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EXHIBIT 4.5
REPRESENTATIVE'S WARRANT AGREEMENT
THIS REPRESENTATIVE'S WARRANT AGREEMENT (the "Agreement"), dated as of
_________________, 1996, is made and entered into by and between BIRMAN MANAGED
CARE, INC., a Delaware corporation (the "Company"), and W. B. MCKEE SECURITIES,
INC. (the "Warrantholder").
The Company agrees to issue and sell, and the Warrantholder agrees to
purchase, for the price of $1,550, warrants, as hereinafter described (the
"Warrants"), to purchase up to an aggregate of 155,000 units (the "Units"), each
Unit consisting of (i) one (subject to adjustment pursuant to Section 8 hereof)
share (the "Shares") of the Company's Common Stock, $.001 par value (the "Common
Stock") and (ii) one Common Stock Purchase Warrant (the "Common Stock Warrants")
exercisable to purchase one share of Common Stock, in connection with a public
offering (the "Offering") by the Company of 1,550,000 Units pursuant to an
underwriting agreement (the "Underwriting Agreement"), dated as of , 1996, among
the Company and the Warrantholder, as Representative of the several underwriters
as contemplated by the prospectus of the Company dated ___________, 1993 (the
"Final Prospectus"). (The Common Stock Warrants underlying the Units are
hereinafter referred to as the "Unit Warrants." The shares of Common Stock
purchasable upon exercise of the Unit Warrants are hereinafter referred to as
the "Unit Warrant Stock.") The purchase and sale of the Warrants shall occur
upon completion of the Offering, and be subject to the conditions to the
Representative's obligation to purchase Units thereunder. The Unit Warrants
shall be subject to all of the terms and conditions of the warrant agreement,
dated as of , 1996, between the Company and American Stock Transfer and Trust
Company, Inc., as Warrant Agent (the "Warrant Agreement").
In consideration of the foregoing and for the purpose of defining the
terms and provisions of the Warrants and the respective rights and obligations
thereunder, the Company and the Warrantholder, for value received, hereby agree
as follows:
Section 1. TRANSFERABILITY AND FORM OF WARRANTS.
1.1. REGISTRATION. The Warrants shall be numbered and shall
be registered on the books of the Company when issued.
1.2. TRANSFER. The Warrants shall be transferable only on
the books of the Company maintained at its principal office in Cookeville,
Tennessee, or wherever its principal office may then be located, upon delivery
thereof duly endorsed by the Warrantholder or by its duly authorized attorney or
representative, accompanied by proper evidence of succession, assignment or
authority to transfer. Upon any registration of transfer, the Company shall
execute and deliver new Warrants to the person entitled thereto.
1.3. LIMITATIONS ON TRANSFER OF THE WARRANTS. Subject to the
provisions of Section 11, the Warrants shall not be sold, transferred, assigned
or hypothecated by the Warrantholder, except to (i) one or more persons, each of
whom on the date of transfer is an officer of the Warrantholder; (ii) a
partnership or partnerships, the general partners of which are the
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Warrantholder and one or more persons, each of whom on the date of transfer is
an officer of the Warrantholder; (iii) a successor to the Warrantholder in
merger or consolidation; (iv) a purchaser of all or substantially all of the
Warrantholder's assets; (v) the stockholders of the Warrantholder or the
stockholders or partners of the Warrantholder's transferees in the event of
liquidation or dissolution; or (vi) any person receiving the Warrants from one
or more of the persons listed in this subsection 1.3 at such person's or
persons' death pursuant to will, trust or the laws of intestate succession. The
Warrants may be divided or combined, upon request to the Company by the
Warrantholder, into a certificate or certificates representing the right to
purchase the same aggregate number of Units. Unless the context indicates
otherwise, the term "Warrantholder" shall include any transferee or transferees
of the Warrants pursuant to this subsection 1.3, and the term "Warrants" shall
include any and all warrants outstanding pursuant to this Agreement, including
those evidenced by a certificate or certificates issued upon division, exchange,
substitution or transfer pursuant to this Agreement.
1.4. FORM OF WARRANTS. The text of the Warrants and of the
form of election to purchase Units shall be substantially as set forth in
Exhibit A attached hereto. The number of shares per Unit issuable upon exercise
of the Warrants is subject to adjustment upon the occurrence of certain events,
all as hereinafter provided. The Warrants shall be executed on behalf of the
Company by its Chairman of the Board, Chief Executive Officer, President or by a
Vice President, and attested to by its Secretary or an Assistant Secretary.
A Warrant bearing the signature of an individual who was at
any time the proper officer of the Company shall bind the Company,
notwithstanding that such individual shall have ceased to hold such office prior
to the delivery of such Warrant or did not hold such office on the date of this
Agreement.
The Warrants shall be dated as of the date of signature
thereof by the Company either upon initial issuance or upon division, exchange,
substitution or transfer.
