriter's Warrants to be issued pursuant to this
Agreement will be issued on the Closing Date (as such term is defined in the
Underwriting Agreement) by the Company to the Underwriter in consideration for,
and as part of, the Underwriter's compensation in connection with the
Underwriter acting as the Underwriter pursuant to the Underwriting Agreement;
NOW, THEREFORE, in consideration of the premises, the payment by the
Underwriter to the Company of Ten Dollars ($10.00), the agreements herein set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Grant. The Holder (as defined in Section 3 below) is hereby
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granted the right to purchase, at any time from _________, 2003 until 5:00 p.m.,
New York time, _______, 2007, up to 160,000 Units at an initial purchase price
(subject to adjustment as provided in Section 8 hereof) of $8.25 per Unit (165%
of the per unit public offering price), subject to the terms and conditions of
this Agreement. The securities issuable, upon exercise of the Underwriter's
Warrant are sometimes referred to herein as the "Underwriter's Securities."
2. Warrant Certificates. The warrant certificate (the
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"Underwriter's Warrant Certificate") to be delivered pursuant to this Agreement
shall be in the form set forth in Exhibit A attached hereto and made a part
hereof, with such appropriate insertions, omissions, substitutions, and other
variations as required or permitted by this Agreement.
3. Exercise of Underwriter's Warrant.
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(a) The Underwriter's Warrant is exercisable during the term
set forth in Section 1 hereof payable by certified or cashier's check or money
order in lawful money of the United States. Upon surrender of Underwriters'
Warrant Certificate with the annexed Form of Election to Purchase duly executed,
together with payment of the Purchase Price (as hereinafter defined) for the
Underwriter's Securities (and such other amounts, if any, arising pursuant to
Section 4 hereof) at the Company's principal office currently located at 0000
000xx Xxxxxx Xxxxx Xxxxx 000, Xxxxx, Xxxxxxx 00000 the registered holder of a
Underwriter's Warrant Certificate ("Holder" or "Holders") shall be entitled to
receive a certificate or certificates for the Underwriter's Securities so
purchased. The purchase rights represented by each Underwriter's Warrant
Certificate are exercisable at the option of the Holder or Holders thereof, in
whole or in part as to Underwriter's Securities. The Underwriter's Warrant may
be exercised to purchase all or any part of the Underwriter's Securities
represented thereby. In the case of the purchase of less than all the
Underwriters' Securities purchasable on the exercise of the Underwriters'
Warrant represented by a Underwriters' Warrant Certificate, the Company shall
cancel the Underwriters' Warrant Certificate represented thereby upon the
surrender thereof and shall execute and deliver a new Underwriters' Warrant
Certificate of like tenor for the balance of the Underwriters' Securities
purchasable thereunder.
(b) In lieu of the payment of cash upon exercise of the
Underwriters' Warrant as provided in Section 3(a), the Holder may exercise the
Underwriters' Warrant by surrendering the Underwriters' Warrant Certificate at
the principal office of the Company, accompanied by a notice stating (i) the
Holder's intent to effect such exercise by an exchange, (ii) Common Stock to be
issued upon the exchange, (iii) whether Underwriters' Warrants are to be
surrendered in connection with the exchange, and (iv) the date on which the
Holder requests that such exchange is to occur. The Purchase Price for the
Underwriters' Securities to be acquired in the exchange shall be paid by the
surrender as indicated in the notice, of Underwriters' Warrants, having a
"Value", as defined below, equal to the Purchase Price. "Value" as to each
Underwriters' Warrant shall mean the difference between the "Market Price", as
hereinafter defined, of a share of Common Stock and a Public Warrant and the
then Purchase Price for a Unit.
By way of example of the application of the formula, assume
that the Market Price of the Common Stock is $7.00 and the Market Price of a
public warrant is $1.00, the Purchase Price of the Underwriters' Warrant is
$6.00. On such assumptions, the Value of a Underwriters' Warrant is $2.00
($8.00-$6.00) and therefore for each three Underwriters' Warrants surrendered,
the Holder could acquire one share of Common Stock in the exchange.
Notwithstanding the example, the Holder shall not be limited to exchanging
Underwriters' Warrants for Common Stock or Warrants.
The Warrant Exchange shall take place on the date specified in the
notice or if the date the notice is received by the Company is later than the
date specified in the notice, on the date the notice is received by the Company.
4. Issuance of Certificates. Upon the exercise of the
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Underwriters' Warrant and payment of the Purchase Price therefor, the issuance
of certificates representing the Underwriters' Securities or other securities,
properties or rights underlying such Underwriters'
Warrant, shall be made forthwith (and in any event within five (5) business days
thereafter) without further charge to the Holder thereof, and such certificates
shall (subject to the provisions of Sections 5 and 7 hereof) be issued in the
name of, or in such names as may be directed by, the Holder thereof; provided,
however, that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
such certificates in a name other than that of the Holder, and the Company shall
not be required to issue or deliver such certificates unless or until the person
or persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid. The Underwriters' Warrant Certificates and the
certificates representing the Underwriters' Securities or other securities,
property or rights (if such property or rights are represented by certificates)
shall be executed on behalf of the Company by the manual or facsimile signature
of the then present Chairman or Vice Chairman of the Board of Directors or
President or Vice President of the Company, attested to by the manual or
facsimile signature of the then present Secretary or Assistant Secretary or
Treasurer or Assistant Treasurer of the Company. The Underwriters' Warrant
Certificates shall be dated the date of issuance thereof by the Company upon
initial issuance, transfer or exchange.
