SECOND AMENDED AND RESTATED SUPPLEMENTAL WARRANT AGREEMENT To Purchase Shares of the Series B Common Stock of HEALTHCARE SERVICES, INC. Dated as of September 30, 2007 (the “Effective Date”)
Exhibit 10.13
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR UNDER ANY APPLICABLE STATE SECURITIES LAWS.
SECOND AMENDED AND RESTATED
SUPPLEMENTAL WARRANT AGREEMENT
SUPPLEMENTAL WARRANT AGREEMENT
To Purchase Shares of the Series B Common Stock of
HEALTHCARE SERVICES, INC.
Dated as of September 30, 2007 (the “Effective Date”)
WHEREAS, Ascension Health, a Missouri not-for-profit corporation (the “Warrantholder”) has
entered into a Restricted Stock Agreement dated as of November 7, 2004 (the “Restricted Stock
Agreement”) with Healthcare Services, Inc. d/b/a Accretive Health, a Delaware corporation (the
“Company”); and
WHEREAS, the Company granted to Warrantholder the right to purchase shares of its Class B
Common Stock pursuant to the terms of that certain Supplemental Warrant Agreement entered into by
and between the Company and the Warrantholder on or about November 7, 2004; and
WHEREAS, the Company and the Warrantholder have entered into that certain Subscription
Agreement between them dated May 15, 2007; and
WHEREAS, the Company and Warrantholder seek to Amend and Restate the terms of that
Supplemental Warrant Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and
in consideration of the Subscription Agreement between them, the Company and Warrantholder agree as
follows:
1. GRANT OF THE RIGHT TO PURCHASE SERIES B COMMON STOCK. In consideration of Warrantholder
and its affiliates’ agreement to provide services to the Company in the form of an “operational
laboratory” and related consulting services relative to the services which Company is developing
for its prospective clients, the Company hereby grants to the Warrantholder, and the Warrantholder
is entitled, upon the terms and subject to the conditions
hereinafter set forth, to subscribe for and purchase from the Company from time to time, up
to 446,190 fully paid and non-assessable shares of the Company’s Series B Common Stock, par value
$0.01 per share (“Common Stock”), in accordance with Exhibit A attached hereto and incorporated
herein by this reference, at a purchase price per share equal to the most recent price per share
paid for a Common Equivalent Share in a capital raising transaction by the Company at the time the
new Agreement, as defined in Appendix A, giving rise to the right to purchase is executed (the
“Exercise Price”); provided, however, that if within six (6) months of the date that additional
shares are issuable pursuant to this Supplemental Warrant Agreement there has not been a capital
raising transaction for the Company then the Exercise Price shall be the price at which the Company
has most recently granted options to its employees at the time the new Agreement giving rise to the
right to purchase is executed. The number of shares and the Exercise Price shall be adjusted as
provided in Section 8 hereof. The Company and the Warrantholder will from time to time indicate on
Appendix A the number of shares for which this Supplemental Warrant Agreement is exercisable and
the applicable Exercise Prices therefore.
2. TERM OF THE SUPPLEMENTAL WARRANT AGREEMENT.
(a) Except as otherwise provided for herein, the term of this Supplemental Warrant Agreement and
the right to purchase Common Stock as granted herein shall continue for a period commencing on the
Effective Date and shall continue until the earliest of (i) 5:00 p.m. Chicago time on the (i) tenth
anniversary of the last Award Date (as defined in Exhibit A); or (ii) the effective date of the
Company’s initial public offering.
(b) Change of Control Recapitalization, Merger or Sale. Notwithstanding the term of this
Supplemental Warrant Agreement fixed pursuant to Section 2(a) hereof, the right to purchase Common
Stock as granted herein shall expire, if not previously exercised, immediately upon (i) a capital
reorganization of the shares of the Company’s stock (other than a combination, reclassification,
exchange or subdivision of shares otherwise provided for in Sections 8(b), 8(c) and 8(d))
involving a “Change of Control” of the Company (a “Change of Control Recapitalization”),
the closing of a merger or consolidation of the Company with or into another corporation when the
Company is not the surviving corporation, or a reverse triangular merger in which the Company is
the surviving entity but the shares of the Company’s capital stock outstanding immediately prior to
the merger are converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise (a “Merger”), or the sale of all or substantially all of the
Company’s properties and assets to any other person (a “Sale”); provided, however, if the acquiring
company requires the Warrantholder to exercise this Supplemental Warrant Agreement, then the
Warrantholder shall exercise this Supplemental Warrant Agreement pursuant to the terms
hereunder. In the event of a Change of Control Recapitalization, Merger or Sale, the Company
will provide the Warrantholder at least thirty (30) days notice of such event and thereafter the
Company and Warrantholder will discuss in good faith what portion of the number of shares issuable
hereunder have been earned or should be awarded in accordance with Appendix A. “Change of Control”
as used herein shall refer to an acquisition of 50% or more of the Company’s voting stock
ordinarily having voting rights if the
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acquiring entity actually exercises management control other than a transaction
involving an offering of the Company’s capital stock in the public market.
