WARRANT PURCHASE AGREEMENT
WARRANT PURCHASE AGREEMENT (this "Agreement"), dated as of January 29,
1997, between Magellan Health Services, Inc., a Delaware corporation (the
"Company"), and Crescent Real Estate Equities Limited Partnership, a Delaware
limited partnership (the "Buyer").
WHEREAS, the Company desires to sell to Buyer, and Buyer desires to
purchase from the Company, warrants to purchase shares of common stock of the
Company, par value $.25 per share ("Common Stock"); and
WHEREAS, the Company and Buyer are entering into contemporaneously herewith
that certain Real Estate Purchase and Sale Agreement dated January 29, 1997
("REIT Purchase Agreement"), pursuant to which the Buyer has agreed to purchase
certain real estate and related assets from the Company; and
WHEREAS, the Company and the Buyer have also agreed to certain other
transactions pursuant to the Transaction Documents (as defined in the REIT
Purchase Agreement).
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
Company and Buyer hereby agree as follows:
ARTICLE I
TERMS OF THE TRANSACTION
1.1 Agreement to Sell and to Purchase Warrants. At the Closing (as defined
in the REIT Purchase Agreement), and on the terms and subject to the conditions
set forth in this Agreement, the Company shall sell to Buyer, and Buyer shall
purchase from the Company, warrants (collectively, the "Warrants") to purchase
shares of Common Stock. The Warrants shall be exercisable during the periods set
forth on Annex 1 and shall constitute the right to purchase that number of
shares of Common Stock as set forth on Annex 1 (subject to adjustment from time
to time as provided in the Warrants). The Warrants shall be in substantially the
form set forth as Exhibit A hereto (except for the number of shares and the
exercise periods which shall be in accordance with Annex I).
1.2 Purchase Price and Payment. The parties hereto acknowledge that the
Purchase Price for the Warrants was made by them in arm's length negotiation.
The aggregate purchase price for the Warrants is the amount to be allocated as
contemplated pursuant to Section 2.1 of the REIT Purchase Agreement (the
"Purchase Price"). The Purchase Price payable by Buyer for the Warrants shall be
paid by Buyer on or before the Closing Date (as hereinafter defined) in
immediately available funds by confirmed wire transfer to a bank account to be
designated by the Company (such designation to occur no later than the third
Business Day prior to the Closing Date).
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1.3 Defined Terms. A list of terms used in this Agreement is set forth in
Article XI.
ARTICLE II
CLOSING AND CLOSING DATE
The Closing of the transactions contemplated hereby shall occur at the time
of the Closing of the REIT Purchase Agreement and upon satisfaction of the
conditions to Closing set forth herein and therein. The date on which the
Closing is required to take place is herein referred to as the "Closing Date."
All Closing transactions shall be deemed to have occurred simultaneously.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer, as of the date hereof, that:
3.1 Corporate Organization. The Company is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority in all material respects to
own, lease, and operate its properties and to carry on its business as now being
conducted. No actions or proceedings to dissolve the Company are pending or, to
the best knowledge of the Company, are threatened.
3.2 Capitalization of the Company.
(a) The authorized capital stock of the Company consists of (i) 80,000,000
shares of Common Stock, of which, as of the date hereof 28,686,091 shares are
outstanding and 4,423,740 shares are held in the Company's treasury, and (ii)
10,000,000 shares of Preferred Stock, without par value, of which, as of the
date hereof, no shares are outstanding. All outstanding shares of capital stock
of the Company have been validly issued and are fully paid and nonassessable,
and no shares of capital stock of the Company are subject to, nor have any been
issued in violation of, preemptive or similar rights. As of the date hereof, (i)
an aggregate of 4,369,752 shares of Common Stock are reserved for issuance
pursuant to stock options granted to certain directors, officers, and employees;
(ii) an aggregate of 2,168,661 shares of Common Stock are reserved for issuance
and issuable upon the exercise of outstanding warrants; (iii) certain shares of
Common Stock are reserved for issuance upon the exercise of certain purchase
rights which become exercisable pursuant to the terms of the Rights Agreement;
and (iv) an aggregate of 2,831,739 shares of Common stock are reserved for
issuance and issuable under the Exchange Agreement.
(b) Except as set forth above in subparagraph (a) of this Section 3.2 and
as contemplated by this Agreement, there are outstanding (i) no shares of
capital stock or other voting securities of
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the Company; (ii) no securities of the Company convertible into or exchangeable
for shares of capital stock or other voting securities of the Company; (iii) no
options or other rights to acquire from the Company, and no obligation of the
Company to issue or sell, any shares of capital stock or other voting securities
of the Company or any securities of the Company convertible into or exchangeable
for such capital stock or voting securities; and (iv) other than employee
compensation plans based on the Company's earnings and executive officer
employment agreements, no equity equivalents, interests in the ownership or
earnings, or other similar rights of or with respect to the Company. There are
no outstanding contractual obligations of the Company to repurchase, redeem or
otherwise acquire any shares of Common Stock or any other securities of the type
described in clauses (i)-(iv) of the preceding sentence.
3.3 Authority Relative to This Agreement. The Company has full corporate
power and authority to execute, deliver, and perform this Agreement to which it
is a party and to consummate the transactions contemplated hereby. The
execution, delivery, and performance by the Company of this Agreement, and the
consummation by it of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action of the Company. This Agreement has
been duly executed and delivered by the Company and constitutes, and the
Warrant, when executed by the Company will be, a valid and legally binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except that such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting
creditors' rights generally or by general principles of equity.
3.4 Noncontravention. The execution, delivery, and performance by the
Company of this Agreement and the Warrants and the consummation by it of the
transactions contemplated hereby do not and will not (i) conflict with or result
in a violation of any provision of the Company's Restated Certificate of
Incorporation or the Company's Bylaws, as amended, or the charter, bylaws or
other governing instruments of any Subsidiary, (ii) conflict with or result in a
violation of any provision of, or constitute (with or without the giving of
notice or the passage of time or both) a default under, or give rise (with or
without the giving of notice or the passage of time or both) to any right of
termination, cancellation, or acceleration under, any bond, debenture, note,
mortgage, indenture, lease, agreement, or other instrument or obligation to
which the Company or any Subsidiary is a party or by which the Company or any
Subsidiary or any of their respective properties may be bound, (iii) result in
the creation or imposition of any Encumbrance upon the properties of the Company
or any Subsidiary, or (iv) assuming compliance with the matters referred to in
Section 3.5, violate any Applicable Law binding upon the Company or any
Subsidiary, except, in the case of clauses (ii), (iii), and (iv) above, for any
such conflicts, violations, defaults, terminations, cancellations,
accelerations, or Encumbrances which would not, individually or in the
aggregate, have a material adverse effect on the business, assets, results of
operations, or financial condition of the Company and the Subsidiaries taken as
a whole or the ability of the Company to consummate the transactions
contemplated hereby.
3.5 Governmental Approvals. No consent, approval, order, or authorization
of, or declaration, filing, or registration with, any Governmental Entity is
required to be obtained or made
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by the Company or any Subsidiary in connection with the execution, delivery, or
performance by the Company of this Agreement or the consummation by it of the
transactions contemplated hereby, other than (i) compliance with any applicable
requirements of the HSR Act; (ii) compliance with any applicable requirements of
the Securities Act; (iii) compliance with any applicable requirements of the
Exchange Act; (iv) compliance with any applicable state securities laws; and (v)
such consents, approvals, orders, or authorizations which, if not obtained, and
such declarations, filings, or registrations which, if not made, would not,
individually or in the aggregate, have a material adverse effect on the
business, assets, results of operations, or financial condition of the Company
or on the ability of the Company to consummate the transactions contemplated
hereby. The representations and warranties of the Company contained in this
Section 3.5, insofar as such representations and warranties pertain to
compliance by the Company with the requirements of the Securities Act and
applicable state securities laws, are based on the representations and
warranties of Buyers contained in Section 4.5.
3.6 Authorization of Issuance: Reservation of Shares. When issued and
delivered pursuant to this Agreement against payment therefor, the Warrants will
have been duly authorized, issued and delivered and will constitute valid and
legally binding obligations of the Company entitled to the benefits provided
therein. During the period within which the Warrants may be exercised, the
Company will at all times have authorized and reserved for the purpose of issue
upon exercise of the Warrants, a sufficient number of shares of Common Stock to
provide for the exercise of the Warrants. All shares of Common Stock which are
issuable upon exercise of the Warrants (the "Warrant Shares") will, when issued,
be validly issued, fully paid and nonassessable. Upon exercise of the Warrants
the issuance of the Warrant Shares will not be subject to any preemptive or
similar rights.
3.7 SEC Filings. The Company has filed with the Commission all forms,
reports, schedules, statements, and other documents (excluding exhibits)
required to be filed by it since September 30, 1995 under the Securities Act,
the Exchange Act, and all other federal securities laws. All forms, reports,
schedules, statements, and other documents (including all amendments thereto)
filed by the Company with the Commission since such date are herein collectively
referred to as the "SEC Filings." The SEC Filings, at the time filed, complied
in all material respects with all applicable requirements of federal securities
laws. None of the SEC Filings, including, without limitation, any financial
statements or schedules included therein, at the time filed, contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading except as the same was corrected or superseded in a subsequent
document duly filed with the Commission. The audited consolidated financial
statements and unaudited consolidated interim financial statements of the
Company included in the SEC Filings present fairly in all material respects, in
conformity with generally accepted accounting principles applied on a consistent
basis (except as may be indicated in the notes thereto and, in the case of the
unaudited consolidated interim financial statements, except to the extent that
preparation of such financial statements in accordance with generally accepted
accounting principles is not required by applicable rules of the Commission),
the consolidated financial position of the Company
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as of the dates thereof and its consolidated results of operations and cash
flows for the periods then ended (subject to normal year-end adjustments in the
case of any interim financial statements).
