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EXHIBIT 10.3
RESTRICTION ON TRANSFER
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF
HAVE BEEN ISSUED AND SOLD WITHOUT REGISTRATION IN RELIANCE UPON EXEMPTIONS FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT") AND SECTION
10-5-9(13) OF THE OFFICIAL CODE OF GEORGIA ANNOTATED (THE "GEORGIA CODE"). SUCH
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR TRANSFERRED OTHER THAN (i)
PURSUANT TO AN EFFECTIVE REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE 1933
ACT AND THE GEORGIA CODE AND (ii) UPON RECEIPT BY THE ISSUER OF EVIDENCE
SATISFACTORY TO IT OF COMPLIANCE WITH THE 1993 ACT, THE GEORGIA CODE AND THE
APPLICABLE SECURITIES LAWS OF ANY OTHER JURISDICTION. THE ISSUER SHALL BE
ENTITLED TO REQUIRE AN OPINION OF COUNSEL SATISFACTORY TO IT WITH RESPECT TO
COMPLIANCE WITH THE ABOVE LAWS.
WARRANT
TO PURCHASE 100,000 SHARES OF CLASS A COMMON STOCK OF
XXXXXXX CENTRAL HOLDING, INC.
1. Warrant.
X. Xxxxx of Warrant. This is to certify that, for value received,
Home Health First, a Texas Not-for-Profit Corporation, (the "Holder") is
entitled to purchase, subject to the provisions of this Warrant, from Xxxxxxx
Central Holding, Inc. ("SCHI"), an aggregate of 100,000 shares of Class A common
stock of SCHI with no par value (the "Common Stock") at a purchase price per
share equal to $0.349 (the "Exercise Price"). The number of shares of Common
Stock that may be received upon exercise of this Warrant and the Exercise Price
are subject to adjustment from time to time as hereinafter set forth.
B. Consideration for Warrant. This Warrant is issued in consideration
of services to be provided by the Holder to SCHI's wholly owned subsidiary
Xxxxxxx Central, Inc. ("SCI"), including marketing assistance, consulting
services and acting as a model demonstration site for SCI to exhibit the SCI
information management services system in operation, as more fully set forth in
a Consulting Agreement between Holder and SCI of even date herewith.
2. Term. This Warrant may be exercised in whole or in part at any
time or from time to time during the period commencing six months after the date
set forth on the signature page hereof and ending on the tenth anniversary of
the date set forth of the signature page, subject to the provisions hereof.
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3. Exercise Procedures.
A. Exercise Notice. In order to exercise this Warrant, the
Holder shall surrender this Warrant and send a written notice of exercise to
SCHI on any business day at SCHI's principal office, addressed to the attention
of the Chief Executive Officer of SCHI (with a copy to the General Counsel),
which notice shall specify that the Warrant is being exercised, and shall be
accompanied by payment in full of the Exercise Price. Any attempt to exercise
the Warrant granted hereunder other than as set forth in this Section 3 shall be
invalid and of no force and effect.
B. Payment. Payment of the Exercise Price for the shares of
Common Stock purchased pursuant to the exercise of the Warrant shall be made
either in cash or in cash equivalent, by certified check or by wire transfer.
C. Delivery of Certificate. Promptly after exercise of the
Warrant as provided for above, SCHI shall deliver to Holder a certificate or
certificates (or copies thereof) for the shares of Common Stock being purchased.
All shares of Common Stock issued upon exercise of this Warrant shall be duly
authorized and validly issued, fully paid and nonassessable. The stock
certificates that will evidence the Common Stock may be imprinted, to the extent
then appropriate, with a conspicuous legend in substantially the following form:
The securities represented by this certificate have not been registered
under either the Securities Act of 1933 (the "Act") or applicable state
securities laws (the "State Acts") and shall not be sold, pledged,
hypothecated, donated or otherwise transferred (whether or not for
consideration) by the holder except upon the issuance to the Company of a
favorable opinion of its counsel or submission to the Company of such
other evidence as may be satisfactory to counsel to the Company, in each
such case, to the effect that any such transfer shall not be in violation
of the Act and the State Acts. The securities represented by this
certificate are subject to forfeiture and restrictions on transfer
pursuant to a Warrant issued to Home Health First dated April 12, 1996.