(c) The Company shall notify the Warrantholder , in accordance with the terms of Section 13(e)
hereof, if an Initial Public Offering, Change of Control Recapitalization, Merger or Sale is
proposed not less than thirty (30) days prior to such event. Such notice also shall contain such
details of the proposed Initial Public Offering, or Change of Control Recapitalization or Merger or
Sale as are reasonable in the circumstances, including the anticipated effective date thereof, and
notice that this Supplemental Warrant Agreement is expected to expire upon closing thereof. If such
closing does not take place, the Company shall promptly notify the Warrantholder that such proposed
transaction has been terminated. Notwithstanding anything to the contrary in this Supplemental
Warrant Agreement, the Warrantholder may rescind any exercise of its purchase rights promptly after
such notice of termination of the proposed transaction if the exercise of this Supplemental Warrant
Agreement occurred after the Company notified the Warrantholder that the Initial Public Offering,
Change of Control Recapitalization, Merger or Sale was proposed or if the exercise was otherwise
precipitated by such proposed Initial Public Offering, Change of Control Recapitalization, Merger
or Sale. In the event of such recission, the Supplemental Warrant Agreement will thereafter
continue to be exercisable on the same terms and conditions contained herein.
3. EXERCISE OF THE PURCHASE RIGHTS.
(a) The purchase rights set forth in this Supplemental Warrant Agreement are exercisable by the
Warrantholder, in whole or in part, at any time, or from time to time, prior to the expiration of
the term set forth in Section 2 above or as modified by any other provision of this Agreement, by
tendering to the Company at its principal office a notice of exercise duly completed and executed
in the form attached hereto as Exhibit I (the “Notice of Exercise”). This Supplemental Warrant
Agreement shall be deemed to have been exercised immediately prior to the close of business on the
date of its surrender for exercise as provided herein, and the Warrantholder (or such other person
as the Warrantholder shall designate to receive the shares issuable upon exercise) shall be treated
as the holder of record of such shares as of the close of business on that date. Within three (3)
days of receipt of the Notice of Exercise, the Company shall deliver to Warrantholder the
acknowledgment of exercise duly completed and executed in the form attached hereto as Exhibit II
(the “Acknowledgment of Exercise”). Promptly upon receipt of the Notice of Exercise and the payment
of the purchase price in accordance with the terms set forth below, and in no event later than
twenty-one (21) days thereafter, the Company shall issue to the Warrantholder a certificate for the
number of shares of Common Stock purchased if Warrantholder has only partially exercised this
Supplemental Warrant Agreement, and a new Supplemental Warrant Agreement pursuant to Section 3(d).
(b) The Exercise Price may be paid at the Warrantholder’s election either (i) in cash, by check or
by wire transfer or (ii) in the manner provided by Section 3(c) of this Supplemental Warrant
Agreement or a combination of (i) and (ii).
