EXHIBIT 10.65
THIS WARRANT AND THE SHARES OF SERIES C PREFERRED STOCK OR COMMON STOCK
ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE FEDERAL
SECURITIES ACT OF 1933, AS AMENDED, THE GEORGIA SECURITIES ACT OF 1973, AS
AMENDED, OR THE SECURITIES LAWS OF ANY OTHER STATE. THIS WARRANT AND ANY OF
SUCH SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF REGISTRATION UNDER SAID ACTS AND ALL
OTHER APPLICABLE SECURITIES LAWS UNLESS AN EXEMPTION FROM REGISTRATION IS
AVAILABLE.
THIS WARRANT IS SUBJECT TO THE RESTRICTIONS ON TRANSFER CONTAINED IN
ARTICLE IV HEREOF.
INVESTMENT WARRANT TO PURCHASE SHARES OF
SERIES C PREFERRED STOCK OR COMMON STOCK OF WEBMD, INC.
Date of Issuance: January 28, 1999
THIS CERTIFIES that, for value received, Premier Purchasing Partners, L.P.,
a California limited partnership, or registered assigns (the "Holder"), is
entitled to purchase, at any time and from time to time prior to the third (3rd)
anniversary of the Date of Issuance indicated hereinabove, subject to the other
provisions of this warrant, from WebMD, Inc., a Georgia corporation (the
"Company"), (i) up to one hundred thousand (100,000) shares of Series C
Preferred Stock of the Company, no par value per share (the "Preferred Stock"),
at twenty dollars ($20.00) per share prior to an Initial Public Offering (as
defined herein) or (ii) subsequent to an Initial Public Offering, that number of
shares of Common Stock into which the number of shares of Preferred Stock would
be convertible immediately prior to the closing of such Initial Public Offering,
each subject to the adjustments set forth in Article V hereof. This warrant is
hereinafter referred to as the "Warrant."
ARTICLE I
CERTAIN DEFINITIONS
For all purposes of this Warrant, unless the context otherwise requires,
the following terms shall have the following respective meanings:
"Act": the federal Securities Act of 1933, as amended, or any similar
federal statute, and the rules and regulations of the Commission promulgated
thereunder, all as the same shall be in effect at the time.
"Additional Shares of Common Stock": all shares of Common Stock issued by
the Company after the date of the Initial Public Offering.
"Additional Shares of Preferred Stock": all shares of Preferred Stock
issued by the Company after the Date of Issuance other than the Warrant Shares.
"Common Stock": unless otherwise indicated, the Company's authorized
"Common Stock," no par value per share, without designation as to series, as it
exists on the date hereof.
"Commission": the Securities and Exchange Commission or any other federal
agency then administering the Act.
"Company": WebMD, Inc., a Georgia corporation, located at 400 The Lenox
Building, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, and any other
corporation assuming or required to assume the Warrant pursuant to Article V.
"Convertible Securities": evidences of indebtedness, shares of stock or
other securities that are convertible into or exchangeable for Additional Shares
of Preferred Stock.
"Date of Issuance": the issue date of this Warrant, indicated on the first
page hereof.
"Exercise Price": $20.00 per Warrant Share.
"Holder": as defined on the first page hereof.
"Initial Public Offering": as defined in the Company's Articles of
Incorporation.
"Market Price": with respect to a share of Common Stock on any business day
following the Initial Public Offering: (a) if such security is listed or
admitted for trading on any national securities exchange, the last sale price of
such security, regular way, or the average of the closing bid and asked prices
thereof if no such sale occurred, in each case as officially reported on the
principal securities exchange on which such security is listed, or (b) if not
reported as described in clause (a), the average of the closing bid and asked
prices of such security in the over-the-counter market as shown by the National
Association of Securities Dealers, Inc. Automated Quotation System, or any
similar system of automated dissemination of quotations of securities prices
then in common use, if so quoted, as reported by any member firm of the New York
Stock Exchange selected by the Company, or (c) if not quoted as described in
clause (b), the average of the closing bid and asked prices for such security as
reported by the National Quotation Bureau Incorporated or any similar successor
organization, as reported by any member firm of the New York Stock Exchange
selected by the Company. If such security is quoted on a national securities or
central market system in lieu of a market or quotation system described above,
the closing price shall be determined in the manner set forth in clause (a) of
the preceding sentence if actual transactions are reported and in the manner set
forth in clause (b) of the preceding sentence if bid and asked prices are
reported but actual transactions are not.
2
"Person": any individual, corporation, partnership, trust, unincorporated
organization and any government, and any political subdivision, instrumentality
or agency thereof.
