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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
HEARx Ltd
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(Name of Issuer)
Common Stock, $0.10 Par Value
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(Title of Class of Securities)
422360107
-----------------------------
(CUSIP Number)
Stephen M. Vine, Esq.
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
399 Park Avenue
New York, New York 10022
(212) 872-1000
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
January 26, 1996
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(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement /x/. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosure provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
Continued on following page(s)
Page 1 of 7 Pages
Exhibit Index: Page 7
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SCHEDULE 13D
CUSIP NO. 422360107 PAGE 2 OF 7 PAGES
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Mr. George Soros
2 Check the Appropriate Box If a Member of a Group*
a. [ ]
b. [ ]
3 SEC Use Only
4 Source of Funds*
PF
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
United States
7 Sole Voting Power
Number of 2,800,000
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 2,800,000
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
2,800,000
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
[ ]
13 Percent of Class Represented By Amount in Row (11)
5.54%
14 Type of Reporting Person*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
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Page 3 of 7 Pages
ITEM 1. SECURITY AND ISSUER.
This statement on Schedule 13D relates to shares of common stock,
$0.10 par value (the "Shares"), of HEARx Ltd. (the "Issuer"). The address of
the principal executive offices of the Issuer is 471 Spencer Drive, West Palm
Beach, Florida 33409. This statement on Schedule 13D is being filed by the
Reporting Person (as defined below) to report a recent acquisition of Shares as
a result of which the Reporting Person may be deemed the beneficial owner of in
excess of 5% of the outstanding Shares.
ITEM 2. IDENTITY AND BACKGROUND.
This statement is being filed on behalf of Mr. George Soros (the
"Reporting Person") in his individual capacity.
The principal occupation of the Reporting Person, a U.S. citizen, is
his direction of the activities of Soros Fund Management ("SFM"), which is
carried out in his capacity as the sole proprietor of SFM at SFM's principal
office located at 888 Seventh Avenue, 33rd Floor, N.Y., N.Y. 10106. SFM's sole
business is to serve, pursuant to contract, as the principal investment manager
to several foreign investment companies.
During the past five years, the Reporting Person has not been (a)
convicted in a criminal proceeding, or (b) a party to any civil proceeding as a
result of which he has been subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to federal or state securities laws, or finding any violation with respect to
such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On January 26, 1996, the Reporting Person, along with other investors
(collectively, the "Investors"), entered into a Stock Purchase Agreement
("Stock Purchase Agreement"), with the Issuer, pursuant to which the Investors
purchasd 1996 Senior Preferred Stock, par value $1.00 per share, of the
Issuer ("Senior Preferred Stock"), Class A Warrants ("Class A Warrants") and
Class B Warrants ("Class B Warrants"), in the amounts and upon the terms
specified in the Stock Purchase Agreement, a copy of which is attached hereto
as Exhibit A.
Pursuant to the Stock Purchase Agreement, the Reporting Person, among
other things, purchased from the Issuer 2,800,000 Class A Warrants with
$1,540,000 of his own personal funds.
ITEM 4. PURPOSE OF TRANSACTION.
The Reporting Person acquired 2,800,000 Class A Warrants pursuant to
the terms of the Stock Purchase Agreement (and thus the Reporting Person may be
deemed to hold the 2,800,000 Shares into which the Class A Warrants may be
converted). A copy of the form of the Class A Warrants ("Class A Form") is
attached as Exhibit B. Pursuant to the terms of the Class A Form, the Class A
Warrants may be exercised at a price of $0.55 per Share for a period of five
years from the date of issuance.
Concurrently with the acquisition of the Class A Warrants, for no
additional consideration, the Reporting Person also received 1,540 shares of
Senior Preferred Stock and 1,026,666 Class B Warrants. The Senior Preferred
Stock was issued pursuant to the terms of a certificate ("Senior Preferred
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Page 4 of 7 Pages
Certificate"), a copy of the form of which is attached hereto as Exhibit C.
Pursuant to the terms of the Senior Preferred Certificate, the Senior Preferred
Stock is not convertible into Shares, but is redeemable at any time by the
Company at $1,000 per share.
The Class B Warrants are exercisable at a price of $0.55 per Share for
a one year period beginning on the fourth anniversary of the date of the
execution of the Stock Purchase Agreement (the fourth anniversary constituting
the "Exercise Date"). A copy of the form of the Class B Warrants ("Class B
Form") is attached hereto as Exhibit D. Pursuant to the terms of the Class B
Form, prior to the Exercise Date, if the Issuer redeems the Senior Preferred
Stock, the Class B Warrants shall also be redeemed automatically at a
redemption price of $0.01 per warrant share underlying the Class B Warrant to
be redeemed.
The Reporting Person has acquired all of the securities described
herein as having been acquired for his account for investment purposes and
pursuant to the terms of each of the documents discussed herein.
Except as set forth above and as contemplated by the Stock Purchase
Agreement, the Reporting Person has no present plans or proposals that would
result in any change in the business, policies, management, structure or
capitalization of the Issuer. The Reporting Person reserves the right to
acquire additional securities of the Issuer, to dispose of such securities at
any time, or to formulate other purposes, plans or proposals regarding the
Issuer or any of its securities, to the extent deemed advisable in light of
general investment and trading policies, market conditions and other factors.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The aggregate number of Shares of which the Reporting Person
may be deemed a beneficial owner is 2,800,000 (approximately 5.54% of the total
number of Shares outstanding, using the total number of Shares outstanding
which assumes the conversion of the 2,800,000 Class A Warrants into Shares).
This number consists of the 2,800,000 Shares issuable upon conversion of the
2,800,000 Class A Warrants presently exercisable by the Reporting Person
pursuant to the terms of the Class A Form.
(b) The Reporting Person has the sole power to direct the voting
and disposition of the Shares which he holds directly.
(c) Except as described in Item 4 hereof, which is incorporated in
this Item 5(c) by reference, there have been no transactions in the Shares
effected since December 6, 1995 (60 days prior to the date hereof).
(d) No person other than the Reporting Person has the right to
participate in the receipt of dividends from, or proceeds from the sale of,
securities held by the Reporting Person.
(e) Not applicable.
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Page 5 of 7 Pages
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
As described in Items 3, 4, and 5 above, on January 26, 1996, the
Issuer and the Investors entered into a Stock Purchase Agreement for the
purpose of acquiring the Senior Preferred Stock, the Class A Warrants and the
Class B Warrants. A copy of the Stock Purchase Agreement is attached hereto as
Exhibit A.
Pursuant to a Registration Rights Agreement, a copy of which is
attached hereto as Exhibit E (the "Registration Rights Agreement"), the Issuer
granted certain registration rights to Investors who hold 50% of the
Registrable Securities (as such is defined in the Registration Rights
Agreement) with respect to Shares acquired upon the exercise of the Class A
Warrants, Class B Warrants, as well as any Shares issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of, such
Shares. The Registration Rights Agreement grants to the Investors certain
demand registration rights in addition to "piggy- back" registration rights,
each as set forth in the Registration Rights Agreement.
Pursuant to a Sell Along Rights Agreement, a copy of which is attached
hereto as Exhibit F (the "Sell Along Rights Agreement"), the Investors are
given certain sell along rights, as such are set forth in the Sell Along Rights
Agreement, in the event that Paul A. Brown, M.D. proposes to transfer more than
five percent of his Shares (other than sales he effects on NASDAQ or a national
securities exchange pursuant to Rule 144 under the Securities Act of 1933, as
amended).
Except as set forth above and as described in Items 3, 4 and 5 hereto,
the Reporting Person does not have any contracts, arrangements, understandings
or relationships with respect to any securities of the Issuer.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
(a) Stock Purchase Agreement, dated January 26, 1996, (the
"Agreement" between HEARx Ltd., Invemed Associates, Inc. and the Investors (as
such are defined in the Agreement).
(b) The form of the Class A Warrants which were issued pursuant to
the Agreement.
(c) The form of the 1996 Senior Preferred Stock which were issued
pursuant to the Agreement.
(d) The form of the Class B Warrants which were issued pursuant to
the Agreement.
(e) Registration Rights Agreement, dated January 26, 1996, between
HEARx Ltd., Invemed Associates, Inc. and the Investors (as such are defined in
the Agreement).
(f) Sell Along Rights Agreement, dated January 26, 1996, between
HEARx Ltd., Invemed Associates, Inc. and the Investors (as such are defined in
the Agreement).
(g) Power of Attorney dated October 27, 1994 granted by Mr. George
Soros in favor of Mr. Sean Warren.
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Page 6 of 6 Pages
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Date: February 5, 1996 GEORGE SOROS
By: /s/ Sean C. Warren
--------------------------------
Sean C. Warren
Attorney-in-Fact
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Page 7 of 7 Pages
INDEX OF EXHIBITS
EXHIBIT
A Stock Purchase Agreement, dated January 26, 1996 ("Agreement"),
between HEARx Ltd., Invemed Associates, Inc. and the Investors
(as such are defined in the Agreement).
B The form of the Class A Warrants which were issued pursuant
to the Agreement.
C The form of the 1996 Senior Preferred Stock which were issued
pursuant to the Agreement.
D The form of the Class B Warrants which were issued pursuant
to the Agreement.
E Registration Rights Agreement, dated January 26, 1996, between
HEARx Ltd., Invemed Associates, Inc. and the Investors (as such
are defined in the Agreement).
F Sell Along Rights Agreement, dated January 26, 1996, between
HEARx Ltd., Invemed Associates, Inc. and the Investors (as such
are defined in the Agreement).
G Power of Attorney dated October 27, 1994 granted by Mr. George
Soros in favor of Mr. Sean Warren.
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EXHIBIT A
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made as of the
26th day of January, 1996 by and among HEARx Ltd., a Delaware corporation (the
"Company"), Invemed Associates, Inc., a New York corporation ("Invemed") and
the investors listed on Schedule A hereto (each, together with Invemed, an
"Investor" and collectively the "Investors").
In consideration of the mutual promises made herein, the
parties hereto agree as follows:
1. Definitions. The following terms, as used herein, have the
following meanings:
1.1 "Affiliate" means, with respect to any person, any
other person which directly or indirectly controls, is controlled by, or is
under common control with, such Person.
1.2 "Agreements" means this Agreement, the Registration
Rights Agreement and the Sell Along Rights Agreement.
1.3 "Closing" means the consummation of the transaction
contemplated by this Agreement, which shall occur simultaneously with the
execution hereof.
1.4 "Common Stock" means the Common Stock, par value
$0.10 per share, of the Company.
1.5 "Invemed Warrants" means warrants to purchase up to
2,250,000 shares of Common Stock at an exercise price of $0.63 per share,
exercisable for a period of five years from the date of issuance, the form of
which is attached hereto as Exhibit D.
1.6 "Investor Warrants" means Class A Warrants to
purchase up to an aggregate of 10,909,090 shares of Common Stock at an exercise
price of $0.55 per share, exercisable for a period of five years from the date
of issuance, the form of which is attached hereto as Exhibit E-1; and Class B
Warrants to purchase up to an aggregate of 4,000,000 shares of Common Stock at
an exercise price of $0.55 per share, exercisable for a period of one year
beginning on the fourth anniversary of the date of this Agreement and
non-detachable from the 1996 Preferred Stock until exercisable, the form of
which is attached hereto as Exhibit E-2.
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1.7 "Material Adverse Effect" means a material adverse
effect on the condition (financial or otherwise), business, assets, results of
operations or prospects of the Company and its subsidiaries, taken as a whole.
1.8 "Person" means an individual, corporation,
partnership, trust, business trust, association, joint stock company, joint
venture, pool, syndicate, sole proprietorship, unincorporated organization,
governmental authority or any other form of entity not specifically listed
herein.
1.9 "1996 Preferred Stock" means the 1996 Senior
Preferred Stock, par value $1.00 per share, of the Company, having the rights
and preferences and subject to the terms and conditions stated in the
Certificate of Designation, Preferences and Rights of 1996 Senior Preferred
Stock of even date herewith, attached hereto as Exhibit A.
1.10 "Registration Rights Agreement" means the
Registration Rights Agreement relating to the Common Stock issuable pursuant to
the exercise of the Warrants, in the form attached hereto as Exhibit B, to be
entered into as of the date hereof.
1.11 "SEC Filings" has the meaning set forth in Section
3.5.
1.12 "Securities" means the 1996 Preferred Stock, the
Warrants and the Common Stock issuable upon the exercise of Warrants.
1.13 "Sell Along Rights Agreement" means the Sell Along
Rights Agreement to be entered into pursuant to Section 6.2 hereof, in the form
attached hereto as Exhibit C, to be entered into as of the date hereof.
1.14 "Warrants" means the Invemed Warrants and the Investor
Warrants.
1.15 "1934 Act" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
1.16 "1933 Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
2. Purchase and Sale of 1996 Preferred Stock and Warrants and
Issuance of Invemed Warrants. Subject to the terms and conditions of this
Agreement, the Investors hereby purchase and the Company hereby sells and
issues to the Investors 6,000 shares of 1996 Preferred Stock and the Investor
Warrants at an aggregate purchase price of $6,000,000, the receipt of which is
hereby acknowledged. Furthermore, the Company hereby issues the Invemed
Warrants to Invemed and the officers and employees of Invemed and the
shareholders of Invemed's parent corporation, all as set forth in Schedule A
hereto (each of whom, together with Invemed shall also be considered an
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"Investor" for purposes of this Agreement), in consideration for services that
have been provided by Invemed in connection with this transaction. The
respective numbers of shares of Preferred Stock and shares underlying the
Investor Warrants, and the consideration paid therefor, and the respective
numbers of shares underlying Invemed Warrants with respect to each Investor is
set forth in Schedule A.
3. Representations and Warranties of the Company. The Company
hereby represents and warrants to the Investors that:
3.1 Organization, Good Standing and Qualification. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite power and
authority to carry on its business as now conducted. The copies of the
Certificate of Incorporation, as amended (the "Certificate of Incorporation"),
and By- Laws, as amended (the "By-Laws") of the Company delivered to the
Investors are true and complete and have not, since the respective dates of
such Certificate of Incorporation, and By-Laws, been amended or repealed
(except for the Certificate of Designations, Preferences and Rights of 1996
Senior Preferred Stock in the form set forth as Exhibit A to this Agreement
which was not included therein and is filed concurrently herewith with the
Secretary of State of the State of Delaware). The Company and each of its
subsidiaries is duly qualified as a foreign corporation in good standing in
each jurisdiction in which the conduct of its business or its ownership or
leasing of property makes such qualification necessary unless the failure to so
qualify would not have a Material Adverse Effect.
3.2 Authorization. All requisite action on the part of
the Company, its officers, directors and stockholders necessary for (i) the
authorization, execution and delivery of this Agreement and the Registration
Rights Agreement, (ii) the performance of all obligations of the Company
hereunder or thereunder and (iii) the authorization, issuance (or reservation
for issuance) and delivery of the Securities has been taken, and this Agreement
and the Registration Rights Agreement constitute the valid and legally binding
obligation of the Company, enforceable against the Company in accordance with
their terms.
3.3 Valid Issuance; Fully Diluted Common Stock Before
Closing.
(i) The authorized capital stock, and the
outstanding capital stock, of the Company consists, in each case immediately
prior to the Closing, solely of the shares indicated in part 1 of Exhibit F to
this Agreement. Immediately following the sale to the Investors at the Closing
contemplated hereby, the authorized capital stock, and the outstanding capital
stock, of the Company will consist in each case solely of the shares indicated
in part 2 of Exhibit F to this Agreement. The voting powers, designations,
preferences and relative, participating, optional and other rights of the 1996
Preferred Stock, and the qualifications, limitations or restrictions thereof are
as fully set forth in Exhibit A to this Agreement. All of the outstanding
shares of capital stock
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indicated in part 2 of Exhibit F are duly authorized and are fully paid and
nonassessable and, assuming the representations of the Investors in Sections
4.3, 4.6 and 4.9 of this Agreement are correct, issued in compliance with all
applicable securities laws. Except as set forth in part 3 of Exhibit F, no one
is entitled to preemptive or similar statutory or contractual rights with
respect to any securities of the Company. All necessary and appropriate
waivers of stockholders with respect to the consummation of the transactions
and the performance of the obligations of the Company contemplated hereby have
been obtained, and the Company shall promptly obtain any necessary waivers not
heretofore obtained. Except as disclosed in part 4 of Exhibit F to this
Agreement, there are no outstanding warrants, options, convertible securities
or other rights, agreements or arrangements of any character under which the
Company is or may be obligated to issue any equity securities of any kind, or
to transfer any equity securities of any kind, and the Company and its
subsidiaries do not have any present plan or intention to issue any equity
securities of any kind, or to transfer any equity securities of any kind owned
by them. Except as disclosed in part 5 of Exhibit F, the Company does not know
of any voting agreements, buy-sell agreements, option or right of first
purchase agreements or other agreements of any kind among any of the
securityholders of the Company relating to the securities held by them. The
Company has not agreed, and has no present intention, to register any of its
securities under the Securities Act of 1933, as amended, except as provided in
the agreements listed in part 6 of Exhibit F.
(ii) The number of outstanding shares of Common
Stock immediately prior to the Closing, as indicated in part 1 of Exhibit F of
this Agreement, plus the number of shares of Common Stock issuable pursuant to
outstanding rights and agreements on a fully diluted basis immediately prior to
the Closing, assuming the complete exercise or conversion of all rights to
acquire capital stock of the Company until such rights and subsequent rights
incident to exercise or conversion are fully exercised or converted for Common
Stock, together represent less than 75 million shares of Common Stock
immediately prior to the Closing.