3.8 Rights Plan. Based upon the representation of Buyer in Section 4.6
hereof and relying upon the information in the most recent Schedule 13D filed by
Rainwater-Magellan Holdings, L.P. related to stock ownership in the Company, the
execution of this Agreement and the issuance of the Warrant Shares (assuming the
continued validity of the representation of Buyer in Section 4.6 hereof) shall
not cause an issuance of certificates within the meaning of Section 3 of the
Rights Agreement dated as of July 21, 1992, between the Company and First Union
National Bank of North Carolina (the "Rights Agreement") or a Triggering Event
as defined in the Rights Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Company that:
4.1 Organization. Buyer is duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its formation.
4.2 Authority Relative to This Agreement. Buyer has full power and
authority to execute, deliver, and perform this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery, and performance by
Buyer of this Agreement, and the consummation by it of the transactions
contemplated hereby, have been duly authorized by all necessary action of Buyer.
This Agreement has been duly executed and delivered by Buyer and constitutes a
valid and legally binding obligation of Buyer, enforceable against Buyer in
accordance with its terms, except that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws
affecting creditors' rights generally or by general principles of equity.
4.3 Noncontravention. The execution, delivery, and performance by Buyer of
this Agreement and the consummation by it of the transactions contemplated
hereby do not and will not (i) conflict with or result in a violation of any
provision of the charter, bylaws, or similar organizational documents of Buyer,
(ii) conflict with or result in a violation of any provision of, or constitute
(with or without the giving of notice or the passage of time or both) a default
under, or give rise (with or without the giving of notice or the passage of time
or both) to any right of termination, cancellation, or acceleration under, any
bond, debenture, note, mortgage, indenture, lease, agreement, or other
instrument or obligation to which Buyer is a party or by which Buyer or any of
its properties may be bound, (iii) result in the creation or imposition of any
Encumbrance upon the properties of Buyer, or (iv) violate any Applicable Law
binding upon Buyer, except, in the case of clauses (ii), (iii), and (iv) above,
for any such conflicts, violations, defaults, terminations, cancellations,
accelerations, or Encumbrances which would not, individually or in the
aggregate,
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have a material adverse effect on the business, assets, results of operations,
or financial condition of Buyer or on the ability of Buyer to consummate the
transactions contemplated hereby.
4.4 Governmental Approvals. Other than any HSR Act filing, no consent,
approval, order, or authorization of, or declaration, filing, or registration
with, any Governmental Entity is required to be obtained or made by Buyer in
connection with the execution, delivery, or performance by Buyer of this
Agreement or the consummation by it of the transactions contemplated hereby.
4.5 Purchase for Investment. Buyer has been furnished with all information
that it has requested for the purpose of evaluating the proposed acquisition of
the Warrants pursuant hereto, and Buyer has had an opportunity to ask questions
of and receive answers from the Company regarding the Company and its business,
assets, results of operations, and financial condition and the terms and
conditions of the issuance of the Warrants. Buyer is acquiring the Warrants to
be purchased by it for its own account for investment and not for distribution
in any manner that would violate applicable securities laws. Buyer can bear the
risk of an investment in the Warrants, and has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of a prospective investment in the Warrants. The acquisition of such
Warrants by Buyer at Closing shall constitute Buyer's confirmation of the
foregoing representations. Buyer understands that such Warrants are being sold
to it in a transaction which is exempt from the registration requirements of the
Securities Act, and that, in making the representations and warranties contained
in Section 3.5 pertaining to compliance by the Company with the requirements of
the Securities Act and applicable securities laws, the Company is relying, to
the extent applicable, upon Buyer's representations set forth herein.
4.6 No Other Shares. Except for such rights as may be conferred on Buyer by
this Agreement, as of the date hereof, Buyer does not beneficially own, directly
or indirectly through any subsidiary, or any affiliate of the Buyer in which the
Buyer directly or indirectly owns stock or equity interests, and Crescent Real
Estate Equities Company does not own, any shares of capital stock of the
Company.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Press Releases. Except as may be required by Applicable Law, neither
Buyer, on the one hand, nor the Company, on the other, shall issue any press
release with respect to this Agreement or the transactions contemplated hereby
without the prior written consent of the other party (which consent shall not be
unreasonably withheld under the circumstances). Any such press release required
by Applicable Law shall only be made after reasonable notice to the other party.
5.2 Stock Exchange Listing. The Company shall use its commercially
reasonable best efforts to cause the Warrant Shares to be approved for listing
on the New York Stock Exchange,
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subject to official notice of issuance, prior to the date any such Warrant
Shares become issuable upon the exercise of the Warrants.
5.3 Registration Rights.
(a) Registration of Warrant Shares. At least 90 days prior to the date on
which the Warrant Shares are issuable upon exercise of the Warrant, the Company
will prepare and file one or more registration statements under the Securities
Act, and use its commercially reasonable best efforts to cause such registration
statements to become effective as promptly as possible, with respect to the
issuance of the Warrant Shares upon exercise of the Warrants and the resale of
the Registrable Warrant Shares.
(b) Registration Procedures. With respect to each registration statement
filed in accordance with this Section 5.3 (the "Registration Statement"), the
Company shall:
(i) cause the Registration Statement and the related prospectus and
any amendment or supplement, (A) to comply in all material respects with
the applicable requirements of the Securities Act and under the rules and
regulations promulgated thereunder, and (B) not to contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading;
(ii) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus used in
connection therewith, and upon the mandatory expiration of the Registration
Statement, one or more additional registration statements, as may be
necessary to keep the Registration Statement effective on a continual basis
for so long as the Buyer or its permitted transferee owns any Underlying
Warrant Shares; provided that the Company shall not be required to maintain
the effectiveness of any Registration Statement filed hereunder for a
period in excess of twelve years and sixty (60) days from the Closing Date;
(iii) furnish, upon written request, to Buyer a copy of any amendment
or supplement to the Registration Statement or prospectus prior to filing
it after effectiveness and not file any such amendment or supplement to
which Buyer shall have reasonably objected on the grounds that such
amendment or supplement does not comply in all material respects with the
requirements of the Securities Act or of the rules or regulations
promulgated thereunder;
(iv) furnish to Buyer such number of copies of the Registration
Statement, each amendment and supplement thereto, the prospectus used in
connection therewith (including, without limitation, each preliminary
prospectus and final prospectus) and such other document as Buyer may
reasonably request in order to facilitate the disposition of the
Registrable Warrant Shares owned by Buyer;
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(v) use its commercially reasonable best efforts to register or
qualify all Registrable Warrant Shares covered by the Registration
Statement under such other securities or blue sky laws of the states of the
United States as may be required for the issuance and sale of the
Registrable Warrant Shares, to keep such registration or qualification in
effect for so long as the Registration Statement remains in effect except
that the Company shall not for any such purpose be required to qualify
generally to do business as a foreign corporation in any jurisdiction in
which it is not and would not, but for the requirements of this Section
5.3, be obligated to be so qualified, or to subject itself to taxation in
any such jurisdiction, or to consent to general service of process in any
such jurisdiction;
(vi) prior to any sale of the Registrable Warrant Shares effected on a
national securities exchange, deliver to such national securities exchange
copies of the prospectus to be used in connection with the offering to be
conducted pursuant to the Registration Statement;
(vii) upon discovery that, or upon the happening of any event as a
result of which, the prospectus included in the Registration Statement, as
then in effect, includes or in the judgment of the Company may include an
untrue statement of a material fact or omits or may omit to state any
material fact required to be stated in such prospectus or necessary to make
the statements in such prospectus not misleading in the light of the
circumstances in which they were made, which circumstance requires
amendment of the Registration Statement or supplementation of the
prospectus, prepare and file as promptly as reasonably possible a
supplement to or an amendment of such prospectus as may be necessary so
that, as when delivered (if required by the Securities Act) to a purchaser
of Registrable Warrant Shares, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to
be stated in such prospectus or necessary to make the statements in such
prospectus not misleading in the light of the circumstances in which they
were made;
(viii) otherwise use its commercially reasonable best efforts to
comply with all applicable rules and regulations under the Securities Act
and, in its discretion, to make available to its securities holders, as
soon as reasonably practicable, an earnings statement covering the period
of at least twelve months, but not more than eighteen months, beginning
with the first month of the first fiscal quarter after the effective date
of the Registration Statement, which earnings statement shall satisfy the
provisions of section 11(a) of the Securities Act;
(ix) provide and cause to be maintained a transfer agent and registrar
for all Registrable Warrant Shares covered by the Registration Statement
from and after a date not later than the effective date of the Registration
Statement;
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(x) use its commercially reasonable best efforts to list all
Registrable Warrant Shares covered by the Registration Statement on any
national securities exchange on which securities of the same class as the
Registrable Warrant Shares are then listed;
(xi) after any sale of the Registrable Warrant Shares pursuant to this
Section 5.3, to the extent not prohibited by law, cause any restrictive
legends to be removed and any transfer restrictions to be rescinded with
respect to the Registrable Warrant Shares;
(xii) enter into such customary agreements (including, without
limitation, underwriting agreements in customary form, substance, and
scope) and take all such other actions as the holders of a majority of the
Registrable Warrant Shares being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of
such Warrant Shares;
(xiii) in the event of the issuance of any stop order suspending the
effectiveness of the Registration Statement, or of any order suspending or
preventing the use of any related prospectus or suspending the
disqualification of any Common Stock included in the Registration Statement
for sale in any jurisdiction, the Company will use its commercially
reasonable best efforts promptly to obtain the withdrawal of such order;
and
(xiv) use its commercially reasonable best efforts to cause such
Registrable Warrant Shares covered by the Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the Buyer thereof to consummate
the disposition of such Warrant Shares.
