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EXHIBIT 10.16
OPTION AGREEMENT
This OPTION AGREEMENT dated as of December 18th, 1996 (the
"Agreement"), by and between Healthdyne Information Enterprises, Inc., a
Georgia corporation ("HIE"), and the Southern Venture Fund II, L.P., a Delaware
limited partnership ("SVFII").
WITNESSETH:
WHEREAS, each of HIE and SVFII are investors in Criterion Health
Strategies, Inc. (f/k/a Alpha Development Corp.), a Tennessee corporation (the
"Company"), with each of HIE and SVFII owning five (5) shares of common stock,
no par value, of the Company ("Criterion Common Stock"), and a Convertible
Debenture of the Company due June 30, 2004, dated October 21, 1994, in the
principal amount of $2,000,000 (individually, a "Criterion Debenture" and
collectively, the "Criterion Debentures"), pursuant to the terms of that
certain Investment Agreement and First Amendment to Incorporation Agreement,
dated as of December 4, 1995 (the "Investment Agreement") among the Company,
Healthdyne, Inc., a Georgia corporation ("Healthdyne"), HIE, SVFII, and Xxxxxxx
X. Xxxxxx and J. Xxxxxx Xxxxxxx, Xx. (individually, a "Shareholder" and
collectively, the "Shareholders");
WHEREAS, Healthdyne, HIE, SVFII and the Company are parties to that
certain First Amendment to Loan Agreement, dated as of December 4, 1995 (the
"Amended Loan Agreement"), and that certain First Amendment to Security
Agreement, dated as of December 4, 1995 (the "Amended Security Agreement"), and
Healthdyne, HIE, SVFII and each of the Shareholders are parties to that certain
First Amendment to Pledge Agreement, dated as of December 4, 1995 (the "Amended
Pledge Agreement");
WHEREAS, the Company, Healthdyne, HIE, SVFII and each of the
Shareholders are parties to that certain Waiver and Second Amendment to
Shareholders' Agreement, dated as of December 4, 1995 (the "Amended
Shareholders' Agreement");
WHEREAS, HIE, SVFII and the Company are parties to that certain letter
agreement dated December 4, 1995 (the "Letter Agreement");
WHEREAS, HIE and SVFII are parties to that certain Intercreditor
Agreement, dated December 4, 1995 (the "Intercreditor Agreement');
WHEREAS, HIE is desirous of increasing its investment in the Company,
and subject to the terms and conditions of this Agreement, SVFII is willing to
grant to HIE an option to purchase SVFII's entire investment in the Company;
and
WHEREAS, simultaneously with the execution hereof, HIE, SVFII, the
Company and the Shareholders have executed a Consent (the "Consent"), pursuant
to which the Shareholders
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and the Company, subject to the conditions therein specified, have consented to
the execution of this Agreement and consummation of the transactions
contemplated hereby;
NOW, THEREFORE, HIE and SVFII agree as follows:
1. Grant of Option. In consideration for the issuance and delivery by
HIE to SVFII of a warrant to purchase 50,000 shares of the common stock, $.01
par value per share, of HIE ("HIE Common Stock"), in the form of Exhibit A
attached hereto and made a part hereof (the "HIE Warrant"), SVFII hereby grants
to HIE the option (the "Option") to purchase from SVFII at any time during the
period beginning December 31, 1996, and terminating at 5:00 p.m., Nashville
time on June 30, 1997 (the "Termination Date"), the five (5) shares of
Criterion Common Stock owned by SVFII (the "SVFII Criterion Stock") and the
Criterion Debenture owned by SVFII (the "SVFII Criterion Debenture") for an
Option purchase price of 416,666 shares of HIE Common Stock, or such greater
number of shares of HIE Common Stock as is provided in Section 3 below (the
"HIE Shares"). HIE may exercise the Option by giving to SVFII written notice
of exercise (the "Notice of Exercise"), which shall specify the closing date
(the "Option Closing Date"). The Option Closing Date shall be no more than
five (5) business days after the date of the Notice of Exercise.
Notwithstanding the foregoing, provided the Notice of Exercise is delivered to
SVFII in the manner provided in Section 6(d) below by the Termination Date, the
Option Closing Date may be after June 30, 1997. The closing with respect to
the exercise of the Option shall take place at the offices of Xxxxxxxx Xxxxxxx
LLP, 5200 NationsBank Plaza, 000 Xxxxxxxxx Xxxxxx, X.X., Xxxxxxx, Xxxxxxx
00000-0000 at 9:00 a.m., local time, on the Option Closing Date, or at such
other place and time as HIE and SVFII shall agree.
2. Closing Deliveries. At the Option closing, the following deliveries
shall take place:
2.1 Deliveries by SVFII.
(a) SVFII shall deliver to HIE:
(i) a stock certificate representing the SVFII
Criterion Stock, accompanied by a duly executed stock
power or duly endorsed for transfer to HIE; and
(ii) the SVFII Criterion Debenture, duly endorsed
for transfer to HIE.
(b) In the event SVFII has not advanced loan proceeds to
the Company in the amount of $2,000,000 pursuant to the provisions of
the Investment Agreement, the Amended Loan Agreement, the Letter
Agreement and the SVFII Criterion Debenture, SVFII shall deliver to
the Company by certified or official bank check or by federal funds
wire transfer an amount equal to the unfunded balance of its
"Commitment" (as defined in the Amended Loan Agreement).
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2.2 Deliveries by HIE.
(a) HIE shall deliver to SVFII one or more stock
certificates evidencing the HIE Shares, registered in the name of
SVFII or its nominees.
(b) SVFII shall have received the opinion of counsel to
HIE, dated the Option Closing Date, substantially in the form attached
hereto as Exhibit B.
2.3 Mutual Deliveries. HIE, SVFII, the Company and the
Shareholders mutually agree, subject to the satisfaction of the
conditions set forth in the Consent, to execute and deliver such other
instruments as shall be reasonably necessary to consummate the
transactions contemplated hereby, including:
(a) the termination of the Intercreditor Agreement;
(b) the termination of the participation of SVFII as a
party to the Investment Agreement, the Amended Loan Agreement,
the Amended Pledge Agreement, the Amended Shareholders'
Agreement, the Amended Security Agreement and the Letter
Agreement; and
(c) the assignment by SVFII to HIE of the security
interests granted to SVFII under the Amended Security
Agreement and the Amended Pledge Agreement.
2.4 HIE Management Shareholders Arrangements. HIE acknowledges
and agrees that it has entered into an agreement in principle dated
November 6, 1996 (the "AIP"), with the Shareholders which contemplates
that each of the Shareholders will grant to HIE an option to purchase
their respective entire investment in the Company, that holders of
options for the Criterion Common Stock will convert their options to
options for stock of HIE under a stock option plan, that HIE will fund
certain obligations to the Company, and that certain other agreements
between the Company, HIE and the Shareholders will be modified or
canceled, and HIE further agrees with SVFII, that, in order to fulfill
the conditions to the Consent, it will negotiate in good faith with
the Shareholders to execute the definitive agreements contemplated by
the AIP, which agreements shall include a provision that the closing
of the transactions contemplated thereunder will occur simultaneously
with the Option closing.
3. The HIE Shares.
(a) Number of HIE Shares. The number of HIE Shares to be
delivered to SVFII upon exercise of the Option shall be 416,666 shares of HIE
Common Stock, provided, however, that if at the date of the Notice of Exercise,
the "Current Market Value" of the HIE Common Stock is less than $4.80 per
share, the number of HIE Shares to be delivered hereunder shall be increased to
that number of shares which, when multiplied by the Current
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Market Value of the HIE Common Stock, equals $2,000,000. For purposes of this
Agreement, "Current Market Value" per share of HIE Common Stock shall mean (i)
if a public market for HIE Common Stock exists at the time of such exercise,
the average of the closing bid and asked prices of HIE Common Stock quoted in
the Over-The-Counter Market Summary or the last reported sale price of the HIE
Common Stock or the closing price quoted on the Nasdaq National Market or on
any exchange on which the HIE Common Stock is listed, whichever is applicable,
as published in The Wall Street Journal for the five (5) trading days prior to
the date of determination of Current Market Value; or (ii) if there is no
public market for HIE Common Stock, determined by HIE's Board of Directors in
good faith. The number of HIE Shares subject to the Option shall be adjusted
by HIE proportionately to reflect changes in the capitalization of HIE between
the date hereof and the Option Closing Date as a result of any
recapitalization, reclassification, stock dividend, stock split, combination of
shares, exchange of shares or any other change in HIE's capital structure which
affects holders of HIE Common Stock generally.
(b) Status of HIE Shares. SVFII acknowledges and agrees
as follows:
(i) The HIE Shares to be received by SVFII upon
HIE's exercise of the Option will not have been
registered under the Securities Act of 1933, as
amended (the "Securities Act"), or any applicable
state securities laws.
(ii) SVFII will not sell or otherwise transfer the
HIE Shares except pursuant to a registered offering
as contemplated by Section 3(c) of this Agreement or
in one or more private transactions if, in the
opinion of counsel to SVFII reasonably satisfactory
to HIE, such transaction or transactions are not
required to be registered under the Securities Act or
any applicable state securities laws.
(iii) Each certificate representing the HIE Shares
to be issued upon exercise of the Option shall
include a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES ACT AND MAY NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM, OR IN THE
ABSENCE OF RECEIPT BY THE COMPANY OF AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT
THE SECURITIES MAY BE SOLD OR TRANSFERRED WITHOUT
SUCH REGISTRATION.