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(c) Notwithstanding any provisions herein to the contrary, if the fair market value of
one share of Common Stock is greater than the Exercise Price (at the date of calculation as set
forth below), in lieu of exercising this Supplemental Warrant Agreement for cash, the Warrantholder
may elect to receive shares equal to the value (as determined below) of this Supplemental Warrant
Agreement (or the portion thereof being canceled) by surrender of this Supplemental Warrant
Agreement at the principal office of the Company together with the properly endorsed Notice of
Exercise (“Net Issuance”) in which event the Company shall issue to the Warrantholder a number of
shares of Common Stock computed using the following formula:
X = Y(A-B)
A
| Where: X = | the number of shares of Common Stock to be issued to the Warrantholder. |
| Y = | the number of shares of Common Stock requested to be exercised under this Supplemental Warrant Agreement. |
| A = | the fair market value of one (1) share of the Company’s Series B Common Stock (at the date of such calculation). |
| B = | the Exercise Price (as adjusted as of the date of calculation). |
For purposes of the above calculation, fair market value of the Common Stock shall mean with
respect to each share of Common Stock:
| (i) | if the exercise is in connection with an Initial Public Offering, and if the Company’s Registration Statement relating to such Initial Public Offering has been declared effective by the Commission, then the fair market value per share shall be the product of (x) the “Initial Price to Public” specified in the final prospectus with respect to the Initial Public Offering and (y) the number of shares of Common Stock into which each share of Common Stock is convertible at the time of such exercise; |
| (ii) | if this Supplemental Warrant Agreement is exercised after, and not in connection with an Initial Public Offering, and: |
| (A) | if the Company’s Common Stock is traded on a national securities exchange, the fair market value shall be deemed to be the product of (x) the average of the closing prices over a twenty-one (21) day period ending three days before the day the fair market value of the securities is being determined and (y) the number of shares of Common Stock into which each share of Common Stock is convertible at the time of such exercise; |
| (B) | if the Company’s Common Stock is traded over-the-counter, the |
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fair market value shall be deemed to be the product of (x)
the average of the closing bid and asked prices of the Company’s
Common Stock quoted on Nasdaq (or similar system) over the twenty-one
(21) day period ending three days before the day the fair market
value of the securities is being determined and (y) the number of shares of Common Stock into which each share of Common Stock is
convertible at the time of such exercise;
| (iii) | if at any time the Common Stock is not listed on any securities exchange or quoted over-the-counter, the fair market value of Common Stock shall be the product of (x) the highest price per share which the Company could obtain from a willing buyer (not a current employee or director) for shares of Common Stock sold by the Company, from authorized but unissued shares, as determined in good faith by the Company’s Board of Directors and (y) the number of shares of Common Stock into which each share of Common Stock is convertible at the time of such exercise; or |
| (iv) | Notwithstanding the provisions of Section 3(c)(i), (ii) and (iii), if the Company shall become subject to a Merger or Sale, the fair market value of Common Stock shall be deemed to be the value received by the holders of the Company’s Common Stock on a common equivalent basis pursuant to such Merger or Sale. |
(d) Upon partial exercise by any method, the Company, at its expense, shall promptly but not
more than three (3) days after surrender of the Supplemental Warrant Agreement, issue an amended
Supplemental Warrant Agreement to Warrantholder representing the remaining number of shares
purchasable hereunder. All other terms and conditions of such amended Supplemental Warrant
Agreement shall be identical to those contained herein, including, but not limited to the Effective
Date hereof.
| 4. RESERVATION OF SHARES. The Company covenants that the Common Stock issuable, or other securities from time to time issuable hereunder, upon exercise of the Warrantholder’s rights, has been duly and validly reserved and, when issued in accordance with the provisions of this Supplemental Warrant Agreement, will be, upon exercise of this Supplemental Warrant Agreement and payment of the then applicable Exercise Price, validly issued, fully paid and non-assessable, and will be free of any taxes, liens, charges or encumbrances of any nature whatsoever (other than taxes in respect of any transfer occurring contemporaneously or otherwise specified herein). The Company agrees that its issuance of this Supplemental Warrant Agreement shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock upon the exercise of this Supplemental Warrant Agreement. The Company shall not be required to pay any tax which may be payable in respect of any transfer involved and the issuance and delivery of any certificate in a name other than that of the Warrantholder. |
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5. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of the Supplemental Warrant Agreement, but in
lieu of such fractional shares the Company shall make a cash payment to Warrantholder therefor upon
the basis of the Exercise Price in effect with respect to such shares.
6. NO RIGHTS AS SHAREHOLDER. This Supplemental Warrant Agreement does not entitle the
Warrantholder to any voting rights or other rights as a shareholder of the Company in its capacity
as a Warrantholder prior to the exercise of the Warrant.
7. WARRANTHOLDER REGISTRY. The Company shall maintain a registry showing the name and
address of the registered holders of this Supplemental Warrant Agreement. The Warrantholder or
any transferee hereof (subject to the provisions of Section 11 hereof) may change its or his
address as shown on the registry by written notice to the Company. Any notice or written
communications required or permitted to be given to the Warrantholder shall be made in accordance
with the provisions of Section 13(e) hereof to the Warrantholder shown on the registry. The Company
shall treat the holder(s) in the registry as the absolute owner(s) of the Supplemental Warrant
Agreement for all purposes until such time as the Warrantholder sends notice to the Company to
change such registry.