3.4 Governmental Consents. The execution, delivery and
performance by the Company of the Agreements require no action by or in respect
of, or filing with, any governmental body, agency, or official other than
filings that have been made pursuant to applicable state securities laws and
post-sale filings pursuant to applicable state and federal securities laws,
which the Company undertakes to file within the applicable time periods.
3.5 Delivery of SEC Filings. The Company has delivered
or made available to the Investors (i) its Annual Report on Form 10-K for its
fiscal year ended December 31, 1994, (ii) its quarterly reports on Form 10-Q
for each fiscal quarter subsequent to that fiscal year end, and (iii) any other
documents filed with the Securities and Exchange Commission (the "SEC") since
December 31, 1994 (collectively, the "SEC Filings").
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3.6 Use of Proceeds. The proceeds of the sale of the
Securities hereunder shall be used by the Company for the build-out and opening
of hearing care centers in the New York area to comply with the Company's
agreement with Oxford Healthcare, completion and installation of the Company's
point-of-sale and database management system, retirement of debt listed in
Schedule 3.6 hereto and general corporate purposes.
3.7 No Material Adverse Change. Except as set forth in
Schedule 3.7, since September 30, 1995, there has not been:
(i) any change in the consolidated assets,
liabilities, financial condition or operating results of the Company from that
reflected in the financial statements included in the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1995, except changes in
the ordinary course of business which have not had, in the aggregate, a
Material Adverse Effect;
(ii) any declaration or payment of any dividend,
or any authorization or payment of any distribution, on any of the capital
stock of the Company, or any redemption or repurchase of any securities of the
Company;
(iii) any material damage, destruction or loss,
whether or not covered by insurance to any assets or properties of the Company
or any of its subsidiaries;
(iv) any waiver by the Company or any of its
subsidiaries of a valuable right or of a material debt owed to it;
(v) any satisfaction or discharge of any lien,
claim or encumbrance or payment of any obligation by the Company or any of its
subsidiaries, except in the ordinary course of business and which is not
material to the assets, properties, financial condition, operating results or
business of the Company and its subsidiaries taken as a whole (as such business
is presently conducted and as it is proposed to be conducted);
(vi) any material change or amendment to a
material contract or arrangement by which the Company or any of their
subsidiaries or any of its assets or properties is bound or subject;
(vii) any material change in any compensation
arrangement or agreement with any employee of the Company or any of its
subsidiaries who now earns, or who would earn as a result of such change, in
excess of $100,000 per annum or any other officer of the Company or any of its
subsidiaries;
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(viii) any labor difficulties or labor union
organizing activities with respect to employees of the Company or any of its
subsidiaries;
(ix) any transaction entered into by the Company
or any of its subsidiaries other than in the ordinary course of business; or
(x) any other event or condition of any
character which might have a Material Adverse Effect, which is not reflected in
the SEC Filings.
3.8 SEC Filings; Material Contracts. (i) As of its
filing date, each report filed by the Company with the SEC pursuant to the 1934
Act, complied as to form in all material respects with the requirements of the
1934 Act and did not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
(ii) Each registration statement and any amendment thereto
filed by the Company pursuant to the 1933 Act and the rules and regulations
thereunder, as of the date such statement or amendment became effective,
complied as to form in all material respects with the 1933 Act and did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading; and each prospectus filed pursuant to Rule 424(b) under the
1933 Act, as of its issue date and as of the closing of any sale or securities
pursuant thereto did not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(iii) Except as listed in Schedule 3.8 hereto, there are no
agreements or instruments currently in force and effect that constitute a
"material contract" (as such term is defined in Item 601(b)(10) of Regulation
S-K) of the Company or that constitute a warrant, option, convertible security
or other right, agreement or arrangement of any character under which the
Company is or may be obligated to issue any equity security of any kind, or to
transfer any equity security of any kind. The Company has delivered to the
Investors prior to the Closing full and complete copies of all agreements
indicated in Schedule 3.8 hereto.
3.9 Reservation of Shares. The Company has reserved a
sufficient number of shares of Common Stock for issuance upon exercise of the
Warrants, and such shares, when issued in accordance with the terms of the
Warrants, will be duly authorized, validly issued, fully paid, non-assessable
and free and clear of all encumbrances and restrictions, except for
restrictions on transfer imposed by applicable securities laws.
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3.10 Disclosures. No representation or warranty made
under any Section hereof and no information furnished by the Company pursuant
hereto, or in any other document delivered by the Company to an Investor or any
authorized representative of an Investor, pursuant to the Agreements or in
connection therewith contains any untrue statement of a material fact or omits
to state a material fact necessary to make the respective statements contained
herein or therein, in light of the circumstances under which the statements
were made, not misleading.
3.11 Registration Rights. The registration rights granted
to the Investors pursuant to the Registration Rights Agreement are at least as
favorable to the Investors as those granted to any holder of any securities of
the Company are to such holder.
3.12 No Breach, Violation or Default. The execution,
delivery and performance of this Agreement and the Registration Rights
Agreement and the issuance and sale of the Securities will not result in a
breach or violation of any of the terms and provisions of, or constitute a
default under, any statute, any rule, regulation (assuming, for this purpose,
that the representations of the Investors in Sections 4.3, 4.6 and 4.9 are
correct) or order of any governmental agency or body or any court, domestic or
foreign, having jurisdiction over the Company or any subsidiary of the Company
or any of their properties, or any agreement or instrument to which the Company
or any such subsidiary is a party or by which the Company or any such
subsidiary is bound or to which any of the properties of the Company or any
such subsidiary is subject, or the Certificate of Incorporation or By- Laws of
the Company or any such subsidiary.
3.13 Title to Properties. Except as disclosed in the SEC
Filings, the Company and its subsidiaries have good and marketable title to all
real properties and all other properties and assets owned by them, in each case
free from liens, encumbrances and defects that would materially affect the
value thereof or materially interfere with the use made or currently planned to
be made thereof by them; and except as disclosed in the SEC Filings, the
Company and its subsidiaries hold any leased real or personal property under
valid and enforceable leases with no exceptions that would materially interfere
with the use made or currently planned to be made thereof by them.
3.14 Certificates, Authorities and Permits. The Company
and its subsidiaries possess adequate certificates, authorities or permits
issued by appropriate governmental agencies or bodies necessary to conduct the
business now operated by them and have not received any notice of proceedings
relating to the revocation or modification of any such certificate, authority
or permit that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a Material Adverse
Effect.
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3.15 No Labor Disputes. No labor dispute with the
employees of the Company or any subsidiary exists or, to the knowledge of the
Company, is imminent that might have a Material Adverse Effect.
3.16 Intellectual Property. The Company and its
subsidiaries own, possess or can acquire on reasonable terms, adequate
trademarks, trade names and other rights to inventions, know-how, patents,
copyrights, confidential information and other intellectual property
(collectively, "Intellectual Property Rights") necessary to conduct the
business now operated by them, or presently employed by them, and have not
received any notice of infringement of or conflict with asserted rights of
others with respect to any Intellectual Property Rights that, if determined
adversely to the Company or any of its subsidiaries, would individually or in
the aggregate have a Material Adverse Effect.
3.17 Environmental Matters. Neither the Company nor any
of its subsidiaries is in violation of any statute, any rule, regulation,
decision or order of any governmental agency or body or any court, domestic or
foreign, relating to the use, disposal or release of hazardous or toxic
substances or relating to the protection or restoration of the environment or
human exposure to hazardous or toxic substances (collectively, "Environmental
Laws"), owns or operates any real property contaminated with any substance that
is subject to any Environmental Laws, is liable for any off-site disposal or
contamination pursuant to any Environmental Laws, or is subject to any claim
relating to any Environmental Laws, which violation, contamination, liability
or claim would individually or in the aggregate have a Material Adverse Effect;
and the Company is not aware of any pending investigation which might lead to
such a claim.
3.18 Litigation. Except as disclosed in the SEC Filings,
there are no pending actions, suits or proceedings against or affecting the
Company, any of its subsidiaries or any of their respective properties that, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Effect or would
materially and adversely affect the ability of the Company to perform its
obligations under this Agreement, or which are otherwise material in the
context of the sale of the Securities; and to the Company's knowledge, no such
actions, suits or proceedings are threatened or contemplated.
3.19 Financial Statements. The financial statements
included in each SEC Filing present fairly the consolidated financial position
of the Company and its subsidiaries as of the dates shown and their
consolidated results of operations and cash flows for the periods shown, and
such financial statements have been prepared in conformity with the generally
accepted accounting principles applied on a consistent basis.
3.20 Insurance Coverage. The Company and its subsidiaries
maintain insurance coverage that is standard for comparably situated companies
for the business being conducted, and properties owned or leased, by the
Company and its subsidiaries.
-8-
<PAGE> 9
4. Representations and Warranties of the Investors. Each of the
Investors hereby represents and warrants, as to itself only, to the Company
that:
4.1 Organization and Existence. If such Investor is a
corporation or partnership, such Investor is a validly existing corporation or
partnership and has all requisite corporate or partnership power and authority
to invest in the Securities of the Company pursuant to this Agreement.
4.2 Authorization. The execution, delivery and
performance by such Investor of the Agreements have been duly authorized. Upon
execution and delivery, the Agreements will each constitute the valid and
legally binding obligation of such Investor, enforceable against such Investor
in accordance with such agreement's terms.
4.3 Purchase Entirely for Own Account. The Securities to
be received by such Investor hereunder will be acquired for investment for the
Investor's own account, not as nominee or agent, and not with a view to the
resale or distribution of any part thereof in violation of the 1933 Act, and
such Investor has no present intention of selling, granting any participation
in, or otherwise distributing the same. By executing this Agreement, such
Investor further represents that subject to the following proviso, such
Investor does not have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participation to such person or to any
third person, with respect to any of the Securities; an Investor that is a
corporate entity may distribute Securities to its executive officers, directors
or shareholders or, in the case of Invemed, to its employees who are registered
representatives under the 1934 Act; an Investor that is a partnership may
distribute Securities to its partners; and Invemed may transfer Invemed
Warrants to its designee to serve on the Company's Board of Directors.
4.4 Investment Experience. Such Investor acknowledges
that it can bear the economic risk and complete loss of its investment in the
Securities and has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of the investment
contemplated hereby.
4.5 Disclosure of Information. Such Investor has had an
opportunity to ask questions and receive answers from the Company regarding the
Company, its business and the terms and conditions of the offering of the
Securities.
4.6 Restricted Securities. Such Investor understands
that the Securities are characterized as "restricted securities" under the
federal securities laws inasmuch as they are being acquired from the Company in
a transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the 1933 Act only in certain limited circumstances. In this connection, such
Investor represents that it understands the resale limitations imposed by the
1933 Act.
-9-
<PAGE> 10
4.7 Further Limitations on Disposition. Without in any
way limiting the representations set forth above, each Investor further agrees
(except as otherwise set forth in Section 4.3) not to make any disposition of
all or any portion of the Securities unless and until:
(a) There is then in effect a registration
statement under the 1933 Act covering such proposed disposition and such
disposition is made in accordance with such registration statement; or
(b) (i) Such Investor shall have notified the
Company of the proposed disposition, and (ii) if reasonably requested by the
Company, such Investor shall have furnished the Company with an opinion of
counsel, reasonably satisfactory to the Company and its counsel, that such
disposition will not require registration of such shares under the 1933 Act.
This subsection shall be inapplicable to dispositions made pursuant to Rule
144.
4.8 Legends. It is understood that the certificates
evidencing the Securities may bear one or all of the following legends (until
such time as the Securities may be freely transferred pursuant to Rule 144(k),
at which time such legends shall be removed at the request of the Investor or
its assignee):
(a) "These securities have not been registered
under the Securities Act of 1933 (the "Act"). They may not be sold, offered
for sale, pledged or hypothecated in the absence of a registration statement in
effect with respect to the securities under the Act or an exemption from the
registration requirements of the Act."
(b) If required by the authorities of any state
in connection with the issuance of sale of the Securities, the legend required
by such state authority.
4.9 Accredited Investor. Such Investor is an accredited
investor as defined in Rule 501(a) of Regulation D, as amended, under the 1933
Act.
4.10 Confidentiality. Such Investor shall maintain in
confidence, and shall not use or disclose without the prior written consent of
the Company, any information clearly marked "confidential" that is furnished to
such Investor by the Company in connection with this Agreement. This
obligation of confidentiality shall not apply, however, to any information (a)
in the public domain through no act or failure to act by such Investor that was
not authorized in writing by the Company, or (b) lawfully disclosed to such
Investor by a third party who possessed such information without any obligation
of confidentiality to the Company.
4.11 Litigation. There is no action, suit, investigation
or proceeding pending against, or to the knowledge of such Investor, threatened
against or affecting, such Investor before any court or arbitrator or any
governmental body, agency or official
-10-
<PAGE> 11
which in any manner challenges or seeks to prevent, enjoin, alter or materially
delay the transactions contemplated by this Agreement.
4A. Additional Representation and Warranty of Invemed. Invemed
hereby represents and warrants that (i) it is a registered broker-dealer under
the 1934 Act, and is similarly registered pursuant to the applicable securities
laws in the states of California, Connecticut, Florida, Georgia, New Jersey,
New York and Pennsylvania (the "Investor States"); (ii) Thomas L. Teague and G.
Allen Mebane did not solicit any persons in connection with the offering of the
Securities and are not receiving Invemed Warrants in connection with soliciting
any persons in connection with the offering of the Securities; (iii) Kenneth G.
Langone and Cristina H. Kepner are registered representatives with the National
Association of Securities Dealers and hold similar qualifications in each of
the Investor States; and (iv) Carlisle Jones is a registered representative
with the National Association of Securities Dealers and holds similar
qualifications in all of the Investor States other than Georgia, and did not
solicit any Georgia residents in connection with the offering of the
Securities.
5. Registration Rights Agreement. The parties acknowledge and
agree that part of the inducement for each Investor to enter into this
Agreement is the Company's execution and delivery of the Registration Rights
Agreement. The parties acknowledge and agree that simultaneously with the
execution hereof, the Registration Rights Agreement is being duly executed and
delivered by the parties thereto.
6. Other Covenants and Agreements.
6.1 Board of Directors Representation. The Company
hereby agrees that for so long as Invemed or any of its executive officers or
directors are the registered and beneficial owners of any Securities and prior
to redemption of all outstanding 1996 Preferred Stock, the Company will
nominate and use its best efforts to cause to be elected one designated
representative of Invemed to serve on the Company's Board of Directors. If
Invemed does not specify a nominee to the Company within 30 days of the
Closing, Invemed shall return to the Company Invemed Warrants to purchase
250,000 shares of Common Stock.
6.2 Limitation on Sales by Certain Management. Dr. Paul
A. Brown (the Company's founder, Chief Executive Officer and Chairman of the
Board) hereby agrees that, in the event he proposes to transfer in one
transaction or a series of related transactions five percent (5%) of the shares
of the Company's Common Stock owned by him (other than sales effected on
Nasdaq, through the NASD Bulletin Board, or on a national securities exchange
pursuant to Rule 144 under the 1933 Act), Dr. Brown shall permit the Investors
to sell the same proportionate number of shares of Common Stock held by the
Investors (and/or underlying the Investor Warrants that may then be exercised)
as Dr. Brown shall sell for the same consideration and otherwise on the same
terms and conditions to be received by Dr. Brown in the proposed sale. Dr.
Brown and
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<PAGE> 12
the Investors acknowledge and agree that simultaneously with the execution
hereof, they have duly executed a Sell Along Rights Agreement detailing the
parties respective rights and obligations in respect to this matter, as set
forth in Exhibit C attached hereto.
6.3 Return of Confidential Information. Each Investor
shall return to the Company information subject to Section 4.11 of this
Agreement upon request by the Company. Such Investor agrees that it will
restrict access to the Company's confidential information among its officers,
directors, partners, employees, agents and representatives to those persons
with a need to use such information.
6.4 Reverse Stock Split. The Company hereby agrees that
it shall effect a 1-for-15 reverse stock split of its Common Stock no later
than the next annual meeting of shareholders of the Company. In no event,
however, shall such meeting be held later than May 31, 1996.
6.5 No Dividends. The Company hereby agrees that it
shall not declare or pay any dividends prior to the redemption of all
outstanding 1996 Preferred Stock.
6.6 Opinion of Counsel. The Company has delivered,
simultaneously with the execution and delivery of this Agreement, the opinion
of Bryan Cave LLP, its counsel, in the form attached hereto as Exhibit G.
Within a reasonable time after the Closing, but in no event more than 60 days
after the date hereof, the Company shall deliver the opinion of Bryan Cave LLP
in the form attached hereto as Exhibit H.
6.7 Reservation of Common Stock Pursuant to Exercise of
Warrants. The Company hereby agrees to at all times reserve and keep available
out of its authorized but unissued shares of Common Stock, solely for the
purpose of permitting exercise of the Warrants, such number of shares of Common
Stock as shall from time to time be sufficient to permit the exercise of all
Warrants in accordance with the terms of the Warrants.
6.8 Relative Equity Interest Represented By the Warrants.
In entering into this Agreement, the Investors have relied upon, among other
things, the representation and warranty set forth in Section 3.3(ii) hereto
concerning the outstanding capital stock of the Company and rights to acquire
capital stock of the Company immediately prior to the Closing. In the event it
is later determined that the representation and warranty in Section 3.3(ii)
hereto is untrue and the sum expressed therein is greater than 75 million, the
Company shall notify each Investor within ten days of discovery and prepare,
execute and deliver to the Investors, within ten days thereafter, such
additional documents and certificates in order to equitably adjust the Warrants
for the benefit of the Investors. The adjustment referenced in the preceding
sentence shall involve the issuance of additional Warrants and/or the reduction
of the exercise price of the Warrants, which adjustment shall be approved in
writing by the holders of a majority of the Warrants.
