THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR
TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS AVAILABLE WITH
RESPECT THERETO.
COMMON STOCK PURCHASE WARRANT
Warrant No. WC- Number of Shares - ______
U.S. PHYSICIANS, INC.
Void after December 31, 2000
1. Issuance. This Warrant (the "Warrant" and, together with other
Warrants issued to other purchasers of the Company's Series C Convertible
Preferred stock or pursuant to Section 17 below, the "Warrants") is issued to by
U.S. PHYSICIANS, Inc., a Pennsylvania corporation (hereinafter with its
successors called the "Company").
2. Purchase Price; Number of Shares. Subject to the terms and
conditions hereinafter set forth, the registered holder of this Warrant (the
"Holder"), is entitled upon surrender of this Warrant with the subscription form
annexed hereto duly executed, at the office of the Company, 000 Xxxxxxxx Xxxxx,
Xxxxx 000, Xxxx Xxxxxxxxxx, XX 00000 or such other office as the Company shall
notify the Holder of in writing, to purchase from the Company at a price per
share (the "Purchase Price") of $4.15, up to __________ fully paid and
nonassessable shares of Common Stock, $.01 par value, of the Company (the
"Common Stock"). Notwithstanding anything else herein, if the Conversion Price
of the Company's Series C Convertible Preferred Stock becomes the Revised
Conversion Price (as defined in Exhibit A to the Company's Third Amended and
Restated Articles of Incorporation (the "Charter")), the Purchase Price shall
thereupon become the Revised Conversion Price; and if, as a result of the
failure to close by May 29, 1998 of a Qualifying IPO as defined in the Charter,
the Conversion Price of the Company's Series C Convertible Preferred Stock is
adjusted, the Purchase Price shall thereupon become the lower of $3.15 or the
Revised Conversion Price. Until such time as this Warrant is exercised in full
or expires, the Purchase Price and the securities issuable upon exercise of this
Warrant are subject to adjustment as hereinafter provided.
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3. Exercisability. This Warrant will become exercisable upon issuance.
4. Payment of Purchase Price. The Purchase Price may be paid (i) in
cash or by check, (ii) by the surrender by the Holder to the Company of any
promissory notes or other obligations issued by the Company, with all such notes
and obligations so surrendered being credited against the Purchase Price in an
amount equal to the principal amount thereof plus accrued interest to the date
of surrender, (iii) through delivery by the Holder to the Company of other
securities issued by the Company, with such securities being credited against
the Purchase Price in an amount equal to the fair market value thereof, as
determined in good faith by the Board of Directors of the Company (the "Board"),
or (iv) by any combination of the foregoing. The Board shall promptly respond in
writing to an inquiry by the Holder as to the fair market value of any
securities the Holder may wish to deliver to the Company pursuant to clause
(iii) above.
5. Net Issue Election. The Holder may elect to receive, without the
payment by the Holder of any additional consideration, shares equal to the value
of this Warrant or any portion hereof by the surrender of this Warrant or such
portion to the Company, with the net issue election notice annexed hereto duly
executed, at the office of the Company. Thereupon, the Company shall issue to
the Holder such number of fully paid and nonassessable shares of Common Stock as
is computed using the following formula:
X = Y (A-B)
A
where X = the number of shares to be issued to the Holder pursuant to this
Section 5.
Y = the number of shares covered by this Warrant in respect of which the
net issue election is made pursuant to this Section 5.
A = the fair market value of one share of Common Stock as at the time the
net issue election is made pursuant to this Section 5. For this
purpose, the fair market value shall be determined as follows: (i)
the closing per share sale price of the Common Stock, as of the
trading day immediately prior to the applicable date, on whichever of
the Nasdaq SmallCap Market or the Nasdaq National Market
(collectively, "Nasdaq"), on which the Common Stock is included for
quotation at such date; (ii) if the Common Stock is not then included
for quotation on Nasdaq, the closing per share sale price of the
Common Stock on the trading day immediately prior to the applicable
date on the principal securities exchange on which the Common Stock
is then listed or admitted to trading; or (iii) if the Common Stock
is not then included for quotation on Nasdaq or traded on a
securities exchange, the fair market value as determined in good
faith by the Board.
