EXHIBIT 4.11
AGREEMENT
AGREEMENT dated as of October 7, 1998, among MEDE AMERICA
CORPORATION, a Delaware corporation (the "Company"), WELSH, CARSON, XXXXXXXX &
XXXXX V, L.P., a Delaware limited partnership ("WCAS V"), WELSH, CARSON,
XXXXXXXX & XXXXX VI, L.P., a Delaware limited partnership ("WCAS VI"), XXXXXXX
XXXXX LEVERAGED CAPITAL FUND LIMITED PARTNERSHIP, an Illinois limited
partnership, ("Xxxxx XX") and XXXXXXX XXXXX CAPITAL PARTNERS V, L.P., a Delaware
limited partnership, ("Xxxxx V"; WCAS V, WCAS VI, Xxxxx XX and Xxxxx V being
hereinafter referred to individually as a "Guarantor" and collectively as the
"Guarantors").
WHEREAS, the Guarantors are collectively the owners of
approximately 80% of the outstanding common and preferred stock of the Company;
WHEREAS, the Company and Bank of America Illinois (the "Bank")
are parties to a Credit Agreement, dated as of December 18, 1995 (the "Credit
Agreement"), as amended, providing for the extension by the Bank to the Company
of a revolving line of credit (the "Line of Credit");
WHEREAS, the maximum amount of Line of Credit was originally
$10,000,000, which was increased to $13.5 million as of February 10, 1997 (the
"February Increase"), subsequently decreased to $5 million and then increased to
a total of $20 million as of October 31, 1997 (the "October Increase").
WHEREAS, in connection with the establishment of the Line of
Credit and the February Increase and the October Increase in the maximum amounts
thereof, the Guarantors gave certain guarantees to the Bank with respect to the
Line of Credit and, in consideration thereof, were issued warrants to purchase
shares of the Company's Common Stock;
WHEREAS, the Company and the Bank have entered into the Fifth
Amendment to Credit Agreement, dated as of the date hereof (the "Fifth
Amendment"), providing, among other things, for an increase in the Line of
Credit of $16 million (the "Additional Indebtedness"), which will permit the
Bank to advance a total of $36 million thereunder;
WHEREAS, in order to induce the Bank to increase and extend
the Line of Credit pursuant to the October Increase, the Bank, WCAS VI, Xxxxx V
and the other Guarantors agreed to modify the Guarantor Percentages provided for
in the Credit Agreement, with the effect that, effective as of the date thereof,
only WCAS VI and Xxxxx V would be liable to the Bank on the Guaranty;
WHEREAS, in order to induce the Bank to increase and extend
the Line of Credit pursuant to the Fifth Amendment, the Bank and the Guarantors
have agreed to modify the Guarantor Percentages provided for in the Credit
Agreement, with the effect that, effective as of the date hereof, WCAS V will
also be liable to the Bank on the Guaranty;
WHEREAS, WCAS V and Xxxxx V are willing to assume the
additional financial risk associated with the Additional Indebtedness under the
Guaranty, and in consideration thereof, the Company is willing to issue to WCAS
V and Xxxxx V warrants to purchase an additional 84,050 shares of its Common
Stock, on the terms and conditions hereinafter set forth;
WHEREAS, as a result of the forgoing, the Guarantors wish to
amend and extend the previous agreements among themselves with respect to the
manner in which they will bear the economic incidence of any payments made by
any of them under the Guaranty;
WHEREAS, the Guarantors hereby confirm that they are assuming
the financial risk associated with the Guaranty and the Line of Credit
(including but not limited to the financial risk associated with the Additional
Indebtedness) in order to protect their existing substantial equity investments
in the Company and to ensure the Company's future financial viability; and
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements contained herein, the parties hereby agree as follows:
I. ARTICLE
ISSUANCE OF WARRANTS
Section 1.01 Issuance of Warrants. (a) In consideration of the assumption
by WCAS V and Xxxxx V of the additional financial risk associated with the
Additional Indebtedness under the Guaranty, the Company shall execute and
deliver to each of WCAS V and Xxxxx a warrant in the form annexed hereto as
Exhibit 1 (individually a "Warrant" and collectively the "Warrants") to purchase
shares of the Company's Common Stock, $.01 par value ("Common Stock"), at an
exercise price specified therein. WCAS V shall be entitled to a Warrant to
purchase 80% shares of Common Stock and Xxxxx V shall be entitled to a Warrant
to purchase 20% shares of Common Stock.
Section 1.02 Tax and Accounting Treatment. The Company, WCAS V and Xxxxx V
agree that for federal, state and local income tax as well as for financial
accounting purposes, the issuance of the Warrants by the Company to WCAS V and
Xxxxx V is in the nature of a dividend distribution and is not compensation (or
a payment) for any services, and each hereby agrees to treat the issuance of the
Warrants in such manner for all such purposes, all to the maximum extent
permitted by applicable law.
