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EXHIBIT 10.40
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of
the 9th day of November, 1997, by and between QuadraMed Corporation, a Delaware
corporation (the "Purchaser"), and the seller indicated on the signature page
hereto (the "Seller"), which Seller is a stockholder of Medicus Systems
Corporation ("Medicus").
WHEREAS, the Purchaser and Medicus expect to enter into a Merger
Agreement simultaneously with the execution of this Agreement (the "Merger
Agreement") pursuant to which Medicus would be acquired by Purchaser through a
merger (the "Merger") of a wholly owned subsidiary of the Purchaser into
Medicus, and Medicus would become a wholly owned subsidiary of the Purchaser;
and
WHEREAS, Purchaser has offered to Seller and certain other
stockholders of Medicus to purchase their shares of Medicus common stock, par
value $.01 per share (the "Medicus Common Stock"), prior to the Merger on the
terms and conditions set forth herein; and
WHEREAS, Seller has agreed to sell shares of Medicus Common Stock
to Purchaser on the terms and conditions hereof.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Medicus Common Stock.
1.1 Sale of Medicus Common Stock.
(a) Subject to the terms and conditions of this
Agreement, the Purchaser agrees to purchase at the Closing and the Seller agrees
to sell to the Purchaser at the Closing an amount of shares (as indicated on the
signature page hereto) of Medicus Common Stock (the "Shares") for the aggregate
Purchase Price set forth in Section 1.1(b) below.
(b) The purchase price to be paid for each Share to be
sold hereunder (the "Purchase Price") shall be $7.50, in cash, without interest
(the "Cash Consideration"), together with a warrant (the "Warrant"), in the form
attached hereto as Appendix A, entitling Seller to acquire .3125 shares of
QuadraMed Common Stock for each share of Medicus Common Stock sold hereunder, on
the terms and conditions set forth therein.
(c) At the Closing (as defined below), the Seller shall
deliver or cause to be delivered to the Purchaser a certificate or certificates
representing the Shares (duly endorsed for transfer or accompanied by an
executed stock power, medallion guaranteed) which the Purchaser is purchasing
against delivery to the Seller of the aggregate Purchase Price for the Shares.
1.2 Closing. The purchase and sale of the Shares under Article
1.1 (the "Closing") shall take place at 12:00 p.m. Chicago time on November 10,
1997 at the offices of Xxxx, Xxxx & Xxxxx, Three First National Plaza, 00 Xxxx
Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000-0000, or as soon as possible
as the Seller, using Seller's best efforts, is able to deliver or cause to be
delivered to Purchaser a certificate or certificates representing the Shares as
required by
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Section 1.1(c) hereof.
2. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Seller as follows:
2.1 Organization, Standing and Power. Each of the Purchaser and
its subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization. Each of Purchaser
and its subsidiaries has the corporate power to own its properties and to carry
on its business as now being conducted and is duly qualified to do business and
is in good standing in each jurisdiction in which the failure to be so qualified
and in good standing would have a Material Adverse Effect on Purchaser. Neither
Purchaser nor any of its subsidiaries is in violation of any of the provisions
of its Certificate of Incorporation or Bylaws or equivalent organizational
documents. Purchaser is the owner of all outstanding shares of capital stock of
each of its subsidiaries and all such shares are duly authorized, validly
issued, fully paid and nonassessable. All of the outstanding shares of capital
stock of each such subsidiary are owned by Purchaser free and clear of all
liens, charges, claims or encumbrances or rights of others. In this Agreement,
any reference to any event, change, condition or effect being "material" with
respect to any entity or group of entities means any material event, change,
condition or effect related to the condition (financial or otherwise),
properties, assets (including intangible assets), liabilities, business,
operations or results of operations of such entity or group of entities. In this
Agreement, any reference to a "Material Adverse Effect" with respect to any
entity or group of entities means any event, change or effect that is materially
adverse to the condition (financial or otherwise), properties, assets,
liabilities, business, operations or results of operations of such entity and
its subsidiaries, taken as a whole.
