<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 13, 1999
REGISTRATION NO. 333-80557
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
AMERICASDOCTOR.COM, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 7374 52-2059555
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) Number)
</TABLE>
------------------------------
AMERICASDOCTOR.COM, INC.
11403 CRONRIDGE DRIVE
SUITE 200
OWINGS MILLS, MARYLAND 21117
(410) 581-1189
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------
SCOTT M. RIFKIN, M.D.
CHIEF EXECUTIVE OFFICER
AMERICASDOCTOR.COM, INC.
11403 CRONRIDGE DRIVE
SUITE 200
OWINGS MILLS, MARYLAND 21117
(410) 581-1189
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
MICHAEL D. NATHAN, ESQ. WILLIAM J. GRANT, JR., ESQ.
SIMPSON THACHER & BARTLETT WILLKIE FARR & GALLAGHER
425 LEXINGTON AVENUE 787 SEVENTH AVENUE
NEW YORK, NEW YORK 10017 NEW YORK, NEW YORK 10019
(212) 455-2000 (212) 728-8000
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If the delivery of the prospectus is expected to be made pursuant to Rule
434 under the Securities Act, check the following box. / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO AGGREGATE OFFERING REGISTRATION
BE REGISTERED PRICE(1) FEE
<S> <C> <C>
Common Stock, par value $ per share......................................... $ 60,000,000 $ 16,680
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(o) under the Securities Act of 1933.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below is an estimate (except for the Commission and Nasdaq
National Market fees) of the fees and expenses payable by the Registrant in
connection with the offering of the common stock:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration fee................ $ 16,680
Transfer agent and registrar fee................................... *
Printing and engraving costs....................................... *
Legal fees and expenses............................................ *
Accounting fees and expenses....................................... *
NASD filing fee.................................................... $ 6,500
Nasdaq National Market listing fee................................. *
Blue Sky fees and expenses......................................... *
Miscellaneous expenses............................................. *
---------
Total........................................................ $ *
---------
---------
</TABLE>
- ------------------------
* to be filed by amendment
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Reference is made to Section 102(b)(7) of the Delaware General Corporation
law (the "DGCL"), which enables a corporation in its original certificate of
incorporation or an amendment thereto to eliminate or limit the personal
liability of a director for monetary damages for violations of the director's
fiduciary duty, except (i) for any breach of a director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the DGCL (providing for liability of directors for
unlawful payment of dividends or unlawful stock purchases or redemption) or (iv)
for any transaction from which a director derived an improper personal benefit.
Reference also is made to Section 145 of the DGCL which provides that a
corporation may indemnify any persons, including officers and directors, who
are, or are threatened to be made, parties to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such corporation), by
reason of the fact that such person was an officer, director, employee or agent
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or other
enterprise. The indemnity may include expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding, provided such
officer, director, employee or agent acted in good faith and in a manner he
reasonably believed to be in or not opposed to the corporation's best interests
and, for criminal proceedings, had no reasonable cause to believe that his
conduct was unlawful. A Delaware corporation may indemnify officers and
directors in an action by or in the right of the corporation under the same
conditions, except that no indemnification is permitted without judicial
approval if the officer or director is adjudged to be liable to the corporation.
Where an officer or director is successful on the merits or otherwise in the
defense of any action referred to above, the corporation must indemnify him
against the expenses (including attorneys' fees) which such officer or director
actually and reasonably incurred.
The Amended and Restated Certificate of Incorporation and the Amended and
Restated Bylaws of AmericasDoctor.com provide for indemnification of officers
and directors to the fullest extent
II-1
<PAGE>
permitted by applicable law. In addition, we have entered into contracts with
each of our independent directors requiring us to indemnify such persons and to
advance litigation expenses to such persons to the fullest extent permitted by
applicable law. Delaware law presently permits a Delaware corporation (i) to
indemnify any officer or director in any third-party or governmental actions
against them for expenses, judgments, fines and amounts paid in settlement and,
in derivative actions, for expenses, if the indemnitee acted in good faith and
in the manner he believed to be in or not opposed to the best interest of such
corporation and (ii) to advance expenses in any action, provided that such
officer or directors agrees to reimburse the corporation if it is ultimately
determined that he was not entitled to indemnification. The contracts also
require us to (i) indemnify such independent directors upon receipt of an
opinion of counsel in certain cases, (ii) pay indemnity demands pending a
determination of entitlement thereto, and (iii) demonstrate, in any action
brought thereunder, that such director was not entitled to indemnification under
applicable law.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
The following table lists the recent sales of unregistered securities and
includes the type of security, the person to whom the securities were sold, the
consideration and the exemption from registration.
<TABLE>
<CAPTION>
SECURITIES
TITLE OF DATE OF ACT
SECURITY ISSUANCE PURCHASER(S) AMOUNT EXEMPTION CONSIDERATION
- ---------------------- ----------------- ---------------------- --------------- ------------- ----------------------
<S> <C> <C> <C> <C> <C>
Common Stock.......... June 1, 1999 Medical Advisory 9,958 Section 4(2) $291,390.54
Systems, Inc.
March 4, 1999 A group of 22 27,778 Section 4(2) $1,000,008
individual accredited
investors
August 14, 1998 A group of 18 63,643 Section 4(2) $997,000
individual accredited
investors
July 2, 1998 Premier Research 63,833 Section 4(2) $1,000,000
Worldwide, Ltd.
July 2, 1998 Medical Advisory 63,833 Section 4(2) $1,000,000
Systems, Inc.
Series B Redeemable
Convertible Preferred
Stock................ June 1, 1999 GE Capital Equity 113,327 Section 4(2) $6,874,976.94
Investments, Inc., TD (103,883 of
Capital Focus II, which has been
L.P., TD Origen subscribed)
Capital Fund, L.P., TD
Javelin Capital Fund,
L.P.
Series A Convertible
Preferred Stock...... February 1, 1999 TD Capital Focus II, 133,333 Section 4(2) $3,999,990
L.P., TD Origen
Capital Fund, L.P., TD
Javelin Capital Fund,
L.P.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
SECURITIES
TITLE OF DATE OF ACT
SECURITY ISSUANCE PURCHASER(S) AMOUNT EXEMPTION CONSIDERATION
- ---------------------- ----------------- ---------------------- --------------- ------------- ----------------------
<S> <C> <C> <C> <C> <C>
Convertible Unsecured
Notes................ Stock was issued A group of 35 Aggregate Section 4(2) $420,000
upon conversion individual investors principal
of the notes on amount of
October 1, 1998 $420,000. All
notes were
converted as of
October 1, 1998
into 44,852
shares of
common stock.
</TABLE>
We have issued an aggregate of 82,298 shares of common stock and warrants to
purchase shares of common stock as payment for services rendered by certain of
our officers and directors, the Wyndhurst Capital Group, LLC, Balance Capital,
LLC and Venture Consultants, LLC. These shares and warrants were issued between
June 1998 and May 1999.
There were no underwriters employed in connection with any of the
transactions set forth in Item 15.
II-3
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
NO. DESCRIPTION
- --------- ----------------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement.**
3.1 Certificate of Designations of Series A Convertible Preferred Stock.*
3.2 Certificate of Designations of Series B Redeemable Convertible Preferred Stock.*
3.3 Amended and Restated Bylaws.*
5.1 Opinion of Simpson Thacher & Bartlett.**
9.1 Form of Stockholders' Voting Agreement.*
10.1 Amended and Restated AmericasDoctor.com, Inc. 1999 Long-Term Incentive Plan.*
10.2 Employment Agreement with Scott M. Rifkin, M.D.*
10.3 Employment Agreement with Jeffrey Lefko.*
10.4 Employment Agreement with Allan C. Sanders.*
10.5 Employment Agreement with Laura Gill.*
10.6 Employment Agreement with Charles R. Bland.**
10.7 Interactive Services Agreement with America Online, Inc.*
10.8 Call Center Service Agreement, as amended, with Medical Advisory Systems, Inc.*
10.9 Support and Service Agreement with Premier Research Worldwide, Ltd.*
10.10 Marketing Service Agreement with Premier Research Worldwide, Ltd.*
10.11 Consulting Agreement with Wyndhurst Capital Group LLC.*
10.12 Warrant to Purchase Series A Common Stock issued to Tullis-Dickerson Capital Focus II, L.P., dated
February 1, 1999.*
10.13 Warrant to Purchase Series A Common Stock issued to TD Origen Capital Fund, L.P., dated February 1, 1999.*
10.14 Warrant to Purchase Series A Common Stock issued to Javelin Capital Fund, L.P., dated February 1, 1999.*
10.15 Securities Purchase Agreement, dated February 1, 1999.*
10.16 Common Stock Warrant issued to GE Capital Equity Investments, Inc., dated June 1, 1999.*
10.17 Common Stock Warrant issued to Tullis-Dickerson Capital Focus II, L.P., dated June 1, 1999.*
10.18 Preferred Stock Warrant issued to GE Capital Equity Investments, Inc., dated June 1, 1999.*
10.19 Preferred Stock Warrant issued to Tullis-Dickerson Capital Focus II, L.P., dated June 1, 1999.*
10.20 Securities Purchase Agreement, dated June 1, 1999.*
10.21 Common Stock Purchase Agreement, dated July 2, 1998.*
10.22 Second Amended and Restated Shareholders' and Voting Agreement, dated June 1, 1999.*
10.23 Second Amended and Restated Registration Rights Agreement, dated June 1, 1999.*
10.24 Agreement, dated February 12, 1999, between AmericasDoctor.com, Inc. and Smith & Nephew Inc.*
10.25 Content Development Agreement, dated June 15, 1999, between AmericasDoctor.com, Inc. and CenterWatch,
Inc.*
11.1 Statement regarding computation of per share earnings.**
12.1 Statements regarding computation of ratios.**
15.1 Letter regarding unaudited interim financial information.**
21.1 List of Subsidiaries*
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
NO. DESCRIPTION
- --------- ----------------------------------------------------------------------------------------------------------
<C> <S>
23.1 Consent of Simpson Thacher & Bartlett (included in Exhibit 5.1).**
23.2 Consent of Arthur Andersen LLP, independent public accountants.*
24.1 Power of attorney (included on signature page to this Registration Statement).
27.1 Financial Data Schedule (EDGAR filed version only).
</TABLE>
- ------------------------
* Filed herewith.
** To be filed by amendment.
(b) Financial Statement Schedules
None
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described under Item 14
above, or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by a
registrant of expenses incurred or paid by a director, officer or controlling
person of such registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial BONA FIDE offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Owings Mills, State of
Maryland, on the 12th day of July, 1999.
<TABLE>
<S> <C> <C>
AMERICASDOCTOR.COM, INC.
By: /s/ LEWIS S. GOODMAN
-----------------------------------------
Lewis S. Goodman
Vice Chairman of the Board of Directors
</TABLE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints each of Scott M. Rifkin, M.D. and Lewis S.
Goodman the true and lawful attorney-in-fact and agent of the undersigned, with
full power of substitution and resubstitution, for and in the name, place and
stead of the undersigned, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement,
including any filings pursuant to Rule 462(b) under the Act, and to file the
same, with all exhibits thereto and other documents in connection therewith with
the Commission, and hereby grants to such attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as the undersigned
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Act, this Registration Statement has
been signed by the following persons in the capacities and on the date
indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------ -------------------------- -------------------
<S> <C> <C>
/s/ SCOTT M. RIFKIN, M.D. Chief Executive Officer
- ------------------------------ and Chairman of the Board July 12, 1999
Scott M. Rifkin, M.D. of Directors
/s/ JEFFREY J. LEFKO Executive Vice-President
- ------------------------------ of Sales and Marketing, July 12, 1999
Jeffrey J. Lefko Director
/s/ LEWIS S. GOODMAN
- ------------------------------ Vice Chairman of the Board July 12, 1999
Lewis S. Goodman of Directors
/s/ THOMAS P. DICKERSON
- ------------------------------ Director July 12, 1999
Thomas P. Dickerson
/s/ CHARLES BLAND
- ------------------------------ President July 12, 1999
Charles Bland
Chief Financial Officer,
/s/ ALLAN C. SANDERS Principal Accounting
- ------------------------------ Officer, Secretary and July 12, 1999
Allan C. Sanders Treasurer
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
NO. DESCRIPTION
- --------- ----------------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement.**
3.1 Certificate of Designations of Series A Convertible Preferred Stock.*
3.2 Certificate of Designations of Series B Redeemable Convertible Preferred Stock.*
3.3 Amended and Restated Bylaws.*
5.1 Opinion of Simpson Thacher & Bartlett.**
9.1 Form of Stockholders' Voting Agreement.*
10.1 Amended and Restated AmericasDoctor.com, Inc. 1999 Long-Term Incentive Plan.*
10.2 Employment Agreement with Scott M. Rifkin, M.D.*
10.3 Employment Agreement with Jeffrey Lefko.*
10.4 Employment Agreement with Allan C. Sanders.*
10.5 Employment Agreement with Laura Gill.*
10.6 Employment Agreement with Charles R. Bland.**
10.7 Interactive Services Agreement with America Online, Inc.*
10.8 Call Center Service Agreement, as amended, with Medical Advisory Systems, Inc.*
10.9 Support and Service Agreement with Premier Research Worldwide, Ltd.*
10.10 Marketing Service Agreement with Premier Research Worldwide, Ltd.*
10.11 Consulting Agreement with Wyndhurst Capital Group LLC.*
10.12 Warrant to Purchase Series A Common Stock issued to Tullis-Dickerson Capital Focus II, L.P., dated
February 1, 1999.*
10.13 Warrant to Purchase Series A Common Stock issued to TD Origen Capital Fund, L.P., dated February 1, 1999.*
10.14 Warrant to Purchase Series A Common Stock issued to Javelin Capital Fund, L.P., dated February 1, 1999.*
10.15 Securities Purchase Agreement, dated February 1, 1999.*
10.16 Common Stock Warrant issued to GE Capital Equity Investments, Inc., dated June 1, 1999.*
10.17 Common Stock Warrant issued to Tullis-Dickerson Capital Focus II, L.P., dated June 1, 1999.*
10.18 Preferred Stock Warrant issued to GE Capital Equity Investments, Inc., dated June 1, 1999.*
10.19 Preferred Stock Warrant issued to Tullis-Dickerson Capital Focus II, L.P., dated June 1, 1999.*
10.20 Securities Purchase Agreement, dated June 1, 1999.*
10.21 Common Stock Purchase Agreement, dated July 2, 1998.*
10.22 Second Amended and Restated Shareholders' and Voting Agreement, dated June 1, 1999.*
10.23 Second Amended and Restated Registration Rights Agreement, dated June 1, 1999.*
10.24 Agreement, dated February 12, 1999, between AmericasDoctor.com, Inc. and Smith & Nephew Inc.*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NO. DESCRIPTION
- --------- ----------------------------------------------------------------------------------------------------------
<C> <S>
10.25 Content Development Agreement, dated June 15, 1999, between AmericasDoctor.com, Inc. and CenterWatch,
Inc.*
11.1 Statement regarding computation of per share earnings.**
12.1 Statements regarding computation of ratios.**
15.1 Letter regarding unaudited interim financial information.**
21.1 List of Subsidiaries*
23.1 Consent of Simpson Thacher & Bartlett (included in Exhibit 5.1).**
23.2 Consent of Arthur Andersen LLP, independent public accountants.*
24.1 Power of attorney (included on signature page to this Registration Statement).
27.1 Financial Data Schedule (EDGAR filed version only).
</TABLE>
- ------------------------
* Filed herewith.
** To be filed by amendment.
(b) Financial Statement Schedules
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF DESIGNATIONS
OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
AMERICA'S DOCTOR, INC.
PURSUANT TO SECTION 151 OF THE
DELAWARE GENERAL CORPORATION LAW
We, Scott M. Rifkin, M.D., Chief Executive Officer, and Lewis S.
Goodman, Secretary, of America's Doctor, Inc., a corporation organized and
existing under the laws of the State of Delaware (the "Corporation"), certify
that pursuant to the authority contained in Article Fourth of the Corporation's
Restated Certificate of Incorporation, as amended, and in accordance with the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, the board of directors of the Corporation has adopted, on January 29,
1999, the following resolution creating a series of preferred stock of the
Corporation designated as the Series A Convertible Preferred Stock:
RESOLVED, by the Board of Directors of America's Doctor, Inc., a
Delaware corporation (the "Corporation"), that pursuant to Article Fourth of the
Restated Certificate of Incorporation of the Corporation, as amended, there be,
and hereby is, established a new series of preferred stock of the Corporation,
consisting of 133,333 shares, par value $0.01 per share, designated "Series A
Convertible Preferred Stock" and having the powers, designations, preferences
and relative participating, optional or other special rights and the
qualifications, limitations or restrictions on such preferences and/or rights as
set forth in Exhibit A hereto.
-1-
<PAGE>
IN WITNESS WHEREOF, America's Doctor, Inc. has caused this
Certificate of Designations to be signed by its President and attested by its
Secretary on this ___ day of January, 1999.
/s/ Scott M. Rifkin
----------------------------------------
Scott M. Rifkin, Chief Executive Officer
ATTEST:
/s/ Lewis S. Goodman
- ---------------------------
Lewis S. Goodman, Secretary
-2-
<PAGE>
EXHIBIT A
Section 1
Definitions
"Additional Shares of Common Stock" shall mean all shares of Common
Stock and Common Stock Equivalents issued (or, pursuant to Section 4.4(b),
deemed to be issued) by the Corporation after the Original Issue Date, other
than shares of Common Stock or Common Stock Equivalents issued or issuable (or
so deemed to be issued):
(a) upon conversion of shares of Preferred Stock or exercise
of the warrants issued in connection with the issuance of the Preferred Stock;
(b) upon conversion of the warrants issued to The Wyndhurst
Capital Group, LLC ("Wyndhurst") exercisable for a nominal price for a number of
shares of Common Stock equal to 3/8ths of 1% of the increase in the number of
the Corporation's total shares of Common Stock and Common Stock Equivalents
outstanding after any financing, for every $1 million raised by Wyndhurst, up to
a maximum of $10 million (including amounts paid for the Preferred Stock);
(c) to officers, directors or employees of, or consultants to,
the Corporation for up to 115,000 shares of Common Stock pursuant to any stock
option, incentive, bonus or compensation program approved by the compensation
committee of the Board of Directors;
(d) to officers, directors or employees of, or consultants to,
the Corporation pursuant to any stock option, incentive, bonus or compensation
program approved by the compensation committee of the Board of Directors,
including any director appointed by the holders of the Preferred Stock then
serving;
(e) to Scott M. Rifkin for up to 100,000 shares of Common
Stock issued pursuant to a stock option, incentive, bonus or compensation
program approved by the Board of Directors or the compensation committee of the
Board of Directors;
(f) by way of dividend or other distribution on shares of
Preferred Stock; or
(g) for which adjustment is made in the Conversion Price
pursuant to Section 4.4(e) or (f).
-1-
<PAGE>
"Common Stock Equivalents" shall mean any warrant, option or other
right to subscribe for or purchase any shares of Common Stock or any evidences
of indebtedness, shares of stock or other securities which are or may be at any
time convertible into or exchangeable for shares of Common Stock.
"Conversion Price" shall mean the price at which shares of Common
Stock shall be deliverable upon conversion.
"Conversion Rights" shall have the meaning set forth in Section 4.
"Convertible Securities" shall mean any evidences of indebtedness,
shares (other than shares of Preferred Stock and the warrants issued in
connection with the issuance of the Preferred Stock) or other securities
directly or indirectly convertible into or exchangeable for Common Stock.
"Initial Conversion Price" shall mean $30.00.
"Liquidation Value" shall mean $30.00, as adjusted for any stock
splits, stock dividends, combinations and other similar recapitalizations
affecting such shares.
"Option" shall mean rights, options or warrants (other than the
warrants issued in connection with the issuance of the Preferred Stock) to
subscribe for, purchase or otherwise acquire either Common Stock or Convertible
Securities.
"Original Issue Date" shall mean the date on which the first share
of Preferred Stock was issued.
"Preferred Stock" shall mean the Series A Convertible Preferred
Stock of the Corporation.
As used in this Section 3, the terms "day" and "days" mean a calendar day.
Whenever the context may require, any pronoun used in this Certificate of
Designations shall include the corresponding masculine, feminine and neuter
forms. All references to Sections in this Certificate of Designations are
references to Sections of this Certificate of Designations unless otherwise
specifically set forth herein.
-2-
<PAGE>
Section 2
Designation
Of the 1,000,000 shares of Preferred Stock which the Corporation has
authority to issue, 133,333 of such shares shall be designated and known as
"Series A Convertible Preferred Stock."
Section 3
Liquidation Rights
Section 3.1 Right to Liquidation Value. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Corporation, the holders of each share of Preferred Stock shall be
entitled to receive, prior and in preference to any distribution of any of the
assets or surplus funds of the Corporation to the holders of the Common Stock by
reason of their ownership thereof, an amount equal to the Liquidation Value of
such Preferred Stock, per share, plus an amount equal to all accrued or declared
but unpaid dividends to and including the date full payment shall be tendered to
the holders of the Preferred Stock with respect to such liquidation, dissolution
or winding up. If the assets or surplus funds to be distributed to the holders
of the Preferred Stock are insufficient to permit the payment to such holders of
their full preferential amounts, the assets and surplus funds legally available
for distribution shall be distributed ratably among the holders of the Preferred
Stock in proportion to the full preferential amount each such holder is
otherwise entitled to receive.
Section 3.2 Merger or Consolidation Deemed a Liquidation. The merger
or consolidation of the Corporation into or with another Corporation or a sale
of all or substantially all of the assets of the Corporation shall be deemed to
be a liquidation, dissolution or winding up of the affairs of the Corporation
within the meaning of this Section 3, and the Corporation shall pay to each of
the holders of Preferred Stock, prior to the consummation of any such merger,
consolidation or sale of assets, an amount equal to their liquidation
preference, upon surrender by such holders of Preferred Stock of the stock
certificates representing the outstanding shares of Preferred Stock held by each
such holder, unless (i) the members of the Board of Directors of the Corporation
prior to such merger or consolidation constitute at least 50% of the members of
the Board of Directors of the surviving entity following such merger or
consolidation and (ii) the shareholders of the Corporation prior to such merger
or consolidation continue to hold at least 50% of the outstanding capital stock
and voting stock of the surviving entity.
Section 3.3 Preferential Payment. All of the preferential amounts to
be paid to the holders of the Preferred Stock pursuant to this Section 3 shall
be paid or set apart in trust for payment before the payment or setting apart
for payment of any amount for, or the distribution of any assets of the
Corporation to, the holders of the Common Stock in connection with such
liquidation, dissolution or winding up.
-3-
<PAGE>
Section 4
Conversion Rights
The holders of the Preferred Stock shall have conversion rights as
follows (the "Conversion Rights"):
Section 4.1 Right to Convert. Each share of Preferred Stock shall be
convertible at the option of the holder thereof at any time and without the
payment of any additional consideration therefor into that number of fully paid
and nonassessable shares of Common Stock as is determined by dividing the
Initial Conversion Price for such share of Preferred Stock by the Conversion
Price (determined as hereinafter provided) in effect at the time of conversion.
The Conversion Price shall be subject to adjustment (in order to adjust the
number of shares of Common Stock into which such Preferred Stock is convertible)
as provided in Section 4.4.
Section 4.2 Mandatory Conversion. At the option of the Corporation,
each share of Preferred Stock shall automatically be converted into shares of
Common Stock at the then effective Conversion Price for such Preferred Stock, as
adjusted pursuant to Section 4.4, upon the closing of an underwritten public
offering pursuant to an effective registration statement under the Securities
Act of 1933, as amended, covering the offer and sale of Common Stock for the
account of the Corporation to the public at a before-the-money market
capitalization of not less than $75,000,000 and with aggregate gross proceeds to
the Corporation of at least $15,000,000. The holders of Preferred Stock entitled
to receive Common Stock issuable upon such conversion of Preferred Stock shall
not be deemed to have converted the Preferred Stock until immediately prior to
the closing of such offering.
Section 4.3 Mechanics of Conversion. No fractional shares of Common
Stock shall be issued upon conversion of Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price. Before any holder of Preferred Stock shall be
entitled to convert the same into full shares of Common Stock, such holder shall
surrender the certificate or certificates therefor, duly endorsed, at the office
of the Corporation or of any transfer agent for the Preferred Stock, and shall
give written notice to the Corporation at such office that he elects to convert
the same and shall state therein his name or the name or name of his nominees in
which he wishes the certificate or certificates for shares of Common Stock to be
issued, together with the applicable federal taxpayer identification number. The
Corporation shall, as soon as practicable thereafter, issue and deliver at such
office to such holder of Preferred Stock, or to his nominee or nominees, a
certificate or certificates for the number of shares of Common Stock to which he
shall be entitled, together with cash in lieu of any fraction of a share. Such
conversion shall be deemed to have been made immediately prior to the close of
business on the date of such surrender of the shares of Preferred Stock to be
converted pursuant to Section 4.1, or immediately prior to the closing of an
event as described in Section 4.2, and the holder of
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Preferred Stock entitled to receive the shares of Common Stock issuable upon
conversion shall be treated for all purposes as the record holder of such shares
of Common Stock on such date.
Section 4.4 Adjustments to Conversion Price for Diluting Issues.
(a) No Adjustment of Conversion Price. Subject to the provisions of
Section 4.4(e) and Section 4.4(f), no adjustment in the number of shares of
Common Stock into which the Preferred Stock is convertible shall be made by
adjustment in the Conversion Price of Preferred Stock in respect of the issuance
of Additional Shares of Common Stock, unless the consideration per share for
such Additional Shares of Common Stock issued or deemed to be issued by the
Corporation is less than the Conversion Price in effect on the date of, and
immediately prior to, the issue of such Additional Shares of Common Stock.
(b) Issue of Options and Convertible Securities Deemed Issue of
Additional Shares of Common Stock. In the event the Corporation at any time or
from time to time after the Original Issue Date shall issue any Options or
Convertible Securities or shall fix a record date for the determination of
holders of any class of securities entitled to receive any such Options or
Convertible Securities, then the maximum number of shares (as set forth in the
instrument relating thereto without regard to any provisions contained therein
for a subsequent adjustment of such number) of Common Stock issuable upon the
exercise of such Options or, in the case of Convertible Securities and Options
therefor, the conversion or exchange of such Convertible Securities, shall
(except as provided in the definition of "Additional Shares of Common Stock") be
deemed to be Additional Shares of Common Stock issued as of the time of such
issue or, in case such a record date shall have been fixed, as of the close of
business on such record date; provided that Additional Shares of Common Stock
shall not be deemed to have been issued unless the consideration per share
(determined pursuant to Section 4.4(d)) of such Additional Shares of Common
Stock would be less than the Conversion Price in effect on the date of and
immediately prior to such issue, or such record date, as the case may be; and
provided, further, that in any such case in which Additional Shares of Common
Stock are deemed to be issued:
(i) no further adjustment in the Conversion Price shall be
made upon the subsequent issue of Convertible Securities or shares of Common
Stock upon the exercise of such Options or conversion or exchange of such
Convertible Securities;
(ii) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase in the
consideration payable to the Corporation, or decrease in the number of shares of
Common Stock issuable, upon the exercise, conversion or exchange thereof, the
Conversion Price computed upon the original issue thereof (or upon the
occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such increase or decrease becoming
effective, be recomputed to reflect such increase or decrease insofar as it
affects such Options or the rights of conversion or exchange under such
Convertible Securities;
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(iii) upon the expiration of any such Options or any rights of
conversion or exchange under such Convertible Securities which shall not have
been exercised, the Conversion Price computed upon the original issue thereof
(or upon the occurrence of a record date with respect thereto) and any
subsequent adjustments based thereon shall, upon such expiration, be recomputed
as if:
(1) in the case of Convertible Securities or Options for
Common Stock, the only Additional Shares of Common Stock issued were the shares
of Common Stock, if any, actually issued upon the exercise of such Options or
the conversion or exchange of such Convertible Securities and the consideration
received therefor was the consideration actually received by the Corporation for
the issue of all such Options, whether or not exercised, plus the consideration
actually received by the Corporation upon such exercise, or for the issue of all
such Convertible Securities which were actually converted or exchanged, plus the
additional consideration, if any, actually received by the Corporation upon such
conversion or exchange, and
(2) in the case of Options for Convertible Securities,
only the Convertible Securities, if any, actually issued upon the exercise
thereof were issued at the time of issue of such Options, and the consideration
received by the Corporation for the Additional Shares of Common Stock deemed to
have been then issued was the consideration actually received by the Corporation
for the issue of all such Options, whether or not exercised, plus the
consideration deemed to have been received by the Corporation (determined
pursuant to Section 4.4(d)) upon the issue of the Convertible Securities with
respect to which such Options were actually exercised;
(iv) no readjustment pursuant to clause (ii) or (iii) above
shall have the effect of increasing the Conversion Price to an amount which
exceeds the lower of (x) the Conversion Price on the original adjustment date,
or (y) the Conversion Price that would have resulted from any issuance of
Additional Shares of Common Stock between the original adjustment date and such
readjustment date;
(v) in the case of any Options which expire by their terms not
more than thirty (30) days after the date of issue thereof, no adjustment of the
Conversion Price shall be made pursuant to this Section 4.4(b) until the
expiration or exercise of all such Options, whereupon such adjustment shall be
made in the same manner provided in clause (iii) above; and
(vi) if such record date shall have been fixed and such
Options or Convertible Securities are not issued on the date fixed therefor, the
adjustment previously made in the Conversion Price which became effective on
such record date shall be canceled as of the close of business on such record
date, and thereafter the Conversion Price shall be adjusted pursuant to this
Section 4.4(b) as of the actual date of their issuance.
(c) Adjustment of Conversion Price Upon Issuance of Additional
Shares of Common Stock. In the event the Corporation shall issue Additional
Shares of Common Stock
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(including Additional Shares of Common Stock deemed to be issued pursuant to
Section 4.4(b)) without consideration or for a consideration per share less than
the Conversion Price in effect on the date of and immediately prior to such
issue, then and in such event, such Conversion Price shall be reduced,
concurrently with such issue, to a price (calculated to the nearest cent)
determined by multiplying such Conversion Price by a fraction (A) the numerator
of which shall be (1) the number of shares of Common Stock outstanding
immediately prior to such issue plus (2) the number of shares of Common Stock
which the aggregate consideration received or to be received by the Corporation
for the total number of Additional Shares of Common Stock so issued would
purchase at such Conversion Price; and (B) the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to such issue
plus the number of Additional Shares of Common Stock so issued.
Notwithstanding the foregoing, the Conversion Price shall not be so
reduced at such time if the amount of such reduction would be an amount less
than $0.01, but any such amount shall be carried forward and reduction with
respect thereto made at the time of and together with any subsequent reduction
which, together with such amount and any other amount or amounts so carried
forward, shall aggregate $0.01 or more.
(d) Determination of Consideration. For purposes of this Section
4.4, the consideration received by the Corporation for the issue of any
Additional Shares of Common Stock shall be computed as follows:
(i) Cash and Property: Such consideration shall:
1) insofar as it consists of cash, be computed at the
aggregate amount of cash received by the Corporation, excluding amounts paid or
payable for accrued interest or accrued dividends;
2) insofar as it consists of property other than cash,
be computed at the fair value thereof at the time of such issue, as determined
in good faith by the Board of Directors; and
3) in the event Additional Shares of Common Stock are
issued together with other shares or securities or other assets of the
Corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (1) and (2) above, as
determined in good faith by the Board of Directors.
(ii) Options and Convertible Securities. The consideration per
share received by the Corporation for Additional Shares of Common Stock
deemed to have been issued pursuant to Section 4.4(b), relating to Options
and Convertible Securities, shall be determined by dividing (x) the total
amount, if any, received or receivable by the Corporation as consideration
for the issue of such Options or Convertible
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Securities, plus the minimum aggregate amount of additional consideration
(as set forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such
consideration until such subsequent adjustment occurs) payable to the
Corporation upon the exercise of such Options or the conversion or
exchange of such Convertible Securities or in the case of Options for
Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities,
by (y) the maximum number of shares of Common Stock (as set forth in the
instruments relating thereto, without regard to any provision contained
therein for a subsequent adjustment of such number until such subsequent
adjustment occurs) issuable upon the exercise of such Options or the
conversion or exchange of such Convertible Securities.
(e) Adjustment for Dividends, Distributions, Subdivisions,
Combinations or Consolidation of Common Stock.
(i) Stock Dividends, Distributions or Subdivisions. In the
event the Corporation at any time or from time to time after the Original Issue
Date shall declare or pay any dividend or make any other distribution on the
Common Stock payable in Common Stock or effect a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of a
dividend in Common Stock), then and in any such event, the Conversion Price
shall be proportionately decreased to reflect such dividend, distribution or
subdivision as of:
1) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the determination
of holders of any class of securities entitled to receive such dividend or
distribution, or
2) in the case of any such subdivision, at the close of
business on the date immediately prior to the date upon which such corporate
action becomes effective.
If such record date or other effective date shall have been fixed and such
dividend, distribution or subdivision shall not have been fully paid or effected
on the date fixed therefor, the adjustment previously made in the Conversion
Price which became effective on such record date or other date shall be canceled
as of the close of business on such record date or other date, and thereafter
the Conversion Price shall be adjusted pursuant to this Section 4.4(e) as of the
time of actual payment of such dividend, distribution or effectiveness of such
subdivision.
(ii) Combinations or Consolidations. In the event the
outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
the Conversion Price in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased.
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(f) Adjustment for Reclassification or Reorganization. In case of
any capital reorganization or reclassification of the capital stock of the
Corporation (other than a reclassification covered by Section 4.4(e)(ii)), each
share of Preferred Stock shall thereafter be convertible into the number of
shares of stock or other securities or property to which a holder of the number
of shares of Common Stock of the Corporation deliverable upon conversion of such
Preferred Stock would have been entitled upon such reorganization or
reclassification. In any such case, appropriate adjustment (as determined by the
Board of Directors) shall be made in the application of these provisions set
forth with respect to the rights and interest thereafter of the holders of the
Preferred Stock, to the end that these provisions (including provisions with
respect to changes in and other adjustments of the Conversion Price) shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
shares of stock or other property thereafter deliverable upon the conversion of
the Preferred Stock.
Section 4.5 No Impairment. The Corporation will not, by amendment of
its 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 hereunder by the Corporation but
will at all times in good faith assist in the carrying out of all the provisions
of this Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Preferred Stock against impairment.
Section 4.6 Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the Conversion Price pursuant to this Section
4, the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with these terms and furnish to each holder of
Preferred Stock a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The Corporation shall, upon the written request at any time of any holder of
Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustments and readjustments, (ii) the
Conversion Price at the time in effect, and (iii) the number of shares of Common
Stock and the amount, if any, of other property which at the time would be
received upon the conversion of such holder's Preferred Stock.
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Section 4.7 Notices of Record Date. In the event of (i) any taking
by the Corporation of a record date of the holders of any class of securities
for the purpose of determining the holders thereof who are entitled to receive
any dividend (other than a cash dividend which is the same as cash dividends
paid in previous quarters) or other distribution, or (ii) any capital
reorganization of the Corporation, any reclassification or recapitalization of
the capital stock of the Corporation, any merger or consolidation of the
Corporation, and any transfer of all or substantially all of the assets of the
Corporation to any other Corporation, or any other entity or person, or any
voluntary or involuntary dissolution, liquidation or winding up of the
Corporation, the Corporation shall mail to each holder of Preferred Stock at
least 20 days (30 days in the case of an acquisition of the Corporation through
a merger or consolidation of the Corporation or the sale of all or substantially
all of its assets and properties) prior to the record date specified therein, a
notice specifying (A) the date on which any such record is to be taken for the
purpose of such dividend or distribution and a description of such dividend or
distribution, (B) the date on which any such reorganization, reclassification,
transfer, consolidation, merger, dissolution, liquidation or winding up is
expected to become effective, and (C) the time, if any, that is to be fixed, as
to when the holders of record of Common Stock (or other securities) shall be
entitled to exchange their shares of Common Stock (or other securities) for
securities or other property deliverable upon such reorganization,
reclassification, transfer, consolidation, merger, dissolution, liquidation or
winding up.
Section 4.8 Common Stock Reserved. The Corporation shall reserve and
keep available out of its authorized but unissued Common Stock such number of
shares of Common Stock as shall from time to time be sufficient to effect
conversion of all outstanding shares of Preferred Stock.
Section 4.9 Other Events Altering Conversion Price. Upon the
occurrence of any event not specifically described in this Section 4 as reducing
the Conversion Price that, in the reasonable exercise of the business judgment
of the Board of Directors of the Corporation reached in good faith, requires, on
equitable principles, the reduction of the Conversion Price, the Conversion
Price will be so equitably reduced.
Section 5
Voting Rights
Section 5.1 General. Except as otherwise required by law and the
provisions of this Section 5 and Section 7 below, the holders of Preferred Stock
and the holders of the Common Stock shall be entitled to notice of any
shareholders' meeting and to vote together as a single class of capital stock
upon any matter submitted to a shareholder for a vote, on the following basis:
(a) Holders of Common Stock shall have one vote per share; and
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(b) Holders of Preferred Stock shall have that number of votes per
share as is equal to the number of shares of Common Stock into which each such
share of Preferred Stock held by such holder is convertible at the time of such
vote.
Section 5.2 Election of Board of Directors. Notwithstanding the
foregoing, the size of the Corporation's board of directors shall be fixed at
seven members, which number shall not be increased or decreased without the
approval or written consent of a majority of the members of the Board of
Directors. The holders of the Preferred Stock and the holders of the Common
Stock shall be entitled to vote upon the election of directors on the following
basis: (i) so long as the holders of the Preferred Stock on the date hereof own
no less than 2% of the outstanding Common Stock on an as converted basis, one
member of the board of directors of the Corporation shall be appointed by the
vote of the holders of a majority of the Preferred Stock, voting as a separate
class; and (ii) six members of the board of directors of the Corporation shall
be appointed by the vote of the holders of a majority of the Common Stock and
the Preferred Stock, voting together as a single class. Each director shall
serve until he or she resigns, dies, becomes incapacitated or is removed. A
director may only be removed and/or replaced by the holders of a majority of the
class or classes of stock which were entitled to appoint him or her.
Section 5.3 Quorum. Except as otherwise required by law, the
following shall constitute quorums at meetings of shareholders:
(a) The presence in person, by teleconference or by proxy of the
holders of shares constituting a majority of the votes entitled to vote thereat,
calculated in accordance with Section 5.1 hereof, shall constitute a quorum for
the purpose of transaction of business at all meetings of shareholders, except
with respect to election of directors under Section 5.2 hereof and except with
respect to the class voting rights under Section 7 hereof.
(b) For the purpose of electing directors under Section 5.2 hereof,
(A) the presence in person, by teleconference or by proxy of the holders of a
majority of the shares of Preferred Stock entitled to vote thereat shall
constitute a quorum for the purpose of electing that number of directors of the
Board of Directors which such shareholders are entitled to elect pursuant to
Section 5.2(i) hereof; and (B) the presence in person, by teleconference or by
proxy of the holders of a majority of the shares of Common Stock and Preferred
Stock entitled to vote thereat shall constitute a quorum for the purpose of
electing that number of directors of the Board of Directors which such
shareholders are entitled to elect pursuant to Section 5.2(ii) hereof.
Section 6
Dividend Rights
The holder of each share of Preferred Stock shall be entitled to receive, with
respect to such share, out of funds legally available for that purpose when, as
and if declared by the Board of Directors, dividends in such amounts as
determined by the Board of Directors; provided, however, that no dividend shall
be declared or be payable on the outstanding shares of the
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Corporation's Common Stock (other than a dividend payable entirely in shares of
Common Stock) unless a dividend has been declared upon the then outstanding
shares of the Preferred Stock having (a) the same record date and payment date
as the dividend declared and payable on the Common Stock and (b) a value per
share of Preferred Stock equal to the product of (i) the value per share of the
dividend declared and payable on the Common Stock and (ii) the largest number of
whole shares of Common Stock into which each share of Preferred Stock is
convertible pursuant to Section 4 hereof on the record date for such dividend.
Section 7
Covenants
So long as any shares of Preferred Stock shall be outstanding, the
Corporation shall not, without first obtaining the affirmative vote or written
consent of the holders of more than a majority of the then outstanding shares of
Preferred Stock, voting as a single class:
(a) alter, change or amend the Restated Certificate of Incorporation
or the Corporation's bylaws, or adopt any Certificate of Designations with
respect to any other series of preferred stock, whether by amendment, merger or
otherwise, in a manner which adversely affects the holders of the Preferred
Stock or the preferences, rights, privileges or powers of, or the restrictions
provided for the benefit of, the Preferred Stock;
(b) authorize, create or issue any other class or capital classes of
stock or series of Preferred Stock or other equity securities having (i) any
preference or priority to the Preferred Stock as to, or being on a parity with
the Preferred Stock with respect to any, redemption, dividends or assets upon
liquidation or winding up of the affairs of the Corporation, including any
deemed liquidation, dissolution or winding up pursuant to Section 3.2 (including
encumbrances of any assets), or (ii) any superior voting rights;
(c) increase the authorized or designated number of any class or
series or equity securities; provided that the Corporation may, without the
approval of the holders of the Preferred Stock, increase the authorized number
of shares of Common Stock in order to make any Permitted Issuances (as defined
in that certain Amended and Restated Shareholders' and Voting Agreement, dated
the date hereof, among the Corporation and certain of its shareholders);
(d) merge or consolidate into or with another corporation or entity
or sell all or substantially all of the Corporation's assets, unless such merger
or consolidation or sale has been approved by the Board of Directors, including
the member of the Board of Directors designated by the holders of the Preferred
Stock;
(e) acquire (whether directly or through a subsidiary) another
entity or an interest in another entity, unless such acquisition has been
approved by the Board of Directors, including the member of the Board of
Directors designated by the holders of the Preferred Stock;
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(f) pay or declare any dividend or other distribution on any shares
of Common Stock or other securities of the Corporation (except as provided by
Section 6);
(g) apply any of its assets to the redemption, retirement, purchase
or other acquisition directly or indirectly, through subsidiaries, if any, or
otherwise, of any shares of its capital stock, except from officers, directors
or employees of or consultants to the Corporation upon termination of employment
pursuant to written agreements in effect on the Original Issue Date, including
under that certain Amended and Restated Shareholders' and Voting Rights
Agreement, dated as of February 1, 1999; or
(h) liquidate or dissolve the Corporation or reclassify any of its
outstanding capital stock.
Section 8
Residual Rights
All rights accruing to the outstanding shares of the Corporation not
expressly provided for to the contrary shall be vested in the Common Stock.
Section 9
No Reissuance of Preferred Stock
No share or shares of Preferred Stock acquired by the Corporation by
reason of redemption, purchase, conversion or otherwise shall be reissued, and
all such shares shall be canceled, retired and eliminated from the shares which
the Corporation shall be authorized to issue.
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Exhibit 3.2
CERTIFICATE OF DESIGNATIONS
OF
SERIES B REDEEMABLE CONVERTIBLE PREFERRED STOCK
OF
AMERICASDOCTOR.COM, INC.
PURSUANT TO SECTION 151 OF THE
DELAWARE GENERAL CORPORATION LAW
We, Scott M. Rifkin, M.D., Chief Executive Officer, and Allan
Sanders, Secretary, of AmericasDoctor.com, Inc., a corporation organized and
existing under the laws of the State of Delaware (the "Corporation"), certify
that pursuant to the authority contained in Article Fourth of the Corporation's
Restated Certificate of Incorporation, as amended, and in accordance with the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, the board of directors of the Corporation has adopted, on June 1,
1999, the following resolution creating a series of preferred stock of the
Corporation designated as the Series B Redeemable Convertible Preferred Stock:
RESOLVED, by the Board of Directors of America's Doctor, Inc., a
Delaware corporation (the "Corporation"), that pursuant to Article Fourth of the
Restated Certificate of Incorporation of the Corporation, as amended, there be,
and hereby is, established a new series of preferred stock of the Corporation,
consisting of 151,103 shares, par value $0.01 per share, designated "Series B
Redeemable Convertible Series B Stock" and having the powers, designations,
preferences and relative participating, optional or other special rights and the
qualifications, limitations or restrictions on such preferences and/or rights as
set forth in Exhibit A hereto.
<PAGE>
IN WITNESS WHEREOF, AmericasDoctor.com, Inc. has caused this
Certificate of Designations to be signed by its President and attested by its
Secretary on this 1st day of June, 1999.
/s/ Scott M. Rifkin
----------------------------------------
Scott M. Rifkin, Chief Executive Officer
ATTEST:
/s/ Allan Sanders
- ------------------------
Allan Sanders, Secretary
<PAGE>
Exhibit A
Section 1
Definitions
"Additional Shares of Common Stock" shall mean all shares of Common
Stock and Common Stock Equivalents issued (or, pursuant to Section 4.4(b),
deemed to be issued) by the Corporation after the Original Issue Date, other
than shares of Series A Stock or Series B Stock or shares of Common Stock or
Common Stock Equivalents issued or issuable (or so deemed to be issued):
(a) upon conversion of shares of Series A Stock or Series B
Stock or exercise of the warrants issued in connection with the issuance of the
Series A Stock or the Series B Stock;
(b) upon conversion of the warrants issued to The Wyndhurst
Capital Group, LLC ("Wyndhurst") exercisable for a nominal price for a number of
shares of Common Stock equal to 3/8ths of 1% of the increase in the number of
the Corporation's total shares of Common Stock and Common Stock Equivalents
outstanding after any financing, for every $1 million raised by Wyndhurst, up to
a maximum of $10 million (including amounts paid for the Series A Stock and
Series B Stock);
(c) to officers, directors or employees of, or consultants to,
the Corporation for up to 190,000 shares of Common Stock pursuant to any stock
option, incentive, bonus or compensation program approved previously or
hereafter by the compensation committee of the Board of Directors;
(d) to officers, directors or employees of, or consultants to,
the Corporation pursuant to any additional stock option, incentive, bonus or
compensation program approved by the compensation committee of the Board of
Directors, including any directors appointed by the holders of the Series A
Stock and Series B Stock then serving;
(e) to Scott M. Rifkin for up to 100,000 shares of Common
Stock issued pursuant to a stock option, incentive, bonus or compensation
program approved by the Board of Directors or the compensation committee of the
Board of Directors;
(f) by way of dividend or other distribution on shares of
Series A Stock and Series B Stock;
(g) for which adjustment is made in the Conversion Price
pursuant to Section 4.4(e) or (f); or
(h) upon conversion, exchange or exercise of any Common Stock
Equivalents outstanding on the Original Issue Date.
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"Common Stock Equivalents" shall mean any warrant, option or other
right to subscribe for or purchase any shares of Common Stock or any evidences
of indebtedness, shares of stock or other securities which are or may be at any
time convertible into or exchangeable for shares of Common Stock.
"Conversion Price" shall mean the price at which shares of Common
Stock shall be deliverable upon conversion of the Series B Stock which initially
shall be the Initial Conversion Price and which shall be adjusted from time to
time as provided in Section 4 hereof.
"Conversion Rights" shall have the meaning set forth in Section 4.
"Convertible Securities" shall mean any evidences of indebtedness,
shares (other than shares of Series B Stock and the warrants issued in
connection with the issuance of the Series B Stock) or other securities directly
or indirectly convertible into or exchangeable for Common Stock.
"Excluded Securities" shall have the meaning set forth in the Second
Amended and Restated Shareholders' and Voting Agreement dated as of June 1,
1999.
"Initial Conversion Price" shall mean $66.18.
"Liquidation Value" shall mean $66.18, as adjusted for any stock
splits, stock dividends, combinations and other similar recapitalizations
affecting such shares.
"Option" shall mean rights, options or warrants (other than the
warrants issued in connection with the issuance of the Series A Stock or Series
B Stock) to subscribe for, purchase or otherwise acquire either Common Stock or
Convertible Securities.
"Original Issue Date" shall mean the date on which the first share
of Series B Stock was issued.
"Qualified IPO" means any sale by the Corporation of shares of
Common Stock or Common Stock Equivalents pursuant to a registration statement
filed by the Corporation under the Securities Act (other than a registration
statement filed on Form S-4 or Form S-8), which filing shall have been declared
effective by the Securities and Exchange Commission, at a before-the-money
market capitalization of not less than $75,000,000 and in which the gross
proceeds received by the Corporation for such securities equals or exceeds
$15,000,000.
"Series A Stock" shall mean the Series A Convertible Preferred Stock
of the Corporation.
"Series B Stock" shall mean the Series B Redeemable Convertible
Preferred Stock of the Corporation.
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As used in this Section 3, the terms "day" and "days" mean a calendar day.
Whenever the context may require, any pronoun used in this Certificate of
Designations shall include the corresponding masculine, feminine and neuter
forms. All references to Sections in this Certificate of Designations are
references to Sections of this Certificate of Designations unless otherwise
specifically set forth herein.
Section 2
Designation
Of the 1,000,000 shares of preferred stock which the Corporation has
authority to issue, 151,103 of such shares shall be designated and known as
"Series B Redeemable Convertible Preferred Stock."
Section 3
Liquidation Rights
Section 3.1 Right to Liquidation Value. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Corporation, the holders of each share of Series B Stock shall be
entitled to receive, ratably with the Series A Stock and prior and in preference
to any distribution of any of the assets or surplus funds of the Corporation to
the holders of the Common Stock by reason of their ownership thereof, an amount
equal to the Liquidation Value of such Series B Stock, per share, plus an amount
equal to all accrued or declared but unpaid dividends to and including the date
full payment shall be tendered to the holders of the Series B Stock with respect
to such liquidation, dissolution or winding up. If the assets or surplus funds
to be distributed to the holders of the Series A Stock and Series B Stock are
insufficient to permit the payment to such holders of their full preferential
amounts, the assets and surplus funds legally available for distribution shall
be distributed ratably among the holders of the Series A Stock and Series B
Stock in proportion to the full preferential amount each such holder is
otherwise entitled to receive.
Section 3.2 Merger or Consolidation Deemed a Liquidation. The merger
or consolidation of the Corporation into or with another Corporation or a sale
of all or substantially all of the assets of the Corporation shall be deemed to
be a liquidation, dissolution or winding up of the affairs of the Corporation
within the meaning of this Section 3, and the Corporation shall pay to each of
the holders of Series B Stock, ratably with the Series A Stock and prior to the
consummation of any such merger, consolidation or sale of assets, an amount
equal to their liquidation preference, upon surrender by such holders of Series
B Stock of the stock certificates representing the outstanding shares of Series
B Stock held by each such holder, unless (i) the members of the Board of
Directors of the Corporation prior to such merger or consolidation constitute at
least 50% of the members of the Board of Directors of the surviving entity
following such merger or consolidation and (ii) the shareholders of the
Corporation prior to such merger or consolidation continue to hold at least 50%
of the outstanding capital stock and voting stock of the surviving entity.
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Section 3.3 Preferential Payment. All of the preferential amounts to
be paid to the holders of the Series B Stock pursuant to this Section 3 shall be
paid or set apart in trust for payment before the payment or setting apart for
payment of any amount for, or the distribution of any assets of the Corporation
to, the holders of the Common Stock in connection with such liquidation,
dissolution or winding up.
Section 4
Conversion Rights
The holders of the Series B Stock shall have conversion rights as
follows (the "Conversion Rights"):
Section 4.1 Right to Convert. Each share of Series B Stock shall be
convertible at the option of the holder thereof at any time and without the
payment of any additional consideration therefor into that number of fully paid
and nonassessable shares of Common Stock as is determined by dividing the
Liquidation Value for such share of Series B Stock by the Conversion Price
(determined as hereinafter provided) in effect at the time of conversion. The
Conversion Price shall be subject to adjustment (in order to adjust the number
of shares of Common Stock into which such Series B Stock is convertible) as
provided in Section 4.4.
Section 4.2 Mandatory Conversion. At the option of the Corporation,
each share of Series B Stock shall automatically be converted into shares of
Common Stock at the then effective Conversion Price for such Series B Stock, as
adjusted pursuant to Section 4.4, upon the closing of an underwritten public
offering pursuant to an effective registration statement under the Securities
Act of 1933, as amended, covering the offer and sale of Common Stock for the
account of the Corporation to the public at a before-the-money market
capitalization of not less than $75,000,000 and with aggregate gross proceeds to
the Corporation of at least $15,000,000. The holders of Series B Stock entitled
to receive Common Stock issuable upon such conversion of Series B Stock shall
not be deemed to have converted the Series B Stock until immediately prior to
the closing of such offering.
Section 4.3 Mechanics of Conversion. No fractional shares of Common
Stock shall be issued upon conversion of Series B Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price. Before any holder of Series B Stock shall be
entitled to convert the same into full shares of Common Stock, such holder shall
surrender the certificate or certificates therefor, duly endorsed, at the office
of the Corporation or of any transfer agent for the Series B Stock, and shall
give written notice to the Corporation at such office that he elects to convert
the same and shall state therein his name or the name or name of his nominees in
which he wishes the certificate or certificates for shares of Common Stock to be
issued, together with the applicable federal taxpayer identification number. The
Corporation shall, as soon as practicable thereafter, issue and deliver at such
office to such holder of Series B
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Stock, or to his nominee or nominees, a certificate or certificates for the
number of shares of Common Stock to which he shall be entitled, together with
cash in lieu of any fraction of a share. Such conversion shall be deemed to have
been made immediately prior to the close of business on the date of such
surrender of the shares of Series B Stock to be converted pursuant to Section
4.1, or immediately prior to the closing of an event as described in Section
4.2, and the holder of Series B Stock entitled to receive the shares of Common
Stock issuable upon conversion shall be treated for all purposes as the record
holder of such shares of Common Stock on such date.
Section 4.4 Adjustments to Conversion Price for Diluting Issues.
(a) No Adjustment of Conversion Price. Subject to the provisions of
Section 4.4(e) and Section 4.4(f), no adjustment in the number of shares of
Common Stock into which the Series B Stock is convertible shall be made by
adjustment in the Conversion Price of Series B Stock in respect of the issuance
of Additional Shares of Common Stock, unless the consideration per share for
such Additional Shares of Common Stock issued or deemed to be issued by the
Corporation is less than the Conversion Price in effect on the date of, and
immediately prior to, the issue of such Additional Shares of Common Stock.
(b) Issue of Options and Convertible Securities Deemed Issue of
Additional Shares of Common Stock. In the event the Corporation at any time or
from time to time after the Original Issue Date shall issue any Options or
Convertible Securities or shall fix a record date for the determination of
holders of any class of securities entitled to receive any such Options or
Convertible Securities, then the maximum number of shares (as set forth in the
instrument relating thereto without regard to any provisions contained therein
for a subsequent adjustment of such number) of Common Stock issuable upon the
exercise of such Options or, in the case of Convertible Securities and Options
therefor, the conversion or exchange of such Convertible Securities, shall
(except as provided in the definition of "Additional Shares of Common Stock") be
deemed to be Additional Shares of Common Stock issued as of the time of such
issue or, in case such a record date shall have been fixed, as of the close of
business on such record date; provided that Additional Shares of Common Stock
shall not be deemed to have been issued unless the consideration per share
(determined pursuant to Section 4.4(d)) of such Additional Shares of Common
Stock would be less than the Conversion Price in effect on the date of and
immediately prior to such issue, or such record date, as the case may be; and
provided, further, that in any such case in which Additional Shares of Common
Stock are deemed to be issued:
(i) no further adjustment in the Conversion Price shall be
made upon the subsequent issue of Convertible Securities or shares of Common
Stock upon the exercise of such Options or conversion or exchange of such
Convertible Securities;
(ii) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase in the
consideration payable to the Corporation, or decrease in the number of shares of
Common Stock issuable, upon the exercise, conversion or exchange thereof, the
Conversion Price computed upon the original issue thereof (or upon the
occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such increase or decrease becoming
effective, be recomputed to
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reflect such increase or decrease insofar as it affects such Options or the
rights of conversion or exchange under such Convertible Securities;
(iii) upon the expiration of any such Options or any rights of
conversion or exchange under such Convertible Securities which shall not have
been exercised, the Conversion Price computed upon the original issue thereof
(or upon the occurrence of a record date with respect thereto) and any
subsequent adjustments based thereon shall, upon such expiration, be recomputed
as if:
(1) in the case of Convertible Securities or Options for
Common Stock, the only Additional Shares of Common Stock issued were the shares
of Common Stock, if any, actually issued upon the exercise of such Options or
the conversion or exchange of such Convertible Securities and the consideration
received therefor was the consideration actually received by the Corporation for
the issue of all such Options, whether or not exercised, plus the consideration
actually received by the Corporation upon such exercise, or for the issue of all
such Convertible Securities which were actually converted or exchanged, plus the
additional consideration, if any, actually received by the Corporation upon such
conversion or exchange, and
(2) in the case of Options for Convertible Securities,
only the Convertible Securities, if any, actually issued upon the exercise
thereof were issued at the time of issue of such Options, and the consideration
received by the Corporation for the Additional Shares of Common Stock deemed to
have been then issued was the consideration actually received by the Corporation
for the issue of all such Options, whether or not exercised, plus the
consideration deemed to have been received by the Corporation (determined
pursuant to Section 4.4(d)) upon the issue of the Convertible Securities with
respect to which such Options were actually exercised;
(iv) no readjustment pursuant to clause (ii) or (iii) above
shall have the effect of increasing the Conversion Price to an amount which
exceeds the lower of (x) the Conversion Price on the original adjustment date,
or (y) the Conversion Price that would have resulted from any issuance of
Additional Shares of Common Stock between the original adjustment date and such
readjustment date;
(v) in the case of any Options which expire by their terms not
more than thirty (30) days after the date of issue thereof, no adjustment of the
Conversion Price shall be made pursuant to this Section 4.4(b) until the
expiration or exercise of all such Options, whereupon such adjustment shall be
made in the same manner provided in clause (iii) above; and
(vi) if such record date shall have been fixed and such
Options or Convertible Securities are not issued on the date fixed therefor, the
adjustment previously made in the Conversion Price which became effective on
such record date shall be canceled as of the close of business on such record
date, and thereafter the Conversion Price shall be adjusted pursuant to this
Section 4.4(b) as of the actual date of their issuance.
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(c) Adjustment of Conversion Price Upon Issuance of Additional
Shares of Common Stock. In the event the Corporation shall issue Additional
Shares of Common Stock (including Additional Shares of Common Stock deemed to be
issued pursuant to Section 4.4(b)) without consideration or for a consideration
per share less than the Conversion Price in effect on the date of and
immediately prior to such issue, then and in such event, such Conversion Price
shall be reduced, concurrently with such issue, to a price (calculated to the
nearest cent) determined by multiplying such Conversion Price by a fraction (A)
the numerator of which shall be (1) the number of shares of Common Stock
outstanding immediately prior to such issue plus (2) the number of shares of
Common Stock which the aggregate consideration received or to be received by the
Corporation for the total number of Additional Shares of Common Stock so issued
would purchase at such Conversion Price; and (B) the denominator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
issue plus the number of Additional Shares of Common Stock so issued.
Notwithstanding the foregoing, the Conversion Price shall not be so
reduced at such time if the amount of such reduction would be an amount less
than $0.01, but any such amount shall be carried forward and reduction with
respect thereto made at the time of and together with any subsequent reduction
which, together with such amount and any other amount or amounts so carried
forward, shall aggregate $0.01 or more.
(d) Determination of Consideration. For purposes of this Section
4.4, the consideration received by the Corporation for the issue of any
Additional Shares of Common Stock shall be computed as follows:
(i) Cash and Property: Such consideration shall:
1) insofar as it consists of cash, be computed at
the aggregate amount of cash received by the Corporation, excluding amounts paid
or payable for accrued interest or accrued dividends;
2) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of such issue, as
determined in good faith by the Board of Directors; and
3) in the event Additional Shares of Common Stock
are issued together with other shares or securities or other assets of the
Corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (1) and (2) above, as
determined in good faith by the Board of Directors.
(ii) Options and Convertible Securities. The consideration per share
received by the Corporation for Additional Shares of Common Stock deemed
to have been issued pursuant to Section 4.4(b), relating to Options and
Convertible Securities, shall be determined by dividing (x) the total
amount, if any, received or receivable by the Corporation as consideration
for the issue of such Options or Convertible
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Securities, plus the minimum aggregate amount of additional consideration
(as set forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such
consideration until such subsequent adjustment occurs) payable to the
Corporation upon the exercise of such Options or the conversion or
exchange of such Convertible Securities or in the case of Options for
Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities,
by (y) the maximum number of shares of Common Stock (as set forth in the
instruments relating thereto, without regard to any provision contained
therein for a subsequent adjustment of such number until such subsequent
adjustment occurs) issuable upon the exercise of such Options or the
conversion or exchange of such Convertible Securities.
(e) Adjustment for Dividends, Distributions, Subdivisions,
Combinations or Consolidation of Common Stock.
(i) Dividends, Distributions or Subdivisions. In the event the
Corporation at any time or from time to time after the Original Issue Date shall
declare or pay any dividend or make any other distribution on the Common Stock
payable in Common Stock or effect a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend in
Common Stock), then and in any such event, the Conversion Price shall be
proportionately decreased to reflect such dividend, distribution or subdivision
as of:
1) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the determination
of holders of any class of securities entitled to receive such dividend or
distribution, or
2) in the case of any such subdivision, at the close of
business on the date immediately prior to the date upon which such corporate
action becomes effective.
If such record date or other effective date shall have been fixed and such
dividend, distribution or subdivision shall not have been fully paid or effected
on the date fixed therefor, the adjustment previously made in the Conversion
Price which became effective on such record date or other date shall be canceled
as of the close of business on such record date or other date, and thereafter
the Conversion Price shall be adjusted pursuant to this Section 4.4(e) as of the
time of actual payment of such dividend, distribution or effectiveness of such
subdivision.
(ii) Combinations or Consolidations. In the event the
outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
the Conversion Price in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased.
(f) Adjustment for Reclassification or Reorganization. In case of
any capital reorganization or reclassification of the capital stock of the
Corporation (other than a
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reclassification covered by Section 4.4(e)(ii)), each share of Series B Stock
shall thereafter be convertible into the number of shares of stock or other
securities or property to which a holder of the number of shares of Common Stock
of the Corporation deliverable upon conversion of such Series B Stock would have
been entitled upon such reorganization or reclassification. In any such case,
appropriate adjustment (as determined by the Board of Directors) shall be made
in the application of these provisions set forth with respect to the rights and
interest thereafter of the holders of the Series B Stock, to the end that these
provisions (including provisions with respect to changes in and other
adjustments of the Conversion Price) shall thereafter be applicable, as nearly
as reasonably may be, in relation to any shares of stock or other property
thereafter deliverable upon the conversion of the Series B Stock.
Section 4.5 No Impairment. The Corporation will not, by amendment of
its 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 hereunder by the Corporation but
will at all times in good faith assist in the carrying out of all the provisions
of this Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series B Stock against impairment.
Section 4.6 Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the Conversion Price pursuant to this Section
4, the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with these terms and furnish to each holder of Series
B Stock a certificate setting forth such adjustment or readjustment and showing
in detail the facts upon which such adjustment or readjustment is based. The
Corporation shall, upon the written request at any time of any holder of Series
B Stock, furnish or cause to be furnished to such holder a like certificate
setting forth (i) such adjustments and readjustments, (ii) the Conversion Price
at the time in effect, and (iii) the number of shares of Common Stock and the
amount, if any, of other property which at the time would be received upon the
conversion of such holder's Series B Stock.
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Section 4.7 Notices of Record Date. In the event of (i) any taking
by the Corporation of a record date of the holders of any class of securities
for the purpose of determining the holders thereof who are entitled to receive
any dividend (other than a cash dividend which is the same as cash dividends
paid in previous quarters) or other distribution, or (ii) any capital
reorganization of the Corporation, any reclassification or recapitalization of
the capital stock of the Corporation, any merger or consolidation of the
Corporation, and any transfer of all or substantially all of the assets of the
Corporation to any other Corporation, or any other entity or person, or any
voluntary or involuntary dissolution, liquidation or winding up of the
Corporation, the Corporation shall mail to each holder of Series B Stock at
least 20 days (30 days in the case of an acquisition of the Corporation through
a merger or consolidation of the Corporation or the sale of all or substantially
all of its assets and properties) prior to the record date specified therein, a
notice specifying (A) the date on which any such record is to be taken for the
purpose of such dividend or distribution and a description of such dividend or
distribution, (B) the date on which any such reorganization, reclassification,
transfer, consolidation, merger, dissolution, liquidation or winding up is
expected to become effective, and (C) the time, if any, that is to be fixed, as
to when the holders of record of Common Stock (or other securities) shall be
entitled to exchange their shares of Common Stock (or other securities) for
securities or other property deliverable upon such reorganization,
reclassification, transfer, consolidation, merger, dissolution, liquidation or
winding up.
Section 4.8 Adjustment Relating to Qualified IPO. If the Corporation
has not effected a Qualified IPO on or prior to December 31, 1999, effective as
of January 1, 2000, the Initial Conversion Price shall be retroactively adjusted
to equal $56.73, any prior adjustment to the Conversion Price shall be
recomputed as if the Initial Conversion Price had been $56.73, and such
Conversion Price shall be subject to further adjustment as provided in Section
4.4.
Section 4.9 Common Stock Reserved. The Corporation shall reserve and
keep available out of its authorized but unissued Common Stock such number of
shares of Common Stock as shall from time to time be sufficient to effect
conversion of all outstanding shares of Series B Stock.
Section 4.10 Other Events Altering Conversion Price. Upon the
occurrence of any event not specifically described in this Section 4 as reducing
the Conversion Price that, in the reasonable exercise of the business judgment
of the Board of Directors of the Corporation reached in good faith, requires, on
equitable principles, the reduction of the Conversion Price, the Conversion
Price will be so equitably reduced.
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Section 5
Voting Rights
Section 5.1 General. Except as otherwise required by law and the
provisions of this Section 5 and Section 7 below, the holders of Series B Stock
and the holders of the Common Stock shall be entitled to notice of any
shareholders' meeting and to vote together as a single class of capital stock
upon any matter submitted to a shareholder for a vote, on the following basis:
(a) Holders of Common Stock shall have one vote per share; and
(b) Holders of Series A and Series B Stock shall have that number of
votes per share as is equal to the number of shares of Common Stock into which
each such share of Series A and Series B Stock held by such holder is
convertible at the time of such vote.
Section 5.2 Election of Board of Directors. Notwithstanding the
foregoing, the size of the Corporation's board of directors shall be fixed at
nine members, which number shall not be increased or decreased without the
approval or written consent of a majority of the members of the Board of
Directors. The holders of the Series A Stock, the holders of the Series B Stock
and the holders of the Common Stock shall be entitled to vote upon the election
of directors on the following basis: (i) so long as the holders of the Series A
Stock on the date hereof own no less than 2% of the outstanding Common Stock on
an as converted basis, one member of the board of directors of the Corporation
shall be appointed by the vote of the holders of a majority of the Series A
Stock, voting as a separate class; (ii) so long as the holders of the Series B
Stock on the Original Issue Date own no less than 2% of the outstanding Common
Stock on an as converted basis, one member of the board of directors of the
Corporation shall be appointed by the vote of the holders of a majority of the
Series B Stock, voting as a separate class; and (iii) seven members of the board
of directors of the Corporation shall be appointed by the vote of the holders of
a majority of the Common Stock, the Series A Stock and Series B Stock, voting
together as a single class. Each director shall serve until he or she resigns,
dies, becomes incapacitated or is removed. A director may only be removed and/or
replaced by the holders of a majority of the series, class or classes of stock
which were entitled to appoint him or her.
Section 5.3 Quorum. Except as otherwise required by law, the
following shall constitute quorums at meetings of shareholders:
(a) The presence in person, by teleconference or by proxy of the
holders of shares constituting a majority of the votes entitled to vote thereat,
calculated in accordance with Section 5.1 hereof, shall constitute a quorum for
the purpose of transaction of business at all meetings of shareholders, except
with respect to election of directors under Section 5.2 hereof and except with
respect to the class voting rights under Section 7 hereof.
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(b) For the purpose of electing directors under Section 5.2 hereof,
(A) the presence in person, by teleconference or by proxy of the holders of a
majority of the shares of Series A Stock entitled to vote thereat shall
constitute a quorum for the purpose of electing that number of directors of the
Board of Directors which such shareholders are entitled to elect pursuant to
Section 5.2(i) hereof; (B) the presence in person, by teleconference or by proxy
of the holders of a majority of the shares of Series B Stock entitled to vote
thereat shall constitute a quorum for the purpose of electing that number of
directors of the Board of Directors which such shareholders are entitled to
elect pursuant to Section 5.2(ii) hereof; and (C) the presence in person, by
teleconference or by proxy of the holders of a majority of the shares of Common
Stock, Series A Stock and Series B Stock entitled to vote thereat shall
constitute a quorum for the purpose of electing that number of directors of the
Board of Directors which such shareholders are entitled to elect pursuant to
Section 5.2(iii) hereof.
Section 6
Dividend Rights
The holder of each share of Series A Stock shall be entitled to receive, with
respect to such share, out of funds legally available for that purpose when, as
and if declared by the Board of Directors, dividends in such amounts as
determined by the Board of Directors; provided, however, that no dividend shall
be declared or be payable on the outstanding shares of the Corporation's Common
Stock (other than a dividend payable entirely in shares of Common Stock) or
Series A Stock unless a dividend has been declared upon the then outstanding
shares of the Series B Stock having (a) the same record date and payment date as
the dividend declared and payable on the Common Stock and (b) a value per share
of Series B Stock equal to the product of (i) the value per share of the
dividend declared and payable on the Common Stock or Series A Stock (on an as
converted basis), as the case may be and (ii) the largest number of whole shares
of Common Stock into which each share of Series B Stock is convertible pursuant
to Section 4 hereof on the record date for such dividend.
Section 7
Covenants
So long as any shares of Series B Stock shall be outstanding, the
Corporation shall not, without first obtaining the affirmative vote or written
consent of the holders of more than a majority of the then outstanding shares of
Series B Stock, voting as a single class:
(a) alter, change or amend the Restated Certificate of Incorporation
or the Corporation's bylaws, or adopt any Certificate of Designations with
respect to any other series of Series B stock, whether by amendment, merger or
otherwise, in a manner which adversely affects the holders of the Series B Stock
or the preferences, rights, privileges or powers of, or the restrictions
provided for the benefit of, the Series B Stock;
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(b) authorize, create or issue any other class or capital classes of
stock or series of Series B Stock or other equity securities having (i) any
preference or priority to the Series B Stock as to, or being on a parity with
the Series B Stock with respect to any, redemption, dividends or assets upon
liquidation or winding up of the affairs of the Corporation, including any
deemed liquidation, dissolution or winding up pursuant to Section 3.2 (including
encumbrances of any assets), or (ii) any superior voting rights;
(c) increase the authorized or designated number of any class or
series or equity securities; provided that the Corporation may, without the
approval of the holders of the Series B Stock, increase the authorized number of
shares of Common Stock in order to issue securities in connection with the
Qualified IPO or to issue Excluded Securities or securities issuable upon
exercise or conversion of Excluded Securities;
(d) merge or consolidate into or with another corporation or entity
or sell all or substantially all of the Corporation's assets, unless such merger
or consolidation or sale has been approved by the Board of Directors, including
the member of the Board of Directors designated by the holders of the Series B
Stock;
(e) acquire (whether directly or through a subsidiary) another
entity or an interest in another entity, unless such acquisition has been
approved by the Board of Directors, including the member of the Board of
Directors designated by the holders of the Series B Stock;
(f) pay or declare any dividend or other distribution on any shares
of Common Stock or other securities of the Corporation (except as provided by
Section 6);
(g) apply any of its assets to the redemption, retirement, purchase
or other acquisition directly or indirectly, through subsidiaries, if any, or
otherwise, of any shares of its capital stock, except from officers, directors
or employees of or consultants to the Corporation upon termination of employment
pursuant to written agreements in effect on the Original Issue Date, including
under that certain Second Amended and Restated Shareholders' and Voting Rights
Agreement, dated as of June 1, 1999; or
(h) liquidate or dissolve the Corporation or reclassify any of its
outstanding capital stock.
Section 8
Optional Redemption of Series B Stock. (a) The outstanding shares of
Series B Stock held by any holder of Series B Stock shall be redeemable, at the
option of such holder, at any time within 180 days after June 1, 2005, by
written notice to the Corporation (a "Redemption Notice"), requiring the
Corporation to redeem out of funds legally available therefor all of such
holder's outstanding Series B Stock.
