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EXHIBIT 10.2
WARRANT
TO PURCHASE COMMON STOCK OF
ARV ASSISTED LIVING, INC.
No. of Shares of Common Stock: 750,000
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1. DEFINITIONS...................................................................... 1
2. EXERCISE OF WARRANT.............................................................. 3
2.1. Manner of Exercise................................................................... 3
2.2. Payment of Taxes..................................................................... 4
2.3. Fractional Shares.................................................................... 4
2.4. Continued Validity................................................................... 4
2.5. Payment in Lieu of Shares............................................................ 5
3. TRANSFER, DIVISION AND COMBINATION............................................... 6
3.1. Transfer ............................................................................ 6
3.2. Division and Combination............................................................. 6
3.3. Expenses............................................................................. 6
3.4. Maintenance of Books................................................................. 6
4. ADJUSTMENTS...................................................................... 6
4.1. Stock Dividends, Subdivisions and Combinations....................................... 6
4.2. Certain Other Distributions.......................................................... 7
4.3. Issuance of Additional Shares of Common Stock........................................ 7
4.4. Issuance of Warrants or Other Rights................................................. 9
4.5. Issuance of Convertible Securities................................................... 10
4.6. Superseding Adjustment............................................................... 10
4.7. Other Provisions Applicable to Adjustments under this Section........................ 11
4.8. Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets..... 13
4.9. Other Action Affecting Common Stock.................................................. 14
4.10. Certain Limitations.................................................................. 14
5. NOTICES TO WARRANT HOLDERS....................................................... 14
5.1. Notice of Adjustments................................................................ 14
5.2. Notice of Corporate Action........................................................... 14
6. NO IMPAIRMENT.................................................................... 15
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION
WITH OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY................................... 15
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS............................... 16
9. RESTRICTIONS ON TRANSFERABILITY.................................................. 16
9.1. Restrictive Legend................................................................... 16
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9.2. Notice of Proposed Transfers; Requests for Registration.............................. 16
9.3. Required Registration................................................................ 17
9.4. Incidental Registration.............................................................. 17
9.5. Registration Procedures.............................................................. 18
9.6. Expenses............................................................................. 20
9.7. Indemnification and Contribution..................................................... 20
9.8. ................................................................................ 21
9.9. Termination of Restrictions.......................................................... 21
9.10. Listing on Securities Exchange....................................................... 22
9.11. Certain Limitations on Registration Rights........................................... 22
9.12. Selection of Managing Underwriters................................................... 22
10. SUPPLYING INFORMATION............................................................ 22
11. LOSS OR MUTILATION............................................................... 22
12. OFFICE OF COMPANY................................................................ 23
13. FILINGS.......................................................................... 23
14. LIMITATION OF LIABILITY.......................................................... 23
15. MISCELLANEOUS.................................................................... 23
15.1. Nonwaiver and Expenses............................................................... 23
15.2. Notice Generally..................................................................... 23
15.3. No Stockholder Rights................................................................ 24
15.4. Indemnification...................................................................... 24
15.5. Remedies............................................................................. 24
15.6. Successors and Assigns............................................................... 24
15.7. Amendment............................................................................ 25
15.8. Severability......................................................................... 25
15.9. Headings............................................................................. 25
15.10. Governing Law........................................................................ 25
EXHIBIT A SUBSCRIPTION FORM............................................................................
EXHIBIT B ASSIGNMENT FORM..............................................................................
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THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF
THIS WARRANT.
NO. OF SHARES OF COMMON STOCK: 750,000
WARRANT
To Purchase Common Stock of
ARV ASSISTED LIVING, INC.
THIS IS TO CERTIFY THAT LFSRI II ASSISTED LIVING LLC, or registered assigns, is
entitled, at any time prior to the Expiration Date (as hereinafter defined), to
purchase from ARV ASSISTED LIVING, INC., a Delaware corporation ("Company"),
750,000 shares (or such lesser number of shares as determined pursuant to
Section 2.1) of Common Stock (as hereinafter defined and subject to adjustment
as provided herein), in whole or in part, including fractional parts, at a
purchase price of $3.00 per share, all on the terms and conditions and pursuant
to the provisions hereinafter set forth.
ARTICLE 1. DEFINITIONS
As used in this Warrant, the following terms have the respective meanings set
forth below:
"Additional Shares of Common Stock" shall mean all shares of Common Stock issued
by Company after the Closing Date, other than Warrant Stock.
"Affiliate" has the meaning ascribed thereto in Rule 12b-2 promulgated under the
Exchange Act, and as in effect on the date hereof.
"Business Day" shall mean any day that is not a Saturday or Sunday or a day on
which banks are required or permitted to be closed in the State of New York or
in the State of California.
"Closing Date" shall have the meaning set forth in the Loan Agreement.
"Commission" shall mean the Securities and Exchange Commission or any other
federal agency then administering the Securities Act and other federal
securities laws.
"Common Stock" shall mean (except where the context otherwise indicates) the
common stock, $.01 par value, of Company as constituted on the Closing Date, and
any capital stock into which such common stock may thereafter be changed, and
shall also include (i) capital stock of Company of any other class (regardless
of how denominated) issued to the holders of shares of common stock upon any
reclassification thereof which is also not preferred as to dividends or assets
over any other class of stock of Company and which is not subject to redemption
and (ii) shares of common stock of any successor or acquiring corporation (as
defined in Section 4.8) received by or distributed to the holders of common
stock of Company in the circumstances contemplated by Section 4.8.
"Convertible Securities" shall mean evidences of indebtedness, shares of stock
or other securities which are convertible into or exchangeable, with or without
payment of additional consideration in cash or property, for Additional Shares
of Common Stock, either immediately or upon the occurrence of a specified date
or a specified event.
"Current Market Price" shall mean, in respect of any share of Common Stock on
any date herein specified, the average of the daily market prices for 30
consecutive Business Days commencing 45 days before such date. The daily market
price for each such Business Day shall be (i) the last sale price on such day on
the principal stock exchange or NASDAQ Stock Market ("NASDAQ") on which such
Common Stock is then listed or admitted to trading, (ii) if no sale takes place
on such day on any such exchange or NASDAQ, the average of the last reported
closing bid and asked prices on such day as officially quoted on any such
exchange or NASDAQ, (iii) if the Common Stock is not then listed or admitted to
trading on any stock exchange or NASDAQ, the average of the last reported
closing bid and asked prices on such day in the over-the-counter market, as
furnished by the National Association of Securities Dealers Automatic Quotation
System or the National Quotation Bureau, Inc., (iv) if neither such corporation
at the time is
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engaged in the business of reporting such prices, as furnished by any similar
firm then engaged in such business, or (v) if there is no such firm, as
furnished by any member of the NASD selected mutually by the Majority Holders
and Company or, if they cannot agree upon such selection, as selected by two
such members of the NASD, one of which shall be selected by the Majority Holders
and one of which shall be selected by Company.
"Current Warrant Price" shall mean, in respect of a share of Common Stock at any
date herein specified, the price at which a share of Common Stock may be
purchased pursuant to this Warrant on such date.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
"Exercise Period" shall mean the period during which this Warrant is exercisable
pursuant to Section 2.1.
"Expiration Date" shall mean April 24, 2005.
"Fully Diluted Outstanding" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be determined,
all shares of Common Stock Outstanding at such date and all shares of Common
Stock issuable in respect of this Warrant, and other options or warrants to
purchase, or securities convertible into, shares of Common Stock outstanding on
such date which would be deemed outstanding in accordance with GAAP for purposes
of determining book value or net income per share.
"GAAP" shall mean generally accepted accounting principles in the United States
of America as from time to time in effect.
"Holder" shall mean the Person in whose name the Warrant set forth herein is
registered on the books of Company maintained for such purpose.
"Loan Agreement" shall mean the Term Loan Agreement dated as of April 24, 2000
by and between Company and LFSRI II Assisted Living LLC, or any successor
agreement between such parties.
"Majority Holders" shall mean the holders of Warrants exercisable for in excess
of 50% of the aggregate number of shares of Common Stock then purchasable upon
exercise of all Warrants, whether or not then exercisable.
"NASD" shall mean the National Association of Securities Dealers, Inc., or any
successor corporation thereto.
"Notes" shall have the meaning set forth in Section 2.1.
"Other Property" shall have the meaning set forth in Section 4.8.
"Outstanding" shall mean, when used with reference to Common Stock, at any date
as of which the number of shares thereof is to be determined, all issued shares
of Common Stock, except shares then owned or held by or for the account of
Company or any subsidiary thereof, and shall include all shares issuable in
respect of outstanding scrip or any certificates representing fractional
interests in shares of Common Stock.
"Permitted Issuances" shall mean (i) the issuance of stock options or other
securities or rights pursuant to a stock option, stock purchase, equity
incentive, or similar plan or related agreement approved by Company's Board of
Directors or a committee thereof, (ii) the issuance of stock options or other
securities or rights to a director, officer, employee or consultant of Company
as approved by Company's Board of Directors or a committee thereof, (iii) the
issuance of securities upon the exercise of any stock options or other
securities or rights referred to in clause (i) or clause (ii), (iv) the issuance
of Common Stock in exchange for all or part of the principal amount of any of
Company's 6 3/4% Convertible Subordinated Notes Due 2006 (the "Convertible
Notes"), and (v) the issuance of securities upon the conversion of all or part
of the Convertible Notes.