"Preferred Stock": as defined on the first page hereof. Following the
occurrence of an Initial Public Offering, all references in this Warrant to
"Preferred Stock" shall be deemed to refer to Common Stock, by virtue of the
automatic conversion of the Preferred Stock into Common Stock that will occur
pursuant to the Company's Articles of Incorporation.
"Stock Unit": one share of Preferred Stock, as such stock is constituted on
the Date of Issuance and thereafter the number of shares of Preferred Stock as
shall result from the adjustments specified in Article V.
"Warrant Office": as defined in Section 3.1.
"Warrant Shares": the shares of Preferred Stock or Common Stock, as the
case may be, purchasable by the Holder upon the exercise of this Warrant.
ARTICLE II
EXERCISE OF WARRANT
2.1 Method of Exercise. To exercise this Warrant, the Holder shall deliver
------------------
to the Company at the Warrant Office designated pursuant to Section 3.1 (a) a
Notice of Exercise substantially in the form attached hereto as Exhibit A duly
------- -
executed by the Holder specifying the number of Warrant Shares to be purchased;
(b) payment of an amount equal to the aggregate Exercise Price for all such
Warrant Shares, which shall be made (i) in cash or by certified or bank
cashier's check payable to the order of the Company, or (ii) by delivery to the
Company of that number of shares of Preferred Stock having a value computed
based upon the then current fair value determined in good faith by the Company's
Board of Directors, equal to the then applicable Exercise Price multiplied by
the number of Warrant Shares then being purchased, and (c) this Warrant. The
number of Warrant Shares to be purchased in any exercise hereunder shall be no
fewer than 25,000 or the total number of Warrant Shares available for purchase
at the date of exercise, whichever is less. In the alternative, this Warrant
may be exercised on a net basis, such that, without the exchange of any funds,
the Holder receives that number of Warrant Shares subscribed to less that number
of Warrant Shares having an aggregate value computed based upon the fair value
at the time of exercise equal to the aggregate Exercise Price that would
otherwise have been paid by such Holder for the number of Warrant Shares
subscribed to. The Company shall, as promptly as practicable, and in any event
within five (5) days thereafter, cause to be issued and delivered to the Holder
(or its nominee) or the transferee designated in the Notice of Exercise a
certificate or certificates representing the number of Warrant Shares specified
in the Notice of Exercise. The stock certificate or certificates so delivered
shall be in denominations of shares as may be specified in said notice and shall
be issued in the name of the Holder or such other name as shall be designated in
said notice. At the time of delivery of the certificate or certificates,
3
appropriate notation shall be made on the Warrant Shares Purchase Schedule
attached to this Warrant designating the number of shares purchased, and this
Warrant shall then be returned to the Holder if this Warrant has been exercised
only in part. The Holder or transferee so designated in the Notice of Exercise
shall be deemed to have become the Holder of record of such Warrant Shares for
all purposes as of the close of business on the date on which the Notice of
Exercise is delivered to the Warrant Office, provided that an amount equal to
the aggregate Exercise Price and this Warrant shall have also been delivered to
the Company. The Company shall pay all expenses, taxes (excluding capital gains
and income taxes) and other charges payable in connection with the preparation,
issuance and delivery of stock certificates, except that, in case stock
certificates shall be registered in a name or names other than the name of the
Holder, funds sufficient to pay all stock transfer taxes payable upon the
issuance of stock certificates shall be paid by the Holder promptly upon receipt
of a written request of the Company therefor.
2.2 Shares to be Fully Paid and Non-Assessable. All Warrant Shares issued
------------------------------------------
upon the exercise of this Warrant shall be validly issued, fully paid, non-
assessable and free from preemptive rights.
2.3 No Fractional Shares to be Issued. The Company shall not be required
---------------------------------
upon any exercise of this Warrant to issue a certificate representing any
fraction of a share of Preferred Stock.
2.4 Legend on Warrant Shares. Each certificate for Warrant Shares issued
------------------------
upon exercise of this Warrant, unless at the time of exercise such shares are
registered under the Act, shall bear substantially the following legend (and any
additional legend required by any national securities exchanges upon which such
shares may, at the time of such exercise, be listed or under applicable
securities laws):
The securities represented by this certificate have not been
registered under the federal Securities Act of 1933, as amended, or
the Georgia Securities Act of 1973, as amended (the "Acts"), or the
securities laws of any state. They may not be sold, transferred,
assigned, pledged, hypothecated, encumbered, or otherwise disposed of
unless, in the opinion of counsel reasonably acceptable to the issuer,
such transfer would be pursuant to an effective registration statement
under said Acts or pursuant to an exemption from such registration.
