EXHIBIT 10.41
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAW AND MAY NOT BE TRANSFERRED IN VIOLATION OF THE ACT, THE RULES AND
REGULATIONS THEREUNDER, ANY APPLICABLE STATE SECURITIES LAW OR THE PROVISIONS OF
THIS WARRANT.
No. of Shares of Common Stock: **811,824**
WARRANT
To Purchase Common Stock of
CAREINSITE, INC.
THIS IS TO CERTIFY THAT HORIZON HEALTHCARE SERVICES, INC., d/b/a HORIZON
BLUE CROSS BLUE SHIELD OF NEW JERSEY ("Horizon"), or its registered and
permitted assigns, is entitled, at any time during the Exercise Period (as
hereinafter defined), to purchase from CAREINSITE, INC., a Delaware corporation
(the "Company"), Eight Hundred and Eleven Thousand Eight Hundred and Twenty Four
(811,824) shares of Common Stock (as hereinafter defined and subject to
adjustment as provided herein), in whole or in part, including fractional parts,
at the Applicable Warrant Price (as hereinafter defined and subject to
adjustment as set forth herein), all on the terms and conditions and pursuant to
the provisions hereinafter set forth.
ARTICLE I
DEFINITIONS
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As used in this Warrant, the following terms have the respective meanings
set forth below:
"Additional Shares of Common Stock" shall mean all shares of Common Stock
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issued or issuable (whether upon the exercise of warrants, Convertible
Securities or otherwise) by the Company after the Effective Date, other than
Warrant Stock.
"Affiliate" shall mean with respect to any person or entity, any other
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person or entity directly or indirectly controlling, controlled by or under
direct or indirect common control with such person or entity. For purposes of
this definition, the term "control" (including correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through ownership of voting securities, by contract or
otherwise.
"Applicable Warrant Price" shall mean the amount of consideration paid by
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the public per share of Common Stock in connection with the initial underwritten
public offering of Common Stock (not subtracting any commissions, discounts or
other expenses incurred in connection with such offering and the related
underwriting).
"Business Day" shall mean any day that is not a Saturday or Sunday or a day
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on which banks are required or permitted to be closed in the State of New York.
"Commission" shall mean the Securities and Exchange Commission or any other
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federal agency then administering the Securities Act and other federal
securities laws.
"Common Stock" shall mean (except where the context otherwise indicates)
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the Common Stock, par value $.01 per share, of the Company, and any capital
stock into which such Common Stock may thereafter be changed, and shall also
include (a) capital stock of the Company of any other class (regardless of how
denominated) issued to the holders of shares of Common Stock upon any
reclassification thereof which is also not preferred as to dividends or assets
over any other class of stock of the Company and which is not subject to
redemption and (b) shares of Common Stock of any successor or acquiring
corporation (as defined in Section 4.7) received by or distributed to the
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holders of Common Stock of the Company in the circumstances contemplated by
Section 4.7; provided, however, that this shall not include any shares of Common
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Stock acquired by the exercise of this Warrant whether in full or in part.
"Company" shall have the meaning set forth in the introductory paragraph
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hereof.
"Convertible Securities" shall mean evidences of indebtedness, shares of
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stock, warrants, rights or other securities which are exercisable, convertible
or exchangeable, (including, but not limited to, Options) with or without
payment of additional consideration in cash or property, for Additional Shares
of Common Stock, either immediately or upon the occurrence of a specified date
or the happening of a specified event or both.
"Current Market Price" shall mean in respect of any share of Common Stock
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on any date herein specified, the lower of (a) the average of the daily market
prices for 15 consecutive Business Days commencing twenty-five (25) days before
such date and (b) the daily market price on the most recent Business Day prior
to such date. The daily market price for each such Business Day shall be the
last reported sale price on such day on the principal stock exchange on which
such Common Stock is then listed or admitted to trading or, if the Common Stock
is not so listed or admitted, the last reported sale price on such day on the
National Association of Securities Dealers, Inc. Automated Quotation National
Market System ("NASDAQ") or any other over-the-counter market or trading
facility on which such Common Stock is then listed; provided, however, that if
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no sale takes place on such day on any such exchange, market or trading
facility, the average of the last reported closing bid and ask prices on such
day as officially quoted on such exchange, market or trading facility shall be
the daily market price for
such Business Day; provided, further, that if the Common Stock is not listed
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or admitted to trade on a stock exchange and is not quoted on NASDAQ, or any
other over-the-counter market or trading facility, the Current Market Price
shall be the Fair Market Value.
"Cut-Back Event" shall have the meaning set forth in Section 7.3(a).
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"Demand Registration" shall have the meaning set forth in Section 7.2.
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"Effective Date" shall mean June 14, 1999.
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"Exercise Period" shall mean the period from and including the date that is
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thirty (30) months after the date on which the Initial Public Offering is
consummated until the Expiration Date.
"Expiration Date" shall mean January 4, 2005.
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"Fair Market Value" shall mean in respect of a share of Common Stock on any
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date herein specified, the fair value as determined in good faith by the Board
of Directors of the Company.
"Holder" shall mean the Person in whose name this warrant is registered on
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the books of the Company maintained for such purpose.
"Incidental Registration" shall have the meaning set forth in Section 7.3.
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"Initial Public Offering" shall mean the initial underwritten public
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offering of Common Stock pursuant to an effective registration statement under
the Securities Act.
"Majority Holders" shall mean the Holders entitled to receive in excess of
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fifty percent (50%) of the aggregate number of shares of Common Stock then
purchasable upon exercise of this Warrant, whether or not then exercisable.
"NASDAQ" shall have the meaning set forth in the paragraph hereof defining
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"Current Market Price".
"Option" means any right, warrant or option to subscribe for or purchase
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shares of Common Stock.
"Other Property" shall have the meaning set forth in Section 4.7.
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"Outstanding" shall mean, when used with reference to the Common Stock, at
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any date as of which the number of shares thereof is to be determined, all
issued shares of Common Stock, except shares then owned or held by or for the
account of the Company or its subsidiaries, and all
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shares issuable in respect of outstanding scrip or any certificates representing
fractional interests in shares of Common Stock.
"Parent" shall mean Synetic, Inc., the corporate parent of the Company.
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"Person" shall mean any individual, sole proprietorship, partnership, joint
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venture, trust, incorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether federal,
state, county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof) and other
organizations, whether or not legal entities.
"Register" shall have the meaning set forth in Section 2.1.
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"Registrable Shares" shall mean shares of Common Stock issued or issuable
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upon the exercise of this Warrant, until the earliest to occur of (i) the sale
of all such shares by the Holder (pursuant to a registration statement or
otherwise) or (ii) such shares being tradable pursuant to Rule 144 under the
Securities Act (or any similar provision then in effect).
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
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similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Shareholders" shall mean Persons holding Common Stock of the
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Company and entitled to register such Common Stock under the Securities Act
pursuant to a registration rights agreement with the Company, other than holders
of Registrable Shares.
"Warrants" shall mean this Warrant and all Warrants issued upon the partial
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exercise, transfer, division or combination of, or in substitution for, any
thereof. All Warrants shall at all times be identical as to terms and
conditions and date, except as to the number of shares of Common Stock for which
they may be exercised.
"Warrant Price" shall mean an amount equal to (a) the number of shares of
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Common Stock being purchased upon exercise of this Warrant pursuant to Section
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2.2 multiplied by (b) the Applicable Warrant Price.
