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EXHIBIT 4.5
VISION 21, INC.
NOTE PURCHASE AGREEMENT
DATED: DECEMBER 20, 1996
10% SENIOR SUBORDINATED NOTES DUE DECEMBER 19, 1999
(DETACHABLE WARRANTS EXCHANGEABLE INTO COMMON STOCK)
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TABLE OF CONTENTS
PAGE
ARTICLE 1 - Authorizations of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 - Issuance and Sale of Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 3 - Agreements with Other Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 4 - Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.2 Description of business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.3 No material adverse change in financial condition or affairs . . . . . . . . . . . . . . . . . . . . 2
4.4 Tax returns and payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.5 No default on other debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.6 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.7 Compliance with applicable laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.8 Litigation, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.9 Adverse developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.10 Compliance with other instruments; none burdensome . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.11 No stockholder or governmental consent required . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.12 Offering of notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.13 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.14 Authorization, execution and delivery of notes . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.15 Representations and warranties of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.16 Representations and warranties as to acquired businesses . . . . . . . . . . . . . . . . . . . . . . 4
4.17 Closings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 5 - Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.1 Representations and warranties correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.2 Reservation of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.3 No default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.4 Sale and delivery of notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.5 Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.6 Compliance certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.7 Legality of investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.8 Proceedings and documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 6 - Purchase for Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 7 - Accounting; Financial Statements and Other Information. . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 8 - Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 9 - Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
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9.1 Prepayment without penalties or premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
9.2 Notations, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 10 - Insurance of Properties and Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 11 - Additional Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 12 - Agreement to Register. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 13 - First Right of Refusal and Co-Sale Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
13.1 Purchase right of first refusal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
13.2 Co-sale rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 14 - Provisions Respecting Exchange of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
14.1 Exchange of warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
14.2 Issuance of common stock upon exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
14.3 Adjustment to exchange price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
14.4 Fractional shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
14.5 Effect of reclassifications, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
14.6 Company to reserve stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
14.7 No dilution or impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
14.8 Taxes on exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
14.9 Notices of record date, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 15 - Transfers Not Registered Under Securities Act of 1933 . . . . . . . . . . . . . . . . . . . . . . . 22
15.1 Restrictive legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
15.2 Notice of proposed transfer, opinions of counsel . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 16 - Registration, Transfer, and Exchange of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 17 - Replacement of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 18 - Events of Default; Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 19 - Subordination of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 20 - Remedies on Default, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 21 - Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
21.1 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
21.2 The Exchange Formula . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
21.3 Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
21.4 First Liquidity Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
21.5 Generally accepted accounting principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
21.6 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
21.7 Market Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
21.8 Net Issuable Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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21.9 Officer's certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
21.10 Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
21.11 Public offering of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
21.12 Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
21.13 Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 22 - Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 23 - Survival of Agreements, Representations, and Warranties, etc.. . . . . . . . . . . . . . . . . . . . 31
ARTICLE 24 - Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 25 - Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 26 - Home Office Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 27 - Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Exhibit A - Form of 10% Senior Subordinated Note, due December 19, 1999 . . . . . . . . . . . . . . . . . . . . . . . 1
Exhibit B - Form of Warrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Exhibit C - Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Schedule 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Schedule 4.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Schedule 4.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SUBSCRIPTION FORM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
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VISION 21, INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
[Name and Address of each
Purchaser; see SCHEDULE 1]
December 20, 1996
Dear Sirs:
Vision 21, Inc., a Florida corporation (the "Company"), agrees with
you as follows:
ARTICLE 1 - AUTHORIZATIONS OF NOTES
The Company has authorized the issue of up to $3,000,000 aggregate
principal amount of its 10% Senior Subordinated Notes due December 19, 1999
("the Notes"), such term to include all Notes issued in exchange therefor or in
replacement thereof substantially in the form attached as EXHIBIT A. There
shall be attached to each Note a detachable warrant exchangeable into Common
Stock of the Company which expires and becomes null and void on December 19,
2003, substantially in the form attached as EXHIBIT B hereto ("Warrant"), such
term to include all warrants issued in exchange therefor or in replacement
thereof, exchangeable for shares of Common Stock of the Company.
Notwithstanding anything else contained in this agreement, the minimum
aggregate amount of Notes that may be sold hereunder shall be Fifty Thousand
Dollars ($50,000.00). All Notes must be purchased on or before December 30,
1996 ("Entry Termination Date").
ARTICLE 2 - ISSUANCE AND SALE OF NOTES
The Company agrees to sell to you and, subject to the terms and
conditions herein set forth, you agree to purchase from the Company, Notes in
the principal amount set forth opposite your name in SCHEDULE 1 hereto. Such
purchase and delivery for each purchaser of the notes ("Purchaser") shall be
made within three days of their execution of this Note Purchase Agreement or at
a time to be mutually agreed upon in writing (either of which shall be the
"Closing Time" for such Purchaser's purchase) but not after the Entry
Termination Date. At Closing Time, the Company will deliver to you the Notes
to be purchased by you against payment of the purchase price thereof by
certified or official bank check or wire transfer (at the election of the
Company) payable to the order of Company in same day U.S. funds. Such
purchase price shall be an amount equal to 100 percent of the principal amount
of the Notes to be purchased by you. The Note or Notes shall be dated as of
the Closing Time and payable to you as the Purchaser thereof.
ARTICLE 3 - AGREEMENTS WITH OTHER PURCHASERS
Through the period from this date through the Entry Termination Date,
the Company may add additional signature pages to this Agreement reflecting
other Purchaser's execution of this Agreement which shall be deemed to be an
automatic addendum to this Agreement. Purchasers shall be listed in SCHEDULE 1
hereto (all of which constitute "Purchasers"). The Purchasers agree to
purchase Notes from
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the Company in the principal amounts set forth opposite their respective names
in SCHEDULE 1. Upon attaching another executed signature page for an
additional Purchaser, the Company shall mail to each existing Purchaser a
revised SCHEDULE 1 which shall replace the then SCHEDULE 1. No Purchaser shall
have any rights against the Company nor shall they have any recision or
cancellation rights should there not be any additional Purchasers.
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.1 Organization. The Company is and at Closing Time will be a
Corporation duly organized and validly existing and in good standing under the
laws of the State of Florida with all requisite corporate power and authority
to own and operate its properties and to carry on its business as now
conducted; the Company has and at Closing Time will have all requisite
corporate power and authority to enter into this agreement, to issue the Notes,
to issue the Warrants, to issue its Common Stock upon exchange of any Warrants,
and to carry out the terms hereof and thereof. The Company is the 100% owner
of its subsidiaries listed on SCHEDULE 4.1 hereto, each of which is duly
organized and validly existing and in good standing under the laws of the
jurisdiction of each incorporation and each has the requisite corporate power
and authority to own and operate their properties and carry on their business
as now conducted.
4.2 Description of business. The Confidential Offering Circular
of the Company of December 1996, hereinafter referred to as the Memorandum,
heretofore furnished to you by the Company constitutes a description of its
business and properties, its Subsidiaries and its acquisition and growth plans.
4.3 No material adverse change in financial condition or affairs.
There has not been any substantial material adverse change in the assets,
liabilities, financial condition or affairs of the Company, its Subsidiaries,
and the acquired businesses ("Acquired Businesses") considered as a single
enterprise from that set forth or reflected in the Memorandum, except as set
forth in SCHEDULE 4.3 hereto.
4.4 Tax returns and payments. All required tax returns and
reports of the Company and its Subsidiaries have been duly filed, and all
taxes, assessments, fees, and other governmental charges upon the Company and
its Subsidiaries or upon any of their respective properties, assets, income,
which are due and payable, have been paid, other than those presently payable
without penalty or interest.
4.5 No default on other debt. Neither the Company nor any
Subsidiary is in default with respect to the payment of any as defined herein
Indebtedness or other observance of any covenant or condition set forth in any
instrument or agreement relating thereto and which would enable the creditor to
accelerate the maturity of its Indebtedness, which would be material to the
Company's business or financial condition.
4.6 Leases. The Company and its Subsidiaries and Acquired
Businesses enjoy peaceful and undisturbed possession under all material leases
under which they are lessees, all such leases are valid and binding obligations
of the lessors, and such lessors have title in fee simple to the properties
leased.
4.7 Compliance with applicable laws. The Company and its
Subsidiaries and Acquired Businesses are in material compliance insofar as is
required with all applicable laws that are necessary for the combined entity to
operate its businesses as described in the Memorandum.
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4.8 Litigation, etc. There are no actions, proceedings, or
investigations pending or to the best of the Company's knowledge, threatened
which, either individually or in the aggregate, might result in any material
adverse change in the business, prospects, condition, affairs, or operations of
the Company and its Subsidiaries and Acquired Businesses considered as one
enterprise, or in any of their properties or assets, or in any material
impairment of the right or ability of the Company and its Subsidiaries,
considered as one enterprise, to carry on operations as now conducted or in any
material liability by the Company and its Subsidiaries and Acquired Businesses,
considered as one enterprise, and there are no such actions, proceedings, or
investigations which question the validity of this Agreement or of the Notes or
Warrants or any action taken or to be taken in connection herewith or
therewith.
4.9 Adverse developments. Except to the extent, if any, disclosed
herein, since the date of the Memorandum, neither the business, prospects,
condition, affairs, or operations of the Company and its Subsidiaries and
Acquired Businesses considered as one enterprise, or any of their respective
properties or assets, have been materially adversely affected in any way as a
result of any legislative or regulatory change or any revocation of license or
right to do business, or any fire, explosion, flood, drought, windstorm,
earthquake, accident, casualty, labor trouble, riot, condemnation, requisition,
embargo, act of God or of the public enemy or of armed forces, or otherwise,
whether or not insured against.
4.10 Compliance with other instruments; none burdensome. Except to
the extent, if any, disclosed in the Memorandum neither the Company nor any
Subsidiary is in violation of any term of its Charter or Bylaws or similar
governing instrument, any mortgage, indenture, contract, agreement, instrument,
judgment, decree, order, statute, rule, or regulation, the violation of which
would have a material adverse affect on the Company, its Subsidiaries, and
Acquired Businesses considered as one enterprise; the execution, delivery, and
performance of and compliance with this agreement and the Notes will not result
in any such violation of or constitute a default under or be in conflict with
any such term, or result in the creation of any mortgage, lien, encumbrance, or
charge upon any of the properties or assets of the Company or any Subsidiary or
Acquired Businesses pursuant to any such term; and there is no such term which
materially adversely affects or in the future may (so far as the Company can
now foresee) materially adversely affect the business, prospects, condition,
affairs, or operations of the Company and its Subsidiaries and Acquired
Businesses or any of their respective properties or assets.
4.11 No stockholder or governmental consent required. No consent,
approval, or authorization by the holder of any shares of the Company's capital
stock or by any governmental authority is presently required in connection with
the execution and delivery of this agreement, or the offer, issue, sale, or
delivery of the Notes, the issue of Warrants, or the issue of Common Stock upon
exchange of any Warrant pursuant to this Agreement or the consummation of any
other transaction contemplated hereby.
4.12 Offering of notes. Neither the Company nor anyone acting on
its behalf has directly or indirectly offered the Notes or the Common Stock
issuable upon exchange of a Warrant or any part thereof for sale to, nor has it
solicited any offer to buy any of the same from, anyone in a manner that would
be considered in violation of the Securities Act of 1933, as amended.
4.13 Disclosure. Neither any certificate nor any other statement
furnished to you in writing by or on behalf of the Company in connection with
the transactions contemplated hereby contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained therein not misleading. There is no fact known to the
Company which materially adversely affects or in the future may (so far as the
Company can now foresee) materially adversely affect
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the business, prospects, condition, affairs, or operations of the Company and
its Subsidiaries and Acquired Businesses considered as one enterprise or their
properties and assets (considered as a whole).
4.14 Authorization, execution and delivery of notes. The Notes and
Warrants (and shares exchangeable from the Warrants) have been duly and validly
authorized, and when executed and delivered in accordance with the provisions
of this Agreement will be the Company's valid obligations, legally binding upon
it in accordance with their terms, and entitled to the benefits of this
Agreement in accordance with the terms thereof, except as enforcement thereof
may be limited by bankruptcy, insolvency, or other laws affecting the
enforcement of creditors' rights.
4.15 Representations and warranties of the Company. The Company
represents that as of December 16, 1996, there were 5,945,000 shares
outstanding including all common shares and common share equivalents
outstanding, and all warrants or options, whether exchanged or unexchanged.
Total shares outstanding immediately following the roll-ups of the "Founding
Practices" (practices described in the Memorandum which have closed with the
Company) shall not exceed 9,500,000.
4.16 Representations and warranties as to acquired businesses. The
above representations and warranties regarding the businesses acquired by the
Company in its roll-up of Founding Practices ("Acquired Practices") are limited
to the representations and warranties received by the Company from the Founding
Practices in such acquisitions and to the Company's knowledge.