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution pursuant to a registration statement under the Act of
the securities represented thereby) shall also bear the above legend unless, in
the opinion of counsel to the Company, the securities represented thereby need
no longer be subject to the restrictions on transferability. In addition, the
provisions of Article IV shall be binding upon all subsequent holders of this
Warrant.
2.5 Acknowledgment of Continuing Obligation. The Company shall, at the
---------------------------------------
time of any exercise of this Warrant in whole or in part, upon request of the
Holder, acknowledge in
4
writing its continuing obligation to such holder in respect of any rights to
which the Holder shall continue to be entitled after exercise in accordance with
this Warrant; provided, however, that the failure of the Holder to make any such
request shall not affect the continuing obligation of the Company to the Holder
in respect of such rights.
ARTICLE III
WARRANT OFFICE; TRANSFER, DIVISION
OR COMBINATION OF WARRANTS
3.1 Warrant Office. The Company shall maintain an office for certain
--------------
purposes specified herein (the "Warrant Office"), which office shall initially
be the Company's location set forth in Article I hereof, and may subsequently be
such other office of the Company or of any transfer agent of the Common Stock in
the continental United States as to which written notice has previously been
given to all of the Holders of the Warrants.
3.2 Ownership of Warrant. The Company may deem and treat the Person in
--------------------
whose name this Warrant is registered as the Holder and 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, until presentation of this Warrant for registration of transfer
as provided in this Article III.
3.3 Transfer of Warrant. The Company agrees to maintain at the Warrant
-------------------
Office books for the registration of permitted transfers of this Warrant.
Subject to the provisions of Article IV, this Warrant and all rights hereunder
are transferable, in whole or in part, on the books at that office, upon
surrender of this Warrant at that office, together with a written assignment of
this Warrant duly executed by the Holder or his or its duly authorized agent or
attorney and funds sufficient to pay any transfer taxes payable upon the making
of the transfer. Subject to Article IV, upon surrender and payment, the Company
shall execute and deliver a new Warrant in the name of the assignee, noting
thereon the number of Warrant Shares theretofore purchased under this Warrant,
and this Warrant shall promptly be canceled. A Warrant may be exercised by a
new Holder for the purchase of shares of Preferred Stock without having a new
warrant issued.
3.4 Division or Combination of Warrants. This Warrant may not be divided
-----------------------------------
or combined with any other warrant.
3.5 Expenses of Delivery of Warrants. The Company shall pay all expenses,
--------------------------------
taxes (other than transfer taxes), and other charges payable in connection with
the preparation, issuance and delivery of new Warrants hereunder.
5
ARTICLE IV
RESTRICTION ON TRANSFER
4.1 Restrictions on Transfer. Notwithstanding any provisions contained in
------------------------
this Warrant to the contrary, this Warrant shall not be exercisable or
transferable except upon the conditions specified in this Article IV, which
conditions are intended, among other things, to ensure compliance with the
provisions of the Act in respect of the exercise or transfer of the Warrant.
4.2 Opinion of Counsel. In connection with any transfer of this Warrant,
------------------
the following provisions shall apply:
(a) If in the written opinion of counsel to the Holder (which opinion
and counsel must be acceptable to the Company), proposed exercise or transfer of
this Warrant may be effected without registration of this Warrant or the Common
Stock issuable hereunder under the Act, the Holder shall be entitled to exercise
or transfer this Warrant as proposed. In no event shall the Company be
obligated (i) to effect a registration under the Act or any state securities law
so as to permit the proposed exercise or transfer of this Warrant, (ii) to
qualify to do business or to file a general consent to service of process in any
state or other jurisdiction where the Company has not already done so, (iii) to
effect a transfer to more than one transferee, this warrant (separate from any
shares issued by partial exercise of this Warrant) being indivisible and
transferable only as a single unit, or (iv) to effect a transfer to any
transferee that is not a qualified institutional buyer or institutional
accredited investor; provided, however, that the Company shall have the
obligation to register the shares of Common Stock issued upon exercise of this
Warrant on the terms set forth in the Investment Agreement.
(b) If in the opinion of such counsel, the proposed exercise or
transfer of this Warrant may not be effected without registration of this
Warrant under the Act, the Holder shall not be entitled to exercise or transfer
this Warrant until registration is effective or until exercise or transfer may
be effected without registration, in the opinion of such counsel as set forth in
Section 4.2(a) above.