-12-
<PAGE> 13
7. Survival.
7.1 Survival of Provisions. All representations,
warranties and agreements contained in this Agreement shall be deemed to be
representations, warranties and agreements as of the date hereof and shall
survive the execution and delivery of this agreement for a period of five years
and six months from the date of this Agreement; provided, however, that the
provisions contained in Section 6 hereof shall survive in accordance therewith.
8. Miscellaneous.
8.1 Successors and Assigns. This Agreement may not be
assigned by either party without the prior written consent of the other party
hereto, except that without the prior written consent of the Company, but after
notice duly given, an Investor may assign its rights and delegate its duties
hereunder to an Affiliate or to any permitted assignee under Section 4.3, and
without the prior written consent of Investor, but after notice duly given, the
Company may assign its rights and delegate its duties hereunder to any
successor-in-interest corporation in the event of a merger or consolidation of
the Company with or into another corporation, or any merger or consolidation of
another corporation with or into the Company which results directly or
indirectly in an aggregate change in the ownership or control of more than 50%
of the voting rights of the equity securities of the Company, or the sale of
all or substantially all of the Company's assets. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
8.2 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
8.3 Titles and Subtitles. The titles and subtitles used
in this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
8.4 Notices. Unless otherwise provided, any notice
required or permitted under this Agreement shall be given in writing and shall
be deemed effectively given upon personal delivery to the party to be notified,
or if sent by telex or telecopier, upon receipt of the correct answer back, or
upon deposit with the United States Post Office, by registered or certified
mail, or upon deposit with an overnight air courier, in each case postage
prepaid and addressed to the party to be notified at the address as
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<PAGE> 14
follows, or at such other address as such party may designate by ten days'
advance written notice to the other party:
If to the Company:
HEARx Ltd.
471 Spencer Drive
West Palm Beach, Florida 33409
Attn: Dr. Paul A. Brown
with a copy to
Bryan Cave LLP
700 13th Street, N.W.
Washington, D.C. 20005
Attn: LaDawn Naegle, Esq.
If to the Investors:
Invemed Associates, Inc.
375 Park Avenue
New York, NY 10152
Attn: Cristina H. Kepner
with a copy to:
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103
Attn: Alan Singer, Esq.
8.5 Finder's Fee. Each party represents that (except for
the delivery by the Company of the Invemed Warrants pursuant to this Agreement)
it neither is nor will be obligated for any finder's fee or commission in
connection with this transaction.
8.6 Expenses. The Company shall pay all costs and
expenses incurred with respect to the negotiation, execution, delivery and
performance of the Agreements, including, without limitation, the fees of
Morgan, Lewis & Bockius LLP, counsel to Invemed.
8.7 Amendments and Waivers. Any term of this Agreement
may be amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
at least 66 2/3% of the
-14-
<PAGE> 15
Securities other than the Invemed Warrants (for this purpose, each share of
Preferred Stock shall be deemed to be 1,000 Securities and each share of Common
Stock underlying the Investor Warrants shall be deemed to be one Security).
Any amendment or waiver effected in accordance with this paragraph shall be
binding upon each holder of any Securities purchased under this Agreement at
the time outstanding, each future holder of all such securities, and the
Company. Notwithstanding the foregoing, the provisions of Section 6.1 hereto
shall be amended only with the consent of the Company and Invemed.
8.8 Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of this Agreement shall
be interpreted as if such provision were so excluded and shall be enforceable
in accordance with its terms.
8.9 Entire Agreement. This Agreement, including the
Exhibits and Schedules hereto, the Registration Rights Agreement and the Sell
Along Rights Agreement, constitute the entire agreement among the parties
hereof with respect to the subject matter hereof and thereof and supersede all
prior agreements and understandings, both oral and written, between the parties
with respect to the subject matter hereof and thereof.
8.10 Further Assurances. The parties shall execute and
deliver all such further instruments and documents and take all such other
actions as may reasonably be required to carry out the transactions
contemplated hereby and to evidence the fulfillment of the agreements herein
contained.
8.11 Applicable Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York without
regard to principles of conflicts of laws.
* * *
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<PAGE> 16
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
The Company
HEARx LTD.
By:
--------------------------
Name: Paul A. Brown, M.D.
Title: Chairman of the Board
Invemed INVEMED ASSOCIATES, INC.
By:
--------------------------
Name:
Title:
The Investors
-----------------------------
Michael C. Neus
-----------------------------
Michael Erlbaum
-----------------------------
Steven Erlbaum
-16-
<PAGE> 17
The Investors
-----------------------------
Harris Berenholz
-----------------------------
Scott Bessent
-----------------------------
Arthur M. Blank
-----------------------------
Ronald M. Brill
-----------------------------
Elliot P. Broidy
-----------------------------
Walter E. Burlock
-----------------------------
Walter Channing
-----------------------------
Stanley Druckenmiller
-17-
<PAGE> 18
-----------------------------
John A. Ehinger
-----------------------------
Marianne Ehinger
-----------------------------
Gary Erlbaum
-----------------------------
Arminio Fraga
-----------------------------
Gary Gladstein
-----------------------------
John M. Hennessy
-----------------------------
Carlisle Jones
-----------------------------
Cristina H. Kepner
-----------------------------
Bruce M. Langone
-18-
<PAGE> 19
-----------------------------
Kenneth G. Langone
-----------------------------
Elizabeth Larson
-----------------------------
Stephen A. Levin
-----------------------------
Bernard Marcus
-----------------------------
G. Allen Mebane
-----------------------------
Charles J. Murphy
-----------------------------
Gabriel Nechamkin
-----------------------------
Mark Sonnino
-19-
<PAGE> 20
-----------------------------
George Soros
-----------------------------
Andrew R. Taussig
-----------------------------
Susan F. Taussig
-----------------------------
Thomas L. Teague
-----------------------------
Sean Warren
The undersigned joins in this Agreement
for the purpose of being bound by the
provisions of Section 6.2 hereof.
- ---------------------------------
Paul A. Brown
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<PAGE> 21
SCHEDULE A
<TABLE>
<CAPTION>
# of Shares of # of Class A # of Class B # of Invemed
Amount 1996 Preferred Investor Investor Warrants
------ -------------- -------- -------- --------
Name Invested Stock Warrants Warrants
---- -------- ----- -------- --------
<S> <C> <C> <C> <C> <C>
Kenneth G. $1,000,000 1,000 1,818,182 666,667 1,359,150
Langone
Stephen A. 258,000 258 469,092 172,000
Levin
Arthur M. Blank 150,000 150 272,727 100,000
Bernard Marcus 250,000 250 454,546 166,667
Walter Channing 25,000 25 45,454 16,667
Carlisle Jones 50,000 50 90,909 33,333 50,000
Bruce M. 100,000 100 181,818 66,667
Langone
Cristina H. 117,000 117 212,727 78,000 292,500
Kepner
Gary Erlbaum 150,000 150 272,727 100,000
Michael Erlbaum 50,000 50 90,909 33,333
Steven Erlbaum 50,000 50 90,909 33,333
Elliot P. 100,000 100 181,818 66,667
Broidy
John M. 50,000 50 90,909 33,333
Hennessy
Andrew R. 25,000 25 45,454 16,667
Taussig and
Susan F.
Taussig
Charles J. 25,000 25 45,454 16,667
Murphy
John A. Ehinger 25,000 25 45,454 16,667
and Marianne
Ehinger
</TABLE>
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<PAGE> 22
<TABLE>
<CAPTION>
# of Shares of # of Class A # of Class B # of Invemed
Amount 1996 Preferred Investor Investor Warrants
------ -------------- -------- -------- --------
Name Invested Stock Warrants Warrants
---- -------- ----- -------- --------
<S> <C> <C> <C> <C> <C>
Ronald M. Brill 25,000 25 45,454 16,667
Harris 50,000 50 90,909 33,333
Berenholz
Scott Bessent 75,000 75 136,364 50,000
Walter E. 200,000 200 363,636 133,333
Burlock
Stan 1,000,000 1,000 1,818,182 666,667
Druckenmiller
Arminio Fraga 50,000 50 90,909 33,333
Gary Gladstein 250,000 250 454,546 166,667
Elizabeth 300,000 300 545,455 200,000
Larson
Gabriel 35,000 35 63,636 23,333
Nechamkin
Mark Sonnino 15,000 15 27,273 10,000
Sean Warren 20,000 20 36,364 13,333
George Soros 1,540,000 1,540 2,800,000 1,026,666
Michael C. Neus 15,000 15 27,273 10,000
Invemed
Associates, 250,000
Inc.
Thomas L. 99,450
Teague
G. Allen Mebane 198,900
</TABLE>
-22-
<PAGE> 23
SCHEDULE 3.6
INDEBTEDNESS TO BE REPAID BY THE COMPANY
WITH A PORTION OF THE OFFERING PROCEEDS
<TABLE>
<CAPTION>
Creditor Name Amount of Debt
------------- --------------
<S> <C>
Minnesota Mining and Manufacturing Company $308,000
Siemens Hearings Instruments, Inc. and Rexton, Inc. 200,000
(in the aggregate)
Dr. Paul Brown 100,000
Bryan Cave LLP 100,000
</TABLE>
-23-
<PAGE> 1
EXHIBIT B
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF A REGISTRATION STATEMENT COVERING THIS WARRANT UNDER SAID ACT OR AN
EXEMPTION FROM REGISTRATION UNDER SAID ACT.
VOID AFTER 5:00 P.M. NEW YORK TIME ON [ ] ("EXPIRATION
DATE").
HEARx LTD.
CLASS A WARRANT TO PURCHASE [ ] SHARES OF
COMMON STOCK, PAR VALUE $0.10 PER SHARE
This is to certify that, for VALUE RECEIVED, [ ]
("Warrantholder"), is entitled to purchase, subject to the provisions of this
Warrant, from HEARx Ltd., a Delaware corporation ("Company"), at any time not
later than 5:00 P.M., New York time, on the Expiration Date, at the exercise
price of Fifty-five cents ($0.55) per share (the exercise price in effect being
herein called the "Warrant Price"), [ ] shares ("Warrant Shares")
of Common Stock, par value $0.10 per share ("Common Stock"), of the Company. The
number of Warrant Shares purchasable upon exercise of this Warrant and the
Warrant Price shall be subject to adjustment from time to time as described
herein.
Section 1. Registration. The Company shall maintain books for the
transfer and registration of the Warrant. Upon the initial issuance of the
Warrant, the Company shall issue and register the Warrant in the name of the
Warrantholder.
Section 2. Transfers. As provided herein, the Warrant may be
transferred only pursuant to a registration statement filed under the Securities
Act of 1933, as amended ("Securities Act") or an exemption from registration
thereunder. Subject to such restrictions, the Company shall transfer from time
to time, the Warrant, upon the books to be maintained by the Company for that
purpose, upon surrender thereof for transfer properly endorsed or accompanied
by appropriate instructions for transfer upon any
E-1
<PAGE> 2
such transfer, and a new Warrant shall be issued to the transferee and the
surrendered Warrant shall be cancelled by the Company.
Section 3. Exercise of Warrant. Subject to the provisions hereof,
the Warrantholder may exercise the Warrant in whole or in part at any time upon
surrender of the Warrant, together with delivery of the duly executed Warrant
exercise form attached thereto, to the Company, at or prior to 5:00 P.M. New
York Time on the Expiration Date, together with payment of the Warrant Price, as
such may be adjusted from time to time in accordance with Section 9, for the
number of Warrant Shares in respect of which the Warrant is then exercisable. To
the extent that any Warrant Shares remain outstanding at 5:01 P.M. on the
Expiration Date, such outstanding Warrant Shares shall automatically expire and
be of no further force and effect, and the holders thereof shall have no further
right to exercise or transfer the same. Payment of the Warrant Price shall be
made (x) in cash or by certified check payable in United States dollars, to the
order of the Company and/or (y) through conversion of the Warrant, effected by
the surrender to the Company of this Warrant. Upon surrender of the Warrant to
the Company as payment of the Warrant Price, the holder thereof shall be
entitled to receive a number of Warrant Shares arrived at by dividing the
difference between the aggregate Market Price (as hereinafter defined) of the
Warrant Shares issuable in respect of the Warrant surrendered and the aggregate
Warrant Price in respect of the Warrant so surrendered by the Market Price per
share of the Warrant Shares. "Market Price" as used herein shall mean, on any
day, as of such day, the average of the reported closing sale price, regular
way, in either case on any national securities exchange on which the Common
Stock is listed or admitted to trading, or if the Common Stock is not listed or
admitted to trading any such exchange, as reported by the Nasdaq Stock Market,
or if such shares are not then so listed or admitted to trading, the average of
the bid and asked prices as reported by the NASD OTC Bulletin Board Service, if
so reported, or if not so reported, then as furnished by National Quotation
Bureau Incorporated or any similar organization selected from time to time by
the Company for the purpose.
Subject to Section 5, upon such surrender of the Warrant and
payment of the Warrant Price as aforesaid, the Company shall issue and cause to
be delivered to the Warrantholder or to such other person as the Warrantholder
may designate, a certificate or certificates for the number of full Warrant
Shares so purchased upon the exercise of the Warrant, together with cash, as
provided in Section 10 hereof in respect of any fraction of a Warrant Share
otherwise issuable upon such surrender. Such certificate or certificates shall
be deemed to have been issued, and the person to whom they are issued shall be
deemed to have become a holder of record of the Warrant Shares, as of the date
of the surrender of the Warrant and payment of the Warrant Price as aforesaid
unless counsel for the Company advises the Company in writing that an earlier
date is permissible for purposes of applicable securities laws. The rights of
purchase represented by the Warrant shall be exercisable, at the election of
the Warrantholder either as an entirety or from time to time for part only of
the Warrant Shares and, in the
E-2
<PAGE> 3
event that the Warrant is exercised in respect of less than all of the Warrant
Shares specified herein at any time prior to the Expiration Date, a new Warrant
will be issued to Warrantholder for the remaining number of Warrant Shares
specified in the Warrant so surrendered within five business days.
Section 4. Exercise and Transfer to Company with the Securities
Act of 1933. Neither this Warrant nor the Common Stock issued upon exercise
hereof nor any other security issued or issuable upon exercise of this Warrant
may be offered or sold except as provided in this agreement and in conformity
with the Securities Act of 1933, as amended, and then only against receipt of
an agreement of such person to whom such offer of sale is made to comply with
the provisions of this Section 4 with respect to any resale or other
disposition of such security. The Company may cause the legend set forth on
the first page of this Warrant to be set forth on each Warrant or any security
issued or issuable upon exercise of this Warrant, unless counsel for the
Company is of the opinion as to any such security that such legend is
unnecessary or such security may then be sold pursuant to Rule 144(k) under the
Securities Act of 1933.
Section 5. Payment of Taxes. The Company will pay any
documentary stamp taxes attributable to the initial issuance of Warrant Shares
issuable upon the exercise of the Warrant; provided, however, that the Company
shall not be required to pay any tax or taxes which may be payable in respect
of any transfer involved in the issue or delivery of any certificates for
Warrant Shares in a name other than that of the registered holder of the
Warrant in respect of which such shares are issued, and in such case, the
Company shall not be required to issue or deliver any certificate for Warrant
Shares or any Warrant until the person requesting the same has paid to the
Company the amount of such tax or has established to the Company's satisfaction
that such tax has been paid.
Section 6. Mutilated or Missing Warrants. In case the Warrant
shall be mutilated, lost, stolen, or destroyed, the Company shall issue in
exchange and substitution of and upon cancellation of the mutilated Warrant, or
in lieu of and substitution for the Warrant lost, stolen or destroyed, a new
Warrant of like tenor and for the purchase of a like number of Warrant Shares,
but only upon receipt of evidence reasonably satisfactory to the Company of
such loss, theft or destruction of the Warrant, and with respect to a lost,
stolen or destroyed Warrant, reasonable indemnity or bond, if requested by the
Company.
Section 7. Reservation of Common Stock. The Company hereby
represents and warrants that there have been reserved, and the Company shall at
all applicable times keep reserved, out of the authorized and unissued Common
Stock, a number of shares sufficient to provide for the exercise of the rights
of purchase represented by the Warrant, and the American Stock Transfer & Trust
Company, the transfer agent for the Common Stock ("Transfer Agent"), and every
subsequent transfer agent for the Common Stock or other shares of the Company's
capital stock issuable upon the exercise of any of the right of purchase
aforesaid shall be irrevocably authorized and directed at all times
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<PAGE> 4
to reserve such number of authorized and unissued shares of Common Stock as
shall be requisite for such purpose. The Company agrees that all Warrant
Shares issued upon exercise of the Warrant shall be, at the time of delivery of
the certificates for such Warrant Shares, duly authorized, validly issued,
fully paid and non-assessable shares of Common Stock of the Company. The
Company will keep a conformed copy of this Warrant on file with the Transfer
Agent and with every subsequent transfer agent for the Common Stock or other
shares of the Company's capital stock issuable upon the exercise of the rights
of purchase represented by the Warrant. The Company will supply from time to
time the Transfer Agent with duly executed stock certificates required to honor
the outstanding Warrant. After the Expiration Date, no Common Stock shall be
subject to reservation in respect to such Warrant Shares which shall have
expires.
Section 8. Warrant Price. The Warrant Price, subject to
adjustment as provided in Section 9, shall, if payment is made in cash or by
certified check, be payable in lawful money of the United States of America.
Section 9. Adjustments. Subject and pursuant to the provisions
of this Section 9, the Warrant Price and number of Warrant Shares subject to
this Warrant shall be subject to adjustment from time to time as set forth
hereinafter. If the adjustment provisions contained in this Section 9 are less
favorable to the holders of this warrant than adjustment provisions available
to any other holder (the "Other Holder") of convertible securities of the
Company or warrants, options or similar rights exercisable for Common Stock of
the Company with respect to such securities ("Other Rights") are to any such
Other Holder, this Warrant shall be immediately and automatically amended,
without the requirement of any action by the holder or the Company, to provide
the holder of this Warrant with adjustment rights at least as favorable as such
Other Rights.
