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EXHIBIT 4.7
VISION 21, INC.
NOTE PURCHASE AGREEMENT
DATED: FEBRUARY 28, 1997
10% SENIOR SUBORDINATED SERIES 1997 NOTES DUE DECEMBER 19, 1999
(DETACHABLE WARRANTS EXCHANGEABLE INTO COMMON STOCK)
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TABLE OF CONTENTS
PAGE
ARTICLE 1 - Authorizations of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 - Issuance and Sale of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 3 - Agreements with Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 4 - Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.2 Description of business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.3 No material adverse change in financial condition or affairs . . . . . . . . . . . . . . . . . . . . 2
4.4 Tax returns and payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.5 No default on other debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.6 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.7 Compliance with applicable laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.8 Litigation, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.9 Adverse developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.10 Compliance with other instruments; none burdensome . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.11 No stockholder or governmental consent required . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.12 Offering of notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.13 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.14 Authorization, execution and delivery of notes . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.15 Representations and warranties of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.16 Representations and warranties as to acquired businesses . . . . . . . . . . . . . . . . . . . . . . 4
4.17 Contracts and Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.18 Closings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 5 - Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.1 Representations and warranties correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.2 Reservation of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.3 No default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.4 Sale and delivery of Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.5 Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.6 Compliance certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.7 Opinion of Company's Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.8 Authorizing Resolutions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.9 Charter Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.10 Legality of investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.11 Proceedings and documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 6 - Purchase for Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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ARTICLE 7 - Accounting; Financial Statements and Other Information . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 8 - Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 9 - Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
9.1 Prepayment without penalties or premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
9.2 Notations, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 10 - Insurance of Properties and Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 11 - Additional Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 12 - Agreement to Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 13 - First Right of Refusal and Co-Sale Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
13.1 Purchase right of first refusal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
13.2 Co-sale rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 14 - Provisions Respecting Exchange of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
14.1 Exchange of Warrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
14.2 Issuance of common stock upon exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
14.3 Adjustment to exchange price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
14.4 Fractional shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
14.5 Effect of reclassifications, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
14.6 Company to reserve stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
14.7 No dilution or impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
14.8 Taxes on exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
14.9 Notices of record date, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 15 - Transfers Not Registered Under Securities Act of 1933 . . . . . . . . . . . . . . . . . . . . . . . . . 23
15.1 Restrictive legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
15.2 Notice of proposed transfer, opinions of counsel . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 16 - Registration, Transfer, and Exchange of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 17 - Replacement of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 18 - Events of Default; Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 19 - Subordination of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 20 - Remedies on Default, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 21 - Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
21.1 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
21.2 The Exchange Formula . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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21.3 Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
21.4 First Liquidity Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
21.5 Generally accepted accounting principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
21.6 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
21.7 Market Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
21.8 Net Issuable Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
21.9 Officer's certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
21.10 Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
21.11 Public offering of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
21.12 Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
21.13 Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 22 - Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 23 - Survival of Agreements, Representations, and Warranties, etc. . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 24 - Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 25 - Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 26 - Home Office Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 27 - Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Exhibit A - Form of 10% Senior Subordinated Series 1997 Note, due December 19, 1999 . . . . . . . . . . . . . . . . . 1
Exhibit B - Form of Stock Purchase Warrant To Subscribe for and Purchase
Common Stock of Vision 21, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Exhibit C - Form of Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Exhibit D - Form of Opinion of Xxxxxxxx, Loop & Xxxxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Schedule 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Schedule 4.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Schedule 4.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Schedule 4.15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Schedule 4.16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Schedule 4.17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Schedule 13.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
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Schedule 19(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SUBSCRIPTION FORM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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VISION 21, INC.
0000 XXXXX XXXXX XXXX
XXXXX, XXXXXXX 00000
[Name and Address of each
Purchaser; see SCHEDULE 1] February 28, 1997
Dear Sirs:
Vision 21, Inc., a Florida corporation (the "Company"), agrees with
you as follows:
ARTICLE 1 - AUTHORIZATIONS OF NOTES
The Company has authorized the issue of up to $2,000,000 aggregate
principal amount of its 10% Senior Subordinated Series 1997 Notes due December
19, 1999 ("the Note"), such term to include all Notes issued in exchange
therefor or in replacement thereof substantially in the form attached as
EXHIBIT A. There shall be attached to each Note a detachable warrant
exchangeable into Common Stock of the Company which expires and becomes null
and void on December 19, 2003, substantially in the form attached as EXHIBIT B
hereto ("Warrant"), such term to include all warrants issued in exchange
therefor or in replacement thereof, exchangeable for shares of Common Stock of
the Company.
ARTICLE 2 - ISSUANCE AND SALE OF NOTES
The Company agrees to sell to Xxxxx Xxxxxxx Healthcare Fund II Limited
Partnership (the "Purchaser") and, subject to the terms and conditions herein
set forth, Purchaser agrees to purchase from the Company, a Note in the
principal amount set forth opposite Purchaser's name in SCHEDULE 1 hereto.
Such purchase and delivery of the Note shall be made concurrent with this Note
Purchase Agreement or at a time to be mutually agreed upon in writing (either
of which shall be the "Closing Time" for such purchase). At Closing Time, the
Company will deliver to Purchaser the Note to be purchased by you against
payment of the purchase price thereof by certified or official bank check or
wire transfer (at the election of the Company) payable to the order of Company
in same day U.S. funds. Such purchase price shall be an amount equal to 100
percent of the principal amount of the Note. The Note shall be dated as of the
Closing Time and payable to Purchaser as the purchaser thereof.
ARTICLE 3 - AGREEMENTS WITH PURCHASERS
The Company and Purchaser acknowledge that the Note is substantially
similar to $1,250,000 in principal of 10% Senior Subordinated Notes and
Detachable Warrants Exchangeable into Common Stock issued in December, 1996,
pursuant to the Note Purchase Agreement dated December 20, 1996 (the "December
1996 Notes). The Note Purchase Agreement dated December 20, 1996 provides the
holder of such Notes and Detachable Warrants with a right of first refusal or
to subsequent issuances of Common Stock of the Company, which right f first
refusal has been waived in connection with the transaction contemplated by this
Agreement.
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ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.1 Organization. The Company is and at Closing Time will be a
Corporation duly organized and validly existing and in good standing under the
laws of the State of Florida with all requisite corporate power and authority
to own and operate its properties and to carry on its business as now
conducted; the Company has and at Closing Time will have all requisite
corporate power and authority to enter into this agreement, to issue the Notes,
to issue the Warrants, to issue its Common Stock upon exchange of any Warrants,
and to carry out the terms hereof and thereof. The Company is the 100% owner
of its subsidiaries listed on SCHEDULE 4.1 hereto, each of which is duly
organized and validly existing and in good standing under the laws of the
jurisdiction of each incorporation and each has the requisite corporate power
and authority to own and operate its properties and carry on its business as
now conducted.
4.2 Description of business. The Confidential Offering Circular
of the Company of December 1996, and an Offering Circular Supplement dated
February 28, 1997, have heretofore been furnished to Purchaser by the Company
on or before the date of this Agreement. Such Offering Circular and Offering
Circular Supplement hereinafter referred to as the Memorandum, constitutes a
description of its business and properties, its Subsidiaries and its
acquisition and growth plans.
4.3 No material adverse change in financial condition or affairs.
There has not been any substantial material adverse change in the assets,
liabilities, financial condition or affairs of the Company, its Subsidiaries,
and the acquired businesses and assets ("Acquired Businesses") considered as a
single enterprise from that set forth or reflected in the Memorandum, except as
set forth in SCHEDULE 4.3 hereto.
4.4 Tax returns and payments. All required tax returns and
reports of the Company and its Subsidiaries have been duly filed, and all
taxes, assessments, fees, and other governmental charges upon the Company and
its Subsidiaries or upon any of their respective properties, assets, income,
which are due and payable, have been paid, other than those presently payable
without penalty or interest.
4.5 No default on other debt. Neither the Company nor any
Subsidiary is in default with respect to the payment of any Indebtedness as
defined herein or other observance of any covenant or condition set forth in
any instrument or agreement relating thereto and which would enable the
creditor to accelerate the maturity of its Indebtedness, which would be
material to the Company's business or financial condition.
4.6 Leases. The Company and its Subsidiaries and Acquired
Businesses enjoy peaceful and undisturbed possession under all material leases
under which they are lessees, all such leases are valid and binding obligations
of the lessors, and such lessors have title in fee simple to the properties
leased.
4.7 Compliance with applicable laws. The Company and its
Subsidiaries and Acquired Businesses are in material compliance insofar as is
required with all applicable laws that are necessary for the combined entity to
operate its businesses as described in the Memorandum. Notwithstanding the
foregoing, the Company is in the process of obtaining licenses with respect to
the applicability of laws relating to third party administrators in certain
states as well as obtaining a license with respect to employee leasing in
Florida.
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4.8 Litigation, etc. There are no actions, proceedings, or
investigations pending or to the best of the Company's knowledge, threatened
which, either individually or in the aggregate, might result in any material
adverse change in the business, prospects, condition, affairs, or operations of
the Company and its Subsidiaries and Acquired Businesses considered as one
enterprise, or in any of their properties or assets, or in any material
impairment of the right or ability of the Company and its Subsidiaries,
considered as one enterprise, to carry on operations as now conducted or in any
material liability by the Company and its Subsidiaries and Acquired Businesses,
considered as one enterprise, and there are no such actions, proceedings, or
investigations which question the validity of this Agreement or of the Notes or
Warrants or any action taken or to be taken in connection herewith or
therewith.
4.9 Adverse developments. Except to the extent, if any, disclosed
herein, since the date of the Memorandum, neither the business, prospects,
condition, affairs, or operations of the Company and its Subsidiaries and
Acquired Businesses considered as one enterprise, or any of their respective
properties or assets, have been materially adversely affected in any way as a
result of any legislative or regulatory change or any revocation of license or
right to do business, or any fire, explosion, flood, drought, windstorm,
earthquake, accident, casualty, labor trouble, riot, condemnation, requisition,
embargo, act of God or of the public enemy or of armed forces, or otherwise,
whether or not insured against.
4.10 Compliance with other instruments; none burdensome. Except to
the extent, if any, disclosed in the Memorandum neither the Company nor any
Subsidiary is in violation of any term of its Articles of Incorporation or
Bylaws or similar governing instrument, any mortgage, indenture, contract,
agreement, instrument, judgment, decree, order, statute, rule, or regulation,
the violation of which would have a material adverse affect on the Company, its
Subsidiaries, and Acquired Businesses considered as one enterprise; the
execution, delivery, and performance of and compliance with this agreement and
the Note will not result in any such violation of or constitute a default under
or be in conflict with any such term, or result in the creation of any
mortgage, lien, encumbrance, or charge upon any of the properties or assets of
the Company or any Subsidiary or Acquired Businesses pursuant to any such term;
and there is no such term which materially adversely affects or in the future
may (so far as the Company can now foresee) materially adversely affect the
business, prospects, condition, affairs, or operations of the Company and its
Subsidiaries or Acquired Businesses or any of their respective properties or
assets.
4.11 No stockholder or governmental consent required. No consent,
approval, or authorization by the holder of any shares of the Company's capital
stock or by any governmental authority is presently required in connection with
the execution and delivery of this agreement, or the offer, issue, sale, or
delivery of the Note, the issue of the Warrant, or the issue of Common Stock
upon exchange of the Warrant pursuant to this Agreement or the consummation of
any other transaction contemplated hereby other than the holder of the December
1996 Notes.
4.12 Offering of notes. Neither the Company nor anyone acting on
its behalf has directly or indirectly offered the Notes or the Common Stock
issuable upon exchange of a Warrant or any part thereof for sale to, nor has it
solicited any offer to buy any of the same from, anyone in a manner that would
be considered in violation of the Securities Act of 1933, as amended.
4.13 Disclosure. Neither any certificate nor any other statement
furnished to you in writing by or on behalf of the Company in connection with
the transactions contemplated hereby contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
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statements contained therein not misleading. There is no fact known to the
Company which materially adversely affects or in the future may (so far as the
Company can now foresee) materially adversely affect the business, prospects,
condition, affairs, or operations of the Company and its Subsidiaries and
Acquired Businesses considered as one enterprise or their properties and assets
(considered as a whole).
4.14 Authorization, execution and delivery of notes. The Note and
Warrant (and shares exchangeable from the Warrant) have been duly and validly
authorized, and when executed and delivered in accordance with the provisions
of this Agreement will be the Company's valid obligations, legally binding upon
it in accordance with their terms, and entitled to the benefits of this
Agreement in accordance with the terms thereof, except as enforcement thereof
may be limited by bankruptcy, insolvency, or other laws affecting the
enforcement of creditors' rights.
4.15 Representations and warranties of the Company. The Company
represents that as of February 28, 1997, shareholders having rights to
immediate delivery of shares of the Company's Common Stock and common share
equivalents have rights to delivery of not more than those shares set forth on
SCHEDULE 4.15. The Company further represents that as of February 28, 1997,
all outstanding options and warrants of the Company's shares are described on
SCHEDULE 4.15.
4.16 Representations and warranties as to acquired businesses. The
above representations and warranties regarding the businesses acquired by the
Company in its roll-up of Founding Practices ("Acquired Practices") are limited
to the representations and warranties received by the Company from the Founding
Practices in such acquisitions and to the Company's knowledge. Attached hereto
as SCHEDULE 4.16 is a list of the businesses acquired by the Company.
4.17 Contracts and Commitments. Except as expressly contemplated
by this Agreement or referenced in any schedule to this Agreement, material
contracts, agreements or other arrangements to which the Company is a party and
the value of which exceeds $500,000 (the "Contracts"), are set forth in
SCHEDULE 4.17.
To the best knowledge of the Company, all of the Contracts are valid,
binding and enforceable in accordance with their respective terms, except (i)
as enforcement may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights in general and (ii) that the
enforceability of such obligations is subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). The Company has performed all material obligations required
to be performed by it under the Contracts and, except for any defaults relating
to the delivery of shares of the Company's stock which has been delayed pending
the receipt of all shareholder consents to the final adjusted share numbers
described in Schedule 4.15 of the Agreement and the purchase price and merger
consideration adjustments described in the acquisition agreements with the
founding practices, which have been delayed pending completion of the audit of
such founding practices' current accounts, is not in default under or in breach
of nor in receipt of any claim of default or breach under any Contract; no
event has occurred to the best knowledge of the Company which with the passage
of time or the giving of notice or both would result in a default, breach or
event of default under any Contract; and the Company has no knowledge of any
breach or anticipated breach by the other parties to any Contract. The
Contracts have been made available for inspection by the Purchaser.
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4.18 Closings. The Company represents that closings of Founding
Practices representing in excess of $30.0 million in practice revenues have
occurred.
ARTICLE 5 - CONDITIONS
Purchaser's obligations to purchase and pay for the Note to be
delivered at Closing Time is subject to the fulfillment, to Purchaser's
satisfaction before or at Closing Time, of the following conditions:
5.1 Representations and warranties correct. The Company's
representations and warranties contained in Article 4 or otherwise made in
writing by or on behalf of the Company in connection with the transactions
contemplated hereby shall have been materially correct when made and shall be
materially correct at and as of Closing Time, except as affected by the
transactions contemplated hereby.
5.2 Reservation of common stock. The Company shall have duly
authorized and reserved for issuance the shares of Common Stock issuable upon
the exchange of the Warrant.
5.3 No default. There shall not exist at Closing Time any
condition or event which constitutes an Event of Default as defined herein or
which, after notice or lapse of time or both, would constitute an Event of
Default.
5.4 Sale and delivery of Note. The Company shall have sold and
delivered to the Purchaser the Note to be acquired by it at Closing Time
pursuant to this Agreement and shall have received payment therefor.
5.5 Performance. The Company shall have performed and complied
with all agreements and conditions contained herein required to be performed or
complied with by it prior to or at Closing Time.
5.6 Compliance certificate. The Company shall have delivered to
Purchaser an Officer's Certificate, dated the date of Closing Time, certifying
as to the fulfillment of the conditions specified in this Article 5, Sections
5.1 to 5.5, inclusive.
5.7 Opinion of Company's Counsel. The Purchaser shall have
received from Xxxxxxxx, Loop & Xxxxxxxx, LLP, counsel for the Company, an
opinion substantially as set forth in EXHIBIT D attached hereto, subject to
certain assumptions, exceptions and qualifications, which shall be addressed to
the Purchaser and dated as of the Closing Date.
5.8 Authorizing Resolutions. The Purchaser shall have received
certified copies of resolutions duly adopted by the Company's Board of
Directors authorizing the execution, delivery and performance of this
Agreement, the Note and the Warrant and each of the other agreements
contemplated hereby, the issuance of the Note and Warrant, and all other
transactions contemplated by this Agreement.
5.9 Charter Documents. The Purchaser shall have received
certified copies of the Company's Articles of Incorporation and Bylaws, as
amended, each as in effect at the Closing Time (provided that facsimile copies
of the Articles of Incorporation may be delivered at Closing Time with
certified copies to follow).
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5.10 Legality of investment. The purchase of the Note at Closing
Time shall be permitted at Closing Time by the laws of the jurisdiction to
which Purchaser is subject and such acquisition shall not subject Purchaser to
any penalty or other onerous condition in or pursuant to any applicable law or
government regulation.
5.11 Proceedings and documents. All corporate and other proceedings
in connection with the transactions contemplated by this agreement and all
documents and instruments incident to such transactions shall be satisfactory
in form and substance to Purchaser and its counsel, and Purchaser and its
counsel shall have received all such counterpart originals or certified or
other copies of such documents requested by Purchaser or such counsel.