ARTICLE V
ADJUSTMENTS
5.1 Adjustments to Number of Stock Units. The number of shares of
------------------------------------
Preferred Stock comprising a Stock Unit shall be subject to adjustment from time
to time as set forth in this Section 5.1.
6
(a) Stock Dividends, Subdivision and Combination. In case at any time
--------------------------------------------
or from time to time the Company shall:
(i) take a record of the holders of its Preferred Stock of any
series for the purpose of entitling them to receive a dividend payable in, or
other distribution of, Preferred Stock, or
(ii) subdivide its outstanding shares of Preferred Stock into a
larger number of shares of Preferred Stock, or
(iii) combine its outstanding shares of Preferred Stock into a
smaller number of shares of Preferred Stock;
then the number of shares of Preferred Stock comprising a Stock Unit immediately
after the happening of any such event shall be adjusted so as to consist of the
number of shares of Preferred Stock that a record holder of the number of shares
of Preferred Stock comprising a Stock Unit immediately prior to the happening of
such event would own or be entitled to receive after the happening of such
event. The adjustments required by this subsection shall be made whenever and
as often as any specified event requiring an adjustment shall occur.
(b) Certain Other Dividends and Distributions. In case at any time or
-----------------------------------------
from time to time the Company shall take a record of the holders of its
Preferred Stock for the purpose of entitling them to receive any dividend or
other distribution of
(i) cash (other than a cash distribution made as a dividend
payable out of the net earnings or net profits of the Company realized during
the year of such distribution or the last preceding year and accumulated net
earnings or net profits of the Company from the date hereof to the time of such
distribution, computed in accordance with generally accepted accounting
principles employed by the Board of Directors of the Company for purposes of
financial reports to shareholders of the Company); or
(ii) any evidences of its indebtedness, any shares of its stock
or any other securities or property of any nature whatsoever (other than cash);
then at least five (5) business days prior to the record date to determine
shareholders entitled to receive such dividend or distribution, the Company
shall give notice of such proposed dividend or distribution to the Holder for
the purpose of enabling the Holder to exercise the same, and thereby participate
in such dividend or distribution.
(c) Issuance of Additional Shares of Preferred Stock.
------------------------------------------------
(i) In case at any time prior to the occurrence of the Initial
Public Offering the Company shall (except as hereinafter provided) issue or sell
any Additional Shares of Preferred Stock for a consideration per share less than
the Exercise Price, then the number of shares of Preferred Stock thereafter
comprising a Stock Unit shall be adjusted to that
7
number determined by multiplying the number of shares of Preferred Stock
comprising a Stock Unit immediately prior to such adjustment by a fraction (i)
the numerator of which shall be the number of shares of Preferred Stock issued
and outstanding plus the number of Additional Shares of Preferred Stock deemed
to be outstanding pursuant to Subsection 5.1(d) immediately prior to the
issuance of such Additional Shares of Preferred Stock plus the number of such
Additional Shares of Preferred Stock so issued and (ii) the denominator of which
shall be the number of shares of Preferred Stock issued and outstanding plus the
number of Additional Shares of Preferred Stock deemed to be outstanding pursuant
to Subsection 5.1(d) immediately prior to the issuance of such Additional Shares
of Preferred Stock plus the number of shares of Preferred Stock that the
aggregate consideration for the total number of such Additional Shares of
Preferred Stock so issued would purchase at the Exercise Price.
(ii) In case at any time after the date of the occurrence of the
Initial Public Offering the Company shall (except as hereinafter provided) issue
or sell any Additional Shares of Common Stock for a consideration per share less
than the Market Price, then the number of shares of Common Stock thereafter
comprising a Stock Unit shall be adjusted to that number determined by
multiplying the number of shares of Common Stock comprising a Stock Unit
immediately prior to such adjustment by a fraction (i) the numerator of which
shall be the number of shares of Common Stock issued and outstanding plus the
number of Additional Shares of Common Stock deemed to be outstanding pursuant to
Subsection 5.1(d) immediately prior to the issuance of such Additional Shares of
Common Stock plus the number of such Additional Shares of Common Stock so issued
and (ii) the denominator of which shall be the number of shares of Common Stock
issued and outstanding plus the number of Additional Shares of Common Stock
deemed to be outstanding pursuant to Subsection 5.1(d) immediately prior to the
issuance of such Additional Shares of Common Stock plus the number of shares of
Common Stock that the aggregate consideration for the total number of such
Additional Shares of Common Stock so issued would purchase at the Market Price.
