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EXHIBIT 4.4
CERULEAN COMPANIES, INC.
WARRANT AGREEMENT
This Warrant Agreement (the "Warrant Agreement") is entered into
effective September 22, 1998 (the "Closing Date"), by and between Cerulean
Companies, Inc. (the "Company") and ____________________________ (the "Holder").
W I T N E S S E T H:
WHEREAS, this Warrant Agreement is entered into pursuant to the
Stipulation of Settlement (the "Stipulation") entered in the matter of Let's Get
Together, Inc. et al. v. Insurance Commissioner of the State of Georgia, et al,
No. E-61714, Superior Court of Xxxxxx County, Georgia (the "Action") and
pursuant to the Final Judgment entered in the Action.
WHEREAS, the terms and conditions of the Stipulation are incorporated
herein by this reference.
WHEREAS, the Company has agreed to grant to Holder warrants to purchase
shares of Series A Preferred Stock of the Company (the "Series A Preferred
Stock") which, together with the warrants to be granted to ___________________,
represent 10.5% of the Total Equity of the Company (as defined in the
Stipulation) as of the date of this Warrant Agreement pursuant to the terms of
the Stipulation (as defined in the Stipulation, of which this Warrant Agreement
is an Exhibit).
WHEREAS, to further the interests of the Company and Holder, the
parties hereto have set forth the terms of such warrants in writing in this
Warrant Agreement; and
NOW, THEREFORE, for and in consideration of the premises and mutual
promises herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are acknowledged, the parties agree as follows:
1. Grant of Warrants.
Subject to the terms and conditions set forth herein, Holder
shall have the right to purchase ____________ shares of Series A Preferred Stock
of the Company (the "Warrant Shares" and this warrant is referred to herein as
the "Warrant").
2. Exercise Price.
The price per Warrant Share shall be $328.8804 (the "Warrant
Price").
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3. Term.
The Warrants are exercisable, in whole or in part, at any time
and from time to time from and after the Closing Date and prior to 5:00 p.m.,
Atlanta, Georgia time, on the fifth anniversary of the Closing Date (at which
time the Warrants shall be and become wholly void and of no value).
4. Exercise of Warrants.
(a) General. The Warrants may be exercised by Holder's
delivery to the Secretary of the Company of a written notice of exercise
executed by Holder (the "Notice of Exercise"). The Notice of Exercise shall be
substantially in the form set forth as Exhibit A, attached hereto and made a
part hereof, and shall identify the number of Warrants that are being exercised.
(b) Partial Exercise. Holder may exercise Warrants to
purchase fewer than all of the Warrant Shares, but such exercise may not be made
for less than 2,000 Warrant Shares or the total remaining Warrant Shares subject
to the Warrant, if less than 2,000 shares. In the event that the Holder
exercises the Warrant to purchase fewer than all of the Warrant Shares, the
Warrant shall remain in effect solely with respect to any unpurchased Warrant
Shares until otherwise terminated.
5. Transfer.
(a) The Warrants may not be sold, transferred, encumbered,
pledged or otherwise disposed of, prior to December 1, 1998, except: (i) by
operation of law or (ii) as required by a final judicial decree.
(b) Subject to the limitations set forth in this Section
below, during the period from December 1, 1998 to December 1, 2001, if Holder
(the "Offeror") desires to sell all or any portion of the Warrants, Holder shall
first offer such Warrants (the "Offered Warrants") to the Company by giving
written notice of its intention to dispose of such Warrants (the "Notice"). The
Notice must name the type of disposition, the proposed purchaser, the number of
Offered Warrants, the price per Warrant and the terms of payment. The Company
may accept such offer with respect to all, but not less than all, of the Offered
Warrants, within thirty (30) days following receipt of the Notice. The Company
may exercise its option by giving notice of such exercise to the Offeror. If any
of the consideration for the Offered Warrants consists of anything other than
cash, the Company may substitute for such consideration the cash equivalent as
reasonably determined by the Company.
(c) The Company may exercise its right of first refusal
set forth in this Section to acquire only up to two percent (2%) of the
aggregate of the issued and outstanding Warrants, shares of Class A Convertible
Common Stock and of Series A Preferred Stock in any one calendar year, unless
the holders of a majority of the Class B Convertible Preferred Stock then
issued, outstanding and entitled to vote, approve of the acquisition of a larger
percentage of Warrants.
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(d) If the right of first refusal provided above is not
exercised as to all of the Offered Warrants or if the purchase by the Company is
not consummated within the time specified in this Section, through no fault of
the Offeror, the Offeror may transfer the Offered Warrants to the proposed
purchaser, at the price and on the terms and conditions set forth in the Notice.
If the transfer of the Offered Warrants by the Offeror to the proposed purchaser
named in the Notice is not made within thirty (30) days after the date the
Offeror became free to transfer, the right to transfer in accordance with the
Notice will expire.