2.2 Capital Structure. Except as described in this Section 2.2,
the authorized and outstanding capital stock of Purchaser is as set forth in the
section entitled "Description of Capital Stock" in the Purchaser's Prospectus
dated October 21, 1997 delivered to the Seller as a part of the Purchaser SEC
Documents (as defined in Section 2.4 hereof). There are no other outstanding
shares of capital stock or voting securities of Purchaser other than shares of
Purchaser Common Stock issued after October 21, 1997 upon the exercise of
options or warrants that were outstanding as of October 21, 1997. All
outstanding shares of Purchaser have been duly authorized, validly issued, fully
paid and are nonassessable and free of any liens or encumbrances other than any
liens or encumbrances created by or imposed upon the holders thereof.
2.3 Authority. Purchaser has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Purchaser. This Agreement has
been duly executed and delivered by Purchaser and constitutes the valid and
binding obligations of Purchaser. The execution and delivery of this Agreement
do not, and the consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation of, or default under (with or without
notice or lapse of time, or both), or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of a benefit under (i)
any provision of the Certificate of Incorporation or Bylaws of Purchaser or any
of its subsidiaries, as amended, or (ii) any material contract or other
agreement or instrument, or any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Purchaser or any of its subsidiaries
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or their properties or assets, except where such conflict, violation, default,
termination, cancellation or acceleration with respect to the foregoing
provisions would not result in a Material Adverse Effect on Purchaser. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Entity, is required by or with respect to
Purchaser or any of its subsidiaries in connection with the execution and
delivery of this Agreement by Purchaser or the consummation by Purchaser of the
transactions contemplated hereby, except for (i) any filings as may be required
under applicable federal and state securities laws and the securities laws of
any foreign country, (ii) the filing with the Nasdaq National Market of a
Notification Form for Listing of Additional Shares with respect to the shares of
Common Stock of the Purchaser issuable upon exercise of the Warrant, and (iii)
such other consents, authorizations, filings, approvals and registrations which,
if not obtained or made, would not have a Material Adverse Effect on Purchaser
and would not prevent or materially alter or delay any of the transactions
contemplated by this Agreement.
2.4 SEC Documents; Financial Statements. Purchaser has delivered
to Seller a copy of the following documents of the Purchaser: (1) the
Purchaser's Prospectus dated October 21, 1997, (2) a draft of Purchaser's Form
10-Q for the quarter ended September 30, 1997, (3) the Purchaser's Annual Report
on Form 10-K for the year ended December 31, 1996, (4) the Purchaser's 1996
Annual Report to Stockholders and (5) the Purchaser's Proxy Statement for the
1997 Annual Meeting of Stockholders (collectively, the "Purchaser SEC
Documents"). As of their respective filing dates, the Purchaser SEC Documents,
with the exception of the draft Form 10-Q for the quarter ended September 30,
1997, which has yet to be filed with the Securities and Exchange Commission
("SEC"), complied in all material respects with the requirements of the
Securities Act of 1933 (the "Securities Act") and the Securities Exchange Act of
1934 (the "Exchange Act"), and none of the Purchaser SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances in which they were made, not misleading. The financial
statements of Purchaser, including the notes thereto, included in the Purchaser
SEC Documents (the "Purchaser Financial Statements") were complete and correct
in all material respects as of their respective dates, complied as to form in
all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto as of their
respective dates, and have been prepared in accordance with generally accepted
accounting principles applied on a basis consistent throughout the periods
indicated and consistent with each other (except as may be indicated in the
notes thereto or, in the case of unaudited statements included in Quarterly
Reports on Form 10-Q, as permitted by Form 10-Q of the SEC). The Purchaser
Financial Statements fairly present the consolidated financial condition and
operating results of Purchaser and its subsidiaries at the dates and during the
periods indicated therein (subject, in the case of unaudited statements, to
normal, recurring year-end adjustments). There has been no material change in
Purchaser's accounting policies except as described in the notes to the
Purchaser Financial Statements.
