1
AMENDMENT NO. 1 TO STOCK AND WARRANT PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO STOCK AND WARRANT PURCHASE AGREEMENT (this
"Amendment") dated as of January 25, 1996, is executed, agreed to and adopted
for good and valuable consideration by MAGELLAN HEALTH SERVICES, INC. (f/k/a
Charter Medical Corporation), a Delaware corporation (the "Company") and
RAINWATER-MAGELLAN HOLDINGS, L.P., a limited partnership formed pursuant to the
provisions of the Texas Revised Limited Partnership Act ("Buyer");
W I T N E S S E T H:
WHEREAS, the Company and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (the "Initial Buyer") have
previously entered into that certain Stock and Warrant Purchase Agreement dated
as of December 22, 1995 (the "Purchase Agreement"); and
WHEREAS, in accordance with Section 10.3 of the Purchase Agreement and
pursuant to that certain Assignment and Assumption Agreement of even date
herewith (the "Assignment"), the Initial Buyer assigned its rights, interests
and obligations under the Purchase Agreement to Buyer, and Buyer assumed the
Initial Buyer's liabilities, covenants and obligations thereunder; and
WHEREAS, the Assignment provides that the Purchase Agreement shall be
amended to reflect the substitution of Buyer under the Purchase Agreement; and
WHEREAS, the parties hereto desire to further amend the Purchase
Agreement to make certain clarifications therein; and
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the adequacy and receipt of which are hereby
acknowledged, the parties hereby agree as follows:
1. Defined Terms. Capitalized terms used in this Amendment and not
defined herein shall have the respective meanings given to them in the Purchase
Agreement.
2. Amendments to the Purchase Agreement.
(a) Annex I to the Purchase Agreement shall be amended to replace the
Initial Buyer with Buyer under the column headed "Name of Buyer." The term
"Buyer" wherever referred to in the Purchase Agreement or in any Exhibit, Annex
or Schedule thereto is amended to refer to Rainwater-Magellan Holdings, L.P.,
and the term "party" or "parties" shall, in addition to referring to the
Company, refer to Rainwater-Magellan Holdings, L.P.
(b) Section 1.3 of the Purchase Agreement is hereby amended to read
in its entirety as follows:
"The parties hereto acknowledge that the allocation of the Purchase
Price between the Shares and the Warrants was made by them in arm's
length negotiation and agree that as of the date hereof the aggregate
Purchase Price for the Securities shall be allocated $2,000,000 for the
Warrants and $67,732,000 for the Shares."
2
(c) The first sentence of Section 5.4 of the Purchase Agreement is
amended by adding the following at the end:
"or the Company's Board of Directors will elect an Initial Designee
acceptable to the Company to fill a vacancy in the Board of Directors."
(d) Section 5.5 of the Purchase Agreement is hereby amended to (i)
correct the reference to "March 31, 1995" appearing in the thirteenth line of
such Section, to "March 31, 1996" and (ii) to delete the period at the end of
such section and insert the following proviso:
"; provided that, if Buyer shall have incurred only one HSR Act filing
fee as of the Closing, then the Company's obligation to reimburse
Rainwater, Inc. for a second HSR filing fee and related expenses
pursuant to clause (ii)(A) above, shall survive such Closing so that if
Buyer is required to make an additional filing for HSR Act approval in
connection with an exercise of the Warrants, the Company shall reimburse
Buyer or Rainwater, Inc. (as applicable) for such filing fee together
with all other fees and expenses (including fees and expenses of
counsel) incurred in connection with such filing."
(e) Section 10.2 of the Purchase Agreement is hereby amended to
delete the period at the end of such section and insert the following:
", including, but not limited to, that certain letter of intent (and
attached term sheet) by and between the Company and Rainwater, Inc.
dated December 15, 1995, and that certain Confidentiality Agreement by
and between the Company and Rainwater, Inc. dated as of November 20,
1995."
3. Effect of Amendment. Except as heretofore expressly set forth in
this Amendment, all terms and provisions of the Purchase Agreement shall remain
in full force and effect as originally executed.
4. Counterparts. This Amendment may be executed in any number of
counterparts, and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
[Remainder of this page intentionally left blank.]
-2-
3
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
MAGELLAN HEALTH SERVICES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Executive Vice
President and Chief Financial
Officer
RAINWATER-MAGELLAN HOLDINGS, L.P.
By: Rainwater, Inc., General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
-3-
4
STOCK AND WARRANT PURCHASE AGREEMENT
STOCK AND WARRANT PURCHASE AGREEMENT (this "Agreement"), dated as of
December 22, 1995, between Magellan Health Services, Inc. (f/n/a Charter
Medical Corporation), a Delaware corporation (the "Company"), and the persons
whose names are set forth on Annex I hereto (such persons being referred to
herein individually as a "Buyer" and collectively as "Buyers").
WHEREAS, the Company desires to sell to Buyers, and Buyers desire to
purchase from the Company, shares of Common Stock, par value $.25 per share, of
the Company ("Common Stock") and warrants to purchase shares of Common Stock;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the Company and Buyers hereby agree as follows:
ARTICLE I
TERMS OF THE TRANSACTION
1.1 Agreement to Sell and to Purchase Common Stock and Warrants.
At the Closing (as hereinafter defined), and on the terms and subject to the
conditions set forth in this Agreement, the Company shall sell and deliver to
each Buyer, and each Buyer shall purchase and accept from the Company, the
number of shares of Common Stock (collectively, the "Shares") and warrants
(collectively, the "Warrants", and herein together with the Shares referred to
as the "Securities") to purchase the number of shares of Common Stock (subject
to adjustment from time to time as provided in the Warrants), set forth
opposite the name of such Buyer on Annex I hereto. The Warrants shall be in
substantially the form set forth as Exhibit A hereto.
1.2 Purchase Price and Payment. The aggregate purchase price for
the Securities is $69,732,000 (the "Purchase Price"). The parties acknowledge
that the Purchase Price, as calculated on a per share basis, is equal to 95% of
the average closing price of the Common Stock as reported in the Wall Street
Journal over the ten trading days beginning on Monday, November 13, 1995 and
continuing through the close of business on Monday, November 27, 1995, which
average was $18.350 per share (i.e. $18.350 x .95 = $17.433 per share). The
portion of the Purchase Price payable by each Buyer for the Securities to be
purchased by it is set forth opposite the name of such Buyer on Annex I hereto
and shall be paid by each Buyer on or before the Closing Date (as hereinafter
defined) in immediately available funds by confirmed wire transfer to a bank
account to be designated by the Company (such designation to occur no later
than the third Business Day (as hereinafter defined) prior to the Closing
Date).
1.3 Allocation of the Purchase Price. The parties hereto
acknowledge that the allocation of the Purchase Price between the Shares and
the Warrants was made by them in arm's length negotiation and agree that a
written allocation of the Purchase Price between the Shares and the Warrants
shall be provided before Closing and such allocation shall be made as of the
date of this Agreement.
5
ARTICLE II
CLOSING AND CLOSING DATE
The closing of the transactions contemplated hereby (the "Closing")
shall take place (i) at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, at 9:00 a.m., local time, on the third
Business Day following the satisfaction or waiver (subject to Applicable Law
[as hereinafter defined]) of each of the conditions to the obligations of the
parties set forth in Articles VI and VII hereof, or (ii) at such other time or
place or on such other date as the parties hereto shall agree. The date on
which the Closing is required to take place is herein referred to as the
"Closing Date". All Closing transactions shall be deemed to have occurred
simultaneously.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each Buyer, as of the date
hereof, that:
3.1 Corporate Organization. The Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority in all material
respects to own, lease, and operate its properties and to carry on its business
as now being conducted. No actions or proceedings to dissolve the Company are
pending or, to the best knowledge of the Company, threatened.
3.2 Qualification. Each of the Company and the Subsidiaries (as
hereinafter defined) is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the property owned, leased, or
operated by it or the conduct of its business requires such qualification or
licensing, except where the failure to do so would not have a material adverse
effect on the business, assets, results of operations or financial condition of
the Company or on the ability of the Company to consummate the transactions
contemplated hereby.
3.3 Capitalization of the Company.
(a) The authorized capital stock of the Company consists of (i)
80,000,000 shares of Common Stock, of which, as of the date hereof, 28,650,715
shares are outstanding and 187,435 shares are held in the Company's treasury,
and (ii) 10,000,000 shares of Preferred Stock, without par value, of which, as
of the date hereof, no shares are outstanding. All outstanding shares of
capital stock of the Company have been validly issued and are fully paid and
nonassessable, and no shares of capital stock of the Company are subject to,
nor have any been issued in violation of, preemptive or similar rights. As of
the date hereof, (i) an aggregate of 4,851,186 shares of Common Stock are
reserved for issuance pursuant to stock options granted to certain directors,
officers, and employees; (ii) an aggregate of 172,981 shares of Common Stock
are reserved for issuance and issuable upon the exercise of outstanding
warrants; (iii) certain shares of Common Stock are reserved for issuance upon
the exercise of certain purchase rights which become exercisable pursuant to
the terms of the Rights Agreement (as hereinafter defined); and (iv) an
aggregate of 3,557,900 shares of Common stock are reserved for issuance and
issuable under the Exchange Agreement (as hereinafter defined).
2
6
(b) Except as set forth above in subparagraph (a) of this Section
3.3 and as contemplated by this Agreement, there are outstanding (i) no shares
of capital stock or other voting securities of the Company; (ii) no securities
of the Company convertible into or exchangeable for shares of capital stock or
other voting securities of the Company; (iii) no options or other rights to
acquire from the Company, and no obligation of the Company to issue or sell,
any shares of capital stock or other voting securities of the Company or any
securities of the Company convertible into or exchangeable for such capital
stock or voting securities; and (iv) other than employee compensation plans
based on the Company's earnings and executive officer employment agreements, no
equity equivalents, interests in the ownership or earnings, or other similar
rights of or with respect to the Company. There are no outstanding contractual
obligations of the Company to repurchase, redeem or otherwise acquire any
shares of Common Stock or any other securities of the type described in clauses
(i) - (iv) of the preceding sentence.
3.4 Authority Relative to This Agreement. The Company has full
corporate power and authority to execute, deliver, and perform this Agreement
and the Ancillary Documents (as hereinafter defined) to which it is a party and
to consummate the transactions contemplated hereby and thereby. The execution,
delivery, and performance by the Company of this Agreement and the Ancillary
Documents to which it is a party, and the consummation by it of the
transactions contemplated hereby and thereby, have been duly authorized by all
necessary corporate action of the Company. This Agreement has been duly
executed and delivered by the Company and constitutes, and each Ancillary
Document executed or to be executed by the Company has been, or when executed
will be, duly executed and delivered by the Company and constitutes, or when
executed and delivered will constitute, a valid and legally binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except that such enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium, and similar laws affecting creditors'
rights generally, and (ii) equitable principles which may limit the
availability of certain equitable remedies (such as specific performance) in
certain instances.
3.5 Noncontravention. The execution, delivery, and performance by
the Company of this Agreement and the Ancillary Documents to which it is a
party and the consummation by it of the transactions contemplated hereby and
thereby do not and will not (i) conflict with or result in a violation of any
provision of the Company's Restated Certificate of Incorporation or the
Company's Bylaws, as amended, or the charter, bylaws or other governing
instruments of any Subsidiary, (ii) conflict with or result in a violation of
any provision of, or constitute (with or without the giving of notice or the
passage of time or both) a default under, or give rise (with or without the
giving of notice or the passage of time or both) to any right of termination,
cancellation, or acceleration under, any bond, debenture, note, mortgage,
indenture, lease, agreement, or other instrument or obligation to which the
Company or any Subsidiary is a party or by which the Company or any Subsidiary
or any of their respective properties may be bound, (iii) result in the
creation or imposition of any Encumbrance upon the properties of the Company or
any Subsidiary, or (iv) assuming compliance with the matters referred to in
Section 3.6, violate any Applicable Law binding upon the Company or any
Subsidiary, except, in the case of clauses (ii), (iii), and (iv) above, for any
such conflicts, violations, defaults, terminations, cancellations,
accelerations, or Encumbrances which would not, individually or in the
aggregate, have a material adverse effect on the business, assets, results of
operations, or financial condition of the Company and the Subsidiaries taken as
a whole or the ability of the Company to consummate the transactions
contemplated hereby.