D. Partial Exercise. In the event this Warrant is exercised in
part only, SCHI shall, upon surrender of this Warrant for cancellation, execute
and deliver to the Holder a new Warrant of like tenor evidencing the right of
the Holder to purchase the balance of the shares of Common Stock subject to
purchase hereunder.
E. Fractional Shares. No fractional shares of Common Stock
shall be issued in connection with any exercise hereunder. In lieu of fractional
shares, SCHI shall make a cash payment therefor based on the fair market value
per share of Common Stock as of the date
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of exercise.
4. Adjustments. The number and kind of securities issuable upon the
exercise of this Warrant and the Exercise Price shall be subject to adjustment
from time to time upon the occurrence of certain events as follows:
A. Reorganization, Consolidation or Merger. In the case of any
reorganization, consolidation or merger of SCHI with or into another corporation
and in which SCHI is not the surviving entity, or the dissolution or liquidation
of SCHI, then SCHI or such successor entity, as the case may be, shall either
(i) execute a new warrant providing that the Holder shall have the right to
exercise such new warrant and to receive, in lieu of each share of Common Stock
issuable upon exercise of this Warrant, the number and kind of shares of stock,
other securities, money or property receivable upon such reorganization,
consolidation, merger, dissolution or liquidation by a holder of the number of
shares then purchasable with this Warrant, or (ii) issue to Holder the number
and kind of shares of stock, other securities, money or property receivable upon
such reorganization, consolidation, merger, dissolution or liquidation by a
holder of a number of shares then purchasable with this Warrant. Any new warrant
shall contain provisions relating to the rights and obligations of the Holder
and SCHI after such reorganization, consolidation or merger that shall have, as
nearly as possible after appropriate adjustment, the same effect as the
provisions of this Warrant, including the provisions of this Warrant. The
adjustment shall be made without change to the total price applicable to the
Warrant and with a corresponding adjustment in the Exercise Price.
B. Stock Dividends; or Split, Subdivision, Combination of
Shares. In case SCHI shall: (i) pay a dividend with respect to shares of its
Class A common stock, (ii) subdivide its outstanding shares of Class A common
stock into a greater number of shares, (iii) combine its outstanding shares of
Class A common stock into a smaller number of shares, or (iv) issue, by
reclassification, exchange, or substitution of its shares of Class A common
stock, any shares of its capital stock, the amount of Common Stock purchasable
upon the exercise of this Warrant immediately prior thereto shall be adjusted so
that the Holder shall be entitled to receive upon exercise of this Warrant that
amount of Common Stock which such Holder would have owned or would have been
entitled to receive after the happening of such event had such Holder exercised
this Warrant immediately prior to the record date, in the case of any such
dividend, or the effective date, in the case of any such subdivision,
combination or reclassification. An adjustment made pursuant to this subsection
shall be made whenever any of such events shall occur, but shall become
effective retroactively after such record date or such effective date, as the
case may be, as to any portion of this Warrant exercised between such record
date or effective date and the date of happening of any such event. The
adjustment shall be made without change to the total price applicable to the
Warrant and with a corresponding adjustment in the Exercise Price.
C. Notice of Adjustments. Whenever the number or kind of
shares or the Exercise Price shall be adjusted pursuant to Section 4 hereof,
SCHI shall mail to the Holder
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a notice setting forth in reasonable detail the event requiring the adjustment,
and after any such adjustment, SCHI shall issue a certificate signed by its
Chief Financial Officer setting forth in reasonable detail the amount of the
adjustment, the method by which such adjustment was calculated, and the change
in the number or kind of shares or the Exercise Price after giving effect to
such adjustment.
D. Board of Directors' Determination. Adjustments specified in
this Section 4 relating to stock or securities of SCHI shall be made by the
Board of Directors of SCHI, whose determination in that respect shall be final,
binding and conclusive.
5. Reservation of Stock: Compliance. SCHI shall at all times reserve
for issuance and/or delivery upon exercise of this Warrant, free from preemptive
rights, such number of shares of authorized but unissued or treasury shares of
Common Stock as shall be required for issuance or delivery upon exercise of this
Warrant. SCHI further agrees that it shall (i) not by amendment to its
certificate of incorporation or bylaws or through any other action avoid or seek
to avoid the observance or performance of any of the covenants or conditions to
be observed or performed hereunder by SCHI, and (ii) promptly take all action as
may from time to time be required in order to permit the Holder to exercise this
Warrant and SCHI to issue shares of Common Stock duly and effectively hereunder.