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(c) Registration of HIE Shares by HIE.
(i) Shelf Registration. HIE agrees with SVFII
that, within ninety (90) days of the Option Closing
Date, HIE shall file with the Securities and Exchange
Commission (the "Commission") a registration
statement under the Securities Act with respect to
resales by SVFII of the HIE Shares issued upon
exercise of the Option. Such registration statement
shall provide for sales to be made on a continuous
basis pursuant to Rule 415 (or any similar rule that
may be adopted by the Commission) in accordance with
the intended method or methods of disposition
designated by SVFII, provided, however, that not more
than one underwritten offering shall be made pursuant
to such registration statement. Such registration
statement shall be filed on Form S- 3 or such other
form as HIE determines in its sole discretion to be
available and appropriate for the registration of
resales of the HIE Shares by SVFII.
HIE shall prepare and file with the Commission such
amendments (including post-effective amendments) and
supplements to the registration statement and the
related prospectus as may be necessary to keep such
registration current and continuously effective for a
period to expire upon the earlier of (a) two years
following the Option Closing Date (or such earlier
time, if any, as to which Rule 144 or any successor
rule or regulation under the Securities Act shall be
available for immediate resales of all of the HIE
Shares by SVFII); or (b) the date that all of the HIE
Shares are sold.
(ii) Piggyback Registration.
(A) If HIE shall propose the
registration under the Securities Act of an
offering of any of its capital stock to be
sold for cash, whether or not for its own
account, pursuant to a firm commitment
underwritten offering (other than a
registration relating to either (1) a
dividend reinvestment, employee stock option,
stock purchase or similar plan, (2) a
transaction pursuant to Rule 145 under the
Securities Act, or (3) a merger,
consolidation or reorganization), HIE, on
each such occasion, shall as promptly as
practicable but in no event later than ten
(10) days prior to the proposed filing date
of the registration statement give written
notice (the "Notice") to SVFII of its
intention to effect such registration, and
SVFII shall be entitled, on each such
occasion, to request to have all or a portion
of the HIE Shares included in such
registration statement. Upon the written
request of SVFII that HIE include any HIE
Shares in such registration statement (which
request shall state the number of HIE Shares
for which registration is sought), given
within ten (10) days after the
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giving of HIE's Notice, HIE shall use its
reasonable efforts to cause such HIE Shares
to be so included in the offering covered by
such registration statement, subject to the
limitations hereinafter set forth.
(B) The registration of some or all of
such HIE Shares pursuant to this Section
3(c)(ii) may be conditioned or restricted if,
in the case of a registration statement which
also includes shares to be sold for the
account of HIE in an underwritten offering,
in the good faith exercise of the reasonable
business judgment of the managing underwriter
of such proposed offering, inclusion thereof
in such registration statement will have an
adverse impact on the marketing of the
securities to be offered by HIE (provided
that such conditions or restrictions apply on
a proportional basis not only to the HIE
Shares but also to all other securities to be
included other than those to be offered for
HIE's own account). If such managing
underwriter shall require that the number of
HIE Shares to be offered by SVFII be reduced
or eliminated, SVFII shall have the right to
withdraw its request for registration
pursuant to this Section 3(c)(ii).
(C) HIE shall not be obligated to honor
any request by SVFII under this Section
3(c)(ii) if (i) in the opinion of counsel for
HIE in form and substance reasonably
satisfactory to SVFII, SVFII could then sell
under Rule 144 promulgated under the
Securities Act the number of HIE Shares it
proposes to have registered under Section
3(c)(ii) or (ii) the request is made more
than two years following the Option Closing
Date.
(iii) Registration Procedures. If and whenever HIE
is obligated by the provisions of this Section 3(c)
to effect the registration of any Warrant Shares
under the Securities Act, HIE shall:
(A) Prepare and file with the Commission
a registration statement with respect to such
securities on such form as HIE deems
appropriate and is permitted or qualified to
use and shall use all reasonable efforts to
cause such registration statement to become
and remain effective as provided herein;
provided, that in the case of any
registration pursuant to Section 3(c)(ii),
such preparation and filing may be delayed in
the sole discretion of HIE, without prejudice
to the rights of SVFII pursuant to Section
3(c)(i).
(B) Furnish to SVFII at a reasonable
time prior to the filing thereof with the
Commission a copy of the registration
statement
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in the form in which HIE proposes to file the
same; not later than one day prior to the
filing thereof, a copy of any amendment
(including any post-effective amendment) to
such registration statement; and promptly
following the effectiveness thereof, a
conformed copy of the registration statement
as declared effective by the Commission and
of each post-effective amendment thereto,
including financial statements and all
exhibits and reports incorporated therein by
reference.
(C) Furnish to SVFII such number of
copies of such registration statement, each
amendment thereto, the prospectus included in
such registration statement (including each
preliminary prospectus), each supplement
thereto and such other documents as they may
reasonably request in order to facilitate the
disposition of the HIE Shares owned by them.
(D) Use all reasonable efforts to
register and qualify the HIE Shares covered
by the registration statement under such
other securities laws of such jurisdictions
as shall be reasonably requested by SVFII and
do any and all other acts and things which
may be reasonably necessary or advisable to
enable SVFII to consummate the disposition of
the HIE Shares owned by SVFII in such
jurisdictions; provided, however, that HIE
shall not be required in connection therewith
or as a condition thereto to qualify to
transact business or to file a general
consent to service of process in any such
states or jurisdictions, or to maintain the
effectiveness of any such registration or
qualification for any period during which it
is not required to maintain the effectiveness
of the related registration statement under
the Securities Act as set forth in Section
3(c)(ii).
(E) Promptly notify SVFII of the
happening of any event as a result of which
the prospectus included in such registration
statement contains an untrue statement of a
material fact or omits any fact necessary to
make the statements therein not misleading
and, at the request of SVFII, and subject to
the further provisions of Section 3(c)(v)(B),
HIE will prepare a supplement or amendment to
such prospectus so that, as thereafter
delivered to the purchasers of such HIE
Shares, such prospectus will not contain an
untrue statement of a material fact or omit
to state any fact necessary to make the
statements therein not misleading.
(F) Enter into such customary agreements
in form and substance satisfactory to HIE and
take such other customary
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actions as may be reasonably requested in
order to expedite or facilitate the
disposition of such HIE Shares.
(G) Make reasonably available for
inspection by SVFII pursuant to such
registration statement and any attorney or
accountant retained by SVFII, all financial
and other records, pertinent corporate
documents and properties of HIE, and use all
reasonable efforts to cause the officers,
directors, employees and independent
accountants of HIE to supply all information
reasonably requested by SVFII, its attorney
or its accountant in connection with such
registration statement, in each case as and
to the extent necessary to permit SVFII to
conduct a reasonable investigation within the
meaning of the Securities Act. To minimize
disruption and expense to HIE during the
course of the registration process, SVFII and
any transferee(s) of SVFII hereunder shall,
to the extent practicable, coordinate
investigation and due diligence efforts
hereunder and, to the extent practicable,
will act through a single set of counsel and
a single set of accountants and will enter
into confidentiality agreements with HIE in
form and substance reasonably satisfactory to
HIE and SVFII prior to receiving any
confidential or proprietary information of
HIE.
(H) Promptly notify SVFII of the
following events and (if requested by SVFII)
confirm such notification in writing: (w)
the filing of the prospectus or any
prospectus supplement and the registration
statement and any amendment or post-
effective amendment thereto and, with respect
to the registration statement or any
post-effective amendment thereto, the
declaration of the effectiveness of such
documents, (x) any requests by the Commission
for amendments or supplements to the
registration statement or the prospectus or
for additional information, (y) the issuance
or threat of issuance by the Commission of
any stop order suspending the effectiveness
of the registration statement or the
initiation of any proceedings for that
purpose, and (z) the receipt by HIE of any
notification with respect to the suspension
of the qualification of the HIE Shares for
sale in any jurisdiction or the initiation or
threat of initiation of any proceeding for
such purpose.
(I) Cooperate with SVFII to facilitate
the timely preparation and delivery of
certificates representing the HIE Shares to
be sold and not bearing any restrictive
legends, and enable such HIE Shares to be in
such lots and registered in such names as
SVFII
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may request at least two (2) business days
prior to any delivery of the HIE Shares to
the purchaser.
(J) Prior to the effectiveness of the
registration statement and any post-
effective amendment thereto, (w) make such
representations and warranties to SVFII and
the underwriters, if any, with respect to the
HIE Shares and the registration statement as
are customarily made by issuers in similar
underwritten offerings; (x) use its best
efforts to obtain "cold comfort" letters and
updates thereof from HIE's independent
certified public accountants addressed to
SVFII and the underwriters, if any, such
letters to be in customary form and covering
matters of the type customarily covered in
"cold comfort" letters by underwriters in
connection with similar underwritten
offerings; (y) deliver such documents and
certificates as may be reasonably requested
(1) by SVFII, and (2) by the underwriters, if
any, to evidence compliance with clause (w)
above and with any customary conditions
contained in the underwriting agreement or
other agreement entered into by HIE; and (z)
obtain opinions of counsel to HIE (which
counsel and which opinions shall be
reasonably satisfactory to the underwriters,
if any), covering the matters customarily
covered in opinions requested in underwritten
offerings. Such counsel shall also state
that no facts have come to the attention of
such counsel which cause them to believe that
such registration statement, the prospectus
contained therein, or any amendment or
supplement thereto, as of their respective
effective or issue dates, contains any untrue
statement of any material fact or omits to
state any material fact necessary to make the
statements therein not misleading (except
that no statement need be made with respect
to any financial statements, notes thereto or
other financial data or other expertized
material contained therein or as to any
information furnished by or on behalf of
SVFII or underwriters, if any, for inclusion
in such registration statement).