1.5. LEGEND ON SHARES AND UNIT WARRANTS. Each certificate for
Shares or Unit Warrants (or Unit Warrant Stock issued upon exercise of a Unit
Warrant) initially issued upon exercise of the Warrants or a Unit Warrant shall
bear the following legend, unless, at the time of exercise, such Shares or Unit
Warrants (or Unit Warrant Stock) are subject to a currently effective
Registration Statement under the Securities Act of 1933, as amended (the "Act"):
"The securities represented by this Certificate have not been
registered under the Securities Act of 1933 or any state
securities laws and may not be sold, exchanged, hypothecated
or transferred in any manner except in compliance with
Section 11 of the Agreement pursuant to which they were
issued."
Any certificate issued at any time in exchange or substitution
for any certificate bearing such legend (except a new certificate issued upon
completion of a public distribution pursuant to a registration statement under
the Act, of the securities represented thereby) shall also bear the above legend
unless, in the opinion of the Company's counsel, the securities represented
thereby need no longer be subject to such restrictions.
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Section 2. EXCHANGE OF WARRANT CERTIFICATE. Any Warrant certificate may
be exchanged for another certificate or certificates entitling the Warrantholder
to purchase a like aggregate number of Units as the certificate or certificates
surrendered then entitled such Warrantholder to purchase. Any Warrantholder
desiring to exchange a Warrant certificate shall make such request in writing
delivered to the Company, and shall surrender, properly endorsed, with
signatures guaranteed, the certificate evidencing the Warrant to be so
exchanged. Thereupon, the Company shall execute and deliver to the person
entitled thereto a new Warrant certificate as so requested.
Section 3. TERM OF WARRANTS; EXERCISE OF WARRANTS. Subject to the terms
of this Agreement, the Warrantholder shall have the right, at any time during
the period commencing at 9:00 A.M. Arizona Time, on the date one year from the
date of the Final Prospectus, and ending at 5:00 P.M., Arizona Time, on the date
immediately preceding the date five years from the date of the Final Prospectus
(the "Termination Date"), to purchase from the Company up to the number of fully
paid and nonassessable Shares and Unit Warrants to which the Warrantholder may
at the time be entitled to purchase pursuant to this Agreement, upon surrender
to the Company, at its principal office, of the certificate evidencing the
Warrants to be exercised, together with the purchase form on the reverse thereof
duly filled in and signed, with signatures guaranteed, and upon payment to the
Company of the Warrant Price (as defined in and determined in accordance with
the provisions of Sections 7 and 8 hereof), for the number of Units in respect
of which such Warrants are then exercised, but in no event for less than 100
Units (unless less than an aggregate of 100 Units are then purchasable under all
outstanding Warrants held by a Warrantholder). Payment of the aggregate Warrant
Price shall be made in cash or by check. No Unit Warrant may be exercised by the
Warrantholder after 5:00 p.m., Arizona Time, on the date immediately preceding
the date five years from the date of the Final Prospectus. The exercise price of
the Unit Warrants shall be $_______ subject to adjustment as is provided in
Section 4 of the of the Warrant Agreement dated as of ______________, 1996,
between the Company and American Stock Transfer and Trust Company, Inc. as
Warrant Agent.
Upon such surrender of the Warrants and payment of such Warrant Price
as aforesaid, the Company shall issue and cause to be delivered with all
reasonable dispatch to or upon the written order of the Warrantholder and in
such name or names as the Warrantholder may designate a certificate or
certificates for the number of full Shares and Unit Warrants so purchased upon
the exercise of the Warrant, together with cash, as provided in Section 9
hereof, in respect of any fractional Shares otherwise issuable upon surrender.
Such certificate or certificates shall be deemed to have been issued and any
person so designated to be named therein shall be deemed to have become a holder
of record of such securities as of the date of surrender of the Warrants and
payment of the Warrant Price, as aforesaid, notwithstanding that the certificate
or certificates representing such securities shall not actually have been
delivered or that the Common Stock and Unit Warrant transfer books of the
Company shall then be closed. The Warrants shall be exercisable, at the election
of the Warrantholder, either in full or from time to time in part and, in the
event that a certificate evidencing the Warrants is exercised in respect of less
than all of the Units specified therein at any time prior to the Termination
Date, a new certificate evidencing the remaining portion of the Warrants will be
issued by the Company.
Section 4. PAYMENT OF TAXES. The Company will pay all documentary stamp
taxes, if any, attributable to the initial issuance of the Warrants or the
securities comprising the Units; provided, however, the Company shall not be
required to pay any tax which may be payable in respect of any secondary
transfer of the Warrants or the securities comprising the Units.
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Section 5. MUTILATED OR MISSING WARRANTS. In case the certificate or
certificates evidencing the Warrants shall be mutilated, lost, stolen or
destroyed, the Company shall, at the request of the Warrantholder, issue and
deliver in exchange and substitution for and upon cancellation of the mutilated
certificate or certificates, or in lieu of and substitution for the certificate
or certificates lost, stolen or destroyed, a new Warrant certificate or
certificates of like tenor and representing an equivalent right or interest, but
only upon receipt of evidence satisfactory to the Company of such loss, theft or
destruction of such Warrant and a bond of indemnity, if requested, also
satisfactory in form and amount at the applicant's cost. Applicants for such
substitute Warrant certificate shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company may prescribe.
