EXHIBIT 10.11
THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN
QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND
THE ISSUANCE OF THE SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS UNLAWFUL, UNLESS THE SALE
OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102, OR 25105
OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS
AGREEMENT ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION BEING OBTAINED UNLESS
THE SALE IS SO EXEMPT.
THE SECURITIES EVIDENCED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED
OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER
THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF SUCH
SECURITIES REASONABLY SATISFACTORY TO THE COMPANY STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
ENACT HEALTH MANAGEMENT SYSTEMS
WARRANT
1. Number of Shares Subject to Warrant. FOR VALUE RECEIVED, on and after
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the date of this Warrant, and subject to the terms and conditions herein set
forth, ALZA Corporation, a Delaware corporation, is entitled to purchase from
ENACT HEALTH MANAGEMENT SYSTEMS, a California Corporation (the "Company"), at
any time before 5:00 p.m. California time on December 31, 2003 ("Termination
Date"), at a price per share equal to the Warrant Price (as defined below), the
Warrant Stock (as defined below and subject to adjustments as described below)
upon exercise of this Warrant pursuant to Section 7 hereof.
2. Definitions. As used in this Warrant, the following terms shall have
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the definitions ascribed to them below:
(a) "Holder" shall mean ALZA Corporation or its assigns.
(b) "Note" shall mean the note issued to ALZA Corporation on
September 28, 1995 in connection with the Loan Agreement (as defined below).
(c) "Loan Agreement" shall mean that certain Loan Agreement by and
between Enact Health Management Systems and ALZA Corporation dated August 29,
1995 and amended November 15, 1995 and August 30, 1996 entered into in
connection with the issuance of the Note and this Warrant.
(d) "Securities" shall mean the shares of Series C Preferred Stock of
the Company purchasable upon exercise of this Warrant.
(e) "Warrant Price" shall be $ 6.913 for each share of Warrant Stock,
subject to adjustment as described in Section 3 below.
(f) "Warrant Stock" shall mean shares of the Securities purchasable
upon exercise of this Warrant or issuable upon conversion of this Warrant. The
total number of shares to be issued initially shall be 36,164.
3. Adjustments and Notices. The Warrant Price and the number of shares
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of Warrant Stock shall be subject to adjustment from time to time in accordance
with the following provisions:
(a) Subdivision, Stock Dividends or Combinations. In case the
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Company shall at any time subdivide the outstanding shares of the Securities or
shall issue a stock dividend with respect to the Securities, the Warrant Price
in effect immediately prior to such subdivision or the issuance of such dividend
shall be proportionately decreased, and in case the Company shall at any time
combine the outstanding shares of the Securities, the Warrant Price in effect
immediately prior to such combination shall be proportionately increased,
effective at the close of business on the date of such subdivision, dividend or
combination, as the case may be.
(b) Issuance or Sale of Additional Shares. In case the Company shall
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at any time issue or sell any Equity Securities (as defined in the Company's
Amended and Restated Articles of Incorporation) at a consideration per share
less than the Conversion Price (as defined in the Company's Amended and Restated
Articles of Incorporation) for any series of the Company's Preferred Stock in
effect immediately prior to the time of such issue or sale, then forthwith upon
such issue or sale, the Warrant Price shall be adjusted to a price (calculated
to the nearest cent) equal to 133% of the Conversion Price for the Securities in
effect immediately after the time of such issue or sale.
(c) Number of Shares. Upon each adjustment pursuant to subdivision
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(a) of this Section 3, the Holder of this Warrant shall thereafter (until
another such adjustment) be entitled to purchase, at the adjusted Warrant Price,
the
number of shares of the Securities, calculated to the nearest full share,
obtained by multiplying the number of shares of the Securities purchasable
hereunder immediately prior to such adjustment by the Warrant Price in effect
prior to such adjustment and dividing the product so obtained by the adjusted
Warrant Price.