"Person" shall mean any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, entity or
government (whether federal, state, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof).
"Restricted Common Stock" shall mean shares of Common Stock which are, or which
upon their issuance on the exercise of this Warrant would be, evidenced by a
certificate bearing the restrictive legend set forth in Section 9.1(a).
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Settlement Agreement" shall mean that certain Settlement Agreement, dated as of
September 29, 1999, among the Company, Prometheus Assisted Living LLC, Lazard
Freres Real Estate Investors L.L.C., LF
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Strategic Realty Investors II L.P., LFSRI II Alternative Partnership L.P., LFSRI
II-CADIM Alternative Partnership L.P., Atria Communities, Inc., and Kapson
Senior Quarters Corp.
"Transfer" shall mean any disposition of any Warrant or Warrant Stock or of any
interest in either thereof, which would constitute a sale thereof within the
meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in Section 9.2.
"Warrants" shall mean this Warrant and all warrants issued upon transfer,
division or combination of, or in substitution for, any thereof. All Warrants
shall at all times be identical as to terms and conditions and date, except as
to the number of shares of Common Stock for which they may be exercised.
"Warrant Price" shall mean an amount equal to (i) the number of shares of Common
Stock being purchased upon exercise of this Warrant pursuant to Section 2.1,
multiplied by (ii) the Current Warrant Price as of the date of such exercise.
"Warrant Stock" shall mean the shares of Common Stock issuable to the Holder
upon the exercise of the Warrant.
ARTICLE 2. EXERCISE OF WARRANT
SECTION 2.1 Manner of Exercise. From and after the Closing
Date and until 5:00 P.M., New York time, on the Expiration Date, Holder may
exercise this Warrant, on any Business Day, for all or any part of the number of
shares of Common Stock purchasable hereunder at the time of such exercise. In
the event that Company does not borrow an aggregate of $10,000,000 under the
Loan Agreement, the number of shares of Common Stock for which this Warrant
shall be exercisable will, at any time, be equal to (x) 75,000 shares of Common
Stock, as such number may be adjusted pursuant to Section 4 (such adjustment in
Section 4 to be calculated assuming that the number of shares of Common Stock
for which this Warrant is exercisable on the Closing Date is 75,000 shares)
multiplied by (y) the aggregate amount of borrowings made under the Loan
Agreement at such time divided by $1,000,000.
In order to exercise this Warrant, in whole or in part, Holder shall deliver to
Company at its principal office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at the office or agency designated by Company pursuant to
Section 12, (i) a written notice of ▇▇▇▇▇▇'s election to exercise this Warrant,
which notice shall specify the number of shares of Common Stock to be purchased,
(ii) payment of the Warrant Price and (iii) this Warrant. Such notice shall be
substantially in the form of the subscription form appearing at the end of this
Warrant as Exhibit A, duly executed by Holder or its agent or attorney. Upon
receipt thereof, Company shall, as promptly as practicable, and in any event
within five (5) Business Days thereafter, execute or cause to be executed and
deliver or cause to be delivered to Holder a certificate or certificates
representing the aggregate number of full shares of Common Stock issuable upon
such exercise, together with cash in lieu of any fraction of a share, as
hereinafter provided. The stock certificate or certificates so delivered shall
be, to the extent possible, in such denomination or denominations as such Holder
shall request in the notice and shall be registered in the name of Holder or,
subject to Section 9, such other name as shall be designated in the notice. This
Warrant shall be deemed to have been exercised and such certificate or
certificates shall be deemed to have been issued, and Holder or, subject to
Section 9, any other Person so designated to be named therein shall be deemed to
have become a holder of record of such shares for all purposes, as of the date
the notice, together with the cash or check or checks and this Warrant, is
received by Company as described above and all taxes required to be paid by
Holder, if any, pursuant to Section 2.2 prior to the issuance of such shares
have been paid. If this Warrant shall have been exercised in part, Company
shall, at the time of delivery of the certificate or certificates representing
Warrant Stock, deliver to Holder a new Warrant evidencing the rights of Holder
to purchase the unpurchased shares of Common Stock called for by this Warrant,
which new Warrant shall in all other respects be identical with this Warrant,
or, at the request of Holder, appropriate notation may be made on this Warrant
and the same returned to Holder. Notwithstanding any provision herein to the
contrary, Company shall not be required to register shares in the name of any
Person who acquired this Warrant (or part hereof) or any Warrant Stock otherwise
than in accordance with this Warrant.
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Payment of the Warrant Price shall be made at the option of the Holder by (i)
certified or official bank check, (ii) by the surrender of one or more of the
notes (collectively, the "Notes") issued by Company and evidencing the loans
made pursuant to the Loan Agreement, (iii) by the Holder's surrender to Company
of that number of shares of Common Stock having an aggregate Current Market
Price equal to the Current Warrant Price for Shares of Common Stock then being
purchased, (iv) a written notice to Company that Holder is exercising the
Warrant (or a portion thereof) by authorizing Company to withhold from issuance
a number of shares of Common Stock issuable upon such exercise of the Warrant
which when multiplied by the Current Market Price of the Common Stock is equal
to the Warrant Price (and such withheld shares of Common Stock shall no longer
be issuable under this Warrant), or (v) any combination thereof, duly endorsed
by or accompanied by appropriate instruments of transfer duly executed by ▇▇▇▇▇▇
or by ▇▇▇▇▇▇'s attorney duly authorized in writing. For the purposes of making
payment of the Warrant Price, the Notes shall have a value equal to 100% of the
principal amount thereof plus accrued and unpaid interest thereon to the date of
surrender in respect of payment of the Warrant Price. If a Holder surrenders
Notes having an aggregate value which exceeds the aggregate Warrant Price,
Company shall, at its option, pay the Holder an amount in cash equal to all or
part of such excess (if any) over the Warrant Price and/or issue a new Note in
the principal amount equal to that portion of such surrendered principal amount
not applied to the Warrant Price or paid in cash to the Holder. If the Holder
surrenders the Notes, the Holder shall specify the portion of the value of each
such Note surrendered to be applied toward the Warrant Price. Notwithstanding
any provision of the Loan Agreement, no payment or issuance of a Note pursuant
to this Section 2.1 or any other provision of this Warrant shall constitute a
prepayment requiring Company to pay a prepayment premium.
SECTION 2.2 Payment of Taxes. All shares of Common Stock
issued upon the exercise of this Warrant against payment of the Warrant Price
pursuant to the terms hereof shall be validly issued, fully paid and
nonassessable and without any preemptive rights. Company shall pay all expenses
in connection with, and all taxes and other governmental charges (other than
those on or measured by the income of Holder) that may be imposed with respect
to, the issue or delivery thereof. Company shall not be required, however, to
pay any tax or other charge imposed in connection with any transfer involved in
the issue of any certificate for shares of Common Stock issuable upon exercise
of this Warrant in any name other than that of Holder, and in such case Company
shall not be required to issue or deliver any stock certificate until such tax
or other charge has been paid or it has been established to the satisfaction of
Company that no such tax or other charge is due.
SECTION 2.3 Fractional Shares. Company shall not be required
to issue a fractional share of Common Stock upon exercise of any Warrant. As to
any fraction of a share which the Holder of one or more Warrants would otherwise
be entitled to purchase upon such exercise, Company shall pay a cash adjustment
in respect of such fraction in an amount equal to the same fraction of (x) the
Current Market Price per share of Common Stock on the date of exercise, if there
is a public market for the Common Stock, or (y) the fair market value per share
of Common Stock on the date of exercise as determined by the Board of Directors
of Company, if there is no public market for the Common Stock.
SECTION 2.4 Continued Validity. A holder of shares of Common
Stock issued upon the exercise of this Warrant, in whole or in part (other than
a holder who acquires such shares after the same have been publicly sold
pursuant to a registration statement under the Securities Act or sold pursuant
to Rule 144 thereunder), shall continue to be entitled with respect to such
shares to all rights to which it would have been entitled as Holder under
Sections 9, 10 and 14 of this Warrant.
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SECTION 2.5 Payment in Lieu of Shares.
(a) As used in this Section 2.5: (i) "Triggering Percentage"
means, at any time, the lowest percentage of Aggregate Beneficial Ownership that
would result in (A) a "Trigger Event" as defined in the Rights Agreement dated
as of May 14, 1998 between Company and ChaseMellon Shareholder Services, L.L.C.
as amended and in effect on the date hereof (the "Rights Agreement") or (B) any
"Change of Control" (or similar term) as defined in the Loan Agreement, the
indenture for the Convertible Notes, or any lease, credit, employment or other
agreement to which Company or a subsidiary of Company is a party as of the date
of this Agreement, the occurrence of which would require Company or a subsidiary
of Company to make any payment to any other Person or otherwise materially and
adversely affect Company or a subsidiary of Company, (ii) "Adjustment Number"
means, at any time, a number of shares of Common Stock which, if subtracted from
the number of shares of Common Stock for which this Warrant, but for the
provisions of this Section 2.5, otherwise would be exercisable at such time,
would cause the Aggregate Beneficial Ownership to be an amount equal to the
Triggering Percentage at such time, minus one-tenth of one percent (.10%), and
(iii) "Aggregate Beneficial Ownership" means the aggregate beneficial ownership
of shares of Common Stock by ▇▇▇▇▇▇ and all Affiliates and Associates (as such
terms are defined in the Rights Agreement).