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B = the Purchase Price in effect under this Warrant at the time the net
issue election is made pursuant to this Section 5.
The Board shall promptly respond in writing to an inquiry by the Holder as to
the fair market value of one share of Common Stock.
6. Partial Exercise. This Warrant may be exercised in part, and the
Holder shall be entitled to receive a new warrant, which shall be dated as of
the date of this Warrant, covering the number of shares in respect of which this
Warrant shall not have been exercised.
7. Issuance Date. The person or persons in whose name or names any
certificate representing shares of Common Stock is issued hereunder shall be
deemed to have become the holder of record of the shares represented thereby as
at the close of business on the date this Warrant is exercised with respect to
such shares, whether or not the transfer books of the Company shall be closed.
8. Expiration Date; Automatic Exercise. This Warrant shall expire at
the close of business on December 31, 2000 and shall be void thereafter.
Notwithstanding the foregoing, this Warrant shall automatically be deemed to be
exercised in full pursuant to the provisions of Section 5 hereof, without any
further action on behalf of the Holder, immediately prior to the time this
Warrant would otherwise expire pursuant to the preceding sentence.
9. Reserved Shares; Valid Issuance. The Company covenants that it will
at all times from and after the date hereof reserve and keep available such
number of its authorized shares of Common Stock, free from all preemptive or
similar rights therein, as will be sufficient to permit the exercise of this
Warrant in full. The Company further covenants that such shares as may be issued
pursuant to the exercise of this Warrant will, upon issuance, be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof.
10. Dividends. If after January , 1998 (the "Original Issue Date") the
Company shall subdivide the Common Stock, by split-up or otherwise, or combine
the Common Stock, or issue additional shares of Common Stock in payment of a
stock dividend on the Common Stock, the number of shares issuable on the
exercise of this Warrant shall forthwith be proportionately increased in the
case of a subdivision or stock dividend, or proportionately decreased in the
case of a combination, and the Purchase Price shall forthwith be proportionately
decreased in the case of a subdivision or stock dividend, or proportionately
increased in the case of a combination.
11. Mergers and Reclassifications. If after the Original Issue Date
there shall be any reclassification, capital reorganization or change of the
Common Stock (other than as a result of a subdivision, combination or stock
dividend provided for in Section 10 hereof), or any consolidation of the Company
with, or merger of the Company into, another corporation or other business
organization (other than a consolidation or merger in which the Company is the
continuing corporation and which does not result in any reclassification or
change of the
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outstanding Common Stock), or any sale or conveyance to another corporation or
other business organization of all or substantially all of the assets of the
Company, then, as a condition of such reclassification, reorganization, change,
consolidation, merger, sale or conveyance, lawful provisions shall be made, and
duly executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder, so that the Holder shall thereafter have the
right to purchase, at a total price not to exceed that payable upon the exercise
of this Warrant in full, the kind and amount of shares of stock and other
securities and property receivable upon such reclassification, reorganization,
change, consolidation, merger, sale or conveyance by a holder of the number of
shares of Common Stock which might have been purchased by the Holder immediately
prior to such reclassification, reorganization, change, consolidation, merger,
sale or conveyance, and in any such case appropriate provisions shall be made
with respect to the rights and interest of the Holder to the end that the
provisions hereof (including without limitation, provisions for the adjustment
of the Purchase Price and the number of shares issuable hereunder) shall
thereafter be applicable in relation to any shares of stock or other securities
and property thereafter deliverable upon exercise hereof.