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II. ARTICLE
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to, and agrees with, WCAS
V and Xxxxx V as follows:
Section 2.01 Organization. The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware
and is duly licensed or qualified to do business as a foreign corporation in
good standing in each of the jurisdiction in which it owns or leases any real
property or in which the nature of business transacted by it makes such
licensing or qualification necessary and where the failure to be so licensed or
qualified would have a material adverse affect on the business, operations or
financial condition of the Company. The Company has the corporate power and
authority to own and hold its properties and to carry on its business as
currently conducted, to execute, deliver and perform this Agreement and the
Warrants and to issue, sell and deliver the shares of Common Stock issuable upon
the exercise of the Warrants (the "Warrant Shares").
Section 2.02 Authorization of Agreement, etc. (a)The execution, delivery
and performance by the Company of this Agreement and the Warrants, and the
issuance, sale and delivery of the Warrant Shares upon exercise of the Warrants,
have been duly authorized by all requisite corporate action and will not (i)
violate any provision of law, any order of any court or other agency of
government, the Amended and Restated Certificate of Incorporation or By-laws of
the Company, or any provision of any indenture, agreement or other instrument by
which the Company or any of its subsidiaries or any of their respective
properties or assets is bound or affected; (ii) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default any
such indenture, agreement or other instrument; or (iii) result in the creation
or imposition of any lien, charge or incumbrance of any nature upon any of the
properties or assets of the Company or any of its subsidiaries.
(b) The Warrant Shares have been duly reserved for issuance upon exercise
of the Warrants and, when so issued, will be duly authorized, validly issued and
outstanding, fully paid and nonassessable shares of Common Stock. Neither the
execution and delivery of the Warrants nor the issuance and delivery of the
Warrant Shares upon exercise thereof is subject to any preemptive rights of
shareholders of the Company or to any right of first refusal or other similar
right in favor of any person.
Section 2.03 Validity. This Agreement has been duly executed and delivered
by the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms. The Warrants, when executed
in accordance with this Agreement, will constitute legal, valid and binding
obligations of the Company, enforceable in accordance with their respective
terms.
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III. ARTICLE
REPRESENTATIONS AND WARRANTIES OF THE GUARANTORS
Each of WCAS V and Xxxxx V represents and warrants to the
Company that it is acquiring the Warrants, and will, upon exercise thereof,
acquire the Warrant Shares, for its own account for purpose of investment and
not with a view to or for sale in connection with any distribution thereof. Each
of WCAS V and Xxxxx V further represents that it understands (i) that neither
the Warrants nor the Warrant Shares have been registered under the Securities
Act of 1933, as amended (the "Securities Act"), by reason of their issuance in
transactions exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) thereof, (ii) the Warrants and, upon exercise thereof,
the Warrant Shares must be held indefinitely unless a subsequent disposition
thereof is registered under the Securities Act or is otherwise exempt from such
registration, (iii) the Warrants and the Warrant Shares will bear a legend to
such effect and (iv) the Company will make a notation on its transfer books to
such effect. Each of WCAS V and Xxxxx V further understands that the exemption
from registration afforded by Rule 144 under the Securities Act depends on the
satisfaction of various conditions and that, if applicable, affords the basis of
sales of the Warrants and/or the Warrant Shares in limited amounts under certain
conditions. Each of WCAS V and Xxxxx V (i) acknowledges that it has had a full
opportunity to request from the Company to review and has received all
information deemed relevant in making a decision to enter into this Agreement
and consummate the transactions contemplated thereby and (ii) will comply with
the restrictions on transferability of the Warrants and Warrant Shares contained
in the Warrant. Each of WCAS V and Xxxxx V is an "Accredited Investor" within
the meaning of Rule 501(a) of the Securities Act.
IV. ARTICLE
AGREEMENTS AMONG THE GUARANTORS
The Guarantors agree that, as among themselves, the liability
for any and all payments made by any of them pursuant to the Guaranty will be
allocated to and borne by them, as follows: (i) 80% to WCAS VI, 18.4% to Xxxxx V
and 1.6% to Xxxxx XX with respect to the first $20 million of principal
indebtedness (and any interest, penalties and other charges thereon) and (ii)
80% to WCAS V and 20% to Xxxxx V with respect to any payments in excess of $20
million of principal indebtedness (and any interest, penalties and other charges
thereon) pursuant to the Fifth Amendment. Each of the Guarantors agrees to
indemnify each of the other Guarantors for any payments made pursuant to the
Guaranty (or to indemnify other Guarantors in accordance with this Article IV)
by such other Guarantor that were in excess of such other Guarantor's pro rata
share of all amounts paid by the Guarantors under the Guaranty, determined in
accordance with the first sentence of this Article IV, but only to the extent of
the excess, if any, of its own payments made pursuant to the Guaranty plus the
indemnity payments made by it to other Guarantors in accordance with this
Article IV, over its pro rata share of all amounts paid by the Guarantors under
the Guaranty, determined in accordance with the first sentence of this Article
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IV. The foregoing shall apply irrespective of which of the Guarantors has
actually made or is liable to make payment under the terms and provisions of the
Guaranty and without regard to the release of any Guarantor of its obligations
under the Guaranty by the Bank or any assignee thereof.