(b) Notwithstanding any other provision of this Agreement, if
at any time the Aggregate Beneficial Ownership, but for the provisions of this
Section 2.5, would otherwise equal or exceed the Triggering Percentage, then (i)
the number of shares of Common Stock for which this Warrant is exercisable shall
be a number equal to (A) the number of shares of Common Stock for which this
Warrant, but for the provisions of this Section 2.5, would otherwise then be
exercisable minus (B) the Adjustment Number at such time and (ii) in addition,
Holder shall have a right (the "Cash Right"), which may be exercised in whole or
in part, to receive immediately available funds from Company in an amount equal
to the Adjustment Number at such time (or such portion of such number exercised
by Holder) multiplied by the closing price of Common Stock on the date of such
exercise, which right may otherwise be exercised upon the same terms and
conditions, and shall be subject to the same Section 4 adjustments, as the right
to exercise this Warrant to purchase shares of Common Stock.
(c) If, at any time after an adjustment pursuant to this
Section 2.5 in the number of shares of Common Stock for which this Warrant is
exercisable, the Aggregate Beneficial Ownership becomes less than the Triggering
Percentage minus one-tenth of one percent (.10%), then the adjustment and the
Cash Right pursuant to this Section 2.5 shall be recalculated based on the
Adjustment Number at such time effective immediately after such time.
(d) Any adjustment made pursuant to this Section 2.5 to the
number of shares of Common Stock or Cash Right for which this Warrant may be
exercised shall be effective immediately prior to the occurrence that would have
caused the Holder's Aggregate Beneficial Ownership to equal or exceed the
Triggering Percentage.
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ARTICLE 3. TRANSFER, DIVISION AND COMBINATION
SECTION 3.1 Transfer. Subject to compliance with Section 9,
transfer of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of Company to be maintained for such purpose, upon
surrender of this Warrant at the principal office of Company referred to in
Section 2.1 or the office or agency designated by Company pursuant to Section
12, together with a written assignment of this Warrant substantially in the form
of Exhibit B hereto duly executed by Holder or its agent or attorney together
with funds sufficient to pay any transfer taxes payable upon the making of such
transfer. Upon such surrender and, if required, such payment, Company shall,
subject to Section 9, execute and deliver a new Warrant or Warrants in the name
of the assignee or assignees and in the denomination specified in such
instrument of assignment, and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, and this Warrant shall
promptly be cancelled. A Warrant, if properly assigned in compliance with
Section 9, may be exercised by a new Holder for the purchase of shares of Common
Stock without having a new Warrant issued.
SECTION 3.2 Division and Combination. Subject to Section 9,
this Warrant may be divided or combined with other Warrants upon presentation
hereof at the aforesaid office or agency of Company, together with a written
notice specifying the names and denominations in which new Warrants are to be
issued, signed by Holder or its agent or attorney. Subject to compliance with
Section 3.1 and with Section 9, as to any transfer which may be involved in such
division or combination, Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
SECTION 3.3 Expenses. Company shall prepare, issue and deliver
at its own expense (other than transfer taxes) the new Warrant or Warrants under
this Section 3.
SECTION 3.4 Maintenance of Books. Company agrees to maintain,
at its aforesaid office or agency, books for the registration and the
registration of transfer of the Warrants.
ARTICLE 4. ADJUSTMENTS
The number of shares of Common Stock for which this Warrant is exercisable, or
the price at which such shares may be purchased upon exercise of this Warrant,
shall be subject to adjustment from time to time as set forth in this Section 4.
Company shall promptly, but in any event within 3 Business Days, after the
happening of any event described below which requires an adjustment pursuant to
this Section 4 give each Holder notice of such event.
SECTION 4.1 Stock Dividends, Subdivisions and Combinations. If
at any time Company shall:
(a) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, Additional Shares of Common Stock,
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(b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
THEN (i) THE NUMBER OF SHARES OF COMMON STOCK FOR WHICH THIS WARRANT IS
EXERCISABLE IMMEDIATELY AFTER THE OCCURRENCE OF ANY SUCH EVENT SHALL BE ADJUSTED
TO EQUAL THE NUMBER OF SHARES OF COMMON STOCK WHICH A RECORD HOLDER OF THE SAME
NUMBER OF SHARES OF COMMON STOCK FOR WHICH THIS WARRANT IS EXERCISABLE
IMMEDIATELY PRIOR TO THE OCCURRENCE OF SUCH EVENT WOULD OWN OR BE ENTITLED TO
RECEIVE AFTER THE HAPPENING OF SUCH EVENT, AND (ii) THE CURRENT WARRANT PRICE
SHALL BE ADJUSTED TO EQUAL (A) THE CURRENT WARRANT PRICE MULTIPLIED BY THE
NUMBER OF SHARES OF COMMON STOCK FOR WHICH THIS WARRANT IS EXERCISABLE
IMMEDIATELY PRIOR TO THE ADJUSTMENT DIVIDED BY (B) THE NUMBER OF SHARES FOR
WHICH THIS WARRANT IS EXERCISABLE IMMEDIATELY AFTER SUCH ADJUSTMENT.
SECTION 4.2 Certain Other Distributions. If at any time
Company shall take a record of the holders of its Common Stock for the purpose
of entitling them to receive any dividend or other distribution of:
(a) cash,
(b) any evidences of its indebtedness, any shares of its stock
or any other securities or property of any nature whatsoever (other than cash,
Convertible Securities or Additional Shares of Common Stock), or
(c) any warrants or other rights to subscribe for or purchase
any evidences of its indebtedness, any shares of its stock or any other
securities or property of any nature whatsoever (other than cash, Convertible
Securities or Additional Shares of Common Stock),
THEN (i) THE NUMBER OF SHARES OF COMMON STOCK FOR WHICH THIS WARRANT IS
EXERCISABLE SHALL BE ADJUSTED TO EQUAL THE NUMBER OF SHARES OF COMMON STOCK FOR
WHICH THIS WARRANT IS EXERCISABLE IMMEDIATELY PRIOR TO SUCH ADJUSTMENT
MULTIPLIED BY A FRACTION (A) THE NUMERATOR OF WHICH SHALL BE THE CURRENT MARKET
PRICE PER SHARE OF COMMON STOCK AT THE DATE OF TAKING SUCH RECORD AND (B) THE
DENOMINATOR OF WHICH SHALL BE SUCH CURRENT MARKET PRICE PER SHARE OF COMMON
STOCK MINUS THE AMOUNT ALLOCABLE TO ONE SHARE OF COMMON STOCK OF ANY SUCH CASH
SO DISTRIBUTABLE AND OF THE FAIR VALUE (AS DETERMINED IN GOOD FAITH BY THE BOARD
OF DIRECTORS OF COMPANY AND SUPPORTED BY AN OPINION FROM AN INVESTMENT BANKING
FIRM OF RECOGNIZED NATIONAL STANDING ACCEPTABLE TO THE MAJORITY HOLDERS) OF ANY
AND ALL SUCH EVIDENCES OF INDEBTEDNESS, SHARES OF STOCK, OTHER SECURITIES OR
PROPERTY OR WARRANTS OR OTHER SUBSCRIPTION OR PURCHASE RIGHTS SO DISTRIBUTABLE,
AND (ii) THE CURRENT WARRANT PRICE SHALL BE ADJUSTED TO EQUAL (A) THE CURRENT
WARRANT PRICE MULTIPLIED BY THE NUMBER OF SHARES OF COMMON STOCK FOR WHICH THIS
WARRANT IS EXERCISABLE IMMEDIATELY PRIOR TO THE ADJUSTMENT DIVIDED BY (B) THE
NUMBER OF SHARES FOR WHICH THIS WARRANT IS EXERCISABLE IMMEDIATELY AFTER SUCH
ADJUSTMENT. A RECLASSIFICATION OF THE COMMON STOCK (OTHER THAN A CHANGE IN PAR
VALUE, OR FROM PAR VALUE TO NO PAR VALUE OR FROM NO PAR VALUE TO PAR VALUE) INTO
SHARES OF COMMON STOCK AND SHARES OF ANY OTHER CLASS OF STOCK SHALL BE DEEMED A
DISTRIBUTION BY COMPANY TO THE HOLDERS OF ITS COMMON STOCK OF SUCH SHARES OF
SUCH OTHER CLASS OF STOCK WITHIN THE MEANING OF THIS SECTION 4.2 AND, IF THE
OUTSTANDING SHARES OF COMMON STOCK SHALL BE CHANGED INTO A LARGER OR SMALLER
NUMBER OF SHARES OF COMMON STOCK AS A PART OF SUCH RECLASSIFICATION, SUCH CHANGE
SHALL BE DEEMED A SUBDIVISION OR COMBINATION, AS THE CASE MAY BE, OF THE
OUTSTANDING SHARES OF COMMON STOCK WITHIN THE MEANING OF SECTION 4.1.
SECTION 4.3 Issuance of Additional Shares of Common Stock. (a)
If at any time Company shall (except as hereinafter provided) issue or sell any
Additional
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Shares of Common Stock, other than Permitted Issuances, in exchange for
consideration in an amount per Additional Share of Common Stock less than the
Current Warrant Price at the time the Additional Shares of Common Stock are
issued, then (i) the Current Warrant Price as to the number of shares for which
this Warrant is exercisable prior to such adjustment shall be reduced to a price
determined by dividing (A) an amount equal to the sum of (x) the number of
shares of Common Stock Outstanding immediately prior to such issue or sale
multiplied by the then existing Current Warrant Price, plus (y) the
consideration, if any, received by Company upon such issue or sale, by (B) the
total number of shares of Common Stock Outstanding immediately after such issue
or sale; and (ii) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product obtained by multiplying the
Current Warrant Price in effect immediately prior to such issue or sale by the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such issue or sale and dividing the product thereof by the
Current Warrant Price resulting from the adjustment made pursuant to clause (i)
above.