12. Adjustments for Issuances Below Purchase Price. In case the Company
shall at any time or from time to time after the Original Issue Date issue or
sell any shares of Common Stock (other than shares issued in transactions to
which Sections 10 or 11 of this Warrant apply) for a consideration per share
less than the Purchase Price in effect for this Warrant immediately prior to the
time of such issue or sale, or pay any dividend or make any other distribution
upon the Common Stock payable in cash, property or securities of the Company
other than Common Stock or in securities of a corporation other than the
Company, then forthwith upon such issue or sale, or upon the payment of such
dividend or the making of such other distribution, as the case may be, the
Purchase Price shall (until another such issue or sale, or dividend or other
distribution) be reduced to a price (calculated to the nearest cent) determined
by dividing (i) an amount equal to the sum of (X) the number of shares of Common
Stock outstanding immediately prior to such issue or sale or the payment of such
dividend or the making of such other distribution, multiplied by the Purchase
Price in effect immediately prior to such event plus (Y) the consideration, if
any, received by the Company upon such issue or sale minus (Z) the amount of
such dividend or other distribution in respect of Common Stock, by (ii) the
total number of shares of Common Stock outstanding immediately after such issue
or sale or dividend or other distribution. Further, the number of shares
purchasable hereunder shall be increased to a number determined by dividing (i)
the number of shares purchasable hereunder immediately prior to such issue or
sale or dividend or other distribution, multiplied by the Purchase Price
hereunder immediately prior to such event, by (ii) the Purchase Price in effect
immediately after the foregoing adjustment. Anything herein to the contrary
notwithstanding, the Company shall not be required to make any adjustment of the
Purchase Price in the case of the issuance from and after December 31, 1996: (i)
of up to an aggregate of 3,282,577 shares (appropriately adjusted to reflect the
occurrence of any event described in Section 10) of Common Stock (directly or
through the grant of options or other convertible securities) to directors,
officers, employees, consultants or affiliated physicians of the Company in
connection with their service to the Company; (ii) of Common Stock made solely
in consideration for the acquisition (whether by merger or otherwise) by the
Company or by an affiliate of the Company of all or substantially
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all of the stock or assets of any other entity engaged primarily in the practice
of medicine or other operating business; (iii) in connection with the employment
by the Company or an affiliate of the Company of a physician, provided that the
issuances contemplated by this clause; (iii) shall be limited to 600,000 shares
(appropriately adjusted to reflect the occurrence of any event described in
Section 10) of Common Stock in the aggregate; (iv) of Warrants on or prior to
January 15, 1997 (or the issuance of Common Stock upon the exercise of
Warrants); or (v) the issuance of warrants to purchase 43,573 shares of Common
Stock in December 1997 and warrants to purchase 77,110 shares of Common Stock,
both in connection with obtaining debt financing or (vi) the issuance of
warrants to the purchasers of Series C Convertible Preferred Stock pursuant to
the terms of the stock purchase agreement relating thereto.
For the purpose of this Section 12, the following provisions shall
also be applicable:
A. In case the Company shall in any manner offer any rights to
subscribe for or to purchase shares of Common Stock, or grant any options for
the purchase of shares of Common Stock, at a price less than the Purchase Price
in effect immediately prior to the time of the offering of such rights or the
granting of such options, as the case may be, all shares of Common Stock which
the holders of such rights or options shall be entitled to subscribe for or
purchase pursuant to such rights or options shall be deemed to be issued or sold
as of the date of the offering of such rights or the granting of such options,
as the case may be, and the minimum aggregate consideration named in such rights
or options for the Common Stock covered thereby, plus the consideration received
by the Company for such rights or options, shall be deemed to be the
consideration actually received by the Company (as of the date of the offering
of such rights or the granting of such options, as the case may be) for the
issue or sale of such shares.
B. In case the Company shall in any manner issue or sell any
shares of any class or obligations directly or indirectly convertible into or
exchangeable for shares of Common Stock and the price per share for which Common
Stock is deliverable upon such conversion or exchange (determined by dividing
(i) the total minimum amount received or receivable by the Company in
consideration of the issue or sale of such convertible or exchangeable shares or
obligations, plus the total minimum amount of premiums, if any, payable to the
Company upon conversion or exchange, by (ii) the total number of shares of
Common Stock necessary to effect the conversion or exchange of all such
convertible or exchangeable shares or obligations) shall be less than the
Purchase Price in effect immediately prior to the time of such issue or sale,
then such issue or sale shall be deemed to be an issue or sale (as of the date
of issue or sale of such convertible or exchangeable shares or obligations) of
the total maximum number of shares of Common Stock necessary to effect the
conversion or exchange of all such convertible or exchangeable shares or
obligations, and the total minimum amount received or receivable by the Company
in consideration of the issue or sale of such convertible or exchangeable shares
or obligations, plus the total minimum amount of premiums, if any, payable to
the Company upon exchange or conversion, shall be deemed to be the consideration
actually received (as of the date of the issue or sale of such convertible or
exchangeable shares or obligations) for the issue or sale of such Common Stock.