3.6 Governmental Approvals. No consent, approval, order, or
authorization of, or declaration, filing, or registration with, any
Governmental Entity (as hereinafter defined) is required to be obtained or made
by the Company or any Subsidiary in connection with the execution, delivery, or
performance by the Company of this Agreement and the Ancillary Documents to
which it is a party or the consummation by it of the transactions contemplated
hereby and thereby, other than (i) compliance with any applicable
3
7
requirements of the HSR Act (as hereinafter defined); (ii) compliance with any
applicable requirements of the Securities Act (as hereinafter defined); (iii)
compliance with any applicable requirements of the Exchange Act (as hereinafter
defined); (iv) compliance with any applicable state securities laws; and (v)
such consents, approvals, orders, or authorizations which, if not obtained, and
such declarations, filings, or registrations which, if not made, would not,
individually or in the aggregate, have a material adverse effect on the
business, assets, results of operations, or financial condition of the Company
or on the ability of the Company to consummate the transactions contemplated
hereby. The representations and warranties of the Company contained in this
Section 3.6, insofar as such representations and warranties pertain to
compliance by the Company with the requirements of the Securities Act and
applicable state securities laws, are based on the representations and
warranties of Buyers contained in Section 4.5.
3.7 Authorization of Issuance; Reservation of Shares. When issued
and delivered pursuant to this Agreement against payment therefor, the
Securities will have been duly authorized, issued and delivered and will
constitute valid and legally binding obligations of the Company entitled to the
benefits provided therein. When issued and delivered pursuant to the Agreement
against payment therefor, the Shares will be fully paid and nonassessable.
During the period within which the Warrants may be exercised, the Company will
at all times have authorized and reserved for the purpose of issue upon
exercise of the Warrants, a sufficient number of shares of Common Stock to
provide for the exercise of the Warrants. All shares of Common Stock which are
issuable upon exercise of the Warrants (the "Warrant Shares") will, when
issued, be validly issued, fully paid and nonassessable. The issuance of the
Shares is not, and upon exercise of the Warrants the issuance of the Warrant
Shares will not be, subject to any preemptive or similar rights.
3.8 Subsidiaries. Except as listed on Section 3.8 of the
Company's Disclosure Schedule attached hereto (the "Disclosure Schedule"), there
are no "Significant Subsidiaries" as that term is defined in Regulation S-X
promulgated by the Securities and Exchange Commission (the "Commission"). Each
Subsidiary is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation. Each
Subsidiary has all requisite corporate power and corporate authority to own,
lease, and operate its properties and to carry on its business as now being
conducted. No actions or proceedings to dissolve any Subsidiary are pending.
3.9 SEC Filings. The Company has filed with the Commission all
forms, reports, schedules, statements, and other documents (excluding exhibits)
required to be filed by it since September 30, 1993 under the Securities Act,
the Exchange Act, and all other federal securities laws. All forms, reports,
schedules, statements, and other documents (including all amendments thereto)
filed by the Company with the Commission since such date are herein
collectively referred to as the "SEC Filings". The SEC Filings, at the time
filed, complied in all material respects with all applicable requirements of
federal securities laws. None of the SEC Filings, including, without
limitation, any financial statements or schedules included therein, at the time
filed, contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary in order to make
the statements contained therein, in light of the circumstances under which
they were made, not misleading except as the same was corrected or superseded
in a subsequent document duly filed with the Commission. Except as set forth
in Section 3.9 of the Disclosure Schedule and except for those contracts not
required to be filed pursuant to the rules and regulations of the Commission,
all material contracts of the Company and the Subsidiaries have been included
in the SEC Filings. The audited consolidated financial statements and
unaudited consolidated interim financial statements of the Company included in
the SEC Filings present fairly in all material respects, in conformity with
generally accepted accounting principles applied on a consistent basis (except
as may be indicated in the notes thereto and, in the case of the unaudited
consolidated interim financial statements, except to the extent that
preparation of such financial statements in accordance with generally accepted
accounting principles is not required by applicable rules of the Commission),
the
4
8
consolidated financial position of the Company as of the dates thereof and its
consolidated results of operations and cash flows for the periods then ended
(subject to normal year-end audit adjustments in the case of any unaudited
interim financial statements).
3.10 Absence of Undisclosed Liabilities. Except as set forth in
Section 3.10 of the Disclosure Schedule or to the extent disclosed in the SEC
Filings filed prior to the date hereof, (a) as of June 30, 1995, neither the
Company nor any Subsidiary had any liabilities or obligations (whether accrued,
absolute, contingent, unliquidated, or otherwise) material to the Company and
the Subsidiaries considered as a whole, and (b) since June 30, 1995, neither
the Company nor any Subsidiary has incurred any such material liabilities or
obligations, other than those incurred in the ordinary course of business
consistent with past practice or pursuant to or as contemplated by this
Agreement.
3.11 Absence of Certain Changes. Except as disclosed in the SEC
Filings filed prior to the date hereof, since June 30, 1995, (i) there has not
been any material adverse change in, or any event or condition that might
reasonably be expected to result in any material adverse change in, the
business, assets, results of operations, condition (financial or otherwise), of
the Company and the Subsidiaries considered as a whole, other than as a result
of legal or regulatory changes affecting the U.S. health care industry
generally and (ii) neither the Company nor any Subsidiary has incurred any
material liability, engaged in any material transaction, or entered into any
material agreement in each case outside the ordinary course of business
consistent with past practice.
3.12 Compliance With Laws. Except as set forth in Section 3.12 of
the Disclosure Schedule, since July 31, 1992, (i) the Company and the
Subsidiaries have complied in all material respects with all Applicable Laws
(including without limitation Applicable Laws relating to securities,
properties, Medicare or Medicaid participation, business products, advertising
and sales practices, employment practices, terms and conditions of employment,
wages and hours, safety, occupational safety, health, environmental protection,
product safety, and civil rights); (ii) neither the Company nor any Subsidiary
has received any written notice, which has not been dismissed or otherwise
disposed of, that the Company or any Subsidiary has not so complied and (iii)
neither the Company nor any Subsidiary is charged or, to the best knowledge of
the Company, threatened with, or, to the best knowledge of the Company, under
investigation with respect to, any violation of any Applicable Law relating to
any aspect of the business of the Company or any Subsidiary other than
violations which in the reasonable judgement of the Company, individually or in
the aggregate, do not and will not have a material adverse effect on the
business, assets, results of operation or financial condition of the Company or
the ability of the Company to consummate the transactions contemplated hereby.
3.13 Litigation. Except as set forth in Section 3.13 of the
Disclosure Schedule, (i) there is (whether insured or uninsured) no action,
suit, proceeding or investigation pending or, to the knowledge of the Company,
threatened in writing, at law or in equity, in any court or before any
Governmental Entity against the Company or any Subsidiary or affecting the
Company or any Subsidiary or any of the respective assets or properties of the
Company or any Subsidiary that, in the reasonable judgement of the Company,
individually or in the aggregate would have a material adverse effect on the
Company or would prevent the Company from consummating the transactions
contemplated by this Agreement, and (ii) the Company and the Subsidiaries and
their respective assets and properties are not subject to any order from any
Governmental Entity that has or is likely to have a material adverse effect on
the Company.
3.14 Prior Private Offerings. Since July 31, 1992, (i) all
securities offered or sold by the Company which were not registered pursuant to
the Securities Act and applicable state securities laws, were offered or sold
pursuant to valid exemptions from the Securities Act and applicable state
securities laws and (ii) no private offering memorandum or other information
furnished (whether in writing or
5
9
orally) to any offeree or purchaser of such securities, at the time of delivery
of such private offering memorandum or other information, contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
3.15 Private Offering of the Securities. The Company agrees that
neither the Company nor anyone acting on its behalf has offered or will offer
the Securities or any part hereof or any similar securities for issue or sale
to, or has solicited or will solicit any offer to acquire any of the same from,
anyone so as to bring the issuance and sale of the Securities within the
provisions of Section 5 of the Securities Act.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYERS
Each Buyer severally (and not jointly) represents and warrants to the
Company that:
4.1 Organization. If Buyer is a corporation, such Buyer is duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. If Buyer is a partnership or trust, such
Buyer is duly formed and validly existing as a partnership or trust under the
laws of the jurisdiction of its formation.
4.2 Authority Relative to This Agreement. Buyer has full power
and authority to execute, deliver, and perform this Agreement and the Ancillary
Documents to which it is a party and to consummate the transactions
contemplated hereby and thereby. If Buyer is a corporation, partnership or
trust, the execution, delivery, and performance by Buyer of this Agreement and
the Ancillary Documents to which it is a party, and the consummation by it of
the transactions contemplated hereby and thereby, have been duly authorized by
all necessary action of Buyer. This Agreement has been duly executed and
delivered by Buyer and constitutes, and each Ancillary Document executed or to
be executed by Buyer has been, or when executed will be, duly executed and
delivered by Buyer and constitutes, or when executed and delivered will
constitute, a valid and legally binding obligation of Buyer, enforceable
against Buyer in accordance with its terms, except that such enforceability may
be limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium, and similar laws affecting creditors' rights generally and (ii)
equitable principles which may limit the availability of certain equitable
remedies (such as specific performance) in certain instances.
4.3 Noncontravention. The execution, delivery, and performance by
Buyer of this Agreement and the Ancillary Documents to which it is a party and
the consummation by it of the transactions contemplated hereby and thereby do
not and will not (i) if Buyer is a corporation, partnership or trust, conflict
with or result in a violation of any provision of the charter, bylaws, or
similar organizational documents of Buyer, (ii) conflict with or result in a
violation of any provision of, or constitute (with or without the giving of
notice or the passage of time or both) a default under, or give rise (with or
without the giving of notice or the passage of time or both) to any right of
termination, cancellation, or acceleration under, any bond, debenture, note,
mortgage, indenture, lease, agreement, or other instrument or obligation to
which Buyer is a party or by which Buyer or any of its properties may be bound,
(iii) result in the creation or imposition of any Encumbrance upon the
properties of Buyer, or (iv) violate any Applicable Law binding upon Buyer,
except, in the case of clauses (ii), (iii), and (iv) above, for any such
conflicts, violations, defaults, terminations, cancellations, accelerations, or
Encumbrances which would not, individually or in the aggregate, have a material
adverse effect on the business, assets, results
6
10
of operations, or financial condition of Buyer or on the ability of Buyer to
consummate the transactions contemplated hereby.
4.4 Governmental Approvals. Other than any HSR Act filing, no
consent, approval, order, or authorization of, or declaration, filing, or
registration with, any Governmental Entity is required to be obtained or made
by Buyer in connection with the execution, delivery, or performance by Buyer of
this Agreement or the consummation by it of the transactions contemplated
hereby.
4.5 Purchase for Investment. Buyer has been furnished with all
information that it has requested for the purpose of evaluating the proposed
acquisition of the Securities pursuant hereto, and Buyer has had an opportunity
to ask questions of and receive answers from the Company regarding the Company
and its business, assets, results of operations, and financial condition and
the terms and conditions of the issuance of the Securities. Buyer is acquiring
the Securities to be purchased by it for its own account for investment and not
for distribution in any manner that would violate applicable securities laws,
but without prejudice to Buyer's rights to dispose of such Securities or a
portion thereof to a transferee or transferee, in accordance with such laws if
at some time in the future Buyer deems is advisable to do so. Buyer can bear
the risk of an investment in the Securities, and has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of a prospective investment in the Securities. The
acquisition of such Securities by Buyer at Closing shall constitute Buyer's
confirmation of the foregoing representations. Buyer understands that such
Securities are being sold to it in a transaction which is exempt from the
registration requirements of the Securities Act, and that, in making the
representations and warranties contained in Section 3.6 pertaining to
compliance by the Company with the requirements of the Securities Act and
applicable securities laws, the Company is relying, to the extent applicable,
upon Buyer's representations set forth herein.
4.6 No Other Shares. Except for such rights as may be conferred
on Buyer by this Agreement and the Ancillary Documents, as of the date hereof,
Buyer does not beneficially own, directly or indirectly, any shares of capital
stock of the Company.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Press Releases. Except as may be required by Applicable Law
or by the rules of any national securities exchange, neither Buyer, on the one
hand, nor the Company, on the other, shall issue any press release with respect
to this Agreement or the transactions contemplated hereby without the prior
written consent of the other party (which consent shall not be unreasonably
withheld under the circumstances). Any such press release required by
Applicable Law or by the rules of any national securities exchange shall only
be made after reasonable notice to the other party.
5.2 Stock Exchange Listing. The Company shall use its reasonable
best efforts to cause the Shares and the Warrant Shares to be approved for
listing on the American Stock Exchange, subject to official notice of issuance,
prior to the Closing Date, and at such time as the Common Stock is listed on
the New York Stock Exchange, cause the Shares and the Warrant Shares to be
listed on the New York Stock Exchange as soon as practicable thereafter.