(b) If the funds of the Corporation legally available for redemption
of the Series B Stock are insufficient to redeem the total number of shares of
Series B Stock
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surrendered for redemption, those funds which are legally available will be used
to redeem the maximum possible number of shares of Series B Stock surrendered
for redemption ratably among the outstanding shares of Series B Stock. At any
time thereafter when additional funds of the Corporation are legally available
for the redemption of Series B Stock, such funds will immediately be used to
redeem the balance of the Series B Stock surrendered for redemption ratably.
(c) For each shares of Series B Stock which is to be redeemed, the
Corporation will be obligated, within 60 days after the date of receipt of the
Redemption Notice therefor and surrender by such holder at the Corporation's
principal office of the certificate representing such Series B Stock to pay an
amount in immediately available funds (the "Redemption Price") equal to the
Liquidation Value thereof plus all accrued but unpaid dividends thereon.
(d) No share of Series B Stock is entitled to any dividends declared
after the date on which the Redemption Price of such Series B Stock is paid. On
such date all rights of the holder of such shares of Series B Stock will cease,
and such Series B Stock will not be deemed to be outstanding.
(e) Any shares of Series B Stock which are redeemed or otherwise
acquired by the Corporation will be cancelled and will not be reissued, sold or
transferred.
Section 9
Residual Rights
All rights accruing to the outstanding shares of the Corporation not
expressly provided for to the contrary shall be vested in the Common Stock.
Section 10
No Reissuance of Series B Stock
No share or shares of Series B Stock acquired by the Corporation by
reason of redemption, purchase, conversion or otherwise shall be reissued, and
all such shares shall be canceled, retired and eliminated from the shares which
the Corporation shall be authorized to issue.
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EXHIBIT 3.3
AMERICASDOCTOR.COM, INC.
AMENDED AND RESTATED
BY-LAWS
ARTICLE I
Offices
The registered office of the Corporation shall be in the City of
Wilmington, New Castle County, State of Delaware.
The Corporation may also have offices at such other places, both
within and without the State of Delaware, as may from time to time be designated
by the Board of Directors.
ARTICLE II
Books
The books and records of the Corporation may be kept (except as
otherwise provided by the laws of the State of Delaware) outside of the State of
Delaware and at such place or places as may from time to time be designated by
the Board of Directors.
ARTICLE III
Stockholders
Section 1. Annual Meetings. The annual meeting of the stockholders
of the Corporation for the election of Directors and the transaction of such
other business as may properly come before said meeting shall be held at the
principal business office of the Corporation or at such other place or places
either within or without the State of Delaware as may be designated by the Board
of Directors and stated in the notice of the meeting, on the first Monday of May
in each year, if not a legal holiday, and, if a legal holiday, then on the next
day not a legal holiday, at 10:00 o'clock in the forenoon.
Written notice of the place designated for the annual meeting of the
stockholders of the Corporation shall be delivered personally or mailed to each
stockholder entitled to vote thereat not less than ten (10) and not more than
sixty (60) days prior to said meeting, but at any meeting at which all
stockholders shall be present, or of which all stockholders not present have
waived notice in writing, the giving of notice as above described may be
dispensed with. If mailed, said notice shall be directed to each stockholder at
his address as the same appears on the stock ledger of the Corporation unless he
shall have filed with the Secretary of the Corporation a written request that
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notices intended for him be mailed to some other address, in which case it shall
be mailed to the address designated in such request.
Section 2. Special Meetings. Special meetings of the stockholders of
the Corporation shall be held whenever called in the manner required by the laws
of the State of Delaware for purposes as to which there are special statutory
provisions, and for other purposes whenever called by resolution of the Board of
Directors or by the holders of a majority of the outstanding shares of capital
stock of the Corporation the holders of which are entitled to vote on matters
that are to be voted on at such meeting. Any such special meeting of
stockholders may be held at the principal business office of the Corporation or
at such other place or places, either within or without the State of Delaware,
as may be specified in the notice thereof.
Except as otherwise expressly required by the laws of the State of
Delaware, written notice of each special meeting, stating the day, hour and
place, and in general terms the business to be transacted thereat, shall be
delivered personally or mailed to each stockholder entitled to vote thereat not
less than ten (10) and not more than sixty (60) days before the meeting. If
mailed, said notice shall be directed to each stockholder at his address as the
same appears on the stock ledger of the Corporation unless he shall have filed
with the Secretary of the Corporation a written request that notices intended
for him be mailed to some other address, in which case it shall be mailed to the
address designated in said request. At any special meeting at which all
stockholders shall be present, or of which all stockholders not present have
waived notice in writing, the giving of notice as above described may be
dispensed with.
Section 3. List of Stockholders. The officer of the Corporation who
shall have charge of the stock ledger of the Corporation shall prepare and make,
at least ten (10) days before the meeting of stockholders, a complete list of
the stockholders entitled to vote at said meeting, arranged in alphabetical
order and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 4. Quorum. At any meeting of the stockholders of the
Corporation, except as otherwise expressly provided by the laws of the State of
Delaware, the Certificate of Incorporation, these By-Laws or any Certificate of
Designations, there must be present, either in person or by proxy, in order to
constitute a quorum, stockholders owning a majority of the issued and
outstanding shares of the capital stock of the Corporation entitled to vote at
said meeting. At any meeting of stockholders at which a quorum is not present,
the holders of, or proxies for, a majority of the stock which is represented at
such meeting, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
or represented. At such adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have been transacted at
the meeting as originally noticed. If the adjournment is for more than thirty
(30) days, or if after the adjournment a new
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record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
Section 5. Organization. The Board of Directors or the stockholders
may appoint any stockholder or any Director or officer of the Corporation to act
as chairman of any meeting of the stockholders of the Corporation.
The Secretary of the Corporation shall act as secretary of all
meetings of the stockholders, but in the absence of the Secretary the presiding
officer may appoint any other person to act as secretary of any meeting.
Section 6. Voting. Except as otherwise provided in the Certificate
of Incorporation, these By-Laws or any Certificate of Designations, each
stockholder of record of common stock of the Corporation shall, at every meeting
of the stockholders of the Corporation, be entitled to one (1) vote for each
share of stock standing in his name on the books of the Corporation on any
matter on which he is entitled to vote. Except as otherwise provided in the
Certificate of Incorporation, these By-Laws or any Certificate of Designations,
each stockholder of record of preferred stock of the Corporation shall, at every
meeting of the stockholders of the Corporation, be entitled to one (1) vote for
each share of common stock into which such stockholder's shares of preferred
stock are convertible at the time of the meeting on any matter on which he is
entitled to vote. Each stockholder of record of capital stock of the Corporation
shall have such other voting rights as are set forth in the Certificate of
Incorporation, these By-Laws or any Certificate of Designations. All such votes
may be cast either in person or by proxy, appointed by an instrument in writing,
subscribed by such stockholder or by his duly authorized attorney, and filed
with the Secretary before being voted on, but no proxy shall be voted after
three (3) years from its date, unless said proxy provides for a longer period.
If the Certificate of Incorporation or Certificate of Designations provides for
more or less than one (1) vote for any share of capital stock of the Corporation
or for voting by holders of a particular class of capital stock as a class, on
any matter, then any and every reference in these By-Laws to a majority or other
proportion of capital stock shall refer to such majority or other proportion of
the votes of such stock voting either as whole or by separate classes, as the
case may be.
The vote on all elections of Directors and on any other questions
before the meeting need not be by ballot, except upon demand of any stockholder.
When a quorum is present at any meeting of the stockholders of the
Corporation, the vote of the holders of a majority of the capital stock entitled
to vote at such meeting and present in person or represented by proxy shall
decide any question brought before such meeting, unless the question is one upon
which, under any provision of the laws of the State of Delaware, the Certificate
of Incorporation, or any Certificate of Designations, a different vote is
required in which case such provision shall govern and control the decision of
such question.
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Section 7. Consent. Except as otherwise provided by the Certificate
of Incorporation, whenever the vote of the stockholders at a meeting thereof is
required or permitted to be taken in connection with any corporate action by any
provision of the laws of the State of Delaware or of the Certificate of
Incorporation, such corporate action may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding capital stock of
the Corporation having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented thereto in writing.
Section 8. Judges. At every meeting of the stockholders of the
Corporation at which a vote by ballot is taken, the polls shall be opened and
closed, the proxies and ballots shall be received and taken in charge, and all
questions touching the qualifications of voters, the validity of proxies and the
acceptance or rejection of votes shall be decided by two (2) judges. Said judges
shall be appointed by the Board of Directors before the meeting, or, if no such
appointment shall have been made, by the presiding officer of the meeting. If
for any reason any of the judges previously appointed shall fail to attend or
refuse or be unable to serve, judges in place of any so failing to attend, or
refusing or unable to serve, shall be appointed in like manner.
ARTICLE IV
Directors
Section 1. Number, Election and Term of Office. The business and
affairs of the Corporation shall be managed by the Board of Directors. The
number of Directors which shall constitute the whole Board shall be not less
than one (1). The number of Directors may be fixed from time to time by vote of
the stockholders or of the Board of Directors, at any regular or special
meeting, subject to the provisions of the Certificate of Incorporation and any
Certificate of Designations. Directors need not be stockholders. Directors shall
be elected at the annual meeting of the stockholders of the Corporation, except
as provided in Section 2 of this Article, to serve until the next annual meeting
of stockholders and until their respective successors are duly elected and have
qualified.
In addition to the powers by these By-Laws expressly conferred upon
them, the Board may exercise all such powers of the Corporation as are not by
the laws of the State of Delaware, the Certificate of Incorporation, any
Certificate of Designations or these By-Laws required to be exercised or done by
the stockholders.
Section 2. Vacancies and Newly Created Directorships. Except as
hereinafter provided and as provided in any Certificate of Designations, any
vacancy in the office of a Director occurring for any reason other than the
removal of a Director pursuant to Section 3 of this Article, and any newly
created Directorship resulting from any increase in the authorized number of
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Directors, may be filled by a majority of the Directors then in office or by a
sole remaining Director. In the event that any vacancy in the office of a
Director occurs as a result of the removal of a Director pursuant to Section 3
of this Article, or in the event that vacancies occur contemporaneously in the
offices of all of the Directors, such vacancy or vacancies shall be filled by
the stockholders of the Corporation at a meeting of stockholders called for the
purpose in accordance with the Certificate of Incorporation, these By-Laws, and
any Certificate of Designations. Directors chosen or elected as aforesaid shall
hold office until the next annual meeting of stockholders and until their
respective successors are duly elected and have qualified.
Section 3. Removals. Except as otherwise provided by the Certificate
of Incorporation or any Certificate of Designations, at any meeting of
stockholders of the Corporation called for the purpose, the holders of a
majority of the shares of capital stock of the Corporation entitled to vote at
such meeting may remove from office, with or without cause, any or all of the
Directors.
Section 4. Regular Meetings. Regular meetings of the Board of
Directors may be held without notice at such time and place, either within or
without the State of Delaware, as shall from time to time be determined by
resolution of the Board.
Section 5. Special Meetings. Special meetings of the Board of
Directors may be called by any two Directors, if the number of Directors which
constitutes the Board of Directors is greater than one (1) or by a sole Director
if the number of Directors which constitutes the Board of Directors is one (1),
on notice given to each Director, and such meetings shall be held at the
principal business office of the Corporation or at such other place or places,
either within or without the State of Delaware, as shall be specified in the
notices thereof.
Section 6. Annual Meetings. The first meeting of each newly elected
Board of Directors shall be held as soon as practicable after each annual
election of Directors and on the same day, at the same place at which regular
meetings of the Board of Directors are held, or at such other time and place as
may be provided by resolution of the Board. Such meeting may be held at any
other time or place which shall be specified in a notice given, as hereinafter
provided, for special meetings of the Board of Directors.
Section 7. Notice. Notice of any meeting of the Board of Directors
requiring notice shall be given to each Director by mailing the same at least
forty-eight (48) hours, or by telegraphing the same at least twelve (12) hours,
before the time fixed for the meeting. Attendance of a Director at a meeting
shall constitute waiver of notice of such meeting, except when such Director
attends such meeting for the express purpose of objecting, at the beginning of
such meeting, to the transaction of any business because such meeting is not
lawfully called or convened.
Section 8. Quorum. At all meetings of the Board of Directors, the
presence of two-thirds or more of the Directors constituting the Board shall
constitute a quorum for the transaction of business. Except as may be otherwise
specifically provided by the laws of the State
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of Delaware, the Certificate of Incorporation, these By-Laws, or any Certificate
of Designations the affirmative vote of a majority of the Directors present at
the time of such vote shall be the act of the Board of Directors if a quorum is
present. If a quorum shall not be present at any meeting of the Board of
Directors, the Directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 9. Consent. Unless otherwise restricted by the Certificate
of Incorporation, these By-Laws, or any Certificate of Designations, any action
required or permitted to be taken at any meeting of the Board of Directors may
be taken without a meeting, if all members of the Board consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board.
Section 10. Telephonic Meetings. Unless otherwise restricted by the
Certificate of Incorporation or these By-Laws, members of the Board of Directors
may participate in a meeting of the Board by means of conference telephone or
similar communications equipment by means of which all persons participating in
such meeting can hear each other, and participation in a meeting pursuant to
this Section 10 shall constitute presence in person at such meeting.
Section 11. Compensation of Directors. Directors, as such, may
receive a salary or other compensation for their services, as determined by the
Board of Directors of the Corporation, which compensation may include a fixed
sum and expenses of attendance, if any, at each regular or special meeting of
the Board. Nothing herein contained shall be construed to preclude any Director
from serving the Corporation in any other capacity and receiving compensation
therefor.
Section 12. Resignations. Any Director of the Corporation may resign
at any time by giving written notice to the Board of Directors or to the
President or the Secretary of the Corporation. Any such resignation shall take
effect at the time specified therein, or, if the time be not specified, upon
receipt thereof; and unless otherwise specified therein, acceptance of such
resignation shall not be necessary to make it effective.
ARTICLE V
Officers
Section 1. Number, Election and Term of Office. The officers of the
Corporation shall be a President, a Treasurer and a Secretary, and may at the
discretion of the Board of Directors include one or more Vice Presidents, and
one or more Assistant Treasurers and Assistant Secretaries. The officers of the
Corporation shall be elected annually by the Board of Directors at its meeting
held immediately after the annual meeting of the stockholders, and shall hold
their respective offices until their successors are duly elected and have
qualified. Except as provided by law, any number of offices may be held by the
same person. The Board of Directors may from time to time appoint such other
officers and agents as the interest of the Corporation may require and may fix
their duties and terms of office.
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Section 2. Prior Approval of Board of Directors. The officers of the
Corporation must obtain the prior approval of the Board of Directors before
taking any action. The Board may delegate specific powers to certain officers
for certain actions on an on-going basis, or it may choose to delegate any of
its powers on a case-by-case basis, retaining such powers for all other
purposes.
Section 3. President. The President shall see that all orders and
resolutions of the Board are carried into effect. He shall ensure that the
books, reports, statements, certificates and other records of the Corporation
are kept, made or filed in accordance with the laws of the State of Delaware. He
may sign, execute and deliver in the name of the Corporation all deeds,
mortgages, bonds, contracts or other instruments authorized by the Board of
Directors, except in cases where the signing, execution or delivery thereof
shall be expressly delegated by the Board of Directors or by these By-Laws to
some other officer or agent of the Corporation or where any of them shall be
required by law otherwise to be signed, executed or delivered. He may sign, with
the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary, certificates of stock of the Corporation. In addition to the powers
and duties expressly conferred upon him by these By-Laws, he shall, except as
otherwise specifically provided by the laws of the State of Delaware, have such
other powers and duties as shall from time to time be assigned to him by the
Board of Directors.
Section 4. Executive Vice President. The Executive Vice President
shall perform such duties as the Board of Directors shall require. The Executive
Vice President shall, during the absence or incapacity of the President, assume
and perform his duties.
Section 5. Vice Presidents. The Vice Presidents shall perform such
duties as the President or the Board of Directors shall require.
Section 6. Secretary. The Secretary may sign all certificates of
stock of the Corporation. He shall record all the proceedings of the meetings of
the Board of Directors and of the stockholders of the Corporation in books to be
kept for that purpose. He shall have custody of the seal of the Corporation and
may affix the same to any instrument requiring such seal when authorized by the
Board of Directors, and when so affixed he may attest the same by his signature.
He shall keep the transfer books, in which all transfers of the capital stock of
the Corporation shall be registered, and the stock books, which shall contain
the names and addresses of all holders of the capital stock of the Corporation
and the number of shares held by each; and he shall keep such stock and transfer
books open daily during business hours to the inspection of every stockholder
and for transfer of stock. He shall notify the Directors and stockholders of
their respective meetings as required by law or by these By-Laws, and shall
perform such other duties as may be required by law or by these By-Laws, or
which may be assigned to him from time to time by the Board of Directors.
Section 7. Assistant Secretaries. The Assistant Secretaries shall,
during the absence or incapacity of the Secretary, assume and perform all
functions and duties which the Secretary might lawfully do if present and not
under any incapacity.
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Section 8. Treasurer. The Treasurer shall have charge of the funds
and securities of the Corporation. He may sign all certificates of stock. He
shall keep full and accurate accounts of all receipts and disbursements of the
Corporation in books belonging to the Corporation and shall deposit all monies
and other valuable effects in the name and to the credit of the Corporation in
such depositories as may be designated by the Board of Directors. He shall
disburse the funds of the Corporation as may be ordered by the Board, and shall
render to the President or the Directors, whenever they may require it, an
account of all his transactions as Treasurer and an account of the business and
financial position of the Corporation.
Section 9. Assistant Treasurers. The Assistant Treasurers shall,
during the absence or incapacity of the Treasurer, assume and perform all
functions and duties which the Treasurer might lawfully do if present and not
under any incapacity.
Section 10. Treasurer's Bond. The Treasurer and Assistant Treasurers
shall, if required so to do by the Board of Directors, each give a bond (which
shall be renewed every six (6) years) in such sum and with such surety or
sureties as the Board of Directors may require.
Section 11. Transfer of Duties. The Board of Directors in its
absolute discretion may transfer the power and duties, in whole or in part, of
any officer to any other officer, or persons, notwithstanding the provisions of
these By-Laws, except as otherwise provided by the laws of the State of
Delaware.
Section 12. Vacancies. Except as otherwise provided by the
Certificate of Incorporation or any Certificate of Designations, if the office
of President, Vice President, Secretary or Treasurer, or of any other officer or
agent becomes vacant for any reason, the Board of Directors may choose a
successor to hold office for the unexpired term.
Section 13. Removals. Except as otherwise provided by the
Certificate of Incorporation or any Certificate of Designations, at any meeting
of the Board of Directors called for the purpose, any officer or agent of the
Corporation may be removed from office, with or without cause, by the
affirmative vote of a majority of the entire Board of Directors.
Section 14. Compensation of Officers. The officers shall receive
such salary or compensation as may be determined by the Board of Directors.
Section 15. Resignations. Any officer or agent of the Corporation
may resign at any time by giving written notice to the Board of Directors or to
the President or the Secretary of the Corporation. Any such resignation shall
take effect at the time specified therein or, if the time be not specified, upon
receipt thereof; and unless otherwise specified therein, acceptance of such
resignation shall not be necessary to make it effective.
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ARTICLE VI
Contracts, Checks and Notes
Section 1. Contracts. Unless the Board of Directors shall otherwise
specifically direct, all contracts of the Corporation shall be executed in the
name of the Corporation by the President or a Vice President.
Section 2. Checks and Notes. All checks, drafts, bills of exchange
and promissory notes and other negotiable instruments of the Corporation shall
be signed by such officers or agents of the Corporation as may be designated by
the Board of Directors.
ARTICLE VII
Stock
Section 1. Certificates of Stock. The certificates for shares of the
stock of the Corporation shall be in such form, not inconsistent with the
Certificate of Incorporation, as shall be prepared or approved by the Board of
Directors. Every holder of stock in the Corporation shall be entitled to have a
certificate signed by, or in the name of the Corporation by, the President or a
Vice President, and by the Treasurer or an Assistant Treasurer or the Secretary
or an Assistant Secretary certifying the number of shares owned by him and the
date of issue; and no certificate shall be valid unless so signed. All
certificates shall be consecutively numbered and shall be entered in the books
of the Corporation as they are issued.
Where a certificate is countersigned (1) by a transfer agent other
than the Corporation or its employee, or, (2) by a registrar other than the
Corporation or its employee, any other signature on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
All certificates surrendered to the Corporation shall be canceled
and, except in the case of lost or destroyed certificates, no new certificates
shall be issued until the former certificates for the same number of shares of
the same class of stock shall have been surrendered and canceled.
Section 2. Transfer of Stock. Upon surrender to the Corporation or
the transfer agent of the Corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
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ARTICLE VIII
Registered Stockholders
The Corporation shall be entitled to treat the holder of record of
any share or shares of stock as the holder in fact thereof and, accordingly,
shall not be bound to recognize any equitable or other claim to, or interest in,
such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, save as expressly provided by the laws of
the State of Delaware.
ARTICLE IX
Lost Certificates
Any person claiming a certificate of stock to be lost or destroyed,
shall make an affidavit or affirmation of the fact and advertise the same in
such manner as the Board of Directors may require, and the Board of Directors
may, in its discretion, require the owner of the lost or destroyed certificate,
or his legal representative, to give the Corporation a bond in a sum sufficient,
in the opinion of the Board of Directors, to indemnify the Corporation against
any claim that may be made against it on account of the alleged loss of any such
certificate. A new certificate of the same tenor and for the same number of
shares as the one alleged to be lost or destroyed may be issued without
requiring any bond when, in the judgment of the Directors, it is proper so to
do.
ARTICLE X
Fixing of Record Date
In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or to receive payment of any dividend or other distribution
or allotment of any rights, or to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which shall not be
more than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
ARTICLE XI
Dividends
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Subject to the relevant provisions of the Certificate of
Incorporation and any Certificate of Designations, dividends upon the capital
stock of the Corporation may be declared by the Board of Directors at any
regular or special meeting, pursuant to law. Dividends may be paid in cash, in
property, or in shares of the capital stock of the Corporation, subject to the
provisions of the Certificate of Incorporation and any Certificate of
Designations.
Before payment of any dividend, there may be set aside out of any
funds of the Corporation available for dividends such sums as the Directors from
time to time, in their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for such other purpose as the
Directors shall think conducive to the interest of the Corporation, and the
Directors may modify or abolish any such reserve in the manner in which it was
created.
ARTICLE XII
Waiver of Notice
Whenever any notice whatever is required to be given by statute or
under the provisions of the Certificate of Incorporation or these By-Laws, a
waiver thereof in writing signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be equivalent
thereto.
ARTICLE XIII
Seal
The corporate seal of the Corporation shall have inscribed thereon
the name of the Corporation, the year of its organization and the words
"Corporate Seal, Delaware."
ARTICLE XIV
Amendments
Subject to the provisions of the Certificate of Incorporation, these
By-Laws may be altered, amended or repealed or new By-Laws may be adopted by the
stockholders or by the Board of Directors, at any regular meeting of the
stockholders or of the Board of Directors or at any special meeting of the
stockholders or of the Board of Directors if notice of such alteration,
amendment or repeal of the By-Laws or of adoption of new By-Laws be contained in
the notice of such special meeting.
Amended and Restated as of May 26, 1999.
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EXHIBIT 9.1
FORM OF STOCKHOLDERS' VOTING AGREEMENT
THIS STOCKHOLDERS' VOTING AGREEMENT (the "Agreement" and any Stockholders'
Voting Agreement in substantially identical form to this Agreement between
Rifkin and a stockholder of America's Doctor, Inc. shall be referred to herein
at the "Voting Agreement(s)") made on this 30th day of June, 1998 (the
"Effective Date") by and between Scott M. Rifkin, M.D. ("Rifkin"), whose address
is 11403 Cronridge Drive, Suite 200, Owings Mills, MD 21117, phone number: (410)
581-1189, and the undersigned party (the "Stockholder").
RECITALS
WHEREAS, the Stockholder owns shares of outstanding common stock (the
"Stock") of America's Doctor, Inc., a Delaware corporation, whose principal
place of business is 11403 Cronridge Drive, Suite 200, Owings Mills, MD 21117
(the "Corporation");
WHEREAS, in consideration for the Stock issued to the Stockholder, the
Stockholder has agreed to allow Rifkin to vote all the Stockholder's Stock in
any manner and for any purpose in Rifkin's sole discretion, for a period of five
(5) years from the Effective Date of this Agreement;
WHEREAS, the Stockholder desires to enter into this Agreement, in
accordance with Section 218(c) of the Delaware General Corporation Law, and that
this Agreement will be specifically enforceable against the Stockholder.
NOW THEREFORE, in consideration of the issuance of the Stock to the
Stockholder at a discount, the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Stockholder agrees as follows:
1. Recitals. The Recitals are incorporated as if fully set forth herein.
2. Voting.
(a) Rifkin shall have the exclusive right to act in respect of and
to vote the Stock held by the Stockholder or to give written consent in lieu of
voting thereon, subject to any limitation on the right to vote contained in the
Articles of Incorporation of the Corporation and subject to the termination
provisions contained in Section 8 herein, at any and all meetings of the
stockholders of the Corporation, for whatsoever purpose called or held, and in
any and all proceedings whether at meetings of the stockholders of the
Corporation or otherwise, wherein the vote or written consent of the Stockholder
of the Corporation may be required, authorized or permitted by law. Until the
expiration of the term of this Agreement, Rifkin shall, in his sole and
uncontrolled discretion, in respect of any and all of the Stock held by the
Stockholder, possess and be entitled to exercise the right to vote thereon for
every purpose, to waive the Stockholder's privilege in respect thereof, and to
consent to any lawful corporate act of the Corporation.
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(b) Rifkin is specifically authorized by way of example, without
limiting his rights hereunder, to vote the Stockholder's Stock for, or to
consent in respect thereof to: any amendment to the Articles of Incorporation or
By-laws of the Corporation whether or not such amendment adversely affects the
rights of the Stockholder; or any increase or reduction of the stock of the
Corporation; or any agreement of consolidation, merger, share exchange or the
sale or other disposition of all, substantially all, or any part of the
property, assets and franchises of the Corporation and the granting,
ratification or confirmation of any option or options therefore (whether
executed before or after the execution of this Agreement, and whether or not
such option or options extend(s) beyond the term of this Agreement), or the
voluntary or involuntary liquidation, dissolution or winding-up of the
Corporation, and the judgment of Rifkin as to the adequacy of the consideration
thereby to be received by the Corporation and the Stockholder (provided that the
Stockholder and each holder of a Voting Agreement of each class is treated
uniformly, share for share) shall be conclusive and binding upon the Stockholder
and all persons claiming through or under him/her; or the issuance of stock or
warrants or other instruments evidencing rights or options to subscribe for, or
otherwise acquire such shares; or the redemption by the Corporation of its own
stock or the purchase or other acquisition by the Corporation of its own stock;
or a purchase by the Corporation, other than in the ordinary course of business,
of property and assets; or the making of any loans or advances by the
Corporation either to employees or suppliers of the Corporation.
(c) Rifkin may, directly or indirectly, transact any lawful business
with the Corporation, notwithstanding any term or provision of this Agreement.
Rifkin may also be a stockholder of the Corporation, may serve as director,
chairman of the Board of Directors, President and/or any compensated officer of
the Corporation and may vote for himself as such. Rifkin shall not be required
to give any form of bond or other insurance hereunder.
(d) At any meeting of the stockholders of the Corporation, Rifkin
may vote the Stock or act in person or by proxy, and Rifkin may give a power of
attorney to any other person to sign for Rifkin in case of action taken in
writing without a meeting.
(e) In voting the Stock, Rifkin shall exercise his best judgment to
the end that the business and affairs of the Corporation shall be properly
managed, but Rifkin does not assume any responsibility or liability in respect
of such management, or in respect of any action taken by Rifkin, or taken in
pursuance of his consent thereto, or in pursuance of his vote so cast, and
Rifkin shall not incur any responsibility or liability under this Agreement, or
as a stockholder, or otherwise, by reason of any error of fact or law and/or of
any matter or thing done or omitted to be done, except for any act with respect
to which it has been judicially determined that Rifkin has engaged in willful
misconduct.
(f) Rifkin shall not be entitled to any compensation for his
services in accordance with this Agreement, unless such compensation is
authorized by a majority vote of the holders of Voting Agreements (Rifkin
abstaining from voting on behalf of himself or any other stockholder from such
majority vote); but it is expressly agreed that Rifkin shall be
2
<PAGE>
reimbursed for, and indemnified against and saved harmless from, any and all
liabilities, losses, costs, damages, expenses and liabilities (including
reasonable attorneys' fees) incurred by him arising out of or in connection with
this Agreement or any action taken in accordance with the terms of this
Agreement; and Rifkin shall receive such indemnity from the Corporation. The
Corporation shall be deemed to be fully entitled, by action of the Board of
Directors of the Corporation, to assume or provide otherwise for payment of any
and all losses, costs, damages, expenses and liabilities (including reasonable
attorneys' fees) incurred by Rifkin arising out of or in connection with this
Agreement or the exercise of his rights hereunder. Rifkin shall be entitled from
time to time to be reimbursed by the Corporation for any such liabilities,
costs, damages and expenses.
(g) Rifkin shall have no duty to hold meetings with the Stockholder
or holders of Voting Agreements, but he shall be entitled to do so if he wishes.
If Rifkin wishes to hold a meeting with the holders of Voting Agreements, Rifkin
shall provide written notice seven (7) calender days prior to such meeting, and
such notice shall state the place, day and hour and the purpose, if any, of such
meeting, but any holder of a Voting Agreement may waive such notice in writing,
either before or after the holding of the meeting. No notice of any adjourned
meeting need be given. Every such meeting shall be held at the main office of
the Corporation, located at: 11403 Cronridge Drive, Suite 200, Owings Mills, MD
21117, unless otherwise designated by Rifkin and approved in writing by
two-thirds of the holders of Voting Agreements to the holding thereof at another
place. The failure to hold meetings shall not in any manner or degree impair or
reduce the authority of Rifkin hereunder.
3. Inscription on Stock Certificates. Simultaneously with the execution of
this Agreement, the Stockholder will inscribe on the certificate(s) representing
the shares of the Stockholder's Stock in the Corporation a legend in
substantially the following form: "The shares of stock evidenced by this
Certificate are subject to the provisions of a voting agreement executed on
___________________, 1998, a copy of which is on file at the principal office of
the Corporation."
4. Changes in Common Stock.In the event that subsequent to the date of
this Agreement any shares or other securities are issued on, or in exchange for,
any of the shares of the Stock held by the Stockholder by reason of any stock
dividend, stock split, consolidation of shares, reclassification, or
consolidation involving the Corporation, or if any additional shares of stock of
the Corporation are issued to the Stockholder, such shares or securities shall
be deemed to be Stock for purposes of this Agreement and shall be duly inscribed
as provided in Section 3 hereof.
5. Agreement Binding Upon Transferees. In the event that, at any time or
from time to time, any share of Stock is transferred by a Stockholder to any
party (other than the Corporation), in accordance with any provision permitting
such transfer in any agreement to which such Stockholder is a party or as
permitted by law with approval by the Corporation, the transferee shall take
such shares of Stock pursuant to all provisions, conditions and covenants of
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<PAGE>
this Agreement, and as a condition precedent to the transfer of such shares of
Stock, the transferee shall agree (for and on behalf of the transferee, the
transferee's legal representatives, transferees and assigns) in writing to be
bound by all provisions of this Agreement as a party hereto, but if the
transferee fails to so execute a writing, the transferee is nonetheless bound by
all provisions, conditions and covenants of this Agreement. In the event that
there shall be any transfer to any person or entity as described herein, all
references herein to a Stockholder shall thereafter be deemed to include such
transferee or transferees.
6. Term. This Agreement shall expire on July 1, 2003; provided, however,
that the parties hereto may extend its duration for additional two (2) year
terms within one (1) year prior to the expiration of the then current term, or
as may otherwise be permitted by law. Rifkin may terminate this Agreement, in
his uncontrolled discretion, by signing a declaration to that effect and sending
copy of the same to the Stockholder.
7. Representations of Stockholders. The Stockholder hereby represents and
warrants to Rifkin and the Corporation that (a) he/she owns and has the right to
vote the number of shares of the Stock set forth opposite his/her name on
Exhibit A attached hereto, (b) he/she has full power to enter into this
Agreement and has not, prior to the date of this Agreement nor during the terms
of this Agreement, executed or delivered any proxy or entered into any other
voting agreement or similar arrangement other than one which has expired or
terminated prior to the date hereof and (c) he/she will not take any action
inconsistent with the purposes and provisions of this Agreement.
8. Termination of Agreement Due to Death or Disability of Rifkin. In the
event of the death or permanent disability of Rifkin preventing him from
exercising the terms and provisions of this Agreement (as determined solely by
Rifkin or his legal representative), then, anything contained herein to the
contrary notwithstanding, this Agreement shall cease and terminate upon written
notice to the Stockholder.
9. Enforceability. The Stockholder expressly agrees that this Agreement
shall be specifically enforceable in any court of competent jurisdiction in
accordance with its terms against each of the parties hereto.
10. General Provisions.
(a) All of the covenants and agreements contained in this Agreement
shall be binding upon, and inure to the benefit of, the respective parties and
their successors, permitted assigns, heirs, legatees, executors, administrators
and other legal representatives, as the case may be.
4
<PAGE>
(b) This Agreement, and the rights of the parties hereto, shall be
governed by and construed in accordance with the laws of the State of Delaware.
(c) This Agreement may be executed in one or more counterparts, each
of which will be deemed an original but all of which together shall constitute
one and the same instrument.
(d) If any provision of this Agreement shall be declared void or
unenforceable by any court or administrative board of competent jurisdiction,
such provision shall be deemed to have been severed from the remainder of this
Agreement and this Agreement shall continue in all respects to be valid and
enforceable.
(e) No waivers of any breach of this Agreement extended by any party
hereto to any other party shall be construed as a waiver of any rights or
remedies of any other party hereto or with respect to any subsequent breach.
(f) Whenever the context of this Agreement shall so require, the use
of the singular number shall include the plural and the use of any gender shall
include all genders.
(g) All notices and other communications hereunder shall be in
writing and shall be either personally delivered, or mailed first class
registered mail, postage prepaid, or sent by reputable overnight courier
service, charges prepaid. Notices shall be deemed to have been given hereunder
when delivered personally, three (3) days after deposit in the U.S. Mail and one
(1) day after deposit with a reputable overnight courier service.
(h) This Agreement may be amended by the written agreement of
holders of Voting Agreements representing not less than two-thirds (2/3) of the
shares of stock entitled to vote.
(i) This Agreement shall be filed with Rifkin, and a duplicate
hereof shall be filed in the principal office of the Corporation.
(CONTINUED NEXT PAGE)
5
<PAGE>
IN WITNESS WHEREOF, the Stockholder has executed this Agreement as of the
date first above written.
WITNESS/ATTEST:
- ------------------------------ ------------------------------------
Name:
Stockholder
Address:
Phone:
WITNESS:
- ------------------------------ ------------------------------------
Scott Rifkin, M.D.
Address same as hereinabove written
READ, ACKNOWLEDGED AND
AGREED TO:
AMERICA'S DOCTOR, INC.
By:____________________________
Its:
Address: 11403 Cronridge Drive
Suite 200
Owings Mills, MD 21117
Phone: (410) 581-1189
6
<PAGE>
EXHIBIT A
AMERICA'S DOCTOR
STOCK CERTIFICATES ISSUED AS OF THE DATE OF EXECUTION OF AGREEMENT
Name of Stockholder Number of Certificates Total Number of Shares
- ------------------- ---------------------- ----------------------
* * *
A similar agreement was entered into by Scott Rifkin and each of several
individual shareholders in the Corporation. The Voting Agreement covers
approximately 35,000 shares in the Corporation.
7
<PAGE>
EXHIBIT 10.1
AMENDED AND RESTATED
AMERICASDOCTOR.COM, INC.
1999 LONG-TERM INCENTIVE PLAN
1. PURPOSE. The purpose of this Amended and Restated 1999 Long-Term
Incentive Plan (the "Plan") of AmericasDoctor.com, Inc., a Delaware corporation
(the "Company"), is to advance the interests of the Company and its stockholders
by providing a means to attract, retain, and reward directors, officers and
other key employees and consultants of the Company and its subsidiaries
(including consultants providing services of substantial value) and to enable
such persons to acquire or increase a proprietary interest in the Company,
thereby promoting a closer identity of interests between such persons and the
Company's stockholders.
2. DEFINITIONS. The definitions of awards under the Plan, including
Options, SARs (including Limited SARs), Restricted Stock, Deferred Stock, Stock
granted as a bonus or in lieu of other awards, Dividend Equivalents, and Other
Stock-Based Awards, are set forth in Section 6 of the Plan. Such awards,
together with any other right or interest granted to a Participant under the
Plan, are termed "Awards." For purposes of the Plan, the following additional
terms shall be defined as set forth below:
(a) "AWARD AGREEMENT" means any written agreement, contract, or
other instrument or document evidencing an Award.
(b) "BENEFICIARY" shall mean the person, persons, trust, or trusts
which have been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under this Plan upon such Participant's death or, if there is no
designated Beneficiary or surviving designated Beneficiary, then the person,
persons, trust, or trusts entitled by will or the laws of descent and
distribution to receive such benefits.
(c) "BOARD" means the Board of Directors of the Company.
(d) "BONUS STOCK AND AWARDS IN LIEU OF CASH OBLIGATIONS" means any
Award granted pursuant to Section 6(f) of the Plan.
(e) A "CHANGE IN CONTROL" shall be deemed to have occurred if:
(i) any person, other than the Company or an employee benefit
plan of the Company, acquires directly or indirectly the Beneficial Ownership
(as defined in Section 13(d) of the Securities Exchange Act of 1934, as amended)
of any voting security of the Company and immediately after such acquisition
such Person is, directly or indirectly, the Beneficial Owner of voting
securities representing 50% or more of the total voting power of all of the
then-outstanding voting securities of the Company;
<PAGE>
2
(ii) the stockholders of the Company shall approve a merger,
consolidation, recapitalization, or reorganization of the Company, a reverse
stock split of outstanding voting securities, or consummation of any such
transaction if stockholder approval is not sought or obtained, other than any
such transaction which would result in at least 75% of the total voting power
represented by the voting securities of the surviving entity outstanding
immediately after such transaction being Beneficially Owned by at least 75% of
the holders of outstanding voting securities of the Company immediately prior to
the transaction, with the voting power of each such continuing holder relative
to other such continuing holders not substantially altered in the transaction;
or
(iii) the stockholders of the Company shall approve a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or a substantial portion of the Company's assets (i.e. 50%
or more of the total assets of the Company).
(f) "CODE" means the Internal Revenue Code of 1986, as amended from
time to time. References to any provision of the Code shall be deemed to include
regulations thereunder and successor provisions and regulations thereto.
(g) "COMMITTEE" means the Compensation Committee of the Board, or
such other Board committee as may be designated by the Board to administer the
Plan; PROVIDED, HOWEVER, that to the extent necessary to comply with Rule 16b-3,
the Committee shall consist of two or more directors, each of whom is a
"disinterested person" within the meaning of Rule 16b-3 and qualifies as an
"outside director" within the meaning of Section 162(m) of the Code.
(h) "DEFERRED STOCK" means the right to receive Stock, granted
pursuant to Section 6(e) of the Plan.
(i) "DIVIDEND EQUIVALENT" means the right to receive certain
property granted pursuant to Section 6(g) of the Plan.
(j) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time. References to any provision of the Exchange Act shall
be deemed to include rules thereunder and successor provisions and rules
thereto.
(k) "FAIR MARKET VALUE" means, with respect to Stock, Awards, or
other property, the fair market value of such Stock, Awards, or other property
determined by such methods or procedures as shall be established from time to
time by the Committee, provided, however, that (i) if the Stock is listed on a
national securities exchange or quoted in an interdealer quotation system, the
Fair Market Value of such Stock on a given date shall be based upon the last
sales price or, if unavailable, the average of the closing bid and asked prices
per share of the Stock on such date (or, if there was no trading or quotation in
the Stock on such date, on the next preceding date on which there was trading or
quotation) as provided by one of such organizations, (ii) the "fair market
value" of Stock on the date on which shares of Stock are first issued and sold
pursuant to a registration statement filed
<PAGE>
3
with and declared effective by the Securities and Exchange Commission shall be
the Initial Public Offering price of the shares so issued and sold, as set forth
in the first final prospectus used in such offering and (iii) the "fair market
value" of Stock prior to the date of the Initial Public Offering shall be as
determined by the Board of Directors.
(l) "INITIAL PUBLIC OFFERING" shall mean an initial public offering
of shares of Stock in a firm commitment underwriting registered with the
Securities and Exchange Commission in compliance with the provisions of the 1933
Act.
(m) "ISO" means any Option intended to be and designated as an
incentive stock option within the meaning of Section 422 of the Code, granted
pursuant to Section 6(b)(iii) of the Plan.
(n) "NON-EMPLOYEE DIRECTOR" shall mean a member of the Board who is
not otherwise an employee of the Company or any subsidiary.
(o) "OPTION " means a stock option granted pursuant to Section 6 of
the Plan.
(p) "OTHER STOCK-BASED AWARDS " means any Award granted pursuant to
Section 6(h) of the Plan.
(q) "PARTICIPANT" means a person who, at a time when eligible under
Section 5 hereof, has been granted an Award under the Plan.
(r) "RESTRICTED STOCK " means an Award of Stock, subject to certain
restrictions, granted pursuant to Section 6(d) of the Plan.
(s) "RULE 16B-3" means Rule 16b-3, as from time to time in effect
and applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.
(t) "STOCK" means the Common Stock, $.01 par value, of the Company
and such other securities as may be substituted for Stock or such other
securities pursuant to Section 4.
(u) "STOCK APPRECIATION RIGHTS" means any stock appreciation rights
granted pursuant to Section 6(c) of the Plan.
3. ADMINISTRATION.
(a) AUTHORITY OF THE COMMITTEE. The Plan shall be administered by
the Committee. The Committee shall have full and final authority to take the
following actions, in each case subject to and consistent with the provisions of
the Plan:
<PAGE>
4
(i) to select Participants to whom Awards may be granted;
(ii) to determine the type or types of Awards to be granted to
each Participant;
(iii) to determine the number of Awards to be granted, the
number of shares of Stock to which an Award will relate, the terms and
conditions of any Award granted under the Plan (including, but not limited to,
any exercise price, grant price, or purchase price, any restriction or
condition, any schedule for lapse of restrictions or conditions relating to
transferability or forfeiture, exercisability, or settlement of an Award, and
waivers or accelerations thereof, and waivers of or modifications to performance
conditions relating to an Award, based in each case on such considerations as
the Committee shall determine), and all other matters to be determined in
connection with an Award;
(iv) to determine whether, to what extent, and under what
circumstances an Award may be settled, or the exercise price of an Award may be
paid, in cash, Stock, other Awards, or other property, or an Award may be
cancelled, forfeited, or surrendered;
(v) to determine whether, to what extent, and under what
circumstances cash, Stock, other Awards, or other property payable with respect
to an Award will be deferred either automatically, at the election of the
Committee, or at the election of the Participant;
(vi) to prescribe the form of each Award Agreement, which need
not be identical for each Participant;
(vii) to adopt, amend, suspend, waive, and rescind such rules
and regulations and appoint such agents as the Committee may deem necessary or
advisable to administer the Plan;
(viii) to correct any defect or supply any omission or
reconcile any inconsistency in the Plan and to construe and interpret the Plan
and any Award, rules and regulations, Award Agreement, or other instrument
hereunder; and
(ix) to make all other decisions and determinations as may be
required under the terms of the Plan or as the Committee may deem necessary or
advisable for the administration of the Plan.
(b) MANNER OF EXERCISE OF COMMITTEE AUTHORITY. Unless authority is
specifically reserved to the Board under the terms of the Plan, the Company's
Certificate of Incorporation or Bylaws, or applicable law, the Committee shall
have sole discretion in exercising authority under the Plan. Any action of the
Committee with respect to the Plan shall be final, conclusive, and binding on
all persons, including the Company, subsidiaries of the Company, Participants,
any person claiming any rights under the Plan from or through any Participant,
and stockholders. The express grant of any specific power to the Committee, and
the taking of any action by the Committee,
<PAGE>
5
shall not be construed as limiting any power or authority of the Committee. The
Committee may delegate to officers or managers of the Company or any subsidiary
of the Company the authority, subject to such terms as the Committee shall
determine, to perform administrative functions and, with respect to Participants
not subject to Section 16 of the Exchange Act, to perform such other functions
as the Committee may determine, to the extent permitted under Rule 16b-3, if
applicable, and other applicable law.
(c) LIMITATION OF LIABILITY. Each member of the Committee shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him by any officer or other employee of the Company or any
subsidiary, the Company's independent certified public accountants, or any
executive compensation consultant, legal counsel, or other professional retained
by the Company to assist in the administration of the Plan. No member of the
Committee, nor any officer or employee of the Company acting on behalf of the
Committee, shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Committee and any officer or employee of the Company acting on
their behalf shall, to the extent permitted by law, be fully indemnified and
protected by the Company with respect to any such action, determination, or
interpretation.
4. STOCK SUBJECT TO PLAN.
(a) AMOUNT OF STOCK RESERVED. The total amount of Stock that may be
subject to outstanding Awards, determined immediately after the grant of any
Award, shall not exceed 290,000 shares of the total number of shares of Stock
outstanding and the total amount of stock that may be subject to all Awards
granted to each individual Participant in any one calendar year shall be
100,000. Shares subject to ISOs, Restricted Stock or Deferred Stock Awards shall
not be deemed delivered if such Awards are forfeited, expire or otherwise
terminate without delivery of shares to the Participant. If an Award valued by
reference to Stock may only be settled in cash, the number of shares to which
such Award relates shall be deemed to be Stock subject to such Award for
purposes of this Section 4(a). Any shares of Stock delivered pursuant to an
Award may consist, in whole or in part, of authorized and unissued shares or
treasury shares.
(b) ADJUSTMENTS. In the event that any dividend or other
distribution (whether in the form of cash, Stock, or other property),
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event, affects the Stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of Participants under the Plan, then the Committee shall, in such manner
as it may deem equitable, adjust any or all of (i) the number and kind of shares
of Stock deemed to be available thereafter for grants of Awards under Section
4(a) (including with respect to the limitations relating to ISOs and to
Restricted and Deferred Stock), (ii) the number and kind of shares of Stock that
may be delivered or deliverable in respect of outstanding Awards, and (iii) the
exercise price, grant price, or purchase price relating to any Award (or, if
deemed appropriate, the Committee may make provision for a cash payment with
respect to any outstanding Award). In addition, the Committee is
<PAGE>
6
authorized to make adjustments in the terms and conditions of, and the criteria
included in, Awards (including, without limitation, cash payments in exchange
for an Award or substitution of Awards using stock of a successor or other
entity) in recognition of unusual or nonrecurring events (including, without
limitation, events described in the preceding sentence) affecting the Company or
any subsidiary or the financial statements of the Company or any subsidiary, or
in response to changes in applicable laws, regulations, or accounting
principles. The foregoing notwithstanding, no adjustments shall be authorized
under this Section 4(c) with respect to ISOs or SARs in tandem therewith to the
extent that such authority would cause the Plan to violate Section 422 or
Section 424 of the Code, and no such adjustment shall be authorized with respect
to Options or other Awards granted in accordance with Section 7(f) hereof to the
extent that such authority would cause such Options or other Awards to fail to
qualify as "performance-based compensation" under Section 162(m)(4)(C) of the
Code and regulations thereunder (including Proposed Regulation 1.162-27(e)(2)).
5. ELIGIBILITY. Executive officers and other key employees of the Company
and its subsidiaries, including any director and persons who provide consulting
or other services to the Company deemed by the Committee to be of substantial
value to the Company, are eligible to be granted Awards under the Plan. In
addition, a person who has been offered employment by the Company or its
subsidiaries is eligible to be granted an Award under the Plan, provided that
such Award shall be cancelled if such person fails to commence such employment,
and no payment of value may be made in connection with such Award until such
person has commenced such employment. The foregoing notwithstanding,
Non-Employee Directors who are members of the Committee shall not be eligible to
be granted Awards under the Plan, and no Participant that is not an employee
shall be eligible to be granted ISOs under the Plan.
6. SPECIFIC TERMS OF AWARDS.
(a) GENERAL. Awards may be granted on the terms and conditions set
forth in this Section 6, except that no Award may be granted under the Plan
after the tenth anniversary of the Effective Date of the Plan, but Awards
theretofore granted may extend beyond that date. In addition, the Committee may
impose on any Award or the exercise thereof, at the date of grant or thereafter
(subject to Section 8(e)), such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee shall determine,
including terms requiring forfeiture of Awards in the event of termination of
employment or service of the Participant. Except as provided in Sections 6(f),
6(h), or 7(a), or to the extent required to comply with requirements of the
Delaware General Corporation Law that lawful consideration be paid for Stock,
only services may be required as consideration for the grant (but not the
exercise) of any Award.
(b) OPTIONS. The Committee is authorized to grant Options to
Participants (including "reload" options automatically granted to offset
specified exercises of options) on the following terms and conditions:
<PAGE>
7
(i) EXERCISE PRICE. The exercise price per share of Stock
purchasable under an Option shall be determined by the Committee.
(ii) TIME AND METHOD OF EXERCISE. The Committee shall
determine the time or times at which an Option may be exercised in whole or in
part, the methods by which such exercise price may be paid or deemed to be paid,
the form of such payment, including, without limitation, cash, Stock, other
Awards or awards granted under other Company plans, or other property (including
notes or other contractual obligations of Participants to make payment on a
deferred basis, such as through "cashless exercise" arrangements, to the extent
permitted by applicable law), and the methods by which Stock will be delivered
or deemed to be delivered to Participants.
(iii) ISOS. The terms of any ISO granted under the Plan shall
comply in all respects with the provisions of Section 422 of the Code, including
but not limited to the requirements that no ISO shall be granted more than ten
years after the effective date of the Plan and that the exercise price of the
ISO shall not be less than the Fair Market Value of the underlying Stock on the
date of grant. Anything in the Plan to the contrary notwithstanding, no term of
the Plan relating to ISOs shall be interpreted, amended, or altered, nor shall
any discretion or authority granted under the Plan be exercised, so as to
disqualify either the Plan or any ISO under Section 422 of the Code.
(iv) TERMINATION OF EMPLOYMENT. Unless otherwise determined by
the Committee, upon termination of a Participant's employment with the Company
and its subsidiaries, such Participant may exercise any Options during the three
month period following such termination of employment, but only to the extent
such Option was exercisable immediately prior to such termination of employment.
Notwithstanding the foregoing, if the Committee determines that such termination
is for cause (as defined in the individual Award Agreements), all Options held
by the Participant shall immediately terminate.
(c) STOCK APPRECIATION RIGHTS. The Committee is authorized to grant
SARs to Participants on the following terms and conditions:
(i) RIGHT TO PAYMENT. An SAR shall confer on the Participant
to whom it is granted a right to receive, upon exercise thereof, the excess of
(A) the Fair Market Value of one share of Stock on the date of exercise (or, if
the Committee shall so determine in the case of any such right other than one
related to an ISO, the Fair Market Value of one share at any time during a
specified period before or after the date of exercise), over (B) the grant price
of the SAR as determined by the Committee as of the date of grant of the SAR,
which, except as provided in Section 7(a), shall be not less than the Fair
Market Value of one share of Stock on the date of grant or any other amount
permitted by applicable laws, rules, by-laws or policies of regulatory
authorities or stock exchanges, whichever is greater.
(ii) OTHER TERMS. The Committee shall determine the time or
times at which an SAR may be exercised in whole or in part, the method of
exercise, method of settlement,
<PAGE>
8
form of consideration payable in settlement, method by which Stock will be
delivered or deemed to be delivered to Participants, whether or not an SAR shall
be in tandem with any other Award, and any other terms and conditions of any
SAR. Limited SARs that may only be exercised upon the occurrence of a Change in
Control may be granted on such terms, not inconsistent with this Section 6(c),
as the Committee may determine. Limited SARs may be either freestanding or in
tandem with other Awards.
(d) RESTRICTED STOCK. The Committee is authorized to grant
Restricted Stock to Participants on the following terms and conditions:
(i) GRANT AND RESTRICTIONS. Restricted Stock shall be subject
to such restrictions on transferability and other restrictions, if any, as the
Committee may impose, which restrictions may lapse separately or in combination
at such times, under such circumstances, in such installments, or otherwise, as
the Committee may determine. Except to the extent restricted under the terms of
the Plan and any Award Agreement relating to the Restricted Stock, a Participant
granted Restricted Stock shall have all of the rights of a stockholder
including, without limitation, the right to vote Restricted Stock or the right
to receive dividends thereon.
(ii) FORFEITURE. Except as otherwise determined by the
Committee, upon termination of employment or service (as determined under
criteria established by the Committee) during the applicable restriction period,
Restricted Stock that is at that time subject to restrictions shall be forfeited
and reacquired by the Company; PROVIDED, HOWEVER, that the Committee may
provide, by rule or regulation or in any Award Agreement, or may determine in
any individual case, that restrictions or forfeiture conditions relating to
Restricted Stock will be waived in whole or in part in the event of termination
resulting from specified causes. Notwithstanding anything contained herein to
the contrary (other than Section 7(g)), all Restricted Stock Awards, other than
an Award granted pursuant to Section 7(f), shall be forfeited upon a
Participant's termination of employment or other service with the Company and
its subsidiaries within three years of the date the award is granted, provided,
however, that the Committee may make exceptions in the event such termination is
by reason of the Participant's death or disability.
(iii) CERTIFICATES FOR STOCK. Restricted Stock granted under
the Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing Restricted Stock are registered in the name of the
Participant, such certificates shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Restricted Stock, the
Company shall retain physical possession of the certificate, and the Participant
shall have delivered a stock power to the Company, endorsed in blank, relating
to the Restricted Stock.
(iv) DIVIDENDS. Dividends paid on Restricted Stock shall be
either paid at the dividend payment date in cash or in shares of unrestricted
Stock having a Fair Market Value equal to the amount of such dividends, or the
payment of such dividends shall be deferred and/or the amount or value thereof
automatically reinvested in additional Restricted Stock, other Awards, or other
investment vehicles, as the Committee shall determine or permit the Participant
to elect. Stock
<PAGE>
9
distributed in connection with a Stock split or Stock dividend, and other
property distributed as a dividend, shall be subject to restrictions and a risk
of forfeiture to the same extent as the Restricted Stock with respect to which
such Stock or other property has been distributed.
(e) DEFERRED STOCK. The Committee is authorized to grant Deferred
Stock to Participants, subject to the following terms and conditions:
(i) AWARD AND RESTRICTIONS.
(A) Delivery of Stock will occur upon expiration of the
deferral period specified for an Award of Deferred Stock by the Committee
under an Award Agreement. Such Deferred Stock shall be subject to such
restrictions as the Committee may impose, if any, which restrictions may
lapse at the expiration of the deferral period or at earlier specified
times, separately or in combination, in installments, or otherwise, as the
Committee may determine.
(B) The Committee may also permit the Participant to
defer the receipt of Stock deliverable to the Participant for purposes
other than pursuant to Section 6(e)(i)(A), above, if the Participant
elects to defer such Stock at least 12 months prior to the date the
Participant would otherwise receive such Stock. The terms regarding the
deferral of such Deferred Stock shall be set forth in a separate
agreement.
(ii) FORFEITURE. Except as otherwise determined by the
Committee, upon termination of employment or service (as determined under
criteria established by the Committee) during the applicable deferral period or
portion thereof to which forfeiture conditions apply (as provided in the Award
Agreement evidencing the Deferred Stock), all Deferred Stock that is at that
time subject to deferral (other than a deferral of Stock permitted by the
Committee pursuant to Section 6(e)(i)(B), above) shall be forfeited; PROVIDED,
HOWEVER, that the Committee may provide, by rule or regulation or in any Award
Agreement, or may determine in any individual case, that restrictions or
forfeiture conditions relating to Deferred Stock will be waived in whole or in
part in the event of termination of employment resulting from specified causes.
Notwithstanding anything contained herein to the contrary (other than Section
7(g)), all Deferred Stock Awards, other than an Award granted pursuant to
Section 7(f), shall be forfeited upon a Participant's termination of employment
or other service with the Company and its subsidiaries within three years of the
date the award is granted; PROVIDED, HOWEVER, that the Committee may make
exceptions in the event such termination is by reason of the Participant's death
or disability.
(f) BONUS STOCK AND AWARDS IN LIEU OF CASH OBLIGATIONS. The
Committee is authorized to grant Stock as a bonus, or to grant Stock or other
Awards in lieu of Company obligations to pay cash under other plans or
compensatory arrangements, provided that, in the case of Participants subject to
Section 16 of the Exchange Act, such cash amounts are determined under such
other plans in a manner that complies with applicable requirements of Rule 16b-3
so that the acquisition of Stock or Awards hereunder shall be exempt from
Section 16(b) liability. Stock or
<PAGE>
10
Awards granted hereunder shall be subject to such other terms as shall be
determined by the Committee.
(g) DIVIDEND EQUIVALENTS. The Committee is authorized to grant
Dividend Equivalents to a Participant, entitling the Participant to receive
cash, Stock, other Awards, or other property equal in value to dividends paid
with respect to a specified number of shares of Stock, or other periodic
payments. Dividend Equivalents may be awarded on a free-standing basis or in
connection with another Award. The Committee may provide that Dividend
Equivalents shall be paid or distributed when accrued or shall be deemed to have
been reinvested in additional Stock, Awards, or other investment vehicles as the
Committee may specify.
(h) OTHER STOCK-BASED AWARDS. The Committee is authorized, subject
to limitations under applicable law, to grant to Participants such other Awards
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Stock, as deemed by the Committee to
be consistent with the purposes of the Plan, including, without limitation,
convertible or exchangeable debt securities, other rights convertible or
exchangeable into Stock, purchase rights for Stock, Awards with value and
payment contingent upon performance of the Company or any other factors
designated by the Committee, and Awards valued by reference to the book value of
Stock or the value of securities of or the performance of specified
subsidiaries. The Committee shall determine the terms and conditions of such
Awards. Stock delivered pursuant to an Award in the nature of a purchase right
granted under this Section 6(h) shall be purchased for such consideration, paid
for at such times, by such methods, and in such forms, including, without
limitation, cash, Stock, other Awards, or other property, as the Committee shall
determine. Cash awards, as an element of or supplement to any other Award under
the Plan, shall also be authorized pursuant to this Section 6(h).
7. CERTAIN PROVISIONS APPLICABLE TO AWARDS.
(a) STAND-ALONE, ADDITIONAL, TANDEM, AND SUBSTITUTE AWARDS. Awards
granted under the Plan may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with, or in substitution for, any
other Award granted under the Plan or any award granted under any other plan of
the Company, any subsidiary, or any business entity to be acquired by the
Company or a subsidiary, or any other right of a Participant to receive payment
from the Company or any subsidiary. Awards granted in addition to or in tandem
with other Awards or awards may be granted either as of the same time as or a
different time from the grant of such other Awards or awards.
(b) TERM OF AWARDS. The term of each Award shall be for such period
as may be determined by the Committee; PROVIDED, HOWEVER, that in no event shall
the term of any ISO or an SAR granted in tandem therewith exceed a period of ten
years from the date of its grant (or such shorter period as may be applicable
under Section 422 of the Code).
<PAGE>
11
(c) FORM OF PAYMENT UNDER AWARDS. Subject to the terms of the Plan
and any applicable Award Agreement, payments to be made by the Company or a
subsidiary upon the grant or exercise of an Award may be made in such forms as
the Committee shall determine, including, without limitation, cash, Stock, other
Awards, or other property, and may be made in a single payment or transfer, in
installments, or on a deferred basis. Such payments may include, without
limitation, provisions for the payment or crediting of reasonable interest on
installment or deferred payments or the grant or crediting of Dividend
Equivalents in respect of installment or deferred payments denominated in Stock.
(d) RULE 16B-3 COMPLIANCE.
(i) SIX-MONTH HOLDING PERIOD. Unless a Participant could
otherwise exercise a derivative security or dispose of Stock delivered upon
exercise of a derivative security granted under the Plan without incurring
liability under Section 16(b) of the Exchange Act, (i) Stock delivered under the
Plan shall be held by the Participant for at least six months from the date of
acquisition to the date of disposition of such Stock, and (ii), with respect to
a derivative security granted under the Plan, at least six months shall elapse
from the date of acquisition of the derivative security to the date of
disposition of the derivative security (other than upon exercise or conversion)
or its underlying equity security.
(ii) TRANSFERABILITY. Except as otherwise provided by the
Committee, Awards under the Plan are not transferable except as designated by
the Participant by will or by the laws of descent and distribution (or pursuant
to a Beneficiary designation).
(iii) REFORMATION TO COMPLY WITH EXCHANGE ACT RULES. It is the
intent of the Company that this Plan comply in all respects with applicable
provisions of Rule 16b-3 or Rule 16a-1(c)(3) under the Exchange Act in
connection with any grant of Awards to or other transaction by a Participant who
is subject to Section 16 of the Exchange Act (except for transactions exempted
under alternative Exchange Act Rules or acknowledged in writing to be non-exempt
by such Participant). Accordingly, if any provision of this Plan or any Award
Agreement relating to an Award does not comply with the requirements of Rule
16b-3 or Rule 16a-1(c)(3) as then applicable to any such transaction, such
provision will be construed or deemed amended to the extent necessary to conform
to the applicable requirements of Rule 16b-3 or Rule 16a-1(c)(3) so that such
Participant shall avoid liability under Section 16(b).
(e) LOAN PROVISIONS. With the consent of the Committee, and subject
at all times to, and only to the extent, if any, and in accordance with, laws
and regulations and other binding obligations or provisions applicable to the
Company, the Company may make, guarantee, or arrange for a loan or loans to a
Participant with respect to the exercise of any Option or other payment in
connection with any Award, including the payment by a Participant of any or all
federal, state, or local income or other taxes due in connection with any Award.
Subject to such limitations, the Committee shall have full authority to decide
whether to make a loan or loans hereunder and to determine the
<PAGE>
12
amount, terms, and provisions of any such loan or loans, including the interest
rate to be charged in respect of any such loan or loans, whether the loan or
loans are to be with or without recourse against the borrower, the terms on
which the loan is to be repaid and conditions, if any, under which the loan or
loans may be forgiven.
(f) PERFORMANCE-BASED AWARDS TO "COVERED EMPLOYEES". Other
provisions of the Plan notwithstanding, the provisions of this Section 7(f)
shall apply to any Award the exercisability or settlement of which is subject to
the achievement of performance conditions (other than an Option or SAR granted
with an exercise or base price at least equal to 100% of Fair Market Value of
Stock on the date of grant) if such Award is granted to a person who, at the
time of grant, is a "covered employee." The definition of "covered employee,"
and other terms used in this Section 7(f), shall be interpreted in a manner
consistent with Section 162(m) of the Code and regulations thereunder (including
Proposed Regulation 1.162-27). The performance objectives for an Award subject
to this Section 7(f) shall consist of one or more business criteria and a
targeted level or levels of performance with respect to such criteria, as
specified by the Committee but subject to this Section 7(f). Performance
objectives shall be objective and shall otherwise meet the requirements of
Section 162(m)(4)(C) of the Code and regulations thereunder (including Proposed
Regulation 1.162-27(e)(2)). The following business criteria shall be used by the
Committee in connection with a performance objective:
(1) Annual earnings before payment of taxes and interest;
(2) Annual earnings per share; and/or
(3) Annual return on common equity.
Achievement of performance objectives shall be measured over a period of one,
two, three, or four years, as specified by the Committee. No business criteria
other than those named above may be used in establishing the performance
objective for an Award to a covered employee. For each such Award relating to a
covered employee, the Committee shall establish the targeted level or levels of
performance for each business criteria. Performance objectives may differ for
Awards under this Section 7(f) to different covered employees. The Committee may
determine that an Award under this Section 7(f) shall be payable upon
achievement of any one of the performance objectives or may require that two or
more of the performance objectives must be achieved in order for an Award to be
payable. The Committee may, in its discretion, reduce the amount of a payout
otherwise to be made in connection with an Award under this Section 7(f), but
may not exercise discretion to increase such amount, and the Committee may
consider other performance criteria in exercising such discretion If the
Committee determines that, with respect to a performance period, the applicable
performance goals have been met with respect to a given Participant, the
Committee shall so certify and ascertain the amount of the applicable
Performance-Based Award, in writing. The maximum amount of a Performance-Based
Award during any calendar year to any Participant shall be: (x) with respect to
Performance-
<PAGE>
13
Based Awards that are Options, 100,000 Shares and (y) with respect to
Performance-Based Awards that are not Options, the then fair market value of
100,000 Shares. No Performance-Based Awards will be paid for such performance
period until such certification is made by the Committee.
(g) ACCELERATION UPON A CHANGE OF CONTROL. Notwithstanding anything
contained herein to the contrary, unless otherwise provided by the Committee in
an Award Agreement, all conditions and/or restrictions relating to the continued
performance of services and/or the achievement of performance objectives with
respect to the exercisability or full enjoyment of an Award shall immediately
lapse upon a Change in Control.
8. GENERAL PROVISIONS.
(a) COMPLIANCE WITH LEGAL AND EXCHANGE REQUIREMENTS. The Company
shall not be obligated to deliver Stock upon the exercise or settlement of any
Award or take other actions under the Plan until the Company shall have
determined that applicable federal and state laws, rules, and regulations have
been complied with and such approvals of any regulatory or governmental agency
have been obtained and contractual obligations to which the Award may be subject
have been satisfied. The Company, in its discretion, may postpone the issuance
or delivery of Stock under any Award until completion of such stock exchange
listing or registration or qualification of such Stock or other required action
under any federal or state law, rule, or regulation as the Company may consider
appropriate, and may require any Participant to make such representations and
furnish such information as it may consider appropriate in connection with the
issuance or delivery of Stock under the Plan.
(b) TRANSFERABILITY. Except as otherwise set forth in Section
7(d)(ii), Awards and other rights of Participants under the Plan may not be
transferred to third parties, pledged, mortgaged, hypothecated, or otherwise
encumbered, and shall not be subject to claims of creditors.
(c) NO RIGHT TO CONTINUED EMPLOYMENT OR SERVICE. Neither the Plan
nor any action taken hereunder shall be construed as giving any employee or
person providing consulting or other services the right to be retained in the
employ or service of the Company or any of its subsidiaries, nor shall it
interfere in any way with the right of the Company or any of its subsidiaries to
terminate any employee's employment or terminate any contract with a person
providing consulting or other services at any time.
(d) TAXES. The Company or any subsidiary is authorized to withhold
from any Award granted or to be settled, any payment relating to an Award under
the Plan, including from a distribution of Stock, or any payroll or other
payment to a Participant, amounts of withholding and other taxes due or
potentially payable in connection with any transaction involving an Award, and
to take such other action as the Committee may deem advisable to enable the
Company and Participants to satisfy obligations for the payment of withholding
taxes and other tax obligations relating to any Award. This authority shall
include authority to withhold or receive Stock that has been held by the
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14
Participant for at least six months following the date of acquisition or other
property and to make cash payments in respect thereof in satisfaction of a
Participant's tax obligations.
(e) CHANGES TO THE PLAN AND AWARDS. The Board may amend, alter,
suspend, discontinue, or terminate the Plan or the Committee's authority to
grant Awards under the Plan without the consent of stockholders or Participants,
except that any such action shall be subject to the approval of the Company's
stockholders at or before the next annual meeting of stockholders for which the
record date is after such Board action if such stockholder approval is required
by any federal or state law or regulation or the rules of any stock exchange or
automated quotation system on which the Stock may then be listed or quoted, and
the Board may otherwise, in its discretion, determine to submit other such
changes to the Plan to stockholders for approval; PROVIDED, HOWEVER, that,
without the consent of an affected Participant, no such action may materially
impair the rights of such Participant under any Award theretofore granted to
him. The Committee may waive any conditions or rights under, or amend, alter,
suspend, discontinue, or terminate, any Award theretofore granted and any Award
Agreement relating thereto; PROVIDED, HOWEVER, that, without the consent of an
affected Participant, no such action may materially impair the rights of such
Participant under such Award.
(f) NO RIGHTS TO AWARDS; NO STOCKHOLDER RIGHTS. No Participant,
employee, or other person shall have any claim to be granted any Award under the
Plan, and there is no obligation for uniformity of treatment of Participants,
employees, and other persons. No Award shall confer on any Participant any of
the rights of a stockholder of the Company unless and until Stock is duly issued
or transferred and delivered to the Participant in accordance with the terms of
the Award.
(g) UNFUNDED STATUS OF AWARDS; CREATION OF TRUSTS. The Plan is
intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to a Participant
pursuant to an Award, nothing contained in the Plan or any Award shall give any
such Participant any rights that are greater than those of a general creditor of
the Company; PROVIDED, HOWEVER, that the Committee may authorize the creation of
trusts or make other arrangements to meet the Company's obligations under the
Plan to deliver cash, Stock, other Awards, or other property pursuant to any
Award, which trusts or other arrangements shall be consistent with the
"unfunded" status of the Plan unless the Committee otherwise determines with the
consent of each affected Participant.
(h) NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan by
the Board nor its submission to the stockholders of the Company for approval
shall be construed as creating any limitations on the power of the Board to
adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options otherwise than under the Plan,
and such arrangements may be either applicable generally or only in specific
cases.
(i) NO FRACTIONAL SHARES. No fractional shares of Stock shall be
issued or delivered pursuant to the Plan or any Award. The Committee shall
determine whether cash, other
<PAGE>
15
Awards, or other property shall be issued or paid in lieu of such fractional
shares or whether such fractional shares or any rights thereto shall be
forfeited or otherwise eliminated.
(j) COMPLIANCE WITH CODE SECTION 162(M). It is the intent of the
Company that Options and other Awards subject to the performance objectives
specified under Section 7(f) granted under the Plan to persons who are "covered
employees" within the meaning of Code Section 162(m) and regulations thereunder
(including Proposed Regulation 1.162-27(c)(2)) shall constitute "qualified
performance-based compensation" within the meaning of Code Section 162(m) and
regulations thereunder (including Proposed Regulation 1.162-27(e), and subject
to the transition rules under Proposed Regulation 1.162-27(h)(2)) thereunder.
Accordingly, if any provision of the Plan or any Award Agreement relating to
such an Award granted to a "covered employee" does not comply or is inconsistent
with the requirements of Code Section 162(m) or regulations thereunder, such
provision shall be construed or deemed amended to the extent necessary to
conform to such requirements, and no provision shall be deemed to confer upon
the Committee or any other person discretion to increase the amount of
compensation otherwise payable to a "covered employee" in connection with any
such Award upon attainment of the performance objectives.
(k) GOVERNING LAW. The validity, construction, and effect of the
Plan, any rules and regulations relating to the Plan, and any Award Agreement
shall be determined in accordance with the Delaware General Corporation Law,
without giving effect to principles of conflicts of laws, and applicable federal
law.
(l) EFFECTIVE DATE; PLAN TERMINATION. The Plan shall become
effective as of the date of its adoption by the Board and shall continue in
effect until terminated by the Board, subject to the approval of the
shareholders of the Company.
<PAGE>
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of the
first (1st) day of February, 1999 (the "Effective Date"), by and between
AMERICA'S DOCTOR, INC., a Delaware corporation (the "Company"), and SCOTT M.
RIFKIN, M.D. (the "Executive").
Explanatory Statement
A. The Company provides on-line medical information to the general public
through the Internet and America On-line.
B. The Executive has specialized expertise related to the business of the
Company.
C. The Company desires to employ the Executive to render the services
described in this Agreement, and the Executive is willing to accept such
employment, upon the terms and conditions hereinafter provided.
NOW, THEREFORE, in consideration of the Explanatory Statement, which shall
be deemed to be a substantive part of this Agreement, and the mutual covenants
and representations contained herein, the parties hereto agree as follows:
1. Employment and Duties.
1.1. Duties. As of the Effective Date, the Company shall employ the
Executive as its President, on a full-time basis to render such services and
perform such duties customary to his position for and on behalf of the Company,
and the Executive shall render such other and further services and perform such
other and further duties for and on behalf of the Company as may be assigned
reasonably to the Executive by the Company's Board of Directors (the
"Services"). The Executive shall perform his duties faithfully and to the best
of his abilities.
1.2. Extent of Service. During the Term, the Executive shall devote
a significant portion of his time and efforts to the business of the Company and
will at such times devote such efforts as are reasonably sufficient for
fulfilling the significant responsibilities entrusted to him. The Executive
shall be permitted to engage in other activities, including, without limitation,
supervising his personal investments, participating in civic, political and
charitable activities, giving lectures and teaching, and serving on boards or as
a trustee of other organizations and corporations (subject to Section 8) so long
as such activities, in the aggregate, do not interfere with the performance by
the Executive of his duties hereunder. The Executive shall be entitled to retain
for his own account any and all income, compensation, fees, and revenue received
by the Executive arising out of, in connection with, or related to the
Executive's permitted activities.