5. Restriction On Transfer of Underwriters' Warrant. The Holder
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of an Underwriters' Warrant Certificate (and its Permitted Transferee, as
defined below), by its acceptance thereof, covenants and agrees that the
Underwriters' Warrant may be sold, transferred, assigned, hypothecated or
otherwise disposed of, in whole or in part, until _______, 2003 (one year
following the effective date of the Public Offering), only to officers and
partners of the Underwriters, or any Public Offering selling group member and
their respective officers and partners, ("Permitted Transferees"). Thereafter
the Underwriters' Warrant may be transferred, assigned, hypothecated or
otherwise disposed of in compliance with applicable law.
6. Purchase Price.
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(a) Initial and Adjusted Purchase Price. Except as otherwise
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provided in Section 8 hereof, the initial purchase price of the Underwriters'
Securities shall be $8.25 per Unit (165% of the per Unit public offering price).
The adjusted purchase price shall be the price which shall result from time to
time from any and all adjustments of the initial purchase price in accordance
with the provisions of Section 8 hereof.
(b) Purchase Price. The term "Purchase Price" herein shall
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mean the initial purchase price or the adjusted purchase price, depending upon
the context.
7. Registration Rights.
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(a) Registration Under the Securities Act of 1933 as amended
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("Act"). The Underwriters' Warrant may have not been registered under the Act.
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The Underwriters' Warrant Certificates may bear the following legend:
"The securities represented by this certificate have not been
registered under the
Securities Act of 1933 (the "Act"), and may not be offered for sale or sold
except pursuant to (i) an effective registration statement under the Act, or
(ii) an opinion of counsel, if such opinion and counsel shall be reasonably
satisfactory to counsel to the issuer, that an exemption from registration under
the Act is available".
(b) Demand Registration. (1) At any time commencing on the
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first anniversary of and expiring on the fifth anniversary of the effective date
of the Company's Registration Statement relating to the Public Offering (the
"Effective Date"), the Holders of a Majority (as hereinafter defined) in
interest of the Underwriters' Warrant, or the Majority in interest of the
Underwriters' Securities (assuming the exercise of all of the Underwriters'
Warrant) shall have the right, exercisable by written notice to the Company, to
have the Company prepare and file with the U.S. Securities and Exchange
Commission (the "Commission"), on one (1) occasion, a registration statement on
Form XX-0, X-0 or other appropriate form, and such other documents, including a
prospectus, as may be necessary in the opinion of both counsel for the Company
and counsel for the Holders, in order to comply with the provisions of the Act,
so as to permit a public offering and sale, of the Underwriters' Securities by
such Holders and any other Holders of the Underwriters' Warrant and/or the
Underwriters' Securities who notify the Company within fifteen (15) business
days after receipt of the notice described in Section 7(b)(2). The Holders of
the Underwriters' Warrant may demand registration prior to exercising the
Underwriters' Warrant, and may pay such exercise price from the proceeds of such
public offering.
(2) The Company covenants and agrees to give written notice of any
registration request under this Section 7(b) by any Holders to all other
registered Holders of the Underwriters' Warrant and the Underwriters' Securities
within ten (10) calendar days from the date of the receipt of any such
registration request.
(3) For purposes of this Agreement, the term "Majority" in reference to
the Holders of the Underwriters' Warrant or Underwriters' Securities, shall mean
in excess of fifty percent (50%) of the then outstanding Underwriters' Warrant
or Underwriters' Securities that (i) are not held by the Company, an affiliate,
officer, creditor, employee or agent thereof or any of their respective
affiliates, members of their family, persons acting as nominees or in
conjunction therewith, or (ii) have not been resold to the public pursuant to a
registration statement filed with the Commission under the Act.
(c) Piggyback Registration. (1) If, at any time within the
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period commencing on the first anniversary and expiring on the sixth anniversary
of the Effective Date, the Company should file a registration statement with the
Commission under the Act (other than in connection with a merger or other
business combination transaction or pursuant to Form S-8), it will give written
notice at least twenty (20) calendar days prior to the filing of each such
registration statement to the Underwriter and to all other Holders of the
Underwriters' Warrant and/or the Underwriters' Securities of its intention to do
so. If an Underwriter or other Holders of the Underwriters' Warrant and/or the
Underwriters' Securities notify the Company within fifteen (15) calendar days
after receipt of any such notice of its or their desire to include any
Underwriters' Securities in such proposed registration statement, the Company
shall afford the Underwriter and such Holders of the Underwriters' Warrant
and/or Underwriters' Securities the opportunity to have any such Underwriters'
Securities registered under such registration statement. Notwithstanding the
provisions of this Section 7(c)(1) and the provisions of Section 7(d), the
Company shall have the right at any time after it shall have given written
notice pursuant to this Section 7(c)(1) (irrespective of whether a written
request for inclusion of any such securities shall have been made) to elect not
to file any such proposed registration statement, or to withdraw the same after
the filing but prior to the effective date thereof.