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"Warrant Stock" shall mean the shares of Common Stock purchased by the
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Holder upon the exercise of this Warrant; provided that if under the terms
hereof there shall be a change such that the securities purchasable hereunder
shall be issued by an entity (other than the Company) or there shall be a change
in the type or class of securities purchasable hereunder, then the term shall
mean the securities issued or issuable upon the exercise of the rights granted
hereunder.
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ARTICLE II
REGISTRATION: EXERCISE OF WARRANT
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2.1 Registration. The Company shall register this Warrant, upon records
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to be maintained by the Company for that purpose (the "Register"), in the name
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of the Holder of such Warrant. The Register shall include the Holder's name,
address (as provided to the Company by the Holder), the number of Warrants
registered in such Holder's name, and any other information pertaining to the
Warrants or the Holder that the Board of Directors of the Company reasonably
deems appropriate. The Company may deem and treat the registered Holder of this
Warrant as the absolute owner thereof for the purpose of any exercise thereof or
any distribution to the Holder thereof, and for all other purposes, and the
Company shall not be affected by any notice to the contrary.
2.2 Manner of Exercise. (a) This Warrant may be exercised for all or any
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part of the number of shares of Common Stock purchasable hereunder at any time
during the Exercise Period.
(b) In order to exercise this Warrant, in whole or in part, the Holder
shall deliver to the Company at the office designated by the Company pursuant to
Section 12.8, (i) a written notice of the Holder's election to exercise this
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Warrant, which notice shall specify the number of shares of Common Stock to be
purchased, (ii) payment of the Warrant Price in the manner provided below, and
(iii) this Warrant. Such notice shall be substantially in the form of the
subscription form appearing at the end of this Warrant as Exhibit A, duly
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executed by the Holder or its agent or attorney duly authorized in writing.
Upon receipt thereof, the Company shall, as promptly as practicable, execute or
cause to be executed and deliver or cause to be delivered to the Holder a
certificate or certificates representing the aggregate number of full shares of
Common Stock issuable upon such exercise, together with cash in lieu of any
fraction of a share, as hereinafter provided. The stock certificate or
certificates so delivered shall be, to the extent possible, in such denomination
or denominations as the Holder shall request in the notice and shall be
registered in the name of the Holder. This Warrant shall be deemed to have been
exercised and such certificate or certificates shall be deemed to have been
issued and the Holder shall be deemed to have become a holder of record of such
shares for all purposes, as of the date the notice, together with the cash or
check or checks, if any, and this Warrant, are received by the Company as
described above and all taxes required to be paid by the Holder, if any, prior
to the issuance of such shares, have been paid. If this Warrant shall have been
exercised in part, the Company shall, at the time of delivery of the certificate
or certificates representing Warrant Stock, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased shares of Common
Stock called for by this Warrant, which new Warrant shall in all other respects
be identical with this Warrant, or, at the sole discretion of the Company,
appropriate notation may be made on this Warrant and the same returned to the
Holder. The issuance of Warrant Stock shall be made without charge to the
Holder for any issuance tax with respect thereto or any other cost incurred by
the Company in connection with
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the exercise of this Warrant and the related issuance of Warrant Stock; provided
the Holder provides the Company or its agent with any report, document or
certificate required by applicable law in order to avoid the imposition of such
taxes or other costs. Notwithstanding any provision herein to the contrary, the
Company shall not be required to register shares in the name of any Person who
acquired this Warrant (or part hereof) or any Warrant Stock otherwise than in
accordance with this Warrant. Payment of the Warrant Price shall be made in
same-day funds by certified or official bank check, or wire transfer.
2.3 Payment of Taxes. The Company shall pay all stock transfer taxes and
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similar governmental charges that may be imposed with respect to the issuance of
Warrant Stock upon the exercise of this Warrant; provided, however, that the
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Company shall not be required to pay any tax or other charge imposed in
connection with any transfer of this Warrant or the issuance or delivery of
certificates for shares of Warrant Stock or other securities in respect of the
shares of Warrant Stock upon the exercise of Warrants, to a person or entity
other than a then existing Holder of Warrants; provided, further, that the
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Company shall not be required to pay any income or other similar tax levied on
any Holder of Warrants.
2.4 Fractional Shares. The Company shall not be required to issue a
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fractional share of Common Stock upon exercise of this Warrant. As to any
fraction of a share which the Holder of this Warrant, the rights under which are
exercised in the same transaction, would otherwise be entitled to purchase upon
such exercise, the Company shall pay a cash adjustment in respect of such final
fraction in an amount equal to the same fraction of the Current Market Price on
the date of notice of exercise. Payment of such amount shall be made in cash or
by check payable to the order of the Holder at the time of delivery of any
certificate or certificates arising upon such exercise.
2.5 Restrictive Legend. Each certificate for Warrant Stock issued upon
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the exercise of this Warrant, and each certificate for Warrant Stock issued to
any subsequent transferee of any such certificate, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAW AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS EITHER (1)
SUCH SHARES ARE REGISTERED UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS OR (2) AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND
LEGAL COUNSEL OF THE HOLDER OF SUCH SHARES (WHICH COUNSEL IS REASONABLY
SATISFACTORY TO THE COMPANY) PROVIDES AN OPINION TO SUCH EFFECT TO THE
COMPANY."
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The Company shall, upon the request of any holder of a stock certificate bearing
the foregoing legend and the surrender of such certificate, issue a new stock
certificate without such legend if such holder shall have delivered to the
Company a legal opinion reasonably satisfactory to the Company to the effect
that the restrictions set forth herein are no longer required or necessary under
the Securities Act or any applicable state law.
ARTICLE III
TRANSFERS
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This Warrant and all rights hereunder are non-transferable, and may not be
sold, transferred, pledged, hypothecated, or assigned without the prior written
consent of the Company (which may be withheld in the Company's sole discretion),
except in connection with the distribution of all of the assets of the Holder
pursuant to a liquidation, dissolution or winding up of the affairs of the
Holder, or the sale of all or substantially all of the Holder's assets or a
merger or consolidation of the Holder where the Holder is not the surviving
entity; provided, however, in no event may a Holder make any transfer to a
direct competitor of the Company. Any such prohibited transfer made without the
Company's consent shall be void ab initio. Any permitted transferee shall agree
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to be bound by all provisions of this Warrant.
ARTICLE IV
ADJUSTMENTS
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The number of shares of Common Stock for which this Warrant is exercisable,
or the price at which such shares may be purchased upon exercise of this
Warrant, shall be subject to adjustment from time to time as set forth in this
Article IV. The Company shall give the Holder notice of any event described
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below which requires an adjustment pursuant to this Article IV as soon as
practicable following the occurrence of such event, which notice shall state the
exercise price resulting from such adjustment and/or the increase or decrease,
if any, in the number of shares of Common Stock or other stock or property
issuable upon the exercise of this Warrant, setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is based.
4.1 Stock Dividends, Subdivisions and Combinations. If at any time the
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Company shall:
(a) pay a dividend or make a distribution on its Common Stock in
Additional Shares of Common Stock (this adjustment will be deemed to occur
immediately after the record date);
(b) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock; or
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(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock;
then (i) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (ii) the Applicable Warrant Price
shall be adjusted to equal (A) the Applicable Warrant Price multiplied by the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the adjustment divided by (B) the number of shares of
Common Stock for which this Warrant is exercisable immediately after such
adjustment.