4.17 Closings. The Company represents that closings of Founding
Practices representing in excess of $30.0 million in practice revenues have
occurred.
ARTICLE 5 - CONDITIONS
Your obligations to purchase and pay for the Notes to be delivered to
you at Closing Time is subject to the fulfillment, to your satisfaction before
or at Closing Time, of the following conditions:
5.1 Representations and warranties correct. The Company's
representations and warranties contained in Article 4 or otherwise made in
writing by or on behalf of the Company in connection with the transactions
contemplated hereby shall have been materially correct when made and shall be
materially correct at and as of Closing Time, except as affected by the
transactions contemplated hereby.
5.2 Reservation of common stock. The Company shall have duly
authorized and reserved for issuance the shares of Common Stock issuable upon
the exchange of Warrants.
5.3 No default. There shall not exist at Closing Time any
condition or event which constitutes an Event of Default as defined herein or
which, after notice or lapse of time or both, would constitute an Event of
Default.
5.4 Sale and delivery of notes. The Company shall have sold and
delivered to all the Purchasers the Notes to be acquired by them at Closing
Time pursuant to this Agreement and shall have received payment therefor.
5.5 Performance. The Company shall have performed and complied
with all agreements and conditions contained herein required to be performed or
complied with by it prior to or at Closing Time.
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5.6 Compliance certificate. The Company shall have delivered to
you an Officer's Certificate, dated the date of Closing Time, certifying as to
the fulfillment of the conditions specified in this Article 5, Sections 5.1 to
5.5, inclusive.
5.7 Legality of investment. Your purchase of the Notes at Closing
Time shall be permitted at Closing Time by the laws of the jurisdiction to
which you are subject and such acquisition shall not subject you to any penalty
or other onerous condition in or pursuant to any applicable law or government
regulation.
5.8 Proceedings and documents. All corporate and other
proceedings in connection with the transactions contemplated by this agreement
and all documents and instruments incident to such transactions shall be
satisfactory in form and substance to you and your counsel, and you and your
counsel shall have received all such counterpart originals or certified or
other copies of such documents requested by you or they.
ARTICLE 6 - PURCHASE FOR INVESTMENT
You represent, and in making this sale to you it is understood and
agreed that: (a) you are acquiring the Notes, Warrants and the shares of Common
Stock issuable upon exchange of any Warrants, and (b) such Notes, Warrants and
Common Stock are being acquired for the purpose of investment and not with a
view to or for sale in connection with any distribution thereof, provided, that
the disposition of your property shall at all times be and remain within your
control. The consent of at least a majority of the holders of Senior
Subordinated Notes and Warrants shall be required for any action which alters,
changes or amends the preferences, rights, or privileges of the Senior
Subordinated Notes and Warrants.
Purchaser represents and warrants that Purchaser is an "accredited
investor" as defined under the Securities Act of 1933 ("Securities Act") and
state "Blue Sky" laws. Purchaser also represents and warrants that Purchaser
shall be such an accredited investor at such time as the Warrants held by
Purchaser are exchanged.
Purchaser represents and warrants that the Notes, Warrants and Shares
of Common Stock issuable upon exchange of any Warrants ("Securities") to be
acquired by Purchaser upon consummation of the transactions described in this
Agreement will be acquired by Purchaser for Purchaser's own account, not as a
nominee or agent, and without a view to resale or other distribution within the
meaning of the Securities Act and the rules and regulations thereunder, except
as contemplated in this Agreement, and that Purchaser will not distribute any
of the Securities in violation of the Securities Act. In addition, the
Securities shall bear any legend required by the securities or "Blue Sky" laws
of any state where Purchaser resides as well as any other legend deemed
appropriate by the Company or its counsel.
Purchaser represents and warrants that the address set forth below
Purchaser's name on SCHEDULE 1 is Purchaser's principal residence.
Purchaser (i) acknowledges that the Securities issued to Purchaser at
the Closing must be held indefinitely by Purchaser unless subsequently
registered under the Securities Act or an exemption from registration is
available, (ii) is aware that any routine sales of Securities made pursuant to
Rule 144 under the Securities Act may be made only in limited amounts and in
accordance with the terms and conditions
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of that Rule and that in such cases where the Rule is not applicable,
compliance with some other registration or exemption will be required.
Purchaser represents and warrants to the Company that Purchaser,
either alone or together with the assistance of Purchaser's own professional
advisor, has such knowledge and experience in financial and business matters
such that Purchaser is capable of evaluating the merits and risks of
Purchaser's investment in any of the Securities to be acquired by Purchaser
upon consummation of the transactions described in this agreement.
Purchaser confirms that Purchaser has received and read the Memorandum
of the Company. Purchaser also confirms that Purchaser has had the opportunity
to ask questions of and receive answers from the Company concerning the terms
and conditions of Purchaser's investment in the Securities, and the Purchaser
has received, to Purchaser's satisfaction, such additional information, in
addition to that set forth herein, about the Company's operations and the terms
and conditions of the offering as Purchaser has requested.
Purchaser also agrees that the certificates or instruments
representing the Securities to be issued to Purchaser pursuant to this
Agreement may contain a restrictive legend noting the restrictions on transfer
and required by federal and applicable state securities laws, and that
appropriate "stop-transfer" instructions will be given to the Company's
transfer agent, if any, provided that this Article 6 shall no longer be
applicable to any Securities following their transfer pursuant to a
registration statement effective under the Securities Act or in compliance with
Rule 144 or if the opinion of counsel referred to above is to the further
effect that transfer restrictions and the legend referred to herein are no
longer required in order to establish compliance with any provisions of the
Securities Act.
Purchaser understands that although an Initial Public Offering is
contemplated by the Company, there are no assurances that an Initial Public
Offering will occur or if it does occur that it will be successful.
At all times following the registration of any of the Company's
securities under the Securities Act or the Securities and Exchange Act of 1934
pursuant to which the Company becomes subject to the reporting requirements of
the Exchange Act, the Company shall use commercially reasonable efforts to
comply with the requirements of Rule 144 under the Securities Act, as such Rule
may be amended from time to time (or any similar rule or regulation hereafter
adopted by the SEC) regarding the availability of current public information to
the extent required to enable any holder of shares of Common Stock to sell such
shares without registration under the Securities Act pursuant to Rule 144 (or
any similar rule or regulation).
ARTICLE 7 - ACCOUNTING; FINANCIAL STATEMENTS AND OTHER INFORMATION
So long as any Note or Warrant remains outstanding, the Company will
maintain a system of accounting established and administered in accordance with
generally accepted accounting principles. The Company will deliver in
duplicate to you, so long as you hold any of the Notes or Warrants, and to each
holder of 10 percent or more in original principal amount of the Notes:
(a) As soon as practicable after the end of each of the first
three quarterly fiscal periods in each fiscal year, and in any event within 90
days thereafter, a consolidated balance sheet of the Company
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and its Subsidiaries as of the end of such period, and consolidated statements
of income and retained earnings of the Company and its Subsidiaries for such
period (and, in the case of the second and third quarterly periods, for the
period from the beginning of the current fiscal year to the end of such
quarterly period), all in reasonable detail and certified as complete and
correct in all material respects, subject to changes resulting from year-end
adjustments, by the Company's principal financial officer.
(b) As soon as practicable after the end of each fiscal year, and
in any event within 120 days thereafter, commencing with the year ending
December 31, 1997, a consolidated balance sheet of the Company and its
Subsidiaries as of the end of such year and consolidated statements of income
and retained earnings of the Company and its Subsidiaries for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail accompanied by an opinion of independent
certified public accountants of recognized national standing selected by the
Company.
(c) Promptly upon receipt thereof, copies of all other reports
submitted to the Company by independent certified public accountants in
connection with any annual or interim audit of the books of the Company or any
of its Subsidiaries, made by such accountants in so far as they related
directly to financial statements submitted to you by the Company pursuant to
the agreement; and
(d) Promptly upon their becoming available, copies of
(1) All regular or periodic reports and filings
(including filings pursuant to the Securities Act of 1933, as amended), if any,
which the Company or any Subsidiary files with the Securities and Exchange
Commission or any governmental agency or agency substituted therefor, or any
similar or corresponding governmental department, commission, board, bureau or
agency, or with any national securities exchange; and
(2) All reports, proxy statements and financial
statements delivered or sent by the Company to its stockholders, provided,
however, that all material furnished pursuant hereto to the extent not
otherwise made public by the Company is furnished to you solely for the
purposes hereof and with the understanding that you will not disclose such
information to any third party, except for regulatory authorities and other
proper disclosures.
ARTICLE 8 - INSPECTION
So long as you hold any of the Notes, the Company will permit any
authorized representative designated by you to visit and inspect, at your
expense, any of the Company's or Subsidiary's properties, including its books
(and to make extracts or copies therefrom), and to discuss its affairs,
finances, and accounts with its officers, all at such reasonable times and as
often as is reasonably requested provided, however, that all material furnished
pursuant hereto to the extent not otherwise made public by the Company is
furnished to you solely for the purposes hereof and with the understanding that
you will not disclose such information to any third party, except for
regulatory authorities and other proper disclosures. The Company will accord
like rights to each holder of 10 percent or more in original principal amount
of the Notes.
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ARTICLE 9 - PREPAYMENT
9.1 Prepayment without penalties or premium. The Company may
prepay all or a portion of the Notes at any time without penalty or a premium
so long as all accrued interest is also paid at such time.
9.2 Notations, etc. Any holder of a Note shall endorse on such
Note prior to any transfer thereof the amount of principal prepaid thereon and
the last date to which interest thereon has been paid, and will notify the
Company of the name and address of the transferee of such Note.
ARTICLE 10 - INSURANCE OF PROPERTIES AND BUSINESS
The Company will maintain or cause to be maintained, with financially
sound and reputable insurers, insurance with respect to its properties and
business and the properties and businesses of its Subsidiaries against loss or
damage of the kind customarily insured against by corporations of established
reputation engaged in the same or a similar business and similarly situated, in
amounts sufficient to prevent the Company or any Subsidiary from becoming a co-
insurer within the terms of the policies in question.
ARTICLE 11 - ADDITIONAL COVENANTS
The Company agrees that so long as you hold any of the Notes or
Warrants,
(a) The Company and its Subsidiaries will remain primarily in the
businesses of physician practice management, ownership of ambulatory surgical
centers, optical, managed care and related activities; and
(b) At all times after the date of any Public Offering of its
Common Stock, the Company shall take all necessary or appropriate steps to
cause to be made available adequate public information with respect to the
Company.
(c) Without limiting any other covenants and provisions hereof,
the Company covenants and agrees that, so long as any Warrants remain
outstanding, it will materially perform and observe the following covenants and
provisions and will cause each Subsidiary to materially perform and observe
such of the following covenants and provisions as are applicable to such
Subsidiary:
(1) Payment of Taxes and Trade Debt. Pay and discharge,
all material taxes, assessments and governmental charges or levies imposed upon
it or upon its income or profits or business, or upon any properties belonging
to it, prior to the date on which penalties attach thereto, and all lawful
claims, which, if unpaid, might become a lien or charge upon any properties of
the Company, provided that the Company shall not be required to pay any such
tax, assessment, charge, levy or claim that is being contested in good faith
and by appropriate proceedings if the Company shall have set aside on its books
and to the extent required by generally accepted accounting principles,
adequate reserves with respect thereto as shall be determined by its Board of
Directors. Pay when due, or in conformity with customary trade terms as
consistent with normal operations, all lease obligations, all trade debt, and
all other Indebtedness incident to the operations of the Company, except such
as are being contested in good faith and by appropriate proceedings if the
Company shall have set aside on its books and shall and to the
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extent required by generally accepted accounting principles, adequate reserves
with respect thereto as shall be determined by its Board of Directors.
(2) Preservation of Corporate Existence. Preserve and
maintain its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified as a
foreign corporation in each jurisdiction in which such qualification is
necessary or desirable in view of its business and operations or the ownership
of its properties. Preserve and maintain all material licenses and other
rights to use patents, processes, licenses, trademarks, trade names,
inventions, intellectual property rights or copyrights owned or possessed by it
and necessary in any material respect to the conduct of its business.
(3) Compliance with Laws. Comply in all material
respects with all applicable laws, rules, regulations and orders of any
governmental authority, noncompliance with which could materially adversely
affect its business or condition, financial or otherwise, except non-compliance
being contested in good faith through appropriate proceedings so long as the
Company shall have set up sufficient reserves, if any, required under generally
accepted accounting principles with respect to such items.
(4) Keeping of Records and Books of Account. Keep
adequate records and books of account, in which complete entries will be made
in accordance with generally accepted accounting principles consistently
applied, reflecting all material financial transactions of the Company, and in
which, for each fiscal year, all proper reserves for depreciation, depletion,
obsolescence, amortization, taxes, bad debts and other purposes in connection
within its business shall be made.