(2) If the managing underwriter of an offering to which the
above piggyback rights apply, in good faith and for valid business reasons,
objects to such rights, such objection shall preclude such inclusion.
(d) Covenants of the Company With Respect to Registration.
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In connection with any registrations under Sections 7(b) and 7(c) hereof, the
Company covenants and agrees as follows:
(1) The Company shall use its best efforts to file a
registration statement within thirty (30) calendar days of receipt of any demand
therefor pursuant to Section 7(b); provided, however, that the Company shall not
be required to produce audited or unaudited financial statements for any period
prior to the date such financial statements are required to be filed in a report
on Form 10-KSB or Form 10-QSB, as the case may be. The Company shall use its
best efforts to have any registration statement declared effective at the
earliest possible time, and shall furnish each Holder desiring to sell
Underwriters' Securities such number of prospectuses as shall reasonably be
requested.
(2) The Company shall pay all costs (excluding fees and
expenses of Holders' counsel and any underwriting discounts or selling fees,
expenses or commissions), fees and expenses in connection with any registration
statement filed pursuant to Sections 7(b) and 7(c) hereof including, without
limitation, the Company's legal and accounting fees, printing expenses, blue sky
fees and expenses.
(3) The Company will use its best efforts to qualify or
register the Underwriters' Securities included in a registration statement for
offering and sale under the securities or blue sky laws of such states as
reasonably are requested by the Holders, provided that the Company shall not be
obligated to execute or file any general consent to service of process or to
qualify as a foreign corporation to do business under the laws of any such
jurisdiction.
(4) The Company shall indemnify the Holders of the
Underwriters' Securities to be sold pursuant to any registration statement and
each person, if any, who controls such Holders within the meaning of Section 15
of the Act or Section 20(a) of the Securities Exchange Act of 1934 (the
"Exchange Act"), against all loss, claim, damage, expense or liability
(including all expenses reasonably incurred in investigating, preparing or
defending
against any claim whatsoever) to which any of them may become subject under the
Act, the Exchange Act or otherwise, arising from such registration statement,
but only to the same extent and with the same effect as the provisions pursuant
to which the Company has agreed to indemnify the Underwriter contained in
Section 8 of the Underwriting Agreement.
(5) The Holders of the Underwriters' Securities to be
sold pursuant to a registration statement, and their successors and assigns,
shall indemnify the Company, its officers and directors and each person, if any,
who controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, against all loss, claim, damage or expense or
liability to which they may become subject under the Act, the Exchange Act or
otherwise, arising from information furnished by or on behalf of such Holders,
or their successors or assigns, for specific inclusion in such registration
statement to the same extent and with the same effect as the provisions
contained in Section 8 of the Underwriting Agreement pursuant to which the
Underwriter has agreed to indemnify the Company.
(6) Nothing contained in this Agreement shall be
construed as requiring the Holders to exercise their Underwriters' Warrant prior
to the initial filing of any registration statement or the effectiveness
thereof, provided that such Holders have made arrangements reasonably
satisfactory to the Company to pay the exercise price from the proceeds of such
offering.
(7) The Company shall furnish to each Underwriter for
the offering, if any, such documents as such Underwriter may reasonably require.
(8) The Company shall as soon as practicable after the
effective date of the registration statement, and in any event within 15 months
thereafter, make "generally available to its security holders" (within the
meaning of Rule 158 under the Act) an earnings statement (which need not be
audited) complying with Section 11(a) of the Act and covering a period of at
least 12 consecutive months beginning after the effective date of the
registration statement.
(9) The Company shall deliver promptly to each Holder
participating in the offering requesting the correspondence described below and
any managing Underwriter copies of all correspondence between the Commission and
the Company, its counsel or auditors with respect to the registration statement
and permit each Holder and Underwriter to do such investigation, upon reasonable
advance notice, with respect to information contained in or omitted from the
registration statement as it deems reasonably necessary to comply with
applicable securities laws or rules of the National Association of Securities
Dealers, Inc. ("NASD"). Such investigation shall include access to books,
records and properties and opportunities to discuss the business of the Company
with its officers and independent auditors, all to such reasonable extent and at
such reasonable times and as often as any such Holder shall reasonably request.
(10) The Company shall enter into an underwriting
agreement with the managing underwriter selected for such underwriting by
Holders holding a Majority of
the Underwriters' Securities requested to be included in such underwriting,
provided, however that such managing underwriter shall be reasonably acceptable
to the Company, except that in connection with an offering for which the Holders
have piggyback rights, the Company shall have the sole right to select the
managing underwriter or underwriters. Such underwriting agreement shall be
satisfactory in form and substance to the Company, a Majority of such Holders
(in respect of a registration under Section 7(b) only) and such managing
underwriter, and shall contain such representations, warranties and covenants by
the Company and such other terms as are customarily contained in agreements of
that type. The Holders shall be parties to any underwriting agreement relating
to an underwritten sale of their Underwriters' Securities. Such Holders shall
not be required to make any representations or warranties to or agreements with
the Company or the underwriters except as they may relate to such Holders and
their intended methods of distribution.