7
11
5.3 Registration Rights.
(a) Registration of Shares. Within 30 days following the Closing,
the Company will prepare and file a registration statement under the Securities
Act, and shall use its best efforts to cause such registration statement to
become effective as promptly as possible thereafter, with respect to the resale
of the Registrable Shares (as hereinafter defined).
(b) Registration of Warrant Shares. Prior to the first date on
which the Warrant Shares are issuable upon exercise of the Warrants, the
Company will prepare and file one or more registration statements under the
Securities Act, and cause such registration statements to become effective as
promptly as possible, with respect to the issuance of the Warrant Shares upon
exercise of the Warrants and the resale of the Registrable Warrant Shares (as
hereinafter defined).
(c) Piggyback Registrations. Until such time as the Buyer Group
(as hereinafter defined) no longer beneficially owns in the aggregate at least
10% of the Shares and Underlying Warrant Shares (as hereinafter defined)
initially purchased hereunder, whenever the Company proposes to register an
offering of any of its Common Stock under the Securities Act other than (i)
under employee compensation or benefit programs or otherwise on Form S-8 or an
equivalent form, (ii) an exchange offer or an offering of securities solely to
the existing stockholders or employees of the Company or to the existing
stockholders of another company in connection with a merger or acquisition or
otherwise on Form S-4 or an equivalent form or (iii) a secondary registration
solely on behalf of holders of securities of the Company, and the registration
form to be used may be used for the registration of the Registrable Securities
(as hereinafter defined), the Company will give prompt written notice to all
Buyers of its intention to effect such a registration and will include in such
registration and offering all Registrable Securities which are then owned by
members of the Buyer Group and with respect to which the Company has received
written requests for inclusion therein within 20 days after the receipt of the
Company's notice (a "Piggyback Registration"). The Company shall use
reasonable efforts to cause the managing underwriters of a proposed
underwritten offering to permit the Registrable Securities then owned by
members of the Buyer Group which have been requested to be included in the
registration statement (or registration statements) for such offering to be
included therein and in the prospectus used in connection therewith on the same
terms and conditions as are provided for therein for persons other than Buyers.
Notwithstanding the foregoing, if the Company gives notice of such a proposed
registration, the total number of Registrable Securities which shall be
included in such registration shall be reduced pro rata to such number, if any,
as in the reasonable opinion of the managing underwriters of such offering
would not adversely affect the marketability or offering price of all of the
securities proposed to be offered by the Company in such offering; provided
however, that to the extent not prohibited by any registration rights
agreements existing as of the date hereof, the securities to be included in the
registration statement (or registration statements) for any person other than
Buyers and the Company shall be first reduced prior to any such pro rata
reduction. It is specifically agreed that the Piggyback Registration rights
set forth in this subparagraph (c) shall not be assignable to any transferee of
Registrable Securities if such transferee is not a member of the Buyer Group.
(d) Registration Procedures. With respect to each registration
statement filed in accordance with this Section 5.3 (the "Registration
Statement"), the Company shall:
(i) cause the Registration Statement and the related
prospectus and any amendment or supplement, (A) to comply in all
material respects with the applicable requirements of the Securities
Act and under the rules and regulations promulgated thereunder, and
(B) not to contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading;
8
12
(ii) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus used in
connection therewith, and upon the mandatory expiration of the
Registration Statement, one or more additional registration
statements, as may be necessary to keep the Registration Statement
effective on a continual basis for so long as the Buyer Group
collectively owns Shares and Underlying Warrant Shares constituting
more than 25% of the Shares and Underlying Warrant Shares initially
purchased hereunder; provided that, the Company shall not be required
to maintain the effectiveness of the Registration Statement filed for
a Piggyback Registration for more than 90 days, and shall not be
required to maintain the effectiveness of any other Registration
Statement filed hereunder for a period in excess of three years from
the Closing Date if after the expiration of such period the
Registrable Securities may be resold without any restrictions under
the Securities Act, it being agreed that if the Registrable Securities
remain subject to any restrictions under the Securities Act (including
any volume restrictions imposed upon "affiliates" under Rule 144) the
Company will continue to maintain the effectiveness of such statement
beyond the three year period subject to the terms hereof;
(iii) furnish, upon written request, to each Buyer a copy of
any amendment or supplement to the Registration Statement or
prospectus prior to filing it after effectiveness and not file any
such amendment or supplement to which any such Buyer shall have
reasonably objected on the grounds that such amendment or supplement
does not comply in all material respects with the requirements of the
Securities Act or of the rules or regulations promulgated thereunder;
(iv) furnish to each Buyer such number of copies of the
Registration Statement, each amendment and supplement thereto, the
prospectus used in connection therewith (including, without
limitation, each preliminary prospectus and final prospectus) and such
other document as such Buyer may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
Buyer;
(v) use its best efforts to register or qualify all
Registrable Securities covered by the Registration Statement under
such other securities or blue sky laws of the states of the United
States as may be required for the issuance and sale of the Registrable
Securities, to keep such registration or qualification in effect for
so long as the Registration Statement remains in effect except that
the Company shall not for any such purpose be required to qualify
generally to do business as a foreign corporation in any jurisdiction
in which it is not and would not, but for the requirements of this
Section 5.3, be obligated to be so qualified, or to subject itself to
taxation in any such jurisdiction, or to consent to general service of
process in any such jurisdiction;
(vi) prior to any sale of the Registrable Securities effected
on the American Stock Exchange or the New York Stock Exchange, as
applicable, deliver to such national securities exchange copies of the
prospectus to be used in connection with the offering to be conducted
pursuant to the Registration Statement;
(vii) upon discovery that, or upon the happening of any event
as a result of which, the prospectus included in the Registration
Statement, as then in effect, includes or in the judgment of the
Company may include an untrue statement of a material fact or omits or
may omit to state any material fact required to be stated in such
prospectus or necessary to make the statements in such prospectus not
misleading in the light of the circumstances in which they were made,
which circumstance requires amendment of the Registration Statement or
supplementation of the prospectus, prepare and file as promptly as
reasonably possible a supplement to or an amendment of such prospectus
as may be necessary so that, as when delivered (if required by the
Securities Act) to a purchaser of Registrable Securities, such
prospectus shall not include an untrue statement
9
13
of a material fact or omit to state a material fact required to be
stated in such prospectus or necessary to make the statements in such
prospectus not misleading in the light of the circumstances in which
they were made;
(viii) otherwise use its best efforts to comply with all
applicable rules and regulations under the Securities Act and, in its
discretion, to make available to its securities holders, as soon as
reasonably practicable, an earnings statement covering the period of
at least twelve months, but not more than eighteen months, beginning
with the first month of the first fiscal quarter after the effective
date of the Registration Statement, which earnings statement shall
satisfy the provisions of section 11(a) of the Securities Act;
(ix) provide and cause to be maintained a transfer agent
and registrar for all Registrable Securities covered by the
Registration Statement from and after a date not later than the
effective date of the Registration Statement;
(x) use its best efforts to list all Registrable Securities
covered by the Registration Statement on any national securities
exchange on which securities of the same class as the Registrable
Securities are then listed;
(xi) after any sale of the Registrable Securities pursuant to
this Section 5.3, to the extent not prohibited by law, cause any
restrictive legends to be removed and any transfer restrictions to be
rescinded with respect to the Registrable Securities;
(xii) enter into such customary agreements (including,
without limitation, underwriting agreements in customary form,
substance, and scope) and take all such other actions as the holders
of a majority of the Registrable Securities being sold or the
underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of such Shares;
(xiii) in the event of the issuance of any stop order
suspending the effectiveness of the Registration Statement, or of any
order suspending or preventing the use of any related prospectus or
suspending the disqualification of any Common Stock included in the
Registration Statement for sale in any jurisdiction, the Company will
use its best efforts promptly to obtain the withdrawal of such order;
and
(xiv) use its best efforts to cause such Registrable
Securities covered by the Registration Statement to be registered with
or approved by such other governmental agencies or authorities as may
be necessary to enable the Buyers thereof to consummate the
disposition of such Shares.
(e) Obligations of Buyer. Each member of the Buyer Group holding
Registrable Securities shall furnish to the Company such information regarding
such member as the Company may from time to time reasonably request in writing
(and will notify the Company of any changes in such information) and as shall
be required by the Securities Act in connection with such registration. Each
such member of the Buyer Group shall enter into such customary agreements
(including, without limitation, underwriting agreements, custody agreements and
powers of attorney in customary form, substance and scope) and take all such
other actions as the Company or the underwriters, if any, reasonably request in
order to expedite or facilitate the disposition of the Registrable Securities.
(f) Delay of Sales. During any period in which the Company is
maintaining the effectiveness of a Registration Statement for the Registrable
Securities pursuant to this Section 5.3, the Company shall have the right, upon
giving notice to the members of the Buyer Group holding Registrable Securities
of
10
14
the exercise of such right, to require such members not to sell any Registrable
Securities pursuant to such Registration Statement for a period of time the
Company deems reasonably necessary, which time shall be specified in such
notice but in no event longer than a period of 90 days, if (i) the Company is
engaged in an offering of shares by the Company for its own account or is
engaged in or proposes to engage in discussions or negotiations with respect
to, or has proposed or taken a substantial step to commence, or there otherwise
is pending, any merger, acquisition, other form of business combination,
divestiture, tender offer, financing or other transaction, or there is an event
or state of facts relating to the Company, in each case which is material to
the Company (any such negotiation, step, event or state of facts being herein
called a "Material Activity"), (ii) such Material Activity would, in the
opinion of counsel for the Company, require disclosure so as to permit the
Registrable Securities to be sold in compliance with applicable law, and (iii)
such disclosure would, in the reasonable judgment of the Company, be adverse to
its interests; provided, that, the Company shall have no right to delay the
filing of a Registration Statement or the selling of Registrable Securities if
at any time during the twelve months preceding the date on which such notice
was given the Company had delayed the selling of Registrable Securities
pursuant to this subparagraph (f). The Company shall have no obligation to
include in any notice contemplated by this subparagraph (f) any reference to or
description of the facts based upon which the Company is delivering such
notice.
(g) Indemnification.
(i) The Company shall indemnify and hold harmless each member
of the Buyer Group holding Registrable Securities, and if such member
is a corporation or partnership, its directors, Affiliates (as
hereinafter defined) and officers, and each other person, if any, who
controls such member within the meaning of the Securities Act against
any losses, claims, damages, liabilities or expenses (including
reasonable fees and expenses of counsel), joint or several, to which
such member or any such director, Affiliate or officer or
participating or controlling person may become subject under the
Securities Act or otherwise in connection with or as a result of a
sale by such member of the Registrable Securities, insofar as such
losses, claims, damages, liabilities or expenses (or related actions
or proceedings) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained
in the Registration Statement, any preliminary prospectus, final
prospectus or summary prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration
Statement, or any document incorporated by reference in the
Registration Statement, or (ii) any omission or alleged omission to
state in any such document a material fact required to be stated in
any such document or necessary to make the statements in any such
document not misleading, and the Company will reimburse such member
and each such director, Affiliate, officer, participating person and
controlling person for any legal or any other expenses reasonably
incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or expense (or action or
proceeding in respect of any such loss, claim, damage, liability or
expense) which arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance
upon and in conformity with written information furnished to the
Company by such member or any such director, Affiliate, officer,
participating person or controlling person for use in the preparation
of the Registration Statement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf
of such member or any such director, Affiliate, officer, participating
person or controlling person and shall survive the transfer of such
securities by such member.
11
15
(ii) Each member of the Buyer Group holding Registrable
Securities, severally and not jointly, shall indemnify and hold
harmless (in the same manner and to the same extent as set forth in
clause (i) of this subparagraph (g)) the Company, each director of the
Company, each officer of the Company who shall sign the Registration
Statement and each other person, if any, who controls the Company
within the meaning of the Securities Act, with respect to any untrue
statement in or omission from the Registration Statement, any
preliminary prospectus, final prospectus or summary prospectus
included in the Registration Statement, or any amendment or supplement
to the Registration Statement, but only to the extent that such
statement or omission was made in direct reliance upon and in
conformity with written information furnished to the Company by such
member for use in the preparation of the Registration Statement,
preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the
Company or any such director, officer or controlling person and shall
survive the transfer of the Registrable Securities by such member.
(iii) Indemnification under this Section 5.3 shall be made as
set forth in Article IX hereof.