ARTICLE 6 - PURCHASE FOR INVESTMENT
Purchaser represents, and agrees in making this sale that: (a)
Purchaser is acquiring the Note, Warrant and the shares of Common Stock
issuable upon exchange of the Warrant, and (b) such Note, Warrant and Common
Stock are being acquired for the purpose of investment and not with a view to
or for sale in connection with any distribution thereof, provided, that the
disposition of Purchaser's property shall at all times be and remain within its
control. The consent of the holders of a majority in amount of the Note and
Warrant shall be required for any action which alters, changes or amends the
preferences, rights, or privileges of the Note and Warrant.
Purchaser represents and warrants that Purchaser is an "accredited
investor" as defined under the Securities Act of 1933 ("Securities Act") and
state "Blue Sky" laws. Purchaser also represents and warrants that Purchaser
shall be such an accredited investor at such time as the Warrant held by
Purchaser is exchanged.
Purchaser represents and warrants that the Note, Warrant and Shares of
Common Stock issuable upon exchange of any Warrant ("Securities") to be
acquired by Purchaser upon consummation of the transactions described in this
Agreement will be acquired by Purchaser for Purchaser's own account, not as a
nominee or agent, and without a view to resale or other distribution within the
meaning of the Securities Act and the rules and regulations thereunder, except
as contemplated in this Agreement, and that Purchaser will not distribute any
of the Securities in violation of the Securities Act. In addition, the
Securities shall bear any legend required by the securities or "Blue Sky" laws
of any state where Purchaser resides as well as any other legend deemed
appropriate by the Company or its counsel.
Purchaser represents and warrants that the address set forth below
Purchaser's name on SCHEDULE 1 is Purchaser's principal residence.
Purchaser (i) acknowledges that the Securities issued to Purchaser at
the Closing must be held indefinitely by Purchaser unless subsequently
registered under the Securities Act or an exemption from registration is
available, (ii) is aware that any routine sales of Securities made pursuant to
Rule 144 under the Securities Act may be made only in limited amounts and in
accordance with the terms and conditions of that Rule and that in such cases
where the Rule is not applicable, compliance with some other registration or
exemption will be required.
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Purchaser represents and warrants to the Company that Purchaser,
either alone or together with the assistance of Purchaser's own professional
advisor, has such knowledge and experience in financial and business matters
such that Purchaser is capable of evaluating the merits and risks of
Purchaser's investment in any of the Securities to be acquired by Purchaser
upon consummation of the transactions described in this agreement.
Purchaser confirms that Purchaser has received and read the Memorandum
of the Company. Purchaser also confirms that Purchaser has had the opportunity
to ask questions of and receive answers from the Company concerning the terms
and conditions of Purchaser's investment in the Securities, and the Purchaser
has received, to Purchaser's satisfaction, such additional information, in
addition to that set forth herein, about the Company's operations and the terms
and conditions of the offering as Purchaser has requested.
Purchaser also agrees that the certificates or instruments representing
the Securities to be issued to Purchaser pursuant to this Agreement may contain
a restrictive legend noting the restrictions on transfer and required by federal
and applicable state securities laws, and that appropriate "stop-transfer"
instructions will be given to the Company's transfer agent, if any, provided
that this Article 6 shall no longer be applicable to any Securities following
their transfer pursuant to a registration statement effective under the
Securities Act or in compliance with Rule 144 or if the opinion of counsel
referred to above is to the further effect that transfer restrictions and the
legend referred to herein are no longer required in order to establish
compliance with any provisions of the Securities Act.
Purchaser understands that although an Initial Public Offering is
contemplated by the Company, there are no assurances that an Initial Public
Offering will occur or if it does occur that it will be successful.
At all times following the registration of any of the Company's
securities under the Securities Act or the Securities Exchange Act of 1934 (the
"Exchange Act") pursuant to which the Company becomes subject to the reporting
requirements of the Exchange Act, the Company shall use commercially reasonable
efforts to comply with the requirements of Rule 144 under the Securities Act of
1933, as amended (the "Securities Act"), as such Rule may be amended from time
to time (or any similar rule or regulation hereafter adopted by the SEC)
regarding the availability of current public information to the extent required
to enable any holder of shares of Common Stock to sell such shares without
registration under the Securities Act pursuant to Rule 144 (or any similar rule
or regulation).
ARTICLE 7 - ACCOUNTING; FINANCIAL STATEMENTS AND OTHER INFORMATION
So long as any Note or Warrant remains outstanding, the Company will
maintain a system of accounting established and administered in accordance with
generally accepted accounting principles. The Company will deliver in
duplicate to Purchaser, so long as Purchaser holds the Note or Warrant:
(a) As soon as practicable after the end of each of the first
three quarterly fiscal periods in each fiscal year, and in any event within 45
days thereafter, a consolidated balance sheet of the Company and its
Subsidiaries as of the end of such period, consolidated statements of income
and retained earnings of the Company and its Subsidiaries for such period (and,
in the case of the second and third quarterly periods, for the period from the
beginning of the current fiscal year to the end of such quarterly period),
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and a consolidated statement of cash flows, all in reasonable detail and
certified as complete and correct in all material respects, subject to changes
resulting from year-end adjustments, by the Company's principal financial
officer.
(b) As soon as practicable after the end of each fiscal year, and
in any event within 120 days for the year ending December 31, 1996, within 90
days thereafter, commencing with the year ending December 31, 1997, a
consolidated balance sheet of the Company and its Subsidiaries as of the end of
such year and consolidated statements of income and retained earnings of the
Company and its Subsidiaries for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable
detail accompanied by an opinion of independent certified public accountants of
recognized national standing selected by the Company.
(c) Promptly upon receipt thereof, copies of all other reports
submitted to the Company by independent certified public accountants in
connection with any annual or interim audit of the books of the Company or any
of its Subsidiaries, made by such accountants in so far as they related
directly to financial statements submitted to Purchaser by the Company pursuant
to the agreement; and
(d) Promptly upon their becoming available, copies of
(1) All regular or periodic reports and filings
(including filings pursuant to the Securities Act or the Exchange Act), if any,
which the Company or any Subsidiary files with the Securities and Exchange
Commission or any governmental agency or agency substituted therefor, or any
similar or corresponding governmental department, commission, board, bureau or
agency, or with any national securities exchange; and
(2) All reports, proxy statements and financial
statements delivered or sent by the Company to its stockholders, provided,
however, that all material furnished pursuant hereto to the extent not
otherwise made public by the Company is furnished to Purchaser solely for the
purposes hereof and with the understanding that Purchaser will not disclose
such information to any third party, except for regulatory authorities and
other proper disclosures.
ARTICLE 8 - INSPECTION
So long as Purchaser holds the Note, the Company will permit any
authorized representative designated by Purchaser to visit and inspect, at
Purchaser's expense, any of the Company's or Subsidiary's properties, including
its books (and to make extracts or copies therefrom), and to discuss its
affairs, finances, and accounts with its officers, all at such reasonable times
and as often as is reasonably requested provided, however, that all material
furnished pursuant hereto to the extent not otherwise made public by the
Company is furnished to Purchaser solely for the purposes hereof and with the
understanding that Purchaser will not disclose such information to any third
party, except for regulatory authorities and other proper disclosures.
ARTICLE 9 - PREPAYMENT
9.1 Prepayment without penalties or premium. The Company may
prepay all or a portion of the Note at any time without penalty or a premium so
long as all accrued interest is also paid at such time.
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9.2 Notations, etc. Any holder of a Note shall endorse on such
Note prior to any transfer thereof the amount of principal prepaid thereon and
the last date to which interest thereon has been paid, and will notify the
Company of the name and address of the transferee of such Note.
ARTICLE 10 - INSURANCE OF PROPERTIES AND BUSINESS
The Company will maintain or cause to be maintained, with financially
sound and reputable insurers, insurance with respect to its properties and
business and the properties and businesses of its Subsidiaries against loss or
damage of the kind customarily insured against by corporations of established
reputation engaged in the same or a similar business and similarly situated, in
amounts sufficient to prevent the Company or any Subsidiary from becoming a co-
insurer within the terms of the policies in question.
ARTICLE 11 - ADDITIONAL COVENANTS
The Company agrees that so long as Purchaser holds the Note or
Warrant,
(a) The Company and its Subsidiaries will remain primarily in the
businesses of physician practice management, ownership of ambulatory surgical
centers, optical, managed care and related activities; and
(b) At all times after the date of any Public Offering of its
Common Stock, the Company shall take all necessary or appropriate steps to
cause to be made available adequate public information with respect to the
Company.
(c) Without limiting any other covenants and provisions hereof,
the Company covenants and agrees that, so long as any Warrant remains
outstanding, it will materially perform and observe the following covenants and
provisions and will cause each Subsidiary to materially perform and observe
such of the following covenants and provisions as are applicable to such
Subsidiary:
(1) Payment of Taxes and Trade Debt. Pay and discharge,
all material taxes, assessments and governmental charges or levies imposed upon
it or upon its income or profits or business, or upon any properties belonging
to it, prior to the date on which penalties attach thereto, and all lawful
claims, which, if unpaid, might become a lien or charge upon any properties of
the Company, provided that the Company shall not be required to pay any such
tax, assessment, charge, levy or claim that is being contested in good faith
and by appropriate proceedings if the Company shall have set aside on its books
and to the extent required by generally accepted accounting principles,
adequate reserves with respect thereto as shall be determined by its Board of
Directors. Pay when due, or in conformity with customary trade terms as
consistent with normal operations, all lease obligations, all trade debt, and
all other Indebtedness incident to the operations of the Company, except such
as are being contested in good faith and by appropriate proceedings if the
Company shall have set aside on its books and shall and to the extent required
by generally accepted accounting principles, adequate reserves with respect
thereto as shall be determined by its Board of Directors.
(2) Preservation of Corporate Existence. Preserve and
maintain its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain
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qualified as a foreign corporation in each jurisdiction in which such
qualification is necessary or desirable in view of its business and operations
or the ownership of its properties. Preserve and maintain all material licenses
and other rights to use patents, processes, licenses, trademarks, trade names,
inventions, intellectual property rights or copyrights owned or possessed by it
and necessary in any material respect to the conduct of its business.
(3) Compliance with Laws. Comply in all material
respects with all applicable laws, rules, regulations and orders of any
governmental authority, noncompliance with which could materially adversely
affect its business or condition, financial or otherwise, except non-compliance
being contested in good faith through appropriate proceedings so long as the
Company shall have set up sufficient reserves, if any, required under generally
accepted accounting principles with respect to such items.
(4) Keeping of Records and Books of Account. Keep
adequate records and books of account, in which complete entries will be made
in accordance with generally accepted accounting principles consistently
applied, reflecting all material financial transactions of the Company, and in
which, for each fiscal year, all proper reserves for depreciation, depletion,
obsolescence, amortization, taxes, bad debts and other purposes in connection
within its business shall be made.
(5) Maintenance of Properties, etc. Maintain and
preserve all of its properties necessary or useful in the proper conduct of its
business, in good repair, working order and condition, ordinary wear and tear
excepted, and from time to time make all necessary and proper repairs,
renewals, replacements, additions and improvements thereto. Comply with the
provisions of all material leases to which the Company is a party or under
which the Company occupies property so as to prevent any material loss or
forfeiture thereof or thereunder.
(6) Visitation Rights. Permit Purchaser or any legal or
financial representative thereof periodically upon reasonable notice during
normal business hours to examine the books and records of the Company at the
Company's premises and permit the Purchaser (or any legal or financial
representatives thereof) to meet, and to discuss the business affairs, finances
and accounts of the Company with any of its officers or directors and
independent accountants.
(d) The Company covenants and agrees that at all times from the
date of this Agreement until such date as the Company may effect a public
offering of its Common Stock, the Purchaser shall be entitled to receive notice
of, and a designated representative of Purchaser shall be entitled to the right
to attend as an observer, all meetings of the Company's Board of Directors
subject to the exclusion of such designated representative from any portions of
meetings of the Company's Board of Directors that the Board determines, in its
sole discretion, are to be kept confidential. The Company agrees to provide to
a person designated by Purchaser, such person initially to be Buzz Xxxxxx,
Managing Director of Xxxxx Xxxxxxx Ventures Incorporated, all information it
provides to directors subject to the exclusion of information which the Company
is bound by a Confidentiality Agreement with a third party. The person
designated by Purchaser shall not share such information unless agreed to by
the Company, and will return the information to the Company within 10 days upon
written request.
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ARTICLE 12 - AGREEMENT TO REGISTER
The Company agrees that:
(a) If at any time the Company determines to take action to
register any of its securities under the Securities Act, as then in effect, or
any similar federal statute (collectively the "Act"), otherwise than pursuant
to Form S-8, or any other form not applicable to an offering of Common Stock
issued or issuable upon the exchange of Warrants, it will notify in writing
each registered holder of any Notes, Warrants or any shares of Common Stock
issued upon exchange thereof of such determination and, upon written request
received within 15 days of the mailing of such notice will use its best efforts
to effect the registration under the Act of any shares of Common Stock issued
or issuable upon such conversion or exchange to which such request relates.
(b) The Company agrees at any time after six months from the date
of any Public Offering of its Common Stock, upon receipt from the registered
holders of at least 50 percent in principal amount of the then outstanding
Notes (or of any Warrants or shares of Common Stock issued in respect thereto)
of a request to register under the Act any shares of Common Stock issued upon
the exchange of any such Warrants, it will notify all other registered holders
thereof of such request and will use its best efforts to effect the
registration under the Act of the shares of Common Stock to which such request
relates. Such holders shall be entitled to make one request for registration
pursuant to this paragraph (b).
(c) If at any time a holder or holder of stock requests that the
Company file a registration statement on Form S-3 for a public offering of all
or any portion of the shares held by such requesting holder or holders, the
reasonably anticipated aggregate price to the public of which would exceed
$500,000, and the Company is a registrant entitled to use Form S-3 or any
successor thereto to register such shares, then the Company shall use its best
efforts to register under the Securities Act on Form S-3 or any successor
thereto, for public sale in accordance with the method or disposition specified
in such notice, the number of shares of stock specified in such notice.
Whenever the Company is required by this Article 12 to use its best efforts to
effect the registration of stock, each of the procedures and requirements of
Article 12 (including but not limited to the requirement that the Company
notify all holders of stock from whom notice has not been received and provide
them with the opportunity to participate in the offering) shall apply to such
registration, provided, however, that there shall be only two registrations on
Form S-3 which may be requested and obtained under this Section.
(d) If the Company is required to use its best efforts to effect
the registration of any Common Stock under the Act, it will use its best
efforts to:
(1) Prepare and file with the Securities and Exchange
Commission (the "Commission"), within 90 days after the receipt of the written
request for registration a registration statement with respect to such shares
of Common Stock and cause such registration statement to become and remain
effective for at least a period of 120 days.
(2) Prepare and file with the Commission all amendments
and supplements to such registration statement and the prospectus used in
connection therewith necessary to keep such registration statement effective
for said 120 day period (if any stand-off period is imposed pursuant to this
Section, such 45 day period shall commence at the termination thereof) and to
comply with the provisions of the
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Act with respect to the disposition of all such shares of Common Stock covered
by such registration statement whenever the holders thereof desire to dispose
of the same;
(3) Furnish to the holders of such shares of Common Stock
whatever numbers of copies of prospectuses, including one or more preliminary
prospectuses, they need to comply with the Act, and all other documents they
reasonably request in order to facilitate the disposition of such shares; and
(4) Register or qualify the shares of Common Stock
covered by such registration statement under the other securities or blue sky
laws of any jurisdictions the holders thereof reasonably request, and do all
other necessary or advisable acts and things to enable such holders to
consummate the disposition of such shares in the applicable jurisdictions,
except that the Company shall not be required to file a general consent to
service in any such jurisdiction.
(e) The Company shall pay all expenses incurred by it in complying
with paragraph (d) of this Article 12 and all reasonable out-of-pocket expenses
(including the reasonable fees and disbursements of one attorney or law firm
representing all the holders of Common Stock covered by any such registration
statement) incurred by such holders in connection therewith (including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of the Company's counsel, and expenses of any special audits
incident to or required by any such registration, but not including, however,
any underwriting discounts, fees or commissions which are to be paid by such
holders).
(f) Notices and requests delivered to the Company pursuant to this
Article 12 shall contain all information regarding the shares of Common Stock
to be registered and the intended method of disposition thereof that is
reasonably required in connection with the action to be taken.
(g) In the event of any registration under the Act of any shares
of Common Stock pursuant to this Article 12, the Company hereby agrees to
indemnify and hold harmless each shareholder disposing of such shares, each
other person, if any, who controls such shareholder within the meaning of the
Act, and each other person, who participates in the offering of such shares,
against all losses, claims, damages or liabilities, joint or several, to which
such shareholder, controlling person, or participating person may become
subject under the Act or otherwise, in so far as such losses, claims, damages
or liabilities (or proceedings in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained, on the effective date thereof, in any registration statement under
which such shares of Common Stock were registered under the Act, or in any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading. The
Company will reimburse such shareholder and each such controlling person or
participating person for all legal or any other expenses reasonably incurred by
such shareholders, controlling person, or participating person in connection
with investigating or defending any such loss, claim, damage, liability or
proceeding; provided, however, that the Company will not be liable in any such
case to the extent that any such losses, claims, damages or liabilities arise
out of or are based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, or said
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by such
shareholder specifically for use in the preparation thereof. Each such
shareholder will agree to indemnify the Company, each person who signed any
such registration statement, and each person, if any, who controls the Company
within the meaning of the Act, in the same manner
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and to the same extent that Company has agreed to indemnify in this paragraph.