8. Adjustments to Purchase Price and Number of Securities.
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(a) Computation of Adjusted Purchase Price. Except as
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hereinafter provided, in case the Company shall at any time after the date
hereof issue or sell any shares of Common Stock (other than the issuances
referred to in Section 8(g) hereof), including shares held in the Company's
treasury, for a consideration per share less than the "Market Price" (as defined
in Section 8(a)(6) hereof) per share of Common Stock on the date immediately
prior to the issuance or sale of such shares, or without consideration, then
forthwith upon any such issuance or sale, the Purchase Price of the Common Stock
shall (until another such issuance or sale) be reduced to the price (calculated
to the nearest full cent) determined by dividing (1) the product of (a) the
Purchase Price in effect immediately before such issuance or sale and (b) the
sum of (i) the total number of shares of Common Stock outstanding immediately
prior to such issuance or sale, and (ii) the number of shares determined by
dividing (A) the aggregate consideration, if any, received by the Company upon
such sale or issuance, by (B) the Market Price, and by (2) the total number of
shares of Common Stock outstanding immediately after such issuance or sale
provided, however, that in no event shall the Purchase Price be adjusted
pursuant to this computation to an amount in excess of the Purchase Price in
effect immediately prior to such computation, except in the case of a
combination of outstanding shares of Common Stock, as provided by Section 8(c)
hereof.
For the purposes of this Section 8, the term "Purchase Price" shall
mean the Purchase Price of the Common Stock forming a part of the Underwriters'
Securities set forth in Section 6 hereof, as adjusted from time to time pursuant
to the provisions of this Section 8.
For the purposes of any computation to be made in accordance with this
Section 8(a), the following provisions shall be applicable:
(1) In case of the issuance or sale of shares of Common Stock (or of
other securities deemed hereunder to involve the issuance or sale of shares of
Common Stock) for a consideration part or all of which shall be cash, the amount
of the cash consideration therefor
shall be deemed to be the amount of cash received by the Company for such shares
(or, if shares of Common Stock are offered by the Company for subscription, the
subscription price, or, if such securities shall be sold to Underwriters or
dealers for public offering without a subscription offering, the initial public
offering price) before deducting therefrom any compensation paid or discount
allowed in the sale, underwriting or purchase thereof by Underwriters or dealers
or others performing similar services, or any expenses incurred in connection
therewith.
(2) In case of the issuance or sale (otherwise than as a dividend or other
distribution on any stock of the Company, and otherwise than on the exercise of
options, rights or warrants or the conversion or exchange of convertible or
exchangeable securities) of shares of Common Stock (or of other securities
deemed hereunder to involve the issuance or sale of shares of Common Stock) for
a consideration part or all of which shall be other than cash, the amount of the
consideration therefor other than cash shall be deemed to be the value of such
consideration as determined in good faith by the Board of Directors of the
Company.
(3) Shares of Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have been issued
immediately after the opening of business on the day following the record date
for the determination of stockholders entitled to receive such dividend or other
distribution and shall be deemed to have been issued without consideration.
(4) The reclassification of securities of the Company other than shares
of Common Stock into securities including shares of Common Stock shall be deemed
to involve the issuance of such shares of Common Stock for a consideration other
than cash immediately prior to the close of business on the date fixed for the
determination of security holders entitled to receive such shares, and the value
of the consideration allocable to such shares of Common Stock shall be
determined as provided in Section 8(a)(2).
(5) The number of shares of Common Stock at any one time outstanding shall
include the aggregate number of shares of Common Stock issued or issuable
(subject to readjustment upon the actual issuance thereof) upon the exercise of
options, rights or warrants and upon the conversion or exchange of convertible
or exchangeable securities.
(6) As used herein in the phrase "Market Price" at any date shall be
deemed to be the last reported sale price, or, in the case no such reported sale
takes place on such day, the average of the last reported sales prices for the
last three (3) trading days, in either case as officially reported by the
principal securities exchange on which the Common Stock is listed or admitted to
trading, or, if the Common Stock is not listed or admitted to trading on any
national securities exchange, the average closing bid price as furnished by the
NASD through the NASD Automated Quotation System ("NASDAQ") or similar
organization if NASDAQ is no longer reporting such information, or if the Common
Stock is not quoted on NASDAQ, as determined in good faith by resolution of the
Board of Directors of the Company, based on the best information available to
it.