The provisions of this Subsection 5.1(c) shall not apply to any issuance of
Additional Shares of Preferred Stock or Common Stock for which an adjustment is
provided under Subsection 5.1(a). No adjustment of the number of shares of
Preferred Stock or Common Stock comprising a Stock Unit shall be made under this
subsection upon the issuance of any Additional Shares of Preferred Stock or
Common Stock that are issued pursuant to the exercise of any warrants or other
subscription or purchase rights or pursuant to the exercise of any conversion
or exchange rights in any Convertible Securities, if any such adjustment shall
previously have been made upon the issuance of such warrants or other rights or
upon the issuance of such Convertible Securities (or upon the issuance of any
warrant or other rights therefor) pursuant to Subsection 5.1(d).
(d) Issuance of Warrants, Convertible Securities or Other Rights. In
------------------------------------------------------------
case at any time or from time to time the Company shall issue or sell any
warrants or other rights to subscribe for or purchase any Additional Shares of
Preferred Stock or any Convertible Securities, whether or not the rights to
exchange or convert thereunder are immediately exercisable, and the
consideration per share for which Additional Shares of Preferred Stock may at
any time thereafter be issuable pursuant to such warrants or other rights or
pursuant to
8
the terms of such Convertible Securities shall be lower than the Exercise Price,
then the number of shares of Preferred Stock thereafter comprising a Stock Unit
shall be adjusted as provided in Subsection 5.1(c) and the aggregate
consideration for such maximum number of Additional Shares of Preferred Stock
shall be deemed to be the minimum consideration received and receivable by the
Company for the issuance of such Additional Shares of Preferred Stock pursuant
to such warrants or other rights or pursuant to the terms of such Convertible
Securities. No adjustment of the number of shares of Preferred Stock comprising
a Stock Unit shall be made under this Subsection 5.1(d) upon the issuance of any
Convertible Securities that are issued pursuant to the exercise of any warrants
or other subscription or purchase rights therefor, if any such adjustment shall
previously have been made upon the issuance of such warrants or other rights
pursuant to this Subsection 5.1(d).
(e) Superseding Adjustment of Stock Unit. If, at any time after any
------------------------------------
adjustment of the number of shares comprising a Stock Unit shall have been made
pursuant to the foregoing Subsection 5.1(d) on the basis of the issuance of
warrants or other rights or the issuance of other Convertible Securities, or
after any new adjustments of the number of shares comprising a Stock Unit shall
have been made pursuant to this Subsection 5.1(e),
(i) such warrants or rights or the right of conversion or
exchange in such other Convertible Securities shall expire, and a portion of
such warrants or rights, or the right of conversion or exchange in respect of a
portion of such other Convertible Securities, as the case may be, shall not have
been exercised, and/or
(ii) the consideration per share, for which shares of Preferred
Stock are issuable pursuant to such warrants or rights or the terms of such
other Convertible Securities, shall be increased for any reason,
then such previous adjustment shall be rescinded and annulled and the Additional
Shares of Preferred Stock that were deemed to have been issued by virtue of the
computation made in connection with the adjustment so rescinded and annulled
shall no longer be deemed to have been issued by virtue of such computation.
Thereupon, a recomputation shall be made of the effect of such rights or options
or other Convertible Securities on the basis of
(x) treating the number of Additional Shares of Preferred Stock, if
any, theretofore actually issued or issuable pursuant to the previous
exercise of such warrants or rights or such right of conversion or
exchange, as having been issued on the date or dates of such exercise and
for the consideration actually received and receivable therefor, and
(y) treating any such warrants or rights or any such other
Convertible Securities that then remain outstanding as having been granted
or issued immediately after the time of such increase of the consideration
per share for which shares of Preferred Stock are issuable under such
warrants or rights or other Convertible Securities;
9
and, if and to the extent called for by the foregoing provisions of this Section
5.1 on the basis aforesaid, a new adjustment of the number of shares comprising
a Stock Unit shall be made, which new adjustment shall supersede the previous
adjustment so rescinded and annulled.
(f) Other Provisions Applicable to Adjustment Under This Section. The
------------------------------------------------------------
following provisions shall be applicable to the making of adjustments of the
number of shares of Preferred Stock comprising a Stock Unit hereinbefore
provided for in this Section 5.1:
(i) Treasury Stock. The sale or other disposition of any issued
--------------
shares of Preferred Stock owned or held by or for the account of the Company
shall be deemed an issuance thereof for the purposes of this Section 5.1.