(a) If the Company shall at any time or from time to time
while the Warrant is outstanding, pay a dividend or make a distribution on its
Common Stock in shares of Common Stock, subdivide its outstanding shares of
Common Stock into a greater number of shares or combine its outstanding shares
into a smaller number of shares or issue by reclassification of its outstanding
shares of Common Stock any shares of its capital stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), then the number of Warrant Shares
purchasable upon exercise of the Warrant and the Warrant Price in effect
immediately prior to the date upon which such change shall become effective,
shall be adjusted by the Company so that the Warrantholder thereafter
exercising the Warrant shall be entitled to receive the number of shares of
Common Stock or other capital stock which the Warrantholder would have received
if the Warrant had been exercised immediately prior to such event. Such
adjustment shall be made successively whenever any event listed above shall
occur.
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<PAGE> 5
(b) If any capital reorganization, reclassification of
the capital stock of the Company, consolidation or merger of the Company with
another corporation, or sale, transfer or other disposition of all or
substantially all of the Company's properties to another corporation shall be
effected, then, as a condition of such reorganization, reclassification,
consolidation, merger, sale, transfer or other disposition, lawful and adequate
provision shall be made whereby each Warrantholder shall thereafter have the
right to purchase and receive upon the basis and upon the terms and conditions
herein specified and in lieu of the Warrant Shares immediately theretofore
issuable upon exercise of the Warrant, such shares of stock, securities or
properties as may be issuable or payable with respect to or in exchange for a
number of outstanding Warrant Shares equal to the number of Warrant Shares
immediately theretofore issuable upon exercise of the Warrant, had such
reorganization, reclassification, consolidation, merger, sale, transfer or
other disposition not taken place, and in any such case appropriate provision
shall be made with respect to the rights and interests of each Warrantholder to
the end that the provisions hereof (including, without limitations, provision
for adjustment of the Warrant Price) shall thereafter be applicable, as nearly
equivalent as may be practicable in relation to any shares of stock, securities
or properties thereafter deliverable upon the exercise thereof. The Company
shall not effect any such consolidation, merger, sale, transfer or other
disposition unless prior to or simultaneously with the consummation thereof the
successor corporation (if other than the Company) resulting from such
consolidation or merger, or the corporation purchasing or otherwise acquiring
such assets or other appropriate corporation or entity shall assume, by written
instrument executed and delivered to the Company, the obligation to deliver to
the holder of the Warrant such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
purchase and the other obligations under this Warrant.
The above provisions of this paragraph (b) shall similarly apply to successive
reorganizations, reclassifications, consolidations, mergers, sales, transfers
or other dispositions.
(c) In case the Company shall fix a record date for the
making of a distribution to all holders of Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of indebtedness or assets
(other than cash dividends or cash distributions payable out of consolidated
earnings or earned surplus or dividends or distributions referred to in Section
9(a)), or subscription rights or warrants, the Warrant Price to be in effect
after such record date shall be determined by multiplying the Warrant Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the total number of shares of Common Stock outstanding
multiplied by the Market Price per share of Common Stock (as determined
pursuant to Section 3), less the fair market value (as determined by the
Company's Board of Directors in good faith) of said assets or evidences of
indebtedness so distributed, or of such subscription rights or warrants, and
the denominator of which shall be the total number of shares of Common Stock
outstanding multiplied by such current Market Price
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<PAGE> 6
per share of Common Stock. Such adjustment shall be made successively whenever
such a record date is fixed.
(d) (i) After the date hereof, if the Company shall at
any time or from time to time while the Warrant is outstanding, issue or sell
any shares of Common Stock (other than Excluded Stock, as hereinafter defined)
for a consideration per share less than the Warrant Price in effect immediately
prior to the time of such issue or sale then, forthwith upon such issue or
sale, the Warrant Price shall be reduced (but not increased) to the
consideration per share received by the Company for such shares of Common Stock
issued or sold. Such adjustment shall be made successively whenever such
issuance or sale is made. No adjustment of the Warrant Price, however, shall
be made in an amount less than $.01 per share, but any such lesser adjustment
shall be carried forward and shall be made at the time of and together with the
next subsequent adjustment. In no event shall the Warrant Price be adjusted so
that the Warrant Price per share is less than the then par value per share of
Common Stock. For purposes hereof, the term "Excluded Stock" shall mean (i)
shares of Common Stock issued pursuant to the exercise or conversion of
options, warrants and preferred stock outstanding on the date hereof or
pursuant to the terms of agreements existing on the date hereof, in accordance
with the terms of such securities and agreements in effect on the date hereof,
(ii) shares of Common Stock issued pursuant to the conversion of Senior
Preferred Stock, Series C ("Senior C Preferred") in accordance with the terms
of such security on the date hereof, and which Senior C Preferred is issued
pursuant to the exercise of warrants outstanding on the date hereof, in
accordance with terms of such warrants in effect on the date hereof and (iii)
up to 1,500,000 shares of Common Stock issued pursuant to the exercise of
employee stock options granted subsequent to the date hereof pursuant to the
Company's employee stock option plan, subject to adjustment in the event of
stock splits, stock dividends, combinations, reclassifications or similar
events (e.g., in the event of a 1-for-15 reverse stock split, the total number
of shares of Common Stock issuable pursuant to this clause (iii) shall be
100,000).
(ii) Upon each adjustment of the Warrant Price, the
Warrantholder shall thereafter be entitled to purchase at the Warrant Price
resulting from such adjustment, that number of Warrant Shares obtained by
multiplying the Warrant Price in effect immediately prior to such adjustment by
the number of Warrant Shares purchasable pursuant hereto immediately prior to
such adjustment and dividing the product thereof by the Warrant Price resulting
from such adjustment. Upon each adjustment of the Warrant Price, the number of
Warrant Shares represented by this Warrant shall be adjusted to equal the
number of shares of Common Stock purchasable by the Warrantholder.
(iii) For purposes of Section 9(d)(i), the following
paragraphs (A) to (F), inclusive, shall be applicable:
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<PAGE> 7
(A) Issuance of Rights, Options or Warrants. In case at
any time after the date hereof the Company shall in any manner grant any rights
to subscribe for or to purchase, any options or warrants (other than
subscription rights or warrants subject to the provisions of Section 9(c)) for
the purchase of shares of Common Stock or any stock or securities convertible
into or exchangeable for Common Stock (such convertible or exchangeable stock
or securities being herein called "Convertible Securities"), whether or not
such rights, options or warrants or the right to convert or exchange any such
Convertible Securities are immediately exercisable, and the price per share for
which shares of Common Stock are issuable upon the exercise of such rights,
options or warrants, or upon conversion or exchange of such Convertible
Securities (determined by dividing (i) the total amount, if any, received or
receivable by the Company as consideration for the granting of such rights,
options or warrants, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the exercise of such rights,
options or warrants, plus, in the case of such rights, options or warrants
which relate to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable upon the conversion or exchange
thereof, by (ii) the total maximum number of shares of Common Stock issuable
upon the exercise of such rights, options or warrants or upon the conversion or
exchange of all such Convertible Securities issuable upon the exercise of such
rights, options or warrants) shall be less than the Warrant Price in effect
immediately prior to the time of the granting of such rights, options or
warrants, as the case may be, then the maximum number of shares of Common Stock
issuable upon the exercise of such rights, options or warrants or upon
conversion or exchange of all such Convertible Securities issuable upon the
exercise of such rights or options shall be deemed to be outstanding as of the
date of the granting of such rights or options and to have been issued for such
price per share, with the effect on the Warrant Price specified in Section
9(d)(i). Except as provided in subparagraph (C), no further adjustment of the
Warrant Price shall be made upon the actual issue of such shares of Common
Stock or of such Convertible Securities upon exercise of such rights, options
or warrants or upon the actual issue of such shares of Common Stock upon
conversion or exchange of such Convertible Securities.
(B) Issuance of Convertible Securities. In case at any
time after the date hereof the Company shall in any manner issue or sell any
Convertible Securities, whether or not the right to exchange or convert
thereunder is immediately exercisable, and the price per share for which shares
of Common Stock are issuable upon such conversion or exchange (determined by
dividing (i) the total amount, if any, received or receivable by the Company as
consideration for the issue or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the conversion or exchange thereof, by (ii) the total maximum
number of shares of Common Stock issuable upon the conversion or exchange of
all such Convertible Securities) shall be less than the Warrant Price in effect
immediately prior to the time of such issue or sale, then the maximum number of
shares of Common Stock issuable upon conversion or exchange of all such
Convertible Securities shall be deemed to be outstanding as of the date of the
issue or sale of such
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<PAGE> 8
Convertible Securities and to have been issued for such price per share, with
the effect on the Warrant Price specified in Section 9(d)(i); provided,
however, that (a) except as otherwise provided in subparagraph (C), no further
adjustment of the Warrant Price shall be made upon the actual issue of such
shares of Common Stock upon conversion or exchange of such Convertible
Securities, and (b) if any such issue or sale of such Convertible Securities is
made upon exercise of any rights to subscribe for or to purchase or any option
or warrant to purchase any such Convertible Securities for which adjustments of
the Warrant Price are made pursuant to the provisions of subparagraph (A), no
further adjustment of the Warrant Price shall be made by reason of such issue
or sale.
(C) Decrease in Option Price or Conversion Rate. Upon
the happening of any of the following events, namely, if the purchase price
provided for in any right, option or warrant referred to in subparagraph (A),
or the additional consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in subparagraphs (A) or (B)
shall decrease, or the rate at which any Convertible Securities referred to in
subparagraphs (A) or (B) are convertible into or exchangeable for shares of
Common Stock shall increase, the Warrant Price then in effect hereunder shall
forthwith be decreased to the Warrant Price which would have been in effect at
such time had such rights, options, warrants or Convertible Securities provided
for such changed purchase price, reduced consideration or increased conversion
rate, as the case may be, at the time they had initially been granted, issued
or sold.
(D) Consideration for Stock. In case at any time shares
of Common Stock or Convertible Securities or any rights or options to purchase
any such shares of Common Stock or Convertible Securities shall be issued or
sold for cash, the consideration therefor shall be deemed to be the amount of
cash paid therefor before deducting therefrom any discounts, commissions or
other expenses allowed, paid or incurred by the Company for any underwriting or
otherwise in connection with the issuance and sale thereof. In case at any
time any shares of Common Stock, Convertible Securities or any rights, options
or warrants to purchase any such shares of Common Stock or Convertible
Securities shall be issued or sold for consideration other than cash, the
amount of consideration other than cash received by the Company shall be deemed
to be the fair value of such consideration, as determined reasonably and in
good faith by the Board of Directors of the Company. In case at any time any
shares of Common Stock, Convertible Securities or any rights, options or
warrants to purchase any shares of Common Stock or Convertible Securities shall
be issued in connection with any merger or consolidation in which the Company
is the surviving corporation, the amount of consideration received therefor
shall be deemed to be the fair value, as determined reasonably and in good
faith by the Board of Directors of the Company, of such portion of the assets
and business of the nonsurviving corporation as such Board of Directors may
reasonably and in good faith determine to be attributable to such shares of
Common Stock. Convertible Securities, rights, options or warrants, as the case
may be. In case at any time any rights, options or warrants to purchase any
shares of Common
E-8
<PAGE> 9
Stock or Convertible Securities shall be issued in connection with the issue
and sale of other securities of the Company, together comprising one integral
transaction in which no consideration is allocated to such rights, options or
warrants by the parties thereto, such rights, options or warrants shall be
deemed to have been issued without consideration.
(e) An adjustment shall become effective immediately
after the record date in the case of each dividend or distribution and
immediately after the effective date of each other event which requires an
adjustment.
(f) The form of Warrant need not be changed because of
any change pursuant to this Section 9, and Warrants issued after such change
may state the same Warrant Price and the same number of Warrant Shares as is
stated in the Warrant initially issued pursuant hereto. However, subject to
the consent of the Warrantholder, which shall not be unreasonably withheld, the
Company may at any time in its sole discretion make any change on the Warrant
that the Company may deem appropriate which does not affect the substance
thereof, and any Warrants thereafter issued, whether in exchange or
substitution for any outstanding Warrant Shares or otherwise, may be in the
form as so changed.
(g) In the event that, as a result of an adjustment made
pursuant to Section 8(a), the holder of the Warrant shall become entitled to
receive any shares of capital stock of the Company other than shares of Common
Stock, the number of such other shares so receivable upon exercise of the
Warrant shall be subject thereafter to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the provisions with respect
to the Warrant Shares contained in this Warrant.
(h) Shares of Common Stock owned by or held for the
account of the Company or any majority-owned subsidiary shall not be deemed
outstanding for the purpose of any computation under this Agreement.
Section 10. Fractional Interest. The Company shall not be
required to issue fractions of Warrant Shares upon the exercise of the Warrant.
If any fraction of a Warrant Share would, except for the provisions of this
Section, be issuable upon the exercise of the Warrant (or specified portions
thereof), the Company shall purchase such fraction for an amount in cash equal
to the current market value of such fraction based upon the current Market
Price (determined pursuant to Section 3) of a Warrant Share. All calculations
under this Section 10 shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be.
Section 11. Benefits. Nothing in this Warrant shall be construed
to give any person, firm or corporation (other than the Company and the
Warrantholder) any legal
E-9
<PAGE> 10
or equitable right, remedy or claim, it being agreed that this Warrant shall be
for the sole and exclusive benefit of the Company and the Warrantholder.
Section 12. Notices to Warrantholder. Upon the happening of any
event requiring an adjustment of the Warrant Price, the Company shall forthwith
give written notice thereof to the Warrantholder at the address appearing in
the records of the Company, stating the adjusted Warrant Price and the adjusted
number of Warrant Shares resulting from such event and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. The certificate of the Company's independent certified
public accountants shall be conclusive evidence of the correctness of any
computation made, absent manifest error. Failure to give such notice to the
Warrantholder or any defect therein shall not affect the legality or validity
of the subject adjustment.
Section 13. Identity of Transfer Agent. The Transfer Agent for
the Common Stock is American Stock Transfer & Trust Company, 99 Wall Street,
New York, New York 10005. Forthwith upon the appointment of any subsequent
transfer agent for the Common Stock or other shares of the Company's capital
stock issuable upon the exercise of the rights of purchase represented by the
Warrant, the Company will mail to the Warrantholder a statement setting forth
the name and address of such transfer agent.
Section 14. Notices. Any notice pursuant hereto to be given or
made by the Warrantholder to or on the Company shall be sufficiently given or
made if sent by certified mail, return receipt requested, postage prepaid,
addressed as follows:
HEARx LTD.
Attention: Paul A. Brown, M.D.
Chairman and Chief Executive Officer
471 Spencer Drive
West Palm Beach, Florida 33409
or such other address as the Company may specify in writing by notice to the
Warrantholder complying as to delivery with the terms of this Section 14.
Any notice pursuant hereto to be given or made by the Company to or on
the Warrantholder shall be sufficiently given or made if sent by certified
mail, return receipt requested, postage prepaid, to the address set forth on
the books of the Company or, as to each of the Company and the Warrantholder,
at such other address as shall be designated by such party by written notice to
the other party complying as to delivery with the terms of this Section 14.
All such notices, requests, demands, directions and other communications shall,
when mailed be effective when deposited in the mails addressed as aforesaid.
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<PAGE> 11
Section 15. Supplements and Amendments. The Company may from
time to time supplement or amend this Warrant without the approval of the
Warrantholder in order to cure any ambiguity or to correct or supplement any
provisions contained herein which may be defective or inconsistent with any
other provision herein or to make any other provisions in regard to matters or
questions arising hereunder which shall not be inconsistent with the provisions
of the Warrant and which shall not in any manner adversely affect the interests
of the Warrantholder.
Section 16. Successors. All the covenants and provisions hereof
by or for the benefit of the Company shall bind and inure to the benefit of its
respective successors and assigns hereunder.
Section 17. Governing Law. This Warrant shall be deemed to be a
contract made under the laws of the State of Delaware and for all purposes
shall be construed in accordance with the laws of said State.
IN WITNESS WHEREOF, the parties hereto have caused this Warrant to be
duly executed, as of the day and year first above written.
HEARx LTD.
By:
---------------------------
Paul A. Brown M.D.
Chairman of the Board
Attest:
- ------------------------------
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<PAGE> 12
HEARx LTD.
WARRANT EXERCISE FORM
HEARx LTD.
471 Spencer
West Palm Beach, Florida 33409
This undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant ("Warrant") for, and to purchase
thereunder by (CHECK AS APPLICABLE) [] payment by cash or certified check; []
conversion of the within Warrant by surrender of the Warrant,
shares of Common Stock* ("Warrant Shares") provided for therein, and requests
that certificates for the Warrant Shares be issued as follows:
-------------------------------
Name
-------------------------------
Address
-------------------------------
-------------------------------
Federal Tax Identification No.
or Social Security No.
and, if the number of Warrant Shares shall not be all the Warrant Shares
purchasable upon exercise of the Warrant, that a new Warrant for the balance of
the Warrant Shares
* NOTE: If conversion of the Warrant is made by surrender of the
Warrant and the number of shares indicated exceeds the maximum
number of shares to which a holder is entitled, the Company
will issue such maximum number of shares.
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<PAGE> 13
purchasable upon exercise of the Warrant be registered in the name of the
undersigned Warrantholder or the undersigned's Assignee as below indicated and
delivered to the address stated below.
