AGREEMENT TO ISSUE SHARES OF COMMON STOCK
DATED AS OF: February 16, 1999
BETWEEN: Baylor College of Medicine "BCM"
Xxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
AND: MedicaLogic, Inc. "MLI"
00000 XX Xxxxxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
RECITALS
A. BCM is a shareholder of PrimaCis Health Information Technology, Inc., a
Delaware corporation ("PrimaCis").
B. Pursuant to the terms of an Agreement of Reorganization and Merger dated
as of December 31, 1998 (the "Merger Agreement") between MLI, PC Merger Corp., a
Texas corporation which is a wholly-owned subsidiary of MLI ("Merger Corp.") and
PrimaCis, PrimaCis was merged with and into Merger Corp. (the "Merger").
AGREEMENT
In consideration of the mutual covenants contained herein, and as a
condition to the performance by PrimaCis of its obligations under the Merger
Agreement, the parties agree as follows:
1.0 Purchase Order. BCM agrees to place an order with MLI (the "Purchase
Order") for 1,500 licenses of MLI's Logician software (the "Software"), at a
price of $3,000 a license.
2.0 License of Software. MLI agrees to offer licenses of the Software
through December 31, 2002, to BCM or any of its affiliated institutions or
affiliated health care providers in the Houston, Texas metropolitan statistical
area (the "Houston MSA"), at a price of $3,000 a license.
3.0 Issuance of Shares of MLI Common Stock. For each license sold by MLI to
BCM from the date of this Agreement through December 31, 2002 other than
pursuant to the Purchase Order, MLI will issue to BCM shares of MLI Common Stock
("Shares") as follows:
3.1 MLI will issue to BCM Shares according to the following formula:
N = R divided by P
where: N = the number of Shares to be issued by MLI to BCM
R = 50 percent of the license fees received by MLI
from the sale of licenses for the Software to BCM from
the date of this Agreement through December 31, 2002
other than pursuant to the Purchase Order
P = the fair market value of MLI's Common Stock
For the purposes of this Section 3.1, the "fair market value" of MLI's
Common Stock (which is currently $2.20 per share) shall mean: (i) prior to an
initial public offering, the fair market value of MLI's Common Stock as of the
last day of a particular quarter for which a calculation pursuant to this
Section 3.1 is being made, as determined in good faith by MLI's Board of
Directors and in accordance with generally accepted accounting principles; and
(ii) after an initial public offering, the average of the closing sale prices of
MLI Common Stock reported on the securities exchange or other principal
securities market on which the MLI Common Stock may be listed or traded for the
last 20 business days of a particular quarter for which a calculation pursuant
to this Section 3.1 is being made.
3.2 For the purposes of this Section 3, any sales of licenses for the
Software in the Houston MSA subsequent to the date of this Agreement other than
pursuant to the Purchase Order shall be credited as if such licenses were sold
to BCM.
3.3 MLI shall calculate the number of Shares to be issued to BCM
quarterly. Within 45 days after the end of each quarter, with the final quarter
ending on December 31, 2002, MLI shall transmit to BCM certificates representing
the Shares, if any, earned in that quarter. MLI shall include in each such
transmittal a written statement in reasonable detail showing MLI's calculation
of the number of shares that BCM is entitled to receive for that quarter
pursuant to this Section 3.
3.4 Notwithstanding anything to the contrary in this Agreement, MLI
shall have no obligation to issue any additional Shares pursuant to this
Agreement when the license fees received by MLI from the sale of licenses of the
Software for the purpose of applying the formula set forth in Section 3.1
exceeds $24,000,000.
4.0 Term. This Agreement shall expire on December 31, 2002.
5.0 Press Releases. The parties shall use their respective best efforts to
draft and release, promptly after the execution of this Agreement, a jointly
drafted and previously agreed upon press release disclosing the terms of this
Agreement and the Purchase Order, the importance of BCM's decision to
standardize on the Software as a single ambulatory electronic medical records
system and the expected use of the Software in Texas Children's Hospital Cancer
Center once oncology content is available.