(h) Registration Expenses. All expenses incident to the Company's
registration of the Registrable Securities pursuant to the provisions of this
Section 5.3, including, without limitation, all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws, printing and
engraving expenses, messenger and delivery expenses and fees and disbursements
of counsel for the Company and all independent certified public accountants,
underwriters (excluding underwriting discounts and any selling commissions) and
any persons retained by the Company (all such expenses being herein called
"Registration Expenses"), will be paid by the Company; provided, that, all
expenses incurred by members of the Buyer Group holding Registrable Securities
to retain any counsel, accountant or other advisor will not be deemed to be
Registration Expenses and will be paid by such members pro rata based upon the
number of Registrable Securities included in the registration. The
underwriting discounts or commissions and any selling commissions together with
any stock transfer or similar taxes attributable to sales of the Registrable
Securities will be paid by the holders of the Registrable Securities pro rata
based upon the number of Registrable Securities held by them.
5.4 Board Representation. In connection with the Company's 1996
annual meeting of stockholders, the Company will nominate a designee of
Rainwater, Inc. (the "Initial Designee") that is acceptable to the Company to
fill a vacancy in the Board of Directors of the Company existing on the date
hereof and will use its reasonable best efforts to cause the Initial Designee
to become elected to the Board. As long as Buyers and their Affiliates
continue to beneficially own in the aggregate at least 600,000 Shares, Warrant
Shares and/or Underlying Warrant Shares (appropriately adjusted for stock
splits, combinations and similar changes), the Company will continue to
nominate the Initial Designee or other designee of Rainwater, Inc. that is
acceptable to the Company on each subsequent date for re-nomination of the
Initial Designee or other designee, as applicable, and will use its reasonable
best efforts to cause such designee to become elected to the Board.
5.5 Fees and Expenses. The Company shall (i) at the Closing pay
Rainwater, Inc., the amount of $150,000; (ii) upon the earlier of the Closing
or the termination of this Agreement, unless this Agreement is terminated
solely as a result of any Buyer's breach of the terms hereof, reimburse
Rainwater, Inc. for (A) up to two filing fees for HSR Act approval of the
transaction proposed herein together with all other fees and expenses
(including fees and expenses of counsel) incurred in connection with such
filings and (B) all other fees and expenses (including fees and expenses of
counsel, financial advisors, accountants and other third party consultants)
incurred in connection with this Agreement and the
12
16
Ancillary Documents, up to a maximum of $100,000 for such other fees and
expenses incurred in connection with this Agreement and the Ancillary
Documents; and (iii) for so long as Buyers and their Affiliates continue to
beneficially own in the aggregate at least 600,000 Shares, Warrant Shares
and/or Underlying Warrant Shares (appropriately adjusted for stock splits,
combinations and similar changes), pay Rainwater, Inc. $75,000 annually, due
quarterly in arrears beginning March 31, 1995 (adjusted pro-rata for any period
which is less than a full quarter), and reimburse Rainwater, Inc. annually
(payable quarterly in arrears) for all fees and expenses, including legal fees,
reasonably incurred by Rainwater, Inc. in connection with the ownership of the
Securities, up to a maximum of $25,000 for any calendar year, unless the
Company shall have approved a greater amount.
5.6 Restrictions on Transfers; Restrictions on Exercise of
Warrants.
(a) Restrictions on Transfer of Shares, Warrants and Warrant
Shares. Subject to the provisions of subsection (c), no member of the Buyer
Group, without having obtained the prior written consent of the Company, shall:
(i) prior to the first anniversary of the Closing Date, sell
or transfer any of the Shares held by such member to any other person,
except for (A) Excluded Transfers (as hereinafter defined), or (B)
sales or transfers of a number of Shares, which together with all
other sales or transfers of Shares made by Rainwater, Inc. (or upon
its approval, other members of the Buyer Group) pursuant to this
clause (B), does not exceed 1% of the Shares initially purchased
hereunder;
(ii) sell or transfer any of the Warrants held by such member
to any other person, except for Excluded Transfers; and
(iii) prior to the fourth anniversary of the Closing Date,
except for an Excluded Transfer, sell or transfer in a privately
negotiated transaction to a single purchaser and its Affiliates, or
any "Group" (as such term is defined in Rule 13d-5(b)(1) under the
Exchange Act) any combination of Shares, Warrants and/or Warrant
Shares, if the aggregate number of Shares, Warrant Shares and
Underlying Warrant Shares to be so transferred equals 5% or more of
the Common Stock then outstanding on a fully-diluted basis (i.e.
including all shares of Common Stock issuable under the terms of any
options, warrants and similar rights).
(b) Restrictions on Exercise of Warrants. Subject to the
provisions of subsection (d), the members of the Buyer Group shall not, during
the time periods set forth below, exercise Warrants to purchase less than the
number of Warrant Shares set forth opposite such time period (appropriately
adjusted for stock splits, combinations and similar changes):
Time Period Warrant Shares
----------- --------------
From the date immediately following
the first anniversary of the Closing Date 400,000
to and including the second Anniversary of
Closing Date
From the date immediately following
the second Anniversary of the Closing Date
to and including the third Anniversary of 200,000
Closing Date
13
17
From and after the third Anniversary
of the Closing Date No restriction
(c) Exceptions to Transfer Restrictions. Notwithstanding
subsection (a), any member of the Buyer Group may sell or transfer any of the
Shares, Warrants and/or Warrant Shares to any person pursuant to, as a result
of, or in connection with (i) a tender offer or an exchange offer approved by
the Board of Directors of the Company; (ii) the consummation of a merger
(provided the Company is not the surviving corporation in such merger),
consolidation, or a sale of all or substantially all the assets of the Company;
or (iii) any other "Fundamental Change Transaction" (as such term is defined in
the Warrant).
(d) Exceptions to Warrant Exercise Restrictions. The limitations
on the exercise of the Warrants during the Exercise Period (as defined in the
Warrant) which are set forth in subsection (b) are subject to the following
exceptions:
(i) the holders may at any time exercise the balance of
the Warrants remaining outstanding at any time;
(ii) upon the written request of Rainwater, Inc., the
holders of the Warrants may exercise once in each calendar year
Warrants to purchase up to 100,000 Warrant Shares; and
(iii) any of the Warrants may be exercised in connection
with a transaction described in subsection (c).
(e) Transferees; No Other Restrictions. During the period in
which the restrictions set forth in this Section 5.6 remain applicable, neither
Buyer nor any transferee who is a member of the Buyer Group shall be entitled
to, directly or indirectly, sell or transfer any of the Shares, Warrants and/or
Warrant Shares in an Excluded Transfer to any person who is not a party to this
Agreement, unless the purported transferee executes an instrument acknowledging
that it is bound by the terms of this Section 5.6 and such instrument is
delivered to the Company. Except as provided in subsection (a) and this
subsection (e), and subject to compliance with the applicable provisions of the
Securities Act, the Shares, the Warrants and the Warrant Shares are freely
transferable.
5.7 Indemnification of Brokerage. The Company shall be solely
responsible for the payment of any amounts owed to ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc. in
connection with the transactions contemplated herein. Each of the parties
hereto agrees to indemnify and hold harmless each other party from and against
any claim or demand for a commission or other compensation by any financial
advisor, broker, agent, finder, or similar intermediary claiming to have been
employed by or on behalf of such indemnifying party and to bear the cost of
legal fees and expenses incurred in defending against any such claim or demand.
5.8 Delivery of Information. The Company will deliver to each
Buyer promptly upon the filing thereof, copies of all registration statements
(other than the exhibits thereto and any registration statements on Form S-8 or
its equivalent) and reports on Forms 10-K (or their equivalents) which the
Company shall have filed with the Commission or any similar reports filed with
any state securities commission or office.
5.9 Rule 144 and Rule 144A Information. With a view to making
available to each Buyer the benefits of Rule 144 and Rule 144A promulgated
under the 1933 Act and any other rule or regulation of the Commission that may
at any time permit the Buyers to sell Common Stock of the Company to the public
without registration, the Company agrees to:
14
18
(i) make and keep public information available, as those
terms are understood and defined in Rule 144;
(ii) file with the Commission in a timely manner all
reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(iii) furnish to each Buyer forthwith upon request (A) a
written statement by the Company that it has complied with the
reporting requirements of Rule 144, the Securities Act and the
Exchange Act, (B) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the
Company under the Securities Act and the Exchange Act and (C) such
other information as may be reasonably requested by each Buyer in
availing itself of any rule or regulation of the Commission which
permits the selling of any such securities without registration.
(iv) comply with all rules and regulations of the
Commission applicable to the Company in connection with use of Rule
144A (or any successor thereto); and
(v) within five business days of the Company's receipt of
a request made by, or on behalf of, any prospective transferee of who
is a Qualified Institutional Buyer (as defined in Rule 144A) and would
be purchasing Common Stock of the Company in reliance upon Rule 144A),
provide to such prospective transferee copies of annual audited and
quarterly unaudited financial statements of the Company for it to
comply with Rule 144A.
5.10 Standstill.
(a) General. Each Buyer agrees that during the two year period
ending on the second anniversary of the Closing Date, it will not, and it will
cause its Affiliates and employees not to, purchase additional shares of the
Company's Common Stock so that Buyers and their Affiliates and employees
collectively own 20% or more of the Company's Common Stock then outstanding;
provided, however, that Buyers and their Affiliates and employees shall not be
deemed to own 20% or more of the Common Stock then outstanding solely by reason
of the Company's purchase of any Common Stock unless thereafter Buyers and
their Affiliates and employees purchase any additional shares of Common Stock
(excluding any acquisition of Warrant Shares upon exercise of the Warrants,
which shall not be restricted hereunder).
(b) Additional Standstill Obligations. Each Buyer further agrees
that during the two year period ending on the second anniversary of the Closing
Date, it will not, and it will cause its Affiliates and employees not to,
without prior Company consent, (i) effect or cause to be effected any (A)
"solicitation" of "proxies" (as such terms are used in the proxy rules of the
Commission) with respect to the Company or any action resulting in such person
becoming a "participant" in any "election contest" (as such terms are used in
the proxy rules of the Commission) with respect to the Company, or (B) any
tender or exchange offer or offer for a merger, consolidation, share exchange
or business combination involving the Company or substantially all of its
assets, or (ii) propose any matter for submission to a vote of the stockholders
of the Company.
(c) Amendments to Rights Agreement. If the Company undertakes the
purchase of any Common Stock under circumstances in which any exercise of
Warrants would be considered to cause Buyers and their Affiliates to become an
"Acquiring Person" under the Rights Agreement, the Company agrees to amend the
Rights Agreement to either (i) include the Buyers and their Affiliates in the
definition of an "Initial Shareholder", or (ii) change the definition of
"Exempt Person" so as to exclude any exercise
15
19
of the Warrants from being considered as an additional purchase of shares of
Common Stock for purposes of the Rights Agreement.
5.11 Participation in Subsequent Private Placements. Until such
time as Buyers and their Affiliates no longer beneficially own in the aggregate
at least 600,000 Shares, Warrant Shares and/or Underlying Warrant Shares, in
the event that the Company desires to issue any Equity Securities (as
hereinafter defined) for cash in a private placement transaction, the Company
shall, prior to such issuance, provide written notice to Rainwater, Inc.
describing in detail the Equity Securities to be issued, the potential
purchasers thereof, if specifically known, and the consideration to be received
therefrom (a "Preemptive Notice"). The Buyer Group shall have the right,
during the 20 Business Days following receipt of the Preemptive Notice (the
"Preemptive Right Offer Period"), to elect to subscribe for and purchase (the
"Preemptive Right") at the same price, and on such other terms and conditions
as are set forth in the Preemptive Notice, such number of shares of Equity
Securities (in the Company's sole discretion either as a portion of or in
addition to the Equity Securities covered by the Preemptive Notice) as may be
required to cause the Equity Ownership Interest (as hereinafter defined) of the
Buyer Group immediately following such issuance to be equal to the Equity
Ownership Interest of the Buyer Group on the date of the Preemptive Notice.
Any notice by the Buyer Group of their election to exercise the Preemptive
Right shall be provided by Rainwater, Inc. on behalf of such group. Any Equity
Securities to be purchased by the Buyer Group shall be allocated pro-rata among
the members of the Buyer Group electing to exercise the Preemptive Right, as
determined by Rainwater, Inc.