Dated:
-------------------, ----
Signature:
------------------------------
-------------------------
Name (please print)
-------------------------
Address
-------------------------
-------------------------
-------------------------
Federal Identification or
Social Security No.
Note: The above signature must
correspond with the name
of the registered holder
as written on the first
page of the Warrant in
every particular, without
alteration or enlargement
or any change whatever,
unless the Warrant has
been assigned.
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<PAGE> 1
EXHIBIT C
HEARx LTD.
CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RIGHTS OF
1996 SENIOR PREFERRED STOCK
PURSUANT TO SECTION 151 OF THE GENERAL
CORPORATION LAW OF THE
STATE OF DELAWARE
HEARx Ltd., a corporation organized on April 11, 1986 and
existing under the laws of the State of Delaware ("Corporation"), the Restated
Certificate of Incorporation of which was filed in the office of the Secretary
of State of Delaware on February 5, 1987, does by its Chairman and its
Secretary hereby certify:
That pursuant to the authority vested in the Board of
Directors by the Restated Certificate of Incorporation, the Board, at a meeting
duly held on January 18, 1996, adopted the following resolutions:
RESOLVED, that pursuant to the authority so conferred upon it,
the Board of Directors hereby authorizes the issuance of 6,000 shares of 1996
Senior Preferred Stock, par value $1.00 per share ("1996 Preferred"), in
connection with a Stock Purchase Agreement to be entered into by the
Corporation; and
RESOLVED, that the voting powers, preferences and relative
rights and privileges and other rights granted to the 1996 Preferred and the
qualifications, limitations or restrictions imposed thereon be, and they hereby
are, as follows:
A. Dividends and Distributions. The holders of the 1996
Preferred shall be entitled to receive dividends or other distributions of the
Corporation, other than liquidating distributions, only as and when declared by
special resolution of the Corporation's Board of Directors.
B. Voting Rights; Separate Vote of 1996 Preferred
Required to Approve Certain Corporate Actions. The holders of the 1996
Preferred shall have 2,485 votes per share of 1996 Preferred held by them and
shall have voting rights and powers equal to the voting rights and powers of
Common Stock, except as set forth below. Except as may be required by law or
as set forth below, the holders of the 1996
<PAGE> 2
Preferred shall not vote separately as a class but shall instead vote with the
holders of Common Stock on all matters as to which stockholders are entitled to
vote under Delaware law.
Notwithstanding the foregoing, without the affirmative vote or
written consent of the holders of a majority of the outstanding shares of 1996
Preferred, voting separately as a class, the Corporation may not:
(a) Issue any securities (including any debt or equity
securities) or any indebtedness, other than pursuant to a Permitted Issuance
(as defined below).
(b) Repay any indebtedness due to Dr. Paul Brown (on the
date hereof, the Chairman of the Board and Chief Executive Officer of the
Corporation) or his assignees, other than indebtedness (including accrued
interest) in the aggregate amount of $100,000.
As used herein, a "Permitted Issuance" is any one of the
following:
(i) The issuance of up to 1,500,000 shares of Common
Stock, $.10 par value, pursuant to employee stock options issued subsequent to
the date hereof, subject to appropriate adjustment in the event of stock
splits, stock dividends, combinations, reclassifications or similar events
(e.g., in the event of a 1-for-15 reverse stock split, the total number of
shares issuable pursuant to this clause (i) shall be 100,000).
(ii) The issuance of any securities of the Corporation
pursuant to the exercise or conversion of options, warrants and preferred stock
outstanding on the date hereof or pursuant to the terms of agreements existing
on the date hereof, in accordance with the terms of such securities and
agreements in effect on the date hereof.
(iii) The issuance of Common Stock of the Corporation
pursuant to the conversion of Senior Preferred Stock, Series C ("Senior C
Preferred") in accordance with the terms of such security on the date hereof,
and which Senior C Preferred is issued pursuant to the exercise of warrants
outstanding on the date hereof, in accordance with terms of such warrants in
effect on the date hereof.
(iv) The incurring of any trade indebtedness or short term
(i.e., maturity of less than one year) bank financing (the term "bank" shall
have the meaning set forth in clauses (A), (B) and (C) of Section 3(a)(6) of
the Securities Exchange Act of 1934, as amended).
C. Priority. The 1996 Preferred shall be senior to all
shares of capital stock of the Corporation other than the Senior Preferred
Stock, Series A, par value $1.00 per share ("Senior A Preferred"); Senior
Preferred Stock, Series B, par value $1.00 per share ("Senior B Preferred");
the Senior Preferred Stock, Series C, par value $1.00 per
A-2
<PAGE> 3
share ("Senior C Preferred"); the Senior Preferred Stock, Series D, par value
$1.00 per share ("Senior D Preferred"); the Senior Preferred Stock, Series E,
par value $1.00 per share ("Senior E Preferred"); the Senior Preferred Stock,
Series G, par value $1.00 per share ("Senior G Preferred"); and the 1994
Convertible Preferred Stock, par value $1.00 per share (the "1994 Convertible
Preferred") (the Senior A, B, C, D, E and G Preferred and the 1994 Convertible
Preferred being together called the "Senior Preferred") and shall rank pari
passu with the Senior Preferred in liquidation only, provided that the
Corporation may authorize and issue additional classes or series of Preferred
Stock that rank pari passu with the 1996 Preferred with the prior written
consent of the holders of the majority of the shares of outstanding 1996
Preferred.
D. No Conversion. Shares of the 1996 Preferred shall
not be convertible at any time into shares of Common Stock.
E. Redemption. The shares of 1996 Preferred shall be
redeemed by the Corporation, in whole but not in part, at the redemption price
of $1,000 per share, at such time as is determined by the Corporation. The
Corporation shall treat such redemption payment as a payment made in exchange
for the 1996 Preferred and not as a dividend for U.S. Federal income tax
purposes.
At least 10 days prior to the date fixed for redemption under
this paragraph E, the Corporation shall send notice of such redemption to each
holder of record of the 1996 Preferred, by registered or certified mail
enclosed in a postage paid envelope addressed to such holder at such holder's
address as the same shall appear on the books of the Corporation. Such notice
shall (a) state that the Corporation is redeeming such shares, (b) state the
date fixed for the redemption thereof, (c) state the per share redemption
price, and (d) call upon each holder to surrender to the Corporation on or
after said date at the place designated in such notice, the certificate or
certificates representing the shares to be redeemed in accordance with such
notice. On or after the date fixed in such notice of redemption, each holder
of shares of 1996 Preferred to be so redeemed shall present and surrender the
certificate or certificates for such shares duly endorsed for transfer to the
Corporation at the place within the United States of America designated in said
notice and thereupon the redemption price of such shares shall be paid to, or
to the order of, the person whose name appears on such certificate or
certificates as the owner thereof.
From and after the date fixed as the day of redemption of the
1996 Preferred, unless default shall be made by the Corporation in providing
for the payment of the redemption price pursuant to such notice, all rights of
the holders of the 1996 Preferred as shareholders of the Corporation, except
the right to receive the redemption price, shall cease and terminate, provided,
however, that the Corporation shall deposit the amount required for the payment
of any part of the redemption price not claimed on the redemption date with a
bank or trust company doing business in the State of Florida and having a
capital and surplus of at least $50,000,000. Any interest allowed on moneys
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so deposited shall be paid to the Corporation. Any moneys so deposited which
shall remain unclaimed by the holders of the 1996 Preferred at the end of six
years after the redemption date shall be paid by such bank or trust company to
the Corporation, but the Corporation shall remain obligated to make payment
thereof to the holders of 1996 Preferred entitled thereto (subject to any
applicable escheat or similar laws). Any shares of 1996 Preferred redeemed by
the Corporation shall be retired and shall not be reissued, and the Corporation
may from time to time take such appropriate corporate action as may be
necessary to reduce the authorized 1996 Preferred.
F. Liquidation, Dissolution or Winding Up.
1. Upon any liquidation, dissolution or winding
up of the Corporation, no distribution shall be made to the holders of any
class or series of Preferred Stock ranking junior to the 1996 Preferred or to
the holders of Common Stock of the Corporation unless the holders of the Senior
A Preferred, the Senior B Preferred, the Senior C Preferred, the Senior D
Preferred, the Senior E Preferred, the Senior G Preferred, the 1994 Convertible
Preferred and the 1996 Preferred shall have received an aggregate amount equal
to $50, $67, $50, $67, $62, $67, $200 and $1,000, per share, respectively.
2. In the event the assets to be distributed to
the holders of the Senior Preferred, the 1996 Preferred and any other class or
series of Preferred Stock ranking pari passu with the Senior Preferred and the
1996 Preferred shall be insufficient to permit the payment of the full
preferential amount owed to the holders of the Senior Preferred, the 1996
Preferred and any class or series of Preferred Stock ranking pari passu with
the Senior Preferred and the 1996 Preferred, then all the assets of the
Corporation to be so distributed shall be distributed to the holders of the
Senior Preferred, the 1996 Preferred and such other pari passu Preferred Stock
on a pro rata basis in proportion to the respective amounts that would
otherwise be payable in respect of the shares held by them upon such
distribution if all amounts payable on or with respect to such shares were paid
in full.
3. In the event that assets of the Corporation
remain after distribution to holders of Senior Preferred and 1996 Preferred and
any other class or series of Preferred Stock ranking pari passu with the Senior
Preferred and 1996 Preferred in accordance with subparagraph 1 of this
paragraph F, the holders of the Common Stock and the holders of Preferred Stock
ranking junior to the Senior Preferred, the 1996 Preferred and any other class
or series of Preferred Stock ranking pari passu with the Senior Preferred and
1996 Preferred shall be entitled to distribution of such assets in accordance
with their respective rights thereto.
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IN WITNESS WHEREOF, the Corporation has caused the foregoing
certificate to be signed by Paul A. Brown, its Chairman of the Board on January
26, 1996.
HEARx Ltd.
By:
----------------------------
Paul A. Brown, M.D.
Chairman of the Board
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<PAGE> 1
EXHIBIT D
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF A REGISTRATION STATEMENT COVERING THIS WARRANT UNDER SAID ACT OR AN
EXEMPTION FROM REGISTRATION UNDER SAID ACT.
EXERCISABLE COMMENCING AT 12:01 A.M., NEW YORK TIME ON [ ]
("EXERCISE DATE"). VOID AFTER 5:00 P.M. NEW YORK TIME ON [ ]
("EXPIRATION DATE").
HEARx LTD.
CLASS B WARRANT TO PURCHASE [ ] SHARES OF
COMMON STOCK, PAR VALUE $0.10 PER SHARE
This is to certify that, for VALUE RECEIVED, [ ]
("Warrantholder"), is entitled to purchase, subject to the provisions of this
Warrant, from HEARx Ltd., a Delaware corporation ("Company"), at any time
beginning at 12:01 A.M. on the Exercise Date and not later than 5:00 P.M., New
York time, on the Expiration Date, at the exercise price of Fifty-five cents
($0.55) per share (the exercise price in effect being herein called the
"Warrant Price"), [ ] shares ("Warrant Shares") of Common Stock,
par value $0.10 per share ("Common Stock"), of the Company. The number of
Warrant Shares purchasable upon exercise of this Warrant and the Warrant Price
shall be subject to adjustment from time to time as described herein.
Notwithstanding the foregoing, this Warrant is subject to redemption, in whole
or in part, prior to the Exercise Date, as set forth in Section 11 hereof.
Section 1. Registration. The Company shall maintain books for the
transfer and registration of the Warrant. Upon the initial issuance of the
Warrant, the Company shall issue and register the Warrant in the name of the
Warrantholder.
Section 2. Transfers. As provided herein, the Warrant may be
transferred only pursuant to a registration statement filed under the Securities
Act of 1933, as amended ("Securities Act") or an exemption from registration
thereunder. Subject to such
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restrictions and the provisions of Section 11, the Company shall transfer from
time to time, the Warrant, upon the books to be maintained by the Company for
that purpose, upon surrender thereof for transfer properly endorsed or
accompanied by appropriate instructions for transfer upon any such transfer,
and a new Warrant shall be issued to the transferee and the surrendered Warrant
shall be cancelled by the Company.
Section 3. Exercise of Warrant. Subject to the provisions hereof,
the Warrantholder may exercise the Warrant in whole or in part at any time upon
surrender of the Warrant, together with delivery of the duly executed Warrant
exercise form attached thereto, to the Company, beginning at 12:01 A.M. on the
Exercise Date until 5:00 P.M. New York Time on the Expiration Date, together
with payment of the Warrant Price, as such may be adjusted from time to time in
accordance with Section 9, for the number of Warrant Shares in respect of which
the Warrant is then exercisable. To the extent that any Warrant Shares remain
outstanding at 5:01 P.M. on the Expiration Date, such outstanding Warrant
Shares shall automatically expire and be of no further force and effect, and the
holders thereof shall have no further right to exercise or transfer the same.
Payment of the Warrant Price shall be made (x) in cash or by certified check
payable in United States dollars, to the order of the Company and/or (y) through
conversion of the Warrant, effected by the surrender to the Company of this
Warrant. Upon surrender of the Warrant to the Company as payment of the Warrant
Price, the holder thereof shall be entitled to receive a number of Warrant
Shares arrived at by dividing the difference between the aggregate Market Price
(as hereinafter defined) of the Warrant Shares issuable in respect of the
Warrant surrendered and the aggregate Warrant Price in respect of the Warrant so
surrendered by the Market Price per share of the Warrant Shares. "Market Price"
as used herein shall mean, on any day, as of such day, the average of the
reported closing sale price, regular way, in either case on any national
securities exchange on which the Common Stock is listed or admitted to trading,
or if the Common Stock is not listed or admitted to trading any such exchange,
as reported by the Nasdaq Stock Market, or if such shares are not then so listed
or admitted to trading, the average of the bid and asked prices as reported by
the NASD OTC Bulletin Board Service, if so reported, or if not so reported, then
as furnished by National Quotation Bureau Incorporated or any similar
organization selected from time to time by the Company for the purpose.
Subject to Section 5, upon such surrender of the Warrant and
payment of the Warrant Price as aforesaid, the Company shall issue and cause to
be delivered to the Warrantholder or to such other person as the Warrantholder
may designate, a certificate or certificates for the number of full Warrant
Shares so purchased upon the exercise of the Warrant, together with cash, as
provided in Section 10 hereof in respect of any fraction of a Warrant Share
otherwise issuable upon such surrender. Such certificate or certificates shall
be deemed to have been issued, and the person to whom they are issued shall be
deemed to have become a holder of record of the Warrant Shares, as of the date
of the surrender of the Warrant and payment of the Warrant Price as aforesaid
unless counsel for the Company advises the Company in writing that an earlier
date is
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<PAGE> 3
permissible for purposes of applicable securities laws. The rights of purchase
represented by the Warrant shall be exercisable, at the election of the
Warrantholder either as an entirety or from time to time for part only of the
Warrant Shares and, in the event that the Warrant is exercised in respect of
less than all of the Warrant Shares specified herein at any time prior to the
Expiration Date, a new Warrant will be issued to Warrantholder for the
remaining number of Warrant Shares specified in the Warrant so surrendered
within five business days.
Section 4. Exercise and Transfer to Company with the Securities
Act of 1933. Neither this Warrant nor the Common Stock issued upon exercise
hereof nor any other security issued or issuable upon exercise of this Warrant
may be offered or sold except as provided in this agreement and in conformity
with the Securities Act of 1933, as amended, and then only against receipt of
an agreement of such person to whom such offer of sale is made to comply with
the provisions of this Section 4 with respect to any resale or other
disposition of such security. The Company may cause the legend set forth on
the first page of this Warrant to be set forth on each Warrant or any security
issued or issuable upon exercise of this Warrant, unless counsel for the
Company is of the opinion as to any such security that such legend is
unnecessary or such security may then be sold pursuant to Rule 144(k) under the
Securities Act of 1933.
Section 5. Payment of Taxes. The Company will pay any
documentary stamp taxes attributable to the initial issuance of Warrant Shares
issuable upon the exercise of the Warrant; provided, however, that the Company
shall not be required to pay any tax or taxes which may be payable in respect
of any transfer involved in the issue or delivery of any certificates for
Warrant Shares in a name other than that of the registered holder of the
Warrant in respect of which such shares are issued, and in such case, the
Company shall not be required to issue or deliver any certificate for Warrant
Shares or any Warrant until the person requesting the same has paid to the
Company the amount of such tax or has established to the Company's satisfaction
that such tax has been paid.
Section 6. Mutilated or Missing Warrants. In case the Warrant
shall be mutilated, lost, stolen, or destroyed, the Company shall issue in
exchange and substitution of and upon cancellation of the mutilated Warrant, or
in lieu of and substitution for the Warrant lost, stolen or destroyed, a new
Warrant of like tenor and for the purchase of a like number of Warrant Shares,
but only upon receipt of evidence reasonably satisfactory to the Company of
such loss, theft or destruction of the Warrant, and with respect to a lost,
stolen or destroyed Warrant, reasonable indemnity or bond, if requested by the
Company.
Section 7. Reservation of Common Stock. The Company hereby
represents and warrants that there have been reserved, and the Company shall at
all applicable times keep reserved, out of the authorized and unissued Common
Stock, a number of shares sufficient to provide for the exercise of the rights
of purchase represented by the Warrant, and the American Stock Transfer & Trust
Company, the transfer agent for the
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Common Stock ("Transfer Agent"), and every subsequent transfer agent for the
Common Stock or other shares of the Company's capital stock issuable upon the
exercise of any of the right of purchase aforesaid shall be irrevocably
authorized and directed at all times to reserve such number of authorized and
unissued shares of Common Stock as shall be requisite for such purpose. The
Company agrees that all Warrant Shares issued upon exercise of the Warrant
shall be, at the time of delivery of the certificates for such Warrant Shares,
duly authorized, validly issued, fully paid and non-assessable shares of Common
Stock of the Company. The Company will keep a conformed copy of this Warrant
on file with the Transfer Agent and with every subsequent transfer agent for
the Common Stock or other shares of the Company's capital stock issuable upon
the exercise of the rights of purchase represented by the Warrant. The Company
will supply from time to time the Transfer Agent with duly executed stock
certificates required to honor the outstanding Warrant. After the Expiration
Date, no Common Stock shall be subject to reservation in respect to such
Warrant Shares which shall have expires.