Such indemnification, however, shall only relate to untrue statements or
alleged untrue statements or omissions or alleged omissions contained in any
such registration statement, or amendment or supplement thereto, based upon and
in conformity with written information furnished to the Company by an
instrument duly executed by such shareholder specifically for use in the
preparation thereof. (h) As a condition of the registration of any shares
of Common Stock, the Purchaser agrees:
(1) ("Market Stand-Off" Agreement). If requested by the
Company and an underwriter of Common Stock of the Company, the Purchaser shall
not sell or otherwise transfer or dispose of any Common Stock (or other
securities) of the Company held by such Purchaser (other than those included in
the registration) during the one hundred eighty (180) day period following the
effective date of a registration statement of the Company filed under the
Securities Act, provided that:
(a) such agreement shall only apply to the first
such registration statement of the Company, including securities to be sold on
its behalf to the public in an underwritten offering; and
(b) all officers and directors of the Company
enter into similar agreements.
The obligations described in this Section shall not apply to a
registration relating solely to employee benefit plans on Form S-8 or a similar
form that may be promulgated in the future, or a registration relating solely
to a Commission Rule 145 transaction on Form S-4 or similar forms that may be
promulgated in the future. The Company may impose stop-transfer instructions
with respect to the shares (or securities) subject to the foregoing restriction
until the end of said one hundred eighty (180) day period. If requested by the
Company, the Purchaser will execute a lock-up agreement memorializing this
obligation.
(2) To comply with all requirements of the Securities Act
and of the Commission in connection with the offering and sale of such shares
of Common Stock;
(3) To effect sales of all such shares of Common Stock,
if so required by the Company, in an organized manner through a single broker
or dealer, or a single syndicate or selling group of brokers and/or dealers,
provided that any such required arrangement shall not prejudice any plan of
distribution proposed by Purchaser;
(4) To cooperate with the Company in its compliance with
all federal and state securities laws, including without limitation providing
such information and signing such documents as are necessary to effect a
registration or reasonably requested by underwriters pursuant to this
Agreement;
(5) To pay its pro rata portion (calculated on the basis
of the ratio of the aggregate offering price attributable to the shares of
holder being registered and sold in relation to the aggregate offering price
attributable to the total number of securities being registered and sold,
including securities being registered and sold by other selling holders) of the
underwriting discounts and selling commissions and to pay all the fees and
disbursements of its counsel if other than the counsel specified in Section
12(e);
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(6) To cooperate with the Company in all respects in
connection with registration of the Common Stock, including timely supplying
all information and executing and returning all documents requested by the
Company and its managing underwriter;
(7) The Company shall not be required to include
any of Purchaser's shares of Common Stock in any
registration statement unless Purchaser accepts the terms of the underwriting
as agreed upon by the Company and underwriters which are selected by the
Company.
(8) The Company shall have the right to defer or suspend
the filing of any registration statement if the Board of Directors of the
Company determines in good faith that it would be seriously detrimental to the
Company and its Shareholders for such registration statement to be filed as
provided in Section 12(i)(4).
(i) Notwithstanding the above, the parties agree:
(1) The Company shall have the sole and exclusive right
to select the underwriters of any public offering of the Company's Common
Stock, including any public offering conducted pursuant to the demand
registration right set forth above. The use of underwriters in any demand
registration right set forth above is subject to the Company's ability to
engage underwriters under terms and conditions deemed reasonable by the
Company. Notwithstanding anything contained herein to the contrary, the demand
registration right set forth above shall be permitted to be exercised only on
three separate occasions (as provided in Section 12(b) and 12(c)), and the
Company may elect, upon receiving such demand to combine such registration with
any other registration of securities it may seek to file.
(2) If the managing underwriter of any public offering
advises the Company that the total number of shares of the Company's Common
Stock which the Company, the Purchaser and any other persons intend to include
in such public offering would adversely affect the success of such public
offering, then the amount of shares of Common Stock to be offered for the
account of Purchaser will be reduced to the extent necessary to reduce the
total number of shares of Common Stock to be included in such public offering
to the amount recommended by such managing underwriter. Such reduction will be
on a pro rata basis with all other shareholders holding registration rights for
the sale of shares in the offering. However, this cut back shall not be
applicable to the demand registrations.
(3) The Company shall not be required to (i) reduce the
amount of shares of Common Stock to be offered by the Company in such public
offering for any reason or (ii) include any shares of Common Stock of Purchaser
in any public offering for which a registration statement is or is proposed to
be filed if such shares of Common Stock are, at the time of effectiveness of
such registration statement, eligible to be sold under Rule 144 under the Act
or otherwise eligible for sale to the public without registration, provided
that the Purchaser is eligible to sell all its shares of Company Common Stock
in any one 90-day period.
(4) The Company shall have the right to extend, suspend
or delay the effectiveness of any registration statement for a period of up to
ninety (90) days if, upon the advice of counsel, such delay is advisable and in
the best interests of the Company or because of the existence of non-public
material information, or to allow the Company to complete any pending audit of
its financial statements,
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any public financing plan, any pending material acquisition or to release
audited financial statements of an acquiree in a pending acquisition.
ARTICLE 13 - FIRST RIGHT OF REFUSAL AND CO-SALE RIGHTS
13.1 Purchase right of first refusal. Prior to any First Liquidity
Event and, except for (i) shares issued in acquisitions to be made by the
Company, (ii) shares issued in establishing a strategic alliance, (which
includes any financial and lending arrangements with Prudential Securities
Incorporated ("Prudential"), or any affiliates or assigns thereof on terms
substantially similar to those set forth on SCHEDULE 13.1), or (iii) for option
shares issued to employees, contractors, consultants or affiliated physicians
approved by the Board of Directors and pursuant to previous option grants or
Warrants disclosed on the attached SCHEDULE 13.1 or related to future options
granted where shares issued are at a price equal to or higher than the current
exchange price as defined herein, no shares of the Company and no interest
therein shall be sold or transferred by the Company after the date hereof, in
any manner whatsoever without the prior written consent of the Purchaser of the
Note or without following the terms of this Article. All of the above
described sales or transfers of Company shares which may be made by the Company
without approval and without complying with this Article shall be deemed
"Approved Transfers."
Prior to making or upon receiving any bona fide offer, or counteroffer
that the Company intends to assert, with respect to any disposition of any
shares of the Company other than pursuant to an Approved Transfer, the Company
shall convey the Offer Terms with respect thereto to Purchaser and Purchaser
shall have the right to purchase all, and only all, of the shares that are the
subject of such offer or counteroffer on the Offer Terms pro rata with all
holders of the December 1996 holders and any subsequent holder with similar
purchase rights of first refusal. Pro rata Purchaser may exercise its right to
acquire such shares by written notice to the Company with respect to an offer,
within the 25 day period following receipt by the Purchaser of any initial
Offer Terms or (ii) with respect to a counteroffer, within 10 business days
after receipt by the Purchaser of the Offer Terms with respect thereto,
provided that Purchasers shall have previously received written notice of the
initial Offer Terms as hereinabove provided. The closing of such purchase
shall occur at the Company's offices or such other location as may be agreed
upon on the date indicated in the written notice delivered to such Purchaser
within the time specified by the most recently delivered Offer Terms. If
Purchaser does not purchase all such shares during such period, the Company
shall be free within the time period specified by the most recently delivered
Offer Terms, to sell or transfer such shares to the third party making or
receiving such offer or counteroffer on Offer Terms no more favorable to such
third party than those contained in the last offer or counteroffer delivered to
Purchaser. In the event more than one Purchaser wishes to acquire shares in
this Section, they shall be entitled to acquire their pro rata share of the
shares to be sold. Such Purchase Right of First Refusal described herein shall
expire upon a First Liquidity Event and there shall be no right of first
refusal with respect to an event that would be a First Liquidity Event.
13.2 Co-sale rights. Prior to any First Liquidity Event and except
for an Approved Transfer or any proposed First Liquidity Event, Xxxxxxxx X.
Xxxxxxxx or Xxxxxxx X. Xxxxxxx, or their affiliates (each individually a
"Seller"), shall not transfer, sell, or otherwise dispose of (collectively, a
"transfer") shares of the Company's Common Stock (either directly or
indirectly), which transfer together with all previous transfers, rather than
Approved Transfers, would be in excess of an aggregate of 15% (on a fully
diluted basis) of the outstanding shares of Common Stock held by such Seller,
to any person (such person being
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hereinafter referred to individually as a "Third Party" and collectively as
"Third Parties"), unless the terms and conditions of such transfer shall
include an offer at the most favorable price, and on the most favorable terms
and conditions, at which the Seller is then intending to transfer such Seller's
Common Stock (except that the only representation and warranty that the
Purchaser or any transferee of Purchaser's that acquired Common Stock pursuant
to this Agreement ("Transferees") shall be required to make in connection with
any transfer is a warranty with respect to its own ownership of the Common
Stock to be sold by it and its ability to convey title thereto free and clear
of liens, encumbrances or adverse claims) to Purchaser and any Transferee to
include, at their option, in the transfer to the Third Party, an amount of
Common Stock determined in accordance with this Section.
The Third Party shall purchase from Purchaser and any Transferee the
number of shares of Common Stock owned by Purchaser or such Transferee, as the
case may be, equalling the number derived by multiplying the total number of
shares to be purchased by the Third Party by a fraction, the numerator of which
is the total number of shares of Stock owned by Purchaser or such Transferee,
as the case may be, that Purchaser or such Transferee, as the case may be,
desires to require the Third Party to purchase and the denominator of which is
the sum of (A) the total number of shares of Stock owned by Purchaser and all
Transferees desiring to require the Third Party to purchase their shares and
(B) the total number of shares of Common Stock owned by Sellers and their
affiliates.
Unless the same is an Approved Transfer or a proposed First Liquidity
Event, before the Seller proposes to transfer any Common Stock, it shall
notify, or cause to be notified, Purchaser and any Transferee in writing of
each such proposed transfer. Such notice shall set forth: (i) the name of the
Third Party and the number of shares of Common Stock proposed to be
transferred, (ii) the address of the Third Party, (iii) the proposed amount and
form of consideration and terms and conditions of payment offered by the Third
Party (the "Third Party Terms") and (iv) whether the Third Party has been
informed of the "Co-Sale Right" provided for in this Section and has agreed to
purchase shares of Common Stock in accordance with the terms hereof.
The Co-Sale right may be exercised by delivery of a written notice to
the Seller (the "Co-Sale Notice") within 15 days following receipt of the
notice specified in the preceding sentence. The Co-Sale Notice shall state the
number of shares of Stock that Purchaser or such Transferee, as the case may
be, would be entitled to include in such transfer to the Third Party.
Upon the giving of a Co-Sale Notice, Purchaser and such Transferees
shall be entitled and obligated to sell the number of shares of Stock set forth
in the Co-Sale Notice to the Third Party on the Third Party Terms; provided,
however, that the Sellers shall not consummate the sale of any shares offered
by them if the Third Party does not purchase all shares which Purchaser and any
Transferee are entitled to and desire to sell pursuant hereto. After
expiration of the 15 day period referred to above, if the provisions of this
Section have been complied with in all respects, the Sellers shall have the
right for a 90 day period to transfer the shares of Common Stock to the Third
Party on the Third Party Terms without further notice to Purchaser or any
Transferee who have not given a Co-Sale Notice, but after such 90 day period,
no such transfer may be made without again giving notice to Purchaser and all
Transferees of the proposed transfer and complying with the requirements of
this Article.
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Notwithstanding anything to the contrary, any Approved Transfer may be
made without compliance with this Article 13. The Co-Sale Rights contained
herein shall terminate upon a First Liquidity Event.
ARTICLE 14 - PROVISIONS RESPECTING EXCHANGE OF WARRANTS
14.1 Exchange of Warrant. The Purchaser shall receive a Warrant to
purchase up to two million ($2,000,000) worth of securities of the Company (the
"Warrant"). At any time up through December 19, 2003, subject to the terms
hereof, the Warrant shall be exchangeable by the holder thereof. The Warrant
shall initially be exchangeable for 421,941 shares of Common Stock, potentially
increasing to up to 500,000 shares of Common Stock so that the Purchaser will
have the right to purchase an aggregate of $2,000,000 worth of Common Stock of
the Company at the Warrant Exchange Price at an exchange price of between $4.00
and $4.74 per share of Common Stock, as hereinafter determined, or in a cashless
exchange for a reduced number of shares (the "Net Issuable Exchange"), as
determined by Section 9 of the Warrant. The Warrant will be exchangeable upon
surrender of the Warrant to the Company at its principal office in Florida at
any time during usual business hours, accompanied, if the Company so requires,
by an instrument or instruments of transfer in form satisfactory to the Company
and duly executed by the holder of the Warrant. The Warrant will expire on the
earlier of (i) 5:00 p.m. on December 19, 2003 (or (ii) five years from the date
of any initial public offering by the Company, if not exchanged by such date.
Should the offering price of the Company's Common Stock in an initial public
offering be less than $9.48 per share, then the Warrant exchange price shall
become one-half of that initial offering price, but not less than $4.00 per
share, subject to Section 14.3, provided however, if the exchange price on any
Warrant subsequently issued to Prudential is less than the exchange price,
Purchaser's exchange price will be adjusted downward to the exchange price
granted by the Company on any Prudential Warrant. Should the Market Price per
share of Common Stock as defined herein be less than $9.48 at the time of any
First Liquidity Event other than an IPO, then the exercise price for the stock
shall become one-half of that Market Price per share on such date, but not less
than $4.00 per share, subject to Section 14.3, provided however, if the exchange
price on any Warrant subsequently issued to Prudential is less than the exchange
price, Purchaser's exchange price will be adjusted downward to the exchange
price granted by the Company on any Prudential Warrant.
14.2 Issuance of common stock upon exchange. As promptly as
practicable after the surrender, as herein provided, of any Warrant, the
Company shall deliver or cause to be delivered to or upon the written order of
the holder of the Warrant the shares to be issued on exchange in accordance
with the provisions of this Article 14 certificates representing the numbers of
fully paid and nonassessable shares of Common Stock into which such Warrant is
exchangeable in accordance with the provisions of this Article 14. Subject to
the following provisions of this paragraph, such exchange shall be deemed to
have been made at the close of business on the date that such Warrant has been
exchanged, so that the rights of the holder of such Warrant exchanged shall
cease at such time and the person or persons entitled to receive the shares of
Common Stock upon exchange of such Warrant shall be treated for all purposes as
having become the record holder or holders of such shares of Common Stock at
such time and such exchange shall be at the exchange price in effect at such
time; provided, however, that no such surrender on any date when the stock
transfer books of the Company are closed shall be effective to constitute the
person or persons entitled to receive the shares of Common Stock upon such
exchange as the record holder or holders of such shares of Common Stock on such
date, but such surrender shall be effective to constitute the person or persons
entitled to receive such shares of Common Stock as the record holder or
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holders thereof for all purposes at the close of business on the next
succeeding day on which such stock transfer books are open and such exchange
shall be at the exchange price in effect on the date that such Warrant has been
surrendered for exchange.
If the last day for the exchange right is a Sunday or is in Florida a
legal holiday or a day on which banking institutions are authorized by law to
close, such right to exchange may be exercised on the next succeeding day which
is not a legal holiday in Florida or a day on which banking institutions are
authorized by law to close.
14.3 Adjustment to exchange price. The exchange price and the
number of shares issuable upon exchange shall, in addition to the preceding
paragraph 14.1, be subject to adjustment as follows in the event the Company
issues or is deemed to have issued shares at less than the current exchange
price:
(a) For the purposes of this Section 14.3(a), the term "current
exchange price" is defined as meaning at any given time the exchange price then
in effect, which is set as $4.74 as of the date hereof; and the terms "current
quotient" is defined as meaning on any given date the amount determined at the
close of business on such day by dividing:
(1) An amount equal to (A) the total number of shares of
Common Stock outstanding when the current exchange price became effective,
exclusive of any such shares which may have been issued after the date hereof
as provided in this Section 14.3(a), multiplied by the current exchange price,
plus (B) the aggregate of the amounts of all consideration, if any, received by
the Company, (or, without duplication, deemed to be received as provided in
paragraph (viii) below) upon all issuances of shares of Common Stock since the
current exchange price became effective and prior to the time of the
determination of the current quotient except shares of Common Stock issued as
provided in Subdivision (c) hereof.
(2) The total number of shares of Common Stock
outstanding immediately prior to the time of such determination, including any
such shares deemed to have been issued as provided in paragraph (viii) below
but excluding any such shares which may have been issued as provided in this
Section 14.3(a). For the purposes of this paragraph, the exchange price of
$4.74 shall be deemed to have become effective at the close of business on the
date of Closing Time. In determining the current quotient, the result shall be
expressed to the nearest cent.
If at the close of business on any date after the date of Closing Time
on which any adjustment event hereunder takes place, the current exchange price
exceeds the current quotient by as much as one percent of the then effective
exchange price, the exchange price shall be reduced to the price equal to the
current quotient, effective at the close of business on such date. In such
case of a subdivision or combination of the outstanding shares of Common Stock
issuable upon exchange of the Warrants, the exchange price shall be first
reduced, effective immediately prior to an adjustment of the exchange price
pursuant to this Section 14.3(a), by the amount, if any, by which the current
exchange price exceeds the current quotient.