(K) Otherwise use its best efforts to
comply with all applicable rules and
regulations of the Commission, and make
generally available to its security holders
an earnings statement satisfying the
provisions of Section 11(a) of the Securities
Act, no later than forty-five (45) days after
the end of any twelve-month period (or ninety
(90) days, if such period is a fiscal year)
beginning with the first month of the fiscal
quarter of HIE commencing after the effective
date of the registration statement, which
statements shall cover such twelve-month
periods.
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(iv) HIE's obligations with respect to and
compliance with this Section 3 shall be expressly
conditioned upon SVFII's compliance with the
following:
(A) SVFII shall cooperate with HIE in
connection with the preparation of the
registration statement, and for so long as
HIE is obligated to keep the registration
statement effective, shall provide to HIE, in
writing, for use in the registration
statement, all such information regarding
SVFII and its plan of distribution of the HIE
Shares as may be necessary to enable HIE to
prepare the registration statement and
prospectus covering the HIE Shares, to
maintain the currency and effectiveness
thereof and otherwise to comply with all
applicable requirements of law in connection
therewith.
(B) During such time as SVFII may be
engaged in a distribution of the HIE Shares,
SVFII shall comply with Rules 10b-6 and 10b-7
promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and
pursuant thereto, shall, among other things:
(w) not engage in any stabilization activity
in connection with the securities of HIE in
contravention of such Rules; (x) distribute
the HIE Shares solely in the manner described
in the registration statement; (y) cause to
be furnished to each broker through whom the
HIE Shares may be offered, or to the offeree
if an offer is not made through a broker,
such copies of the prospectus and any
amendment or supplement thereto and documents
incorporated by reference therein as may be
required by law; and (z) not bid for or
purchase any securities of HIE or attempt to
induce any person to purchase any securities
of HIE other than as permitted under the
Exchange Act.
(v) Holdback Agreements.
(A) Notwithstanding any provision
of this Agreement to the contrary, in the
event HIE notifies SVFII, in writing and no
later than ten (10) days prior to the
proposed filing date that HIE intends to file
a registration statement in connection with
an underwritten offering of any of its
capital stock, SVFII shall refrain from
selling or otherwise distributing, except in
accordance with the provisions of Section
3(c)(ii) hereunder, any HIE Shares within the
period beginning up to seven days prior to
the effective date of such registration
statement (or on such later date that HIE
notifies SVFII, in writing, that such period
has begun) and ending up to 90 days after
such effective date (or on
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such earlier date that HIE notifies
SVFII that such period has ended) (the
"Offering Restricted Period"). In the event
the Holder's Shares are not included in such
a registered underwritten offering pursuant
to Section 3(c)(ii) hereof, HIE's obligation
under Section 3 to keep the registration
statement filed pursuant to Section 3(c)(i)
current and effective shall be extended for a
number of days equal to the Offering
Restricted Period, or, if earlier, until the
date on which all of the HIE Shares have been
disposed of.
(B) Notwithstanding anything set forth
herein to the contrary, SVFII agrees that it
will give HIE prior oral notice, directed to
its Chief Executive Officer or its Chief
Financial Officer, confirmed immediately in
writing by facsimile transmission, of its
intention to sell any HIE Shares under the
shelf registration statement, which notice
shall be given not less than two (2) days in
advance of any such proposed sale. In the
event that HIE thereafter informs SVFII,
within one (1) day of its receipt of such
notice from SVFII, that in the good faith
exercise of its reasonable business judgment,
there exist bona fide financing, acquisition
or other plans of HIE or other matters which
would require disclosure by HIE of
information, the premature disclosure of any
of which would adversely affect or otherwise
be detrimental to HIE, SVFII shall refrain
from selling HIE Shares until the earlier to
occur of the date (x) HIE notifies SVFII that
it has filed with the Commission an amendment
or supplement to the prospectus included in
the shelf registration statement, (y) HIE
notifies SVFII that the potentially
disclosable event no longer exists and that
the prospectus included in the shelf
registration statement does not contain an
untrue statement of material fact or omit to
state any fact necessary to make the
statements therein not misleading, or (z)
which is 90 days after the date that SVFII
orally notified HIE of its intention to sell
any HIE Shares (each of which is a
"Disclosure Restricted Period"). HIE's
obligation under Section 3 to keep the
registration statement filed pursuant to
Section 3 current and effective shall be
extended for a number of days equal to the
Disclosure Restricted Period, or, if earlier,
until the date on which all of the HIE Shares
have been disposed of.
(vi) HIE shall bear the expenses of registration
pursuant to this Section 3; provided, however, that
SVFII shall be responsible for (x) the fees and
expenses of its own counsel, its own accountants and
other experts retained by it with respect to such
registration and resales and (y)
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all underwriting discounts or brokerage fees or
commissions relating to the sale of the HIE Shares.
(vii) Indemnification.
(A) HIE shall indemnify and hold
harmless SVFII, its general partner, each
underwriter (as defined in the Securities
Act), each other selling agent who may be
deemed to be an underwriter, and each
controlling person of SVFII, any underwriter
or other selling agent, if any (within the
meaning of the Securities Act), against any
losses, claims, damages or liabilities, joint
or several (or actions in respect thereof)
("Losses"), to which such indemnified party
may be subject under the Securities Act,
under any other statute or at common law, but
only to the extent such Losses arise out of
or are based upon (i) any untrue statement
(or alleged untrue statement) of any material
fact contained in (x) the registration
statement under which the HIE Shares held by
SVFII were registered under the Securities
Act or offered for sale, (y) any preliminary
prospectus (if used prior to the effective
date of such registration statement), or (z)
any final prospectus or any post-effective
amendment or supplement thereto (if used
during the period HIE is required to keep the
registration statement effective), in each
case, on the effective date of such
registration statement or post-effective
amendment, or the date of such prospectus,
including any preliminary prospectus, or
supplement (the "Disclosure Documents"), (ii)
any omission (or alleged omission) to state
therein a material fact required to be stated
therein or necessary to make the statements
made therein not misleading or (iii) any
violation by HIE of the Securities Act or any
applicable state securities laws ("Blue Sky
Laws"), or any rule or regulation promulgated
under the Securities Act or any Blue Sky Law,
or any other law applicable to HIE in
connection with the sale, registration or
qualification of the HIE Shares held by
SVFII; and HIE shall reimburse each such
indemnified party for any legal or other
expenses reasonably incurred by such party in
connection with investigating or defending
any such loss, claim, damage, liability or
action, whether or not resulting in any
liability, or in connection with any
investigation or proceeding by any
governmental agency or instrumentality
relating to any such claims with respect to
any offering of securities pursuant to this
Section 3, but excluding any amounts paid in
settlement of any action, suit, arbitration,
proceeding, litigation, or investigation
(collectively "Litigation"), commenced or
threatened, if such settlement is effected
without the prior written consent of HIE,
which consent shall not be unreasonably
withheld; provided, however, that HIE shall
not be
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liable to SVFII, its general partner, any
underwriter, other selling agent or
controlling person in any such case to the
extent that any such Losses arise out of or
are based upon (i) an untrue statement or
omission or alleged omission (y) made in any
such Disclosure Documents in reliance upon
and in conformity with written information
furnished to HIE by or on behalf of such
indemnified party expressly for use in the
preparation thereof and so designated by such
indemnified party, or (z) made in any
preliminary prospectus if a copy of the final
prospectus was not delivered to the person
alleging any loss, claim, damage or liability
for which Losses arise at or prior to the
written confirmation of the sale of such HIE
Shares to such person and the untrue
statement or omission concerned had been
corrected in such final prospectus and copies
thereof had timely been delivered by HIE to
such indemnified party; or (ii) the use of
any prospectus after such time as HIE has
advised such indemnified party that the
filing of a post-effective amendment or
supplement thereto is required, except the
prospectus as so amended or supplemented, or
the use of any prospectus after such time as
the obligation of HIE to keep the same
current and effective has expired.