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C. In the case of any dividend or other distribution on the
Common Stock of the Company payable in property, securities of the Company other
than Common Stock or securities of a corporation other than the Company, such
dividend or other distribution shall be deemed to have been paid or made at a
value equal to the fair value of the property or securities so distributed. Any
dividend or distribution referred to in this Subsection C shall be deemed to
have been paid or made on the day following the date fixed for the determination
of stockholders entitled to receive such dividend or distribution.
D. In determining the amount of consideration received by the
Company for Common Stock, securities convertible thereinto or exchangeable
therefor, or rights or options for the purchase thereof, no deduction shall be
made for expenses or underwriting discounts or commissions paid by the Company.
The Board shall determine in good faith the fair value of the amount of
consideration other than money received by the Company upon the issue by it of
any of its securities. The Board shall also determine in good faith the fair
value of any dividend or other distribution made upon Common Stock payable in
property, securities of the Company other than Common Stock or securities of a
corporation other than the Company. The Board shall, in the case that any Common
Stock, securities convertible thereinto or exchangeable therefor, or rights or
options for the purchase thereof are issued with other stock, securities or
assets of the Company, determine in good faith what part of the consideration
received therefor is applicable to the issue of the Common Stock, securities
convertible thereinto or exchangeable therefor, or rights or options for the
purchase thereof.
E. If there shall be any change in (i) the minimum aggregate
consideration named in the rights or options referred to in Subsection A above,
(ii) the consideration received by the Company for such rights or options, (iii)
the price per share for which Common Stock is deliverable upon the conversion or
exchange of the convertible or exchangeable shares or obligations referred to in
Subsection B above, (iv) the number of shares which may be subscribed for or
purchased pursuant to the rights or options referred to in Subsection A above,
or (v) the rate at which the convertible or exchangeable shares or obligations
referred to in Subsection B above are convertible into or exchangeable for
Common Stock, then the Purchase Price in effect at the time of such event shall
be readjusted to the Purchase Price which would have been in effect at such time
had such rights, options, or convertible or exchangeable shares or obligations
still outstanding provided for such changed consideration, price per share,
number of shares, or rate of conversion or exchange, as the case may be, at the
time initially offered, granted, issued or sold, but only if as a result of such
adjustment the Purchase Price then in effect hereunder is thereby reduced.
13. Fractional Shares. In no event shall any fractional share of Common
Stock be issued upon any exercise of this Warrant. If, upon exercise of this
Warrant as an entirety, the Holder would, except as provided in this Section 13,
be entitled to receive a fractional share of Common Stock, then the Company
shall issue the next higher number of full shares of Common Stock, issuing a
full share with respect to such fractional share.
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14. Certificate of Adjustment. Whenever the Purchase Price is
adjusted, as herein provided, the Company shall promptly deliver to the Holder a
certificate of a firm of independent public accountants setting forth the
Purchase Price after such adjustment and setting forth a brief statement of the
facts requiring such adjustment.
15. Notices of Record Date, Etc. In the event of:
A. any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right,
B. any reclassification of the capital stock of the Company,
capital reorganization of the Company, consolidation or merger involving the
Company, or sale or conveyance of all or substantially all of its assets, or
C. any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then and in each such event the Company will mail or cause to be mailed to the
Holder a notice specifying (i) the date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and stating the amount
and character of such dividend, distribution or right, or (ii) the date on which
any such reclassification, reorganization, consolidation, merger, sale or
conveyance, dissolution, liquidation or winding-up is to take place, and the
time, if any is to be fixed, as of which the holders of record in respect of
such event are to be determined. Such notice shall be mailed at least 20 days
prior to the date specified in such notice on which any such action is to be
taken.