Section 6. RESERVATION OF SHARES. There has been reserved, and the
Company shall at all times keep reserved so long as the Warrants remain
outstanding, out of its authorized Common Stock, such number of shares of Common
Stock as shall be subject to purchase under the Warrants (including such number
of shares of Unit Warrant Stock subject to purchase upon exercise of the Unit
Warrants). Every transfer agent for the Common Stock and other securities of the
Company issuable upon the exercise of the Warrants will be irrevocably
authorized and directed at all times to reserve such number of authorized shares
and other securities as shall be requisite for such purpose. The Company will
keep a copy of this Agreement and the Warrant Agreement on file with every
transfer agent for the Common Stock and other securities of the Company issuable
upon the exercise of the Warrants. The Company will supply every such transfer
agent with duly executed stock and other certificates, as appropriate, for such
purpose and will provide or otherwise make available any cash which may be
payable as provided in Section 9 hereof.
Section 7. WARRANT PRICE. The price per Unit (the "Warrant Price") at
which Units shall be purchasable upon the exercise of the Warrants shall be
$____, subject to adjustment as provided in Section 8.
Section 8. ADJUSTMENT OF NUMBER OF SHARES. The number and kind of
securities purchasable upon the exercise of the Warrants and the Warrant Price
shall be subject to adjustment from time to time upon the happening of certain
events, as follows:
8.1. ADJUSTMENTS. The number of Shares purchasable upon the
exercise of the Warrants shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in
Common Stock or make a distribution in Common Stock, (ii) subdivide its
outstanding Common Stock, (iii) combine its outstanding Common Stock into a
smaller number of shares of Common Stock, or (iv) issue by reclassification of
its Common Stock other securities of the Company, the number of Shares
purchasable upon exercise of the Warrants immediately prior thereto shall be
adjusted so that the Warrantholder shall be entitled to receive the kind and
number of Shares or other securities of the Company which it would have owned or
would have been entitled to receive immediately after the happening of any of
the events described above, had the Warrants been exercised immediately prior to
the happening of such event or any record date with respect thereto. Any
adjustment made pursuant to this subsection 8.1(a) shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
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(b) In case the Company shall issue rights, options,
warrants or convertible securities to all or substantially all holders of its
Common Stock, without any charge to such holders, entitling them to subscribe
for or purchase Common Stock at a price per share which is lower at the record
date mentioned below than the then Current Market Price (as defined in Section
9), the number of Shares thereafter purchasable upon the exercise of each
Warrant shall be determined by multiplying the number of Shares theretofore
purchasable upon exercise of the Warrant by a fraction, of which the numerator
shall be the number of shares of Common Stock outstanding immediately prior to
the issuance of such rights, options, warrants or convertible securities plus
the number of additional shares of Common Stock offered for subscription or
purchase, and of which the denominator shall be the number of shares of Common
Stock outstanding immediately prior to the issuance of such rights, options,
warrants or convertible securities plus the number of shares which the aggregate
offering price of the total number of shares offered would purchase at such
Current Market Price. Such adjustment shall be made whenever such rights,
options, warrants or convertible securities are issued, and shall become
effective immediately and retroactive to the record date for the determination
of stockholders entitled to receive such rights, options, warrants or
convertible securities.
(c) In case the Company shall distribute to all or
substantially all holders of its Common Stock evidences of its indebtedness or
assets (excluding cash dividends or distributions out of earnings) or rights,
options, warrants or convertible securities containing the right to subscribe
for or purchase Common Stock (excluding those referred to in subsection 8.1(b)
above), then in each case the number of Shares thereafter purchasable upon the
exercise of the Warrants shall be determined by multiplying the number of Shares
theretofore purchasable upon exercise of the Warrants by a fraction, of which
the numerator shall be the then Current Market Price on the date of such
distribution, and of which the denominator shall be such Current Market Price on
such date minus the then fair value (determined as provided in subparagraph (e)
below) of the portion of the assets or evidences of indebtedness so distributed
or of such subscription rights, options, warrants or convertible securities
applicable to one share. Such adjustment shall be made whenever any such
distribution is made and shall become effective on the date of distribution
retroactive to the record date for the determination of stockholders entitled to
receive such distribution.
(d) No adjustment in the number of Shares purchasable
pursuant to the Warrants shall be required unless such adjustment would require
an increase or decrease of at least one percent in the number of Shares then
purchasable upon the exercise of the Warrants or, if the Warrants are not then
exercisable, the number of Shares purchasable upon the exercise of the Warrants
on the first date thereafter that the Warrants become exercisable; provided,
however, that any adjustments which by reason of this subsection 8.1(d) are not
required to be made immediately shall be carried forward and taken into account
in any subsequent adjustment.