(c) Obligations of Buyer. The Buyer holding Registrable Warrant Shares
shall furnish to the Company such information regarding the Buyer as the Company
may from time to time reasonably request in writing (and will notify the Company
of any changes in such information) and as shall be required by the Securities
Act in connection with such registration.
(d) Delay of Sales. During any period in which the Company is maintaining
the effectiveness of a Registration Statement for the Registrable Warrant Shares
pursuant to this Section 5.3, the Company shall have the right, upon giving
notice to the Buyer holding Registrable Warrant Shares of the exercise of such
right, to require the Buyer not to sell any Registrable Warrant Shares pursuant
to such Registration Statement for a period of time the Company deems reasonably
necessary, which time shall be specified in such notice but in no event longer
than a period of 90 days, if (i) the Company is engaged in an offering of shares
by the Company for its own account or is engaged in or proposes to engage in
discussions or negotiations with respect to, or has proposed or taken a
substantial step to commence, or there otherwise is pending, any merger,
acquisition, other form of business combination, divestiture, tender offer,
financing or other transaction, or there is an event or state of facts relating
to the Company, in each case which is material to the Company (any such
negotiation, step, event or state of facts being herein called a "Material
Activity"), (ii) such Material Activity would, in the opinion of counsel for the
Company reasonably acceptable to Buyer,
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require disclosure so as to permit the Registrable Warrant Shares to be sold in
compliance with applicable law, and (iii) such disclosure would, in the
reasonable judgment of the Company, be adverse to its interests in any material
respect. The Company shall have no obligation to include in any notice
contemplated by this subparagraph (f) any reference to or description of the
facts based upon which the Company is delivering such notice.
(e) Indemnification.
(i) The Company shall indemnify and hold harmless the Buyer holding
Registrable Warrant Shares and its directors, Affiliates and officers, and
each other person, if any, who controls the Buyer within the meaning of the
Securities Act against any losses, claims, damages, liabilities or expenses
(including reasonable fees and expenses of counsel), joint or several, to
which the Buyer or any such director, Affiliate or officer or participating
or controlling person may become subject under the Securities Act or
otherwise in connection with or as a result of a sale by the Buyer of the
Registrable Warrant Shares, insofar as such losses, claims, damages,
liabilities or expenses (or related actions or proceedings) arise out of or
are based upon (i) any untrue statement of any material fact contained in
the Registration Statement, any preliminary prospectus, final prospectus or
summary prospectus contained in the Registration Statement, or any
amendment or supplement to the Registration Statement, or any document
incorporated by reference in the Registration Statement, or (ii) any
omission to state in any such document a material fact required to be
stated in any such document or necessary to make the statements in any such
document not misleading, and the Company will reimburse the Buyer and each
such director, Affiliate, officer, participating person and controlling
person for any legal or any other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or expense (or action or proceeding in respect of any such loss,
claim, damage, liability or expense) which arises out of or is based upon
an untrue statement or omission made in the Registration Statement, any
such preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement except for any untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by the Buyer or any such director, Affiliate, officer,
participating person or controlling person for use in the preparation of
the Registration Statement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Buyer or
any such director, Affiliate, officer, participating person or controlling
person and shall survive the transfer of Registrable Warrant Shares by the
Buyer.
(ii) The Buyer shall indemnify and hold harmless (in the same manner
and to the same extent as set forth in clause (i) of this subparagraph (f))
the Company, each director of the Company, each officer of the Company who
shall sign the Registration Statement and each other person, if any, who
controls the Company within the meaning of the Securities Act, with respect
to any untrue statement in or omission from the Registration Statement, any
preliminary prospectus, final prospectus or summary prospectus included in
the Registration Statement, or any amendment or supplement to the
Registration Statement, but only to the
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extent that such statement or omission was made in direct reliance upon and
in conformity with written information furnished to the Company by the
Buyer for use in the preparation of the Registration Statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any such director,
officer or controlling person and shall survive the transfer of the
Registrable Warrant Shares by the Buyer.
(iii) Indemnification under this Section 5.3 shall be made as set
forth in Article IX hereof.
(f) Registration Expenses. All expenses incident to the Company's
registration of the Registrable Warrant Shares pursuant to the provisions of
this Section 5.3, including, without limitation, all registration and filing
fees, fees and expenses of compliance with securities or blue sky laws, printing
and engraving expenses, messenger and delivery expenses and fees and
disbursements of counsel for the Company and all independent certified public
accountants, underwriters (excluding underwriting discounts and any selling
commissions) and any persons retained by the Company (all such expenses being
herein called "Registration Expenses"), will be paid by the Company; provided,
that, all expenses incurred by the Buyer holding Registrable Warrant Shares to
retain any counsel, accountant or other advisor will not be deemed to be
Registration Expenses and will be paid by the Buyer. The underwriting discounts
or commissions and any selling commissions together with any stock transfer or
similar taxes attributable to sales of the Registrable Warrant Shares will be
paid by the Buyer.
5.4 Fees and Expenses. The parties shall each pay their own fees and
expenses and those of their agents, advisors, attorneys and accountants with
respect to the negotiation and execution of this Agreement.
5.5 Restrictions on Transfers: Restrictions on Exercise of Warrants.
(a) Restrictions on Transfer of Warrants and Warrant Shares. Subject to the
provisions of subsections (b) and (c), without having obtained the prior written
consent of the Company, the Buyer shall not:
(i) sell or transfer any of the Warrants held by it to any other
person, except for Excluded Transfers (as defined below) or to a wholly
owned Subsidiary; and
(ii) prior to the twelfth anniversary of the Closing Date, except for
an Excluded Transfer, sell or transfer in a privately negotiated
transaction to a single purchaser and its Affiliates, or any "Group" (as
such term is defined in Rule 13d-5(b)(1) under the Exchange Act) any
combination of Warrants and/or Warrant Shares, if the aggregate number of
Warrant Shares and Underlying Warrant Shares to be so transferred equals 5%
or more of
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the Common Stock then outstanding on a fully-diluted basis (i.e. including
all shares of Common Stock issuable under the terms of any options,
warrants and similar rights).
(b) Exceptions to Transfer Restrictions. Notwithstanding subsection (a),
the Buyer may sell or transfer any of the Warrants and/or Warrant Shares to any
person pursuant to, as a result of, or in connection with (i) a tender offer or
an exchange offer approved by the Board of Directors of the Company; (ii) the
consummation of a merger (provided the Company is not the surviving corporation
in such merger), consolidation, or a sale of all or substantially all the assets
of the Company; or (iii) any other "Fundamental Change Transaction" (as such
term is defined in the Warrant). The Buyer may also transfer all or any portion
of any one or more of the Warrants to Crescent Opportunity Corporation ("COC")
if the transfer of such Warrants is necessary to avoid jeopardizing, by reason
of the ownership or exchange of such Warrants, the qualification of Crescent
Real Estate Equities Company ("CEI") as a real estate investment trust for
federal income tax purposes ("REIT"); provided, however, that in the event of
any transfer for such purpose, the Buyer provides the Company with a written
opinion of counsel that the transfer of such Warrants is necessary to avoid
jeopardizing the qualification of CEI as a REIT (any transfer pursuant to this
Section 5.5(b), an "Excluded Transfer").
(c) Transferees. During the period in which the restrictions set forth in
this Section 5.5 remain applicable, neither Buyer nor any transferee shall be
entitled to, directly or indirectly, sell or transfer any of the Warrants and/or
Warrant Shares in an Excluded Transfer to any person who is not a party to this
Agreement, unless the purported transferee executes an instrument acknowledging
that it is bound by the terms of this Section 5.5 and such instrument is
delivered to the Company.
5.6 Indemnification of Brokerage. Each of the parties hereto agrees to
indemnify and hold harmless each other party from and against any claim or
demand for a commission or other compensation by any financial advisor, broker,
agent, finder, or similar intermediary claiming to have been employed by or on
behalf of such indemnifying party and to bear the cost of legal fees and
expenses incurred in defending against any such claim or demand.
5.7 Delivery of Information. The Company will deliver to the Buyer promptly
upon the filing thereof, copies of all registration statements (other than the
exhibits thereto and any registration statements on Form S-8 or its equivalent)
and reports on Forms 10-K (or their equivalents) which the Company shall have
filed with the Commission or any similar reports filed with any state securities
commission or office.