V. ARTICLE
AGREEMENTS OF THE COMPANY
The Company covenants and agrees that any right to payment
received by the Guarantors in respect of the Credit Agreement, as amended, and
their guaranty thereof, whether by way of purchase, subrogation or otherwise,
and regardless whether and to what extent the same shall be subordinated to
other indebtedness to the Banks or shall have been waived pending certain
events, may be applied, both as to principal and accrued and unpaid interest,
dollar for dollar, by the Guarantors, or any of them, as the purchase price of
any equity securities offered by the Company to investors for cash. In addition,
in the event that the Company shall be unable to make a payment under the Credit
Agreement, as amended, the Guarantors shall have the right (but not the
obligation) (i) to purchase additional equity securities of the Company and (ii)
to require the Company to use the net proceeds of such purchase to make such
payment under the Credit Agreement, as amended. The right set forth in the
preceding sentence may only be exercised upon joint approval by the Guarantors,
and the securities so purchased shall be issued at fair value, based upon
current market conditions for the issuance of equity securities. The Company
shall use its best efforts to provide the Guarantors with sufficient notice in
advance of a payment default under the Credit Agreement, as amended, to enable
the Guarantors to exercise their rights under this Article V.
VI. ARTICLE
MISCELLANEOUS
Section 6.01 Expenses. Each party hereto will pay its own expenses in
connection with the transactions contemplated hereby, whether or not such
transactions shall be consummated; provided, however, that the Company shall pay
the fees and disbursements of the Guarantors' special counsel, Messrs. Reboul,
MacMurray, Xxxxxx, Xxxxxxx & Kristol.
Section 6.02 Survival of Agreements. All covenants, agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the Warrants and the issuance, sale and delivery
of the Warrant Shares.
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Section 6.03 Parties in Interest. All covenants and agreements contained in
this Agreement by or on behalf of any of the parties hereto shall bind and inure
to the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not.
Section 6.04 Notices. All notices, requests, consent and other
communications hereunder shall be in writing and shall be mailed by first class
registered mail, postage prepaid, or sent by a recognized courier service
addressed as follows:
If to the Company to it at:
00 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
If to WCAS VI or WCAS V to it at
000 Xxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. xx Xxxxxx
If to Xxxxx XX or Xxxxx V to it at
000 X. Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
or, in any such case, at such other address or addresses as shall have been
furnished in writing my such party to the others.
SECTION 6.05 LAW GOVERNING. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 6.06 Entire Agreement. This Agreement constitutes the entire
Agreement of the parties with respect to the subject matter hereof and may not
be modified or amended except in writing.
Section 6.07 Counterparts. This Agreement may be executed 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.
IN WITNESS WHEREOF, the Company and the Guarantors have
executed this Agreement as of the day and year first above written.
MEDE AMERICA CORPORATION
By
----------------------------------
Name:
Title:
WELSH, CARSON, XXXXXXXX &
XXXXX V, L.P.
By WCAS V Partners, General Partner
By
----------------------------------
General Partner
WELSH, CARSON, XXXXXXXX &
XXXXX VI, L.P.
By WCAS VI Partners, L.P., General
Partner
By
----------------------------------
General Partner
XXXXXXX XXXXX LEVERAGED CAPITAL
FUND LIMITED PARTNERSHIP
By Xxxxxxx Xxxxx Leveraged Capital
Management, L.P.
By Xxxxxxx Xxxxx & Company,
General Partner
By
---------------------------------
XXXXXXX XXXXX CAPITAL
PARTNERS V, L.P.
By Xxxxxxx Xxxxx Capital Partners,
LLC,
General Partner
By
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EXHIBIT 1
FORM OF WARRANT
THIS WARRANT HAS BEEN ISSUED IN RELIANCE UPON THE REPRESEN TATION OF
THE HOLDER THAT IT HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TOWARDS THE RESALE OR OTHER DISTRIBUTION THEREOF. NEITHER
THIS WARRANT NOR THE SHARES ISSU ABLE UPON THE EXERCISE OF THIS WARRANT
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
MEDE AMERICA CORPORATION
Stock Subscription Warrant
Warrant to Subscribe October 7, 1998
for shares
Void After October 7, 2003
----------
THIS CERTIFIES that, for value received, [NAME OF HOLDER], a [
] ("Holder"), or its registered assigns, is entitled to subscribe for and
purchase from MEDE AMERICA CORPORATION, a Delaware corporation (hereinafter
called the "Corporation"), at an exercise price (the "Warrant Exercise Price")
of (i) $8.00 per share (subject to adjustment as hereinafter provided) or (ii)
in the event an initial public offering for the Corporation's Common Stock (as
herein defined) is completed by March 31, 1999, the offering price per share, at
any time prior to October 7, 2003, up to [ ( )] (subject to adjustment as
hereinafter provided) fully paid and nonassessable shares of Common Stock,
subject, however, to the provisions and upon the terms and conditions
hereinafter set forth. This Warrant and any warrant or warrants subsequently
issued upon exchange or transfer hereof and each other warrant issued pursuant
to the Agreement, dated as of October 7, 1998 (the "Agreement"), among the Corpo
ration and the stockholders of the Corporation named therein, and any warrant or
warrants subse
quently issued upon exchange or transfer thereof, are hereinafter collectively
called the "War rants".
Section 1. Exercise of Warrant.