(e) Whenever the number of Warrant Shares purchasable
upon the exercise of the Warrant is adjusted, as herein provided, the Warrant
Price payable upon exercise of the Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment by a fraction, of which the
numerator shall be the number of Warrant Shares purchasable upon the exercise of
the Warrant immediately prior to such adjustment, and of which the denominator
shall be the number of Warrant Shares so purchasable immediately thereafter,
provided, however, that in no event shall the Warrant Price be adjusted to an
amount less than 120% of the initial public offering price of the Units (after
taking into account adjustments resulting for stock splits, reverse stock
splits, stock dividends and similar events occurring after the date hereof).
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(f) To the extent not covered by subsections 8.1(b) or
(c) hereof, in case the Company shall sell or issue Common Stock or rights,
options, warrants or convertible securities containing the right to subscribe
for or purchase shares of Common Stock at a price per share (determined, in the
case of such rights, options, warrants or convertible securities, by dividing
(i) the total amount received or receivable by the Company in consideration of
the sale or issuance of such rights, options, warrants or convertible
securities, plus the total consideration payable to the Company upon exercise or
conversion thereof, by (ii) the total number of shares covered by such rights,
options, warrants or convertible securities) lower than the then Current Market
Price in effect immediately prior to such sale or issuance, then the number of
Shares thereafter purchasable upon the exercise of the Warrants shall be
determined by multiplying the number of Shares theretofore purchasable upon
exercise of the Warrants by a fraction, of which the numerator shall be the
Warrant Price and the denominator shall be that price (calculated to the nearest
cent) determined by dividing (I) an amount equal to the sum of (A) the number of
shares of Common Stock outstanding immediately prior to such sale or issuance
multiplied by the Warrant Price, plus (B) the consideration received by the
Company upon such sale or issuance, by (II) the total number of shares of Common
Stock outstanding immediately after such sale or issuance. For the purposes of
such adjustments, the Common Stock which the holders of any such rights,
options, warrants or convertible securities shall be entitled to subscribe for
or purchase shall be deemed issued and outstanding as of the date of such sale
or issuance and the consideration received by the Company therefor shall be
deemed to be the consideration received by the Company for such rights, options,
warrants or convertible securities, plus the consideration or premiums stated in
such rights, options, warrants or convertible securities to be paid for the
Common Stock covered thereby. In case the Company shall sell or issue Common
Stock or rights, options, warrants or convertible securities containing the
right to subscribe for or purchase Common Stock for a consideration consisting,
in whole or in part, of property other than cash or its equivalent, then in
determining the "price per share" of Common Stock and the "consideration
received by the Company" for purposes of the first sentence of this subsection
8.1(f), the Board of Directors shall determine the fair value of said property,
and such determination, if reasonable and based upon the Board of Directors'
good faith business judgment, shall be binding upon the Warrantholder. In
determining the "price per share" of Common Stock, any underwriting discounts or
commissions shall not be deducted from the price received by the Company for
sales of securities registered under the Act.
(g) Whenever the number of Shares purchasable upon the
exercise of the Warrants is adjusted as herein provided, the Company shall cause
to be promptly mailed to the Warrantholder by first class mail, postage prepaid,
notice of such adjustment and a certificate of the chief financial officer of
the Company setting forth the number of Shares purchasable upon the exercise of
the Warrants after such adjustment, a brief statement of the facts requiring
such adjustment and the computation by which such adjustment was made.
(h) For the purpose of this subsection 8.1, the term
"Common Stock" shall mean (i) the class of stock designated as the Common Stock
of the Company at the date of this Agreement, or (ii) any other class of stock
resulting from successive changes or reclassifications of such Common Stock
consisting solely of changes in par value, or from par value to no par value, or
from no par value to par value. In the event that at any time, as a result of an
adjustment made pursuant to this Section 8, the Warrantholder shall become
entitled to purchase any securities of the Company other than Common Stock and
Unit Warrants, (i) if the Warrantholder's right to purchase is on any other
basis than that available to all holders of the Company's Common Stock, the
Company shall obtain an opinion of an independent investment banking firm
valuing such other
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securities and (ii) thereafter the number of such other securities so
purchasable upon exercise of the Warrants shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Shares contained in this Section 8.
(i) Upon the expiration of any rights, options,
warrants or conversion privileges, if such shall not have been exercised, the
number of Shares purchasable upon exercise of the Warrants, to the extent the
Warrants have not then been exercised, shall, upon such expiration, be
readjusted and shall thereafter be such as they would have been had they been
originally adjusted (or had the original adjustment not been required, as the
case may be) on the basis of (A) the fact that the only shares of Common Stock
so issued were the shares of Common Stock, if any, actually issued or sold upon
the exercise of such rights, options, warrants or conversion privileges, and (B)
the fact that such shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such exercise plus the
consideration, if any, actually received by the Company for the issuance, sale
or grant of all such rights, options, warrants or conversion privileges whether
or not exercised; provided, however, that no such readjustment shall have the
effect of decreasing the number of Shares purchasable upon exercise of the
Warrants by an amount in excess of the amount of the adjustment initially made
in respect of the issuance, sale or grant of such rights, options, warrants or
conversion privileges.