(B) In connection with the registration
or sale of HIE Shares pursuant to this
Section 3, SVFII shall, and shall cause any
underwriter retained by it who participates
in the offering to, indemnify and hold
harmless HIE, each of its directors, each of
its officers who have signed such
registration statement and each controlling
person of HIE (within the meaning of the
Securities Act), against any Losses, joint or
several, to which such indemnified party may
become subject under the Securities Act,
under any other statute or at common law, but
only to the extent such Losses arise out of
or are based upon (i) any untrue statement
(or alleged untrue statement) of any material
fact contained in any of the Disclosure
Documents or any omission or alleged omission
to state therein a material fact required to
be stated therein or necessary to make the
statements therein not misleading, if the
statement or omission was made in reliance
upon and in conformity with written
information furnished to HIE by or on behalf
of such indemnifying party expressly for use
in the preparation thereof and so designated
by such indemnifying party; (ii) the use by
such indemnifying party of any prospectus
after such time as HIE has advised such
indemnifying party that the filing of a
post-effective amendment or supplement
thereto is required, except the prospectus as
so amended or supplemented, or after such
time as the obligation of HIE to keep the
registration statement effective and current
has expired, or (iii) any information given
or
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representation made by such indemnifying
party in connection with the sale of HIE
Shares which is not contained in and not in
conformity with the prospectus (as amended or
supplemented at the time of the giving of
such information or making of such
representation); and such indemnifying party
shall reimburse each such indemnified party
for any legal and other expenses reasonably
incurred by such party in investigating or
defending any such loss, claim, damage,
liability or action, whether or not resulting
in any liability, or in connection with any
investigation or proceeding by any
governmental agency or instrumentality
relating to any such claims with respect to
any offering of securities pursuant to this
Section 3, but excluding any amounts paid in
settlement of any Litigation, commenced or
threatened, if such settlement is effected
without the prior written consent of such
indemnifying party, which consent shall not
be unreasonably withheld.
(d) Permitted Transfers. The rights of SVFII under this
Section 3 may be transferred or assigned by SVFII to any partner in SVFII,
provided that HIE is given written notice at the time of or within a reasonable
time after said transfer or assignment, of the name and address of the
transferee or assignee and identifying the securities with respect to which
such rights are to be transferred or assigned, and, provided further, that the
transferee or assignee of such rights assumes the obligations of SVFII under
this Section 3. In any event, such rights may be transferred only in
connection with a transfer of the HIE Shares subject to such rights. HIE
agrees that it shall be obligated to each partner in SVFII hereunder to the
same extent that HIE is obligated to SVFII provided that each such partner
assumes all obligations of SVFII hereunder to HIE.
4. Representations, Warranties and Agreements of HIE. HIE hereby
represents and warrants to, and agrees with, SVFII that:
(a) HIE is a corporation duly organized, validly existing and in
good standing under the laws of the State of Georgia, and has the corporate
power to own and operate its properties, to carry on its business as now
conducted and to enter into and to perform its obligations under this
Agreement.
(b) HIE has full legal right, power and authority to enter into
this Agreement and the HIE Warrant and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the performance by HIE of its obligations hereunder and under each
instrument and under the transactions contemplated hereby are within the
corporate powers of HIE and have been duly authorized by all necessary
corporate action properly taken, and do not and will not contravene or conflict
with the articles of incorporation or by-laws of HIE or any material agreement
binding upon HIE or its properties or, to the knowledge of HIE, any material
provision of law or any applicable material judgment, ordinance, regulation or
order of any court or governmental agency.
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(c) This Agreement and the HIE Warrant are the legal, valid and
binding obligations of HIE, enforceable against it in accordance with their
respective terms except as such enforceability may be limited by bankruptcy or
similar laws affecting the rights of creditors generally and by the
availability of equitable remedies.
(d) The shares of HIE Common Stock to be issued upon exercise of
the HIE Warrant will, upon issuance and payment therefor, be legally and
validly issued and outstanding, fully paid and nonassessable. HIE shall at all
times reserve and keep available for issuance upon the exercise of the HIE
Warrant such number of authorized shares of HIE Common Stock as will be
sufficient to permit the exercise in full of the HIE Warrant. HIE covenants
and agrees that all shares of HIE Common Stock which may be issued to SVFII
upon exercise of the Option will, upon issuance and delivery against transfer
of the consideration therefor, be legally and validly issued and outstanding,
fully paid and nonassessable.
(e) No consent, waiver, approval or other authorization and filing
or registration with any private or public authority is required for the
execution, delivery and performance by HIE of this Agreement or the
consummation by HIE of the transactions contemplated hereby, except such as may
be required under the Securities Act or any applicable Blue Sky Laws, and, with
respect to the consummation of the Option exercise, such as have been obtained
under the Consent, subject to the satisfaction of the conditions set forth
therein.
(f) HIE has been subject to the reporting requirements of Section
12 or 15(d) of the Exchange Act since October 31, 1995, has filed with the
Commission all the material required to be filed pursuant to Section 13, 14 or
15(d) of the Exchange Act since January 1, 1996, and has filed in a timely
manner with the Commission all reports required to be filed since January 1,
1996. HIE has furnished SVFII with true and complete copies of (i) HIE's
annual report on Form 10-K (including exhibits) filed with the Commission for
the fiscal year ended December 31, 1995, (ii) each of HIE's quarterly reports
on Form 10-Q (including exhibits) filed with the Commission for each of the
fiscal quarters since January 1, 1996, and (iii) HIE's proxy statement dated
April 29, 1996 in connection with the annual meeting of stockholders held on
May 21, 1996 (the reports referred to in clauses (i) and (ii) being the "HIE
Reports"). HIE is a registrant eligible to use Form S-3 under the Securities
Act for transactions involving secondary offerings. All of the financial
statements of HIE included within the HIE Reports were prepared in accordance
with generally accepted accounting principles ("GAAP") and fairly present the
consolidated financial position of HIE and the consolidated results of
operations and changes in financial position or cash flows for HIE at the dates
and for the periods referred to therein in conformity with GAAP applied on a
consistent basis throughout the periods involved. As of their respective
dates, the HIE Reports referred to herein complied as to form in all material
respects with all rules and regulations promulgated by the Commission.
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5. Representations, Warranties and Agreements of SVFII. SVFII hereby
represents and warrants to, and agrees with, HIE that:
(a) SVFII is a limited partnership duly organized and validly
existing and in good standing under the laws of its jurisdiction of
organization.
(b) SVFII has full power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby, and has taken
all action necessary for the due execution and delivery of this Agreement and
has duly executed and delivered this Agreement. This Agreement constitutes
SVFII's legal, valid and binding obligation enforceable against SVFII in
accordance with its terms, except as such enforceability may be limited by
bankruptcy or similar laws affecting the rights of creditors generally and by
the availability of equitable remedies and will not contravene or conflict with
the partnership agreement or certificate of partnership of SVFII or any
material agreement binding upon SVFII or its properties or, to the knowledge of
SVFII, any material provision of law or any applicable material judgment,
ordinance, regulation or order of any court or governmental agency.
(c) SVFII has good, valid and marketable title, beneficially and
of record, to the SVFII Criterion Stock and the SVFII Criterion Debenture, free
and clear of any and all restrictions, claims, pledges, liens, charges,
security interests and other encumbrances (collectively "Liens"), and, at the
Option Closing, will transfer to HIE good, valid and marketable title thereto
free and clear of all Liens. The SVFII Criterion Common Stock and the SVFII
Criterion Debenture represent, and on the Option Closing Date will represent,
all of SVFII's interest in the Company.
(d) No consent, waiver, approval or other authorization and filing
or registration with any private or public authority is required for the
execution, delivery and performance by SVFII of this Agreement or the
consummation by SVFII of the transactions contemplated hereby, except such as
have been obtained under the Consent, subject to the satisfaction of the
conditions set forth therein.
(e) With respect to the Warrant:
(i) SVFII is an "accredited investor" as that term is
defined in Regulation D promulgated under the Securities Act
and is acquiring the Warrant and will acquire any HIE Common
Stock issuable upon exercise of the Warrant for its own
account for investment and not with a view to the resale or
distribution of all or any part thereof, except in accordance
with applicable federal and state securities laws. Upon
exercise of the Warrant, this representation shall be deemed
to have been given with respect to the HIE Common Stock
received. SVFII recognizes that it must bear the economic
risk of the investment for an indefinite period.
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(ii) SVFII has been given the opportunity to ask HIE and
its officers and directors questions relating to HIE and has
had access to such financial and other information concerning
HIE as it has considered necessary to make a decision to
invest in the Warrant and the HIE Common Stock for which the
Warrant is exercisable and has availed itself of that
opportunity to the full extent desired.
(iii) SVFII understands that the Warrant and the shares of
HIE Common Stock issuable upon exercise of the Warrant have
not been registered under the Securities Act or any state
securities laws and are being offered pursuant to certain
exemptions under the Securities Act for transactions by an
issuer not involving any public offering and similar
exemptions under applicable state securities laws, and, except
as provided in Section 6 of the Warrant, HIE has no obligation
to register any of such securities for resale by SVFII.
(iv) SVFII agrees that it will not sell, transfer or
otherwise distribute the Warrant or the HIE Common Stock
issuable upon exercise of the Warrant, except pursuant to a
registered offering or in one or more private transactions if,
in the opinion of counsel to SVFII reasonably satisfactory to
HIE, such transaction or transactions are not required to be
registered under the Securities Act or any applicable state
securities laws.
6. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia. Whenever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Agreement.
(b) Successor and Assigns. This Agreement shall inure to the
benefit and shall be binding upon the parties, their legal representatives and
permitted assigns, subject to the limitations otherwise set forth in this
Agreement.
(c) Counterparts. For the convenience of the parties, any number
of counterparts of this Agreement may be executed and all such counterparts or
facsimile copy thereof shall be deemed to be an original instrument.
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(d) Notices. Any notice or other communication by any party
hereto to the other parties shall be in writing and shall be given, and be
deemed to have been given, if either delivered personally, by overnight
delivery service or mail, postage prepaid, registered or certified mail, return
receipt requested, addressed as follows:
(i) to HIE: Healthdyne Information
Enterprises, Inc.
0000 Xxxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: President and CEO
(ii) to SVFII: The Southern Venture Fund II, L.P.