6. General Restriction.
A. Registration Requirements. SCHI shall not be required to
issue any shares of Common Stock under the Warrant if the issuance of such
shares would constitute a violation by SCHI of any provision of any law or
regulation of any governmental authority, including without limitation, the
registration or qualification requirement of applicable federal and state
securities laws or regulations. If at any time SCHI shall determine, based upon
a written opinion of legal counsel, that the registration or qualification of
any shares subject to the Warrant under any applicable state or federal law is
necessary as a condition of or in connection with the issuance of shares, the
Warrant may not be exercised in whole or in part unless such registration or
qualification shall have been effected or obtained free of any conditions not
reasonably acceptable to SCHI, and any delay caused thereby shall in no way
affect the date of termination of the Warrant. Specifically in connection with
the Securities Act of 1933 (as now in effect or as hereafter amended) (the
"Securities Act") and applicable state securities laws ("State Acts"), unless a
registration statement under the Securities Act and State Acts is in effect with
respect to the shares of Common Stock covered by the Warrant, SCHI shall not be
required to issue such shares unless the Board of Directors of SCHI has received
evidence reasonable satisfactory to it that the Holder may acquire such shares
pursuant to an exemption from registration under the Securities Act and State
Acts. SCHI shall not be obligated to take any affirmative action in order to
cause the exercise of the Warrant or the issuance of shares pursuant thereto to
comply with any law or regulation of any governmental authority. As to any
jurisdiction that expressly imposes the requirement that the Warrant shall not
be exercisable unless and until the shares of Common Stock covered by the
Warrant are registered or are subject to an available exemption from
registration, the exercise of the Warrant (under circumstances in which the laws
of such
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jurisdiction apply) shall be deemed conditioned upon the effectiveness of such
registration or the availability of such an exemption.
B. No Hypothecation. This Warrant may not be sold, transferred
or hypothecated by the Holder and cannot be exercised by anyone other than the
Holder. Any such disposition shall be null and void.
C. No Shareholder Rights. The Holder of this Warrant as such,
shall not be entitled to vote or receive dividends or to be deemed the holder of
shares for any purpose, nor shall anything contained in this Warrant be
construed to confer upon the Holder, any of the rights of a shareholder of SCHI
including but not limited to any right to vote, give or withhold consent to any
action by SCHI, whether upon any recapitalization, issue of stock,
reclassification of stock, merger, share exchange, conveyance or otherwise,
receive notice of meetings or other action affecting shareholders (except for
the notices provided for herein), receive dividends, receive subscription
rights, or any other right, until this Warrant shall have been exercised, the
Exercise Price paid, and the Common Stock purchasable upon the exercise hereof
shall have become deliverable as provided herein; provided, however, that any
such exercise on any date when the stock transfer books of SCHI shall be closed
shall constitute the person or persons in whose name or names the certificate or
certificates for those Shares are to be issued as the record holder or holders
thereof for all purposes at the opening of business on the next succeeding day
on which such stock transfer books are open, and the Warrant surrendered shall
not be deemed to have been exercised, in whole or in part as the case may be,
until the next succeeding day on which stock transfer books are open for the
purpose of determining entitlement to dividends on SCHI's common stock.
7. Applicable Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Georgia, without respect to conflicts
of law provisions, except to the extent federal law may be applicable.
8. Registration Rights.
A. Piggyback Registration.
i. In the event that, at any time while this Warrant is
outstanding, SCHI proposes to register any shares of common stock under the
Securities Act, other than for an offering primarily or exclusively to employees
or in connection with the acquisition of the assets or shares of or merger or
consolidation with another corporation, and the form of registration statement
to be used may also be used for the registration of shares of Common Stock the
Holder would receive upon conversion of the Warrant (a "Piggyback
Registration"), SCHI shall notify the Holder prior to the filing of any such
registration statement with the Securities and Exchange Commission ("SEC"), and
will use its best efforts to include in such registration all shares which the
Holder would receive upon exercise of this Warrant and with respect to which
SCHI has received written request for inclusion within ten (10) days after
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such notice. Each such request shall contain an undertaking from the Holder to
(i) provide all such information and material and to take all such actions as
may be required by SCHI in order to permit SCHI to comply with all applicable
federal and state securities laws, and (ii) comply with all obligations of the
Holder pursuant to this Section 12.
ii. The right of the Holder to have the Common Stock it
would receive upon exercise of the Warrant included in the foregoing
registration shall expire upon termination of the right to exercise the Warrant
pursuant to Section 2 hereof.