8.2. NO ADJUSTMENT FOR DIVIDENDS. Except as provided in
subsection 8.1, no adjustment in respect of any dividends or distributions out
of earnings shall be made during the term of the Warrants or upon the exercise
of the Warrants.
8.3. NO ADJUSTMENT IN CERTAIN CASES. No adjustments shall be
made pursuant to Section 8 hereof in connection with the issuance of Units,
Shares, Unit Warrants or Unit Warrant Stock sold as part of the public sale and
issuance of Units pursuant to the Underwriting Agreement or the issuance of
Units, Shares, Unit Warrants or Unit Warrant Stock upon exercise of the
Warrants. No adjustments shall be made pursuant to Section 8 hereof in
connection with the grant or exercise of presently authorized or outstanding
options to purchase Common Stock under the Company's existing stock option plan
or the exercise of presently outstanding warrants to purchase Common Stock.
8.4. PRESERVATION OF PURCHASE RIGHTS UPON RECLASSIFICATION,
CONSOLIDATION, ETC. In case of any consolidation of the Company with or merger
of the Company into another corporation or in case of any sale or conveyance to
another corporation of the property, assets or business of the Company as an
entirety or substantially as an entirety, the Company or such successor or
purchasing corporation, as the case may be, shall execute with the Warrantholder
an agreement that the Warrantholder shall have the right thereafter upon payment
of the Warrant Price in effect immediately prior to such action to purchase,
upon exercise of the Warrants, the kind and amount of shares and other
securities and property which it would have owned or have been entitled to
receive after the happening of such consolidation, merger, sale or conveyance
had the Warrants (and each underlying security) been exercised immediately prior
to such action. In the event of a merger described in Section 368(a)(2)(E) of
the Internal Revenue Code of 1954, as amended, in which the Company is the
surviving corporation, the right to purchase Units under the Warrants shall
terminate on the date of such merger and thereupon the Warrants shall become
null and void, but only if the controlling corporation shall agree to substitute
for the Warrants its warrant which entitles the holder thereof to purchase upon
its exercise the kind and amount of shares and other securities and property
which it would have owned or been entitled to receive had the Warrants been
exercised
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immediately prior to such merger. Any such agreements referred to in this
subsection 8.4 shall provide for adjustments, which shall be as nearly
equivalent as may be practicable to the adjustments provided for in Section 8
hereof. The provisions of this subsection 8.4 shall similarly apply to
successive consolidations, mergers, sales or conveyances.
8.5. PAR VALUE OF SHARES OF COMMON STOCK. Before taking any
action which would cause an adjustment effectively reducing the portion of the
Warrant Price allocable to each Share below the then par value per share of the
Common Stock issuable upon exercise of the Warrants, the Company will take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and nonassessable
Common Stock upon exercise of the Warrants.
8.6. INDEPENDENT PUBLIC ACCOUNTANTS. The Company may retain a
firm of independent public accountants of recognized national standing (which
may be any such firm regularly employed by the Company) to make any computation
required under this Section 8, and a certificate signed by such firm shall be
conclusive evidence of the correctness of any computation made under this
Section 8.
8.7. STATEMENT ON WARRANT CERTIFICATES. Irrespective of any
adjustments in the number of securities issuable upon exercise of Warrants,
Warrant certificates theretofore or thereafter issued may continue to express
the same number of securities as are stated in the similar Warrant certificates
initially issuable pursuant to this Agreement. However, the Company may, at any
time in its sole discretion (which shall be conclusive), make any change in the
form of Warrant certificate that it may deem appropriate and that does not
affect the substance thereof; and any Warrant certificate thereafter issued,
whether upon registration of transfer of, or in exchange or substitution for, an
outstanding Warrant certificate, may be in the form so changed.
Section 9. FRACTIONAL INTERESTS. The Company shall not be required to
issue fractional Shares on the exercise of the Warrants. If any fraction of a
Share would, except for the provisions of this Section 9, be issuable on the
exercise of the Warrants (or specified portion thereof), the Company shall pay
an amount in cash equal to the then Current Market Price multiplied by such
fraction. For purposes of this Agreement, the term "Current Market Price" shall
mean (i) if the Common Stock is traded in the over-the-counter market and not in
the Nasdaq National Market nor on any national securities exchange, the average
of the per share closing bid prices of the Common Stock on the 30 consecutive
trading days immediately preceding the date in question, as reported by Nasdaq
or an equivalent generally accepted reporting service, or (ii) if the Common
Stock is traded in the Nasdaq National Market or on a national securities
exchange, the average for the 30 consecutive trading days immediately preceding
the date in question of the daily per share closing prices of the Common Stock
in the Nasdaq National Market or on the principal stock exchange on which it is
listed, as the case may be. For purposes of clause (i) above, if trading in the
Common Stock is not reported by Nasdaq, the bid price referred to in said clause
shall be the lowest bid price as reported in the "pink sheets" published by
National Quotation Bureau, Incorporated. The closing price referred to in clause
(ii) above shall be the last reported sale price or, in case no such reported
sale takes place on such day, the average of the reported closing bid and asked
prices, in either case in the Nasdaq National Market or on the national
securities exchange on which the Common Stock is then listed.