(b) If at any time Company shall (except as hereinafter
provided) at any time issue or sell any Additional Shares of Common Stock, other
than Permitted Issuances, for consideration in an amount per Additional Share of
Common Stock less than the Current Market Price, then (i) the number of shares
of Common Stock for which this Warrant is exercisable shall be adjusted to equal
the product obtained by multiplying the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such issue or sale by a
fraction (A) the numerator of which shall be the number of shares of Common
Stock Outstanding immediately after such issue or sale, and (B) the denominator
of which shall be the number of shares of Common Stock Outstanding immediately
prior to such issue or sale plus the number of shares which the aggregate
offering price of the total number of such Additional Shares of Common Stock
would purchase at the then Current Market Price; and (ii) the Current Warrant
Price as to the number of shares for which this Warrant is exercisable prior to
such adjustment shall be adjusted by multiplying such Current Warrant Price by a
fraction (X) the numerator of which shall be the number of shares for which this
Warrant is exercisable immediately prior to such issue or sale; and (Y) the
denominator of which shall be the number of shares of Common Stock purchasable
immediately after such issue or sale.
(c) If at any time Company (except as hereinafter provided)
shall issue or sell any Additional Shares of Common Stock, other than Permitted
Issuances, in exchange for consideration in an amount per Additional Share of
Common Stock which is less than the Current Warrant Price and Current Market
Price (as defined above) at the time the Additional Shares of Common Stock are
issued, the adjustment required under Section 4.3 shall be made in accordance
with the formula in paragraph (a) or (b) above which results in the lower
Current Warrant Price following such adjustment. The provisions of paragraphs
(a) and (b) of Section 4.3 shall not apply to any issuance of Additional Shares
of Common Stock for which an adjustment is provided under Section 4.1 or 4.2. No
adjustment of the number of shares of Common Stock for which this Warrant shall
be exercisable shall be made under paragraph (a) or (b) of Section 4.3 upon the
issuance of any Additional Shares of Common Stock which are issued pursuant to
the
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exercise of any warrants or other subscription or purchase rights or pursuant to
the exercise of any conversion or exchange rights in any Convertible Securities,
if any such adjustment shall previously have been made upon the issuance of such
warrants or other rights or upon the issuance of such Convertible Securities (or
upon the issuance of any warrant or other rights therefor) pursuant to Section
4.4 or Section 4.5.
(d) If any Additional Shares of Common Stock, other than
Permitted Issuances, are issued or sold in exchange for consideration in an
amount per Additional Share of Common Stock equal to or greater than the Current
Warrant Price and the Current Market Price at the time the Additional Shares are
issued, then (i) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product obtained by multiplying the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such adjustment by a fraction (A) the numerator of which
shall be the number of shares of Common Stock Outstanding immediately after the
issuance of such Additional Shares of Common Stock, and (B) the denominator of
which shall be the number of shares of Common Stock Outstanding immediately
prior to the issuance of such Additional Shares of Common Stock; and (ii) the
Current Warrant Price as to the number of shares of Common Stock for which this
Warrant is exercisable prior to such adjustment shall not change but the Current
Warrant Price for each of the incremental number of shares of Common Stock for
which this Warrant becomes exercisable after such adjustment shall be equal to
the fair value of such consideration per Additional Share of Common Stock.
SECTION 4.4 Issuance of Warrants or Other Rights. If at any
time Company shall take a record of the holders of its Common Stock for the
purpose of entitling them to receive a distribution of, or shall in any manner
(whether directly or by assumption in a merger in which Company is the surviving
corporation) issue or sell, any warrants or other rights to subscribe for or
purchase any Additional Shares of Common Stock or any Convertible Securities,
whether or not the rights to exchange or convert thereunder are immediately
exercisable, and the price per share for which Common Stock is issuable upon the
exercise of such warrants or other rights or upon conversion or exchange of such
Convertible Securities shall be less than the Current Warrant Price or the
Current Market Price in effect immediately prior to the time of such issue or
sale, then the number of shares for which this Warrant is exercisable and the
Current Warrant Price shall be adjusted as provided in Section 4.3 on the basis
that the maximum number of Additional Shares of Common Stock issuable pursuant
to all such warrants or other rights or necessary to effect the conversion or
exchange of all such Convertible Securities shall be deemed to have been issued
and outstanding and Company shall be deemed to have received all of the
consideration payable therefor, if any, as of the date of the issuance of such
warrants or other rights. No further adjustments of the number of shares of
Common Stock for which this Warrant is exercisable or the Current Warrant Price
shall be made upon the actual issue of such Common Stock or of such Convertible
Securities upon exercise of such warrants or other rights or upon the actual
issue of such Common Stock upon such conversion or exchange of such Convertible
Securities.
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SECTION 4.5 Issuance of Convertible Securities. If at any time
Company shall take a record of the holders of its Common Stock for the purpose
of entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which Company is the surviving
corporation) issue or sell, any Convertible Securities, whether or not the
rights to exchange or convert thereunder are immediately exercisable, and the
price per share for which Common Stock is issuable upon such conversion or
exchange shall be less than the Current Warrant Price or Current Market Price in
effect immediately prior to the time of such issue or sale, then the number of
Shares for which this Warrant is exercisable and the Current Warrant Price shall
be adjusted as provided in Section 4.3 on the basis that the maximum number of
Additional Shares of Common Stock necessary to effect the conversion or exchange
of all such Convertible Securities shall be deemed to have been issued and
outstanding and Company shall have received all of the consideration payable
therefor, if any, as of the date of issuance of such Convertible Securities. No
adjustment of the number of Shares for which this Warrant is exercisable and the
Current Warrant Price shall be made under this Section 4.5 upon the issuance of
any Convertible Securities which are issued pursuant to the exercise of any
warrants or other subscription or purchase rights therefor, if any such
adjustment shall previously have been made upon the issuance of such warrants or
other rights pursuant to Section 4.4. No further adjustments of the number of
shares of Common Stock for which this Warrant is exercisable or the Current
Warrant Price shall be made upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities and, if any issue or sale
of such Convertible Securities is made upon exercise of any warrant or other
right to subscribe for or to purchase any such Convertible Securities for which
adjustments of the number of shares of Common Stock for which this Warrant is
exercisable and the Current Warrant Price have been or are to be made pursuant
to other provisions of this Section 4, no further adjustments of the number of
shares of Common Stock for which this Warrant is exercisable or the Current
Warrant Price shall be made by reason of such issue or sale.
SECTION 4.6 Superseding Adjustment. If, at any time after any
adjustment of the number of shares of Common Stock for which this Warrant is
exercisable and the Current Warrant Price shall have been made pursuant to
Section 4.4 or Section 4.5 as the result of any issuance of warrants, rights or
Convertible Securities,
(a) such warrants or rights, or the right of conversion or
exchange in such other Convertible Securities, shall expire, and all or a
portion of such warrants or rights, or the right of conversion or exchange with
respect to all or a portion of such other Convertible Securities, as the case
may be, shall not have been exercised, or
(b) the consideration per share for which shares of Common
Stock are issuable pursuant to such warrants or rights, or the terms of such
other Convertible Securities, shall be increased solely by virtue of provisions
therein contained for an automatic increase in such consideration per share upon
the occurrence of a specified date or event,
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THEN FOR EACH OUTSTANDING WARRANT SUCH PREVIOUS ADJUSTMENT SHALL BE RESCINDED
AND ANNULLED AND THE ADDITIONAL SHARES OF COMMON STOCK WHICH WERE DEEMED TO HAVE
BEEN ISSUED BY VIRTUE OF THE COMPUTATION MADE IN CONNECTION WITH THE ADJUSTMENT
SO RESCINDED AND ANNULLED SHALL NO LONGER BE DEEMED TO HAVE BEEN ISSUED BY
VIRTUE OF SUCH COMPUTATION. THEREUPON, A RECOMPUTATION SHALL BE MADE OF THE
EFFECT OF SUCH RIGHTS OR OPTIONS OR OTHER CONVERTIBLE SECURITIES ON THE BASIS OF
(i) treating the number of Additional Shares of Common Stock
or other property, if any, theretofore actually issued or issuable
pursuant to the previous exercise of any such warrants or rights or any
such right of conversion or exchange, as having been issued on the date
or dates of any such exercise and for the consideration actually
received and receivable therefor, and
(ii) treating any such warrants or rights or any such other
Convertible Securities which then remain outstanding as having been
granted or issued immediately after the time of such increase of the
consideration per share for which shares of Common Stock or other
property are issuable under such warrants or rights or other
Convertible Securities;
whereupon a new adjustment of the number of shares of Common Stock for which
this Warrant is exercisable and the Current Warrant Price shall be made, which
new adjustment shall supersede the previous adjustment so rescinded and
annulled.