000 00xx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: General Partner
(iii) to the Company: Criterion Health Strategies, Inc.
000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: President and CEO
Any party may change the address for notice by notifying the other parties in
writing of the new address.
(e) Specific Performance. The parties hereto acknowledge and
agree that the benefits to them under this Agreement are unique, that they are
willing to enter into this Agreement only upon performance by each other of all
of their obligations hereunder and that they will not have an adequate remedy
at law if the other fails to perform any of its obligations hereunder.
Accordingly, the parties hereby agree that each shall have the right, in
addition to any other rights or remedies it may have at law or in equity, to
specific performance or equitable relief by way of injunction if the other
party fails to perform any of its obligations hereunder.
(f) Modification or Waiver. No change, modification or waiver of
any term of this Agreement shall be valid or binding upon the parties hereto
unless such change, modification or waiver shall be in writing signed by all
parties hereto.
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(g) Headings. The headings and captions used in this Agreement
are used for convenience of reference only and shall not be considered in
construing or interpreting this Agreement. All references in this Agreement to
sections, paragraphs and exhibits shall, unless otherwise provided, refer to
sections and paragraphs hereof and exhibits attached hereto, all of which are
incorporated herein by this reference.
(h) Entire Agreement. This Agreement and the other instruments
specified herein constitute the entire understanding and agreement of the
parties hereto with respect to the subject matter hereof and supersede all
prior discussions, understandings and agreements with respect thereto.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this Option
Agreement on the date first above written.
HEALTHDYNE INFORMATION ENTERPRISES, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President and Chief
Financial Officer
THE SOUTHERN VENTURE FUND II, L.P.
By: Its General Partner
SV Partners II, L.P.
By: /s/ Xxxxxxxx X. Xxxx
-----------------------------
Name: Xxxxxxxx X. Xxxx
A General Partner
Each of Criterion Health Strategies, Inc., Xxxxxxx X. Xxxxxx and J. Xxxxxx
Xxxxxxx, Xx. executes this Agreement solely for the purpose of (a)
acknowledging that HIE and SVFII have advised each of them of this Agreement,
and (b) the closing deliveries contemplated to be made by each of them under
Section 2 hereof.
Criterion Health Strategies, Inc.
By: /s/ J. Xxxxxx Xxxxxxx, Xx.
---------------------------
Name: J. Xxxxxx Xxxxxxx, Xx.
Title: Executive Vice President and
Chief Financial Officer
/s/ Xxxxxxx X. Xxxxxx
---------------------------
Xxxxxxx X. Xxxxxx
/s/ J. Xxxxxx Xxxxxxx, Xx.
---------------------------
J. Xxxxxx Xxxxxxx, Xx.
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EXHIBIT A
Warrant No. S-1
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE
OFFERED, SOLD, OR TRANSFERRED UNTIL (i) A REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) IN THE OPINION OF COUNSEL ACCEPTABLE TO
THE COMPANY, REGISTRATION UNDER THE SECURITIES ACT OR SUCH APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED OFFER, SALE OR
TRANSFER.
HEALTHDYNE INFORMATION ENTERPRISES, INC.
STOCK PURCHASE WARRANT
THIS STOCK PURCHASE WARRANT (the "Warrant") is issued this 18th day of
December, 1996, by HEALTHDYNE INFORMATION ENTERPRISES, INC., a Georgia
corporation (the "Company"), to THE SOUTHERN VENTURE FUND II, L.P., a Delaware
limited partnership ("SVFII," which, together with any assignee or transferee
hereinafter referred to collectively as "Holder" or "Holders").
1. Issuance of Warrant. For and in consideration of the grant by SVFII to
the Company of an option to purchase all of the securities of Criterion Health
Strategies, Inc., a Tennessee corporation, held by SVFII pursuant to the terms
and conditions of that certain Option Agreement between SVFII and the Company
dated the date hereof, the Company hereby grants to Holder the right to
purchase 50,000 shares of the Company's common stock, $.01 par value per share
(the "Common Stock"), at the purchase price per share (the "Exercise Price")
set forth herein. The shares of Common Stock issuable upon exercise of this
Warrant are hereinafter referred to as the "Warrant Shares." The number of
Warrant Shares and the Exercise Price are subject to adjustment as provided in
Section 9 below.
2. Term. Subject to the terms and conditions set forth herein, this
Warrant shall be exercisable in whole or in part at any time and from time to
time from the date hereof until 5:00 p.m. Atlanta, Georgia time on December 13,
2003 (the "Expiration Date") and shall be void thereafter.
3. Price. The Exercise Price per share for which the Warrant Shares may
be purchased pursuant to the terms of this Warrant shall be $_____ per share,
as adjusted from time to time pursuant to Section 9 hereof.
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4. Exercise.
(a) This Warrant may be exercised by the Holder hereof (but only on
the conditions hereinafter set forth) as to part or all of the Warrant
Shares by surrender of this Warrant and the Notice of Exercise attached hereto
as Exhibit A, duly completed and executed on behalf of the Holder, at the
office of the Company, 0000 Xxxxxxx Xxxxx, 00xx Xxxxx, Xxxxxxxx, Xxxxxxx 00000,
or at such other address as the Company shall designate in a written notice to
the Holder hereof, together with a check acceptable and payable to the Company
in the amount of the Exercise Price times the number of Warrant Shares being
purchased.
(b) In lieu of exercising the Warrant by payment of the Exercise
Price in cash pursuant to Section 4(a) above, the Holder shall have the
right to require the Company to convert the Warrant, in whole or in part and at
any time or times (the "Conversion Right"), into Warrant Shares, by surrender
to the Company of this Warrant and the Notice of Exercise attached hereto, duly
completed and executed by the Holder to evidence the exercise of the Conversion
Right. Upon exercise of the Conversion Right, the Company shall deliver to the
Holder a certificate(s) representing that number of Warrant Shares which is
equal to the quotient obtained by dividing (x) the value of the number of
Warrants being converted at the date the Conversion Right is exercised
(determined by subtracting (A) the aggregate Exercise Price for all such
Warrants immediately prior to the exercise of the Conversion Right from (B) the
aggregate Fair Market Value (determined on the basis of the Fair Market Value
per share of Common Stock multiplied by that number of Warrant Shares
purchasable upon exercise of such Warrants immediately prior to the exercise of
the Conversion Right)), by (y) the Fair Market Value per share of Common Stock
on the date of exercise of the Conversion Right. For purposes of this
calculation, the Fair Market Value per share of Common Stock shall be (i) if a
public market for the Company's Common Stock exists at the time of such
exercise, the average of the closing bid and asked prices of the Common Stock
quoted in the Over-The-Counter Market Summary or the last reported sales price
of the Common Stock or the closing price quoted on the Nasdaq National Market
or on any exchange on which the Common Stock is listed, whichever is
applicable, as published in The Wall Street Journal for the five (5) trading
days prior to the date of determination of Fair Market Value; or (ii) if there
is no public market for the Company's Common Stock, determined by the Company's
Board of Directors in good faith. Any references in this Warrant to the
"exercise" of any Warrants, and the use of the term "exercise" herein, shall be
deemed to include (without limitation) any exercise of the Conversion Right.
(c) Upon exercise of this Warrant as aforesaid, the person entitled
to receive the Warrant Shares issuable upon such exercise shall be
treated for all purposes as the holder of record of such shares as of the close
of business on the date of exercise. As promptly as practicable on or after
such date, and in any event within ten (10) days thereafter, the Company shall
execute and deliver to the Holder of this Warrant a certificate or certificates
for the total number of whole Warrant Shares for which this Warrant is being
exercised (net of any Warrant Shares applied upon exercise of the Conversion
Right), in such names and denominations as are requested by such Holder. If
this Warrant shall be exercised with respect to less than all of the
Warrant Shares, the Company, at its expense, will issue to the Holder a new
Warrant covering
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the number of Warrant Shares with respect to which this Warrant shall
not have been exercised, which new Warrant shall be identical to this Warrant
except for the number of shares remaining subject to the Warrant. If, upon
exercise of this Warrant, the Holder would be entitled to acquire a fractional
share of the Company's Common Stock, such fractional share shall be disregarded
and the number of shares subject to this Warrant shall be rounded down to the
next lower number of shares and the Holder shall be entitled to receive from
the Company a cash payment equal to the product of the per share Exercise Price
multiplied by such fraction rounded to the nearest xxxxx.
(d) The Company will pay all documentary stamp taxes attributable
to the initial issuance of Warrant Shares upon the exercise of this
Warrant, provided that such certificates for such Warrant Shares are issued in
the name of SVFII or in the name of any partner of SVFII. The Company shall
not be required to pay any tax or taxes which may be payable in respect of any
other transfer involved in the issue of any certificates for Warrant Shares and
the Company shall not be required to issue or deliver such certificates for
Warrant Shares unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
5. Covenants and Conditions. The above provisions are subject to the
following:
(a) The Holder of this Warrant and any transferee hereof or of the
Warrant Shares issuable upon exercise of this Warrant, by their
acceptance hereof or thereof, hereby (i) acknowledge that this Warrant has
been, and any Warrant Shares issuable upon exercise hereof will be, acquired
for investment purposes and not with a view to distribution or resale and (ii)
understand and agree that this Warrant and the Warrant Shares issuable upon the
exercise hereof, have not been registered under the Securities Act or any
applicable state securities laws ("Blue Sky Laws"), and may not be sold,
pledged, hypothecated or otherwise transferred without (i) an effective
registration statement for such Warrant under the Securities Act and such
applicable Blue Sky Laws, or (ii) an opinion of counsel reasonably satisfactory
to the Company that registration is not required under the Securities Act or
under any applicable Blue Sky Laws. Transfer of the Warrant Shares issued upon
the exercise of this Warrant shall be restricted in the same manner and to the
same extent as the Warrant. Each Warrant and each certificate representing
such Warrant Shares shall bear substantially the following legend (with such
changes therein as may be appropriate to reflect whether such legend refers to
a Warrant or Warrant Shares):
THE WARRANT AND SHARES OF COMMON STOCK REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY APPLICABLE STATE
SECURITIES LAW AND MAY NOT BE TRANSFERRED UNTIL (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR SUCH APPLICABLE STATE
SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR
(ii) IN THE OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY,
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REGISTRATION UNDER THE SECURITIES ACT OR SUCH APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED
TRANSFER.