(5) Maintenance of Properties, etc. Maintain and
preserve all of its properties necessary or useful in the proper conduct of its
business, in good repair, working order and condition, ordinary wear and tear
excepted, and from time to time make all necessary and proper repairs,
renewals, replacements, additions and improvements thereto. Comply with the
provisions of all material leases to which the Company is a party or under
which the Company occupies property so as to prevent any material loss or
forfeiture thereof or thereunder.
(6) Visitation Rights. Permit Purchaser or any legal or
financial representative thereof periodically upon reasonable notice during
normal business hours to examine the books and records of the Company at the
Company's premises and permit the Purchaser (or any legal or financial
representatives thereof) to meet, and to discuss the business affairs, finances
and accounts of the Company with any of its officers or directors and
independent accountants.
ARTICLE 12 - AGREEMENT TO REGISTER
The Company agrees that:
(a) If at any time the Company determines to take action to
register any of its securities under the Securities Act of 1933, as then in
effect, or any similar federal statute (collectively the "Act"), otherwise than
pursuant to Form S-8, or any other form not applicable to an offering of Common
Stock issued or issuable upon the exchange of Warrants, it will notify in
writing each registered holder of any Notes, Warrants or any shares of Common
Stock issued upon exchange thereof of such determination and, upon written
request received within 15 days of the mailing of such notice will use its best
efforts to effect
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the registration under the Act of any shares of Common Stock issued or issuable
upon such conversion or exchange to which such request relates.
(b) The Company agrees at any time after six months from the date
of any Public Offering of its Common Stock, upon receipt from the registered
holders of at least 50 percent in principal amount of the then outstanding
Notes (or of any Warrants or shares of Common Stock issued in respect thereto)
of a request to register under the Act any shares of Common Stock issued upon
the exchange of any such Warrants, it will notify all other registered holders
thereof of such request and will use its best efforts to effect the
registration under the Act of the shares of Common Stock to which such request
relates. Such holders shall be entitled to make one request for registration
pursuant to this paragraph (b).
(c) If at any time a holder or holder of stock requests that the
Company file a registration statement on Form S-3 for a public offering of all
or any portion of the shares held by such requesting holder or holders, the
reasonably anticipated aggregate price to the public of which would exceed
$500,000, and the Company is a registrant entitled to use Form S-3 or any
successor thereto to register such shares, then the Company shall use its best
efforts to register under the Securities Act on Form S-3 or any successor
thereto, for public sale in accordance with the method or disposition specified
in such notice, the number of shares of stock specified in such notice.
Whenever the Company is required by this Article 12(c) to use its best efforts
to effect the registration of stock, each of the procedures and requirements of
Article 12(c) (including but not limited to the requirement that the Company
notify all holders of stock from whom notice has not been received and provide
them with the opportunity to participate in the offering) shall apply to such
registration, provided, however, that there shall be only two registrations on
Form S-3 which may be requested and obtained under this Section.
(d) If the Company is required to use its best efforts to effect
the registration of any Common Stock under the Act, it will use its best
efforts to:
(1) Prepare and file with the Securities and Exchange
Commission (the "Commission"), within 90 days after the receipt of the written
request for registration a registration statement with respect to such shares
of Common Stock and cause such registration statement to become and remain
effective for at least a period of 45 days.
(2) Prepare and file with the Commission all amendments
and supplements to such registration statement and the prospectus used in
connection therewith necessary to keep such registration statement effective
for said 45 day period (if any stand-off period is imposed pursuant to this
Section, such 45 day period shall commence at the termination thereof) and to
comply with the provisions of the Act with respect to the disposition of all
such shares of Common Stock covered by such registration statement whenever the
holders thereof desire to dispose of the same;
(3) Furnish to the holders of such shares of Common Stock
whatever numbers of copies of prospectuses, including one or more preliminary
prospectuses, they need to comply with the Act, and all other documents they
reasonably request in order to facilitate the disposition of such shares; and
(4) Register or qualify the shares of Common Stock
covered by such registration statement under the other securities or blue sky
laws of any jurisdictions the holders thereof reasonably request, and do all
other necessary or advisable acts and things to enable such holders to
consummate the
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disposition of such shares in the applicable jurisdictions, except that the
Company shall not be required to file a general consent to service in any such
jurisdiction.
(e) The Company shall pay all expenses incurred by it in complying
with paragraph (d) of this Article 12 and all reasonable out-of-pocket expenses
(including the reasonable fees and disbursements of one attorney or law firm
representing all the holders of Common Stock covered by any such registration
statement) incurred by such holders in connection therewith (including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of the Company's counsel, and expenses of any special audits
incident to or required by any such registration, but not including, however,
any underwriting discounts, fees or commissions which are to be paid by such
holders).
(f) Notices and requests delivered to the Company pursuant to this
Article 12 shall contain all information regarding the shares of Common Stock
to be registered and the intended method of disposition thereof that is
reasonably required in connection with the action to be taken.
(g) In the event of any registration under the Act of any shares
of Common Stock pursuant to this Article 12, the Company hereby agrees to
indemnify and hold harmless each shareholder disposing of such shares, each
other person, if any, who controls such shares within the meaning of the Act,
and each other person, who participates in the offering of such shares, against
all losses, claims, damages or liabilities, joint or several, to which such
shareholder, controlling person, or participating person may become subject
under the Act or otherwise, in so far as such losses, claims, damages or
liabilities (or proceedings in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained, on the effective date thereof, in any registration statement under
which such shares of Common Stock were registered under the Act, or in any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading. The
Company will reimburse such shareholder and each such controlling person or
participating person for all legal or any other expenses reasonably incurred by
such shareholders, controlling person, or participating person in connection
with investigating or defending any such loss, claim, damage, liability or
proceeding; provided, however, that the Company will not be liable in any such
case to the extent that any such losses, claims, damages or liabilities arise
out of or are based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, or said
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by such
shareholder specifically for use in the preparation thereof. Each such
shareholder will agree to indemnify the Company, each person who signed any
such registration statement, and each person, if any, who controls the Company
within the meaning of the Act, in the same manner and to the same extent that
Company has agreed to indemnify in this paragraph. Such indemnification,
however, shall only relate to untrue statements or alleged untrue statements or
omissions or alleged omissions contained in any such registration statement, or
amendment or supplement thereto, based upon and in conformity with written
information furnished to the Company by an instrument duly executed by such
shareholder specifically for use in the preparation thereof.
(h) As a condition of the registration of any shares of Common
stock, the holders thereof shall agree:
(1) Not to sell any of such shares of Common Stock
pursuant to the registration statement for an initial public offering until 180
days after completion of the offering, unless sooner
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permitted to do so by the managing underwriter or underwriters, of any public
offering of the Company's securities then in process, and to execute such a
lock-up agreement required by the underwriter;
(2) To comply with all requirements of the Act and of the
Commission in connection with the offering and sale of such shares of Common
Stock;
(3) To effect sales of all such shares of Common Stock,
if so required by the Company, in an organized manner through a single broker
or dealer, or a single syndicate or selling group of brokers and/or dealers,
provided that any such required arrangement shall not prejudice any plan of
distribution proposed by any of such holders;
(4) To cooperate with the Company in its compliance with
all federal and state securities laws, including without limitation providing
such information and signing such documents as are necessary to effect a
registration or reasonably requested by underwriters pursuant to this
Agreement;
(5) To pay his prorata portion (calculated on the basis
of the ratio of the aggregate offering price attributable to the shares of
holder being registered and sold in relation to the aggregate offering price
attributable to the total number of securities being registered and sold,
including securities being registered and sold by other selling stockholders)
of the underwriting discounts and selling commissions and to pay all the fees
and disbursements of his counsel;
(6) Holder agrees to cooperate with the Company in all
respects in connection with registration of the Common Stock, including timely
supplying all information and executing and returning all documents requested
by the Company and its managing underwriter;
(7) The Company shall not be required to include any of
holder's shares of Common Stock in any registration statement unless holder
accepts the terms of the underwriting as agreed upon by the Company and
underwriters which are selected by the Company.
(8) The Company shall have the right to defer or suspend
the filing of any registration statement if the Board of Directors of the
Company determines in good faith that it would be seriously detrimental to the
Company and its Shareholders for such registration statement to be filed.
(i) Notwithstanding the above, the parties agree:
(1) The Company shall have the sole and exclusive right
to select the underwriters of any public offering of the Company's Common
Stock, including any public offering conducted pursuant to the demand
registration right set forth above. The use of underwriters in any demand
registration right set forth above is subject to the Company's ability to
engage underwriters under terms and conditions deemed reasonable by the
Company. Notwithstanding anything contained herein to the Company, the demand
registration right set forth above shall be permitted to be exercised only on
two separate occasions, and the Company may elect, upon receiving such demand
to combine such registration with any other registration of securities it may
seek to file.
(2) If the managing underwriter of any public offering
advises the Company that the total number of shares of the Company's Common
Stock which the Company, the holder and any other persons intend to include in
such public
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offering would adversely affect the success of such public offering, then the
amount of shares of Common Stock to be offered for the account of holder will
be reduced to the extent necessary to reduce the total number of shares of
Common Stock to be included in such public offering to the amount recommended
by such managing underwriter. Such reduction will be on a prorata basis with
all other shareholders holding registration rights for the sale of shares in
the offering. However, this cut back shall not be applicable to the demand
registrations.
(3) The Company shall not be required to (i) reduce the
amount of shares of Common Stock to be offered by the Company in such public
offering for any reason or (ii) include any shares of Common Stock of holder in
any public offering for which a registration statement is or is proposed to be
filed if such shares of Common Stock are, at the time of effectiveness of such
registration statement, eligible to be sold under Rule 144 under the Act or
otherwise eligible for sale to the public without registration.
(4) The Company shall have the right to extend, suspend
or delay the effectiveness of any registration statement for a period of up to
ninety (90) days if, upon the advice of counsel, such delay is advisable and in
the best interests of the Company because of the existence of non-public
material information, or to allow the Company to complete any pending audit of
its financial statements, any public financing plan, any pending material
acquisition or to release audited financial statements of an acquiree in a
pending acquisition.
ARTICLE 13 - FIRST RIGHT OF REFUSAL AND CO-SALE RIGHTS
13.1 Purchase right of first refusal. Prior to any First Liquidity
Event and, except for shares issued in acquisitions to be made by the Company,
shares issued in establishing a strategic alliance, or for option shares issued
to employees, contractors, consultants or affiliated physicians, no shares of
the Company and no interest therein shall be sold or transferred by the Company
after the date hereof, in any manner whatsoever without the prior written
consent of the holders of a majority interest of the Notes or without following
the terms of this Article. All of the above described sales or transfers of
Company shares which may be made by the Company without approval and without
complying with this Article shall be deemed "Approved Transfers."
Prior to making or upon receiving any bona fide offer, or counteroffer
that the Company intends to assert, with respect to any disposition of any
shares of the Company other than pursuant to an Approved Transfer, the Company
shall convey the Offer Terms with respect thereto to Purchasers and Purchasers
shall have the right to purchase all, and only all, of the shares that are the
subject of such offer or counteroffer on the Offer Terms. Purchasers may
exercise their right to acquire such shares by written notice to the Company
with respect to an offer, within the 25 day period following receipt by the
Purchaser of any initial Offer Terms or (ii) with respect to a counteroffer,
within 10 business days after receipt by the Purchasers of the Offer Terms with
respect thereto, provided that Purchasers shall have previously received
written notice of the initial Offer Terms as hereinabove provided. The closing
of such purchase shall occur at the Company's offices or such other location as
may be agreed upon on the date indicated in the written notice delivered to
such Purchasers within the time specified by the most recently delivered Offer
Terms. If Purchasers do not purchase all such shares during such period, the
Company shall be free within the time period specified by the most recently
delivered Offer Terms, to sell or transfer such shares to the third party
making or receiving such offer or counteroffer on Offer Terms no more favorable
to such third party than those contained in the last offer or counteroffer
delivered to Purchasers. In the event more than one Purchaser wishes to
acquire shares in this Section, they shall be
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entitled to acquire their prorata share of the shares to be sold. Such
Purchase Right of First Refusal described herein shall expire upon a First
Liquidity Event.