2.5 Absence of Certain Changes. Since June 30, 1997 (the
"Purchaser Balance Sheet Date"), Purchaser has conducted its business in the
ordinary course consistent with past practice and there has not occurred: (i)
any change, event or condition (whether or not covered by insurance) that has
resulted in a Material Adverse Effect to Purchaser; (ii) any acquisition, sale
or transfer of any material asset of Purchaser or any of its subsidiaries other
than in the ordinary course of business and consistent with past practice; (iii)
any material change in accounting
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methods or practices (including any change in depreciation or amortization
policies or rates) by Purchaser or any revaluation by Purchaser of any of its
assets; (iv) any declaration, setting aside, or payment of a dividend or other
distribution with respect to the shares of Purchaser, or any direct or indirect
redemption, purchase or other acquisition by Purchaser of any of its shares of
capital stock; or (v) any negotiation or agreement by Purchaser or any of its
subsidiaries to do any of the things described in the preceding clauses (i)
through (iv) (other than negotiations regarding the transactions contemplated by
this Agreement).
2.6 Absence of Undisclosed Liabilities. Purchaser has no material
obligations or liabilities of any nature (matured or unmatured, fixed or
contingent) other than (i) those set forth or adequately provided for in the
Balance Sheet included in Purchaser's Quarterly Report on Form 10-Q for the
period ended June 30, 1997 included in the Purchaser SEC Documents (the
"Purchaser Balance Sheet"), (ii) those incurred in the ordinary course of
business and not required to be set forth in the Purchaser Balance Sheet under
generally accepted accounting principles, and (iii) those incurred in the
ordinary course of business since the Purchaser Balance Sheet Date and
consistent with past practice.
2.7 Litigation. There is no private or governmental action, suit,
proceeding, claim, arbitration or investigation pending before any agency, court
or tribunal, foreign or domestic, or, to the knowledge of Purchaser or any of
its subsidiaries, threatened against Purchaser or any of its subsidiaries or any
of their respective properties or any of their respective officers or directors
(in their capacities as such) that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on Purchaser. There is
no judgment, decree or order against Purchaser or any of its subsidiaries or, to
the knowledge of Purchaser or any of its subsidiaries, any of their respective
directors or officers (in their capacities as such) that could prevent, enjoin,
alter or materially delay any of the transactions contemplated by this
Agreement, or that could reasonably be expected to have a Material Adverse
Effect on Purchaser.
2.8 Compliance With Laws. Each of Purchaser and its subsidiaries
has complied with, is not in violation of, and has not received any notices of
violation with respect to, any federal, state, local or foreign statute, law or
regulation with respect to the conduct of its business, or the ownership or
operation of its business, except for such violations or failures to comply as
could not be reasonably expected to have a Material Adverse Effect on Purchaser.
2.9 Complete Copies of Materials. Purchaser has delivered or made
available true and complete copies of each document which has been requested by
Seller in connection with Seller's legal and financial review of Purchaser and
its subsidiaries.
2.10 Execution of Merger Agreement. Purchaser and Medicus have
executed the Merger Agreement simultaneous with the execution of this Agreement.
3. Representations and Warranties of the Seller. The Seller
hereby represents and warrants that:
3.1 Valid Title. Seller now has and at the Closing Date will have
good and marketable title to the Shares to be sold by the Seller, free and clear
of any liens, encumbrances, equities and claims, and full right, power and
authority to effect the sale and delivery of such
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Shares; and upon the delivery of, against payment for, the Shares pursuant to
this Agreement, the Purchaser will acquire good and marketable title thereto,
free and clear of any liens, encumbrances equities and claims.
3.2 Authorization. Seller has full right, power and authority to
execute and deliver this Agreement and to perform its obligations under this
Agreement. The execution and delivery of this Agreement and the consummation by
Seller of the transactions herein contemplated and the fulfillment by Seller of
the terms hereof will not require any consent, approval, authorization, or other
order of any court, regulatory body, administrative agency or other governmental
body and will not result in a breach of any of the terms and provisions of, or
constitute a default under, organizational documents of such Seller, if not an
individual, or any indenture, mortgage, deed of trust or other agreement or
instrument to which such Seller is a party, or of any order, rule or regulation
applicable to Seller of any court or of any regulatory body or administrative
agency or other governmental body having jurisdiction.