(b) The Holder and the Company agree to execute such documents and
instruments as counsel for the Company reasonably deems necessary to effect the
compliance of the issuance of the Warrant and any Warrant Shares with
applicable federal and state securities laws, including compliance with
applicable exemptions from the registration requirements of such laws.
(c) The Company covenants and agrees that all Warrant Shares which
may be issued upon exercise of this Warrant will, upon issuance and
payment therefor, be legally and validly issued and outstanding, fully paid and
nonassessable. The Company shall at all times reserve and keep available for
issuance upon the exercise of this Warrant such number of authorized shares of
Common Stock as will be sufficient to permit the exercise in full of this
Warrant.
6. Registration Rights.
(a) Demand Rights.
(i) The Company agrees that if it receives from the Holder a
written request that the Company effect any registration with respect
to Warrant Shares on a shelf registration pursuant to Rule 415 of the
Securities and Exchange Commission (the "Commission"), the Company will as soon
as practicable use its best efforts to effect such registration (including,
without limitation, filing post-effective amendments, appropriate
qualifications under applicable Blue Sky Laws, and appropriate compliance with
the Securities Act) as would permit or facilitate the sale and distribution of
all or such portion of such Warrant Shares as are specified in such request.
Such shelf registration shall not be deemed to provide for an underwritten
offering of the Warrant Shares pursuant to such registration statement.
(ii) The Company shall only be required to effect one (1)
registration of Warrant Shares pursuant to this Section 6(a), and the
provisions of Section 6(c) below shall apply.
(iii) The Company, upon receipt of such request for
registration pursuant to Section 6(a)(i), will as promptly as
practicable prepare and file with the Commission a registration statement on
Form S-3 or on such other form as the Company determines in its sole discretion
to be available and appropriate for the registration under the Securities Act
of a secondary public offering. The Company shall use reasonable efforts to
keep such registration statement current and continuously effective until the
earlier of (A) the date when all Warrant Shares covered by the registration
statement have been sold or (B) one year from the effective date of the
registration statement with respect to a shelf registration or (C) such time as
to which all of the Warrant Shares may be sold immediately by the Holder under
Rule 144 or any successor rule or regulation under the Securities Act.
A-4
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(iv) Upon written notice to the Holder stating the reasons
therefor, the Company shall be entitled to postpone, for a reasonable
period of time not to exceed ninety (90) days, the filing of a registration
statement pursuant to this Section 6(a) if (A) such filing would occur prior to
ninety (90) days following the effective date of a registration statement
relating to an underwritten public offering of securities of the Company for
its own account, or (B) the Company would be required to undergo a special
interim audit in order to comply with such request, unless the Holder agrees to
bear the costs of such special interim audit, or (C) the Company determines, in
the good faith exercise of its reasonable business judgment, that such
registration and offering would materially interfere with bona fide financing,
acquisition or other plans of the Company or would require disclosure of
information, the premature disclosure of which would materially adversely
affect or otherwise be materially detrimental to the Company. If the Company
postpones the filing of the registration statement, it shall promptly notify
the Holder in writing when the events or circumstances permitting such
postponement have ended.
(b) Piggyback Registration.
(i) If the Company shall propose the registration under the
Securities Act of an offering of any of its capital stock to be sold
for cash, whether or not for its own account, pursuant to a firm commitment
underwritten offering (other than a registration relating to either (A) a
dividend reinvestment, employee stock option, stock purchase or similar plan,
(B) a transaction pursuant to Rule 145 under the Securities Act, or (C) a
merger, consolidation or reorganization), the Company, on each such occasion,
shall as promptly as practicable but in no event later than ten (10) days prior
to the proposed filing date of the registration statement give written notice
(the "Notice") to the Holder of its intention to effect such registration, and
the Holder shall be entitled, on each such occasion, to request to have all or
a portion of the Warrant Shares included in such registration statement. Upon
the written request of the Holder that the Company include any Warrant Shares
in such registration statement (which request shall state the number of Warrant
Shares for which registration is sought), given within ten (10) days after the
giving of the Company's Notice, the Company shall use its reasonable efforts to
cause such Warrant Shares to be so included in the offering covered by such
registration statement, subject to the limitations hereinafter set forth.
(ii) The registration of some or all of such Warrant Shares
pursuant to this Section 6(b)(i) may be conditioned or restricted if,
in the case of a registration statement which also includes shares to be sold
for the account of the Company in an underwritten offering, in the good faith
exercise of the reasonable business judgment of the managing underwriter of
such proposed offering, inclusion thereof in such registration statement will
have an adverse impact on the marketing of the securities to be offered by the
Company (provided that such conditions or restrictions apply on a proportional
basis not only to the Warrant Shares but also to all other securities to be
included other than those to be offered for the Company's own account). If
such managing underwriter shall require that the number of Warrant Shares to be
offered by the Holder be reduced or eliminated, the Holder shall have the right
to withdraw its request for registration pursuant to this Section 6(b)(i).
A-5
26
(iii) The Company may, for any reason and without the consent
of the Holder determine at any time not to proceed with the
registration which is the subject of the Company's Notice and abandon the
proposed offering, whereupon the Company shall be relieved of any further
obligations hereunder to proceed with such registration or offering.
(c) Limitation of Registration Rights. The Company shall not be
obligated to honor any request by a Holder under Section 6(a) or 6(b)
if, in the opinion of counsel for the Company in form and substance reasonably
satisfactory to such Holder, such Holder could then sell under Rule 144
promulgated under the Securities Act, the number of Warrant Shares it proposes
to have registered in compliance with this Agreement.
(d) Registration Procedures. If and whenever the Company is
obligated by the provisions of this Section 6 to effect the
registration of any Warrant Shares under the Securities Act, the Company shall:
(i) Prepare and file with the Commission a registration
statement with respect to such securities on such form as the Company
deems appropriate and is permitted or qualified to use and shall use all
reasonable efforts to cause such registration statement to become and remain
effective as provided herein; provided, that in the case of any registration
pursuant to Section 6(b), such preparation and filing may be delayed in the
sole discretion of the Company, without prejudice to the rights of the Holder
pursuant to Section 6(a).
(ii) Prepare and file with the Commission such amendments and
post-effective amendments to any such registration statement filed pursuant to
Section 6(a) as may be necessary to keep such registration statement effective
during the period referred to in Section 6(a)(iii) and to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement, and cause the prospectus to
be supplemented by any required prospectus supplement, and as so supplemented
to be filed with the Commission pursuant to Rule 424 under the Securities Act.
(iii) Furnish to the selling Holder at a reasonable time prior
to the filing thereof with the Commission a copy of the registration
statement in the form in which the Company proposes to file the same; not later
than one day prior to the filing thereof, a copy of any amendment (including
any post-effective amendment) to such registration statement; and promptly
following the effectiveness thereof, a conformed copy of the registration
statement as declared effective by the Commission and of each post-effective
amendment thereto, including financial statements and all exhibits and reports
incorporated therein by reference.
(iv) Furnish to the selling Holder of Warrant Shares such
number of copies of such registration statement, each amendment
thereto, the prospectus included in such registration statement (including each
preliminary prospectus), each supplement thereto and such other documents as
they may reasonably request in order to facilitate the disposition of the
Warrant Shares owned by them.
A-6
27
(v) Use all reasonable efforts to register and qualify the
Warrant Shares covered by the registration statement under such other
securities laws of such jurisdictions as shall be reasonably requested by the
selling Holder of Warrant Shares and do any and all other acts and things which
may be reasonably necessary or advisable to enable the selling Holder to
consummate the disposition of the Warrant Shares owned by such Holder in such
jurisdictions; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to qualify to transact business
or to file a general consent to service of process in any such states or
jurisdictions, or to maintain the effectiveness of any such registration or
qualification for any period during which it is not required to maintain the
effectiveness of the related registration statement under the Securities Act as
set forth in Section 6(a)(iii).
(vi) Promptly notify each selling Holder of Warrant Shares of
the happening of any event as a result of which the prospectus included
in such registration statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements therein not misleading and,
at the request of any such Holder, and subject to the further provisions of
Section 6(f)(ii), the Company will prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such Warrant
Shares, such prospectus will not contain an untrue statement of a material fact
or omit to state any fact necessary to make the statements therein not
misleading.
(vii) Enter into such customary agreements in form and
substance reasonably satisfactory to the Company and take such other
customary actions as may be reasonably requested in order to expedite or
facilitate the disposition of such Warrant Shares.