13.2 Co-sale rights. Prior to any First Liquidity Event and except
for an Approved Transferor any proposed First Liquidity Event, the Company
shall not transfer, sell, or otherwise dispose of (collectively, a "transfer")
shares of the Company's Common Stock (either directly or indirectly), which
transfer together with all previous transfers, rather than approved transfers,
would be in excess of an aggregate of 15% (on a fully diluted basis) of the
outstanding shares of Common Stock, to any person (such person being
hereinafter referred to individually as a "Third Party" and collectively as
"Third Parties"), unless the terms and conditions of such transfer shall
include an offer at the most favorable price, and on the most favorable terms
and conditions, at which the Company is then intending to transfer its Common
Stock (except that the only representation and warranty that the Purchasers or
any transferee of Purchasers that acquired Common Stock pursuant to this
Agreement ("Transferees") shall be required to make in connection with any
transfer is a warranty with respect to its own ownership of the Common Stock to
be sold by it and its ability to convey title thereto free and clear of liens,
encumbrances or adverse claims) to Purchasers and any Transferee to include, at
their option, in the transfer to the Third Party, an amount of Common Stock
determined in accordance with this Section.
The Third Party shall purchase from Purchasers and any Transferee the
number of shares of Common Stock owned by Purchaser or such Transferee, as the
case may be, equalling the number derived by multiplying the total number of
shares to be purchased by the Third Party by a fraction, the numerator of which
is the total number of shares of Stock owned by Purchasers or such Transferee,
as the case may be, that Purchasers or such Transferee, as the case may be,
desires to require the Third Party to purchase and the denominator of which is
the sum of (A) the total number of shares of Stock owned by Purchasers and all
Transferees desiring to require the Third Party to purchase their shares and
(B) the total number of shares of Common Stock owned by Sellers and their
affiliates. Each Purchaser shall be entitled to sell their pro rata share of
the Purchaser's right to sell.
Unless the same is an Approved Transfer on a proposed First Liquidity
Event, before the Company proposes to transfer any Common Stock, it shall
notify, or cause to be notified, Purchasers and any Transferee in writing of
each such proposed transfer. Such notice shall set forth: (i) the name of the
Third Party and the number of shares of Common Stock proposed to be
transferred, (ii) the address of the Third Party, (iii) the proposed amount and
form of consideration and terms and conditions of payment offered by the Third
Party (the "Third Party Terms") and (iv) whether the Third Party has been
informed of the "Co-Sale Right" provided for in this Section and has agreed to
purchase shares of Common Stock in accordance with the terms hereof.
The Co-Sale right may be exercised by delivery of a written notice to
the Company (the "Co-Sale Notice") within 15 days following receipt of the
notice specified in the preceding sentence. The Co-Sale Notice shall state the
number of shares of Stock that Purchasers or such Transferee, as the case may
be, would be entitled to include in such transfer to the Third Party.
Upon the giving of a Co-Sale Notice, Purchaser and such Transferees
shall be entitled and obligated to sell the number of shares of Stock set forth
in the Co-Sale Notice to the Third Party on the Third Party Terms; provided,
however, that the Company and their affiliates shall not consummate the sale of
any shares offered by them if the Third Party does not purchase all shares
which Purchasers and any Transferee are entitled to and desire to sell pursuant
hereto. After expiration of the 15 day period
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referred to above, if the provisions of this Section have been complied with in
all respects, the Company shall have the right for a 90 day period to transfer
the shares of Common Stock to the Third Party on the Third Party Terms without
further notice to Purchasers or any Transferee who have not given a Co-Sale
Notice, but after such 90 day period, no such transfer may be made without
again giving notice to Purchasers and all Transferees of the proposed transfer
and complying with the requirements of this Article.
Notwithstanding anything to the contrary, any Approved Transfer may be
made without compliance with this Article 13. The Co-Sale Rights contained
herein shall terminate upon a First Liquidity Event.
ARTICLE 14 - PROVISIONS RESPECTING EXCHANGE OF WARRANTS
14.1 Exchange of warrants. At any time up through December 19,
2003, subject to the terms hereof, the Warrants shall be exchangeable by the
holder of such Warrant. Each Warrant shall initially be exchangeable for
10,549 shares of Common Stock at an exchange price of $4.74 per share of Common
Stock or in a cashless exchange for a reduced number of shares (the "Net
Issuable Exchange") as determined by the Exchange Formula defined herein. The
Warrants will be exchangeable upon surrender of the Warrant to the Company at
its principal office in Florida at any time during usual business hours,
accompanied, if so required by the Company, by an instrument or instruments of
transfer in form satisfactory to the Company duly executed by the holder of
such Warrant. However, in the event that the Company has not completed an
initial public offering by September 30, 1997, and thereby redeemed the Notes,
or a First Liquidity Event as defined herein has occurred, the exchange price
of the Warrants shall be adjusted to $4.00 per share. The Warrants will expire
by 5:00 p.m., December 19, 2003 if not exchanged by such date. Should the
mid-price offering price set forth in an initial filed Form S-1 Registration
Statement for an initial public offering be less than $9.48 per share, then the
exchange price shall become one-half of that mid-price offering price. Should
the Market Price per share of Common Stock as defined herein be less than $9.48
at the time of any First Liquidity Event other than an IPO, then the exercise
price for the stock shall become one-half of that Market Price per share on
such date. Notwithstanding anything contained herein to the contrary, a holder
may no longer exchange Warrants for shares of stock after the date of a First
Liquidity Event pursuant to a Net Issuable Exchange, but may only exchange
Warrants for shares of stock by payment of the exchange price.
14.2 Issuance of common stock upon exchange. As promptly as
practicable after the surrender, as herein provided, of any Warrant, the
Company shall deliver or cause to be delivered to or upon the written order of
the holder of the Warrant the shares to be issued on exchange in accordance
with the provisions of this Article 14 certificates representing the numbers of
fully paid and nonassessable shares of Common Stock into which such Warrant is
exchangeable in accordance with the provisions of this Article 14. Subject to
the following provisions of this paragraph, such exchange shall be deemed to
have been made at the close of business on the date that such Warrant has been
exchanged, so that the rights of the holder of such Warrant exchanged shall
cease at such time and the person or persons entitled to receive the shares of
Common Stock upon exchange of such Warrant shall be treated for all purposes as
having become the record holder or holders of such shares of Common Stock at
such time and such exchange shall be at the exchange price in effect at such
time; provided, however, that no such surrender on any date when the stock
transfer books of the Company are closed shall be effective to constitute the
person or persons entitled to receive the shares of Common Stock upon such
exchange as the record holder or holders of such shares of Common Stock on such
date, but such surrender shall be effective to
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constitute the person or persons entitled to receive such shares of Common
Stock as the record holder or holders thereof for all purposes at the close of
business on the next succeeding day on which such stock transfer books are open
and such exchange shall be at the exchange price in effect on the date that
such Warrant has been surrendered for exchange.
If the last day for the exchange right is a Sunday or is in Florida a
legal holiday or a day on which banking institutions are authorized by law to
close, such right to exchange may be exercised on the next succeeding day which
is not a legal holiday in Florida or a day on which banking institutions are
authorized by law to close.
14.3 Adjustment to exchange price. The exchange price shall, in
addition to the preceding paragraph 14.1, be subject to adjustment as follows:
(a) For the purposes of this Section 14.3(a), the term "current
exchange price" is defined as meaning at any given time the exchange price then
in effect; and the terms "current quotient" is defined as meaning on any given
date the amount determined at the close of business on such day by dividing:
(1) An amount equal to (A) the total number of shares of
Common Stock outstanding when the current exchange price became effective,
exclusive of any such shares which may have been issued after the date hereof
as provided in this Section 14.3(a), multiplied by the current exchange price,
plus (B) the aggregate of the amounts of all consideration, if any, received by
the Company, (or, without duplication, deemed to be received as provided in
paragraph (viii) below) upon all issuances of shares of Common Stock since the
current exchange price became effective and prior to the time of the
determination of the current quotient except shares of Common Stock issued as
provided in Subdivision (c) hereof, minus (C) the aggregate amount of all
dividends and other distributions which have been paid or made after December
20, 1996, on Common Stock, other than in cash out of Company's earned surplus
or in Common Stock, by
(2) The total number of shares of Common Stock
outstanding immediately prior to the time of such determination, including any
such shares deemed to have been issued as provided in paragraph (viii) below
but excluding any such shares which may have been issued as provided in this
Section 14.3(a). For the purposes of this paragraph, the exchange price of
$4.74 shall be deemed to have become effective at the close of business on the
date of Closing Time. In determining the current quotient, the result shall be
expressed to the nearest cent.
If at the close of business on any date after the date of Closing Time
on which any adjustment event hereunder takes place, the current exchange price
exceeds the current quotient by as much as one percent of the then effective
exchange price, the exchange price shall be reduced to the price equal to the
current quotient, effective at the close of business on such date. In such
case of a subdivision or combination of the outstanding shares of Common Stock
issuable upon exchange of the Warrants, the exchange price shall be first
reduced, effective immediately prior to an adjustment of the exchange price
pursuant to this Section 14.3(a), by the amount, if any, by which the current
exchange price exceeds the current quotient.
For the purposes of this Section 14.3(a), the following provisions
shall also be applicable:
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i) If additional shares of Common stock are issued for cash, the
consideration received by the Company therefor shall be deemed to be the amount
of cash received by the Company for such shares, before deducting therefrom any
commissions or other expenses paid or incurred by the Company for any
underwriting of, or otherwise in connection with, the issuance of such shares.
ii) If additional shares of Common Stock are issued (otherwise
than upon the exchange of the Company's obligations or shares of stock or upon
the exchange of rights or options to subscribe for or to purchase shares of
Common Stock) for a full or partial consideration other than cash, the amount
of the non-cash consideration received by the Company for such shares shall be
deemed to be the value of such consideration as determined in good faith by the
Company's Board of Directors.
iii) If additional shares of Common Stock are issued upon
conversion or exchange of any obligations (including the Notes) or of any
shares of the Company's stock that are convertible into or exchangeable for
shares of Common Stock or upon the exchange of rights or options to subscribe
for or to purchase shares of Common Stock, the amount of the consideration
received by the Company for such additional shares of Common Stock shall be
deemed to be the total of: (a) the amount of consideration received by the
Company upon the original issuance of such obligations, shares, rights, or
options, plus (b) any other consideration received by the Company upon
conversion, exchange, or exchange except in adjustment of interest and
dividends. If obligations, shares, rights, or options, of the same class or
series of a class as the obligations, shares, rights, or options so converted,
exchanged or exchanged have been originally issued for different amounts of
consideration, the amount of consideration received by the Company upon the
original issuance of each obligation, share, right, or option so converted,
exchanged, or exchanged shall be deemed to be the average amount of the
consideration received by the Company upon the original issuance of all such
obligations, shares, rights, or options. The amount of the consideration,
obligations, shares, rights, or options so converted, exchanged, or exchanged
and the amount of any other consideration received by the Company upon the
original issuance of the obligations, shares, rights, or options so converted,
exchanged, or exchanged and the amount of any other consideration, received by
the Company upon such conversion, exchange, or exchange shall be determined in
the same manner provided in paragraphs (i) and (ii) above with respect to the
consideration received by the Company in case of the issuance of additional
shares of Common Stock. If such obligations, shares, rights, or options have
been issued as a dividend upon any stock of the Company, the amount of the
consideration received by the Company upon the original issuance thereof shall
be deemed to be zero.
iv) If additional shares of Common Stock are issued as a
dividend, the aggregate number of shares of Common Stock issuable in payment of
such dividend shall be deemed to have been issued and to be outstanding at the
close of business on the record date fixed for the determination of
stockholders entitled to such dividend. Shares of Common Stock issued
otherwise than as a dividend shall be deemed to have been issued and to be
outstanding at the close of business on the date of issue.
v) The term dividend shall mean a dividend or other distribution
upon stock of the Company.
vi) The number of shares of Common Stock at any time outstanding
shall include all shares of Common Stock then owned or held by or for the
account of the Company.
vii) If the Company declares a dividend without fixing a record
date for determining the stockholders entitled thereto, the first business day
during which the Company's stock transfer books are
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closed for the purpose of such determination shall be deemed to be the record
date fixed for the determination of stockholders entitled to such dividend.
viii) In case of (a) the issuance of shares of stock or obligations
convertible into or exchangeable for shares of Common stock at a exchange price
per share less than the current exchange price in effect immediately prior to
the issuance of such convertible stock or obligations, or (b) the issuance of
any rights to subscribe for or to purchase, or any options for the purchase of,
additional shares of Common Stock, at a price per share for the additional
shares of Common Stock issuable upon the exchange of such rights or options
less than the current exercisable price in effect immediately prior to the
issuance of such rights or the granting of such options, then the issuance of
such stock, obligations, rights, or options shall be deemed to be an issuance
(as of the date of issuance of such stock, obligations, rights, or options) of
the total maximum number of shares of Common Stock issuable upon the conversion
or exchange of all such convertible stock or obligations or upon the exchange
of all such rights or options, as the case may be. In such case, the amount
received or receivable by the Company in consideration of the issuance of such
stock, obligations, rights, or options (plus the minimum aggregate amount of
premium or additional consideration payable to the Company upon conversion or
exchange of the stock or obligations or upon the exchange of such rights or
options) before deducting therefrom any commissions or other expenses paid or
incurred by the Company for any underwriting of, or otherwise in connection
with, the issuance of such stock, obligations, rights or options, shall be
deemed to be the consideration actually received (as of the date of issuance of
such rights or options) for the issuance of the additional shares of Common
Stock.