5.12 No Solicitation. From the date of this Agreement to the
earlier of (i) the Closing Date, (ii) January 31, 1996, or (ii) the termination
of this Agreement in accordance with its terms (but not including upon or due
to a breach of this Agreement by the Company), the Company agrees that, except
pursuant to agreements in existence as of the date hereof, (A) it will not, (B)
it will not permit any Subsidiary to and (C) it will not authorize or permit
any officer, director or employee of the Company or any Subsidiary, or any
investment banker, attorney, financial advisor, accountant or other person
retained by the Company or any Subsidiary, directly or indirectly (including by
way of furnishing any information) to (i) solicit, initiate, assist, encourage
or accept any proposal regarding a financing, sale of stock, or any other
transaction involving the Company, which in each case is similar to the
proposed investment contemplated herein (a "Transaction"); (ii) engage in any
negotiations with respect to, or otherwise attempt to consummate, a
Transaction; (iii) provide any public or non-public information concerning the
Company to any person in connection with any proposal for a Transaction or to
any person whom the Company or any Subsidiary knows or has reason to believe is
in the process of planning or considering a Transaction; or (iv) reach any
agreement or understanding for or with respect to any Transaction. The Company
will immediately advise Buyer orally and, within one Business Day, in writing
of any such inquiries, requests for information or Transaction proposals of
which it has knowledge. If the Company or any Subsidiary receives from any
person any offer, inquiry or informational request referred to above, the
Company will promptly advise such person in writing of the terms of this
Section 5.12 and will send Buyer a copy of such notice.
5.13 Amendment of Schedules. Each party hereto agrees that, with
respect to the representations and warranties of such party contained in this
Agreement, such party shall have the continuing obligation until the Closing to
supplement or amend promptly the Schedules hereto with respect to any matter
hereafter arising or discovered which, if existing or known at the date of this
Agreement, would have been required to be set forth or described in the
Schedules. For all purposes of this Agreement, including without limitation
for purposes of determining whether the conditions set forth in Sections 6.1
and 7.1 have been fulfilled, the Schedules hereto shall be deemed to include
only that information contained therein on the date of this Agreement and shall
be deemed to exclude all information contained in any supplement or amendment
thereto; provided, however, that if the Closing shall occur, then all matters
16
20
disclosed pursuant to any such supplement or amendment at or prior to the
Closing shall be waived and no party shall be entitled to make a claim thereon
pursuant to the terms of this Agreement.
5.14 Access to Information. Between the date hereof and the
Closing, the Company (i) shall give Buyers and their authorized representatives
reasonable access to the Company's employees, offices and other facilities, and
all books and records of the Company and the Subsidiaries, (ii) shall permit
Buyer and its authorized representatives to make such inspections as they may
reasonably require to verify the accuracy of any representation or warranty
contained in Article III, and (iii) shall cause the Company's officers to
furnish Buyer and its authorized representatives with such financial and
operating data and other information with respect to the Company and the
Subsidiaries as Buyer may from time to time reasonably request; provided,
however, that no investigation pursuant to this Section shall affect any
representation or warranty of the Company contained in this Agreement or in any
agreement, instrument, or document delivered pursuant hereto or in connection
herewith; and provided further that the Company shall have the right to have a
representative present at all times.
5.15 HSR Act Notification. To the extent it is determined that the
HSR Act will be applicable to the transaction contemplated hereby, each of the
parties hereto shall (i) file or cause to be filed, as promptly as practicable
after the execution and delivery of this Agreement and in no event later than
January 10, 1996, with the Federal Trade Commission and the United States
Department of Justice, all reports and other documents required to be filed by
such party under the HSR Act concerning the transactions contemplated hereby
and (ii) promptly comply with or cause to be complied with any requests by the
Federal Trade Commission or the United States Department of Justice for
additional information concerning such transactions, in each case so that the
waiting period applicable to this Agreement and the transactions contemplated
hereby under the HSR Act shall expire as soon as practicable after the
execution and delivery of this Agreement. Each party hereto agrees to request,
and to cooperate with the other party or parties in requesting, early
termination of any applicable waiting period under the HSR Act.
5.16 Survival of Covenants. Except for any covenant or agreement
which by its terms expressly terminates as of a specific date, the covenants
and agreements of the parties hereto contained in this Agreement shall survive
the Closing without contractual limitation.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligations of the Company to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment on or prior
to the Closing Date of each of the following conditions:
6.1 Representations and Warranties True. All the representations
and warranties of Buyers contained in this Agreement shall be true and correct
on and as of the Closing Date, except to the extent that any such
representation or warranty is made as of a specified date, in which case such
representation or warranty shall have been true and correct as of such
specified date, except to the extent contemplated by this Agreement or the
Ancillary Documents.
6.2 Covenants and Agreements Performed. Buyers shall have
performed and complied with all covenants and agreements required by this
Agreement, if any, to be performed or complied with by them on or prior to the
Closing Date.
17
21
6.3 HSR Act. To the extent that the HSR Act is applicable to the
transaction contemplated herein, all waiting periods (and any extensions
thereof) applicable to this Agreement and the transactions contemplated hereby
under the HSR Act shall have expired or been terminated.
6.4 Legal Proceedings. No Proceeding (as hereinafter defined)
shall, on the Closing Date, be pending or threatened seeking to restrain,
prohibit, or obtain damages or other relief in connection with this Agreement
or the consummation of the transactions contemplated hereby.
6.5 Certificate. The Company shall have received a certificate
executed by each Buyer, and if Buyer is a corporation, partnership or trust, by
a duly authorized person on behalf of Buyer dated the Closing Date,
representing and certifying, in such detail as the Company may reasonably
request, that the conditions set forth in Sections 6.1 and 6.2 have been
fulfilled.
6.6 Private Placement Information. The Company shall have
received evidence reasonably satisfactory it establishing the status (as
"accredited investors" or otherwise) of all Buyers who are assignees of the
Buyer initially executing this Agreement, to the extent reasonably required to
establish that the issuance and sale of the Securities is exempt from the
registration requirements of the Securities Act.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF BUYERS
The obligations of Buyers to consummate the transactions contemplated
by this Agreement shall be subject to the fulfillment on or prior to the
Closing Date of each of the following conditions:
7.1 Representations and Warranties True. All the representations
and warranties (other than Section 3.11) of the Company contained in this
Agreement shall be true and correct on and as of the Closing Date (except that
the representations and warranties contained in Sections 3.3(a) and 3.8 shall
be true and correct in all material respects), except to the extent that any
such representation or warranty is made as of a specified date, in which case
such representation or warranty shall have been true and correct as of such
specified date, except to the extent contemplated by this Agreement or the
Ancillary Documents.
7.2 Covenants and Agreements Performed. The Company shall have
performed and complied with all covenants and agreements required by this
Agreement to be performed or complied with by it on or prior to the Closing
Date.
7.3 Opinion of Counsel. Each Buyer shall have received an opinion
of legal counsel to the Company, dated the Closing Date, in form and substance
satisfactory to the Buyers and their counsel, covering those matters set forth
in Exhibit 7.3 attached hereto.
7.4 Legal Proceedings. No Proceeding shall, on the Closing Date,
be pending or threatened seeking to restrain, prohibit, or obtain damages or
other relief in connection with this Agreement or the consummation of the
transactions contemplated hereby.
18
22
7.5 Certificates. Each Buyer shall have received a certificate or
certificates representing the Shares and the Warrants, as applicable, in
definitive form representing the Shares and Warrants purchased by it, (in the
case of the Warrants in substantially the form set forth in Exhibit A hereto)
registered in the name of such Buyer and duly executed by the Company.
7.6 Officer Certificate. Buyer shall have received a certificate
executed on behalf of the Company by the chief executive officer or the chief
financial officer of the Company, dated the Closing Date, representing and
certifying, in such detail as the Buyer may reasonably request, that the
conditions set forth in Sections 7.1, 7.2 and 7.4 have been fulfilled.
ARTICLE VIII
TERMINATION, AMENDMENT, AND WAIVER
8.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby abandoned at any time prior to the Closing in
the following manner:
(a) by mutual written consent of the Company and Buyers; or
(b) by the Company, if, on the Closing Date, any of the conditions
set forth in Article VI shall not have been satisfied and shall not have been
waived by the Company; or
(c) by Buyers, if, on the Closing Date, any of the conditions set
forth in Article VII shall not have been satisfied and shall not have been
waived by Buyers; or
(d) by the Company or Buyers if the Closing has not occurred by
the close of business on January 31, 1996, so long as the failure to consummate
the transaction on or before such date does not result from a breach of this
Agreement by the party seeking termination of this Agreement; provided that, if
the failure to consummate the transaction on or before such date is due solely
to the failure to have satisfied the condition in Section 6.3, then the
earliest date upon which this Agreement may be terminated pursuant to this
subparagraph (d) is March 31, 1996; or
(e) at any time before the Closing, by Company or Buyers, in the
event (i) of a material breach of this Agreement by any non-terminating party
if such non-terminating party fails to cure such breach within five Business
Days following notification by any one or more terminating parties, or (ii)
upon notification to the non-terminating party by the terminating party that
the satisfaction of any condition to the terminating party's obligations under
this Agreement has become impossible or impractical with the use of best
efforts, if the failure of such condition to be satisfied is not caused by a
breach by the terminating party.
8.2 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 8.1 by the Company, on the one hand, or
Buyers, on the other, written notice thereof shall forthwith be given to the
other party specifying the provision hereof pursuant to which such termination
is made, and this Agreement shall become void and have no effect, except that
the agreements contained in this Section and in Sections 5.1, 5.5 and 5.7 and
Article IX shall survive the termination hereof. Nothing contained in this
Section shall relieve any party from liability for any breach of this
Agreement.
8.3 Amendment. This Agreement may not be amended except by an
instrument in writing signed by or on behalf of all the parties hereto.
19
23
8.4 Waiver. No failure or delay by a party hereto in exercising
any right, power, or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege. The
provisions of this Agreement may not be waived except by an instrument in
writing signed by or on behalf of the party against whom such waiver is sought
to be enforced.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS;
INDEMNIFICATION
9.1 Survival. The representations and warranties of the parties
hereto contained in this Agreement or in any certificate, instrument or
document delivered pursuant hereto shall survive the Closing, regardless of any
investigation made by or on behalf of any party, until the second anniversary
of the Closing Date; provided, however, that the representations and warranties
of the Company contained in Sections 3.1, 3.3., 3.4 and 3.7 shall survive until
30 days after the expiration of the limitation period under the applicable
statute of limitations (each such anniversary and time of expiration, a
"Survival Date"). No action may be brought with respect to a breach of any
representation after the Survival Date unless, prior to such time, the party
seeking to bring such an action has notified the other parties of such claim,
specifying in reasonable detail the nature of the loss suffered. The
provisions of this Section 9.1 shall have no effect upon any of the covenants
of the parties set forth in Article V or any of the other obligations of the
parties hereto under the Agreement, whether to be performed later, at or after
the Closing.
9.2 Indemnification by Company. The Company shall indemnify,
defend, and hold harmless Buyers from and against any and all claims, actions,
causes of action, demands, losses, damages, liabilities, costs, and expenses
(including reasonable attorneys' fees and expenses) (collectively, "Damages"),
asserted against, resulting to, imposed upon, or incurred by Buyers, directly
or indirectly, by reason of or resulting from any breach by the Company of any
of its representations, warranties, covenants, or agreements contained in this
Agreement or in any certificate, instrument, or document delivered pursuant
hereto.
9.3 Indemnification by Buyers. Each Buyer severally (but not
jointly) shall indemnify, defend, and hold harmless the Company from and
against any and all Damages asserted against, resulting to, imposed upon, or
incurred by the Company, directly or indirectly, by reason of or resulting from
any breach by such Buyer of any of its representations, warranties, covenants,
or agreements contained in this Agreement or in any certificate, instrument, or
document delivered pursuant hereto.
9.4 Procedure for Indemnification. Promptly after receipt by an
indemnified party under Section 9.2 or 9.3 of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to be
made against an indemnifying party under such Section, give written notice to
the indemnifying party of the commencement thereof, but the failure so to
notify the indemnifying party shall not relieve it of any liability that it may
have to any indemnified party except to the extent the indemnifying party
demonstrates that the defense of such action is prejudiced thereby. In case
any such action shall be brought against an indemnified party and it shall give
written notice to the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it may wish, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. If the indemnifying party elects to
assume the defense of such action, the indemnified party shall have the right
to employ separate counsel at its own expense and to participate in the defense
thereof. If the indemnifying party elects not to assume (or fails to assume)
the defense of such action,
20
24
the indemnified party shall be entitled to assume the defense of such action
with counsel of its own choice, at the expense of the indemnifying party. If
the action is asserted against both the indemnifying party and the indemnified
party and there is a conflict of interests which renders it inappropriate for
the same counsel to represent both the indemnifying party and the indemnified
party, the indemnifying party shall be responsible for paying for separate
counsel for the indemnified party; provided, however, that if there is more
than one indemnified party, the indemnifying party shall not be responsible for
paying for more than one separate firm of attorneys to represent the
indemnified parties, regardless of the number of indemnified parties. The
indemnifying party shall have no liability with respect to any compromise or
settlement of any action effected without its written consent (which shall not
be unreasonably withheld).