4.2 Issuance of Additional Shares of Common Stock. (a) If at any time the
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Company shall (except as hereinafter provided in Section 4.2(b)) issue or sell
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any Additional Shares of Common Stock and such Additional Shares of Common Stock
are issued or sold for no consideration or for consideration in an amount per
additional share of Common Stock less than the Fair Market Value, then the
Applicable Warrant Price shall be reduced to a price determined by multiplying
(i) the Applicable Warrant Price by (ii) a fraction, (A) the numerator of which
is the sum of (1) the number of shares of Common Stock Outstanding immediately
prior to such issuance or sale, plus (2) an amount equal to the quotient arrived
at by dividing the aggregate consideration, if any, received by the Company upon
such issuance or sale, by the Fair Market Value per share of the shares so
issued or sold, and (B) the denominator of which is the number of shares of
Common Stock Outstanding immediately after such issuance or sale.
(b) The provisions of Section 4.2(a) shall not apply to any issuance
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of Additional Shares of Common Stock for which an adjustment is provided under
Sections 4.1 or 4.7. No adjustment of the number of shares of Common Stock for
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which this Warrant shall be exercisable or the Applicable Warrant Price shall be
made under Section 4.2(a) upon the issuance of any Additional Shares of Common
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Stock which are issued pursuant to the exercise, conversion or exchange of any
Convertible Securities.
4.3 Issuance of Convertible Securities. If at any time the Company shall
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issue or sell, any Convertible Securities, and the price per share for which
Common Stock issuable upon the exercise, conversion or exchange of such
Convertible Securities shall be less than the Fair Market Value in effect
immediately prior to the time of such issue or sale, then the Applicable Warrant
Price shall be adjusted as provided in Section 4.2(a) on the basis that (a) the
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maximum number of Additional Shares of Common Stock issuable pursuant to all
such Convertible Securities shall be deemed to have been issued and outstanding,
(b) the price per share for such Additional Shares of Common Stock shall be
deemed to be the lowest possible price per share in any range of prices per
share at which such Additional Shares of Common Stock are available to such
holders, and (c) the Company shall have received all of the consideration
payable therefor,
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if any, as of the date of the actual issuance of such Convertible Securities. No
further adjustments of the Applicable Warrant Price shall be made upon the
actual issue of Additional Shares of Common Stock upon exercise, conversion or
exchange of such Convertible Securities.
4.4 Superseding Adjustment. If, at any time after any adjustment of the
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number of shares of Common Stock for which this Warrant is exercisable shall
have been made pursuant to Section 4.3 as the result of any issuance of
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Convertible Securities, and either
(a) the right of exercise, conversion or exchange for such Convertible
Securities, shall expire and all or a portion of such rights with respect to all
or a portion of such other Convertible Securities, as the case may be, shall not
have been exercised, or
(b) the consideration per share for which shares of Common Stock are
issuable pursuant to such Convertible Securities, shall be increased, then such
previous adjustment shall be rescinded and annulled and the Additional Shares of
Common Stock which were deemed to have been issued by virtue of the computation
made in connection with the adjustment so rescinded and annulled shall no longer
be deemed to have been issued by virtue of such computation. Thereupon, a
recomputation shall be made of the effect of such Convertible Securities on the
then outstanding Warrants, but not on any then outstanding Warrant Stock, on the
basis of
(c) treating the number of Additional Shares of Common Stock
theretofore actually issued or issuable pursuant to the previous exercise,
conversion or exchange, as having been issued on the date or dates of any such
exercise, conversion or exchange and for the consideration actually received and
receivable therefor, and
(d) treating any such Convertible Securities which then remain
outstanding as having been granted or issued immediately after the time of such
increase of the consideration per share for which shares of Common Stock are
issuable under such Convertible Securities.
4.5 Liquidation; Dissolution. If the Company shall dissolve, liquidate or
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wind up its affairs, the Holder shall have the right, but not the obligation, to
exercise this Warrant effective as of the date of such dissolution, liquidation
or winding up; provided that written notice of such intent to exercise is
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delivered to the Company within ten (10) business days of the date that the
Holder receives written notice of the Company's intent to dissolve, liquidate or
wind up its affairs. If any such dissolution, liquidation or winding up results
in any cash distribution to the Holder in excess of the Applicable Warrant Price
for the shares of Common Stock for which this Warrant is exercised, then the
Holder may, at its option, exercise this Warrant without making payment of such
Applicable Warrant Price and, in such case, the Company shall, upon distribution
to the Holder, consider such Applicable Warrant Price to have been paid in full,
and in making such settlement to the Holder, shall deduct an amount equal to
such Applicable Warrant Price from the amount payable to the Holder.
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4.6 Other Provisions Applicable to Adjustments under this Section. The
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following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock for which this Warrant is exercisable provided
for in this Article IV;
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(a) Computation of Consideration. To the extent that any Additional
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Shares of Common Stock or any Convertible Securities shall be issued for cash
consideration, the consideration received by the Company therefor shall be the
amount of the cash received by the Company therefor, or, if such Additional
Shares of Common Stock or Convertible Securities are offered by the Company for
subscription, the subscription price, or, if such Additional Shares of Common
Stock or Convertible Securities are sold to underwriters or dealers for public
offering without a subscription offering, the public offering price (in any such
case subtracting any amounts paid or receivable for accrued interest or accrued
dividends, but not subtracting any compensation, discounts or expenses paid or
incurred by the Company for and in the underwriting of, or otherwise in
connection with, the issuance thereof). To the extent that such issuance shall
be for a consideration other than cash, then, except as herein otherwise
expressly provided, the amount of such consideration shall be deemed to be fair
value of such consideration at the time of such issuance as determined in good
faith by the Board of Directors of the Company. The consideration for any
Additional Shares of Common Stock issuable pursuant to the terms of any
Convertible Securities shall be the consideration, if any, received by the
Company for issuing such Convertible Securities, plus the consideration paid or
payable to the Company in respect of the subscription for or purchase of such
Convertible Securities, plus the additional consideration, if any, payable to
the Company upon the exercise, conversion or exchange of such Convertible
Securities. In case of the issuance at any time of any Additional Shares of
Common Stock or Convertible Securities in payment or satisfaction of any
dividends upon any class of stock other than Common Stock, the Company shall be
deemed to have received for such Additional Shares of Common Stock or
Convertible Securities consideration equal to the amount of such dividend so
paid or satisfied.
(b) When Adjustments Are Made. The adjustments required by this
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Article IV shall be made whenever and as often as any specified event requiring
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an adjustment shall occur, except that any adjustment of the number of shares of
Common Stock for which this Warrant is exercisable or of the Applicable Warrant
Price that would otherwise be required may be postponed (except in the case of a
subdivision or combination of shares of the Common Stock, as provided for in
Section 4.1 ) up to, but not beyond, the date of exercise if such adjustment
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either by itself or with other adjustments not previously made adds or subtracts
less than one percent (1%) of the shares of Common Stock for which this Warrant
is exercisable or of the Applicable Warrant Price immediately prior to the
making of such adjustment. Any adjustment representing a change of less than
such minimum amount (except as aforesaid) which is postponed shall be carried
forward and made as soon as such adjustment, together with other adjustments
required by this Article IV and not previously made, would result in a minimum
adjustment, but in no event later than the date of exercise of this Warrant.
For the purpose of any adjustment, any specified event shall be deemed to have
occurred at the close of business on the date of its occurrence.
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(c) Factional Interests. In computing adjustments under this Article
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IV, fractional interests in Common Stock shall be taken into account to the
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nearest 1/10th of a share.