For the purposes of this Section 14.3(a), the following provisions
shall also be applicable:
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i) If additional shares of Common stock are issued for cash, the
consideration received by the Company therefor shall be deemed to be the amount
of cash received by the Company for such shares, before deducting therefrom any
commissions or other expenses paid or incurred by the Company for any
underwriting of, or otherwise in connection with, the issuance of such shares.
ii) If additional shares of Common Stock are issued (otherwise
than upon the exchange of the Company's obligations or shares of stock or upon
the exchange of rights or options to subscribe for or to purchase shares of
Common Stock) for a full or partial consideration other than cash, the amount
of the non-cash consideration received by the Company for such shares shall be
deemed to be the value of such consideration as determined in good faith by the
Company's Board of Directors.
iii) If additional shares of Common Stock are issued upon
conversion or exchange of any obligations (including the Notes) or of any
shares of the Company's stock that are convertible into or exchangeable for
shares of Common Stock or upon the exchange of rights or options to subscribe
for or to purchase shares of Common Stock, the amount of the consideration
received by the Company for such additional shares of Common Stock shall be
deemed to be the total of: (a) the amount of consideration received by the
Company upon the original issuance of such obligations, shares, rights, or
options, plus (b) any other consideration received by the Company upon
conversion, exchange, or exchange except in adjustment of interest and
dividends. If obligations, shares, rights, or options, of the same class or
series of a class as the obligations, shares, rights, or options so converted,
exchanged or exchanged have been originally issued for different amounts of
consideration, the amount of consideration received by the Company upon the
original issuance of each obligation, share, right, or option so converted,
exchanged, or exchanged shall be deemed to be the average amount of the
consideration received by the Company upon the original issuance of all such
obligations, shares, rights, or options. The amount of the consideration,
obligations, shares, rights, or options so converted, exchanged, or exchanged
and the amount of any other consideration received by the Company upon the
original issuance of the obligations, shares, rights, or options so converted,
exchanged, or exchanged and the amount of any other consideration, received by
the Company upon such conversion, exchange, or exchange shall be determined in
the same manner provided in paragraphs (i) and (ii) above with respect to the
consideration received by the Company in case of the issuance of additional
shares of Common Stock. If such obligations, shares, rights, or options have
been issued as a dividend upon any stock of the Company, the amount of the
consideration received by the Company upon the original issuance thereof shall
be deemed to be zero.
iv) If additional shares of Common Stock are issued as a
dividend, the aggregate number of shares of Common Stock issuable in payment of
such dividend shall be deemed to have been issued and to be outstanding at the
close of business on the record date fixed for the determination of
stockholders entitled to such dividend. Shares of Common Stock issued
otherwise than as a dividend shall be deemed to have been issued and to be
outstanding at the close of business on the date of issue.
v) The term dividend shall mean a dividend or other distribution
upon stock of the Company.
vi) The number of shares of Common Stock at any time outstanding
shall not include all shares of Common Stock then owned or held by or for the
account of the Company.
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vii) If the Company declares a dividend without fixing a record
date for determining the stockholders entitled thereto, the first business day
during which the Company's stock transfer books are closed for the purpose of
such determination shall be deemed to be the record date fixed for the
determination of stockholders entitled to such dividend.
viii) In case of (a) the issuance of shares of stock or obligations
convertible into or exchangeable for shares of Common stock at a exchange price
per share less than the current exchange price in effect immediately prior to
the issuance of such convertible stock or obligations, or (b) the issuance of
any rights to subscribe for or to purchase, or any options for the purchase of,
additional shares of Common Stock, at a price per share for the additional
shares of Common Stock issuable upon the exchange of such rights or options less
than the current exercisable price in effect immediately prior to the issuance
of such rights or the granting of such options, then the issuance of such stock,
obligations, rights, or options shall be deemed to be an issuance (as of the
date of issuance of such stock, obligations, rights, or options) of the total
maximum number of shares of Common Stock issuable upon the conversion or
exchange of all such convertible stock or obligations or upon the exchange of
all such rights or options, as the case may be. In such case, the amount
received or receivable by the Company in consideration of the issuance of such
stock, obligations, rights, or options (plus the minimum aggregate amount of
premium or additional consideration payable to the Company upon conversion or
exchange of the stock or obligations or upon the exchange of such rights or
options) before deducting therefrom any commissions or other expenses paid or
incurred by the Company for any underwriting of, or otherwise in connection
with, the issuance of such stock, obligations, rights or options, shall be
deemed to be the consideration actually received (as of the date of issuance of
such rights or options) for the issuance of the additional shares of Common
Stock.
The Consideration actually received by the Company for any shares of
Common Stock issued upon the exchange of such stock or obligations or upon the
exchange of such rights or options, which pursuant to this paragraph (viii) is
deemed to have been received, shall not be included in the first paragraph of
this Section 14.3(a) for the purpose of computing the current quotient and no
further adjustment of the exchange price shall be made in respect thereof
except that:
(1) On the expiration of such rights or options or the
termination of the right to convert or exchange such stock or obligations, the
current quotient and the current exchange price shall forthwith be readjusted
to the current quotient and current exchange price which would have obtained
had the adjustments made on account of the issuance of such options, rights or
convertible or exchangeable securities been made upon the basis of the delivery
of only the number of shares of Common Stock actually delivered upon the
exchange of such rights or options or upon conversion or exchange of such
securities for the consideration actually received by the Company for such
options, rights or securities and upon the exchange, exchange or conversion
thereof; and
(2) If the purchase or exchange price or exchange rate
provided for in any such options, rights, stock, or obligations changes or a
different purchase or exchange price or exchange rate becomes effective at any
time or from time to time (other than under or by reason of provisions
designated to protect against dilution) then, upon such change becoming
effective, the current quotient and current exchange price then in effect
hereunder shall forthwith be increased or decreased to such current quotient
and current exchange price as would have obtained had the adjustments made upon
the issuance of such options, rights or convertible or exchangeable securities
been made upon the basis of (A) the issuance of
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the number of shares of Common Stock theretofore actually delivered upon the
exchange, conversion or exchange thereof, (B) the issuance of all Common Stock
and all other options, rights or convertible or exchangeable securities issued
after the issuance of such options, rights or convertible or exchangeable
securities, and (C) the original issuance at the time of such exchange of any
such options, rights or convertible or exchangeable securities then still
outstanding.
In case, however, such stock or obligations are convertible or
exchangeable at a exchange price or exchange rate or such rights or options are
exercisable at a purchase price, per share equal to or in excess of the current
exchange price immediately prior to the issuance or sale of such convertible
stock or obligations or of such rights or options, then no adjustment of the
exchange price shall be made except in respect of additional shares of Common
Stock actually issued upon the conversion or exchange of any such convertible
stock or obligations or upon the exchange of any such rights or options.
ix) No adjustment in the exchange price shall be made in respect
of the issuance or sales of Common Stock held in the Company's treasury to the
extent it acquired such Common Stock after the date of Closing Time, except
that if any such treasury shares are issued or sold for a consideration per
share which is less than the exchange price in effect immediately prior to such
issue or sale and which is less than the average cost per share of such
treasury shares, Company shall be deemed for purposes of this Section 14.3, to
have issued or sold shares of Common Stock equal in number to such treasury
shares for a consideration per share equal to the exchange price in effect
immediately prior to such issue or sale reduced by the amount by which such
average cost of such treasury share exceeds such consideration per share.
(b) If the Company at any time subdivides or issues a stock
dividend upon the outstanding shares of Common Stock, the exchange price in
effect immediately prior to such subdivision or stock dividend shall be
proportionately decreased, and if the Company at any time combines the
outstanding shares of Common Stock, the exchange price in effect immediately
prior to such combination shall be proportionately increased. Any such
adjustment shall become effective at the close of business on the date that
such subdivision, stock dividend or combination becomes effective.
(c) No adjustment of the exchange price shall be made as a result
of or in connection with any Approved Transfer as defined in Section 13.1:
(d) Whenever the exchange price is adjusted, as herein provided,
the Company shall promptly deliver to each holder of Warrants a computation
setting forth the exchange price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment. Such computation shall
be made by certified public accountants (who may be Company's regular auditors
or certified public accounts and shall be conclusive evidence of the
correctness of such adjustment.
(e) The adjustments to the exchange price provided for in this
Section 14.3 shall be applicable, as provided in the Warrants, to the Purchase
Price provided for in the Warrants.
14.4 Fractional shares. No fractional shares or script
representing fractional shares shall be issued upon the exchange of any
Warrants. If the exchange of any Warrants results in a fraction, an amount of
money equal to such fraction multiplied by the fair market value of one share
of Common
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Stock of the Company on the date on which such conversion or exchange is deemed
made shall be paid to the person otherwise entitled to such fraction.
14.5 Effect of reclassifications, etc. In case of any
reclassification or change of outstanding shares of Common Stock issuable upon
exchange of any Warrants (other than a change in par value, or from par value
to no par value, or from no par value to par value, or as a result of a
subdivision or combination), or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as
an entirety, the Company, or such successor or purchasing corporation, as the
case may be, shall execute with each holder of Warrants a supplemental
agreement providing that the holder of each Warrant then outstanding shall have
the right thereafter to exchange such Warrant to purchase the kind and amount
of shares of stock and other securities and property receivable upon such
reclassification, change, sale or conveyance. Such supplemental agreement
shall provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article 14. The above
provisions of this Section 14.5 shall similarly apply to successive
reclassifications and changes of shares of Common Stock and to successive sales
or conveyances.
14.6 Company to reserve stock. The Company covenants that it will
at all times reserve and keep available out of its authorized Common Stock,
solely for the purpose of issue upon exchange of the Warrants as herein
provided, the number of shares of Common Stock that is then issuable upon the
exchange of all outstanding Warrants. The Company covenants that all shares of
Common Stock which are so issuable shall, when issued pursuant to the terms of
the Warrants and this agreement, be duly and validly issued and fully paid and
nonassessable.
14.7 No dilution or impairment. The Company will not, by amendment
of its Articles 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 term of this agreement, the Notes, or Warrants, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of
all such action that is necessary or appropriate in order to protect the rights
of the holders of the Notes and Warrants against dilution or other impairment.
14.8 Taxes on exchange. The issuance of certificates for shares of
Common Stock upon the exchange of Warrants shall be made without charge to the
Warrant holders for any tax (other than federal or state income taxes) in
respect to the issuance of such certificates. Such certificates shall be
issued in the respective names of, or in the names directed by, the holder of
the Warrant exchanged. Company, however, shall not be required to pay any tax
which may be payable in respect to any transfer involved in the issuance and
delivery of any such certificate in a name other than that of the holder of the
Warrants exchanged, or to issue or deliver such certificates until the person
or persons requesting the issuance thereof have paid the Company the amount of
such tax or have established to the satisfaction of the Company that such tax
has been paid.
14.9 Notices of record date, etc.. If any of the following events
occur, the Company will mail or cause to be mailed a notice, as specified
below, to every holder of a Note or Warrant:
(a) Any taking by Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a cash dividend at the same rate
as the rate of the last cash dividend theretofore paid) or other distribution,
or
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any right to subscribe for, purchase or otherwise acquire any shares of stock
of any class or any other securities or property or to receive any other right;
(b) Any capital reorganization of the Company, any
reclassification or recapitalization of the Company's capital stock, or any
transfer of all or substantially all of the assets of the Company to or
consolidation or merger of the Company with or into any other Person;
(c) Any voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(d) Any proposed issue or grant by the Company of any shares of
stock of any class or any other securities (other than notes or other
obligations issued or incurred by Company in connection with the purchase of
real or personal property or the borrowing of money privately), or any right or
option to subscribe for, purchase or otherwise acquire any shares of stock of
any class or any securities (other than the Public Offering of Common Stock or
any issue or grant referred to herein).
The above notice to the Note or Warrant holder shall specify:
(1) The date or expected date on which any such record is
to be taken for the purpose of such dividend, distribution, or right, and
stating the amount and character of such dividend, distribution, or right;
(2) The date or expected date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up is to take place, and the time,
if any is to be fixed, as of which the holders of record of Common Stock (or
other securities) shall be entitled to exchange their shares of Common Stock
(or other securities) for securities or other property deliverable upon such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation, or winding-up; and
(3) The amount and character of any stock or other
securities, or rights or options with respect thereto, proposed to be issued or
granted, the date or expected date of such proposed issue or grant, and the
persons or class of persons to whom such proposed issue or grant is to be
offered or made. Such notice shall be mailed at least 20 days prior to the
date therein specified.
ARTICLE 15 - TRANSFERS NOT REGISTERED UNDER SECURITIES ACT OF 1933
15.1 Restrictive legends. Each Note, Warrant and certificate for
Common Stock issued upon the exchange of any Warrant, and each Note, Warrant,
and stock certificate issued upon the transfer of any such Note, Warrant or
Common Stock (except as otherwise permitted by this Article 15), shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"The securities represented hereby have not been registered
under the Securities Act of 1933. Such securities may not be
sold or transferred in the absence of such registration or an
exemption therefrom under said Act. Such securities may not
be transferred except upon the conditions specified in certain
agreements, dated as of February 28, 1997, between the Company
and certain Purchasers, complete and correct copies of
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which are available for inspection at the office of the Company and a
conformed copy of which will be furnished to the holder of such
securities upon written request and without charge. No transfer of
such securities shall be valid or effective unless and until the
conditions so specified have been complied with."
15.2 Notice of proposed transfer, opinions of counsel. Except as
provided in the last paragraph of this Section 15.2, prior to any transfer of
any such Notes, Warrants, or Common Stock, the holder thereof will give written
notice to Company of such holder's intention to effect such transfer and to
comply in all other respects with this Section 15.2. Each such notice shall
(a) describe the manner and circumstances of the proposed transfer in
sufficient detail to enable counsel to render the opinions referred to below,
and (b) designate counsel for the holder giving such notice (who may be house
counsel for such holder). The holder giving such notice will submit a copy
thereof to the counsel designated in such notice and Company will promptly
submit a copy thereof to its counsel, and the following provisions shall apply:
(1) If in the opinion of each such counsel, the proposed
transfer may be effected without registration under the Act of such Notes,
Warrants, or Common Stock, the Company will promptly notify the holder thereof
and such holder shall thereupon be entitled to transfer such Notes, Warrants,
or Common Stock in accordance with the terms of the notice delivered by such
holder to the Company. Each Note, Warrant, or certificate, if any, issued upon
or in connection with such transfer shall bear the appropriate restrictive
legend set forth in Section 15.1, unless in the opinion of each such counsel
such legend is no longer required to insure compliance with the Act. If for
any reason counsel for the Company (after having been furnished with the
required information under clause (a) of this Section 15.2) fails to deliver an
opinion to Company, or Company fails to notify such holder thereof as
aforesaid, within 20 days after counsel for such holder has delivered its
opinion to such holder (with a copy to Company), then for all purposes of this
agreement the opinion of the Company's counsel shall be deemed to be the same
as the opinion of counsel for such holder.
(2) If in the opinion of either or both of such counsel,
the proposed transfer may not be effected without registration under the Act of
such Notes, Warrants, or Common Stock, Company will promptly so notify the
holder thereof and thereafter such holder shall not be entitled to transfer
such Notes, Warrants, or Common Stock until receipt of a further notice from
Company under subdivision (1) above or, in the case of Common Stock, unless
registration of such Common Stock under the Act has become effective.
The Company will pay the reasonable fees and disbursements of counsel
(other than inside counsel) for any holder and of counsel for the Company in
connection with all opinions rendered by them pursuant to this Section 15.2.
ARTICLE 16 - REGISTRATION, TRANSFER, AND EXCHANGE OF NOTES
(a) The Company shall, at its expense (except for transfer taxes),
keep a register at its principal office in which, subject to reasonable
regulations, it shall provide for the registration and transfers of Notes.
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(b) Whenever any Note or Notes are surrendered at the Company's
principal office, either for transfer or exchange, accompanied (if so required
by the Company) by an instrument of transfer in a form satisfactory to Company
and duly executed by the holder thereof or the holder's attorney duly
authorized in writing, the Company shall execute and deliver in exchange
therefor (subject to the provisions of Article 15) a new printed Note or Notes
as requested by the holder, in the same aggregate unpaid principal amount as
that of the surrendered Note or Notes. The holder requesting the exchange,
however, shall pay any transfer tax relating to such transaction. Each such
new Note shall be dated as of the date to which interest has been paid on the
unpaid principal amount of the surrendered Note or Notes, and shall be in the
principal amounts and registered in the same name or names the holder
designates in writing.
ARTICLE 17 - REPLACEMENT OF NOTES
If any Note held by a Person other than Purchaser is lost, stolen,
destroyed, or mutilated, and the Company receives evidence reasonably
satisfactory to it of such loss, theft, destruction, or mutilation, and such
Person delivers an indemnity bond in a reasonable amount determined by Company,
or a mutilated Note is surrendered and cancelled, Company will, at its expense,
execute and deliver a new replacement Note of like tenor, dated the date to
which interest has been paid on the replacement Note.