(d) Reorganization, Merger etc. Upon the closing of any (i) merger
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or consolidation of the Company into or with another corporation in which the
shareholders of the Company shall own less than 50% of the voting securities of
the surviving corporation, (ii) sale, transfer or lease (but not including a
transfer or lease by pledge or mortgage to a bona fide lender) of all or
substantially all of the assets of the Company, or (iii) sale by the Company's
shareholders of 50% or more of the Company's outstanding securities in one or
more related transactions, this Warrant shall terminate. In the event of any
other merger, reorganization or consolidation or any reclassification, change or
conversion of the class or series of securities issuable upon exercise of this
Warrant, the Company, or such successor or purchasing corporation, as the case
may be, shall, as a condition to closing such merger, reorganization or
consolidation or reclassification, change or conversion duly execute and deliver
to the Holder hereof a new warrant so that the Holder shall have the right to
receive, at a total purchase price not to exceed that payable upon the exercise
of the unexercised portion of this Warrant, and in lieu of the shares of the
Securities theretofore issuable upon exercise of this Warrant, the kind and
amount of shares of stock, other securities, money and property receivable upon
such merger, reorganization or consolidation or reclassification, change or
conversion by the Holder of the number of shares of Securities then purchasable
under this Warrant. Such new warrant shall provide for adjustments that shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Section 3. The provisions of this subparagraph (d) shall similarly apply to
successive mergers, reorganizations or consolidations or reclassifications,
changes or conversions.
(e) Notice. Upon any adjustment of the Warrant Price and any increase
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or decrease in the number of shares of the Securities purchasable upon the
exercise or conversion of this Warrant, then, and in each such case, the
Company, within thirty (30) days thereafter, shall give written notice thereof
to the Holder of this Warrant at the address of such Holder as shown on the
books of the Company which notice shall state the Warrant Price as adjusted and
the increased or decreased number of shares purchasable upon the exercise or
conversion of this Warrant, setting forth in reasonable detail the method of
calculation of each. The Company further agrees to notify the Holder of this
Warrant in writing of a reorganization, merger or sale in accordance with
Section 3(d) hereof at least twenty (20) days prior to the effective date
thereof.
4. No Shareholder Rights. This Warrant, by itself, as distinguished from
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any shares purchased hereunder, shall not entitle its Holder to any of the
rights of a shareholder of the Company.
5. Reservation of Stock. On and after the date of this Warrant, the
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Company will reserve from its authorized and unissued Securities a sufficient
number of shares to provide for the issuance of Warrant Stock upon the exercise
or conversion of this Warrant and shall reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of Common
Stock upon the conversion of the Warrant Stock. Issuance of this Warrant shall
constitute full authority to the Company's officers who are charged with the
duty of executing stock certificates to execute and issue the necessary
certificates for shares of Warrant Stock issuable upon the exercise or
conversion of this Warrant.
6. Conversion. In lieu of exercising this Warrant or any portion hereof,
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the Holder hereof shall have the right to convert this Warrant or any portion
hereof into Warrant Stock. The number of shares of Warrant Stock to be issued
to Holder upon such conversion shall be computed using the following formula:
X = (P)(Y)(A-B)/A
where X = the number of shares of Securities to be issued to the
Holder for the portion of the Warrant being converted.
P = the portion of the Warrant being converted expressed as a
decimal fraction.
Y = the total number of shares of Securities issuable upon
exercise of the Warrant in full.
A = the fair market value of one share of Warrant Stock which
shall mean (i) the fair market value of the Company's stock
issuable upon conversion of such share as of the last
business day immediately prior to the date the notice of
conversion is received by the Company, as determined in good
faith by the Company's Board of Directors, or (ii) if this
Warrant is being converted in conjunction with a public
offering of stock the price to the public per share pursuant
to the offering.
B = the Warrant Price on the date of conversion.
Any portion of this Warrant that is converted shall be immediately canceled.