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Section 10. NO RIGHTS AS STOCKHOLDER; NOTICES TO WARRANTHOLDER. Nothing
contained in this Agreement or in the Warrants shall be construed as conferring
upon the Warrantholder or its transferees any rights as a stockholder of the
Company, including the right to vote, receive dividends, consent or receive
notices as a stockholder in respect of any meeting of stockholders for the
election of directors of the Company or any other matter. If, however, at any
time prior to the expiration of the Warrants and prior to their exercise, any
one or more of the following events shall occur:
(a) any action which would require an adjustment pursuant to
Section 8.1 (except subsections 8.1(e) and 8.1(h)) or 8.4; or
(b) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation, merger or sale of its
property, assets and business as an entirety or substantially as an
entirety) shall be proposed;
then the Company shall give notice in writing of such event to the
Warrantholder, as provided in Section 14 hereof, at least 20 days prior to the
date fixed as a record date or the date of closing the transfer books for the
determination of the stockholders entitled to any relevant dividend,
distribution, subscription rights or other rights or for the determination of
stockholders entitled to vote on such proposed dissolution, liquidation or
winding up. Such notice shall specify such record date or the date of closing
the transfer books, as the case may be. Failure to mail or receive such notice
or any defect therein shall not affect the validity of any action taken with
respect thereto.
Section 11. RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS.
(a) The Warrantholder agrees that prior to making any
disposition of the Warrants, the Shares, the Unit Warrants or the Unit Warrant
Stock, other than to persons or entities identified in clauses (i) through (vi),
inclusive, of Section 1.3, the Warrantholder shall give written notice to the
Company describing briefly the manner in which any such proposed disposition is
to be made; and no such disposition shall be made if the Company has notified
the Warrantholder that in the opinion of counsel reasonably satisfactory to the
Warrantholder a registration statement or other notification or post-effective
amendment thereto (hereinafter collectively a "Registration Statement") under
the Act is required with respect to such disposition and no such Registration
Statement has been filed by the Company with, and declared effective, if
necessary, by, the Securities and Exchange Commission (the "Commission").
(b) The Company shall be obligated to the owners of the
Warrants, the Shares, the Unit Warrants and the Unit Warrant Stock to file a
Registration Statement as follows:
(i) Whenever during the four-year period beginning on
the date one year from the date of the Final Prospectus and ending on the date
immediately preceding the date five years from the date of the Final Prospectus,
the Company proposes to file with the Commission a Registration Statement (other
than as to securities issued pursuant to an employee benefit plan or as to a
transaction subject to Rule 145 promulgated under the Act), it shall, at least
30 days prior to each such filing, give written notice of such proposed filing
to the Warrantholder and each holder of Shares, Unit Warrants and Unit Warrant
Stock, at their respective addresses as they appear on the records of the
Company, and shall offer to include and shall include in such filing any
proposed disposition of the Shares, the Unit Warrants and the Unit Warrant Stock
upon receipt by the
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Company, not less than 10 days prior to the proposed filing date, of a request
therefor setting forth the facts with respect to such proposed disposition and
all other information with respect to such person reasonably necessary to be
included in such Registration Statement. In the event that the managing
underwriter for said offering advises the Company in writing that the inclusion
of such securities in the offering would be detrimental to the offering, such
securities shall nevertheless be included in the Registration Statement,
provided that the Warrantholder and each holder of Shares, Unit Warrants and
Unit Warrant Stock desiring to have such securities included in the Registration
Statement agrees in writing, for a period of 60 days following such offering,
not to sell or otherwise dispose of such securities pursuant to such
Registration Statement, which Registration Statement the Company shall keep
effective for a period of at least nine months following the expiration of such
60-day period.
(ii) In addition to any Registration Statement pursuant
to subparagraph (i) above, during the four-year period beginning on the date one
year from the date of the Final Prospectus and ending on the date immediately
preceding the date five years from the date of the Final Prospectus the Company
will, as promptly as practicable (but in any event within 60 days), after
written request by W. B. McKee Securities, Inc. or by a person or persons
holding (or having the right to acquire by virtue of holding the Warrants or
Unit Warrants) at least 50% of the shares of Common Stock which have been (or
may be) issued upon exercise of the Warrants and Unit Warrants, prepare and file
at its own expense a Registration Statement with the Commission and appropriate
Blue Sky authorities sufficient to permit the public offering of the Shares, the
Unit Warrants and the Unit Warrant Stock, and will use its best efforts at its
own expense through its officers, directors, auditors and counsel, in all
matters necessary or advisable, to cause such Registration Statement to become
effective as promptly as practicable; provided, however, that the Company shall
only be obligated to file one such Registration Statement under this Section
11(b)(ii).