(e) As of December 1, 2001, all restrictions on the
transferability of the Warrants will expire, and the Company will, upon written
request of the holder, register the Warrant Shares or exchange the Warrant
Shares for a comparable security that is fully registered under the Securities
Act of 1933.
6. Medium and Time of Payment of Warrant Price.
The Holder may exercise for cash in the amount of the Exercise
Price at any time except in the case of a Major Event as described herein. In
the event the Exercise Price is paid in cash, such payment shall be made by bank
or cashier's check accompanying the Exercise Notice. The Company shall not be
required to issue fractional Warrant Shares upon exercise of the Warrants, but
shall pay an amount in cash equal to the Warrant Price of one share of Series A
Preferred Stock multiplied by such fraction.
Subject to the provisions of this Warrant Agreement, in lieu
of cash consideration, the Holder may, and shall in the case of a Major Event as
described in Section 7 hereof, when exercising the Warrants pursuant to Section
4 hereof, request that the Company convert the Warrants, in whole or in part and
at any time or times, into Warrant Shares, by surrendering to the Company the
Notice of Exercise of Warrants specifying the number of Warrants being
converted. Within ten (10) days after receipt of the Notice of Exercise of
Warrants, the Company shall deliver to the Holder (without payment by the Holder
of any Warrant Price) that number of Warrant Shares which is equal to the
difference obtained by subtracting from the total number of Warrants being
exercised the number of shares obtained by multiplying (i) the total number of
Warrants being exercised by (ii) a fraction, the numerator of which is the
Warrant Price and the denominator of which is the Market Price (as hereinafter
defined). "Market Price" means, with respect to any Warrant Share on any date
herein specified, if there shall not then be a public market for the Company's
Class A Common Stock, the Appraised Value (as defined hereafter) per share of
Class A Common Stock at such date, or if there shall then be a public market for
the Class A Common Stock, the average of the closing market prices for the five
(5) days on which the Class A Common Stock could be traded immediately preceding
such date. "Appraised Value" means, with respect to any share of Class A Common
Stock on any date herein specified, the higher of (i) the fair market value of a
share of Class A Common Stock as determined by agreement between the Holder and
the Company or (ii) in the absence of such an agreement, the fair market value
of a share of Class A Common Stock as determined by an independent investment
banking firm or an independent appraiser engaged by the Company and reasonably
acceptable to the Holder.
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7. Merger, Consolidation or Sale of Assets.
In the event of any capital reorganization or any
consolidation or merger of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger which does not result
in any reclassification or change of the outstanding Class A Common Stock), 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 (each, a "Major Event"),
prior to the consummation of such Major Event, the Company shall accelerate the
exercise of all Warrants then existing under this Warrant Agreement, and such
Warrants shall automatically and without further action be converted into
Warrant Shares immediately prior to the consummation of the Major Event in the
manner described in Section 6 herein for Warrant exercises without payment of
cash. In the event the Company elects to undertake or enter into a Major Event,
the Company shall provide the Holder with notice of its intention to undertake
or enter into such Major Event at least thirty (30) days prior to the
consummation of the transaction constituting the Major Event.
8. Adjustments for Stock Splits and Combinations; Dilutive
Issuances.
(a) Except as provided in this Section 8, no adjustments
in respect of any dividends or other distributions on the Warrant Shares shall
be made during the term of the Warrants or upon the exercise of the Warrants.
Outstanding Warrants shall be subject to adjustment as
follows:
(1) In the event the Company shall
(i) pay a dividend or make a
distribution on the Class A Convertible
Common Stock ("Class A Common") in shares of
Class A Common or any other shares of
capital stock of the Company,
(ii) subdivide outstanding shares of
Class A Common into a greater number of
shares of Class A Common,
(iii) combine outstanding shares of Class
A Common into a smaller number of shares of
Class A Common, or
(iv) issue, by reclassification of
shares of Class A Common, any shares of its
capital stock or other securities of the
Company,
the amount of Warrant Shares receivable upon the
exercise of Warrants immediately prior thereto shall
be adjusted so that the Holder of any Warrants
thereafter exercised shall be entitled to receive the
number and kind of shares of capital stock or other
securities which such Holder would have owned or
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have been entitled to receive after the happening of
any of the events described above, had such Warrants
been exercised prior to the happening of such event;
provided, any such adjustment otherwise payable in
shares of Class A Common or other common equivalent
shall be payable instead in shares of Series A
Preferred. Such adjustments shall be made whenever
any of the events listed above shall occur and shall
become effective immediately after the close of
business on the record date, in the case of a stock
dividend, and shall become effective immediately
after the effective date, in the case of a
subdivision or combination or reclassification.