(d) When Adjustment Not Required. If the Company shall take a record
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of the holders of its Common Stock for the purpose of entitling them to receive
a dividend or distribution or subscription or purchase rights and shall,
thereafter and before the distribution to stockholders thereof, legally abandon
its plan to pay or deliver such dividend, distribution, subscription or purchase
rights, then thereafter no adjustment shall be required by reason of the taking
of such record and any such adjustment previously made in respect thereof shall
be rescinded and annulled. The adjustments pursuant to this Article IV shall
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not apply to: (i) any Convertible Securities which are issued to officers,
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directors, employees, or consultants of the Company pursuant to a bona fide plan
or plans adopted in good faith by the Board of Directors of the Company; (ii)
any Additional Shares of Common Stock issued to such officers, directors,
employees, or consultants of the Company upon the exchange, conversion or
exercise of the Convertible Securities described in the immediately preceding
clause (i); (iii) Additional Shares of Common Stock, Convertible Securities and
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other securities issued in connection with investments in, acquisitions of, or
mergers, combinations or other strategic relationships with, other companies;
(iv) Additional Shares of Common Stock issued in a bona fide public offering
pursuant to a firm commitment underwriting or sales at the market pursuant to a
continuous offering stock program; (v) Additional Shares of Common Stock issued
in any private placement or other transaction exempt from the registration
requirements of the Securities Act pursuant to a firm commitment underwriting;
(vi) rights to purchase Additional Shares of Common Stock or issuance of
Additional Shares of Common Stock pursuant to a dividend reinvestment plan or
other plan hereafter adopted for the reinvestment of dividends or interest;
(vii) a change in the par value or no par value of the Common Stock (other than
as a consequence of an event described in Section 4.1(b), 4.1(c) or 4.7) for
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which an adjustment to the number of Shares of Common Stock for which the
Warrant is exercisable is required pursuant to such Section 4.1(b), 4.1(c) or
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4.7; or (viii) non-stock dividends or distributions paid by the Company, except
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to the extent otherwise provided in Section 4.9. In addition, to the extent
that the Warrants become exercisable for cash, no interest shall accrue on such
cash.
4.7 Reorganization, Reclassification, Merger, Consolidation or Disposition
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of Assets. In case the Company shall reorganize its capital, reclassify its
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capital stock, consolidate or merge with or into another corporation (where the
Company is not the surviving corporation, a reverse triangular merger in which
the Company is the surviving entity but the shares of the Company's Capital
Stock outstanding immediately prior to the merger are converted, by virtue of
the merger, into other property, whether in the form of cash, securities or
otherwise, or where there is a change in or distribution with respect to the
Common Stock of the Company), or sell, transfer or otherwise dispose of all or
substantially all its property, assets or business to another Person and,
pursuant to the terms of such reorganization, reclassification, merger,
consolidation or disposition of assets, shares of Common Stock of any successor
or acquiring corporation or of the Company (as applicable), or any cash, shares
of stock or other securities or property of any nature whatsoever (including,
warrants or other subscription or purchase rights) in addition to or
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in lieu of Common Stock of the successor or acquiring corporation or of the
Company (as applicable) ("Other Property"), are to be received by or distributed
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to the holders of Common Stock of the Company, then the Holder shall have the
right thereafter to receive, upon exercise of such Warrant, the number of shares
of Common Stock of the successor or acquiring corporation or of the Company, if
it is the surviving corporation, and Other Property receivable upon or as a
result of such reorganization, reclassification, merger, consolidation or
disposition of assets by a holder of the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such event; provided,
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however, that this Section 4.7 shall not apply to the extent any action causes
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an adjustment to be made pursuant to Sections 4.1, 4.2, 4.3 or 4.5 hereof. In
------------ --- --- ---
case of any such reorganization, reclassification, merger, consolidation or
disposition of assets, the successor or acquiring corporation (if other than the
Company) shall expressly assume the due and punctual observance and performance
of each and every covenant and condition of this Warrant to be performed and
observed by the Company and all the obligations and liabilities hereunder,
subject to such modifications as may be deemed appropriate (as determined in
good faith by resolution of the Board of Directors of the Company) in order to
provide for adjustments of shares of the Common Stock for which this Warrant is
exercisable which shall be as nearly equivalent as practicable to the
adjustments provided for in this Article IV. For purposes of this Section 4.7
---------- -----------
"Common Stock of any successor or acquiring corporation" shall include stock
------------------------------------------------------
of such corporation of any class which is not preferred as to dividends or
assets over any other class of stock of such corporation and which is not
subject to redemption and shall also include any evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable
for any such stock, either immediately or upon the arrival of a specified date
or the happening of a specified event and any warrants or other rights to
subscribe for or purchase any such stock. The foregoing provisions of this
Section 4.7 shall similarly apply to successive reorganizations,
-----------
reclassifications, mergers, consolidations or dispositions of assets and to the
stock or securities of any other corporation that are at the time receivable by
the Holders upon the exercise of this Warrant.
4.8 Reclassifications. If the Company changes any of the securities as to
-----------------
which purchase rights under this Warrant exist into the same or a different
number of securities of any other class or classes, this Warrant shall
thereafter represent the right to acquire such number and kind of securities as
would have been issuable as the result of such change with respect to the
securities that were subject to the purchase rights under this Warrant
immediately prior to such reclassification or other change and the Applicable
Warrant Price therefore shall be appropriately adjusted.
4.9 Extraordinary Dividends. If the Company declares and pays an
-----------------------
extraordinary dividend (i.e., a dividend that is inconsistent with the Company's
dividend policy adopted by the board other than an initial dividend), and the
failure thereupon to make any adjustment pursuant to this Article IV would not
----------
fairly protect the purchase rights represented by this Warrant in accordance
with the essential intent and principles hereof, then, in such case, the Company
shall appoint a firm of independent certified public accountants of recognized
national standing (which may be the regular independent auditors of the Company)
or independent investment banking
12
firm of recognized national standing, which shall give their opinion upon the
adjustment, if any, on a basis consistent with the essential intent and
principles established in this Article IV, necessary to preserve, without
----------
dilution, the purchase rights represented by this Warrant. Upon receipt of such
opinion, the Company will promptly mail a copy thereof to the Holder of this
Warrant and shall make the adjustment, if any, described therein.
4.10 Other Notices. In case at any time:
-------------
(a) there shall be any capital reorganization, or reclassification of
the capital stock of the Company, or consolidation or merger of the Company with
another corporation (other than a subsidiary of the Company in which the Company
is the surviving or continuing corporation and no change occurs in the Company's
Common Stock), or sale of all or substantially all of its assets to, another
corporation;
(b) there shall be a voluntary or involuntary dissolution,
liquidation, bankruptcy, assignment for the benefit of creditors, or winding up
of the Company; or
(c) the Company shall declare any non-cash dividend on its Common
Stock;
then, in any one or more of said cases, the Company shall give written
notice, addressed to the Holder at the address of such Holder as shown on the
Register, of the date (or, if not then known, a reasonable approximation thereof
by the Company) on which such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, bankruptcy, assignment for the benefit
of creditors, winding up or other action or dividend, as the case may be, shall
take place. Such notice shall also specify (or, if not then known, reasonably
approximate) the date as of which the holders of Common Stock of record shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation, bankruptcy, assignment for the benefit of
creditors winding up, or other action, or the date of such dividend, as the case
may be. Such notice shall be mailed to the Holder at least twenty days prior to
the record date for such action in the case of any action described in
Subsection (a) or Subsection (c) above, and in the case of any action described
-------------- --------------
in Subsection (b) above, at least twenty days prior to the day on which the
--------------
action described is to take place and at least twenty days prior to the record
date for determining holders of Common Stock entitled to receive securities
and/or other property in connection with such action.