(ii) Computation of Consideration. To the extent that any
----------------------------
Additional Shares of Preferred Stock or any Convertible Securities or any
warrants or other rights to subscribe for or purchase any Additional Shares of
Preferred Stock or any Convertible Securities shall be issued for a cash
consideration, the consideration received by the Company therefor shall be
deemed to be the amount of the cash received by the Company therefor, or, if
such Additional Shares of Preferred Stock or Convertible Securities are offered
by the Company for subscription, the subscription price, or, if such Additional
Shares of Preferred Stock or Convertible Securities are sold to underwriters or
dealers for public offering without a subscription offering, the initial public
offering price, in any such case excluding any amounts paid or receivable for
accrued interest or accrued dividends (but without deduction of any
compensation, discounts or expenses paid or incurred by the Company for and in
the underwriting of, or otherwise in connection with, the issuance thereof). To
the extent that such issuance shall be for a consideration other than cash,
then, except as herein otherwise expressly provided, the amount of such
consideration shall be deemed to be the fair value of such consideration at the
time of such issuance as determined in good faith by the Board of Directors of
the Company (but without deduction of any compensation, discounts or expenses
paid or incurred by the Company for and in the underwriting of, or otherwise in
connection with, the issuance thereof). In case any Additional Shares of
Preferred Stock or Convertible Securities or any warrants or other rights to
subscribe for or purchase such Additional Shares of Preferred Stock or
Convertible Securities shall be issued in connection with any merger in which
the Company issues any securities, the amount of consideration therefor shall be
deemed to be the fair value, as determined in good faith by the Board of
Directors of the Company, of such portion of the assets and business of the
nonsurviving corporation as such Board in good faith shall determine to be
attributable to such Additional Shares of Preferred Stock, Convertible
Securities, warrants or other rights, as the case may be. In the event of any
consolidation or merger of the Company in which the Company is not the surviving
corporation or in the event of any sale of all or substantially all of the
assets of the Company for stock or other securities of any corporation, the
Company shall be deemed to have issued a number of Additional Shares of
Preferred Stock or Convertible Securities of the other corporation computed on
the basis of the actual exchange ratio on which the transaction was predicated,
and the consideration received for such issuance shall be equal to the fair
market value, as determined in good faith by the Board of Directors of the
Company, on the date of such transaction, of such stock or securities of the
other corporation, and if any such
10
calculation results in adjustment of the number of shares of Preferred Stock
comprising a Stock Unit immediately prior to such merger, conversion or sale for
purposes of this Subsection 5.1(f), such merger, conversion or sale shall be
deemed to have been made after giving effect to such adjustment. The
consideration for any Additional Shares of Preferred Stock issuable pursuant to
any warrants or other rights to subscribe for or purchase the same shall be the
consideration received by the Company for issuing such warrants or other rights,
plus the additional consideration payable to the Company upon the exercise of
such warrants or other rights. The consideration for any Additional Shares of
Preferred Stock issuable pursuant to the terms of any Convertible Securities
shall be the consideration received by the Company for issuing any warrants or
other rights to subscribe for or purchase such Convertible Securities, plus the
consideration paid or payable to the Company in respect of the subscription for
or purchase of such Convertible Securities, plus the additional consideration,
if any, payable to the Company upon the exercise of the right of conversion or
exchange in such Convertible Securities. In case of the issuance at any time of
any Additional Shares of Preferred Stock or Convertible Securities in payment or
satisfaction of any dividends upon any class of stock other than Preferred
Stock, the Company shall be deemed to have received for such Additional Shares
of Preferred Stock or Convertible Securities a consideration equal to the amount
of such dividend so paid or satisfied.
(iii) When Adjustments to be Made. The adjustments required by
---------------------------
the preceding subsections of this Section 5.1 shall be made whenever and as
often as any specified event requiring an adjustment shall occur, except that no
adjustment of the number of shares of Preferred Stock comprising a Stock Unit
that would otherwise be required shall be made (except in the case of a
subdivision or combination of shares of the Preferred Stock, as provided for in
Subsection 5.1(a)) unless and until such adjustment, either by itself or with
other adjustments not previously made, adds or subtracts at least 1/20th of a
share to or from the number of shares of Preferred Stock comprising a Stock Unit
immediately prior to the making of such adjustment. Any adjustment representing
a change of less than such minimum amount (except as aforesaid) shall be carried
forward and made as soon as such adjustment, together with other adjustments
required by this section and not previously made, would result in a minimum
adjustment. For the purpose of any adjustment, any specified event shall be
deemed to have occurred at the close of business on the date of its occurrence.