(viii) Make reasonably available for inspection by any selling
Holder of Warrant Shares pursuant to such registration statement and
any attorney or accountant retained by such selling Holder, all financial and
other records, pertinent corporate documents and properties of the Company, and
use all reasonable efforts to cause the officers, directors, employees and
independent accountants of the Company to supply all information reasonably
requested by any such seller, attorney or accountant in connection with such
registration statement, in each case as and to the extent necessary to permit
the selling Holder to conduct a reasonable investigation within the meaning of
the Securities Act. To minimize disruption and expense to the Company during
the course of the registration process, all prospective selling Holders shall,
to the extent practicable, coordinate their investigation and due diligence
efforts hereunder and, to the extent practicable, will act through a single set
of counsel and a single set of accountants and will enter into confidentiality
agreements with the Company in form and substance reasonably satisfactory to
the Company and such Holders prior to receiving any confidential or proprietary
information of the Company.
(ix) Promptly notify the selling Holder of Warrant Shares of
the following events and (if requested by any such person) confirm such
notification in writing: (A) the filing of the prospectus or any prospectus
supplement and the registration statement and any amendment or post-effective
amendment thereto and, with respect to the registration statement or any
post-effective amendment thereto, the declaration of the effectiveness of such
documents, (B) any requests by the Commission for amendments or supplements to
the
A-7
28
registration statement or the prospectus or for additional information,
(C) the issuance or threat of issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or the initiation of
any proceedings for that purpose, and (D) the receipt by the Company of any
notification with respect to the suspension of the qualification of the Warrant
Shares for sale in any jurisdiction or the initiation or threat of initiation
of any proceeding for such purpose.
(x) Cooperate with the selling Holder of Warrant Shares to
facilitate the timely preparation and delivery of certificates
representing the Warrant Shares to be sold and not bearing any restrictive
legends, and enable such Warrant Shares to be in such lots and registered in
such names as the selling Holder may request at least two (2) business days
prior to any delivery of the Warrant Shares to the purchaser.
(xi) Prior to the effectiveness of the registration statement
and any post-effective amendment thereto and at each closing of an
underwritten offering pursuant to Section 6(b) hereof, (A) make such
representations and warranties to the selling Holder of Warrant Shares and the
underwriters, if any, with respect to the Warrant Shares and the registration
statement as are customarily made by issuers in similar underwritten offerings;
(B) use its best efforts to obtain "cold comfort" letters and updates thereof
from the Company's independent certified public accountants addressed to the
selling Holder of Warrant Shares and the underwriters, if any, such letters to
be in customary form and covering matters of the type customarily covered in
"cold comfort" letters by underwriters in connection with similar underwritten
offerings; (C) deliver such documents and certificates as may be reasonably
requested (1) by the Holders of a majority of the Warrant Shares being sold,
and (2) by the underwriters, if any, to evidence compliance with clause (A)
above and with any customary conditions contained in the underwriting agreement
or other agreement entered into by the Company; and (D) obtain opinions of
counsel to the Company (which counsel and which opinions shall be reasonably
satisfactory to the underwriters, if any), covering the matters customarily
covered in opinions requested in underwritten offerings. Such counsel shall
also state that no facts have come to the attention of such counsel which cause
them to believe that such registration statement, the prospectus contained
therein, or any amendment or supplement thereto, as of their respective
effective or issue dates, contains any untrue statement of any material fact or
omits to state any material fact necessary to make the statements therein not
misleading (except that no statement need be made with respect to any financial
statements, notes thereto or other financial data or other expertized material
contained therein or as to any information furnished by or on behalf of the
selling Holder or underwriters, if any, for inclusion in such registration
statement).
(xii) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders an earnings statement satisfying the
provisions of Section 11(a) of the Securities Act, no later than forty-five
(45) days after the end of any twelve-month period (or ninety (90) days, if
such period is a fiscal year) beginning with the first month of the fiscal
quarter of the Company commencing after the effective date of the registration
statement, which statements shall cover such twelve-month periods.
A-8
29
(e) The Company's obligations with this Section 6 shall be expressly
conditioned upon Holder's compliance with the following:
(i) The selling Holder shall cooperate with the Company in
connection with the preparation of a registration statement with
respect to or including any Warrant Shares, and for so long as the Company is
obligated to keep the registration statement effective, shall provide to the
Company, in writing, for use in the registration statement, all such
information regarding the Holder and its plan of distribution of the Warrant
Shares as may be necessary to enable the Company to prepare the registration
statement and prospectus covering the Warrant Shares, to maintain the currency
and effectiveness thereof and otherwise to comply with all applicable
requirements of law in connection therewith.
(ii) During such time as the selling Holder may be engaged in a
distribution of the Warrant Shares, the Holder shall comply with Rules 10b-6
and 10b-7 promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and pursuant thereto, shall, among other things: (w) not
engage in any stabilization activity in connection with the securities of the
Company in contravention of such Rules; (x) distribute the Warrant Shares
solely in the manner described in the registration statement; (y) cause to be
furnished to each broker through whom the Warrant Shares may be offered, or to
the offeree if an offer is not made through a broker, such copies of the
prospectus and any amendment or supplement thereto and documents incorporated
by reference therein as may be required by law; and (z) not bid for or purchase
any securities of the Company or attempt to induce any person to purchase any
securities of the Company other than as permitted under the Exchange Act.
(f) Holdback Agreements.
(i) Notwithstanding any provision of this Agreement to the
contrary, in the event the Company notifies the Holder, in writing and
no later than 10 days prior to the proposed filing date, that the Company
intends to file a registration statement in connection with an underwritten
offering of any of its capital stock, the Holder shall refrain from selling or
otherwise distributing, except in accordance with the provisions of Section
6(b) hereof, any Warrant Shares within the period beginning up to seven days
prior to the effective date of such registration statement (or on such later
date that the Company notifies the Holder, in writing, that such period has
begun) and ending up to 90 days after such effective date (or on such earlier
date that the Company notifies the Holder that such period has ended) (the
"Offering Restricted Period"). In the event the Holder's Warrant Shares are
not included in such a registered underwritten offering pursuant to Section
6(b) hereof, the Company's obligation under Section 6(a)(iii) to keep the
registration statement filed pursuant to Section 6(a) current and effective
shall be extended for a number of days equal to the Offering Restricted Period,
or, if earlier, until the date on which all of the Warrant Shares have been
disposed of.
(ii) Notwithstanding anything set forth herein to the contrary,
the Holder agrees that it will give the Company prior oral notice,
directed to its Chief Executive Officer or its Chief Financial Officer,
confirmed immediately in writing by facsimile
A-9
30
transmission, of its intention to sell any Warrant Shares under the
shelf registration statement, which notice shall be given not less than two (2)
days in advance of any such proposed sale. In the event that the Company
thereafter informs the Holder, within one (1) day of its receipt of such
notice, that, in the good faith exercise of its reasonable business judgment,
there exist bona fide financing, acquisition or other plans of the Company or
other matters which could require disclosure by the Company of information, the
premature disclosure of any of which would materially adversely affect or
otherwise be materially detrimental to the Company, the Holder shall refrain
from selling the Warrant Shares until the earlier to occur of the date (x) the
Company notifies the Holder that it has filed with the Commission an amendment
or supplement to the prospectus included in the shelf registration statement,
(y) the Company notifies the Holder that the potentially disclosable event no
longer exists and that the prospectus included in the shelf registration
statement does not contain an untrue statement of material fact or omit to
state any fact necessary to make the statements therein not misleading, or (z)
which is 90 days after the date that the Holder orally notified the Company of
its intention to sell any Warrant Shares (each of which is a "Disclosure
Restricted Period"). The Company's obligation under Section 6(a)(iii) to keep
the registration statement filed pursuant to Section 6(a) current and effective
shall be extended for a number of days equal to the Disclosure Restricted
period, or, if earlier, until the date on which all of the Warrant Shares have
been disposed of.
(g) Expenses. The Company shall bear the expenses of registration
pursuant to this Section 6; provided, however, that the selling Holder
shall be responsible for (x) the fees and expenses of its own counsel, its own
accountants and other experts retained by it with respect to such registration
and resales and (y) all underwriting discounts or brokerage fees or commissions
relating to the sale of the Warrant Shares pursuant to Section 6(b).
(h) Indemnification.