As soon as practicable following any adjustment of the Applicable
Warrant Price and/or the number of shares of Common Stock purchasable upon
exercise of this Warrant, a certificate, signed by (i) the Company's President
or Chief Financial Officer, or (ii) any independent firm of certified public
accountants, or investment banking firm, in either case of recognized national
standing, which the Company selects at its own expense, setting forth in
reasonable detail the events requiring the adjustment and the method by which
such adjustment was calculated, shall be mailed to the Holder and shall specify
the adjusted Applicable Warrant
13
Price and/or the number of shares of Common Stock purchasable upon exercise of
the Warrant after giving effect to the adjustment.
4.11 No Impairment. The Company shall not, by amendment of its charter or
-------------
bylaws or through any reorganization, recapitalization, transfer of assets,
consolidation. merger, dissolution, issuance or sale of securities or any other
voluntary action, seek to avoid the observance or performance of any of the
terms to be observed or performed hereunder by the Company, but shall at all
times in good faith assist in the carrying out of all the provisions of this
Article IV.
----------
4.12 Determination Final. Any determination that the Company or the Board
-------------------
of Directors of the Company shall make pursuant to this Article IV shall be
----------
final, binding and conclusive.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
As of the Effective Date, the Company hereby represents that:
5.1 Organization. It is a corporation duly organized, validly existing
------------
and in good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to carry on its business as it is now
being conducted and to execute, deliver and perform this Warrant and to
consummate the transaction contemplated hereby;
5.2 Authority. The Company has the right and power, and is duly
---------
authorized and empowered, to enter into, execute, deliver and perform its
obligations under this Warrant;
5.3 Binding Effect. This Warrant has been duly authorized, executed and
--------------
delivered and constitutes a valid and binding obligation of the Company
enforceable in accordance with its terms, except to the extent that
enforceability may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and (b) general
principles of equity.
5.4 No Conflict. The execution, delivery and/or performance by the
-----------
Company of this Warrant shall not, by the lapse of time, the giving of notice or
otherwise, constitute a violation of any applicable law or a breach of any
provision contained in the Company's charter or bylaws or contained in any
agreement, instrument or document to which the Company is a party or by which it
is bound.
5.5 Consents. No consent, approval, authorization or other order of any
--------
court, regulatory body, administrative agency or other governmental body is
required for the valid issuance of the Warrant or for the performance of any of
the Company's obligations hereunder, except as may be required by federal or
state securities laws.
14
ARTICLE VI
COVENANTS
---------
The Company covenants that from and after the Effective Date, the Company
shall at all times reserve and keep available for issue upon the exercise of
this Warrant such number of its authorized and unissued shares of Common Stock
as will be sufficient to permit such exercise in full. All shares of Common
Stock which shall be so issuable, when issued upon exercise of this Warrant and
payment therefor in accordance with the terms of this Warrant, shall be duly and
validly issued and fully paid and nonassessable, and not subject to preemptive
rights.
ARTICLE VII
DEMAND AND INCIDENTAL REGISTRATION OF REGISTRABLE
-------------------------------------------------
SHARES
------
7.1 Registration. Neither this Warrant nor the Registrable Shares has
------------
been registered under the Securities Act or applicable state securities laws.
The Holder, by acceptance hereof, represents that it is acquiring the Warrants
to be issued to it for its own account and not with a view to the distribution
thereof, and agrees not to sell, transfer, pledge or hypothecate any Warrants or
any Registrable Shares unless a registration statement is effective for such
Warrants or Registrable Shares under the Securities Act or in the opinion of
such Holder's counsel, which counsel must be acceptable to the Company (a copy
of which opinion shall be delivered to the Company) such transaction is exempt
from the registration requirements of the Securities Act and applicable state
securities laws.
7.2 Demand Registration. At any time after the date that is sixty (60)
-------------------
days prior to the commencement of the Exercise Period, holders of not less than
fifty percent (50%) of the then total number of Registrable Shares, as to which
Warrants have been exercised or are then exercisable, may make a written request
for registration under the Securities Act of all or part of their Registrable
Shares (the "Demand Registration") for the public disposition of such
-------------------
Registrable Shares. The Company shall, as soon as reasonably practicable after
receipt of such written request, notify all other holders of Registrable Shares,
as to which Warrants have been exercised or are then exercisable, of the
Company's receipt of such written request, and offer such holders the
opportunity to include their Registrable Shares, as to which Warrants have been
exercised or are then exercisable, in such Demand Registration. The Company
shall then use its reasonable best efforts to register under the Securities Act
the Registrable Shares proposed to be sold by such holders and to keep such
Demand Registration open for ninety (90) days if such Demand Registration
becomes effective after the commencement of the Exercise Period, or ninety (90)
days after the commencement of the Exercise Period, if such Demand Registration
becomes effective before such commencement (the "Registration Period").
provided, however, that the Company shall not be obligated (i) to effect the
-------- -------
Demand Registration covering less than fifty percent (50%) of the then total
number of Registrable Shares, or (ii) to effect more than one (1) Demand
Registrations under this Section 7.2: provided that if the Registrable Shares
----------- --------
proposed to be sold by such holders were not sold pursuant to the Demand
Registration, other than because such holders elected not to sell their
Registrable Shares, the holders of any number of Registrable Shares shall be
entitled to make a written request for an additional Demand Registration in
accordance with the procedures of this Section 7.2 until such Registrable Shares
-----------
initially proposed to be sold by such holders have been
15
sold (except that a request for an additional Demand Registration may not be
made until six (6) months after the effective date of the Registration Statement
effected in response to any previous Demand Registration); and provided,
--------
further, that the Demand Registration shall be subject to the provisions of
-------
Section 7.4 hereof. A request for the Demand Registration will specify the
-----------
number of Registrable Shares proposed to be sold. A registration will not count
as the Demand Registration until the registration statement relating thereto has
become effective and been kept open for the entire Registration Period.
7.3 Incidental Registration. (a) If the Company proposes to register
-----------------------
under the Securities Act any Common Stock for sale to the public pursuant to a
firm commitment underwriting, the Company will give written notice at such time
to all holders of Registrable Shares, as to which Warrants have been exercised
or are then exercisable, of its intention to do so. Upon the written request of
any such holder, given within thirty (30) days after receipt of any such notice
by the Company, to register any of its Registrable Shares, the Company will use
its reasonable best efforts to cause the Registrable Shares as to which
registration shall have been so requested, to be included in the securities to
be covered by such registration statement (the "Incidental Registration"), all
to the extent requisite to permit the sale or other disposition by the holder
(in accordance with its written request) of such Registrable Shares so
registered; provided, however, that nothing herein shall prevent the Company
-------- -------
from abandoning or delaying any such registration at any time; and provided,
--------
further, that the Incidental Registration shall be subject to the provisions of
-------
Sections 7.3(b) and 7.3(c) and Section 7.4 to the extent indicated therein. Any
--------------- ------ -----------
request by a holder pursuant to this Section 7.3 to register Registrable Shares
-----------
shall specify the number of Registrable Shares to be included in the
underwriting and that such Registrable Shares are to be included in the
underwriting on the same terms and conditions as the shares of Common Stock
otherwise being sold through underwriters under such registration. If the
managing underwriter or underwriters shall advise the Company in writing that,
in the view of such underwriters, such holders of Registrable Shares shall have
requested the registration of a number of Registrable Shares that exceeds the
maximum number of Shares that can be sold without having a material adverse
effect on the marketing of the Common Stock to be sold under such registration
statement, including the price at which such Common Stock can be sold (an
"Adverse Market Effect"), the Company shall not be required to register Shares
in excess of such maximum number, subject to the provisions of Section 7.3(b) (a
--------------
"Cut-Back Event").