7. Exercise or Conversion of Warrant; Automatic Conversion. This Warrant
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may be exercised or converted in whole or part by the Holder, at any time after
the date hereof prior to the termination of this Warrant, by the surrender of
this
Warrant, together with the Notice of Exercise or Notice of Conversion (as the
case may be) and Investment Representation Statement in the forms attached
hereto as Attachments 1, 2 and 3, respectively, duly completed and executed at
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the principal office of the Company, specifying the portion of the Warrant to be
exercised or converted and, in the case of exercise, accompanied by payment in
full of the Warrant Price in cash or by check with respect to the shares of
Warrant Stock being purchased. This Warrant shall be deemed to have been
exercised or converted immediately prior to the close of business on the date
of its surrender for exercise or conversion as provided above, and the person
entitled to receive the shares of Warrant Stock issuable upon such exercise or
conversion shall be treated for all purposes as Holder of such shares of record
as of the close of business on such date. As promptly as practicable after such
date, the Company shall issue and deliver to the person or persons entitled to
receive the same a certificate or certificates for the number of full shares of
Warrant Stock issuable upon such exercise or conversion. If the Warrant shall
be exercised or a conversion is effected for less than the total number of
shares of Warrant Stock then issuable upon exercise, promptly after surrender of
the Warrant upon such exercise or conversion, the Company will execute and
deliver a new Warrant, dated the date hereof, evidencing the right of the Holder
to the balance of the Warrant Stock purchasable hereunder upon the same terms
and conditions set forth herein.
In the event of any transaction which would cause the termination of this
Warrant under Section 3(d) hereof, and if (i) the Holder has not exercised or
converted this Warrant in full prior to such transaction and (ii) the fair
market value of the shares of unexercised and unconverted Warrant Stock exceeds
the total of (x) the number of shares of unexercised and unconverted Warrant
Stock multiplied by (y) the Warrant Price, then this Warrant shall be deemed to
have been converted in full immediately prior to the closing of such transaction
merger, acquisition and the Company shall take all actions necessary to cause
such conversion to occur and to be issued to Holder the kind and amount of
consideration that would have been received upon an election to convert under
Section 6 and Section 7 of this Warrant.
8. Transfer of Warrant.
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(a) This Warrant may be transferred or assigned by the Holder hereof
in whole or in part, provided that (i) the transferor provides, at the Company's
request, an opinion of counsel satisfactory to the Company that such transfer
does not require registration under the Act and the securities law applicable
with respect to any other applicable jurisdiction, and (ii) the Company, in its
sole discretion, consents to such assignment or transfer; provided, however,
that the Company's consent is not required in the event of a transfer of this
Warrant to an entity which controls, is controlled by or is under common control
with ALZA Corporation.
(b) Subject to the foregoing subparagraph (a), if this Warrant is
transferred in part as a result of a transfer of all or part of the Holder's
rights and obligations under the Loan Agreement and the Note, then, at the
Holder's discretion, this Warrant shall also be assigned and transferred to the
extent such that the transferee of the Note receives such portion of this
Warrant as is equal to proportional amount of the maximum loan obligation
transferred by such Holder to the transferee.
9. Registration Rights. The Holder shall have registration rights as set
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forth in the Amended and Restated Rights Agreement by and among the Company,
ALZA Corporation and others dated August 29, 1995 as amended July 17, 1996.
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10. Termination. This Warrant shall terminate on the first to occur of
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(a) 5:00 p.m. California time on the Termination Date, (b) any of the events
described in clauses (i), (ii) or (iii) of Section 3(d), and (c) the
consummation of an underwritten public offering of the common stock of the
Company on the terms set forth in Article III, Section 4(b)(iii) of the
Company's Amended and Restated Articles of Incorporation.
11. Miscellaneous. This Warrant shall be governed by the laws of the
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State of California, as such laws are applied to contracts to be entered into
and performed entirely in California by California residents. The headings in
this Warrant are for purposes of convenience and reference only, and shall not
be deemed to constitute a part hereof. Neither this Warrant nor any term hereof
may be changed or waived orally, but only by an instrument in writing signed by
the Company and the Holder of this Warrant. All notices and other
communications from the Company to the Holder of this Warrant shall be delivered
personally or mailed by first class mail, postage prepaid, to the address
furnished to the Company in writing by the last Holder of this Warrant who shall
have furnished an address to the Company in writing, and if mailed shall be
deemed given three days after deposit in the United States mail.
ISSUED: August 30, 1996
ENACT HEALTH MANAGEMENT SYSTEMS
By: /s/ Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx, President
Attachment 1
NOTICE OF EXERCISE
TO: ENACT HEALTH MANAGEMENT SYSTEMS
1. The undersigned hereby elects to purchase ____________________________
shares of the Warrant Stock of ENACT Health Management Systems pursuant to the
terms of the attached Warrant, and tenders herewith payment of the purchase
price in full, together with all applicable transfer taxes, if any.