(iv) Fractional Interests. In computing adjustments under this
--------------------
section, fractional interests in Preferred Stock shall be taken into account to
the nearest one-thousandth of a share.
(v) When Adjustment Not Required -- Abandonment of Plan for
-------------------------------------------------------
Dividend and the Like. If the Company shall take a record of the holders of its
---------------------
Preferred Stock for the purpose of entitling them to receive a dividend or
distribution or subscription or purchase rights and shall, thereafter and before
the distribution to shareholders thereof, legally abandon its plan to pay or
deliver such dividend, distribution, subscription or purchase rights, then
thereafter no adjustment shall be required by reason of the taking of such
record and any such adjustment previously made in respect thereof shall be
rescinded and annulled.
11
(g) Reorganization, Reclassification, Merger, Consolidation or
----------------------------------------------------------
Disposition of Assets. In case the Company shall reorganize its capital,
---------------------
reclassify its capital stock, merge or consolidate into another corporation,
then the number of shares of stock purchasable upon exercise of this Warrant
shall be adjusted to consist of the number of shares of stock or other
securities that a record holder of the number of shares of Preferred Stock
purchasable upon exercise of this Warrant immediately prior to such event would
own or be entitled to receive immediately after such event.
(h) No Adjustment. Notwithstanding the foregoing, an adjustment as
-------------
provided in this Section 5.1 shall not be made if (a) the Company offers
securities to the public pursuant to a registration statement under the
Securities Act; (b) the Company issues securities pursuant to the acquisition by
the Company of any product, technology, know-how or another corporation by
merger, purchase of all or substantially all of the assets, or any other
reorganization whereby the Company owns over fifty percent (50%) of the voting
power of such corporation; (c) the Company issues shares of its capital stock in
connection with any stock split, stock dividend or recapitalization by the
Company; (d) the Company issues any shares of common stock of the Company
pursuant to options, warrants or rights granted either before or after the Date
of Issuance to purchase shares of such common stock, in favor of employees,
directors, officers or consultants of the Company or any subsidiary thereof
pursuant to a stock option plan or agreement approved by the Company's Board of
Directors; provided that such stock options thereunder, if granted after the
Date of Issuance, are granted at a conversion or exercise price that the
Company's Board of Directors determines in good faith is not less than the fair
market value of the securities into which they are exercisable as of the date of
grant; or (e) the Company converts any securities into Common Stock pursuant to
the Company's Articles of Incorporation.
5.2 Notice to Holder. Whenever the Company takes any action that causes
----------------
the composition of a Stock Unit to change under Sections 5.1(a) through 5.1(g),
the Company shall provide the Holder with written notice of such change and the
number of Warrant Shares for which this Warrant is or will become exercisable.
Such notice will be provided not more than ten days after any such action has
occurred.
ARTICLE VI
REGISTRATION RIGHTS
Any and all shares of the Company's Common Stock issued pursuant to this
Warrant or upon conversion of Preferred Stock issued pursuant to this Warrant
shall be deemed "Registrable Securities" for purposes of Article 8 of that
certain Investment Agreement of even date herewith by and between the Company
and Premier Purchasing Partners, L.P.
12
ARTICLE VII
ADDITIONAL NOTICES TO WARRANT HOLDER
In addition to any other notice required hereunder, the Company shall
provide the Holder with a copy of any notice that the Company is required to
provide those Persons holding shares of Preferred Stock on the same date such
persons receive such notice.
ARTICLE VIII
EXPIRATION
This Warrant shall expire and may not be exercised after the third (3rd)
anniversary of the Date of Issuance.
ARTICLE IX
CERTAIN COVENANTS OF THE COMPANY
The Company has taken all action necessary to authorize the issuance of
this Warrant and the issuance of shares of Preferred Stock upon exercise hereof.
The Company covenants and agrees that it will reserve and set apart and have at
all times, free from preemptive rights, a number of shares of authorized but
unissued Preferred Stock or other securities deliverable upon the exercise of
this Warrant sufficient to enable it at any time to fulfill all its obligations
hereunder.
ARTICLE X
MISCELLANEOUS
10.1 Entire Agreement. This Warrant contains the entire agreement between
----------------
the Holder and the Company with respect to the purchase of the Warrant Shares
and supersedes all prior arrangements or understandings with respect thereto.
10.2 Waiver and Amendment. Any term or provision of this Warrant may be
--------------------
waived at any time by the party that is entitled to the benefits thereof, and
any term or provision of this Warrant may be amended or supplemented at any time
by agreement of the holder hereof and the Company, except that any waiver of any
term or condition, or any amendment or supplementation, of this Warrant must be
in writing. A waiver of any breach or failure to enforce any of the terms or
conditions of this Warrant shall not in any way affect, limit or waive a party's
rights hereunder at any time to enforce strict compliance thereafter with any
term or condition of this Warrant.