SECTION 4.7 Other Provisions Applicable to Adjustments under
this Section. The following provisions shall be applicable to the making of
adjustments of the number of shares of Common Stock for which this Warrant is
exercisable and the Current Warrant Price provided for in this Section 4:
(a) Computation of Consideration. To the extent that any
Additional Shares of Common Stock or any Convertible Securities or any warrants
or other rights to subscribe for or purchase any Additional Shares of Common
Stock or any Convertible Securities shall be issued for cash consideration, the
consideration received by Company therefor shall be the amount of the cash
received by Company therefor, or, if such Additional Shares of Common Stock or
Convertible Securities are offered by Company for subscription, the subscription
price, or, if such Additional Shares of Common Stock or Convertible Securities
are sold to underwriters or dealers for public offering without a subscription
offering, the initial public offering price (in any such case subtracting any
amounts paid or receivable for accrued interest or accrued dividends and any
compensation, discounts or expenses paid or incurred by Company for and in the
underwriting of, or otherwise in connection with, the issuance thereof). To the
extent that such issuance shall be for a consideration other than cash, then,
except as herein otherwise expressly provided, the amount of such consideration
shall be deemed to be the fair value of such consideration at the time of such
issuance as determined in good faith by the Board of Directors of Company. In
case any Additional Shares of Common Stock or any Convertible Securities or any
warrants or other rights to subscribe for or purchase such Additional Shares of
Common Stock or Convertible Securities shall be issued in connection with any
merger in which Company issues any securities, the amount of consideration
therefor shall be deemed to be the fair value, as determined in good faith by
the Board of Directors of Company, of such portion of the assets and business of
the
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nonsurviving corporation as such Board in good faith shall determine to be
attributable to such Additional Shares of Common Stock, Convertible Securities,
warrants or other rights, as the case may be. The consideration for any
Additional Shares of Common Stock issuable pursuant to any warrants or other
rights to subscribe for or purchase the same shall be the consideration received
by Company for issuing such warrants or other rights plus the additional
consideration payable to Company upon exercise of such warrants or other rights.
The consideration for any Additional Shares of Common Stock issuable pursuant to
the terms of any Convertible Securities shall be the consideration received by
Company for issuing warrants or other rights to subscribe for or purchase such
Convertible Securities, plus the consideration paid or payable to Company in
respect of the subscription for or purchase of such Convertible Securities, plus
the additional consideration, if any, payable to Company upon the exercise of
the right of conversion or exchange in such Convertible Securities. In case of
the issuance at any time of any Additional Shares of Common Stock or Convertible
Securities in payment or satisfaction of any dividends upon any class of stock
other than Common Stock, Company shall be deemed to have received for such
Additional Shares of Common Stock or Convertible Securities a consideration
equal to the amount of such dividend so paid or satisfied.
(b) When Adjustments to Be Made. The adjustments required by
this Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the number of
shares of Common Stock for which this Warrant is exercisable that would
otherwise be required may be postponed (except in the case of a subdivision or
combination of shares of Common Stock, as provided for in Section 4.1) up to,
but not beyond the date of exercise if such adjustment either by itself or with
other adjustments not previously made adds or subtracts less than 1% of the
shares of Common Stock for which this Warrant is exercisable immediately prior
to the making of such adjustment. Any adjustment representing a change of less
than such minimum amount (except as aforesaid) which is postponed shall be
carried forward and made as soon as such adjustment, together with other
adjustments required by this Section 4 and not previously made, would result in
a minimum adjustment of at least 1% or in any event, on the date of exercise.
For the purpose of any adjustment, any specified event shall be deemed to have
occurred at the close of business on the date of its occurrence.
(c) Fractional Interests. In computing adjustments under this
Section 4, fractional interests in Common Stock shall be taken into account to
the nearest 1/10th of a share.
(d) When Adjustment Not Required. If Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a dividend or distribution or subscription or purchase rights and shall,
thereafter and before the distribution to stockholders thereof, legally abandon
its plan to pay or deliver such dividend, distribution, subscription or purchase
rights, then thereafter no adjustment shall be required by reason of the taking
of such record and any such adjustment previously made in respect thereof shall
be rescinded and annulled.
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(e) Escrow of Warrant Stock. If Holder exercises this Warrant
after any property becomes distributable pursuant to this Section 4 by reason of
the taking of any record of the holders of Common Stock but prior to the
occurrence of the event for which such record is taken, any Additional Shares of
Common Stock issuable upon exercise of this Warrant shall be held in escrow,
upon payment of the Current Warrant Price, for Holder by Company to be issued to
Holder upon and to the extent that the event actually takes place.
Notwithstanding any other provision to the contrary herein, if the event for
which such record was taken fails to occur or is rescinded, then such escrowed
shares shall be cancelled by Company.
(f) Challenge to Good Faith Determination. Whenever the Board
of Directors of Company shall be required to make a determination in good faith
of the fair value of any item under this Section 4, such determination may be
challenged in good faith by the Majority Holders, and any dispute shall be
resolved by an investment banking firm of recognized national standing selected
by Company and acceptable to the Majority Holders.
SECTION 4.8 Reorganization, Reclassification, Merger,
Consolidation or Disposition of Assets. In case Company shall reorganize its
capital, reclassify its capital stock, consolidate or merge with or into another
corporation (where Company is not the surviving corporation or where there is a
change in or distribution with respect to the Common Stock of Company), or sell,
transfer or otherwise dispose of all or substantially all its property, assets
or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, any cash, shares of stock or other securities or property of any nature
whatsoever including warrants or other subscription or purchase rights or any
shares of common stock of the successor or acquiring corporation (collectively,
"Other Property"), are to be received by or distributed to the holders of Common
Stock of Company, then each Holder shall have the right thereafter to receive,
upon exercise of such Warrant, the number of shares of common stock of the
successor or acquiring corporation or of Company, if it is the surviving
corporation, and Other Property receivable upon or as a result of such
reorganization, reclassification, merger, consolidation or disposition of assets
by a holder of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than Company) shall expressly assume the due
and punctual observance and performance of each and every covenant and condition
of this Warrant to be performed and observed by Company and all the obligations
and liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined by resolution of the Board of Directors of Company)
in order to provide for adjustments of shares of Common Stock for which this
Warrant is exercisable which shall be as nearly equivalent as practicable to the
adjustments provided for in this Section 4. For purposes of this Section 4.8,
"common stock of the successor or acquiring corporation" shall include stock of
such corporation of any class which is not preferred as to dividends or assets
over any other class of stock of such corporation and which is not subject to
redemption and shall also include any evidences of indebtedness, shares of stock
or other securities which are
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convertible into or exchangeable for any such stock, either immediately or upon
the arrival of a specified date or the happening of a specified event and any
warrants or other rights to subscribe for or purchase any such stock. The
foregoing provisions of this Section 4.8 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or disposition of
assets.
SECTION 4.9 Other Action Affecting Common Stock. In case at
any time or from time to time Company shall take any action in respect of its
Common Stock, other than any action described in this Section 4, then, unless
such action will not have a materially adverse effect upon the rights of the
Holders, the number of shares of Common Stock or other stock for which this
Warrant is exercisable and/or the purchase price thereof shall be adjusted in
such manner as may be equitable in the circumstances.
SECTION 4.10 Certain Limitations. Notwithstanding anything
herein to the contrary, Company agrees not to enter into any transaction which,
by reason of any adjustment hereunder, would cause the Current Warrant Price to
be less than the par value per share of Common Stock.
ARTICLE 5. NOTICES TO WARRANT HOLDERS
SECTION 5.1 Notice of Adjustments. Whenever the number of
shares of Common Stock for which this Warrant is exercisable, or whenever the
price at which a share of such Common Stock may be purchased upon exercise of
the Warrants, shall be adjusted pursuant to Section 4, Company shall forthwith
prepare a certificate to be executed by the chief financial officer of Company
setting forth, in reasonable detail, the event requiring the adjustment and the
method by which such adjustment was calculated (including a description of the
basis on which the Board of Directors of Company determined the fair value of
any evidences of indebtedness, shares of stock, other securities or property or
warrants or other subscription or purchase rights referred to in Section 4.2 or
4.7(a)), specifying the number of shares of Common Stock for which this Warrant
is exercisable and (if such adjustment was made pursuant to Section 4.8 or 4.9)
describing the number and kind of any other shares of stock or Other Property
for which this Warrant is exercisable, and any change in the purchase price or
prices thereof, after giving effect to such adjustment or change. Company shall
promptly cause a signed copy of such certificate to be delivered to each Holder
in accordance with Section 15.2. Company shall keep at its office or agency
designated pursuant to Section 12 copies of all such certificates and cause the
same to be available for inspection at said office during normal business hours
by any Holder or any prospective purchaser of a Warrant designated by a Holder
thereof.