B. Expenses. Holder shall pay all expenses incident to SCHI's
performance of or compliance with the provisions of Section 8A including without
limitation, all registration and filing fees, fees and expenses of compliance
with the Securities Act and State Acts, printing expenses, messenger and
delivery expenses, fees and disbursements of counsel for SCHI (but not the legal
fees of any Holder) and all independent public accountants and other persons
retained by SCHI, but excluding brokerage fees, underwriting commissions and
discounts.
C. Indemnification. The Holder agrees to cooperate fully with
SCHI in effecting registration and qualifications of the Common Stock into which
this Warrant has been converted, and shall indemnify and hold harmless SCHI and
each person who may control SCHI within the meaning of Section 15 of the
Securities Act, each director of SCHI, and each officer who signed any
registration statement, from and against all losses, claims, damages, expenses,
and liabilities (including reasonable attorney's fees) caused by any untrue
statement of a material fact contained in any such registration statement, or
contained in a prospectus furnished thereunder, or any amendment or supplement
thereto, or caused by any omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, to the extent that
such untrue statement or omission was made in reliance upon information
furnished to SCHI by the Holder for inclusion therein.
D. Termination of Registration Provisions. This Section 8
shall irrevocably terminate upon the occurrence of an acquisition, consolidation
or merger involving SCHI and a corporation which is a publicly traded company in
which SCHI is not the surviving corporation (or SCHI is the surviving
corporation as a result of a reverse triangular merger in which the stockholders
of SCHI become stockholders of a publicly traded company). For purposes of this
paragraph, a "publicly traded company" shall mean a company listed on a national
securities exchange or quoted on the "National Market System" or "National List"
published by the National Association of Securities Dealers Automated Quotations
System or any successor list.
E. Necessary Action. In connection with this Section 8, each
of SCHI and the Holder agrees to take or cause to be taken such further actions,
to execute, deliver and file or cause to be executed, delivered and filed such
further statements, assignments, agreements, proxies and other instruments, and
to use best efforts to obtain such consents, as may be
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necessary or as may be reasonably requested in order to fully effectuate the
purposes, terms and conditions of this Agreement.
9. Limitations.
A. Right of First Refusal. If, prior to the effective date of
an offering for sale by SCHI of securities of SCHI of the same class as the
Common Stock, pursuant to a registration statement filed in accordance with the
Securities Act of 1933 as amended, or any comparable law then in effect, the
Holder (or, if the Common Stock is owned or held by a transferee, such
transferee) shall receive a bona fide offer from a third party to purchase any
Common Stock acquired upon exercise of the Warrant, which offer the Holder or
such transferee intends to accept, the Holder or such transferee, as the case
may be, before consummating the sale to such third party, shall notify SCHI in
writing of such offer, which notice shall state the number of shares of Common
Stock subject to such offer and the price and terms of payment offered by such
third party. SCHI shall have thirty (30) days after receipt of such notice
within which to notify the Holder or such transferee, as the case may be, in
writing, of its election to purchase all the Common Stock which is the subject
of such third party offer at the same price and upon the same terms and
conditions as are contained in such third party offer. Failure by SCHI to give
such written notice within such thirty (30) day period shall constitute a
rejection of such offer by SCHI. If SCHI shall reject such offer or fail timely
to accept such offer, or if after timely accepting such offer SCHI shall fail
timely to consummate the purchase of the Common Stock which is the subject of
that offer, then the Holder or such transferee, as the case may be, shall be
free to sell the Common Stock which is the subject of such third party offer to
the third party at the price and upon the same terms and conditions as are set
forth in the third party offer; provided, however, if the Holder or such
transferee, as the case may be, does not consummate such sale to the third party
within sixty (60) days after rejection by SCHI of such offer or, if such offer
is timely accepted by SCHI, after failure of SCHI timely to consummate such
purchase, the Common Stock which was the subject of such third party offer or
agreement shall once again become subject to the provisions of this Section 9,
and any subsequent disposition of such Common Stock shall be made only after
compliance with the terms of this Section 9. If SCHI timely accepts such offer,
SCHI shall give written notice to the Holder or transferee, as the case may be,
of the time and date of the closing of the repurchase, which shall be no later
than thirty (30) days following the date SCHI gives written notice of its
acceptance of such offer and shall be held at the principal office of SCHI. At
closing, SCHI shall deliver the sale price, and the Holder or the transferee, as
the case may be, shall deliver the Common Stock to be repurchased duly endorsed
for transfer and with all required revenue stamps attached, and the title to the
Common Stock shall be transferred to SCHI free and clear of all liens, claims
and encumbrances, however described, except for restrictions imposed by
applicable securities laws. The price for Common Stock repurchased shall be
payable at the election of the Company or its designee as follows: ( 1 ) upon
the terms of payment as are contained in the third party offer, or, all in
cash at the closing.