ARTICLE 18 - EVENTS OF DEFAULT; ACCELERATION
The following events shall constitute Events of Default:
(a) The Company defaults in the payment of any part of the
principal of or premium on any Note when it becomes due and payable, whether at
maturity or at a date fixed for prepayment or by declaration or otherwise;
(b) The Company defaults in the payment of any installment of
interest on any Note for more than 20 days after it has become due and payable;
(c) The Company defaults in the performance of or compliance with
any material term of this agreement, and such default is not remedied within 30
days after the holder of any Note gives the Company written notice thereof;
(d) The Company or any Subsidiary defaults (as principal,
guarantor, or other surety) in the payment of principal of, premium or interest
on, or any other payment of money due under, any other material obligation for
borrowed money (including any obligation secured by a purchase money mortgage)
beyond any provided period of grace, or in the performance of any other
material agreement, term, or condition contained in any agreement under which
such obligation is created if the effect of such default is to cause, or permit
the holder or holders of such obligation (or a trustee on their behalf) to
cause, the obligation to become due before its stated maturity;
(e) The Company or any Subsidiary (i) makes an assignment for the
benefit of creditors, (ii) admits in writing to its inability to pay its debts
as they become due, (iii) files a voluntary petition in bankruptcy, (iv) is
adjudicated a bankrupt or insolvent, (v) files any petition or answer seeking
for itself any reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any present or future
statute, law, or regulation, (vi) files an answer admitting or not contesting
the
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material allegations of a material petition filed against the Company or any
Subsidiary in such proceeding, or (vii) seeks, consents to, or acquiesces in
the appointment of any trustee, receiver, or liquidator of the Company or any
Subsidiary or of all or any substantial part of the Company's or Subsidiary's
property, or the Company or its directors or majority stockholders take any
action looking to its dissolution or liquidation;
(f) An action is commenced against the Company or any Subsidiary
seeking a reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any present or future statute, law, or
regulation, and the action is not dismissed, or all orders or proceedings
thereunder affecting the Company's operations or business are not stayed within
60 days after commencement of such action, or the stay of any such order or
proceedings is thereafter set aside; or, a trustee, receiver, or liquidator is
appointed for the Company or any Subsidiary or of all or a substantial part of
the Company's or Subsidiary's properties without the Company's or Subsidiary's
consent or acquiescence, and the appointment is not vacated within 60 days
after the appointment; or
(g) A final judgment, against which the Company or any Subsidiary
is uninsured and which, together with other like outstanding judgments against
the Company and its Subsidiaries, exceeds a total of $500,000, is rendered
against the Company or a Subsidiary, and within 60 days after the entry
thereof, the judgment is not discharged or execution thereof stayed pending
appeal; or, within 60 days after the stay expires, the judgment is not
discharged.
Notwithstanding the above, or anything else contained in this
agreement, should the Company be in default under any Senior Debt, the Company
shall have the opportunity to cure the same and during such period not to
exceed 30 days, no Note payments shall become due and payable and shall be
delayed until the Senior Debt is satisfied in full.
If any of the above Events of Default occur, any holder or holders of
50 percent or more in aggregate principal amount of the Notes then outstanding
("50 percent holders") may at any time (unless all defaults have previously
been remedied), by written notice to the Company, and, to the extent they are
known to such holder or holders, to the other holders of Notes declare all the
Notes, to be due and payable. In such case, the Notes immediately shall mature
and become due and payable, together with interest accrued thereon. While an
Event of Default continues, however, and irrespective of whether the 50 percent
holders have declared all of the Notes to be due and payable, any original
purchaser of the Notes or Transferee may, by written notice to the Company,
declare the Notes then held by it to be, and such Notes shall thereupon be and
become, immediately due and payable, together with interest accrued thereon.
Any such action by 50 percent holders, however, may be rescinded with the
consent of the holders of 66.66 percent or more in aggregate principal amount
of the Notes then outstanding, if the Company has cured the Event of Default.
ARTICLE 19 - SUBORDINATION OF NOTES
(a) The payment of the principal of and interest on the Note is
hereby expressly subordinated, to the extent and in the manner hereinafter in
this Article 19 set forth, to the right of payment of the prior payment of
Senior Debt in full. Attached as SCHEDULE 19(A) is a list of all Company
indebtedness and a delineation as to which of such debt is Senior Debt.
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(b) Upon any distribution of the Company's assets upon its
dissolution, winding up, liquidation, or reorganization, whether in bankruptcy,
insolvency, reorganization or receivership proceedings, or upon an assignment
for the benefit of creditors or any other marshalling of the Company's assets
and liabilities or otherwise:
(1) All principal, premium, if any, and interest due upon
all Senior Debt shall first be paid in full, or payment thereof provided for in
money or money's worth, before the holders of the Notes are entitled to receive
any payment upon the principal of, premium, if any, or interest on the Notes;
(2) Any payment or distribution of the Company's assets
of any kind or character, whether in cash, property or securities (other than
shares of the Company's stock as reorganized or readjusted or securities of
Company or any other corporation provided for by a plan of reorganization or
readjustment, the payment of which is subordinated to the payment of all Senior
Debt which may at the time be outstanding on terms not less favorable to the
holders thereof than those of this Article 19) to which the holders of the
Notes would be entitled except for the provisions of this Article 19 shall be
paid by the liquidating trustee or otherwise, directly to the holders of Senior
Debt (pro rata to each such holder on the basis of the respective amounts of
Senior Debt held by each such holder), to the extent necessary to pay in full
all Senior Debt remaining unpaid, after giving effect to any prior or
concurrent payment or distribution, or provision therefor, to the holders of
Senior Debt on the Senior Debt;
(3) If, notwithstanding the foregoing, any payment or
distribution of the Company's assets of any kind or character, whether in cash,
property, or securities (other than shares of the Company's stock as
reorganized or readjusted or securities of Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated to the payment of all Senior Debt which may at the time be
outstanding on terms not less favorable to the holders thereof than those of
this Article 19) is received by the holders of the Notes before all Senior Debt
is paid in full, or provision made for its payment, such payment or
distribution shall be paid over to holders of Senior Debt (pro rata to each
such holder on the basis of the respective amounts of Senior Debt held by such
holder), for application to the payment of all Senior Debt remaining unpaid
until all such Senior Debt has been paid in full, or provision made for its
payment, after giving effect to any prior or concurrent payment or distribution
to the holders of the Senior Debt on the Senior Debt; and
(4) Each holder of the Notes agrees, in the event of any
proceeding described in this paragraph (b) of this Article 19, to proceed
promptly and with due diligence to enforce its claim, or to notify the Company
and the other holders of the Notes in writing of its intention not to so
enforce its claim, as a holder of the Notes against the Company.
(c) In the event and during the continuance of any default by the
Company in the payment of any Senior Debt when due (whether at a stated
maturity date, upon acceleration or otherwise), no payment of principal of,
premium, if any, or interest on the Notes shall be made by the Company.
(d) Subject to the payment in full of all Senior Debt, the holders
of the Notes shall be subrogated to the rights of the holders of the Senior
Debt to receive payments or distributions of the Company's assets applicable to
the Senior Debt until the principal of, premium, if any, and interest on the
Notes is paid in full. No such payments or distributions applicable to the
Senior Debt shall, as
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between the Company, its creditors other than the holders of the Senior Debt,
and the holders of the Notes, be deemed to be a payment by the Company to or on
account of the Notes.
(e) The provisions of this Article 19 are solely for the purpose
of defining the rights of the holders of the Notes, on the one hand, relative
to the rights of the holders of the Senior Debt, on the other hand, and nothing
contained in this Article 19 or elsewhere in the Agreements or in the Notes is
intended to or shall:
(1) Impair, as between the Company, its creditors other
than the holders of Senior Debt, and the holders of the Notes, the Company's
obligation, which is unconditional and absolute, to pay to the holders of the
Notes the principal of, premium, if any, and interest on the Notes, as and when
the same becomes due and payable in accordance with the terms of the Notes, or
(2) Affect the rights of the holders of the Notes
relative to creditors of Company other than the holders of the Senior Debt, nor
shall anything in the Agreements or in the Notes prevent the holder of any
Notes from exercising all remedies otherwise permitted by applicable law upon
default under this agreement, subject to the rights, if any, under this Article
19 of the holders of the Senior Debt in respect to the Company's assets
received upon the exchange of any such remedy.
(f) Upon any payment or distribution of the Company's assets
referred to in this Article 19, the holders of the Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction in
which such dissolution, winding up, liquidation, or reorganization proceedings
are pending or upon a certificate of the liquidating trustee or agent or other
person making any distribution to the holders of the Notes on the Notes for the
purpose of ascertaining the amount of the Senior Debt, the holders thereof, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 19.
(g) Nothing contained in this Article 19 or in the Agreements or
in the Note, shall affect the Company's obligation to make, or prevent the
Company from making, at any time except as set forth in paragraphs (b), (c) and
(d) of this Article 19, payments of principal of, premium, if any, or interest
on the Notes.
(h) No modification, amendment, or waiver of any provision of this
Article 19 shall be made without the prior written consent of the holders
having a majority interest in the Note.
ARTICLE 20 - REMEDIES ON DEFAULT, ETC.
If any one or more Events of Default occur and are continuing, the
holders of any Notes at the time outstanding may proceed to protect and enforce
their rights by an action at law, suit in equity, or other appropriate
proceeding, whether for the specific performance of any agreement contained
herein or in such Note, or for an injunction against a violation of any of the
terms hereof or thereof, or in aid of the exchange of any power granted hereby
or thereby or by law. In case of a default in the payment of any principal of
or premium, if any, or interest on any Note, the Company will pay the holder a
further amount sufficient to cover the cost of collection, including (without
limitation) reasonable attorney's fees, expenses, and disbursements. If any
holder of any Note gives any notice or takes any other action in respect of a
claimed default, the Company will forthwith give written notice thereof to all
other holders
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of the Notes at the time outstanding describing the notice or action and the
nature of the claimed default. No course of dealing and no delay by any holder
of any Note in exercising any right, power, or remedy shall operate as a waiver
thereof or otherwise prejudice such holder's rights, powers and remedies. No
right, power, or remedy conferred hereby or by any Note upon any holder thereof
shall be exclusive of any other right, power, or remedy referred to herein or
therein or now or hereafter available by law, in equity, by statute or
otherwise.
ARTICLE 21 - DEFINITIONS
As used herein, the following terms have the following respective
meanings:
21.1 Affiliate.
(a) Any Person owning or controlling 5 percent or more of any
class of stock or similar interests of Company or any
Subsidiary;
(b) Any spouse of any such Person;
(c) Any relative (within the third degree) of any such Person or
spouse;
(d) Any corporation, association, or other business entity in
which any such Person or spouse or relative has a substantial direct or
indirect interest; and
(e) Any corporation (other than a Subsidiary), association, or
other business entity 5 percent or more of any class of stock or similar
interests of which is owned or controlled by the Company or any Subsidiary.
21.2 The Exchange Formula. In a Net Issuable Exchange, the formula
for determining the number of shares of Common Stock to be received in exchange
for a Warrant shall be determined as provided in Section 9 of the Form of
Warrant attached as EXHIBIT B.
21.3 Common Stock. All shares now or hereafter authorized by the
class of the Company's Common Stock, par value $.001 per share, presently
authorized and stock of any other class into which such shares may hereafter
have been changed.
21.4 First Liquidity Event. A change of control in the Company
defined as (i) a change in ownership of the majority of the Company's issued
and outstanding stock, (ii) or the change in ownership of enough issued and
outstanding Company stock (i.e. less than a majority) to control the outcome of
an election of the Company's directors, (iii) a merger where the Company is not
the surviving entity, (iv) an initial public offering by the Company in excess
of $15.0 million in net proceeds, or (v) a sale of substantially all of the
Company's assets.
21.5 Generally accepted accounting principles. As determined by
independent certified public accountants of recognized national standing
selected by the Company.
21.6 Indebtedness. As applied to a Person,
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(a) All items which, in accordance with generally accepted
accounting principles, would be included in determining total liabilities as
shown on the liability side of a balance sheet of such Person as of the date of
which the Indebtedness is to be determined;
(b) All Indebtedness (other than Indebtedness owing to such
Person) secured by any mortgage, pledge, lien, security interest or conditional
sale, or other title retention agreement to which any property or asset owned or
held by such Person is subject, regardless of whether the Indebtedness secured
thereby has been assumed; and
(c) All Indebtedness of others which such Person has directly or
indirectly guaranteed, endorsed (other than for collection or deposit in the
ordinary course of business), discounted, sold with recourse or agreed
(contingently or otherwise) to purchase or repurchase or otherwise acquire, or
in respect of which such Person has agreed to supply or advance funds (whether
by way of loan, stock purchase, capital contribution or otherwise) or otherwise
to become directly or indirectly liable.
21.7 Market Price. The Market Price of shares of stock of the
Company shall be determined as set forth in Section 4(g) of the Form of Warrant
attached as EXHIBIT B.
21.8 Net Issuable Exchange. A cashless exchange of the Warrant for
shares of Common Stock based upon The Exchange Formula.
21.9 Officer's certificate. A certificate signed in the name of
the Company by its Chairman of the Board of Directors, or its President or one
of its Vice Presidents and its Treasurer or one of its Assistant Treasurers.
21.10 Person. A corporation, an association, a partnership, an
organization, a business, an individual, or a government or political
subdivision thereof, or any governmental agency, but excluding a Subsidiary.
21.11 Public offering of common stock. The first underwritten
public offering of shares of the Company's Common Stock registered under the
Act, as a result of which Purchasers will no longer be entitled to
anti-dilution protection as to its ownership Warrants or Common Stock.
21.12 Senior Debt. The principal (and premium, if any, payable on
redemption) of and interest on all Indebtedness of the Company and its
Subsidiaries for any current and future liabilities or obligations of any kind,
and all current and future guaranties, direct or indirect, by the Company or
any Subsidiary of such Indebtedness of others and all renewals, extensions and
refundings of any such Indebtedness, and all such current and future guaranties
by the Company or any Subsidiary of renewals, extensions and refundings of any
such Indebtedness of others, whether such Indebtedness or guaranty is
outstanding on the date of this agreement or thereafter created, incurred or
assumed, unless by the terms of the future instrument creating or evidencing
such future Indebtedness or future guaranty or pursuant to which the same is
outstanding it is provided in effect that the Indebtedness or guaranty is not
superior in right of payment to the Notes. Notwithstanding anything contained
herein to the contrary, all debt that is not traditionally senior debt (senior
debt to include, but not be limited to current and future acquisition debt,
bank debt, institutional debt, trade debt, financing debt, (except Company
affiliates or insiders and the December 1996 Notes), shall be pari passu basis
with this debt. As to the current outstanding debt to the
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Company Director, the Company covenants and agrees to provide Purchasers on an
equal basis and at the same time on a pari passu basis, for any payment on such
debt to the Company Director or grant of security to such Company Director.
The Company agrees to immediately provide Purchasers with notice of any demand
or action by said Director to collect such debt. In the event of a payment to
Purchaser hereunder the Note shall be reduced accordingly.
21.13 Subsidiary. Any corporation, association, or other business
entity in which more that 50 percent of the stock of each class having ordinary
voting power is, at the time as of which any determination is being made, owned
or controlled, directly or indirectly, by the Company and/or one or more of its
Subsidiaries.
ARTICLE 22 - EXPENSES
Upon consummation of the transaction, the Company will pay:
(a) All the costs and expenses of this agreement, of the printing
and the issue of the Notes and Warrants and the Common Stock issuable upon
conversion of the Notes and Warrants, of any taxes (including any interest and
penalties in respect thereof) payable on such issue (Company agreeing to
indemnify Purchaser in respect thereof), of furnishing all opinions by the
Company's counsel (including any opinions reasonably requested by Purchaser's
special counsel as to any legal matter arising hereunder) and all certificates
on behalf of the Company, and of the Company's performance of and compliance
with all of its agreements and conditions contained herein;
(b) The cost of delivering to Purchaser, insured to your
satisfaction, the Notes and Warrants purchased by Purchaser at Closing Time and
any Notes and Warrants or Common Stock or Warrants delivered to Purchaser upon
any exchange, delivery or exchange pursuant to the provisions of this agreement
and of delivering any Notes to the Company, insured to Purchaser's
satisfaction, if delivered by Purchaser pursuant to the provisions of this
agreement or upon any conversion or prepayment of the Notes;
(c) Pay, indemnify, and hold Purchaser and each other holder of
any Note harmless from and against any and all liability and loss with respect
to or resulting from:
(1) All claims for or on account of brokers' or finders'
fees or commissions with respect to such transactions; and
(2) The nonpayment or delayed payment of all stamp and
other taxes, fees, and excises (other than transfer taxes), if any, including
any interest and penalties, which may be or be determined to be, payable in
connection with this transaction, or in connection with the original issue of
the Notes or any Common Stock issuable upon exchange of Notes or Warrants.
(d) All legal fees and costs incurred with Special Counsel of the
Purchaser in connection with this transaction up to $10,000. Special Counsel
is Xxxxxxxxx & Xxxxxx P.L.L.P., 4200 IDS Center, 00 Xxxxx 0xx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxxx 00000.
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ARTICLE 23 - SURVIVAL OF AGREEMENTS, REPRESENTATIONS, AND WARRANTIES, ETC.
All agreements, representations, and warranties contained herein or
made in writing by or on behalf of Company in connection with the transactions
contemplated hereby shall survive the execution and delivery of this agreement,
any investigation at any time made by Purchaser or on its behalf, Purchaser's
acquisition of the Note, and any disposition, or payment of the Note. All
statements contained in any certificate or other instrument delivered by Company
pursuant hereto or in connection with the transactions contemplated hereby shall
be deemed representations and warranties by the Company hereunder.
ARTICLE 24 - NOTICES, ETC.
All notices, requests, consents, and other communications hereunder
shall be in writing and mailed by first class registered or certified mail,
postage prepaid:
(a) If to Purchaser, at its address as set forth in SCHEDULE 1 to
this agreement, marked for attention as there indicated, or at any other
address furnished to Company by Purchaser in writing; or
(b) If to any other holder of any Note or Warrant, at any address
furnished to the Company in writing by such holder, or, until such other holder
furnishes to Company an address, then to, and at the address of, the last
holder of such Note or Warrant who has so furnished an address to Company; or
(c) If to the Company, Vision 21, Inc., 0000 Xxxxx Xxxxx Xxxx,
Xxxxx, Xxxxxxx 00000, with a copy to Xxxxxxx X. Xxxxx, Esquire, Xxxxxxxx, Loop
& Xxxxxxxx, LLP, 000 X. Xxxxxxx Xxxx. Xxxxx 0000, Xxxxx, Xxxxxxx 00000.