(b) Options, Rights, Warrant and Convertible and Exchangeable
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Securities. Except in the case of the Company issuing rights to subscribe for
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shares of Common Stock distributed to all the stockholders of the Company and
Holders of Underwriters' Warrant pursuant to Section 8(i) hereof, if the Company
shall at any time after the date hereof issue options, rights or warrants to
purchase shares of Common Stock, or issue any securities convertible into or
exchangeable for shares of Common Stock (other than the issuances referred to in
Section 8(g) hereof), (i) for a consideration per share less than the Market
Price (including the issuance thereof without consideration such as by way of
dividend or other distribution), or (ii) without consideration, the Purchase
Price in effect immediately prior to the issuance of such options, rights or
warrants, or such convertible or exchangeable securities, as the case may be,
shall be reduced to a price determined by making a computation in accordance
with the provisions of Section 8(a) hereof, provided that:
(1) The aggregate maximum number of shares of Common
Stock issuable or that may become issuable under such options, rights or
warrants (assuming exercise in full even if not then currently exercisable or
currently exercisable in full) shall be deemed to be issued and outstanding at
the time such options, rights or warrants were issued, and for a consideration
equal to the minimum purchase price per share provided for in such options,
rights or warrants at the time of issuance, plus the consideration (determined
in the same manner as consideration received on the issue or sale of shares in
accordance with the terms of the Underwriters' Warrant), if any, received by the
Company for such options, rights or warrants; provided, however, that upon the
expiration or other termination of such options, rights or warrants, if any
thereof shall not have been exercised, the number of shares of Common Stock
deemed to be issued and outstanding pursuant to this Section 8(b)(1) (and for
the purposes of Section 8(a)(5) hereof) shall be reduced by such number of
shares as to which options, warrants and/or rights shall have expired or
terminated unexercised, and such number of shares shall no longer be deemed to
be issued and outstanding, and the Purchase Price then in effect shall forthwith
be readjusted and thereafter be the price which it would have been had
adjustment been made on the basis of the issuance only of shares actually issued
or issuable upon the exercise of those options, rights or warrants as to which
the exercise rights shall not be expired or terminated unexercised.
(2) The aggregate maximum number of shares of Common
Stock issuable upon conversion or exchange of any convertible or exchangeable
securities (assuming conversion or exchange in full even if not then currently
convertible or exchangeable in full) shall be deemed to be issued and
outstanding at the time of issuance of such securities, and for a consideration
equal to the consideration (determined in the same manner as consideration
received on the issue or sale of shares of Common Stock in accordance with the
terms of the Underwriters' Warrant) received by the Company for such securities,
plus the minimum consideration, if any, receivable by the Company upon the
conversion or exchange thereof; provided, however, that upon the expiration or
other termination of the right to convert or exchange such convertible or
exchangeable securities (whether by reason or redemption or otherwise), the
number of shares deemed to be issued and outstanding pursuant to this Section
8(b)(2) (and for the purpose of Section 8(a)(5) hereof) shall be reduced by such
number of shares as to which the conversion or exchange rights shall have
expired or terminated unexercised, and
such number of shares shall no longer be deemed to be issued and outstanding and
the Purchase Price then in effect shall forthwith be readjusted and thereafter
be the price which it would have been had adjustment been made on the basis of
the issuance only of the shares actually issued or issuable upon the conversion
or exchange of those convertible or exchangeable securities as to which the
conversion or exchange rights shall not have expired or terminated unexercised.
(3) If any change shall occur in the price per share
provided for in any of the options, rights or warrants referred to in Section
8(b)(1), or in the price per share at which the securities referred to in
Section 8(b)(2) are convertible or exchangeable, and if a change in the Purchase
Price has not occurred by reason of the event giving rise to the change in the
price per share of such other options, rights, warrants, or convertible or
exchangeable securities, such options, rights or warrants or conversion or
exchange rights, as the case may be, to the extent not theretofore exercised,
the shall be deemed to have expired or terminated on the date when such price
change became effective in respect of shares not theretofore issued pursuant to
the exercise or conversion or exchange thereof, and the Company shall be deemed
to have issued upon such date new options, rights or warrants or convertible or
exchangeable securities at the new price in respect of the number of shares
issuable upon the exercise of such options, rights or warrants or the conversion
or exchange of such convertible or exchangeable securities.
(c) Subdivision and Combination. In case the Company shall
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at any time issue any shares of Common Stock in connection with a stock dividend
in shares of Common Stock or subdivide or combine the outstanding shares of
Common Stock, the Purchase Price shall forthwith be proportionately decreased in
the case of a stock dividend or a subdivision or increased in the case of
combination.
(d) Adjustment in Number of Securities. Upon each adjustment
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of the Purchase Price pursuant to the provisions of this Section 8, the number
of Underwriters' Securities issuable upon the exercise of the Underwriters'
Warrant shall be adjusted to the nearest whole share by multiplying a number
equal to the Purchase Price in effect immediately prior to such adjustment by
the number of Underwriters' Securities issuable upon exercise of the
Underwriters' Warrant immediately prior to such adjustment and dividing the
product so obtained by the adjusted Purchase Price.
(e) Definition of Common Stock. For the purpose of this
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Agreement, the term "Common Stock" shall mean the class of stock designated as
Common Stock in the Certificate of Incorporation, of the Company as it may be
amended as of the date hereof.