5.8 Rule 144 and Rule 144A Information. With a view to making available to
the Buyer the benefits of Rule 144 and Rule 144A promulgated under the 1933 Act
and any other rule or regulation of the Commission that may at any time permit
the Buyer to sell Common Stock of the Company to the public without
registration, the Company agrees to:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144;
-12-
(ii) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange
Act; and
(iii) furnish to Buyer forthwith upon request (A) a written statement
by the Company that it has complied with the reporting requirements of Rule
144, the Securities Act and the Exchange Act, (B) a copy of the most recent
annual or quarterly report of the Company and such other reports and
documents so filed by the Company under the Securities Act and the Exchange
Act and (C) such other information as may be reasonably requested by each
Buyer in availing itself of any rule or regulation of the Commission which
permits the selling of any such securities without registration; and
(iv) comply with all rules and regulations of the Commission
applicable to the Company in connection with use of Rule 144A (or any
successor thereto); and
(v) within five business days of the Company's receipt of a request
made by, or on behalf of, any prospective transferee of who is a Qualified
Institutional Buyer (as defined in Rule 144A) and would be purchasing
Common Stock of the Company in reliance upon Rule 144A), provide to such
prospective transferee copies of annual audited and quarterly unaudited
financial statements of the Company for it to comply with Rule 144A.
5.9 Standstill.
(a) General. Buyer agrees that during the four year period ending on the
anniversary of the Closing Date, it will not, and it will cause its Affiliates
and employees (other than Xxxxxxx X. Xxxxxxxxx, Xxxx X. Xxxx and Xxxxxx X.
Xxxxxxx) not to, purchase additional shares (excluding any acquisition of shares
of Common Stock or Equity Securities pursuant to warrants outstanding pursuant
to that certain Stock and Warrant Purchase Agreement dated December 22, 1995
between the Company and Xxxxxxx X. Xxxxxxxxx and certain other buyers) of the
Company's Common Stock (or other Equity Securities) so that Buyer and its
Affiliates and employees collectively own 20% or more of the Company's Common
Stock then outstanding; provided, however, that Buyer and its Affiliates and
employees shall not be deemed to own 20% or more of the Common Stock then
outstanding solely by reason of the Company's purchase of any Common Stock
unless thereafter Buyer and its Affiliates and employees purchase any additional
shares of Common Stock (excluding any acquisition of Warrant Shares upon
exercise of the Warrants, which shall not be restricted hereunder).
(b) Additional Standstill Obligations. Buyer further agrees that during the
twelve year period ending on the anniversary of the Closing Date, it will not,
and it will cause its Affiliates and employees not to, without prior Company
consent, (i) effect or cause to be effected any (A) "solicitation" of "proxies"
(as such terms are used in the proxy rules of the Commission) with respect to
the Company or any action resulting in such person becoming a "participant" in
any "election contest" (as such terms are used in the proxy rules of the
Commission) with respect to the Company,
-13-
or (B) any tender or exchange offer or offer for a merger, consolidation, share
exchange or business combination involving the Company or substantially all of
its assets, (ii) propose any matter for submission to a vote of the stockholders
of the Company, or (iii) sell any shares of the Company's Common Stock (or other
Equity Securities) short.
(c) Amendments to Rights Agreement. If the Company undertakes the purchase
of any Common Stock under circumstances in which any exercise of Warrants would
be considered to cause Buyer and its Affiliates to become an "Acquiring Person"
under the Rights Agreement, the Company agrees to amend the Rights Agreement to
either (i) include the Buyer and its Affiliates in the definition of an "Initial
Shareholder", or (ii) change the definition of "Exempt Person" so as to exclude
any exercise of the Warrants from being considered as an additional purchase of
shares of Common Stock for purposes of the Rights Agreement. The Company agrees
to amend the Rights Agreement prior to Closing to the extent, if any, necessary
to prevent any of the transactions contemplated hereby, including any issuance
of Warrant Shares, to cause an issuance of certificates under Section 3 of the
Rights Agreement or a Triggering Event under the Rights Agreement.
5.10 Notices. The Company agrees to give the Buyer notice of any of the
events referred to in Section 4(g) of the Warrants at least five (5) Business
Days prior to any record date established or related to any such event which the
Buyer agrees to keep strictly confidential unless and until any such event has
been publicly announced.
5.11 Survival of Covenants. Except for any covenant or agreement which by
its terms expressly terminates as of a specific date, the covenants and
agreements of the parties hereto contained in this Agreement shall survive the
Closing without contractual limitation.
5.12 Assignment of Warrant Shares. Prior to Closing, Buyer shall transfer
and assign to Crescent Opportunity Corporation ("COC") Warrants to purchase
1,283,311 Warrant Shares, which number is equal to one half of the total number
of Warrant Shares purchased by Buyer from the Company pursuant to this Agreement
and listed on Annex I hereto, and such Warrant Shares shall be exercisable in
accordance with Annex I. Following the Closing, this Agreement will be amended
and COC will become a party to this Agreement, subject to all of the rights and
obligations contained herein and contemplated by this Agreement.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligations of the Company to consummate the transactions contemplated
by this Agreement shall be subject to the fulfillment on or prior to the Closing
Date of each of the following conditions:
-14-
6.1 Representations and Warranties True. All the representations and
warranties of Buyer contained in this Agreement shall be true and correct on and
as of the Closing Date in all material respects, except to the extent that any
such representation or warranty is made as of a specified date, in which case
such representation or warranty shall have been true and correct as of such
specified date, except to the extent contemplated by this Agreement.
6.2 Covenants and Agreements Performed. Buyer shall have performed and
complied with all covenants and agreements required by this Agreement, if any,
to be performed or complied with by it on or prior to the Closing Date in all
material respects.
6.3 HSR Act. To the extent that the HSR Act is applicable to the
transaction contemplated herein, all waiting periods (and any extensions
thereof) applicable to this Agreement and the transactions contemplated hereby
under the HSR Act shall have expired or been terminated.
6.4 Legal Proceedings. No Proceeding shall, on the Closing Date, be pending
or threatened seeking to restrain, prohibit, or obtain damages or other relief
in connection with this Agreement or the consummation of the transactions
contemplated hereby.
6.5 Certificate. The Company shall have received a certificate executed by
a duly authorized person on behalf of Buyer dated the Closing Date, representing
and certifying, in such detail as the Company may reasonably request, that the
conditions set forth in Sections 6.1, 6.2 and 6.4 have been fulfilled.
6.6 Other Conditions. All conditions to closing set forth in the REIT
Purchase Agreement have been satisfied or waived.
6.7 Other Transactions. All Transactions under the other Transaction
Documents (as defined in the REIT Purchase Agreement) have been consummated
contemporaneously herewith.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment on or prior to the Closing
Date of each of the following conditions:
7.1 Representations and Warranties True. All the representations and
warranties of the Company contained in this Agreement shall be true and correct
on and as of the Closing Date in all material respects, except to the extent
that any such representation or warranty is made as of a specified date, in
which case such representation or warranty shall have been true and correct as
of such specified date, except to the extent contemplated by this Agreement.
-15-
7.2 Covenants and Agreements Performed. The Company shall have performed
and complied with all covenants and agreements required by this Agreement to be
performed or complied with by it on or prior to the Closing Date in all material
respects.
7.3 Legal Proceeding. No Proceeding shall, on the Closing Date, be pending
or threatened seeking to restrain, prohibit, or obtain damages or other relief
in connection with this Agreement or the consummation of the transactions
contemplated hereby.
7.4 Certificates. Buyer shall have received a certificate or certificates
representing the Warrants, in definitive form representing the Warrants
purchased by it, ( in substantially the form set forth in Exhibit A hereto)
registered in the name of Buyer and duly executed by the Company.
7.5 Other Conditions. All conditions to closing the REIT Purchase Agreement
have been satisfied or waived.
7.6 Other Transactions. All Transactions under the other Transaction
Documents (as defined in the REIT Purchase Agreement) have been consummated
contemporaneously herewith.
ARTICLE VIII
TERMINATION, AMENDMENT, AND WAIVER
8.1 Termination. This Agreement shall be terminated and the transactions
contemplated hereby abandoned if the REIT Purchase Agreement is terminated.
8.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 8.1, this Agreement shall become void and have no
effect, except that the agreements contained in this Section and in Sections
5.1, 5.4 and 5.6 and Article IX shall survive the termination hereof. Nothing
contained in this Section shall relieve any party from liability for any breach
of this Agreement.
8.3 Amendment. This Agreement may not be amended except by an instrument in
writing signed by or on behalf of all the parties hereto.
8.4 Waiver. No failure or delay by a party hereto in exercising any right,
power, or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power, or privilege. The provisions
of this Agreement may not be waived except by an instrument in writing signed by
or on behalf of the party against whom such waiver is sought to be enforced.
-16-
ARTICLE IX
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
9.1 Survival. The representations and warranties of the parties hereto
contained in this Agreement or in any certificate, instrument or document
delivered pursuant hereto shall survive the Closing, regardless of any
investigation made by or on behalf of any party, until the first anniversary of
the Closing Date (the "Survival Date"). No action may be brought with respect to
a breach of any representation after the Survival Date unless, prior to such
time, the party seeking to bring such an action has notified the other party of
such claim, specifying in reasonable detail the nature of the loss suffered. The
provisions of this Section 9.1 shall have no effect upon any of the covenants of
the parties set forth in Article V or any of the other obligations of the
parties hereto under the Agreement, whether to be performed later, at or after
the Closing.