6.0 Investment Representations. BCM represents that it will be acquiring
the Shares pursuant to this Agreement for investment for its own account, and
not with a view to, or for resale in connection with, any distribution of the
Shares. The Shares are being offered and sold pursuant to this Agreement without
registration under the Securities Act of 1933 (the "1933 Act") or any state
securities law based on exemptions provided under such laws, and that the Shares
are "restricted securities" under federal securities laws and as such may not be
sold or disposed of unless they are registered under the 1933 Act and all
applicable state securities laws or unless, in the opinion of counsel acceptable
to MLI, exemptions from the registration requirements of the 1933 Act and all
applicable state securities laws are available. BCM is an "accredited investor"
as defined in Rule 501 of the Securities and Exchange Commission.
7.0 Stock Certificate Legends. BCM understands that there will be placed on
the certificates for the Shares, or any substitution therefor, the following
legends:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
AND RESALE AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED
UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE
INVESTOR SHOULD BE AWARE THAT IT MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD
OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS
IN COMPLIANCE WITH THE ACT, UNLESS THE SECURITIES ARE RESOLD
IN COMPLIANCE WITH RULE 144, AND ANY APPLICABLE STATE
SECURITIES LAWS."
"A FULL STATEMENT OF THE DESIGNATIONS, RELATIVE RIGHTS,
PREFERENCES AND LIMITATIONS OF THE SHARES OF EACH CLASS OF
STOCK OF THE ISSUER, THE VARIATIONS IN THE RELATIVE RIGHTS
AND PREFERENCES BETWEEN THE SHARES OF EACH SERIES OF
PREFERRED STOCK SO FAR AS FIXED AND DETERMINED, AND THE
AUTHORITY OF THE BOARD OF DIRECTORS TO DETERMINE VARIATIONS
FOR FUTURE SERIES MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE RECORD HOLDER
OF THIS CERTIFICATE TO THE SECRETARY OF THE ISSUER AT ITS
PRINCIPAL OFFICE."
"TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED BY THE TERMS OF AN AGREEMENT BETWEEN THE
CORPORATION AND CERTAIN OF ITS SHAREHOLDERS, A COPY OF WHICH
CAN BE OBTAINED BY THE RECORD HOLDER OF THIS CERTIFICATE
FROM THE SECRETARY OF THE CORPORATION."
8.0 Supplemental Signature Page - (Shareholders Agreement); Restrictive
Agreement (VHA). Concurrently with the execution and delivery of this Agreement,
BCM shall execute and deliver to MLI a supplemental signature page to the
MedicaLogic, Inc. Shareholders Agreement dated as of February 1, 1994, as
amended, and a supplemental signature page to the Restrictive Agreement (VHA) by
and between the Company and VHA.
9.0 Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements and
understandings, oral and written, among the parties hereto with respect to the
subject matter hereof.
10.0 Assignment. This agreement shall not be assignable by either party
without the prior written consent of the other.
11.0 Binding Effect; No Third Party Benefit. This agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and assigns, subject to the restrictions on assignment contained in
Section 10. Nothing express or implied in this agreement is intended or shall be
construed to confer upon or give to a person, firm or corporation other than the
parties hereto any rights or remedies under or by reason of this Agreement or
any transaction contemplated hereby.
12.0 Amendment and Modification. Subject to applicable law, this agreement
may be amended or modified only by a writing signed by the party against whom
enforcement is sought.
13.0 Counterparts. For the convenience of the parties hereto, this
agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.
14.0 Captions. The article, section and paragraph captions herein are for
convenience of reference only, do not constitute a part of this agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
15.0 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally
or mailed, certified or registered mail with postage prepaid, or sent by telex,
telegram or facsimile (in each case with evidence of confirmed transmission) as
set forth in the Merger Agreement.
16.0 Choice of Law. This agreement shall be governed by and construed in
accordance with the laws of the State of Texas, exclusive of choice of law
rules.
IN WITNESS WHEREOF, the parties have executed this agreement as of the date
first written above.
BAYLOR COLLEGE OF MEDICINE
By J. XXXXXX XXXX
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Name: J. Xxxxxx Xxxx, M.D.
Title: Vice President for Information
Technology
MEDICALOGIC, INC.
By GUY E. FIELD
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Name: Guy E. Field
Title: VP Finance