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B. Termination. This Warrant shall terminate, expire and
become immediately null and void upon any termination for cause by SCHI's wholly
owned subsidiary Xxxxxxx Central, Inc. ("SCI") of the Information Management
Services Agreement between SCI and Holder dated April 12, 1996, in accordance
with Section 12.1 thereof.
C. Forfeiture. In the event that Holder exercises this Warrant
in whole or in part, and all or any part of the Common Stock issuable under this
Warrant is issued and/or delivered to Holder, such Common Stock shall be
forfeited and transferred back to SCHI immediately upon any termination for
cause by SCHI's wholly owned subsidiary SCI of the Information Management
Services Agreement between SCI and Holder dated April 12, 1996, in accordance
with Section 12.1 thereof. In event of such forfeiture, Holder shall be entitled
to payment by SCHI of the lesser of (i) the aggregate Exercise Price paid for
such Common Stock, or (ii) the fair market value of such Common Stock, subject
to Section 10 hereof.
10. Cancellation Provision. If the Holder fails to deliver the Common
Stock certificates properly assigned when requested or required to do so
pursuant to this Agreement, SCHI shall cancel the Common Stock certificates of
the Holder and shall deposit any payment required pursuant to this Agreement
which was to be made to the Holder in exchange for the certificates to the
credit or account of the Holder in escrow with any clearinghouse bank in the
City of Atlanta, Georgia, at the expense and risk of the Holder, or its
successors or assigns, whereupon SCHI shall treat the Common Stock represented
thereby as having been forfeited to or repurchased by SCHI or its designees.
11. Notices. All notices, demands, requests, or other communications
which may be or are required to be given, served, or sent under this Warrant
shall be in writing and shall be mailed by first-class, registered or certified
main, return receipt requested, postage prepaid, or transmitted by hand
delivery, overnight or express mail, or telegram, addressed as follows:
(i) If to SCHI:
Chief Executive Officer
Xxxxxxx Central Holding, Inc.
0000 Xxxxxx Xxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
with a copy (which shall not constitute notice) to:
General Counsel
Xxxxxxx Central Holding, Inc.
0000 Xxxxxx Xxxxx Xxxx
Xxxxxxx, XX 00000
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(ii) If to Holder, to its most recent address reflected in the official
records of SCHI.
Either SCHI or the Holder may designate by notice in writing a new address to
which any notice, or communication may thereafter be so given, served or sent.
Each notice, or communication which shall be mailed, delivered or transmitted in
the manner described above shall be deemed sufficiently given, sent and received
for all purposes at such time as it is delivered to the addressee (with the
return receipt or the affidavit of messenger being deemed conclusive evidence of
such delivery) or at such time as delivery is refused by the addressee upon
presentation.
IN WITNESS WHEREOF, SCHI has caused this Warrant to be duly executed as
of the day and year set forth below.
DATED: April 12, 1996
[SEAL] XXXXXXX CENTRAL HOLDING, INC.
ATTEST:
/s/ By:/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx,
Chief Executive Officer
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