Section 8. Warrant Price. The Warrant Price, subject to
adjustment as provided in Section 9, shall, if payment is made in cash or by
certified check, be payable in lawful money of the United States of America.
Section 9. Adjustments. Subject and pursuant to the provisions
of this Section 9, the Warrant Price and number of Warrant Shares subject to
this Warrant shall be subject to adjustment from time to time as set forth
hereinafter. If the adjustment provisions contained in this Section 9 are less
favorable to the Warrantholders than adjustment provisions available to any
other holder (the "Other Holder") of convertible securities of the Company or
warrants, options or similar rights exercisable for Common Stock of the Company
with respect to such securities ("Other Rights") are to any such Other Holder,
this Warrant shall be immediately and automatically amended, without the
requirement of any action by the Warrantholders or the Company, to provide the
Warrantholders with adjustment rights at least as favorable as such Other
Rights.
(a) If the Company shall at any time or from time to time
while the Warrant is outstanding, pay a dividend or make a distribution on its
Common Stock in shares of Common Stock, subdivide its outstanding shares of
Common Stock into a greater number of shares or combine its outstanding shares
into a smaller number of shares or issue by reclassification of its outstanding
shares of Common Stock any shares of its capital stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), then the number of Warrant Shares
purchasable upon exercise of the Warrant and the Warrant Price in effect
immediately prior to the date upon which such change shall become effective,
shall be adjusted by the Company so that the Warrantholder thereafter
exercising the Warrant shall be entitled to receive the number of shares of
Common Stock or other capital stock which the Warrantholder would have received
if the Warrant had been exercised immediately prior to such event. Such
adjustment shall be made successively whenever any event listed above shall
occur.
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(b) If any capital reorganization, reclassification of
the capital stock of the Company, consolidation or merger of the Company with
another corporation, or sale, transfer or other disposition of all or
substantially all of the Company's properties to another corporation shall be
effected, then, as a condition of such reorganization, reclassification,
consolidation, merger, sale, transfer or other disposition, lawful and adequate
provision shall be made whereby each Warrantholder shall thereafter have the
right to purchase and receive upon the basis and upon the terms and conditions
herein specified and in lieu of the Warrant Shares immediately theretofore
issuable upon exercise of the Warrant, such shares of stock, securities or
properties as may be issuable or payable with respect to or in exchange for a
number of outstanding Warrant Shares equal to the number of Warrant Shares
immediately theretofore issuable upon exercise of the Warrant, had such
reorganization, reclassification, consolidation, merger, sale, transfer or
other disposition not taken place, and in any such case appropriate provision
shall be made with respect to the rights and interests of each Warrantholder to
the end that the provisions hereof (including, without limitations, provision
for adjustment of the Warrant Price) shall thereafter be applicable, as nearly
equivalent as may be practicable in relation to any shares of stock, securities
or properties thereafter deliverable upon the exercise thereof. The Company
shall not effect any such consolidation, merger, sale, transfer or other
disposition unless prior to or simultaneously with the consummation thereof the
successor corporation (if other than the Company) resulting from such
consolidation or merger, or the corporation purchasing or otherwise acquiring
such assets or other appropriate corporation or entity shall assume, by written
instrument executed and delivered to the Company, the obligation to deliver to
the Warrantholder such shares of stock, securities or assets as, in accordance
with the foregoing provisions, such Warrantholder may be entitled to purchase
and the other obligations under this Warrant.
The above provisions of this paragraph (b) shall similarly apply to successive
reorganizations, reclassifications, consolidations, mergers, sales, transfers
or other dispositions.
(c) In case the Company shall fix a record date for the
making of a distribution to all holders of Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of indebtedness or assets
(other than cash dividends or cash distributions payable out of consolidated
earnings or earned surplus or dividends or distributions referred to in Section
9(a)), or subscription rights or warrants, the Warrant Price to be in effect
after such record date shall be determined by multiplying the Warrant Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the total number of shares of Common Stock outstanding
multiplied by the Market Price per share of Common Stock (as determined
pursuant to Section 3), less the fair market value (as determined by the
Company's Board of Directors in good faith) of said assets or evidences of
indebtedness so distributed, or of such subscription rights or warrants, and
the denominator of which shall be the total number of shares of Common Stock
outstanding multiplied by such current Market Price
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<PAGE> 6
per share of Common Stock. Such adjustment shall be made successively whenever
such a record date is fixed.
(d) (i) After the date hereof, if the Company shall at
any time or from time to time while the Warrant is outstanding, issue or sell
any shares of Common Stock (other than Excluded Stock, as hereinafter defined)
for a consideration per share less than the Warrant Price in effect immediately
prior to the time of such issue or sale then, forthwith upon such issue or
sale, the Warrant Price shall be reduced (but not increased) to the
consideration per share received by the Company for such shares of Common Stock
issued or sold. Such adjustment shall be made successively whenever such
issuance or sale is made. No adjustment of the Warrant Price, however, shall
be made in an amount less than $.01 per share, but any such lesser adjustment
shall be carried forward and shall be made at the time of and together with the
next subsequent adjustment. In no event shall the Warrant Price be adjusted so
that the Warrant Price per share is less than the then par value per share of
Common Stock. For purposes hereof, the term "Excluded Stock" shall mean (i)
shares of Common Stock issued pursuant to the exercise or conversion of
options, warrants and preferred stock outstanding on the date hereof or
pursuant to the terms of agreements existing on the date hereof, in accordance
with the terms of such securities and agreements in effect on the date hereof,
(ii) shares of Common Stock issued pursuant to the conversion of Senior
Preferred Stock, Series C ("Senior C Preferred") in accordance with the terms
of such security on the date hereof, and which Senior C Preferred is issued
pursuant to the exercise of warrants outstanding on the date hereof, in
accordance with terms of such warrants in effect on the date hereof and (iii)
up to 1,500,000 shares of Common Stock issued pursuant to the exercise of
employee stock options granted subsequent to the date hereof pursuant to the
Company's employee stock option plan, subject to appropriate adjustment in the
event of stock splits, stock dividends, combinations, reclassifications or
similar events (e.g., in the event of a 1-for-15 reverse stock split, the total
number of shares of Common Stock issuable pursuant to this clause (iii) shall
be 100,000).
(ii) Upon each adjustment of the Warrant Price, the
Warrantholder shall thereafter be entitled to purchase at the Warrant Price
resulting from such adjustment, that number of Warrant Shares obtained by
multiplying the Warrant Price in effect immediately prior to such adjustment by
the number of Warrant Shares purchasable pursuant hereto immediately prior to
such adjustment and dividing the product thereof by the Warrant Price resulting
from such adjustment. Upon each adjustment of the Warrant Price, the number of
Warrant Shares represented by this Warrant shall be adjusted to equal the
number of shares of Common Stock purchasable by the Warrantholder.
(iii) For purposes of Section 9(d)(i), the following
paragraphs (A) to (F), inclusive, shall be applicable:
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(A) Issuance of Rights, Options or Warrants. In case at
any time after the date hereof the Company shall in any manner grant any rights
to subscribe for or to purchase, any options or warrants (other than
subscription rights or warrants subject to the provisions of Section 9(c)) for
the purchase of shares of Common Stock or any stock or securities convertible
into or exchangeable for Common Stock (such convertible or exchangeable stock
or securities being herein called "Convertible Securities"), whether or not
such rights, options or warrants or the right to convert or exchange any such
Convertible Securities are immediately exercisable, and the price per share for
which shares of Common Stock are issuable upon the exercise of such rights,
options or warrants, or upon conversion or exchange of such Convertible
Securities (determined by dividing (i) the total amount, if any, received or
receivable by the Company as consideration for the granting of such rights,
options or warrants, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the exercise of such rights,
options or warrants, plus, in the case of such rights, options or warrants
which relate to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable upon the conversion or exchange
thereof, by (ii) the total maximum number of shares of Common Stock issuable
upon the exercise of such rights, options or warrants or upon the conversion or
exchange of all such Convertible Securities issuable upon the exercise of such
rights, options or warrants) shall be less than the Warrant Price in effect
immediately prior to the time of the granting of such rights, options or
warrants, as the case may be, then the maximum number of shares of Common Stock
issuable upon the exercise of such rights, options or warrants or upon
conversion or exchange of all such Convertible Securities issuable upon the
exercise of such rights or options shall be deemed to be outstanding as of the
date of the granting of such rights or options and to have been issued for such
price per share, with the effect on the Warrant Price specified in Section
9(d)(i). Except as provided in subparagraph (C), no further adjustment of the
Warrant Price shall be made upon the actual issue of such shares of Common
Stock or of such Convertible Securities upon exercise of such rights, options
or warrants or upon the actual issue of such shares of Common Stock upon
conversion or exchange of such Convertible Securities.
(B) Issuance of Convertible Securities. In case at any
time after the date hereof the Company shall in any manner issue or sell any
Convertible Securities, whether or not the right to exchange or convert
thereunder is immediately exercisable, and the price per share for which shares
of Common Stock are issuable upon such conversion or exchange (determined by
dividing (i) the total amount, if any, received or receivable by the Company as
consideration for the issue or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the conversion or exchange thereof, by (ii) the total maximum
number of shares of Common Stock issuable upon the conversion or exchange of
all such Convertible Securities) shall be less than the Warrant Price in effect
immediately prior to the time of such issue or sale, then the maximum number of
shares of Common Stock issuable upon conversion or exchange of all such
Convertible Securities shall be deemed to be outstanding as of the date of the
issue or sale of such
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Convertible Securities and to have been issued for such price per share, with
the effect on the Warrant Price specified in Section 9(d)(i); provided,
however, that (a) except as otherwise provided in subparagraph (C), no further
adjustment of the Warrant Price shall be made upon the actual issue of such
shares of Common Stock upon conversion or exchange of such Convertible
Securities, and (b) if any such issue or sale of such Convertible Securities is
made upon exercise of any rights to subscribe for or to purchase or any option
or warrant to purchase any such Convertible Securities for which adjustments of
the Warrant Price are made pursuant to the provisions of subparagraph (A), no
further adjustment of the Warrant Price shall be made by reason of such issue
or sale.
(C) Decrease in Option Price or Conversion Rate. Upon
the happening of any of the following events, namely, if the purchase price
provided for in any right, option or warrant referred to in subparagraph (A),
or the additional consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in subparagraphs (A) or (B)
shall decrease, or the rate at which any Convertible Securities referred to in
subparagraphs (A) or (B) are convertible into or exchangeable for shares of
Common Stock shall increase, the Warrant Price then in effect hereunder shall
forthwith be decreased to the Warrant Price which would have been in effect at
such time had such rights, options, warrants or Convertible Securities provided
for such changed purchase price, reduced consideration or increased conversion
rate, as the case may be, at the time they had initially been granted, issued
or sold.
(D) Consideration for Stock. In case at any time shares
of Common Stock or Convertible Securities or any rights or options to purchase
any such shares of Common Stock or Convertible Securities shall be issued or
sold for cash, the consideration therefor shall be deemed to be the amount of
cash paid therefor before deducting therefrom any discounts, commissions or
other expenses allowed, paid or incurred by the Company for any underwriting or
otherwise in connection with the issuance and sale thereof. In case at any
time any shares of Common Stock, Convertible Securities or any rights, options
or warrants to purchase any such shares of Common Stock or Convertible
Securities shall be issued or sold for consideration other than cash, the
amount of consideration other than cash received by the Company shall be deemed
to be the fair value of such consideration, as determined reasonably and in
good faith by the Board of Directors of the Company. In case at any time any
shares of Common Stock, Convertible Securities or any rights, options or
warrants to purchase any shares of Common Stock or Convertible Securities shall
be issued in connection with any merger or consolidation in which the Company
is the surviving corporation, the amount of consideration received therefor
shall be deemed to be the fair value, as determined reasonably and in good
faith by the Board of Directors of the Company, of such portion of the assets
and business of the nonsurviving corporation as such Board of Directors may
reasonably and in good faith determine to be attributable to such shares of
Common Stock. Convertible Securities, rights, options or warrants, as the case
may be. In case at any time any rights, options or warrants to purchase any
shares of Common
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Stock or Convertible Securities shall be issued in connection with the issue
and sale of other securities of the Company, together comprising one integral
transaction in which no consideration is allocated to such rights, options or
warrants by the parties thereto, such rights, options or warrants shall be
deemed to have been issued without consideration.
(e) An adjustment shall become effective immediately
after the record date in the case of each dividend or distribution and
immediately after the effective date of each other event which requires an
adjustment.
(f) The form of Warrant need not be changed because of
any change pursuant to this Section 9 or Section 11, and Warrants issued after
such change may state the same Warrant Price and the same number of Warrant
Shares as is stated in the Warrant initially issued pursuant hereto. However,
subject to the consent of the Warrantholder, which shall not be unreasonably
withheld, the Company may at any time in its sole discretion make any change on
the Warrant that the Company may deem appropriate which does not affect the
substance thereof, and any Warrants thereafter issued, whether in exchange or
substitution for any outstanding Warrant Shares or otherwise, may be in the
form as so changed.
(g) In the event that, as a result of an adjustment made
pursuant to Section 8(a), the Warrantholder shall become entitled to receive
any shares of capital stock of the Company other than shares of Common Stock,
the number of such other shares so receivable upon exercise of the Warrant
shall be subject thereafter to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Warrant Shares contained in this Warrant.
(h) Shares of Common Stock owned by or held for the
account of the Company or any majority-owned subsidiary shall not be deemed
outstanding for the purpose of any computation under this Agreement.
Section 10. Fractional Interest. The Company shall not be
required to issue fractions of Warrant Shares upon the exercise of the Warrant.
If any fraction of a Warrant Share would, except for the provisions of this
Section, be issuable upon the exercise of the Warrant (or specified portions
thereof), the Company shall purchase such fraction for an amount in cash equal
to the current market value of such fraction based upon the current Market
Price (determined pursuant to Section 3) of a Warrant Share. All calculations
under this Section 10 shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be.
Section 11. Non Transferability Separately From 1996 Senior
Preferred Stock Prior to Exercise Date; Redemption of Warrant Upon Redemption
of Preferred Stock. The Warrant initially is being issued together with shares
of the Company's 1996 Senior
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Preferred Stock ("1996 Preferred"), and prior to the Exercise Date may only be
transferred together with the 1996 Preferred so that for each share of 1996
Preferred transferred, this Warrant must be transferred with respect to 66 2/3
Warrant Shares (subject to adjustment as set forth in Section 9), purchasable
upon exercise of this Warrant and vice versa.
In the event that, prior to the Exercise Date, the Company redeems the
1996 Preferred, it shall also redeem this Warrant, at the redemption price of
$.01 per Warrant Share underlying the Warrant to be redeemed.
As part of the notice sent to holders of 1996 Preferred advising such
holders of the redemption of 1996 Preferred, the Company shall also include
notice of redemption of the Warrant. Such notice shall (a) state that the
Company is required to redeem the Warrant, (b) state the date fixed for the
redemption thereof, (c) state the redemption price per Warrant Share underlying
the Warrant and (d) call upon each Warrantholder to surrender the Warrant to
the Company on or after said date at the place designated in such notice. On
or after the date fixed in such notice of redemption, the holder of the Warrant
shall present and surrender the Warrant duly endorsed for transfer to the
Company at the place designated on said notice and thereupon the redemption
price of the Warrant Shares underlying the Warrant shall be paid to, or to the
order of, the person whose name appears on the Warrant as the Warrantholder
thereof.
Following the Exercise Date, the provisions of this Section 11 shall
terminate and be of no further force or effect.
Section 12. Benefits. Nothing in this Warrant shall be construed
to give any person, firm or corporation (other than the Company and the
Warrantholder) any legal or equitable right, remedy or claim, it being agreed
that this Warrant shall be for the sole and exclusive benefit of the Company
and the Warrantholder.
Section 13. Notices to Warrantholder. Upon the happening of any
event requiring an adjustment of the Warrant Price, the Company shall forthwith
give written notice thereof to the Warrantholder at the address appearing in
the records of the Company, stating the adjusted Warrant Price and the adjusted
number of Warrant Shares resulting from such event and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. The certificate of the Company's independent certified
public accountants shall be conclusive evidence of the correctness of any
computation made, absent manifest error. Failure to give such notice to the
Warrantholder or any defect therein shall not affect the legality or validity
of the subject adjustment.
Section 14. Identity of Transfer Agent. The Transfer Agent for
the Common Stock is American Stock Transfer & Trust Company, 99 Wall Street,
New York, New York 10005. Forthwith upon the appointment of any subsequent
transfer agent for the
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<PAGE> 11
Common Stock or other shares of the Company's capital stock issuable upon the
exercise of the rights of purchase represented by the Warrant, the Company will
mail to the Warrantholder a statement setting forth the name and address of
such transfer agent.
Section 15. Notices. Any notice pursuant hereto to be given or
made by the Warrantholder to or on the Company shall be sufficiently given or
made if sent by certified mail, return receipt requested, postage prepaid,
addressed as follows:
HEARx LTD.
Attention: Paul A. Brown, M.D.
Chairman and Chief Executive Officer
471 Spencer Drive
West Palm Beach, Florida 33409
or such other address as the Company may specify in writing by notice to the
Warrantholder complying as to delivery with the terms of this Section 13.