ARTICLE 25 - AMENDMENTS AND WAIVERS
Neither this agreement nor any Notes nor any term hereof or thereof
may be changed, waived, discharged or terminated orally or in writing, except
that any term of this agreement or of the Notes may be amended and the
observance of any such term may be waived (either generally or in a particular
instance and either retroactively or prospectively) with (and only with) the
written consent of the holders of at least 51 percent in principal amount of
the Notes at the time outstanding, provided, however, that no such amendment or
waiver shall, without the written consent of the holders of all of the Notes at
the time outstanding, (a) change the amount or time of any payment or
prepayment of any Notes or any part thereof, or of any premium or interest
thereon, or (b) reduce the percentage of the principal amount of the Notes the
holders of which are required to consent to any amendment or waiver under this
Article 25.
ARTICLE 26 - HOME OFFICE PAYMENT
The Company agrees that, as long as Purchaser shall hold any Notes,
the Company will make payments of principal thereof and interest and premium,
if any, thereon by check duly mailed to Purchaser, or to Purchaser's nominee,
at the address set forth under Purchaser's name on SCHEDULE 1, or any other
address you designate to the Company in writing, notwithstanding any contrary
provision herein or in any Note with respect to the place of payment.
Purchaser agrees that, before disposing of any Note, Purchaser will make a
notation thereon of all principal payments previously made thereon and of the
date
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to which interest thereon had been paid, and will notify the Company of the
name and address of the transferee of such Note if known to Purchaser.
ARTICLE 27 - MISCELLANEOUS
This agreement is being delivered and is intended to be performed in
the State of Florida and shall be construed and enforced in accordance with and
governed by the laws of such State. All the terms of this agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto, whether so expressed or not, and,
in particular, shall inure to the benefit of and be enforceable by any holder
or holders at the time of the Notes. This agreement embodies the entire
agreement and understanding between Purchaser and the Company and supersedes
all prior agreements and understandings relating to the subject matter hereof.
The headings in this agreement are for convenience of reference only, and shall
not limit or otherwise affect the meaning hereof. This agreement may be
executed simultaneously in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
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If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this letter and return the same to
the Company, whereupon this letter shall become a binding contract between you
and the Company.
Very truly yours,
VISION 21, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxxxx X. Xxxxxxxx, President
(Corporate Seal)
Attest:
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Xxxxxxx X. Xxxxx, Chief Financial
Officer
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The foregoing agreement is hereby agreed to as of this date thereof.
XXXXX XXXXXXX HEALTHCARE FUND II
LIMITED PARTNERSHIP
By: Xxxxx Xxxxxxx Healthcare Management
Partnership, its General Partner
By: /s/ Buzz Xxxxxx
----------------------------------------
Buzz Xxxxxx, Managing Director of
Xxxxx Xxxxxxx Ventures Incorporated,
its General Partner
Address:
Buzz Xxxxxx, Managing Director
Xxxxx Xxxxxxx Ventures Incorporated
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
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EXHIBIT A - FORM OF
10% SENIOR SUBORDINATED SERIES 1997 NOTE, DUE DECEMBER 19, 1999
$2,000,000 February 28, 1997
Largo, Florida
FOR VALUE RECEIVED, the undersigned Vision 21, Inc. ("the Company"), a
corporation organized and existing under the laws of the State of Florida,
hereby promises to pay to Xxxxx Xxxxxxx Healthcare Fund II Limited Partnership,
or registered assigns, interest (computed on the basis of a 360-day year of
twelve 30-day months) on the unpaid balance thereof at the rate of 10 percent
per annum from the date hereof, payable semiannually on the 19th day of
December and the 19th day of June each year commencing with June 19, 1997 until
the principal hereof has become due and payable, and thereafter at the rate of
12 percent per annum until paid, and so far as may be lawful, with interest on
any overdue installment of interest at the rate of 12 percent per annum. The
entire principal sum of the Note in the amount of $2,000,000 and any accrued
interest yet unpaid shall become due and payable in full the earlier of
December 19, 1999, or the date of a First Liquidity Event as defined in the
Note Purchase Agreement.
Payments of both principal and interest are to be made at 0000 Xxxxx
Xxxxx Xxxx, Xxxxx, Xxxxxxx 00000, or any other place the holder hereof
designates to the Company in writing, in lawful money of the United States of
America.
This Note has been issued, pursuant to that Note Purchase Agreement
dated February 28, 1997, between the Company and the Purchaser of said Note and
is entitled to the benefits of said Note Purchase Agreement. As provided
therein, this Note is subject to prepayment, in whole or in part, without
penalty or premium.
This Note and all payments hereon, including principal and interest,
are subordinated to all the Company's Senior Debt, as defined in said Note
Purchase Agreement, to the extent and in the manner specified in that
agreement.
If an event of default, as defined in the Note Purchase Agreement
occurs and is continuing, the principal of this Note may be declared due and
payable in the manner and with the effect provided in said Note Purchase
Agreement.
VISION 21, INC.
(Corporate Seal) By:
----------------------------------------------
Xxxxxxxx X. Xxxxxxxx, President
Attest:
By:
----------------------------------------------
Xxxxxxx X. Xxxxx, Chief Financial Officer
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EXHIBIT B - FORM OF STOCK PURCHASE WARRANT
TO SUBSCRIBE FOR AND PURCHASE COMMON STOCK OF VISION 21, INC.
THIS CERTIFIES THAT, for value received, Xxxxx Xxxxxxx Healthcare Fund
II Limited Partnership (herein called "Purchaser"), or its registered assigns,
is entitled to subscribe for and purchase from Vision 21, Inc. (hereinafter
called the "Company"), a corporation organized and existing under the laws of
the State of Florida, at the price specified below (subject to adjustment as
noted below) at any time after the date hereof to and including the earlier of
(i) December 19, 2003 and (ii) five years from the closing date of an initial
public offering ("IPO") of the Company's Common Stock (the "Expiration Date")
Four Hundred Twenty-One Thousand Nine Hundred Forty-One (421,941) fully paid and
nonassessable shares of the Company's Common Stock (hereinafter the "Common
Stock") as provided herein (subject to adjustment as noted below). This Warrant
has been issued pursuant to a Note Purchase Agreement dated as of February 28,
1997 (the "Note Purchase Agreement") between the Purchaser and the Company and
entitles the Purchaser to purchase $2,000,000 of Common Stock of the Company.
The applicable provisions of the Note Purchase Agreement are incorporated herein
by reference and to the extent that there is any inconsistency between the Note
Purchase Agreement and this Warrant, the terms of the Note Purchase Agreement
shall prevail. All capitalized terms not otherwise defined in this Warrant
shall have the same meaning as defined in the Note Purchase Agreement.
For purposes of this Warrant, the term "Capital Stock" shall mean and
include the Company's presently authorized Common Stock and shall also include
any capital stock of any class of this Company, including preferred stock, and
any securities convertible or exchangeable into shares of the Company's Common
Stock or preferred stock.
This Warrant shall initially be exchangeable for 421,941 shares of
Common Stock, potentially increasing to up to 500,000 shares of Common Stock so
that the Purchaser will have the right to purchase an aggregate of $2,000,000
worth of Common Stock of the Company at an exchange price of between $4.00 and
$4.74 per share of Common Stock (the "Warrant Exchange Price"), as hereinafter
determined, or in a cashless exchange for a reduced number of shares (the "Net
Issuable Exchange"), as determined by section 9 of this Warrant. Should the
offering price of the Company's Common Stock in an initial public offering be
less than $9.48 per share, then the Warrant Exchange Price shall become
one-half of that initial offering price, but not less than $4.00 per share,
subject to section 4 below. Should the Market Price per share of Common Stock
as defined herein be less than $9.48 at the time of any First Liquidity Event
other than an IPO, then the exercise price for the stock shall become one-half
of that Market Price per share on such date, but not less than $4.00 per share,
subject to section 4 below, provided, however, if the exchange price on any
warrant subsequently issued to Prudential, as hereinafter defined, is less than
the Warrant Exchange Price, the Warrant Exchange Price will be adjusted
downward to the exchange price granted by the Company on any Prudential
warrant.
This Warrant is subject to the following provisions, terms and
conditions:
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1. The rights represented by this Warrant may be exercised by the
holder hereof, in whole or in part, by written notice of exercise delivered to
the Company 20 days prior to the intended date of exercise and by the surrender
of this Warrant (properly endorsed if required) and payment of the Warrant
Exchange Price at the principal office of the Company. The Company agrees that
the shares so purchased shall be and are deemed to be issued to the holder
hereof as the record owner of such shares as of the close of business on the
date on which this Warrant shall have been surrendered and payment made for
such shares as aforesaid. Subject to the provisions of the next succeeding
paragraph, certificates for the shares of stock so purchased shall be delivered
to the holder hereof as promptly as practicable, after the rights represented
by this Warrant shall have been so exercised, and, unless this Warrant has
expired, a new Warrant representing the number of shares, if any, with respect
to which this Warrant shall not then have been exercised shall also be
delivered to the holder hereof as promptly as practicable.
2. Notwithstanding the foregoing, however, the Company shall not
be required to deliver any certificate for shares of stock upon exercise of
this Warrant except in accordance with the provisions, and subject to the
limitations, of paragraph 7 hereof.
3. The Company represents and warrants that this Warrant has been
duly authorized by all necessary corporate action, has been duly executed and
delivered and is a legal and binding obligation of the Company. The Company
covenants and agrees that all shares which may be issued upon the exercise of
the rights represented by this Warrant according to the terms hereof or
represented by the Common Stock to be issued pursuant to the Warrant will, upon
issuance, be duly authorized and issued, fully paid and nonassessable. The
Company further covenants and agrees that during the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized, and reserved for the purpose of issue or transfer upon
exercise of the subscription rights evidenced by this Warrant, a sufficient
number of shares of its Common Stock to provide for the exercise of the rights
represented by this Warrant.
4. The Warrant Exchange Price and the number of shares issuable
upon exchange shall, in addition to the above paragraphs, be subject to
adjustment as follows in the event the Company issues or is deemed to have
issued shares at less than the current exchange price:
(a) For the purposes of this section 4(a), the term "current
exchange price" is defined as meaning at any given time the Warrant Exchange
Price then in effect, which is set as $4.74 as of the date hereof; and the term
"current quotient" is defined as meaning on any given date the amount
determined at the close of business on such day by dividing:
(1) An amount equal to (A) the total number of shares of
Common Stock outstanding when the current exchange price became effective,
exclusive of any such shares which may have been issued after the date hereof
as provided in this section 4(a), multiplied by the current exchange price,
plus (B) the aggregate of the amounts of all consideration, if any, received by
the Company, (or, without duplication, deemed to be received as provided in
paragraph (viii) below) upon all issuances of shares of Common Stock since the
current exchange
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price became effective and prior to the time of the determination of the
current quotient except shares of Common Stock issued as provided in
Subdivision (c) hereof; by
(2) The total number of shares of Common Stock
outstanding immediately prior to the time of such determination, including any
such shares deemed to have been issued as provided in paragraph (viii) below
but excluding any such shares which may have been issued as provided in this
section 4(a). For the purposes of this paragraph, the Warrant Exchange Price
of $4.74 shall be deemed to have become effective at the close of business on
the date of this Warrant. In determining the current quotient, the result
shall be expressed to the nearest cent.
If at the close of business on any date after the date of this Warrant
on which any adjustment event hereunder takes place, the current exchange price
exceeds the current quotient by as much as one percent of the then effective
Warrant Exchange Price, the Warrant Exchange Price shall be reduced to the
price equal to the current quotient, effective at the close of business on such
date. In such case of a subdivision or combination of the outstanding shares
of Common Stock issuable upon exchange of the Warrant, the Warrant Exchange
Price shall be first reduced, effective immediately prior to an adjustment of
the Warrant Exchange Price pursuant to this section 4, by the amount, if any,
by which the current exchange price exceeds the current quotient.
For the purposes of this section 4, the following provisions shall
also be applicable:
i) If additional shares of Common Stock are issued for cash, the
consideration received by the Company therefor shall be deemed to be the amount
of cash received by the Company for such shares, before deducting therefrom any
commissions or other expenses paid or incurred by the Company for any
underwriting of, or otherwise in connection with, the issuance of such shares.
ii) If additional shares of Common Stock are issued (otherwise
than upon the exchange of the Company's obligations or shares of stock or upon
the exchange of rights or options to subscribe for or to purchase shares of
Common Stock) for a full or partial consideration other than cash, the amount
of the non-cash consideration received by the Company for such shares shall be
deemed to be the value of such consideration as determined in good faith by the
Company's Board of Directors.
iii) If additional shares of Common Stock are issued upon
conversion or exchange of any obligations (including the Notes) or of any
shares of the Company's stock that are convertible into or exchangeable for
shares of Common Stock or upon the exchange of rights or options to subscribe
for or to purchase shares of Common Stock, the amount of the consideration
received by the Company for such additional shares of Common Stock shall be
deemed to be the total of: (a) the amount of consideration received by the
Company upon the original issuance of such obligations, shares, rights, or
options, plus (b) any other consideration received by the Company upon
conversion, or exchange except in adjustment of interest and dividends. If
obligations, shares, rights, or options, of the same class or series of a class
as the obligations, shares, rights,
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or options so converted, or exchanged have been originally issued for different
amounts of consideration, the amount of consideration received by the Company
upon the original issuance of each obligation, share, right, or option so
converted, or exchanged shall be deemed to be the average amount of the
consideration received by the Company upon the original issuance of all such
obligations, shares, rights, or options. The amount of the consideration,
obligations, shares, rights, or options so converted, or exchanged and the
amount of any other consideration received by the Company upon the original
issuance of the obligations, shares, rights, or options so converted, or
exchanged and the amount of any other consideration, received by the Company
upon such conversion, or exchange shall be determined in the same manner
provided in paragraphs (i) and (ii) above with respect to the consideration
received by the Company in case of the issuance of additional shares of Common
Stock. If such obligations, shares, rights, or options have been issued as a
dividend upon any stock of the Company, the amount of the consideration received
by the Company upon the original issuance thereof shall be deemed to be zero.
iv) If additional shares of Common Stock are issued as a
dividend, the aggregate number of shares of Common Stock issuable in payment of
such dividend shall be deemed to have been issued and to be outstanding at the
close of business on the record date fixed for the determination of
stockholders entitled to such dividend. Shares of Common Stock issued
otherwise than as a dividend shall be deemed to have been issued and to be
outstanding at the close of business on the date of issue.
v) The term dividend shall mean a dividend or other distribution
upon stock of the Company.
vi) The number of shares of Common Stock at any time outstanding
shall not include all shares of Common Stock then owned or held by or for the
account of the Company.
vii) If the Company declares a dividend without fixing a record
date for determining the stockholders entitled thereto, the first business day
during which the Company's stock transfer books are closed for the purpose of
such determination shall be deemed to be the record date fixed for the
determination of stockholders entitled to such dividend.
viii) In case of (a) the issuance of shares of stock or obligations
convertible into or exchangeable for shares of Common Stock at an exchange
price per share less than the current exchange price in effect immediately
prior to the issuance of such convertible stock or obligations, or (b) the
issuance of any rights to subscribe for or to purchase, or any options for the
purchase of, additional shares of Common Stock, at a price per share for the
additional shares of Common Stock issuable upon the exchange of such rights or
options less than the current exercisable price in effect immediately prior to
the issuance of such rights or the granting of such options, then the issuance
of such stock, obligations, rights, or options shall be deemed to be an
issuance (as of the date of issuance of such stock, obligations, rights, or
options) of the total maximum number of shares of Common Stock issuable upon
the conversion or exchange of all such convertible stock or obligations or upon
the exchange of all such rights or options, as the
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case may be. In such case, the amount received or receivable by the Company in
consideration of the issuance of such stock, obligations, rights, or options
(plus the minimum aggregate amount of premium or additional consideration
payable to the Company upon conversion or exchange of the stock or obligations
or upon the exchange of such rights or options) before deducting therefrom any
commissions or other expenses paid or incurred by the Company for any
underwriting of, or otherwise in connection with, the issuance of such stock,
obligations, rights or options, shall be deemed to be the consideration
actually received (as of the date of issuance of such rights or options) for
the issuance of the additional shares of Common Stock.
The Consideration actually received by the Company for any shares of
Common Stock issued upon the exchange of such stock or obligations or upon the
exchange of such rights or options, which pursuant to this paragraph (viii) is
deemed to have been received, shall not be included in the (first paragraph of
this section 4(a) for the purpose of computing the current quotient and no
further adjustment of the exchange price shall be made in respect thereof
except that:
(1) On the expiration of such rights or options or the
termination of the right to convert or exchange such stock or obligations, the
current quotient and the current exchange price shall forthwith be readjusted
to the current quotient and current exchange price which would have obtained
had the adjustments made on account of the issuance of such options, rights or
convertible or exchangeable securities been made upon the basis of the delivery
of only the number of shares of Common Stock actually delivered upon the
exchange of such rights or options or upon conversion or exchange of such
securities for the consideration actually received by the Company for such
options, rights or securities and upon the exchange, exchange or conversion
thereof; and
(2) If the purchase or exchange price or exchange rate
provided for in any such options, rights, stock, or obligations changes or a
different purchase or exchange price or exchange rate becomes effective at any
time or from time to time (other than under or by reason of provisions
designated to protect against dilution) then, upon such change becoming
effective, the current quotient and current exchange price then in effect
hereunder shall forthwith be increased or decreased to such current quotient
and current exchange price as would have obtained had the adjustments made upon
the issuance of such options, rights or convertible or exchangeable securities
been made upon the basis of (A) the issuance of the number of shares of Common
Stock theretofore actually delivered upon the exchange, conversion or exchange
thereof, (B) the issuance of all Common Stock and all other options, rights or
convertible or exchangeable securities issued after the issuance of such
options, rights or convertible or exchangeable securities, and (C) the original
issuance at the time of such exchange of any such options, rights or
convertible or exchangeable securities then still outstanding.