(b) In the event of a Cut-Back Event arising in connection with an
Incidental Registration, the following provisions shall apply:
(i) if the registration of Common Stock giving rise to the Incidental
Registration is initiated by the Company, then the Company shall include in such
registration (A) first, all of the Common Stock which the Company proposes to
sell, and (B) second, the number of shares of Common Stock validly requested by
Selling Shareholders and holders of Registrable Shares to be included in such
registration that, in the opinion of the underwriters, can be sold without
having an Adverse Market Effect, such amount to be allocated among all such
Selling Shareholders and holders of Registrable Shares pro rata on the basis of
the respective
16
number of shares of Common Stock each such Selling Shareholder and holder of
Registrable Shares has requested to be included in such registration; and
(ii) if a registration of Common Stock giving rise to an Incidental
Registration is initiated by any Selling Shareholder(s), then there shall be
included in such registration (A) if the Company is not selling Common Stock in
the registration, (I) first, all of the Common Stock proposed to be sold by such
Selling Shareholder(s) initiating such registration, and (II) second, the number
of shares of Common Stock of the Company validly requested by all other Selling
Shareholders and holders of Registrable Shares to be included in such
registration that, in the opinion of the underwriters, can be sold without
having an Adverse Market Effect, such amount to be allocated among all such
other Selling Shareholders and holders of Registrable Shares pro rata on the
basis of the respective number of shares of Common Stock each such other Selling
Shareholder and holder of Registrable Shares has requested to be included in
such registration; and (B) if the Company is selling Common Stock in the
registration (other than solely in connection with the covering of an over-
allotment option), (I) first, all of the Common Stock proposed to be sold by the
Company and such Selling Shareholder(s) initiating such registration, and (II)
second, the number of shares of Common Stock of the Company validly requested by
all other Selling Shareholders and holders of Registrable Shares to be included
in such registration that, in the opinion of the underwriters, can be sold
without having an Adverse Market Effect, such amount to be allocated among all
such other Selling Shareholders and holders of Registrable Shares pro rata on
the basis of the respective number of shares of Common Stock each such other
Selling Shareholder and holder of Registrable Shares has requested to be
included in such registration;
7.4 Discretion. Notwithstanding any other provision hereof to the
----------
contrary,
(a) the Company shall be entitled, in its reasonable discretion, to
elect, once with respect to each Demand Registration which it may be requested
to effect hereunder, to delay the filing of a registration statement pursuant to
Section 7.2 for up to one hundred and twenty (120) days from the date of the
-----------
request therefor under Section 7.2 (or for such shorter period if the Company
-----------
files a registration statement under the Securities Act for the sale of Common
Stock to the public pursuant to an underwritten public offering or continuous
offering stock program), so long as the Board of Directors of the Company shall
have determined in good faith prior to effecting such delay that such delay
would be in the best interests of the Company,
(b) the Company shall have the right to select the managing
underwriter or underwriters for any offer or sale of the Registrable Shares to
which the Demand Registration or Incidental Registration relates; provided,
--------
however, that in the case of a Demand Registration, the holders of a majority of
-------
the Registrable Shares participating in the Demand Registration shall have the
right to approve such underwriters, such approval not to be unreasonably
withheld or delayed,
(c) in the event of a Cut-Back Event arising in connection with a
Demand Registration, the Company shall not be required to register Registrable
Shares in excess of the
17
maximum number which can be sold without an Adverse Market Effect; provided,
--------
however, that holders of Registrable Shares shall have priority over any and
-------
all Selling Shareholders (including, but not limited to, Parent and the Company)
in determining whose shares of Common Stock shall be included in the
Registration,
(d) in connection with a Demand Registration, the holders of
Registrable Shares shall consult with the Company with respect to the method of
sale of such Registrable Shares; and in any event, such holders shall use their
best efforts to the effect that the sale of such Shares shall not have a
material adverse effect on the market price of the Common Stock,
(e) the Company shall pay, all out-of-pocket expenses incident to the
Company's effectuation of a Demand Registration or an Incidental Registration,
including without limitation, all registration and filing fees (including filing
fees with respect to the National Association of Securities Dealers, Inc.), all
fees and expenses of complying with state securities or "blue sky)," laws, all
printing expenses, all listing fees, all registrars' and transfer agents' fees,
the fees and disbursements of counsel for the Company and of its independent
certified public accountants, including the expenses of any special audits
and/or "comfort" letters required by or incident to such performance and
compliance; but excluding the fees and disbursements of counsel to the sellers
of the Registrable Shares, underwriting discounts and commissions, and
applicable transfer taxes, if any, which shall be borne by the sellers of the
Registrable Shares being registered in all cases, and
(f) such holders agree to cooperate fully to facilitate the Demand
Registration and the Incidental Registration, and offer and sale of Registrable
Shares covered thereby, including completing selling shareholder questionnaires,
entering into customary underwriting and other agreements, and furnishing
information for inclusion in any prospectus.
7.4 Payment of Exercise Price. The Company acknowledges that the Holder
may desire to make cash payment of the Warrant Price with net proceeds received
from the sale of the Warrant Stock. Accordingly, the Company agrees that the
Holder shall be entitled to exercise the Warrant concurrent with the sale of the
Warrant Stock and have the net proceeds applied directly to payment in full of
the Warrant Price.
ARTICLE VIII
REGISTRATION PROCEDURES
-----------------------
If the Company is required by the provisions hereof to use commercially
reasonable efforts to effect the registration of any Registrable Shares under
the Securities Act, the Company will:
(a) furnish to each seller of Registrable Shares and to any
underwriter such number of copies of the registration statement and the
prospectus included therein (including
18
each preliminary prospectus) as such persons reasonably may request in order to
facilitate the intended disposition of the Registrable Shares covered by such
registration statement;
(b) use commercially reasonable efforts (i) to register or qualify the
Registrable Shares covered by such registration statement under the securities
or "blue sky" laws of such jurisdictions as the sellers of Registrable Shares
or, in the case of an underwritten public offering, the managing underwriter,
reasonably shall request, (ii) to prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements, and take such
other actions, as may be necessary to maintain such registration and
qualification in effect at all times for the period of distribution contemplated
thereby and (iii) to take such further action as may be necessary or advisable
to enable the disposition of the Registrable Shares in such jurisdictions,
provided, that the Company shall not for any such purpose be required to qualify
--------
generally to transact business as a foreign corporation in any jurisdiction
where it is not so qualified or to consent to general service of process in any
such jurisdiction;
(c) use commercially reasonable efforts to list the Registrable Shares
covered by such registration statement with any securities exchange on which the
Common Stock of the Company is then listed, or, if the Common Stock is not then
listed on a national securities exchange, use its best efforts to facilitate the
reporting of the Common Stock on NASDAQ;
(d) notify each seller of Registrable Shares and each underwriter
under such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the happening
of any event of which the Company has knowledge as a result of which the
prospectus contained in such registration statement, as then in effect, includes
any untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing and promptly amend or
supplement such registration statement to correct any such untrue statement or
omission;
(e) notify each seller of Registrable Shares of the issuance by the
Commission of any stop order suspending the effectiveness of the registration
statement or the initiation of any proceedings for that purpose and make every
reasonable effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest possible time;
(f) if the offering is an underwritten offering, enter into a written
agreement with the managing underwriter selected in the manner herein provided
in such form and containing such provisions as are usual and customary in the
securities business for such an arrangement between such underwriter and
companies of the Company's size and investment stature, including without
limitation, customary indemnification and contribution provisions;
(g) make available for inspection by each seller of Registrable Shares
at such seller's expense, any underwriter participating in any distribution
pursuant to such registration
19
statement, and any attorney accountant or other agent retained by such seller or
underwriter, financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such registration
statement;
(h) provide a transfer agent and registrar, which may be a single
entity for the Registrable Shares not later than the effective date of the
registration statement; and
(i) take all actions reasonably necessary to facilitate the timely
preparation and delivery of certificates (not bearing any legend restricting the
sale or transfer of such securities) representing the Registrable Shares to be
sold pursuant to the registration statement and to enable such certificates to
be in such denominations and registered in such names as the investors or any
underwriters may reasonably request,
In connection with any registration hereunder, the sellers of Registrable
Shares will furnish to the Company in writing such information with respect to
themselves and the proposed distribution by them as reasonably shall be
necessary in order to assure compliance with federal and applicable state
securities laws.