(a) Method of Exercise. The rights represented by this Warrant
may be exercised by the holder hereof, in whole at any time or from
time to time in part, but not as to a fractional share of Common Stock,
by the surrender of this Warrant (properly endorsed) at the office of
the Corporation as it may designate by notice in writing to the holder
hereof at the address of such holder appearing on the books of the
Corporation, and as further provided below in this Section 1:
(i) Cash Exercise. By payment to the Corporation of the
Warrant Exercise Price in cash or by certified or official bank check,
for each share being purchased;
(ii) Surrender of Indebtedness of or Claims Against
Corporation. By surrender to the Corporation for cancellation of any
indebtedness of or claim against the Corporation (including without
limitation any claim against the Corporation as subrogee in the event
the Holder shall have performed under its guarantee under the Credit
Agreement, as defined in the Agreement), or of any portion thereof, for
which credit shall be given toward the Warrant Exercise Price for each
share being acquired on a dollar-for-dollar basis with reference to the
principal amount canceled;
(iii) Net Issue Exercise. By an election to receive shares the
aggregate fair market value of which as of the date of exercise is
equal to the fair market value of this Warrant (or the portion thereof
being exercised) on such date, in which event the Corporation, upon
receipt of notice of such election, shall issue to the holder hereof a
number of shares of the Corporation's Common Stock equal to (A) the
number of shares of Common Stock acquirable upon exercise of all or any
portion of this Warrant being exercised, as at such date, multiplied by
(B) the balance remaining after deducting (x) the Warrant Exercise
Price, as in effect on such date, from (y) the fair market value of one
share of the Corpora tion's Common Stock as at such date and dividing
the result by (C) such fair market value; or
(iv) Combined Payment Method. By satisfaction of the Warrant
Exercise Price for each share being acquired in any combination of two
or more of the methods described in clauses (i), (ii) and (iii) above.
(b) Definition of Fair Market Value. For the purposes of this
Section 1, "fair market value" shall mean, as to any security, as
follows: if that security is listed or admit xxx to trading on one or
more national securities exchanges, the average of the last reported
sales prices per share regular way or, in case no such reported sales
takes place on any such day, the average of the last reported bid and
asked prices per share regular
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way, in either case on the principal national securities exchange on
which that security is listed or admitted to trading, for the 20
trading days immediately preceding the date upon which the fair market
value is determined (the "Determination Date"); if that security is not
listed or admitted to trading on a national securities exchange but is
quoted by the NASD Automated Quotation System ("NASDAQ"), the average
of the last reported sales prices per share regular way or, in case no
reported sale takes place on any such day or the last reported sales
prices are not then quoted by NASDAQ, the average for each such day of
the last reported bid and asked prices per share, for the 20 trading
days immediately preceding the Determination Date as furnished by the
National Quotation Bureau Incor porated or any similar successor
organization; and if that security is not listed or admitted to trading
on a national securities exchange or quoted by NASDAQ or any other
nation ally recognized quotation service, the "fair market value" shall
be the fair value thereof determined jointly by the Corporation and the
registered holders of Warrants outstanding representing a majority of
the shares of Common Stock acquirable upon exercise of the Warrants,
provided, however, that if such parties are unable to reach agreement
within a reasonable time, the "fair market value" shall be determined
in good faith by an inde pendent investment banking firm selected
jointly by the Corporation and the registered holders of Warrants
outstanding representing a majority of the shares of Common Stock
issuable upon exercise of the Warrants or, if that selection cannot be
made within 15 days, by an independent investment banking firm selected
by the American Arbitration Associa tion in accordance with its rules.
Anything in this paragraph (b) to the contrary notwith standing, the
fair market value of this Warrant or any portion thereof as of any
Determina tion Date shall be equal to (i) the fair market value of the
shares of Common Stock issuable upon exercise of this Warrant (or such
portion thereof), (determined in accor dance with the foregoing
provisions of this paragraph (b)), minus (ii) the aggregate Warrant
Exercise Price of this Warrant (or such portion thereof).
(c) Delivery of Certificates, Etc. In the event of any
exercise of the rights repre sented by this Warrant, a certificate or
certificates for the shares of Common Stock so purchased, registered in
the name of the holder, shall be delivered to the holder hereof within
a reasonable time, not exceeding ten days, 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 (except a
remaining fractional share), if any, with respect to which this Warrant
shall not then have been exercised shall also be issued to the holder
hereof within such time. The person in whose name any certificate for
shares of Common Stock is issued upon exercise of this Warrant shall
for all purposes be deemed to have become the holder of record of such
shares on the date on which the Warrant was surrendered and payment of
the Warrant Exercise Price and any applicable taxes was made, except
that, if the date of such surrender and payment is a date on which the
stock transfer books of the Corporation are closed, such person shall
be deemed to have become the holder of such shares at the close of
business on the next succeeding date on which the stock transfer books
are open.
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Section 2. Adjustment of Number of Shares. Upon each
adjustment of the Warrant Exercise Price as provided in Section 3, the holder of
this Warrant shall thereafter be entitled to purchase, at the Warrant Exercise
Price resulting from such adjustment, the number of shares (calculated to the
nearest tenth of a share) obtained by multiplying the Warrant Exercise Price in
effect immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Warrant Exercise Price resulting from such adjustment.