16. Amendment. The terms of this Warrant may be amended, modified or
waived only with the written consent of the Company and the holders of Warrants
representing at least two-thirds of the number of shares of Common Stock then
issuable upon the exercise of the Warrants. No such amendment, modification or
waiver shall be effective as to this Warrant unless the terms of such amendment,
modification or waiver shall apply with the same force and effect to all of the
other Warrants then outstanding.
17. Warrant Register; Transfers, Etc.
A. The Company will maintain a register containing the names and
addresses of the registered holders of the Warrants. The Holder may change its
address as shown on the warrant register by written notice to the Company
requesting such change. Any notice or written communication required or
permitted to be given to the Holder may be given by certified mail or delivered
to the Holder at its address as shown on the warrant register.
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B. Subject to compliance with applicable federal and state
securities laws, this Warrant may be transferred by the Holder with respect to
any or all of the shares purchasable hereunder. Upon surrender of this Warrant
to the Company, together with the assignment hereof properly endorsed, for
transfer of this Warrant as an entirety by the Holder, the Company shall issue a
new warrant of the same denomination to the assignee. Upon surrender of this
Warrant to the Company, together with the assignment hereof properly endorsed,
by the Holder for transfer with respect to a portion of the shares of Common
Stock purchasable hereunder, the Company shall issue a new warrant to the
assignee, in such denomination as shall be requested by the Holder hereof, and
shall issue to such Holder a new warrant covering the number of shares in
respect of which this Warrant shall not have been transferred.
C. In case this Warrant shall be mutilated, lost, stolen or
destroyed, the Company shall issue a new warrant of like tenor and denomination
and deliver the same (i) in exchange and substitution for and upon surrender and
cancellation of any mutilated Warrant, or (ii) in lieu of any Warrant lost,
stolen or destroyed, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft or destruction of such Warrant (including a
reasonably detailed affidavit with respect to the circumstances of any loss,
theft or destruction) and of indemnity reasonably satisfactory to the Company,
provided, however, that so long as the original holder of this Warrant is the
registered holder of this Warrant, no indemnity shall be required other than its
written agreement to indemnify the Company against any loss arising from the
issuance of such new warrant.
18. No Impairment. The Company will not, by amendment of its Articles
of Incorporation or through any reclassification, capital reorganization,
consolidation, merger, sale or conveyance of assets, dissolution, liquidation,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder.
19. Governing Law. The provisions and terms of this Warrant shall be
governed by and construed in accordance with the internal laws of the
Commonwealth of Pennsylvania.
20. Successors and Assigns. This Warrant shall be binding upon the
Company's successors and assigns and shall inure to the benefit of the Holder's
successors, legal representatives and permitted assigns.
21. Business Days. If the last or appointed day for the taking of any
action required or the expiration of any right granted herein shall be a
Saturday or Sunday or a legal
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holiday in the Commonwealth of Pennsylvania, then such action may be taken or
right may be exercised on the next succeeding day which is not a Saturday or
Sunday or such a legal holiday.
Dated: January , 1998 U.S. PHYSICIANS, Inc.
By:___________________________
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SUBSCRIPTION
To:____________________ Date:_________________________
The undersigned hereby subscribes for __________ shares of Common Stock
covered by this Warrant. The certificate(s) for such shares shall be issued in
the name of the undersigned or as otherwise indicated below:
------------------------------
Signature
------------------------------
Name for Registration
------------------------------
Mailing Address
NET ISSUE ELECTION NOTICE
To:____________________ Date:_________________________
The undersigned hereby elects under Section 5 to surrender the right to
purchase _______ shares of Common Stock pursuant to this Warrant. The
certificate(s) for the shares issuable upon such net issue election shall be
issued in the name of the undersigned or as otherwise indicated below.
------------------------------
Signature
------------------------------
Name for Registration
------------------------------
Mailing Address
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ASSIGNMENT
For value received ____________________________ hereby sells, assigns
and transfers unto ____________________________________________________________
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Please print or typewrite name and address of Assignee
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the within Warrant, and does hereby irrevocably constitute and appoint
_______________________ its attorney to transfer the within Warrant on
the books of the within named Company with full power of substitution on the
premises.
Dated:_______________________
In the Presence of:
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