SECTION 5.2 Notice of Corporate Action. If at any time
(a) Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property, or to receive any other right, or
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(b) there shall be any capital reorganization of Company, any
reclassification or recapitalization of the capital stock of Company or any
consolidation or merger of Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of
Company to, another corporation, or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of Company;
THEN, IN ANY ONE OR MORE OF SUCH CASES, COMPANY SHALL GIVE TO HOLDER (i) AT
LEAST 30 DAYS' PRIOR WRITTEN NOTICE OF THE DATE ON WHICH A RECORD DATE SHALL BE
SELECTED FOR SUCH DIVIDEND, DISTRIBUTION OR RIGHT OR FOR DETERMINING RIGHTS TO
VOTE IN RESPECT OF ANY SUCH REORGANIZATION, RECLASSIFICATION, MERGER,
CONSOLIDATION, SALE, TRANSFER, DISPOSITION, DISSOLUTION, LIQUIDATION OR WINDING
UP, AND (ii) IN THE CASE OF ANY SUCH REORGANIZATION, RECLASSIFICATION, MERGER,
CONSOLIDATION, SALE, TRANSFER, DISPOSITION, DISSOLUTION, LIQUIDATION OR WINDING
UP, AT LEAST 30 DAYS' PRIOR WRITTEN NOTICE OF THE DATE WHEN THE SAME SHALL TAKE
PLACE. SUCH NOTICE IN ACCORDANCE WITH THE FOREGOING CLAUSE ALSO SHALL SPECIFY
(i) THE DATE ON WHICH ANY SUCH RECORD IS TO BE TAKEN FOR THE PURPOSE OF SUCH
DIVIDEND, DISTRIBUTION OR RIGHT, THE DATE ON WHICH THE HOLDERS OF COMMON STOCK
SHALL BE ENTITLED TO ANY SUCH DIVIDEND, DISTRIBUTION OR RIGHT, AND THE AMOUNT
AND CHARACTER THEREOF, AND (ii) THE DATE ON WHICH ANY SUCH REORGANIZATION,
RECLASSIFICATION, MERGER, CONSOLIDATION, SALE, TRANSFER, DISPOSITION,
DISSOLUTION, LIQUIDATION OR WINDING UP IS TO TAKE PLACE AND THE TIME, IF ANY
SUCH TIME IS TO BE FIXED, AS OF WHICH THE HOLDERS OF COMMON STOCK SHALL BE
ENTITLED TO EXCHANGE THEIR SHARES OF COMMON STOCK FOR SECURITIES OR OTHER
PROPERTY DELIVERABLE UPON SUCH REORGANIZATION, RECLASSIFICATION, MERGER,
CONSOLIDATION, SALE, TRANSFER, DISPOSITION, DISSOLUTION, LIQUIDATION OR WINDING
UP. EACH SUCH WRITTEN NOTICE SHALL BE SUFFICIENTLY GIVEN IF ADDRESSED TO HOLDER
AT THE LAST ADDRESS OF HOLDER APPEARING ON THE BOOKS OF COMPANY AND DELIVERED IN
ACCORDANCE WITH SECTION 15.2.
ARTICLE 6. NO IMPAIRMENT
Company shall not by any action, including, without limitation, amending 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 actions as may be
necessary or appropriate to protect the rights of Holder against impairment.
Without limiting the generality of the foregoing, Company will (a) not increase
the par value of any shares of Common Stock receivable upon the exercise of this
Warrant above the amount payable therefor upon such exercise immediately prior
to such increase in par value, (b) take all such action as may be necessary or
appropriate in order that Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this Warrant, and (c)
use its best efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary
to enable Company to perform its obligations under this Warrant.
ARTICLE 7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
From and after the Closing Date, Company shall at all times reserve and keep
available for issuance upon the exercise of Warrants such number of its
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of all outstanding Warrants. Company represents and
warrants that, as of the Closing Date, the Company has 17,459,689 shares of
Common Stock issued and outstanding and 100,000,000 shares of Common Stock
authorized and available for issuance. Before taking any action which would
cause an adjustment reducing the Current Warrant Price below the then par value,
if any, of the shares of Common Stock issuable upon exercise of the Warrants,
Company shall take any corporate action which may be necessary in order that
Company may validly and legally issue fully paid and non-assessable shares of
such Common Stock at such adjusted Current Warrant Price.
Before taking any action which would result in an adjustment in the number of
shares of Common Stock for which this Warrant is exercisable or in the Current
Warrant Price, Company shall obtain all such
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authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory body or bodies having jurisdiction thereof.
If any shares of Common Stock required to be reserved for issuance upon exercise
of Warrants require registration or qualification with any governmental
authority or other governmental approval or filing under any federal or state
law (otherwise than as provided in Section 9) before such shares may be so
issued, Company will in good faith and as expeditiously as possible and at its
expense endeavor to cause such shares to be duly registered.
ARTICLE 8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by Company to the holders of
its Common Stock with respect to which any provision of Section 4 refers to the
taking of a record of such holders, Company will in each such case take such a
record and will take such record as of the close of business on a Business Day.
Company will not at any time, except upon dissolution, liquidation or winding up
of Company, close its stock transfer books or Warrant transfer books so as to
result in preventing or delaying the exercise or transfer of any Warrant.
ARTICLE 9. RESTRICTIONS ON TRANSFERABILITY
The Warrants and the Warrant Stock may be transferred, hypothecated or assigned,
as collateral or otherwise, upon satisfaction of the conditions specified in
this Section 9, which conditions are intended to ensure compliance with the
provisions of the Securities Act with respect to the Transfer of any Warrant or
any Warrant Stock. Holder, by acceptance of this Warrant, agrees to be bound by
the provisions of this Section 9.
SECTION 9.1 Restrictive Legend. (a) Except as otherwise
provided in this Section 9, each certificate for Warrant Stock initially issued
upon the exercise of this Warrant, and each certificate for Warrant Stock issued
to any subsequent transferee of any such certificate, shall be stamped or
otherwise imprinted with a legend in substantially the following form:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933, as amended,
and are subject to the conditions specified in a certain
Warrant dated April 24, 2000, originally issued by ARV
Assisted Living, Inc. No transfer of the shares represented by
this certificate shall be valid or effective until such
conditions have been fulfilled. A copy of the form of said
Warrant is on file with the Secretary of ARV Assisted Living,
Inc. The holder of this certificate, by acceptance of this
certificate, agrees to be bound by the provisions of such
Warrant."
(b) Except as otherwise provided in this Section 9, each
Warrant shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"This Warrant and the securities represented hereby have not
been registered under the Securities Act of 1933, as amended,
and may not be transferred in violation of such Act, the rules
and regulations thereunder or the provisions of this Warrant."
SECTION 9.2 Notice of Proposed Transfers; Requests for
Registration. Prior to or promptly following any Transfer of any Warrants or any
shares of Restricted Common Stock, the holder of such Warrants or Restricted
Common Stock shall give written notice (a "Transfer Notice") to Company of such
Transfer. Each certificate, if any, evidencing such shares of Restricted Common
Stock issued upon such Transfer shall
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bear the restrictive legend set forth in Section 9.1(a), and each Warrant issued
upon such Transfer shall bear the restrictive legend set forth in Section
9.1(b), unless in the opinion of counsel to such holder which is reasonably
acceptable to Company such legend is not required in order to ensure compliance
with the Securities Act.
The holders of Warrants and Warrant Stock shall have the right to request
registration of such Warrant Stock pursuant to Sections 9.3 and 9.4.
SECTION 9.3 Required Registration. After receipt of a written
notice from one or more holders of Warrants and/or Warrant Stock requesting that
Company effect the registration under the Securities Act of either (i) 350,000
or more shares of Warrant Stock or (ii) Warrant Stock with an anticipated
aggregate offering price of at least $1,000,000 and specifying the intended
method or methods of disposition thereof, Company shall promptly notify all
holders of Warrants and Warrant Stock in writing of the receipt of such request.
Thereupon, each such holder, in lieu of exercising its rights under Section 9.4,
may elect (by written notice sent to Company within ten Business Days from the
date of such holder's receipt of the aforementioned Company's notice) to have
its shares of Warrant Stock included in such registration thereof pursuant to
this Section 9.3. Thereupon, Company shall then, as expeditiously as is
possible, use its best efforts to effect the registration under the Securities
Act of all shares of Warrant Stock which Company has been so requested to
register by such holders for sale, all to the extent required to permit the
disposition (in accordance with the intended method or methods thereof, as
aforesaid) of the Warrant Stock so registered; provided, however, that Company
shall not be required to effect more than one registration of any Warrant Stock
pursuant to this Section 9.3 in any 12-month period.
SECTION 9.4 Incidental Registration. If Company at any time
proposes to file on its behalf and/or on behalf of any of its security holders
(the "demanding security holders") a Registration Statement under the Securities
Act on any form (other than a Registration Statement on Form S-4 or S-8 or any
successor form for securities to be offered in a transaction of the type
referred to in Rule 145 under the Securities Act or to employees of Company
pursuant to any employee benefit plan, respectively) for the general
registration of securities to be sold for cash with respect to its Common Stock
or any other class of equity security (as defined in Section 3(a)(11) of the
Exchange Act) of Company, it will give written notice to all holders of Warrants
or Warrant Stock at least 60 days before the initial filing with the Commission
of such Registration Statement, which notice shall set forth the intended method
of disposition of the securities proposed to be registered by Company. The
notice shall offer to include in such filing the aggregate number of shares of
Warrant Stock, and the number of shares of Common Stock for which this Warrant
is exercisable, as such holders may request.
Each holder of any such Warrants or any such Warrant Stock desiring to have
Warrant Stock registered under this Section 9.4 shall advise Company in writing
within 30 days after the date of receipt of such offer from Company, setting
forth the amount of such Warrant Stock for which registration is requested.
Company shall thereupon include in such filing the number of shares of Warrant
Stock for which registration is so requested, subject to the next sentence, and
shall use its best efforts to effect registration under the Securities Act of
such shares. If the managing underwriter of a proposed public offering shall
advise Company in writing that, in its opinion, the distribution of the Warrant
Stock requested to be
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included in the registration concurrently with the securities being registered
by Company or such demanding security holder would materially and adversely
affect the distribution of such securities by Company or such demanding security
holder, then all selling security holders (other than any demanding security
holder who initially requested such registration) shall reduce the amount of
securities each intended to distribute through such offering on a pro rata
basis. Except as otherwise provided in Section 9.6, all expenses of such
registration shall be borne by Company.