The Consideration actually received by the Company for any shares of
Common Stock issued upon the exchange of such stock or obligations or upon the
exchange of such rights or options, which pursuant to this paragraph (viii) is
deemed to have been received, shall not be included in the first paragraph of
this Section 14.3(a) for the purpose of computing the current quotient and no
further adjustment of the exchange price shall be made in respect thereof
except that:
(1) On the expiration of such rights or options or the
termination of the right to convert or exchange such stock or obligations, the
current quotient and the current exchange price shall forthwith be readjusted
to the current quotient and current exchange price which would have obtained
had the adjustments made on account of the issuance of such options, rights or
convertible or exchangeable securities been made upon the basis of the delivery
of only the number of shares of Common Stock actually delivered upon the
exchange of such rights or options or upon conversion or exchange of such
securities for the consideration actually received by the Company for such
options, rights or securities and upon the exchange, exchange or conversion
thereof; and
(2) If the purchase or exchange price or exchange rate
provided for in any such options, rights, stock, or obligations changes or a
different purchase or exchange price or exchange rate becomes effective at any
time or from time to time (other than under or by reason of provisions
designated to protect against dilution) then, upon such change becoming
effective, the current quotient and current exchange price then in effect
hereunder shall forthwith be increased or decreased to such current quotient
and current exchange price as would have obtained had the adjustments made upon
the issuance of such options, rights or convertible or exchangeable securities
been made upon the basis of (A) the issuance of the number of shares of Common
Stock theretofore actually delivered upon the exchange, conversion or exchange
thereof, (B) the issuance of all Common Stock and all other options, rights or
convertible or exchangeable securities issued after the issuance of such
options, rights or convertible or exchangeable
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securities, and (C) the original issuance at the time of such exchange of any
such options, rights or convertible or exchangeable securities then still
outstanding.
In case, however, such stock or obligations are convertible or
exchangeable at a exchange price or exchange rate or such rights or options are
exercisable at a purchase price, per share equal to or in excess of the current
exchange price immediately prior to the issuance or sale of such convertible
stock or obligations or of such rights or options, then no adjustment of the
exchange price shall be made except in respect of additional shares of Common
Stock actually issued upon the conversion or exchange of any such convertible
stock or obligations or upon the exchange of any such rights or options.
ix) No adjustment in the exchange price shall be made in respect
of the issuance or sales of Common Stock held in the Company's treasury to the
extent it acquired such Common Stock after the date of Closing Time, except
that if any such treasury shares are issued or sold for a consideration per
share which is less than the exchange price in effect immediately prior to such
issue or sale and which is less than the average cost per share of such
treasury shares, Company shall be deemed for purposes of this Section 14.3, to
have issued or sold shares of Common Stock equal in number to such treasury
shares for a consideration per share equal to the exchange price in effect
immediately prior to such issue or sale reduced by the amount by which such
average cost of such treasury share exceeds such consideration per share.
(b) If the Company at any time subdivides or issues a stock
dividend upon the outstanding shares of Common Stock, the exchange price in
effect immediately prior to such subdivision or stock dividend shall be
proportionately decreased, and if the Company at any time combines the
outstanding shares of Common Stock, the exchange price in effect immediately
prior to such combination shall be proportionately increased. Any such
adjustment shall become effective at the close of business on the date that
such subdivision, stock dividend or combination becomes effective.
(c) No adjustment of the exchange price shall be made as a result
of or in connection with any of the following:
(1) The grant and issuance of stock options to the
Company's officers, employees, consultants, or affiliated professionals not
exceeding 15% of the total outstanding shares of the Company at any give time;
(2) The issuance of shares for strategic alliances
identified in the future (not with any current Affiliate) which is determined
to be in the best interest of the Company by the Board of Directors.
(d) Whenever the exchange price is adjusted, as herein provided,
the Company shall promptly deliver to each holder of Warrants a computation
setting forth the exchange price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment. Such computation shall
be made by certified public accountants (who may be Company's regular auditors
or certified public accounts and shall be conclusive evidence of the
correctness of such adjustment.
(e) The adjustments to the exchange price provided for in this
Section 14.3 shall be applicable, as provided in the Warrants, to the Purchase
Price provided for in the Warrants.
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14.4 Fractional shares. No fractional shares or script
representing fractional shares shall be issued upon the exchange of any
Warrants. If the exchange of any Warrants results in a fraction, an amount of
money equal to such fraction multiplied by the fair market value of one share
of Common Stock of the Company on the date on which such conversion or exchange
is deemed made shall be paid to the person otherwise entitled to such fraction.
14.5 Effect of reclassifications, etc. In case of any
reclassification or change of outstanding shares of Common Stock issuable upon
exchange of any Warrants (other than a change in par value, or from par value
to no par value, or from no par value to par value, or as a result of a
subdivision or combination), or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as
an entirety, the Company, or such successor or purchasing corporation, as the
case may be, shall execute with each holder of Warrants a supplemental
agreement providing that the holder of each Warrant then outstanding shall have
the right thereafter to exchange such Warrant to purchase the kind and amount
of shares of stock and other securities and property receivable upon such
reclassification, change, sale or conveyance. Such supplemental agreement
shall provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article 14. The above
provisions of this Section 14.5 shall similarly apply to successive
reclassifications and changes of shares of Common Stock and to successive sales
or conveyances.
14.6 Company to reserve stock. The Company covenants that it will
at all times reserve and keep available out of its authorized Common Stock,
solely for the purpose of issue upon exchange of the Warrants as herein
provided, the number of shares of Common Stock that is then issuable upon the
exchange of all outstanding Warrants. The Company covenants that all shares of
Common Stock which are so issuable shall, when issued pursuant to the terms of
the Warrants and this agreement, be duly and validly issued and fully paid and
nonassessable.
14.7 No dilution or impairment. The Company will not, by amendment
of its Articles of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue, or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any term of this agreement, the Notes, or Warrants, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of
all such action that is necessary or appropriate in order to protect the rights
of the holders of the Notes and Warrants against dilution or other impairment.
14.8 Taxes on exchange. The issuance of certificates for shares of
Common Stock upon the exchange of Warrants shall be made without charge to the
Warrant holders for any tax (other than federal or state income taxes) in
respect to the issuance of such certificates. Such certificates shall be
issued in the respective names of, or in the names directed by, the holder of
the Warrant exchanged. Company, however, shall not be required to pay any tax
which may be payable in respect to any transfer involved in the issuance and
delivery of any such certificate in a name other than that of the holder of the
Warrants exchanged, or to issue or deliver such certificates until the person
or persons requesting the issuance thereof have paid the Company the amount of
such tax or have established to the satisfaction of the Company that such tax
has been paid.
14.9 Notices of record date, etc.. If any of the following events
occur, the Company will mail or cause to be mailed a notice, as specified
below, to every holder of a Note or Warrant:
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(a) Any taking by Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a cash dividend at the same rate
as the rate of the last cash dividend theretofore paid) or other distribution,
or any right to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other securities or property or to receive any other
right;
(b) Any capital reorganization of the Company, any
reclassification or recapitalization of the Company's capital stock, or any
transfer of all or substantially all of the assets of the Company to or
consolidation or merger of the Company with or into any other Person;
(c) Any voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(d) Any proposed issue or grant by the Company of any shares of
stock of any class or any other securities (other than notes or other
obligations issued or incurred by Company in connection with the purchase of
real or personal property or the borrowing of money privately), or any right or
option to subscribe for, purchase or otherwise acquire any shares of stock of
any class or any securities (other than the Public Offering of Common Stock or
any issue or grant referred to herein).
The above notice to the Note or Warrant holder shall specify:
(1) The date or expected date on which any such record is
to be taken for the purpose of such dividend, distribution, or right, and
stating the amount and character of such dividend, distribution, or right;
(2) The date or expected date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up is to take place, and the time,
if any is to be fixed, as of which the holders of record of Common Stock (or
other securities) shall be entitled to exchange their shares of Common Stock
(or other securities) for securities or other property deliverable upon such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation, or winding-up; and
(3) The amount and character of any stock or other
securities, or rights or options with respect thereto, proposed to be issued or
granted, the date or expected date of such proposed issue or grant, and the
persons or class of persons to whom such proposed issue or grant is to be
offered or made. Such notice shall be mailed at least 20 days prior to the
date therein specified.
ARTICLE 15 - TRANSFERS NOT REGISTERED UNDER SECURITIES ACT OF 1933
15.1 Restrictive legends. Each Note, Warrant and certificate for
Common Stock issued upon the exchange of any Warrant, and each Note, Warrant,
and stock certificate issued upon the transfer of any such Note, Warrant or
Common Stock (except as otherwise permitted by this Article 15), shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"The securities represented hereby have not been registered
under the Securities Act of 1933. Such securities may not be
sold or transferred in the absence of such registration or an
exemption therefrom under said Act. Such securities may not
be transferred except upon the conditions
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specified in certain agreements, dated as of December 20,
1996, between the Company and certain Purchasers, complete and
correct copies of which are available for inspection at the
office of the Company and a conformed copy of which will be
furnished to the holder of such securities upon written
request and without charge. No transfer of such securities
shall be valid or effective unless and until the conditions so
specified have been complied with."
15.2 Notice of proposed transfer, opinions of counsel. Except as
provided in the last paragraph of this Section 15.2, prior to any transfer of
any such Notes, Warrants, or Common Stock, the holder thereof will give written
notice to Company of such holder's intention to effect such transfer and to
comply in all other respects with this Section 15.2. Each such notice shall
(a) describe the manner and circumstances of the proposed transfer in
sufficient detail to enable counsel to render the opinions referred to below,
and (b) designate counsel for the holder giving such notice (who may be house
counsel for such holder). The holder giving such notice will submit a copy
thereof to the counsel designated in such notice and Company will promptly
submit a copy thereof to its counsel, and the following provisions shall apply:
(1) If in the opinion of each such counsel, the proposed
transfer may be effected without registration under the Act of such Notes,
Warrants, or Common Stock, the Company will promptly notify the holder thereof
and such holder shall thereupon be entitled to transfer such Notes, Warrants,
or Common Stock in accordance with the terms of the notice delivered by such
holder to the Company. Each Note, Warrant, or certificate, if any, issued upon
or in connection with such transfer shall bear the appropriate restrictive
legend set forth in Section 15.1, unless in the opinion of each such counsel
such legend is no longer required to insure compliance with the Act. If for
any reason counsel for the Company (after having been furnished with the
required information under clause (a) of this Section 15.2) fails to deliver an
opinion to Company, or Company fails to notify such holder thereof as
aforesaid, within 20 days after counsel for such holder has delivered its
opinion to such holder (with a copy to Company), then for all purposes of this
agreement the opinion of the Company's counsel shall be deemed to be the same
as the opinion of counsel for such holder.
(2) If in the opinion of either or both of such counsel,
the proposed transfer may not be effected without registration under the Act of
such Notes, Warrants, or Common Stock, Company will promptly so notify the
holder thereof and thereafter such holder shall not be entitled to transfer
such Notes, Warrants, or Common Stock until receipt of a further notice from
Company under subdivision (1) above or, in the case of Common Stock, unless
registration of such Common Stock under the Act has become effective.
The Company will pay the reasonable fees and disbursements of counsel
(other than house counsel) for any holder and of counsel for the Company in
connection with all opinions rendered by them pursuant to this Section 15.2.
ARTICLE 16 - REGISTRATION, TRANSFER, AND EXCHANGE OF NOTES
(a) The Company shall, at its expense (except for transfer taxes),
keep a register at its principal office in which, subject to reasonable
regulations, it shall provide for the registration and transfers of Notes.
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(b) Whenever any Note or Notes are surrendered at the Company's
principal office, either for transfer or exchange, accompanied (if so required
by the Company) by an instrument of transfer in a form satisfactory to Company
and duly executed by the holder thereof or the holder's attorney duly
authorized in writing, the Company shall execute and deliver in exchange
therefor (subject to the provisions of Article 15) a new printed Note or Notes
as requested by the holder, in the same aggregate unpaid principal amount as
that of the surrendered Note or Notes. The holder requesting the exchange,
however, shall pay any transfer tax relating to such transaction. Each such
new Note shall be dated as of the date to which interest has been paid on the
unpaid principal amount of the surrendered Note or Notes, and shall be in the
principal amounts and registered in the same name or names the holder
designates in writing.