8. ADJUSTMENT RIGHTS. The Exercise Price(s) and the number of shares of Common Stock
purchasable hereunder are subject to adjustment, as follows from time to time:
(a) Non-Change of Control Recapitalization. If at any time there shall be a capital
reorganization of the shares of the Company’s stock (other than a Change of Control
Recapitalization or a combination, reclassification, exchange or subdivision of shares otherwise
provided for in Sections 8(b), 8(c) and 8(d) herein) (a “Non-Change of Control Recapitalization”)
lawful provision shall be made so that the Warrantholder shall thereafter be entitled to receive,
upon exercise of its rights under the Supplemental Warrant Agreement, in lieu of the shares
originally issuable pursuant hereto, the number of shares of stock or other securities issuable as
a result of such Non-Change of Control Recapitalization, all subject to further adjustment as
otherwise provided in this Section 8. In any such case, appropriate adjustment (as determined in
good faith by the Company’s Board of Directors) shall be made in the application of the provisions
of this Supplemental Warrant Agreement with respect to the rights and interests of the
Warrantholder after the Non-Change of Control Recapitalization to the end that the provisions of
this Supplemental Warrant Agreement (including adjustments of number of shares of Common Stock
purchasable) shall be applicable after the next Non-Change of Control Recapitalization to the
greatest extent possible, in relation to any shares or other property deliverable after that
Non-Change of Control Recapitalization upon exercise of this Supplemental Warrant Agreement. If the
per share consideration payable to the holder hereof for shares in connection with any such
Non-Change of Control Recapitalization is in a form other than cash or marketable securities, then
the value of such consideration shall be determined in good faith by the Company’s Board of
Directors.
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(b) Reclassification of Shares. If the Company at any time during the term of
this Supplemental Warrant Agreement shall, by combination, reclassification, exchange
or subdivision of securities or otherwise, change any of the securities as to which purchase rights
under this Supplemental Warrant Agreement exist into the same or a different number of securities
of any other class or classes, this Supplemental Warrant Agreement shall thereafter represent the
right to acquire such number and kind of securities as would have been issuable as the result of
such change with respect to the securities which were subject to the purchase rights under this
Supplemental Warrant Agreement immediately prior to such combination, reclassification, exchange,
subdivision or other change and the Exercise Price(s) shall be appropriately
adjusted, all subject to further adjustment as provided in this Section 8.
(c) Split, Subdivision or Combination of Shares. If the Company at any time during the
term of this Supplemental Warrant Agreement shall combine, split or subdivide the securities as to
which purchase rights under this Supplemental Warrant Agreement exists into a different number of
securities of the same class, the Exercise Price for such securities shall be proportionately
decreased in the case of a split or subdivision, or proportionately increased in the case of a
combination, all subject to further adjustment as provided in this Section 8.
(d) Stock Dividends. If during the term of this Supplemental Warrant Agreement the
Company shall at any time declare or make a dividend payable in, or make any other distribution
(except any distribution specifically provided for in the foregoing subsections (b) or (c)) of the
Company’s stock, then the Exercise Price shall be adjusted, from and after the record date of such
dividend or distribution, to that price determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction (i) the numerator of which shall be the total
number of all shares of the Company’s stock outstanding immediately prior to such dividend or
distribution, and (ii) the denominator of which shall be the total number of all shares of the
Company’s stock outstanding immediately after such dividend or distribution. The Warrantholder
shall thereafter be entitled to purchase, at the Exercise Price resulting from such adjustment, the
number of shares of Common Stock (calculated to the nearest whole share) obtained by multiplying
the Exercise Price in effect immediately prior to such adjustment by the number of shares of Common
Stock issuable upon the exercise hereof immediately prior to such adjustment and dividing the
product thereof by the Exercise Price resulting from such adjustment.
(e) Notice of Adjustments. If: (1) the Company shall declare any dividend or
distribution upon its stock, whether in cash, property, stock or other securities; (2) the Company
shall offer for subscription pro rata to the holders of any class of its Common or other
convertible stock any additional shares of stock of any class or other rights; (3) there shall be
any Non-Change of Control Recapitalization; (4) there shall be any voluntary or involuntary
dissolution, liquidation or winding up of the Company; or (5) any other event requiring the
Exercise Price or the number of shares purchasable hereunder to be adjusted pursuant to this
Section 8, then, in connection with each such event, the Company shall send to the Warrantholder
at the Company’s expense and pursuant to Section 13(e) hereof at least twenty (20) days’ prior
written notice of the date: (A) on which the books of the Company shall close or a record shall be
taken for such dividend, distribution, subscription rights (specifying the date on
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which the holders of Common Stock shall be entitled thereto) or for determining rights to vote in
respect of a Non-Change of Control Recapitalization, dissolution, liquidation or winding up; and
(B) in the case of any such Non-Change of Control Recapitalization, dissolution, liquidation or
winding up, at least twenty (20) days’ prior written notice of the date when the same shall take
place (and specifying the date on which the holders of Common Stock shall be entitled to exchange
their Common Stock for securities or other property deliverable upon such Non-Change of Control
Recapitalization, dissolution, liquidation or winding up). In the case of an Initial Public
Offering, the Company shall give Warrantholder at least twenty (20) days written notice prior to
the effective date thereof.