ARTICLE IX
INDEMNIFICATION AND CONTRIBUTION
--------------------------------
9.1 Indemnification by Company. In the event of a registration of any of
--------------------------
the Registrable Shares under the Securities Act pursuant to the terms of this
Warrant, the Company will indemnify and hold harmless and pay and reimburse,
each seller of such Registrable Shares thereunder, each underwriter of such
Registrable Shares thereunder and each other person, if any, who controls such
seller or underwriter within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, as and, when incurred,
to which such seller, underwriter or controlling person may become subject under
the Securities Act or otherwise insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which such Registrable Shares were registered
under the Securities Act pursuant hereto or any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation or alleged violation of the Securities
Act or any state securities or blue sky laws and will reimburse each such
seller, each such underwriter and each such controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, that the
Company will not be liable in any such case if and to the extent that any such
loss, claim, damage or liability arises out of or is based upon the Company's
reliance on an untrue statement or alleged untrue statement or omission or
alleged omission so made in
20
conformity with information furnished by any such seller, any such underwriter
or any such controlling person in writing specifically for use in such
registration statement or prospectus. Notwithstanding the foregoing, the
indemnity provided in this Section 9.1 shall not apply to amounts paid in
-----------
settlement of any such loss, claim, damage, liability or expense if such
settlement is effected without the consent of such indemnified party.
9.2 Indemnification of Company. In the event of a registration of any of
--------------------------
the Registrable Shares under the Securities Act pursuant hereto each seller of
such Registrable Shares thereunder, severally and not jointly will indemnify and
hold harmless the Company, each person, if any, who controls the Company within
the meaning of the Securities Act, each officer of the Company who signs the
registration statement, each director of the Company, each underwriter and each
person who controls any underwriter within the meaning of the Securities Act,
against all losses, claims, damages or liabilities, joint or several, as and
when incurred, to which the Company or such officer, director, underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon reliance on any untrue statement or
alleged untrue statement of any material fact contained in the registration
statement under which such Registrable Shares were registered under the
Securities Act pursuant hereto or any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereof, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company and each such officer, director,
underwriter and controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action, provided, that such seller will be liable
hereunder in any such case if and only to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with information pertaining to such seller, as such, furnished
in writing to the Company by such seller specifically for use in such
registration statement or prospectus, and provided, that the liability of each
seller hereunder shall be limited to the proceeds received by such seller from
the sale of Registrable Shares covered by such registration statement.
Notwithstanding the foregoing, the indemnity provided in this Section 9.2 shall
-----------
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or expense if such settlement is effected without the consent of such
indemnified party.
9.3 Notice of Action. Promptly after receipt by an indemnified party
----------------
hereunder of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party hereunder, notify the indemnifying party in writing thereof, but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to such indemnified party other than under this
Article IX and shall only relieve it from any liability which it may have to
----------
such indemnified party under this Article IX if and to the extent the
----------
indemnifying party is materially prejudiced by such omission. In case any such
action shall be brought g against any indemnified party and it shall notify the
21
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel reasonably satisfactory to such
indemnified party, and, after notice from the indemnifying party to such
indemnified party of its election so to assume and undertake the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under this Article IX for any legal expenses subsequently incurred by such
----------
indemnified party in connection with the defense thereof other than reasonable
costs of investigation and of liaison with counsel so selected, provided, that
--------
if the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
based upon written advise of its counsel that there may be reasonable defenses
available to it which are different from or additional to those available to the
indemnifying party or if the interests of the indemnified party reasonably may
be deemed to conflict with the interests of the indemnifying party, the
indemnified party shall have the right to select a separate counsel and to
assume such legal defenses and otherwise to participate in the defense of such
action, with the expenses and fees of such separate counsel and other expenses
related to such participation to be reimbursed by the indemnifying party as
incurred.
9.4 Contribution. In order to provide for just and equitable contribution
------------
to joint liability under the Securities Act in any case in which either (i) any
holder of Registrable Shares exercising rights under this Warrant or any
controlling person of any holder, makes a claim for indemnification pursuant to
this Article IX but it is judicially determined (by the entry of a final
----------
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Article IX provides for indemnification in such case, or (ii) contribution
----------
under the Securities Act may be required on the part of any holder or any such
controlling person in circumstances for which indemnification is provided under
this Article IX; then, and in each such case, the Company and holder will
-----------
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after contribution from others) in such proportion so that
holder is responsible for the portion represented by the percentage that the
public offering price of its Registrable Shares offered by the registration
statement bears to the public offering price of all securities offered by such
registration statement, and the Company is responsible for the remaining
portion; provided, that, in any such case, (a) no holder will be required to
--------
contribute any amount in excess of the public offering price of all such
Registrable Shares offered by it pursuant to such registration statement and (b)
no person or entity guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) will be entitled to contribution from
any person or entity who was not guilty of such fraudulent misrepresentation.
ARTICLE X
LOSS OR MUTILATION
------------------
Upon receipt by the Company from the Holder of evidence reasonably
satisfactory to the Company of the ownership of and the loss, theft, destruction
or mutilation of this Warrant and
22
indemnity reasonably satisfactory to the Company and in case of mutilation upon
surrender and cancellation hereof, the Company will execute and deliver in lieu
hereof a new Warrant of like tenor to the Holder; provided, however, in the case
--------
of mutilation, no indemnity shall be required if this Warrant in identifiable
form is surrendered to the Company for cancellation.
ARTICLE XI
NO STOCK RIGHTS
---------------
No Holder of this Warrant, as such, shall be entitled to vote or be deemed
the holder of Common Stock or any other securities of the Company which may at
any time be issuable on the exercise hereof, nor shall anything contained herein
be construed to confer upon the Holder of this Warrant, as such, the rights of a
stockholder of the Company or the right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, to exercise any preemptive right, to
receive notice of meetings or other actions affecting stockholders (except as
provided herein), or to receive dividends or subscription rights or otherwise
(except as provided herein), until the exercise of Warrants shall have occurred.