3.3 Purchase Entirely for Own Account. This Agreement is made
with Seller in reliance upon Seller's representation to the Purchaser, which by
Seller's execution of this Agreement Seller hereby confirms, that the Warrant to
be acquired by Seller will be acquired for investment for Seller's own account,
not as a nominee or agent, and not with a view to the resale or distribution of
any part thereof, and that Seller has no present intention of selling, granting
any participation in, or otherwise distributing the same. By executing this
Agreement, Seller further represents that Seller does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to the
Warrant.
3.4 Reliance upon Seller Representations. Seller understands that
the Warrant is not registered under the Securities Act on the ground that the
sale provided for in this Agreement and the issuance of securities hereunder is
exempt from registration under the Securities Act pursuant to section 4(2)
thereof, and that the Purchaser's reliance on such exemption is predicated on
the Seller's representations set forth herein.
3.5 Receipt of Information. Seller believes it has received all
the information it considers necessary or appropriate for deciding whether to
purchase the Warrant. Seller further represents that it has had an opportunity
to ask questions and receive answers from the Purchaser regarding the terms and
conditions of the offering of the Warrant and the business, properties,
prospects and financial condition of the Purchaser and to obtain additional
information (to the extent the Purchaser possessed such information or could
acquire it without unreasonable effort or expense) necessary to verify the
accuracy of any information furnished to it or to which it had access. The
foregoing, however, does not limit or modify the representations and warranties
of the Purchaser in Section 2 of this Agreement or the right of the Seller to
rely thereon.
3.6 Investment Experience. Seller represents that it is
experienced in evaluating and investing in securities of companies similar to
the Purchaser and acknowledges that it is able to fend for itself, can bear the
economic risk of its investment, and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Warrant. If other than an individual, Seller also
represents it has not been organized for the purpose of acquiring the Warrant.
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3.7 Accredited Investor. Seller represents to the Purchaser that
the Seller is an "Accredited Investor" within the meaning of SEC Rule 501 of
Regulation D, as presently in effect.
3.8 Restricted Securities. Seller understands that the Warrant
may not be sold, transferred, or otherwise disposed of without registration
under the Securities Act or an exemption therefrom, and that in the absence of
an effective registration statement covering the Warrant or an available
exemption from registration under the Securities Act, the Warrant must be held
indefinitely.
3.9 Legends. To the extent applicable, each certificate or other
document evidencing the Warrant shall be endorsed with the legend set forth
below, and Seller covenants that, except to the extent such restrictions are
waived by the Purchaser, Seller shall not transfer the shares represented by any
such certificate without complying with the restrictions on transfer described
in the legend endorsed on such certificate:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED OR OFFERED FOR SALE IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR
UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, SATISFACTORY TO
THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED."
3.10 Proxy. Seller has executed and delivered to Purchaser a
Proxy in the form attached hereto as Appendix B for the Shares granting
Purchaser a proxy to vote the Shares purchased by the Purchaser hereunder.
4. Conditions of Seller's Obligations at Closing. The obligations
of Seller under subparagraph 1.1 of this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions:
4.1 Representations and Warranties. The representations and
warranties of the Purchaser contained in Section 2 shall be true on and as of
the Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date.
4.2 Performance. The Purchaser shall have performed and complied
with all agreements, obligations and conditions contained in this Agreement that
are required to be performed or complied with by it on or before the Closing
Date.
4.3 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at the Closing and
all documents incident thereto shall be reasonably satisfactory in form and
substance to the Seller.
4.4 Payment of Purchase Price. Purchaser shall have delivered the
Purchase Price specified in Section 1.1.
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5. Conditions of the Purchaser's Obligations at Closing. The
obligations of the Purchaser to Seller under this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions by
Seller:
5.1 Representations and Warranties. The representations and
warranties of the Seller contained in Section 3 shall be true on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of the Closing Date.