Each such written notice shall set forth, in reasonable detail, (i) the event requiring the
adjustment, (ii) the amount of the adjustment, (iii) the method by which such adjustment was
calculated, (iv) the Exercise Price and (v) the number of shares subject to purchase hereunder
after giving effect to such adjustment, and shall be given by first class mail, postage prepaid,
addressed to the Warrantholder, at the address as shown on the books of the Company. The Company
shall give the Warrantholder a statement, no less often than quarterly, showing the ownership of
the Company on a fully-diluted basis, organized by class of shares, including but not limited to
the shares into which this Supplemental Warrant Agreement is exchangeable.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
(a) Organization. The Company is a corporation duly organized validly existing and in
good standing under the laws of the State of Delaware, has all requisite corporate power and
authority to own and operate its properties and assets and carry on its business as now conducted
and proposed to be conducted. The Company is duly qualified to transact business and is in good
standing in all jurisdictions in which the failure to so qualify would have a material adverse
effect on its business, properties, prospects or financial condition.
(b) Due Authority and Non-Contravention. The execution and delivery by the Company
of this Supplemental Warrant Agreement and the Restricted Stock Agreement and the performance of
all obligations of the Company hereunder, including the issuance to Warrantholder of the right to
acquire the shares of Common Stock or other securities into which the Supplemental Warrant
Agreement may be exercisable, have been duly authorized by all necessary corporate action on the
part of the Company, and the Restricted Stock Agreement and this Supplemental Warrant Agreement
are not inconsistent with the Company’s Certificate or Bylaws, do not contravene any law or
governmental rule, regulation or order applicable to it, do not and will not contravene any
provision of, or constitute a default under, any indenture, mortgage, contract or other
instrument to which it is a party or by which it is bound, and the Restricted Stock Agreement and
this Supplemental Warrant Agreement constitute legal, valid and binding agreements of the
Company, enforceable in accordance with their respective terms.
(c) Issued Securities. All issued and outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and nonassessable and
have been issued in full compliance with all Federal and state securities laws. In addition:
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| (i) | The authorized capital of the Company consists of 20,000,000 shares of capital stock, of which 50,000 shares are preferred and 19,950,000 shares are common. | ||
| (ii) | The parties agree that for the purpose of this Warrant Agreement that the capitalization of the Company is as set forth on Exhibit A attached hereto. | ||
| (iii) | Except for the holders of preferred stock, and except as otherwise granted to the Warrantholder as of the date hereof, no shareholder of the Company has preemptive rights to purchase new issuances of the Company’s capital stock and no person has rights to acquire additional shares of the Company as of the date hereof. |
(d) Consents and Approvals. No consent or approval of, giving of notice to,
registration with, or taking of any other action in respect of any state, federal or other
governmental authority or agency is required with respect to the execution, delivery and
performance by the Company of its obligations under this Supplemental Warrant Agreement.
(e) Permits. The Company has all franchises, permits, licenses and any similar
authority necessary for the conduct of its business as now being conducted or proposed to be
conducted, the lack of which could materially adversely affect the business, properties, prospects
or financial condition of the Company. The Company is not in default in any material respect under
any of such franchises, permits, licenses or other similar authority.
(f) Disclosure. The Company has provided Warrantholder with all the information
reasonably available to it without undue expense that Warrantholder has requested in connection
with its acquisition of the Supplemental Warrant Agreement. To the best of the Company’s
knowledge after reasonable investigation, neither this Agreement nor any other written statements
or certificates made or delivered in connection herewith contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements herein or
therein not misleading.
(g) Exempt Transaction. Subject to the accuracy of the Warrantholder’s
representations in Section 11 hereof, the issuance of the Common Stock upon exercise of this
Supplemental Warrant Agreement will constitute a transaction exempt from (i) the registration
requirements of Section 5 of the Securities Act of 1933, as amended (the “1933 Act”), in reliance
upon Section 4(2) thereof, and (ii) the qualification requirements of the Missouri Securities Act
of 2003 in reliance upon Section 409.2-202(14) thereof.
10. REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER. This Supplemental Warrant
Agreement has been entered into by the Company in reliance upon the following representations and
covenants of the Warrantholder:
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(a) Authority. Warrantholder has full power and authority to enter into the
Supplemental Warrant Agreement and it constitutes a valid and legally binding obligation of
Warrantholder.