In case, however, such stock or obligations are convertible or
exchangeable at an exchange price or exchange rate or such rights or options
are exercisable at a purchase price per share equal to or in excess of the
current exchange price immediately prior to the issuance or sale of such
convertible stock or obligations or of such rights or options, then no
adjustment of the exchange
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price shall be made except in respect of additional shares of Common Stock
actually issued upon the conversion or exchange of any such convertible stock
or obligations or upon the exchange of any such rights or options.
ix) No adjustment in the Warrant Exchange Price shall be made in
respect of the issuance or sales of Common Stock held in the Company's treasury
to the extent it acquired such Common Stock after the date of this Warrant,
except that if any such treasury shares are issued or sold for a consideration
per share which is less than the Warrant Exchange Price in effect immediately
prior to such issue or sale and which is less than the average cost per share
of such treasury shares, the Company shall be deemed for purposes of this
section 4, to have issued or sold shares of Common Stock equal in number to
such treasury shares for a consideration per share equal to the Warrant
Exchange Price in effect immediately prior to such issue or sale reduced by the
amount by which such average cost of such treasury share exceeds such
consideration per share.
(b) In case the Company at any time subdivides or issues a stock
dividend upon the outstanding shares of Common Stock the Warrant Exchange Price
in effect immediately prior to such subdivision shall be proportionately
reduced, and conversely, in case the outstanding shares of Common Stock of the
Company shall be combined into a smaller number of shares, the Warrant Exchange
Price in effect immediately prior to such combination shall be proportionately
increased. Any such adjustment shall become effective at the close of business
on the date that such subdividision, stock dividend or combination becomes
effective.
(c) If any capital reorganization or reclassification of the
capital stock of the Company, or consolidation or merger of the Company with
another corporation, or the sale of all or substantially all of its assets to
another corporation shall be effected in such a way that holders of Common
Stock shall be entitled to receive stock, securities or assets with respect to
or in exchange for Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate provision
shall be made whereby the holder hereof 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 the Common Stock of the
Company immediately theretofore purchasable and receivable upon the exercise of
the rights represented hereby, such shares of stock, securities or assets as
may be issued or payable with respect to or in exchange for a number of
outstanding shares of such Common Stock equal to the number of shares of such
stock immediately theretofore purchasable and receivable upon the exercise of
the rights represented hereby had such reorganization, reclassification,
consolidation, merger or sale not taken place, and 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 provisions for adjustments of the Warrant Exchange Price and of the
number of shares purchasable upon the exercise of this Warrant) shall
thereafter be applicable as nearly as may be, in relation to any shares of
stock, securities or assets thereafter deliverable upon the exercise hereof.
The Company shall not effect any such consolidation, merger or sale, unless
prior to the consummation thereof the successor corporation (if other than the
Company) resulting from such consolidation or merger or the corporation
purchasing such
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assets shall assume, by written instrument executed and mailed to the
registered holder hereof at the last address of such holder appearing on the
books of the Company, the obligation to deliver to such holder such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such holder may be entitled to purchase.
(d) Upon any adjustment of the Warrant Exchange Price, then and in
each such case the Company shall give written notice thereof, by first-class
mail, postage prepaid, addressed to the registered holder of this Warrant at
the address of such holder as shown on the books of the Company, which notice
shall state the warrant purchase price resulting from such adjustment and the
increase or decrease, if any, in the number of shares purchasable at such price
upon the exercise of this Warrant setting forth in reasonable detail the method
of calculation and the facts upon which such calculation is based.
(e) In case any time:
(1) the Company shall declare any cash dividend on its
capital stock at a rate in excess of the rate of the last cash
dividend theretofore paid;
(2) the Company shall pay any dividend payable in stock
upon its capital stock or make any distribution (other than regular
cash dividends) to the holders of its capital stock;
(3) the Company shall offer for subscription pro rata to
the holders of its capital stock any additional shares of stock of any
class or other rights;
(4) 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 of
its assets to, another corporation; or
(5) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company.
then, in any one or more of said cases, the Company shall give written
notice, by first-class mail, postage prepaid, addressed to the
registered holder of this Warrant at the address of such holder as
shown on the books of the Company, of the date on which (aa) the books
of the Company shall close or a record shall be taken for such
dividend, distribution or subscription rights, or (bb) such
reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, or conversion or redemption
shall take place, as the case may be. Such notice shall also specify
the date as of which the holders of capital stock of record shall
participate in such dividend, distribution or subscription rights, or
shall be entitled to exchange their capital stock for securities or
other property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up,
or conversion or
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redemption, as the case may be. Such written notice shall be given at
least 20 days prior to the action in question and not less than 20
days prior to the record date or the date on which the Company's
transfer books are closed in respect thereto.
(f) If any event occurs as to which in the opinion of the
Board of Directors of the Company the other provisions of this section 4 are not
strictly applicable or if strictly applicable would not fairly protect the
purchase rights of the holder of this Warrant in accordance with the essential
intent and principles of such provisions, then the Board of Directors shall make
an adjustment in the application of such provisions, in accordance with such
essential intent and principles, so as to protect such purchase rights as
aforesaid. In addition, if the Company issues any shares of Common Stock other
than for an Approved Transfer (as defined herein) at a price less than the
then-current exchange price as defined herein, then the Warrant Exchange Price
shall be adjusted as provided in this section 4.
(g) No fractional shares of Common Stock shall be issued upon the
exercise of this Warrant, but, instead of any fraction of a share which would
otherwise be issuable, the Company shall pay a cash adjustment (which may be
effected as a reduction of the amount to be paid by the holder hereof upon such
exercise) in respect of such fraction in an amount equal to the same fraction
of the Market Price per share of Common Stock as of the close of business on
the date of the notice required by paragraph 1 above. "Market Price" shall
mean, if the Common Stock is traded on a securities exchange or on the Nasdaq
National Market or Nasdaq SmallCap Market, the average of the closing prices of
the Common Stock on such exchange or on the Nasdaq National Market or Nasdaq
SmallCap Market on the 10 trading days ending on the trading day prior to the
date of determination, or, if the Common Stock is otherwise traded in the
over-the- counter market, the average of the closing bid prices on the 10
trading days ending on the trading day prior to the date of determination. If
at any time the Common Stock is not traded on an exchange or on the Nasdaq
National Market or Nasdaq SmallCap Market or otherwise traded in the
over-the-counter market, then the Market Price shall be deemed to be the
average closing prices or average closing bid prices of the Common Stock, as
the case may be, or, if such exercise occurs in connection with a public
offering of the Common Stock, the public offering price of the Common Stock. If
at any time the Common Stock is not traded on an exchange or the or on the
Nasdaq National Market or Nasdaq SmallCap Market or otherwise traded in the
over-the-counter market the Market Price shall be deemed to be the higher of
(i) the book value thereof as determined by any firm of independent public
accountants of recognized standing selected 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 (ii) the fair value
thereof determined in good faith by the Board of Directors of the Company as of
a date which is within 15 days of the date as of which the determination is to
be made.
(h) No adjustment of the Warrant Exchange Price shall be made as a
result of or in connection with (i) shares issued in acquisitions to be made by
the Company, (ii) shares issued in establishing a strategic alliance, (which
includes any financial and lending arrangements with Prudential Securities
Incorporated ("Prudential"), or any affiliates or assigns thereof on terms
substantially similar to those set forth on Schedule 13.1 to the Note Purchase
Agreement), or (iii)
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for option shares issued to employees, contractors, consultants or affiliated
physicians approved by the Board of Directors and pursuant to previous option
grants or Warrants disclosed on the attached Schedule 13.1 to the Note Purchase
Agreement or related to future options granted where shares issued are at a
price equal to or higher than the current exchange price as defined herein,
("Approved Transfers"), provided, however, if the exchange price on any warrant
subsequently issued to Prudential is less than the Warrant Exchange Price, the
Warrant Exchange Price will be adjusted downward to the exchange price granted
by the Company on any Prudential warrant.
(i) The issuance of certificates for shares of Common Stock upon
the exchange of Warrants shall be made without charge to the Warrant holders
for any tax (other than federal or state income taxes) in respect to the
issuance of such certificates. Such certificates shall be issued in the
respective names of, or in the names directed by, the holder of the Warrant
exchanged. Company, however, shall not be required to pay any tax which may be
payable in respect to any transfer involved in the issuance and delivery of any
such certificate in a name other than that of the holder of the Warrants
exchanged, or to issue or deliver such certificates until the person or persons
requesting the issuance thereof have paid the Company the amount of such tax or
have established to the satisfaction of the Company that such tax has been
paid.
5. This Warrant shall not entitle the holder hereof to any voting
rights or other rights as a stockholder of the Company. Unless otherwise
provided in the Note Purchase Agreement, no dividends are, or should be
payable, or shall accrue on or with respect to this Warrant or any interest
represented by this Warrant or on the shares purchasable upon exercise hereof
until or unless, and except to the extent that this Warrant is exercised.
6. The holder of this Warrant, by acceptance hereof, agrees to
give written notice to the Company before transferring this Warrant or
transferring any Common Stock issuable or issued upon the exercise hereof of
such holder's intention to do so, describing briefly the manner of any proposed
transfer of this Warrant or such holder's intention as to the disposition to be
made of shares of Common Stock issuable or issued upon the exercise hereof. In
addition the holder of this Warrant shall represent in such notice to the
Company that a copy of the Note Purchase Agreement has been provided to any
proposed transferree(s). Such holder shall also provide the Company with an
opinion of counsel satisfactory to the Company to the effect that the proposed
transfer of this Warrant or disposition of shares may be effected without
registration or qualification (under any Federal or State law) of this Warrant
or the shares of Common Stock issuable or issued upon the exercise hereof.
Upon receipt of such written notice and opinion by the Company, such holder
shall be entitled to transfer this Warrant, or to exercise this Warrant in
accordance with its terms and dispose of the shares received upon such exercise
or to dispose of shares of Common Stock received upon the previous exercise of
this Warrant, all in accordance with the terms of the notice delivered by such
holder to the Company, provided that an appropriate legend respecting the
aforesaid restrictions on transfer and disposition may be endorsed on this
Warrant or the certificates for such shares.
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7. Subject to the provisions of paragraph 6 hereof, this Warrant
and all rights hereunder are transferable, in whole or in part, at the
principal office of the Company by the holder hereof in person or by duly
authorized attorney, upon surrender of this Warrant properly endorsed. Each
taker and holder of this Warrant, by taking or holding the same, consents and
agrees that the bearer of this Warrant when endorsed, may be treated by the
Company and all other persons dealing with this Warrant as the absolute owner
hereof for any purpose and as the person entitled to exercise the rights
represented by this Warrant, or to the transfer hereof on the books of the
Company, any notice to the contrary notwithstanding; but until such transfer on
such books, the Company may treat the registered holder hereof as the owner for
all purposes.
8. If permitted by federal and state securities laws, this
Warrant is exchangeable, upon the surrender hereof by the holder hereof at the
principal office of the Company, for new Warrants of like tenor representing in
the aggregate the right to subscribe for and purchase the number of shares
which may be subscribed for and purchased hereunder, each of such new Warrants
to represent the right to subscribe for and purchase such number of shares as
shall be designated by said holder hereof at the time of such surrender.
9. (a) In addition to and without limiting the rights of the
holder of this Warrant under the terms of this Warrant the holder of this
Warrant shall have the right (the "Conversion Right") to convert this Warrant
or any portion thereof into shares of Common Stock as provided in this
paragraph 9 at any time or from time to time prior to its expiration. Upon
exercise of the Conversion Right with respect to a particular number of shares
subject to this Warrant (the "Converted Warrant Shares"), the Company shall
deliver to the holder of this Warrant, without payment by the holder of any
exercise price or any cash or other consideration, that number of shares of
Common Stock equal to the quotient obtained by dividing the Net Value (as
hereinafter defined) of the Converted Warrant Shares by the fair market value
(as defined in paragraph (c) below) of a single share of Common Stock,
determined in each case as of the close of business on the Conversion Date (as
hereinafter defined). The "Net Value" of the Converted Warrant Shares shall be
determined by subtracting the aggregate Warrant Exchange Price of the Converted
Warrant Shares from the aggregate fair market value of the Converted Warrant
Shares. No fractional shares shall be issuable upon exercise of the
Conversion Right and if the number of shares to be issued in accordance with
the foregoing formula is other than a whole number, the Company shall pay to
the holder of this Warrant an amount in cash equal to the fair market value of
the resulting fractional share.
(b) The Conversion Right may be exercised by the holder of this
Warrant by the surrender of this Warrant at the principal office of the Company
together with a written statement specifying that the holder thereby intends to
exercise the Conversion Right and indicating the number of shares subject to
this Warrant which are being surrendered (referred to in paragraph (a) above as
the Converted Warrant Shares) in exercise of the Conversion Right. Such
conversion shall be effective upon receipt by the Company of this Warrant
together with the aforesaid written statement or on such later date as is
specified therein (the "Conversion Date"), but not later than the expiration
date of this Warrant. Certificates for the shares of Common
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Stock issuable upon exercise of the Conversion Right together with a check in
payment of any fractional share and, in the case of a partial exercise, a new
warrant evidencing the shares remaining subject to this Warrant shall be issued
as of the Conversion Date and shall be delivered to the holder of this Warrant
within 15 days following the Conversion Date.
(c) For purposes of this paragraph 9, the "fair market value" of
a share of the Common Stock as of a particular date shall be its Market Price,
calculated as described in paragraph 4(g) hereof.
10. The holder of this Warrant shall have no registration rights
except for the registration rights specified in the Note Purchase Agreement.
11. All questions concerning this Warrant will be governed and
interpreted and enforced in accordance with the internal law, not the law of
conflicts, of the State of Florida.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officer and this Warrant to be dated as of February 28,
1997.
VISION 21, INC.
By____________________________________
Its________________________________
RESTRICTION ON TRANSFER
"The securities evidenced hereby have not been registered under the
Securities Act of 1933, as amended, or the securities laws of any state and may
not be transferred without (i) the opinion of counsel satisfactory to this
corporation that such transfer may be lawfully made without registration under
the Federal Securities Act of 1933 and all applicable state securities laws or
(ii) such registration."
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EXHIBIT C - FORM OF ASSIGNMENT
(To Be Signed Only Upon Assignment)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto________________________________________________________ this Warrant, and
appoints________________________________________________________ to transfer
this Warrant on the books of the Company with the full power of substitution in
the premises.
Dated:
---------------------------
In the presence of:
---------------------------------
---------------------------------------------------------------------
(Signature must conform in all respects to the name of the holder as
specified on the face of this Warrant without alteration, enlargement
or any change whatsoever, and the signature must be guaranteed in the
usual manner)
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55
EXHIBIT D - FORM OF OPINION OF XXXXXXXX, LOOP & XXXXXXXX
1. The Company has been duly incorporated and organized and is a
validly existing corporation in good standing under the laws of the State of
Florida. The Company is duly qualified to transact business in all
jurisdictions in which the conduct of its business requires such qualification
and in which the failure to qualify would have a materially adverse effect upon
the business of the Company. The Company has the corporate power and authority
to enter into the Agreement, to issue and sell the Note and Warrant, and to
carry out the provisions of the Agreement, and has the corporate power and
authority to own and hold its properties owned and leased and to carry on the
business in which it has engaged.
2. The Agreement, Note and Warrant each have been duly and
validly authorized, executed and delivered by the Company and constitute the
legal, valid and binding agreements and obligations of the Company enforceable
against the Company in accordance with their respective terms.
3. The authorized Capital Stock of the Company consists of sixty
million (60,000,000) shares of capital stock, $.001 par value, consisting of
(i) fifty million (50,000,000) shares designated as Common Stock, and, to our
knowledge, as of the date hereof, the Company is committed to issue such number
of shares of Common Stock as set forth in Schedule 4.15 of the Agreement, and
(ii) ten million (10,000,000) shares of Preferred Stock, of which, to our
knowledge, zero (-0-) shares are currently issued and outstanding as of the
date hereof. To our knowledge, there are currently outstanding options and
warrants to purchase such number of shares of Common Stock set forth in
Schedule 4.15 of the Agreement and such number of shares are reserved for
issuance upon the exercise of such outstanding options and warrants. All of
the outstanding shares have been duly authorized and are validly issued and
non-assessable and, to our knowledge, are free and clear of any encumbrances or
restrictions (except any securities law restrictions), shareholder preemption
or similar statutory rights or any contractual purchase rights. The shares
issuable upon conversion of the Note and exercise of the Warrant have been duly
authorized and reserved and, assuming due conversion of the Note and due
exercise of the Warrant and payment of the exercise price, will be duly
authorized, validly issued and non-assessable, free and clear of any
encumbrances or restrictions (except any securities law restrictions),
shareholder preemption or similar statutory rights or any contractual purchase
rights. Except for such securities and the Warrant to be delivered and such
options and warrants set forth in Schedule 4.15 of the Agreement, to our
knowledge, there are no outstanding securities convertible into Common Stock of
the Company or outstanding options, warrants or other rights to acquire
securities (or agreements for any such rights) of the Company. To our
knowledge, except as set forth in the Agreement, the Services Agreement dated
as of September 9, 1996 with Xxxxxxx X. Xxxxxxxxx, M.D., the Agreement dated
May 10, 1996 with Xxxxx X. Xxxxxx, the Advisory Agreement dated as of October
20, 1996 with Xxxxx X. Xxxxxx and the Registration Rights Agreements dated as
of December 1, 1996, there are no agreements or understandings on the part of
the Company with respect to the registration of any securities of the Company
under the Securities Act, and there are no obligations on the part of the
Company to purchase or redeem
D-1
56
any outstanding shares of capital stock of the Company. To our knowledge,
except as otherwise provided in (i) the Agreement; (ii) the Confidential
Information Memorandum dated December 1996, as amended, (iii) the Note Purchase
Agreement dated December 20, 1996; (iv) the Agreement and Plan of Reorganization
dated as of December 1, 1996, with Eye Institute of Southern Arizona, P.C.,
Xxxxxxx X. Xxxx, M.D. and Xxxxx Xxxxxx, M.D., and Vision 21 of Arizona, Inc.
which provides that, if certain conditions are satisfied, the Company will pay
Xx. Xxxx and Xx. Xxxxxx 210,302 shares of stock of the Company in consideration
for the transfer of ambulatory surgical center assets to Xx. Xxxx and Xx.