Any notice pursuant hereto to be given or made by the Company to or on
the Warrantholder shall be sufficiently given or made if sent by certified
mail, return receipt requested, postage prepaid, to the address set forth on
the books of the Company or, as to each of the Company and the Warrantholder,
at such other address as shall be designated by such party by written notice to
the other party complying as to delivery with the terms of this Section 15.
All such notices, requests, demands, directions and other communications shall,
when mailed be effective when deposited in the mails addressed as aforesaid.
Section 16. Supplements and Amendments. The Company may from
time to time supplement or amend this Warrant without the approval of the
Warrantholder in order to cure any ambiguity or to correct or supplement any
provisions contained herein which may be defective or inconsistent with any
other provision herein or to make any other provisions in regard to matters or
questions arising hereunder which shall not be inconsistent with the provisions
of the Warrant and which shall not in any manner adversely affect the interests
of the Warrantholder.
Section 17. Successors. All the covenants and provisions hereof
by or for the benefit of the Company shall bind and inure to the benefit of its
respective successors and assigns hereunder.
Section 18. Governing Law. This Warrant shall be deemed to be a
contract made under the laws of the State of Delaware and for all purposes
shall be construed in accordance with the laws of said State.
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<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have caused this Warrant to be
duly executed, as of the day and year first above written.
HEARx LTD.
By:
---------------------------
Paul A. Brown M.D.
Chairman of the Board
Attest:
- ------------------------------
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<PAGE> 13
HEARx LTD.
WARRANT EXERCISE FORM
HEARx LTD.
471 Spencer
West Palm Beach, Florida 33409
This undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant ("Warrant") for, and to purchase
thereunder by (CHECK AS APPLICABLE) [] payment by cash or certified check; []
conversion of the within Warrant by surrender of the Warrant,
shares of Common Stock* ("Warrant Shares") provided for therein, and requests
that certificates for the Warrant Shares be issued as follows:
-------------------------------
Name
-------------------------------
Address
-------------------------------
-------------------------------
Federal Tax Identification No.
or Social Security No.
and, if the number of Warrant Shares shall not be all the Warrant Shares
purchasable upon exercise of the Warrant, that a new Warrant for the balance of
the Warrant Shares
* NOTE: If conversion of the Warrant is made by surrender of the
Warrant and the number of shares indicated exceeds the maximum
number of shares to which a Warrantholder is entitled, the
Company will issue such maximum number of shares.
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<PAGE> 14
purchasable upon exercise of the Warrant be registered in the name of the
undersigned Warrantholder or the undersigned's Assignee as below indicated and
delivered to the address stated below.
Dated:
-------------------, ----
Signature:
------------------------------
------------------------------
Name (please print)
------------------------------
Address
------------------------------
------------------------------
Federal Identification or
Social Security No.
Note: The above signature must
correspond with the name of
the registered holder as
written on the first page of
the Warrant in every
particular, without alteration
or enlargement or any change
whatever, unless the Warrant
has been assigned.
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<PAGE> 1
EXHIBIT E
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made
and entered as of this 26th day of January, 1996, by and among HEARx LTD, a
Delaware corporation (the "Company"), Invemed Associates, Inc., a New York
corporation ("Invemed"), and the Investors listed on Schedule A hereto pursuant
to the Stock Purchase Agreement (the "SPA") dated as of the date hereof, by and
among the Company, Invemed and the Investors.
The parties hereby agree as follows:
1. Certain Definitions
As used in this Agreement, the following terms shall
have the following meanings:
"Common Stock" shall mean the Common Stock, par value
$0.10 per share, of the Company.
"Invemed Warrants" means warrants to purchase up to
2,250,000 shares of Common Stock issued pursuant to the SPA.
"Investors" shall mean the Investors as defined in
the SPA.
"Investor Warrants" means warrants to purchase up to
an aggregate of 14,909,090 shares of Common Stock issued pursuant to the SPA.
"Prospectus" shall mean the prospectus included in
any Registration Statement, as amended or supplemented by any prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by such Registration Statement and by all other
amendments and supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such prospectus.
"1996 Preferred Stock" shall mean the 1996 Senior
Preferred Stock, par value $1.00 per share, of the Company.
"Register," "registered" and "registration" refer to
a registration effected by preparing and filing a registration statement or
similar document in compliance with the 1933 Act (as defined below), and the
declaration or ordering of effectiveness of such registration statement or
document.
<PAGE> 2
"Registrable Securities" shall mean (i) the Common
Stock acquired upon the exercise of the Investor Warrants or the Invemed
Warrants and (ii) any Common Stock of the Company issued as (or issuable upon
the conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of, such Common Stock, excluding in all cases, however, any
Registrable Securities sold by a person in a transaction in which its rights
under this Agreement are not assigned.
"Registration Statement" shall mean any registration
statement of the Company that covers any of the Registrable Securities pursuant
to the provisions of this Agreement, including the Prospectus, amendments and
supplements to such Registration Statement, including post-effective
amendments, all exhibits and all material incorporated by reference in such
Registration Statement.
"SEC" means the U.S. Securities and Exchange
Commission.
"1933 Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"1934 Act" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
"Warrants" means the Invemed Warrants and the
Investor Warrants.
2. Demand Registration.
(a) Request for Registration. The holders of
more than 50% of the Registrable Securities (computed in accordance with the
provisions of the third and fourth sentence of Section 9(b)) may request
registration under the 1933 Act of those Registrable Securities described in
the notice to the Company requesting such registration. Within ten days after
receipt of any such request, the Company will give written notice of such
request to all other holders of Registrable Securities and will include in such
registration all Registrable Securities with respect to which the holder has
given notice to the Company of such holder's request for inclusion therein
within 30 days after the receipt by such holder of the Company's notice. The
holders of those Registrable Securities who originally requested registration
and the holders who, in the manner specified above, thereafter requested to be
included in such registration shall be collectively referred to herein as the
"Participating Holders." If adverse tax consequences to the holder might
result from exercise of the Warrant and the subsequent sale of the Common Stock
acquired pursuant to the Warrant, the Company will use its best efforts to
cause the underwriter of any underwritten Demand Registration or underwritten
Piggyback Registration to purchase and exercise such Warrant or portion thereof
as may be proffered by the holder thereof so that the holder may sell the
Warrant or a portion thereof.
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<PAGE> 3
(b) Demand Registration. The holders of
Registrable Securities will collectively be entitled to only one demand
registration as provided in subsection (a) above (the "Demand Registration")
and that demand may be made at any time specified in subsection (a) by the
holders of at least 50% of all outstanding Registrable Securities. The Company
will pay all Registration expenses associated therewith, excluding discounts,
commissions, or fees of underwriters, selling brokers, dealer managers or
similar securities industry professionals relating to the distribution of the
Registrable Securities or fees or expenses of counsel to the holders in excess
of $15,000. The Demand Registration will be a short-form registration on Form
S-3 or any successor form thereof if the Company is permitted to use such short
form. No securities other than Registrable Securities shall be included in the
Demand Registration without the consent of the holders of at least 50% of all
outstanding Registrable Securities.
(c) Restrictions on Registration. The Company
will not be obligated to effect any long-form Registration within six months
after the effective date of a registration in which the holders of Registrable
Securities were given piggyback rights pursuant to paragraph 3. The Company
may postpone for up to three months the filing or the effectiveness of a
registration statement for the Demand Registration if the Company's Board of
Directors determines in good faith that the Demand Registration can be
reasonably expected to have a materially adverse effect on any proposal or plan
by the Company or any of its subsidiaries to engage in a transaction or series
of transactions that are or may be material to the Company; provided that the
Company may exercise this right only once in any 180 day period; and, provided
further, that in the event the Company exercises this right, the Participating
Holders will be entitled to withdraw such request and, if such request is
withdrawn, such demand will not count as the Demand Registration.
(d) Selection of Underwriters. The Participating
Holders, by action of the holders of a majority of the Registrable Securities
to be included in such registration, will have the right to select one or more
investment banker(s) and manager(s), reasonably acceptable to the Company, to
administer the offering.
3. Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company
proposes to register any of its securities under the 1933 Act, other than (i)
pursuant to the Demand Registration, (ii) any other demand registration now
outstanding to other holders of the Company's securities (which holders have
the right to exclude holders of Registrable Securities from such registration)
or (iii) registration on Form S-8, the Company will give 30 days prior written
notice to all holders of Registrable Securities of the intention to effect such
a registration and, subject to the provisions of subsection (c) hereof, will
include in such registration all Registrable Securities with respect to which
the holder has given notice of request for inclusion therein to the Company
within 15 days after the
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<PAGE> 4
receipt of the Company's notice (a "Piggyback Registration" and such requesting
holders of Registrable Securities being herein referred to as "Piggyback
Holders").
(b) Piggyback Expenses. The Company will pay all
Registration expenses of the Piggyback Holders, excluding discounts,
commissions, or fees of underwriters, selling brokers, dealer managers or
similar securities industry professionals relating to the distribution of the
Registrable Securities and excluding fees or expenses of counsel to the holders
in excess of $5,000.
(c) Priority on Piggyback Registration. If in
respect of an underwritten Piggyback Registration, the managing underwriters
advise the Company in writing that in their opinion, the number of securities
to be included in such registration exceeds the number which can be sold in
such offering, the priority of registration will be as follows: (i) first, the
shares sought by the Company to be registered shall be included in such
registration; and (ii) second, if all such shares are so included, all
Registrable Securities requested by the Piggyback Holders to be included in
such registration shall be so included along with other registrable securities
of other holders exercising or otherwise given piggyback registration rights,
pro rata on the basis of the number of shares requested to be included in each
registration by such holders.
(d) Selection of Underwriters. The Company will
have the right to select one or more investment banker(s) and manager(s) to
administer the offering.
4. Holdback Agreements.
(a) Each holder of Registrable Securities agrees
not to effect any public sale or distribution of equity securities of the
Company, or any securities convertible into or exercisable for such securities,
during the seven days prior to and the 90-day period beginning on the effective
date of any underwritten Demand Registration or any underwritten Piggyback
Registration in which such holder's Registrable Securities are included (except
as part of such underwritten registration) unless the underwriters managing the
registered public offering otherwise agree; provided, that in no event shall a
holder of Registrable Securities be subject to a limitation on sale or
distribution that covers a period longer than that to which any other
securityholder whose securities are included in the registration is subject.
(b) The Company agrees (i) not to effect any
public sale or distribution of its equity securities, or any securities
convertible into or exchangeable or exercisable for such securities, during the
seven days prior to and during the 90-day period beginning on the effective
date of any underwritten Demand Registration or any underwritten Piggyback
Registration (except as part of such underwritten registration or pursuant to
registration on Form S-8), unless the underwriters managing the registered
public offering otherwise agree, and (ii) to cause each holder of at least 5%
of any class of its equity securities, or any person that would own 5% of the
Company's outstanding
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<PAGE> 5
equity securities on conversion, exchange or exercise of securities convertible
into or exchangeable or exercisable for such securities, purchased from the
Company at any time after the date of this Agreement (other than in a
registered public offering made subsequent to such offering) to agree not to
effect any public sale or distribution of any such securities during such
period (except as part of such underwritten registration, if otherwise
permitted), unless the underwriters managing the registered public offering
otherwise agree.
5. Registration Procedures. Whenever the holders of
Registrable Securities have requested that any Registrable Securities be
registered pursuant to this Agreement, the Company will use its best efforts to
effect the registration and the sale of such Registrable Securities in
accordance with the intended method of disposition thereof, and pursuant
thereto the Company will as expeditiously as possible:
(a) prepare and file with the SEC a Registration
Statement with respect to such Registrable Securities and use its reasonable
best efforts to cause such Registration Statement to become effective and to
remain continuously effective for a period which will terminate when all
Registrable Securities covered by such Registration Statement, as amended from
time to time, have been sold or a period of one year, whichever is shorter;
(b) prepare and file with the SEC such amendments
and post-effective amendments to the Registration Statement and the Prospectus
as may be necessary to keep the Registration Statement effective for the period
specified in Section 5(a) and to comply with the provisions of the 1933 Act and
the 1934 Act with respect to the distribution of all Registrable Securities;
provided that, at a time reasonably prior to the filing of a Registration
Statement or Prospectus, or any amendments or supplements thereto, the Company
will furnish to the Participating Holders or the Piggyback Holders, as the case
may be, copies of all documents proposed to be filed, which documents will be
subject to the comments of the Participating Holders or the Piggyback Holders,
as the case may be, and their counsel;
(c) notify the Participating Holders or the
Piggyback Holders, as the case may be, promptly, and confirm such advice in
writing, (i) when the Prospectus or any supplement or post-effective amendment
has been filed, and with respect to the Registration Statement or any
post-effective amendment, when the same has become effective, (ii) of any
request by the SEC for amendments or supplements to the Registration Statement
or the Prospectus or for additional information, (iii) of the issuance by the
SEC of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose, and (iv) of
the receipt by the Company of any notification with respect to the suspension
of the qualification of the Registrable Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose;
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<PAGE> 6
(d) make reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the Registration
Statement;
(e) furnish to the Participating Holders or the
Piggyback Holders, as the case may be, at least five copies of the Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules, all documents incorporated therein by reference and
all exhibits (including those incorporated by reference);
(f) deliver to each Participating Holder or
Piggyback Holder, as the case may be, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement thereto
as such holder may reasonably request in order to facilitate the disposition of
the Registrable Securities;
(g) prior to any public offering of Registrable
Securities, use its reasonable best efforts to register or qualify or cooperate
with the Participating Holders or the Piggyback Holders, as the case may be,
and the underwriters, if any, and their respective counsel in connection with
the registration or qualification of such Registrable Securities for offer and
sale under the securities or blue sky laws of such jurisdictions as the
Participating Holders or the Piggyback Holders, as the case may be, or any
underwriter reasonably requests in writing and do any and all other reasonable
acts or things necessary or advisable to enable the distribution in such
jurisdictions of the Registrable Securities covered by the Registration
Statement; provided that the Company will not be required to qualify generally
to do business in any jurisdiction where it is not then so qualified or to take
any action which would subject it to general service of process in any such
jurisdiction where it is not then so subject;
(h) cause all Registrable Securities covered by
the Registration Statement to be listed on each securities exchange,
interdealer quotation system or other market on which similar securities issued
by the Company are then listed;
(i) in the event of any underwritten public
offering, enter into and perform its obligations under an underwriting
agreement, usual and customary in form, with the managing underwriter of such
offering; the Participating Holders or the Piggyback Holders, as the case may
be, shall also enter into and perform their obligations under such agreement,
usual and customary in form; the Company shall take such other actions as the
underwriters reasonably request in order to expedite or facilitate a
disposition of the Registrable Securities;
(j) upon request, furnish to each Participating
Holder or Piggyback Holder, as the case may be, a signed counterpart, addressed
to such holder, of (i) an opinion of counsel for the Company, dated the
effective date of such registration statement (or, if such registration
includes an underwritten public offering, dated the date of the closing under
the underwriting agreement), and (ii) a "comfort" letter, dated
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<PAGE> 7
the effective date of such registration statement (and, if such registration
includes an underwritten public offering, dated the date of the closing under
the underwriting agreement), signed by the independent public accountants who
have certified the Company's financial statements included in such registration
statement, covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in the case
of such accountants' letter, with respect to events subsequent to the date of
such financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to underwriters in underwritten
public offerings of securities and, in the case of the accountants' letter,
such other financial matters, as the principal underwriter with respect to such
registration may reasonably request (or, if such registration does not involve
an underwritten offering, as may reasonably (i.e., in conformity with Statement
on Auditing Standards No. 72, as amended, or any successor statement thereto)
be requested by holders of a majority of the Registrable Securities included in
such registration);
(k) immediately notify each Participating Holder
or Piggyback Holder, as the case may be, at any time when a Prospectus relating
thereto is required to be delivered under the Securities Act, upon discovery
that, or upon the happening of any event as a result of which, the Prospectus
included in such Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing, and at the request of any such
holder, promptly prepare and furnish to such holder a reasonable number of
copies of a supplement to or an amendment of such Prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
Registrable Securities, such Prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing;
(l) otherwise use its reasonable efforts to
comply with all applicable rules and regulations of the SEC under the 1933 Act
and the 1934 Act, take such other actions as may be reasonably necessary to
facilitate the registration or the disposition of the Registrable Securities
hereunder; and make available to its security holders, as soon as reasonably
practicable, but not later than the Availability Date (as defined below), an
earnings statement covering a period of at least twelve months, beginning after
the effective date of the applicable Registration Statement, which earnings
statement shall satisfy the provisions of subsection 11(a) of the 1933 Act (for
the purpose of this subsection 5(b), "Availability Date" means the 45th day
following the end of the fourth fiscal quarter that includes the effective date
of such Registration Statement, except that, if such fourth fiscal quarter is
the last quarter of the Company's fiscal year, "Availability Date" means the
90th day after the end of such fourth fiscal quarter).