9.2 Indemnification by Company. The Company shall indemnify, defend, and
hold harmless Buyer from and against any and all claims, actions, causes of
action, demands, losses, damages, liabilities, costs, and expenses (including
reasonable attorneys' fees and expenses) (collectively, "Damages"), asserted
against, resulting to, imposed upon, or incurred by Buyer, directly or
indirectly, by reason of or resulting from any breach by the Company of any of
its representations, warranties, covenants, or agreements contained in this
Agreement or in any certificate, instrument, or document delivered pursuant
hereto. Notwithstanding anything to the contrary contained herein, the Company's
indemnity obligations hereunder (i) will not extend to Damages arising out of
negligence, willful misconduct or fraud of the Buyer and (ii) with respect to
indemnification Damages under this Section 9.2 (other than, for each of (i) and
(ii), Damages related to the ability of the Buyer to exercise the Warrants,
receive the Warrant Shares, or sell the Warrant Shares related to the failure of
Magellan to effect the registration of the Warrant Shares), the Company's
indemnification obligations (x) for a period of two (2) years following the
Closing, shall not arise until the aggregate Damages resulting from the breach
exceed $1,000,000, at which time such indemnity obligations shall cover all
Damages, and (y) after two (2) years following the Closing, shall not arise
until the aggregate Damages during such period resulting from the breach exceed
$10,000,000, at which time such indemnity obligations shall cover all Damages.
9.3 Indemnification by Buyer. Buyer shall indemnify, defend, and hold
harmless the Company from and against any and all Damages asserted against,
resulting to, imposed upon, or incurred by the Company, directly or indirectly,
by reason of or resulting from any breach by Buyer of any of its
representations, warranties, covenants, or agreements contained in this
Agreement or in any certificate, instrument, or document delivered pursuant
hereto. Notwithstanding anything to the contrary contained herein, Buyer's
indemnity obligations hereunder (i) will not extend to Damages arising out of
negligence, willful misconduct or fraud of the Company and (ii) with respect to
indemnification Damages under this Section 9.3, the Buyer's indemnification
obligations (x) for a period of two (2) years following the Closing, shall not
arise until the aggregate Damages resulting from the breach exceed $1,000,000,
at which time such indemnity obligations shall cover all Damages, and (y) after
two (2) years following the Closing, shall not arise until the aggregate
-17-
Damages during such period resulting from the breach exceed $10,000,000, at
which time such indemnity obligations shall cover all Damages.
9.4 Procedure for Indemnification. Promptly after receipt by an indemnified
party under Section 9.2 or 9.3 of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against an
indemnifying party under such Section, give written notice to the indemnifying
party of the commencement thereof, but the failure so to notify the indemnifying
party shall not relieve it of any liability that it may have to any indemnified
party except to the extent the indemnifying party demonstrates that the defense
of such action is prejudiced thereby. In case any such action shall be brought
against an indemnified party and it shall give written notice to the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it may wish, to assume
the defense thereof with counsel reasonably satisfactory to such indemnified
party. If the indemnifying party elects to assume the defense of such action,
the indemnified party shall have the right to employ separate counsel at its own
expense and to participate in the defense thereof. If the indemnifying party
elects not to assume (or fails to assume) the defense of such action, the
indemnified party shall be entitled to assume the defense of such action with
counsel of its own choice, at the expense of the indemnifying party. If the
action is asserted against both the indemnifying party and the indemnified party
and there is a conflict of interests which renders it inappropriate for the same
counsel to represent both the indemnifying party and the indemnified party, the
indemnifying party shall be responsible for paying for separate counsel for the
indemnified party; provided, however, that if there is more than one indemnified
party, the indemnifying party shall not be responsible for paying for more than
one separate firm of attorneys to represent the indemnified parties, regardless
of the number of indemnified parties. The indemnifying party shall have no
liability with respect to any compromise or settlement of any action effected
without its written consent (which shall not be unreasonably withheld).
ARTICLE X
MISCELLANEOUS
10.1 Notices. All notices, requests, demands, and other communications
required or permitted to be given or made hereunder by any party hereto shall be
in writing and shall be deemed to have been duly given or made if delivered
personally, or transmitted by first class registered or certified mail, postage
prepaid, return receipt requested, or sent by prepaid overnight delivery
service, or sent by cable, telegram, or telefax, to the parties at the addresses
and telefax numbers set forth opposite their names on the signature page hereof
(or at such other addresses and telefax numbers as shall be specified by the
parties by like notice).
10.2 Entire Agreement. This Agreement, together with the Transaction
Documents, constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof
-18-
and supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.
10.3 Binding Effect; Assignment; No Third Party Benefit. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective legal representatives, successors, and permitted assigns. Except as
otherwise expressly provided in this Agreement, neither this Agreement nor any
of the rights, interests, or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties.
Except as provided in Article IX, nothing in this Agreement, express or implied,
is intended to or shall confer upon any person other than the parties hereto,
and their respective legal representatives, successors, and permitted assigns,
any rights, benefits, or remedies of any nature whatsoever under or by reason of
this Agreement.
10.4 Severability. If any provision of this Agreement is held to be
unenforceable, this Agreement shall be considered divisible and such provision
shall be deemed inoperative to the extent it is deemed unenforceable, and in all
other respects this Agreement shall remain in full force and effect; provided
however, that if any such provision may be made enforceable by limitation
thereof, then such provision shall be deemed to be so limited and shall be
enforceable to the maximum extent permitted by applicable law.
10.5 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware, without regard to
the principles of conflicts of laws thereof.
10.6 Counterparts. This Agreement may be executed by the parties hereto in
any number of counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same agreement. Each counterpart may
consist of a number of copies hereof each signed by less than all, but together
signed by all, the parties hereto.
ARTICLE XI
DEFINITIONS
11.1 Certain Defined Terms. As used in this Agreement, each of the
following terms has the meaning given it in this Article:
"Affiliate" has the meaning specified in Rule 12b-2 promulgated under
the Exchange Act.
"Applicable Law" means any statute, law, rule, or regulation or any
judgment, order, writ, injunction, or decree of any Governmental Entity to
which a specified person or property is subject.
-19-
"Business Day" shall mean any day other than a Saturday, a Sunday, or
a day on which banking institutions in Atlanta, Georgia or Dallas, Texas
are authorized or obligated by law or executive order to close.
"Encumbrances" means liens, charges, pledges, options, mortgages,
deeds of trust, security interests, claims, restrictions (whether on
voting, sale, transfer, disposition, or otherwise), easements, and other
encumbrances of every type and description, whether imposed by law,
agreement, understanding, or otherwise.
"Equity Ownership Interests" shall mean, with respect to the Buyer, at
any time, the fraction (a) having as its numerator the number of shares of
Common Stock and Underlying Warrant Shares held beneficially by the Buyer
at such time, and (b) having as its denominator the aggregate number of
shares of Common Stock (calculated on a fully diluted basis) issued and
outstanding at such time.
"Equity Securities" means any capital stock of the Company, and any
securities directly or indirectly convertible into, or exercisable or
exchangeable for any capital stock of the Company, or any right, option,
warrant or other security which, with the payment of additional
consideration, the expiration of time or the occurrence of any event shall
give the holder thereof the right to acquire any capital stock of the
company or any security convertible into or exercisable or exchangeable
for, any capital stock of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Agreement" means that certain Exchange Agreement among the
Company and certain other parties dated as of December 13, 1995.
"Governmental Entity" means any court or tribunal in any jurisdiction
(domestic or foreign) or any public, governmental, or regulatory body,
agency, department, commission, board, bureau, or other authority or
instrumentality (domestic or foreign).
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, enterprise,
unincorporated organization, or Governmental Entity.
"Proceedings" means all proceedings, actions, suits, investigations,
and inquiries by or before any arbitrator or Governmental Entity.
"Registrable Warrant Shares" means the Warrant Shares and any Common
Stock or other Equity Securities issued with respect thereto by way of
stock dividend or stock split
-20-
or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise.
"Rights Agreement" means that certain Rights Agreement, dated as of
July 21,1992 between the Company and First Union National Bank of North
Carolina, as rights agent.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" means any corporation more than 50% of whose outstanding
voting securities, or any general partnership, joint venture, or similar
entity more than 50% of whose total equity interests, is owned, directly or
indirectly, by the Company, or any limited partnership of which the Company
or any Subsidiary is a general partner.
"Underlying Warrant Shares" shall mean, at any time, all shares of
Common Stock which may be acquired upon exercise of the Warrants. For
purposes hereof, any person who holds Warrants shall be deemed to be the
holder of the Underlying Warrant Shares obtainable upon exercise of such
Warrants.
11.2 Certain Additional Defined Terms. In addition to such terms as are
defined in the opening paragraph of and the recitals to this Agreement and in
Section 11.1, the following terms are used in this Agreement as defined in the
Sections set forth opposite such terms:
Defined Term Section Reference
Closing...............................................................Article II
Closing Date..........................................................Article II
Damages......................................................................9.2
Excluded Transfer............................................................5.5
Material Activity............................................................5.3
Purchase Price...............................................................1.2
Registration Expenses........................................................5.3
Registration Statement.......................................................5.3
SEC Filings..................................................................3.7
Survival Date................................................................9.1
Warrant Shares...............................................................3.6
Warrants.....................................................................1.1
-21-
IN WITNESS WHEREOF, the parties have executed this Agreement, or caused
this Agreement to be executed by their duly authorized representatives, all as
of the day and year first above written.
MAGELLAN HEALTH SERVICES, INC.