<PAGE>
2. Compensation and Benefits. In consideration of Executive's Services
under this Agreement, the Executive shall be compensated as follows:
2.1. Annual Salary. The Company shall pay the Executive during each
fiscal year of the Company during the Term an annual salary of Two Hundred
Twenty-Five Thousand Dollars ($225,000) plus annual cost-of-living adjustments
(determined as of the first day of the Company's fiscal year) (the "Annual
Salary"); the Annual Salary shall be prorated for that portion of the Company's
fiscal year during which the Term commenced and/or terminated if such
commencement and/or termination occurred on a day other than the first day and
last day, respectively, of the Company's fiscal year. The Annual Salary shall be
payable in semi-monthly installments. The Annual Salary shall be reviewed by the
Board each year during the Term and may be adjusted in the sole and absolute
discretion of the Board, provided that no such adjustment shall result in a
decrease of the Annual Salary.
2.2. Bonus. The Executive is eligible to receive, in addition to the
Annual Salary, an annual bonus ("Bonus") with respect to each fiscal year the
Executive is employed by the Company. The amount of the Bonus shall be
determined by the Compensation Committee of the Company in its sole discretion,
and the determination of the Compensation Committee shall be final, conclusive
and binding upon each of the parties. The Bonus shall not exceed $100,000.00 for
any year. The amount of the Bonus shall be based on the Executive's performance
and on goals and objectives to be mutually determined by the Executive and the
Compensation Committee
2.3. Stock Options. The Executive has the right to participate in
the Company's 1999 Long-Term Incentive Stock Option Plan (the "Option Plan").
The Option Plan provides for a three-year vesting schedule. On the Effective
Date, the Company shall grant the Executive an option to purchase Eighteen
Thousand (18,000) shares of the Company's common stock at a price of $66.18 per
share. The Board of Directors may, but is not obligated to, grant the Executive
additional options or option rights. Such options, if granted, shall be granted
at the end of each fiscal year.
2.4. Benefits. During the Term, the Executive shall be entitled to
receive employee benefits consisting of participation in the Company's pension
and retirement plans, group life insurance, group health insurance and such
other perquisites as may be provided by the Company from time to time to
executives equivalent to the Executive (collectively the "Perquisites") in
accordance with the policies of the Company in effect from time to time.
2.5. Vacations and Personal Leave. During each 12-month period
during the Term, the Executive shall be entitled to twenty (20) paid vacation
days. The Executive shall take his vacation at such time or times as shall be
approved by his supervisor or the Board of Directors, which approval shall not
be unreasonably withheld.
2.6. Relocation Assistance.
<PAGE>
(a) The Company will reimburse the Executive for all normal
and customary costs associated withthe sale of the Executive's current
residence, which is located at 7714 South Hill Circle, Littleton, CO 80120. The
Company will also reimburse the Executive for all normal and customary costs
associated with (a) the purchase of a new home and (b) the relocation of the
Executive's household effects. Costs to be reimbursed include, but are not
limited to, attorney's fees, brokerage fees, seller's closing costs, moving
charges, mortgage origination fees relating to any mortgage on the Executive's
new residence (except that reimbursement of mortgage origination fees shall be
limited to a maximum of three per cent (3%) of the principal amount of the
mortgage). In the event the Executive is obligated to treat any of these
reimbursed costs as taxable income, the Company will also reimburse all federal
and state income taxes relating to such reimbursed costs.
(b) The Company will also pay the Executive for all costs, up
to a maximum of Seven Thousand Five Hundred Dollars ($7,500.00), associated with
up to six months of temporary housing and up to three (3) house-hunting trips
relating to the relocation of the Executive
3. Withholding. The Company shall withhold from any Annual Salary or Bonus
payment and any other compensation or benefits payable under this Agreement, all
federal, state, city and other taxes as shall be required pursuant to law.
4. Reimbursement of Certain Expenses. Subject to such policies as may from
time to time be established by the Board, the Company shall pay or reimburse the
Executive for all ordinary, necessary and reasonable expenses (including,
without limitation, travel, meetings, dues, subscriptions, fees, educational
expenses, computer equipment and the like) actually incurred or paid by the
Executive during the Term in the performance of the Services (including, without
limitation, expenses incident to attendance at board or management meetings of
the Company) upon presentation of expense statements or vouchers or such other
supporting information as the Board may require.
5. Disability.
5.1. Definitions. For purposes of this Agreement, the Executive
shall be "disabled" or have a "disability" if the Executive shall have an
illness, injury, or other physical or mental condition which results in the
Executive's inability to perform substantially the Services to the extent the
Executive was performing the Services immediately prior to the commencement of
such condition.
5.2. Temporary Disability. In the event that the Executive shall be
disabled for not more than 90 consecutive days or any 90 days during any twelve
(12) - month period during the Term, then the Executive, during the continuance
of such disability, shall remain employed by the Company hereunder and shall
continue to be paid his Annual Salary and Bonus and otherwise shall have all of
the rights and be subject to all of the Executive's obligations and
-3-
<PAGE>
duties under this Agreement, other than the obligation and duty to render the
Services otherwise in accordance with this Agreement.
5.3. Permanent Disability. In the event that the Executive shall be
disabled for more than 180 consecutive days or any 180 days during any twelve
(12) - month period during the Term, the Executive shall be deemed to be
"Permanently Disabled" for purposes of this Agreement, and this Agreement and
the Executive's employment hereunder shall cease and terminate, whereupon
neither party shall have any further rights, duties or obligations under this
Agreement, except for the Executive's obligations and duties under Sections 7, 8
and 9 hereof and the Company's obligations and duties under Sections 2, 3 and 4
hereof, but each party shall remain liable and responsible to the other for all
prior obligations and duties hereunder and for all acts and omissions of such
party prior to such termination. If the Executive's employment is terminated
under this Section 5.3, his right to receive his Bonus hereunder for any
Employment Year which has ended shall remain vested, but his right to receive
his Bonus for the year in which he is terminated shall be prorated to the
Termination Date, and if the Executive shall have no further right to receive a
Bonus except as stated hereinabove.
5.4. Arbitration of Disability Dispute. If the Company and the
Executive are unable to agree whether the Executive is Permanently Disabled
within the meaning of this Section, then that limited issue shall be submitted
to and settled by binding arbitration under and pursuant to the Maryland Uniform
Arbitration Act and the rules and regulations of the American Arbitration
Association, and the decision in such arbitration shall be final, conclusive and
binding upon each of the parties and judgment may be entered thereon in any
court of competent jurisdiction.
6. Death of the Executive. In the event of the death of the Executive
during the Term, this Agreement and the Executive's employment hereunder shall
terminate, whereupon neither party shall have any further rights, duties or
obligations under this Agreement, except that the Executive's estate shall be
bound by the Executive's obligations and duties under Sections 7, 8 and 9
hereof, the Company shall remain liable for the Company's obligations and duties
under Sections 2, 3 and 4 hereof, and further, the Company and the Executive's
estate shall remain liable and responsible to the other for all prior
obligations and duties hereunder and for all acts and omissions of the parties
prior to the Executive's death. If the Executive dies during the Term, his
eligibility to receive a Bonus hereunder for any Employment Year which has ended
shall remain vested, but his eligibility to receive a Bonus for the Employment
Year in which he has died shall be prorated to the date of his death. If the
Executive dies during the Term, the Executive shall have no further right or
eligibility to receive Bonus except as stated hereinabove.
7. Confidential Information.
7.1. Non-Disclosure of Confidential Information. The Executive
acknowledges that in the Executive's employment hereunder, the Executive will be
making use of, acquiring and adding to confidential information of a special and
unique nature and value
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relating to such matters as, but not limited to, the Company's business
operations, internal structure, financial affairs, systems, procedures, manuals,
confidential reports and lists of accounts, trade secrets, customers and
vendors, as well as the amount, nature and type of services used and preferred
by the Company's accounts and customers and the fees paid by such accounts, all
of which shall be deemed to be confidential information. In consideration of
employment by the Company, the Executive agrees that during the Term and upon
and after ceasing to be employed by the Company for any reason whatsoever, the
Executive shall not, for any reason or purpose whatsoever, directly or
indirectly, divulge or disclose to any person or entity any of such confidential
information which was obtained by the Executive as a result of the Executive's
employment with the Company, or any information or knowledge respecting the
affairs of the Company or any of its officers, directors, executives,
stockholders, accounts, customers or referrers of accounts learned or conceived
by the Executive while in the employ of the Company, but shall hold all of the
same inviolate.
7.2. Confidential Records. All financial books, records, instruments
and documents; client lists; data; reports; programs; software; tapes;
rolodexes; telephone and address books; card decks; listings; programming and
any other instruments, records or documents relating or pertaining to the
accounts serviced by the Company or the Executive, the Services rendered by the
Executive, or the Company (collectively, the "Records") shall at all times be
and remain the property of the Company. Upon ceasing to be employed by the
Company for any reason whatsoever, the Executive shall return to the Company all
Records (whether furnished by the Company or prepared by the Executive), and the
Executive shall neither make nor retain any copies of any of such Records after
such cessation of employment.
7.3 All inventions and other creations, whether or not patentable or
copyrightable or trademarkable, and all ideas, reports and other creative works,
including, without limitation, computer programs, manuals and related materials,
made or conceived in whole or in part by the Executive while employed by the
Company and within one (1) year of termination of the Executive's employment
under this Agreement for any reason whatsoever, which relate in any manner
whatsoever to the business, existing or proposed, of the Company or any other
business or research or development effort in which the Company or any of its
subsidiaries or affiliates engages during the Executive's employment by the
Company will be disclosed promptly by the Executive to the Company and shall be
the sole and exclusive property of the Company. All copyrightable works created
by the Executive and covered by this Section 7.3 shall be deemed to be works
made for hire. The Executive shall cooperate with the Company in patenting or
copyrighting or trademarking all such inventions, ideas, reports and other
creative works, shall execute, acknowledge, seal and deliver all documents
tendered by the Company to evidence its ownership thereof throughout the world,
and shall cooperate with the Company in obtaining, defending, and enforcing its
rights therein.
8. Restrictive Covenants.
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8.1. Non-Competition. The Executive and the Company recognize than
an important part of the Executive's duties will be to develop good will for the
Company through the Executive's personal contacts with customers, clients,
accounts, agents and others having business relationships with the Company, and
that there is a danger that this good will, a proprietary asset of the Company,
may follow the Executive if and when the Executive's relationship with the
Company is terminated. Accordingly, the Executive covenants that for a period of
one (1) year after the Executive ceases to be employed by the Company, the
Executive shall not, without the prior written consent of the Company, directly
or indirectly:
(a) Engage, either as a consultant, independent contractor,
proprietor, stockholder, partner, officer, director, executive, owner or
otherwise, in any business or activity that competes with the Company and the
Company's business;
(b) Render or attempt to render any services which were
rendered by the Company during the two (2) year period immediately preceding
such cessation of the Executive's employment with the Company to any clients,
customers or accounts of the Company with whom the Executive had direct or
indirect contact and/or to whom the Executive rendered any services at any time
during such two (2) year period, to or for the benefit or account of the
Executive or to or for the benefit or account of any other person or entity; and
(c) Solicit for employment or employ to or for the benefit or
account of the Executive or to or for the benefit or account of any other person
or entity any Executive of the Company, nor shall the Executive urge, directly
or indirectly, any client or referrer of clients, customers, or accounts of the
Company to discontinue, in whole or in part, business with the Company or not to
do business with the Company. For purposes of this Section 8.1(c) of this
Agreement, the term "referrer of clients" shall mean any person or entity who or
which referred a client, customer or account to the Company at any time prior to
such cessation of the Executive's employment with the Company.
8.2. Severability and Modification. The Parties hereto agree that to
the extent that any provision or portion of Section 8.1 of this Agreement shall
be held, found or deemed to be unreasonable, unlawful or unenforceable by a
court of competent jurisdiction, then any such provision or portion thereof
shall be deemed to be modified to the extent necessary in order that any such
provision or portion thereof shall be legally enforceable to the fullest extent
permitted by applicable law; and the parties hereto do further agree that any
court of competent jurisdiction shall, and the parties hereto do hereby
expressly authorize, request and empower any court of competent jurisdiction to,
enforce any such provision or portion thereof or to modify any such provision or
portion thereof in order that any such provision or portion thereof shall be
enforced by such court to the fullest extent permitted by applicable law.
8.3. Definitions. As used in Sections 7 and 8, "clients,"
"customers," and "accounts" shall include any person or entity that, directly or
indirectly, through one or more
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intermediaries, controls or is controlled by, or is under common control with,
any such "clients," "customers," or "accounts."
9. Termination of Employment.
9.1 Termination for Cause. If the Executive engages in (i) fraud,
(ii) embezzlement, (iii) any other crime involving moral turpitude, (iv) gross
or willful neglect of duty, or (v) material breach of any of the provisions of
this Agreement, on his part to be performed by him, the Company may at any time
thereafter terminate the Executive's employment hereunder by written notice to
him, effective immediately and the date the notice shall be the Termination Date
hereunder. Any such termination shall be deemed to be termination for cause, for
purposes of this Agreement. If the Executive's employment is terminated for
cause hereunder, then the Executive shall be entitled to receive only the
following payments: any portion of his Annual Salary accrued to the date of such
termination and not theretofore paid to him; any Bonus to which he is entitled
for any completed Employment Year under this Agreement which has not theretofore
been paid to him; any vested rights the Executive has under the Option Plan;
plus reimbursement for any expenses properly incurred by the Executive, and
supported by appropriate vouchers, which expenses have been incurred prior to
the date of such termination and which have not theretofore been reimbursed.
Except as set forth in the immediately preceding sentence, all of the
Executive's rights of compensation hereunder shall be terminated as of the
Termination Date in the event of termination for cause.
9.3. Other Termination of Employment by the Company. Anything
contained in this Agreement to the contrary notwithstanding, the Company may
discharge the Executive at any time upon written notice. In the event the
Company terminates the employment of the Executive hereunder other than pursuant
to any of the prior provisions hereof, without the Executive's consent, and in
accordance with this Section, then the Executive shall be deemed to have been
constructively terminated by the Company. Upon such termination, the Executive
shall be entitled to receive (a) his Annual Salary installment payments
(calculated as of the date of such termination) for a period of twelve (12)
months following such termination, and (b) group health insurance coverage for a
period of twelve (12) months following such termination. The Executive shall not
be entitled to any other compensation, reimbursement or benefits.
9.4. Other Termination of Employment by Executive. If the Executive
quits his employment (other than as authorized under Section 9.2 hereof), then
he shall be deemed to have been terminated by the Company for cause and shall be
subject to the provisions of Section 9.1 hereof.
9.5 Termination in the Event of Sale Merger or Consolidation. Upon a
change in control of the Company as a result of a sale, merger or consolidation,
if the Executive's total compensation, benefits, responsibilities or position
within the Company is diminished within six (6) months after such change of
control, sale, merger or consolidation, the Executive may elect to terminate his
employment by the Company, in which event the Executive would receive all of
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the compensation and benefits set forth in Section 9.3, above. In addition, upon
such termination, the Executive's rights under the Option Plan and any annual
incentive plan established by the Company shall immediately vest.
9.6. Injunctive Relief. It is recognized that damages, in the event
of a breach or threatened breach by the Executive of the Executive's obligations
and duties under this Agreement, would be difficult to ascertain, and it is,
therefore, agreed that the Company, in addition to, and without limiting any
other power, remedy or right it may have, shall have the right to seek an
injunction or other equitable relief in any court of competent jurisdiction,
seeking to enjoin any such breach, and the Executive hereby waives any and all
defenses he may have on the ground of lack of jurisdiction or competence of the
court to grant such an injunction or other equitable relief and any substantive
defenses to the granting of such injunctive relief. The existence of this right
shall not preclude any other powers, rights and remedies at law, in equity or
otherwise which the Company may have, but shall be in addition to, and
cumulative with, any other remedy available to the Company at law, in equity or
otherwise.
9.7. Indemnification. The Executive shall defend, indemnify and hold
harmless the Company from and against any and all claims, demands, threats,
charges, suits, actions, proceedings, liabilities, damages, losses, costs and
expenses (including attorneys' and experts' fees, interest and court costs) of
every kind and nature arising out of, resulting from, or in connection with any
breach or threatened breach of this Agreement by the Executive. The Company
shall defend, indemnify and hold harmless the Executive from and against any and
all claims, demands, threats, charges, suits, actions, proceedings, liabilities,
damages, losses, costs and expenses (including attorneys' and experts' fees,
interest and court costs) of every kind and nature arising out of or resulting
from the Executive's actions in his capacity as an officer or director of the
Company.
9.8. Setoff. Anything contained in this Agreement to the contrary
notwithstanding, the Company may setoff against any amount of money or other
consideration due to the Executive under this Agreement, any amount of money or
other consideration that is, or may become, due from the Executive to the
Company pursuant to Section 9.6 of this Agreement or otherwise under or outside
of this Agreement.
10. Term.
10.1. Duration. The term of this Agreement and the Company's
employment of the Executive (the "Term") shall commence on the July 1, 1999
and shall continue until the first to occur of the following: (i) the close
of business on the fifth (5th) anniversary of the date of this Agreement (the
"Initial Term"), or such later date to which the Executive's employment is
extended as provided in Section 10.2; (ii) the Executive's normal retirement
date under the Company's retirement policy or plan as in effect from time to
time ("Normal Retirement Date"); (iii) the death or Permanent Disability of
the Executive; (iv) the termination of this Agreement pursuant to Section 9;
(v) at the Executive's option, pursuant to Section 10.3.
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10.2. Extension of Term. The Term shall be extended automatically
after the Initial Term, without any further action on the part of the Executive
or the Company, indefinitely (but not beyond (a) the Executive's Normal
Retirement Date or (b) a termination as defined in Section 9, and not in the
event of the death or Permanent Disability of the Executive) for additional
one-year terms (each a "Renewal Term"), unless the Company or the Executive
notifies the other to the contrary in writing not less than three (3) months
prior to the end of the Initial Term or any Renewal Term.
10.3 Initial Public Offering; Executive's Right to Renegotiate. In
the event of a firmly underwritten initial public offering of the Company's
common stock at a before-the-money market capitalization of not less than
$75,000,000, the Executive, in his sole discretion, may require the Company to
renegotiate the terms of this Agreement. In such event, the Executive shall be
entitled to compensation and other benefits consistent with the compensation and
benefits of other Chief Executive Officers of similarly situated companies.
10.4. Obligations Upon Termination. Upon the cessation of the
Company's employment of the Executive for any reason whatsoever, neither party
shall thereafter have any further rights, duties or obligations under this
Agreement, except for the Executive's obligations and duties arising under
Sections 7, 8 and 9 hereof and the Company's obligations and duties arising
under Sections 2, 3, 4 and 9 hereof, but each party shall remain liable and
responsible to the other for all prior obligations and duties hereunder and for
all acts and omissions of such party prior to such termination.
11. Insurance. The Executive hereby consents to the Company, in its
discretion, taking out and maintaining during the Term, such life, disability
and disability buyout insurance policies with respect to the Executive, in such
amounts, with such insurance companies and upon such terms and conditions as may
be determined by the Board in its discretion, to fund or partially fund the
Company's obligation to repurchase any Stock owned by the Executive at the time
of the Executive's death or Permanent Disability, which the Company is obligated
to repurchase under the terms of any stockholders' agreement to which the
Executive and the Company are parties or for any other Company purpose.
12. Benefit. This Agreement shall inure to the benefit of and be binding
upon the Company, its successors and assigns, including, but not limited, to (i)
any corporation which may acquire all or substantially all of the Company's
assets and business, (ii) any corporation with or into which the Company may be
consolidated or merged, or (iii) any corporation that is the successor
corporation in a share exchange, and the Executive, his heirs, guardians and
personal and legal representatives.
13. Notices.
All notices and other communications required or permitted to be given
hereunder shall be in writing, and shall be hand-delivered against receipted
copy, telecopied to the telephone
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number set forth below or mailed by United States registered or certified mail,
return receipt requested, postage prepaid, to the address set forth below:
If to the Company to:
America's Doctor, Inc.
11403 Cronridge Drive
Owings Mills, MD 21117
Tel: (410) 581-1189
Fax: (410) 581-1571
with a copy to:
Jamie B. Eisenberg, Esq.
Rifkin, Livingston, Levitan & Silver, LLC
575 South Charles Street, Suite 200
Baltimore, MD 21201
Tel: (410) 837-9700
Fax: (410) 837-9716
And if to the Executive during the Term, in care of the Company;
And if to the Executive after the Term, to:
SCOTT M. RIFKIN, M.D.
11 Ashton Court
Owings Mills, MD 21117
or to such other address or telephone number as the Executive or the Company may
notify the other in writing pursuant to this Section. Notices hand-delivered or
transmitted in accordance with this provision shall be deemed to have been
received on the date so hand-delivered or telecopied or three (3) days after the
date so mailed.
14. Notification Requirement. During the period of noncompetition provided
in Section 8 of this Agreement, the Executive shall give notice to the Company
of each new business activity in which he plans to undertake at least one
hundred twenty (120) days prior to beginning such activity. Such notice shall
state the name and address of the person for whom such activity is undertaken,
the business address of the activity, and the nature of Executive's business
relationship and/or position with such person, company or project. The Executive
shall provide the Company with such information as the Company may reasonably
request in order to determine Executive's continued compliance with
non-competition agreements.
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15. Conflicting Agreements. Executive hereby represents and warrants to
the Company that his execution of this Agreement and the performance of his
obligations hereunder will not breach or be in conflict with any other agreement
to which he may be a party or may be bound and is not subject to any covenant
against competition or similar covenants that would affect performance of his
duties and obligations hereunder. Executive shall not use for the benefit of the
Company any proprietary information of a third party without such third party's
consent.
16. Miscellaneous.
16.1. Binding effect. This Agreement shall be effective as of the
date hereof and shall be binding upon and inure to the benefit of the Executive,
his heirs, personal and legal representatives, and guardians and shall be
binding upon and inure to the benefit of the Company and its successors and
assigns.
16.2. Assignment. This Agreement may not be assigned by the
Executive without the prior written consent of the Company.
16.3. Integrated Agreement. This Agreement represents the full,
complete, entire and integrated agreement between the Executive and the Company
with respect to the subject matter hereof, and supersedes all prior oral and
written agreements, understandings and negotiations with respect to the subject
matter hereof.
16.4. Amendments. This Agreement may not be changed, modified, or
discharged orally, but only by an instrument in writing signed by the parties.
16.5. Applicable Law. This Agreement is entered into in, and shall
be governed by, construed and enforced in accordance with the laws of the State
of Maryland, without reference to principles of conflicts of laws.
16.6. Explanatory Statement; Exhibits; Headings. The Explanatory
Statement and each exhibit attached hereto are substantive parts hereof;
headings of the sections of this Agreement are for convenience of reference only
and are not substantive parts hereof.
16.7. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which together shall be one
and the same instrument.
16.8. Gender. The use of any gender herein shall be deemed to be or
include the other genders and the neuter and the use of the singular herein
shall be deemed to be and include the plural (and vice versa), wherever
appropriate.
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16.9 Severability. The parties hereto agree that to the extent that
any provision or portion of this Agreement shall be held, found or deemed to be
unreasonable, unlawful or unenforceable by a court of competent jurisdiction,
then any such provision or portion thereof shall be deemed to be modified to the
extent necessary in order that any such provision or portion thereof shall be
legally enforceable to the fullest extent permitted by applicable law.
16.10 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which together shall be one
and the same instrument.
IN WITNESS WHEREOF, the parties have executed, acknowledged, sealed and
delivered this Agreement as of the date first above written.
ATTEST: AMERICASDOCTOR.COM, INC.
/s/ Lewis S. Goodman By: /s/ Allan C. Sanders
- ------------------------ -------------------------------
Allan C. Sanders
----------------------------------
Name (printed)
Chief Financial Officer
----------------------------------
Title
WITNESS: SCOTT M. RIFKIN, M.D.
/s/ Lewis S. Goodman /s/ Scott M. Rifkin
- ------------------------ ----------------------------------
STATE OF MARYLAND TO WIT:
CITY/COUNTY OF
I HEREBY CERTIFY that on this 29 day of January, 1999, before me, the
subscriber, a Notary Public in and for the City/County and State aforesaid,
personally appeared Allan C. Sanders, who acknowledged himself to be the
Chief Financial Officer of AmericasDoctor.com, Inc., a Delaware corporation
(the "Corporation"), known to me (or satisfactorily proven) to be the person
whose name is subscribed to the within instrument, and he
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acknowledged that he executed the same for the purposes therein contained as the
duly authorized ____________________ of said Corporation by signing the name of
the Corporation by himself as ____________________.
AS WITNESS my hand and Notarial Seal.
/s/
------------------------------------
Notary Public
My Commission Expires: 5-1-02
I HEREBY CERTIFY that on this _____ day of _______________, 1999, before
me, the subscriber, a Notary Public in and for the City/County and State
aforesaid, personally appeared CHARLES R. BLAND, known to me (or satisfactorily
proven) to be the person whose name is subscribed to the within instrument, who
acknowledged the foregoing instrument to be his act.
AS WITNESS my hand and Notarial Seal.
/s/
------------------------------------
Notary Public
My Commission Expires: 5-1-02
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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of the
first (1st) day of February, 1999 (the "Effective Date"), by and between
AMERICA'S DOCTOR, INC., a Delaware corporation (the "Company"), and JEFFREY
LEFKO (the "Executive").
Explanatory Statement
A. The Company provides on-line medical information to the general public
through the Internet and America On-line.
B. The Company recognizes the Executive's importance to the Company and
the important role the Executive has played in the accomplishments of the
Company to date.
C. The Executive has specialized expertise related to the business of the
Company.
D. The Company desires to employ the Executive to render the services
described in this Agreement, and the Executive is willing to accept such
employment, upon the terms and conditions hereinafter provided.
NOW, THEREFORE, in consideration of the Explanatory Statement, which shall
be deemed to be a substantive part of this Agreement, and the mutual covenants
and representations contained herein, the parties hereto agree as follows:
1. Employment and Duties.
1.1. Duties. As of the Effective Date, the Company shall employ the
Executive as its Executive Vice President of Sales & Marketing, on a full-time
basis to render such services and perform such duties customary to his position
for and on behalf of the Company, and the Executive shall render such other and
further services and perform such other and further duties for and on behalf of
the Company as may be assigned reasonably to the Executive by the Company's
Chief Executive Officer, President or the Board of Directors of the Company (the
"Services"). The Executive shall perform his duties faithfully and to the best
of his abilities.
1.2. Extent of Service. During the Term, the Executive shall devote
all of his time and efforts to the business of the Company and will at such
times devote such efforts as are reasonably sufficient for fulfilling the
significant responsibilities entrusted to him. The Executive shall be permitted
to engage in other activities, including, without limitation, supervising his
personal investments, participating in civic, political and charitable
activities, giving lectures and teaching, and serving on boards or as a trustee
of other organizations and corporations (subject to
<PAGE>
Section 8) so long as such activities, in the aggregate, do not interfere with
the performance by the Executive of his duties hereunder. The Executive shall be
entitled to retain for his own account any and all income, compensation, fees,
and revenue received by the Executive arising out of, in connection with, or
related to the Executive's permitted activities.
2. Compensation and Benefits. In consideration of Executive's Services
under this Agreement, the Executive shall be compensated as follows:
2.1. Annual Salary. The Company shall pay the Executive during each
fiscal year of the Company during the Term an annual salary of One Hundred
Twenty Thousand Dollars ($120,000) plus annual cost-of-living adjustments
(determined as of the first day of hte Company's fiscal year) (the "Annual
Salary"); the Annual Salary shall be prorated for that portion of the Company's
fiscal year during which the Term commenced and/or terminated if such
commencement and/or termination occurred on a day other than the first day and
last day, respectively, of the Company's fiscal year. The Annual Salary shall be
payable in equal periodic installments which are no less frequent than monthly.
The Annual Salary shall be reviewed by the Board each year during the Term and
may be adjusted in the sole and absolute discretion of the Board, provided that
no such adjustment shall result in a decrease of the Annual Salary.
2.2. Bonus. The Executive is eligible to receive, in addition to the
Annual Salary, an annual bonus ("Bonus") with respect to each fiscal year the
Executive is employed by the Company. The amount of the Bonus shall be
determined by the Compensation Committee of the Company in its sole discretion,
and the determination of the Compensation Committee shall be final, conclusive
and binding upon each of the parties.
2.3. Stock Options. The Executive will be a participant in a Stock
Option Agreement, the form of which has been preliminarily approved by the
Company's Board of Directors by Resolution dated January 29, 1999 (the "Stock
Option Agreement"), pursuant to which the Company shall grant certain stock
options (the "Options") to the Executive. The Executive's rights in and/or to
the Options, including the effect of termination of Executive's employment
(whether for cause or without cause) and the effect of a change in control of
the Company upon the Options rights, are set forth in the Stock Option
Agreement.
2.4. Benefits. During the Term, the Executive shall be entitled to
receive employee benefits consisting of participation in the Company's pension
and retirement plans, group life insurance, group health insurance, disability
insurance and malpractice insurance plans, automobile allowance and such other
perquisites as may be provided by the Company from time to time to executives
equivalent to the Executive (collectively the "Perquisites") in accordance with
the policies of the Company in effect from time to time, provided that in no
event shall the Perquisites available to the Executive be less than those
available as of the date of this Agreement.
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2.5. Vacations and Personal Leave. During each 12-month period
during the Term, the Executive shall be entitled to fifteen (15) paid vacation
days and five (5) paid personal-leave days. The Executive shall take his
vacation at such time or times as shall be approved by his supervisor or the
Board of Directors, which approval shall not be unreasonably withheld.
3. Withholding. The Company shall withhold from any Annual Salary or Bonus
payment and any other compensation or benefits payable under this Agreement, all
federal, state, city and other taxes as shall be required pursuant to law.
4. Reimbursement of Certain Expenses. Subject to such policies as may from
time to time be established by the Board, the Company shall pay or reimburse the
Executive for all ordinary, necessary and reasonable expenses (including,
without limitation, travel, meetings, dues, subscriptions, fees, educational
expenses, computer equipment and the like) actually incurred or paid by the
Executive during the Term in the performance of the Services (including, without
limitation, expenses incident to attendance at board or management meetings of
the Company) upon presentation of expense statements or vouchers or such other
supporting information as the Board may require.
5. Disability.
5.1. Definitions. For purposes of this Agreement, the Executive
shall be "disabled" or have a "disability" if the Executive shall have an
illness, injury, or other physical or mental condition which results in the
Executive's inability to perform substantially the Services to the extent the
Executive was performing the Services immediately prior to the commencement of
such condition.
5.2. Temporary Disability. In the event that the Executive shall be
disabled for not more than 90 consecutive days or any 90 days during any twelve
(12) - month period during the Term, then the Executive, during the continuance
of such disability, shall remain employed by the Company hereunder and shall
continue to be paid his Annual Salary and Bonus and otherwise shall have all of
the rights and be subject to all of the Executive's obligations and duties under
this Agreement, other than the obligation and duty to render the Services
otherwise in accordance with this Agreement.
5.3. Permanent Disability. In the event that the Executive shall be
disabled for more than 120 consecutive days or any 120 days during any twelve
(12) - month period during the Term, the Executive shall be deemed to be
"Permanently Disabled" for purposes of this Agreement, and this Agreement and
the Executive's employment hereunder shall cease and terminate, whereupon
neither party shall have any further rights, duties or obligations under this
Agreement, except for the Executive's obligations and duties under Sections 7, 8
and 9 hereof and the Company's obligations and duties under Sections 2, 3 and 4
hereof, but each party shall remain liable and responsible to the other for all
prior obligations and duties hereunder and for all acts and omissions of such
party prior to such termination. If the Executive's employment is terminated
under this Section 5.3, his right to receive his Bonus hereunder for any
Employment
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Year which has ended shall remain vested, but his right to receive his Bonus for
the year in which he is terminated shall be prorated to the Termination Date,
and if the Executive shall have no further right to receive a Bonus except as
stated hereinabove.
5.4. Arbitration of Disability Dispute. If the Company and the
Executive are unable to agree whether the Executive is Permanently Disabled
within the meaning of this Section, then that limited issue shall be submitted
to and settled by binding arbitration under and pursuant to the Maryland Uniform
Arbitration Act and the rules and regulations of the American Arbitration
Association, and the decision in such arbitration shall be final, conclusive and
binding upon each of the parties and judgment may be entered thereon in any
court of competent jurisdiction.
6. Death of the Executive. In the event of the death of the Executive
during the Term, this Agreement and the Executive's employment hereunder shall
terminate, whereupon neither party shall have any further rights, duties or
obligations under this Agreement, except that the Executive's estate shall be
bound by the Executive's obligations and duties under Sections 7, 8 and 9
hereof, the Company shall remain liable for the Company's obligations and duties
under Sections 2, 3 and 4 hereof, and further, the Company and the Executive's
estate shall remain liable and responsible to the other for all prior
obligations and duties hereunder and for all acts and omissions of the parties
prior to the Executive's death. If the Executive dies during the Term, his
eligibility to receive a Bonus hereunder for any Employment Year which has ended
shall remain vested, but his eligibility to receive a Bonus for the Employment
Year in which he has died shall be prorated to the date of his death. If the
Executive dies during the Term, the Executive shall have no further right or
eligibility to receive Bonus except as stated hereinabove.
7. Confidential Information.
7.1. Non-Disclosure of Confidential Information. The Executive
acknowledges that in the Executive's employment hereunder, the Executive will be
making use of, acquiring and adding to confidential information of a special and
unique nature and value relating to such matters as, but not limited to, the
Company's business operations, internal structure, financial affairs, systems,
procedures, manuals, confidential reports and lists of accounts, trade secrets,
customers and vendors, as well as the amount, nature and type of services used
and preferred by the Company's accounts and customers and the fees paid by such
accounts, all of which shall be deemed to be confidential information. In
consideration of employment by the Company, the Executive agrees that during the
Term and upon and after ceasing to be employed by the Company for any reason
whatsoever, the Executive shall not, for any reason or purpose whatsoever,
directly or indirectly, divulge or disclose to any person or entity any of such
confidential information which was obtained by the Executive as a result of the
Executive's employment with the Company, or any information or knowledge
respecting the affairs of the Company or any of its officers, directors,
executives, stockholders, accounts, customers or referrers of accounts learned
or conceived by the Executive while in the employ of the Company, but shall hold
all of the same inviolate.
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7.2. Confidential Records. All financial books, records, instruments
and documents; client lists; data; reports; programs; software; tapes;
rolodexes; telephone and address books; card decks; listings; programming and
any other instruments, records or documents relating or pertaining to the
accounts serviced by the Company or the Executive, the Services rendered by the
Executive, or the Company (collectively, the "Records") shall at all times be
and remain the property of the Company. Upon ceasing to be employed by the
Company for any reason whatsoever, the Executive shall return to the Company all
Records (whether furnished by the Company or prepared by the Executive), and the
Executive shall neither make nor retain any copies of any of such Records after
such cessation of employment.
7.3 All inventions and other creations, whether or not patentable or
copyrightable or trademarkable, and all ideas, reports and other creative works,
including, without limitation, computer programs, manuals and related materials,
made or conceived in whole or in part by the Executive while employed by the
Company and within one (1) year of termination of the Executive's employment
under this Agreement for any reason whatsoever, which relate in any manner
whatsoever to the business, existing or proposed, of the Company or any other
business or research or development effort in which the Company or any of its
subsidiaries or affiliates engages during the Executive's employment by the
Company will be disclosed promptly by the Executive to the Company and shall be
the sole and exclusive property of the Company. All copyrightable works created
by the Executive and covered by this Section 7.3 shall be deemed to be works
made for hire. The Executive shall cooperate with the Company in patenting or
copyrighting or trademarking all such inventions, ideas, reports and other
creative works, shall execute, acknowledge, seal and deliver all documents
tendered by the Company to evidence its ownership thereof throughout the world,
and shall cooperate with the Company in obtaining, defending, and enforcing its
rights therein.
8. Restrictive Covenants.
8.1. Non-Competition. The Executive and the Company recognize than
an important part of the Executive's duties will be to develop good will for the
Company through the Executive's personal contacts with customers, clients,
accounts, agents and others having business relationships with the Company, and
that there is a danger that this good will, a proprietary asset of the Company,
may follow the Executive if and when the Executive's relationship with the
Company is terminated. Accordingly, the Executive covenants that for a period of
one (1) year after the Executive ceases to be employed by the Company, the
Executive shall not, without the prior written consent of the Company, directly
or indirectly:
(a) Engage, either as a consultant, independent contractor,
proprietor, stockholder, partner, officer, director, executive, owner or
otherwise, in any business or activity that competes with the Company and the
Company's business;
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(b) Render or attempt to render any services which were
rendered by the Company during the two (2) year period immediately preceding
such cessation of the Executive's employment with the Company to any clients,
customers or accounts of the Company with whom the Executive had direct or
indirect contact and/or to whom the Executive rendered any services at any time
during such two (2) year period, to or for the benefit or account of the
Executive or to or for the benefit or account of any other person or entity; and
(c) Solicit for employment or employ to or for the benefit or
account of the Executive or to or for the benefit or account of any other person
or entity any Executive of the Company, nor shall the Executive urge, directly
or indirectly, any client or referrer of clients, customers, or accounts of the
Company to discontinue, in whole or in part, business with the Company or not to
do business with the Company. For purposes of this Section 8.1(c) of this
Agreement, the term "referrer of clients" shall mean any person or entity who or
which referred a client, customer or account to the Company at any time prior to
such cessation of the Executive's employment with the Company.
8.2. Severability and Modification. The Parties hereto agree that to
the extent that any provision or portion of Section 8.1 of this Agreement shall
be held, found or deemed to be unreasonable, unlawful or unenforceable by a
court of competent jurisdiction, then any such provision or portion thereof
shall be deemed to be modified to the extent necessary in order that any such
provision or portion thereof shall be legally enforceable to the fullest extent
permitted by applicable law; and the parties hereto do further agree that any
court of competent jurisdiction shall, and the parties hereto do hereby
expressly authorize, request and empower any court of competent jurisdiction to,
enforce any such provision or portion thereof or to modify any such provision or
portion thereof in order that any such provision or portion thereof shall be
enforced by such court to the fullest extent permitted by applicable law.
8.3. Definitions. As used in Sections 7 and 8, "clients,"
"customers," and "accounts" shall include any person or entity that, directly or
indirectly, through one or more intermediaries, controls or is controlled by, or
is under common control with, any such "clients," "customers," or "accounts."
9. Termination of Employment.
9.1 Termination for Cause. If the Executive engages in (i) fraud,
(ii) embezzlement, (iii) any other crime involving moral turpitude, (iv) gross
or willful neglect of duty, or (v) material breach of any of the provisions of
this Agreement, on his part to be performed by him, the Company may at any time
thereafter terminate the Executive's employment hereunder by written notice to
him, effective immediately and the date the notice shall be the Termination Date
hereunder. Any such termination shall be deemed to be termination for cause, for
purposes of this Agreement. If the Executive's employment is terminated for
cause hereunder, then the Executive shall be entitled to receive only the
following payments: any portion of his Annual Salary accrued to the date of such
termination and not
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theretofore paid to him; any Bonus to which he is entitled for any completed
Employment Year under this Agreement which has not theretofore been paid to him;
any vested rights the Executive has under the Stock Option Agreement; plus
reimbursement for any expenses properly incurred by the Executive, and supported
by appropriate vouchers, which expenses have been incurred prior to the date of
such termination and which have not theretofore been reimbursed. Except as set
forth in the immediately preceding sentence, all of the Executive's rights of
compensation hereunder shall be terminated as of the Termination Date in the
event of termination for cause.
9.2. Constructive Termination of Executive. In the event the Company
removes the Executive from the position of Executive Vice President of Sales &
Marketing, without his consent (or fails to re-elect the Executive at any
meeting of the Board of Directors of the Company held for the purpose of
electing or re-electing officers of the Company) or substantially changes his
duties or his reporting responsibility to the Chairman under Section 1.1, the
employment of the Executive, at his option, exercisable by written notice given
to the Company at any time within ninety (90) days following such event (or
failure to re-elect) (time of notice being deemed to be of the essence), shall
be deemed to have been constructively terminated by the Company hereunder, as of
the date of the Executive's notice; provided, however, that such constructive
termination shall not be deemed a breach by the Company of its obligations under
this Agreement and further provided, however, that termination for cause
pursuant to Section 9.1 shall make the provisions of this Section 9.2
inapplicable. If the Executive's employment is terminated under this Section
9.2, he shall continue to receive his Annual Salary for a period of nine (9)
months from the date of Termination (the "Severance Payment"). In the event of
the Constructive Termination of the Executive's Employment pursuant to this
Section 9.2, the Executive's right to receive Bonus for each completed
Employment Year shall remain in effect, and the Executive's right to receive
Bonus on account of the year in which he has elected to terminate his employment
by virtue of Constructive Termination shall be prorated to the date of such
election.
9.3. Other Termination of Employment by the Company. Anything
contained in this Agreement to the contrary notwithstanding, the Company may
discharge the Executive at any time upon written notice. In the event the
Company terminates the employment of the Executive hereunder other than pursuant
to any of the prior provisions hereof, without the Executive's consent, and in
accordance with this Section, then the Executive shall be deemed to have been
constructively terminated by the Company.
9.4. Other Termination of Employment by Executive. If the Executive
quits his employment (other than as authorized under Section 9.2 hereof), then
he shall be deemed to have been terminated by the Company for cause and shall be
subject to the provisions of Section 9.1 hereof.
9.5 Termination in the Event of Sale Merger or Consolidation. Upon a
change in control of the Company as a result of a sale, merger or consolidation,
if the Executive is
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subsequently terminated within nine (9) months under any provision of this
Agreement except Section 9.1, the Executive shall be entitled to receive a lump
sum payment in an amount equal to the greater of (a) two (2) times the amount of
compensation remaining due the Executive under this Agreement, or (b) the
Severance Payment. If the Executive is terminated thereafter, the Executive
shall only be entitled to the Severance Payment.
9.6. Injunctive Relief. It is recognized that damages, in the event
of a breach or threatened breach by the Executive of the Executive's obligations
and duties under this Agreement, would be difficult to ascertain, and it is,
therefore, agreed that the Company, in addition to, and without limiting any
other power, remedy or right it may have, shall have the right to seek an
injunction or other equitable relief in any court of competent jurisdiction,
seeking to enjoin any such breach, and the Executive hereby waives any and all
defenses he may have on the ground of lack of jurisdiction or competence of the
court to grant such an injunction or other equitable relief and any substantive
defenses to the granting of such injunctive relief. The existence of this right
shall not preclude any other powers, rights and remedies at law, in equity or
otherwise which the Company may have, but shall be in addition to, and
cumulative with, any other remedy available to the Company at law, in equity or
otherwise.
9.7. Indemnification. The Executive shall defend, indemnify and hold
harmless the Company from and against any and all claims, demands, threats,
charges, suits, actions, proceedings, liabilities, damages, losses, costs and
expenses (including attorneys' and experts' fees, interest and court costs) of
every kind and nature arising out of, resulting from, or in connection with any
breach or threatened breach of this Agreement by the Executive. The Company
shall defend, indemnify and hold harmless the Executive from and against any and
all claims, demands, threats, charges, suits, actions, proceedings, liabilities,
damages, losses, costs and expenses (including attorneys' and experts' fees,
interest and court costs) of every kind and nature arising out of or resulting
from the Executive's actions in his capacity as an officer or director of the
Company.
9.8. Setoff. Anything contained in this Agreement to the contrary
notwithstanding, the Company may setoff against any amount of money or other
consideration due to the Executive under this Agreement, any amount of money or
other consideration that is, or may become, due from the Executive to the
Company pursuant to Section 9.6 of this Agreement or otherwise under or outside
of this Agreement.
10. Term.
10.1. Duration. The term of this Agreement and the Company's
employment of the Executive (the "Term") shall commence on the date of this
Agreement and shall continue until the first to occur of the following: (i) the
close of business on the fifth (5th) anniversary of the date of this Agreement
(the "Initial Term"), or such later date to which the Executive's employment is
extended as provided in Section 10.2; (ii) the Executive's normal retirement
date under the Company's retirement policy or plan as in effect from time to
time ("Normal
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Retirement Date"); (iii) the death or Permanent Disability of the Executive;
(iv) the termination of this Agreement pursuant to Section 9; (v) at the
Executive's option, pursuant to Section 10.3.
10.2. Extension of Term. The Term shall be extended automatically
after the Initial Term, without any further action on the part of the Executive
or the Company, indefinitely (but not beyond (a) the Executive's Normal
Retirement Date or (b) a termination as defined in Section 9, and not in the
event of the death or Permanent Disability of the Executive) for additional
one-year terms (each a "Renewal Term"), unless the Company or the Executive
notifies the other to the contrary in writing not less than three (3) months
prior to the end of the Initial Term or any Renewal Term.
10.3 Initial Public Offering; Executive's Right to Renegotiate. In
the event of a firmly underwritten initial public offering of the Company's
common stock at a before-the-money market capitalization of not less than
$75,000,000, the Executive, in his sole discretion, may require the Company to
renegotiate the terms of this Agreement. In such event, the Executive shall be
entitled to compensation and other benefits consistent with the compensation and
benefits of other Executive Vice Presidents of Sales & Marketing of similarly
situated companies.
10.4. Obligations Upon Termination. Upon the cessation of the
Company's employment of the Executive for any reason whatsoever, neither party
shall thereafter have any further rights, duties or obligations under this
Agreement, except for the Executive's obligations and duties arising under
Sections 7, 8 and 9 hereof and the Company's obligations and duties arising
under Sections 2, 3, 4 and 9 hereof, but each party shall remain liable and
responsible to the other for all prior obligations and duties hereunder and for
all acts and omissions of such party prior to such termination.
11. Insurance. The Executive hereby consents to the Company, in its
discretion, taking out and maintaining during the Term, such life, disability
and disability buyout insurance policies with respect to the Executive, in such
amounts, with such insurance companies and upon such terms and conditions as may
be determined by the Board in its discretion, to fund or partially fund the
Company's obligation to repurchase any Stock owned by the Executive at the time
of the Executive's death or Permanent Disability, which the Company is obligated
to repurchase under the terms of any stockholders' agreement to which the
Executive and the Company are parties or for any other Company purpose.
12. Benefit. This Agreement shall inure to the benefit of and be binding
upon the Company, its successors and assigns, including, but not limited, to (i)
any corporation which may acquire all or substantially all of the Company's
assets and business, (ii) any corporation with or into which the Company may be
consolidated or merged, or (iii) any corporation that is the successor
corporation in a share exchange, and the Executive, his heirs, guardians and
personal and legal representatives.
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13. Notices.
All notices and other communications required or permitted to be given
hereunder shall be in writing, and shall be hand-delivered against receipted
copy, telecopied to the telephone number set forth below or mailed by United
States registered or certified mail, return receipt requested, postage prepaid,
to the address set forth below:
If to the Company to:
America's Doctor, Inc.
11403 Cronridge Drive
Owings Mills, MD 21117
Tel: (410) 581-1189
Fax: (410) 581-1571
with a copy to:
Jamie B. Eisenberg, Esq.
Rifkin, Livingston, Levitan & Silver, LLC
575 South Charles Street, Suite 200
Baltimore, MD 21201
Tel: (410) 837-9700
Fax: (410) 837-9716
And if to the Executive during the Term, in care of the Company;
And if to the Executive after the Term, to:
Jeffrey Lefko
7004 Wardman Road
Baltimore, MD 21212
(410) 321-4934
or to such other address or telephone number as the Executive or the Company may
notify the other in writing pursuant to this Section. Notices hand-delivered or
transmitted in accordance with this provision shall be deemed to have been
received on the date so hand-delivered or telecopied or three (3) days after the
date so mailed.
14. Notification Requirement. During the period of noncompetition provided
in Section 8 of this Agreement, the Executive shall give notice to the Company
of each new business activity in which he plans to undertake at least one
hundred twenty (120) days prior to beginning such activity. Such notice shall
state the name and address of the person for whom such activity is undertaken,
the business address of the activity, and the nature of Executive's
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business relationship and/or position with such person, company or project. The
Executive shall provide the Company with such information as the Company may
reasonably request in order to determine Executive's continued compliance with
non-competition agreements.
15. Shareholders' Agreement. This Agreement is and shall remain subject to
the terms and conditions of the Shareholders' Agreement dated ___________, 1999.
16. Conflicting Agreements. Executive hereby represents and warrants to
the Company that his execution of this Agreement and the performance of his
obligations hereunder will not breach or be in conflict with any other agreement
to which he may be a party or may be bound and is not subject to any covenant
against competition or similar covenants that would affect performance of his
duties and obligations hereunder. Executive shall not use for the benefit of the
Company any proprietary information of a third party without such third party's
consent.
17. Miscellaneous.
17.1. Binding effect. This Agreement shall be effective as of the
date hereof and shall be binding upon and inure to the benefit of the Executive,
his heirs, personal and legal representatives, and guardians and shall be
binding upon and inure to the benefit of the Company and its successors and
assigns.
17.2. Assignment. This Agreement may not be assigned by the
Executive without the prior written consent of the Company.
17.3. Integrated Agreement. This Agreement represents the full,
complete, entire and integrated agreement between the Executive and the Company
with respect to the subject matter hereof, and supersedes all prior oral and
written agreements, understandings and negotiations with respect to the subject
matter hereof.
17.4. Amendments. This Agreement may not be changed, modified, or
discharged orally, but only by an instrument in writing signed by the parties.
17.5. Applicable Law. This Agreement is entered into in, and shall
be governed by, construed and enforced in accordance with the laws of the State
of Maryland, without reference to principles of conflicts of laws.
17.6. Explanatory Statement; Exhibits; Headings. The Explanatory
Statement and each exhibit attached hereto are substantive parts hereof;
headings of the sections of this Agreement are for convenience of reference only
and are not substantive parts hereof.
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17.7. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which together shall be one
and the same instrument.
17.8. Gender. The use of any gender herein shall be deemed to be or
include the other genders and the neuter and the use of the singular herein
shall be deemed to be and include the plural (and vice versa), wherever
appropriate.
17.9 Severability. The parties hereto agree that to the extent that
any provision or portion of this Agreement shall be held, found or deemed to be
unreasonable, unlawful or unenforceable by a court of competent jurisdiction,
then any such provision or portion thereof shall be deemed to be modified to the
extent necessary in order that any such provision or portion thereof shall be
legally enforceable to the fullest extent permitted by applicable law.
17.10 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which together shall be one
and the same instrument.
IN WITNESS WHEREOF, the parties have executed, acknowledged, sealed and
delivered this Agreement as of the date first above written.
ATTEST: AMERICA'S DOCTOR, INC.
/s/ Lewis S. Goodman By: /s/ Scott M. Rifkin, M.D.
- ------------------------ -------------------------------
Scott M. Rifkin, M.D.
----------------------------------
Name (printed)
Chairman and CEO
----------------------------------
Title
WITNESS: JEFFREY LEFKO
/s/ Lewis S. Goodman /s/ Jeffrey Lefko
- ------------------------ ----------------------------------
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STATE OF MARYLAND TO WIT:
CITY/COUNTY OF
I HEREBY CERTIFY that on this 29 day of January, 1999, before
me, the subscriber, a Notary Public in and for the City/County and State
aforesaid, personally appeared Scott Rifkin, who acknowledged himself to
be the Chairman & CEO of America's Doctor, Inc., a Delaware corporation
(the "Corporation"), known to me (or satisfactorily proven) to be the person
whose name is subscribed to the within instrument, and he acknowledged that he
executed the same for the purposes therein contained as the duly authorized
officer of said Corporation by signing the name of the Corporation
by himself as Chief Executive Officer.
AS WITNESS my hand and Notarial Seal.
------------------------------------
Notary Public
My Commission Expires: 5-1-02
I HEREBY CERTIFY that on this 29 day of Janurary, 1999, before
me, the subscriber, a Notary Public in and for the City/County and State
aforesaid, personally appeared JEFFREY LEFKO, known to me (or satisfactorily
proven) to be the person whose name is subscribed to the within instrument, who
acknowledged the foregoing instrument to be his act.
AS WITNESS my hand and Notarial Seal.
------------------------------------
Notary Public
My Commission Expires: 5-1-02
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EXHIBIT 10.4
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of the
first (1st) day of February, 1999 (the "Effective Date"), by and between
AMERICA'S DOCTOR, INC., a Delaware corporation (the "Company"), and ALLAN C.
SANDERS (the "Executive").
Explanatory Statement
A. The Company provides on-line medical information to the general public
through the Internet and America On-line.
B. The Company recognizes that the Executive joined the Company on April
1, 1998, without pay, shortly after its founding. The Company recognizes the
Executive's importance to the Company and the important role the Executive has
played in the accomplishments of the Company to date.
C. The Executive has specialized expertise related to the business of the
Company.
D. The Company desires to employ the Executive to render the services
described in this Agreement, and the Executive is willing to accept such
employment, upon the terms and conditions hereinafter provided.
NOW, THEREFORE, in consideration of the Explanatory Statement, which shall
be deemed to be a substantive part of this Agreement, and the mutual covenants
and representations contained herein, the parties hereto agree as follows:
1. Employment and Duties.
1.1. Duties. As of the Effective Date, the Company shall employ the
Executive as its Chief Financial Officer, on a full-time basis to render such
services and perform such duties customary to his position for and on behalf of
the Company, and the Executive shall render such other and further services and
perform such other and further duties for and on behalf of the Company as may be
assigned reasonably to the Executive by the Company's Chief Executive Officer,
President or the Board of Directors of the Company (the "Services"). The
Executive shall perform his duties faithfully and to the best of his abilities.
1.2. Extent of Service. During the Term, the Executive shall devote
all of his time and efforts to the business of the Company and will at such
times devote such efforts as are reasonably sufficient for fulfilling the
significant responsibilities entrusted to him. The Executive shall be permitted
to engage in other activities, including, without limitation, supervising his
personal investments, participating in civic, political and charitable
activities, giving lectures and
<PAGE>
teaching, and serving on boards or as a trustee of other organizations and
corporations (subject to Section 8) so long as such activities, in the
aggregate, do not interfere with the performance by the Executive of his duties
hereunder. The Executive shall be entitled to retain for his own account any and
all income, compensation, fees, and revenue received by the Executive arising
out of, in connection with, or related to the Executive's permitted activities.
2. Compensation and Benefits. In consideration of Executive's Services
under this Agreement, the Executive shall be compensated as follows:
2.1. Annual Salary. The Company shall pay the Executive during each
fiscal year of the Company during the Term an annual salary of One Hundred
Twenty Thousand Dollars ($120,000) plus annual cost-of-living adjustments
(determined as of the first day of the Company's fiscal year) (the "Annual
Salary"); the Annual Salary shall be prorated for that portion of the Company's
fiscal year during which the Term commenced and/or terminated if such
commencement and/or termination occurred on a day other than the first day and
last day, respectively, of the Company's fiscal year. The Annual Salary shall be
payable in equal periodic installments which are no less frequent than monthly.
The Annual Salary shall be reviewed by the Board each year during the Term and
may be adjusted in the sole and absolute discretion of the Board, provided that
no such adjustment shall result in a decrease of the Annual Salary.
2.2. Bonus. The Executive is eligible to receive, in addition to the
Annual Salary, an annual bonus ("Bonus") with respect to each fiscal year the
Executive is employed by the Company. The amount of the Bonus shall be
determined by the Compensation Committee of the Company in its sole discretion,
and the determination of the Compensation Committee shall be final, conclusive
and binding upon each of the parties.
2.3. Stock Options. The Executive will be a participant in a Stock
Option Agreement, the form of which has been preliminarily approved by the
Company's Board of Directors by Resolution dated January 29, 1999 (the "Stock
Option Agreement"), pursuant to which the Company shall grant certain stock
options (the "Options") to the Executive. The Executive's rights in and/or to
the Options, including the effect of termination of Executive's employment
(whether for cause or without cause) and the effect of a change in control of
the Company upon the Options rights, are set forth in the Stock Option
Agreement.
2.4. Benefits. During the Term, the Executive shall be entitled to
receive employee benefits consisting of participation in the Company's pension
and retirement plans, group life insurance, group health insurance, disability
insurance and malpractice insurance plans, automobile allowance and such other
perquisites as may be provided by the Company from time to time to executives
equivalent to the Executive (collectively the "Perquisites") in accordance with
the policies of the Company in effect from time to time, provided that in no
event shall the Perquisites available to the Executive be less than those
available as of the date of this Agreement.
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2.5. Vacations and Personal Leave. During each 12-month period
during the Term, the Executive shall be entitled to fifteen (15) paid vacation
days and five (5) paid personal-leave days. The Executive shall take his
vacation at such time or times as shall be approved by his supervisor or the
Board of Directors, which approval shall not be unreasonably withheld.
3. Withholding. The Company shall withhold from any Annual Salary or Bonus
payment and any other compensation or benefits payable under this Agreement, all
federal, state, city and other taxes as shall be required pursuant to law.
4. Reimbursement of Certain Costs and Expenses.
4.1. Business-related expenses. Subject to such policies as may from
time to time be established by the Board, the Company shall pay or reimburse the
Executive for all ordinary, necessary and reasonable expenses (including,
without limitation, travel, meetings, dues, subscriptions, fees, educational
expenses, computer equipment and the like) actually incurred or paid by the
Executive during the Term in the performance of the Services (including, without
limitation, expenses incident to attendance at board or management meetings of
the Company) upon presentation of expense statements or vouchers or such other
supporting information as the Board may require.
4.2. Continuing Education Costs and Expenses. In addition to the
expenses payable to the Executive under Section 4.1 of this Agreement, the
Company shall pay all reasonable and necessary costs and expenses relating to
continuing education of the Executive as required to maintain the Executive's
CPA license.
5. Disability.
5.1. Definitions. For purposes of this Agreement, the Executive
shall be "disabled" or have a "disability" if the Executive shall have an
illness, injury, or other physical or mental condition which results in the
Executive's inability to perform substantially the Services to the extent the
Executive was performing the Services immediately prior to the commencement of
such condition.
5.2. Temporary Disability. In the event that the Executive shall be
disabled for not more than 90 consecutive days or any 90 days during any twelve
(12) - month period during the Term, then the Executive, during the continuance
of such disability, shall remain employed by the Company hereunder and shall
continue to be paid his Annual Salary and Bonus and otherwise shall have all of
the rights and be subject to all of the Executive's obligations and duties under
this Agreement, other than the obligation and duty to render the Services
otherwise in accordance with this Agreement.
5.3. Permanent Disability. In the event that the Executive shall be
disabled for more than 120 consecutive days or any 120 days during any twelve
(12) - month period during
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the Term, the Executive shall be deemed to be "Permanently Disabled" for
purposes of this Agreement, and this Agreement and the Executive's employment
hereunder shall cease and terminate, whereupon neither party shall have any
further rights, duties or obligations under this Agreement, except for the
Executive's obligations and duties under Sections 7, 8 and 9 hereof and the
Company's obligations and duties under Sections 2, 3 and 4 hereof, but each
party shall remain liable and responsible to the other for all prior obligations
and duties hereunder and for all acts and omissions of such party prior to such
termination. If the Executive's employment is terminated under this Section 5.3,
his right to receive his Bonus hereunder for any Employment Year which has ended
shall remain vested, but his right to receive his Bonus for the year in which he
is terminated shall be prorated to the Termination Date, and if the Executive
shall have no further right to receive a Bonus except as stated hereinabove.
5.4. Arbitration of Disability Dispute. If the Company and the
Executive are unable to agree whether the Executive is Permanently Disabled
within the meaning of this Section, then that limited issue shall be submitted
to and settled by binding arbitration under and pursuant to the Maryland Uniform
Arbitration Act and the rules and regulations of the American Arbitration
Association, and the decision in such arbitration shall be final, conclusive and
binding upon each of the parties and judgment may be entered thereon in any
court of competent jurisdiction.
6. Death of the Executive. In the event of the death of the Executive
during the Term, this Agreement and the Executive's employment hereunder shall
terminate, whereupon neither party shall have any further rights, duties or
obligations under this Agreement, except that the Executive's estate shall be
bound by the Executive's obligations and duties under Sections 7, 8 and 9
hereof, the Company shall remain liable for the Company's obligations and duties
under Sections 2, 3 and 4 hereof, and further, the Company and the Executive's
estate shall remain liable and responsible to the other for all prior
obligations and duties hereunder and for all acts and omissions of the parties
prior to the Executive's death. If the Executive dies during the Term, his
eligibility to receive a Bonus hereunder for any Employment Year which has ended
shall remain vested, but his eligibility to receive a Bonus for the Employment
Year in which he has died shall be prorated to the date of his death. If the
Executive dies during the Term, the Executive shall have no further right or
eligibility to receive Bonus except as stated hereinabove.
7. Confidential Information.
7.1. Non-Disclosure of Confidential Information. The Executive
acknowledges that in the Executive's employment hereunder, the Executive will be
making use of, acquiring and adding to confidential information of a special and
unique nature and value relating to such matters as, but not limited to, the
Company's business operations, internal structure, financial affairs, systems,
procedures, manuals, confidential reports and lists of accounts, trade secrets,
customers and vendors, as well as the amount, nature and type of services used
and preferred by the Company's accounts and customers and the fees paid by such
accounts, all of which shall be deemed to be confidential information. In
consideration of employment by
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the Company, the Executive agrees that during the Term and upon and after
ceasing to be employed by the Company for any reason whatsoever, the Executive
shall not, for any reason or purpose whatsoever, directly or indirectly, divulge
or disclose to any person or entity any of such confidential information which
was obtained by the Executive as a result of the Executive's employment with the
Company, or any information or knowledge respecting the affairs of the Company
or any of its officers, directors, executives, stockholders, accounts, customers
or referrers of accounts learned or conceived by the Executive while in the
employ of the Company, but shall hold all of the same inviolate.
7.2. Confidential Records. All financial books, records, instruments
and documents; client lists; data; reports; programs; software; tapes;
rolodexes; telephone and address books; card decks; listings; programming and
any other instruments, records or documents relating or pertaining to the
accounts serviced by the Company or the Executive, the Services rendered by the
Executive, or the Company (collectively, the "Records") shall at all times be
and remain the property of the Company. Upon ceasing to be employed by the
Company for any reason whatsoever, the Executive shall return to the Company all
Records (whether furnished by the Company or prepared by the Executive), and the
Executive shall neither make nor retain any copies of any of such Records after
such cessation of employment.
7.3 All inventions and other creations, whether or not patentable or
copyrightable or trademarkable, and all ideas, reports and other creative works,
including, without limitation, computer programs, manuals and related materials,
made or conceived in whole or in part by the Executive while employed by the
Company and within one (1) year of termination of the Executive's employment
under this Agreement for any reason whatsoever, which relate in any manner
whatsoever to the business, existing or proposed, of the Company or any other
business or research or development effort in which the Company or any of its
subsidiaries or affiliates engages during the Executive's employment by the
Company will be disclosed promptly by the Executive to the Company and shall be
the sole and exclusive property of the Company. All copyrightable works created
by the Executive and covered by this Section 7.3 shall be deemed to be works
made for hire. The Executive shall cooperate with the Company in patenting or
copyrighting or trademarking all such inventions, ideas, reports and other
creative works, shall execute, acknowledge, seal and deliver all documents
tendered by the Company to evidence its ownership thereof throughout the world,
and shall cooperate with the Company in obtaining, defending, and enforcing its
rights therein.
8. Restrictive Covenants.
8.1. Non-Competition. The Executive and the Company recognize than
an important part of the Executive's duties will be to develop good will for the
Company through the Executive's personal contacts with customers, clients,
accounts, agents and others having business relationships with the Company, and
that there is a danger that this good will, a proprietary asset of the Company,
may follow the Executive if and when the Executive's relationship with the
Company is terminated. Accordingly, the Executive covenants that for a
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period of one (1) year after the Executive ceases to be employed by the Company,
the Executive shall not, without the prior written consent of the Company,
directly or indirectly:
(a) Engage, either as a consultant, independent contractor,
proprietor, stockholder, partner, officer, director, executive, owner or
otherwise, in any business or activity that competes with the Company and the
Company's business;
(b) Render or attempt to render any services which were
rendered by the Company during the two (2) year period immediately preceding
such cessation of the Executive's employment with the Company to any clients,
customers or accounts of the Company with whom the Executive had direct or
indirect contact and/or to whom the Executive rendered any services at any time
during such two (2) year period, to or for the benefit or account of the
Executive or to or for the benefit or account of any other person or entity; and
(c) Solicit for employment or employ to or for the benefit or
account of the Executive or to or for the benefit or account of any other person
or entity any Executive of the Company, nor shall the Executive urge, directly
or indirectly, any client or referrer of clients, customers, or accounts of the
Company to discontinue, in whole or in part, business with the Company or not to
do business with the Company. For purposes of this Section 8.1(c) of this
Agreement, the term "referrer of clients" shall mean any person or entity who or
which referred a client, customer or account to the Company at any time prior to
such cessation of the Executive's employment with the Company.
8.2. Severability and Modification. The Parties hereto agree that to
the extent that any provision or portion of Section 8.1 of this Agreement shall
be held, found or deemed to be unreasonable, unlawful or unenforceable by a
court of competent jurisdiction, then any such provision or portion thereof
shall be deemed to be modified to the extent necessary in order that any such
provision or portion thereof shall be legally enforceable to the fullest extent
permitted by applicable law; and the parties hereto do further agree that any
court of competent jurisdiction shall, and the parties hereto do hereby
expressly authorize, request and empower any court of competent jurisdiction to,
enforce any such provision or portion thereof or to modify any such provision or
portion thereof in order that any such provision or portion thereof shall be
enforced by such court to the fullest extent permitted by applicable law.
8.3. Definitions. As used in Sections 7 and 8, "clients,"
"customers," and "accounts" shall include any person or entity that, directly or
indirectly, through one or more intermediaries, controls or is controlled by, or
is under common control with, any such "clients," "customers," or "accounts."
9. Termination of Employment.
9.1 Termination for Cause. If the Executive engages in (i) fraud,
(ii) embezzlement, (iii) any other crime involving moral turpitude, (iv) gross
or willful neglect of duty, or (v) material breach of any of the provisions of
this Agreement, on his part to be
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performed by him, the Company may at any time thereafter terminate the
Executive's employment hereunder by written notice to him, effective immediately
and the date the notice shall be the Termination Date hereunder. Any such
termination shall be deemed to be termination for cause, for purposes of this
Agreement. If the Executive's employment is terminated for cause hereunder, then
the Executive shall be entitled to receive only the following payments: any
portion of his Annual Salary accrued to the date of such termination and not
theretofore paid to him; any Bonus to which he is entitled for any completed
Employment Year under this Agreement which has not theretofore been paid to him;
any vested rights the Executive has under the Stock Option Agreement; plus
reimbursement for any expenses properly incurred by the Executive, and supported
by appropriate vouchers, which expenses have been incurred prior to the date of
such termination and which have not theretofore been reimbursed. Except as set
forth in the immediately preceding sentence, all of the Executive's rights of
compensation hereunder shall be terminated as of the Termination Date in the
event of termination for cause.
9.2. Constructive Termination of Executive. In the event the Company
removes the Executive from the position of Chief Financial Officer or Director
of the Company, without his consent (or fails to re-elect the Executive at any
meeting of the Board of Directors of the Company held for the purpose of
electing or re-electing officers of the Company) or substantially changes his
duties or his reporting responsibility to the Chairman under Section 1.1, the
employment of the Executive, at his option, exercisable by written notice given
to the Company at any time within ninety (90) days following such event (or
failure to re-elect) (time of notice being deemed to be of the essence), shall
be deemed to have been constructively terminated by the Company hereunder, as of
the date of the Executive's notice; provided, however, that such constructive
termination shall not be deemed a breach by the Company of its obligations under
this Agreement and further provided, however, that termination for cause
pursuant to Section 9.1 shall make the provisions of this Section 9.2
inapplicable. If the Executive's employment is terminated under this Section
9.2, he shall continue to receive his Annual Salary for a period of nine (9)
months from the date of Termination (the "Severance Payment"). In the event of
the Constructive Termination of the Executive's Employment pursuant to this
Section 9.2, the Executive's right to receive Bonus for each completed
Employment Year shall remain in effect, and the Executive's right to receive
Bonus on account of the year in which he has elected to terminate his employment
by virtue of Constructive Termination shall be prorated to the date of such
election.
9.3. Other Termination of Employment by the Company. Anything
contained in this Agreement to the contrary notwithstanding, the Company may
discharge the Executive at any time upon written notice. In the event the
Company terminates the employment of the Executive hereunder other than pursuant
to any of the prior provisions hereof, without the Executive's consent, and in
accordance with this Section, then the Executive shall be deemed to have been
constructively terminated by the Company.
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9.4. Other Termination of Employment by Executive. If the Executive
quits his employment (other than as authorized under Section 9.2 hereof), then
he shall be deemed to have been terminated by the Company for cause and shall be
subject to the provisions of Section 9.1 hereof.
9.5 Termination in the Event of Sale Merger or Consolidation. Upon a
change in control of the Company as a result of a sale, merger or consolidation,
if the Executive is subsequently terminated within nine (9) months under any
provision of this Agreement except Section 9.1, the Executive shall be entitled
to receive a lump sum payment in an amount equal to the greater of (a) two (2)
times the amount of compensation remaining due the Executive under this
Agreement, or (b) the Severance Payment. If the Executive is terminated
thereafter, the Executive shall only be entitled to the Severance Payment.
9.6. Injunctive Relief. It is recognized that damages, in the event
of a breach or threatened breach by the Executive of the Executive's obligations
and duties under this Agreement, would be difficult to ascertain, and it is,
therefore, agreed that the Company, in addition to, and without limiting any
other power, remedy or right it may have, shall have the right to seek an
injunction or other equitable relief in any court of competent jurisdiction,
seeking to enjoin any such breach, and the Executive hereby waives any and all
defenses he may have on the ground of lack of jurisdiction or competence of the
court to grant such an injunction or other equitable relief and any substantive
defenses to the granting of such injunctive relief. The existence of this right
shall not preclude any other powers, rights and remedies at law, in equity or
otherwise which the Company may have, but shall be in addition to, and
cumulative with, any other remedy available to the Company at law, in equity or
otherwise.
9.7. Indemnification. The Executive shall defend, indemnify and hold
harmless the Company from and against any and all claims, demands, threats,
charges, suits, actions, proceedings, liabilities, damages, losses, costs and
expenses (including attorneys' and experts' fees, interest and court costs) of
every kind and nature arising out of, resulting from, or in connection with any
breach or threatened breach of this Agreement by the Executive. The Company
shall defend, indemnify and hold harmless the Executive from and against any and
all claims, demands, threats, charges, suits, actions, proceedings, liabilities,
damages, losses, costs and expenses (including attorneys' and experts' fees,
interest and court costs) of every kind and nature arising out of or resulting
from the Executive's actions in his capacity as an officer or director of the
Company.
9.8. Setoff. Anything contained in this Agreement to the contrary
notwithstanding, the Company may setoff against any amount of money or other
consideration due to the Executive under this Agreement, any amount of money or
other consideration that is, or may become, due from the Executive to the
Company pursuant to Section 9.6 of this Agreement or otherwise under or outside
of this Agreement.
10. Term.
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10.1. Duration. The term of this Agreement and the Company's
employment of the Executive (the "Term") shall commence on the date of this
Agreement and shall continue until the first to occur of the following: (i) the
close of business on the fifth (5th) anniversary of the date of this Agreement
(the "Initial Term"), or such later date to which the Executive's employment is
extended as provided in Section 10.2; (ii) the Executive's normal retirement
date under the Company's retirement policy or plan as in effect from time to
time ("Normal Retirement Date"); (iii) the death or Permanent Disability of the
Executive; (iv) the termination of this Agreement pursuant to Section 9; (v) at
the Executive's option, pursuant to Section 10.3.
10.2. Extension of Term. The Term shall be extended automatically
after the Initial Term, without any further action on the part of the Executive
or the Company, indefinitely (but not beyond (a) the Executive's Normal
Retirement Date or (b) a termination as defined in Section 9, and not in the
event of the death or Permanent Disability of the Executive) for additional
one-year terms (each a "Renewal Term"), unless the Company or the Executive
notifies the other to the contrary in writing not less than three (3) months
prior to the end of the Initial Term or any Renewal Term.