ARTICLE 17 - REPLACEMENT OF NOTES
If any Note held by a Person other than you is lost, stolen,
destroyed, or mutilated, and the Company receives evidence reasonably
satisfactory to it of such loss, theft, destruction, or mutilation, and such
Person delivers an indemnity bond in a reasonable amount determined by Company,
or a mutilated Note is surrendered and cancelled, Company will, at its expense,
execute and deliver a new replacement Note of like tenor, dated the date to
which interest has been paid on the replacement Note.
ARTICLE 18 - EVENTS OF DEFAULT; ACCELERATION
The following events shall constitute Events of Default:
(a) The Company defaults in the payment of any part of the
principal of or premium on any Note when it becomes due and payable, whether at
maturity or at a date fixed for prepayment or by declaration or otherwise;
(b) The Company defaults in the payment of any installment of
interest on any Note for more than 20 days after it has become due and payable;
(c) The Company defaults in the performance of or compliance with
any material term of this agreement, and such default is not remedied within 30
days after the holder of any Note gives the Company written notice thereof;
(d) The Company or any Subsidiary defaults (as principal,
guarantor, or other surety) in the payment of principal of, premium or interest
on, or any other payment of money due under, any other material obligation for
borrowed money (including any obligation secured by a purchase money mortgage)
beyond any provided period of grace, or in the performance of any other
material agreement, term, or condition contained in any agreement under which
such obligation is created if the effect of such default is to cause, or permit
the holder or holders of such obligation (or a trustee on their behalf) to
cause, the obligation to become due before its stated maturity;
(e) The Company or any Subsidiary (i) makes an assignment for the
benefit of creditors, (ii) admits in writing to its inability to pay its debts
as they become due, (iii) files a voluntary petition in bankruptcy, (iv) is
adjudicated a bankrupt or insolvent, (v) files any petition or answer seeking
for itself any reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any present or future
statute, law, or regulation, (vi) files an answer admitting or not contesting
the material allegations of a material petition filed against the Company or
any Subsidiary in such proceeding,
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or (vii) seeks, consents to, or acquiesces in the appointment of any trustee,
receiver, or liquidator of the Company or any Subsidiary or of all or any
substantial part of the Company's or Subsidiary's property, or the Company or
its directors or majority stockholders take any action looking to its
dissolution or liquidation;
(f) An action is commenced against the Company or any Subsidiary
seeking a reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any present or future statute, law, or
regulation, and the action is not dismissed, or all orders or proceedings
thereunder affecting the Company's operations or business are not stayed within
60 days after commencement of such action, or the stay of any such order or
proceedings is thereafter set aside; or, a trustee, receiver, or liquidator is
appointed for the Company or any Subsidiary or of all or a substantial part of
the Company's or Subsidiary's properties without the Company's or Subsidiary's
consent or acquiescence, and the appointment is not vacated within 60 days
after the appointment; or
(g) A final judgment, against which the Company or any Subsidiary
is uninsured and which, together with other like outstanding judgments against
the Company and its Subsidiaries, exceeds a total of $500,000, is rendered
against the Company or a Subsidiary, and within 60 days after the entry
thereof, the judgment is not discharged or execution thereof stayed pending
appeal; or, within 60 days after the stay expires, the judgment is not
discharged.
Notwithstanding the above, or anything else contained in this
agreement, should the Company be in default under any Senior Debt, the Company
shall have the opportunity to cure the same and during such period no Note
payments shall become due and payable and shall be delayed until the Senior
Debt is satisfied in full.
If any of the above Events of Default occur, any holder or holders of
50 percent or more in aggregate principal amount of the Notes then outstanding
("50 percent holders") may at any time (unless all defaults have previously
been remedied), by written notice to the Company, and, to the extent they are
known to such holder or holders, to the other holders of Notes declare all the
Notes, to be due and payable. In such case, the Notes immediately shall mature
and become due and payable, together with interest accrued thereon. While an
Event of Default continues, however, and irrespective of whether the 50 percent
holders have declared all of the Notes to be due and payable, any original
purchaser of the Notes may, by written notice to the Company, declare the Notes
then held by it to be, and such Notes shall thereupon be and become,
immediately due and payable, together with interest accrued thereon. Any such
action by 50 percent holders, however, may be rescinded with the consent of the
holders of 66.66 percent or more in aggregate principal amount of the Notes
then outstanding, if the Company has cured the Event of Default.
ARTICLE 19 - SUBORDINATION OF NOTES
(a) The payment of the principal of and interest on the Notes is
hereby expressly subordinated, to the extent and in the manner hereinafter in
this Article 19 set forth, to the right of payment of the prior payment of
Senior Debt in full.
(b) Upon any distribution of the Company's assets upon its
dissolution, winding up, liquidation, or reorganization, whether in bankruptcy,
insolvency, reorganization or receivership
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proceedings, or upon an assignment for the benefit of creditors or any other
marshalling of the Company's assets and liabilities or otherwise:
(1) All principal, premium, if any, and interest due upon
all Senior Debt shall first be paid in full, or payment thereof provided for in
money or money's worth, before the holders of the Notes are entitled to receive
any payment upon the principal of, premium, if any, or interest on the Notes;
(2) Any payment or distribution of the Company's assets
of any kind or character, whether in cash, property or securities (other than
shares of the Company's stock as reorganized or readjusted or securities of
Company or any other corporation provided for by a plan of reorganization or
readjustment, the payment of which is subordinated to the payment of all Senior
Debt which may at the time be outstanding on terms not less favorable to the
holders thereof than those of this Article 19) to which the holders of the
Notes would be entitled except for the provisions of this Article 19 shall be
paid by the liquidating trustee or otherwise, directly to the holders of Senior
Debt (pro ▇▇▇▇▇ to each such holder on the basis of the respective amounts of
Senior Debt held by each such holder), to the extent necessary to pay in full
all Senior Debt remaining unpaid, after giving effect to any prior or
concurrent payment or distribution, or provision therefor, to the holders of
Senior Debt on the Senior Debt;
(3) If, notwithstanding the foregoing, any payment or
distribution of the Company's assets of any kind or character, whether in cash,
property, or securities (other than shares of the Company's stock as
reorganized or readjusted or securities of Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated to the payment of all Senior Debt which may at the time be
outstanding on terms not less favorable to the holders thereof than those of
this Article 19) is received by the holders of the Notes before all Senior Debt
is paid in full, or provision made for its payment, such payment or
distribution shall be paid over to holders of Senior Debt (pro rata to each
such holder on the basis of the respective amounts of Senior Debt held by such
holder), for application to the payment of all Senior Debt remaining unpaid
until all such Senior Debt has been paid in full, or provision made for its
payment, after giving effect to any prior or concurrent payment or distribution
to the holders of the Senior Debt on the Senior Debt; and
(4) Each holder of the Notes agrees, in the event of any
proceeding described in this paragraph (b) of this Article 19, to proceed
promptly and with due diligence to enforce its claim, or to notify the Company
and the other holders of the Notes in writing of its intention not to so
enforce its claim, as a holder of the Notes against the Company.
(c) In the event and during the continuance of any default by the
Company in the payment of any Senior Debt when due (whether at a stated
maturity date, upon acceleration or otherwise), no payment of principal of,
premium, if any, or interest on the Notes shall be made by the Company.
(d) Subject to the payment in full of all Senior Debt, the holders
of the Notes shall be subrogated to the rights of the holders of the Senior
Debt to receive payments or distributions of the Company's assets applicable to
the Senior Debt until the principal of, premium, if any, and interest on the
Notes is paid in full. No such payments or distributions applicable to the
Senior Debt shall, as between the Company, its creditors other than the holders
of the Senior Debt, and the holders of the Notes, be deemed to be a payment by
the Company to or on account of the Notes.
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(e) The provisions of this Article 19 are solely for the purpose
of defining the rights of the holders of the Notes, on the one hand, relative
to the rights of the holders of the Senior Debt, on the other hand, and nothing
contained in this Article 19 or elsewhere in the Agreements or in the Notes is
intended to or shall:
(1) Impair, as between the Company, its creditors other
than the holders of Senior Debt, and the holders of the Notes, the Company's
obligation, which is unconditional and absolute, to pay to the holders of the
Notes the principal of, premium, if any, and interest on the Notes, as and when
the same becomes due and payable in accordance with the terms of the Notes, or
(2) Affect the rights of the holders of the Notes
relative to creditors of Company other than the holders of the Senior Debt, nor
shall anything in the Agreements or in the Notes prevent the holder of any
Notes from exercising all remedies otherwise permitted by applicable law upon
default under this agreement, subject to the rights, if any, under this Article
19 of the holders of the Senior Debt in respect to the Company's assets
received upon the exchange of any such remedy.
(f) Upon any payment or distribution of the Company's assets
referred to in this Article 19, the holders of the Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction in
which such dissolution, winding up, liquidation, or reorganization proceedings
are pending or upon a certificate of the liquidating trustee or agent or other
person making any distribution to the holders of the Notes on the Notes for the
purpose of ascertaining the amount of the Senior Debt, the holders thereof, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 19.
(g) Nothing contained in this Article 19 or in the Agreements or
in the Notes, shall affect the Company's obligation to make, or prevent the
Company from making, at any time except as set forth in paragraphs (b), (c) and
(d) of this Article 19, payments of principal of, premium, if any, or interest
on the Notes.
(h) No modification, amendment, or waiver of any provision of this
Article 19 shall be made without the prior written consent of the holders
having a majority interest in the Notes.
ARTICLE 20 - REMEDIES ON DEFAULT, ETC.
If any one or more Events of Default occur and are continuing, the
holders of any Notes at the time outstanding may proceed to protect and enforce
their rights by an action at law, suit in equity, or other appropriate
proceeding, whether for the specific performance of any agreement contained
herein or in such Note, or for an injunction against a violation of any of the
terms hereof or thereof, or in aid of the exchange of any power granted hereby
or thereby or by law. In case of a default in the payment of any principal of
or premium, if any, or interest on any Note, the Company will pay the holder a
further amount sufficient to cover the cost of collection, including (without
limitation) reasonable attorney's fees, expenses, and disbursements. If any
holder of any Note gives any notice or takes any other action in respect of a
claimed default, the Company will forthwith give written notice thereof to all
other holders of the Notes at the time outstanding describing the notice or
action and the nature of the claimed default. No course of dealing and no
delay by any holder of any Note in exercising any right, power, or remedy shall
operate as a waiver thereof or otherwise prejudice such holder's rights, powers
and remedies. No right, power, or remedy conferred hereby or by any Note upon
any holder thereof shall be exclusive of
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any other right, power, or remedy referred to herein or therein or now or
hereafter available by law, in equity, by statute or otherwise.
ARTICLE 21 - DEFINITIONS
As used herein, the following terms have the following respective
meanings:
21.1 Affiliate.
(a) Any Person owning or controlling 5 percent or more of any
class of stock or similar interests of Company or any
Subsidiary;
(b) Any spouse of any such Person;
(c) Any relative (within the third degree) of any such Person or
spouse;
(d) Any corporation, association, or other business entity in
which any such Person or spouse or relative has a substantial direct or
indirect interest; and
(e) Any corporation (other than a Subsidiary), association, or
other business entity 5 percent or more of any class of stock or similar
interests of which is owned or controlled by the Company or any Subsidiary.
21.2 The Exchange Formula. In a Net Issuable Exchange the formula
for determining the number of shares of Common Stock to be received in exchange
for a Warrant shall be determined as follows:
The Current Number of Shares at Any
Given Time To be Received in the Event X MP - EP = # of shares in exchange for a Warrant
of an Exchange of a Warrant with Full -------
Payment of the Exchange Price MP
MP = MARKET PRICE OF STOCK.
EP = EXERCISE PRICE.
21.3 Common Stock. All shares now or hereafter authorized by the
class of the Company's Common Stock, par value $.001 per share, presently
authorized and stock of any other class into which such shares may hereafter
have been changed.
21.4 First Liquidity Event. A change of control in the Company
defined as a change in ownership of the majority of the Company's issued and
outstanding stock or the change in ownership of enough issued and outstanding
Company stock (i.e. less than a majority) to control the outcome of an election
of the Company's directors, a merger where the Company is not the surviving
entity, an initial public offering by the Company in excess of $15.0 million in
net proceeds, or a sale of substantially all of the Company's assets.
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21.5 Generally accepted accounting principles. As determined by
independent certified public accountants of recognized national standing
selected by the Company.