Address:
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000 By: /s/ E. Xxx Xxxxxxxx
Fax: (000) 000-0000 -------------------------------------
E. Xxx Xxxxxxxx, Chairman
and Chief Executive Officer
CRESCENT REAL ESTATE EQUITIES
LIMITED PARTNERSHIP
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------
Xxxxxx Xxxxxxx
President and Chief Operating Officer
-22-
ANNEX I
Number of Shares of
Common Stock
Date First Issuable Upon Exercise End of Exercise
Warrant [Number] Exercisable of Warrants Period
----------------- ------------ ---------------------- ---------------
[1] May 31, 1998 30,000 May 31, 2001
[2] May 31, 1999 62,325 May 31, 2002
[3] May 31, 2000 97,114 May 31, 2003
[4] May 31, 2001 134,513 May 31, 2004
[5] May 31, 2002 174,678 May 31, 2005
[6] May 31, 2003 217,770 May 31, 2006
[7] May 31, 2004 263,961 May 31, 2007
[8] May 31, 2005 313,433 May 31, 2008
[9] May 31, 2006 366,376 May 31, 2009
[10] May 31, 2007 422,961 May 31, 2009
[11] May 31, 2008 483,491 May 31, 2009
-23-
EXHIBIT A
(Form of Warrants)
-24-
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS AND MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, OR OTHERWISE
DISPOSED OF UNLESS REGISTERED PURSUANT TO THE PROVISIONS OF THAT ACT OR UNLESS
AN OPINION OF COUNSEL TO THE COMPANY OR OTHER COUNSEL, REASONABLY SATISFACTORY
TO THE COMPANY IS OBTAINED STATING THAT SUCH DISPOSITION IS IN COMPLIANCE WITH
AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION.
THE RIGHT TO SELL OR OTHERWISE TRANSFER THIS WARRANT IS SUBJECT TO CERTAIN
RESTRICTIONS SET FORTH IN A WARRANT PURCHASE AGREEMENT DATED JANUARY 29, 1997,
BETWEEN THE COMPANY AND THE INITIAL BUYER OF THE WARRANTS, A COPY OF WHICH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF THE COMPANY. THIS WARRANT MAY
NOT BE SOLD OR TRANSFERRED EXCEPT UPON THE CONDITIONS SPECIFIED IN THE WARRANT
PURCHASE AGREEMENT AND IN THIS WARRANT, AND NO SALE OR TRANSFER OF THIS WARRANT
SHALL BE VALID OR EFFECTIVE UNLESS AND UNTIL SUCH CONDITIONS SHALL HAVE BEEN
COMPLIED WITH.
------------------------------------------------------------------
MAGELLAN HEALTH SERVICES, INC.
(Incorporated under the laws of the State of Delaware)
Void after 5:00 p.m., Atlanta, Georgia, local time,
on [May 31], 2001
No. ___ Right to Purchase
[_______] Shares
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, [Crescent Real Estate Equities
Limited Partnership, a Delaware limited partnership] (the "Holder"), or
registered assigns, is entitled to purchase from Magellan Health Services, Inc.,
a Delaware corporation (the "Company"), at any time or from time to time during
the period specified in Paragraph 2 hereof, ([______]) fully paid and
nonassessable shares of the Company's Common Stock, par value $.25 per share
(the "Common Stock"), at an exercise price per share of $ 30 (the "Exercise
Price"). The term "Warrant Shares", as used herein, refers to the shares of
Common Stock purchasable hereunder. The Warrant Shares and the Exercise Price
are subject to adjustment as provided in Paragraph 4 hereof.
- 24 -
This Warrant, together with all warrants issued upon transfer, exchange or
in replacement hereof pursuant to Paragraph 7 hereof (collectively, the
"Warrants"), is issued pursuant to, and is subject to all terms, provisions, and
conditions contained in, that certain Warrant Purchase Agreement, dated January
29, 1997 (the "Purchase Agreement'), by and between the Company and the Holder.
This Warrant is subject to the following additional terms, provisions, and
conditions:
12. Manner of Exercise; Issuance of Certificates; Payment for Shares.
Subject to the provisions hereof and the provisions of the Purchase Agreement
which restrict the exercise of the Warrants, this Warrant may be exercised by
the holder hereof, in whole or in part, by the surrender of this Warrant,
together with a completed Exercise Agreement in the form attached hereto, to the
Company during normal business hours on any business day at the Company's
principal office in Atlanta, Georgia (or such other office or agency of the
Company as it may designate by notice to the holder hereof), during the Exercise
Period (as defined in Paragraph 2), and upon payment to the Company of the
Exercise Price for the Warrant Shares specified in said Exercise Agreement,
which such payment shall be made in cash or by certified or official bank check.
The Company shall not be required to issue fractional Warrant Shares upon any
exercise of the Warrant, but instead shall pay to the holder of this Warrant the
cash value of any such fractional Warrant Shares. The Warrant Shares so
purchased shall be deemed to be issued to the holder hereof or its designee as
the record owner of such shares as of the close of business on the date on which
this Warrant shall have been surrendered, the completed Exercise Agreement
delivered, and payment made for such shares as aforesaid. Certificates for the
Warrant Shares so purchased, representing the aggregate number of shares
specified in said Exercise Agreement, shall be delivered to the holder hereof
within a reasonable time, not exceeding ten business days, after this Warrant
shall have been so exercised. The certificates so delivered shall be in such
denominations as may be reasonably requested by the holder hereof, shall, unless
the Warrant Shares evidenced by such certificate have previously been registered
under the Securities Act of 1933, as amended (the "Securities Act"), be
imprinted with a restrictive legend substantially similar to the legend
appearing on the face of this Warrant, and shall be registered in the name of
said holder or such other name as shall be designated by said holder. If this
Warrant shall have been exercised only in part, then, unless this Warrant has
expired, the Company shall, at its expense, at the time of delivery of said
certificates, deliver to said holder a new Warrant representing the number of
shares with respect to which this Warrant shall not then have been exercised,
which Warrant shall be imprinted on its face with the same legend appearing on
the face of this Warrant. The Company shall pay all taxes and other expenses and
charges payable in connection with the preparation, execution, and delivery of
stock certificates (and any new Warrants) pursuant to this Paragraph 1 except
that, in case such stock certificates shall be registered in a name or names
other than the holder of this Warrant, funds sufficient to pay all stock
transfer taxes which shall be payable in connection with the execution and
delivery of such stock certificates shall be paid by the holder hereof to the
Company at the time of the delivery of such stock certificates by the Company as
mentioned above.
13. Period of Exercise. Subject to the provisions of the Purchase Agreement
which restrict the exercise of the Warrants, this Warrant is exercisable at any
time or from time to time
- 25 -
during the period commencing at 9:00 a.m. Atlanta, Georgia, local time, on
[ ] and ending at 5:00 p.m. Atlanta, Georgia, local time, on
[ ] (the "Exercise Period").
14. Certain Actions Prohibited. The Company will not, by amendment of
certificate of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities, or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed by it hereunder, but will at all times in
good faith assist in the carrying out of all the provisions of this Warrant and
in the taking of all such action as may reasonably be requested by the holder of
this Warrant in order to protect the exercise privilege of the holder of this
Warrant against dilution or other impairment, consistent with the tenor and
purpose of this Warrant.
Without limiting the generality of the foregoing,
(i) the Company will not increase the par value of the shares of
Common Stock receivable upon the exercise of this Warrant above the
Exercise Price then in effect,
(ii) before taking any action which would cause an adjustment reducing
the Exercise Price below the then par value of the shares of Common Stock
so receivable, the Company will take all such corporate action as may be
necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock at such adjusted
Exercise Price upon the exercise of this Warrant, or
(iii) the Company will not take any action which results in any
adjustment of the Exercise Price if the total number of shares of Common
Stock issuable after the action upon the exercise of this Warrant would
exceed the total number of shares of Common Stock then authorized by the
Company's charter and available for other than the purpose of issue upon
such exercise.
15. Anti-dilution Provisions. The Exercise Price shall be subject to
adjustment from time to time as provided in this Paragraph 4. Upon each
adjustment of the Exercise Price, the holder of this Warrant shall thereafter be
entitled to purchase, at the Exercise Price resulting from such adjustment, the
largest number of Warrant Shares obtained by multiplying the Exercise Price in
effect immediately prior to such adjustment by the number of Warrant Shares
purchasable hereunder immediately prior to such adjustment and dividing the
product thereof by the Exercise Price resulting from such adjustment. For
purposes of this Paragraph 4, the term "Capital Stock," as used herein, includes
the Common Stock and any additional class of stock of the Company having no
preference as to dividends or distributions on liquidation which may be
authorized in the future by an amendment to the Company's charter, provided that
the shares purchasable pursuant to this Warrant shall include only shares of
Common Stock, or shares resulting from any subdivision or combination of the
Common Stock, or in the case of any reorganization, reclassification,
consolidation, merger, or sale of the character referred to in this Paragraph 4,
the stock or other securities or property provided for in this Paragraph 4.
- 26 -
(a) Subdivisions and Combinations. In case at any time the Company shall
(i) subdivide the outstanding shares of Capital Stock into a greater number of
shares, or (ii) combine the outstanding shares of Capital Stock into a smaller
number of shares, the Exercise Price in effect immediately prior thereto shall
be adjusted proportionately so that the adjusted Exercise Price shall bear the
same relation to the Exercise Price in effect immediately prior to such event as
the total number of shares of Capital Stock outstanding immediately prior to
such event shall bear to the total number of shares of Capital Stock outstanding
immediately after such event. Such adjustment shall become effective immediately
after the effective date of a subdivision or combination.