Section 3. Adjustment of Price Upon Issuance of Common Stock.
If and whenever the Corporation shall issue or sell any shares of its Common
Stock for a consideration per share less than the Warrant Exercise Price in
effect immediately prior to the time of such issue or sale, then, forthwith upon
such issue or sale the Warrant Exercise Price shall be reduced to the price
(calculated to the nearest $.01) determined by dividing (i) an amount equal to
the sum of (a) the number of shares of Common Stock outstanding immediately
prior to such issue or sale (in cluding as outstanding all shares of Common
Stock issuable upon conversion of all outstanding Convertible Securities (as
hereinafter defined) or exercise of outstanding Warrants multiplied by the then
existing Warrant Exercise Price, and (b) the consideration, if any, received by
the Corpo ration upon such issue or sale, by (ii) the total number of shares of
Common Stock outstanding immediately after such issue or sale (including as
outstanding all shares of Common Stock issuable upon conversion of all
outstanding Convertible Securities or exercise of outstanding Warrants). No
adjustments of the Warrant Exercise Price, however, shall be made in an amount
less than $.01 per share, but any such lesser adjustment shall be carried
forward and shall be made at the time and together with the next subsequent
adjustment which together with any adjustments so carried forward shall amount
to $.01 per share or more.
For purposes of this Section 3, the following paragraphs (a)
to (p), inclusive, shall also be applicable:
(a) Issuance of Rights or Options. In case at any time the
Corporation shall in any manner grant (whether directly or by
assumption in a merger or otherwise) any rights to subscribe for or to
purchase, or any options for the purchase of, Common Stock or any stock
or securities convertible into or exchangeable for Common Stock (such
rights or options being herein called "Options", and such convertible
or exchangeable stock or securities being herein called "Convertible
Securities") whether or not such Options or the right to convert or
exchange any such Convertible Securities are immediately exercisable,
and the price per share for which Common Stock is issuable upon the
exercise of such Options or upon conversion or exchange of such
Convertible Securities (determined by dividing (i) the total amount, if
any, received or receivable by the Corporation as consider ation for
the granting of such Options, plus the minimum aggregate amount of
additional consideration payable to the Corporation upon the exercise
of all such Options, plus, in the case of such Options which relate to
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable
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upon the issue or sale of such Convert ible Securities and upon the
conversion or exchange thereof, by (ii) the total maximum number of
shares of Common Stock issuable upon the exercise of such Options or
upon the conversion or exchange of all such Convertible Securities
issuable upon the exercise of such Options) shall be less than the
Warrant Exercise Price in effect immediately prior to the time of the
granting of such Options, then the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon
conversion or exchange of the total maximum amount of such Convertible
Securities issuable upon the exercise of such Options shall be deemed
to have been issued for such price per share as of the date of granting
of such Options and thereafter shall be deemed to be outstanding.
Except as otherwise provided in paragraph (c), no adjustment of the
Warrant Exercise Price shall be made upon the actual issue of such
Common Stock or of such Convertible Securities upon exercise of such
Options or upon the actual issue of such Common Stock upon conversion
or exchange of such Convertible Securities.
(b) Issuance of Convertible Securities. In case the
Corporation shall in any manner issue (whether directly or by
assumption in a merger or otherwise) or sell any Convertible
Securities, whether or not the rights to exchange or convert thereunder
are immediately exercisable, and the price per share for which Common
Stock is issuable upon such conversion or exchange (determined by
dividing (i) the total amount received or receivable by the Corporation
as consideration for the issue or sale of such Convertible Securities,
plus the minimum aggregate amount of additional consideration, if any,
payable to the Corporation upon the conversion or exchange of all such
Convertible Securities) shall be less than the Warrant Exercise Price
in effect immediately prior to the time of such issue or sale, then the
total maximum number of shares of Common Stock issuable upon conversion
or exchange of all such Convertible Securities shall be deemed to have
been issued for such price per share as of the date of the issue or
sale of such Convertible Securities and thereafter shall be deemed to
be outstanding, provided that (i) except as otherwise provided in
paragraph (c) below, no adjustment of the Warrant Exercise Price shall
be made upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities, and (ii) if any such issue or
sale of such Convertible Securities is made upon exercise of any Option
to purchase any such Convertible Securi ties for which adjustments of
the Warrant Exercise Price have been or are to be made pursuant to
other provisions of this Section 3, no further adjustment of the
Warrant Exercise Price shall be made by reason of such issue or sale.
(c) Change in Option Price or Conversion Rate. Upon the
happening of any of the following events, namely, if the purchase price
provided for in any Option referred to in paragraph (a), the additional
consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to in paragraph (a) or (b), or the rate
at which any Convertible Securities referred to in paragraph (a) or (b)
are convertible into or exchangeable for Common Stock shall change at
any time (other than under or by reason of provisions designed to
protect against dilution), the Warrant Exercise Price in effect at
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the time of such event shall forthwith be readjusted to the Warrant
Exercise Price whichffect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or conversion rate, as the case may be, at the
time initially granted, issued or sold; and on the expiration of any
such Option or the termination of any such right to convert or exchange
such Convertible Securities, the Warrant Exercise Price then in effect
hereunder shall forthwith be increased to the Warrant Exercise Price
which would have been in effect at the time of such expiration or
termination had such Option or Convertible Security, to the extent
outstanding immediately prior to such expiration or termination, never
been issued, and the Common Stock issuable thereunder shall no longer
be deemed to be outstanding.