(b) No Intent to Distribute. The right to acquire Common Stock upon exercise of the
Warrantholder’s rights contained herein will not be with a view to the sale or distribution of any
part thereof, and the Warrantholder has no present intention of selling or engaging in any public
distribution of the same.
(c) Private Issue. The Warrantholder understands (i) that the Common Stock issuable
upon exercise of this Warrant is not registered under the 1933 Act or qualified under applicable
state securities laws on the ground that the issuance contemplated by this Supplemental Warrant
Agreement will be exempt from the registration and qualifications requirements thereof, and (ii)
that the Company’s reliance on such exemption is predicated on the representations set forth in
this Section 10.
The Warrantholder understands that if the Company does not register with the Securities and
Exchange Commission pursuant to Section 12 or Section 15(d) of the Securities Exchange Act of
1934, as amended (the “1934 Act”) and file reports pursuant to Section 13 of the 1934 Act, or if a
registration statement covering the securities under the 1933 Act is not in effect when it desires
to sell (i) the rights to purchase Common Stock pursuant to this Supplemental Warrant Agreement or
(ii) the Common Stock issuable upon exercise of the right to purchase, it may be required to hold
such securities for an indefinite period.
(d) Receipt of Information. Warrantholder believes it has received all the
information it considers necessary or appropriate for deciding whether to purchase the Common
Stock. Warrantholder further represents that it has had an opportunity to ask questions and
receive answers from the Company regarding the terms and conditions of the offering of the Common
Stock and the business, properties, prospects, and financial condition of the Company possessed
such information or could acquire it without unreasonable effort or expense) necessary to verify
the accuracy of any information furnished to Warrantholder or to which it had access. The
foregoing, however, does not limit or modify the representations and warranties of the Company in
Section 9 of this Agreement or the right Warrantholder to rely thereon.
(e) Investment Experience. Warrantholder represents it: (1) is experienced in
evaluating and investing in securities of companies in the development stage and acknowledges that
it is able to fend itself, can bear the economic risk of its investment, and has such knowledge
and experience in financial and business matters that it is capable of evaluating the merits and
risks of the investment in the Common Stock; (2) is an “accredited investor” within the meaning of
the Securities and Exchange Rule 501 of Regulation D, as presently in effect as of the Effective
Date; and (3) has not been organized for the purpose of acquiring the Common Stock.
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11. TRANSFERS.
(a) Generally. Subject to the terms and conditions contained in Section 10 hereof
provided, however, that notwithstanding anything to the contrary herein, the transferee of the
rights and interests in the Supplemental Warrant Agreement be limited to wholly-owned subsidiaries
of the Warrantholder, and provided, further, that notwithstanding the foregoing, the Warrantholder
and any successor transferee may make a transfer to a person or entity not a subsidiary upon the
prior written consent of the Company which consent shall not be unreasonably withheld and provided
that such transfer was effected in accordance with applicable federal and state securities laws,
this Supplemental Warrant Agreement and all rights hereunder are transferable in whole or in part
by the Warrantholder. The transfer shall be recorded on the books of the Company upon receipt by
the Company of a notice of transfer in the form attached hereto as Exhibit III (the “Transfer
Notice”), at its principal offices and the payment to the Company of all transfer taxes and other
governmental charges imposed on such transfer.
(b) Transferability and Nonnegotiability of Supplemental Warrant Agreement. This
Supplemental Warrant Agreement may not be transferred or assigned in whole or in part without
compliance with all applicable federal and state securities laws by the transferor and the
transferee (including the delivery of investment representation letters and legal opinions
reasonably satisfactory to the Company, if such are requested by the Company). Subject to the provisions of the 1933 Act, title to this Supplemental Warrant Agreement may be transferred by
endorsements (by the Warrantholder executing the Transfer Notice attached hereto as Exhibit III))
and delivery in the same manner as a negotiable instrument transferable by endorsement and
delivery.
(c) Exchange of Supplemental Warrant Agreement Upon a Transfer. On surrender of this
Supplemental Warrant Agreement for exchange, properly endorsed and subject to the limitations on
assignments and transfers and contained in this Section 11, the Company shall issue to or on the
order of the Warrantholder a new Supplemental Warrant Agreement(s), in the name of the
Warrantholder or as the Warrantholder (on payment by the Warrantholder of any applicable transfer
taxes) may direct, for the number of shares issuable upon exercise hereof in accordance with the
provisions of Section 3(d) hereof.
(d) Legend. This Warrant and all shares of Common Stock or Common Stock issued upon
exercise hereof or conversion thereof shall be stamped or imprinted with a legend in
substantially the form as set forth on page 1 hereof (in addition to any legend required by state
securities laws).