10.3 Initial Public Offering; Executive's Right to Renegotiate. In
the event of a firmly underwritten initial public offering of the Company's
common stock at a before-the-money market capitalization of not less than
$75,000,000, the Executive, in his sole discretion, may require the Company to
renegotiate the terms of this Agreement. In such event, the Executive shall be
entitled to compensation and other benefits consistent with the compensation and
benefits of other Chief Financial Officers of similarly situated companies.
10.4. Obligations Upon Termination. Upon the cessation of the
Company's employment of the Executive for any reason whatsoever, neither party
shall thereafter have any further rights, duties or obligations under this
Agreement, except for the Executive's obligations and duties arising under
Sections 7, 8 and 9 hereof and the Company's obligations and duties arising
under Sections 2, 3, 4 and 9 hereof, but each party shall remain liable and
responsible to the other for all prior obligations and duties hereunder and for
all acts and omissions of such party prior to such termination.
11. Insurance. The Executive hereby consents to the Company, in its
discretion, taking out and maintaining during the Term, such life, disability
and disability buyout insurance policies with respect to the Executive, in such
amounts, with such insurance companies and upon such terms and conditions as may
be determined by the Board in its discretion, to fund or partially fund the
Company's obligation to repurchase any Stock owned by the Executive at the time
of the Executive's death or Permanent Disability, which the Company is obligated
to repurchase under the terms of any stockholders' agreement to which the
Executive and the Company are parties or for any other Company purpose.
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12. Benefit. This Agreement shall inure to the benefit of and be binding
upon the Company, its successors and assigns, including, but not limited, to (i)
any corporation which may acquire all or substantially all of the Company's
assets and business, (ii) any corporation with or into which the Company may be
consolidated or merged, or (iii) any corporation that is the successor
corporation in a share exchange, and the Executive, his heirs, guardians and
personal and legal representatives.
13. Notices.
All notices and other communications required or permitted to be given
hereunder shall be in writing, and shall be hand-delivered against receipted
copy, telecopied to the telephone number set forth below or mailed by United
States registered or certified mail, return receipt requested, postage prepaid,
to the address set forth below:
If to the Company to:
America's Doctor, Inc.
11403 Cronridge Drive
Owings Mills, MD 21117
Tel: (410) 581-1189
Fax: (410) 581-1571
with a copy to:
Jamie B. Eisenberg, Esq.
Rifkin, Livingston, Levitan & Silver, LLC
575 South Charles Street, Suite 200
Baltimore, MD 21201
Tel: (410) 837-9700
Fax: (410) 837-9716
And if to the Executive during the Term, in care of the Company;
And if to the Executive after the Term, to:
Allan C. Sanders
4 Scott Norman Court
Owings Mills, MD 21117
(410) 363-2337
or to such other address or telephone number as the Executive or the Company may
notify the other in writing pursuant to this Section. Notices hand-delivered or
transmitted in accordance
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with this provision shall be deemed to have been received on the date so
hand-delivered or telecopied or three (3) days after the date so mailed.
14. Notification Requirement. During the period of noncompetition provided
in Section 8 of this Agreement, the Executive shall give notice to the Company
of each new business activity in which he plans to undertake at least one
hundred twenty (120) days prior to beginning such activity. Such notice shall
state the name and address of the person for whom such activity is undertaken,
the business address of the activity, and the nature of Executive's business
relationship and/or position with such person, company or project. The Executive
shall provide the Company with such information as the Company may reasonably
request in order to determine Executive's continued compliance with
non-competition agreements.
15. Shareholders' Agreement. This Agreement is and shall remain subject to
the terms and conditions of the Shareholders' Agreement dated ___________, 1999.
16. Conflicting Agreements. Executive hereby represents and warrants to
the Company that his execution of this Agreement and the performance of his
obligations hereunder will not breach or be in conflict with any other agreement
to which he may be a party or may be bound and is not subject to any covenant
against competition or similar covenants that would affect performance of his
duties and obligations hereunder. Executive shall not use for the benefit of the
Company any proprietary information of a third party without such third party's
consent.
17. Miscellaneous.
17.1. Binding effect. This Agreement shall be effective as of the
date hereof and shall be binding upon and inure to the benefit of the Executive,
his heirs, personal and legal representatives, and guardians and shall be
binding upon and inure to the benefit of the Company and its successors and
assigns.
17.2. Assignment. This Agreement may not be assigned by the
Executive without the prior written consent of the Company.
17.3. Integrated Agreement. This Agreement represents the full,
complete, entire and integrated agreement between the Executive and the Company
with respect to the subject matter hereof, and supersedes all prior oral and
written agreements, understandings and negotiations with respect to the subject
matter hereof.
17.4. Amendments. This Agreement may not be changed, modified, or
discharged orally, but only by an instrument in writing signed by the parties.
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17.5. Applicable Law. This Agreement is entered into in, and shall
be governed by, construed and enforced in accordance with the laws of the State
of Maryland, without reference to principles of conflicts of laws.
17.6. Explanatory Statement; Exhibits; Headings. The Explanatory
Statement and each exhibit attached hereto are substantive parts hereof;
headings of the sections of this Agreement are for convenience of reference only
and are not substantive parts hereof.
17.7. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which together shall be one
and the same instrument.
17.8. Gender. The use of any gender herein shall be deemed to be or
include the other genders and the neuter and the use of the singular herein
shall be deemed to be and include the plural (and vice versa), wherever
appropriate.
17.9 Severability. The parties hereto agree that to the extent that
any provision or portion of this Agreement shall be held, found or deemed to be
unreasonable, unlawful or unenforceable by a court of competent jurisdiction,
then any such provision or portion thereof shall be deemed to be modified to the
extent necessary in order that any such provision or portion thereof shall be
legally enforceable to the fullest extent permitted by applicable law.
17.10 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which together shall be one
and the same instrument.
IN WITNESS WHEREOF, the parties have executed, acknowledged, sealed and
delivered this Agreement as of the date first above written.
ATTEST: AMERICA'S DOCTOR, INC.
/s/ Lewis S. Goodman By: /s/ Scott M. Rifkin
- ------------------------ -------------------------------
Scott M. Rifkin
----------------------------------
Name (printed)
Chairman and CEO
----------------------------------
Title
WITNESS: ALLAN C. SANDERS
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/s/ Lewis S. Goodman /s/ Allan C. Sanders
- ------------------------ ----------------------------------
STATE OF MARYLAND TO WIT:
CITY/COUNTY OF
I HEREBY CERTIFY that on this 29 day of January, 1999, before
me, the subscriber, a Notary Public in and for the City/County and State
aforesaid, personally appeared Scott Rifkin, who acknowledged himself to
be the Chairman & CEO of America's Doctor, Inc., a Delaware corporation
(the "Corporation"), known to me (or satisfactorily proven) to be the person
whose name is subscribed to the within instrument, and he acknowledged that he
executed the same for the purposes therein contained as the duly authorized
____________________ of said Corporation by signing the name of the Corporation
by himself as ____________________.
AS WITNESS my hand and Notarial Seal.
------------------------------------
Notary Public
My Commission Expires: 5-1-02
I HEREBY CERTIFY that on this 29 day of January, 1999, before
me, the subscriber, a Notary Public in and for the City/County and State
aforesaid, personally appeared ALLAN C. SANDERS, known to me (or satisfactorily
proven) to be the person whose name is subscribed to the within instrument, who
acknowledged the foregoing instrument to be his act.
AS WITNESS my hand and Notarial Seal.
------------------------------------
Notary Public
My Commission Expires: 5-1-02
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Exhibit 10.5
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of the
first (1st) day of February, 1999 (the "Effective Date"), by and between
AMERICA'S DOCTOR, INC., a Delaware corporation (the "Company"), and LAURA GILL
(the "Executive").
Explanatory Statement
A. The Company provides on-line medical information to the general public
through the Internet and America On-line.
B. The Company recognizes that the Executive joined the Company on April
1, 1998, without pay, shortly after its founding. The Company recognizes the
Executive is important to the Company and the important role the Executive has
played in the accomplishments of the Company to date.
C. The Executive has specialized expertise related to the business of the
Company.
D. The Company desires to employ the Executive to render the services
described in this Agreement, and the Executive is willing to accept such
employment, upon the terms and conditions hereinafter provided.
NOW, THEREFORE, in consideration of the Explanatory Statement, which shall
be deemed to be a substantive part of this Agreement, and the mutual covenants
and representations contained herein, the parties hereto agree as follows:
1. Employment and Duties.
1.1. Duties. As of the Effective Date, the Company shall employ the
Executive as its Chief Operating Officer, on a full-time basis to render such
services and perform such duties customary to her position for and on behalf of
the Company, and the Executive shall render such other and further services and
perform such other and further duties for and on behalf of the Company as may be
assigned reasonably to the Executive by the Company's Chief Executive Officer,
President or the Board of Directors of the Company (the "Services"). The
Executive shall perform her duties faithfully and to the best of her abilities.
1.2. Extent of Service. During the Term, the Executive shall devote
all of her time and efforts to the business of the Company and will at such
times devote such efforts as are reasonably sufficient for fulfilling the
significant responsibilities entrusted to him. The Executive shall be permitted
to engage in other activities, including, without limitation, supervising her
personal investments, participating in civic, political and charitable
activities, giving lectures and
<PAGE>
teaching, and serving on boards or as a trustee of other organizations and
corporations (subject to Section 8) so long as such activities, in the
aggregate, do not interfere with the performance by the Executive of her duties
hereunder. The Executive shall be entitled to retain for her own account any and
all income, compensation, fees, and revenue received by the Executive arising
out of, in connection with, or related to the Executive's permitted activities.
2. Compensation and Benefits. In consideration of Executive's Services
under this Agreement, the Executive shall be compensated as follows:
2.1. Annual Salary. The Company shall pay the Executive during each
fiscal year of the Company during the Term an annual salary of One Hundred
Twenty Thousand Dollars ($120,000) plus annual cost-of-living adjustments
(determined as of the first day of the Company's fiscal year) (the "Annual
Salary"); the Annual Salary shall be prorated for that portion of the Company's
fiscal year during which the Term commenced and/or terminated if such
commencement and/or termination occurred on a day other than the first day and
last day, respectively, of the Company's fiscal year. The Annual Salary shall be
payable in equal periodic installments which are no less frequent than monthly.
The Annual Salary shall be reviewed by the Board each year during the Term and
may be adjusted in the sole and absolute discretion of the Board, provided that
no such adjustment shall result in a decrease of the Annual Salary.
2.2. Bonus. The Executive is eligible to receive, in addition to the
Annual Salary, an annual bonus ("Bonus") with respect to each fiscal year the
Executive is employed by the Company. The amount of the Bonus shall be
determined by the Compensation Committee of the Company in its sole discretion,
and the determination of the Compensation Committee shall be final, conclusive
and binding upon each of the parties.
2.3. Stock Options. The Executive will be a participants in a Stock
Option Agreement, the form of which has been preliminarily approved by the
Company's Board of Directors by Resolution dated January 29, 1999 (the "Stock
Option Agreement"), pursuant to which the Company shall grant certain stock
options (the "Options") to the Executive. The Executive's rights in and/or to
the Options, including the effect of termination of Executive's employment
(whether for cause or without cause) and the effect of a change in control of
the Company upon the Options rights, are set forth in the Stock Option
Agreement.
2.4. Benefits. During the Term, the Executive shall be entitled to
receive employee benefits consisting of participation in the Company's pension
and retirement plans, group life insurance, group health insurance, disability
insurance and malpractice insurance plans, automobile allowance and such other
perquisites as may be provided by the Company from time to time to executives
equivalent to the Executive (collectively the "Perquisites") in accordance with
the policies of the Company in effect from time to time, provided that in no
event shall the Perquisites available to the Executive be less than those
available as of the date of this Agreement.
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2.5. Vacations and Personal Leave. During each 12-month period
during the Term, the Executive shall be entitled to fifteen (15) paid vacation
days and five (5) paid personal-leave days. The Executive shall take his
vacation at such time or times as shall be approved by his supervisor or the
Board of Directors, which approval shall not be unreasonably withheld.
3. Withholding. The Company shall withhold from any Annual Salary or Bonus
payment and any other compensation or benefits payable under this Agreement, all
federal, state, city and other taxes as shall be required pursuant to law.
4. Reimbursement of Certain Expenses. Subject to such policies as may from
time to time be established by the Board, the Company shall pay or reimburse the
Executive for all ordinary, necessary and reasonable expenses (including,
without limitation, travel, meetings, dues, subscriptions, fees, educational
expenses, computer equipment and the like) actually incurred or paid by the
Executive during the Term in the performance of the Services (including, without
limitation, expenses incident to attendance at board or management meetings of
the Company) upon presentation of expense statements or vouchers or such other
supporting information as the Board may require.
5. Disability.
5.1. Definitions. For purposes of this Agreement, the Executive
shall be "disabled" or have a "disability" if the Executive shall have an
illness, injury, or other physical or mental condition which results in the
Executive's inability to perform substantially the Services to the extent the
Executive was performing the Services immediately prior to the commencement of
such condition.
5.2. Temporary Disability. In the event that the Executive shall be
disabled for not more than 90 consecutive days or any 90 days during any twelve
(12) - month period during the Term, then the Executive, during the continuance
of such disability, shall remain employed by the Company hereunder and shall
continue to be paid his Annual Salary and Bonus and otherwise shall have all of
the rights and be subject to all of the Executive's obligations and duties under
this Agreement, other than the obligation and duty to render the Services
otherwise in accordance with this Agreement.
5.3. Permanent Disability. In the event that the Executive shall be
disabled for more than 120 consecutive days or any 120 days during any twelve
(12) - month period during the Term, the Executive shall be deemed to be
"Permanently Disabled" for purposes of this Agreement, and this Agreement and
the Executive's employment hereunder shall cease and terminate, whereupon
neither party shall have any further rights, duties or obligations under this
Agreement, except for the Executive's obligations and duties under Sections 7, 8
and 9 hereof and the Company's obligations and duties under Sections 2, 3 and 4
hereof, but each party shall remain liable and responsible to the other for all
prior obligations and duties hereunder and for all acts and omissions of such
party prior to such termination. If the Executive's employment is
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terminated under this Section 5.3, his right to receive his Bonus hereunder for
any Employment Year which has ended shall remain vested, but his right to
receive his Bonus for the year in which he is terminated shall be prorated to
the Termination Date, and if the Executive shall have no further right to
receive a Bonus except as stated hereinabove.
5.4. Arbitration of Disability Dispute. If the Company and the
Executive are unable to agree whether the Executive is Permanently Disabled
within the meaning of this Section, then that limited issue shall be submitted
to and settled by binding arbitration under and pursuant to the Maryland Uniform
Arbitration Act and the rules and regulations of the American Arbitration
Association, and the decision in such arbitration shall be final, conclusive and
binding upon each of the parties and judgment may be entered thereon in any
court of competent jurisdiction.
6. Death of the Executive. In the event of the death of the Executive
during the Term, this Agreement and the Executive's employment hereunder shall
terminate, whereupon neither party shall have any further rights, duties or
obligations under this Agreement, except that the Executive's estate shall be
bound by the Executive's obligations and duties under Sections 7, 8 and 9
hereof, the Company shall remain liable for the Company's obligations and duties
under Sections 2, 3 and 4 hereof, and further, the Company and the Executive's
estate shall remain liable and responsible to the other for all prior
obligations and duties hereunder and for all acts and omissions of the parties
prior to the Executive's death. If the Executive dies during the Term, his
eligibility to receive a Bonus hereunder for any Employment Year which has ended
shall remain vested, but his eligibility to receive a Bonus for the Employment
Year in which he has died shall be prorated to the date of his death. If the
Executive dies during the Term, the Executive shall have no further right or
eligibility to receive Bonus except as stated hereinabove.
7. Confidential Information.
7.1. Non-Disclosure of Confidential Information. The Executive
acknowledges that in the Executive's employment hereunder, the Executive will be
making use of, acquiring and adding to confidential information of a special and
unique nature and value relating to such matters as, but not limited to, the
Company's business operations, internal structure, financial affairs, systems,
procedures, manuals, confidential reports and lists of accounts, trade secrets,
customers and vendors, as well as the amount, nature and type of services used
and preferred by the Company's accounts and customers and the fees paid by such
accounts, all of which shall be deemed to be confidential information. In
consideration of employment by the Company, the Executive agrees that during the
Term and upon and after ceasing to be employed by the Company for any reason
whatsoever, the Executive shall not, for any reason or purpose whatsoever,
directly or indirectly, divulge or disclose to any person or entity any of such
confidential information which was obtained by the Executive as a result of the
Executive's employment with the Company, or any information or knowledge
respecting the affairs of the Company or any of its officers, directors,
executives, stockholders, accounts, customers or
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referrers of accounts learned or conceived by the Executive while in the employ
of the Company, but shall hold all of the same inviolate.
7.2. Confidential Records. All financial books, records, instruments
and documents; client lists; data; reports; programs; software; tapes;
rolodexes; telephone and address books; card decks; listings; programming and
any other instruments, records or documents relating or pertaining to the
accounts serviced by the Company or the Executive, the Services rendered by the
Executive, or the Company (collectively, the "Records") shall at all times be
and remain the property of the Company. Upon ceasing to be employed by the
Company for any reason whatsoever, the Executive shall return to the Company all
Records (whether furnished by the Company or prepared by the Executive), and the
Executive shall neither make nor retain any copies of any of such Records after
such cessation of employment.
7.3. All inventions and other creations, whether or not patentable
or copyrightable or trademarkable, and all ideas, reports and other creative
works, including, without limitation, computer programs, manuals and related
materials, made or conceived in whole or in part by the Executive while employed
by the Company and within one (1) year of termination of the Executive's
employment under this Agreement for any reason whatsoever, which relate in any
manner whatsoever to the business, existing or proposed, of the Company or any
other business or research or development effort in which the Company or any of
its subsidiaries or affiliates engages during the Executive's employment by the
Company will be disclosed promptly by the Executive to the Company and shall be
the sole and exclusive property of the Company. All copyrightable works created
by the Executive and covered by this Section 7.3 shall be deemed to be works
made for hire. The Executive shall cooperate with the Company in patenting or
copyrighting or trademarking all such inventions, ideas, reports and other
creative works, shall execute, acknowledge, seal and deliver all documents
tendered by the Company to evidence its ownership thereof throughout the world,
and shall cooperate with the Company in obtaining, defending, and enforcing its
rights therein.
8. Restrictive Covenants.
8.1. Non-Competition. The Executive and the Company recognize than
an important part of the Executive's duties will be to develop good will for the
Company through the Executive's personal contacts with customers, clients,
accounts, agents and others having business relationships with the Company, and
that there is a danger that this good will, a proprietary asset of the Company,
may follow the Executive if and when the Executive's relationship with the
Company is terminated. Accordingly, the Executive covenants that for a period of
one (1) year after the Executive ceases to be employed by the Company, the
Executive shall not, without the prior written consent of the Company, directly
or indirectly:
(a) Engage, either as a consultant, independent contractor,
proprietor, stockholder, partner, officer, director, executive, owner or
otherwise, in any business or activity that competes with the Company and the
Company's business;
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(b) Render or attempt to render any services which were
rendered by the Company during the two (2) year period immediately preceding
such cessation of the Executive's employment with the Company to any clients,
customers or accounts of the Company with whom the Executive had direct or
indirect contact and/or to whom the Executive rendered any services at any time
during such two (2) year period, to or for the benefit or account of the
Executive or to or for the benefit or account of any other person or entity; and
(c) Solicit for employment or employ to or for the benefit or
account of the Executive or to or for the benefit or account of any other person
or entity any Executive of the Company, nor shall the Executive urge, directly
or indirectly, any client or referrer of clients, customers, or accounts of the
Company to discontinue, in whole or in part, business with the Company or not to
do business with the Company. For purposes of this Section 8.1(c) of this
Agreement, the term "referrer of clients" shall mean any person or entity who or
which referred a client, customer or account to the Company at any time prior to
such cessation of the Executive's employment with the Company.
8.2. Severability and Modification. The Parties hereto agree that to
the extent that any provision or portion of Section 8.1 of this Agreement shall
be held, found or deemed to be unreasonable, unlawful or unenforceable by a
court of competent jurisdiction, then any such provision or portion thereof
shall be deemed to be modified to the extent necessary in order that any such
provision or portion thereof shall be legally enforceable to the fullest extent
permitted by applicable law; and the parties hereto do further agree that any
court of competent jurisdiction shall, and the parties hereto do hereby
expressly authorize, request and empower any court of competent jurisdiction to,
enforce any such provision or portion thereof or to modify any such provision or
portion thereof in order that any such provision or portion thereof shall be
enforced by such court to the fullest extent permitted by applicable law.
8.3. Definitions. As used in Sections 7 and 8, "clients,"
"customers," and "accounts" shall include any person or entity that, directly or
indirectly, through one or more intermediaries, controls or is controlled by, or
is under common control with, any such "clients," "customers," or "accounts."
9. Termination of Employment.
9.1. Termination for Cause. If the Executive engages in (i) fraud,
(ii) embezzlement, (iii) any other crime involving moral turpitude, (iv) gross
or willful neglect of duty, or (v) material breach of any of the provisions of
this Agreement, on his part to be performed by him, the Company may at any time
thereafter terminate the Executive's employment hereunder by written notice to
him, effective immediately and the date the notice shall be the Termination Date
hereunder. Any such termination shall be deemed to be termination for cause, for
purposes of this Agreement. If the Executive's employment is terminated for
cause hereunder, then the Executive shall be entitled to receive only the
following
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payments: any portion of his Annual Salary accrued to the date of such
termination and not theretofore paid to him; any Bonus to which he is entitled
for any completed Employment Year under this Agreement which has not theretofore
been paid to him; any vested rights the Executive has under the Stock Option
Agreement; plus reimbursement for any expenses properly incurred by the
Executive, and supported by appropriate vouchers, which expenses have been
incurred prior to the date of such termination and which have not theretofore
been reimbursed. Except as set forth in the immediately preceding sentence, all
of the Executive's rights of compensation hereunder shall be terminated as of
the Termination Date in the event of termination for cause.
9.2. Constructive Termination of Executive. In the event the Company
removes the Executive from the position of Chief Operating Officer or Director
of the Company, without his consent (or fails to re-elect the Executive at any
meeting of the Board of Directors of the Company held for the purpose of
electing or re-electing officers of the Company) or substantially changes his
duties or his reporting responsibility to the Chairman under Section 1.1, the
employment of the Executive, at his option, exercisable by written notice given
to the Company at any time within ninety (90) days following such event (or
failure to re-elect) (time of notice being deemed to be of the essence), shall
be deemed to have been constructively terminated by the Company hereunder, as of
the date of the Executive's notice; provided, however, that such constructive
termination shall not be deemed a breach by the Company of its obligations under
this Agreement and further provided, however, that termination for cause
pursuant to Section 9.1 shall make the provisions of this Section 9.2
inapplicable. If the Executive's employment is terminated under this Section
9.2, he shall continue to receive her Annual Salary for a period of nine (9)
months from the date of Termination (the "Severance Payment"). In the event of
the Constructive Termination of the Executive's Employment pursuant to this
Section 9.2, the Executive's right to receive Bonus for each completed
Employment Year shall remain in effect, and the Executive's right to receive
Bonus on account of the year in which he has elected to terminate his employment
by virtue of Constructive Termination shall be prorated to the date of such
election.
9.3. Other Termination of Employment by the Company. Anything
contained in this Agreement to the contrary notwithstanding, the Company may
discharge the Executive at any time upon written notice. In the event the
Company terminates the employment of the Executive hereunder other than pursuant
to any of the prior provisions hereof, without the Executive's consent, and in
accordance with this Section, then the Executive shall be deemed to have been
constructively terminated by the Company.
9.4. Other Termination of Employment by Executive. If the Executive
quits his employment (other than as authorized under Section 9.2 hereof), then
he shall be deemed to have been terminated by the Company for cause and shall be
subject to the provisions of Section 9.1 hereof.
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9.5. Termination in the Event of Sale Merger or Consolidation. Upon
a change in control of the Company as a result of a sale, merger or
consolidation, if the Executive is subsequently terminated within nine (9)
months under any provision of this Agreement except Section 9.1, the Executive
shall be entitled to receive a lump sum payment in an amount equal to the
greater of (a) two (2) times the amount of compensation remaining due the
Executive under this Agreement, or (b) the Severance Payment. If the Executive
is terminated thereafter, the Executive shall only be entitled to the Severance
Payment.
9.6. Injunctive Relief. It is recognized that damages, in the event
of a breach or threatened breach by the Executive of the Executive's obligations
and duties under this Agreement, would be difficult to ascertain, and it is,
therefore, agreed that the Company, in addition to, and without limiting any
other power, remedy or right it may have, shall have the right to seek an
injunction or other equitable relief in any court of competent jurisdiction,
seeking to enjoin any such breach, and the Executive hereby waives any and all
defenses he may have on the ground of lack of jurisdiction or competence of the
court to grant such an injunction or other equitable relief and any substantive
defenses to the granting of such injunctive relief. The existence of this right
shall not preclude any other powers, rights and remedies at law, in equity or
otherwise which the Company may have, but shall be in addition to, and
cumulative with, any other remedy available to the Company at law, in equity or
otherwise.
9.7. Indemnification. The Executive shall defend, indemnify and hold
harmless the Company from and against any and all claims, demands, threats,
charges, suits, actions, proceedings, liabilities, damages, losses, costs and
expenses (including attorneys' and experts' fees, interest and court costs) of
every kind and nature arising out of, resulting from, or in connection with any
breach or threatened breach of this Agreement by the Executive. The Company
shall defend, indemnify and hold harmless the Executive from and against any and
all claims, demands, threats, charges, suits, actions, proceedings, liabilities,
damages, losses, costs and expenses (including attorneys' and experts' fees,
interest and court costs) of every kind and nature arising out of or resulting
from the Executive's actions in his capacity as an officer or director of the
Company.
9.8. Setoff. Anything contained in this Agreement to the contrary
notwithstanding, the Company may setoff against any amount of money or other
consideration due to the Executive under this Agreement, any amount of money or
other consideration that is, or may become, due from the Executive to the
Company pursuant to Section 9.6 of this Agreement or otherwise under or outside
of this Agreement.
10. Term.
10.1. Duration. The term of this Agreement and the Company's
employment of the Executive (the "Term") shall commence on the date of this
Agreement and shall continue until the first to occur of the following: (i) the
close of business on the fifth (5th) anniversary of the date of this Agreement
(the "Initial Term"), or such later date to which the Executive's
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employment is extended as provided in Section 10.2; (ii) the Executive's normal
retirement date under the Company's retirement policy or plan as in effect from
time to time ("Normal Retirement Date"); (iii) the death or Permanent Disability
of the Executive; (iv) the termination of this Agreement pursuant to Section 9;
(v) at the Executive's option, pursuant to Section 10.3.
10.2. Extension of Term. The Term shall be extended automatically
after the Initial Term, without any further action on the part of the Executive
or the Company, indefinitely (but not beyond (a) the Executive's Normal
Retirement Date or (b) a termination as defined in Section 9, and not in the
event of the death or Permanent Disability of the Executive) for additional
one-year terms (each a "Renewal Term"), unless the Company or the Executive
notifies the other to the contrary in writing not less than three (3) months
prior to the end of the Initial Term or any Renewal Term.
10.3 Initial Public Offering; Executive's Right to Renegotiate. In
the event of a firmly underwritten initial public offering of the Company's
common stock at a before-the-money market capitalization of not less than
$75,000,000, the Executive, in her sole discretion, may require the Company to
renegotiate the terms of this Agreement. In such event, the Executive shall be
entitled to compensation and other benefits consistent with the compensation and
benefits of other Chief Operating Officers of similarly situated companies.
10.4. Obligations Upon Termination. Upon the cessation of the
Company's employment of the Executive for any reason whatsoever, neither party
shall thereafter have any further rights, duties or obligations under this
Agreement, except for the Executive's obligations and duties arising under
Sections 7, 8 and 9 hereof and the Company's obligations and duties arising
under Sections 2, 3, 4 and 9 hereof, but each party shall remain liable and
responsible to the other for all prior obligations and duties hereunder and for
all acts and omissions of such party prior to such termination.
11. Insurance. The Executive hereby consents to the Company, in its
discretion, taking out and maintaining during the Term, such life, disability
and disability buyout insurance policies with respect to the Executive, in such
amounts, with such insurance companies and upon such terms and conditions as may
be determined by the Board in its discretion, to fund or partially fund the
Company's obligation to repurchase any Stock owned by the Executive at the time
of the Executive's death or Permanent Disability, which the Company is obligated
to repurchase under the terms of any stockholders' agreement to which the
Executive and the Company are parties or for any other Company purpose.
12. Benefit. This Agreement shall inure to the benefit of and be binding
upon the Company, its successors and assigns, including, but not limited, to (i)
any corporation which may acquire all or substantially all of the Company's
assets and business, (ii) any corporation with or into which the Company may be
consolidated or merged, or (iii) any corporation that is the successor
corporation in a share exchange, and the Executive, his heirs, guardians and
personal and legal representatives.
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13. Notices.
All notices and other communications required or permitted to be given
hereunder shall be in writing, and shall be hand-delivered against receipted
copy, telecopied to the telephone number set forth below or mailed by United
States registered or certified mail, return receipt requested, postage prepaid,
to the address set forth below:
If to the Company to:
America's Doctor, Inc.
11403 Cronridge Drive
Owings Mills, MD 21117
Tel: (410) 581-1189
Fax: (410) 581-1571
with a copy to:
Jamie B. Eisenberg, Esq.
Rifkin, Livingston, Levitan & Silver, LLC
575 South Charles Street, Suite 200
Baltimore, MD 21201
Tel: (410) 837-9700
Fax: (410) 837-9716
And if to the Executive during the Term, in care of the Company;
And if to the Executive after the Term, to:
Laura Gill
3505 Round Hollow Road
Baltimore, MD 21208
(410) 486-2889
or to such other address or telephone number as the Executive or the Company may
notify the other in writing pursuant to this Section. Notices hand-delivered or
transmitted in accordance with this provision shall be deemed to have been
received on the date so hand-delivered or telecopied or three (3) days after the
date so mailed.
14. Notification Requirement. During the period of noncompetition provided
in Section 8 of this Agreement, the Executive shall give notice to the Company
of each new business activity in which he plans to undertake at least one
hundred twenty (120) days prior to beginning such activity. Such notice shall
state the name and address of the person for whom such activity is undertaken,
the business address of the activity, and the nature of Executive's
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business relationship and/or position with such person, company or project. The
Executive shall provide the Company with such information as the Company may
reasonably request in order to determine Executive's continued compliance with
non-competition agreements.
15. Shareholders' Agreement. This Agreement is and shall remain subject to
the terms and conditions of the Shareholders' Agreement dated ___________, 1999.
16. Conflicting Agreements. Executive hereby represents and warrants to
the Company that his execution of this Agreement and the performance of his
obligations hereunder will not breach or be in conflict with any other agreement
to which he may be a party or may be bound and is not subject to any covenant
against competition or similar covenants that would affect performance of his
duties and obligations hereunder. Executive shall not use for the benefit of the
Company any proprietary information of a third party without such third party's
consent.
17. Miscellaneous.
17.1. Binding effect. This Agreement shall be effective as of the
date hereof and shall be binding upon and inure to the benefit of the Executive,
his heirs, personal and legal representatives, and guardians and shall be
binding upon and inure to the benefit of the Company and its successors and
assigns.
17.2. Assignment. This Agreement may not be assigned by the
Executive without the prior written consent of the Company.
17.3. Integrated Agreement. This Agreement represents the full,
complete, entire and integrated agreement between the Executive and the Company
with respect to the subject matter hereof, and supersedes all prior oral and
written agreements, understandings and negotiations with respect to the subject
matter hereof.
17.4. Amendments. This Agreement may not be changed, modified, or
discharged orally, but only by an instrument in writing signed by the parties.
17.5. Applicable Law. This Agreement is entered into in, and shall
be governed by, construed and enforced in accordance with the laws of the State
of Maryland, without reference to principles of conflicts of laws.
17.6. Explanatory Statement; Exhibits; Headings. The Explanatory
Statement and each exhibit attached hereto are substantive parts hereof;
headings of the sections of this Agreement are for convenience of reference only
and are not substantive parts hereof.
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17.7. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which together shall be one
and the same instrument.
17.8. Gender. The use of any gender herein shall be deemed to be or
include the other genders and the neuter and the use of the singular herein
shall be deemed to be and include the plural (and vice versa), wherever
appropriate.
17.9. Severability. The parties hereto agree that to the extent that
any provision or portion of this Agreement shall be held, found or deemed to be
unreasonable, unlawful or unenforceable by a court of competent jurisdiction,
then any such provision or portion thereof shall be deemed to be modified to the
extent necessary in order that any such provision or portion thereof shall be
legally enforceable to the fullest extent permitted by applicable law.
17.10. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which together shall be one
and the same instrument.
IN WITNESS WHEREOF, the parties have executed, acknowledged, sealed and
delivered this Agreement as of the date first above written.
ATTEST: AMERICA'S DOCTOR, INC.
/s/ Lewis S. Goodman By: /s/ Scott M. Rifkin
- ------------------------ -------------------------------
Scott M. Rifkin
----------------------------------
Name (printed)
Chairman and CEO
----------------------------------
Title
WITNESS: LAURA GILL
/s/ Lewis S. Goodman /s/ Laura Gill
- ------------------------ ----------------------------------
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STATE OF MARYLAND TO WIT:
CITY/COUNTY OF
I HEREBY CERTIFY that on this 29 day of January, 1999, before
me, the subscriber, a Notary Public in and for the City/County and State
aforesaid, personally appeared Scott Rifkin, who acknowledged himself to
be the Chairman & CEO of America's Doctor, Inc., a Delaware corporation
(the "Corporation"), known to me (or satisfactorily proven) to be the person
whose name is subscribed to the within instrument, and he acknowledged that he
executed the same for the purposes therein contained as the duly authorized
____________________ of said Corporation by signing the name of the Corporation
by himself as ____________________.
AS WITNESS my hand and Notarial Seal.
------------------------------------
Notary Public
My Commission Expires: 5-1-02
I HEREBY CERTIFY that on this 29 day of January, 1999, before
me, the subscriber, a Notary Public in and for the City/County and State
aforesaid, personally appeared LAURA GILL, known to me (or satisfactorily
proven) to be the person whose name is subscribed to the within instrument, who
acknowledged the foregoing instrument to be her act.
AS WITNESS my hand and Notarial Seal.
------------------------------------
Notary Public
My Commission Expires: 5-1-02
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EXHIBIT 10.7
CONFIDENTIAL TREATMENT REQUESTED
INTERACTIVE SERVICES AGREEMENT
This agreement (the "Agreement"), effective as of October, 1997 (the
"Effective Date"), is made and entered into by and between America Online, Inc.
("AOL"), a Delaware corporation, with its principal offices at 22000 AOL Way,
Dulles, Virginia 20166, and Ask-A-Doc, Inc. (or such other name as may be used
with prior notice to AOL) ("Interactive Content Provider" or "ICP"), a Delaware
corporation, with its principal offices at 11 Aston Court, Owings Mills,
Maryland 21117 (each a "Party" and collectively the "Parties").
INTRODUCTION
AOL and ICP each desires that AOL provide access to the ICP Internet
Site (as defined below) through the AOL Network (as defined below), subject to
the terms and conditions set forth in this Agreement. Defined terms used but not
defined in the body of this Agreement or in Exhibit C shall be as defined on
Exhibit B attached hereto.
TERMS
1. DISTRIBUTION; PROGRAMMING
1.1 Anchor Tenancy. Beginning on the Launch Date and continuing during the
remainder of the Term, ICP shall receive anchor tenant distribution within the
Health Channel offered on the AOL Service, as follows: AOL shall (a)
continuously and prominently place an agreed-upon ICP logo or banner on the
Health Channel main screen and the Health Channel's Illness & Treatments and
Support Groups Experts subscreens (or, with respect to any such screens, any
specific successors thereof) (collectively, the "Screens"); (b)provide ICP with
the keyword "Ask-A-Doctor" which shall Link to the Welcome Mat(s) (as defined
below); and (c) list ICP in AOL's "Directory of Services" and "Find" features.
AOL shall also use reasonable efforts to program the ICP Internet Site, or
Content therefrom, into the Health Channel's Healthy Living subscreen.
1.1.1 Changes to AOL Service. AOL reserves the right to redesign or
modify the organization, structure, "look and feel," navigation and other
elements of the AOL Service. In the event such modifications materially affect
the placements for ICP described above, AOL will work with ICP in good faith to
provide ICP with a comparable package of placements which are reasonably
satisfactory to ICP.
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Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as [***]. A complete version of this
exhibit has been filed separately with the Securities and Exchange Commission.
<PAGE>
2
1.1.2 Soft Launch. In order to optimize the ICP Internet Site for
distribution hereunder as specified in Section 5, beginning on the Soft Launch
Date and continuing for a period of thirty (30) days thereafter, AOL shall make
the ICP Internet Site available for distribution on a limited basis to AOL
internal and employee accounts (or such other group that is a subset of all AOL
Members, as AOL may determine in its discretion).
1.1.3 Health Channel [***]
1.2 Content. The ICP Internet Site shall consist of the Content (including
a detailed plan of the scope and depth of the Content and the technologies to be
used to present and deliver such Content) described on Exhibit A hereto. ICP
shall not authorize or permit any third party to distribute any other Content of
ICP through the AOL Network absent AOL's prior written approval. The inclusion
of any additional Content for distribution through the AOL Network (including,
without limitation, any features, functionality or technology) not expressly
described on Exhibit A shall be subject to AOL's prior written approval.
1.3 License. ICP hereby grants AOL a worldwide license to use, market,
license, store, distribute, display, communicate, perform, transmit, and promote
the ICP Internet Site (or any portion thereof) through the AOL Network as AOL
may determine in its sole discretion, including without limitation the right to
integrate Content from the ICP Internet Site by Linking to specific areas on the
ICP Internet Site, provided that the presentation of any such Content on the AOL
Network shall conform with the specifications set forth on Exhibit D. Subject to
such right and license, ICP retains all right, title to and interest in the ICP
Internet Site.
1.4 Management. ICP shall design, create, edit, manage, update, and
maintain the ICP Internet Site. Except as specifically provided for herein, AOL
shall have no obligations of any kind with respect to the ICP Internet Site. ICP
shall be responsible for any hosting or communication costs associated with the
ICP Internet Site (including, without limitation, the costs associated with (i)
any agreed-upon direct connections between the AOL Network and the ICP Internet
Site or (ii) a mirrored version of the ICP Internet Site). ICP shall ensure
that, at all times during the Term, the ICP Internet Site and all Content
contained in or through such site complies with all governmental regulations
regarding the provision of medical advice. AOL Members shall not be required to
go through a registration process (or other similar process) in order to access
<PAGE>
3
and use the ICP Internet Site, provided that if ICP elects to have all users to
the ICP Internet Site go through a registration process (or other similar
process) in order to access and the site, then ICP shall be permitted to require
AOL Members to go through the identical process.
1.5 Notices; Licensed Content. ICP agrees that it will include language
approved by AOL in the ICP Internet Site and the Welcome Mats (as defined below)
indicating that (i) ICP is solely responsible for the ICP Internet Site and
Welcome Mats, and (ii) AOL is not responsible for the Content contained in the
ICP Internet Site or Welcome Mats, or any expense, loss or damage arising out of
services provided through the ICP Internet Site or Welcome Mats, or arising from
any other use of the ICP Internet Site or Welcome Mats (e.g., "in no event shall
AOL or any of its agents, employees, representatives or affiliates be in any
respect legally liable to you or to any third party in connection with any
opinions, advice or information contained herein or in any response" and "AOL
makes no warranty or guarantee as to the accuracy, completeness, correctness,
timeliness, or usefulness of any opinions, advice or information contained
herein or in any response").
(b) At all times during the Term ICP shall maintain an insurance
policy or policies reasonably satisfactory to AOL and adequate in amount
to insure ICP against all liability associated with the Content on the ICP
Internet Site. ICP shall also include AOL as a named insured party on such
policy or policies. ICP shall provide AOL with a written copy of such
policy or policies no later than sixty (60) days prior to the Soft Launch
Date and thereafter during the Term upon request of AOL.
1.6 Carriage Fee. Subject to Section 6.1 regarding renewal for a third
year of carriage, ICP shall pay AOL as follows: (a) $[***] on the Effective
Date; (b) $[***] on the date that is 90 days after the Effective Date; (c)
upon the Soft Launch; and (d) $[***] in 24 equal monthly installments of
$[***] each beginning on the Launch Date and continuing every thirty (30)
days after the Launch Date.
1.7 Impressions Guarantee. AOL shall provide ICP with at least 23 million
Impressions per year (measured from the Launch Date from ICP's presence on the
AOL Network hereunder (the "Impressions Guarantee"). A minimum of 85% of the
Impressions Guarantee shall be generated from ICP's presence on the Screens and
the Health Channel's Healthy Living subscreen, as specified in Section 1.1, and
the remaining impressions, if any, may be generated from ICP's presence on other
appropriate screens on the AOL Network as AOL may determine in its discretion.
For the purposes of this Agreement, ICP's presence on an AOL screen shall
conform to the specifications set forth on Exhibit D, provided that only screens
that contain a link to
<PAGE>
4
the ICP Internet Site or the Welcome Mat (as defined herein) will count against
the Impressions Guarantee. The Term shall be extended without additional
carriage fees payable by ICP until the Impressions Guarantee is met.
2. PROMOTION
2.1 Cooperation. Each Party shall cooperate with and reasonably assist the
other Party in supplying material for marketing and promotional activities.
2.2 Interactive Site. ICP shall include the following promotions within
each ICP Interactive Site during the Term: (i) a continuous promotional button
for AOL appearing "above the fold" on the first screen of the ICP Interactive
Site; and (ii) a Link to a location of AOL's choosing where users can obtain
promotional information about AOL products and services and/or download or order
AOL's then-current version of the AOL client software (for which ICP shall earn
bounties for New Members as specified on Exhibit E). ICP shall also provide AOL
with at least 20% of the remnant advertising/promotional space on the ICP
Internet Site, at no cost to AOL, for AOL promotions.
2.3 Publications, etc. ICP shall use commercially reasonable efforts to
prominently and regularly promote AOL and the ICP Internet Site's availability
through the AOL Service in publications, programs, features or other forms of
media over which ICP exercises at least partial editorial control.
2.4 Keyword. In any instances when ICP makes promotional reference to an
ICP Interactive Site, including any listings of the applicable "URL(s)" for such
web site(s) (each a "Web Reference"), ICP shall include a listing of the
applicable AOL "keyword" of comparable prominence to the Web Reference.
2.5 Preferred Access Provider. When promoting AOL, ICP shall promote AOL
as the preferred access provider through which a user can access the ICP
Internet Site (and ICP shall not implement or authorize any other promotions on
behalf of any third parties which are inconsistent with the foregoing). In this
regard, with respect to any ICP Interactive Site accessible or operating through
any operating system (including without limitation any Microsoft system) (an
"Operating System"), ICP shall (a) include in any such ICP Interactive Site a
prominent "Try AOL" feature (and controls and software relating to such feature)
that will cause a user of such site to link directly to AOL access software
located or present on or within the Operating System, so that the user who
already is an AOL
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5
Member or who does not have Internet access will be connected to the AOL
registration screen, the AOL service, the AOL application setup program or
elsewhere as determined by AOL, and (b) use or support any AOL provided software
or feature that directs a user of such ICP Interactive Site who does not have
Internet access to the AOL application setup program located or present on or
within the Operating System (instead of the Internet Referral Server or any
similar service or successor thereto).
2.6 Direct Marketing. The parties shall execute any New Member acquisition
programs, and ICP shall earn bounties for such programs, as specified described
in Exhibit E attached hereto.
3. REPORTING
3.1 Usage Data. AOL shall make available to ICP a monthly report
specifying for the prior month aggregate usage and Impressions with respect to
ICP's presence on the AOL Network. In addition, to the extent AOL is caching the
ICP Internet Site, AOL shall supply ICP with monthly reports reflecting
aggregate impressions by AOL Members to the cached version of the ICP Internet
Site during the prior month. ICP will supply AOL with monthly reports which
reflect total impressions by AOL Members to the ICP Internet Site during the
prior month, total impressions by all users to the ICP Internet Site during the
prior month and any transactions involving AOL Members at the ICP Internet Site
during the period in question. ICP shall also provide AOL with "click-though"
data with respect to the promotions specified in Section 2.
3.2 Promotional Commitments. ICP shall provide to AOL a monthly report
documenting its compliance with any promotional commitments it has undertaken
pursuant to Section 2 in the form attached as Exhibit F hereto.
4. ADVERTISING AND MERCHANDISING
4.1 Advertising Sales. AOL owns all right, title and interest in and to
the advertising and promotional spaces within the AOL Network (including,
without limitation, advertising and promotional spaces on any AOL forms or pages
which are included within, preceding, framing or otherwise associated with the
ICP Internet Site). The specific advertising inventory within any such AOL forms
or pages shall be as reasonably determined by AOL. ICP owns all right, title and
interest in and to the advertising and promotional spaces within ICP Internet
Site and/or Welcome Mat(s) (as defined below).
<PAGE>
6
4.2 AOL Programming. If the parties agree that during the Term ICP will
provide exclusive to AOL or differentiated (e.g., from programming available
outside of the AOL Network) online programming ("AOL Programming"), the Parties
shall enter into a separate addendum to this Agreement setting forth the terms
which will govern the AOL programming, including without limitation the
advertising, surcharge, and transactions revenue, if any, derived from the AOL
programming, and any applicable revenue sharing and other charges.
5. CUSTOMIZATION OF SITES
5.1 Performance. ICP shall optimize the ICP Internet Site for distribution
hereunder according to AOL specifications and guidelines to ensure that (i) the
functionality and features within the ICP Internet Site are optimized for the
client software then in use by a majority of AOL Members and (ii) the forms used
in the ICP Internet Site are designed and populated in a manner intended to
minimize delays when AOL Members attempt to access such forms, as follows:
(a) ICP shall design the ICP Internet Site to support the Windows
version of the Microsoft Internet Explorer 3.0 browser, and make
commercially reasonable efforts to support all other AOL browsers, listed
at: http://webmaster.info. aol.com/BrowTable.html and set forth on Exhibit
G hereto;
(b) ICP shall configure the server from which it serves the ICP
Internet site to examine the HTTP User-Agent field in order to identify
the AOL User-Agents listed at:
http://webmaster.info.aol.com/Brow2Text.html and as set forth on Exhibit G
hereto (the "AOL User-Agents"); and
(c) ICP shall design its web site to support HTTP 1.0 or later
protocol as defined in RFC 1945 (available at
http://ds.internic.net/rfc/rfc1945.text) and to adhere to AOL's parameters
for refreshing cached information listed at
http://webmaster.info.aol.com/CacheText.html.
AOL reserves the right to review the ICP Internet Site to determine
whether such sites are compatible with AOL's then-available client and
host software and the AOL network.
5.2 Customization. ICP shall customize the ICP Internet site for AOL
Members as follows: ICP shall identify the AOL User-Agents as specified above,
and use such identification in order to:
(a) create a customized home page "welcome mat" for the AOL audience
for each area on the ICP Internet Site linked to
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7
from the AOL Network on a continuous basis (each a "Welcome Mat");
(b) ensure that AOL members linking to the ICP Internet Site do not
receive advertisements, promotions or links for any entity reasonably
construed to be in competition with AOL and that such advertisements,
promotions and links are not otherwise in conflict with AOL advertising
policies and any AOL exclusivities; and
(c) provide continuous navigational ability for AOL members to
return to an agreed-upon point on the AOL service (for which AOL shall
supply the proper address) from ICP Internet site (e.g., the point on the
AOL service from which the ICP Internet Site is Linked).
5.3 Links on ICP Internet Site. The Parties will work together on mutually
acceptable links (including links back to AOL) within the ICP Internet Site in
order to create a robust and engaging AOL member experience. ICP shall take
reasonable efforts to insure that AOL traffic is generally either kept within
the ICP Internet Site or channeled back into the AOL Network. To the extent that
AOL notifies ICP in writing that, in AOL's reasonable judgment, Links from such
site cause an excessive amount of AOL traffic to be diverted outside of such
site and the AOL Network in a manner that has a detrimental effect on the
traffic flow of the AOL audience, then ICP shall immediately reduce the number
of Linds out of such site(s). In the event that ICP cannot or does not so limit
diverted traffic from the ICP Internet Site, AOL reserves the right to terminate
the Links from the AOL Network to the ICP Internet Site at issue and ICP shall
only be responsible to pay a pro-rata share of the carriage fees otherwise owed
by ICP hereunder for the period for which the Links are in place.
6. TERM AND TERMINATION.
6.1 Term. Unless earlier terminated as set forth herein, the initial term
of this Agreement shall be from the Effective Date until the date that is two
(2) years from the Launch Date, provided that for two (2) years after expiration
of the Term, AOL shall continue to have the option to Link to the ICP Internet
Site.
6.1.1 Third Year Extension by AOL. AOL may extend the Agreement
for an additional year upon AOL's then-standard terms and conditions and with
payments by ICP to AOL of $[***] (paybale in monthly installments in advance
of $[***] beginning on the date that is two(2) years from the Launch Date) by
providing ICP with written notice thereof no later than sixty (60) days prior
to the expiration of the initial term (the "Put Notice").
6.1.2 Third Year Extension by ICP
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8
[***]
6.2 Termination for Breach. Either party may terminate this Agreement at
any time in the event of a material breach by the other Party which remains
uncured after thirty (30) days written notice thereof; provided that AOL will
not be required to provide a notice to ICP in connection with any failure by ICP
to make payments pursuant to Section 1.6 (and the cure period shall therefore
begin upon the occurrence of the failure to pay). In addition, if any claims,
suit, action or proceeding is brought which gives rise to a claim for
indemnification under Section VI of Exhibit c hereto, AOL shall have the right
to terminate this Agreement upon fifteen (15) days prior notice.
6.3 Termination for Bankruptcy/Insolvency. Either Party may terminate this
Agreement immediately following written notice to the other Party if the other
Party: (i) ceases to do business in the normal course, (ii) becomes or is
declared insolvent or bankrupt, (iii) is the subject of any proceeding related
to its liquidation or insolvency (whether voluntary or involuntary) which is not
dismissed within ninety (90) calendar days or (iv) makes an assignment for the
benefit of creditors.
7. TERMS AND CONDITIONS: The legal terms and conditions set forth on Exhibit
C attached hereto are hereby made a part of this Agreement.
<PAGE>
9
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the Effective Date.
AMERICA ONLINE, INC. ASK-A-DOC, INC.
By: /s/ Barry Schuller By: /s/ Scott M. Rifkin, M.D.
---------------------------------- -----------------------------
Print Name: Barry Schuller Print Name: Scott M. Rifkin, M.D.
-------------------------- ---------------------
Title: President, Creative Development, Title: Chairman
AOL Networks --------------------------
- --------------------------------------
Date: 10/27/97 Date: October 10, 1997
-------------------------------- ---------------------------
Tax ID/EIN#
----------------------
<PAGE>
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EXHIBIT A
Description of Content
[***]
<PAGE>
EXHIBIT A-1
Real Time Medical Advice Content Sites
[***]
<PAGE>
EXHIBIT B
DEFINITIONS. The following definitions shall apply to this Agreement:
AOL Service. The U.S. version of the America Online brand service (excluding
Digital City, AOL.com, NetFind or any similar "sub" service that may be
distributed by or through the America Online brand service).
Affiliate. Any agent, distributor or franchisee of AOL, or an entity in which
AOL holds at least a nineteen percent (19%) equity interest.
AOL Look and Feel. The distinctive and particular elements of graphics, design,
organization, presentation, layout, user interface, navigation, trade dress and
stylistic convention (including the digital implementations thereof) within the
AOL Network and the total appearance and impression substantially formed by the
combination, coordination and interaction of these elements.
AOL Member(s). Authorized users of the AOL Network, including any sub-accounts
using the AOL network under an authorized master account.
AOL Network. (i) The America Online(R) brand service, (ii) any international
versions of the America Online service through which AOL or its affiliates elect
to offer the ICP Internet Site and (iii) any other product or service owned,
operated, distributed or authorized to be distributed by or through AOL or its
Affiliates worldwide through which such party elects to offer the ICP Internet
Site (which may include, without limitation, Internet sites promoting AOL
products and services and any "offline" information browsing products of AOL or
its Affiliates).
Confidential Information. Any information relating to or disclosed in the course
of the Agreement, which is, or should be reasonably understood to be,
confidential or proprietary to the disclosing Party, including, but not limited
to, the material terms of this Agreement, information about AOL Members,
technical processes and formulas, source codes, product designs, sales, cost and
other unpublished financial information, product and business plans, projections
and marketing data. "Confidential Information" shall not include information (a)
already lawfully known to or independently developed by the receiving Party, (b)
disclosed in published materials, (c) generally known to the public, (d)
lawfully obtained from any third party or (e) required or reasonably advised to
be disclosed by law.
Content. Information, materials, features, products, services, opinions, advice,
advertisements, promotions, links, pointers, technology and software.
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2
ICP Interactive Site. Any interactive site or area which is managed, maintained
or owned by ICP or its agents or to which ICP provides and/or licenses
information, content or other materials, including, by way of example and
without limitation, (i) an ICP site on the world Wide Web portion of the
Internet or (ii) a channel or area delivered through a "push" product such as
the Pointcast Network or interactive environment such as Microsoft's proposed
"Active Desktop."
ICP Internet Site. The Internet site and content, currently located at
URL:http://________, which are managed, maintained or owned by ICP or its agents
or to which ICP licenses information, content or other materials.
Impression. An AOL Member's viewing of any screen on the AOL Network containing
ICP's presence.
Launch Date. One hundred and eighty (180) days from the Effective Date.
Link. The mechanism by which a user at one world wide web site can automatically
move to another world wide web site and other sites on the Internet or by which
an AOL Member can move from a site on the AOL Network to a site on the world
wide web or another site on the AOL Network.
New Member. Any person or entity (a) who registers for the AOL Network using
ICP's special promotion identifier and (b) from whom AOL or an Affiliate of AOL
collects at least three monthly usage fees for the use of the AOL Network.
Soft Launch Date. One hundred and fifty (150) days from the Effective Date.
Term. The period beginning on the Effective Date and ending upon the expiration
or earlier termination of the Agreement.
<PAGE>
EXHIBIT C -- STANDARD LEGAL TERMS AND CONDITIONS
I. AOL NETWORK
Content. ICP represents and warrants that all Content contained within the ICP
Internet Site (i) will conform to AOL's applicable Terms of Service, the terms
of this Agreement and any other standard, written AOL policy, (ii) will not
infringe on or violate any copyright, trademark, U.S. patent or any other third
party right, and (iii) will not contain any content which violates any
applicable law or regulation (collectively, the "Rules"). In the event that AOL
notifies ICP in writing that any such Content, as reasonable determined by AOL,
(i) does not comply or adhere to the Rules or (ii) is inconsistent with AOL's
programming objectives (e.g., content relating to other topics or services than
as specified on Exhibit A, then ICP shall use its best efforts to block access
by AOL Members to such Content. In the event that ICP cannot, through its best
efforts, block access by AOL Members to such Content in question, then ICP shall
provide AOL prompt written notice of such fact. AOL may then, at its option,
either (i) restrict access from the AOL Network to the Content in question using
technology available to AOL or (ii) in the event access cannot be restricted,
direct ICP to remove any such Content until such time as the Content in question
is no longer displayed. ICP will cooperate with AOL's reasonable requests to the
extent AOL elects to implement any such access restrictions.
Contests. ICP shall take all steps necessary to ensure that any contest,
sweepstakes or similar promotion conducted or promoted through the ICP Internet
Site (a "Contest") complies with all applicable federal, state and local laws
and regulations. ICP shall provide AOL with (i) at least thirty (30) days prior
written notice of any Contest and (ii) upon AOL's request, an opinion from ICP's
counsel confirming that the contest complies with all applicable federal, state
and local laws and regulations.
AOL Look and Feel. ICP acknowledges and agrees that AOL shall own all right,
title and interest in and to the AOL Look and Feel. In addition, AOL shall
retain editorial control over the portions of the AOL pages and forms which
frame the ICP Internet Site (the "AOL Frames"). AOL may, at its discretion,
incorporate navigational icons, links and pointers or other Content into such
AOL Frames.
Operations. AOL shall be entitled to require reasonable changes to the ICP
Internet Site to the extent such site will, in AOL's good faith judgment,
adversely affect operations of the AOL Network.
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2
Duty to Inform. ICP shall promptly inform AOL of any information related to the
ICP Internet Site which could reasonably lead to a claim, demand or liability of
or against AOL and/or its Affiliates by any third party.
Response to Questions/ Comments; Customer Service. ICP shall respond promptly
and professionally to questions, comments, complaints and other reasonable
requests regarding the ICP Internet Site by AOL Members or on request by AOL,
and shall cooperate and assist AOL in promptly answering the same.
Statements to Third Parties. ICP shall not make, publish, or otherwise
communicate, or cause to be made, published, or otherwise communicated, any
deleterious remarks whatsoever to any third parties concerning AOL or its
affiliates, directors, officers, employees or agents, including without
limitation, AOL's business projects, business capabilities, performance of
duties and services or financial position.
Production Work. In the event that ICP requests any AOL production assistance,
ICP shall work with AOL to develop detailed production plans for the requested
production assistance (the "Production Plan"). Following receipt of the final
Production Plan, AOL shall notify ICP of (i) AOL's availability to perform the
requested production work, (ii) the proposed fee or fee structure for the
requested production and maintenance work and (iii) the estimated development
schedule for such work. To the extent the Parties reach agreement regarding
implementation of agreed-upon Production Plan, such agreement shall be reflected
in a separate work order signed by the Parties. To the extent ICP elects to
retain a third party provider to perform any such production work, work produced
by such third party provider must generally conform to AOL's production
Standards & Practices (a copy of which will be supplied by AOL to ICP upon
request). The specific production resources which AOL allocates to any
production work to be performed on behalf of ICP shall be as determined by AOL
in its sole discretion.
Training and Support. AOL shall make available to ICP standard AOL training and
support programs necessary to produce any AOL areas hereunder. ICP can select
its training and support program from the options then offered by AOL. ICP shall
be responsible to pay the fees associated with its chosen training and support
package. In addition, ICP will pay travel and lodging costs associated with its
participation in any AOL training programs (including AOL's travel and lodging
costs when training is conducted at ICP's offices).
II. TRADEMARKS
<PAGE>
3
Trademark License. In designing and implementing any marketing, advertising,
press releases or other promotional materials related to this Agreement and/or
referencing the other Party and/or its trade names, trademarks and service marks
(the "Promotional Materials") and subject to the other provisions contained
herein, ICP shall be entitled to use the following trade names, trademarks and
servicemarks of AOL: the "America Online(R)" brand service, "AOLTM"
service/software and AOL's triangle logo; and AOL and its Affiliates shall be
entitled to use the trade names, trademarks and service marks of ICP
(collectively, together with the AOL marks listed above, the "Marks"); provided
that each Party: (i) does not create a unitary composite mark involving a Mark
of the other Party without the prior written approval of such other Party and
(ii) displays symbols and notices clearly and sufficiently indicating the
trademark status and ownership of the other Party's Marks in accordance with
applicable trademark law and practice.
Rights. Each Party acknowledges that its utilization of the other Party's Marks
will not create in it, nor will it represent it has, any right, title or
interest in or to such Marks other than the licenses expressly granted herein.
Each Party agrees not to do anything contesting or impairing the trademark
rights of the Other Party.
Quality Standards. Each Party agrees that the nature and quality of its products
and services supplied in connection with the other Party's Marks shall conform
to quality standards communicated in writing by the other Part, for use of its
trademarks. Each Party agrees to supply the other Party, upon request, with a
reasonable number of samples of any Materials publicly disseminated by such
Party which utilize the other Party's Marks. Each Party shall comply with all
applicable laws, regulations and customs and obtain any required government
approvals pertaining to use of the other Party's Marks.
Promotional Materials/Press Releases. Each Party will submit to the other Party,
for its prior written approval, which shall not be unreasonably withheld or
delayed, any Promotional Materials; provided, however, that either Party's use
of screen shots relating to the distribution under this Agreement for
promotional purposes shall not require the approval of the other Party so long
as the AOL Network is clearly identified as the source of such screen shots.
Once approved, the Promotional Materials may be used by a Party and its
affiliates for the purpose of such promotion therein and reused for such purpose
until such approval is withdrawn with reasonable prior notice. In the event such
<PAGE>
4
approval is withdrawn, existing inventories of Promotional Materials may be
depleted.
Infringement Proceedings. Each Party agrees to promptly notify the other Party
of any unauthorized use of the other Party's Marks of which it has actual
knowledge. Each Party shall have the sole right and discretion to bring,
proceedings alleging infringement of its Mark's or unfair competition related
thereto; provided, however, that each Party agrees to provide the other Party,
at such other Party's expense, with its reasonable cooperation and assistance
with respect to any such infringement proceedings.
III. REPRESENTATIONS AND WARRANTIES
Each Party represents and warrants to the other Party that: (i) such Party has
the full corporate right, power and authority to enter into this Agreement, to
grant the licenses granted hereunder and to perform the acts required of it
hereunder; (ii) the execution of this Agreement by such Party, and the
performance by such Party of its obligations and duties hereunder, do not and
will not violate any agreement to which such Party is a party or by which it is
otherwise bound; (iii) when executed and delivered by such Party, this Agreement
will constitute the legal, valid and binding obligation of such Party,
enforceable against such Party in accordance with its terms; (iv) such Party's
Promotional Materials will neither infringe on any copyright, U.S. patent or any
other third party right nor violate any applicable law or regulation and (v)
such Party acknowledges that the other Party makes no representations,
warranties or agreements related to the subject matter hereof which are not
expressly provided for in this Agreement.
IV. CONFIDENTIALITY
Each Party acknowledges that Confidential Information may be disclosed to the
other Party during the course of this Agreement. Each Party agrees that it shall
take reasonable steps, at least substantially equivalent to the steps it takes
to protect its own proprietary information, during the Term and for a period of
three (3) years following expiration or termination of this Agreement, to
prevent the duplication or disclosure of Confidential Information of the other
Party, other than by or to its employees or agents who must have access to such
Confidential Information to perform such Party's obligations hereunder, who
shall each agree to comply with this Section of this Agreement.
V. RELATIONSHIP WITH AOL MEMBERS
Solicitation of Subscribers. During the Term and for the two-year period
following the expiration or termination of this Agreement, neither ICP nor
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5
its agents will use the AOL Network to (i) solicit or participate in the
solicitation of AOL Members when that solicitation is for the benefit of any
entity (including ICP) which could reasonably be construed to be or become in
competition with AOL or (ii) promote any services which could reasonably be
construed to be in competition with services available through AOL including,
but not limited to, services available through the Internet (e.g., the ICP
Internet Site). ICP may not send any AOL Member e-mail communications on or
through the Network without a "Prior Business Relationship." For purposes of
this Agreement, a "Prior Business Relationship" shall mean that the AOL Member
has either (i) purchased Products from IPC through the AOL Network or (ii)
voluntarily provided information to ICP through a contest, registration, or
other communication, which included clear and conspicuous notice to the AOL
Member that the information provided by the AOL Member could result in an e-mail
being sent to that AOL Member by ICP or its agents.
Collection of Member information. ICP is prohibited from collecting AOL Member
screennames from public or private areas of the AOL Network, except as
specifically provided below. ICP shall ensure that any survey, questionnaire or
other means of collecting Member information including, without limitation,
requests directed to specific AOL Member screennames and automated methods of
collecting screennames (an "Information Request") complies with (i) all
applicable law and regulations, (ii) AOL"s applicable Terms of Service, and
(iii) any privacy policies which have been issued by AOL Privacy Policies").
Each Information Request shall clearly and conspicuously specify to the AOL
Members at issue the purpose for which Member Information collected through the
Information Request shall be used (the "Specified Purpose").
Use of Member Information. ICP shall restrict use of the Member Information
collected through an Information Request to the Specified Purpose. In no event
shall ICP (i) provide AOL Member names, screennames, addresses or other
identifying information ("Member Information") to any third party (except to the
extent specifically (a) permitted under the AOL Privacy Policies or (b)
authorized by the AOL Members in question) or (ii) otherwise use any Member
Information in contravention of the above section regarding "Solicitation of
Members."
VI. TREATMENT OF CLAIMS
Liability. UNDER NO CIRCUMSTANCES SHALL AOL BE LIABLE TO ICP FOR INDIRECT,
INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES (EVEN IF ICP HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES), ARISING FROM THE USE OF OR
INABILITY TO USE THE AOL
<PAGE>
6
NETWORK OR ANY OTHER PROVISION OF THIS AGREEMENT, SUCH AS, BUT NOT LIMITED TO,
LOSS OF REVENUE OR ANTICIPATED PROFITS OR LOST BUSINESS. EXCEPT AS PROVIDED
BELOW IN THE "INDEMNITY" SECTION, AOL SHALL NOT BE LIABLE TO ICP FOR MORE THAN
THE AGGREGATE AMOUNTS EARNED BY AOL UNDER THIS AGREEMENT AS OF THE DATE OF THE
APPLICABLE CLAIM.
No Additional Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT,
NEITHER PARTY MAKES, AND EACH PARTY HEREBY SPECIFICALLY DISCLAIMS, ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE AOL NETWORK, OR
ANY AOL PUBLISHING TOOLS, INCLUDING ANY IMPLIED WARRANTY 0F MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE AND IMPLIED WARRANTIES ARISING FROM COURSE OF
DEALING OR COURSE OF PERFORMANCE WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, AOL SPECIFICALLY DISCLAIMS ANY WARRANTY REGARDING THE PROFITABILITY
OF AOL NETWORK OR THE ICP INTERNET SITE.
Indemnity. Each Party will defend, indemnify, save and hold harmless the other
Party and the officers, directors, agents, affiliates, distributors, franchisees
and employees of the other Party from any and all third party claims, demands,
liabilities, costs or expenses, including reasonable outside and in-house
attorneys' fees ("Liabilities"), resulting from the indemnifying Party's
material breach of any obligation, duty, representation or warranty of this
Agreement, except where Liabilities result from the gross negligence or knowing
and willful misconduct of the other Party. In addition, ICP will defend,
indemnify, save and hold harmless AOL and the officers, directors, agents,
affiliates, distributors, franchisees and employees of AOL from any and all
Liabilities arising out of or in connection with any actual or threatened claim,
suit, action, demand, liability or proceeding of any kind by any person or
entity based on or arising out of any Content (including, without limitation,
opinions and advice) appearing within the ICP Internet site.
Claims. Each Party agrees to (i) promptly notify the other Party in writing of
any indemnifiable claim and give the other Party the opportunity to defend or
negotiate a settlement of any such claim at such other Party's expense and (ii)
cooperate fully with the other Party, at that other Party's expense, in
defending or settling such claim. AOL reserves the right, at its own expense, to
assume the exclusive defense and control of any matter otherwise subject to
indemnification by ICP hereunder, and in such event, ICP shall have no further
obligation to provide indemnification for such matter hereunder.
Acknowledgement. AOL AND ICP EACH ACKNOWLEDGES THAT THE PROVISIONS OF THIS
AGREEMENT
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7
WERE NEGOTIATED TO REFLECT AN INFORMED, VOLUNTARY ALLOCATION BETWEEN THEM OF ALL
RISKS (BOTH KNOWN AND UNKNOWN) ASSOCIATED WITH THE TRANSACTIONS CONTEMPLATED
HEREUNDER. THE LIMITATIONS AND DISCLAIMERS RELATED TO WARRANTIES AND LIABILITY
CONTAINED IN THIS AGREEMENT ARE INTENDED TO LIMIT THE CIRCUMSTANCES AND EXTENT
OF LIABILITY. THE PROVISIONS OF THIS SECTION VI SHALL BE ENFORCEABLE INDEPENDENT
OF AND SEVERABLE FROM ANY OTHER ENFORCEABLE OR UNENFORCEABLE PROVISION OF THIS
AGREEMENT.
VII. MISCELLANEOUS
Auditing Rights. Each Party shall maintain complete, clear and accurate records
of all expenses, revenues, fees, transactions and related documentation
(including agreements) in connection with the performance of this Agreement
("Records"). All such Records shall be maintained for a minimum of five (5)
years following termination of this Agreement. For the sole purpose of ensuring
compliance with this Agreement each Party shall have the right, at its expense,
to direct an independent certified public accounting firm subject to strict
confidentiality restrictions to conduct a reasonable and necessary copying and
inspection of portions of the Records of the other Party which are directly
related to amounts payable to the Party requesting the audit pursuant to this
Agreement. Any such audit may be conducted after twenty (20) business days prior
written notice, subject to the following. Such audits shall not be made more
frequently than once every twelve months. No such audit of AOL shall occur
during the period beginning on June 1 and ending October 1. In lieu of providing
access to its Records as described above, a Party shall be entitled to provide
the other Party with a report from an independent certified public accounting
firm confirming the information to be derived from such Records.
Excuse. Neither Party shall be liable for, or be considered in breach of or
default under this Agreement on account of, any delay or failure to perform as
required by this Agreement as a result of any causes or conditions which are
beyond such Party's reasonable control and which such Party is unable to
overcome by the exercise of reasonable diligence.
Independent Contractors. The Parties to this Agreement are independent
contractors. Neither Party is an agent, representative or partner of the other
Party. Neither Party shall have any right, power or authority to enter into any
agreement for or on behalf of, or incur any obligation or liability of, or to
otherwise bind, the other Party. This Agreement shall not be interpreted or
construed to create an association, agency, joint venture or partnership between
the Parties or to impose any liability attributable to
<PAGE>
8
such a relationship upon either Party.
Notice. Any notice, approval, request, authorization, direction or other
communication under this Agreement shall be given in writing and shall be deemed
to have been delivered and given for all purposes (i) on the delivery date if
delivered by electronic mail on the AOL Network, (ii) on the delivery date if
delivered personally to the Party to whom the same is directed; (iii) one
business day after deposit with a commercial overnight carrier, with
written-verification of receipt or (iv) five business days after the mailing
date, whether or not actually received, if sent by U.S. mail, return receipt
requested, postage and charges prepaid, or any other means of rapid mail
delivery for which a receipt is available, to the person(s) specified below at
the address of the Party set forth in the first paragraph of this Agreement.
No Waiver. The failure of either Party to insist upon or enforce strict
performance by the other Party of any provision of this Agreement or to exercise
any right under this Agreement shall not be construed as a waiver or
relinquishment to any extent of such Party's right to assert or rely upon any
such provision or right in that or any other instance; rather, the same shall be
and remain in full force and effect.
Return of Information. Upon the expiration or termination of this Agreement,
each Party shall, upon the written request of the other Party, return or destroy
(at the option of the Party receiving the request) all confidential information,
documents, manuals and other materials specified the other Party.
Survival. Sections IV, V, VI, and VII of this Exhibit C, shall survive the
completion, expiration, termination or cancellation of this Agreement.
Entire Agreement. This Agreement sets forth the entire agreement and supersedes
any and all prior agreements of the Parties with respect to the transactions set
forth herein. Neither Party shall be bound by, and each Party specifically
objects to, any term, condition or other provision which is different from or in
addition to the provisions of this Agreement (whether or not it would materially
alter this Agreement) and which is proffered by the other Party in any
correspondence or other document, unless the Party to be bound thereby
specifically agrees to such provision in writing.
Amendment. No change, amendment or modification of any provision of this
Agreement shall be valid unless set forth in a written instrument signed by the
Party subject to enforcement of such amendment.
<PAGE>
9
Further Assurances. Each Party shall take such action (including, but not
limited to, the execution, acknowledgment and delivery of documents) as may
reasonably be requested by any other Party for the implementation or continuing
performance of this Agreement.
Assignment. ICP shall not assign this Agreement or any right, interest or
benefit under this Agreement without the prior written consent of AOL. Subject
to the foregoing, this Agreement shall be fully binding upon, inure to the
benefit of and be enforceable by the Parties hereto and their respective
successors and assigns.
Construction; Severability. In the event that any provision of this Agreement
conflicts with the law under which this Agreement is to be construed or if any
such provision is held invalid by a court with jurisdiction over the Parties to
this Agreement, (i) such provision shall be deemed to be restated to reflect as
nearly as possible the original intentions of the Parties in accordance with
applicable law, and (ii) the remaining terms, provisions, covenants and
restrictions of this Agreement shall remain in fall force and effect.
Remedies. Except where otherwise specified, the rights and remedies granted to a
Party under this Agreement are cumulative and in addition to, and not in lieu
of, any other rights or remedies which the Party may possess at law or in
equity.