21.6 Indebtedness. As applied to a Person,
(a) All items which, in accordance with generally accepted
accounting principles, would be included in determining total liabilities as
shown on the liability side of a balance sheet of such Person as of the date of
which the Indebtedness is to be determined;
(b) All Indebtedness (other than Indebtedness owing to such
Person) secured by any mortgage, pledge, lien, security interest or conditional
sale, or other title retention agreement to which any property or asset owned
or held by such Person is subject, regardless of whether the Indebtedness
secured thereby has been assumed; and
(c) All Indebtedness of others which such Person has directly or
indirectly guaranteed, endorsed (other than for collection or deposit in the
ordinary course of business), discounted, sold with recourse or agreed
(contingently or otherwise) to purchase or repurchase or otherwise acquire, or
in respect of which such Person has agreed to supply or advance funds (whether
by way of loan, stock purchase, capital contribution or otherwise) or otherwise
to become directly or indirectly liable.
21.7 Market Price. This Market Price of stock shall be the method
of determining a market price of stock in use for the Exchange Formula and in
determining Market Price on the date of a First Liquidity Event. Market Price
shall mean the average of the daily closing price of the Company's common stock
for the ten (10) consecutive business days immediately prior to the day in
question. The closing price for each day shall be (a) the last reported sales
price or, in case no such reported sale takes place on such day, the average of
the reported closing bid and asked prices, in either case on the principal
national securities exchange on which the common stock is listed or admitted to
trading or, if the common stock is not listed or admitted to trading on any
national securities exchange, on the National Association of Securities Dealers
Automated Quotation National Market System, or (b) if the Common Stock is not
listed or admitted to trading on any national securities exchange or quoted on
such National Market System, the average of the closing bid and asked prices in
the over-the-counter market as furnished by any New York Stock Exchange member
firm reasonably selected from time to time by the Company for that purpose, or
(c) if the common stock is neither listed or admitted to trading as aforesaid,
nor traded in the over-the-counter market, Market Price shall be determined in
the following manner: For a period of ten (10) days after the date the Company
is notified of a holder's desire to effect a Net Issuable Exchange or after the
date of a First Liquidity Event (the "Negotiation Period"), the holder's
effected (the "Participating Holder"), and the Company agree to negotiate in
good faith to reach agreement upon the Market Price of the Company's common
stock. In the event that the Participating Holder and the Company are unable
to agree upon the Market Price by the end of the Negotiation Period, the Market
Price of the Company's Common Stock shall be determined for purposes of Section
1.2 initially by an appraiser selected by the Company (the "Company Appraiser")
and whose appraisal (the "Company Appraisal") shall be furnished to the
Participating Holder within fifteen (15) days after the date of the notice
given under Section 1.2 hereof. If the Participating Holder does not object to
such determination within fifteen (15) days after receipt of such appraisal,
the fair market value determined by the Company Appraiser shall be the Market
Price. If the Participating Holder objects to the fair market value determined
by Company Appraiser, then the Participating Holder may select an Appraiser
(the "Holder's Appraiser") who shall review the determination of the Company
appraiser and issue a report thereon (the
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"Holder's Appraiser") within fifteen (15) days after delivery to the
Participating Holder of the Company Appraisal. Within ten (10) days after
delivery to the Company of the Holder's Appraisal, the Company Appraiser and
the Holder's Appraiser shall meet in order to resolve any questions or
differences with respect to the Market Price. If such Appraisers agree on a
Market Price of the Company's common stock, such price shall be the Market
Price. If no agreement is reached, such Appraisers shall select an appraiser
(the "Third Appraiser") within five (5) days after such meeting. The Market
Price of the common stock shall then be determined by the Third Appraiser
within thirty (30) days after delivery to the Company of the Holder's
Appraisal, and the determination of the Third Appraiser shall be conclusive and
binding on both the Company and the Participating Holders. Market Price of the
common stock shall in all cases be calculated by determining the Market Price
of the entire common stock equity interest of the Company taken as a whole,
without premium for control or discounts for minority interests or restrictions
on transfer. All expenses of the Company appraisal, the Holder's Appraisal and
the Third Appraisal shall be borne equally by the Company and the Participating
Holder(s) on a prorata basis.
21.8 Net Issuable Exchange. A cashless exchange of Warrant for
shares of Common Stock based upon The Exchange Formula.
21.9 Officer's certificate. A certificate signed in the name of
the Company by its Chairman of the Board of Directors, or its President or one
of its Vice Presidents and its Treasurer or one of its Assistant Treasurers.
21.10 Person. A corporation, an association, a partnership, an
organization, a business, an individual, or a government or political
subdivision thereof, or any governmental agency, but excluding a Subsidiary.
21.11 Public offering of common stock. The first underwritten
public offering of shares of the Company's Common Stock registered under the
Act, as a result of which Purchasers will no longer be entitled to
anti-dilution protection as to its ownership Warrants or Common Stock.
21.12 Senior Debt. The principal (and premium, if any, payable on
redemption) of and interest on all Indebtedness of the Company and its
Subsidiaries for any current and future liabilities or obligations of any kind,
and all current and future guaranties, direct or indirect, by the Company or
any Subsidiary of such Indebtedness of others and all renewals, extensions and
refundings of any such Indebtedness, and all such current and future guaranties
by the Company or any Subsidiary of renewals, extensions and refundings of any
such Indebtedness of others, whether such Indebtedness or guaranty is
outstanding on the date of this agreement or thereafter created, incurred or
assumed, unless by the terms of the future instrument creating or evidencing
such future Indebtedness or future guaranty or pursuant to which the same is
outstanding it is provided in effect that the Indebtedness or guaranty is not
superior in right of payment to the Notes. Notwithstanding anything contained
herein to the contrary, all debt that is not traditionally senior debt (senior
debt to include, but not be limited to current and future acquisition debt,
bank debt, institutional debt, trade debt, financing debt, (except Company
affiliates or insiders), shall be pari passu basis with this debt. As to the
current outstanding debt to the Company Director, the Company covenants and
agrees to provide Purchasers on an equal basis and at the same time on a pari
passu basis, for any payment on such debt to the Company Director or grant of
security to such Company Director. The Company agrees to immediately provide
Purchasers with notice of any demand or action by said Director to collect such
debt. In the event of a payment to Purchaser hereunder the Note shall be
reduced accordingly.
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21.13 Subsidiary. Any corporation, association, or other business
entity in which more that 50 percent of the stock of each class having ordinary
voting power is, at the time as of which any determination is being made, owned
or controlled, directly or indirectly, by the Company and/or one or more of its
Subsidiaries.
ARTICLE 22 - EXPENSES
Upon consummation of the transaction, the Company will pay:
(a) All the costs and expenses of this agreement, of the printing
and the issue of the Notes and Warrants and the Common Stock issuable upon
conversion of the Notes and Warrants, of any taxes (including any interest and
penalties in respect thereof) payable on such issue (Company agreeing to
indemnify you in respect thereof), of furnishing all opinions by the Company's
counsel (including any opinions requested by your special counsel as to any
legal matter arising hereunder) and all certificates on behalf of the Company,
and of the Company's performance of and compliance with all of its agreements
and conditions contained herein;
(b) The cost of delivering to you, insured to your satisfaction,
the Notes and Warrants purchased by you at Closing Time and any Notes and
Warrants or Common Stock or Warrants delivered to you upon any exchange,
delivery or exchange pursuant to the provisions of this agreement and of
delivering any Notes to the Company, insured to your satisfaction, if delivered
by you pursuant to the provisions of this agreement or upon any conversion or
prepayment of the Notes;
(c) Pay, indemnify, and hold you and each other holder of any Note
harmless from and against any and all liability and loss with respect to or
resulting from:
(1) All claims for or on account of brokers' or finders'
fees or commissions with respect to such transactions; and
(2) The nonpayment or delayed payment of all stamp and
other taxes, fees, and excises (other than transfer taxes), if any, including
any interest and penalties, which may be or be determined to be, payable in
connection with this transaction, or in connection with the original issue of
the Notes or any Common Stock issuable upon exchange of Notes or Warrants.
(d) All legal fees and costs incurred with Special Counsel of the
Purchaser in connection with this transaction. Special Counsel is Posternak,
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, L.L.P., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇.
ARTICLE 23 - SURVIVAL OF AGREEMENTS, REPRESENTATIONS, AND WARRANTIES, ETC.
All agreements, representations, and warranties contained herein or
made in writing by or on behalf of Company in connection with the transactions
contemplated hereby shall survive the execution and delivery of this agreement,
any investigation at any time made by you or on your behalf, your acquisition
of the Notes, and any disposition, or payment of the Notes. All statements
contained in any certificate or other instrument delivered by Company pursuant
hereto or in connection with the transactions contemplated hereby shall be
deemed representations and warranties by the Company hereunder.
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ARTICLE 24 - NOTICES, ETC.
All notices, requests, consents, and other communications hereunder
shall be in writing and mailed by first class registered or certified mail,
postage prepaid:
(a) If to you, at your address as set forth in SCHEDULE 1 to this
agreement, marked for attention as there indicated, or at any other address
furnished to Company by you in writing; or
(b) If to any other holder of any Note or Warrant, at any address
furnished to the Company in writing by such holder, or, until such other holder
furnishes to Company an address, then to, and at the address of, the last
holder of such Note or Warrant who has so furnished an address to Company; or
(c) If to the Company, Vision 21, Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, with a copy to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire, ▇▇▇▇▇▇▇▇, Loop
& ▇▇▇▇▇▇▇▇, LLP, ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
ARTICLE 25 - AMENDMENTS AND WAIVERS
Neither this agreement nor any Notes nor any term hereof or thereof
may be changed, waived, discharged or terminated orally or in writing, except
that any term of this agreement or of the Notes may be amended and the
observance of any such term may be waived (either generally or in a particular
instance and either retroactively or prospectively) with (and only with) the
written consent of the holders of at least 51 percent in principal amount of
the Notes at the time outstanding, provided, however, that no such amendment or
waiver shall, without the written consent of the holders of all of the Notes at
the time outstanding, (a) change the amount or time of any payment or
prepayment of any Notes or any part thereof, or of any premium or interest
thereon, or (b) reduce the percentage of the principal amount of the Notes the
holders of which are required to consent to any amendment or waiver under this
Article 25.
ARTICLE 26 - HOME OFFICE PAYMENT
The Company agrees that, as long as you shall hold any Notes, it will
make payments of principal thereof and interest and premium, if any, thereon by
check duly mailed to you, or to your nominee, at the address set forth under
your name on SCHEDULE 1, or any other address you designate to the Company in
writing, notwithstanding any contrary provision herein or in any Note with
respect to the place of payment. You agree that, before disposing of any Note,
you will make a notation thereon of all principal payments previously made
thereon and of the date to which interest thereon had been paid, and will
notify the Company of the name and address of the transferee of such Note if
known to you.
ARTICLE 27 - MISCELLANEOUS
This agreement is being delivered and is intended to be performed in
the State of Florida and shall be construed and enforced in accordance with and
governed by the laws of such State. All the terms of this agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto, whether so expressed or not, and,
in particular, shall inure to the benefit of and be enforceable by any holder
or holders at the time of the Notes. This agreement embodies the entire
agreement and understanding between you and the Company and supersedes all
prior agreements and understandings relating to the subject matter hereof. The
headings in this agreement are
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for convenience of reference only, and shall not limit or otherwise affect the
meaning hereof. This agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this letter and return the same to
the Company, whereupon this letter shall become a binding contract between you
and the Company.
Very truly yours,
VISION 21, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
(Corporate Seal)
Attest:
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief Financial
Officer
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The foregoing agreement is hereby agreed to as of this date thereof.
/s/
-----------------------------------
Purchaser
By:
--------------------------------
Purchaser's Facsimile Number:
---------------------------------
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The foregoing agreement is hereby agreed to as of this date thereof.
/s/
-----------------------------------
Purchaser
By:
--------------------------------
Purchaser's Facsimile Number:
------------------------------
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The foregoing agreement is hereby agreed to as of this date thereof.
/s/
------------------------------------
Purchaser
By:
---------------------------------
Purchaser's Facsimile Number:
------------------------------
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The foregoing agreement is hereby agreed to as of this date thereof.
/s/
--------------------------------
Purchaser
By:
-----------------------------
Purchaser's Facsimile Number:
------------------------------
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EXHIBIT A - FORM OF
10% SENIOR SUBORDINATED NOTE, DUE DECEMBER 19, 1999
$50,000 December 20, 1996
Largo, Florida
FOR VALUE RECEIVED, the undersigned Vision 21, Inc. ("the Company"), a
corporation organized and existing under the laws of the State of Florida,
hereby promises to pay to ______________________________________, or registered
assigns, interest (computed on the basis of a 360-day year of twelve 30-day
months) on the unpaid balance thereof at the rate of 10 percent per annum from
the date hereof, payable semiannually on the 19th day of December and the 19th
day of June each year commencing with June 19, 1997 until the principal hereof
has become due and payable, and thereafter at the rate of 12 percent per annum
until paid, and so far as may be lawful, with interest on any overdue
installment of interest at the rate of 12 percent per annum. The entire
principal sum of the Note in the amount of $50,000 and any accrued interest yet
unpaid shall become due and payable in full the earlier of December 19, 1999,
or the date of a First Liquidity Event as defined in the Note Purchase
Agreement.