12. REGISTRATION RIGHTS. Upon exercise of this Supplemental Warrant Agreement, the
Warrantholder shall have and be entitled to exercise, together with all other holders of
securities possessing registration rights as set forth in the Company’s Restricted Stock Plan.
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13. MISCELLANEOUS.
(a) Effective Date. The provisions of this Supplemental Warrant Agreement shall be
construed and shall be given effect in all respects as if it had been executed and delivered by the
Company on the date hereof. This Supplemental Warrant Agreement shall be binding upon any
successors or assigns of the Company and the benefits hereunder shall inure to any successors of
the Warrantholder.
(b) Attorney’s Fees. In any litigation, arbitration or court proceeding between the
Company and the Warrantholder relating hereto, the prevailing party shall be entitled to
attorneys’ fees and expenses and all costs of proceedings incurred in enforcing this Supplemental
Warrant Agreement.
(c) Governing Law. This Supplemental Warrant Agreement shall be governed by and
construed for all purposes under and in accordance with the laws of the State of Delaware.
(d) Counterparts. This Supplemental Warrant 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 by hand or by nationally recognized courier service.
(e) Notices. Any notice required or permitted hereunder shall be given in writing and
shall be deemed effectively given upon personal delivery, by hand or nationally recognized courier
service, facsimile transmission (provided that the original is sent by personal delivery or mail
as hereinafter set forth) or three (3) days after deposit in the United States mail, by registered
or certified mail, addressed (i) to the Warrantholder at Xxxxxxx X. Xxxxxxx, Director, Strategic
Health Venture Investing, Ascension Health Ventures, LLC, 0000 Xxxxxxxxx Xxxx, Xx. Xxxxx, Xxxxxxxx
00000 and (ii) to the Company at Suite 3650, 000 X. Xxxxxxxx Xxxxxx, Xxxxxxx, XX 00000, Attention:
Xxxxxxx X. Xxxxxxxx (and/or if by facsimile, (000 ) 000-0000) or (iii) at such other address as
any such party may subsequently designate by written notice to the other party.
(f) Remedies. In the event of any default hereunder, the non-defaulting party may
proceed to protect and enforce its rights either by suit in equity and/or by action at law,
including but not limited to an action for damages as a result of any such default, and/or an
action for specific performance for any default where Warrantholder will not have an adequate
remedy at law and where damages will not be readily ascertainable. The Company expressly agrees
that it shall not oppose an application by the Warrantholder or any other person entitled to the
benefit of this Agreement requiring specific performance of any or all provisions hereof or
enjoining the Company from continuing to commit any such breach of this Agreement.
(g) No Impairment of Rights. The Company will not, by amendment of its Certificate or
through any other means, avoid or seek to avoid the observance or performance of any of the terms
of this Supplemental Warrant Agreement, but will at all times in good faith assist in the carrying
out of all such terms and in the taking of all such actions as may be necessary or appropriate in
order to protect the rights of the Warrantholder against impairment.
12
(h) Survival. The representations, warranties, covenants and conditions of the
respective parties contained herein or made pursuant to this Supplemental Warrant Agreement shall
survive the execution, delivery and exercise of this Supplemental Warrant Agreement.
(i) Severability. In the event any one or more of the provisions of this Supplemental
Warrant Agreement shall for any reason be held invalid, illegal or unenforceable, the remaining
provisions of this Supplemental Warrant Agreement shall be unimpaired, and the invalid, illegal or
unenforceable provision shall be replaced by a mutually acceptable valid, legal and enforceable
provision, which comes closest to the intention of the parties underlying the invalid, illegal or
unenforceable provision.
(j) Amendments. Any provision of this Supplemental Warrant Agreement may be amended
by a written instrument signed by the Company and by the Warrantholder.
(k) Business Days. In the event that the Warrantholder’s rights hereunder would
otherwise terminate on a Saturday, Sunday or other day which is a legal or bank holiday in the
State of Illinois, then the Warrantholder’s rights hereunder shall continue until the next
succeeding business day.
(1) Lost, Stolen, Destroyed or Mutilated Warrants. In case this Warrant shall be
mutilated, lost, stolen or destroyed, the Company will issue a new Warrant of like date, tenor and
denomination and deliver the same in exchange and substitution for and upon surrender and
cancellation of any mutilated Warrant, or in lieu of any Warrant lost, stolen or destroyed, upon
receipt of evidence satisfactory to the Company of the loss, theft or destruction of such Warrant,
and upon receipt of reasonable indemnity satisfactory to the Company.