(c) All fees, disbursements and out-of-pocket expenses
(other than Warrantholders' brokerage fees and commissions and legal fees of
counsel to the Warrantholder, if any) in connection with the filing of any
Registration Statement under Section 11(b) and in complying with applicable
securities and Blue Sky laws shall be borne by the Company. The Company at its
expense will supply any Warrantholder and any holder of Shares, Unit Warrants or
Unit Warrant Stock with copies of such Registration Statement and the prospectus
included therein and other related documents in such quantities as may be
reasonably requested by the Warrantholder or holder of Shares, Unit Warrants or
Unit Warrant Stock.
(d) If the Warrantholder shall be entitled to registration
of any Shares, Unit Warrants or Unit Warrant Stock as provided in this Section
11 and so requests, in lieu of such registration, the Company shall have the
right, for a period of 30 days following such request, to purchase or cause to
be purchased all of the securities to which such request for registration
pertains, at the Current Market Price (as defined in Section 9) less the
exercise price, if any, of the Warrants or Unit Warrants, as the case may be.
(e) The Company shall not be required by this Section 11 to
file such Registration Statement if, in the opinion of counsel for the
Warrantholders and holders of Shares, Unit Warrants and Unit Warrant Stock and
the Company (or, should they not agree, in the opinion of another counsel
experienced in securities law matters acceptable to counsel for such holders and
the Company), the proposed public offering or other transfer as to which such
Registration Statement is requested is exempt from applicable federal and state
securities laws and would result in all
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purchasers or transferees obtaining securities which are not "restricted
securities," as defined in Rule 144 under the Act.
(f) The provisions of this Section 11 and Section 12 hereof
shall apply to the extent as provided herein if the Company chooses to file an
Offering Statement under Regulation A promulgated under the Act.
(g) The Company agrees that until all Shares, Unit Warrants
and Unit Warrant Stock have been sold under a Registration Statement or pursuant
to Rule 144 under the Act, it will keep current in filing all materials required
to be filed with the Commission in order to permit the holders of such
securities to sell the same under Rule 144.
Section 12. INDEMNIFICATION.
(a) In the event of the filing of any Registration Statement
with respect to the Warrants, the Shares, the Unit Warrants or the Unit Warrant
Stock pursuant to Section 11 hereof, the Company agrees to indemnify and hold
harmless the Warrantholder or any holder of such Shares, Unit Warrants or Unit
Warrant Stock and each person, if any, who controls the Warrantholder or any
holder of such Shares, Unit Warrants or Unit Warrant Stock, within the meaning
of the Act, against any losses, claims, damages or liabilities, joint or several
(which shall, for all purposes of this Agreement, include, but not be limited
to, all costs of defense and investigation and all attorneys' fees), to which
the Warrantholder or any holder of such Shares, Unit Warrants or Unit Warrant
Stock or such controlling person may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any such Registration Statement, or
any related preliminary prospectus, final prospectus, or amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that the Company will
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 an untrue statement or alleged
untrue statement or omission or alleged omission made in such Registration
Statement, preliminary prospectus, final prospectus or amendment or supplement
thereto in reliance upon, and in conformity with, written information furnished
to the Company by such Warrantholder or the holder of such Shares, Unit Warrants
or Unit Warrant Stock specifically for use in the preparation thereof. This
indemnity will be in addition to any liability which the Company may otherwise
have.
(b) The Warrantholder and the holders of the Shares, Unit
Warrants and Unit Warrant Stock agree that they will indemnify and hold harmless
the Company, each other person referred to in subparts (1), (2) and (3) of
Section 11(a) of the Act in respect of the Registration Statement and each
person, if any, who controls the Company within the meaning of the Act, against
any losses, claims, damages or liabilities (which shall, for all purposes of
this Agreement, include but not be limited to, all costs of defense and
investigation and all attorneys' fees) to which the Company or any such
director, officer or controlling person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in such Registration Statement,
or any related preliminary prospectus, final prospectus or amendment or
supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the
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statements therein not misleading, but in each case only to the extent that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in such Registration Statement, preliminary prospectus, final prospectus or
amendment or supplement thereto in reliance upon, and in conformity with,
written information furnished to the Company by the Warrantholder or such holder
of Shares, Unit Warrants or Unit Warrant Stock specifically for use in the
preparation thereof. This indemnity agreement will be in addition to any
liability which the Warrantholder or such holder of Shares, Unit warrants or
Unit Warrant Stock may otherwise have.