(b) Stock Dividends. In case the Company at any time after the date hereof
shall declare, order, pay or make any dividend or other distribution to all
holders of the Capital Stock payable in Capital Stock, then in each such case,
subject to Paragraph 4(d) hereof, the Exercise Price in effect immediately prior
to the close of business on the record date fixed for the determination of
holders of any class of securities entitled to receive such dividend or
distribution shall be reduced to a price (calculated to the nearest .001 of a
cent) determined by multiplying such Exercise Price by a fraction
(i) the numerator of which shall be the number of shares of Capital
Stock outstanding immediately prior to such dividend or distribution, and
(ii) the denominator of which shall be the number of shares of Capital
Stock outstanding immediately after such dividend or distribution.
Such adjustment shall be made on the date such dividend is paid or such
distribution is made and shall become effective retroactive to the record date
for the determination of shareholders entitled to receive such dividend or
distribution.
(c) Dividends other than Stock Dividends. In case the Company at any time
after the date hereof shall declare, order, pay or make any dividend or other
distribution to all holders of the Capital Stock, other than a dividend payable
in shares of Capital Stock (including, without limitation, dividends or
distributions payable in cash, evidences of indebtedness, rights, options or
warrants to subscribe for or purchase any Capital Stock or other securities, or
any other securities or other property), then, and in each such case, subject to
Paragraph 4(d) hereof, the Exercise Price in effect immediately prior to the
close of business on the record date fixed for the determination of holders of
any class of securities entitled to receive such dividend or distribution shall
be reduced to a price (calculated to the nearest .001 of a cent) determined by
multiplying such Exercise Price by a fraction
(i) the numerator of which shall be the "Market Price" (as defined
below) in effect on such record date or, if any class of Capital Stock
trades on an ex-dividend basis, the trading date immediately prior to the
date of commencement of ex-dividend trading, less the value of such
dividend or distribution (as determined in good faith by the Board of
Directors of the Company) applicable to one share of Capital Stock, and
- 27 -
(ii) the denominator of which shall be such Market Price on such
record date of, if any class of Capital Stock trades on an ex-dividend
basis, the trading date immediately prior to the date of commencement of
ex-dividend trading.
Such adjustment shall be made on the date such dividend is paid or such
distribution is made and shall become effective retroactive to the record date
for the determination of shareholders entitled to receive such dividend or
distribution.
For the purpose hereof, "Market Price" shall mean, on any date specified
herein, (A) if any class of Capital Stock is listed or admitted to trading on
any national securities exchange, the highest price obtained by taking the
arithmetic mean over a period of 20 consecutive days on which such national
securities exchange (or if such stock is traded on more than one national
securities exchange, the exchange the Company has designated under the
Securities Exchange Act of 1934 to receive copies of reports filed by the
Company under such act) is open for trading on a regular basis (any such day is
a "Trading Day") ending the Trading Day immediately prior to such date of the
average, on each such Trading Day, of the high and low sale prices of shares of
each such class of Capital Stock or if no such sale takes place on such date,
the average of the highest closing bid and lowest closing asked prices thereof
on such date, in each case as officially reported on all national securities
exchanges on which each such class of Capital Stock is then listed or admitted
to trading, or (B) if no shares of any class of Capital Stock are then listed or
admitted to trading on any national securities exchange, the highest closing
price of any class of Capital Stock on such date in the over-the-counter market
as shown by the NASDAQ National Market System or, if no such shares of any class
of Capital Stock are then quoted in such system, as published by the National
Quotation Bureau, Inc. or any similar successor organization, and in either case
as reported by any member firm of the New York Stock Exchange selected by the
Company. If no shares of any class of Capital Stock are then listed or admitted
to trading on any national securities exchange and if no closing bid and asked
prices thereof are then so quoted or published in the over-the-counter market,
"Market Price" shall mean the higher of (x) the book value per share of Capital
Stock (assuming for the purposes of this calculation the economic equivalence of
all shares of all class of Capital Stock) as determined on a fully diluted basis
in accordance with generally accepted accounting principles by the Board of
Directors of the Company as of the last day of any month ending within 60 days
preceding the date as of which the determination is to be made or (y) the fair
value per share of classes of Capital Stock (assuming for the purposes of this
calculation the economic equivalence of all shares of all classes of Capital
Stock), as determined on a fully diluted basis in good faith by the Board of
Directors of the Company, as of a date which is 15 days preceding the date as of
which the determination is to be made.
(d) Minimum Adjustment of Exercise Price. If the amount of any adjustment
of the Exercise Price required pursuant to this Paragraph 4 would be less than
one percent (1%) of the Exercise Price in effect at the time such adjustment is
otherwise so required to be made, such amount shall be carried forward and
adjustment with respect thereto made at the time of and together with any
subsequent adjustment which, together with such amount and any other amount or
amounts so carried forward, shall aggregate at least one percent (1%) of such
Exercise Price; provided that, upon
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the exercise of this Warrant, all adjustments carried forward and not
theretofore made up to and including the date of such exercise shall, with
respect to the portion of this Warrant then exercised, be made to the nearest
.001 of a cent.
(e) Fundamental Change Transaction. In case at any time after the date
hereof a purchase, tender, or exchange offer shall have been made to and
accepted by the holders of more than 50% of the outstanding shares of Capital
Stock, or the Company is otherwise a party to any transaction (including,
without limitation, a merger, consolidation, sale of all or substantially all
the Company's assets, liquidation, or recapitalization of the Capital Stock)
which is to be effected in such a way that as a result of such transaction or
offer (x) the holders of Common Stock (or any other securities of the Company
then issuable upon the exercise of this Warrant) shall be entitled to receive
stock or other securities or property (including cash) with respect to or in
exchange for Common Stock (or such other securities), or (y) the Capital Stock
ceases to be a publicly traded security either listed on the American Stock
Exchange, the New York Stock Exchange or the NASDAQ National Market System or
any successor thereto or comparable system (each such transaction being herein
called a "Fundamental Change Transaction"), then, as a condition of such
Fundamental Change Transaction, lawful and adequate provision shall be made
whereby the holder of this Warrant shall thereafter have the right to purchase
and receive upon the basis and upon the terms and conditions specified in this
Warrant, and in lieu of the shares of Common Stock (or such other securities)
purchasable immediately before such transaction upon the exercise hereof, such
stock or other securities or property (including cash) as may be issuable or
payable with respect to or in exchange for a number of outstanding shares of
Common Stock (or such other securities) equal to the number of shares of Common
Stock (or such other securities) purchasable immediately before such transaction
upon the exercise hereof, had such Fundamental Change Transaction not taken
place. In any such case appropriate provision shall be made with respect to the
rights and interests of the holder of this Warrant to the end that the
provisions hereof (including, without limitation, the provisions for adjustments
of the Exercise Price and of the number of Warrant Shares purchasable upon
exercise hereof) shall thereafter be applicable, as nearly as reasonably may be,
in relation to the stock or other securities or property thereafter deliverable
upon the exercise hereof (including an immediate adjustment of the Exercise
Price if by reason of or in connection with such Fundamental Change Transaction
any securities are issued or event occurs which would, under the terms hereof,
require an adjustment of the Exercise Price). In the event of a consolidation or
merger of the Company with or into another corporation or entity as a result of
which a greater or lesser number of shares of common stock of the surviving
corporation or entity are issuable to holders of Capital Stock in respect of the
number of shares of Capital Stock outstanding immediately prior to such
consolidation or merger, then the Exercise Price in effect immediately prior to
such consolidation or merger shall be adjusted in the same manner as though
there were a subdivision or combination of the outstanding shares of Capital
Stock. The Company shall not effect any such Fundamental Change Transaction
unless prior to or simultaneously with the consummation thereof the successor
corporation or entity (if other than the Company) resulting from such
consolidation or merger or the corporation or entity purchasing such assets and
any other corporation or entity the shares of stock or other securities or
property of which are receivable thereupon by the holder of this Warrant shall
expressly assume, by written instrument executed and delivered (and satisfactory
in
- 29 -
form) to the holder of this Warrant, (i) the obligation to deliver to such
holder such stock or other securities or property as, in accordance with the
foregoing provisions, such holder may be entitled to purchase and (ii) all other
obligations of the Company hereunder.
(f) Notice of Adjustment. Upon the occurrence of any event requiring an
adjustment of the Exercise Price, then and in each such case the Company shall
promptly deliver to the holder of this Warrant a notice stating the Exercise
Price resulting from such adjustment and the increase or decrease, if any, in
the number of shares of Common Stock issuable upon exercise of this Warrant,
setting forth in reasonable detail the method of calculation and the facts upon
which such calculation is based. Within 90 days after each fiscal year in which
any such adjustment shall have occurred, or within 30 days after any request
therefor by the holder of this Warrant stating that such holder contemplates
exercise of this Warrant, the Company will deliver to the holder of this Warrant
a certificate of the Company's chief financial officer confirming the statements
in the most recent notice delivered under this Paragraph 4(f).