(2) The provisions of paragraph (1) of this
Section 8(a) shall also apply to other securities, in
addition to Class A Common, deliverable upon exchange
of the Warrants; for purposes of such application
"Class A Common" shall be deemed to refer to any such
security deliverable upon exercise of the Warrants.
(3) Whenever the property receivable upon
exercise is adjusted as herein provided, the Company
shall determine such adjustment in accordance with
this Section 8(a) and shall prepare a certificate of
an authorized officer of the Company (an "Officer's
Certificate") setting forth such adjustment and
showing in detail the facts upon which such
adjustment is based, and such certificate shall
forthwith be delivered to the Holder together with a
notice stating that the property receivable upon
exercise has been adjusted and setting forth what
kind and amount of stock, securities, property and
cash are deliverable upon the exercise of the
Warrants.
(4) In case the Company shall make a
distribution to all holders of Class A Common
(including any such distribution made in connection
with a consolidation or merger in which the Company
is the continuing corporation) of shares of its
stock, evidences of its indebtedness or assets (other
than dividends or distributions in cash payable out
of consolidated earnings or earned surplus or
dividends or distributions described in paragraph (1)
of this Section 8(a)), thereafter the Holder shall be
entitled to receive upon exercise thereof the number
and kind of shares of stock, evidences of
indebtedness or assets which such Holder would have
owned or have been entitled to receive, had such
Warrant been exercised prior to the distribution
thereof, provided any such distribution otherwise
payable in shares of Class A Common or other common
equivalent shall be payable instead in shares of
Series A Preferred.
(b) Upon any Major Event as described in Section 7
hereof, the Company shall determine the kinds and amount of stock, securities,
property and cash to which each Warrant Share is entitled and shall prepare an
Officer's Certificate setting forth such determination and showing in
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detail the facts upon which such determination is based, and such certificate
shall forthwith be delivered to the Holder with a notice stating that, as a
result of such merger, consolidation, sale or transfer, the property receivable
upon the exercise of Warrants has been altered, and setting forth what kind and
amount of stock, securities, property and cash are receivable upon the exercise
of Warrants.
(c) The provisions of paragraphs (a) and (b) hereof shall
also apply to other issuers, in addition to the Company, the securities of which
are deliverable upon the exercise of Warrants; for purposes of such application,
Class A Common shall be deemed to refer to any such security of such issuer.
(d) The Holder of a Warrant shall not be entitled to
receive any interest or earnings attributable to the investment of any cash that
is deliverable upon exercise of a warrant during the time prior to such Holder's
exercise of the Warrant.
(e) If the Company shall, at any time prior to the
expiration of this Warrant, issue Diluting Shares (as hereinafter defined) in a
Dilution Event (as hereinafter defined) for consideration per Diluting Share (as
hereinafter defined) (i) which is less than the Warrant Price and (ii) which is
less than fair market value, then the Warrant Price prior to the issuance of the
Diluting Shares shall be reduced to a price equal to the consideration per share
paid for each Diluting Share.
Diluting Shares shall mean shares of Common Stock or Class A
Convertible Common Stock (in either case in this Section 8(e) referred to as
"Common Stock") or evidence of indebtedness, shares of stock or other securities
which are convertible into or exchangeable, with or without payment of
additional consideration in cash or property, for shares of Common Stock either
immediately or upon the occurrence of a specified date or a specified event.
Dilution Event shall mean the issuance of Diluting Shares in
any transaction with a third party including present security holders of the
Company but excluding transactions with respect to (i) benefit plans for
employees and (ii) the conversion to Common Stock of shares of Class A
Convertible Common Stock or Class B Convertible Preferred Stock outstanding on
the date of this Warrant Agreement.
Nothing in this Section shall preclude the Warrant Holder from
other remedies at equity or at law with respect to the issuance of Diluting
Shares in a Dilution Event.
9. Agreement of Holder.
Holder acknowledges that it has read this Warrant Agreement
and understands the following:
(a) Agreement Restrictions: Certain restrictions may
apply with respect to the Warrant Shares acquired by Holder pursuant to the
terms and provisions of this Warrant Agreement.
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(b) Securities Restrictions. The Warrant Shares acquired
by Holder upon exercise of the Warrants have not been registered under the
Securities Act of 1933, as amended, or the securities laws of any state. If the
Company, upon advice of counsel, determines such action is necessary or
desirable, no Warrant Shares shall be issued to the Holder unless, at the time
of issuance, the Holder (i) represents and warrants that it will acquire the
Warrant Shares for investment only and not for purposes of resale or
distribution, and (ii) makes such further representations and warranties as are
deemed necessary or desirable by the Company with regard to holding and resale
of the Warrant Shares. The Holder shall, upon the request of the Company,
execute and deliver to the Company an agreement or affidavit to such effect. The
Warrant Shares issued pursuant to this Warrant Agreement shall be subject to the
restrictions set forth in the Articles of Amendment of the Articles of
Incorporation of Cerulean, which articles of amendment, as filed on September
22, 1998 and corrected as filed on October 1, 1998 are attached hereto as
Exhibit A.