(f) Reclassification, Merger or Consolidation. The Company
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will not merge, reorganize or take any other action which would terminate the
Underwriters' Warrant without first making adequate provision for the
Underwriters' Warrant. In case of any reclassification or change of the
outstanding shares of Common Stock issuable upon exercise of the outstanding
warrants (other than a change in par value to no par value, or from nor par
value to par value, or as a result of a subdivision or combination), or in case
of any consolidation of the
Company with, or merger of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger in which the Company
is the continuing corporation and which does not result in any reclassification
or change of the outstanding Common Stock except a change as a result of a
subdivision or combination of such shares or a change in par value, as
aforesaid), or in the case of a sale or conveyance to another corporation or
other entity of the property of the Company as an entirety or substantially as
an entirety, the Holders of each Underwriters' Warrant then outstanding or to be
outstanding shall have the right thereafter (until the expiration of such
Underwriters' Warrant) to purchase, upon exercise of such Underwriters' Warrant,
the kind and number of shares of stock and other securities and property
receivable upon such reclassification, change, consolidation, merger, sale or
conveyance as if the Holders were the owner of the shares of Common Stock
underlying the Underwriters' Warrant immediately prior to any such events at a
price equal to the product of (x) the number of shares issuable upon exercise of
the Underwriters' Warrant and (y) the Purchase Price in effect immediately prior
to the record date for such reclassification, change, consolidation, merger,
sale or conveyance, as if such Holders had exercised the Underwriters' Warrant.
In the event of a consolidation, merger, sale or conveyance of property, the
corporation formed by such consolidation or merger, or acquiring such property,
shall execute and deliver to the Holders a supplemental Underwriters' warrant
agreement to such effect. Such supplemental Underwriters' warrant agreement
shall provide for adjustments which shall be identical to the adjustment
provided for in this Section 8. The provisions of this Section 8(f) shall
similarly apply to successive consolidations or mergers.
(g) No Adjustment of Purchase Price in Certain Cases. No
------------------------------------------------
adjustment of the Purchase Price shall be made:
(1) Upon the issuance or sale of (i) the Underwriters'
Warrant or the securities underlying the Underwriters' Warrant, (ii) the
securities sold pursuant to the Public Offering (including those sold upon
exercise of the Underwriters' over-allotment option), or (iii) the shares
issuable pursuant to the options, warrants, rights, stock purchase agreements or
convertible or exchangeable securities outstanding or in effect on the date
hereof as described in the prospectus relating to the Public Offering.
(2) If the amount of said adjustments shall aggregate
less than two ($.02) cents for one (1) share of Common Stock; provided, however,
that in such case any adjustment that would otherwise be required then to be
made shall be carried forward and shall be made at the time of and together with
the next subsequent adjustment which, together with any adjustment so carried
forward, shall aggregate at least two ($.02) cents for one (1) share of Common
Stock. In addition, Registered Holders shall not be entitled to cash dividends
paid by the Company prior to the exercise of any warrant or warrants held by
them.
9. Exchange and Replacement of Warrant Certificates. Each
------------------------------------------------
Underwriters' Warrant Certificate is exchangeable without expense, upon the
surrender thereof by the registered Holders at the principal executive office of
the Company, for a new Underwriters' Warrant Certificate of like tenor and date
representing in the aggregate the right to purchase the
same number of Underwriters' Securities in such denominations as shall be
designated by the Holders thereof at the time of such surrender.
10. Loss, Theft etc. of Certificates. Upon receipt by the
--------------------------------
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of any Underwriters' Warrant Certificate, and, in case
of loss, theft or destruction, of indemnity or security reasonably satisfactory
to it, and reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of the Underwriters' Warrant
Certificates, if mutilated, the Company will make and deliver a new
Underwriters' Warrant Certificate of like tenor, in lieu thereof.
11. Elimination of Fractional Interests. The Company shall not
-----------------------------------
be required to issue certificates representing fractions of shares of Common
Stock upon the exercise of the Underwriters' Warrant, nor shall it be required
to issue scrip or pay cash in lieu of fractional interests; provided, however,
that if a Holder exercises all Underwriters' Warrant held of record by such
Holder the fractional interests shall be eliminated by rounding any fraction to
the nearest whole number of shares of Common Stock or other securities,
properties or rights.
12. Reservation and Listing of Securities. The Company shall
-------------------------------------
at all times reserve and keep available out of its authorized shares of Common
Stock, solely for the purpose of issuance upon the exercise of the Underwriters'
Warrant, such number of shares of Common Stock or other securities and
properties or rights as shall be issuable upon the exercise thereof. The Company
covenants and agrees that, upon exercise of Underwriters' Warrant and payment of
the Purchase Price therefor, all the shares of Common Stock issuable upon such
exercise shall be duly and validly issued, fully paid, non-assessable and not
subject to the preemptive rights of any stockholder. As long as the
Underwriters' Warrant shall be outstanding, the Company shall use its best
efforts to cause the Common Stock to be listed (subject to official notice of
issuance) on all securities exchanges on which the Common Stock issued to the
public in connection herewith may then be listed or quoted.