ARTICLE X
MISCELLANEOUS
10.1 Notices. All notices, requests, demands, and other
communications required or permitted to be given or made hereunder by any party
hereto shall be in writing and shall be deemed to have been duly given or made
if delivered personally, or transmitted by first class registered or certified
mail, postage prepaid, return receipt requested, or sent by prepaid overnight
delivery service, or sent by cable, telegram, or telefax, to the parties at the
addresses and telefax numbers set forth opposite their names on the signature
page hereof (in the case of the Company) and on Annex I hereto (in the case of
Buyers) (or at such other addresses and telefax numbers as shall be specified
by the parties by like notice).
10.2 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.
10.3 Binding Effect; Assignment; No Third Party Benefit. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, legal representatives, successors, and permitted
assigns. Except as otherwise expressly provided in this Agreement, neither
this Agreement nor any of the rights, interests, or obligations hereunder shall
be assigned by any of the parties hereto without the prior written consent of
the other parties, except that any Buyer may assign to any partnership in which
Rainwater, Inc. is the sole managing partner, or to any other member of the
Buyer Group, any of Buyer's rights, interests, or obligations hereunder, upon
notice to the other party or parties. Prior to the Closing, any assignee of
the initial Buyer executing this Agreement shall, upon such assignment, execute
this Agreement as a Buyer and the provisions of Annex I shall be amended to
accurately reflect the portion of the Securities to be purchased by each Buyer.
Except as provided in Article IX, nothing in this Agreement, express or
implied, is intended to or shall confer upon any person other than the parties
hereto, and their respective heirs, legal representatives, successors, and
permitted assigns, any rights, benefits, or remedies of any nature whatsoever
under or by reason of this Agreement.
10.4 Severability. If any provision of this Agreement is held to
be unenforceable, this Agreement shall be considered divisible and such
provision shall be deemed inoperative to the extent it is deemed unenforceable,
and in all other respects this Agreement shall remain in full force and effect;
provided however, that if any such provision may be made enforceable by
limitation thereof, then such provision shall be deemed to be so limited and
shall be enforceable to the maximum extent permitted by applicable law.
10.5 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
21
25
DELAWARE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
10.6 Counterparts. This Agreement may be executed by the parties
hereto in any number of counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same agreement. Each
counterpart may consist of a number of copies hereof each signed by less than
all, but together signed by all, the parties hereto.
ARTICLE XI
DEFINITIONS
11.1 Certain Defined Terms. As used in this Agreement, each of the
following terms has the meaning given it in this Article:
"Affiliate" has the meaning specified in Rule 12b-2
promulgated under the Exchange Act.
"Ancillary Documents" means each agreement, instrument, and
document (other than this Agreement) executed or to be executed by the
Company or Buyer in connection with the transactions contemplated by
this Agreement, including without limitation the Warrants.
"Applicable Law" means any statute, law, rule, or regulation
or any judgment, order, writ, injunction, or decree of any
Governmental Entity to which a specified person or property is
subject.
"Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in Atlanta, Georgia are
authorized or obligated by law or executive order to close.
"Buyer Group" shall mean collectively, all Buyers together
with their respective Affiliates and bona fide employees.
"Encumbrances" means liens, charges, pledges, options,
mortgages, deeds of trust, security interests, claims, restrictions
(whether on voting, sale, transfer, disposition, or otherwise),
easements, and other encumbrances of every type and description,
whether imposed by law, agreement, understanding, or otherwise.
"Equity Ownership Interests" shall mean, with respect to the
members of the Buyer Group, at any time, the fraction (a) having as
its numerator the number of shares of Common Stock and Underlying
Warrant Shares held beneficially by all members of the Buyer Group at
such time, and (b) having as its denominator the aggregate number of
shares of Common Stock (calculated on a fully diluted basis) issued
and outstanding at such time.
"Equity Securities" means any capital stock of the Company,
and any securities directly or indirectly convertible into, or
exercisable or exchangeable for any capital stock of the Company, or
any right, option, warrant or other security which, with the payment
of additional consideration, the expiration of time or the occurrence
of any event shall give the holder thereof the right to acquire any
capital stock of the company or any security convertible into or
exercisable or exchangeable for, any capital stock of the Company.
22
26
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Agreement" means that certain Exchange Agreement
among the Company and certain other parties dated as of December 13,
1995.
"Excluded Transfer" means any transfer by a member of the
Buyer Group to (i) an affiliate or bona fide employee of the
transferor, (ii) any other Buyer, or (iii) to any Affiliate or bona
fide employee of another Buyer.
"Governmental Entity" means any court or tribunal in any
jurisdiction (domestic or foreign) or any public, governmental, or
regulatory body, agency, department, commission, board, bureau, or
other authority or instrumentality (domestic or foreign).
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended.
"person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, enterprise,
unincorporated organization, or Governmental Entity.
"Proceedings" means all proceedings, actions, suits,
investigations, and inquiries by or before any arbitrator or
Governmental Entity.
"Registrable Securities" means the Registrable Shares and the
Registrable Warrant Shares.
"Registrable Shares" means the Shares and any Common Stock or
other Equity Securities issued with respect thereto by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or
otherwise.
"Registrable Warrant Shares" means the Warrant Shares and any
Common Stock or other Equity Securities issued with respect thereto by
way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or
other reorganization or otherwise.
"Rights Agreement" means that certain Rights Agreement, dated
as of July 21, 1992 between the Company and First Union National Bank
of North Carolina, as rights agent.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" means any corporation more than 50% of whose
outstanding voting securities, or any general partnership, joint
venture, or similar entity more than 50% of whose total equity
interests, is owned, directly or indirectly, by the Company, or any
limited Partnership of which the Company or any Subsidiary is a
general partner.
"Underlying Warrant Shares" shall mean, at any time, all
shares of Common Stock which may be acquired upon exercise of the
Warrants. For purposes hereof, any person who holds Warrants shall be
deemed to be the holder of the Underlying Warrant Shares obtainable
upon exercise of such Warrants.
23
27
11.2 Certain Additional Defined Terms. In addition to such terms
as are defined in the opening paragraph of and the recitals to this Agreement
and in Section 11.1, the following terms are used in this Agreement as defined
in the Sections set forth opposite such terms:
Defined Term Section Reference
------------ -----------------
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Article II
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Article II
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8
Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2
Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8
Initial Designee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4
Material Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
Preemptive Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.11
Preemptive Right . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.11
Preemptive Right Offer Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.11
Piggyback Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Registration Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Survival Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1
Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12
Warrant Registration Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
Warrant Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7
Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
24
28
IN WITNESS WHEREOF, the parties have executed this Agreement, or
caused this Agreement to be executed by their duly authorized representatives,
all as of the day and year first above written.
MAGELLAN HEALTH SERVICES, INC.
Address:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ E. ▇▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ --------------------------------------
E. ▇▇▇ ▇▇▇▇▇▇▇▇, Chairman
and Chief Executive Officer
BUYER(S):
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
25
29
ANNEX I
Shares
Number of Underlying Total
Name of Buyer Address and Fax Shares Warrants Purchase Price
------------- --------------- ------ -------- --------------
▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇ ▇▇. 4,000,000 2,000,000 $69,732,000
Rainwater ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇▇
(▇▇▇)▇▇▇-▇▇▇▇
30
EXHIBIT A
(Form of Warrants)
31
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS AND MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, OR OTHERWISE
DISPOSED OF UNLESS REGISTERED PURSUANT TO THE PROVISIONS OF THAT ACT OR UNLESS
AN OPINION OF COUNSEL TO THE COMPANY OR OTHER COUNSEL, REASONABLY SATISFACTORY
TO THE COMPANY IS OBTAINED STATING THAT SUCH DISPOSITION IS IN COMPLIANCE WITH
AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION.
THE RIGHT TO SELL OR OTHERWISE TRANSFER THIS WARRANT IS SUBJECT TO CERTAIN
RESTRICTIONS SET FORTH IN A STOCK AND WARRANT PURCHASE AGREEMENT DATED DECEMBER
22, 1995, BETWEEN THE COMPANY AND THE INITIAL BUYERS OF THE WARRANTS, A COPY OF
WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF THE COMPANY. THIS
WARRANT MAY NOT BE SOLD OR TRANSFERRED EXCEPT UPON THE CONDITIONS SPECIFIED IN
THE STOCK AND WARRANT PURCHASE AGREEMENT AND IN THIS WARRANT, AND NO SALE OR
TRANSFER OF THIS WARRANT SHALL BE VALID OR EFFECTIVE UNLESS AND UNTIL SUCH
CONDITIONS SHALL HAVE BEEN COMPLIED WITH.
------------------------------------------
MAGELLAN HEALTH SERVICES, INC.
(Incorporated under the laws of the State of Delaware)
Void after 5:00 p.m., Atlanta, Georgia, local time,
on January ___, 2000.
No. ______ Right to Purchase
_________ Shares
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, _________________________,
(the "HOLDER"), or registered assigns, is entitled to purchase from Magellan
Health Services, Inc. (f/k/a Charter Medical Corporation), a Delaware
Corporation (the "COMPANY"), at any time or from time to time during the period
specified in Paragraph 2 hereof,
___________________________________________(__________) fully paid and
nonassessable shares of the Company's Common Stock, par value $.25 per share
(the "COMMON STOCK"), at an exercise price per share of $26.150 (the "EXERCISE
PRICE"). The term "WARRANT SHARES", as used herein, refers to the shares of
Common Stock purchasable hereunder. The Warrant Shares and the Exercise Price
are subject to adjustment as provided in Paragraph 4 hereof.
This Warrant is one of a series of Warrants (the "Warrants") issued
pursuant to, and is subject to all terms, provisions, and conditions contained
in, that certain Stock and Warrant Purchase Agreement, dated December 22, 1995
(the "Purchase Agreement"), by and among the Company, the Holder and other
purchasers of the Warrants. This Warrant is subject to the following
additional terms, provisions, and conditions:
1. Manner of Exercise; Issuance of Certificates; Payment for
Shares. Subject to the provisions hereof and the provisions of the Purchase
Agreement which restrict the exercise of the Warrants, this Warrant may be
exercised by the holder hereof, in whole or in part, by the surrender of this
▇-▇
▇▇
▇▇▇▇▇▇▇, together with a completed Exercise Agreement in the form attached
hereto, to the Company during normal business hours on any business day at the
Company's principal office in Atlanta, Georgia (or such other office or agency
of the Company as it may designate by notice to the holder hereof), during the
Exercise Period (as defined in Paragraph 2), and upon payment to the Company of
the Exercise Price for the Warrant Shares specified in said Exercise Agreement,
which such payment shall be made in cash or by certified or official bank
check. The Company shall not be required to issue fractional Warrant Shares
upon any exercise of the Warrant, but instead shall pay to the holder of this
Warrant the cash value of any such fractional Warrant Shares. The Warrant
Shares so purchased shall be deemed to be issued to the holder hereof or its
designee as the record owner of such shares as of the close of business on the
date on which this Warrant shall have been surrendered, the completed Exercise
Agreement delivered, and payment made for such shares as aforesaid.
Certificates for the Warrant Shares so purchased, representing the aggregate
number of shares specified in said Exercise Agreement, shall be delivered to
the holder hereof within a reasonable time, not exceeding ten business days,
after this Warrant shall have been so exercised. The certificates so delivered
shall be in such denominations as may be reasonably requested by the holder
hereof, shall, unless the Warrant Shares evidenced by such certificate have
previously been registered under the Securities Act of 1933, as amended (the
"SECURITIES ACT") be imprinted with a restrictive legend substantially similar
to the legend appearing on the face of this Warrant, and shall be registered in
the name of said holder or such other name as shall be designated by said
holder. If this Warrant shall have been exercised only in part, then, unless
this Warrant has expired, the Company shall, at its expense, at the time of
delivery of said certificates, deliver to said holder a new Warrant
representing the number of shares with respect to which this Warrant shall not
then have been exercised, which Warrant shall be imprinted on its face with the
same legend appearing on the face of this Warrant. The Company shall pay all
taxes and other expenses and charges payable in connection with the
preparation, execution, and delivery of stock certificates (and any new
Warrants) pursuant to this Paragraph 1 except that, in case such stock
certificates shall be registered in a name or names other than the holder of
this Warrant, funds sufficient to pay all stock transfer taxes which shall be
payable in connection with the execution and delivery of such stock
certificates shall be paid by the holder hereof to the Company at the time of
the delivery of such stock certificates by the Company as mentioned above.