Xxxxxx'x professional association; (v) the agreement with J&R Xxxxxxx, X.X.,
P.A. regarding 9,314 shares of stock of the Company issuable as contingent
consideration for the acquisition of the practice if certain conditions are
satisfied; and (vi) the Stock Purchase Agreement with the shareholders of
Minnesota Eye Care Alliance, Inc. ("MECA"), which provides that the Company will
purchase the shares of MECA in exchange for $700,000, payable in cash or stock
on the date of any initial public offering of the Company, there are no
agreements or understandings among shareholders of the Company concerning
voting, rights of first refusal, repurchase or redemption rights, puts, calls or
similar rights to capital stock of the Company.
4. The execution, delivery and performance of the Agreement by
the Company and the issuance of the Note and Warrant pursuant thereto do not
violate any provision of the Company's Articles of Incorporation or Bylaws, as
amended, and, to our knowledge, do not constitute a default under the
provisions of any material agreement known to us to which the Company is a
party or by which it is bound, and do not violate or contravene (a) any
governmental statute, rule or regulation applicable to the Company or (b) any
order, writ, judgment, injunction, decree, determination or award which has
been entered against the Company and of which we are aware. To our knowledge,
the Company is not in default of any material agreements in which the Company
is a party or by which it is bound (except for any defaults relating to the
delivery of shares of the Company's stock which has been delayed pending the
receipt of all shareholder consents to the final adjusted share numbers
described in Schedule 4.15 of the Agreement and the purchase price and merger
consideration adjustments described in the acquisition agreements with the
founding practices, which have been delayed pending completion of the audit of
such founding practices' current accounts), or in violation of any laws,
statutes, rules or regulations known to us.
5. There is no action, proceeding or investigation pending or, to
our knowledge, overtly threatened against the Company or any of its officers or
directors before any court or authority or administrative agency that questions
the validity of the Agreement or the right of the Company to enter into the
Agreement or to consummate the transactions contemplated thereby or that might
result, either individually or in the aggregate, in any material adverse change
in the assets, business, properties, financial condition, prospects, or
operations of the Company or in any material change in the current equity
structure of the Company.
6. Assuming the continuing accuracy and validity of the
representations made by the Purchaser in the Agreement, the offer and sale of
the Note and Warrant is, and the issuance of
D-2
57
the Common Stock upon exercise of the Warrant will be, exempt from the
registration requirements of the Securities Act, and in compliance with all
applicable state securities laws.
7. To our knowledge, no security holder of the Company or any
third party is entitled to preemptive or similar rights to subscribe for or to
purchase any shares of capital stock of the Company, nor will any security
holder of the Company be entitled to any such rights as a result of the
execution or delivery of the Warrant or the issuance of the Common Stock
issuable upon exercise of the Warrant.
8. The Company has obtained any approval or consent of all
governmental agencies or bodies or other third parties required to be obtained
by it for the legal and valid execution and delivery and performance of the
Agreement and the legal and valid offer, issuance and sale of the Note and
Warrant and the offer of the shares of Common Stock issuable upon exercise of
the Warrant to the Purchaser and we are not aware of any proceedings, or threat
thereof, that question the validity thereof.
This opinion is furnished to the Purchaser solely for its benefit in
connection with the purchase of the Note, and may not be relied upon by any
other person, nor quoted in whole or in part or otherwise referred to by you in
any document or instrument, nor is this opinion letter to be filed with any
governmental agency or other person, without the prior written consent of this
firm.
D-3
58
SCHEDULE 1
Column A COLUMN B COLUMN C
-------- -------- --------
NUMBER OF SHARES OF
COMMON STOCK INTO
PRINCIPAL NUMBER OF WARRANTS WHICH WARRANT IS
NAME AND ADDRESS AMOUNT OF NOTE PURCHASER IS TO INITIALLY
OF PURCHASERS TO BE PURCHASED RECEIVE EXCHANGEABLE
-------------------------------- ---------------- ------------------ --------------------
XXXXX XXXXXXX HEALTHCARE $ 2,000,000 1 421,941
FUND II LIMITED PARTNERSHIP,
XXXXX XXXXXXX HEALTHCARE
MANAGEMENT LIMITED PARTNERSHIP,
ITS GENERAL PARTNER, C/O BUZZ
XXXXXX, MANAGING DIRECTOR OF
XXXXX XXXXXXX VENTURES
INCORPORATED, ITS GENERAL
PARTNER,
XXXXX XXXXXXX TOWER
000 XXXXX XXXXX XXXXXX
XXXXXXXXXXX, XX 00000
S-1
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SCHEDULE 4.1
VISION 21, INC. AND SUBSIDIARIES
% OF OUTSTANDING
STOCK OWNED BY COMPANY
STATE OF DIRECTLY OR
CORPORATION INCORPORATION THROUGH A SUBSIDIARY
-------------------------------------- ------------- -----------------------
The Company Florida NA
Vision 21 Physician Practice Florida 100%
Management Company (practice
management company)
Vision 21 Managed Eye Care of Tampa Florida 100%
Bay, Inc. (managed care organization)
Vision 21 of Southern Arizona, Inc. Arizona 100%
S-2
60
SCHEDULE 4.3
Exceptions to Company's representation that there are no material adverse
changes in financial condition or affairs of the Company, its Subsidiaries and
Acquired Businesses.
Four Seasons, P.A. described in the Memorandum will not
be acquired. The Company does not expect the change resulting from the
foregoing to have a material adverse effect on the Company's earnings. For the
effect on the Company's earnings, see Schedule A, page 19 of the Memorandum.
S-3
61
SCHEDULE 4.15
STOCK, OPTIONS AND WARRANTS OWNERSHIP SUMMARIES
LIST OF STOCK
NUMBER OF SHARES NUMBER OF SHARES
BENEFICIALLY OWNED AS PER BENEFICIALLY
PRELIMINARY BASKET OWNED AS PER FINAL
BENEFICIAL OWNER ALLOCATIONS BASKET ALLOCATIONS*
-------------------------------------- ------------------------ -------------------
Xxxxx Xxxxxxxx 578,819 540,663
Xxxxx X. Xxxxxx 434,105 405,497
Xxxx Xxxxxxxxx 173,642 162,199
Xxxxxxx Xxxxxxx **1,157,614 965,005
Xxx Xxxxxxxx **3,001,365 2,772,309
Xxxx Xxxxx 60,371 49,212
Xx. Xxxxx & Associates #6966, P.A. 105,000 103,138
Xx. Xxxxx & Associates #6958, P.A. 105,000 103,138
Xxxxxx X. Xxxxxx, M.D. P.A. 216,988 219,957
Xxxxxxx X. Xxxx 304,118 297,459
Xxxxx Xxxxxx 304,117 297,459
Northwest Eye Specialists, P.L.L.C. 500,536 491,576
Xxxxxx X. Xxxxxx 221,985 217,303
Eye Specialists of Arizona
Network, P.C. 109,463 107,505
Sharona Optical, Inc. 97,967 95,975
Xxxx X. Xxxx 101,648 99,231
Xxxx Xx Xxxx 17,554 17,100
J&R Xxxxxxx, X.X., P.A. 104,826 103,863
Roseville Opticians, Inc. 11,620 11,480
Xxxxxxxxx, Xxxxxxxxx & Xxxxxxx
Ophthalmology Associates P.A. 452,961 455,196
Optometric Eye Care Centers, P.A. 96,484 94,717
Xxxxxxxx & Associates, #6965 P.A. 598,889 560,957
------------------------ -------------------
TOTAL SHARES: **8,755,072 8,170,939
======================== ===================
_______________________________
* Vision 21, Inc. has not yet received the written consent of all of its
shareholders concerning the final number of shares that such
shareholders shall receive as modified by (i) the final allocation of
basketshares utilized as part of the consideration for the acquisition
of founding practices, and (ii) other adjustments such as an
allocation of certain operating expenses from Vision 21, Inc. to
Xxxxxxxx, Xxxxxx & Associates, P.A. Although the management of Vision
21, Inc. has received consent orally from many of such shareholders
and believes that ultimately all of such shareholders will consent to
the final number of share set forth above, there can be no assurances
S-4
62
that all shareholders will agree to such final numbers. Messrs.
Xxxxxxxx and Xxxxxxx have already consented to the final number of
shares they will receive as set forth above. The final number of
shares of individuals and entities receiving shares as a result of
founding practice acquisitions are also subject to post-closing
adjustments which shall occur after completion of audits of such
founding practices' current accounts, all as more specifically
described in the acquisition agreements with respect to such
practices. The above list excludes 210,302 shares of Vision 21 common
stock which may be issued and paid as consideration to Xxxxxxx X.
Xxxx and Xxxxx Xxxxxx in the event that certain ambulatory surgical
center assets are transferred to their professional corporation.
** Messrs. Xxxxxxxx and Xxxxxxx have consented to the adjustment of the
final number of shares they will receive from 1,157,614 to 965,005 for
Xx. Xxxxxxx and 3,001,365 to 2,772,309 for Xx. Xxxxxxxx. This reduces
the aggregate amount of preliminary shares from 8,755,072 to
8,333,407.
LIST OF OUTSTANDING OPTION AGREEMENTS
------------------------------------------------------------------------------
NAME NUMBER OF SHARES
-------------------------------------- -----------------------------
Xxxxxx Xxxxxxxx 25,000
Xxxxxxxx X. Xxxxxxx 50,000
Xxxxxxx Xxxxx 30,000
Xxxx X. Xxxxxxx 35,000
Xxxxx Xxxxxxxxx 15,000
Xxxxxx Xxxx 35,000
Xxxxx Xxxxxxx 15,000
Xxxxxxxx Xxxxxx 15,000
Xxxxxx Xxxxxxx 15,000
Xxxxx X. Xxxxxxx 75,000
Xxxx Xxxxxx 25,000
Xxxx X. Xxxxx, O.D. 50,000
Xxxxxxx X. Xxxxx 120,000
Other Employees and Non-Shareholder
Affiliated Professionals 395,000
--------
TOTAL OPTION SHARES: *900,000
========
-------------------------
* Subject to adjustment pursuant to the terms of the Option Agreements.
LIST OF WARRANTS
In connection with the Note Purchase Agreement dated December 20, 1996,
there are outstanding Warrants exchangeable for 263,725 shares of Common Stock
of the Company, subject to adjustment pursuant to the terms of the Agreement.
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63
SCHEDULE 4.16
The business assets of the following companies were acquired
as of December 1, 1996:
1. Cambridge Eye Clinic, P.A. and EE Optical Lab, Inc.
2. Eye Institute of Southern Arizona, P.C.
3. Xxxxxx X. Xxxxxx, M.D., P.C., Eye Specialists of Arizona Network, P.C.
and Sharona Optical, Inc.
4. Northwest Eye Specialists, P.L.L.C.
5. Xxxxxxxx & Associates, #6965 P.A.
6. J&R Xxxxxxx, X.X., P.A. and Roseville Opticians, Inc.
7. Xxxxxxxxx, Xxxxxxxxx & Xxxxxxx Ophthalmology Associates, P.A.
8. Optometric Eye Care Centers, P.A.
9. Xx. Xxxxx & Associates, #6950 P.A., Xx. Xxxxx & Associates, #6958
P.A. and Xx. Xxxxx & Associates, #6966 P.A.
10. Xxxxxx X. Xxxxxx, M.D., P.A.
S-6
64
SCHEDULE 4.17
CONTRACTS
1. Business Management Agreement dated as of December 1, 1996
between Cambridge Eye Clinic, P.A. and Xxxx X. Xxxx, O.D.,
P.A.
2. Business Management Agreement dated as of December 1, 1996
between Eye Institute of Southern Arizona and a newly-formed
Arizona professional association.
3. Business Management Agreement dated as of December 1, 1996
between Xxxxxx X. Xxxxxx, M.D., P.C. and Millennium Vision,
P.C.
4. Business Management Agreement dated as of December 1, 1996
between Vision 21 and Northwest Eye Specialist, P.L.L.C.
5. Business Management Agreement dated as of December 1, 1996
between Vision 21 and Xxxxxxxx & Associates, #6965 P.A.
6. Business Management Agreement dated as of December 1, 1996
between Vision 21 and J&R Xxxxxxx, X.X., P.A.
7. Business Management Agreement dated as of December 1, 1996
between Vision 21 and Xxxxxxxxx, Xxxxxxxxx & Xxxxxxx
Ophthalmology Associates, P.A.
8. Business Management Agreement dated as of December 1, 1996
between Vision 21 and Optometric Eye Care Centers, P.A.
9. Business Management Agreement dated as of December 1, 1996
between Xx. Xxxxx & Associates, #6950 P.A. and a newly-formed
Florida professional association.
10. Business Management Agreement dated as of December 1, 1996
between Vision 21 and Xx. Xxxxx & Associates #6958 P.A.
11. Business Management Agreement dated as of December 1, 1996
between Vision 21 and Xx. Xxxxx & Associates #6966 P.A.
12. Business Management Agreement dated as of December 1, 1996
between Vision 21 and Xxxxxx X. Xxxxxx, M.D., P.A.
13. Service Agreement, dated May 1, 1995, between HIP Health Plan
of Florida, Inc. and Vision 21, Inc.
14. Ancillary Provider Participation Agreement with a term of one
year beginning January 1, 1996, as renewed and amended from
time to time among Humana Medical Plan, Inc., Humana Health
Plan of Florida, Inc., Humana Health Insurance Company of
Florida, Inc., Human Insurance Company and Vision 21, Inc.
15. Managed Care Agreement between FHP and Eye Specialists of
Arizona Network, P.C.
16. Joint Venture Agreement dated as of May 1, 1996, between For
Eyes Managed Care, Inc. and Vision 21, Inc.
17. Consulting Agreement, effective date February 1, 1996, between
ECCA Managed Vision Care, Inc. and Vision 21 Managed Eye Care
Inc.
18. Services Agreement dated March 10, 1996, between BSM
Consulting Group and Vision 21, Inc.
S-7
65
SCHEDULE 13.1
See Schedule 4.15 for Option Table. The Proposed transaction with
Prudential is as follows:
The Company is negotiating a $5,000,000 credit facility with Prudential
Securities Credit Corporation (the "Lender"). It is anticipated that the
credit facility will be a senior unsecured loan bearing interest at the rate of
10% per annum, payable monthly in arrears and maturing on the earlier of
September 30, 1997, the closing of the Company's initial public offering or
change of control. In addition it is anticipated that 300,000 Warrants will be
issued to the Lender for shares of the Company's Common Stock at a purchase
price of 80% of the initial public offering price. If the Company is not
public in six months, the purchase price is reduced to $4.00 per share. In
addition, the Lender will receive 150,000 additional Warrants for shares at a
price equal to the greater of 50% of the initial public offering price or $4.00
per share if the credit facility is not paid at maturity. The Lender will also
receive an additional 150,000 Warrants for shares at a price equal to the
greater of 50% of the initial public offering price or $4.00 per share if the
credit facility remains unpaid 271 days after the closing. There can be no
assurance that the credit facility will be consummated or, if consummated, that
the terms of the credit facility will be as set forth herein.
S-8
66
SCHEDULE 19(A)
INDEBTEDNESS OUTSTANDING AS OF FEBRUARY 25, 1997
PARI PASSU SENIOR
DEBT DEBT
---------- ------
Xxxxxxx Bank Senior Secured Credit Facility $ $ 2.0
June 1996 Promissory Note to Xxxxx Xxxxxxxx 3.0
December 1996 10% Senior Subordinated Notes Due December 1999 1.2
Tax Notes Payable to Founding Practices 2.0
---------- -------
$ 4.2 $ 4.0
========== =======
* ALL OTHER DEBT OF THE COMPANY EXISTING AS OF FEBRUARY 25, 1997 OTHER
THAN AS SET FORTH ABOVE IS CONSIDERED SENIOR DEBT TO THE NOTES.
S-9
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SUBSCRIPTION FORM
To be Executed by the Holder of this Warrant if such Holder
Desires to Exercise this Warrant in Whole or in Part:
To: VISION 21, INC. (the "Company")
The undersigned ______________________________
Please insert Social Security or other
identifying number of Subscriber:
______________________
hereby irrevocably elects to exercise the right of purchase represented by this
Warrant for, and to purchase thereunder, ___________ shares of the Common Stock
(the "Common Stock") provided for therein and tenders payment herewith to the
order of the Company in the amount of $_________, such payment being made as
provided on the face of this Warrant.
The undersigned requests that certificates for such shares of Common
Stock be issued as follows:
Name:
-------------------------------------------------------------------------
Address:
----------------------------------------------------------------------
Deliver to:
-------------------------------------------------------------------
Address:
----------------------------------------------------------------------
and, if such number of shares of Common Stock shall not be all the shares of
Common Stock purchasable hereunder, that a new Warrant for the balance
remaining of the shares of Common Stock purchasable under this Warrant be
registered in the name of, and delivered to, the undersigned at the address
stated above.
Dated:
Signature
-----------------------------------
Note: The signature on this
Subscription Form must correspond
with the name as written upon the
face of this Warrant in every
particular, without alteration or
enlargement or any change whatever.
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