SECTION 9.5 Registration Procedures. If Company is required by
the provisions of this Section 9 to use its best efforts to effect the
registration of any of its securities under the Securities Act, Company will, as
expeditiously as possible:
(a) prepare and file with the Commission a Registration
Statement with respect to such securities and use its best efforts to cause such
Registration Statement to become and remain effective for a period of time
required for the disposition of such securities by the holders thereof;
(b) 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 and
to comply with the provisions of the Securities Act with respect to the sale or
other disposition of all securities covered by such Registration Statement until
the earlier of such time as all of such securities have been disposed of in a
public offering;
(c) furnish to such selling security holders such number of
copies of a summary prospectus or other prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents, as such selling security holders may reasonably request;
(d) notify such selling security holders at any time when a
summary prospectus or other prospectus including a preliminary prospectus, is
required to be delivered under the Securities Act, of the happening of any event
as a result of which such prospectus included in such Registration Statement
contains an untrue statement of a material fact or omits any fact necessary to
make the statements therein not misleading, and, at the request of such selling
security holders, Company shall prepare a supplement or amendment to such
prospectus so that, such prospectus shall not contain an untrue statement of a
material fact or omit to state any fact necessary to make the statements therein
not misleading;
(e) use its best efforts to register or qualify the securities
covered by such Registration Statement under such other securities or blue sky
laws of such jurisdictions within the United States and Puerto Rico as each
holder of such securities shall request (provided, however, that Company shall
not be obligated to qualify as a foreign corporation to do business under the
laws of any jurisdiction in which it is not then qualified or to file any
general consent to service or process), and do such other reasonable acts and
things as may be required of it to enable such holder to consummate the
disposition in such jurisdiction of the securities covered by such Registration
Statement;
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(f) furnish, at the request of any holder requesting
registration of Warrant Stock pursuant to Section 9.3, on the date that such
shares of Warrant Stock are delivered to the underwriters for sale pursuant to
such registration or, if such Warrant Stock is not being sold through
underwriters, on the date that the Registration Statement with respect to such
shares of Warrant Stock becomes effective, (1) an opinion, dated such date, of
the independent counsel representing Company for the purposes of such
registration, addressed to the underwriters, if any, and if such Warrant Stock
is not being sold through underwriters, then to the holders making such request,
in customary form and covering matters of the type customarily covered in such
legal opinions; and (2) a comfort letter dated such date, from the independent
certified public accountants of Company, addressed to the underwriters, if any,
and if such Warrant Stock is not being sold through underwriters, then to the
holder making such request and, if such accountants refuse to deliver such
letter to such holder, then to Company in a customary form and covering matters
of the type customarily covered by such comfort letters as the underwriters or
such holders shall reasonably request. Such opinion of counsel shall
additionally cover such other legal matters with respect to the registration in
respect of which such opinion is being given as such holders holding a majority
of the Warrant Stock being so registered may reasonably request. Such letter
from the independent certified public accountants shall additionally cover such
other financial matters (including information as to the period ending not more
than five Business Days prior to the date of such letter) with respect to the
registration in respect of which such letter is being given as the holders
holding a majority of the Warrant Stock being so registered may reasonably
request;
(g) enter into customary agreements (including an underwriting
agreement in customary form) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of such securities;
and
(h) make available for inspection by such selling security
holders, any underwriter participating in any disposition pursuant to such
Registration Statement and any attorney, accountant or other agent retained by
any such selling security holder or underwriter, all financial and other
records, pertinent corporate documents and properties of Company, and cause
Company's officers, directors, employees and independent accountants to supply
all information reasonably requested by any such Selling Security holder,
underwriter, attorney, accountant or agent in connection with such Registration
Statement;
(i) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, but not later than 18
months after the effective date of the Registration Statement, an earnings
statement covering the period of at least 12 months beginning with the first
full month after the effective date of such Registration Statement, which
earnings statements shall satisfy the provisions of Section 11(a) of the
Securities Act.
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It shall be a condition precedent to the obligation of Company to take any
action pursuant to this Section 9 in respect of the securities which are to be
registered at the request of any holder of Warrants or Warrant Stock that such
holder shall furnish to Company such information regarding the securities held
by such holder and the intended method of disposition thereof as Company shall
reasonably request and as shall be required in connection with the action taken
by Company.
SECTION 9.6 Expenses. All expenses incurred in complying with
Section 9, including, without limitation, all registration and filing fees
(including all expenses incident to filing with the NASD), printing expenses,
fees and disbursements of counsel for Company, the reasonable fees and expenses
of one counsel for the selling security holders (selected by those holding a
majority of the shares being registered), expenses of any special audits
incident to or required by any such registration and expenses of complying with
the securities or blue sky laws of any jurisdictions pursuant to Section 9.5(d),
shall be paid by Company, except that Company shall not be liable for any fees,
discounts or commissions to any underwriter or any fees or disbursements of
counsel for any underwriter in respect of the securities sold by such holder of
Warrant Stock.
SECTION 9.7 Indemnification and Contribution. (a) In the event
of any registration of any of the Warrant Stock under the Securities Act
pursuant to this Section 9, Company shall indemnify and hold harmless the holder
of such Warrant Stock, such holder's directors and officers, and each other
Person (including each underwriter) who participated in the offering of such
Warrant Stock and each other Person, if any, who controls such holder or such
participating Person within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which such holder
or any such director or officer or participating Person or controlling Person
may become subject under the Securities Act or any other statute or at common
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any alleged untrue statement
of any material fact contained, on the effective date thereof, in any
Registration Statement under which such securities were registered under the
Securities Act, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto, or (ii) any alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and shall reimburse such holder or such
director, officer or participating Person or controlling Person for any legal or
any other expenses reasonably incurred by such holder or such director, officer
or participating Person or controlling Person in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that Company shall not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon any
alleged untrue statement or alleged omission made in such Registration
Statement, preliminary prospectus, prospectus or amendment or supplement in
reliance upon and in conformity with written information furnished to Company by
such holder specifically for use therein or (in the case of any registration
pursuant to Section 9.3) so furnished for such purposes by any underwriter. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such holder or such director, officer or participating
Person or controlling Person, and shall survive the transfer of such securities
by such holder.
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(b) Each holder of any Warrant Stock, by acceptance thereof,
agrees to indemnify and hold harmless Company, its directors and officers and
each other Person, if any, who controls Company within the meaning of the
Securities Act against any losses, claims, damages or liabilities, joint or
several, to which Company or any such director or officer or any such Person may
become subject under the Securities Act or any other statute or at common law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon information in writing provided to
Company by such holder of such Warrant Stock specifically for use in the
following documents and contained, on the effective date thereof, in any
Registration Statement under which securities were registered under the
Securities Act at the request of such holder, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement thereto, but
in no event, in an amount exceeding the net proceeds received by such holder in
the offering.
(c) If the indemnification provided for in this Section 9 from
the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified parties in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding. The liability of any holder of Warrant Stock
hereunder shall not exceed the net proceeds received by it in the offering.
SECTION 9.8 The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 9.7(c) were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
SECTION 9.9 Termination of Restrictions. Notwithstanding the
foregoing provisions of Section 9, the restrictions imposed by this Section upon
the transferability of the Warrants, the Warrant Stock and the Restricted Common
Stock (or Common Stock issuable upon the exercise of the Warrants) and the
legend requirements
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of Section 9.1 shall terminate as to any particular Warrant or share of Warrant
Stock or Restricted Common Stock (or Common Stock issuable upon the exercise of
the Warrants) (i) when and so long as such security shall have been effectively
registered under the Securities Act and disposed of pursuant thereto, (ii) when
such security is disposed of pursuant to Rule 144 under the Securities Act, or
(iii) when Company shall have received an opinion of counsel reasonably
satisfactory to it that such shares may be transferred without registration
thereof under the Securities Act. Whenever the restrictions imposed by this
Section shall terminate as to any share of Restricted Common Stock, as
hereinabove provided, the holder thereof shall be entitled to receive from
Company, at Company's expense, a new certificate representing such Common Stock
not bearing the restrictive legend set forth in Section 9.1(a).
SECTION 9.10 Listing on Securities Exchange. So long as any
shares of Common Stock are listed on any securities exchanges, Company shall
increase the number of shares listed on such securities exchanges to cover all
shares of Common Stock issued or, to the extent permissible under the applicable
securities exchange rules, issuable upon the exercise of this Warrant.
SECTION 9.11 Certain Limitations on Registration Rights.
Notwithstanding the other provisions of Section 9, Company shall not be
obligated to register the Warrant Stock of any holder if, in the written opinion
of counsel to Company reasonably satisfactory to the holder and its counsel (or,
if the holder has engaged an investment banking firm, to such investment banking
firm and its counsel), the sale or other disposition of such holder's Warrant
Stock, in the manner proposed by such holder (or by such investment banking
firm), may be effected without registering such Warrant Stock under the
Securities Act.
SECTION 9.12 Selection of Managing Underwriters. The managing
underwriter or underwriters for any offering of Warrant Stock to be registered
pursuant to Section 9.3 shall be selected by the holders of a majority of the
shares being so registered (other than any shares being registered pursuant to
Section 9.4) and shall be reasonably acceptable to Company.