Applicable Law; Jurisdiction. This Agreement shall be interpreted, construed and
enforced in all respects in accordance with the laws of the Commonwealth of
Virginia except for its conflicts of laws principles. Each Party irrevocably
consents to the exclusive jurisdiction of the courts of the Commonwealth of
Virginia and the federal courts situated in the Commonwealth of Virginia, in
connection with any action to enforce the provisions of this Agreement, to
recover damages or other relief for breach or default under this Agreement, or
otherwise arising under or by reason of this Agreement.
Export Controls. Both parties shall adhere to all applicable laws, regulations
and rules relating to the export of technical data and shall not export or
re-export any technical data, any products received from the other Party or the
direct product of such technical data to any proscribed country listed in such
applicable laws, regulations and rules unless properly authorized.
Headings. The captions and headings used in this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement.
Counterparts. This Agreement
<PAGE>
10
may be executed in counterparts, each of which shall be deemed an original and
all of which together shall constitute one and the same document.
<PAGE>
EXHIBIT D
Format For ICP's Presence on the AOL Network
Any ICP trademark or logo
Any headline or picture from ICP content
Any teaser, icon, Link to ICP Internet Site or Welcome Mat
Any other Content which originates from, describes or promotes ICP or ICP's
Content
<PAGE>
EXHIBIT E
New Member Acquisition Programs
A. Download button on ICP web site -- bounties shall be Ten Dollars ($10) for
each New Member.
<PAGE>
EXHIBIT F
CERTIFICATE OF COMPLIANCE WITH COMMITMENTS
REGARDING PROMOTIONS AND EXCLUSIVITY
Pursuant to Section 2 of the Interactive Services Agreement between ____________
("ICP") and America Online, inc. ("AOL"), dated as of __________, 1997 (the
"Agreement"), the following report is delivered to AOL for the month ending
________ (the "Month"):
I. Promotional Commitments
ICP hereby certifies to AOL that ICP completed the following promotional
commitments during the Month:
Type of Date(s) of Duration/Circulation Relevant
Promotion Promotion of Promotion Contract
Section
1.
2.
3.
IN WITNESS WHEREOF, this Certificate has been executed this ____ day of _______,
199_.
Ask-A-Doctor, Inc.
By:
------------------
Print Name: Scott Rifkin, M.D.
------------------
Title: Chairman
--------
Date: October 10, 1997
----------------
<PAGE>
EXHIBIT G
TECHNICAL SPECIFICATIONS
1. BROWSER Table (attached hereto)
2. User-Agent Table (attached hereto)
<PAGE>
2
Confidential
AMENDMENT TO INTERACTIVE SERVICES AGREEMENT
This Amendment to Interactive services Agreement (this "Amendment"),
dated as of April __, 1998, is between America Online, Inc ("AOL"), a Delaware
corporation, with offices at 22000 AOL Way, Dulles, Virginia 20166, and
Ask-A-Doc, Inc. ("ICP") a Delaware corporation, with offices at 11 Aston Court,
Owings Mills, Maryland 21117. AOL and ICP may be referred to individually as
"Party" and collectively as "Parties."
BACKGROUND
AOL and MP entered into an Interactive Services Agreement effective
as of October 1, 1997 (the "Agreement"). The Parties desire to amend the
Agreement to reflect their agreement with respect to the timing of payments due
to AOL from ICP pursuant to the Agreement and the payment of additional carriage
fees by ICP in return for AOL"s forebearance as to payments that are currently
due. Defined terms used but not defined in this Amendment shall be as defined in
the Agreement.
In consideration of the premises, mutual covenants and agreements
herein and other good and valuable consideration, the receipt and sufficient of
which are hereby acknowledged, the Parties, intending to be legally bound
hereby, agrees as follows:
TERMS
1. Until May 16, 1998 (the "Forebearance Date"), AOL shall forebear and shall
take no action to enforce ICP"s obligations to pay the carriage fees which
are currently due, or which become due prior to the Forebearance Date,
pursuant to Section 1.6 of the Agreement.
2. On the Forebearance Date, ICP shall pay AOL (i) all carriage fees due
and unpaid as of the Forebearance Date and (ii) and additional [***]
($[***])(the "Additional Carriage Fee"). The Additional Carriage Fee is
in addition to the carriage fees described in Section 1.6 of the
Agreement and is not an advance payment of such carriage fees. From and
after the Forebearance Date, all payments due under the Agreement shall
become due and be paid by ICP in accordance with, and on the dates set
forth in, the Agreement.
3. Except as amended by this Agreement, the Agreement is ratified and
confirmed in all respects and continues in full force and effect.
<PAGE>
3
<PAGE>
4
IN WITNESS WHEREOF, the Parties have executed this Amendment as of the date
first written above.
AMERICA ONLINE, INC. ASK-A-DOC, INC.
By: /s/ Barry Schuller By: /s/ Lewis S. Goodman
----------------------------- ------------------------------------
Print Name: Barry Schuller Print Name: Lewis S. Goodman
--------------------- ----------------------------
Title: President, AOL Interactive Title: Vice President
Services ---------------------------------
- ---------------------------------
<PAGE>
Confidential
SECOND AMENDMENT TO INTERACTIVE SERVICES AGREEMENT
This Second Amendment to Interactive Services Agreement (this
"Second Amendment"), dated as of August 20, 1998, between America Online, Inc.
("AOL"), a Delaware corporation with offices at 22000 AOL Way, Dulles, Virginia
20166, and America's Doctor, Inc. ("ICP") a Delaware corporation, with offices
at 11 Aston Court, Owings Mills, Maryland 21117. AOL and ICP may be referred to
individually as a "Party" and collectively as "Parties."
BACKGROUND
AOL and ICP entered into an Interactive Services Agreement effective
as of October 1, 1997 (the "Agreement") and an Amendment to Interactive Services
Agreement dated as of April __, 1998 (the "Amendment"). The Parties desire to
amend the Agreement and the Amendment to reflect their agreement with respect to
the timing of payments due to AOL from ICP pursuant to the Agreement and the
length of the term of the Agreement. Defined terms used but not defined in this
Amendment shall be as defined in the Agreement.
In consideration of the premises, mutual covenants and agreements
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties, intending to be legally bound
hereby, agrees as follows:
TERMS
1. Term. The initial term of the Agreement shall be extended through June 21,
2000.
2. Carriage Fees. All amounts not yet paid by ICP to AOL as of the date of
this Second Amendment shall be paid according to the following schedule:
ICP shall pay AOL [***] ($[***]) on or before September 21, 1998.
Thereafter, ICP shall pay AOL [***] dollars ($[***]) on or before the 21st
day of each month during the initial term, up through and including
April 21, 2000. After April 21, 2000 and continuing through the expiration
of the initial term, no further payments by ICP to AOL shall become due.
3. Wired Payments. All payments by ICP hereunder shall be paid in immediately
available, non-refundable U.S. funds wired to the "America Online"
account, Account Number , or such other account of which AOL
shall give ICP written notice.
4. Except as amended by this Second Amendment, the Agreement is ratified and
confirmed in all respects and continues in full force and effect.
IN WITNESS WHEREOF, the Parties have executed this Amendment as of the date
first written above.
<PAGE>
2
AMERICA ONLINE, INC. AMERICA'S DOCTOR, INC.
By: /s/ Barry Schuller By: /s/ Scott M. Rifkin, M.D.
----------------------------- ------------------------------------
Print Name: Barry Schuller Print Name: Scott M. Rifkin, M.D.
---------------------- ----------------------------
Title: President, AOL Interactive Title: Chairman and CEO
Services ---------------------------------
- ----------------------------------
Date: Date: 8/20/98
---------------------------- ----------------------------------
<PAGE>
EXHIBIT 10.8
CALL CENTER SERVICE AGREEMENT
This Call Center Service Agreement (the "Service Agreement") is made
this 2nd day of July, 1998 (the "Effective Date") by and between America's
Doctor, Inc., a Delaware corporation ("AD") and Medical Advisory Systems, Inc.,
a Delaware corporation ("MAS").
RECITALS
WHEREAS, AD is a company formed to implement real-time medical
information and related services via the Internet; and
WHEREAS, AD will provide its services to its users through
Physicians and other health staff located at one or more call center(s) (the
"Call Center"); and
WHEREAS, AD does not and will not engage in the practice of
medicine; and
WHEREAS, MAS is a company headquartered at 8050 Southern Maryland
Boulevard, Owings, Maryland 20736 (the "MAS Office") providing medical
assistance products and services twenty-four hours (24) a day utilizing a
worldwide telecommunications system; and
WHEREAS, MAS will operate the AD Call Center in a manner such that
neither MAS nor AD will engage in the practice of medicine; and
WHEREAS, MAS has agreed to purchase Fifty Thousand (50,000) shares
of common stock of AD (the "MAS Stock") pursuant to the terms of a Stock
Purchase Agreement of even date herewith; and
WHEREAS, in consideration for the MAS Stock, MAS has agreed to pay
AD the sum of One Million Dollars ($1,000,000) (the "Stock Purchase Price"); and
WHEREAS, the Stock Purchase Price shall be paid by MAS to AD by way
of credits
<PAGE>
2
for services rendered, certain assets purchased by MAS and cash payments by MAS
to AD pursuant to this Service Agreement; and
WHEREAS, AD has agreed to promote MAS's core programs and core lines
of business, including its 800 Series and 900 voice telephone service, on AD's
site on America Online ("AOL").
NOW THEREFORE, in consideration of the foregoing recitals and the
premises and the consideration set forth herein, AD and MAS hereby agree as
follows:
1. Incorporation of Recitals. The foregoing recitals are
incorporated as part of this Service Agreement as if set forth fully herein.
2. Term.
(a) The term of this Service Agreement shall be for two (2) years
(the "Initial Term") commencing on the Effective Date. At the conclusion of the
Initial Term, unless either party hereto gives notice of termination as provided
in Section 2(b) below, the Service Agreement shall automatically renew for a
term of one (1) year (the "Renewal Term"). At the conclusion of the Renewal
Term, unless either party hereto gives notice of termination as provided in
Section 2(b) below, the Service Agreement shall automatically renew for a term
of two (2) years (the "Extended Term").
(b) Either party to this Service Agreement may terminate the Service
Agreement without cause by providing written notice of termination not less than
ninety (90) days prior to the expiration of the Initial Tenn, the Renewal Term
or the Extended Term.
3. Exclusivity. During the Term of this Service Agreement, or unless
otherwise agreed to by MAS, during the term of this Service Agreement, MAS shall
be the exclusive provider of
<PAGE>
3
Call Center services to AD.
4. Goals and Objectives. AD and MAS agree that the goals and
objectives to be achieved through this Service Agreement are as follows:
(a) Create and operate a twenty-four (24) hour a day three hundred
sixty-five (365) day a year Call Center to service the needs of AD's users;
(b) Establish and maintain high quality services for AD's users;
(c) Commence operations of the Call Center in a timely manner as set
forth in AD's Business Plan;
(d) Provide and maintain AD's Call Center services within the budget
for such services set forth in AD's Business Plan;
(e) Respond to a minimum of thirty thousand (30,000) AD user
transactions in the first month of operation of the Call Center, with monthly
increases pursuant to AD's Business Plan or actual usage, whichever is greater;
(f) Minimize wait time for AD's users;
(g) Respond to each user's questions timely, accurate and
completely; and
(h) Staff the Call Center with qualified Board Eligible/Board
Certified Physicians and other qualified health care professionals;
(i) Training Call Center Physicians and other health care
professionals to respond to a minimum of eight (8) user inquiries per hour.
5. MAS Responsibilities. MAS shall use reasonable business efforts
to provide and maintain the following goods and services in a timely, efficient
and effective manner:
<PAGE>
4
(a) Installation of fifteen (15) work stations. MAS shall purchase
and maintain all of the furnishings, computer equipment, connections,
communication lines, service, software (other than software being developed by
The Brook Group). MAS shall further purchase the server(s) and other equipment
necessary to operate the Call Center. MAS shall comply with all of the
specifications set forth in the proposal by Management Works attached to this
Service Agreement as Exhibit A (the "Specification"). The Specifications may be
modified by AD provided that such modification(s) does not increase the cost to
MAS of fulfilling the Specifications. AD shall provide MAS with any such
modifications prior to MAS ordering any item in the Specifications. MAS, with
AD's consent, may modify the Specifications provided that any such
modification(s) provide for matching equivalent specifications sufficient to
fulfill AD's needs for the project;
(b) Recruit and hire a sufficient number of Board Eligible/Board
Certified Physicians (the "Physicians") as per the Business Plan, as well as
other qualified professionals, such as dieticians, nurses, etc. (the "Health
Staff") to staff and service the Call Center in a manner allowing AD to
accurately respond to its users' requests in a timely manner;
(c) Develop a training program for and train the Physicians and the
Health Staff;
(d) Provide twenty-four (24) hour supervision of the Physicians and
the Health Staff;
(e) Provide AD with spillover access to physicians employed by MAS
who primarily provide services for MAS core business operations (the "MAS
Physicians") to assist with the AD Call Center;
(f) Provide the AD Call Center Physicians and Health Staff with
access to MAS's
<PAGE>
5
health care reference data bases and other resource materials;
(g) Enter into a joint venture with AD for the purpose of the
marketing and sales of MAS's premium services to corporations, insurance
companies, HMO's, medical institutions, sophisticated medical consumers and
medically troubled populations;
(h) Provide such other services and resources as are necessary to
operate the Call Center in an efficient and effective manner.
6. Physician and Health Staff Recruitment and Hiring. Immediately
upon the execution of this Service Agreement, MAS shall commence recruiting and
hiring the Physicians and Health Staff necessary to adequately staff the AD Call
Center. Unless otherwise directed by AD in accordance with Section 23(b) herein,
the Physicians and Health Staff shall be hired as independent contractors by MAS
or an MAS subsidiary or affiliate. MAS shall require all Physicians and Health
Staff to sign a contract containing a non-competition clause restricting the
Physicians and Health Staff from working for another online medical information
service in competition with AD. In addition to the non-competition provision,
the contract between MAS and the Physicians and Health Staff shall contain
provisions requiring the Physicians and Health Staff to comply with the
procedures and protocols which shall be developed by AD and implemented by MAS.
MAS may pay Physicians up to $60.00 per hour, exclusive of any benefits and
other payroll costs. If MAS wishes to pay a Physician more than $60.00 per hour,
MAS must first obtain the approval of AD, which approval shall not be
unreasonably withheld. MAS shall obtain approval from AD for the hourly rates to
be paid to the Health Staff. Such approval shall not be unreasonably withheld.
<PAGE>
6
7. Training. MAS shall design and administer a program to train the
AD Call Center Physicians and Health Staff. This training program shall be
approved by AD. In addition to the initial training, MAS shall provide AD Call
Center Physicians and Health Staff with ongoing continuing education and
training. The content and frequency of the ongoing training shall be agreed upon
by AD and MAS.
8. Online Service/Equipment Issues. MAS agrees that if AD suffers an
interruption in service as a result of any equipment failure or other problem
attributable to the Call Center, MAS shall provide AD with an assessment
evaluation within fifteen ( 15) minutes of the system failure, and a full
evaluation within thirty (30) minutes of- the system failure. MAS shall notify
an AD designee within fifteen (15) minutes of any system failure.
9. Backup/Redundancy Plan. MAS shall implement the backup/redundancy
plan agreed to between AD and MAS.
10. MAS Report Data Delivery. MAS shall provide such reports and
data reasonably requested by AD. Such reports and data shall include, but not be
limited to: Call Center usage; user wait time; response time; and zip code
specific usership reports. MAS shall provide such reports and data to AD upon
request by a designated AD representative.
11. Ownership of Equipment/ Risk of Loss.
(a) All equipment, including connections, furnishings and software
purchased by MAS for the AD Call Center (the "Equipment") pursuant to this
Service Agreement shall be titled in the name of and owned by AD. MAS shall
provide AD with written documentation specifying the Equipment purchased and
containing proof of payment. Any additional furnishings and equipment
<PAGE>
7
purchased by MAS for the AD Call Center shall be owned by MAS unless by
agreement, AD shall reimburse MAS for such furnishings and equipment in which
event such furnishings and equipment shall become part of the Equipment. The
term Equipment also includes any equipment, including connections, furnishings
and software purchased directly by AD and placed at the AD Call Center. All of
the Equipment shall be clearly labeled as owned by AD and MAS shall maintain a
complete and up-to-date lists of all of the Equipment.
(b) AD shall bear the risk of loss for damage to the Equipment,
except however, if such damage is caused by the gross negligence or willful
neglect of MAS, then, in such event, MAS shall bear the risk of loss.
12. Call Center Start-Up. For purposes of this Service Agreement,
the start-up date for the Call Center shall be two (2) weeks prior to the soft
launch of the AD service, pursuant to AD's contract with AOL. The period from
the Effective Date through the Start-up Date shall be referred to herein as the
"Pre-Start-up Period." The period after the Start-up Date shall be referred to
herein as the "Post-Start-up Period.
13. Credit Against Stock Purchase Price.
(a) In consideration for the services enumerated below, which shall
be performed during the Pre-Start-Up Period, MAS shall receive as a credit
against the Stock Purchase Price the total sum of $360,000.
<PAGE>
8
------------------------------------------------------------
Service Credit
------- ------
------------------------------------------------------------
(i) May and June Rent ($5,000 per month) $10,000
------------------------------------------------------------
(ii) Installation of fifteen (15) Work Stations,
including but not limited to, workstations,
furniture, server(s), communication connectors and
software per Management Works specifications $200,000
------------------------------------------------------------
(iii) Hiring and Start-up training of Physicians,
Health Staff and Supervisors (not including the
actual cost of salaries, which shall be treated in
accordance with Sections 15 and 16 herein) $60,000
------------------------------------------------------------
(iv) MAS Management Salaries $60,000
------------------------------------------------------------
(v) Benefits on Management Salaries $15,000
------------------------------------------------------------
(iv) Systems Coordination, Hardware and $15,000
Generator
------------------------------------------------------------
Total: $360,000
------------------------------------------------------------
(b) If the cost of providing the fifteen (15) Work Stations and
related Equipment exceeds the projected cost as set forth in the Management Work
Specifications, MAS shall receive additional credit against the Stock Purchase
Price for each dollar the actual cost exceeds the total Management Works
projected cost.
14. Payment Against The Stock Purchase Price And Issuance of the MAS
Stock.
(a) MAS shall make total cash payments of Six Hundred Forty Thousand
Dollars ($640,000) against the Stock Purchase as follows: (i) commencing seven
(7) days from the date on
<PAGE>
9
which AD shall first pay a MAS monthly invoice in accordance with Section 16
below (the "Initial MAS Payment Date"), and on the 7th day following the date on
which AD pays each MAS monthly invoice for each of ten (10) successive months
following the Initial MAS Payment Date, MAS shall pay AD the sum of Fifty Three
Thousand Three Hundred Twenty Dollars ($53,320.00); and (ii) on the 7th day
following the date on which AD pays the monthly invoice for the eleventh (1lth)
month following the Initial MAS Payment Date, MAS shall pay AD the sum of Fifty
Three Thousand Four Hundred Eighty Dollars ($53,480.00).
(b) Provided MAS has fully performed in accordance withSection 13(a)
herein, upon the Start-up Date, AD shall issue MAS the total of Eighteen
Thousand (18,000) shares of the MAS Stock.
(c) AD shall issue to MAS Two Thousand Six Hundred Sixty Six (2,666)
shares of the MAS Stock upon receipt by AD of each payment of Fifty Three
Thousand Three Hundred Twenty Dollars ($53,320.00) in accordance with Section
14(a) herein.
(d)AD shall issue to MAS Two Thousand Six Hundred Seventy Four
(2,674) shares of the MAS Stock upon receipt by AD of the final payment of Fifty
Three Thousand Four Hundred Eighty Dollars ($53,480.00) in accordance with
Section 14(a) herein.
15.Post Start-up Period Management. During the Post Start-up Period
MAS shall provide Call Center management oversight such that AD shall be able to
fill the following positions at a cost less than projected in the AD Business
Plan (as defined in the MAS Stock Purchase Agreement):
(a) Vice President of Information Technology;
(b) Vice President of Health Services;
<PAGE>
10
(c) Director of Provider Education; and
(d) Administrator/Coordinator
16. MAS Billing.
(a) MAS shall bill AD monthly for services provided AD under the
terms of this Service Agreement, including the services provided pursuant to
Section 6 herein. Subject to Section l6(f) below, payment shall be due ten (10)
days after receipt of MAS's invoice by AD. When MAS's total monthly bills to AD
exceed Two Hundred Thousand Dollars ($200,000), MAS may, at its option, bill AD
every two (2) weeks. Subject to Section 16(f) below, payment shall be due within
ten (10) days of AD's receipt of each biweekly billing statement.
(b) MAS shall charge AD, MAS's actual cost plus ten percent (10%),
but in no event less than Twenty Six Thousand Dollars ($26,000) per month, for
Physicians, other Health Staff and Supervisory Personnel. Upon the earlier to
occur of: (i) AD being profitable on a cash basis for three (3) consecutive
months; or (ii) the tenth (10th) month after the Effective Date, MAS may
increase the charge to AD for Physicians and Health Staff to its actual cost
plus twenty percent (20%), but in no event less than Twenty Six Thousand Dollars
($26,000) per month. Provided, however, that pursuant to Section 25 herein, if
MAS is permitted by AD, pursuant to Section 25 herein, to contribute an
additional Five Hundred Thousand Dollars ($500,000) of ongoing operation and
management services in exchange for additional common stock in AD at a valuation
to be determined by AD, MAS shall continue to charge its actual cost plus ten
percent (10%), but in no event less than Twenty Six Thousand Dollars ($26,000)
per month, until such additional investment is fully paid by MAS, during the
Term of this Service Agreement, including any extensions thereof.
<PAGE>
11
(c) If MAS purchases additional equipment for the Call Center with
AD's consent, MAS may bill AD for the actual cost of such equipment.
(d) MAS may bill AD for the actual cost of expenses such as
overnight deliveries, postage, long distance telephone charges, facsimiles and
miscellaneous office supplies, such as pencils, pens, paper, etc.
(e) Except for Post Start-up Period rent charges ($5,000 per month),
MAS shall not bill AD for any general overhead expenses including, but not
limited to, electric charges, building maintenance and local telephone charges.
(f) AD shall prepay MAS's payroll for Physicians, Health Staff and
Supervisory Personnel pursuant to the following procedure: not less than seventy
two (72) hours prior to the date payroll checks are to be distributed, MAS shall
provide AD, in writing, the amount of the payroll; (ii) not less than twenty
four (24) hours prior to the date payroll checks are to be distributed, AD shall
transfer to MAS an amount sufficient to pay the payroll. AD's failure to prepay
the payroll in accordance with this Section 16(f) shall constitute a breach of
this Service Agreement by AD.
17. Additional Locations.
(a) In the event MAS is unable to adequately staff all of AD's Call
Center needs at the MAS Office location, AD shall open additional call centers
at other locations.
(b) MAS shall have the responsibility for recruiting, training and
supervising Physicians and Health Staff at any such additional location.
(c) AD and MAS shall mutually agree upon any additional costs
(including costs of additional supervisory personnel) MAS may incur in its
operation of additional Call Center locations.
<PAGE>
12
MAS shall charge AD in accordance with Section 16 above for any such additional
costs.
18. Noncompetition.
(a) During the term of this Service Agreement and provided that MAS
is not in default hereunder, MAS has the exclusive right to provide Call Center
services to AD, and AD shall not operate any competing Call Center.
(b) During the term of this Service Agreement and for a period of
one (1) year after the termination of this Service Agreement, AD shall not
compete with MAS in any of MAS's core business activities, including
specifically, MAS's "800 Series" and "900" voice telephone services.
(c) During the term of this Service Agreement, and for a period of
one (1) year after the termination of this Service Agreement, MAS shall not
compete with AD by providing real time medical information and related services
via the Internet.
(d) In the event this Service Agreement is terminated for any
reason, AD may contract with or employ the Physicians and Health Staff dedicated
primarily to the AD Call Center. In no event shall AD recruit, contract with or
employ any member of MAS's staff, including MAS Physicians, not dedicated
primarily to the AD Call Center.
19. MAS Standard of Care. MAS shall use reasonable business efforts
to operate the Call Center efficiently and effectively and to comply with all of
the protocols and procedures agreed to between AD and MAS. MAS shall take care
to ensure that the Physicians and Health Staff comply with AD's protocols and
procedures such that AD does not engage in the practice of medicine or any other
health related field. MAS has not violated its standard of care pursuant to this
Section 19 if it complies with all of the protocols and procedures agreed to
between AD and MAS but nevertheless, a
<PAGE>
13
Physician(s) or member(s) of the Health Staff is/are found to have engaged in
the practice of medicine or some other health related field.
20. Indemnification. AD hereby agrees to indemnify, hold harmless
and defend MAS, the Physicians and/or the Health Staff from and against any and
all claims of any nature whatsoever arising directly from the operation of the
Call Center brought against MAS, any Physician or member of the Health Staff
provided that there is no finding that MAS, the Physicians and/or the Health
Staff have not complied with all of the protocols and procedures for operating
the Call Center agreed to between MAS and AD. AD shall maintain general
liability business insurance with coverage limits of $1,000,000 per occurrence
and $3,000,000 in the aggregate.
21. Operations Committee; Operational Criteria. During the term of
this Service Agreement, the Board of Directors of AD shall appoint a Call Center
Operations Committee (the "Operations Committee") consisting of three (3)
members. The Operations Committee shall be composed of Scott Rifkin, the PRWW
Board Representative and the MAS Board Representative. The Operations Committee
shall establish reasonable performance criteria that MAS must comply with under
this Service Agreement (the "Performance Criteria"). The Performance Criteria
shall change from time to time. The Operations Committee shall present proposed
Performance Criteria to MAS in writing, and MAS shall have five (5) business
days to comment upon the proposed Performance Criteria. Within five (5) business
days of MAS's response to the proposed Performance Criteria, the Operations
Committee shall present MAS with the written Performance Criteria with which MAS
shall comply until such time as the Operations Committee amends or modifies the
performance criteria.
22. Default by MAS.
<PAGE>
14
(a) The failure of MAS to comply with any of the terms of this
Service Agreement including, but not limited to, the failure to comply with the
Performance Criteria, described in Section 21 above, shall constitute a breach
of the Service Agreement by MAS. MAS shall be deemed to have failed to comply
with the Performance Criteria if two (2) of the three (3) members of the
Operations Committee determine that there is noncompliance. In such event, the
Operations Committee shall give MAS written notice of such noncompliance, which
written notice shall specify the nature of such noncompliance (the "Notice of
Noncompliance"). MAS shall have fifteen (15) days after receipt of the Notice of
Noncompliance to cure such noncompliance. If two (2) of the three (3) members of
the Operations Committee determine that MAS has failed to cure in accordance
with the Notice of Noncompliance, the Operations Committee shall so notify MAS
in writing and MAS shall be in breach of this Service Agreement.
(b) Upon MAS's breach of this Service Agreement, this Service
Agreement shall automatically terminate. Upon termination, AD may, at its sole
option, take any or all of the following actions:
(i) Subject to Section 29 herein, pursue any and all remedies
available by law including damages;
(ii) Take possession of all Call Center Equipment owned by AD
pursuant to Section 22(d) below;
(iii) In accordance with and subject to the provisions of
Section 18(d), contract with or employ the Physicians and/or Health
Staff; and
(iv) Take any and all other actions AD deems in its best
interest to facilitate
<PAGE>
15
the continued operation of the AD Call Center.
(c) Upon termination, AD shall promptly deliver to MAS the balance
of any shares paid for and due MAS pursuant to Section 14 herein.
(d) Upon the termination of this Service Agreement, MAS shall have
the right to purchase the balance of the MAS Stock then unpaid for by paying the
remaining balance of the Stock Purchase Price to AD in cash within thirty (30)
days of the termination of the Service Agreement. Upon payment by MAS of the
balance of the Stock Purchase Price, AD shall promptly deliver the balance of
the MAS Stock to MAS.
(e) Upon termination of this Service Agreement, MAS shall cooperate
with AD in order to effect an orderly transition of the Call Center from MAS to
AD or AD's designee. MAS shall continue to operate the Call Center for a period
of thirty (30) days after termination. MAS shall surrender and turnover the AD
Call Center Equipment within such thirty (30) day period. If MAS fails to
turnover the Equipment in a timely manner, then AD or its designee may enter the
MAS Office and remove the AD Call Center Equipment. AD shall take care to remove
the Equipment in a manner which will cause the least disruption to MAS's core
business services.
(f) In the event AD wrongfully terminates or otherwise breaches this
Service Agreement, subject to Section 29 herein, MAS may pursue any and all
remedies available by law including seeking damages.
23. Independent Contractors.
(a) In the event that any State or Federal taxing authority asserts
that the Physicians
<PAGE>
16
and/or Health Staff are employees of MAS (or an MAS subsidiary or affiliate),
MAS shall immediately so notify AD in writing. AD may, in its discretion,
participate in any negotiation or litigation with such taxing authority. If AD
wishes to challenge the taxing authority, AD shall be responsible for the costs
of such challenge, including any costs incurred by MAS. If it is determined that
the Physicians and/or Health Staff are employees and not independent
contractors, AD shall be responsible to reimburse MAS and pay for any payroll
withholding or other taxes associated with the employment of the Physicians
and/or Health Staff.
(b) AD, in its sole discretion, may require MAS to treat the
Physician and/or Health Staff as employees rather than independent contractors.
In such event, AD shall pre-pay, pursuant to Section 16(f) herein, all sums
required to comply with state and federal withholding obligations.
24. AD Responsibilities to MAS.
(a) In addition to all of AD's obligations set forth above, AD shall
do the following:
(i) Jointly develop a program with MAS to promote and market
at no cost to MAS, MAS's core programs and lines of business on AD's
site on AOL;
(ii) Participate in the marketing of MAS's 800 Series
telephone product so long as such participation results in no
financial costs to AD, is limited to the referral of AD users to the
MAS 800 Series telephone service, and is determined by AD's Board as
not being detrimental to AD;
(iii) Provide direct links from the AD site on AOL to MAS's
website(s);
(iv) Include the MAS sponsored Doc-Talk, LLC. 800 Series
telephone
<PAGE>
17
service in its banner advertisement cycle on the AD main page at no
cost to MAS;
(v) Enter into a joint venture with MAS for the purpose of the
marketing and sales of MAS's premium services to corporations,
insurance companies, HMO's, medical institutions, sophisticated
medical consumers and medically troubled populations; and
(vi) Analyze with MAS and, if feasible, pursue the marketing
and sales of MAS's premium services in international markets.
25. Additional Stock Purchase by MAS. AD, in its sole and absolute
discretion, may request MAS to contribute up to an additional Five Hundred
Thousand Dollars ($500,000) of ongoing services in accordance with the terms of
this Service Agreement (the "Additional Services") in exchange for additional
common stock in AD (the "Additional MAS Stock"). The valuation of the Additional
MAS Stock shall be set by the AD Board of Directors. MAS, in its sole and
absolute discretion, may agree to perform the Additional Services, or may
decline to do so.
26. Eligibility for AD Stock Options. To the extent permitted by law
and the corporate Bylaws of AD, the MAS Supervisory Personnel, the Physicians
and the Health Staff shall be eligible for the AD employer stock option plan, at
the sole and absolute discretion of the AD Board and Compensation Committee.
27. Representations. Warranties and Disclaimers.
(a) AD is a corporation duly incorporated under the laws of the
State of Delaware and is authorized to enter into this Service Agreement.
<PAGE>
18
(b) MAS is a corporation duly incorporated under the laws of the
State of Delaware and is authorized to enter into this Service Agreement.
(c) The parties hereto understand and agree that Doc-Talk, LLC is an
affiliate of MAS which has been formed for the purpose of marketing premium
medical services telephonically and via the Internet.
(d) Except as specifically provided herein, this Service Agreement
does not constitute a joint venture between MAS and AD.
28. Force Majeure. Neither party hereunder shall be liable to the
other for any failure or delay in performance of its obligations under this
Service Agreement due to causes beyond the reasonable control of the party in
question such as governmental action or rioting, civil commotion, fire, flood,
epidemic or other act of God. Performance of the contractual obligation which
has been delayed by the force majeure shall be deemed suspended only for a
period equal to the delay caused by such event.
29. Arbitration and Governing Law.
(a) This Service Agreement shall be governed and construed in
accordance with the laws of the State of Maryland.
(b) In the event the parties have any material dispute under this
Service Agreement, the parties hereby agree to submit any such dispute to
binding arbitration in the State of Maryland.
30. Assignment.
(a) MAS may not assign this Service Agreement or any of its
obligations and rights under this Service Agreement to any party without the
express written consent of AD.
<PAGE>
19
(b) AD may assign its rights and obligations under this Service
Agreement to a third party provided such third party agrees to comply with all
of the terms of this Service Agreement.
31. Notices. All notices and demands required or permitted to be
given by either party to the other under this Service Agreement shall be in
writing, sent certified mail, return receipt requested, postage prepaid, or by
Federal Express or other reputable overnight courier service, or by hand
delivery and shall be deemed to have been received upon hand delivery, or one
(1) business day following deposit with Federal Express or other reputable
overnight courier service, or three (3) days following deposit in the U.S. Mail
if sent by certified mail to the address shown below or to such other address as
either party may designate by notice to the other.
Medical Advisory Systems, Inc.
8050 Southern Maryland Boulevard
Owings, Maryland 20736
America s Doctor, Inc.
11403 Cronridge Drive
Suite 200
Owings Mills, Maryland 21117
32. Amendment of the Service Agreement. No amendment of this Service
Agreement shall be valid and binding unless set forth in writing and duly
executed by all of the parties hereto.
33. Severability. Any provision of this Service Agreement which
shall prove to be invalid, void or illegal shall inno way affect, impair or
invalidate any other provision hereof and such other provision shall remain in
full force and effect.
<PAGE>
20
(CONTINUED ON NEXT PAGE)
<PAGE>
21
AMERICA'S DOCTOR, INC.
By: /s/ Scott Rifkin
-------------------------------------
Scott Rifkin, M.D.
Its: Chairman
MEDICAL ADVISORY SYSTEMS, INC.
By: /s/ Ronald Pickett
-------------------------------------
Ronald Pickett
Its: President
READ and AGREED:
Premier Research Worldwide
By: /s/ Fred Powell
-------------------------------
Fred Powell
Its: Chief Financial Officer
<PAGE>
EXHIBIT 10.9
SUPPORT AND SERVICE AGREEMENT
THIS AGREEMENT, is made the 2nd day of July, 1998, by and between
PREMIER RESEARCH WORLDWIDE, LTD., a Delaware corporation with its principal
place of business located at 124 S. 15th Street, Philadelphia, PA 19102
(referred to herein as "PRWW") and AMERICA'S DOCTOR, INC., a Delaware
corporation with its principal place of business located at 11403 Cronridge
Drive, Suite 200, Owings Mills, MD 21117 (referred to herein as "AD").
WHEREAS, the parties hereto have entered into a Stock Purchase
Agreement dated as of July 1, 1998 (the "Stock Purchase Agreement") wherein PRWW
has purchased certain stock in AD pursuant to the terms of the Stock Purchase
Agreement; and
WHEREAS, the parties hereto are entering into this Agreement
pursuant to and in connection with the Stock Purchase Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties hereto agree as follows:
1. DEFINITIONS
1.1 "Services" shall mean the providing of support and services to
PRWW by AD as set forth in Subsection 3.1 of this Agreement.
1.2 "Term" shall mean the period of time during which this Agreement
is in force.
1.3 "Operative" shall mean the Services conforming in all material
respects to the performance levels and requirements detailed in this Agreement.
1.4 "Effective Date" shall mean July 2, 1998.
1.5 All other defined terms shall have the meanings ascribed to them
in this Agreement.
2. TERM AND TERMINATION
2.1 The Term of this Agreement shall begin on the Effective Date and
shall continue until this Agreement is terminated as provided in Subsection 2.2.
2.2 This Agreement may be terminated as follows:
(a) By the mutual, written agreement of the parties to terminate
this Agreement; or
<PAGE>
2
(b) On written notice by a party if the other party materially
breaches any provision hereof and does not cure such breach within thirty
(30) days after its receipt of written notice, specifying the breach, from
the non-breaching party; or
(c) On written notice by a party if the other party files a
voluntary bankruptcy proceeding, becomes subject to an involuntary
bankruptcy proceeding (which is not dismissed or stayed within 30 days of
its commencement), becomes subject to a receiver or trustee, or makes an
assignment for the benefit of its creditor; or
(d) By PRWW without cause with sixty (60) days prior notice to AD;
or
(e) From and after the date that PRWW no longer owns at least 1% of
the outstanding voting stock of AD, by AD without cause with 60 days prior
notice to PRWW.
3. SUPPORT AND SERVICE PROVISIONS.
3.1 AD agrees to provide the following to PRWW:
(a) AD shall provide PRWW with direct links from all AD's existing
and future website(s) (but not every page within such websites) to users
to provide the following:
(i) ongoing solicitation and quantification of qualified
clinical research organization (CRO) volunteer patients to
participate in clinical/medical studies administered by PRWW; and
(ii) education of the users on the societal merits of
participating in clinical research.
(b) AD shall promote and market PRWW's studies on line through use
of its promotional space on its existing and future Health Main Page(s) to
connect to promotional material for PRWW studies.
(i) As an example, AD will offer its AOL users daily and
monthly themes such as "Heart Disease Prevention." Such promotional
ads will be connected to a number of targeted choices for the AOL
users. If the AOL user selects a PRWW targeted choice, the AOL user
will be immediately connected to a PRWW targeted site (the "Targeted
Site").
(ii) The Targeted Site will be created by AD specifically for
PRWW under the supervision of and pursuant to the sole discretion of
PRWW (AD having the right not to follow PRWW's directions if the
same would be detrimental in any material respect to AD's image or
business plan). The Targeted Site will give the AOL user appropriate
<PAGE>
3
information about PRWW's clinical research activities. If the AOL
user wishes to volunteer, the AOL user will make a choice by
clicking an icon and will be led automatically and immediately to a
form to complete (the "Form" or "Forms" as the context may require).
The Form will be created by AD specifically for PRWW under the
supervision of and pursuant to the sole discretion of PRWW. The Form
will gather the information which PRWW needs for its own purposes
and will be varied within reason from study to study at the sole
discretion of PRWW. AD shall provide all such completed forms to
PRWW by e-mail or other agreed upon means on a daily basis. AD will
also provide to PRWW monthly statistical summaries of the
information gathered on the Forms as well as its updated monthly
databases.
3.2 PRWW agrees to provide thcfollowing to AD:
(a) Introductions to the Premier Hospital Group and other related
healthcare organizations;
(b) Introductions to the pharmaceutical, medical instrument
companies, and other organizations with which PRWW has an ongoing business
relationship (PRWW representing that it has relationships with at least
twenty such entities).
4. EXCLUSIVITY/CONFIDENTIALITY
4.1 AD shall provide the above described Services exclusively to
PRWW and shall not provide similar services to any other person or entity
relating to recruitment for clinical trials.
4.2 AD shall not design or provide any program that is in any way
substantially similar or related to the program provided to PRWW for or in
conjunction with any other person or entity relating to recruitment for clinical
trials without the express written permission of PRWW.
4.3 All materials, documents, and other information shared with PRWW
by AD during the course of this Agreement shall be deemed to be, between AD and
PRWW, confidential information ("Information") and AD shall share same only with
those persons performing hereunder who have a need-to-know same in order to
perform the Services. Upon termination of this Agreement, all Information
provided to PRWW by AD hereunder shall continue to be the exclusive property of
PRWW. AD shall be liable for any unauthorized use or disclosure of the
Information by AD's employees which could have reasonably been prevented by AD.
4.4 AD represents, warrants, covenants and agrees that it shall
maintain reasonable safeguards against the destruction, loss or alteration of
information and data under its control and required to be provided to PRWW
hereunder.
4.5 AD shall not, without the prior written approval of PRWW,
publicly disclose in any press release, filing, brochure or document any
information pertaining to this Agreement (it being
<PAGE>
4
understood that AD may disclose this Agreement to potential investors).
4.6 Nothing herein confers or shall confer upon PRWW any right,
title or interest in any goodwill, trademark, trade name, brand name, knowledge
or credibility of AD. PRWW acknowledges that all such interests are the
exclusive property of AD. PRWW shall not assert any claim of ownership or right
to the same.
4.7 Nothing herein confers or shall confer upon AD, any right, title
or interest in any goodwill, trademark, trade name, brand name, knowledge or
credibility of PRWW. AD acknowledges that all such interests are the exclusive
property of PRWW. AD shall not assert any claim of ownership or right to same.
5. GENERAL PROVISIONS
5.1 Each party hereto shall indemnify and hold the other party and
its directors, officers, employees, agents, subsidiaries, parents, affiliates,
consultants and subcontractors (all "Associates") harmless from any claim,
liability, loss, damages or expense, together with all reasonable costs and
expenses relating thereto; including reasonable attorneys' fees, resulting from
the negligent, reckless or willful acts or omissions of such party, its agents
or employees in connection with the providing of the Services hereunder.
5.2 Each party hereto shall indemnify and hold the other party and
its Associates harmless from any and all claim, liability, loss, damages or
expense, together win all reasonable costs and expenses relating thereto,
including reasonable attorneys' fees, arising out of or resulting from any
breach of any representation, warranty, covenant or obligation of such party
contained in this Agreement.
5.3 Each party hereto shall indemnify and hold the other party and
its Associates harmless from any and all claim, liability, loss, damages or
expense, together with all reasonable costs and expenses relating thereto,
including reasonable attorneys' fees, arising from a claim that the Services
provided by such party, or any part thereof, infringes a patent, copyright,
trade secret or other intellectual property right of a third party.
5.4 Each party hereto shall promptly notify the other party in
writing of the assertion of any claim, liability, loss, damages or expense
described in this Section 5. The indemnifying party shall have the exclusive
right to control the defense and settlement of such claim, and the indemnified
party and its Associates shall cooperate and provide all reasonable information,
assistance and authority to enable the indemnifying party to conduct such
defense.
5.5 In the event that the Services provided by a party hereunder, or
any part thereof, are found to infringe a patent, copyright or other
intellectual property right, such party shall, in addition to the indemnity
provided above, take the following actions at its expense: (a) procure for the
other party the right to continue to use the Services; or (b) if such cure is
not made available despite such party's best efforts to secure same, replace or
modify the offending element(s) of the Services provided
<PAGE>
5
for hereunder by such party, so that it/they are no longer infringing while
still meeting the requirements of this Agreement. A party shall not have
liability hereunder for any claim based on the other party or its Associates'
misuse of any product or use or combination of any product with software,
hardware or other materials.
5.6 The parties respective rights and obligations under Sections
4.3, 4.4, 4.5, 4.6 and 4.7 hereof and this Section 5 shall survive any
expiration or termination of this Agreement.
6. ADDITIONAL COVENANTS, REPRESENTATIONS AND WARRANTIES
6.1 AD represents that AOL has represented to it that AOL has
approximately 32 million impressions per year on the Health Main Page. This
represents the number of times per year that an AOL user enters the Health Main
Page screen each year.
6.2 AD represents that AOL has represented to it that IntelliHealth,
an AOL Health Main Page Anchor Tenant without real time medical services, is
running 2.5 - 3.0 million page impressions per month.
6.3 AD represents that the users of the Health Main Page and the
Anchor Tenants of the Health Main Page are within a demographic group from which
volunteers of the nature needed by PRWW are typically found.
6.4 AD represents that it is an anchor tenant the AOL Health Main
Page. AD anticipates more than 500,000 users in its first month of operations as
an Anchor Tenant on AOL's Health Main Page based upon discussions with AOL and
representatives of other Health Main Page Anchor Tenants.
6.5 AD shall use its best efforts to perform the Services hereunder
pursuant to the highest standards in the industry.
6.6 AD will designate and at all times use its best efforts to
maintain its facility, equipment and service personnel in a manner necessary to
provide the Services to PRWW as contemplated in this Agreement.
6.7 AD shall designate and maintain at all times a specific contact
person located at the offices of AD who will have primary responsibility to
respond, or facilitate the response, to telephone requests for Service by PRWW.
6.8 AD represents, warrants, covenants and agrees that AD's
personnel performing hereunder are and shall be skilled in the providing of the
Services.
6.9 AD represents, warrants, covenants and agrees that it has in
effect, and shall use its best efforts to establish and maintain in effect
during the term of this Agreement, all hardware, software, firmware and other
intellectual property license and support agreements (including, without
limitation,
<PAGE>
6
those agreements necessary to secure access to and use of new release levels,
amendments, improvements and updates to such hardware, software, firmware and
other intellectual property) as are necessary to lawfully and properly provide
the Services.
6.10 AD represents, warrants, covenants and agrees that it
currently, and shall for the term of this Agreement, strictly enforce any
material rights, warranties, licenses and other benefits accruing to it under
each of its agreements with third parties whose goods or services are utilized
in the providing of the Services.
6.11 AD represents, warrants, covenants and agrees that the
hardware, software, firmware and intellectual property provided, developed
and/or used by AD hereunder shall not infringe upon or violate any patent,
copyright, trademark, trade secret or other intellectual property right of any
third party.
6.12 AD represents, warrants, covenants and agrees that the Services
shall be furnished and in all respects provided in conformance and compliance
with applicable laws.
6.13 AD represents, warrants, covenants and agrees that the software
and firmware utilized to provide the Services hereunder shall not incur errors
or defects as a result of the century date change in the year 2000.
6.14 AD hereby represents and warrants that it has the authority to
enter into this Agreement and the right to provide the Services to PRWW
hereunder without breach of any obligation to AOL or any third party, and that
its performance under this Agreement will not breach any obligation to AOL or
any third party, or any contract, agreement, rule, law or regulation of
whatsoever nature.
7. ASSIGNMENT
Neither party shall assign any of its rights nor delegate any of its
obligations under this Agreement without the prior written consent of the other
party; provided that the rights and obligations of a party under this Agreement
will be automatically assigned to and assumed by any successor to it by merger
or consolidation or any person which acquires substantially all of the assets
and business of such person. Any prohibited assignment or delegation shall be
null and void.
8. RELATIONSHIP OF THE PARTIES
The parties are independent contractors. Nothing in this Agreement
or in the activities contemplated by the parties pursuant to this Agreement
shall be deemed to create an agency, partnership, employment or joint venture
relationship between the parties. Each party shall be deemed to be acting solely
on its own behalf and, except as expressly stated, has no authority to pledge
the credit of, or incur obligations or perform any acts or make any statements
on behalf of, the other party. Neither party shall represent to any person or
permit any person to act upon the belief that it has any such authority from the
other party. Neither party's officers or employees, agents or contractors shall
be deemed officers, employees, agents or contractors of the other party for any
purpose.
<PAGE>
7
9. AMENDMENT
No changes, amendments or modifications of any of the terms or
conditions of this Agreement shall be valid unless made by an instrument in
writing signed by both parties.
<PAGE>
8
Services to PRWW on behalf of AD under this Agreement, are discovered to be
unauthorized aliens, AD will immediately remove such individuals from performing
work and replace such individuals with individuals who are not unauthorized
aliens. In the event any PRWW personnel or contractor working under this
Agreement or other individual(s) providing Services to AD on behalf of PRWW
under this Agreement, are discovered to be unauthorized aliens, PRWW will
immediately remove such individuals from performing work and replace such
individuals with individuals who are not unauthorized aliens.
11.9 If either party's performance under this Agreement is
interfered with by reason of any circumstances beyond said party's reasonable
control, including without limitation, severe weather, fire, explosion, A.C.
power failure, acts of God, war, revolution, civil commotion, or acts of public
enemies, any law, order, regulation, ordinance or requirement of any government
or legal body or any representative of any such government or legal body, labor
unrest, including without limitation, strikes, slow downs, picketing or
boycotts, then said party shall be excused from its performance on a day-for-day
basis to the extent of such interference.
11.10 Notices and other communications shall be transmitted in
writing by certified U.S. Mail, postage prepaid, return receipt requested, or by
facsimile or by overnight courier, addressed to the parties at the address first
set forth above. Such notices and communications shall be deemed effective four
(4) days after the date of mailing or upon receipt as evidenced by the U.S.
Postal Service return receipt cards, whichever is earlier, or upon receipt if
sent by facsimile or overnight courier.
12. ENTIRE AGREEMENT
This Agreement, with any other instrument, agreement or document
attached or referred to, which are incorporated by this reference as though set
forth in full, embodies the final, full and exclusive statement of the agreement
between AD and PRWW, and as of its date supersedes all prior agreements,
negotiations, representations and proposals, written or oral, relating to the
Services. This Agreement shall not be construed to govern any other transaction
between AD and PRWW. Neither party shall be bound or liable to any other party
for any representation, promise or inducement made by any agent or person in
their employ relating to the subject matter which is not embodied in this
Agreement.
<PAGE>
9
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, such parties acting by their representatives being thereunto
duly authorized.
PREMIER RESEARCH WORLDWIDE,
LTD.
By: /s/ Fred M. Powell
----------------------------------
AMERICA'S DOCTOR, INC.
By: /s/ Scott M. Rifkin
----------------------------------
<PAGE>
EXHIBIT 10.10
MARKETING SERVICE AGREEMENT
THIS MARKETING SERVICE AGREEMENT (the "Marketing Agreement"), is made this
18 day of March, 1999, by and between PREMIER RESEARCH WORLDWIDE, LTD., a
Delaware corporation with its principal place of business located at 30 South
17th Street, Philadelphia, PA 19103 (referred to herein as "PRWW") and AMERICA'S
DOCTOR, INC., a Delaware corporation with its principal place of business
located at 11403 Cronridge Drive, Suite 200, Owings Mills, MD 21117 (referred to
herein as "AD").
WHEREAS, PRWW and AD entered into a Stock Purchase Agreement, dated July
2, 1998, and a Support and Service Agreement on July 2, 1998, as amended from
time to time (the "Support and Service Agreement");
WHEREAS, AD desires to market AD's services regarding obtaining subjects
for clinical trials for third parties, including contract research organizations
("CRO's") and pharmaceutical companies;
WHEREAS, PRWW has specialized expertise in obtaining and marketing
subjects in clinical trials;
WHEREAS, AD acknowledges that PRWW's specialized expertise is not readily
available in the marketplace and will add great value to AD;
WHEREAS, AD desires to determine the commercial feasibility of recruiting
candidates for clinical trials and marketing said candidates to pharmaceutical,
biotechnology and medical device companies and clinical/contract research
organizations;
WHEREAS, PRWW desires to assist AD in the marketing of AD's services to
such third parties by, among other things, providing AD with education and
training on how to obtain and market subjects for clinical trials; and
WHEREAS, in connection with this Marketing Agreement, PRWW and AD desire
to amend the Support and Service Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties hereto agree as follows:
1
<PAGE>
1. Recitals. The abovementioned recitals are incorporated as if fully set forth
herein.
2. Term. The term of this Marketing Agreement shall be deemed to have commenced
on January 1, 1999 (the "Effective Date") and expire on December 31, 2000.
3. PRWW Marketing Services. PRWW and specifically, the CEO of PRWW (or other
officer(s) of PRWW mutually agreed upon by AD and PRWW), shall consult with and
provide marketing services to the Board of Directors and the officers of AD, at
reasonable times, concerning matters pertaining to the marketing of AD's
services to CRO's and other third parties interested in recruitment,
quantification and qualification of volunteers for clinical/medical studies (the
"PRWW Marketing Services"). PRWW's Marketing Services to AD shall include, but
not be limited to the following duties and functions: (1) educate and train AD
officers, employees and representatives about volunteer and patient recruitment
and marketing techniques for volunteer and patient recruitment; (ii) impart
personal expertise and knowledge as to the workings of CRO and pharmaceutical
organizations with regard to the recruitment, quantification and qualification
of volunteers for clinical/medical studies; (iii) reasonably make available the
resources of PRWW to AD in conjunction with AD's marketing efforts to other
CRO's and pharmaceutical companies; (iv) accompany representatives of AD on
marketing and sales presentations; (v) use its best efforts to introduce AD to
CRO's and pharmaceutical companies; (vi) assist in determining appropriate
pricing levels for AD's products and services; and (vii) any other
marketing/sales related activities reasonably requested by AD or its Directors.
PRWW's Marketing Services shall not be required to exceed two hundred (200)
hours for each three (3) month calendar period under this Marketing Agreement.
In addition, AD shall use its best efforts to provide PRWW with timely
notification of when the PRWW Marketing Services will be required. PRWW and its
representatives shall not represent AD, AD's Board of Directors, officers,
employees or agents in any transaction or communication, unless authorized by
AD's officers or its Board of Directors.
4. Fee. In consideration of the modification to the Support and Service
Agreement in accordance with Section 6 herein and for PRWW's Marketing Services,
AD agrees to pay PRWW in accordance with the amounts set forth in this Section
4.
AD shall pay PRWW a total fee of Four Million Six Hundred Thousand Dollars
($4,600,000) in installments of Five Hundred Seventy Five Thousand Dollars
($575,000) per three (3) month calendar period (the "Fee"). The payment schedule
shall be as follows and there shall be a five (5) day grace period for all
payments:
a. $575,000 due on March 15, 1999 (for the three month period commencing
January 1, 1999);
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b. $575,000 due on June 15, 1999 (for the three month period commencing
April 1, 1999);
c. $575,000 due on September 15, 1999 (for the three month period
commencing July 1, 1999);
d. $575,000 due on December 15, 1999 (for the three month period
commencing October 1, 1999);
e. $575,000 due on March 15, 2000 (for the three month period commencing
January 1, 2000);
f. $575,000 due on June 15, 2000 (for the three month period commencing
April 1, 2000);
g. $575,000 due on September 15, 2000 (for the three month period
commencing July 1, 2000);
h. $575,000 due on December 15, 2000 (for the three month period
commencing October 1, 2000).
5. Option. Within ninety days prior to the expiration of this Marketing
Agreement, AD can elect to purchase PRWW's exclusive right to patient data as
set forth in Section 4 of the Support and Service Agreement, as partially
amended in Section 6 of this Marketing Agreement, for an additional sum of
$200,000 to be paid on or before December 31, 2000 (the "Option").
6. Modification of the Support and Service Agreement. During the term of this
Marketing Agreement and for all time on and after the date of AD's payment of
the Option, the Support and Service Agreement is and shall be amended as
follows:
6.1 Section 1.1 of the Support and Service Agreement is deleted in its
entirety and replaced with the following:
"'Services' shall mean the providing of support and services to PRWW
by AD in the manner set forth in Section 3.1, subject to the
provisions of Sections 3.2, 4.1, 4.2 and 4.3 of this Agreement."
6.2 Section 3.2 of the Support and Service Agreement is amended to reflect
that PRWW shall inform AD, in advance, of any clinical/medical study in which
PRWW participates and in which patient recruitment, qualification, or
quantification may be required and shall make best efforts to so notify AD at
least thirty (30) days prior to the commencement of such study or PRWW's
participation in such study. The notification must include specifics on the
solicitation and quantification of volunteer patients sought via the AD
website(s) for each such study, including but not limited to the protocols and
procedures of each study, the principal investigators of each study, and the
institutions involved in each study.
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6.3 Sections 4.1, 4.2, and 4.3 of the Support and Service Agreement are
deleted in their entirety and replaced with the following:
"4.1 AD may provide similar solicitation, quantification,
recruitment or other services as those provided to PRWW pursuant to
this Agreement to any other person or entity at AD's sole
discretion.
4.2 AD may contract with other CRO's (or any other person or entity
with an interest in volunteer recruitment, solicitation or
qualification) in any manner whatsoever, at AD's sole discretion,
provided that AD does not materially interfere with the Services
granted to PRWW. PRWW agrees that there is no material interference
provided that PRWW has the right to solicit, quantify, qualify and
recruit volunteers for its studies pursuant to Section 3.2 of this
Agreement as amended. Specifically, AD may provide the Services to
PRWW while simultaneously providing the same or similar recruitment,
quantification or qualification services to a third party,
regardless of whether such same or similar services conflict in
whole or in part with the provision of the Services to PRWW. For
example, if AD has contracted with a CRO to provide recruits for a
study that conflicts with either: (a) a study ongoing by PRWW; or
(b) a study to be commenced by PRWW, in either case, AD shall
provide both PRWW and the other CRO with the right to solicit,
quantify and recruit patients simultaneously.
4.3 All materials, documents, volunteer data, and other information
provided to PRWW by AD during the course of this Agreement shall be
deemed to be, between AD and PRWW, confidential information
("Information") which shall be owned by AD. Upon termination of this
Agreement, PRWW may retain all Information provided to PRWW by AD
pursuant to Section 3.1 hereunder provided that PRWW may only use
such Information for the express purpose of recruitment of
volunteers for studies in which PRWW participates and for which PRWW
properly notified AD pursuant to Section 3.2 of this Agreement prior
to the termination of this Agreement. During the Term of this
Agreement PRWW may only use the Information for the express purpose
of recruitment of volunteers for studies in which PRWW participates
and for which PRWW properly notified AD pursuant to Section 3.2 of
this Agreement. PRWW shall be liable for any unauthorized use or
disclosure of the Information by PRWW's employees which could have
reasonably been prevented by PRWW."
6.4 Section 4.5 of the Support and Service Agreement is deleted in its
entirety.
6.5 Section 6.5 of the Support and Service Agreement is deleted in its
entirety and replaced with the following: "AD and PRWW shall each use
commercially reasonable efforts to perform the Services required hereunder."
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6.6 Section 6.9 of the Support and Service Agreement is amended to delete
the words "its best effort" and to insert, in its stead, the words "commercially
reasonable efforts."
7. Relationship of the parties. The parties are independent contractors. Nothing
in this Marketing Agreement or in the activities contemplated by the parties
pursuant to this Marketing Agreement shall be deemed to create an agency,
partnership, employment or joint venture relationship between the parties. Each
party shall be deemed to be acting solely on its own behalf and, except as
expressly stated, does not have the authority to pledge the credit of, or incur
obligations or perform any acts or make any statements on behalf of, the other
party. Neither party shall represent to any person or permit any person to act
upon the belief that it has any such authority from the other party. Neither
party's officers or employees, agents or contractors shall be deemed officers,
employees, agents or contractors of the other party for any purpose.
8. Disclosures. In connection with this Marketing Agreement, AD and its
Directors, officers and representatives will furnish PRWW and its
representatives with data, material and information concerning AD (the
"Disclosures") which PRWW reasonably requests or is necessary for the
performance by PRWW hereunder. PRWW agrees that any Disclosures received by PRWW
or its representatives will be treated by PRWW as confidential and will not be
revealed to any other person, firm, organization or entity except to PRWW's
agents, employees, and representatives in connection with the PRWW Marketing
Services to be performed on behalf of AD: (1) who will be informed of the
confidential nature of the Disclosures; and (ii) who will treat such Disclosures
as confidential and shall not reveal any Disclosures to any other person, firm,
organization or entity. PRWW shall be responsible for any breach of this
provision by any of its agents, employees or representatives.
9. Voluntary Termination by AD. AD may terminate this Marketing Agreement by
giving one hundred eighty (180) days written notice to PRWW. Upon AD's
termination of this Marketing Agreement, except as provided in Section 12
herein, all of AD's and PRWW's rights and obligations under this Marketing
Agreement shall be null and void and AD and PRWW shall each be bound by the
terms of the Support and Service Agreement.
10. PRWW Termination for Cause/Liquidated Damages. In the event that AD fails to
make any or all payments due under Section 4 above within forty-five (45) days
of when such payment(s) is due (the "AD Default"), then PRWW shall have the
right to elect one of the following remedies: (a) PRWW may terminate the
Marketing Agreement, and, except as provided in Section 12 herein, all of AD's
and PRWW's rights and obligations under this Marketing Agreement shall be null
and void and AD and PRWW shall be bound by the terms of the Support and Service
Agreement; or (b) AD shall pay liquidated damages to PRWW in an amount equal to
all amounts unpaid under this Marketing Agreement by AD at the time of the
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AD Default, plus an amount equal to the fees which would have been earned by
PRWW over the next two calendar quarters.
11. AD Termination for Cause/Liquidated Damages. In the event of any material
breach of this Marketing Agreement by PRWW, which breach is not cured after
thirty (30) days written notification of such material breach, AD may terminate
this Marketing Agreement for cause by notifying PRWW of such termination in
writing, and AD shall not be obligated to make any further payments to PRWW
pursuant to this Marketing Agreement. In the event AD terminates this Marketing
Agreement for cause, pursuant to this Section 11, except as provided in Section
12 herein, all of AD's and PRWW's rights and obligations under this Marketing
Agreement shall be null and void, and AD and PRWW shall be bound by the terms of
the Support and Service Agreement.
12. Trademarks. Nothing herein confers or shall confer upon PRWW any right,
title or interest in any goodwill, trademark, trade name, service mark, brand
name, knowledge or credibility of AD. PRWW acknowledges that all such interests
are the exclusive property of AD. PRWW shall not utilize any goodwill,
trademark, service mark, trade name, brand name, knowledge or credibility of AD
without prior written consent of AD and shall not assert any claim of ownership
or right to same.
13. Indemnification. Each party hereto shall indemnify and hold the other party
and its directors, officers, employees, agents, subsidiaries, parents,
affiliates, consultants and subcontractors (all "Associates") harmless from any
claim, liability, loss, damages or expense, together with all reasonable costs
and expenses relating thereto, including reasonable attorneys' fees, resulting
from the negligent, reckless or willful acts or omissions of such party or its
Associates in connection with the providing of the PRWW Marketing Services
hereunder. Each party hereto shall indemnify and hold the other party and its
directors, officers, employees, agents, subsidiaries, parents, affiliates,
consultants and subcontractors (all "Associates") harmless from any claim,
liability, loss, damages or expense, together with all reasonable costs and
expenses relating thereto, including reasonable attorneys' fees, arising out of
or resulting from any breach of any representation, warranty, covenant or
obligation of such party contained in this Marketing Agreement herein.
14. Survival. The parties respective rights and obligations under Sections 8
("Disclosures"), 12 ("Trademarks") and 13 ("Indemnification") shall survive any
expiration or termination of this Marketing Agreement. Moreover, in the event AD
exercises the Option pursuant to Section 5, the modifications made by Section 6
of this Marketing Agreement to the Support and Service Agreement shall survive
the termination of this Marketing Agreement.
15. Representations by PRWW. PRWW represents, warrants, covenants and agrees
that the PRWW Marketing Services shall be furnished and in all respects provided
in conformance and
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compliance with applicable laws. PRWW represents and warrants that it has the
authority to enter into this Marketing Agreement and the right to provide the
PRWW Marketing Services to AD hereunder without breach of any obligation to any
other third party, and that its performance under this Marketing Agreement will
not breach any contract, agreement, rule, law or regulation of whatever nature.
16. Representations by AD. AD represents and warrants that it has the authority
to enter into this Marketing Agreement without breach of any obligation to any
other third party, and that its performance under this Marketing Agreement will
not breach any contract, agreement, rule, law or regulation of whatever nature.
17. Entire Agreement/Amendments. This Marketing Agreement constitutes the entire
agreement between the parties and supersedes and takes precedence over all prior
agreement or understandings, whether oral or written, between the parties. This
Marketing Agreement shall not be construed to govern any other transactions
between AD and PRWW. No changes, amendments or modifications of any of the terms
or conditions of this Marketing Agreement shall be valid unless made by an
instrument in writing signed by both parties.
18. Assignment. Neither party shall assign any of its rights nor delegate any of
its obligations under this Agreement without the prior written consent of the
other party; however, PRWW may assign its rights under this Agreement to any
successor to PRWW by merger or consolidation or any person or entity which
acquires substantially all of the assets and business of PRWW, which assignee
shall assume PRWW's duties and obligations hereunder.
19. Arbitration. Any controversy or claim arising out of or relating to this
Marketing Agreement, or the breach thereof, shall be settled by arbitration in
accordance of the rules of the American Arbitration Association, and judgment
upon the award rendered by the arbitrator(s) shall be entered in any court
having jurisdiction thereof. For that purpose, the parties hereto consent to the
jurisdiction and venue of an appropriate court located in the State of Maryland.
The parties acknowledge that in no event shall the aggregate contribution of the
other party, its agents, members, employees, and affiliates of each,
collectively exceed the amount of the Fee provided in Section 4 of this
Marketing Agreement.
20. Miscellaneous.
20.1 This Marketing Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland without regard to conflict of
law principles.
20.2 Section heading are included for convenience only and are not to be
used to construe or interpret this Marketing Agreement.
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20.3 Whenever this Marketing Agreement requires either party's approval,
consent or satisfaction, the response shall not be unreasonably or arbitrarily
withheld or delayed.
20.4 The failure of either party to object to, or to take affirmative
action with respect to, any conduct of the other party that violates any term or
condition of this Marketing Agreement shall be limited to that particular
instance, and shall not be construed as a waiver of that party's right for such
breach or as a waiver of such remedies for future breaches by the other party.
20.5 If any provision of this Marketing Agreement becomes unlawful or
unenforceable in any jurisdiction, such provision shall be ineffective only to
the extent of such invalidity or unenforceability without invalidating the
remaining provisions of this Marketing Agreement, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate such provision or
render it unenforceable in any other jurisdiction.
20.6 This Marketing Agreement may be executed by the parties in one or
more counterparts; each of which when so executed shall be an original, but all
such counterparts shall constitute one and the same instrument.
20.7 All pronouns and words shall be read in appropriate number and
gender; the masculine, feminine and neuter shall be interpreted interchangeably;
and the singular shall include the plural and vice versa, as the circumstances
may require.
20.8 The parties hereto represent that they have carefully read the
foregoing Marketing Agreement, understood its terms, had the opportunity to
consult with an attorney of their choice, and voluntarily signed the same as
their own free act with the intent to be legally bound thereby. The parties
acknowledge that the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Marketing Agreement or any amendments hereto. The
terms of this Marketing Agreement are contractual and not a mere recital.
20.9 Notices and other communications shall be transmitted in writing by
certified U.S. Mail, postage prepaid, return receipt requested or by overnight
courier, addressed to the parties at the address first set forth above. Such
notices and communications shall be deemed effective four (4) days after the
date of mailing or upon receipt as evidenced by the U.S. Postal Service return
receipt cards, whichever is earlier, or upon receipt if sent by overnight
courier.
(CONTINUED NEXT PAGE)
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IN WITNESS WHEREOF, the parties hereto have caused this Marketing
Agreement to be duly executed as of the date first above-written, such parties
acting by their representatives being thereunto duly authorized.
PREMIER RESEARCH WORLDWIDE, LTD.
/s/ Joel Morganroth
- ---------------------------------
By: Joel Morganroth, CEO & President
AMERICA'S DOCTOR, INC.
/s/ Scott M. Rifkin
- ---------------------------------
By: Scott M. Rifkin, CEO
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EXHIBIT 10.11
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT is made this _____ day of January, 1999, by and
between The Wyndhurst Capital Group, LLC, whose principal place of business is
575 S. Charles Street, Suite 200, Baltimore, MD 21201 (hereinafter referred to
as the "Consultant"), and America's Doctor, Inc., whose principal place of
business is located at 11403 Cronridge Drive, Suite 200, Owings Mills, MD 21117
(hereinafter referred to as "AD" or the "Company).
WHEREAS, the Consultant has provided numerous services for the Company
since its inception, including but not limited to helping to found the Company
in August, 1997, negotiating the America OnLine contract, assisting the Company
in obtaining its start-up capital; negotiating major contracts; and structuring
the Company;
WHEREAS, the Company recognizes the Consultant's importance to the Company
and the significant role the Consultant has played in the accomplishments of the
Company to date;
WHEREAS, the Company desires to have the Consultant continue to perform
consulting services for the Company;
WHEREAS, the Consultant desires to continue consulting to the Company, its
Board of Directors and the officers of the Company;
WHEREAS, the Consultant has been and shall remain an independent
contractor and not an employee of the Company;
WHEREAS, the Company and the Consultant have an ongoing agreement
regarding the compensation of the Consultant which both parties desire to
memorialize in writing;
NOW, THEREFORE, it is agreed as follows:
1. Recitals. The abovementioned recitals are incorporated as if fully set
forth herein.
2. Term. The term of this Consulting Agreement shall be for a period of
one (1) year commencing on November 1, 1998, and may be renewed for two (2)
successive six (6) month periods upon the agreement of the Company and the
Consultant.
3. Consultations. The Consultant shall be available to consult with the
Board of Directors, and the officers of the Company, at reasonable times,
concerning matters pertaining to the organization of the administrative staff,
the fiscal policies of the Company, the relationship of the Company with its
employees or with any organization representing its employees, and, in general,
the important problems of concern in the business affairs of the Company. The
Consultant's services shall include, but not be limited to the following duties
and functions relating to the Company: (i) coordinate, supervise all financing
activities of the Company; (ii)
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serve as the primary contact/advisor for the Company in connection with the
raising of capital in the form of debt or equity; (iii) assist the Company in
structuring the employee stock option plan; (iv) act as the primary business
interface between the Company's outside counsel and Company management; (v)
serve as the primary interface between the Company management and its Board of
Directors; (vi) assist in the preparation of the Company's business plans and
financial forecasts; (vii) perform management/business consulting services;
(viii) and any other activities reasonably requested by the Company or its
Directors. The Consultant shall not represent the Company, its Board of
Directors, its officers or any other members of the Company in any transactions
or communications nor shall Consultant make claim to do so, unless authorized by
the Company, its officers or its Directors.
4. Compensation.
4.1 Monthly Fee. The Consultant shall receive $10,000 per month,
payable monthly from the Company for the performance of the services to be
rendered to the Company pursuant to the terms of the Consulting Agreement. The
monthly fee may be applied against fees paid to the Consultant pursuant to
Section 4.3 below.
4.2 Out-of-Pocket Expenses. In addition, the Company shall reimburse
the Consultant for any reasonable out of pocket expenses incurred by the
Consultant pursuant to the terms of this Consulting Agreement.
4.3. Fees Paid Upon Financing(s). By way of background, the Company
executed a letter agreement with the Robinson-Humphrey Company, LLC ("RH") on
November 9, 1998, in which RH agreed to become the exclusive agent of the
Company to seek and to raise approximately $10,000,000 to $12,000,000 of private
equity for the Company within a specified time period. The Consultant was to
supervise RH's activities and be the primary interface between the Company and
RH. The Company obligated itself to pay RH and the Consultant a cash fee
totaling six percent (6%) of the amount of securities sold by the Company, and
$0.01 warrants of the Company representing three eights of one percent (3/8 of
1%) of the Company (on a fully diluted basis at the time of the placement) for
each $1,000,000 million dollars of securities sold. In addition, the Company had
previously obligated itself to pay the Consultant and other consultant(s) cash
fees and warrants, which when added to compensation to be paid to RH equaled a
total of 8% cash and 5,075 $.01 for each $1,000,000 raised for the first
$6,420,000 of funds raised. Shortly after executing this letter agreement, RH
asked to be and was released by the Company from performance under the letter
agreement. Prior to, during, and since the time RH was released from performance
under the letter agreement, the Company has relied upon the Consultant as its
primary source of guidance, expertise, and assistance in all aspects relating to
the Company's finances. In payment to the Consultant for this and other services
performed for the Company, the Company agreed and agrees to compensate the
Consultant (or its designee(s)) as follows:
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4.3(a) The Company's current $3,500,000 million dollar Common
Stock offering.
The Company is currently raising $3,500,000 million dollars
through a private offering of Common Stock at $25.00 per share. Upon the close
of this offering, the Consultant (or its designee(s)) shall be entitled to: (i)
a cash fee equal to eight percent (8%) of the total funds raised, minus the
aggregate Monthly Fee previously paid to the Consultant (in accordance with
Section 4.1); and (ii) $0.01 warrants of the Company representing 10,124 shares
of Common Stock of the Company; and
4.3(b) The proposed investment by Tullis-Dickerson Capital
Focus II ("TDCFII").
The Company is currently negotiating an investment by TDCFII
in an amount up to $4,000,000 at a price of $30.00 per share of Convertible
Series A Preferred Stock. Upon the close of this offering with TDCFII (or the
prior close with any other party investing $4,000,000 in the Company), the
Consultant (or its designee(s)) shall be entitled to: (i) a cash fee equal to
six percent (6%) of the funds raised, minus the aggregate Monthly Fee previously
paid to the Consultant (in accordance with Section 4.1) to the extent that such
Monthly Fee did not reduce the cash fee in Section 4.3(a)(i); and (ii) $0.01
warrants of the Company representing 10,517 shares of Common Stock of the
Company; and
4.3(c) The Company's fundraising efforts up to and including
$6,000,000 over and above the amounts contained in Section 4.3(a) and 4.3(b).