(m) Voting Rights. Until such time as there is a Public Market (as defined in the
Restricted Stock Agreement) for Company’s securities, the Warrantholder shall vote any of the
Common Stock acquired by it pursuant to the terms of this Supplemental Warrant Agreement in
accordance with the holders of a majority of the then-outstanding voting shares in any vote, not
counting for this purpose the Common Stock acquired pursuant to this Supplemental Warrant
Agreement.
13
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Warrant Agreement to be
executed by its officers thereunto duly authorized as of the Effective Date.
| Company: | ||||||
| HEALTHCARE SERVICES, INC. | ||||||
| By: | /s/ Xxxx Xxxxxxxx | |||||
| Title: | ||||||
| Warrantholder: | ||||||
| ASCENSION HEALTH | ||||||
| By: | /s/ Xxxxxxx Xxxxxxxx | |||||
| Title: | ||||||
14
APPENDIX A TO
SUPPLEMENTAL WARRANT
[See Attached]
15
Appendix A
to
Amended and Restated Supplemental Warrant
to
Amended and Restated Supplemental Warrant
Warrants shall be earned based upon the reasonable and necessary services of Ascension Health
in assisting Accretive Health in identifying new clients and demonstrating its operating model
in accordance with the following schedule:
Each $500 million in Qualifying
Revenue under contract for
management by Accretive Health
|
25% of shares issuable under the Amended and Restated Supplemental Warrant earned not to exceed the number of issuable shares hereunder |
“Agreement” shall mean a valid, binding and written agreement between Accretive Health and an
entity, other than Ascension or Ascension Affiliates, under which Accretive Health will provide
management services.
“Award Date” shall mean each date upon which Ascension Health earns the warrant rights as set
forth above.
“In-Scope Revenue” shall mean the revenues under management by Accretive under the respective
Agreement as measured using the prior 12 months revenue figures for such entity.
“Qualifying Revenue” shall mean the In-Scope Revenue for entities with which Accretive Health
enters into a new Agreement after May 31, 2007.
EXHIBIT A TO
SUPPLEMENTAL WARRANT
[See Attached]
EXHIBIT I
NOTICE OF EXERCISE
| To: | ||
(1)
|
The undersigned Warrantholder hereby elects to purchase shares of the Series B Common Stock of Healthcare Services, Inc., a Delaware corporation (the “Company”), pursuant to the terms of the Supplemental Warrant Agreement dated the day of , 2004 (“ Supplemental Warrant Agreement”) between the Company and the Warrantholder, and tenders herewith payment of the purchase price for such shares in full, together with all applicable transfer taxes, if any. | |
(2)
|
In exercising its rights to purchase the Series B Common Stock of the Company, the undersigned hereby confirms and acknowledges the investment representations and warranties made in Section 10 of the Supplemental Warrant Agreement. | |
(3)
|
Please issue a certificate or certificates representing said shares Series B Common Stock in the name of the undersigned or in such other name as is specified below. | |
(4)
|
Please issue a replacement Supplemental Warrant Agreement representing Warrantholder’s right to purchase shares, based upon an original grant of the right to purchase shares, as adjusted to date. |
(Name) |
||||
(Address) |
||||
| Warrantholder: ASCENSION HEALTH | ||||
By: |
||||
Title: |
||||
Date: |
||||
EXHIBIT II
ACKNOWLEDGEMENT OF EXERCISE
The undersigned ,
hereby acknowledge receipt of the “Notice of Exercise” from Ascension Health, to purchase shares of the Series B Common
Stock of Healthcare Services, Inc. pursuant to the terms of the Supplemental Warrant Agreement, and further acknowledges
that shares remain subject to purchase under the
terms of the Supplemental Warrant Agreement.
| Company: | ||||||
| By: | ||||||
| Title: | ||||||
| Date: | ||||||
EXHIBIT III
TRANSFER NOTICE
TRANSFER NOTICE
(To transfer or assign the foregoing Supplemental Warrant
Agreement execute this form and supply required information. Do
not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Supplemental Warrant Agreement and all rights evidenced
thereby are hereby transferred and assigned to
| (Please Print) | ||||
| whose address is | ||||
Dated |
||||
| Warrantholder’s Signature | ||||
| Warrantholder’s Address | ||||
| Signature Guaranteed: | ||||
NOTE: The signature to this Transfer Notice must correspond with the name as it
appears on the fact of the Supplemental Warrant Agreement, without alternation or
enlargement or any change whatever, officers of corporations and those acting in a
fiduciary or other representative capacity should file proper evidence of authority to
assign the foregoing Supplemental Warrant Agreement.