5.2 Delivery of Medicus Common Stock. Seller shall have delivered
all documents and instruments required to be delivered under Section 1.1 hereof.
6. Miscellaneous.
6.1 Entire Agreement. This Agreement and the documents referred
to herein constitute the entire agreement among the parties concerning the
subject matter hereof and no party shall be liable or bound to any other party
in any manner by any warranties, representations, or covenants except as
specifically set forth herein or therein.
6.2 Survival of Warranties. The representations and warranties of
the Purchaser and Seller contained in or made pursuant to this Agreement shall
survive until the Effective Time of the Merger (as defined in the Merger
Agreement).
6.3 Successors and Assigns. Except as otherwise provided herein,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective heirs, legal representatives, 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 heirs,
legal representatives, successors and assigns any rights, remedies, obligations,
or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.
6.4 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Delaware.
6.5 Counterparts; Facsimile Signatures. 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.
Facsimile signatures of the parties to this Agreement shall be sufficient to
evidence their execution hereof.
6.6 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.
6.7 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 by hand or
professional courier service or on the day of delivery by Federal Express, by
registered or certified mail, postage prepaid and addressed to the party to be
notified at the address indicated for such party on the signature page hereof,
or at such other address as such party may designate by ten (10) days' advance
written notice to the other parties.
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6.8 Expenses. Irrespective of whether the Closing is effected,
each party shall pay its own costs and expenses that it incurs with respect to
the negotiation, execution, delivery and performance of this Agreement.
6.9 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 parties hereto. 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 (including securities into which such securities have been
converted), each future holder of all such securities, and the Purchaser.
6.10 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 the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
QUADRAMED CORPORATION
By: ____________________________________
Name:
Title:
SELLER SELLER
(if an individual) (if a corporation, partnership, trust or
other entity)
____________________________________ By: ____________________________________
Name:_______________________________ Name of Entity:_________________________
Address:____________________________ Name of Signatory:______________________
____________________________ Title of Signatory:_____________________
Address:________________________________
Total Number of Shares of
Medicus Common Stock owned by Seller:______________________________
Number of Shares of
Medicus Common Stock to be sold hereunder:________________________
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APPENDIX A
FORM OF WARRANT
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WARRANT TO PURCHASE
______________ SHARES OF COMMON STOCK
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER THAT ACT OR AN OPINION OF COUNSEL TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.
QUADRAMED CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFIES THAT, for value received, ____________________
("Investor") is entitled to purchase, on the terms hereof, __________________
(__________) shares of Common Stock ("Common Stock") of QuadraMed Corporation, a
Delaware corporation (the "Company"), subject to adjustment as provided herein
and at a purchase price as set forth herein. This Warrant is issued pursuant to
the terms of that certain Stock Purchase Agreement dated as of November 9, 1997
between the Company and Investor (the "Stock Purchase Agreement"), which was
entered into in connection with the Agreement and Plan of Reorganization dated
November 9, 1997 (the "Merger Agreement") between the Company and Medicus
Systems Corporation, a Delaware corporation ("Medicus"), pursuant to which the
Company will acquire Medicus by merger of a wholly owned subsidiary of the
Company with and into Medicus (the "Merger").
1. EXERCISE OF WARRANT
The terms and conditions upon which this Warrant may be exercised, and
the Common Stock covered hereby (the "Warrant Stock") may be purchased, are as
follows:
1.1 Exercise. Subject to the limitations set forth herein, this Warrant
may be exercised with respect to all or a portion of the shares of the Warrant
Stock at the effective time of the Merger under the laws of the State of
Delaware (the "Effective Time"). To the extent that this Warrant is not
exercised at the Effective Time or the number of shares issuable upon exercise
of this Warrant is limited as set forth herein, the portion of this Warrant
which is unexercised or subject to the limitations as set forth herein shall
terminate and shall be void and of no further force or effect with respect to
such Warrant Stock.
1.2 Purchase Price. The purchase price for the shares of Warrant Stock
to be issued upon exercise of this Warrant shall be $24.00 per share, subject to
adjustment as set forth herein.