The Company anticipates it will seek funding in excess of the
amounts contemplated in Sections 4.3(a) and 4.3(b) above, and shall compensate
the Consultant (or its designee(s)) for any such amounts raised by the Company,
up to and including $6,000,000 raised over and above the amounts described in
Sections 4.3(a) and 4.3(b) (in the form of either debt or equity), as follows:
(i) a cash fee equal to six percent (6%) of the funds raised, minus the
aggregate Monthly Fee previously paid to the Consultant (in accordance with
Section 4.1) to the extent that such Monthly Fee did not reduce the cash fee in
Section 4.3(a)(i) and/or Section 4.3(b)(i); and (ii) $0.01 warrants of the
Company equal to three-eighths of one percent (3/8 of 1%) for each $1,000,000
million dollars raised (on a fully diluted basis at the time of the raise); and
4.3(d) Fundraising efforts by the Company over and above the
amounts contained in Sections 4.3(a), 4.3(b) and 4.3(c).
The Company anticipates it will seek additional capital over and
above the amounts contemplated in 4.3(a), 4.3(b), and 4.3(c) above, at which
time the amount of cash and
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warrant compensation to be paid to the Consultant (or its designee(s)) shall be
mutually agreed upon by the Consultant and the Company.
4.4 Compensation for other services. The Consultant shall be
entitled to market compensation for performing other services for the Company,
including but not limited to, negotiating a sale or merger or related
transaction. The compensation to be paid for such services shall be mutually
agreed upon between the Company and the Consultant.
5. Independent Contractor. Both the Company and the Consultant agree that
the Consultant will act as an independent contractor in the performance of its
duties under this Consulting Agreement. Accordingly, the Consultant shall be
responsible for payment of all taxes including Federal, State and local taxes
arising out of the Consultant's activities in accordance with this Consulting
Agreement.
6. Liability. With regard to the services to be performed by the
Consultant pursuant to the terms of this Consulting Agreement, the Consultant
shall not be liable to the Company, or to anyone who may claim any right due to
any relationship with the Corporation, for any acts or omissions in the
performance of services on the part of the Consultant or on the part of the
agents, members, employees or affiliates of the Consultant, except when said
acts or omissions of the Consultant are due to willful misconduct or gross
negligence.
7. Indemnification. The Company shall indemnify and hold harmless the
Consultant, its agents, members, employees, and affiliates of each (collectively
the "Indemnified Party") from and against any losses, claims, damages, expenses,
liabilities, threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the Company) joint or several, to which any of them may
become subject by reason of the fact that he is or was a consultant, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of the Company or another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including all reasonable legal fees and other reasonable expenses incurred in
connection with investigating, preparing, defending, paying, settling or
compromising any claim, action, suit, proceeding, loss damage, expense or
liability, whether or not in connection with an action in which the Consultant,
its agents, members, employees or affiliates is a named party), judgments, fines
and amounts paid in settlement to the fullest extent allowable by law. The
Company will not, however, be responsible under the foregoing provisions with
respect to any loss, claim, damage, expense or liability to the extent that a
court competent jurisdiction shall have determined by a final judgment (not
subject to further appeal) that such loss, claim, damage, expense or liability
resulted from actions taken or omitted to be taken by the Consultant due to the
Consultant's gross negligence or willful misconduct.
8. Termination. This Consulting Agreement may be terminated by either
party upon thirty (30) days' written notice to the other party at the address
stated above or at an address chosen subsequent to the execution of this
Consulting Agreement and duly communicated to the
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other party. Notwithstanding the foregoing, it is expressly understood that the
provisions relating to the payment of fees and expenses and indemnification will
survive any such termination or expiration of this Consulting Agreement or
completion of the Consultant's services.
9. Information. In connection with the Consultant's engagement, the
Company and its advisors will furnish the Consultant with all data, material and
information concerning the Company (the "Information") which the Consultant
reasonably request or is necessary for the Consultant's performance of its
services, all of which will be accurate and complete in all material respects.
The Consultant agrees that any Information received by the Consultant during any
furtherance of the Consultant's obligations in accordance with this Consulting
Agreement will be treated by the Consultant in full confidence and will not be
revealed to any other person, firms or organizations except to its agents,
members, employees, and affiliates in connection with the Consulting services to
be performed on behalf of the Company.
10. Arbitration. Any controversy or claim arising out of or relating to
this contract, or the breach thereof, shall be settled by arbitration in
accordance of the rules of the American Arbitration Association, and judgment
upon the award rendered by the arbitrator(s) shall be entered in any court
having jurisdiction thereof. For that purpose, the parties hereto consent to the
jurisdiction and venue of an appropriate court located in the State of Maryland.
In the event that litigation results from or arises out of this Consulting
Agreement or the performance thereof, the parties agree to reimburse the
prevailing party's reasonable attorney's fees, court costs, and all other
expenses, whether or not taxable by the court as costs, in addition to any other
relief to which the prevailing party may be entitled. The Company acknowledges
that in no event shall the aggregate contribution of the Consultant, its agents,
members, employees, and affiliates of each exceed the amount of the fee actually
received by the Consultant pursuant to this Consulting Agreement. In addition,
no action shall be entertained by said court or any court of competent
jurisdiction if filed more than one year subsequent to the date the cause(s) of
action actually accrued regardless of whether damages were otherwise as of said
time calculable.
11. Miscellaneous.
11.1 Entire Agreement. This Consulting Agreement constitutes the
entire agreement between the parties and supersedes and takes precedence over
all prior agreements or understanding whether oral or written, between the
Consultant and the Company and may only be modified by written agreement signed
by both parties.
11.2 Governing Law. This Consulting Agreement shall be governed by
and construed in accordance with the laws of the State of Maryland without
regard to conflict of laws principles.
11.3 Headings. The paragraph headings in this Agreement have been
included for mere convenience of reference, and shall not be considered
substantive parts of this Agreement in resolving any question or interpretation
or construction.
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11.4 No Waiver. The failure of either party to object to, or to take
affirmative action with respect to, any conduct of the other party that violates
any term or condition of this Agreement shall be limited to that particular
instance, and shall not be construed as a waiver of that party's rights for such
breach or as a waiver of such remedies for future breaches by the other party.
11.5 Severability. If any provision of this Agreement becomes
unlawful or unenforceable in any jurisdiction, such provision shall be
ineffective only to the extent of such invalidity or unenforceability without
invalidating the remaining provisions of this Agreement, and any such invalidity
or unenforceability in any jurisdiction shall not invalidate such provision or
render it unenforceable in any other jurisdiction.
11.6 Binding Agreement; Assignment. This Agreement is binding upon
and shall enure to the benefit of the parties and their respective successors
and permitted assigns. Neither party may transfer or assign this Agreement
without the prior written consent of the other party.
11.7 Rights Unique. The parties hereto acknowledge that each party's
rights and obligations hereunder (other than the payment of money for which
there is an adequate remedy for damages at law) are special, unique,
extraordinary and impossible of replacement, which gives them a peculiar value,
the loss of which could not be reasonably or adequately compensated in damages
in an action at law, and that either party's failure or refusal to perform its
obligations hereunder would cause the other party loss and damages. If either
party fails or refuses to perform such obligations, the other party shall be
entitled to injunctive or other equitable relief against it, including temporary
relief prior to a time at which a preliminary hearing may be held by a court of
competent jurisdiction to prevent the continuance of such failure or refusal or
to prevent the breaching party from granting rights to others in violation of
this Agreement.
11.8 Number/Gender/Plural. All pronouns and words shall be read in
appropriate number and gender; the masculine, feminine and neuter shall be
interpreted interchangeably; and the singular shall include the plural and vice
versa, as the circumstances may require.
11.9 Voluntary Agreement. The parties hereto represent that they
have carefully read the foregoing Consulting Agreement, understood its terms,
consulted with an attorney of their choice, and voluntarily signed the same as
their own free act with the intent to be legally bound thereby. The terms of
this Consulting Agreement are contractual and not a mere recital.
(CONTINUED NEXT PAGE)
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IN WITNESS WHEREOF, the parties have hereunto executed this Consulting
Agreement as of the date hereupon first written.
THE WYNDHURST CAPITAL GROUP, LLC ATTEST:
By: /s/ Lewis Goodman /s/
---------------------------- --------------------------------
Lewis Goodman, Managing Director
America's Doctor, Inc. ATTEST:
By: /s/ Scott M. Rifkin /s/ Allan Sanders
---------------------------- --------------------------------
Scott M. Rifkin, Chairman and CEO
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<PAGE>
EXHIBIT 10.12
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS BY REASON OF EXEMPTIONS FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE SECURITIES LAWS AND MAY
NOT BE SOLD, PLEDGED, ASSIGNED OR OTHERWISE DISPOSED OF IN ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS OR UNLESS, IN THE OPINION OF COUNSEL TO AMERICA'S DOCTOR, INC., AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
WARRANT
No. W-1 Warrant to Purchase a Number of Shares of
Common Stock to be determined as set forth herein.
AMERICA'S DOCTOR, INC.
This certifies that, for value received, TULLIS-DICKERSON CAPITAL
FOCUS II, L.P., or its registered assigns, is entitled to subscribe for and
purchase, at any time and from time to time during the Effective Period, a
number of shares of duly authorized, validly issued, fully paid and
non-assessable Common Stock, including fractional shares, equal to the Number of
Shares at an exercise price of $0.01 per share, upon the terms and subject to
the conditions hereinafter set forth.
1. Definitions. For the purposes of this Warrant, the following terms have
the following meanings:
"Appraisal Procedure" shall mean a determination of Fair Value per
share of Common Stock (on the basis set forth in the definition of that term and
in section 8 hereof) by an Appraiser selected by the Corporation and Two Thirds
in Interest of the Holders, which Appraiser shall be directed to independently
determine Fair Value per share of Common Stock as of the Effective Date of a
Triggering Event and to submit its determination in writing to the Corporation
and the Holders at the earliest practicable date, but in any event within 45
days following the selection of such Appraiser, provided that if the Corporation
and Two Thirds in Interest of the Holders are unable to agree upon the selection
of an Appraiser within 30 days, then each of the Corporation and Two Thirds in
Interest of the Holders shall select an Appraiser who shall be directed to
independently determine the Fair Value per share of Common Stock and to submit
its determination in writing to the Corporation and the Holders at the earliest
practicable date, but in any event within 45 days following the selection of
both Appraisers. If the value determined by the Appraiser whose determination is
the higher of the two appraisals does not exceed by more than ten percent (10%)
the average of the values
<PAGE>
determined by each Appraiser, Fair Value per share of Common Stock shall be the
average of the values determined by the two Appraisers. If the value determined
by the Appraiser whose determination is the higher of the two appraisals does
exceed by more than ten percent (10%) the average of the value determined by
each Appraiser, then the two Appraisers shall, within 15 days following
submission to the Corporation and the Holders of the later of such two
appraisals, select a third independent Appraiser who shall be directed to
determine Fair Value per share of Common Stock independently of the other
Appraisers and to submit its determination in writing to the Corporation and the
Holders at the earliest practicable date, but in any event within 15 days of
such Appraiser's selection. The value determined by the Appraiser whose
determination is the most discrepant from the average of the three appraisals
shall be discarded, and Fair Value per share of Common Stock shall equal the
average of the remaining two appraisals, except that if the highest and lowest
appraisals are equally discrepant from the average of the three appraisals, Fair
Value per share of Common Stock shall be such average. Fair Value per share of
Common Stock shall in all cases be determined on the basis set forth in the
definition of that term, and all Appraisers shall be so instructed.
"Appraiser" shall mean an independent appraiser of recognized
national standing.
"Common Stock" shall mean the Corporation's Common Stock, par value
$0.01 per share, and any Stock into which such Common Stock may hereafter be
changed.
"Common Stock Equivalent" shall mean any warrant, option or other
right to subscribe for or purchase any shares of Common Stock or any evidences
of indebtedness, shares of Stock or other securities which are or may be at any
time convertible into or exchangeable for shares of Common Stock.
"Corporation" shall mean America's Doctor, Inc., a Delaware
corporation, and its successors and assigns.
"Counsel" shall mean counsel to the Corporation.
"Effective Date of a Triggering Event" shall mean the following:
(a) with respect to a Triggering Event defined in clause (a) of the
definition of Triggering Event, the closing date of such sale;
(b) with respect to a Triggering Event defined in clause (b) or (c)
of the definition of Triggering Event, the closing date of such sale,
transfer or other disposition; and
(c) with respect to a Triggering Event defined in clause (d) of the
definition of Triggering Event, the effective date of such merger or
consolidation.
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<PAGE>
"Effective Period" shall mean the period beginning on the Effective
Date of a Triggering Event and ending the later of (a) (i) with respect to a
Triggering Event as defined in clause (a) of the definition of a Triggering
Event, on such date which is five years after the Effective Date of a Triggering
Event and (ii) with respect to a Triggering Event as defined in clause (b), (c)
or (d) of the definition of a Triggering Event, on such date which is twelve
months after the Effective Date of a Triggering Event and (b) twelve months
after the final determination of the Number of Shares.
"Exercise Price" shall mean the product of the Warrant Price and the
Number of Shares.
"Fair Value" per share of Common Stock as of any date shall mean:
(i) with respect to a Triggering Event of the type defined in
clause (a) of the definition of a Triggering Event, if the
registered securities are shares of Common Stock, then the price at
which such shares of Common Stock are offered to the public, and if
the registered securities are not shares of Common Stock, then the
Common Stock price implied by the price at which such securities are
offered to the public;
(ii) with respect to a Triggering Event of the type defined in
clause (b) of the definition of a Triggering Event, an amount equal
to the ratio of:
(1) the difference between:
(x) the sum of (A) the aggregate consideration received in
connection with such sale (including the value of any cash,
securities, tangible assets and intangible assets received and
the value of any liabilities of the Corporation assumed by the
acquiror), (B) the value of any assets retained by the
Corporation after giving effect to such sale, and (C) the
consideration which would be received by the Corporation upon
the exercise, conversion or exchange of all outstanding Common
Stock Equivalents, regardless of whether such Common Stock
Equivalents are then exercisable, convertible or exchangeable,
and
(y) the value of any liabilities retained by the Corporation
after giving effect to such sale, and
(2) the number of shares of Common Stock outstanding determined on a
Fully Diluted Basis as of the Effective Date of a Triggering Event
(excluding all classes of preferred stock of the Corporation which
were not converted to Common Stock in connection with such sale);
3
<PAGE>
(iii) with respect to a Triggering Event of the type defined
in clause (c) of the definition of a Triggering Event, the purchase
price per share of Common Stock received in such sale; and
(iv) with respect to a Triggering Event of the type defined in
clause (d) of the definition of a Triggering Event, the
consideration per share of Common Stock received in such merger or
consolidation.
The "Fair Value" of a number of shares of Common Stock as of any date shall mean
the product of (a) Fair Value per share of Common Stock as of such date and (b)
such number of shares of Common Stock. The "Fair Value" shall be determined by
either (i) the mutual agreement of the Corporation and Two Thirds in Interest of
the Holders within thirty days of receipt of written notice from the
Corporation, pursuant to section 2.1 hereof, of the anticipated occurrence of a
Triggering Event; or (ii) if the Holders and the Corporation are unable to agree
within thirty days of the date of receipt of written notice from the Corporation
pursuant to section 2.1 hereof, at the election of either party, pursuant to the
Appraisal Procedure.
"Fully Diluted Basis" shall mean on a basis whereby the aggregate
number of shares for such determination includes (i) all shares of such Common
Stock then issued and outstanding; and (ii) all shares of Common Stock which
would be outstanding upon the exercise, conversion or exchange of all
outstanding Common Stock Equivalents, which Common Stock Equivalents are then
exercisable, convertible or exchangeable.
"Holder" shall mean the Person or Persons who shall from time to
time own of record this Warrant.
"Holders" shall mean the Persons who shall from time to time own of
record all the outstanding Warrants, including this Warrant.
"Investment Date" shall mean, with respect to any shares of Series A
Preferred Stock, the date upon which such shares of Series A Preferred Stock
were issued.
"Number of Shares" shall mean, with respect to any Holder, the
number of shares of Common Stock that, when taken together with the Value of the
Original Series A Equity Stake of such Holder as of the Effective Date of the
Triggering Event and all dividends or other distributions received by such
Holder (or its predecessor-in-interest) with respect to the Series A Preferred
Stock, would have a Fair Value as of such date equal to an amount that implies
achievement of a 15% annual pre-tax internal rate of return (determined on a pro
rata basis for any partial year and on a monthly compounding basis) on the
aggregate amount paid by such Holder (or its predecessor-in-interest) for Series
A Preferred Stock shares and for this Warrant from the Investment Date,
calculated in accordance with generally accepted financial principles; provided,
however, that if the Number of Shares determined as provided above is zero or
less than zero, then the Number of Shares shall be zero and this Warrant shall
immediately terminate.
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<PAGE>
"Person" shall mean an individual, a corporation, a partnership, a
trust, an unincorporated organization or a government organization or an agency
or political subdivision thereof.
"Securities Act" shall mean as of any date the Securities Act of
1933, as amended, or any similar Federal statute then in effect.
"Securities Purchase Agreement" shall mean the Securities Purchase
Agreement dated as of February 1, 1999, among the Corporation and the Purchasers
named therein, as it may be amended from time to time.
"Series A Preferred Stock" shall mean the Corporation's Series A
Convertible Preferred Stock, par value $0.01 per share.
"Stock" shall include any and all shares, interests or other
equivalents (however designated) of, or participations in, the capital stock of
the Corporation of any class.
"Triggering Event" means the first to occur of the following events:
(a) Any sale by the Corporation of shares of Common Stock or Common
Stock Equivalents pursuant to a registration statement filed by the
Corporation under the Securities Act (other than a registration statement
filed on Form S-4 or Form S-8), which filing shall have been declared
effective by the Securities and Exchange Commission, at a before-the-money
market capitalization of not less than $75,000,000 and in which the gross
proceeds received by the Corporation for such securities equals or exceeds
$15,000,000.
(b) Any sale, transfer or other disposition of all or substantially
all of the assets of the Corporation, other than (i) sales or other
transfers to affiliates or partners of the Holder and (ii) sales or other
transfers to wholly owned affiliates of the Corporation, provided that
such affiliate assumes all of the Corporation's obligations hereunder.
(c) Any sale, transfer or other disposition of more than 80% of the
outstanding Common Stock of the Corporation determined on a Fully Diluted
Basis, other than (i) sales or other transfers to affiliates or partners
of the Holder and (ii) sales or other transfers to wholly owned affiliates
of the Corporation, provided that such affiliate assumes all of the
Corporation's obligations hereunder.
(d) Any merger or consolidation involving the Corporation
immediately following the effective date of which a majority of the board
of directors of the corporation surviving such merger or consolidation are
not members of the board of directors immediately prior to such merger or
consolidation.
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<PAGE>
"Two Thirds in Interest of the Holders" means Holders of (i)
Warrants representing at least two-thirds of the number of shares of Common
Stock then issuable upon exercise of the Warrants or (ii) two-thirds of the
number of shares of Series A Preferred Stock then outstanding.
"Value of the Original Series A Equity Stake," as of any date with
respect to any Holder, shall mean the greater of:
(a) the Fair Value of the number of shares of Common Stock issuable
upon the conversion of the issued shares of Series A Preferred Stock
originally issued to the Holder (or its predecessor-in-interest); and
(b) the lesser of:
(i) the liquidation value as of such date of the shares of
Series A Preferred Stock originally issued to the Holder (or its
predecessor-in-interest); and
(ii) the stockholders equity of the Corporation as of the end
of the most recent fiscal quarter of the Corporation, as reflected
on the balance sheet of the Corporation, determined in accordance
with generally accepted accounting principles; provided, however,
that if the stockholders equity of the Corporation as reflected on
such balance sheet is zero or less than zero, then the number
calculated pursuant to this clause (b) shall be zero.
"Warrant" shall mean this Warrant.
"Warrant Price" shall mean $0.01 per share of Common Stock.
"Warrants" shall mean this Warrant and all other Warrants issued by
the Corporation pursuant to the Securities Purchase Agreement.
2. Determination of "Number of Shares".
2.1. Thirty days prior to the anticipated occurrence of a
Triggering Event, the Corporation shall deliver notice to the Holder that a
Triggering Event is expected to occur and providing a description in reasonable
detail of the Triggering Event and the anticipated Effective Date of such
Triggering Event.
2.2. Within thirty days of receipt of written notice from the
Corporation pursuant to section 2.1 hereof, the Corporation and the Two Thirds
in Interest of Holders shall attempt to agree on the Number of Shares for the
Holders and, if they so agree, the number so agreed shall be the Number of
Shares. If, within thirty days of receipt by the Holders of the notice from the
Corporation referred to in section 2.1, the Corporation and Two Thirds in
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<PAGE>
Interest of the Holders have been unable to so agree, either party may invoke
the Appraisal Procedure described in section 8 hereof, in which event such
Appraiser or Appraisers shall be instructed to determine the Number of Shares,
which shall then be binding on the Corporation and the Holder.
3. Duration. The right to exercise this Warrant to subscribe for and
purchase shares of Common Stock represented hereby shall commence on the
Effective Date of a Triggering Event and shall expire at 5:00 P.M., Eastern
Time, on the last day of the Effective Period.
4. Method of Exercise; Payment; Issuance of New Warrant; Transfer
and Exchange.
4.1. The purchase right represented by this Warrant may be
exercised any time during the Effective Period. If this Warrant is exercised on
the Effective Date of a Triggering Event, such exercise shall be deemed to occur
prior to the occurrence of the Triggering Event, except for purposes of
determining the Fair Value per share of Common Stock, the Number of Shares and
determining the number of shares outstanding on a Fully Diluted Basis hereunder.
4.2. The Holder hereof may exercise this Warrant, in whole or
in part, by delivery to the Corporation at its office at 11403 Cronridge Drive,
Suite 200, Owings Mills, Maryland, 21117, Attention: Chief Executive Officer (or
such other address as the Corporation may specify to Holder from time to time),
of (a) a written notice of Holder's election to exercise this Warrant, which
notice shall specify the number of shares of Common Stock to be purchased, (b)
payment of the Exercise Price in the manner provided below and (c) this Warrant.
Such notice shall be substantially in the form of the subscription form
appearing at the end of this Warrant as Exhibit A, duly executed by Holder or
its agent or attorney. Payment of the Exercise Price shall be made at the option
of Holder by (i) wire transfer to an account in a bank located in the United
States designated for such purpose by the Corporation, (ii) certified or
official bank check, (iii) cancellation of indebtedness of the Corporation to
Holder at the time of exercise, (iv) cancellation as of the date of exercise of
a portion of this Warrant (calculated as the net fair market value of such
cancelled portion at the time of exercise) or (v) any combination of the
foregoing. The net fair market value of any portion of this Warrant cancelled in
full or partial payment of the Exercise Price shall be determined by (A)
multiplying (i) the number of shares of Common Stock for which the portion of
this Warrant to be cancelled was exercisable by (ii) the Fair Value of a share
of Common Stock as of the date of cancellation and (B) subtracting from such
product the aggregate Exercise Price of the shares of Common Stock for which the
portion of this Warrant to be cancelled was exercisable. In the event of any
exercise of the rights represented by this Warrant, (x) certificates for the
shares of Common Stock so purchased shall be dated the date of such exercise and
delivered to the Holder hereof within a reasonable time, not exceeding 15 days
after such exercise, and the Holder hereof shall be deemed for all purposes to
be the Holder of
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<PAGE>
the shares of Common Stock so purchased as of the date of such exercise, and (y)
unless this Warrant has expired pursuant to section 3 hereof, a new Warrant
representing the number of shares, if any, with respect to which this Warrant
shall not then have been exercised shall also be issued to the Holder hereof
within such time. Any such warrant shall be dated the date hereof and shall
represent the right to purchase the remaining number of shares of Common Stock
issuable pursuant thereto.
4.3. Subject to compliance with section 6 hereof, this Warrant
may be transferred on the books of the Corporation by the Holder hereof in
person or by duly authorized attorney, upon surrender of this Warrant at the
principal office of the Corporation, properly endorsed and upon payment of any
necessary transfer tax or other governmental charge imposed upon such transfer.
Subject to compliance with section 6 hereof, this Warrant is exchangeable at the
aforesaid principal office of the Corporation for two or more warrants for the
purchase of the same aggregate number of shares of Common Stock, each new
warrant to represent the right to purchase such number of shares of Common Stock
as the Holder hereof shall designate at the time of such exchange. If this
Warrant is transferred or exchanged for two or more Warrants prior to the
Effective Date of a Triggering Event, the Number of Shares issuable under each
such warrant shall be a percentage of the Number of Shares issuable hereunder
which, together with all other warrants issued in the transfer or exchange of
this Warrant, shall aggregate 100% of the Number of Shares hereunder. Any such
warrants shall be dated the date hereof and shall be identical with this Warrant
except as to the number of shares of Common Stock issuable pursuant thereto.
5. Stock Fully Paid; Reservation of Shares.
5.1. The Corporation covenants and agrees that all shares of
Common Stock which may be issued upon the exercise of the rights represented by
this Warrant will, upon issuance, be fully paid and non-assessable and free from
all taxes, liens and charges with respect to issuance. The Corporation further
covenants and agrees that during the period within which the rights represented
by this Warrant may be exercised, the Corporation will at all times have
authorized and reserved for the purpose of the issue upon exercise of this
Warrant a sufficient number of shares of Common Stock to provide for the
exercise of the rights represented by this Warrant. If the Warrant Price is at
any time less than the par value of the Common Stock, the Corporation also
covenants and agrees to cause to be taken such action (whether by decreasing the
par value of the Common Stock, the conversion of the Common Stock from par value
to no par value, or otherwise) as will permit the exercise of this Warrant and
the issuance of the Common Stock without any additional payment by the Holder
hereof (other than payment of the Exercise Price and applicable transfer taxes,
if any), which Common Stock, upon such issuance, will be fully paid and
non-assessable.
5.2. The Corporation shall not by any action, including,
without limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary
8
<PAGE>
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of the Holder hereof against impairment.
Without limiting the generality of the foregoing, the Corporation will (a) not
increase the par value of any shares of Common Stock above the amount payable
therefor upon the exercise of this Warrant immediately prior to such increase in
par value and (b) take all such action as may be necessary or appropriate in
order that the Corporation may validly and legally issue fully paid and
nonassessable shares of Common Stock, free and clear of any liens, claims,
encumbrances and restrictions (other than as provided herein) upon the exercise
of this Warrant.
6. Restrictions on Transferability. The Warrant and the Common Stock
issued upon exercise of the Warrant shall not be transferred, hypothecated or
assigned before satisfaction of the conditions specified in this section 6,
which conditions are intended to ensure compliance with the provisions of the
Securities Act and state securities or "blue sky" laws with respect to the
transfer, hypothecation or assignment of any Warrant or Common Stock issued upon
exercise of any Warrant. Holder, by acceptance of this Warrant, agrees to be
bound by the provisions of this section
6.1. Restrictive Legend.
6.1.1 Except as otherwise provided in this section 6, each
certificate for Common Stock issued upon exercise of this Warrant, and each
certificate for Common Stock issued to any subsequent transferee of any such
certificate, shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES OR BLUE SKY LAWS OF ANY STATE. THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT AND LAWS OR THE RULES AND REGULATIONS
THEREUNDER."
6.1.2 Except as otherwise provided in this section 6, each
Warrant shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS
BY REASON OF EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF
THE ACT AND SUCH STATE SECURITIES LAWS AND MAY NOT BE SOLD,
PLEDGED, ASSIGNED OR OTHERWISE DISPOSED OF IN ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE
9
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STATE SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL TO
AMERICA'S DOCTOR, INC., AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE."
6.2. Notice of Proposed Transfers. Prior to any transfer,
hypothecation or assignment or attempted transfer, hypothecation or assignment
of the Warrant or any Common Stock issued upon exercise of the Warrant, the
Holder of such Warrant or Common Stock shall give ten (10) days prior written
notice (a "Transfer Notice") to the Corporation of such Holder's intention to
effect such transfer, hypothecation or assignment, describing the manner and
circumstances of the proposed transfer, hypothecation or assignment, and obtain
from Counsel a written opinion addressed to the Corporation that the proposed
transfer, hypothecation or assignment of the Warrant or such Common Stock may be
effected without registration under the Securities Act and applicable state
securities or "blue sky" laws. After receipt of the Transfer Notice and written
opinion, the Corporation shall, within five (5) days thereof, so notify the
Holder of the Warrant or such Common Stock in writing and such Holder shall
thereupon be entitled to transfer, hypothecate or assign the Warrant or Common
Stock, in accordance with the terms of the Transfer Notice. Each certificate, if
any, evidencing such shares of Common Stock issued upon such Transfer shall bear
the restrictive legend set forth in section 6.1.1, and each Warrant issued upon
such Transfer shall bear the legend set forth in section 6.1.2, unless in the
written opinion of Counsel addressed to the Corporation such legend is not
required in order to ensure compliance with the Securities Act and applicable
state securities or "blue sky" laws. The Holder of the Warrant or such Common
Stock, as the case may be, giving the Transfer Notice shall not be entitled to
transfer the Warrant or such Common Stock until receipt of notice from the
Corporation under this section 6.2.
7. Fractional Shares. No fractional shares of Common Stock will be
issued in connection with any exercise hereof, but in lieu of such fractional
shares, the Corporation shall make a cash payment therefor equal in amount to
the product of the applicable fraction multiplied by the Warrant Price.
8. Determination of Fair Value Binding; Expenses; Cooperation.
Whenever any provision of this Agreement requires a determination of Fair Value
per share of Common Stock pursuant to the Appraisal Procedure, such
determination in accordance with such procedure shall be binding on the Holder
and the Corporation. If an Appraiser is selected by agreement between the
Corporation and Two Thirds in Interest of the Holders, the fees and expenses of
such Appraiser shall be paid one-half by the Corporation and one-half by the
Holders. If two Appraisers are selected (one by each of the Corporation and Two
Thirds in Interest of the Holders), the Corporation shall pay the fees and
expenses of the Appraiser selected by it and the Holders shall pay the fees and
expenses of the Appraiser selected by the Holders. If a third Appraiser is
selected, the fees and expenses of such third Appraiser shall be paid one-half
by the Corporation and one-half by the Holders. The Corporation and the Holder
agree to fully cooperate with all Appraisers and, in connection therewith, the
Corporation shall
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<PAGE>
make available to all such Appraisers all information (financial or otherwise)
relating to the Corporation reasonably requested by such Appraisers.
9. Amendment and Waiver. Any term, covenant, agreement or condition
in this Warrant may be amended, or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Corporation and the Holder.
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<PAGE>
10. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT GIVING EFFECT TO
THE CHOICE OF LAW PRINCIPLES OF SUCH STATE).
Dated: February 1, 1999 AMERICA'S DOCTOR, INC.
Attest: By: /s/ Scott M. Rifkin
------------------------------------
Scott M. Rifkin, Chief Executive Officer
/s/ Lewis S. Goodman
- ---------------------------
Lewis S. Goodman, Secretary
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<PAGE>
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of the attached Warrant irrevocably
exercises the attached Warrant for the purchase of ________ shares of Common
Stock, $0.01 par value, of America's Doctor, Inc. and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant and requests that certificates for the shares of Common Stock hereby
purchased (and any securities or other property issuable upon such exercise) be
issued in the name of and delivered to _______________________ whose address is
______________________________________________ and, if such shares of Common
Stock shall not include all of the shares of Common Stock issuable as provided
in this Warrant, that a new Warrant of like tenor and date for the balance of
the shares of Common Stock issuable hereunder be delivered to the undersigned.
--------------------------------
Name of Registered Owner
--------------------------------
Signature of Registered Owner
--------------------------------
--------------------------------
Address
--------------------------------
Federal ID Number
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
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EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of Common Stock
- ---------------------------- -----------------------------
and does hereby irrevocably constitute and appoint __________________
attorney-in-fact to register such transfer on the books of America's Doctor,
Inc. maintained for the purpose, with full power of substitution in the
premises.
Dated:_____________________________
Name:_____________________________
Signature:__________________________
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
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EXHIBIT 10.13
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS BY REASON OF EXEMPTIONS FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE SECURITIES LAWS AND MAY
NOT BE SOLD, PLEDGED, ASSIGNED OR OTHERWISE DISPOSED OF IN ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS OR UNLESS, IN THE OPINION OF COUNSEL TO AMERICA'S DOCTOR, INC., AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
WARRANT
No. W-2 Warrant to Purchase a Number of Shares of
Common Stock to be determined as set forth herein.
AMERICA'S DOCTOR, INC.
This certifies that, for value received, TD ORIGEN CAPITAL FUND,
L.P., or its registered assigns, is entitled to subscribe for and purchase, at
any time and from time to time during the Effective Period, a number of shares
of duly authorized, validly issued, fully paid and non-assessable Common Stock,
including fractional shares, equal to the Number of Shares at an exercise price
of $0.01 per share, upon the terms and subject to the conditions hereinafter set
forth.
1. Definitions. For the purposes of this Warrant, the following terms have
the following meanings:
"Appraisal Procedure" shall mean a determination of Fair Value per
share of Common Stock (on the basis set forth in the definition of that term and
in section 8 hereof) by an Appraiser selected by the Corporation and Two Thirds
in Interest of the Holders, which Appraiser shall be directed to independently
determine Fair Value per share of Common Stock as of the Effective Date of a
Triggering Event and to submit its determination in writing to the Corporation
and the Holders at the earliest practicable date, but in any event within 45
days following the selection of such Appraiser, provided that if the Corporation
and Two Thirds in Interest of the Holders are unable to agree upon the selection
of an Appraiser within 30 days, then each of the Corporation and Two Thirds in
Interest of the Holders shall select an Appraiser who shall be directed to
independently determine the Fair Value per share of Common Stock and to submit
its determination in writing to the Corporation and the Holders at the earliest
practicable date, but in any event within 45 days following the selection of
both Appraisers. If the value determined by the Appraiser whose determination is
the higher of the two appraisals does not exceed by more than ten percent (10%)
the average of the values
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determined by each Appraiser, Fair Value per share of Common Stock shall be the
average of the values determined by the two Appraisers. If the value determined
by the Appraiser whose determination is the higher of the two appraisals does
exceed by more than ten percent (10%) the average of the value determined by
each Appraiser, then the two Appraisers shall, within 15 days following
submission to the Corporation and the Holders of the later of such two
appraisals, select a third independent Appraiser who shall be directed to
determine Fair Value per share of Common Stock independently of the other
Appraisers and to submit its determination in writing to the Corporation and the
Holders at the earliest practicable date, but in any event within 15 days of
such Appraiser's selection. The value determined by the Appraiser whose
determination is the most discrepant from the average of the three appraisals
shall be discarded, and Fair Value per share of Common Stock shall equal the
average of the remaining two appraisals, except that if the highest and lowest
appraisals are equally discrepant from the average of the three appraisals, Fair
Value per share of Common Stock shall be such average. Fair Value per share of
Common Stock shall in all cases be determined on the basis set forth in the
definition of that term, and all Appraisers shall be so instructed.
"Appraiser" shall mean an independent appraiser of recognized
national standing.
"Common Stock" shall mean the Corporation's Common Stock, par value
$0.01 per share, and any Stock into which such Common Stock may hereafter be
changed.
"Common Stock Equivalent" shall mean any warrant, option or other
right to subscribe for or purchase any shares of Common Stock or any evidences
of indebtedness, shares of Stock or other securities which are or may be at any
time convertible into or exchangeable for shares of Common Stock.
"Corporation" shall mean America's Doctor, Inc., a Delaware
corporation, and its successors and assigns.
"Counsel" shall mean counsel to the Corporation.
"Effective Date of a Triggering Event" shall mean the following:
(a) with respect to a Triggering Event defined in clause (a) of the
definition of Triggering Event, the closing date of such sale;
(b) with respect to a Triggering Event defined in clause (b) or (c)
of the definition of Triggering Event, the closing date of such sale,
transfer or other disposition; and
(c) with respect to a Triggering Event defined in clause (d) of the
definition of Triggering Event, the effective date of such merger or
consolidation.
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"Effective Period" shall mean the period beginning on the Effective
Date of a Triggering Event and ending the later of (a) (i) with respect to a
Triggering Event as defined in clause (a) of the definition of a Triggering
Event, on such date which is five years after the Effective Date of a Triggering
Event and (ii) with respect to a Triggering Event as defined in clause (b), (c)
or (d) of the definition of a Triggering Event, on such date which is twelve
months after the Effective Date of a Triggering Event and (b) twelve months
after the final determination of the Number of Shares.
"Exercise Price" shall mean the product of the Warrant Price and the
Number of Shares.
"Fair Value" per share of Common Stock as of any date shall mean:
(i) with respect to a Triggering Event of the type defined in
clause (a) of the definition of a Triggering Event, if the
registered securities are shares of Common Stock, then the price at
which such shares of Common Stock are offered to the public, and if
the registered securities are not shares of Common Stock, then the
Common Stock price implied by the price at which such securities are
offered to the public;
(ii) with respect to a Triggering Event of the type defined in
clause (b) of the definition of a Triggering Event, an amount equal
to the ratio of:
(1) the difference between:
(x) the sum of (A) the aggregate consideration received in
connection with such sale (including the value of any cash,
securities, tangible assets and intangible assets received and
the value of any liabilities of the Corporation assumed by the
acquiror), (B) the value of any assets retained by the
Corporation after giving effect to such sale, and (C) the
consideration which would be received by the Corporation upon
the exercise, conversion or exchange of all outstanding Common
Stock Equivalents, regardless of whether such Common Stock
Equivalents are then exercisable, convertible or exchangeable,
and
(y) the value of any liabilities retained by the Corporation
after giving effect to such sale, and
(2) the number of shares of Common Stock outstanding determined on a
Fully Diluted Basis as of the Effective Date of a Triggering Event
(excluding all classes of preferred stock of the Corporation which
were not converted to Common Stock in connection with such sale);
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(iii) with respect to a Triggering Event of the type defined
in clause (c) of the definition of a Triggering Event, the purchase
price per share of Common Stock received in such sale; and
(iv) with respect to a Triggering Event of the type defined in
clause (d) of the definition of a Triggering Event, the
consideration per share of Common Stock received in such merger or
consolidation.
The "Fair Value" of a number of shares of Common Stock as of any date shall mean
the product of (a) Fair Value per share of Common Stock as of such date and (b)
such number of shares of Common Stock. The "Fair Value" shall be determined by
either (i) the mutual agreement of the Corporation and Two Thirds in Interest of
the Holders within thirty days of receipt of written notice from the
Corporation, pursuant to section 2.1 hereof, of the anticipated occurrence of a
Triggering Event; or (ii) if the Holders and the Corporation are unable to agree
within thirty days of the date of receipt of written notice from the Corporation
pursuant to section 2.1 hereof, at the election of either party, pursuant to the
Appraisal Procedure.
"Fully Diluted Basis" shall mean on a basis whereby the aggregate
number of shares for such determination includes (i) all shares of such Common
Stock then issued and outstanding; and (ii) all shares of Common Stock which
would be outstanding upon the exercise, conversion or exchange of all
outstanding Common Stock Equivalents, which Common Stock Equivalents are then
exercisable, convertible or exchangeable.
"Holder" shall mean the Person or Persons who shall from time to
time own of record this Warrant.
"Holders" shall mean the Persons who shall from time to time own of
record all the outstanding Warrants, including this Warrant.
"Investment Date" shall mean, with respect to any shares of Series A
Preferred Stock, the date upon which such shares of Series A Preferred Stock
were issued.
"Number of Shares" shall mean, with respect to any Holder, the
number of shares of Common Stock that, when taken together with the Value of the
Original Series A Equity Stake of such Holder as of the Effective Date of the
Triggering Event and all dividends or other distributions received by such
Holder (or its predecessor-in-interest) with respect to the Series A Preferred
Stock, would have a Fair Value as of such date equal to an amount that implies
achievement of a 15% annual pre-tax internal rate of return (determined on a pro
rata basis for any partial year and on a monthly compounding basis) on the
aggregate amount paid by such Holder (or its predecessor-in-interest) for Series
A Preferred Stock shares and for this Warrant from the Investment Date,
calculated in accordance with generally accepted financial principles; provided,
however, that if the Number of Shares determined as provided above is zero or
less than zero, then the Number of Shares shall be zero and this Warrant shall
immediately terminate.
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"Person" shall mean an individual, a corporation, a partnership, a
trust, an unincorporated organization or a government organization or an agency
or political subdivision thereof.
"Securities Act" shall mean as of any date the Securities Act of
1933, as amended, or any similar Federal statute then in effect.
"Securities Purchase Agreement" shall mean the Securities Purchase
Agreement dated as of February 1, 1999, among the Corporation and the Purchasers
named therein, as it may be amended from time to time.
"Series A Preferred Stock" shall mean the Corporation's Series A
Convertible Preferred Stock, par value $0.01 per share.
"Stock" shall include any and all shares, interests or other
equivalents (however designated) of, or participations in, the capital stock of
the Corporation of any class.
"Triggering Event" means the first to occur of the following events:
(a) Any sale by the Corporation of shares of Common Stock or Common
Stock Equivalents pursuant to a registration statement filed by the
Corporation under the Securities Act (other than a registration statement
filed on Form S-4 or Form S-8), which filing shall have been declared
effective by the Securities and Exchange Commission, at a before-the-money
market capitalization of not less than $75,000,000 and in which the gross
proceeds received by the Corporation for such securities equals or exceeds
$15,000,000.
(b) Any sale, transfer or other disposition of all or substantially
all of the assets of the Corporation, other than (i) sales or other
transfers to affiliates or partners of the Holder and (ii) sales or other
transfers to wholly owned affiliates of the Corporation, provided that
such affiliate assumes all of the Corporation's obligations hereunder.
(c) Any sale, transfer or other disposition of more than 80% of the
outstanding Common Stock of the Corporation determined on a Fully Diluted
Basis, other than (i) sales or other transfers to affiliates or partners
of the Holder and (ii) sales or other transfers to wholly owned affiliates
of the Corporation, provided that such affiliate assumes all of the
Corporation's obligations hereunder.
(d) Any merger or consolidation involving the Corporation
immediately following the effective date of which a majority of the board
of directors of the corporation surviving such merger or consolidation are
not members of the board of directors immediately prior to such merger or
consolidation.
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"Two Thirds in Interest of the Holders" means Holders of (i)
Warrants representing at least two-thirds of the number of shares of Common
Stock then issuable upon exercise of the Warrants or (ii) two-thirds of the
number of shares of Series A Preferred Stock then outstanding.
"Value of the Original Series A Equity Stake," as of any date with
respect to any Holder, shall mean the greater of:
(a) the Fair Value of the number of shares of Common Stock issuable
upon the conversion of the issued shares of Series A Preferred Stock
originally issued to the Holder (or its predecessor-in-interest); and
(b) the lesser of:
(i) the liquidation value as of such date of the shares of
Series A Preferred Stock originally issued to the Holder (or its
predecessor-in-interest); and
(ii) the stockholders equity of the Corporation as of the end
of the most recent fiscal quarter of the Corporation, as reflected
on the balance sheet of the Corporation, determined in accordance
with generally accepted accounting principles; provided, however,
that if the stockholders equity of the Corporation as reflected on
such balance sheet is zero or less than zero, then the number
calculated pursuant to this clause (b) shall be zero.
"Warrant" shall mean this Warrant.
"Warrant Price" shall mean $0.01 per share of Common Stock.
"Warrants" shall mean this Warrant and all other Warrants issued by
the Corporation pursuant to the Securities Purchase Agreement.
2. Determination of "Number of Shares".
2.1. Thirty days prior to the anticipated occurrence of a
Triggering Event, the Corporation shall deliver notice to the Holder that a
Triggering Event is expected to occur and providing a description in reasonable
detail of the Triggering Event and the anticipated Effective Date of such
Triggering Event.
2.2. Within thirty days of receipt of written notice from the
Corporation pursuant to section 2.1 hereof, the Corporation and the Two Thirds
in Interest of Holders shall attempt to agree on the Number of Shares for the
Holders and, if they so agree, the number so agreed shall be the Number of
Shares. If, within thirty days of receipt by the Holders of the notice from the
Corporation referred to in section 2.1, the Corporation and Two Thirds in
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Interest of the Holders have been unable to so agree, either party may invoke
the Appraisal Procedure described in section 8 hereof, in which event such
Appraiser or Appraisers shall be instructed to determine the Number of Shares,
which shall then be binding on the Corporation and the Holder.
3. Duration. The right to exercise this Warrant to subscribe for and
purchase shares of Common Stock represented hereby shall commence on the
Effective Date of a Triggering Event and shall expire at 5:00 P.M., Eastern
Time, on the last day of the Effective Period.
4. Method of Exercise; Payment; Issuance of New Warrant; Transfer
and Exchange.
4.1. The purchase right represented by this Warrant may be
exercised any time during the Effective Period. If this Warrant is exercised on
the Effective Date of a Triggering Event, such exercise shall be deemed to occur
prior to the occurrence of the Triggering Event, except for purposes of
determining the Fair Value per share of Common Stock, the Number of Shares and
determining the number of shares outstanding on a Fully Diluted Basis hereunder.
4.2. The Holder hereof may exercise this Warrant, in whole or
in part, by delivery to the Corporation at its office at 11403 Cronridge Drive,
Suite 200, Owings Mills, Maryland, 21117, Attention: Chief Executive Officer (or
such other address as the Corporation may specify to Holder from time to time),
of (a) a written notice of Holder's election to exercise this Warrant, which
notice shall specify the number of shares of Common Stock to be purchased, (b)
payment of the Exercise Price in the manner provided below and (c) this Warrant.
Such notice shall be substantially in the form of the subscription form
appearing at the end of this Warrant as Exhibit A, duly executed by Holder or
its agent or attorney. Payment of the Exercise Price shall be made at the option
of Holder by (i) wire transfer to an account in a bank located in the United
States designated for such purpose by the Corporation, (ii) certified or
official bank check, (iii) cancellation of indebtedness of the Corporation to
Holder at the time of exercise, (iv) cancellation as of the date of exercise of
a portion of this Warrant (calculated as the net fair market value of such
cancelled portion at the time of exercise) or (v) any combination of the
foregoing. The net fair market value of any portion of this Warrant cancelled in
full or partial payment of the Exercise Price shall be determined by (A)
multiplying (i) the number of shares of Common Stock for which the portion of
this Warrant to be cancelled was exercisable by (ii) the Fair Value of a share
of Common Stock as of the date of cancellation and (B) subtracting from such
product the aggregate Exercise Price of the shares of Common Stock for which the
portion of this Warrant to be cancelled was exercisable. In the event of any
exercise of the rights represented by this Warrant, (x) certificates for the
shares of Common Stock so purchased shall be dated the date of such exercise and
delivered to the Holder hereof within a reasonable time, not exceeding 15 days
after such exercise, and the Holder hereof shall be deemed for all purposes to
be the Holder of
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the shares of Common Stock so purchased as of the date of such exercise, and (y)
unless this Warrant has expired pursuant to section 3 hereof, a new Warrant
representing the number of shares, if any, with respect to which this Warrant
shall not then have been exercised shall also be issued to the Holder hereof
within such time. Any such warrant shall be dated the date hereof and shall
represent the right to purchase the remaining number of shares of Common Stock
issuable pursuant thereto.
4.3. Subject to compliance with section 6 hereof, this Warrant
may be transferred on the books of the Corporation by the Holder hereof in
person or by duly authorized attorney, upon surrender of this Warrant at the
principal office of the Corporation, properly endorsed and upon payment of any
necessary transfer tax or other governmental charge imposed upon such transfer.
Subject to compliance with section 6 hereof, this Warrant is exchangeable at the
aforesaid principal office of the Corporation for two or more warrants for the
purchase of the same aggregate number of shares of Common Stock, each new
warrant to represent the right to purchase such number of shares of Common Stock
as the Holder hereof shall designate at the time of such exchange. If this
Warrant is transferred or exchanged for two or more Warrants prior to the
Effective Date of a Triggering Event, the Number of Shares issuable under each
such warrant shall be a percentage of the Number of Shares issuable hereunder
which, together with all other warrants issued in the transfer or exchange of
this Warrant, shall aggregate 100% of the Number of Shares hereunder. Any such
warrants shall be dated the date hereof and shall be identical with this Warrant
except as to the number of shares of Common Stock issuable pursuant thereto.
5. Stock Fully Paid; Reservation of Shares.
5.1. The Corporation covenants and agrees that all shares of
Common Stock which may be issued upon the exercise of the rights represented by
this Warrant will, upon issuance, be fully paid and non-assessable and free from
all taxes, liens and charges with respect to issuance. The Corporation further
covenants and agrees that during the period within which the rights represented
by this Warrant may be exercised, the Corporation will at all times have
authorized and reserved for the purpose of the issue upon exercise of this
Warrant a sufficient number of shares of Common Stock to provide for the
exercise of the rights represented by this Warrant. If the Warrant Price is at
any time less than the par value of the Common Stock, the Corporation also
covenants and agrees to cause to be taken such action (whether by decreasing the
par value of the Common Stock, the conversion of the Common Stock from par value
to no par value, or otherwise) as will permit the exercise of this Warrant and
the issuance of the Common Stock without any additional payment by the Holder
hereof (other than payment of the Exercise Price and applicable transfer taxes,
if any), which Common Stock, upon such issuance, will be fully paid and
non-assessable.
5.2. The Corporation shall not by any action, including,
without limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary
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action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of the Holder hereof against impairment.
Without limiting the generality of the foregoing, the Corporation will (a) not
increase the par value of any shares of Common Stock above the amount payable
therefor upon the exercise of this Warrant immediately prior to such increase in
par value and (b) take all such action as may be necessary or appropriate in
order that the Corporation may validly and legally issue fully paid and
nonassessable shares of Common Stock, free and clear of any liens, claims,
encumbrances and restrictions (other than as provided herein) upon the exercise
of this Warrant.
6. Restrictions on Transferability. The Warrant and the Common Stock
issued upon exercise of the Warrant shall not be transferred, hypothecated or
assigned before satisfaction of the conditions specified in this section 6,
which conditions are intended to ensure compliance with the provisions of the
Securities Act and state securities or "blue sky" laws with respect to the
transfer, hypothecation or assignment of any Warrant or Common Stock issued upon
exercise of any Warrant. Holder, by acceptance of this Warrant, agrees to be
bound by the provisions of this section
6.1. Restrictive Legend.
6.1.1 Except as otherwise provided in this section 6, each
certificate for Common Stock issued upon exercise of this Warrant, and each
certificate for Common Stock issued to any subsequent transferee of any such
certificate, shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES OR
BLUE SKY LAWS OF ANY STATE. THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT AND LAWS
OR THE RULES AND REGULATIONS THEREUNDER."
6.1.2 Except as otherwise provided in this section 6, each Warrant
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS BY REASON
OF EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH
STATE SECURITIES LAWS AND MAY NOT BE SOLD, PLEDGED, ASSIGNED OR
OTHERWISE DISPOSED OF IN ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND APPLICABLE
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STATE SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL TO
AMERICA'S DOCTOR, INC., AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE."
6.2. Notice of Proposed Transfers. Prior to any transfer,
hypothecation or assignment or attempted transfer, hypothecation or assignment
of the Warrant or any Common Stock issued upon exercise of the Warrant, the
Holder of such Warrant or Common Stock shall give ten (10) days prior written
notice (a "Transfer Notice") to the Corporation of such Holder's intention to
effect such transfer, hypothecation or assignment, describing the manner and
circumstances of the proposed transfer, hypothecation or assignment, and obtain
from Counsel a written opinion addressed to the Corporation that the proposed
transfer, hypothecation or assignment of the Warrant or such Common Stock may be
effected without registration under the Securities Act and applicable state
securities or "blue sky" laws. After receipt of the Transfer Notice and written
opinion, the Corporation shall, within five (5) days thereof, so notify the
Holder of the Warrant or such Common Stock in writing and such Holder shall
thereupon be entitled to transfer, hypothecate or assign the Warrant or Common
Stock, in accordance with the terms of the Transfer Notice. Each certificate, if
any, evidencing such shares of Common Stock issued upon such Transfer shall bear
the restrictive legend set forth in section 6.1.1, and each Warrant issued upon
such Transfer shall bear the legend set forth in section 6.1.2, unless in the
written opinion of Counsel addressed to the Corporation such legend is not
required in order to ensure compliance with the Securities Act and applicable
state securities or "blue sky" laws. The Holder of the Warrant or such Common
Stock, as the case may be, giving the Transfer Notice shall not be entitled to
transfer the Warrant or such Common Stock until receipt of notice from the
Corporation under this section 6.2.
7. Fractional Shares. No fractional shares of Common Stock will be
issued in connection with any exercise hereof, but in lieu of such fractional
shares, the Corporation shall make a cash payment therefor equal in amount to
the product of the applicable fraction multiplied by the Warrant Price.
8. Determination of Fair Value Binding; Expenses; Cooperation.
Whenever any provision of this Agreement requires a determination of Fair Value
per share of Common Stock pursuant to the Appraisal Procedure, such
determination in accordance with such procedure shall be binding on the Holder
and the Corporation. If an Appraiser is selected by agreement between the
Corporation and Two Thirds in Interest of the Holders, the fees and expenses of
such Appraiser shall be paid one-half by the Corporation and one-half by the
Holders. If two Appraisers are selected (one by each of the Corporation and Two
Thirds in Interest of the Holders), the Corporation shall pay the fees and
expenses of the Appraiser selected by it and the Holders shall pay the fees and
expenses of the Appraiser selected by the Holders. If a third Appraiser is
selected, the fees and expenses of such third Appraiser shall be paid one-half
by the Corporation and one-half by the Holders. The Corporation and the Holder
agree to fully cooperate with all Appraisers and, in connection therewith, the
Corporation shall
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make available to all such Appraisers all information (financial or otherwise)
relating to the Corporation reasonably requested by such Appraisers.
9. Amendment and Waiver. Any term, covenant, agreement or condition
in this Warrant may be amended, or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Corporation and the Holder.
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10. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT GIVING EFFECT TO
THE CHOICE OF LAW PRINCIPLES OF SUCH STATE).
Dated: February 1, 1999 AMERICA'S DOCTOR, INC.
Attest: By: /s/ Scott M. Rifkin
------------------------------------
Scott M. Rifkin, Chief Executive Officer
/s/ Lewis S. Goodman
- -------------------------
Lewis S. Goodman, Secretary
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EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of the attached Warrant irrevocably
exercises the attached Warrant for the purchase of ________ shares of Common
Stock, $0.01 par value, of America's Doctor, Inc. and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant and requests that certificates for the shares of Common Stock hereby
purchased (and any securities or other property issuable upon such exercise) be
issued in the name of and delivered to _______________________ whose address is
______________________________________________ and, if such shares of Common
Stock shall not include all of the shares of Common Stock issuable as provided
in this Warrant, that a new Warrant of like tenor and date for the balance of
the shares of Common Stock issuable hereunder be delivered to the undersigned.
--------------------------------
Name of Registered Owner
--------------------------------
Signature of Registered Owner
--------------------------------
--------------------------------
Address
--------------------------------
Federal ID Number
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
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EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of Common Stock
- ---------------------------- -----------------------------
and does hereby irrevocably constitute and appoint __________________
attorney-in-fact to register such transfer on the books of America's Doctor,
Inc. maintained for the purpose, with full power of substitution in the
premises.
Dated:_____________________________
Name:_____________________________
Signature:__________________________
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
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EXHIBIT 10.14
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS BY REASON OF EXEMPTIONS FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE SECURITIES LAWS AND MAY
NOT BE SOLD, PLEDGED, ASSIGNED OR OTHERWISE DISPOSED OF IN ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS OR UNLESS, IN THE OPINION OF COUNSEL TO AMERICA'S DOCTOR, INC., AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
WARRANT
No. W-3 Warrant to Purchase a Number of Shares of
Common Stock to be determined as set forth herein.
AMERICA'S DOCTOR, INC.
This certifies that, for value received, JAVELIN CAPITAL FUND, L.P.,
or its registered assigns, is entitled to subscribe for and purchase, at any
time and from time to time during the Effective Period, a number of shares of
duly authorized, validly issued, fully paid and non-assessable Common Stock,
including fractional shares, equal to the Number of Shares at an exercise price
of $0.01 per share, upon the terms and subject to the conditions hereinafter set
forth.
1. Definitions. For the purposes of this Warrant, the following terms have
the following meanings:
"Appraisal Procedure" shall mean a determination of Fair Value per
share of Common Stock (on the basis set forth in the definition of that term and
in section 8 hereof) by an Appraiser selected by the Corporation and Two Thirds
in Interest of the Holders, which Appraiser shall be directed to independently
determine Fair Value per share of Common Stock as of the Effective Date of a
Triggering Event and to submit its determination in writing to the Corporation
and the Holders at the earliest practicable date, but in any event within 45
days following the selection of such Appraiser, provided that if the Corporation
and Two Thirds in Interest of the Holders are unable to agree upon the selection
of an Appraiser within 30 days, then each of the Corporation and Two Thirds in
Interest of the Holders shall select an Appraiser who shall be directed to
independently determine the Fair Value per share of Common Stock and to submit
its determination in writing to the Corporation and the Holders at the earliest
practicable date, but in any event within 45 days following the selection of
both Appraisers. If the value determined by the Appraiser whose determination is
the higher of the two appraisals does not exceed by more than ten percent (10%)
the average of the values
<PAGE>
determined by each Appraiser, Fair Value per share of Common Stock shall be the
average of the values determined by the two Appraisers. If the value determined
by the Appraiser whose determination is the higher of the two appraisals does
exceed by more than ten percent (10%) the average of the value determined by
each Appraiser, then the two Appraisers shall, within 15 days following
submission to the Corporation and the Holders of the later of such two
appraisals, select a third independent Appraiser who shall be directed to
determine Fair Value per share of Common Stock independently of the other
Appraisers and to submit its determination in writing to the Corporation and the
Holders at the earliest practicable date, but in any event within 15 days of
such Appraiser's selection. The value determined by the Appraiser whose
determination is the most discrepant from the average of the three appraisals
shall be discarded, and Fair Value per share of Common Stock shall equal the
average of the remaining two appraisals, except that if the highest and lowest
appraisals are equally discrepant from the average of the three appraisals, Fair
Value per share of Common Stock shall be such average. Fair Value per share of
Common Stock shall in all cases be determined on the basis set forth in the
definition of that term, and all Appraisers shall be so instructed.
"Appraiser" shall mean an independent appraiser of recognized
national standing.
"Common Stock" shall mean the Corporation's Common Stock, par value
$0.01 per share, and any Stock into which such Common Stock may hereafter be
changed.
"Common Stock Equivalent" shall mean any warrant, option or other
right to subscribe for or purchase any shares of Common Stock or any evidences
of indebtedness, shares of Stock or other securities which are or may be at any
time convertible into or exchangeable for shares of Common Stock.
"Corporation" shall mean America's Doctor, Inc., a Delaware
corporation, and its successors and assigns.
"Counsel" shall mean counsel to the Corporation.
"Effective Date of a Triggering Event" shall mean the following:
(a) with respect to a Triggering Event defined in clause (a) of the
definition of Triggering Event, the closing date of such sale;
(b) with respect to a Triggering Event defined in clause (b) or (c)
of the definition of Triggering Event, the closing date of such sale,
transfer or other disposition; and
(c) with respect to a Triggering Event defined in clause (d) of the
definition of Triggering Event, the effective date of such merger or
consolidation.
2
<PAGE>
"Effective Period" shall mean the period beginning on the Effective
Date of a Triggering Event and ending the later of (a) (i) with respect to a
Triggering Event as defined in clause (a) of the definition of a Triggering
Event, on such date which is five years after the Effective Date of a Triggering
Event and (ii) with respect to a Triggering Event as defined in clause (b), (c)
or (d) of the definition of a Triggering Event, on such date which is twelve
months after the Effective Date of a Triggering Event and (b) twelve months
after the final determination of the Number of Shares.
"Exercise Price" shall mean the product of the Warrant Price and the
Number of Shares.
"Fair Value" per share of Common Stock as of any date shall mean:
(i) with respect to a Triggering Event of the type defined in
clause (a) of the definition of a Triggering Event, if the
registered securities are shares of Common Stock, then the price at
which such shares of Common Stock are offered to the public, and if
the registered securities are not shares of Common Stock, then the
Common Stock price implied by the price at which such securities are
offered to the public;
(ii) with respect to a Triggering Event of the type defined in
clause (b) of the definition of a Triggering Event, an amount equal
to the ratio of:
(1) the difference between:
(x) the sum of (A) the aggregate consideration received in
connection with such sale (including the value of any cash,
securities, tangible assets and intangible assets received and
the value of any liabilities of the Corporation assumed by the
acquiror), (B) the value of any assets retained by the
Corporation after giving effect to such sale, and (C) the
consideration which would be received by the Corporation upon
the exercise, conversion or exchange of all outstanding Common
Stock Equivalents, regardless of whether such Common Stock
Equivalents are then exercisable, convertible or exchangeable,
and
(y) the value of any liabilities retained by the Corporation
after giving effect to such sale, and
(2) the number of shares of Common Stock outstanding determined on a
Fully Diluted Basis as of the Effective Date of a Triggering Event
(excluding all classes of preferred stock of the Corporation which
were not converted to Common Stock in connection with such sale);
3
<PAGE>
(iii) with respect to a Triggering Event of the type defined
in clause (c) of the definition of a Triggering Event, the purchase
price per share of Common Stock received in such sale; and
(iv) with respect to a Triggering Event of the type defined in
clause (d) of the definition of a Triggering Event, the
consideration per share of Common Stock received in such merger or
consolidation.
The "Fair Value" of a number of shares of Common Stock as of any date shall mean
the product of (a) Fair Value per share of Common Stock as of such date and (b)
such number of shares of Common Stock. The "Fair Value" shall be determined by
either (i) the mutual agreement of the Corporation and Two Thirds in Interest of
the Holders within thirty days of receipt of written notice from the
Corporation, pursuant to section 2.1 hereof, of the anticipated occurrence of a
Triggering Event; or (ii) if the Holders and the Corporation are unable to agree
within thirty days of the date of receipt of written notice from the Corporation
pursuant to section 2.1 hereof, at the election of either party, pursuant to the
Appraisal Procedure.
"Fully Diluted Basis" shall mean on a basis whereby the aggregate
number of shares for such determination includes (i) all shares of such Common
Stock then issued and outstanding; and (ii) all shares of Common Stock which
would be outstanding upon the exercise, conversion or exchange of all
outstanding Common Stock Equivalents, which Common Stock Equivalents are then
exercisable, convertible or exchangeable.
"Holder" shall mean the Person or Persons who shall from time to
time own of record this Warrant.
"Holders" shall mean the Persons who shall from time to time own of
record all the outstanding Warrants, including this Warrant.
"Investment Date" shall mean, with respect to any shares of Series A
Preferred Stock, the date upon which such shares of Series A Preferred Stock
were issued.
"Number of Shares" shall mean, with respect to any Holder, the
number of shares of Common Stock that, when taken together with the Value of the
Original Series A Equity Stake of such Holder as of the Effective Date of the
Triggering Event and all dividends or other distributions received by such
Holder (or its predecessor-in-interest) with respect to the Series A Preferred
Stock, would have a Fair Value as of such date equal to an amount that implies
achievement of a 15% annual pre-tax internal rate of return (determined on a pro
rata basis for any partial year and on a monthly compounding basis) on the
aggregate amount paid by such Holder (or its predecessor-in-interest) for Series
A Preferred Stock shares and for this Warrant from the Investment Date,
calculated in accordance with generally accepted financial principles; provided,
however, that if the Number of Shares determined as provided above is zero or
less than zero, then the Number of Shares shall be zero and this Warrant shall
immediately terminate.
4
<PAGE>
"Person" shall mean an individual, a corporation, a partnership, a
trust, an unincorporated organization or a government organization or an agency
or political subdivision thereof.
"Securities Act" shall mean as of any date the Securities Act of
1933, as amended, or any similar Federal statute then in effect.
"Securities Purchase Agreement" shall mean the Securities Purchase
Agreement dated as of February 1, 1999, among the Corporation and the Purchasers
named therein, as it may be amended from time to time.
"Series A Preferred Stock" shall mean the Corporation's Series A
Convertible Preferred Stock, par value $0.01 per share.
"Stock" shall include any and all shares, interests or other
equivalents (however designated) of, or participations in, the capital stock of
the Corporation of any class.
"Triggering Event" means the first to occur of the following events:
(a) Any sale by the Corporation of shares of Common Stock or Common
Stock Equivalents pursuant to a registration statement filed by the
Corporation under the Securities Act (other than a registration statement
filed on Form S-4 or Form S-8), which filing shall have been declared
effective by the Securities and Exchange Commission, at a before-the-money
market capitalization of not less than $75,000,000 and in which the gross
proceeds received by the Corporation for such securities equals or exceeds
$15,000,000.
(b) Any sale, transfer or other disposition of all or substantially
all of the assets of the Corporation, other than (i) sales or other
transfers to affiliates or partners of the Holder and (ii) sales or other
transfers to wholly owned affiliates of the Corporation, provided that
such affiliate assumes all of the Corporation's obligations hereunder.
(c) Any sale, transfer or other disposition of more than 80% of the
outstanding Common Stock of the Corporation determined on a Fully Diluted
Basis, other than (i) sales or other transfers to affiliates or partners
of the Holder and (ii) sales or other transfers to wholly owned affiliates
of the Corporation, provided that such affiliate assumes all of the
Corporation's obligations hereunder.
(d) Any merger or consolidation involving the Corporation
immediately following the effective date of which a majority of the board
of directors of the corporation surviving such merger or consolidation are
not members of the board of directors immediately prior to such merger or
consolidation.
5
<PAGE>
"Two Thirds in Interest of the Holders" means Holders of (i)
Warrants representing at least two-thirds of the number of shares of Common
Stock then issuable upon exercise of the Warrants or (ii) two-thirds of the
number of shares of Series A Preferred Stock then outstanding.
"Value of the Original Series A Equity Stake," as of any date with
respect to any Holder, shall mean the greater of:
(a) the Fair Value of the number of shares of Common Stock issuable
upon the conversion of the issued shares of Series A Preferred Stock
originally issued to the Holder (or its predecessor-in-interest); and
(b) the lesser of:
(i) the liquidation value as of such date of the shares of
Series A Preferred Stock originally issued to the Holder (or its
predecessor-in-interest); and
(ii) the stockholders equity of the Corporation as of the end
of the most recent fiscal quarter of the Corporation, as reflected
on the balance sheet of the Corporation, determined in accordance
with generally accepted accounting principles; provided, however,
that if the stockholders equity of the Corporation as reflected on
such balance sheet is zero or less than zero, then the number
calculated pursuant to this clause (b) shall be zero.
"Warrant" shall mean this Warrant.
"Warrant Price" shall mean $0.01 per share of Common Stock.
"Warrants" shall mean this Warrant and all other Warrants issued by
the Corporation pursuant to the Securities Purchase Agreement.
2. Determination of "Number of Shares".
2.1. Thirty days prior to the anticipated occurrence of a
Triggering Event, the Corporation shall deliver notice to the Holder that a
Triggering Event is expected to occur and providing a description in reasonable
detail of the Triggering Event and the anticipated Effective Date of such
Triggering Event.
2.2. Within thirty days of receipt of written notice from the
Corporation pursuant to section 2.1 hereof, the Corporation and the Two Thirds
in Interest of Holders shall attempt to agree on the Number of Shares for the
Holders and, if they so agree, the number so agreed shall be the Number of
Shares. If, within thirty days of receipt by the Holders of the notice from the
Corporation referred to in section 2.1, the Corporation and Two Thirds in
6
<PAGE>
Interest of the Holders have been unable to so agree, either party may invoke
the Appraisal Procedure described in section 8 hereof, in which event such
Appraiser or Appraisers shall be instructed to determine the Number of Shares,
which shall then be binding on the Corporation and the Holder.
3. Duration. The right to exercise this Warrant to subscribe for and
purchase shares of Common Stock represented hereby shall commence on the
Effective Date of a Triggering Event and shall expire at 5:00 P.M., Eastern
Time, on the last day of the Effective Period.
4. Method of Exercise; Payment; Issuance of New Warrant; Transfer
and Exchange.
4.1. The purchase right represented by this Warrant may be
exercised any time during the Effective Period. If this Warrant is exercised on
the Effective Date of a Triggering Event, such exercise shall be deemed to occur
prior to the occurrence of the Triggering Event, except for purposes of
determining the Fair Value per share of Common Stock, the Number of Shares and
determining the number of shares outstanding on a Fully Diluted Basis hereunder.
4.2. The Holder hereof may exercise this Warrant, in whole or
in part, by delivery to the Corporation at its office at 11403 Cronridge Drive,
Suite 200, Owings Mills, Maryland, 21117, Attention: Chief Executive Officer (or
such other address as the Corporation may specify to Holder from time to time),
of (a) a written notice of Holder's election to exercise this Warrant, which
notice shall specify the number of shares of Common Stock to be purchased, (b)
payment of the Exercise Price in the manner provided below and (c) this Warrant.
Such notice shall be substantially in the form of the subscription form
appearing at the end of this Warrant as Exhibit A, duly executed by Holder or
its agent or attorney. Payment of the Exercise Price shall be made at the option
of Holder by (i) wire transfer to an account in a bank located in the United
States designated for such purpose by the Corporation, (ii) certified or
official bank check, (iii) cancellation of indebtedness of the Corporation to
Holder at the time of exercise, (iv) cancellation as of the date of exercise of
a portion of this Warrant (calculated as the net fair market value of such
cancelled portion at the time of exercise) or (v) any combination of the
foregoing. The net fair market value of any portion of this Warrant cancelled in
full or partial payment of the Exercise Price shall be determined by (A)
multiplying (i) the number of shares of Common Stock for which the portion of
this Warrant to be cancelled was exercisable by (ii) the Fair Value of a share
of Common Stock as of the date of cancellation and (B) subtracting from such
product the aggregate Exercise Price of the shares of Common Stock for which the
portion of this Warrant to be cancelled was exercisable. In the event of any
exercise of the rights represented by this Warrant, (x) certificates for the
shares of Common Stock so purchased shall be dated the date of such exercise and
delivered to the Holder hereof within a reasonable time, not exceeding 15 days
after such exercise, and the Holder hereof shall be deemed for all purposes to
be the Holder of
7
<PAGE>
the shares of Common Stock so purchased as of the date of such exercise, and (y)
unless this Warrant has expired pursuant to section 3 hereof, a new Warrant
representing the number of shares, if any, with respect to which this Warrant
shall not then have been exercised shall also be issued to the Holder hereof
within such time. Any such warrant shall be dated the date hereof and shall
represent the right to purchase the remaining number of shares of Common Stock
issuable pursuant thereto.
4.3. Subject to compliance with section 6 hereof, this Warrant
may be transferred on the books of the Corporation by the Holder hereof in
person or by duly authorized attorney, upon surrender of this Warrant at the
principal office of the Corporation, properly endorsed and upon payment of any
necessary transfer tax or other governmental charge imposed upon such transfer.
Subject to compliance with section 6 hereof, this Warrant is exchangeable at the
aforesaid principal office of the Corporation for two or more warrants for the
purchase of the same aggregate number of shares of Common Stock, each new
warrant to represent the right to purchase such number of shares of Common Stock
as the Holder hereof shall designate at the time of such exchange. If this
Warrant is transferred or exchanged for two or more Warrants prior to the
Effective Date of a Triggering Event, the Number of Shares issuable under each
such warrant shall be a percentage of the Number of Shares issuable hereunder
which, together with all other warrants issued in the transfer or exchange of
this Warrant, shall aggregate 100% of the Number of Shares hereunder. Any such
warrants shall be dated the date hereof and shall be identical with this Warrant
except as to the number of shares of Common Stock issuable pursuant thereto.
5. Stock Fully Paid; Reservation of Shares.
5.1. The Corporation covenants and agrees that all shares of
Common Stock which may be issued upon the exercise of the rights represented by
this Warrant will, upon issuance, be fully paid and non-assessable and free from
all taxes, liens and charges with respect to issuance. The Corporation further
covenants and agrees that during the period within which the rights represented
by this Warrant may be exercised, the Corporation will at all times have
authorized and reserved for the purpose of the issue upon exercise of this
Warrant a sufficient number of shares of Common Stock to provide for the
exercise of the rights represented by this Warrant. If the Warrant Price is at
any time less than the par value of the Common Stock, the Corporation also
covenants and agrees to cause to be taken such action (whether by decreasing the
par value of the Common Stock, the conversion of the Common Stock from par value
to no par value, or otherwise) as will permit the exercise of this Warrant and
the issuance of the Common Stock without any additional payment by the Holder
hereof (other than payment of the Exercise Price and applicable transfer taxes,
if any), which Common Stock, upon such issuance, will be fully paid and
non-assessable.