If the purchase price provided for in any such Option referred to in
paragraph (a) or the rate at which any Convertible Securities referred
to in paragraph (a) or (b) are convertible into or exchangeable for
Common Stock, shall be reduced at any time under or by reason of
provisions with respect thereto designed to protect against dilution,
then in case of the delivery of Common Stock upon the exercise of any
such Option or upon conversion or exchange of any such Convertible
Security, the Warrant Exercise Price then in effect hereunder shall
forthwith be adjusted to such respective amount as would have been
obtained had such Option or Convertible Security never been issued as
to such Common Stock and had adjustments been made upon the issuance of
the shares of Common Stock delivered as aforesaid, but only if as a
result of such adjustment the Warrant Exercise Price then in effect
hereunder is thereby reduced.
(d) Stock Dividends. In case the Corporation shall declare a
dividend or make any other distribution upon any stock of the
Corporation payable in Common Stock, Options or Convertible Securities,
any Common Stock, Options or Convertible Securities, as the case may
be, issuable in payment of such dividend or distribution shall be
deemed to have been issued in a subdivision of outstanding shares as
provided in paragraph (h) below.
(e) Consideration for Stock. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to be the
amount received by the Corporation therefor, without deduction
therefrom of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection therewith.
In case any shares of Common Stock, Options or Convertible Securities
shall be issued or sold for a consideration other than cash, the amount
of the consideration other than cash received by the Corporation shall
be deemed to be the fair value of such consideration as determined by
the Board of Directors of the Corporation, without deduction of any
expenses incurred or any under writing commissions or concessions paid
or allowed by the Corporation in connection therewith. The amount of
consideration deemed to be received by the Corporation pursuant to the
foregoing provisions of this paragraph (e) upon any issuance and/or
sale, pursuant to an established compensation plan of the Corporation,
to directors, officers or
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employees of the Corporation in connection with their employment of
shares of Common Stock, Options or Convertible Securities, shall be
increased by the amount of any tax benefit realized by the Corporation
as a result of such issuance and/or sale, the amount of such tax
benefit being the amount by which the Federal and/or State income or
other tax liability of the Corporation shall be reduced by reason of
any deduction or credit in respect of such issuance and/or sale. In
case any Options shall be issued in connection with the issue and sale
of other securities of the Corporation, together comprising one
integral transaction in which no specific consideration is allocated to
such Options by the parties thereto, such Options shall be deemed to
have been issued without consideration. In case any shares of Common
Stock, Options or Convertible Securities shall be issued in connection
with any merger or consolidation in which the Corporation is the
surviving corporation, the amount of consideration therefor shall be
deemed to be the fair value as determined by the Board of Directors of
the Corporation of such portion of the assets and business of the
non-surviving corporation as such Board shall determine to be
attributable to such Common Stock, Options or Convertible Securities,
as the case may be. In the event of any consolidation or merger of the
Corporation in which the Corporation is not the surviving corporation
or in the event of any sale of all or substantially all of the assets
of the Corporation for stock or other securities of any corporation,
the Corporation shall be deemed to have issued a number of shares of
its Common Stock for stock or securities of the other corporation
computed on the basis of the actual exchange ratio on which the
transaction was predicated and for a consideration equal to the fair
market value on the date of such transaction of such stock or
securities of the other corporation, and if any such calculation
results in adjustment of the Warrant Exercise Price, the determination
of the number of shares of Common Stock receivable under this Warrant
immediately prior to such merger, consolidation or sale, for purposes
of paragraph (j), shall be made after giving effect to such adjustment
of the Warrant Exercise Price.
(f) Record Date. In case the Corporation shall take a record
of the holders of its Common Stock for the purpose of entitling them
(i) to receive a dividend or other distribution payable in Common
Stock, Options or Convertible Securities, or (ii) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then such
record date shall be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase,
as the case may be.
(g) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by
or for the account of the Corporation, and the disposition of any such
shares shall be considered an issue or sale of Common Stock for the
purposes of this Section 3.
(h) Subdivision or Combination of Stock. In case the
Corporation shall at any time subdivide its outstanding shares of
Common Stock into a greater number of shares,
7
the Warrant Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced, and conversely, in case
the outstanding shares of Common Stock of the Corporation shall be
combined into a smaller number of shares, the Warrant Exercise Price in
effect immediately prior to such combination shall be proportionately
increased.
(i) Certain Issues of Common Stock Excepted. Anything herein
to the contrary notwithstanding, the Corporation shall not be required
to make any adjustment of the Warrant Exercise Price in the case of the
issuance of shares of Common Stock upon exercise of employee stock
options approved by the Board of Directors of the Corporation.