13. Notices to Underwriters' Warrant Holders. Nothing contained
----------------------------------------
in this Agreement shall be construed as conferring upon the Holders the right to
vote or to consent or to receive notice as a stockholder in respect of any
meetings of stockholders for the election of directors or any other matter, or
as having any rights whatsoever as a stockholder of the Company. If, however, at
any time prior to the expiration of the Underwriters' Warrant and their
exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its
shares of Common Stock for the purpose of entitling them to receive a dividend
or distribution payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of current or retained earnings, as
indicated by the accounting treatment of such dividend or distribution on the
books of the Company; or
(b) the Company shall offer to all the holders of its Common
Stock
any additional shares of capital stock of the Company or securities convertible
into or exchangeable for shares of capital stock of the Company, or any option,
right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety shall be
proposed; then, in any one or more of said events, the Company shall give
written notice of such event at least fifteen (15) calendar days prior to the
date fixed as a record date or the date of closing the transfer books for the
determination of the stockholders entitled to such dividend, distribution,
convertible or exchangeable securities or subscription rights, or entitled to
vote on such proposed dissolution, liquidation, winding up or sale. Such notice
shall specify such record date or the date of closing the transfer books, as the
case may be. Failure to give such notice or any defect therein shall not affect
the validity of any action taken in connection with the declaration or payment
of any such dividend, or the issuance of any convertible or exchangeable
securities, or subscription rights, options or warrants, or any proposed
dissolution, liquidation, winding up or sale.
14. Notices. All notices, requests, consents and other
-------
communications hereunder shall be in writing and shall be deemed to have been
duly made when delivered, or five days after being mailed by registered or
certified mail, return receipt requested: If to the registered Holders of the
Underwriters' Warrant, to the address of such Holders as shown on the books of
the Company; or
(a) If to the Company to 0000 000xx Xxxxxx Xxxxx Xxxxx 000,
Xxxxx, Xxxxxxx 00000 or to such other address as the Company may designate by
notice to the Holders.
15. Supplements and Amendments. The Company and the Underwriter
--------------------------
may from time to time supplement or amend this Agreement without the approval of
any Holders of Underwriters' Warrant Certificates (other than the Underwriters)
in order to cure any ambiguity, to correct or supplement any provision contained
herein which may be defective or inconsistent with any provisions herein, or to
make any other provision in regard to matters or questions arising hereunder
which the Company and the Underwriters may deem necessary or desirable and which
the Company and the Underwriters deem shall not adversely affect the interests
of the Holders of Underwriters' Warrant Certificates.
16. Successors. All the covenants and provisions of this
----------
Agreement shall be binding upon and inure to the benefit of the Company, the
Underwriter, the Holders and their respective successors and assigns hereunder.
17. Termination. This Agreement shall terminate at the close of
-----------
business on _______, 2007. Notwithstanding the foregoing, the indemnification
provisions of Section 7 shall survive such termination until the close of
business on the expiration of any applicable statue of limitations.
18. Governing Law; Submission to Jurisdiction. This Agreement
-----------------------------------------
and each Underwriters' Warrant Certificate issued hereunder shall be deemed to
be a contract made under the laws of the State of New York and for all purposes
shall be construed in accordance with the laws of said state without giving
effect to the rules of said state governing the conflicts of laws.
19. Entire Agreement; Modification. This Agreement (including
------------------------------
the Underwriting Agreement, to the extent portions thereof are referred to
herein) contains the entire understanding between the parties hereto with
respect to the subject matter hereof and thereof. This Agreement may not be
modified or amended except by a writing duly signed by the Company and the
Holders of a Majority in Interest of the Underwriters' Securities (for this
purpose, treating all then outstanding Underwriters' Warrants as if they had
been exercised).
20. Severability. If any provision of this Agreement shall be
------------
held to be invalid or unenforceable, such invalidity or unenforceability shall
not affect any other provision of this Agreement.
21. Captions. The caption headings of the Sections of this
--------
Agreement are for convenience of reference only and are not intended, nor should
they be construed as, a part of this Agreement and shall be given no substantive
effect.
22. Benefits of this Agreement. Nothing in this Agreement shall be
--------------------------
construed to give to any person or corporation other than the Company and the
Underwriter and any other registered Holders of the Underwriters' Warrant
Certificates or Underwriters' Securities any legal or equitable right, remedy or
claim under this Agreement; and this Agreement shall be for the sole and
exclusive benefit of the Company and the Underwriter and any other Holders of
the Underwriters' Warrant Certificates or Underwriters' Securities.
23. Counterparts. This Agreement may be executed in any number
------------
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and such counterparts shall together constitute but one and
the same instrument.
24. Binding Effect. This Agreement shall be binding upon and
--------------
inure to the benefit of the Company, the Underwriters and their respective
successors and assigns and the Holders from time to time of the Underwriters'
Warrant Certificates or any of them.
[Signature on following page]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
VERTICAL HEALTH SOLUTIONS, INC.