5.2. The Corporation shall not by any action, including,
without limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary
8
<PAGE>
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of the Holder hereof against impairment.
Without limiting the generality of the foregoing, the Corporation will (a) not
increase the par value of any shares of Common Stock above the amount payable
therefor upon the exercise of this Warrant immediately prior to such increase in
par value and (b) take all such action as may be necessary or appropriate in
order that the Corporation may validly and legally issue fully paid and
nonassessable shares of Common Stock, free and clear of any liens, claims,
encumbrances and restrictions (other than as provided herein) upon the exercise
of this Warrant.
6. Restrictions on Transferability. The Warrant and the Common Stock
issued upon exercise of the Warrant shall not be transferred, hypothecated or
assigned before satisfaction of the conditions specified in this section 6,
which conditions are intended to ensure compliance with the provisions of the
Securities Act and state securities or "blue sky" laws with respect to the
transfer, hypothecation or assignment of any Warrant or Common Stock issued upon
exercise of any Warrant. Holder, by acceptance of this Warrant, agrees to be
bound by the provisions of this section
6.1. Restrictive Legend.
6.1.1 Except as otherwise provided in this section 6, each
certificate for Common Stock issued upon exercise of this Warrant, and each
certificate for Common Stock issued to any subsequent transferee of any such
certificate, shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES OR
BLUE SKY LAWS OF ANY STATE. THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT AND LAWS
OR THE RULES AND REGULATIONS THEREUNDER."
6.1.2 Except as otherwise provided in this section 6, each Warrant
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS BY REASON
OF EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH
STATE SECURITIES LAWS AND MAY NOT BE SOLD, PLEDGED, ASSIGNED OR
OTHERWISE DISPOSED OF IN ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND APPLICABLE
9
<PAGE>
STATE SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL TO
AMERICA'S DOCTOR, INC., AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE."
6.2. Notice of Proposed Transfers. Prior to any transfer,
hypothecation or assignment or attempted transfer, hypothecation or assignment
of the Warrant or any Common Stock issued upon exercise of the Warrant, the
Holder of such Warrant or Common Stock shall give ten (10) days prior written
notice (a "Transfer Notice") to the Corporation of such Holder's intention to
effect such transfer, hypothecation or assignment, describing the manner and
circumstances of the proposed transfer, hypothecation or assignment, and obtain
from Counsel a written opinion addressed to the Corporation that the proposed
transfer, hypothecation or assignment of the Warrant or such Common Stock may be
effected without registration under the Securities Act and applicable state
securities or "blue sky" laws. After receipt of the Transfer Notice and written
opinion, the Corporation shall, within five (5) days thereof, so notify the
Holder of the Warrant or such Common Stock in writing and such Holder shall
thereupon be entitled to transfer, hypothecate or assign the Warrant or Common
Stock, in accordance with the terms of the Transfer Notice. Each certificate, if
any, evidencing such shares of Common Stock issued upon such Transfer shall bear
the restrictive legend set forth in section 6.1.1, and each Warrant issued upon
such Transfer shall bear the legend set forth in section 6.1.2, unless in the
written opinion of Counsel addressed to the Corporation such legend is not
required in order to ensure compliance with the Securities Act and applicable
state securities or "blue sky" laws. The Holder of the Warrant or such Common
Stock, as the case may be, giving the Transfer Notice shall not be entitled to
transfer the Warrant or such Common Stock until receipt of notice from the
Corporation under this section 6.2.
7. Fractional Shares. No fractional shares of Common Stock will be
issued in connection with any exercise hereof, but in lieu of such fractional
shares, the Corporation shall make a cash payment therefor equal in amount to
the product of the applicable fraction multiplied by the Warrant Price.
8. Determination of Fair Value Binding; Expenses; Cooperation.
Whenever any provision of this Agreement requires a determination of Fair Value
per share of Common Stock pursuant to the Appraisal Procedure, such
determination in accordance with such procedure shall be binding on the Holder
and the Corporation. If an Appraiser is selected by agreement between the
Corporation and Two Thirds in Interest of the Holders, the fees and expenses of
such Appraiser shall be paid one-half by the Corporation and one-half by the
Holders. If two Appraisers are selected (one by each of the Corporation and Two
Thirds in Interest of the Holders), the Corporation shall pay the fees and
expenses of the Appraiser selected by it and the Holders shall pay the fees and
expenses of the Appraiser selected by the Holders. If a third Appraiser is
selected, the fees and expenses of such third Appraiser shall be paid one-half
by the Corporation and one-half by the Holders. The Corporation and the Holder
agree to fully cooperate with all Appraisers and, in connection therewith, the
Corporation shall
10
<PAGE>
make available to all such Appraisers all information (financial or otherwise)
relating to the Corporation reasonably requested by such Appraisers.
9. Amendment and Waiver. Any term, covenant, agreement or condition
in this Warrant may be amended, or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Corporation and the Holder.
11
<PAGE>
10. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT GIVING EFFECT TO
THE CHOICE OF LAW PRINCIPLES OF SUCH STATE).
Dated: February 1, 1999 AMERICA'S DOCTOR, INC.
Attest: By: /s/ Scott M. Rifkin
------------------------------------
Scott M. Rifkin, Chief Executive Officer
/s/ Lewis S. Goodman
- -------------------------
Lewis S. Goodman, Secretary
12
<PAGE>
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of the attached Warrant irrevocably
exercises the attached Warrant for the purchase of ________ shares of Common
Stock, $0.01 par value, of America's Doctor, Inc. and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant and requests that certificates for the shares of Common Stock hereby
purchased (and any securities or other property issuable upon such exercise) be
issued in the name of and delivered to _______________________ whose address is
______________________________________________ and, if such shares of Common
Stock shall not include all of the shares of Common Stock issuable as provided
in this Warrant, that a new Warrant of like tenor and date for the balance of
the shares of Common Stock issuable hereunder be delivered to the undersigned.
--------------------------------
Name of Registered Owner
--------------------------------
Signature of Registered Owner
--------------------------------
--------------------------------
Address
--------------------------------
Federal ID Number
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
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<PAGE>
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of Common Stock
- ---------------------------- -----------------------------
and does hereby irrevocably constitute and appoint __________________
attorney-in-fact to register such transfer on the books of America's Doctor,
Inc. maintained for the purpose, with full power of substitution in the
premises.
Dated:_____________________________
Name:_____________________________
Signature:__________________________
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
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EXHIBIT 10.15
================================================================================
SECURITIES PURCHASE AGREEMENT
BY AND BETWEEN
AMERICA'S DOCTOR, INC.
AND
THE PURCHASERS IDENTIFIED ON SCHEDULE A HERETO
DATED: FEBRUARY 1, 1999
================================================================================
<PAGE>
SECURITIES PURCHASE AGREEMENT
TABLE OF CONTENTS
SECTION 1. Certain Definitions........................................1
1.1. Defined Terms...................................................1
SECTION 2. Authorization And Sale.....................................4
2.1. Authorization of Preferred Stock and Warrants...................4
2.2. Sale and Purchase...............................................4
2.3. The Closing.....................................................4
SECTION 3. Representations And Warranties Of The Corporation..........5
3.1. Organization and Corporate Power................................5
3.2. Authorization...................................................5
3.3. Equity Investments..............................................6
3.4. Capitalization..................................................6
3.5. Shareholder Lists and Agreements................................7
3.6. Financial Information...........................................7
3.7. Absence of Undisclosed Liabilities..............................7
3.8. Absence of Certain Changes......................................8
3.9. Tax Matters.....................................................9
3.10. Title; Encumbrances; Burdensome Restrictions.................10
3.11. Intellectual Property Rights.................................10
3.12. Litigation...................................................11
3.13. No Defaults..................................................12
3.14. Labor Agreements and Actions.................................12
3.15. Compliance...................................................12
3.16. Insurance....................................................12
3.17. Conflicts....................................................13
3.18. Accounts; Related Transactions...............................13
3.19. Securities Law Compliance....................................14
3.20. No Consent or Approval Required..............................14
3.21. Agreements...................................................14
3.22. Brokers......................................................16
3.23. Employee Benefit Plans; Employees............................16
3.24. Investment Company Act.......................................17
3.25. Small Business Concern.......................................17
3.26. Real Property Holding Corporation............................17
3.27. Disclosure...................................................17
SECTION 4. Representations, Warranties And Covenants Of The
Purchasers................................................17
SECTION 5. Conditions To And Deliveries At Closing...................19
5.1. Preferred Stock................................................19
5.2. Accuracy of Representations and Warranties.....................19
5.3. Performance....................................................19
5.4. Corporate Proceedings; Consents, Etc...........................19
5.5. Certificate of Secretary.......................................20
5.6. Shareholders' Agreement and Registration Rights Agreement......20
5.7. Adverse Proceedings; No Material Adverse Effect................20
5.8. Small Business Administration Documentation....................20
5.9. Employment Agreements..........................................21
5.10. Absence of Liens.............................................21
5.11. Opinion of Counsel...........................................21
<PAGE>
5.12. Effectiveness................................................21
5.13. Approvals....................................................21
5.14. Other Matters................................................21
SECTION 6. Survival Of Representations, Warranties And Agreements,
Etc. .....................................................22
SECTION 7. Additional Remedies.......................................22
SECTION 8. Expenses..................................................22
SECTION 9. Additional Provisions.....................................23
9.1. Successors and Assigns.........................................23
9.2. Entire Agreement...............................................23
9.3. Notices........................................................23
9.4. Changes........................................................25
9.5. Counterparts...................................................25
9.6. Headings.......................................................25
9.7. Nouns and Pronouns.............................................25
9.8. Governing Law..................................................25
9.9. Severability...................................................25
9.10. Construction.................................................26
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement") made as of this 1st
day of February, 1999, by and between America's Doctor, Inc., a Delaware
corporation (the "Corporation"), and the purchasers identified on Schedule A
hereto (the "Purchasers").
RECITALS:
Subject to the terms and conditions hereof, the Corporation desires to
issue and sell, and the Purchasers desire to purchase, in the aggregate, up to
133,333 shares of Series A Convertible Preferred Stock, $0.01 par value, of the
Corporation, and warrants to purchase a number of shares of Common Stock, $0.01
par value, of the Corporation specified in such warrants, substantially in the
form of Exhibit A hereto (the "Warrants").
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and intending to be legally bound hereby, the parties hereto agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
1.1. Defined Terms.
As used in this Agreement, the following terms shall have the
following meanings:
"Action" shall mean any action, suit, proceeding, claim, arbitration
or investigation.
"Activity Event of Default" shall have the meaning set forth in
Section 6.5(b)."Budget" shall mean the annual operating and capital budget of
the Corporation, with monthly breakdowns prepared by management and signed by
the Chief Executive Officer or the Chief Financial Officer of the Corporation.
"Certificate of Incorporation" shall mean the Corporation's Restated
Certificate of Incorporation, including the Certificate of Designations with
respect to the Preferred Stock, a copy of which Certificate of Designations is
attached hereto as Exhibit B.
"Closing" shall mean the closing of the transactions contemplated
under Section 2.3(a) of this Agreement.
"Closing Date" shall mean the date of the Closing.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
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"Commission" shall mean the United States Securities and Exchange
Commission.
"Common Stock" shall mean the Corporation's Common Stock, par value
$0.01 per share.
"Corporation" shall mean America's Doctor, Inc., a Delaware
corporation.
"Designated Persons" shall mean the former and present directors,
officers and employees of, and consultants to, the Corporation.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder,
all as the same shall be in effect at the time.
"Intellectual Property Rights" shall mean all industrial and
intellectual property rights, including without limitation, Proprietary
Information, patents, patent applications, patent rights, mask works, mask work
applications, trademarks, trademark applications, trade names, service marks,
service mark applications, copyrights, copyright applications, know-how,
certificates of public convenience and necessity, franchises, licenses, trade
secrets, proprietary processes and formulae.
"IRS" shall mean the Internal Revenue Service.
"Javelin" shall mean Javelin Capital Fund, L.P., a Delaware limited
partnership, a small business investment Company licensed by the SBA, and its
successors and assigns.
"Operative Documents" shall mean, collectively, this Agreement and
the Exhibits hereto.
"Person" shall mean and include an individual, a corporation, a
partnership, a trust, an unincorporated organization and a government or any
department, agency or political subdivision thereof.
"Preferred Stock" shall mean the Corporation's Series A Convertible
Preferred Stock, par value $0.01 per share.
"Proprietary Information" shall mean all customer lists, source and
object code, algorithms, architecture, structure, display screens, layouts,
processes, inventions, trade secrets, know-how, development tools, software and
other proprietary rights owned by the Corporation pertaining to any product or
service manufactured, marketed or sold, or proposed to be manufactured, marketed
or sold (as the case may be), by the Corporation or used, employed or exploited
in the development, license, sale, marketing or distribution or maintenance
thereof, and all documentation and media constituting, describing or relating to
the above, including without limitation, manuals, memoranda, know-how,
notebooks, records and disclosures.
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"Purchasers" shall mean the persons and entities identified on
Schedule A hereto.
"Recent Balance Sheet" shall have the meaning set forth in Section
3.6(a)(iii).
"Recent Financial Statements" shall have the meaning set forth in
Section 3.6(a)(iii).
"Register", "Registered", "Registration" and "Registration
Statement" shall refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act, and the
declaration or ordering of effectiveness of such registration statement.
"Registration Rights Agreement" shall mean the Amended and Restated
Registration Rights Agreement among the Corporation, Premier Research Worldwide,
Ltd., Medical Advisory Systems, Inc. and the Purchasers substantially in the
form attached hereto as Exhibit D.
"Related Transaction" shall have the meaning set forth in Section
3.18.
"SBA" shall mean the United States Small Business Administration.
"SBIC" shall mean each of Javelin or Origen and "SBICs" shall mean
Javelin and Origen, collectively.
"SBIC Act" shall mean the Small Business Investment Act of 1958, as
amended.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission promulgated thereunder, all as
the same shall be in effect at the time.
"Shareholders' Agreement" shall mean the Amended and Restated
Shareholders' and Voting Agreement by and among the Corporation, the Purchasers,
and the Common Stock shareholders identified therein substantially in the form
attached hereto as Exhibit C.
"Taxes" shall mean all federal, state, county, local and foreign
income, profits, franchise, sales, use, occupation, property, excise, payroll,
withholding and other taxes (including penalties and interest).
"Warrants" shall have the meaning set forth in the second Recital
above.
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SECTION 2. AUTHORIZATION AND SALE.
2.1. Authorization of Preferred Stock and Warrants.
The Corporation has duly authorized the sale and issuance, pursuant
to the terms of this Agreement, of up to 133,333 shares of its preferred stock
having the rights, restrictions, privileges and preferences set forth in the
Certificate of Incorporation. The Corporation has, or before the Closing will
have, authorized the granting, pursuant to the terms of this Agreement, of
shares of its Common Stock pursuant to the terms of the Warrants. The
Corporation has, or before the Closing will have, filed the Certificate of
Incorporation with the Secretary of State of the State of Delaware.
2.2. Sale and Purchase.
a) Subject to the terms and conditions of this Agreement, at the
Closing (as defined in Section 2.3), the Corporation will sell and issue to
Purchasers and Purchasers will purchase the number of shares of Preferred Stock
indicated on Schedule A hereto opposite each such Purchaser's name and a Warrant
for the purchase price of $30.00 per share, for an aggregate purchase price of
$3,999,990.
b) The Corporation will use the proceeds from the sales of the
Preferred Stock and Warrants for product development, working capital and other
valid corporate purposes.
2.3. The Closing.
a) The closing of the sale and purchase of the Preferred Stock and
Warrants under this Agreement shall take place on the date hereof at the offices
of Rifkin, Livingston, Levitan & Silver, LLC, Harbor Court, Suite 200, 575 South
Charles Street, Baltimore, Maryland 21201, or at such other place as is mutually
agreeable to the Corporation and the Purchasers.
b) At the Closing, the Corporation shall deliver to each of the
Purchasers a certificate for the shares of Preferred Stock being purchased by
such Purchaser as set forth on Schedule A hereto, registered in the name of such
Purchaser (or its nominee), and a Warrant, against payment to the Corporation of
the purchase price set forth in Section 2.2(a), by wire transfer, check or other
method acceptable to the Corporation.
c) If at the Closing any of the conditions specified in Section 5
shall not have been fulfilled, each of the Purchasers shall, at its election, be
relieved of all of its obligations under this Agreement without thereby waiving
any other rights it may have by reason of such failure or such non-fulfillment.
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SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION.
The Corporation represents and warrants to each of the Purchasers as
follows:
3.1. Organization and Corporate Power.
The Corporation:
a) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware;
b) has all requisite corporate power and authority to own, lease and
operate its properties currently owned, leased and operated, to carry on its
business as currently conducted and to execute, deliver and perform this
Agreement; and
c) is duly qualified as a foreign corporation and in good standing
to do business in all such jurisdictions, if any, in which the conduct of its
business or its ownership, leasing or operation of property as then conducted,
owned, leased or operated, requires such qualification, except for those
jurisdictions in which failure to so qualify would not have a material adverse
effect on the business or assets of the Corporation.
d) will have all requisite power and authority to execute and
deliver the Operative Documents, to carry out the transactions contemplated
thereby, and to issue and deliver the Preferred Stock and the Warrants, and the
Common Stock issuable upon exercise of the Warrants.
3.2. Authorization.
a) The execution, delivery and performance by the Corporation of the
Operative Documents have been duly authorized by all requisite corporate action
by the Corporation, and the Operative Documents constitute the valid and binding
obligations of the Corporation, enforceable in accordance with their terms,
subject to applicable bankruptcy, reorganization, insolvency, moratorium and
similar laws affecting creditors' rights generally and to general principals of
equity.
b) The issuance, sale and delivery of the Preferred Stock and
Warrants and, upon exercise of the Warrants or the conversion of the Preferred
Stock, the Common Stock issuable with respect to such exercise or conversion,
have been duly authorized by all requisite corporate action of the Corporation,
and when issued, sold and delivered in accordance with this Agreement, the
Preferred Stock will be validly issued and outstanding, fully paid and
nonassessable with only limited liability attaching solely to the ownership
thereof, and not subject to preemptive or any other similar rights of the
stockholders of the Corporation or others. When issued and delivered in
accordance with the terms of the Certificate of Incorporation and the Warrants,
the Common Stock issuable upon the conversion of the Preferred Stock and the
exercise of the Warrants will be validly issued and outstanding, fully paid and
nonassessable with only limited liability
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attaching solely to the ownership thereof, and not subject to preemptive or any
other similar rights of the stockholders of the Corporation or others.
3.3. Equity Investments.
The Corporation has never had, nor does it presently have, any
subsidiaries, nor has it owned, nor does it presently own, any capital stock or
other proprietary interest or other voting control, directly or indirectly, in
any corporation, association, trust, partnership, joint venture or other entity.
3.4. Capitalization.
a) The authorized capital stock of the Corporation, immediately
prior to the Closing, will consist of (i) 2,500,000 shares of Common Stock,
534,579 of which shares are issued and outstanding and (ii) 1,000,000 shares of
preferred stock, none of which shares are issued and outstanding. All of the
issued and outstanding shares of the Corporation's capital stock have been duly
authorized and validly issued and are fully paid and non-assessable and all
securities previously issued and sold by the Corporation were issued and sold in
compliance with applicable Federal securities laws. Except as set forth in
Schedule 3.4, no other shares of the Corporation's capital stock or securities
convertible into or exchangeable for shares of the Corporation's capital stock
have been issued or reserved for issuance, and except as set forth in Schedule
3.4 or contemplated by the Operative Documents, (A) no subscription, warrant,
option, convertible security or other right (contingent or otherwise) to
purchase or acquire any shares of capital stock of the Corporation is authorized
or outstanding, (B) there is not any, commitment or offer of the Corporation to
issue any subscription, warrant, option, convertible security or other such
right, or to issue or distribute to holders of any shares of its capital stock
any evidences of indebtedness or assets of the Corporation, (C) the Corporation
has no obligation (contingent or otherwise) to purchase, redeem or otherwise
acquire any shares of its capital stock or any interest therein or to pay any
dividend or make any other distribution in respect thereof and (D) there are no
restrictions on the transfer of the Corporation's capital stock other than
compliance with applicable Federal securities laws. Except as contemplated by
the Operative Documents or as set forth in Schedule 3.4, no person or entity is
entitled to (1) any preemptive or similar right with respect to the issuance of
any capital stock of the Corporation or (2) any rights with respect to the
registration of any capital stock of the Corporation under the Securities Act.
b) Immediately after consummation of the transactions contemplated
hereby at the Closing, the authorized capital stock of the Corporation will
consist of (i) 2,500,000 shares of Common Stock, of which 534,579 shares will be
issued and outstanding, fully paid and nonassessable, and 383,333 shares will be
reserved for issuance upon the conversion of Preferred Stock and Warrants, and
(ii) 1,000,000 shares of preferred stock, 133,333 of which shares will be
designated as Preferred Stock and will be issued and outstanding, fully paid and
nonassessable.
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3.5. Shareholder Lists and Agreements.
Schedule 3.5 annexed hereto sets forth a true and complete list of
all shareholders and other security holders of the Corporation showing the
number of shares of Common Stock or other securities held by each Shareholder or
security holder. Except as set forth in Schedule 3.5 or otherwise as
contemplated by the Operative Documents, there are no agreements, written or
oral, between the Corporation and any of the holders of the Corporation's
capital stock, or between or among any holders of the Corporation's capital
stock, relating to the acquisition, disposition or voting of such capital stock.
3.6. Financial Information.
a) The Corporation has previously delivered to the Purchasers the
following financial information:
(i) the Corporation's financial projections, dated December
31, 1998 and related statements of income;
(ii) the balance sheet of the Corporation as of December 31,
1998 and the related statements of income and schedules, prepared by
the Corporation; and
(iii) the draft audited balance sheet of the Corporation as of
June 30, 1998 (the "Recent Balance Sheet") and the related
statements of income and cash flow, prepared by the Corporation's
independent auditors (together, the "Recent Financial Statements").
b) The projections referenced in Section 3.6(a)(i) above were
prepared based upon good faith assumptions and represent the Corporation's
reasonable estimate of future results based upon information available as of the
date of such projections.
c) To the Corporation's best knowledge, (i) the Recent Financial
Statements (together with any notes and schedules thereto) are true, correct and
complete, (ii) are in accordance with the books and records of the Corporation,
(iii) fairly present the financial condition of the Corporation as of the dates
indicated and the results of operations and cash flow of the Corporation for the
periods indicated and (iv) have been prepared in accordance with generally
accepted accounting principles consistently applied.
3.7. Absence of Undisclosed Liabilities.
Except as disclosed in the Recent Financial Statements, as listed on
Schedule 3.7 hereof, or for liabilities incurred in the ordinary course and in
amounts not greater than incurred for a comparable period in the prior fiscal
year, as of the date of this Agreement, to the Corporation's best knowledge, (a)
the Corporation has no liability of any nature (matured or unmatured, fixed or
contingent) which was not
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provided for or disclosed on the Recent Balance Sheet, (b) all liability
reserves, if any, established by the Corporation were adequate in all respects
and were established by the Corporation in accordance with generally accepted
accounting principles consistently applied, and (c) there are no loss
contingencies (as such term is used in "Statement of Financial Accounting
Standards No. 5" issued by the Financial Accounting Standards Board in March
1975) which were not adequately disclosed in the Recent Financial Statements as
required by said Statement No. 5. There were no loss contingencies (as such term
is used in Statement of Financial Accounting Standards No. 5 issued by the
Financial Accounting Standards Board in March 1975) which were not adequately
provided for on the Recent Balance Sheet.
3.8. Absence of Certain Changes.
Except as listed on Schedule 3.8 and, with respect to the
capitalization, as listed on Schedule 3.4, since June 30, 1998, there has not
been:
a) any material adverse change in the financial condition, results
of operations, assets, liabilities, business or prospects of the Corporation or
any occurrence or circumstance or combination thereof which could reasonably be
expected to result in any such material adverse change;
b) any funds borrowed or any obligations or liabilities (absolute or
contingent) incurred by the Corporation, except as incurred in the ordinary
course of business consistent with past practices, or any endorsement,
assumption or guaranty of payment or collection of any obligation of any other
person or entity;
c) any discharge or satisfaction by the Corporation of any lien or
encumbrance or payment of any obligation or liability (absolute or contingent)
other than current liabilities reflected in the Recent Financial Statements;
d) any agreement or arrangement entered into by the Corporation
granting preferential rights to purchase any of the assets, properties or rights
of the Corporation (including management and control thereof), or requiring the
consent of any party to a transfer or assignment of such assets, properties or
rights (or change in the management or control thereof), or providing for the
merger or consolidation of the Corporation with or into another corporation,
association or business entity;
e) any amendment or termination of any material contract, agreement
or license to which the Corporation is a party, except in the ordinary course of
business consistent with past practices;
f) any transaction entered into by the Corporation other than in the
ordinary course of business consistent with past practices;
g) any material asset or property of the Corporation made subject to
a lien of any kind;
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h) any waiver of any valuable right of the Corporation, or, except
in the ordinary course of business consistent with past practices, the
cancellation of any debt or claim held by the Corporation;
i) any declaration, setting aside or payment of dividends on, or
other distribution with respect to, or any direct or indirect redemption or
acquisition of, any shares of the capital stock of the Corporation, or any
agreement or commitment therefor;
j) any mortgage, pledge, sale, assignment or transfer of any
tangible or intangible assets of the Corporation except in the ordinary course
of business consistent with past practices;
k) any loan by the Corporation to, or any loan to the Corporation
from, any officer, director, employee or shareholder of the Corporation, or any
agreement or commitment therefor, except advances in the ordinary course of
business for reasonable travel and entertainment expenses in customary amounts;
l) any damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting the assets, property or business
of the Corporation;
m) any change in the accounting methods or practices followed by the
Corporation; or
n) any agreement entered into to do any of the foregoing described
in clauses (a) through (m) above.
3.9. Tax Matters.
Except as provided on Schedule 3.9 hereof, the Corporation has filed
all federal, state, county, and local tax returns and tax reports required to be
filed with the appropriate governmental agencies in all jurisdictions in which
such returns and reports are required to be filed and all of the foregoing are
true, correct and complete. All Taxes required to have been paid or accrued by
the Corporation have been fully paid or are adequately provided for on the
Recent Balance Sheet. No issues have been raised (and are currently pending) by
the IRS or any other taxing authority concerning the Corporation's liability for
Taxes, and no waivers of statutes of limitations have been given or requested
with respect to the Corporation. There is no tax lien of any kind outstanding
against the assets, property, or business of the Corporation. All deficiencies
asserted or assessments (including interest and penalties) made as a result of
any examination by the IRS or by appropriate state or departmental tax
authorities of the federal, state or local income tax, sales tax or franchise
tax returns of or with respect to the Corporation have been fully paid or are
adequately provided for on the Recent Balance Sheet and no proposed (but
unassessed) additional taxes, interest or penalties have been asserted. The
provisions for taxes in the Recent Balance Sheet are sufficient for the payment
of all accrued and unpaid federal, state or local and foreign
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taxes as of such date. The Corporation has not (i) elected to be treated as a
collapsible corporation pursuant to Section 341(f) of the Code, nor (ii) made
any other elections pursuant to the Code that would have an adverse effect on
the Corporation, its financial condition, its business as presently conducted or
presently proposed to be conducted or any of its properties or assets. The
Corporation has not made any material payments, is not obligated to make any
material payments and is not a party to any agreement that under certain
circumstances could obligate it to make any material payments that would be
treated as a "golden parachute" payment under the Code. The Corporation is not a
party to any tax allocation or sharing agreement. The Corporation has not (i)
been a member of an affiliated group filing a consolidated federal income tax
return, and (ii) had liability for the Taxes of any entity under Treasury
Regulation ss. 1.502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise.
3.10. Title; Encumbrances; Burdensome Restrictions.
The Corporation does not own and has never owned any real property.
The items of personal property of the Corporation reflected on the Recent
Financial Statements are in good operating condition and repair, reasonable wear
and tear excepted, are suitable for the purposes for which they are presently
used or then used in the conduct of its business, are structurally sound and
free from patent defects and there is no material expenditure presently required
in order to maintain such condition and state of repair or replace any tangible
personal property. Except as set forth on Schedule 3.10 attached hereto, and,
with respect to certain leasehold interests and licenses for the use of assets,
as set forth in the Recent Financial Statements, the Corporation owns good and
valid title (or leasehold title, as the case may be) to all property and assets,
real, personal or fixed, tangible or intangible, used by it in its operations as
presently conducted or as proposed to be conducted, subject to no mortgages,
liens, security interests, pledges, charges or other encumbrances of any kind.
The Corporation is not obligated under any contract or agreement or subject to
any charter or other corporate restriction which adversely affects its business,
properties, assets, prospects or condition (financial or otherwise). The
Corporation is not in violation of any zoning, building or safety ordinance,
regulation or requirement or other law or regulation applicable to the operation
of its owned properties. The Corporation, in its capacity as lessee, is not in
violation of any zoning, building or safety ordinance, regulation or requirement
or other law or regulation applicable to the operation of its leased properties.
The Corporation has not received any notice of violation with which it has not
complied.
3.11. Intellectual Property Rights.
a) A complete list of the Intellectual Property Rights of the
Corporation is set forth on Schedule 3.11 to this Agreement. Except as set forth
on Schedule 3.11 attached hereto, there are no Intellectual Property Rights
necessary or required to enable the Corporation to carry on its respective
business as now conducted and as presently proposed to be conducted. No third
party has any ownership right, title, interest, claim in
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or lien on any of the Intellectual Property Rights of the Corporation and there
are no restrictions on the Corporation's use or right to use the Intellectual
Property Rights. The Corporation has not granted or assigned to any other person
or entity any right to make, have made, assemble or sell the products or
proposed products or to provide the services or proposed services of the
Corporation. To the best knowledge of the Corporation, no other Person is using
or infringing upon the Corporation's Intellectual Property Rights.
b) Except as set forth on Schedule 3.11, the Corporation has not
violated or infringed, is not currently violating or infringing, and has not
received any communications alleging that it (or any of its employees or
consultants) has violated or infringed or, by conducting its business as
presently conducted or proposed to be conducted, would violate or infringe, the
Intellectual Property Rights of any other person or entity. No third party has
claimed or has reason to claim that any Designated Person has (a) violated or
may be violating any of the terms or conditions of his employment,
non-competition or non-disclosure agreement with such third party, (b) disclosed
or may be disclosing or utilized or may be utilizing any trade secret or
proprietary information or documentation of such third party or (c) interfered
or may be interfering in the employment relationship between such third party
and any of its present or former employees. No third party has requested
information from the Corporation which suggests that such a claim might be
contemplated. No Designated Person has employed or proposes to employ any trade
secret or any information or documentation proprietary to any former employer,
and no Designated Person has violated any confidential relationship which such
Designated Person may have had with any third party, in connection with the
development, manufacture or sale of any product or proposed product or the
development or sale of any service or proposed service of the Corporation, and
the Corporation has no reason to believe there will be any such employment or
violation. None of the execution or delivery of this Agreement, or the carrying
on of the business of the Corporation as officers, employees or agents by any
Designated Person, or the conduct or proposed conduct of the business of the
Corporation, will conflict with or result in a breach of the terms, conditions
or provisions of or constitute a default under any contract, covenant or
instrument under which any such Designated Person is obligated or under any
judgment, decree or order of any court or administrative agency to which such
Designated Person is subject.
3.12. Litigation.
Except as set forth on Schedule 3.12 hereof, there is no Action
pending (or, to the best knowledge of the Corporation, currently threatened)
against the Corporation, or its existing or proposed business or activities,
properties or assets or, to the best knowledge of the Corporation, against any
Designated Person in connection with such Designated Person's relationship with,
or actions taken on behalf of, the Corporation. There is no factual or legal
basis for any such Action that might result, individually or in the aggregate,
in any material adverse change in the business, properties or financial
condition of the Corporation. The Corporation is not a party to or subject to
the provisions of any order, writ, injunction, judgment or decree of any
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court or governmental agency or instrumentality and there is no Action by the
Corporation currently pending or which the Corporation intends to initiate.
3.13. No Defaults.
The Corporation is not in default under its Certificate of
Incorporation or bylaws. The Corporation is not in default: (a) under any note,
indenture, mortgage, other instrument evidencing indebtedness, lease, purchase
or sales order, or any other material contract, agreement or instrument to which
it is a party or by which it or any of its property is bound or affected or (b)
with respect to any order, writ, injunction, judgment or decree of any court or
any federal, state, municipal or other domestic or foreign governmental
department, commission, board, bureau, agency or instrumentality. To the best
knowledge of the Corporation, there exists no condition, event or act which
constitutes, or which after notice, lapse of time or both, would constitute, a
default under any of the foregoing.
3.14. Labor Agreements and Actions.
The Corporation is not bound by or subject to any contract,
commitment or arrangement with any labor union, and no labor union has
requested, sought or attempted to represent any employees, representatives or
agents of the Corporation. There is no strike or other labor dispute involving
the Corporation pending nor, to the best knowledge of the Corporation,
threatened, nor is the Corporation aware of any labor organization activity
involving its employees.
3.15. Compliance.
Except as set forth on Schedule 3.15 hereof, the Corporation (a) has
complied in all material respects with all federal, state, local and foreign
laws, ordinances, regulations and orders applicable to its businesses or the
ownership of its assets, and the Corporation has not received notice of any
claimed default with respect to such laws, ordinances, rules and regulations;
and (b) has or has applied for all federal, state, local and foreign
governmental licenses and permits necessary or required to enable it to carry on
its business as now conducted and as proposed to be conducted. To the
Corporation's best knowledge, such licenses and permits, if issued, are in full
force and effect, no violations have been recorded in respect of any such
licenses or permits, and no proceeding is pending or, to the best knowledge of
the Corporation, threatened to revoke or limit any thereof. None of the
aforesaid licenses and permits shall be affected in any material adverse respect
by any Operative Document.
3.16. Insurance.
To the Corporation's best knowledge, all policies of commercial
general liability, professional liability, theft, fidelity, life, fire, product
liability, worker's compensation, health, excess liability and other forms of
insurance held by the
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Corporation are valid and enforceable policies and are outstanding and duly in
force and all premiums with respect thereto are paid to date. The amounts of
coverage under such policies of insurance for the assets and property of the
Corporation are (a) adequate against risks usually insured against by Persons
operating similar businesses and operating similar properties and (b) in
compliance in all respects with all federal, state, local and foreign laws,
ordinances, regulations and orders applicable to its business that govern such
amounts. There is no default with respect to any provision contained in any
insurance policy, nor has there been any failure to give any notice or present
any claim under any insurance policy in a timely fashion or in the manner or
detail required by the policy. There are no outstanding claims under any
insurance policy. No insurance policy provides for retrospective or retroactive
premium adjustments. No notice of cancellation or non-renewal with respect to,
or disallowance of any claim under, any insurance policy has been received by
the Corporation. The Corporation has not been refused any insurance, nor has its
coverage been limited by any insurance carrier to which it has applied for
insurance or with which it has carried insurance during the last five years.
3.17. Conflicts.
The execution and delivery of the Operative Documents by the
Corporation, the consummation of the transactions contemplated hereby and
thereby and compliance with the provisions hereof and thereof by the Corporation
and the issuance, sale and delivery of Preferred Stock by the Corporation, will
not (i) violate any provision of law, statute, rule or regulation, or any
ruling, writ, injunction, order, judgment or decree of any court, administrative
agency or other governmental body applicable to the Corporation or (ii) conflict
with or result in any breach of any of the terms, conditions or provisions of,
or constitute (wht due notice or lapse of time, or both) a default (or give rise
to any right of termination, cancellation or acceleration) under, the
Certificate of Incorporation or bylaws, or under any notice, indenture,
mortgage, lease, purchase or sales order or other material contract, agreement
or instrument to which the Corporation is a party or by which it or any of its
property is bound or affected, or (iii) result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
the Corporation.
3.18. Accounts; Related Transactions.
All accounts and notes receivable of the Corporation as of June 30,
1998 and all accounts and notes receivable arising between such date and the
Closing Date are and will be valid and subsisting and represent and will
represent accounts actually accrued in the ordinary course of business
consistent with past practices. There have been no accounts receivable of the
Corporation converted to notes receivable or otherwise extended.b) Except as set
forth on Schedule 3.18 hereof, no current or former stockholder, director,
officer or employee of the Corporation nor any relative or "associate" (as
defined in the rules and regulations promulgated under the Exchange Act) of any
such Person, is presently, directly or indirectly through his or its affiliation
with any other person or entity, a party to any transaction with the Corporation
providing for
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the furnishing of services (other than employment of such individuals by the
Corporation) by or to, or the sale of products by or to, or rental of real or
personal property from or to, or otherwise requiring cash payments to or by, any
such Person in excess of an aggregate of $1,000.00. For purposes of this
Agreement, a transaction of the type described in this Section 3.18 is sometimes
herein referred to as a "Related Transaction".
3.19. Securities Law Compliance.
The Corporation has not offered any Common Stock, or any security or
securities similar to the Common Stock or the Preferred Stock, for sale to, or
solicited any offers to buy any of the foregoing from, or otherwise approached
or negotiated in respect thereof, with any Person or Persons other than a
limited number of institutional or other sophisticated investors deemed to be
"accredited investors" as such term is defined in Rule 501(a) of Regulation D
adopted under the Securities Act and no more than thirty five unaccredited
investors, and in accordance with, the Securities Act.
3.20. No Consent or Approval Required.
Except as set forth on Schedule 3.20 and for the filing of any
notice subsequent to the Closing that may be required under applicable federal
securities laws (which, if required, shall be filed on a timely basis as may be
so required), no permit, consent, approval or authorization of, or declaration
to, or filing with, any Person (governmental or private) is required for the
valid authorization, execution, delivery and performance by the Corporation of
the Operative Documents or for the valid authorization, designation, issuance,
sale and delivery of the Preferred Stock, or the carrying out by the Corporation
of the transactions contemplated hereby.
3.21. Agreements.
a) Except as listed on Schedule 3.21, (x) the Corporation is not a
party to any written or oral contract not made in the ordinary course of
business and (y) whether or not made in the ordinary course of business, the
Corporation is not a party to any written or oral:
(i) contract with any labor union;
(ii) contract for the future purchase of fixed assets or for the
future purchase of materials, supplies or equipment in excess
of normal operating requirements;
(iii) contract for the employment of any officer, individual
employee or other person on a full-time basis or any contract
with any person on a consulting basis;
(iv) bonus, pension, profit-sharing, retirement, stock purchase,
stock option, hospitalization, medical insurance or similar
plan, contract or
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understanding in effect with respect to employees or any of
them or the employees of others;
(v) agreement or indenture relating to the borrowing of money or
to the mortgaging, pledging or otherwise placing of a lien on
any assets of the Corporation;
(vi) guaranty of any obligation for borrowed money or otherwise;
(vii) lease or agreement under which the Corporation is lessee of or
holds or operates any property, real or personal, owned by any
other party;
(viii) lease or agreement under which the Corporation is lessor of
or permits any third party to hold or operate any property,
real or personal, owned or controlled by the Corporation;
(ix) agreement or other commitment for capital expenditures in
excess of $10,000.00;
(x) distributor, dealer, manufacturer's representative or sales
agency agreement which is not terminable on less than ninety
(90) days' notice without cost or other liability to the
Corporation (except for agreements which, in the aggregate,
are not material to the business of the Corporation);
(xi) contract, agreement or commitment under which the Corporation
is obligated to pay any broker's fees, finder's fees or any
such similar fees, to any third party;
(xii) contract, agreement or commitment under which the Corporation
has issued, or may become obligated to issue, any shares of
capital stock of the Corporation, or any warrants, options,
convertible securities or other commitments pursuant to which
the Corporation is or may become obligated to issue any shares
of its capital stock;
(xiii) contract, agreement or commitment under which the Corporation
is obligated to repurchase or otherwise acquire or retire any
shares of its capital stock;
(xiv) contract, agreement or commitment with officers, directors,
employees or shareholder of the Corporation or persons or
entities related to or affiliated with any such persons;
(xv) contract, agreement or commitment relating to product
development;
(xvi) agreements which limit the freedom of the Corporation or its
employees, officers or directors to engage in any area of
business or to compete with any other person or entity; or
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(xvii) any other contract, agreement, arrangement or understanding
which is material to the operation of the business of the
Corporation.
The Corporation has furnished to counsel to the Purchasers true and correct
copies of all such written agreements and other documents.
b) Except as contemplated by the Operative Documents, no Person has
any right to cause the Corporation to effect the registration under the
Securities Act of any shares of Common Stock, Preferred Stock or any other
securities (including without limitation, debt securities) of the Corporation.
c) Except as set forth in Schedule 3.21, the execution, delivery and
performance by the Corporation of the Operative Documents and the offering,
issuance and sale of the Preferred Stock, the Warrants and the Common Stock
issuable upon conversion of the Preferred Stock and upon the exercise of the
Warrants does not and will not conflict with or result in any violation of,
breach of or default under any purchase order issued by the Corporation for an
amount equal to or in excess of $5,000 or any other contract, obligation or
commitment of the Corporation, or any charter provision, bylaw or corporate
restriction of the Corporation, or result in the creation of any lien, charge,
security interest or encumbrance of any nature upon any of the properties or
assets of the Corporation or violate any instrument, agreement, judgment,
decree, order, statute, rule or governmental regulation applicable to the
Corporation or to which the Corporation is a party or by which it or any of its
properties are bound.
3.22. Brokers.
Except as set forth on Schedule 3.22, neither the Corporation, nor
any of its officers, directors, employees or stockholders have employed any
broker or finder in connection with the transactions contemplated by this
Agreement.
3.23. Employee Benefit Plans; Employees.
a) Except as set forth on Schedule 3.23, the Corporation has no
employee benefit plans, pension, retirement, deferred compensation, profit
sharing, bonus, incentive, stock option, severance, health, life, disability,
group insurance or other plans, programs or arrangements.
b) No employee of the Corporation will become entitled to any bonus,
retirement, severance or similar benefit or enhanced benefit solely as a result
of the transactions contemplated hereby.
c) The Corporation is not aware that any officer, director,
executive or management employee of or consultant to the Corporation has any
plans to terminate his relationship with the Corporation. Except as set forth in
Schedule 3.23, the Corporation is in compliance with and has been in compliance
with all applicable laws relating to the employment of labor, including without
limitation, provisions relating to wages, laws, equal opportunity, collective
bargaining and the payment of social security and other
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taxes. Except as set forth on Schedule 3.23, all employees of the Corporation
are engaged on a full-time basis.
3.24. Investment Company Act.
The Corporation is not an "investment company" as that term is
defined in, and is not otherwise subject to regulation under, the Investment
Company Act of 1940, as amended.
3.25. Small Business Concern.
The Company represents and warrants to the SBICs that the Company,
taken together with its "affiliates" (as that term is defined in 13 C.F.R.
ss.121.103), is a "Small Business Concern" within the meaning of 15 U.S.C.
ss.662(5), that is Section 103(5) of the Small Business Investment Act of 1958,
as amended (the "Act"), and the regulations thereunder, including 13 C.F.R.
ss.107, and meets the applicable size eligibility criteria set forth in 13
C.F.R. ss.121.301(c)(1) or the industry standard covering the industry in which
the Company is primarily engaged as set forth in 13 C.F.R. ss.121.301(c)(2).
Neither the Company nor any of its subsidiaries presently engages in any
activities for which a small business investment company is prohibited from
providing funds by the SBIC Act, including 13 C.F.R. ss.107.
3.26. Real Property Holding Corporation.
The Corporation is not a real property holding corporation within
the meaning of Code Section 897(c)(2) and any regulations promulgated
thereunder.
3.27. Disclosure.
To the Corporation's best knowledge, neither this Agreement nor any
other written document, certificate, instrument or statement furnished or made
to the Purchasers by or on behalf of the Corporation in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein and therein not misleading. There is no fact known to the
Corporation which materially adversely affects the business, properties or
financial condition of the Corporation which has not been set forth in this
Agreement or in the other documents, certificates, instruments or statements
furnished to the Purchasers by or on behalf of the Corporation.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS.
Each of the Purchasers, severally and not jointly, represents,
warrants and covenants to the Corporation that:
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a) the execution, delivery and performance of this Agreement, the
Registration Rights Agreement and the Shareholders' Agreement have been duly
authorized by all requisite action by the Purchasers and each constitutes the
valid and binding obligation of the Purchasers, enforceable in accordance with
its terms;
b) it is acquiring the Preferred Stock and Warrants for its own
account, for investment and not with a view to the distribution thereof within
the meaning of the Securities Act;
c) it understands that the Preferred Stock and Warrants have not
been, and will not be, registered under the Securities Act, in each case by
reason of its issuance by the Corporation in a transaction exempt from the
registration requirements of the Securities Act; and that the Preferred Stock
and Warrants must be held by it indefinitely unless a subsequent disposition
thereof is registered under the Securities Act or is exempt from registration;
d) it understands that the exemption from registration afforded by
Rule 144 (the provisions of which are known to it) promulgated under the
Securities Act depends on the satisfaction of various conditions, and that, if
and when applicable, Rule 144 may only afford the basis for sales in limited
amounts;
e) it will not transfer the Preferred Stock or Warrants except in
compliance with the Shareholders' Agreement, the Registration Rights Agreement
and applicable law;
f) it has not employed any broker or finder in connection with the
transactions contemplated by this Agreement; and
g) (i) it is an "accredited investor" as defined in Rule 501(a)
promulgated under the Securities Act, and by reason of its business and
financial experience, and the business and financial experience of those persons
retained by it to advise it with respect to its investment in the Preferred
Stock, has such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and risks of the
prospective investment, is able to bear the economic risk of such investment
and, at the present time, is able to afford a complete loss of such investment
and (ii) it is familiar with the business of the Corporation and has had the
opportunity to ask questions of the officers and directors of the Corporation
and to obtain such information about the financial condition of the Corporation
as it has requested.
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SECTION 5. CONDITIONS TO AND DELIVERIES AT CLOSING.
The obligations of each of the Purchasers hereunder are subject to
the satisfaction of the following conditions at or before the Closing; provided,
however, that each of the following conditions may be waived in writing, in
advance, by the approval of each of the Purchasers:
5.1. Preferred Stock.
The Purchasers shall have received the Preferred Stock to be issued
in connection with such Closing which shall have been duly authorized, issued
and executed by the Corporation. The gross proceeds to the Corporation from the
sale of the Preferred Stock and Warrants shall be no less than $3,999,990.
5.2. Accuracy of Representations and Warranties.
To the Corporation's best knowledge, each representation and
warranty contained in Section 3 and in the Operative Documents shall be true on
and as of such Closing Date with the same effect as though such representation
and warranty had been made on and as of that date.
5.3. Performance.
The Corporation shall have performed and complied with all
agreements and conditions contained in this Agreement and in the Operative
Documents required to be performed or complied with by the Corporation prior to
or at the Closing.
5.4. Corporate Proceedings; Consents, Etc.
All corporate and other proceedings to be taken and all waivers and
consents to be obtained in connection with the transactions contemplated by the
Operative Documents shall have been taken or obtained and all documents incident
thereto shall be satisfactory in form and substance to each of the Purchasers
and to their counsel and each of the Purchasers shall have received all such
originals or certified or other copies of such documents it may reasonably have
requested.
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5.5. Certificate of Secretary.
The Purchasers shall have received a certificate of the Secretary of
the Corporation, dated the date of the Closing, to the effect that (i) attached
thereto is a true and complete copy of the Certificate of Incorporation and the
bylaws of the Corporation (as amended through such date) as in effect on the
date thereof, (ii) the Certificate of Incorporation and the bylaws are
sufficient in form and substance to permit the transactions contemplated in the
Operative Documents, (iii) attached thereto is a true and complete copy of
resolutions adopted by the Board of Directors authorizing the execution,
delivery and performance of the Operative Documents, the execution, issuance and
delivery of the Preferred Stock and Warrants, and certifying that such
resolutions are the only resolutions of the Board of Directors with respect to
such matters, (iv) the Corporation is in good standing in reliance on a good
standing certificate from the Secretary of State of the State of Delaware as of
a recent date.
5.6. Shareholders' Agreement and Registration Rights Agreement.
The Shareholders' Agreement and the Registration Rights Agreement
shall have each been executed and delivered by the Corporation and such other
parties named therein. In addition, the Corporation and such parties shall have
complied with all of the terms and conditions of the Shareholders' Agreement,
including without limitation, the placement of legends required to be placed on
securities owned by such parties.
5.7. Adverse Proceedings; No Material Adverse Effect.
No suit, action, or other proceeding seeking to restrain, prevent or
change the transactions contemplated hereby, in the Registration Rights
Agreement or in the Shareholders' Agreement or otherwise questioning the
validity or legality of such transactions shall have been instituted and be
pending. No event, occurrence, fact, condition, change, development or effect
shall have occurred, exist or come to exist since June 30, 1998, that,
individually or in the aggregate, has constituted or resulted in or could
reasonably be expected to constitute or result in, a material adverse effect on
the Corporation other than as may be due to a change in general economic
conditions.
5.8. Small Business Administration Documentation.
On or before the closing of the Investment, the SBIC shall have
received from the Company SBA Form 480 (Size Status Declaration) and SBA Form
652 (Assurance of Compliance ) which have been completed and executed by the
Company, and SBA Form 1031 (Portfolio Finance Report), Parts A and B of which
has been completed by the Company (the "SBA Documents").
20
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5.9. Employment Agreements.
Employment agreements in the forms attached as Exhibit E hereto
shall have been executed and delivered by the Corporation and each of Scott M.
Rifkin, Jeffrey Lefko, Laura Gill and Allan Sanders.
5.10. Absence of Liens.
The Corporation's business and assets shall be free and clear of all
liens, claims, security interests and encumbrances whatsoever except as set
forth on Schedule 3.9.
5.11. Opinion of Counsel.
The Purchasers shall have received an opinion from Rifkin,
Livingston, Levitan & Silver, LLC, counsel for the Corporation, dated the
Closing Date, addressed to the Purchasers, and satisfactory in form and
substance to Purchasers.
5.12. Effectiveness.
The Certificate of Incorporation shall have been made effective by
filing such Certificate of Incorporation with the Secretary of State of the
State of Delaware.
5.13. Approvals.
The Board of Directors of the Corporation shall have each duly
approved this Agreement, the Shareholders' Agreement, the Registration Rights
Agreement, the Certificate of Incorporation, the Warrants and the transactions
contemplated under each of the foregoing, and the Purchasers shall have received
a certificate of an officer of the Corporation certifying the resolutions or the
Board of Directors of the Corporation with respect to such approvals. Any
shareholder approval required in connection with the transaction contemplated
hereby shall have been obtained, and the Purchasers shall have received a
certificate of an officer of the Corporation certifying the resolutions of the
shareholders of the Corporation with respect to such approvals.
5.14. Other Matters.
All business and legal due diligence shall have been satisfactorily
completed by each of the Purchasers and their counsel, as determined in each of
the Purchasers' sole discretion. All corporate, legal, governmental,
administrative and other proceedings in connection with the transactions
contemplated by this Agreement and all documents and instruments incident to
such transactions shall be reasonably satisfactory in substance and form to the
Purchasers, and the Purchasers shall have received all such counterpart
originals or certified or other copies of such documents as it may reasonably
request.
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SECTION 6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS, ETC.
All representations and warranties hereunder shall survive the
Closing for a period of two years and thereafter shall terminate. All statements
contained in any certificate or other instrument delivered by the Corporation or
by an officer on behalf of the Corporation through the date hereof pursuant to
this Agreement, any agreement delivered in connection herewith, or in connection
with the transactions contemplated by this Agreement shall constitute
representations and warranties by the Corporation under this Agreement. All
agreements contained herein shall survive indefinitely until, by their
respective terms, they are no longer operative, and in any event, so long as any
of the shares of Preferred Stock are outstanding.
SECTION 7. ADDITIONAL REMEDIES.
In case any one or more of the representations, warranties,
covenants and/or agreements set forth in this Agreement or any other agreement
executed in connection herewith shall have been breached by the Corporation, and
in case any claim is made against the Corporation by any shareholder that the
securities issued to it by the Corporation were issued in violation of any state
securities or "blue sky" laws, the Corporation agrees to indemnify, defend and
hold the Purchasers harmless from and against all demands, claims, actions or
causes of action, assessments, losses, damages (including, without limitation,
diminution in value), liabilities, costs and expenses (including, without
limitation, interest, penalties, fines, punitive damages and reasonable
attorneys' fees and disbursement), arising out of or resulting from any
misrepresentation or breach of any representation or warranty, or noncompliance
with any conditions or covenants in this Agreement, or in the schedules and
exhibits attached hereto or in any documents furnished by or on behalf of the
Corporation or such violation of state securities or "blue sky" laws.
SECTION 8. EXPENSES.
The Corporation shall bear its own expenses and legal fees with
respect to the transactions contemplated by the Operative Documents and shall
pay, and save the Purchasers harmless against all liability for the payment of:
(a) all costs and other expenses incurred in connection with the preparation of
the Operative Documents and the Corporation's performance of and compliance with
all agreements and conditions contained therein on its part to be performed or
complied with prior to the date hereof, including the fees and disbursements of
one counsel to the Purchasers for services rendered in connection therewith, up
to $50,000, (b) all costs and other expenses
22
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incurred by the Corporation in connection with delivering to the Purchasers the
Preferred Stock, Warrants and the Common Stock upon conversion or exercise
thereof, (c) the fees and disbursements of one counsel to the Purchasers for
services rendered after the date hereof in connection with (i) any amendment or
waiver with respect to any of the terms or conditions of any of the Operative
Documents or (ii) the enforcement of the rights of the Purchasers pursuant to
the terms and conditions of any of the Operative Documents if such enforcement
results from a breach by the Corporation of any of its obligations under any of
the Operative Documents. The Corporation further agrees that it shall pay, and
shall save the Purchasers harmless from any and all liability with respect to,
any stamp, issue or similar taxes which may be determined to be payable in
connection with the execution, delivery, performance and/or issuance, as the
case may be, of the Preferred Stock, the Warrants or the Common Stock upon
conversion or exercise thereof, or any amendment or waiver of the terms or
conditions of any of the Operative Documents. The Corporation shall reimburse
the members of its board of directors, including any members designated by the
holders of the Preferred Stock, for travel and other out-of-pocket expenses
associated with their services as members of the board of directors, and shall
reimburse the Purchasers for any expenses incurred by Purchasers on behalf of
the Corporation.
SECTION 9. ADDITIONAL PROVISIONS.
9.1. Successors and Assigns.
This Agreement shall bind and inure to the benefit of the
Corporation and the Purchasers, and the respective successors, assigns,
transferees, heirs, executors and administrators of the Corporation and the
Purchasers.
9.2. Entire Agreement.
This Agreement (as amended from time to time) and the other writings
referred to herein or delivered pursuant thereto (including all Schedules and
Exhibits hereto) which form a part hereof contain the entire agreement among the
parties with respect to the subject matter hereof and supercede all prior and
contemporaneous arrangements or understandings with respect thereto.
9.3. Notices.
All notices, requests, consents and other communications hereunder
to any party shall be deemed to be sufficient if contained in a written
instrument delivered in person or duly sent by first class registered or
certified mail, return receipt requested, postage prepaid, by
nationally-recognized overnight courier service or by telecopy, receipt
confirmed, addressed to such party at the address set forth below or such other
address as may hereafter be designated in writing by the addressee to the
addressor listing all parties:
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If to the Corporation, to:
America's Doctor, Inc.
11403 Cronridge Drive, Suite 200
Owings Mills, MD 21117
Attention: Scott M. Rifkin, M.D.
With a copy to:
Rifkin, Livingston, Levitan & Silver, LLC
Harbor Court, Suite 200
575 South Charles Street
Baltimore, MD 21201
Attention: Jamie Eisenberg, Esq.
If to the Purchasers, to:
Tullis-Dickerson Capital Focus II, L.P.
One Greenwich Plaza
Greenwich, CT 06830
Attention: Mr. Thomas P. Dickerson
And:
TD Origen Capital Fund, L.P.
One Technology Center
1155 University Blvd., S.E.
Alburquerque, NM 87106
Attention: J. Michael Schafer
And:
Javelin Capital Fund, L.P.
2850 Cahaba Road, Suite 240
Birmingham, AL 35223
Attention: Lyle H. Hohnke
With a copy to:
Law Offices of Gloria M. Skigen
One Greenwich Plaza, Third Floor
Greenwich, CT 06830
Attention: Gloria M. Skigen, Esq.
24
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All such notices, advises and communications shall be deemed to have been
received (a) in the case of personal delivery or overnight courier service, on
the date of such delivery, (b) in the case of telecopy, upon receipt of a
confirmation report, and (c) in the case of mailing, on the third day after the
posting thereof.
9.4. Changes.
The terms and provisions of this Agreement may not be modified or
amended, or any of the provisions hereof waived, temporarily or permanently,
except pursuant to the consent of the Corporation and the Purchasers, or their
permitted transferees.
9.5. Counterparts.
This Agreement may be executed in any number of counterparts, and
each such counterpart hereof shall be deemed to be an original instrument, but
all such counterparts together shall constitute but one agreement.
9.6. Headings.
The headings of the sections of this Agreement have been inserted
for convenience of reference only and shall not be deemed to be a part of this
Agreement.
9.7. Nouns and Pronouns.
Whenever the context may require, any pronouns used herein shall
include the corresponding masculine, feminine or neuter forms, and the similar
form of names and pronouns shall include the plural and vice-versa.
9.8. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Maryland, without regard to conflict of laws.
9.9. Severability.
Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
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9.10. Construction.
The parties acknowledge that each party and its counsel have
reviewed and revised this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on their behalf.
THE CORPORATION:
AMERICA'S DOCTOR, INC.
By: /s/ Scott M. Rifkin
----------------------------------
Name: Scott M. Rifkin
Title: Chief Executive Officer
PURCHASERS:
TULLIS-DICKERSON CAPITAL FOCUS II, L.P.
By: Tullis-Dickerson Partners II, LLC,
its general partner
By: /s/ Thomas P. Dickerson
----------------------------------
Thomas P. Dickerson, Principal
TD ORIGEN CAPITAL FUND, L.P.
By: TD II Regional Partners, Inc.,
its general partner
By: /s/ Thomas P. Dickerson
----------------------------------
Thomas P. Dickerson, Vice President
JAVELIN CAPITAL FUND, L.P.
By: JVP, L.P., its general partner
By: JVP, Inc., its general partner
By: /s/ Thomas P. Dickerson
----------------------------------
Thomas P. Dickerson, Vice President
27
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Schedule A
Purchasers
----------
Series A Preferred Total
Name and Address Shares Purchase Price
- ---------------- ------ --------------
Javelin Capital Fund, L.P.
2850 Cahaba Road, Suite 240
Birmingham, AL 35223 16,667 $ 500,010
TD Origen Capital Fund, L.P.
One Technology Center
1155 University Blvd., S.E
Albuquerque, NM 87106 16,667 $ 500,010
Tullis-Dickerson Capital Focus II, L.P.
One Greenwich Plaza
Greenwich, CT 06830 99,999 $2,999,970
---------- ----------
TOTAL: 133,333 $3,999,990
28
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EXHIBIT 10.16
COMMON STOCK WARRANT
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS BY REASON OF EXEMPTIONS FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE SECURITIES LAWS AND MAY
NOT BE SOLD, PLEDGED, ASSIGNED OR OTHERWISE DISPOSED OF IN ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS OR UNLESS, IN THE OPINION OF COUNSEL TO AMERICASDOCTOR.COM, INC., AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
WARRANT
No.21 Warrant to Purchase a Number of Shares of
Common Stock to be determined as set
forth herein.
AMERICASDOCTOR.COM, INC.
This certifies that, for value received, GE Capital Equity
Investments, Inc., or its registered assigns, is entitled to subscribe for
and purchase, at any time and from time to time during the Effective Period,
a number of shares of duly authorized, validly issued, fully paid and
non-assessable Common Stock, including fractional shares, equal to the Number
of Shares at an exercise price of $0.01 per share, upon the terms and subject
to the conditions hereinafter set forth.
1. Definitions. For the purposes of this Warrant, the following terms have
the following meanings:
"Appraisal Procedure" shall mean a determination of Fair Value per
share of Common Stock (on the basis set forth in the definition of that term and
in Section 9 hereof) by an Appraiser selected by the Corporation and Two Thirds
in Interest of the Holders, which Appraiser shall be directed to independently
determine Fair Value per share of Common Stock as of the Effective Date of a
Triggering Event and to submit its determination in writing to the Corporation
and the Holders at the earliest practicable date, but in any event within 45
days following the selection of such Appraiser, provided that if the Corporation
and Two Thirds in Interest of the Holders are unable to agree upon the selection
of an Appraiser within 30 days, then each of the Corporation and Two Thirds in
Interest of the Holders shall select an Appraiser who shall be directed to
independently determine the Fair Value per share of Common Stock and to submit
its determination in writing to the Corporation and the Holders at the earliest
practicable date, but in any event within 45 days following the selection of
both Appraisers. If the value determined by the Appraiser whose determination is
the higher of the two appraisals does not exceed by more than ten percent (10%)
the average of the values
<PAGE>
determined by each Appraiser, Fair Value per share of Common Stock shall be the
average of the values determined by the two Appraisers. If the value determined
by the Appraiser whose determination is the higher of the two appraisals does
exceed by more than ten percent (10%) the average of the value determined by
each Appraiser, then the two Appraisers shall, within 15 days following
submission to the Corporation and the Holders of the later of such two
appraisals, select a third independent Appraiser who shall be directed to
determine Fair Value per share of Common Stock independently of the other
Appraisers and to submit its determination in writing to the Corporation and the
Holders at the earliest practicable date, but in any event within 15 days of
such Appraiser's selection. The value determined by the Appraiser whose
determination is the most discrepant from the average of the three appraisals
shall be discarded, and Fair Value per share of Common Stock shall equal the
average of the remaining two appraisals, except that if the highest and lowest
appraisals are equally discrepant from the average of the three appraisals, Fair
Value per share of Common Stock shall be such average. Fair Value per share of
Common Stock shall in all cases be determined on the basis set forth in the
definition of that term, and all Appraisers shall be so instructed.
"Appraiser" shall mean an independent appraiser of recognized
national standing.
"Common Stock" shall mean the Corporation's Common Stock, par value
$0.01 per share, and any Stock into which such Common Stock may hereafter be
changed.
"Common Stock Equivalents" shall mean any warrant, option or other
right to subscribe for or purchase any shares of Common Stock or any evidences
of indebtedness, shares of Stock or other securities which are or may be at any
time convertible into or exchangeable for shares of Common Stock.
"Composite Transactions Tape": A security price reporting service
that includes all transactions in a security on each of the exchanges and in the
over-the-counter market.
"Corporation" shall mean America's Doctor, Inc., a Delaware
corporation, and its successors and assigns.
"Counsel" shall mean counsel to the Corporation.
"Effective Date of a Triggering Event" shall mean the following:
(a) with respect to a Triggering Event defined in clause (a) of the
definition of Triggering Event, the closing date of such sale;
(b) with respect to a Triggering Event defined in clause (b) or (c)
of the definition of Triggering Event, the closing date of such sale,
transfer or other disposition; and
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(c) with respect to a Triggering Event defined in clause (d) of the
definition of Triggering Event, the effective date of such merger or
consolidation.
"Effective Period" shall mean the period beginning on the Effective
Date of a Triggering Event and ending on the later of (a) (i) with respect to a
Triggering Event as defined in clause (a) of the definition of a Triggering
Event, on such date which is five years after the Effective Date of a Triggering
Event and (ii) with respect to a Triggering Event as defined in clause (b), (c)
or (d) of the definition of a Triggering Event, on such date which is twelve
months after the Effective Date of a Triggering Event and (b) twelve months
after the final determination of the Number of Shares.
"Exercise Price" shall mean the product of the Warrant Price and
the Number of Shares.
"Fair Market Value" shall mean the amount per share of Common Stock
as determined in good faith by the board of directors of the Corporation based
on an opinion of an independent investment banking firm reasonably acceptable to
the majority in interest of the outstanding Warrants with an established
national reputation as a value of securities.
"Fair Value" per share of Common Stock as of any date shall mean:
(i) with respect to a Triggering Event of the type defined in
clause (a) of the definition of a Triggering Event, if the
registered securities are shares of Common Stock, then the price at
which such shares of Common Stock are offered to the public, and if
the registered securities are not shares of Common Stock, then the
Common Stock price implied by the price at which such securities are
offered to the public;
(ii) with respect to a Triggering Event of the type defined in
clause (b) of the definition of a Triggering Event, an amount equal
to the ratio of:
(1) the difference between:
(x) the sum of (A) the aggregate consideration received in
connection with such sale (including the value of any cash,
securities, tangible assets and intangible assets received and
the value of any liabilities of the Corporation assumed by the
acquiror), (B) the value of any assets retained by the
Corporation after giving effect to such sale, and (C) the
consideration which would be received by the Corporation upon
the exercise, conversion or exchange of all outstanding Common
Stock Equivalents, regardless of whether such Common Stock
Equivalents are then exercisable, convertible or exchangeable,
and
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(y) the value of any liabilities retained by the Corporation
after giving effect to such sale, and
(2) the number of shares of Common Stock outstanding determined on a
Fully Diluted Basis as of the Effective Date of a Triggering Event
(excluding all classes of preferred stock of the Corporation which
were not converted to Common Stock in connection with such sale);
(iii) with respect to a Triggering Event of the type defined
in clause (c) of the definition of a Triggering Event, the purchase
price per share of Common Stock received in such sale; and
(iv) with respect to a Triggering Event of the type defined in
clause (d) of the definition of a Triggering Event, the
consideration per share of Common Stock received in such merger or
consolidation.
The "Fair Value" of a number of shares of Common Stock as of any date shall mean
the product of (a) Fair Value per share of Common Stock as of such date and (b)
such number of shares of Common Stock. The "Fair Value" shall be determined by
either (i) the mutual agreement of the Corporation and Two Thirds in Interest of
the Holders within thirty days of receipt of written notice from the
Corporation, pursuant to Section 2.1 hereof, of the anticipated occurrence of a
Triggering Event; or (ii) if the Holders and the Corporation are unable to agree
within thirty days of the date of receipt of written notice from the Corporation
pursuant to Section 2.1 hereof, at the election of either party, pursuant to the
Appraisal Procedure.
"Fully Diluted Basis" shall mean on a basis whereby the aggregate
number of shares for such determination includes (i) all shares of such Common
Stock then issued and outstanding; and (ii) all shares of Common Stock which
would be outstanding upon the exercise, conversion or exchange of all
outstanding Common Stock Equivalents, which Common Stock Equivalents are then
exercisable, convertible or exchangeable.
"Holder" shall mean the Person or Persons who shall from time to
time own of record this Warrant.
"Holders" shall mean the Persons who shall from time to time own of
record all the outstanding Warrants, including this Warrant.
"Investment Date" shall mean, with respect to any shares of Series B
Preferred Stock, the date upon which such shares of Series B Preferred Stock
were issued.
"Number of Shares" shall mean, with respect to any Holder, the
number of shares of Common Stock that, when taken together with the Value of the
Original Series B Equity Stake of such Holder as of the Effective Date of the
Triggering Event and all dividends
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or other distributions received by such Holder (or its predecessor-in-interest)
with respect to the Series B Preferred Stock, would have a Fair Value as of such
date equal to an amount that implies achievement of a 15% annual pre-tax
internal rate of return (determined on a pro rata basis for any partial year and
on a monthly compounding basis) on the aggregate amount paid by such Holder (or
its predecessor-in-interest) for Series B Preferred Stock shares and for this
Warrant from the Investment Date, calculated in accordance with generally
accepted financial principles; provided, however, that if the Number of Shares
determined as provided above is zero or less than zero, then the Number of
Shares shall be zero and this Warrant shall immediately terminate.
"Person" shall mean an individual, a corporation, a partnership, a
trust, an unincorporated organization or a government organization or an agency
or political subdivision thereof.
"Securities Act" shall mean as of any date the Securities Act of
1933, as amended, or any similar Federal statute then in effect.
"Securities Purchase Agreement" shall mean the Securities Purchase
Agreement dated as of June 1, 1999, among the Corporation and the Purchasers
named therein, as it may be amended from time to time.
"Series A Preferred Stock" shall mean the Corporation's Series A
Convertible Preferred Stock, par value $0.01 per share.
"Series B Preferred Stock" shall mean the Corporation's Series B
Redeemable Convertible Preferred Stock, par value $0.01 per share.
"Stock" shall include any and all shares, interests or other
equivalents (however designated) of, or participations in, the capital stock of
the Corporation of any class.
"Triggering Event" means the first to occur of the following
events:
(a) Any sale by the Corporation of shares of Common Stock or Common
Stock Equivalents pursuant to a registration statement filed by the
Corporation under the Securities Act (other than a registration statement
filed on Form S-4 or Form S-8), which filing shall have been declared
effective by the Securities and Exchange Commission, at a before-the-money
market capitalization of not less than $75,000,000 and in which the gross
proceeds received by the Corporation for such securities equals or exceeds
$15,000,000.
(b) Any sale, transfer or other disposition of all or substantially
all of the assets of the Corporation, other than (i) sales or other
transfers to affiliates or partners of the Holder and (ii) sales or other
transfers to wholly owned affiliates of the Corporation, provided that
such affiliate assumes all of the Corporation's obligations hereunder.
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(c) Any sale, transfer or other disposition of more than 80% of the
outstanding Common Stock of the Corporation determined on a Fully Diluted
Basis, other than (i) sales or other transfers to affiliates or partners
of the Holder and (ii) sales or other transfers to wholly owned affiliates
of the Corporation, provided that such affiliate assumes all of the
Corporation's obligations hereunder.
(d) Any merger or consolidation involving the Corporation
immediately following the effective date of which a majority of the board
of directors of the corporation surviving such merger or consolidation are
not members of the board of directors immediately prior to such merger or
consolidation.
"Two Thirds in Interest of the Holders" means Holders of (i)
Warrants representing at least two-thirds of the number of shares of Common
Stock then issuable upon exercise of the Warrants or (ii) two-thirds of the
number of shares of Series B Preferred Stock then outstanding.
"Value of the Original Series B Equity Stake," as of any date with
respect to any Holder, shall mean the greater of:
(a) the Fair Value of the number of shares of Common Stock issuable
upon the conversion of the issued shares of Series B Preferred Stock
originally issued to the Holder (or its predecessor-in-interest); and
(b) the lesser of:
(i) the liquidation value as of such date of the shares of
Series B Preferred Stock originally issued to the Holder (or its
predecessor-in-interest); and
(ii) the stockholders equity of the Corporation as of the end
of the most recent fiscal quarter of the Corporation, as reflected
on the balance sheet of the Corporation, determined in accordance
with generally accepted accounting principles; provided, however,
that if the stockholders equity of the Corporation as reflected on
such balance sheet is zero or less than zero, then the number
calculated pursuant to this clause (b) shall be zero.
"Warrant" shall mean this Warrant.
"Warrant Price" shall mean $0.01 per share of Common Stock.
"Warrants" shall mean this Warrant and all other Warrants issued by
the Corporation pursuant to the Securities Purchase Agreement.
2. Determination of "Number of Shares".
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<PAGE>
2.1. Thirty days prior to the anticipated occurrence of a
Triggering Event, the Corporation shall deliver notice to the Holder that a
Triggering Event is expected to occur and providing a description in reasonable
detail of the Triggering Event and the anticipated Effective Date of such
Triggering Event.
2.2. Within thirty days of receipt by the Holder of written
notice from the Corporation pursuant to Section 2.1 hereof, the Corporation and
the Two Thirds in Interest of Holders shall attempt to agree on the Number of
Shares for the Holders and, if they so agree, the number so agreed shall be the
Number of Shares. If, within thirty days of receipt by the Holders of the notice
from the Corporation referred to in Section 2.1, the Corporation and Two Thirds
in Interest of the Holders have been unable to so agree, either party may invoke
the Appraisal Procedure described in Section 9 hereof, in which event such
Appraiser or Appraisers shall be instructed to determine the Number of Shares,
which shall then be binding on the Corporation and the Holder.
3. Duration. The right to exercise this Warrant to subscribe for and
purchase shares of Common Stock represented hereby shall commence on the
Effective Date of a Triggering Event and shall expire at 5:00 P.M., Eastern
Time, on the last day of the Effective Period.
4. Method of Exercise; Payment; Issuance of New Warrant; Transfer
and Exchange.
4.1. The purchase right represented by this Warrant may be
exercised any time during the Effective Period. If this Warrant is exercised on
the Effective Date of a Triggering Event, such exercise shall be deemed to occur
prior to the occurrence of the Triggering Event, except for purposes of
determining the Fair Value per share of Common Stock, the Number of Shares and
determining the number of shares outstanding on a Fully Diluted Basis hereunder.