2. Period of Exercise. Subject to the provisions of the Purchase
Agreement which restrict the exercise of the Warrants, this Warrant is
exercisable at any time or from time to time during the period commencing on
January ____, 1997 and ending 5:00 p.m. Atlanta, Georgia, local time, on
January ___, 2000 (the "EXERCISE PERIOD").
3. Certain Actions Prohibited. The Company will not, by
amendment of certificate 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 of the terms to be observed or performed by it
hereunder, but will at all times in good faith assist in the carrying out of
all the provisions of this Warrant and in the taking of all such action as may
reasonably be requested by the holder of this Warrant in order to protect the
exercise privilege of the holder of this Warrant against dilution or other
impairment, consistent with the tenor and purpose of this Warrant.
Without limiting the generality of the foregoing,
(i) the Company will not increase the par value of the
shares of Common Stock receivable upon the exercise of this Warrant
above the Exercise Price then in effect,
(ii) before taking any action which would cause an
adjustment reducing the Exercise Price below the then par value of the
shares of Common Stock so receivable, the Company will
A-2
33
take all such corporate action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock at such adjusted Exercise Price
upon the exercise of this Warrant, or
(iii) the Company will not take any action which results in
any adjustment of the Exercise Price if the total number of shares of
Common Stock issuable after the action upon the exercise of this
Warrant would exceed the total number of shares of Common Stock then
authorized by the Company's charter and available for other the
purpose of issue upon such exercise.
4. Anti-dilution Provisions. The Exercise Price shall be subject
to adjustment from time to time as provided in this Paragraph 4. Upon each
adjustment of the Exercise Price, the holder of this Warrant shall thereafter
be entitled to purchase, at the Exercise Price resulting from such adjustment,
the largest number of Warrant Shares obtained by multiplying the Exercise Price
in effect immediately prior to such adjustment by the number of Warrant Shares
purchasable hereunder immediately prior to such adjustment and dividing the
product thereof by the Exercise Price resulting from such adjustment. For
purposes of this Paragraph 4, the term "CAPITAL STOCK", as used herein,
includes the Common Stock and any additional class of stock of the Company
having no preference as to dividends or distributions on liquidation which may
be authorized in the future by an amendment to the Company's charter, provided
that the shares purchasable pursuant to this Warrant shall include only shares
of Common Stock, or shares resulting from any subdivision or combination of the
Common Stock, or in the case of any reorganization, reclassification,
consolidation, merger, or sale of the character referred to in this Paragraph
4, the stock or other securities or property provided for in this Paragraph 4.
(a) Subdivisions and Combinations. In case at any time the
Company shall (i) subdivide the outstanding shares of Capital Stock into a
greater number of shares, or (ii) combine the outstanding shares of Capital
Stock into a smaller number of shares, the Exercise Price in effect immediately
prior thereto shall be adjusted proportionately so that the adjusted Exercise
Price shall bear the same relation to the Exercise Price in effect immediately
prior to such event as the total number of shares of Capital Stock outstanding
immediately prior to such event shall bear to the total number of shares of
Capital Stock outstanding immediately after such event. Such adjustment shall
become effective immediately after the effective date of a subdivision or
combination.
(b) Stock Dividends. In case the Company at any time after the
date hereof shall declare, order, pay or make any dividend or other
distribution to all holders of the Capital Stock payable in Capital Stock, then
in each such case, subject to Paragraph 4(d) hereof, the Exercise Price in
effect immediately prior to the close of business on the record date fixed for
the determination of holders of any class of securities entitled to receive
such dividend or distribution shall be reduced to a price (calculated to the
nearest .001 of a cent) determined by multiplying such Exercise Price by a
fraction
(i) the numerator of which shall be the number of shares
of Capital Stock outstanding immediately prior to such dividend or
distribution, and
(ii) the denominator of which shall be the number of
shares of Capital Stock outstanding immediately after such dividend or
distribution.
Such adjustment shall be made on the date such dividend is paid or
such distribution is made and shall become effective retroactive to the record
date for the determination of shareholders entitled to receive such dividend or
distribution.
A-3
34
(c) Dividends other than Stock Dividends. In case the Company at
any time after the date hereof shall declare, order, pay or make any dividend
or other distribution to all holders of the Capital Stock, other than a
dividend payable in shares of Capital Stock (including, without limitation,
dividends or distributions payable in cash, evidences of indebtedness, rights,
options or warrants to subscribe for or purchase any Capital Stock or other
securities, or any other securities or other property), then, and in each such
case, subject to Paragraph 4(d) hereof, the Exercise Price in effect
immediately prior to the close of business on the record date fixed for the
determination of holders of any class of securities entitled to receive such
dividend or distribution shall be reduced to a price (calculated to the nearest
.001 of a cent) determined by multiplying such Exercise Price by a fraction
(i) the numerator of which shall be the "Market Price"
(as defined below) in effect on such record date or, if any class of
Capital Stock trades on an ex-dividend basis, the trading date
immediately prior to the date of commencement of ex-dividend trading,
less the value of such dividend or distribution (as determined in good
faith by the Board of Directors of the Company) applicable to one
share of Capital Stock, and
(ii) the denominator of which shall be such Market Price
on such record date or, if any class of Capital Stock trades on an
ex-dividend basis, the trading date immediately prior to the date of
commencement of ex-dividend trading.
Such adjustment shall be made on the date such dividend is paid or
such distribution is made and shall become effective retroactive to the record
date for the determination of shareholders entitled to receive such dividend or
distribution.
For the purpose hereof, "MARKET PRICE" shall mean, on any date
specified herein, (A) if any class of Capital Stock is listed or admitted to
trading on any national securities exchange, the highest price obtained by
taking the arithmetic mean over a period of 20 consecutive days on which such
national securities exchange (or if such stock is traded on more than one
national securities exchange, the exchange the Company has designated under the
Securities Exchange Act of 1934 to receive copies of reports filed by the
Company under such act) is open for trading on a regular basis (any such day is
a "TRADING DAY") ending the Trading Day immediately prior to such date of the
average, on each such Trading Day, of the high and low sale prices of shares of
each such class of Capital Stock or if no such sale takes place on such date,
the average of the highest closing bid and lowest closing asked prices thereof
on such date, in each case as officially reported on all national securities
exchanges on which each such class of Capital Stock is then listed or admitted
to trading, or (B) if no shares of any class of Capital Stock are then listed
or admitted to trading on any national securities exchange, the highest closing
price of any class of Capital Stock on such date in the over-the-counter market
as shown by the NASDAQ National Market System or, if no such shares of any
class of Capital Stock are then quoted in such system, as published by the
National Quotation Bureau, Inc. or any similar successor organization, and in
either case as reported by any member firm of the New York Stock Exchange
selected by the Company. If no shares of any class of Capital Stock are then
listed or admitted to trading on any national securities exchange and if no
closing bid and asked prices thereof are then so quoted or published in the
over-the-counter market, "Market Price" shall mean the higher of (x) the book
value per share of Capital Stock (assuming for the purposes of this calculation
the economic equivalence of all shares of all classes of Capital Stock) as
determined on a fully diluted basis in accordance with generally accepted
accounting principles by the Board of Directors of the Company as of the last
day of any month ending within 60 days preceding the date as of which the
determination is to be made or (y) the fair value per share of Capital Stock
(assuming for the purposes of this calculation the economic equivalence of all
shares of all classes of Capital Stock), as determined on a fully diluted basis
in good faith by the Board of Directors of the Company, as of a date which is
15 days preceding the date as of which the determination is to be made.
A-4
35
(d) Minimum Adjustment of Exercise Price. If the amount of any
adjustment of the Exercise Price required pursuant to this Paragraph 4 would be
less than one percent (1%) of the Exercise Price in effect at the time such
adjustment is otherwise so required to be made, such amount shall be carried
forward and adjustment with respect thereto made at the time of and together
with any subsequent adjustment which, together with such amount and any other
amount or amounts so carried forward, shall aggregate at least one percent (1%)
of such Exercise Price; provided that, upon the exercise of this Warrant, all
adjustments carried forward and not theretofore made up to and including the
date of such exercise shall, with respect to the portion of this Warrant then
exercised, be made to the nearest .001 of a cent.
(e) Fundamental Change Transaction. In case at any time after the
date hereof a purchase, tender, or exchange offer shall have been made to and
accepted by the holders of more than 50% of the outstanding shares of Capital
Stock, or the Company is otherwise a party to any transaction (including,
without limitation, a merger, consolidation, sale of all or substantially all
the Company's assets, liquidation, or recapitalization of the Capital Stock)
which is to be effected in such a way that as a result of such transaction or
offer (x) the holders of Common Stock (or any other securities of the Company
then issuable upon the exercise of this Warrant) shall be entitled to receive
stock or other securities or property (including cash) with respect to or in
exchange for Common Stock (or such other securities), or (y) the Capital Stock
ceases to be a publicly traded security either listed on the American Stock
Exchange, the New York Stock Exchange or the NASDAQ National Market System or
any successor thereto or comparable system (each such transaction being herein
called a "FUNDAMENTAL CHANGE TRANSACTION"), then, as a condition of such
Fundamental Change Transaction, lawful and adequate provision shall be made
whereby the holder of this Warrant shall thereafter have the right to purchase
and receive upon the basis and upon the terms and conditions specified in this
Warrant, and in lieu of the shares of Common Stock (or such other securities)
purchasable immediately before such transaction upon the exercise hereof, such
stock or other securities or property (including cash) as may be issuable or
payable with respect to or in exchange for a number of outstanding shares of
Common Stock (or such other securities) equal to the number of shares of Common
Stock (or such other securities) purchasable immediately before such
transaction upon the exercise hereof, had such Fundamental Change Transaction
not taken place. In any such case appropriate provision shall be made with
respect to the rights and interests of the holder of this Warrant to the end
that the provisions hereof (including, without limitation, the provisions for
adjustments of the Exercise Price and of the number of Warrant Shares
purchasable upon exercise hereof) shall thereafter be applicable, as nearly as
reasonably may be, in relation to the stock or other securities or property
thereafter deliverable upon the exercise hereof (including an immediate
adjustment of the Exercise Price if by reason of or in connection with such
Fundamental Change Transaction any securities are issued or event occurs which
would, under the terms hereof, require an adjustment of the Exercise Price).
In the event of a consolidation or merger of the Company with or into another
corporation or entity as a result of which a greater or lesser number of shares
of common stock of the surviving corporation or entity are issuable to holders
of Capital Stock in respect of the number of shares of Capital Stock
outstanding immediately prior to such consolidation or merger, then the
Exercise Price in effect immediately prior to such consolidation or merger
shall be adjusted in the same manner as though there were a subdivision or
combination of the outstanding shares of Capital Stock. The Company shall not
effect any such Fundamental Change Transaction unless prior to or
simultaneously with the consummation thereof the successor corporation or
entity (if other than the Company) resulting from such consolidation or merger
or the corporation or entity purchasing such assets and any other corporation
or entity the shares of stock or other securities or property of which are
receivable thereupon by the holder of this Warrant shall expressly assume, by
written instrument executed and delivered (and satisfactory in form) to the
holder of this Warrant, (i) the obligation to deliver to such holder such stock
or other securities or property
A-5
36
as, in accordance with the foregoing provisions, such holder may be entitled to
purchase and (ii) all other obligations of the Company hereunder.
(f) Notice of Adjustment. Upon the occurrence of any event
requiring an adjustment of the Exercise Price, then and in each such case the
Company shall promptly deliver to the holder of this Warrant a notice stating
the Exercise Price resulting from such adjustment and the increase or decrease,
if any, in the number of shares of Common Stock issuable upon exercise of this
Warrant, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based. Within 90 days after each fiscal
year in which any such adjustment shall have occurred, or within 30 days after
any request therefor by the holder of this Warrant stating that such holder
contemplates exercise of this Warrant, the Company will deliver to the holder
of this Warrant a certificate of the Company's chief financial officer
confirming the statements in the most recent notice delivered under this
Paragraph 4(f).