By:
---------------------------------
Name: Xxxxxxx Xxxxxxx
XXXXXXX XXXXXXXX SECURITIES CORP.,
By:
---------------------------------
Name: Xxxxxxx Xxxxxxx
Title: CEO
Schedule A
to
Underwriters' Warrant Agreement
Between
VERTICAL HEALTH SOLUTIONS, INC.
XXXXXXX XXXXXXXX SECURITIES CORPORATION
Underwriter
Xxxxxxx Davidson Securities Corp.
VERTICAL HEALTH SOLUTIONS, INC.
-------------------------------
WARRANT CERTIFICATE
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT"), AND MAY NOT BE OFFERED FOR SALE OR SOLD
EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR
(ii) AN OPINION OF COUNSEL, IF SUCH OPINION AND COUNSEL SHALL BE REASONABLY
SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER
THE ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE COMMENCING ___________, 2003 THROUGH
5:00 P.M., NEW YORK TIME ON __________, 2007
Warrant covering 160,000 units
No. UW-1
This Warrant Certificate certifies that Xxxxxxx Xxxxxxxx
Securities Corp. or registered assigns, is the registered holder of this Warrant
to purchase initially, at any time from _________, 2003, until 5:00 p.m., New
York time on ________, 2007 (the "Expiration Date"), up to 160,000 Units, each
Unit consisting of one share of Common Stock, $.001 par value (the "Common
Stock") of Vertical Health Solutions, Inc. ("Company") and one warrant to
purchase common stock at $6.25 per share, at a purchase price of $8.25 per Unit
(165% of the per share public offering price) (the "Purchase Price"), upon the
surrender of this Warrant Certificate and payment of the applicable Purchase
Price at an office or agency of the Company, but subject to the conditions set
forth herein and in the Underwriters' Warrant Agreement, dated as of ________,
2002, by and between the Company and Xxxxxxx Davidson Securities Corp. (the
"Warrant Agreement"). Payment of the Purchase Price shall be made by certified
or cashier's check or money order payable to the order of the Company or through
a cashless exercise by surrending the Warrant Certificate pursuant to the
Underwriter Agreement.
No Warrant may be exercised after 5:00 p.m., New York time, on
the Expiration Date, at which time all Warrant evidenced hereby, unless
exercised prior thereto, shall thereafter be void.
The Warrant evidenced by this Warrant Certificate is part of a
duly authorized issue of Warrants issued pursuant to the Warrant Agreement
between the Company and the
Underwriter, which Warrant Agreement is hereby incorporated by reference in and
made a part of this instrument and is hereby referred to for a description of
the rights, limitation of rights, obligations, duties and immunities thereunder
of the Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Warrant.
The Warrant Agreement provides that upon the occurrence of
certain events the Purchase Price and the type and/or number of the Company's
securities issuable upon the exercise of this Warrant, may, subject to certain
conditions, be adjusted. In such event, the Company will, at the request of the
holder, issue a new Warrant Certificate evidencing the adjustment in the
Purchase Price and the number and/or type of securities issuable upon the
exercise of the Warrant; provided, however, that the failure of the Company to
issue such new Warrant Certificates shall not in any way change, alter, or
otherwise impair, the rights of the holder as set forth in the Warrant
Agreement.
Upon due presentment for registration of transfer of this
Warrant Certificate at an office or agency of the Company, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrant shall be issued to the transferee(s) in
exchange as provided herein, without any charge except for any tax or other
governmental charge imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced
by this Certificate, the Company shall forthwith issue to the holder hereof a
new Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof
as the absolute owner(s) of this Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone), for the purpose
of any exercise hereof, and of any distribution to the holder(s) hereof, and for
all other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined
in the Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
IN WITNESS WHEREOF, the undersigned has executed this
certificate this ___ day of _____, 2002.
Vertical Health Solutions, Inc.
By:
-------------------------------
Xxxxxxx Xxxxxxx
CEO
ATTEST:
By:
------------------------------
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED___________________________
hereby sells, assigns and transfers unto _____________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _____________________
Attorney, to transfer the within Warrant Certificate on the books of Vertical
Health Solutions, Inc. with full power of substitution.
Dated:
--------------------
Signature
------------------------------
(Signature must conform in all respects
to the name of holder as specified on the face of the Warrant Certificate.)
[Signature guarantee]
--------------------------------
(Insert Social Security or Other
Identifying Number of Holders)
FORM OF ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise the right, represented by
this Warrant Certificate, to purchase ______ units and herewith tenders in
payment for such securities a certified or cashier's check or money order
payable to the order of Vertical Health Solutions, Inc. in the amount of
$______, all in accordance with the terms hereof. The undersigned requests that
certificates for such securities be registered in the name of
___________________________ whose address is _____________________ and that such
certificates be delivered to _____________________________________ whose address
is __________________________________________________________.
Dated:
Signature
----------------------------------
(Signature must conform in all respects to the name of holder as specified on
the face of the Warrant Certificate.)
(Insert Social Security or Other
Identifying Number of Holders)
[Signature guarantee]