Payments of both principal and interest are to be made at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or any other place the holder hereof
designates to the Company in writing, in lawful money of the United States of
America.
This Note is one of a number of the Company's Notes all of the same
tenor as this Note except for certain variations between series. This Note has
been, and such other Notes have been issued, pursuant to that Note Purchase
Agreement dated December 20, 1996, between the Company and the Purchasers of
said Notes and is entitled to the benefits of said Note Purchase Agreement. As
provided therein, this Note is subject to prepayment, in whole or in part,
without penalty or premium.
This Note and all payments hereon, including principal and interest,
are subordinated to all the Company's Senior Debt, as defined in said Note
Purchase Agreement, to the extent and in the manner specified in that
agreement.
If an event of default, as defined in the Note Purchase Agreement
occurs and is continuing, the principal of this Note may be declared due and
payable in the manner and with the effect provided in said Note Purchase
Agreement.
VISION 21, INC.
(Corporate Seal) By:
-------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
Attest:
By:
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief Financial
Officer
S-1
42
EXHIBIT B - FORM OF WARRANT
No. of Shares: 10,549 Warrant No.
----------
WARRANT EXCHANGEABLE TO
COMMON STOCK
EXPIRING DECEMBER 19, 2003
THIS CERTIFIES THAT, for value received, or registered assigns, is
entitled to exchange this Warrant with Vision 21, Inc., a Florida corporation
("the Company"), on or after January 1, 1997, and before 5 p.m., New York City
time, on December 19, 2003, for 10,549 shares of Common Stock, par value $_____
per share, of Company, at the Exchange Price (as hereinafter defined) in lawful
money of the United States of America or, except as restricted herein, pursuant
to a Net Issuable Exchange (or defined in the Note Purchase Agreement described
below). The number of shares of Common Stock to be received upon an exchange
of this Warrant and the Exchange Price are subject to adjustment as hereinafter
set forth.
This Warrant has been issued pursuant to the Note Purchase Agreement
dated as of December 20, 1996, between Company and the Purchasers defined
therein, (the "Note Purchase Agreement"). The applicable provisions of the
Note Purchase Agreement are incorporated herein by reference, and the holder
hereof is entitled to the benefit thereof. A conformed copy of the Note
Purchase Agreement will be furnished to the holder hereof by the Company upon
written request and without charge.
Section 1. Exchange of warrants. At any time up through December 19,
2003, subject to the terms hereof, the Warrants shall be exchangeable by the
holder of such Warrant. Each Warrant shall initially be exchangeable for
10,549 shares of Common Stock at an exchange price of $4.74 per share of Common
Stock or in a cashless exchange for a reduced number of shares (the "Net
Issuable Exchange") as determined by the Exchange Formula defined herein. The
Warrants will be exchangeable upon surrender of the Warrant to the Company at
its principal office in Florida at any time during usual business hours,
accompanied, if so required by the Company, by an instrument or instruments of
transfer in form satisfactory to the Company duly executed by the holder of
such Warrant. However, in the event that the Company has not completed an
initial public offering by September 30, 1997, and redeemed the Notes, or if a
First Liquidity Event as defined in the Note Purchase Agreement has not
occurred, the exchange price of the Warrants shall be adjusted to $4.00 per
share. The Warrants will expire by 5:00 p.m., December 19, 2003 if not
exchanged by such date. Should the mid- price offering price set forth in an
initial filed Form S-1 Registration Statement (and the Company warrants that
there will be a price range set forth in the initial Form S-1 Registration
Statement filed) for an initial public offering be less than $9.48 per share,
than the exchange price for the stock shall become one-half of that mid-price
offering price. Should the Market Price per share of Common Stock as defined
herein be less than $9.48 at the time of any First Liquidity Event other than
an IPO, then the exercise price for the stock shall become one-half of that
Market Price per share on such date. Notwithstanding anything contained herein
to the contrary, a holder may no longer exchange Warrants for shares of stock
after the date of a First Liquidity Event pursuant to a Net Issuable Exchange,
but may only exchange Warrants for shares of stock by payment of the exchange
price.
▇-▇
▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ of common stock upon exchange. As promptly as
practicable after the surrender, as herein provided, of any Warrant, the
Company shall deliver or cause to be delivered to or upon the written order of
the holder of the Warrant the shares to be issued on exchange in accordance
with the provisions of this Section 2 certificates representing the numbers of
fully paid and nonassessable shares of Common Stock into which such Warrant is
exchangeable in accordance with the provisions of this Section 2. Subject to
the following provisions of this paragraph, such exchange shall be deemed to
have been made at the close of business on the date that such Warrant has been
exchanged, so that the rights of the holder of such Warrant exchanged shall
cease at such time and the person or persons entitled to receive the shares of
Common Stock upon exchange of such Warrant shall be treated for all purposes as
having become the record holder or holders of such shares of Common Stock at
such time and such exchange shall be at the exchange price in effect at such
time; provided, however, that no such surrender on any date when the stock
transfer books of the Company are closed shall be effective to constitute the
person or persons entitled to receive the shares of Common Stock upon such
exchange as the record holder or holders of such shares of Common Stock on such
date, but such surrender shall be effective to constitute the person or persons
entitled to receive such shares of Common Stock as the record holder or holders
thereof for all purposes at the close of business on the next succeeding day on
which such stock transfer books are open and such exchange shall be at the
exchange price in effect on the date that such Warrant has been surrendered for
exchange.
Section 3. Registered holder as owner; replacement. (a) The Company
may treat the registered holder hereof as the owner hereof (notwithstanding any
notations of ownership or writing hereon made by anyone other than the Company)
for all purposes and shall not be affected by any notice to the contrary.
a. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction, or mutilation of this
Warrant, and, in case of loss, theft or destruction, or indemnity or security
reasonably satisfactory to it, and upon surrender and cancellation of this
Warrant, if mutilated, the Company will make and deliver a new Warrant of like
tenor, in lieu of this Warrant, provided, that if an original holder of Notes
or its nominee or nominees is such holder an agreement of indemnity shall be
sufficient for all purposes of this Section 3.
b. This Warrant shall be promptly cancelled by the Company upon
the surrender hereof in connection with any exchange, transfer, or replacement.
The Company shall pay all expenses, taxes (other than stock transfer taxes) and
other charges payable in connection with the preparation, execution, and
delivery of Warrants pursuant to this Section 3.
Section 4. Restrictions on transfer. This Warrant and the related
Warrant Shares shall not be transferrable or exchanged except upon the
conditions and to the extent specified in the Note Purchase Agreement.
Section 5. Adjustment of exchange price. The Exchange Price shall be
subject to adjustment from time to time in the manner as described in the Note
Purchase Agreement.
Section 6. Reduction of exchange price. The Company shall have the
right, at any time or from time to time, voluntarily to reduce the Exchange
Price then in effect for any period or periods of time its Board of Directors
may determine. In each such event Company shall mail to all Warrantholders a
certificate of an officer of Company stating (a) Company's election to reduce
the Exchange Price in
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accordance with this Section 6, (b) that such election is irrevocable during
the period below referred to, and (c) the period in which such reduced Exchange
Price shall be in effect, such period to commence not less than 30 days after
the certificate is mailed to the Warrantholders. Failure to receive such
certificate by mail, or any defect therein, shall not affect the validity of
the reduction of the Exchange Price during such period. No reduction of the
Exchange Price pursuant to the provisions of this Section 6 shall be deemed for
the purposes of Section 5 to alter or adjust the Exchange Price or to increase
the number of shares then purchasable upon the exchange of the Warrants.
Section 7. Special agreements of company. (a) The Company covenants
and agrees that it will reserve and set apart and have at all times a number of
shares of authorized but unissued Common Stock deliverable upon the exchange of
this Warrant or any other rights or privileges provided for herein sufficient
to enable it at any time to fulfill all its obligations hereunder. The Company
covenants and agrees that it will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of its terms hereunder, but
will at all times in good faith assist in carrying out all of the provisions of
this Warrant and in taking all necessary or appropriate action in order to
protect the rights of the holders of this Warrant against dilution or other
impairment.
a. This Warrant shall be binding upon any corporation succeeding
to the Company by merger, consolidation, or acquisition of all or substantially
all of the Company's assets.
Section 8. Notices. All notices and documents to Warrantholders
under this agreement shall be sent by registered or certified mail to the
holder at the address shown on the holder's warrant or any other address the
holder has furnished the Company in writing. All notices and documents to the
Company shall be sent by certified or registered mail to its principal office,
at Vision 21, Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or any other
address the Company has furnished the Warrantholders in writing with a copy to
Company counsel:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
▇▇▇▇▇▇▇▇, Loop & ▇▇▇▇▇▇▇▇, LLP
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Section 9. No rights as shareholder; limitation of liability. This
Warrant shall not entitle the holder hereof to any of the rights of a
shareholder of the Company except as set forth in the Note Purchase Agreement.
No provision hereof, in the absence of affirmative action by the holder to
purchase shares of Common Stock, and no mere enumeration herein of the rights
or privileges of the holder hereof, shall give rise to any liability of such
holder for the Exchange Price or as a shareholder of the Company, whether such
liability is asserted by the Company or by its creditors.
Section 10. Law governing. This Warrant shall be governed by, and
construed and enforced in accordance with the, the laws of the State of
Florida.
Section 11. Rights under Note Purchase Agreement. The holder hereof
shall be entitled to all rights accorded to a holder, as well as all
obligations as contained in the Note Purchase Agreement.
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Section 12. Expiration. This Warrant shall expire and become null
and void if not exchanged on or before 5:00 p.m. on December 19, 2003.
IN WITNESS WHEREOF, Vision 21, Inc. has caused this Warrant to be
signed by its duly authorized officer under its corporate seal, attested by its
duly authorized officer, and to be dated December 20, 1996.
VISION 21, INC.
By:
-------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
Attest:
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, Chief Financial Officer
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EXHIBIT C - ASSIGNMENT
To Be Executed by the Registered Holder if He Desires to
Transfer the Warrant
VISION 21, INC.
FOR VALUE RECEIVED, __________________________________________, hereby
sells, assigns, and transfers unto ________________________________________,
the right to purchase __________ shares of Common Stock, evidenced by the
within Warrant, and does hereby irrevocably constitute and appoint
_____________________________________________ as Attorney to transfer the said
Warrant on the books of the Company, with full power of substitution.
----------------------------------------
Signature
----------------------------------------
----------------------------------------
Address
Dated: , 19
--------------------- ----
In the presence of:
-----------------------------------
-----------------------------------
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SCHEDULE 1
COLUMN A
COLUMN B COLUMN C
-------- --------
PRINCIPAL NUMBER OF SHARES OF
AMOUNT OF NUMBER OF COMMON STOCK INTO
NOTES WARRANTS WHICH WARRANTS ARE
NAME AND ADDRESS TO BE PURCHASER IS TO INITIALLY
OF PURCHASERS PURCHASED RECEIVE EXCHANGEABLE
---------------- ---------------- --------------- -------------------
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SCHEDULE 4.1
VISION 21, INC. AND SUBSIDIARIES
% OF OUTSTANDING
STOCK OWNED BY COMPANY
STATE OF DIRECTLY OR
CORPORATION INCORPORATION THROUGH A SUBSIDIARY
---------------------------------- ------------- --------------------
The Company Florida NA
Vision 21 Physician Practice Florida 100%
Management Co., Inc. (practice
management company)
Managed Eyecare of Tampa Bay, Inc. Florida 100%
(managed care organization)
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SCHEDULE 4.3
Exceptions to Company's representation that there are no material adverse
changes in financial condition or affairs of the Company, its Subsidiaries and
Acquired Businesses.
The following practices described in the Memorandum have not closed as of
December 20, 1996:
1. ▇▇▇▇▇▇▇ Eye Associates (have not determined as yet whether
acquisition will occur)
2. Four Seasons (will not be acquired)
3. Optometric Eyecare Centers, P.A. (while nothing definitive has
been executed and there can be no guarantee, they are expected
to be acquired the week of December 23, 1996)
Result on Company: See SCHEDULE A, Page 19 of Memorandum.
All other practices described on SCHEDULE A, Page 19 have closed on or before
December 20, 1996.
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NOTICE
The signature to the foregoing Assignment must correspond to the name
as written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
SUBSCRIPTION FORM
To Be Executed by the Registered Holder if He Desires to
Exchange the Warrant
VISION 21, INC.
The undersigned hereby exchanges the right to purchase __________
shares of Common Stock covered by this Warrant according to the conditions
thereof and herewith makes payment of the Exchange Price of such shares in
full.
----------------------------------------
Signature
----------------------------------------
----------------------------------------
Address
Dated: , 19
--------------- ----