(j) Reorganization, Reclassification, Consolidation, Merger or
Sale. If any capital reorganization or reclassification of the capital
stock of the Corporation or any consolidation or merger of the
Corporation 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
provisions shall be made whereby each holder of the Warrants shall
thereafter have the right to receive upon the basis and upon the terms
and conditions specified herein and in lieu of the shares of Common
Stock of the Corporation immediately theretofore receivable upon the
exercise of such Warrant or Warrants, such shares of stock, securities
or assets (including cash) 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 so
receivable 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
such holder to the end that the provisions hereof (including without
limitation provisions for adjustments of the Warrant Exercise Price)
shall thereafter be applicable, as nearly as may be, in relation to any
shares of stock, securities or assets thereafter deliverable upon the
exercise of such exercise rights (in cluding an immediate adjustment,
by reason of such reorganization or reclassification, of the Warrant
Exercise Price to the value for the Common Stock reflected by the terms
of such reorganization or reclassification if the value so reflected is
less than the Warrant Exercise Price in effect immediately prior to
such reorganization or reclassification). In the event of a merger or
consolidation of the Corporation as a result of which a greater or
lesser number of shares of common stock of the surviving corporation
are issuable to holders of Common Stock of the Corporation outstanding
immediately prior to such merger or consolidation, the Warrant Exercise
Price in effect immediately prior to such merger or consolidation shall
be adjusted in the same manner as though there were a subdivision or
combination of the outstanding shares of Common Stock of the Corpo
ration. The Corporation will not effect any such consolidation, merger
or any sale of all or substantially all of its assets of properties,
unless prior to the consummation thereof the
8
successor corporation (if other than the Corporation) resulting from
such consolidation or merger or the corporation purchasing such assets
shall assume by written instrument executed and mailed or delivered to
each holder of the Warrants at the last address of such holder
appearing on the books of the Corporation, 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 receive.
(k) Notice of Adjustment. Upon any adjustment of the Warrant
Exercise Price, then and in each such case, the Corporation shall give
written notice thereof, by first class mail, postage prepaid, addressed
to each holder of the Warrants at the address of such holder as shown
on the books of the Corporation, which notice shall state the Warrant
Exercise Price resulting from such adjustment, setting forth in
reasonable detail the method of calculation and the facts upon which
such calculation is based.
(l) Certain Events. If any event occurs as to which in the
opinion of the Board of Directors of the Corporation the other
provisions of this Section 3 are not strictly applicable or if strictly
applicable would not fairly protect the exercise rights of this
Warrant, in accordance with the essential intent and principles of such
provisions to protect against dilution, then such Board of Directors
shall in good faith make an adjust ment in the application of such
provisions, in accordance with such essential intent and principles, so
as to protect such exercise rights as aforesaid.
(m) Stock to Be Reserved. The Corporation will at all times
reserve and keep available out of its authorized Common Stock or its
treasury shares, solely for the purpose of issue upon the exercise of
this Warrant as herein provided, such number of shares of Common Stock
as shall then be issuable upon the exercise of this Warrant. The
Corpora tion covenants that all shares of Common Stock which shall be
so issued shall be duly and validly issued and fully paid and
nonassessable and free from all taxes, liens and charges with respect
to the issue thereof, and, without limiting the generality of the
foregoing, the Corporation covenants that it will from time to time
take all such action as may be requisite to assure that the par value
per share of the Common Stock is at all times equal to or less than the
effective Warrant Exercise Price. The Corporation will take all such
action as may be necessary to assure that all such shares of Common
Stock may be so issued without violation of any applicable law or
regulation, or of any requirements of any national securities exchange
upon which the Common Stock of the Corporation may be listed. The
Corporation will not take any action which results in any adjustment of
the Warrant Exercise Price if the total number of shares of Common
Stock issued and issuable after such action upon exercise of this
Warrant would exceed the total number of shares of Common Stock then
authorized by the Corporation's Articles of Incorporation. The
Corporation has not granted and will not grant any right of first
refusal with respect to shares issuable upon exercise of this Warrant,
and there are no preemptive rights associated with such shares.
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(n) Issue Tax. The issuance of certificates for shares of
Common Stock upon exercise of the Warrants shall be made without charge
to the holders of such Warrants for any issuance tax in respect thereof
provided that the Corporation shall not be required to pay any tax
which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of
any holder of the Warrants.
(o) Closing of Books. The Corporation will at no time close
its transfer books against the transfer of the shares of Common Stock
issued or issuable upon the exercise of this Warrant in any manner
which interferes with the timely exercise of this Warrant.
(p) Definition of Common Stock. As used herein the term
"Common Stock" shall mean and include the Common Stock, $.01 par value,
of the Corporation as autho rized on the date hereof and also any
capital stock of any class of the Corporation hereinafter authorized
which shall not be limited to a fixed sum or percentage in respect of
the rights of the holders thereof to participate in dividends or in the
distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corpora tion, provided, however, that
the shares purchasable pursuant to this Warrant shall include only
shares designated as Common Stock, $.01 par value, of the Corporation
on the date hereof, or shares of any class or classes resulting from
any reclassification or reclass ifications thereof which are not
limited to any such fixed sum or percentage and are not subject to
redemption by the Corporation and, in case at any time there shall be
more than one such resulting class, the shares of each class then so
issuable shall be substantially in the proportion which the total
number of shares of such class resulting from all such
reclassifications bears to the total number of shares of all such
classes resulting from all such reclassifications.