(c) Promptly after receipt by an indemnified party under
this Section 12 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 12, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
the indemnifying party from any liability which it may have to any indemnified
party otherwise than as to the particular item as to which indemnification is
then being sought solely pursuant to this Section 12. In case any such action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
in, and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, reasonably assume the defense thereof, subject to the
provisions herein stated, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense hereof, the
indemnifying party will not be liable to such indemnified party under this
Section 12 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation, unless the indemnifying party shall not pursue the
action to its final conclusion. The indemnified party shall have the right to
employ separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall not be at the expense
of the indemnifying party if the indemnifying party has assumed the defense of
the action with counsel reasonably satisfactory to the indemnified party;
provided that if the indemnified party is a Warrantholder or a holder of Shares,
Unit Warrants or Unit Warrant Stock or a person who controls a Warrantholder or
a holder of Shares, Unit Warrants or Unit Warrant Stock within the meaning of
the Act, the fees and expenses of such counsel shall be at the expense of the
indemnifying party if (i) the employment of such counsel has been specifically
authorized in writing by the indemnifying party or (ii) the named parties to any
such action, including any impleaded parties, include both a Warrantholder or a
holder of Shares, Unit Warrants or Unit Warrant Stock or such controlling person
and the indemnifying party and a Warrantholder or a holder of Shares, Unit
Warrants or Unit Warrant Stock or such controlling person shall have been
advised by such counsel that there may be one or more legal defenses available
to a Warrantholder or a holder of Shares, Unit Warrants or Unit Warrant Stock or
controlling person which are not available to or in conflict with any legal
defenses which may be available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of a Warrantholder or a holder of Shares, Unit Warrants or Unit
Warrant Stock or such controlling person, it being understood, however, that the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys for the
Warrantholder, the holders of the Shares, the Unit Warrants and the Unit Warrant
Stock and controlling persons, which firm shall be designated in writing by a
majority in interest of such holders and controlling persons based upon the
value of the securities included in the Registration Statement). No settlement
of any action against an indemnified party shall be made without the
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consent of the indemnified and the indemnifying parties, which shall not be
unreasonably withheld in light of all factors of importance to such parties.
Section 13. CONTRIBUTION. In order to provide for just and equitable
contribution under the Act in any case in which (i) a Warrantholder or any
holder of the Shares, Unit Warrants or Unit Warrant Stock or controlling person
makes a claim for indemnification pursuant to Section 12 hereof but it is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that the express provisions of Section 12 hereof
provide for indemnification in such case or (ii) contribution under the Act may
be required on the part of any Warrantholder or any holder of the Shares, Unit
Warrants or Unit Warrant Stock or controlling person, then the Company and any
Warrantholder or any such holder of the Shares, Unit Warrants or Unit Warrant
Stock or controlling person shall contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (which shall, for all
purposes of this Agreement, include, but not be limited to, all costs of defense
and investigation and all attorneys' fees), in either such case (after
contribution from others) on the basis of relative fault as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or a
Warrantholder or holder of Shares, Unit Warrants or Unit Warrant Stock or
controlling person on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and such holders of such securities and such controlling
persons agree that it would not be just and equitable if contribution pursuant
to this Section 13 were determined by pro rata allocation or by any other method
which does not take account of the equitable considerations referred to in this
Section 13. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages or liabilities (or actions in respect thereof
referred to above in this Section 13 shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
Section 14. NOTICES. Any notice pursuant to this Agreement by the
Company or by a Warrantholder, a holder of Shares, Unit Warrants or Unit Warrant
Stock shall be in writing and shall be deemed to have been duly given if
delivered or mailed by certified mail, return receipt requested:
(a) If to a Warrantholder, a holder of Shares, Unit Warrants
or Unit Warrant Stock:
W. B. McKee Securities Inc.
3003 N. Central Avenue, Suite 100
Phoenix, Arizona 85012
(b) If to the Company:
Birman Managed Care, Inc.
502 Gould Drive
Cookeville, Tennessee 38506
Attention: President
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Each party may from time to time change the address to which notices to
it are to be delivered or mailed hereunder by notice in accordance herewith to
the other party.
Section 15. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company, the Warrantholder, or the
holders of Shares, Unit Warrants or Unit Warrant Stock shall bind and inure to
the benefit of their respective successors and assigns hereunder.
Section 16. MERGER OR CONSOLIDATION OF THE COMPANY. The Company will
not merge or consolidate with or into any other corporation or sell all or
substantially all of its property to another corporation, unless the provisions
of Section 8.4 are complied with.
Section 17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All statements
contained in any schedule, exhibit, certificate or other instrument delivered by
or on behalf of the parties hereto, or in connection with the transactions
contemplated by this Agreement, shall be deemed to be representations and
warranties hereunder. Notwithstanding any investigations made by or on behalf of
the parties to this Agreement, all representations, warranties and agreements
made by the parties to this Agreement or pursuant hereto shall survive.
Section 18. APPLICABLE LAW. This Agreement shall be deemed to be a
contract made under the laws of the State of Arizona and for all purposes shall
be construed in accordance with the laws of said State.
Section 19. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company, the
Warrantholder and the holders of Shares, Unit Warrants or Unit Warrant Stock any
legal or equitable right, remedy or claim under this Agreement. This Agreement
shall be for the sole and exclusive benefit of the Company, the Warrantholder
and the holders of Shares, Unit Warrants and Unit Warrant Stock.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, all as of the day and year first above written.
BIRMAN MANAGED CARE, INC.
By:
---------------------------------
, President
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ATTEST:
- -----------------------------------
, Secretary
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W. B. MCKEE SECURITIES, INC.
By:
---------------------------------
, President
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