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1.3 Method of Exercise. Not later than seven (7) days prior to the
Effective Time, the Company shall provide written notice to the holder of this
Warrant of the proposed Effective Time. The exercise of the purchase rights
evidenced by this Warrant shall be effected by (a) the surrender of the Warrant,
together with a duly executed copy of the form of subscription attached hereto,
to the Company or its designated agent no later than the Effective Time at its
principal offices or at the offices of such designated agent and (b) the
delivery of the purchase price by check or wire transfer for the number of
shares for which the purchase rights hereunder are being exercised.
1.4 Issuance of Shares. In the event the purchase rights evidenced by
this Warrant are exercised in whole or in part, the issuance of the Warrant
Stock shall be credited immediately on the official stock record books of the
Company and, if requested, a certificate or certificates for the purchased
shares shall be issued to the Investor as soon as practicable; provided,
however, the Warrant Stock shall only be so issued if the Form S-3 Registration
Statement (as defined in Section 3.1 hereof) has been declared effective by the
Securities Exchange Commission (the "SEC").
1.5 Limitation on Shares Issuable. In no event shall the aggregate
number of shares of Common Stock which the Company is obligated to issue (1)
upon conversion of warrants, including this Warrant, issued to stockholders of
Medicus pursuant to stock purchase agreements dated as of November 9, 1997
("Warrants") and (2) in exchange for outstanding shares of Medicus Common Stock
pursuant to the Merger Agreement exceed 1,800,000 shares. In the event that the
total number of shares of Common Stock which holders of Warrants, including
Investor, and stockholders of Medicus have elected to receive as described in
clauses (1) and (2) in the immediately preceding sentence exceeds 1,800,000, the
Company shall only be required to issue 1,800,000 shares of Common Stock and
such holders, including Investor, shall be entitled to receive shares of Common
Stock equal to each holder's pro rata portion of the total amount of shares
issued by the Company as described in clauses (1) and (2), based on the total
number of shares each holder and each stockholder elected to receive.
2. CERTAIN ADJUSTMENTS
2.1 Adjustment Due to Warrant Value Limitation. If at the Effective Time
the QuadraMed Stock Value (as defined below) exceeds $27.60, then the number of
shares of Warrant Stock issuable upon exercise of this Warrant shall be adjusted
downward such that the number of shares of Warrant Stock issuable upon exercise
of this Warrant shall be X, where X is equal to the Warrant Value (as defined
below) divided by the difference of (i) the QuadraMed Stock Value minus (ii)
$24.00. For purposes of this Warrant, the term "QuadraMed Stock Value" shall
mean that price per share equal to the average of the closing prices of Common
Stock during the fifteen (15) days prior to the second day prior to the date of
the Medicus Stockholders Meeting (as such term is defined in the Merger
Agreement). For purposes of this Warrant, the term "Warrant Value" shall mean
the product of $3.60 multiplied by the initial number of shares of Warrant Stock
issuable hereunder.
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2.2 Mergers, Consolidations or Sale of Assets. If at any time there
shall be a capital reorganization of the Common Stock (other than a combination,
reclassification, exchange or subdivision of Warrant Stock otherwise provided
for herein), or a merger or consolidation of the Company with or into another
corporation in which the Company is not the surviving corporation or in which
the Common Stock of the Company is converted into any other security or
property, or the sale of the Company's properties and assets as, or
substantially as, an entirety to any other person, then, as a part of such
reorganization, merger, consolidation or sale, lawful provision shall be made so
that the Investor shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified in this Warrant and upon payment of the
purchase price then in effect, the number of shares of stock or other securities
or property of the successor or surviving corporation resulting from such
reorganization, merger, consolidation or sale, to which a holder of the Warrant
Stock deliverable upon exercise of this Warrant would have been entitled under
the provisions of the agreement in such reorganization, merger, consolidation or
sale if this Warrant had been exercised immediately before that reorganization,
merger, consolidation or sale. In any such case, appropriate adjustment (as
determined in good faith by the Company's Board of Directors) shall be made in
the application of the provisions of this Warrant with respect to the rights and
interests of the Investor after the reorganization, merger, consolidation or
sale to the end that the provisions of this Warrant (including adjustment of the
purchase price then in effect and the number of shares of Warrant Stock) shall
be applicable after that event, as near as reasonably may be, in relation to any
shares or other property deliverable after that event upon exercise of this
Warrant.