(g) Other Notices. In case at any time:
(i) the Company shall declare or pay to all the holders of
Capital Stock any dividend (whether payable in Capital Stock, cash,
securities or other property);
(ii) the Company shall offer for subscription pro rata to
all the holders of Capital Stock any additional shares of stock of any
class or other rights;
(iii) there shall be any capital reorganization, or
reclassification of the Capital Stock of the Company, or consolidation
or merger of the Company with, or sale of all or substantially all its
assets to, another corporation or other entity;
(iv) there shall be a voluntary or involuntary dissolution,
liquidation, or winding-up of the Company; or
(v) there shall be any other Fundamental Change
Transaction;
then, in any one or more of such cases, the Company shall give to the holder of
this Warrant (a) at least 15 days prior to any event referred to in clause (i)
above, at least 30 days prior to any event referred to in clause (ii), (iii),
(iv) or (v) above, written notice of the date on which the books of the Company
shall close or a record shall be taken for such dividend, distribution, or
subscription rights or for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding-up, or Transaction and (b) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding-up, or Transaction known to the Company, at least 30 days
prior written notice of the date (or, if not then known, a reasonable
approximation thereof by the Company) when the same shall take place. Such
notice in accordance with the foregoing clause (a) shall also specify, in the
case of any such dividend, distribution, or subscription rights, the date on
which such holders of Capital Stock shall be entitled thereto, and such notice
in accordance with the foregoing clause (b) shall also specify the date on
which such holders of Capital Stock shall be entitled to exchange their Capital
Stock for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation,
winding-up, or Transaction, as the case may be. Such notice shall also state
that the action in question or the record date is subject to the effectiveness
of a registration statement under the Securities Act, or to a favorable vote of
security holders, if either is required.
A-6
37
(h) Certain Events. If any event occurs as to which, in the good
faith judgment of the Board of Directors of the Company, the other provisions
of this Paragraph 4 are not strictly applicable or if strictly applicable would
not fairly protect the exercise rights of the holder of this Warrant in
accordance with the essential intent and principles of such provisions, then
the Board of Directors of the Company shall make such adjustment, if any, on a
basis consistent with such essential intent and principles, necessary to
preserve, without dilution, the rights of the holder of this Warrant; provided,
that no such adjustment shall have the effect of increasing the Exercise Price
as otherwise determined pursuant to this Paragraph 4.
5. Issue Tax. The issuance of certificates for Warrant Shares upon
the exercise of this Warrant shall be made without charge to the holder of this
Warrant or such shares for any issuance tax in respect thereof, provided that
the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of any warrant or
certificate in a name other than the holder of this Warrant.
6. No Rights or Liabilities as a Shareholder. This Warrant shall
not entitle the holder hereof to any voting rights or other rights as a
shareholder of the Company. No provision of this Warrant, in the absence of
affirmative action by the holder hereof to purchase Warrant Shares, 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 Exercise Price or as a shareholder
of the Company, whether such liability is asserted by the Company or by
creditors of the Company.
7. Transfer, Exchange, and Replacement of Warrant; Registration
Rights.
(a) Warrant Transferable. The transfer of this Warrant and all
rights hereunder, in whole or in part, is registrable at the office or agency
of the Company referred to in Paragraph 7(e) hereof by the holder hereof in
person or by his duly authorized attorney, upon surrender of this Warrant
properly endorsed. Upon any transfer of this Warrant to any person, other than
a person who is at that time a holder of other Warrants, the Company shall have
the right to require the holder and the transferee to make customary
representations to the extent reasonably necessary to assure that the transfer
will comply with the Securities Act and any applicable state securities laws.
Each holder of this Warrant, by taking or holding the same, consents and agrees
that this Warrant, when endorsed in blank, shall be deemed negotiable, and that
the holder hereof, when this Warrant shall have been so endorsed, may be
treated by the Company and all other persons dealing with this Warrant as the
absolute owner and holder hereof for any purpose and as the person entitled to
exercise the rights represented by this Warrant and to the registration of
transfer hereof on the books of the Company; but until due presentment for
registration of transfer on such books the Company may treat the registered
holder hereof as the owner and holder hereof for all purposes, and the Company
shall not be affected by any notice to the contrary.
(b) Warrant Exchangeable for Different Denominations. This Warrant
is exchangeable, upon the surrender hereof by the holder hereof at the office
or agency of the Company referred to in Paragraph 7(e) hereof, for new Warrants
of like tenor representing in the aggregate the right to purchase the number of
shares of Common Stock which may be purchased hereunder, each of such new
Warrants to be imprinted with the same legend appearing on the face of this
Warrant and to represent the right to purchase such number of shares as shall
be designated by said holder hereof at the time of such surrender. For
purposes hereof, the term "WARRANT" shall be deemed to include any and all such
replacement Warrants, whether issued pursuant to this subparagraph (b) or any
other Paragraph hereof.
(c) Replacement of Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant and, in the case of any such loss, theft, or
A-7
38
destruction, upon delivery of an indemnity agreement reasonably satisfactory in
form and amount to the Company, or, in the case of any such mutilation, upon
surrender and cancellation of this Warrant, the Company, at its expense, will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
(d) Cancellation; Payment of Expenses. Upon the surrender of this
Warrant in connection with any transfer, exchange, or replacement as provided
in this Paragraph 7, this Warrant shall be promptly cancelled by the Company.
The Company shall pay all taxes (other than securities transfer taxes) and all
other expenses and charges payable in connection with the preparation,
execution, and delivery of Warrants pursuant to this Paragraph 7.
(e) Register. The Company shall maintain, at its principal office
in Atlanta, Georgia (or such other office or agency of the Company as it may
designate by notice to the holder hereof), a register for this Warrant, in
which the Company shall record the name and address of the person in whose name
this Warrant has been issued, as well as the name and address of each
transferee and each prior owner of this Warrant.
(f) Registration Rights. The issuance of any Warrant Shares
required to be reserved for purposes of exercise of this Warrant and the resale
of such Warrant Shares are entitled to the benefits of the registration rights
set forth in the Purchase Agreement.
8. Notices. All notices, requests, and other communications
required or permitted to be given or delivered hereunder to the holder of this
Warrant shall be in writing, and shall be personally delivered, or shall be
sent by certified or registered mail, postage prepaid and addressed, to such
holder at the address shown for such holder on the books of the Company, or at
such other address as shall have been furnished to the Company by notice from
such holder. All notices, requests, and other communications required or
permitted to be given or delivered hereunder to the Company shall be in
writing, and shall be personally delivered, or shall be sent by certified or
registered mail, postage prepaid and addressed, to the office of the Company at
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
_______________________, or at such other address as shall have been furnished
to the holder of this Warrant by notice from the Company. Any such notice,
request, or other communication may be sent by telegram or telex, but shall in
such case be subsequently confirmed by a writing personally delivered or sent
by certified or registered mail as provided above. All notices, requests, and
other communications shall be deemed to have been given either at the time of
the delivery thereof to (or the receipt by, in the case of a telegram or telex)
the person entitled to receive such notice at the address of such person for
purposes of this Paragraph 8, or, if mailed, at the completion of the third
full day following the time of such mailing thereof to such address, as the
case may be.
9. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF DELAWARE, WITHOUT REGARD TO ANY
CHOICE OF LAW PRINCIPLES OF SUCH STATE.
10. Remedies. The Company stipulates that the remedies at law of
the holder of this Warrant in the event of any default or threatened default by
the Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific enforcement of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
▇-▇
▇▇
▇▇. Miscellaneous.
(a) Amendments. This Warrant and any provision hereof may not be
changed, waived, discharged, or terminated orally, but only by an instrument in
writing signed by the party (or any predecessor in interest thereof) against
which enforcement of the same is sought.
(b) Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for purposes of reference only, and
shall not affect the meaning or construction of any of the provisions hereof.
(c) Successors and Assigns. This Warrant shall, to the extent
provided in Section 4(e), be binding upon any entity succeeding to the Company
by merger, consolidation, or acquisition of all or substantially all the
Company's assets.
A-9
40
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer under its corporate seal, attested by its duly
authorized officer, on this _____ day of _______________________ , 1996.
MAGELLAN HEALTH SERVICES, INC.
By:
---------------------------------------
Name:
---------------------------------
Title:
--------------------------------
[CORPORATE SEAL]
Attest:
-----------------------------------
Name:
-----------------------------
Title:
----------------------------
A-10
41
FORM OF EXERCISE AGREEMENT
Dated: , .
--------------- -----
To:
-------------------------
-------------------------
-------------------------
Attention:
----------------------------------------
The undersigned, pursuant to the provisions set forth in the within
Warrant, hereby agrees to purchase ________ shares of Common Stock covered by
such Warrant, and makes payment herewith in full therefor at the price per
share provided by such Warrant *[in cash or by certified or official bank check
in the amount of $______________] held by the undersigned and any applicable
taxes payable by undersigned. Please issue a certificate or certificates for
such shares of Common Stock in the name of and pay any cash for any fractional
share to:
Name:
----------------------------------------------------
Signature:
-----------------------------------------------------
Title of Signing Officer or Agent (if any):
--------------------
Note: The above signature should correspond exactly with
the name on the face of the within Warrant or with
the name of the assignee appearing in the
assignment form.
and, if said number of shares of Common Stock shall not be all the shares
purchasable under the within Warrant, a new Warrant is to be issued in the name
of said undersigned covering the balance of the shares purchasable thereunder
less any fraction of a share paid in cash.
A-11
42
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
all the rights represented by and under the within Warrant, with respect to the
number of shares of Common Stock covered thereby set forth hereinbelow, to:
Name of Assignee Address No. of Shares
---------------- ------- -------------
, and hereby irrevocably constitutes and appoints __________________________ as
agent and attorney-in-fact to transfer said Warrant on the books of the
within-named corporation, with full power of substitution in the premises.
Dated: , .
-------------------- ----
In the presence of
--------------------
Name:
---------------------------------------------------
Signature:
----------------------------------------------
Title of Signing Officer or Agent
(if any):
-----------------------------------------------
Address:
------------------------------------------------
-------------------------------------------
Note: The above signature should correspond
exactly with the name on the face of the
within Warrant.
A-12
43
COMPANY DISCLOSURE SCHEDULE
Section 3.8. - List of Significant Subsidiaries
Charter Behavioral Health Systems Inc.
Section 3.9 - List of Material Agreements
Employment agreement of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ is being filed with
the Company's 10-K for the year ended September 30, 1995.
Section 3.10 - List of Material Liabilities/Obligations
(a) the litigation and non-compliance with laws referred to in the
letter from ▇▇▇▇▇ ▇. ▇▇▇▇▇ to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ dated November 10, 1995, and the
update thereto from ▇▇▇▇▇ ▇. ▇▇▇▇▇ to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇ dated
November 21, 1995 (copies of which have been delivered to Buyers), which in the
reasonable judgment of the Company, do not and will not, individually and in
the aggregate have a material adverse effect on the business, assets, results
of operations or financial condition of the Company.
(b) acquisition of a majority interest in Green Springs Health Systems
Inc.
Section 3.12 - Compliance with Laws
(ii) those notices of non-compliance referred to in the letter from
▇▇▇▇▇ ▇. ▇▇▇▇▇ to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ dated November 10, 1995, and the update
thereto from ▇▇▇▇▇ ▇. ▇▇▇▇▇ to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇ dated November 21,
1995 (copies of which have been delivered to Buyers).
Section 3.13 - Litigation
None
44
EXHIBIT 7.3
Matters to be Covered in Opinion of Counsel to Company
- due incorporation, valid existence and good standing of Company and
significant subsidiaries under the laws of the State of Delaware, and corporate
power to own, lease and operate properties and to carry on business as
presently conducted
- qualification to do business and good standing as a foreign
corporation in states necessary for conduct of current business
- confirmation of authorized and outstanding capital stock of Company
- issuance of shares duly authorized, and shares are validly issued,
fully paid and nonassessable
- warrant shares to be issued are validly authorized and reserved for
issuance and assuming no changes in law, warrant shares will be validly issued,
fully paid and nonassessable upon proper exercise of warrant and payment of
exercise price
- issuance of the Securities and any Warrant Shares upon exercise of
Warrants is not subject to any preemptive right under the Delaware General
Corporation Law or the certificate of incorporation or bylaws of Company
- due authorization, execution, delivery and performance of agreements
- agreements are legal, valid and binding upon Company
- agreements and transaction will not conflict with or violate
certificate of incorporation, bylaws or applicable law or breach, violate or
cause default under material contracts, judgements, orders etc., or result in
creation of material lien upon properties
- any required consents approvals, filings etc. required under
applicable law have been obtained
- confirmation of no material adverse litigation and proceedings
- issuance of Securities exempt from registration requirements
- confirmation that private offering of Warrants and Shares will not
be integrated with public offering of Warrant Shares and resale of Warrant
Shares.