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<PAGE> 8
6. Indemnification.
(a) Indemnification by Company. The Company
agrees to indemnify and hold harmless, to the fullest extent permitted by law,
each Participating Holder or Piggyback Holder as the case may be, such holder's
officers, directors, partners and employees and each person who controls such
holder (within the meaning of the 1933 Act) and each underwriter, if any
(including any broker or dealer which may be deemed an underwriter) and each
person who controls any underwriter of the Registrable Securities against all
losses, claims, damages, liabilities, costs (including, without limitation,
reasonable attorney's fees) and expenses caused by (i) any untrue or alleged
untrue statement of a material fact contained in any Registration Statement,
Prospectus or any preliminary prospectus or any amendment or supplement thereto
or any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, except insofar as the same are based upon any information furnished
in writing to the Company by such holder, expressly for use therein, or (ii)
any violation by the Company of any federal, state or common law, rule or
regulation applicable to the Company in connection with any Registration
Statement, Prospectus or any preliminary prospectus, or any amendment or
supplement thereto, and shall reimburse, as incurred, each of the foregoing
persons for any legal and any other expenses reasonably incurred in connection
with investigating or defending any such claims. The foregoing is subject to
the condition that, insofar as the foregoing indemnities relate to any untrue
statement, alleged untrue statement, omission or alleged omission made in any
preliminary prospectus or Prospectus which is eliminated or remedied in any
Prospectus or amendment or supplement thereto, the above indemnity obligations
of the Company shall not inure to the benefit of any indemnified party if a
copy of such final Prospectus or amendment or supplement thereto had been made
available to such indemnified party and was not sent or given by such
indemnified party at or prior to the time such action is required of such
indemnified party by the 1933 Act and if delivery of such Prospectus or
amendment or supplement thereto would have eliminated (or been a sufficient
defense to) any liability of such indemnified party with respect to such
statement or omission. Indemnity under this Section 4(a) shall remain in full
force and effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the permitted transfer of the Registrable
Securities.
(b) Indemnification by Holder of Registrable
Securities. In connection with any registration pursuant to the terms of this
Agreement, the holder of Registrable Securities included in such registration
will furnish to the Company in writing such information as the Company
reasonably requests concerning the holder or the proposed manner of
distribution for use in connection with any Registration Statement or
Prospectus and agrees to indemnify and hold harmless, to the fullest extent
permitted by law, the Company, its directors and officers and each person who
controls the Company (within the meaning of the 1933 Act) against any losses,
claims, damages, liabilities and expense resulting from any untrue statement of
a material fact or any
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<PAGE> 9
omission of a material fact required to be stated in the Registration Statement
or Prospectus or preliminary prospectus or necessary to make the statements
therein not misleading, to the extent, but only to the extent, that such untrue
statement or omission is contained in any information furnished in writing by
the holder of Registrable Securities to the Company specifically for inclusion
in such Registration Statement or Prospectus and that such information was
substantially relied upon by the Company in preparation of the Registration
Statement or Prospectus or any amendment or supplement thereto. In no event
shall the liability of the holder of Registrable Securities hereunder be
greater in amount than the dollar amount of the proceeds (net of all expense
paid by such holder and the amount of any damages such holder has otherwise
been required to pay by reason of such untrue statement or omission) received
by such holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
(c) Conduct of Indemnification Proceedings. Any
person entitled to indemnification hereunder shall (i) give prompt notice to
the indemnifying party of any claim with respect to which it seeks
indemnification and (ii) permit such indemnifying party to assume the defense
of such claim with counsel reasonably satisfactory to the indemnified party;
provided that any person entitled to indemnification hereunder shall have the
right to employ separate counsel and to participate in the defense of such
claim, but the fees and expenses of such counsel shall be at the expense of
such person unless (a) the indemnifying party has agreed to pay such fees or
expenses, or (b) the indemnifying party shall have failed to assume the defense
of such claim and employ counsel reasonably satisfactory to such person or (c)
in the reasonable judgment of any such person, based upon written advice of its
counsel, a conflict of interest may exist between such person and the
indemnifying party with respect to such claims (in which case, if the person
notifies the indemnifying party in writing that such person elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such claim on behalf of
such person); and provided, further, that the failure of any indemnified party
to give notice as provided herein shall not relieve the indemnifying party of
its obligations hereunder, except to the extent that such failure to give
notice shall materially adversely affect the indemnifying party in the defense
of any such claim or litigation. It is understood that the indemnifying party
shall not, in connection with any proceeding in the same jurisdiction, be
liable for fees or expenses of more than one separate firm of attorneys (in
addition to local counsel) at any time for all such indemnified parties. No
indemnifying party will, except with the consent of the indemnified party,
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation.
(d) Contribution. If for any reason the
indemnification provided for in the preceding clauses (a) and (b) is
unavailable to an indemnified party or insufficient to hold it harmless, other
than as expressly specified therein, then the
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<PAGE> 10
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such loss, claim, damage or liability in such
proportion as is appropriate to reflect the relative fault of the indemnified
party and the indemnifying party, as well as any other relevant equitable
considerations. No person guilty of fraudulent misrepresentation within the
meaning of Section 11(f) of the 1933 Act shall be entitled to contribution from
any person not guilty of such fraudulent misrepresentation. In no event shall
the contribution obligation of a holder of Registrable Securities be greater in
amount than the dollar amount of the proceeds (net of all expenses paid by such
holder and the amount of any damages such holder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission) received by it upon the sale of the Registrable Securities giving
rise to such contribution obligation.
7. Holders Entitled to Equivalent Rights. If the
registration rights of the holders of Registrable Securities granted pursuant
to this Agreement are less favorable to such holders than registration rights
available to any other holder ("Other Holder") of securities of the Company on
the date hereof ("Other Rights") are to such Other Holder, this Agreement shall
be immediately and automatically amended, without the requirement of any action
by the parties hereto, to provide the holders of Registrable Securities under
this Agreement with registration rights at least as favorable as such Other
Rights.
8. Termination. The Company shall be under no
obligation to effect any registration under this Agreement with respect to any
Registrable Securities that may be sold pursuant to Rule 144(k) under the 1933
Act, and this Agreement shall terminate with respect to those securities.
9. Miscellaneous.
(a) Remedies. If the Company shall breach its
obligations to register the Registrable Securities pursuant to this Agreement,
the Investors shall be entitled to exercise all rights provided herein or
granted by law, including recovery of damages, or in equity, including specific
performance.
(b) Amendments and Waivers. This Agreement may
be amended and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company
shall have obtained the written consent to such amendment, action or omission
to act, of the holder or holders of at least 66 2/3% or more of the shares of
Registrable Securities (and, in the case of any amendment, action or omission
to act that affects adversely any specific holder of Registrable Securities or
a specific group of holders of Registrable Securities, the written consent of
each such holder or holders of 75% or more of the Registrable Securities held
by such group). Each holder of any Registrable Securities at the time and any
subsequent holder of Registrable Securities shall be bound by any consent
authorized by
B-10
<PAGE> 11
this subsection 9(b), whether or not such Registrable Securities shall have
been marked to indicate such consent. The percentage of Registrable Securities
held by a holder or holders for purposes of this paragraph shall be based on
the sum of the shares then currently issuable upon exercise of Warrants held by
such holder or holders plus shares issuable upon exercise of Warrants which
such holder or holders would be holding if Warrants for such shares owned by
such holder or holders had not been exercised. Warrants and shares issued upon
the exercise of Warrants that are not Registrable Securities will be excluded
from the computation set forth in the preceding sentence. Notwithstanding the
foregoing, this Agreement shall automatically be amended in accordance with the
provisions of Section 7.
(c) Notices. All notices and other
communications provided for or permitted hereunder shall be made as set forth
in Section 8.4 of the SPA.
(d) Assignments and Transfers by Investors. This
Agreement and all the rights and obligations of the Investors hereunder may not
be assigned or transferred to any transferee or assignee except as set forth
herein. Each Investor may make such assignment or transfer to any transferee
or assignee of any Registrable Securities, provided, that (i) such transfer is
made expressly subject to this Agreement and the transferee agrees in writing
to be bound by the terms and conditions hereof, and (ii) the Company is
provided with written notice of such assignment. The Investors may assign or
transfer their rights and obligations hereunder to each other, so long as the
Company is provided with written notice of any such assignment or transfer. In
addition, the Company hereby expressly consents to transfers or assignments of
this Agreement and all the rights and obligations of an Investor hereunder by
the Investor that is a partnership to its partners, pro rata in accordance with
their ownership interests in the Investor, by an Investor that is a
corporation, to its executive officers, directors, or shareholders, and by an
Investor that is an individual to his or her spouse or children, provided,
however, that (i) such transfer is made expressly subject to this Agreement and
each transferee agrees in writing to be bound by the terms and conditions
hereof, and (ii) the Company is provided with written notice of any such
assignment.
(e) Assignments and Transfers by the Company.
This Agreement may not be assigned by the Company without the prior written
consent of Investors, except that without the prior written consent of the
Investors, but after notice duly given, the Company shall assign its rights and
delegate its duties hereunder to any successor-in-interest corporation, and
such successor-in-interest shall assume such rights and duties, in the event of
a merger or consolidation of the Company with or into another corporation, or
any merger or consolidation of another corporation with or into the Company
which results directly or indirectly in an aggregate change in the ownership or
control of more than 50% of the voting rights of the equity securities of the
Company, or the sale of all or substantially all of the Company's assets.
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<PAGE> 12
(f) Benefits of the Agreement. The terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective permitted successors and assigns of the parties. Nothing in
this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
(g) Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
(h) Titles and Subtitles. The titles and
subtitles used in this Agreement are used for convenience only and are not to
be considered in construing or interpreting this Agreement.
(i) Expenses. If any action at law or in equity
is necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
(j) Severability. If one or more provisions of
this Agreement are held to be unenforceable under applicable law, such
provision shall be excluded from this Agreement and the balance of this
Agreement shall be interpreted as if such provision were so excluded and shall
be enforceable in accordance with its terms.
(k) Further Assurances. The Parties shall
execute and deliver all such further instruments and documents and take all
such other actions as may reasonably be required to carry out the transactions
contemplated hereby and to evidence the fulfillment of the agreements herein
contained.
(l) Entire Agreement. This Agreement is intended
by the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. This
Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
(m) Applicable Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York without regard to principles of conflicts of law.
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<PAGE> 13
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
The Company: HEARx LTD.
By:
-----------------------------
Name: Paul A. Brown, M.D.
Title: Chairman of the Board
Invemed: INVEMED ASSOCIATES, INC.
By:
-----------------------------
Name:
Title:
The Investors:
--------------------------------
Harris Berenholz
--------------------------------
Scott Bessent
--------------------------------
Arthur M. Blank
--------------------------------
Ronald M. Brill
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<PAGE> 14
--------------------------------
Elliot P. Brody
--------------------------------
Walter E. Burlock
--------------------------------
Walter Channing
--------------------------------
Stanley Druckenmiller
--------------------------------
John A. Ehinger
--------------------------------
Marianne Ehinger
--------------------------------
Gary Erlbaum
--------------------------------
Arminio Fraga
--------------------------------
Gary Gladstein
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<PAGE> 15
--------------------------------
John M. Hennessy
--------------------------------
Carlisle Jones
--------------------------------
Cristina H. Kepner
--------------------------------
Bruce M. Langone
--------------------------------
Kenneth G. Langone
--------------------------------
Elizabeth Larson
--------------------------------
Stephen A. Levin
--------------------------------
Bernard Marcus
--------------------------------
G. Allen Mebane
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<PAGE> 16
--------------------------------
Charles J. Murphy
--------------------------------
Gabriel Nechamkin
--------------------------------
Mark Sonnino
--------------------------------
George Soros
--------------------------------
Andrew R. Taussig
--------------------------------
Susan F. Taussig
--------------------------------
Thomas L. Teague
--------------------------------
Sean Warren
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<PAGE> 17
--------------------------------
Michael C. Neus
--------------------------------
Michael Erlbaum
--------------------------------
Steven Erlbaum
B-17
<PAGE> 1
EXHIBIT F
SELL ALONG RIGHTS AGREEMENT
This Sell Along Rights Agreement (the "Agreement") is made and
entered into as of this 26th day of January, 1996, by and among Paul A. Brown,
M.D. (the "Control Shareholder"), a principal shareholder of HEARx Ltd., a
Delaware corporation (the "Company"), and Invemed Associates, Inc., a New York
corporation and the investors listed on Schedule A hereto ("Investors" under
that Stock Purchase Agreement of even date herewith).
The parties hereto agree as follows:
1. In the event that the Control Shareholder proposes to
transfer, in one or more related transactions, more than five percent (5%) of
the shares of Common Stock of the Company, par value $.10 per share (the
"Common Stock") (which for purposes of this Agreement shall be deemed to
include all securities convertible into or exchangeable for Common Stock), held
by the Control Shareholder (a "Sale of Securities") other than sales effected
on Nasdaq, through the NASD Bulletin Board, or a national securities exchange
pursuant to Rule 144 under the Securities Act of 1933, as amended, then the
Control Shareholder shall permit the Investors, or cause the Investors to be
permitted, to sell the same proportionate number of shares of Common Stock
(which for purposes hereof shall include all securities exchangeable for or
convertible into Common Stock) held by Investors as such Control Shareholder
shall sell for the same consideration and otherwise on the same terms and
conditions to be received by such Control Shareholder in the Sale of
Securities.
2. The obligations of the Control Shareholder under this
Agreement to afford the Investors, or cause the Investors to be afforded, the
rights referred to herein will be discharged if the Investors are given written
notice which specifies the terms of the proposed transfer by the Control
Shareholder and which allows the Investors ten business days to exercise such
rights (by written reply addressed to such person as may be designated in the
written notice, and if requested in such written notice, sent by registered
mail, return receipt requested), and within such ten business day period the
Investors have not given notice of exercise of such rights, provided, that in
the event the terms of the proposed transfer change, the Investors shall be
entitled to receive a new written notice and to reply to such notice in
accordance with the provisions of this Section 2.
3. The provisions of this Agreement may not be amended,
modified or supplemented without the written consent of the parties hereto.
This Agreement and all the rights and obligations of the Investors hereunder
may not be assigned or transferred
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<PAGE> 2
to any transferee or assignee except as set forth herein. The Investors may
assign or transfer their rights and obligations hereunder to each other, so
long as the Control Shareholder is provided with written notice of any such
assignment or transfer. In addition, the Control Shareholder hereby expressly
consents to transfers or assignments of this Agreement and all the rights and
obligations of an Investor hereunder by an Investor that is a partnership to
its partners, pro rata in accordance with their ownership interests in the
Investor, by an Investor that is a corporation, to its executive officers,
directors, or shareholders, and by an Investor that is an individual to his or
her spouse or children, provided, however, that (i) such transfer is made
expressly subject to this Agreement and each transferee agrees in writing to be
bound by the terms and conditions hereof, and (ii) the Company is provided with
written notice of any such assignment.
4. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5. This Agreement and Section 6.2 of the Stock Purchase
Agreement referenced in the preamble hereof, constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof and
supersede all prior agreements and understandings between the parties with
respect to such subject matter.
6. Applicable Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York without
regard to principles of conflicts of law.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
The Control Shareholder:
--------------------------------
Paul A. Brown, M.D.
Invemed: INVEMED ASSOCIATES, INC.
By:
-----------------------------
Name:
Title:
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<PAGE> 3
The Investors:
-------------------------------
Harris Berenholz
-------------------------------
Scott Bessent
-------------------------------
Arthur M. Blank
-------------------------------
Ronald M. Brill
-------------------------------
Elliot P. Broidy
-------------------------------
Walter E. Burlock
-------------------------------
Walter Channing
-------------------------------
Stanley Druckenmiller
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<PAGE> 4
-------------------------------
John A. Ehinger
-------------------------------
Marianne Ehinger
-------------------------------
Gary Erlbaum
-------------------------------
Arminio Fraga
-------------------------------
Gary Gladstein
-------------------------------
John M. Hennessy
-------------------------------
Carlisle Jones
-------------------------------
Cristina H. Kepner
-------------------------------
Bruce M. Langone
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<PAGE> 5
-------------------------------
Kenneth G. Langone
-------------------------------
Elizabeth Larson
-------------------------------
Stephen A. Levin
-------------------------------
Bernard Marcus
-------------------------------
G. Allen Mebane
-------------------------------
Charles J. Murphy
-------------------------------
Gabriel Nechamkin
-------------------------------
Mark Sonnino
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<PAGE> 6
-------------------------------
George Soros
-------------------------------
Andrew R. Taussig
-------------------------------
Susan F. Taussig
-------------------------------
Thomas L. Teague
-------------------------------
Sean Warren
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<PAGE> 7
-------------------------------
Michael C. Neus
-------------------------------
Michael Erlbaum
-------------------------------
Steven Erlbaum
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<PAGE> 1
EXHIBIT G
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that I, GEORGE SOROS, hereby make, constitute
and appoint SEAN C. WARREN as my agent and attorney in fact for the purpose of
executing in my name or in my personal capacity all documents, certificates,
instruments, statements, filings and agreements ("documents") to be filed with
or delivered to any foreign or domestic governmental or regulatory body or
required or requested by any other person or entity pursuant to any legal or
regulatory requirement relating to the acquisition, ownership, management or
disposition of securities or other investments, and any other documents
relating or ancillary thereto, including but not limited to, all documents
relating to filings with the Securities and Exchange Commission (the "SEC")
pursuant to the Securities Act of 1933 or the Securities Exchange Act of 1934
(the "Act") and the rules and regulations promulgated thereunder, including:
(1) all documents relating to the beneficial ownership of securities required
to be filed with the SEC pursuant to Section 13(d) or Section 16(a) of the Act
including, without limitation: (a) any acquisition statements on Schedule 13D
or Schedule 13G and any amendments thereto, (b) any joint filing agreements
pursuant to Rule 13d-1(f) and (c) any initial statements of, or statements of
changes in, beneficial ownership of securities on Form 3, Form 4 or Form 5 and
(2) any information statements on Form 13F required to be filed with the SEC
pursuant to Section 13(f) of the Act.
All past acts of the attorney-in-fact in furtherance of the foregoing are
hereby ratified and confirmed.
This power of attorney shall be valid from the date hereof until revoked by me.
IN WITNESS WHEREOF, I have executed this instrument this 27th day of October,
1994.
/s/ George Soros
--------------------------
GEORGE SOROS