3. COVENANTS OF THE COMPANY
3.1 Registration of Warrant Stock. As soon as practicable following the
date hereof, the Company shall prepare and file with the SEC a Registration
Statement on Form S-3 (the "Form S-3 Registration Statement") registering the
shares of Common Stock issuable upon the exercise of this Warrant and shall take
all necessary actions to have the Form S-3 Registration Statement declared
effective by the SEC as soon as practicable.
3.2 No Changes in Capital Structure. The Company covenants with Investor
that it shall not (i) subdivide its outstanding shares of Common Stock into a
greater number of shares, (ii) combine its outstanding shares of Common Stock
into a smaller number of shares of Common Stock, or (iii) issue by
reclassification of its shares of Common Stock or capital reorganization other
securities of the Company.
4. FRACTIONAL SHARES
No fractional shares shall be issued in connection with any exercise of
this Warrant. In lieu of the issuance of such fractional share, the Company
shall make a cash payment equal to the then fair market value of such fractional
share as reasonably determined by the Company's Board of Directors.
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5. RESERVATION OF COMMON STOCK; VALID ISSUANCE
The Company shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the exercise of this Warrant such number of its shares of Common Stock
as shall from time to time be sufficient to effect the exercise of this Warrant;
and if at any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the exercise of the entire Warrant, in
addition to such other remedies as shall be available to the holder of this
Warrant, the Company will use its reasonable best efforts to take such corporate
action as may be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such purposes.
The Company represents and warrants to the Investor that any shares of Common
Stock issued upon exercise of this Warrant will be duly and validly issued and
fully paid and nonassessable.
6. NO PRIVILEGE OF STOCK OWNERSHIP
Prior to the exercise of this Warrant, the Investor shall not be
entitled, by virtue of holding this Warrant, to any rights of a stockholder of
the Company, including (without limitation) the right to vote, receive dividends
or other distributions, exercise preemptive rights or be notified of stockholder
meetings, and such holder shall not be entitled to any notice or other
communication concerning the business or affairs of the Company, except as
required by law.
7. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by the holder
hereof to purchase the Warrant Stock, and no mere enumeration herein of the
rights or privileges of the holder hereof, shall give rise to any liability of
such holder for the purchase price or as a stockholder of the Company, whether
such liability is asserted by the Company or by creditors of the Company.
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8. TRANSFER RESTRICTION
This Warrant shall not be transferable without the prior written consent
of the Company.
9. PAYMENT OF TAXES
The Company shall pay all expenses in connection with, and all taxes and
other governmental charges (other than any thereof on, based on or measured by,
the net income of the holder thereof) that may be imposed in respect of, the
issue or delivery of the Warrant Stock. The Company shall not be required,
however, to pay any tax or other charge imposed in connection with any transfer
involved in the issue of any certificate for shares of the Warrant Stock in any
name other than that of the Investor, and in such case, the Company shall not be
required to issue or deliver any stock certificate until such tax or other
charge has been paid or it has been established to the Company's satisfaction
that no such tax or other charge is due.
10. SUCCESSORS AND ASSIGNS
The terms and provisions of this Warrant shall be binding upon the
Company and the Investor and their permitted successors and assigns.
11. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant, and in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to the
Company, and upon reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of this Warrant, if
mutilated, the Company will make and deliver a new warrant of like tenor and
dated as of such cancellation, in lieu of this Warrant.
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12. GOVERNING LAW
This Warrant shall be governed by and construed in accordance with the
laws of the State of Delaware.
QUADRAMED CORPORATION
By _________________________________
Name:
Title:
Dated: November 9, 1997
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