ARTICLE XII
MISCELLANEOUS
-------------
12.1 Limitation of Liability. No provision hereof, in the absence of
-----------------------
affirmative action by the Holder to purchase shares of Common Stock, and no
enumeration herein of the rights or privileges of the Holder hereof, shall give
rise to any liability of such Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is asserted the
Company or by creditors of the Company.
12.2 Nonwaiver; Cumulative Remedies. No course of dealing or any delay or
------------------------------
failure to exercise any right hereunder on the part of the Holder or the Company
shall operate as a waiver of such right or otherwise prejudice the rights,
powers or remedies of the Holder or the Company. No single or partial waiver by
the Holder or the Company of any provision of this Warrant or of any breach or
default hereunder or of any right or remedy shall operate as a waiver of any
other provision, breach, default right or remedy or of the same provision,
breach, default right or remedy on a future occasion. The rights and remedies
provided in this Warrant are cumulative and are in addition to all rights and
remedies which the Holder or the Company may have in law or in equity or by
statute otherwise.
12.3 Modification; Severability
--------------------------
(a) If, in any action before any court or agency legally empowered
enforce any term, any term is found to be unenforceable, then such term shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency.
23
(b) If any term is not curable as set forth in Section 12.3(a), the
---------------
unenforceability of such term shall not affect the other provisions of this
Warrant but this Warrant shall be construed as if such unenforceable term had
never been contained herein.
12.4 Integration. This Warrant replaces all prior and contemporaneous
-----------
agreements and supersedes all prior and contemporaneous negotiations between the
parties with respect to the transactions contemplated herein and constitutes the
entire agreement of the parties with respect to the transactions contemplated
herein.
12.5 Amendment. This Warrant may not be modified or amended except by
---------
written agreement of the Company and the Holder.
12.6 Headings. The headings of the Sections of this Warrant are for the
--------
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
12.7 Meanings. Whenever used in this Warrant, any noun or pronoun shall be
--------
deemed to include both the singular and plural and to cover all genders; and the
words "herein," "hereof" and "hereunder" and words of similar import shall refer
to this instrument as a whole, including any amendments hereto.
12.8 Notice Generally. All notices, consents, requests, instructions,
----------------
approvals and other communications provided for herein shall be deemed validly
given, made or served if in writing and delivered personally (as of such
delivery) or sent by certified mail, return receipt requested, postage prepaid,
(as of the date of receipt as noted on the delivery receipts), addressed, if to
the Holder, to the Holder at its last known address appearing on the Register,
and if to the Company, to the Company at c/o CareInsite, Inc., 000 Xxxxx Xxxxx,
Xxxxxx 0, Xxxxxxx Xxxx, Xxx Xxxxxx 00000, Attention: Chief Financial Officer,
with copy to the General Counsel at the same address or at such other address as
shall be furnished in writing by the parties as herein provided.
12.9 Successors and Assigns. Subject to the provisions of Article 3, this
----------------------
Warrant and the rights evidenced hereby shall inure to the benefit of and be
binding upon the successors and assigns of the Company and the Holder.
12.10 Survival of Rights and Duties. Subject to the provision of
-----------------------------
Section 12.11, this Warrant shall terminate and be of no further force and
effect on the earlier of 5:00 P.M., New York City time, on the last day of the
Exercise Period or the date on which all of the Warrants have been exercised,
except that the provisions of Article II, Articles VII, VIII and IX (if this
---------- ------------ ---- --
Warrant was exercised), and Article XII shall continue in full force and effect
-----------
after such termination date.
12.11 [INTENTIONALLY LEFT BLANK]
24
12.12 Termination if Initial Public Offering is Not Consummated.
---------------------------------------------------------
Notwithstanding any other provision of this Warrant, in the event that the
Initial Public Offering is not consummated on or prior to July 15, 1999, this
Warrant shall not be exercisable and shall terminate and be of no further force
and effect, without liability to the Company or the Holder.
12.13 Governing Law. In all respects, including all matters of
-------------
construction, validity and performance, this Warrant and the obligations arising
hereunder shall be governed by, and construed and enforced in accordance with
the laws of the State of New York applicable to contracts made and performed in
such state, without regard to the principles thereof regarding conflict of laws,
and any applicable laws of the United States of America.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
25
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed and
its corporate seal to be impressed hereon and attested by its Secretary or an
Assistant Secretary.
Dated: As of June 14, 1999
CAREINSITE, INC.
By:
---------------------------------
Name: Xxxxx X. Love
Title: Executive Vice President-
Chief Financial Officer
Attest:
Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President - General Counsel
26
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant ("Subscriber") hereby
irrevocably exercises this Warrant for the purchase of shares of Common Stock of
CAREINSITE, INC. (the "Company"), and herewith makes payment therefor in the
amount of $ _________, all at the price and on the terms and conditions
specified in this Warrant and requests that a certificate (or ______
certificates in denominations of shares) for the shares of Common Stock hereby
purchased (and any securities or Other Property issuable upon such exercise) be
issued in the name of and delivered to Subscriber and, if such shares of Common
Stock shall not include all of the shares of Common Stock issuable as provided
in this Warrant, that a new Warrant of like tenor and date for the balance of
the shares of Common Stock issuable hereunder be delivered to Subscriber.
Subscriber hereby represents and warrants as follows:
(a) The Common Stock to be acquired hereunder is being acquired by
Subscriber for investment purposes only solely for its own
account, and not with a view to, or in connection with, the
distribution thereof in violation of securities laws.
(b) Subscriber understands that the Common Stock has not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), or under applicable state securities laws.
Subscriber understands and agrees further that the Common Stock
must be held indefinitely unless it is subsequently registered
under the Securities Act or an exemption from registration under
the Securities Act and applicable state securities laws covering
the sale of the Common Stock is available. Subscriber understands
that legends stating that the Common Stock have not been
registered under the Securities Act, and setting out or referring
to any other restrictions on transferability and sale of the
Common Stock, will be placed on any and all documents evidencing
the Common Stock.
(c) Subscriber is aware that:
(i) Investment in the Company involves a high degree of risk,
lack of liquidity and substantial restrictions on
transferability of the Common Stock; and
(ii) No federal or state agency has made any finding or
determination as to the fairness for investment by the
public, nor has made any recommendation or endorsement, of
the Common Stock.
(d) Subscriber, either directly or indirectly, has sufficient
financial resources available to support the loss of all of its
investment in the Company, and has no need for liquidity in its
investment in the Company.
(e) Subscriber, either itself or through its advisers, is
sophisticated and experienced in investment matters, and, as a
result, Subscriber is in a position to evaluate an investment in
the Company.
(f) Subscriber has been furnished any materials Subscriber has
requested relating to the Company and the Common Stock, and
Subscriber has been afforded the opportunity to ask questions of
the officers of the Company concerning the Company and the Common
Stock.
(g) Subscriber is an "accredited investor" as that term is defined in
Rule 501 (a) of Regulation D under the Securities Act.
(Subscriber should strike this subparagraph (g) in its entirety
if not an "accredited investor.")
(h) Subscriber, if not an accredited investor, hereby represents and
affirms that (i) Subscriber has a net worth exceeding ten (10)
times Subscriber's investment, or (ii) Subscriber has either
alone or with Subscriber's professional advisor the capacity to
protect Subscriber's interests in connection with this
transaction, or (iii) Subscriber is able to bear the economic
risk of the investment.
(Name of Registered Owner)
(Signature of Registered Owner)
(Street Address)
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with
the name as written upon the face of this Warrant in every
particular, without alteration or enlargement or any change
whatsoever.