10.3 Illegality. In the event that any one or more of the provisions
----------
contained in this Warrant shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and
13
the remaining provisions of this Warrant shall not, at the election of the party
for whom the benefit of the provision exists, be in any way impaired.
10.4 Filing of Warrant. A copy of this Warrant shall be filed in the
-----------------
records of the Company.
10.5 Notices. Any notice or other document required or permitted to be
-------
given or delivered to the Holder shall be delivered personally, or sent by
certified or registered mail, to the Holder at the last address shown on the
books of the Company maintained at the Warrant Office for the registration of,
and the registration of transfer of, the Warrant or at any more recent address
of which any Holder shall have notified the Company in writing. Any notice or
other document required or permitted to be given or delivered to the Company
shall be delivered at, or sent by certified or registered mail to, the Warrant
Office, attention: Chief Executive Officer, or such other address within the
United States of America as shall have been furnished by the Company to the
Holder hereof.
10.6 Limitation of Liability; Not Shareholders. No provision of this
-----------------------------------------
Warrant shall be construed as conferring upon the Holder the right to vote,
consent, receive dividends or receive notice other than as herein expressly
provided in respect of meetings of shareholders for the election of directors of
the Company or any other matter whatsoever as a shareholder of the Company. No
provision hereof, in the absence of affirmative action by the Holder to purchase
Warrant Shares, and no enumeration herein of the rights or privileges of the
Holder, shall give rise to any liability of such Holder for the purchase price
of any Warrant Shares or as a shareholder of the Company, whether such liability
is asserted by the Company or by creditors of the Company.
10.7 Loss, Destruction, Etc. of Warrant. Upon receipt of evidence
----------------------------------
satisfactory to the Company of the loss, theft, mutilation or destruction of the
Warrant, and in the case of any such loss, theft or destruction, upon delivery
of a bond of indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation, upon surrender
and cancellation of the Warrant, the Company shall make and deliver a new
warrant, of like tenor, in lieu of such lost, stolen, destroyed or mutilated
Warrant. Any Warrant issued under the provisions of this Section 10.7 in lieu
of any Warrant alleged to be lost, destroyed or stolen, or in lieu of any
mutilated Warrant, shall constitute an original contractual obligation on the
part of the Company.
14
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in its
name by its Chief Executive Officer and its corporate seal to be impressed
hereon.
[CORPORATE SEAL] WEBMD, INC.
Attest:
By: /s/ W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------- ------------------------------
Name: W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
--------------------------
Title: Executive Vice President Chief Executive Officer
-------------------------
15
WARRANT SHARES PURCHASE SCHEDULE
No. of Shares Purchased Date of Purchase Notation by Company
Officer
__________________________ ________________ _________________________
__________________________ ________________ _________________________
__________________________ ________________ _________________________
__________________________ ________________ _________________________
__________________________ ________________ _________________________
__________________________ ________________ _________________________
16
EXHIBIT A
---------
TO WARRANT
NOTICE OF EXERCISE
Dated:_______________________________
The undersigned hereby irrevocably elects to exercise its right to purchase
_____ shares of the [PREFERRED STOCK] [COMMON STOCK], no par value per share, of
WebMD, Inc., such right being pursuant to a Warrant dated _______________ ____,
1999, as issued to Premier Purchasing Partners, L.P., for up to ________ shares
of such [PREFERRED STOCK] [COMMON STOCK], and (i) remits herewith the sum of
$_______ in payment for same in accordance with said warrant or (ii), in
accordance with Section 2.2 of the Warrant, elects to receive such number of
shares by having credited to the undersigned the Market Value (as such term is
defined in the Warrant) of a sufficient number of additional shares of
[PREFERRED STOCK] [COMMON STOCK] for which the Warrant could otherwise be
exercised such that such Market Value equals the Exercise Price for such shares
of [PREFERRED STOCK] [COMMON STOCK]. After giving effect to the foregoing
election to exercise, there shall remain unexercised the right to purchase _____
shares of the [Preferred Stock] [Common Stock], no par value per share, (subject
to adjustment) under this Warrant.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name____________________________________________________________________________
(Please typewrite or print in block letters)
Address_________________________________________________________________________
Signature:___________________________________
Shares Heretofore Purchased
Under Warrant:
_________________________________
17