2. Please issue a certificate or certificates representing said shares of
Warrant Stock in the name of the undersigned or in such other name as is
specified below:
____________________
(Name)
____________________
(Address)
______________________________ ____________________________________________
(Date) (Name of Warrant Holder)
Attachment 2
NOTICE OF CONVERSION
TO: ENACT HEALTH MANAGEMENT SYSTEMS
1. The undersigned hereby elects to convert the right to acquire
____________________________ shares of the Warrant Stock of ENACT Health
Management Systems pursuant to the terms of the attached Warrant, into the right
to receive _______________ shares of ENACT Common Stock without further payment.
The fair market value used for purposes of this calculation was__________which
amount includes applicable transfer taxes, if any.
2. Please issue a certificate or certificates representing said shares of
Warrant Stock in the name of the undersigned or in such other name as is
specified below:
____________________
(Name)
____________________
(Address)
____________________________ ____________________________________________
(Date) (Name of Warrant Holder)
By:_________________________________________
Title:______________________________________
Attachment 3
INVESTMENT REPRESENTATION STATEMENT
Shares of the Securities
(as defined in the attached Warrant) of
ENACT HEALTH MANAGEMENT SYSTEMS
In connection with the purchase of the above-listed securities, the
undersigned hereby represents to ENACT Health Management Systems (the "Company")
as follows:
(a) The securities to be received upon the exercise of the Warrant (the
"Securities") will be acquired for investment for its own account, not as a
nominee or agent, and not with a view to the sale or distribution of any part
thereof, and the undersigned has no present intention of selling, granting
participation in or otherwise distributing the same, but subject, nevertheless,
to any requirement of law that the disposition of its property shall at all
times be within its control. By executing this Statement, the undersigned
further represents that it does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer, or grant participations to such
person or to any third person, with respect to any Securities issuable upon
exercise of the Warrant.
(b) The undersigned understands that the Securities issuable upon exercise
of the Warrant at the time of issuance may not be registered under the
Securities Act of 1933, as amended (the "Act"), and applicable state securities
laws, on the ground that the issuance of such securities is exempt pursuant to
Section 4 (2) of the Act and state law exemptions relating to offers and sales
not by means of a public offering, and that the Company's reliance on such
exemptions is predicated on the undersigned's representations set forth herein.
(c) The undersigned agrees that in no event will it make a disposition of
any Securities acquired upon the exercise of the Warrant unless and until (i) it
shall have notified the Company of the proposed disposition and shall have
furnished the Company with a statement of the circumstances surrounding the
proposed disposition, and (ii) it shall have furnished the Company with an
opinion of counsel satisfactory to the Company and Company's counsel to the
effect that (A) appropriate action necessary for compliance with the Act and any
applicable state securities laws has been taken or an exemption from the
registration requirements of the Act and such laws is available, and (B) the
proposed transfer will not violate any of said laws.
(d) The undersigned acknowledges that an investment in the Company is
highly speculative and represents that it is able to fend for itself in the
transactions contemplated by this Statement, has such knowledge and experience
in financial and
business matters as to be capable of evaluating the merits and risks of its
investments, and has the ability to bear the economic risks (including the risk
of a total loss) of its investment. The undersigned represents that it has had
the opportunity to ask questions of the Company concerning the Company's
business and assets and to obtain any additional information which it considered
necessary to verify the accuracy of or to amplify the Company's disclosures, and
has had all questions which have been asked by it satisfactorily answered by the
Company.
(e) The undersigned acknowledges that the Securities issuable upon
exercise of the Warrant must be held indefinitely unless subsequently registered
under the Act or an exemption from such registration is available. The
undersigned is aware of the provisions of Rule 144 promulgated under the Act
which permit limited resale of shares purchased in a private placement subject
to the satisfaction of certain conditions, including, among other things, the
existence of a public market for the shares, the availability of certain current
public information about the Company, the resale occurring not less than two
years after a party has purchased and paid for the security to be sold, the sale
being through a "broker's transaction" or in transactions directly with a
"market makers" (as provided by Rule 144(f)) and the number of shares being sold
during any three-month period not exceeding specified limitations.
Dated: August 30, 1996
____________________________________________
(Typed or Printed Name)
By:_________________________________________
(Signature)
____________________________________________
(Title)