10. Delivery of Certificates.
As promptly as practical after the date of exercise of the
Warrants and the receipt by the Company of consideration therefor, the Company
shall deliver to Holder a certificate representing the Warrant Shares acquired
by Holder pursuant to its exercise of the Warrants.
11. Notices.
All notices or other communications hereunder shall be in
writing and shall be effective (i) when personally delivered by courier
(including overnight carriers) or otherwise to the party to be given such notice
or other communication or (ii) on the third business day following the date
deposited in the United States mail if such notice or other communication is
sent by certified or registered mail with return receipt requested and postage
thereon fully prepaid. The addresses for such notices shall be as follows:
If to the Company:
Cerulean Companies, Inc.
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
with a copy to:
Xxxxx X. Xxxx, Xx., Esq.
Long Xxxxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx - Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
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If to Holder:
____________________________________________
____________________________________________
____________________________________________
Attention: _________________________________
Any party hereto, by notice of the other party hereunder, may change its address
for receipt of notices hereunder.
12. Miscellaneous.
(a) Unless and except as otherwise specifically provided
in this Agreement, Holder shall have no rights of a stockholder with respect to
any Warrant Shares covered by the Warrants until the date of issuance of a stock
certificate to it for such Warrant Shares.
(b) If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that this Agreement will not permit Holder to acquire the full number of Warrant
Shares as provided in Section 1 hereof, it is the express intention of the
Company to allow Holder to acquire such lesser number of Warrant Shares as may
be permissible without any amendment or modification hereof.
(c) This Agreement shall be construed and enforced in
accordance with the laws of the State of Georgia without giving effect to the
State of Georgia's choice-of-law principles.
(d) This Agreement together with the Stipulation and the
exhibits thereto contain the entire understanding among the parties and
supersedes any prior understanding and agreements between them representing the
subject matter hereof. There are no representations, agreements, arrangements or
understandings, oral or written, between and among the parties hereto relating
to the subject matter hereof which are not fully expressed herein.
(e) Section and other headings contained in this
Agreement are for reference purposes only and are in no way intended to
describe, interpret, define or limit the scope, extent or intent of this
Agreement or any provision hereof.
(f) This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which shall
constitute one agreement, and the signatures of any party or any counterpart
shall be deemed to be a signature to, and may be appended to, any other
counterpart.
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IN WITNESS WHEREOF, the parties hereto have executed this Warrant
Agreement as of the date written above.
CERULEAN COMPANIES, INC.
By:_______________________________________
Xxxx X. Xxxxxxx
Vice President and General Counsel
HOLDER:
___________________________________
By:_______________________________________
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EXHIBIT A
CERULEAN COMPANIES, INC.
NOTICE OF EXERCISE OF WARRANTS
This Notice of Exercise is given pursuant to the terms of the Warrant
Agreement, dated September 22, 1998 (the "Warrant Agreement") between Cerulean
Companies, Inc. (the "Company") and _________________________________________
(the "Holder"), which Warrant Agreement is made a part hereof and incorporated
herein by reference.
EXERCISE OF WARRANTS. Holder hereby elects to purchase _______ shares
of Series A Preferred Stock pursuant to the Warrant Agreement. Holder hereby
delivers, together with this written statement of exercise, the full Warrant
Price with respect to the purchase of the shares o by bank or cashier's check in
the amount of the total Warrant Price or, o without payment of cash by agreeing
to accept the lesser number of Warrant Shares determined in accordance with
Section 6 of the Warrant Agreement.
ACKNOWLEDGMENT. Holder hereby acknowledges that, to the extent it is an
"affiliate" of the Company (as that term is defined in Rule 144 promulgated
under the Securities Act of 1933, as amended) or to the extent that the shares
have not been registered under the Securities Act of 1933, as amended, or
applicable state securities laws, any shares of the Company's Series A Preferred
Stock acquired by it pursuant to this Notice are subject to, and the
certificates representing such shares shall be legended to reflect, certain
trading restrictions under applicable securities laws (including particularly
the Securities and Exchange Commission's Rule 144), all as described in Section
9 of the Warrant Agreement, and Holder hereby agrees to comply with all such
restrictions and to execute such documents or take such other actions as the
Company may require in connection with such restrictions.
Executed this ______ day of _________________, ________.
Holder:
_____________________________________________
By:_________________________________________________
Title:______________________________________________
Cerulean Companies, Inc. hereby acknowledges receipt
of this Notice of Exercise and receipt of payment in
the form and amount indicated above, all on this
______ day of ____________________, ________.
CERULEAN COMPANIES, INC.
By: _________________________________________________
Title: ______________________________________________