(i) The Company shall indemnify and hold harmless the selling
Holder, its general partner, each underwriter (as defined in the
Securities Act), each other selling agent who may be deemed to be an
underwriter, and each controlling person of the selling Holder, any underwriter
or other selling agent, if any (within the meaning of the Securities Act),
against any losses, claims, damages or liabilities, joint or several (or
actions in respect thereof) ("Losses"), to which such indemnified party may be
subject under the Securities Act, under any other statute or at common law, but
only to the extent such Losses arise out of or are based upon (i) any untrue
statement (or alleged untrue statement) of any material fact contained in (x)
the registration statement under which the Warrant Shares held by the Holder
were registered under the Securities Act or offered for sale, (y) any
preliminary prospectus (if used prior to the effective date of such
registration statement), or (z) any final prospectus or any post-effective
amendment or supplement thereto (if used during the period the Company is
required to keep the registration statement effective), in each case, on the
effective date of such registration statement or post-effective amendment, or
the date of such prospectus, including any preliminary prospectus, or
supplement (the "Disclosure Documents"), (ii) any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements made therein not misleading or (iii) any
violation by the Company of the Securities Act or any Blue Sky Law, or any rule
or regulation promulgated under the Securities Act or any Blue Sky Law, or any
other
A-10
31
law, applicable to the Company in connection with the sale,
registration or qualification of the Warrant Shares held by the Holder; and the
Company shall reimburse each such indemnified party for any legal or other
expenses reasonably incurred by such party in connection with investigating or
defending any such loss, claim, damage, liability or action, whether or not
resulting in any liability, or in connection with any investigation or
proceeding by any governmental agency or instrumentality relating to any such
claims with respect to any offering of securities pursuant to this Section 6,
but excluding any amounts paid in settlement of any action, suit, arbitration,
proceeding, litigation, or investigation (collectively "Litigation"), commenced
or threatened, if such settlement is effected without the prior written consent
of the Company, which consent shall not be unreasonably withheld; provided,
however, that the Company shall not be liable to the Holder, its general
partner, any underwriter, other selling agent or controlling person in any such
case to the extent that any such Losses arise out of or are based upon (i) an
untrue statement or omission or alleged omission (y) made in any such
Disclosure Documents in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such indemnified party
expressly for use in the preparation thereof and so designated by such
indemnified party, or (z) made in any preliminary prospectus if a copy of the
final prospectus was not delivered to the person alleging any loss, claim,
damage or liability for which Losses arise at or prior to the written
confirmation of the sale of such Warrant Shares to such person and the untrue
statement or omission concerned had been corrected in such final prospectus and
copies thereof had timely been delivered by the Company to such indemnified
party; or (ii) the use of any prospectus after such time as the Company has
advised such indemnified party that the filing of a post-effective amendment or
supplement thereto is required, except the prospectus as so amended or
supplemented, or the use of any prospectus after such time as the obligation of
the Company to keep the same current and effective has expired.
(ii) In connection with the registration or sale of Warrant
Shares pursuant to this Section 6, the Holder shall indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed such registration statement and each controlling person of the Company
(within the meaning of the Securities Act), against any Losses, joint or
several, to which such indemnified party may become subject under the
Securities Act, under any other statute or at common law, but only to the
extent such Losses arise out of or are based upon (i) any untrue statement (or
alleged untrue statement) of any material fact contained in any of the
Disclosure Documents or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if the statement or omission was made in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of such indemnifying party expressly for use in the preparation thereof
and so designated by such indemnifying party; (ii) the use by such indemnifying
party of any prospectus after such time as the Company has advised such
indemnifying party that the filing of a post-effective amendment or supplement
thereto is required, except the prospectus as so amended or supplemented, or
after such time as the obligation of the Company to keep the registration
statement effective and current has expired, or (iii) any information given or
representation made by such indemnifying party in connection with the sale of
Warrant Shares which is not contained in and not in conformity with the
prospectus (as amended or supplemented at the time of the giving of such
information or making of such
A-11
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representation); and such indemnifying party shall reimburse each such
indemnified party for any legal and other expenses reasonably incurred by such
party in investigating or defending any such loss, claim, damage, liability or
action, whether or not resulting in any liability, or in connection with any
investigation or proceeding by any governmental agency or instrumentality
relating to any such claims with respect to any offering of securities pursuant
to this Section 6, but excluding any amounts paid in settlement of any
Litigation, commenced or threatened, if such settlement is effected without the
prior written consent of such indemnifying party, which consent shall not be
unreasonably withheld.
7. Transfer of Warrants. Subject to the provisions of Section 5,
this Warrant may be transferred, in whole or in part, to any partner in
SVFII, by presentation of the Warrant to the Company with written instructions
for such transfer and by the execution by such transferee of an investment
letter in a form reasonably satisfactory to the Company. Upon such
presentations for transfer and receipt of such investment letter, the Company
shall promptly execute and deliver a new Warrant or Warrants in the form hereof
in the name of the assignee or assignees and in the denominations specified in
such instructions. The Company shall pay all expenses in connection with the
preparation, issuance and delivery of Warrants under this Section 7.
8. Warrant Holder Not Shareholder. This Warrant does not confer
upon the Holder, as such, any right whatsoever as a shareholder of the
Company.
9. Adjustment Upon Changes in Company Common Stock. The number of
shares of Common Stock subject to this Warrant and the Exercise Price
per share of such shares shall be adjusted by the Company proportionately to
reflect changes in the capitalization of the Company as a result of any
recapitalization, reclassification, stock dividend, stock split, combination of
shares, exchange of shares or any other change in the Company's capital
structure which affects holders of Common Stock generally. All adjustments
described herein shall be reflected on the Company's stock warrant ledger and
the Holder shall receive written notice thereof.
10. Merger, Sale of Assets, etc. If at any time while this
Warrant, or any portion thereof, is outstanding and unexpired, there
shall be (a) a reorganization (other than a combination, reclassification,
exchange or subdivision of shares otherwise provided for in Section 9 hereof),
(b) a merger or consolidation of the Company with or into another corporation
in which the Company is not the surviving entity, 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, or (c) a sale or transfer of the Company's
properties and assets as, or substantially as, an entirety to any other person,
then, as a part of such reorganization, merger, consolidation, sale or
transfer, lawful provision shall be made so that the holder of this Warrant
shall thereafter be entitled to receive upon exercise of this Warrant, during
the period specified herein and upon payment of the Exercise Price then in
effect, the number of shares of stock or other securities or property of the
successor corporation resulting from such reorganization, merger,
consolidation, sale or transfer that a holder of the shares deliverable upon
exercise of this Warrant would have been entitled to receive in such
reorganization, consolidation, merger, sale or transfer if this Warrant had
been exercised
A-12
33
immediately before such reorganization, merger, consolidation, sale or
transfer, all subject to further adjustment for other future events as provided
in Section 9. The foregoing provision of this Section 10 shall similarly apply
to successive reorganizations, consolidations, mergers, sales and transfers and
to the stock or securities of any other corporation that are at the time
receivable upon the exercise of this Warrant. If the per share consideration
payable to the holder hereof for shares in connection with any such transaction
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. In all events, appropriate adjustments (as determined in good faith
by the Company's Board of Directors) shall be made in the application of the
provisions of this Warrant with respect to the rights and interests of the
Holder after the transaction, to the end that the provisions of this Warrant
shall be applied after that event, as nearly as reasonably may be, in relation
to any shares or other property deliverable after that event upon exercise of
this Warrant.
11. Notice of Certain Events. In case:
(a) the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive any dividend
or other distribution, or any right to subscribe for or purchase any shares of
capital stock of any class, or to receive any other rights; or
(b) of any capital reorganization, any reclassification of
shares of capital stock of the Company (other than a subdivision or
combination of outstanding shares of Common Stock to which Section 9 applies),
or any consolidation or merger of the Company or the sale or transfer of all or
substantially all of the assets of the Company; or
(c) of any voluntary dissolution, liquidation, or winding up
of the Company;
then the Company shall mail (at least ten (10) days prior to the applicable
date referred to in subclause (x) or in subclause (y) below, as the case may
be), to the Holder at the address set forth in the Company's stock records, a
notice stating that (x) the date on which a record is to be taken for the
purpose of such dividend, distribution or rights or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution or rights are to be determined, or (y)
the date on which such reclassification, capital reorganization, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up is expected to
become effective, and, if applicable, the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such
reclassification, capital reorganization, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up.
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34
IN WITNESS WHEREOF, Healthdyne Information Enterprises, Inc. has caused
this Warrant to be executed by its duly authorized officer on the date first
above written.
HEALTHDYNE INFORMATION ENTERPRISES, INC.
By:
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President and Chief
Financial Officer
Accepted:
THE SOUTHERN VENTURE FUND II, L.P.
By: Its General Partner
SV Partners II, L.P.
By:
----------------------------
Name: Xxxxxxxx X. Xxxx
A General Partner
A-14
35
EXHIBIT A
NOTICE OF EXERCISE
To: HEALTHDYNE INFORMATION ENTERPRISES, INC.
The undersigned, the holder of the foregoing Warrant No. S-1, and pursuant
to the terms hereof, hereby elects to exercise rights represented by said
Warrant for, and to purchase thereunder, _________ shares of the Company's
Common Stock covered by said Warrant, and tenders herewith payment of the
purchase price in full for such shares of $__________ by:
_____ (a) cash, through the delivery of a certified or official bank
check; or
_____ (b) exercising the Conversion Right provided under Section 4(b) of
the Warrant by the surrender of said Warrant.
The undersigned hereby requests that certificates for such shares (or any
other securities or other property issuable upon such exercise) be issued in
the name of and delivered to the undersigned at the address set forth below.
-------------------------------
Name
Date: -------------------------------
---------- Signature
Address:
-------------------------------
-------------------------------
-------------------------------
36
EXHIBIT B
FORM OF OPINION OF COUNSEL TO
HEALTHDYNE INFORMATION ENTERPRISES, INC. ("HIE")
1. HIE was incorporated and is validity existing as a corporation in good
standing under the laws of the State of Georgia.
2. The [416,666] shares of common stock, $.01 par value per share, of HIE
(the "HIE Shares"), [to be delivered to SFVII] have been duly authorized for
issuance and sale pursuant to the Option Agreement and, when issued and
delivered against payment of the consideration therefor as provided in the
Option Agreement, will be validly issued, fully paid and nonassessable.