(g) Other Notices. In case at any time:
(i) the Company shall declare or pay to all the holders of Capital
Stock any dividend (whether payable in Capital Stock, cash, securities or
other property);
(ii) the Company shall offer for subscription pro rata to all the
holders of Capital Stock any additional shares of stock of any class or
other rights;
(iii) there shall be any capital reorganization, or reclassification
of the Capital Stock of the Company, or consolidation or merger of the
Company with, or sale of all or substantially all its assets to, another
corporation or other entity;
(iv) there shall be a voluntary or involuntary dissolution,
liquidation, or winding- up of the Company; or
(v) there shall be any other Fundamental Change Transaction;
then, in any one or more of such cases, the Company shall give to the holder of
this Warrant (a) at least five (5) Business Days prior to the record date
established or related to any event referred to in clause (i) - (v) above
(which, for purposes of events referred to in clauses (i) - (v) above, shall be
the date on which the books of the Company shall close or a record shall be
taken for such dividend, distribution, or subscription rights or for determining
rights to vote in respect of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, winding-up, or
Transaction) written notice of such record date and (b) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding-up, or Transaction known to the Company, at least 30 days
prior written notice of the date (or, if not then known, a reasonable
approximation thereof by the Company) when the same shall take place. Such
notice in accordance with the foregoing clause (a) shall also specify, in the
case of any such dividend,
- 30 -
distribution, or subscription rights, the date on which such holders of Capital
Stock shall be entitled thereto, and such notice in accordance with the
foregoing clause (b) shall also specify the date on which such holders of
Capital Stock shall be entitled to exchange their Capital Stock for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, winding-up, or
Transaction, as the case may be. Such notice shall also state that the action in
question or the record date is subject to the effectiveness of a registration
statement under the Securities Act, or to a favorable vote of security holders,
if either is required.
(h) Certain Events. If any event occurs as to which, in the good faith
judgment of the Board of Directors of the Company, the other provisions of this
Paragraph 4 are not strictly applicable or if strictly applicable would not
fairly protect the exercise rights of the holder of this Warrant in accordance
with the essential intent and principles of such provisions, then the Board of
Directors of the Company shall make such adjustment, if any, on a basis
consistent with such essential intent and principles, necessary to preserve,
without dilution, the rights of the holder of this Warrant; provided, that no
such adjustment shall have the effect of increasing the Exercise Price as
otherwise determined pursuant to this Paragraph 4.
16. Issue Tax. The issuance of certificates for Warrant Shares upon the
exercise of this Warrant shall be made without charge to the holder of this
Warrant or such shares for any issuance tax in respect thereof, provided that
the Company shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any warrant or
certificate in a name other than the holder of this Warrant.
17. No Rights or Liabilities as a Shareholder. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a shareholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the holder hereof to purchase Warrant Shares, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Exercise Price or as a shareholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
18. Transfer, Exchange, and Replacement of Warrant; Registration Rights.
(a) Restrictions on Transfer of Warrants. This Warrant shall not be
transferable to any person or entity other than a wholly-owned affiliate of the
Holder or as permitted under the Purchase Agreement. The transfer of this
Warrant to a wholly-owned affiliate or other transferee permitted under the
Purchase Agreement and all rights hereunder, in whole or in part, is registrable
at the office or agency of the Company referred to in Paragraph 7(e) hereof by
the holder hereof in person or by his duly authorized attorney, upon surrender
of this Warrant properly endorsed. Upon any transfer of this Warrant to any
wholly-owned affiliate or other permitted transferee, other than a wholly-owned
affiliate or other permitted transferee who is at that time a holder of other
Warrants, the Company shall have the right to require the holder and the
affiliate or other transferee to make customary representations to the extent
reasonably necessary to assure that the transfer will comply with the Securities
Act and any applicable state securities laws. Each holder of this Warrant, by
- 31 -
taking or holding the same, consents and agrees that this Warrant, then endorsed
in blank, shall be deemed negotiable, and that the holder hereof, when this
Warrant shall have been so endorsed, may be treated by the Company and all other
persons dealing with this Warrant as the absolute owner and holder hereof for
any purpose and as the person entitled to exercise the rights represented by
this Warrant and to the registration of transfer hereof on the books of the
Company; but until due presentment for registration of transfer on such books
the Company may treat the registered holder hereof as the owner and holder
hereof for all purposes, and the Company shall not be affected by any notice to
the contrary.
(b) Warrant Exchangeable for Different Denominations. This Warrant is
exchangeable, upon the surrender hereof by the holder hereof at the office or
agency of the Company referred to in Paragraph 7(e) hereof, for new Warrants of
like tenor representing in the aggregate the right to purchase the number of
shares of Common Stock which may be purchased hereunder, each of such new
Warrants to be imprinted with the same legend appearing on the face of this
Warrant and to represent the right to purchase such number of shares as shall be
designated by said holder hereof at the time of such surrender. For purposes
hereof, the term "Warrant" shall be deemed to include any and all such
replacement Warrants, whether issued pursuant to this subparagraph (b) or any
other Paragraph hereof.
(c) Replacement of Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant and, in the case of any such loss, theft, or destruction, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
(d) Cancellation; Payment of Expenses. Upon the surrender of this Warrant
in connection with any transfer, exchange, or replacement as provided in this
Paragraph 7, this Warrant shall be promptly canceled by the Company. The Company
shall pay all taxes (other than securities transfer taxes) and all other
expenses and charges payable in connection with the preparation, execution, and
delivery of Warrants pursuant to this Paragraph 7.
(e) Register. The Company shall maintain, at its principal office in
Atlanta, Georgia (or such other office or agency of the Company as it may
designate by notice to the holder hereof), a register for this Warrant, in which
the Company shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each transferee and
each prior owner of this Warrant.
(f) Registration Rights. The issuance of any Warrant Shares required to be
reserved for purposes of exercise of this Warrant and the resale of such Warrant
Shares are entitled to the benefits of the registration rights set forth in the
Purchase Agreement.
- 32 -
19. Notices. All notices, requests, and other communications required or
permitted to be given or delivered hereunder to the holder of this Warrant shall
be in writing, and shall be personally delivered, or shall be sent by certified
or registered mail, postage prepaid and addressed, to such holder at the address
shown for such holder on the books of the Company, or at such other address as
shall have been furnished to the Company by notice from such holder. All
notices, requests, and other communications required or permitted to be given or
delivered hereunder to the Company shall be in writing, and shall be personally
delivered, or shall be sent by certified or registered mail, postage prepaid and
addressed, to the office of the Company at 0000 Xxxxxxxxx Xxxx, X.X., Xxxxx
0000, Xxxxxxx, XX 00000, Attention: Chief Financial Officer, or at such other
address as shall have been furnished to the holder of this Warrant by notice
from the Company. Any such notice, request, or other communication may be sent
by telegram or telex, but shall in such case be subsequently confirmed by a
writing personally delivered or sent by certified or registered mail as provided
above. All notices, requests, and other communications shall be deemed to have
been given either at the time of the delivery thereof to (or the receipt by, in
the case of a telegram or telex) the person entitled to receive such notice at
the address of such person for purposes of this Paragraph 8, or, if mailed, at
the completion of the third full day following the time of such mailing thereof
to such address, as the case may be.
20. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF DELAWARE, WITHOUT REGARD TO ANY CHOICE
OF LAW PRINCIPLES OF SUCH STATE.
21. Remedies. The Company stipulates that the remedies at law of the holder
of this Warrant in the event of any default or threatened default by the Company
in the performance of or compliance with any of the terms of this Warrant are
not and will not be adequate, and that such terms may be specifically enforced
by a decree for the specific enforcement of any agreement contained herein or by
an injunction against a violation of any of the terms hereof or otherwise.
22. Miscellaneous.
(a) Amendments. This Warrant and any provision hereof may not be changed,
waived, discharged, or terminated orally, but only by an instrument in writing
signed by the party (or any predecessor in interest thereof) against which
enforcement of the same is sought.
(b) Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for purposes of reference only, and
shall not affect the meaning or construction of any of the provisions hereof.
(c) Successors and Assigns. This Warrant shall, to the extent provided in
Section 4(e), be binding upon any entity succeeding to the Company by merger,
consolidation, or acquisition of all or substantially all the Company's assets.
- 33 -
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer under its corporate seal, attested by its duly
authorized officer, on this __ day of January __, 1997.
MAGELLAN HEALTH SERVICES, INC.
By:
---------------------------
[CORPORATE SEAL]
Attest:
----------------------------------------
Xxxxx X. Xxxxxxxxxx, Assistant Secretary
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FORM OF EXERCISE AGREEMENT
Dated: _____________, ____.
To: ______________________
______________________
______________________
Attention: ___________
The undersigned, pursuant to the provisions set forth in the within
Warrant, hereby agrees to purchase _____ shares of Common Stock covered by such
Warrant, and makes payment herewith in full therefor at the price per share
provided by such Warrant [in cash or by certified or official bank check in the
amount of $______________] held by the undersigned and any applicable taxes
payable by undersigned. Please issue a certificate or certificates for such
shares of Common Stock in the name of and pay any cash for any fractional share
to:
Name:_____________________________________________________
Signature:________________________________________________
Title of Signing Officer or Agent (if any):_______________
Note:The above signature should correspond exactly with the
name on the face of the within Warrant or with the name
of the assignee appearing in the assignment form.
and, if said number of shares of Common Stock shall not be all the shares
purchasable under the within Warrant, a new Warrant is to be issued in the name
of said undersigned covering the balance of the shares purchasable thereunder
less any fraction of a share paid in cash.
- 35 -
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers all the rights represented by and under the within Warrant, with
respect to the number of shares of Common Stock covered thereby set forth
hereinbelow, to:
Name of Assignee Address No. of Shares
---------------- ------- -------------
, and hereby irrevocably constitutes and appoints _______________________ as
agent and attorney-in-fact to transfer said Warrant on the books of the
within-named corporation, with full power of substitution in the premises.
Dated: ______________, ____.
In the presence of
-----------------------------------
Name:
Signature:
Title of Signing Officer or Agent
(if any):
Address:
Note: The above signature should correspond
exactly with the name on the face of
the within Warrant.
- 36 -