Section 4. Notices of Record Dates. In the event of
(1) any taking by the Corporation 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 or other distribution
(other than cash dividends out of earned surplus), or 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, or
(2) any capital reorganization of the Corporation,
any reclassification or recapitalization of the capital stock of the
Corporation or any transfer of all or substantially all the assets of
the Corporation to or consolidation or merger of the Corporation with
or into any other corporation, or
(3) any voluntary or involuntary dissolution, liquidation or
winding-up of the Corporation,
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then and in each such event the Corporation will give notice to the holder of
this Warrant specifying (i) the 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, and (ii) the 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 will be entitled to exchange their shares of Common Stock for securities
or other property deliverable upon such reorganiza tion, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up. Such notice shall be given at least 20 days and not more than 90
days prior to the date therein specified, and such notice shall state that the
action in question or the record date is subject to the effectiveness of a
registration statement under the Securities Act or to a favorable vote of
stockholders, if either is required.
Section 5. [omitted]
Section 6. No Stockholder Rights or Liabilities. This Warrant
shall not entitle the holder hereof to any voting rights or other rights as a
stockholder of the Corporation. No provi sion hereof, in the absence of
affirmative action by the holder hereof to purchase shares of Common Stock, and
no mere enumeration herein of the rights or privileges of the holder hereof,
shall give rise to any liability of such holder for the Warrant Exercise Price
or as a stockholder of the Corporation, whether such liability is asserted by
the Corporation or by creditors of the Corporation.
Section 7. Investment Representation and Legend. The holder,
by acceptance of the Warrant, represents and warrants to the Corporation that it
is acquiring the Warrant and the shares of Common Stock (or other securities)
issuable upon the exercise hereof for investment purposes only and not with a
view towards the resale or other distribution thereof and agrees that (a) it
will not offer, sell, transfer, encumber or otherwise dispose of the Warrant or
any of the shares of Common Stock (or other securities) issuable upon the
exercise hereof unless either (i) there is an effective registration statement
under said Act relating thereto or (ii) the Corporation has received an opinion
of counsel, reasonably satisfactory in form and substance to the Corpora tion,
stating that such registration is not required; and (b) the Corporation may
affix upon this Warrant the following legend:
"This Warrant has been issued in reliance upon the
representation of the holder that it has been acquired for investment
purposes and not with a view towards the resale or other distribution
thereof. Neither this Warrant nor the shares issuable upon the exercise
of this Warrant have been registered under the Securities Act of 1933."
The holder, by acceptance of this Warrant, further agrees that the Corporation
may affix the following legend to certificates for shares of Common Stock issued
upon exercise of this Warrant:
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"The securities represented by this certificate have been
issued in reliance upon the representation of the holder that they have
been acquired for investment and not with a view toward the resale or
other distribution thereof, and have not been registered under the
Securities Act of 1933. Neither the securities evidenced hereby, nor
any interest therein, may be offered, sold, transferred, encumbered or
otherwise disposed of unless either (i) there is an effective
registration statement under said Act relating thereto or (ii) the
Corporation has received an opinion of counsel, reasonably satisfactory
in form and substance to the Corporation, stating that such
registration is not required."
Section 8. Lost, Stolen, Mutilated or Destroyed Warrant. If
this Warrant is lost, stolen, mutilated or destroyed, the Corporation may, on
such terms as to indemnity or otherwise as it may in its discretion reasonably
impose (which shall, in the case of a mutilated Warrant, include the surrender
thereof), issue a new Warrant of like denomination and tenor as the Warrant so
lost, stolen, mutilated or destroyed. Any such new Warrant shall constitute an
original contractual obligation of the Corporation, whether or not the allegedly
lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable by
anyone.
Section 9. Notices. All notices, requests and other
communications required or permitted to be given or delivered hereunder shall be
in writing, and shall be delivered, or shall be sent by certified or registered
mail, postage prepaid and addressed, if to the holder to such holder at the
address shown on such holder's Warrant or at such other address as shall have
been furnished to the Corporation by notice from such holder. All notices,
requests and other communications required or permitted to be given or delivered
hereunder shall be in writing, and shall be delivered, or shall be sent by
certified or registered mail, postage prepaid and addressed to the Corporation
at such address as shall have been furnished to the holder by notice from the
Corporation.
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IN WITNESS WHEREOF, MedE America Corporation has executed this
Warrant on and as of the day and year first above written.
MEDE AMERICA CORPORATION
By_____________________________
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SUBSCRIPTION AGREEMENT
To:
Dated:
The undersigned, pursuant to the provisions set forth in the
within Warrant, hereby agrees to subscribe for and purchase ____shares of Common
Stock of MedE America Corporation, a Delaware Corporation (the "Corporation")
covered by such Warrant, and makes payment herewith in full therefor [at the
price per share provided by such Warrant [in cash] [by surrender of indebtedness
of the Corporation as provided in Section 1(a)(ii) of such Warrant] [as provided
in Section 1(a)(iii) of such Warrant].
Signature
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Address
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