ARTICLE 10. SUPPLYING INFORMATION
Company shall cooperate with each Holder of a Warrant and each holder of
Restricted Common Stock in supplying such information as may be reasonably
necessary for such holder to complete and file any information reporting forms
presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of any Warrant
or Restricted Common Stock.
ARTICLE 11. LOSS OR MUTILATION
Upon receipt by Company from any Holder of evidence reasonably satisfactory to
it of the ownership of and the loss, theft, destruction or mutilation of this
Warrant and indemnity reasonably satisfactory to it (it being understood that
the written agreement of such Holder shall be sufficient indemnity), and in case
of mutilation upon surrender and cancellation hereof, Company will execute and
deliver in lieu hereof a new Warrant of like tenor to such Holder; provided, in
the case of mutilation, no indemnity shall be required if this Warrant in
identifiable form is surrendered to Company for cancellation.
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ARTICLE 12. OFFICE OF COMPANY
As long as any of the Warrants remain outstanding, Company shall maintain an
office or agency (which may be the principal executive offices of Company) where
the Warrants may be presented for exercise, registration of transfer, division
or combination as provided in this Warrant.
ARTICLE 13. Filings
Company will file on or before the required date all regular or periodic reports
(pursuant to the Exchange Act) with the Commission and will deliver to Holder
promptly upon their becoming available one copy of each report, notice or proxy
statement sent by Company to its stockholders generally, and of each regular or
periodic report (pursuant to the Exchange Act) and any Registration Statement,
prospectus or written communication (other than transmittal letters) (pursuant
to the Securities Act), filed by Company with (i) the Commission or (ii) any
securities exchange on which shares of Common Stock are listed.
ARTICLE 14. limitation of liability
No provision hereof, in the absence of affirmative action by Holder to purchase
shares of Common Stock, and no enumeration herein of the rights or privileges of
Holder hereof, shall give rise to any liability of such Holder for the purchase
price of any Common Stock or as a stockholder of Company, whether such liability
is asserted by Company or by creditors of Company.
ARTICLE 15. MISCELLANEOUS
SECTION 15.1 Nonwaiver and Expenses. No course of dealing or
any delay or failure to exercise any right hereunder on the part of a party
hereto shall operate as a waiver of such right or otherwise prejudice that
party's rights, powers or remedies. If a party hereto fails to make, when due,
any payments provided for hereunder, or fails to comply with any other provision
of this Warrant, that party shall pay to the other party such amounts as shall
be sufficient to cover any costs and expenses including, but not limited to,
reasonable attorneys' fees, including those of appellate proceedings, incurred
by such other party in collecting any amounts due pursuant hereto or in
otherwise enforcing any of its rights, powers or remedies hereunder.
SECTION 15.2 Notice Generally. Any notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder to be
made pursuant to the provisions of this Warrant shall be sufficiently given or
made if in writing and either delivered in person with receipt acknowledged or
sent by registered or certified mail, return receipt requested, postage prepaid,
or by telecopy and confirmed by telecopy answerback, addressed as follows:
(a) If to any Holder or holder of Warrant Stock, at its last
known address appearing on the books of Company maintained for such purpose.
(b) If to Company at
ARV Assisted Living, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to:
O'Melveny & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
OR AT SUCH OTHER ADDRESS AS MAY BE SUBSTITUTED BY NOTICE GIVEN AS ▇▇▇▇▇▇
PROVIDED. THE GIVING OF ANY NOTICE REQUIRED HEREUNDER MAY BE WAIVED IN WRITING
BY THE PARTY ENTITLED TO RECEIVE SUCH NOTICE. EVERY NOTICE, DEMAND, REQUEST,
CONSENT, APPROVAL, DECLARATION, DELIVERY OR OTHER COMMUNICATION HEREUNDER SHALL
BE DEEMED TO HAVE BEEN DULY GIVEN OR SERVED ON THE DATE ON WHICH PERSONALLY
DELIVERED, WITH RECEIPT ACKNOWLEDGED, TELECOPIED AND CONFIRMED BY TELECOPY
ANSWERBACK, OR THREE (3) BUSINESS DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED
IN THE UNITED STATES MAIL. FAILURE OR DELAY IN DELIVERING COPIES OF ANY NOTICE,
DEMAND, REQUEST, APPROVAL, DECLARATION, DELIVERY OR OTHER COMMUNICATION TO THE
PERSON DESIGNATED ABOVE TO RECEIVE A COPY SHALL IN NO WAY ADVERSELY AFFECT THE
EFFECTIVENESS OF SUCH NOTICE, DEMAND, REQUEST, APPROVAL, DECLARATION, DELIVERY
OR OTHER COMMUNICATION.
SECTION 15.3 No Stockholder Rights. Prior to the effective
exercise of this Warrant in accordance with the provisions hereof, Holder shall
not be entitled to any rights of a stockholder with respect to any shares of
Warrant Stock, including (without limitation) the right to vote such shares or
to receive dividends or other distributions thereon.
SECTION 15.4 Indemnification. Company agrees to indemnify and
hold harmless Holder from and against any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees,
expenses and disbursements of any kind which may be imposed upon, incurred by or
asserted against Holder in any manner relating to or arising out of the issuance
of this Warrant to Holder (but not relating to or arising out of any exercise of
any Warrant); provided, however, that Company will not be liable hereunder to
the extent that any liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, attorneys' fees, expenses or
disbursements (i) arise solely out of Holder's violation of any state or federal
securities laws, (ii) arise out of any matter for which Company has expressly
retained the right to pursue such matter against the Holder pursuant to Section
5.01(c) of the Settlement Agreement or (iii) are found in a final non-appealable
judgment by a court to have resulted from ▇▇▇▇▇▇'s gross negligence, bad faith
or willful misconduct in its capacity as a stockholder or warrantholder of
Company.
SECTION 15.5 Remedies. Each party hereto, in addition to being
entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under Section 9 of this
Warrant. Each party agrees that monetary damages would not be adequate
compensation for any loss incurred by the other party by reason of a breach by
it of the provisions of Section 9 of this Warrant and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.
SECTION 15.6 Successors and Assigns. Subject to the provisions
of Sections 3.1 and 9, this Warrant and the rights evidenced hereby shall inure
to the benefit of and be binding upon the successors of Company and the
successors and assigns of
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Holder. The provisions of this Warrant are intended to be for the benefit of all
Holders from time to time of this Warrant and, with respect to Section 9 hereof,
holders of Warrant Stock, and shall be enforceable by any such Holder or holder
of Warrant Stock.
SECTION 15.7 Amendment. This Warrant and all other Warrants
may be modified or amended or the provisions hereof waived with the written
consent of Company and the Majority Holders, provided that no such Warrant may
be modified or amended to reduce the number of shares of Common Stock for which
such Warrant is exercisable or to increase the price at which such shares may be
purchased upon exercise of such Warrant (before giving effect to any adjustment
as provided therein) without the prior written consent of the Holder thereof.
SECTION 15.8 Severability. Wherever possible, each provision
of this Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Warrant.
SECTION 15.9 Headings. The headings used in this Warrant are
for the convenience of reference only and shall not, for any purpose, be deemed
a part of this Warrant.
SECTION 15.10 Governing Law. This Warrant shall be governed by
the laws of the State of New York, without regard to the provisions thereof
relating to conflict of laws.
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IN WITNESS WHEREOF, Company has caused this Warrant to be duly executed and its
corporate seal to be impressed hereon and attested by its Secretary or an
Assistant Secretary.
Dated: April 24, 2000
ARV Assisted Living, Inc.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President and
Secretary
Attest:
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇
Title: Assistant Secretary
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EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably exercises this
Warrant for the purchase of ______ Shares of Common Stock of ARV Assisted
Living, Inc. and herewith makes payment therefor, all at the price and on the
terms and conditions specified in this Warrant and requests that certificates
for the shares of Common Stock hereby purchased (and any securities or other
property issuable upon such exercise) be issued in the name of and delivered to
_____________ whose address is _________________ and, if such shares of Common
Stock shall not include all of the shares of Common Stock issuable as provided
in this Warrant, that a new Warrant of like tenor and date for the balance of
the shares of Common Stock issuable hereunder be delivered to the undersigned.
------------------------------------
(Name of Registered Owner)
------------------------------------
(Signature of Registered Owner)
------------------------------------
(Street Address)
------------------------------------
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the
name as written upon the face of the within Warrant in every
particular, without alteration or enlargement or any change
whatsoever.
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EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under this Warrant, with respect to the number of shares of
Common Stock set forth below:
Name and Address of Assignee No. of Shares of Common Stock
---------------------------- -----------------------------
AND DOES HEREBY IRREVOCABLY CONSTITUTE AND APPOINT __________________________
ATTORNEY-IN-FACT TO REGISTER SUCH TRANSFER ON THE BOOKS OF ARV ASSISTED LIVING,
INC. MAINTAINED FOR THE PURPOSE, WITH FULL POWER OF SUBSTITUTION IN THE
PREMISES.
DATED: PRINT NAME:
-------------------- -------------------------
SIGNATURE:
--------------------------
WITNESS:
----------------------------
NOTICE: THE SIGNATURE ON THIS SUBSCRIPTION MUST CORRESPOND WITH
THE NAME AS WRITTEN UPON THE FACE OF THE WITHIN WARRANT IN
EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY
CHANGE WHATSOEVER.