4.2. The Holder hereof may exercise this Warrant, in whole or
in part, by delivery to the Corporation at its office at 11403 Cronridge Drive,
Suite 200, Owings Mills, Maryland, 21117, Attention: Chief Executive Officer (or
such other address as the Corporation may specify to Holder from time to time),
of (a) a written notice of Holder's election to exercise this Warrant, which
notice shall specify the number of shares of Common Stock to be purchased, (b)
payment of the Exercise Price in the manner provided below and (c) this Warrant.
Such notice shall be substantially in the form of the subscription form
appearing at the end of this Warrant as Exhibit A, duly executed by Holder or
its agent or attorney. Payment of the Exercise Price shall be made at the option
of Holder by (i) wire transfer to an account in a bank located in the United
States designated for such purpose by the Corporation, (ii) certified or
official bank check, (iii) cancellation of indebtedness of the Corporation to
Holder at the time of exercise, (iv) cancellation as of the date of exercise of
a portion of this Warrant (calculated as the net fair market value of such
cancelled portion at the time of
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<PAGE>
exercise) or (v) any combination of the foregoing. The net fair market value of
any portion of this Warrant cancelled in full or partial payment of the Exercise
Price shall be determined by (A) multiplying (i) the number of shares of Common
Stock for which the portion of this Warrant to be cancelled was exercisable by
(ii) the Fair Value of a share of Common Stock as of the date of cancellation
and (B) subtracting from such product the aggregate Exercise Price of the shares
of Common Stock for which the portion of this Warrant to be cancelled was
exercisable. In the event of any exercise of the rights represented by this
Warrant, (x) certificates for the shares of Common Stock so purchased shall be
dated the date of such exercise and delivered to the Holder hereof within a
reasonable time, not exceeding 15 days after such exercise, and the Holder
hereof shall be deemed for all purposes to be the Holder of the shares of Common
Stock so purchased as of the date of such exercise, and (y) unless this Warrant
has expired pursuant to Section 3 hereof, a new Warrant representing the number
of shares, if any, with respect to which this Warrant shall not then have been
exercised shall also be issued to the Holder hereof within such time. Any such
warrant shall be dated the date hereof and shall represent the right to purchase
the remaining number of shares of Common Stock issuable pursuant thereto. By
exercising this Warrant, the Holder represents and warrants as of the date of
exercise with respect to the matters set forth in Section 4 of the Securities
Purchase Agreement.
4.3. Subject to compliance with Section 7 hereof, this Warrant
may be transferred on the books of the Corporation by the Holder hereof in
person or by duly authorized attorney, upon surrender of this Warrant at the
principal office of the Corporation, properly endorsed and upon payment of any
necessary transfer tax or other governmental charge imposed upon such transfer.
Subject to compliance with Section 7 hereof, this Warrant is exchangeable at the
aforesaid principal office of the Corporation for two or more warrants for the
purchase of the same aggregate number of shares of Common Stock, each new
warrant to represent the right to purchase such number of shares of Common Stock
as the Holder hereof shall designate at the time of such exchange. If this
Warrant is transferred or exchanged for two or more Warrants prior to the
Effective Date of a Triggering Event, the Number of Shares issuable under each
such warrant shall be a percentage of the Number of Shares issuable hereunder
which, together with all other warrants issued in the transfer or exchange of
this Warrant, shall aggregate 100% of the Number of Shares hereunder. Any such
warrants shall be dated the date hereof and shall be identical with this Warrant
except as to the number of shares of Common Stock issuable pursuant thereto.
5. Adjustments to Number of Shares for Diluting Issues.
5.1. Adjustment for Dividends, Distributions, Subdivisions,
Combinations or Consolidation of Common Stock.
(i) Stock Dividends, Distributions or Subdivisions. In the
event the Corporation at any time or from time to time after the
Effective Date of a Triggering Event shall declare or pay any
dividend or make any other
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distribution on the Common Stock payable in cash (other than regular
quarterly cash dividends), Common Stock or other property (such
other property being valued at the Fair Market Value) effect a
subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in
Common Stock), then and in any such event, the Number of Shares
shall be proportionately adjusted to reflect such dividend,
distribution or subdivision as of:
(1) in the case of any such dividend or distribution, immediately
after the close of business on the record date for the determination
of holders of any class of securities entitled to receive such
dividend or distribution, or
(2) in the case of any such subdivision, at the close of business on
the date immediately prior to the date upon which such corporate
action becomes effective.
If such record date or other effective date shall have been fixed and such
dividend, distribution or subdivision shall not have been fully paid or effected
on the date fixed therefor, the adjustment previously made to the Number of
Shares which became effective on such record date or other date shall be
canceled as of the close of business on such record date or other date, and
thereafter the Number of Shares shall be adjusted pursuant to this Section 5.1
as of the time of actual payment of such dividend, distribution or effectiveness
of such subdivision.
(ii) Combinations or Consolidations. In the event the
outstanding shares of Common Stock shall be combined or
consolidated, by reclassification or otherwise, into a lesser number
of shares of Common Stock, the Number of Shares in effect
immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or
consolidation, be proportionately adjusted.
5.2. Adjustment for Reclassification or Reorganization. In
case of any capital reorganization or reclassification of the capital stock of
the Corporation (other than a reclassification covered by Section 5.1(ii)), the
Holder hereof shall thereafter be entitled upon the exercise of this Warrant to
receive, in lieu of the shares of Common Stock for which this Warrant was
exercisable prior to such reorganization or reclassification, the number of
shares of stock or other securities or property to which a holder of the number
of shares of Common Stock of the Corporation deliverable upon the exercise of
this Warrant would have been entitled upon such reorganization or
reclassification. In any such case, appropriate adjustments (as determined by
the board of directors) shall be made in the application of the provisions of
this Section 5 set forth with respect to the rights and interest thereafter of
the holders Common Stock issuable upon the exercise of this Warrant, to the end
that the provisions of this Section 5 (including provisions with respect to
changes in and other adjustments of the Number of Shares) shall thereafter be
applicable, as nearly as reasonably may be, in relation to any shares of stock
or other property thereafter deliverable upon the exercise of this Warrant.
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6. Stock Fully Paid; Reservation of Shares.
6.1. The Corporation covenants and agrees that all shares of
Common Stock which may be issued upon the exercise of the rights represented by
this Warrant will, upon issuance, be fully paid and non-assessable and free from
all taxes, liens and charges with respect to issuance. The Corporation further
covenants and agrees that during the period within which the rights represented
by this Warrant may be exercised, the Corporation will at all times have
authorized and reserved for the purpose of the issue upon exercise of this
Warrant a sufficient number of shares of Common Stock to provide for the
exercise of the rights represented by this Warrant. Notwithstanding any
adjustment required pursuant to Section 5 above, in no event shall the Exercise
Price per share of Common Stock be less than the par value of the Common Stock.
6.2. The Corporation shall not by any action, including,
without limitation, amending its 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 of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of the Holder hereof against impairment. Without limiting the generality
of the foregoing, the Corporation will (a) not increase the par value of any
shares of Common Stock above the amount payable therefor upon the exercise of
this Warrant immediately prior to such increase in par value and (b) take all
such action as may be necessary or appropriate in order that the Corporation may
validly and legally issue fully paid and nonassessable shares of Common Stock,
free and clear of any liens, claims, encumbrances and restrictions (other than
as provided herein) upon the exercise of this Warrant.
7. Restrictions on Transferability. The Warrant and the Common Stock
issued upon exercise of the Warrant shall not be transferred, hypothecated or
assigned before satisfaction of the conditions specified in this Section 7,
which conditions are intended to ensure compliance with the provisions of the
Securities Act and state securities or "blue sky" laws with respect to the
transfer, hypothecation or assignment of any Warrant or Common Stock issued upon
exercise of any Warrant. Holder, by acceptance of this Warrant, agrees to be
bound by the provisions of this Section 7.
7.1. Restrictive Legend.
7.1.1 Except as otherwise provided in this Section 7, each
certificate for Common Stock issued upon exercise of this Warrant, and each
certificate for Common Stock issued to any subsequent transferee of any such
certificate, shall be stamped or otherwise imprinted with a legend in
substantially the following form:
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"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES OR BLUE SKY LAWS OF ANY STATE. THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT AND LAWS OR THE RULES AND REGULATIONS
THEREUNDER."
7.1.2 Except as otherwise provided in this Section 7, each
Warrant shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS
BY REASON OF EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF
THE ACT AND SUCH STATE SECURITIES LAWS AND MAY NOT BE SOLD,
PLEDGED, ASSIGNED OR OTHERWISE DISPOSED OF IN ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE
STATE SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL TO
AMERICA'S DOCTOR, INC., AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE."
7.2. Notice of Proposed Transfers. Prior to any transfer,
hypothecation or assignment or attempted transfer, hypothecation or assignment
of the Warrant or any Common Stock issued upon exercise of the Warrant, the
Holder of such Warrant or Common Stock shall give ten (10) days prior written
notice (a "Transfer Notice") to the Corporation of such Holder's intention to
effect such transfer, hypothecation or assignment, describing the manner and
circumstances of the proposed transfer, hypothecation or assignment, and obtain
from Counsel a written opinion addressed to the Corporation that the proposed
transfer, hypothecation or assignment of the Warrant or such Common Stock may be
effected without registration under the Securities Act and applicable state
securities or "blue sky" laws. After receipt of the Transfer Notice and written
opinion, the Corporation shall, within five (5) days thereof, so notify the
Holder of the Warrant or such Common Stock in writing and such Holder shall
thereupon be entitled to transfer, hypothecate or assign the Warrant or Common
Stock, in accordance with the terms of the Transfer Notice. Each certificate, if
any, evidencing such shares of Common Stock issued upon such Transfer shall bear
the restrictive legend set forth in Section 7.1.1, and each Warrant issued upon
such Transfer shall bear the legend set forth in Section 7.1.2, unless in the
written opinion of Counsel addressed to the Corporation such legend is not
required in order to ensure compliance with the Securities Act and applicable
state securities or "blue sky" laws. The Holder of the Warrant or such Common
Stock, as the case may be, giving the Transfer Notice shall not be entitled to
transfer the Warrant or such Common Stock until receipt of notice from the
Corporation under this Section 7.2.
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8. Fractional Shares. No fractional shares of Common Stock will be
issued in connection with any exercise hereof, but in lieu of such fractional
shares, the Corporation shall make a cash payment therefor equal in amount to
the product of the applicable fraction multiplied by the Warrant Price.
9. Determination of Fair Value Binding; Expenses; Cooperation.
Whenever any provision of this Agreement requires a determination of Fair Value
per share of Common Stock pursuant to the Appraisal Procedure, such
determination in accordance with such procedure shall be binding on the Holder
and the Corporation. If an Appraiser is selected by agreement between the
Corporation and Two Thirds in Interest of the Holders, the fees and expenses of
such Appraiser shall be paid one-half by the Corporation and one-half by the
Holders. If two Appraisers are selected (one by each of the Corporation and Two
Thirds in Interest of the Holders), the Corporation shall pay the fees and
expenses of the Appraiser selected by it and the Holders shall pay the fees and
expenses of the Appraiser selected by the Holders. If a third Appraiser is
selected, the fees and expenses of such third Appraiser shall be paid one-half
by the Corporation and one-half by the Holders. The Corporation and the Holder
agree to fully cooperate with all Appraisers and, in connection therewith, the
Corporation shall make available to all such Appraisers all information
(financial or otherwise) relating to the Corporation reasonably requested by
such Appraisers.
10. Amendment and Waiver. Any term, covenant, agreement or condition
in this Warrant may be amended, or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Corporation and the Holder.
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11. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
THE PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES OF AMERICA, IN
EACH CASE LOCATED IN THE COUNTY OF NEW YORK, FOR ANY ACTION, PROCEEDING OR
INVESTIGATION IN ANY COURT OR BEFORE ANY GOVERNMENTAL AUTHORITY ("LITIGATION")
ARISING OUT OF OR RELATING TO THIS WARRANT AND THE TRANSACTIONS CONTEMPLATED
HEREBY (AND AGREES NOT TO COMMENCE ANY LITIGATION RELATING THERETO EXCEPT IN
SUCH COURTS), AND FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR
DOCUMENT BY U.S. REGISTERED MAIL TO ITS RESPECTIVE ADDRESS SET FORTH IN THIS
WARRANT SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY LITIGATION BROUGHT AGAINST
IT IN ANY SUCH COURT. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY LITIGATION
ARISING OUT OF THIS WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN THE
COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES OF AMERICA, IN EACH CASE
LOCATED IN THE COUNTY OF NEW YORK, AND HEREBY FURTHER IRREVOCABLY AND
UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT
ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. EACH OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO TRIAL
BY JURY IN CONNECTION WITH ANY LITIGATION ARISING OUT OF OR RELATING TO THIS
WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Dated: June 1, 1999 AMERICASDOCTOR.COM, INC.
Attest: By: /s/ Scott M. Rifkin
--------------------------------------
Scott M. Rifkin, Chief Executive Officer
/s/ Allan Sanders
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Allan Sanders, Secretary
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EXHIBIT A
SUBSCRIPTION FORM
To be executed only upon exercise of Warrant
The undersigned registered owner of the attached Warrant irrevocably
exercises the attached Warrant for the purchase of ________ shares of Common
Stock, $0.01 par value, of America's Doctor, Inc. and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant and requests that certificates for the shares of Common Stock hereby
purchased (and any securities or other property issuable upon such exercise) be
issued in the name of and delivered to _______________________ whose address is
______________________________________________ and, if such shares of Common
Stock shall not include all of the shares of Common Stock issuable as provided
in this Warrant, that a new Warrant of like tenor and date for the balance of
the shares of Common Stock issuable hereunder be delivered to the undersigned.
--------------------------------
Name of Registered Owner
--------------------------------
Signature of Registered Owner
--------------------------------
--------------------------------
Address
--------------------------------
Federal ID Number
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
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EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of Common Stock
- ---------------------------- -----------------------------
and does hereby irrevocably constitute and appoint __________________
attorney-in-fact to register such transfer on the books of America's Doctor,
Inc. maintained for the purpose, with full power of substitution in the
premises.
Dated:
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Name:
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Signature:
--------------------------
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
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EXHIBIT 10.17
COMMON STOCK WARRANT
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS BY REASON OF EXEMPTIONS FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE SECURITIES LAWS AND MAY
NOT BE SOLD, PLEDGED, ASSIGNED OR OTHERWISE DISPOSED OF IN ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS OR UNLESS, IN THE OPINION OF COUNSEL TO AMERICASDOCTOR.COM, INC., AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
WARRANT
No.24 Warrant to Purchase a Number of Shares of
Common Stock to be determined as set
forth herein.
AMERICASDOCTOR.COM, INC.
This certifies that, for value received, Tullis-Dickerson Capital
Focus II, L.P., or its registered assigns, is entitled to subscribe for and
purchase, at any time and from time to time during the Effective Period, a
number of shares of duly authorized, validly issued, fully paid and
non-assessable Common Stock, including fractional shares, equal to the Number
of Shares at an exercise price of $0.01 per share, upon the terms and subject
to the conditions hereinafter set forth.
1. Definitions. For the purposes of this Warrant, the following terms have
the following meanings:
"Appraisal Procedure" shall mean a determination of Fair Value per
share of Common Stock (on the basis set forth in the definition of that term and
in Section 9 hereof) by an Appraiser selected by the Corporation and Two Thirds
in Interest of the Holders, which Appraiser shall be directed to independently
determine Fair Value per share of Common Stock as of the Effective Date of a
Triggering Event and to submit its determination in writing to the Corporation
and the Holders at the earliest practicable date, but in any event within 45
days following the selection of such Appraiser, provided that if the Corporation
and Two Thirds in Interest of the Holders are unable to agree upon the selection
of an Appraiser within 30 days, then each of the Corporation and Two Thirds in
Interest of the Holders shall select an Appraiser who shall be directed to
independently determine the Fair Value per share of Common Stock and to submit
its determination in writing to the Corporation and the Holders at the earliest
practicable date, but in any event within 45 days following the selection of
both Appraisers. If the value determined by the Appraiser whose determination is
the higher of the two appraisals does not exceed by more than ten percent (10%)
the average of the values
<PAGE>
determined by each Appraiser, Fair Value per share of Common Stock shall be the
average of the values determined by the two Appraisers. If the value determined
by the Appraiser whose determination is the higher of the two appraisals does
exceed by more than ten percent (10%) the average of the value determined by
each Appraiser, then the two Appraisers shall, within 15 days following
submission to the Corporation and the Holders of the later of such two
appraisals, select a third independent Appraiser who shall be directed to
determine Fair Value per share of Common Stock independently of the other
Appraisers and to submit its determination in writing to the Corporation and the
Holders at the earliest practicable date, but in any event within 15 days of
such Appraiser's selection. The value determined by the Appraiser whose
determination is the most discrepant from the average of the three appraisals
shall be discarded, and Fair Value per share of Common Stock shall equal the
average of the remaining two appraisals, except that if the highest and lowest
appraisals are equally discrepant from the average of the three appraisals, Fair
Value per share of Common Stock shall be such average. Fair Value per share of
Common Stock shall in all cases be determined on the basis set forth in the
definition of that term, and all Appraisers shall be so instructed.
"Appraiser" shall mean an independent appraiser of recognized
national standing.
"Common Stock" shall mean the Corporation's Common Stock, par value
$0.01 per share, and any Stock into which such Common Stock may hereafter be
changed.
"Common Stock Equivalents" shall mean any warrant, option or other
right to subscribe for or purchase any shares of Common Stock or any evidences
of indebtedness, shares of Stock or other securities which are or may be at any
time convertible into or exchangeable for shares of Common Stock.
"Composite Transactions Tape": A security price reporting service
that includes all transactions in a security on each of the exchanges and in the
over-the-counter market.
"Corporation" shall mean America's Doctor, Inc., a Delaware
corporation, and its successors and assigns.
"Counsel" shall mean counsel to the Corporation.
"Effective Date of a Triggering Event" shall mean the following:
(a) with respect to a Triggering Event defined in clause (a) of the
definition of Triggering Event, the closing date of such sale;
(b) with respect to a Triggering Event defined in clause (b) or (c)
of the definition of Triggering Event, the closing date of such sale,
transfer or other disposition; and
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(c) with respect to a Triggering Event defined in clause (d) of the
definition of Triggering Event, the effective date of such merger or
consolidation.
"Effective Period" shall mean the period beginning on the Effective
Date of a Triggering Event and ending on the later of (a) (i) with respect to a
Triggering Event as defined in clause (a) of the definition of a Triggering
Event, on such date which is five years after the Effective Date of a Triggering
Event and (ii) with respect to a Triggering Event as defined in clause (b), (c)
or (d) of the definition of a Triggering Event, on such date which is twelve
months after the Effective Date of a Triggering Event and (b) twelve months
after the final determination of the Number of Shares.
"Exercise Price" shall mean the product of the Warrant Price and
the Number of Shares.
"Fair Market Value" shall mean the amount per share of Common Stock
as determined in good faith by the board of directors of the Corporation based
on an opinion of an independent investment banking firm reasonably acceptable to
the majority in interest of the outstanding Warrants with an established
national reputation as a value of securities.
"Fair Value" per share of Common Stock as of any date shall mean:
(i) with respect to a Triggering Event of the type defined in
clause (a) of the definition of a Triggering Event, if the
registered securities are shares of Common Stock, then the price at
which such shares of Common Stock are offered to the public, and if
the registered securities are not shares of Common Stock, then the
Common Stock price implied by the price at which such securities are
offered to the public;
(ii) with respect to a Triggering Event of the type defined in
clause (b) of the definition of a Triggering Event, an amount equal
to the ratio of:
(1) the difference between:
(x) the sum of (A) the aggregate consideration received in
connection with such sale (including the value of any cash,
securities, tangible assets and intangible assets received and
the value of any liabilities of the Corporation assumed by the
acquiror), (B) the value of any assets retained by the
Corporation after giving effect to such sale, and (C) the
consideration which would be received by the Corporation upon
the exercise, conversion or exchange of all outstanding Common
Stock Equivalents, regardless of whether such Common Stock
Equivalents are then exercisable, convertible or exchangeable,
and
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<PAGE>
(y) the value of any liabilities retained by the Corporation
after giving effect to such sale, and
(2) the number of shares of Common Stock outstanding determined on a
Fully Diluted Basis as of the Effective Date of a Triggering Event
(excluding all classes of preferred stock of the Corporation which
were not converted to Common Stock in connection with such sale);
(iii) with respect to a Triggering Event of the type defined
in clause (c) of the definition of a Triggering Event, the purchase
price per share of Common Stock received in such sale; and
(iv) with respect to a Triggering Event of the type defined in
clause (d) of the definition of a Triggering Event, the
consideration per share of Common Stock received in such merger or
consolidation.
The "Fair Value" of a number of shares of Common Stock as of any date shall mean
the product of (a) Fair Value per share of Common Stock as of such date and (b)
such number of shares of Common Stock. The "Fair Value" shall be determined by
either (i) the mutual agreement of the Corporation and Two Thirds in Interest of
the Holders within thirty days of receipt of written notice from the
Corporation, pursuant to Section 2.1 hereof, of the anticipated occurrence of a
Triggering Event; or (ii) if the Holders and the Corporation are unable to agree
within thirty days of the date of receipt of written notice from the Corporation
pursuant to Section 2.1 hereof, at the election of either party, pursuant to the
Appraisal Procedure.
"Fully Diluted Basis" shall mean on a basis whereby the aggregate
number of shares for such determination includes (i) all shares of such Common
Stock then issued and outstanding; and (ii) all shares of Common Stock which
would be outstanding upon the exercise, conversion or exchange of all
outstanding Common Stock Equivalents, which Common Stock Equivalents are then
exercisable, convertible or exchangeable.
"Holder" shall mean the Person or Persons who shall from time to
time own of record this Warrant.
"Holders" shall mean the Persons who shall from time to time own of
record all the outstanding Warrants, including this Warrant.
"Investment Date" shall mean, with respect to any shares of Series B
Preferred Stock, the date upon which such shares of Series B Preferred Stock
were issued.
"Number of Shares" shall mean, with respect to any Holder, the
number of shares of Common Stock that, when taken together with the Value of the
Original Series B Equity Stake of such Holder as of the Effective Date of the
Triggering Event and all dividends
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<PAGE>
or other distributions received by such Holder (or its predecessor-in-interest)
with respect to the Series B Preferred Stock, would have a Fair Value as of such
date equal to an amount that implies achievement of a 15% annual pre-tax
internal rate of return (determined on a pro rata basis for any partial year and
on a monthly compounding basis) on the aggregate amount paid by such Holder (or
its predecessor-in-interest) for Series B Preferred Stock shares and for this
Warrant from the Investment Date, calculated in accordance with generally
accepted financial principles; provided, however, that if the Number of Shares
determined as provided above is zero or less than zero, then the Number of
Shares shall be zero and this Warrant shall immediately terminate.
"Person" shall mean an individual, a corporation, a partnership, a
trust, an unincorporated organization or a government organization or an agency
or political subdivision thereof.
"Securities Act" shall mean as of any date the Securities Act of
1933, as amended, or any similar Federal statute then in effect.
"Securities Purchase Agreement" shall mean the Securities Purchase
Agreement dated as of June 1, 1999, among the Corporation and the Purchasers
named therein, as it may be amended from time to time.
"Series A Preferred Stock" shall mean the Corporation's Series A
Convertible Preferred Stock, par value $0.01 per share.
"Series B Preferred Stock" shall mean the Corporation's Series B
Redeemable Convertible Preferred Stock, par value $0.01 per share.
"Stock" shall include any and all shares, interests or other
equivalents (however designated) of, or participations in, the capital stock of
the Corporation of any class.
"Triggering Event" means the first to occur of the following
events:
(a) Any sale by the Corporation of shares of Common Stock or Common
Stock Equivalents pursuant to a registration statement filed by the
Corporation under the Securities Act (other than a registration statement
filed on Form S-4 or Form S-8), which filing shall have been declared
effective by the Securities and Exchange Commission, at a before-the-money
market capitalization of not less than $75,000,000 and in which the gross
proceeds received by the Corporation for such securities equals or exceeds
$15,000,000.
(b) Any sale, transfer or other disposition of all or substantially
all of the assets of the Corporation, other than (i) sales or other
transfers to affiliates or partners of the Holder and (ii) sales or other
transfers to wholly owned affiliates of the Corporation, provided that
such affiliate assumes all of the Corporation's obligations hereunder.
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<PAGE>
(c) Any sale, transfer or other disposition of more than 80% of the
outstanding Common Stock of the Corporation determined on a Fully Diluted
Basis, other than (i) sales or other transfers to affiliates or partners
of the Holder and (ii) sales or other transfers to wholly owned affiliates
of the Corporation, provided that such affiliate assumes all of the
Corporation's obligations hereunder.
(d) Any merger or consolidation involving the Corporation
immediately following the effective date of which a majority of the board
of directors of the corporation surviving such merger or consolidation are
not members of the board of directors immediately prior to such merger or
consolidation.
"Two Thirds in Interest of the Holders" means Holders of (i)
Warrants representing at least two-thirds of the number of shares of Common
Stock then issuable upon exercise of the Warrants or (ii) two-thirds of the
number of shares of Series B Preferred Stock then outstanding.
"Value of the Original Series B Equity Stake," as of any date with
respect to any Holder, shall mean the greater of:
(a) the Fair Value of the number of shares of Common Stock issuable
upon the conversion of the issued shares of Series B Preferred Stock
originally issued to the Holder (or its predecessor-in-interest); and
(b) the lesser of:
(i) the liquidation value as of such date of the shares of
Series B Preferred Stock originally issued to the Holder (or its
predecessor-in-interest); and
(ii) the stockholders equity of the Corporation as of the end
of the most recent fiscal quarter of the Corporation, as reflected
on the balance sheet of the Corporation, determined in accordance
with generally accepted accounting principles; provided, however,
that if the stockholders equity of the Corporation as reflected on
such balance sheet is zero or less than zero, then the number
calculated pursuant to this clause (b) shall be zero.
"Warrant" shall mean this Warrant.
"Warrant Price" shall mean $0.01 per share of Common Stock.
"Warrants" shall mean this Warrant and all other Warrants issued by
the Corporation pursuant to the Securities Purchase Agreement.
2. Determination of "Number of Shares".
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<PAGE>
2.1. Thirty days prior to the anticipated occurrence of a
Triggering Event, the Corporation shall deliver notice to the Holder that a
Triggering Event is expected to occur and providing a description in reasonable
detail of the Triggering Event and the anticipated Effective Date of such
Triggering Event.
2.2. Within thirty days of receipt by the Holder of written
notice from the Corporation pursuant to Section 2.1 hereof, the Corporation and
the Two Thirds in Interest of Holders shall attempt to agree on the Number of
Shares for the Holders and, if they so agree, the number so agreed shall be the
Number of Shares. If, within thirty days of receipt by the Holders of the notice
from the Corporation referred to in Section 2.1, the Corporation and Two Thirds
in Interest of the Holders have been unable to so agree, either party may invoke
the Appraisal Procedure described in Section 9 hereof, in which event such
Appraiser or Appraisers shall be instructed to determine the Number of Shares,
which shall then be binding on the Corporation and the Holder.
3. Duration. The right to exercise this Warrant to subscribe for and
purchase shares of Common Stock represented hereby shall commence on the
Effective Date of a Triggering Event and shall expire at 5:00 P.M., Eastern
Time, on the last day of the Effective Period.
4. Method of Exercise; Payment; Issuance of New Warrant; Transfer
and Exchange.
4.1. The purchase right represented by this Warrant may be
exercised any time during the Effective Period. If this Warrant is exercised on
the Effective Date of a Triggering Event, such exercise shall be deemed to occur
prior to the occurrence of the Triggering Event, except for purposes of
determining the Fair Value per share of Common Stock, the Number of Shares and
determining the number of shares outstanding on a Fully Diluted Basis hereunder.
4.2. The Holder hereof may exercise this Warrant, in whole or
in part, by delivery to the Corporation at its office at 11403 Cronridge Drive,
Suite 200, Owings Mills, Maryland, 21117, Attention: Chief Executive Officer (or
such other address as the Corporation may specify to Holder from time to time),
of (a) a written notice of Holder's election to exercise this Warrant, which
notice shall specify the number of shares of Common Stock to be purchased, (b)
payment of the Exercise Price in the manner provided below and (c) this Warrant.
Such notice shall be substantially in the form of the subscription form
appearing at the end of this Warrant as Exhibit A, duly executed by Holder or
its agent or attorney. Payment of the Exercise Price shall be made at the option
of Holder by (i) wire transfer to an account in a bank located in the United
States designated for such purpose by the Corporation, (ii) certified or
official bank check, (iii) cancellation of indebtedness of the Corporation to
Holder at the time of exercise, (iv) cancellation as of the date of exercise of
a portion of this Warrant (calculated as the net fair market value of such
cancelled portion at the time of
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<PAGE>
exercise) or (v) any combination of the foregoing. The net fair market value of
any portion of this Warrant cancelled in full or partial payment of the Exercise
Price shall be determined by (A) multiplying (i) the number of shares of Common
Stock for which the portion of this Warrant to be cancelled was exercisable by
(ii) the Fair Value of a share of Common Stock as of the date of cancellation
and (B) subtracting from such product the aggregate Exercise Price of the shares
of Common Stock for which the portion of this Warrant to be cancelled was
exercisable. In the event of any exercise of the rights represented by this
Warrant, (x) certificates for the shares of Common Stock so purchased shall be
dated the date of such exercise and delivered to the Holder hereof within a
reasonable time, not exceeding 15 days after such exercise, and the Holder
hereof shall be deemed for all purposes to be the Holder of the shares of Common
Stock so purchased as of the date of such exercise, and (y) unless this Warrant
has expired pursuant to Section 3 hereof, a new Warrant representing the number
of shares, if any, with respect to which this Warrant shall not then have been
exercised shall also be issued to the Holder hereof within such time. Any such
warrant shall be dated the date hereof and shall represent the right to purchase
the remaining number of shares of Common Stock issuable pursuant thereto. By
exercising this Warrant, the Holder represents and warrants as of the date of
exercise with respect to the matters set forth in Section 4 of the Securities
Purchase Agreement.
4.3. Subject to compliance with Section 7 hereof, this Warrant
may be transferred on the books of the Corporation by the Holder hereof in
person or by duly authorized attorney, upon surrender of this Warrant at the
principal office of the Corporation, properly endorsed and upon payment of any
necessary transfer tax or other governmental charge imposed upon such transfer.
Subject to compliance with Section 7 hereof, this Warrant is exchangeable at the
aforesaid principal office of the Corporation for two or more warrants for the
purchase of the same aggregate number of shares of Common Stock, each new
warrant to represent the right to purchase such number of shares of Common Stock
as the Holder hereof shall designate at the time of such exchange. If this
Warrant is transferred or exchanged for two or more Warrants prior to the
Effective Date of a Triggering Event, the Number of Shares issuable under each
such warrant shall be a percentage of the Number of Shares issuable hereunder
which, together with all other warrants issued in the transfer or exchange of
this Warrant, shall aggregate 100% of the Number of Shares hereunder. Any such
warrants shall be dated the date hereof and shall be identical with this Warrant
except as to the number of shares of Common Stock issuable pursuant thereto.
5. Adjustments to Number of Shares for Diluting Issues.
5.1. Adjustment for Dividends, Distributions, Subdivisions,
Combinations or Consolidation of Common Stock.
(i) Stock Dividends, Distributions or Subdivisions. In the
event the Corporation at any time or from time to time after the
Effective Date of a Triggering Event shall declare or pay any
dividend or make any other
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<PAGE>
distribution on the Common Stock payable in cash (other than regular
quarterly cash dividends), Common Stock or other property (such
other property being valued at the Fair Market Value) effect a
subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in
Common Stock), then and in any such event, the Number of Shares
shall be proportionately adjusted to reflect such dividend,
distribution or subdivision as of:
(1) in the case of any such dividend or distribution, immediately
after the close of business on the record date for the determination
of holders of any class of securities entitled to receive such
dividend or distribution, or
(2) in the case of any such subdivision, at the close of business on
the date immediately prior to the date upon which such corporate
action becomes effective.
If such record date or other effective date shall have been fixed and such
dividend, distribution or subdivision shall not have been fully paid or effected
on the date fixed therefor, the adjustment previously made to the Number of
Shares which became effective on such record date or other date shall be
canceled as of the close of business on such record date or other date, and
thereafter the Number of Shares shall be adjusted pursuant to this Section 5.1
as of the time of actual payment of such dividend, distribution or effectiveness
of such subdivision.
(ii) Combinations or Consolidations. In the event the
outstanding shares of Common Stock shall be combined or
consolidated, by reclassification or otherwise, into a lesser number
of shares of Common Stock, the Number of Shares in effect
immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or
consolidation, be proportionately adjusted.
5.2. Adjustment for Reclassification or Reorganization. In
case of any capital reorganization or reclassification of the capital stock of
the Corporation (other than a reclassification covered by Section 5.1(ii)), the
Holder hereof shall thereafter be entitled upon the exercise of this Warrant to
receive, in lieu of the shares of Common Stock for which this Warrant was
exercisable prior to such reorganization or reclassification, the number of
shares of stock or other securities or property to which a holder of the number
of shares of Common Stock of the Corporation deliverable upon the exercise of
this Warrant would have been entitled upon such reorganization or
reclassification. In any such case, appropriate adjustments (as determined by
the board of directors) shall be made in the application of the provisions of
this Section 5 set forth with respect to the rights and interest thereafter of
the holders Common Stock issuable upon the exercise of this Warrant, to the end
that the provisions of this Section 5 (including provisions with respect to
changes in and other adjustments of the Number of Shares) shall thereafter be
applicable, as nearly as reasonably may be, in relation to any shares of stock
or other property thereafter deliverable upon the exercise of this Warrant.
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6. Stock Fully Paid; Reservation of Shares.
6.1. The Corporation covenants and agrees that all shares of
Common Stock which may be issued upon the exercise of the rights represented by
this Warrant will, upon issuance, be fully paid and non-assessable and free from
all taxes, liens and charges with respect to issuance. The Corporation further
covenants and agrees that during the period within which the rights represented
by this Warrant may be exercised, the Corporation will at all times have
authorized and reserved for the purpose of the issue upon exercise of this
Warrant a sufficient number of shares of Common Stock to provide for the
exercise of the rights represented by this Warrant. Notwithstanding any
adjustment required pursuant to Section 5 above, in no event shall the Exercise
Price per share of Common Stock be less than the par value of the Common Stock.
6.2. The Corporation shall not by any action, including,
without limitation, amending its 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 of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of the Holder hereof against impairment. Without limiting the generality
of the foregoing, the Corporation will (a) not increase the par value of any
shares of Common Stock above the amount payable therefor upon the exercise of
this Warrant immediately prior to such increase in par value and (b) take all
such action as may be necessary or appropriate in order that the Corporation may
validly and legally issue fully paid and nonassessable shares of Common Stock,
free and clear of any liens, claims, encumbrances and restrictions (other than
as provided herein) upon the exercise of this Warrant.
7. Restrictions on Transferability. The Warrant and the Common Stock
issued upon exercise of the Warrant shall not be transferred, hypothecated or
assigned before satisfaction of the conditions specified in this Section 7,
which conditions are intended to ensure compliance with the provisions of the
Securities Act and state securities or "blue sky" laws with respect to the
transfer, hypothecation or assignment of any Warrant or Common Stock issued upon
exercise of any Warrant. Holder, by acceptance of this Warrant, agrees to be
bound by the provisions of this Section 7.
7.1. Restrictive Legend.
7.1.1 Except as otherwise provided in this Section 7, each
certificate for Common Stock issued upon exercise of this Warrant, and each
certificate for Common Stock issued to any subsequent transferee of any such
certificate, shall be stamped or otherwise imprinted with a legend in
substantially the following form:
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"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES OR BLUE SKY LAWS OF ANY STATE. THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT AND LAWS OR THE RULES AND REGULATIONS
THEREUNDER."
7.1.2 Except as otherwise provided in this Section 7, each
Warrant shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS
BY REASON OF EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF
THE ACT AND SUCH STATE SECURITIES LAWS AND MAY NOT BE SOLD,
PLEDGED, ASSIGNED OR OTHERWISE DISPOSED OF IN ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE
STATE SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL TO
AMERICA'S DOCTOR, INC., AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE."
7.2. Notice of Proposed Transfers. Prior to any transfer,
hypothecation or assignment or attempted transfer, hypothecation or assignment
of the Warrant or any Common Stock issued upon exercise of the Warrant, the
Holder of such Warrant or Common Stock shall give ten (10) days prior written
notice (a "Transfer Notice") to the Corporation of such Holder's intention to
effect such transfer, hypothecation or assignment, describing the manner and
circumstances of the proposed transfer, hypothecation or assignment, and obtain
from Counsel a written opinion addressed to the Corporation that the proposed
transfer, hypothecation or assignment of the Warrant or such Common Stock may be
effected without registration under the Securities Act and applicable state
securities or "blue sky" laws. After receipt of the Transfer Notice and written
opinion, the Corporation shall, within five (5) days thereof, so notify the
Holder of the Warrant or such Common Stock in writing and such Holder shall
thereupon be entitled to transfer, hypothecate or assign the Warrant or Common
Stock, in accordance with the terms of the Transfer Notice. Each certificate, if
any, evidencing such shares of Common Stock issued upon such Transfer shall bear
the restrictive legend set forth in Section 7.1.1, and each Warrant issued upon
such Transfer shall bear the legend set forth in Section 7.1.2, unless in the
written opinion of Counsel addressed to the Corporation such legend is not
required in order to ensure compliance with the Securities Act and applicable
state securities or "blue sky" laws. The Holder of the Warrant or such Common
Stock, as the case may be, giving the Transfer Notice shall not be entitled to
transfer the Warrant or such Common Stock until receipt of notice from the
Corporation under this Section 7.2.
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8. Fractional Shares. No fractional shares of Common Stock will be
issued in connection with any exercise hereof, but in lieu of such fractional
shares, the Corporation shall make a cash payment therefor equal in amount to
the product of the applicable fraction multiplied by the Warrant Price.
9. Determination of Fair Value Binding; Expenses; Cooperation.
Whenever any provision of this Agreement requires a determination of Fair Value
per share of Common Stock pursuant to the Appraisal Procedure, such
determination in accordance with such procedure shall be binding on the Holder
and the Corporation. If an Appraiser is selected by agreement between the
Corporation and Two Thirds in Interest of the Holders, the fees and expenses of
such Appraiser shall be paid one-half by the Corporation and one-half by the
Holders. If two Appraisers are selected (one by each of the Corporation and Two
Thirds in Interest of the Holders), the Corporation shall pay the fees and
expenses of the Appraiser selected by it and the Holders shall pay the fees and
expenses of the Appraiser selected by the Holders. If a third Appraiser is
selected, the fees and expenses of such third Appraiser shall be paid one-half
by the Corporation and one-half by the Holders. The Corporation and the Holder
agree to fully cooperate with all Appraisers and, in connection therewith, the
Corporation shall make available to all such Appraisers all information
(financial or otherwise) relating to the Corporation reasonably requested by
such Appraisers.
10. Amendment and Waiver. Any term, covenant, agreement or condition
in this Warrant may be amended, or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Corporation and the Holder.
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<PAGE>
11. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
THE PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES OF AMERICA, IN
EACH CASE LOCATED IN THE COUNTY OF NEW YORK, FOR ANY ACTION, PROCEEDING OR
INVESTIGATION IN ANY COURT OR BEFORE ANY GOVERNMENTAL AUTHORITY ("LITIGATION")
ARISING OUT OF OR RELATING TO THIS WARRANT AND THE TRANSACTIONS CONTEMPLATED
HEREBY (AND AGREES NOT TO COMMENCE ANY LITIGATION RELATING THERETO EXCEPT IN
SUCH COURTS), AND FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR
DOCUMENT BY U.S. REGISTERED MAIL TO ITS RESPECTIVE ADDRESS SET FORTH IN THIS
WARRANT SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY LITIGATION BROUGHT AGAINST
IT IN ANY SUCH COURT. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY LITIGATION
ARISING OUT OF THIS WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN THE
COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES OF AMERICA, IN EACH CASE
LOCATED IN THE COUNTY OF NEW YORK, AND HEREBY FURTHER IRREVOCABLY AND
UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT
ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. EACH OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO TRIAL
BY JURY IN CONNECTION WITH ANY LITIGATION ARISING OUT OF OR RELATING TO THIS
WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Dated: June 1, 1999 AMERICASDOCTOR.COM, INC.
Attest: By: /s/ Scott M. Rifkin
--------------------------------------
Scott M. Rifkin, Chief Executive Officer
/s/ Allan Sanders
- -------------------------
Allan Sanders, Secretary
-13-
<PAGE>
EXHIBIT A
SUBSCRIPTION FORM
To be executed only upon exercise of Warrant
The undersigned registered owner of the attached Warrant irrevocably
exercises the attached Warrant for the purchase of ________ shares of Common
Stock, $0.01 par value, of America's Doctor, Inc. and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant and requests that certificates for the shares of Common Stock hereby
purchased (and any securities or other property issuable upon such exercise) be
issued in the name of and delivered to _______________________ whose address is
______________________________________________ and, if such shares of Common
Stock shall not include all of the shares of Common Stock issuable as provided
in this Warrant, that a new Warrant of like tenor and date for the balance of
the shares of Common Stock issuable hereunder be delivered to the undersigned.
--------------------------------
Name of Registered Owner
--------------------------------
Signature of Registered Owner
--------------------------------
--------------------------------
Address
--------------------------------
Federal ID Number
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
-14-
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of Common Stock
- ---------------------------- -----------------------------
and does hereby irrevocably constitute and appoint __________________
attorney-in-fact to register such transfer on the books of America's Doctor,
Inc. maintained for the purpose, with full power of substitution in the
premises.
Dated:
------------------------------
Name:
-------------------------------
Signature:
--------------------------
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
-15-
<PAGE>
EXHIBIT 10.18
PREFERRED STOCK WARRANT
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS BY REASON OF EXEMPTIONS FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE SECURITIES LAWS AND MAY
NOT BE SOLD, PLEDGED, ASSIGNED OR OTHERWISE DISPOSED OF IN ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS OR UNLESS, IN THE OPINION OF COUNSEL TO AMERICASDOCTOR.COM. INC., AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
WARRANT
No.PB-1 Warrant to Purchase 25,183 Shares of
Preferred Stock.
AMERICASDOCTOR.COM, INC.
This certifies that, for value received, GE Capital Equity
Investments, Inc., or its registered assigns, is entitled to subscribe for
and purchase, 25,183 shares (subject to adjustment as set forth herein) of
duly authorized, validly issued, fully paid and non-assessable Series B
Redeemable Convertible Preferred Stock, par value $0.01 per share (the
"Preferred Stock"), at an exercise price of $66.18 per share (subject to
adjustment as set forth herein), upon the terms and subject to the conditions
hereinafter set forth.
1. Definitions. For the purposes of this Warrant, the following terms have
the following meanings:
"Common Stock" shall mean the Corporation's Common Stock, par value
$0.01 per share, and any Stock into which such Common Stock may hereafter be
changed.
"Common Stock Equivalents" shall mean any warrant, option or other
right to subscribe for or purchase any shares of Common Stock or any evidences
of indebtedness, shares of Stock or other securities which are or may be at any
time convertible into or exchangeable for shares of Common Stock.
"Corporation" shall mean AmericasDoctor.com, Inc., a Delaware
corporation, and its successors and assigns.
"Counsel" shall mean counsel to the Corporation.
"Exercise Price" shall mean the product of the Warrant Price and the
number of shares of Preferred Stock for which this Warrant is being exercised.
<PAGE>
"Holder" or "Holders" shall mean the Person or Persons who shall
from time to time own of record this Warrant.
"Person" shall mean an individual, a corporation, a partnership, a
trust, an unincorporated organization or a government organization or an agency
or political subdivision thereof.
"Preferred Stock" shall mean the Corporation's Series B Redeemable
Convertible Preferred Stock, par value $0.01 per share.
"Preferred Stock Warrant" shall mean this Warrant.
"Preferred Stock Warrants" shall mean this Preferred Stock
Warrant and all other Preferred Stock Warrants issued by the Corporation
pursuant to the Securities Purchase Agreement.
"Qualified IPO" means any sale by the Corporation of shares of
Common Stock or Common Stock Equivalents pursuant to a registration statement
filed by the Corporation under the Securities Act (other than a registration
statement filed on Form S-4 or Form S-8), which filing shall have been declared
effective by the Securities and Exchange Commission, at a before-the-money
market capitalization of not less than $75,000,000 and in which the gross
proceeds received by the Corporation for such securities equals or exceeds
$15,000,000.
"Securities Act" shall mean as of any date the Securities Act of
1933, as amended, or any similar Federal statute then in effect.
"Securities Purchase Agreement" shall mean the Securities Purchase
Agreement dated as of June 1, 1999, among the Corporation and the Purchasers
named therein, as it may be amended from time to time.
"Two Thirds in Interest of the Holders" means Holders of (i)
Preferred Stock Warrants representing at least two-thirds of the number of
shares of Preferred Stock then issuable upon exercise of the Preferred Stock
Warrants or (ii) two-thirds of the number of shares of Preferred Stock then
outstanding.
"Warrant Price" shall mean $66.18 per share of Preferred Stock. The
Warrant Price shall be subject to adjustment as set forth in Section 4.
2. Duration. The right to exercise this Warrant to subscribe for and
purchase shares of Preferred Stock represented hereby shall commence on October
16, 1999 and shall expire at 5:00 P.M., Eastern Time, on April 15, 2000;
provided that if, on or prior to October 15, 1999, the Company has (i) effected
a Qualified IPO, (ii) effected an additional equity financing at a price per
share of Common Stock (or in the case of any issuance of Common Stock
Equivalents, per underlying share of Common Stock) in excess of $66.18 which has
-2-
<PAGE>
resulted in cash proceeds to the Company of at least $5,000,000 (excluding any
proceeds of such financing which are used or are to be used to repurchase or
redeem shares of Common Stock or Common Stock Equivalents) or (iii) entered into
any commercial contract for the sale of goods or services (excluding sales of
assets not in the ordinary course of business) which has resulted in cash
proceeds to the Company of at least $5,000,000, then, in any such case, this
Warrant shall terminate and shall be of no further force or effect.
3. Method of Exercise; Payment; Issuance of New Warrant; Transfer
and Exchange.
3.1 The Holder hereof may exercise this Warrant, in whole or
in part, by delivery to the Corporation at its office at 11403 Cronridge Drive,
Suite 200, Owings Mills, Maryland, 21117, Attention: Chief Executive Officer (or
such other address as the Corporation may specify to Holder from time to time),
of (a) a written notice of Holder's election to exercise this Warrant, which
notice shall specify the number of shares of Preferred Stock to be purchased,
(b) payment of the Exercise Price in the manner provided below and (c) this
Warrant. Such notice shall be substantially in the form of the subscription form
appearing at the end of this Warrant as Exhibit A, duly executed by Holder or
its agent or attorney. Payment of the Exercise Price shall be made at the option
of Holder by (i) wire transfer to an account in a bank located in the United
States designated for such purpose by the Corporation, (ii) certified or
official bank check, (iii) cancellation of indebtedness of the Corporation to
Holder at the time of exercise, (iv) cancellation as of the date of exercise of
a portion of this Warrant (calculated as the net fair market value of such
cancelled portion at the time of exercise) or (v) any combination of the
foregoing. The net fair market value of any portion of this Warrant cancelled in
full or partial payment of the Exercise Price shall be determined by (A)
multiplying (i) the number of shares of Preferred Stock for which the portion of
this Warrant to be cancelled was exercisable by (ii) the fair value (as
determined by mutual agreement between the Corporation and Two Thirds in
Interest of the Holders) of a share of Preferred Stock as of the date of
cancellation and (B) subtracting from such product the aggregate Exercise Price
of the shares of Preferred Stock for which the portion of this Warrant to be
cancelled was exercisable. In the event of any exercise of the rights
represented by this Warrant, (x) certificates for the shares of Preferred Stock
so purchased shall be dated the date of such exercise and delivered to the
Holder hereof within a reasonable time, not exceeding 15 days after such
exercise, and the Holder hereof shall be deemed for all purposes to be the
Holder of the shares of Preferred Stock so purchased as of the date of such
exercise, and (y) unless this Warrant has expired pursuant to Section 3 hereof,
a new Warrant representing the number of shares, if any, with respect to which
this Warrant shall not then have been exercised shall also be issued to the
Holder hereof within such time. Any such warrant shall be dated the date hereof
and shall represent the right to purchase the remaining number of shares of
Preferred Stock issuable pursuant thereto. By exercising this Warrant, the
Holder represents and warrants as of the date of exercise with respect to the
matters set forth in Section 4 of the Securities Purchase Agreement.
-3-
<PAGE>
3.3. Subject to compliance with Section 6 hereof, this Warrant
may be transferred on the books of the Corporation by the Holder hereof in
person or by duly authorized attorney, upon surrender of this Warrant at the
principal office of the Corporation, properly endorsed and upon payment of any
necessary transfer tax or other governmental charge imposed upon such transfer.
Subject to compliance with Section 6 hereof, this Warrant is exchangeable at the
aforesaid principal office of the Corporation for two or more warrants for the
purchase of the same aggregate number of shares of Preferred Stock, each new
warrant to represent the right to purchase such number of shares of Preferred
Stock as the Holder hereof shall designate at the time of such exchange. Any
such warrants shall be dated the date hereof and shall be identical with this
Warrant except as to the number of shares of Preferred Stock issuable pursuant
thereto.
4. Certain Adjustments.
4.1. Adjustment for Dividends, Distributions, Subdivisions,
Combinations or Consolidation of Preferred Stock.
(i) Dividends, Distributions or Subdivisions. In the event the
Corporation at any time or from time to time after the date hereof
shall declare or pay any dividend or make any other distribution on
the Preferred Stock payable in Preferred Stock or effect a
subdivision of the outstanding shares of Preferred Stock (by
reclassification or otherwise than by payment of a dividend in
Preferred Stock), then and in any such event, the number of shares
for which this Warrant is exercisable and the Warrant Price shall be
appropriately adjusted to reflect such dividend, distribution or
subdivision as of:
(1) in the case of any such dividend or distribution, immediately
after the close of business on the record date for the determination
of holders of Preferred Stock entitled to receive such dividend or
distribution, or
(2) in the case of any such subdivision, at the close of business on
the date immediately prior to the date upon which such corporate
action becomes effective.
If such record date or other effective date shall have been fixed and such
dividend, distribution or subdivision shall not have been fully paid or effected
on the date fixed therefor, the adjustment previously made to the number of
shares for which this Warrant is exercisable which became effective on such
record date or other date shall be canceled as of the close of business on such
record date or other date, and thereafter the number of shares for which this
Warrant is exercisable shall be adjusted pursuant to this Section 4.1 as of the
time of actual payment of such dividend, distribution or effectiveness of such
subdivision.
(ii) Combinations or Consolidations. In the event the
outstanding shares of Preferred Stock shall be combined or
consolidated, by reclassification
-4-
<PAGE>
or otherwise, into a lesser number of shares of Preferred Stock, the
number of shares for which this Warrant is exercisable and the
Warrant Price in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately adjusted.
4.2. Adjustment for Reclassification, Reorganization or
Conversion. In case of any capital reorganization or reclassification of the
capital stock of the Corporation (other than a reclassification covered by
Section 4.1(ii)) or automatic conversion of the shares of Preferred Stock in
connection with a Qualified IPO, the Holder hereof shall thereafter be entitled
upon the exercise of this Warrant to receive, in lieu of the shares of Preferred
Stock for which this Warrant was exercisable prior to such reorganization,
reclassification or conversion, the number of shares of stock or other
securities or property to which a holder of the number of shares of Preferred
Stock of the Corporation deliverable upon the exercise of this Warrant would
have been entitled upon such reorganization, reclassification or conversion. In
any such case, appropriate adjustments (as determined by the board of directors)
shall be made in the application of the provisions of this Section 4 set forth
with respect to the rights and interest thereafter of the holders of Preferred
Stock issuable upon the exercise of this Warrant, to the end that the provisions
of this Section 4 (including provisions with respect to changes in and other
adjustments of the number of shares for which this Warrant is exercisable) shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
shares of stock or other property thereafter deliverable upon the exercise of
this Warrant.
5. Stock Fully Paid; Reservation of Shares.
5.1. The Corporation covenants and agrees that all shares of
Preferred Stock which may be issued upon the exercise of the rights represented
by this Warrant will, upon issuance, be fully paid and non-assessable and free
from all taxes, liens and charges with respect to issuance. The Corporation
further covenants and agrees that during the period within which the rights
represented by this Warrant may be exercised, the Corporation will at all times
have authorized and reserved for the purpose of the issue upon exercise of this
Warrant a sufficient number of shares of Preferred Stock to provide for the
exercise of the rights represented by this Warrant. Notwithstanding any
adjustment required pursuant to Section 4 above, in no event shall the Exercise
Price per share of Common Stock be less than the par value of the Common Stock.
5.2. The Corporation shall not by any action, including,
without limitation, amending its 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 of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of the Holder hereof against impairment. Without limiting the generality
of the foregoing, the Corporation
-5-
<PAGE>
will (a) not increase the par value of any shares of Preferred Stock above the
amount payable therefor upon the exercise of this Warrant immediately prior to
such increase in par value and (b) take all such action as may be necessary or
appropriate in order that the Corporation may validly and legally issue fully
paid and nonassessable shares of Preferred Stock, free and clear of any liens,
claims, encumbrances and restrictions (other than as provided herein) upon the
exercise of this Warrant.
6. Restrictions on Transferability. The Warrant and the Preferred
Stock issued upon exercise of the Warrant shall not be transferred, hypothecated
or assigned before satisfaction of the conditions specified in this Section 6,
which conditions are intended to ensure compliance with the provisions of the
Securities Act and state securities or "blue sky" laws with respect to the
transfer, hypothecation or assignment of any Warrant or Preferred Stock issued
upon exercise of any Warrant. Holder, by acceptance of this Warrant, agrees to
be bound by the provisions of this Section 6.
6.1. Restrictive Legend.
6.1.1 Except as otherwise provided in this Section 6, each
certificate for Preferred Stock issued upon exercise of this Warrant, each
certificate for Common Stock issued upon conversion of any such Preferred Stock
and each certificate for Preferred Stock or Common Stock issued to any
subsequent transferee of any such certificate, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES OR BLUE SKY LAWS OF ANY STATE. THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT AND LAWS OR THE RULES AND REGULATIONS
THEREUNDER."
6.1.2 Except as otherwise provided in this Section 6, each
Warrant or share of Preferred Stock or Common Stock issuable upon conversion
thereon, shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES
LAWS BY REASON OF EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND SUCH STATE SECURITIES LAWS AND MAY
NOT BE SOLD, PLEDGED, ASSIGNED OR OTHERWISE DISPOSED OF IN
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
AND APPLICABLE STATE SECURITIES LAWS OR UNLESS, IN THE OPINION
OF COUNSEL TO
-6-
<PAGE>
AMERICASDOCTOR.COM. INC., AN EXEMPTION FROM SUCH REGISTRATION
IS AVAILABLE."
6.2. Notice of Proposed Transfers. Prior to any transfer,
hypothecation or assignment or attempted transfer, hypothecation or assignment
of the Warrant or any Preferred Stock issued upon exercise of the Warrant, the
Holder of such Warrant or Preferred Stock shall give ten (10) days prior written
notice (a "Transfer Notice") to the Corporation of such Holder's intention to
effect such transfer, hypothecation or assignment, describing the manner and
circumstances of the proposed transfer, hypothecation or assignment, and obtain
from Counsel a written opinion addressed to the Corporation that the proposed
transfer, hypothecation or assignment of the Warrant or such Preferred Stock may
be effected without registration under the Securities Act and applicable state
securities or "blue sky" laws. After receipt of the Transfer Notice and written
opinion, the Corporation shall, within five (5) days thereof, so notify the
Holder of the Warrant or such Preferred Stock in writing and such Holder shall
thereupon be entitled to transfer, hypothecate or assign the Warrant or
Preferred Stock, in accordance with the terms of the Transfer Notice. Each
certificate, if any, evidencing such shares of Preferred Stock issued upon such
Transfer shall bear the restrictive legend set forth in Section 6.1.1, and each
Warrant issued upon such Transfer shall bear the legend set forth in Section
6.1.2, unless in the written opinion of Counsel addressed to the Corporation
such legend is not required in order to ensure compliance with the Securities
Act and applicable state securities or "blue sky" laws. The Holder of the
Warrant or such Preferred Stock, as the case may be, giving the Transfer Notice
shall not be entitled to transfer the Warrant or such Preferred Stock until
receipt of notice from the Corporation under this Section 6.2.
7. Fractional Shares. No fractional shares of Preferred Stock will
be issued in connection with any exercise hereof, but in lieu of such fractional
shares, the Corporation shall make a cash payment therefor equal in amount to
the product of the applicable fraction multiplied by the fair value of one share
of Preferred Stock (as determined by mutual agreement between the Corporation
and Two Thirds in Interest of the Holders).
8. Amendment and Waiver. Any term, covenant, agreement or condition
in this Warrant may be amended, or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Corporation and the Holder.
9. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
AND UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES OF AMERICA, IN EACH
CASE LOCATED IN THE COUNTY OF NEW YORK, FOR ANY ACTION, PROCEEDING
-7-
<PAGE>
OR INVESTIGATION IN ANY COURT OR BEFORE ANY GOVERNMENTAL AUTHORITY
("LITIGATION") ARISING OUT OF OR RELATING TO THIS WARRANT AND THE TRANSACTIONS
CONTEMPLATED HEREBY (AND AGREES NOT TO COMMENCE ANY LITIGATION RELATING THERETO
EXCEPT IN SUCH COURTS), AND FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS,
NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL TO ITS RESPECTIVE ADDRESS SET FORTH
IN THIS WARRANT SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY LITIGATION BROUGHT
AGAINST IT IN ANY SUCH COURT. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY LITIGATION
ARISING OUT OF THIS WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN THE
COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES OF AMERICA, IN EACH CASE
LOCATED IN THE COUNTY OF NEW YORK, AND HEREBY FURTHER IRREVOCABLY AND
UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT
ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. EACH OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO TRIAL
BY JURY IN CONNECTION WITH ANY LITIGATION ARISING OUT OF OR RELATING TO THIS
WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Dated: June 1, 1999 AMERICASDOCTOR.COM, INC.
Attest: By: /s/ Scott M. Rifkin
-------------------------------------
Scott M. Rifkin, Chief Executive Officer
/s/ Allan Sanders
- -------------------------
Allan Sanders, Secretary
-8-
<PAGE>
EXHIBIT A
SUBSCRIPTION FORM
To be executed only upon exercise of Warrant
The undersigned registered owner of the attached Warrant irrevocably
exercises the attached Warrant for the purchase of ________ shares of Preferred
Stock, $0.01 par value, of AmericasDoctor.com. Inc. and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant and requests that certificates for the shares of Preferred hereby
purchased (and any securities or other property issuable upon such exercise) be
issued in the name of and delivered to _______________________ whose address is
______________________________________________ and, if such shares of Preferred
Stock shall not include all of the shares of Preferred Stock issuable as
provided in this Warrant, that a new Warrant of like tenor and date for the
balance of the shares of Preferred Stock issuable hereunder be delivered to the
undersigned.
--------------------------------
Name of Registered Owner
--------------------------------
Signature of Registered Owner
--------------------------------
--------------------------------
Address
--------------------------------
Federal ID Number
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
-9-
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Preferred Stock set forth below:
Name and Address of Assignee No. of Shares of Preferred Stock
- ---------------------------- --------------------------------
and does hereby irrevocably constitute and appoint __________________
attorney-in-fact to register such transfer on the books of AmericasDoctor.com.
Inc. maintained for the purpose, with full power of substitution in the
premises.
Dated:
-----------------------------
Name:
------------------------------
Signature:
-------------------------
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
-10-
<PAGE>
EXHIBIT 10.19
PREFERRED STOCK WARRANT
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS BY REASON OF EXEMPTIONS FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE SECURITIES LAWS AND MAY
NOT BE SOLD, PLEDGED, ASSIGNED OR OTHERWISE DISPOSED OF IN ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS OR UNLESS, IN THE OPINION OF COUNSEL TO AMERICASDOCTOR.COM. INC., AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
WARRANT
No.PB-4 Warrant to Purchase 9,444 Shares of
Preferred Stock.
AMERICASDOCTOR.COM, INC.
This certifies that, for value received, Tullis-Dickerson Capital
Focus II, L.P., or its registered assigns, is entitled to subscribe for and
purchase, 9,444 shares (subject to adjustment as set forth herein) of duly
authorized, validly issued, fully paid and non-assessable Series B Redeemable
Convertible Preferred Stock, par value $0.01 per share (the "Preferred
Stock"), at an exercise price of $66.18 per share (subject to adjustment as
set forth herein), upon the terms and subject to the conditions hereinafter
set forth.
1. Definitions. For the purposes of this Warrant, the following terms have
the following meanings:
"Common Stock" shall mean the Corporation's Common Stock, par value
$0.01 per share, and any Stock into which such Common Stock may hereafter be
changed.
"Common Stock Equivalents" shall mean any warrant, option or other
right to subscribe for or purchase any shares of Common Stock or any evidences
of indebtedness, shares of Stock or other securities which are or may be at any
time convertible into or exchangeable for shares of Common Stock.
"Corporation" shall mean AmericasDoctor.com, Inc., a Delaware
corporation, and its successors and assigns.
"Counsel" shall mean counsel to the Corporation.
"Exercise Price" shall mean the product of the Warrant Price and the
number of shares of Preferred Stock for which this Warrant is being exercised.
<PAGE>
"Holder" or "Holders" shall mean the Person or Persons who shall
from time to time own of record this Warrant.
"Person" shall mean an individual, a corporation, a partnership, a
trust, an unincorporated organization or a government organization or an agency
or political subdivision thereof.
"Preferred Stock" shall mean the Corporation's Series B Redeemable
Convertible Preferred Stock, par value $0.01 per share.
"Preferred Stock Warrant" shall mean this Warrant.
"Preferred Stock Warrants" shall mean this Preferred Stock
Warrant and all other Preferred Stock Warrants issued by the Corporation
pursuant to the Securities Purchase Agreement.
"Qualified IPO" means any sale by the Corporation of shares of
Common Stock or Common Stock Equivalents pursuant to a registration statement
filed by the Corporation under the Securities Act (other than a registration
statement filed on Form S-4 or Form S-8), which filing shall have been declared
effective by the Securities and Exchange Commission, at a before-the-money
market capitalization of not less than $75,000,000 and in which the gross
proceeds received by the Corporation for such securities equals or exceeds
$15,000,000.
"Securities Act" shall mean as of any date the Securities Act of
1933, as amended, or any similar Federal statute then in effect.
"Securities Purchase Agreement" shall mean the Securities Purchase
Agreement dated as of June 1, 1999, among the Corporation and the Purchasers
named therein, as it may be amended from time to time.
"Two Thirds in Interest of the Holders" means Holders of (i)
Preferred Stock Warrants representing at least two-thirds of the number of
shares of Preferred Stock then issuable upon exercise of the Preferred Stock
Warrants or (ii) two-thirds of the number of shares of Preferred Stock then
outstanding.
"Warrant Price" shall mean $66.18 per share of Preferred Stock. The
Warrant Price shall be subject to adjustment as set forth in Section 4.
2. Duration. The right to exercise this Warrant to subscribe for and
purchase shares of Preferred Stock represented hereby shall commence on October
16, 1999 and shall expire at 5:00 P.M., Eastern Time, on April 15, 2000;
provided that if, on or prior to October 15, 1999, the Company has (i) effected
a Qualified IPO, (ii) effected an additional equity financing at a price per
share of Common Stock (or in the case of any issuance of Common Stock
Equivalents, per underlying share of Common Stock) in excess of $66.18 which has
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resulted in cash proceeds to the Company of at least $5,000,000 (excluding any
proceeds of such financing which are used or are to be used to repurchase or
redeem shares of Common Stock or Common Stock Equivalents) or (iii) entered into
any commercial contract for the sale of goods or services (excluding sales of
assets not in the ordinary course of business) which has resulted in cash
proceeds to the Company of at least $5,000,000, then, in any such case, this
Warrant shall terminate and shall be of no further force or effect.
3. Method of Exercise; Payment; Issuance of New Warrant; Transfer
and Exchange.
3.1 The Holder hereof may exercise this Warrant, in whole or
in part, by delivery to the Corporation at its office at 11403 Cronridge Drive,
Suite 200, Owings Mills, Maryland, 21117, Attention: Chief Executive Officer (or
such other address as the Corporation may specify to Holder from time to time),
of (a) a written notice of Holder's election to exercise this Warrant, which
notice shall specify the number of shares of Preferred Stock to be purchased,
(b) payment of the Exercise Price in the manner provided below and (c) this
Warrant. Such notice shall be substantially in the form of the subscription form
appearing at the end of this Warrant as Exhibit A, duly executed by Holder or
its agent or attorney. Payment of the Exercise Price shall be made at the option
of Holder by (i) wire transfer to an account in a bank located in the United
States designated for such purpose by the Corporation, (ii) certified or
official bank check, (iii) cancellation of indebtedness of the Corporation to
Holder at the time of exercise, (iv) cancellation as of the date of exercise of
a portion of this Warrant (calculated as the net fair market value of such
cancelled portion at the time of exercise) or (v) any combination of the
foregoing. The net fair market value of any portion of this Warrant cancelled in
full or partial payment of the Exercise Price shall be determined by (A)
multiplying (i) the number of shares of Preferred Stock for which the portion of
this Warrant to be cancelled was exercisable by (ii) the fair value (as
determined by mutual agreement between the Corporation and Two Thirds in
Interest of the Holders) of a share of Preferred Stock as of the date of
cancellation and (B) subtracting from such product the aggregate Exercise Price
of the shares of Preferred Stock for which the portion of this Warrant to be
cancelled was exercisable. In the event of any exercise of the rights
represented by this Warrant, (x) certificates for the shares of Preferred Stock
so purchased shall be dated the date of such exercise and delivered to the
Holder hereof within a reasonable time, not exceeding 15 days after such
exercise, and the Holder hereof shall be deemed for all purposes to be the
Holder of the shares of Preferred Stock so purchased as of the date of such
exercise, and (y) unless this Warrant has expired pursuant to Section 3 hereof,
a new Warrant representing the number of shares, if any, with respect to which
this Warrant shall not then have been exercised shall also be issued to the
Holder hereof within such time. Any such warrant shall be dated the date hereof
and shall represent the right to purchase the remaining number of shares of
Preferred Stock issuable pursuant thereto. By exercising this Warrant, the
Holder represents and warrants as of the date of exercise with respect to the
matters set forth in Section 4 of the Securities Purchase Agreement.
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3.3. Subject to compliance with Section 6 hereof, this Warrant
may be transferred on the books of the Corporation by the Holder hereof in
person or by duly authorized attorney, upon surrender of this Warrant at the
principal office of the Corporation, properly endorsed and upon payment of any
necessary transfer tax or other governmental charge imposed upon such transfer.
Subject to compliance with Section 6 hereof, this Warrant is exchangeable at the
aforesaid principal office of the Corporation for two or more warrants for the
purchase of the same aggregate number of shares of Preferred Stock, each new
warrant to represent the right to purchase such number of shares of Preferred
Stock as the Holder hereof shall designate at the time of such exchange. Any
such warrants shall be dated the date hereof and shall be identical with this
Warrant except as to the number of shares of Preferred Stock issuable pursuant
thereto.
4. Certain Adjustments.
4.1. Adjustment for Dividends, Distributions, Subdivisions,
Combinations or Consolidation of Preferred Stock.
(i) Dividends, Distributions or Subdivisions. In the event the
Corporation at any time or from time to time after the date hereof
shall declare or pay any dividend or make any other distribution on
the Preferred Stock payable in Preferred Stock or effect a
subdivision of the outstanding shares of Preferred Stock (by
reclassification or otherwise than by payment of a dividend in
Preferred Stock), then and in any such event, the number of shares
for which this Warrant is exercisable and the Warrant Price shall be
appropriately adjusted to reflect such dividend, distribution or
subdivision as of:
(1) in the case of any such dividend or distribution, immediately
after the close of business on the record date for the determination
of holders of Preferred Stock entitled to receive such dividend or
distribution, or
(2) in the case of any such subdivision, at the close of business on
the date immediately prior to the date upon which such corporate
action becomes effective.
If such record date or other effective date shall have been fixed and such
dividend, distribution or subdivision shall not have been fully paid or effected
on the date fixed therefor, the adjustment previously made to the number of
shares for which this Warrant is exercisable which became effective on such
record date or other date shall be canceled as of the close of business on such
record date or other date, and thereafter the number of shares for which this
Warrant is exercisable shall be adjusted pursuant to this Section 4.1 as of the
time of actual payment of such dividend, distribution or effectiveness of such
subdivision.
(ii) Combinations or Consolidations. In the event the
outstanding shares of Preferred Stock shall be combined or
consolidated, by reclassification
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or otherwise, into a lesser number of shares of Preferred Stock, the
number of shares for which this Warrant is exercisable and the
Warrant Price in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately adjusted.
4.2. Adjustment for Reclassification, Reorganization or
Conversion. In case of any capital reorganization or reclassification of the
capital stock of the Corporation (other than a reclassification covered by
Section 4.1(ii)) or automatic conversion of the shares of Preferred Stock in
connection with a Qualified IPO, the Holder hereof shall thereafter be entitled
upon the exercise of this Warrant to receive, in lieu of the shares of Preferred
Stock for which this Warrant was exercisable prior to such reorganization,
reclassification or conversion, the number of shares of stock or other
securities or property to which a holder of the number of shares of Preferred
Stock of the Corporation deliverable upon the exercise of this Warrant would
have been entitled upon such reorganization, reclassification or conversion. In
any such case, appropriate adjustments (as determined by the board of directors)
shall be made in the application of the provisions of this Section 4 set forth
with respect to the rights and interest thereafter of the holders of Preferred
Stock issuable upon the exercise of this Warrant, to the end that the provisions
of this Section 4 (including provisions with respect to changes in and other
adjustments of the number of shares for which this Warrant is exercisable) shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
shares of stock or other property thereafter deliverable upon the exercise of
this Warrant.
5. Stock Fully Paid; Reservation of Shares.
5.1. The Corporation covenants and agrees that all shares of
Preferred Stock which may be issued upon the exercise of the rights represented
by this Warrant will, upon issuance, be fully paid and non-assessable and free
from all taxes, liens and charges with respect to issuance. The Corporation
further covenants and agrees that during the period within which the rights
represented by this Warrant may be exercised, the Corporation will at all times
have authorized and reserved for the purpose of the issue upon exercise of this
Warrant a sufficient number of shares of Preferred Stock to provide for the
exercise of the rights represented by this Warrant. Notwithstanding any
adjustment required pursuant to Section 4 above, in no event shall the Exercise
Price per share of Common Stock be less than the par value of the Common Stock.
5.2. The Corporation shall not by any action, including,
without limitation, amending its 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 of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of the Holder hereof against impairment. Without limiting the generality
of the foregoing, the Corporation
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will (a) not increase the par value of any shares of Preferred Stock above the
amount payable therefor upon the exercise of this Warrant immediately prior to
such increase in par value and (b) take all such action as may be necessary or
appropriate in order that the Corporation may validly and legally issue fully
paid and nonassessable shares of Preferred Stock, free and clear of any liens,
claims, encumbrances and restrictions (other than as provided herein) upon the
exercise of this Warrant.
6. Restrictions on Transferability. The Warrant and the Preferred
Stock issued upon exercise of the Warrant shall not be transferred, hypothecated
or assigned before satisfaction of the conditions specified in this Section 6,
which conditions are intended to ensure compliance with the provisions of the
Securities Act and state securities or "blue sky" laws with respect to the
transfer, hypothecation or assignment of any Warrant or Preferred Stock issued
upon exercise of any Warrant. Holder, by acceptance of this Warrant, agrees to
be bound by the provisions of this Section 6.
6.1. Restrictive Legend.
6.1.1 Except as otherwise provided in this Section 6, each
certificate for Preferred Stock issued upon exercise of this Warrant, each
certificate for Common Stock issued upon conversion of any such Preferred Stock
and each certificate for Preferred Stock or Common Stock issued to any
subsequent transferee of any such certificate, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES OR BLUE SKY LAWS OF ANY STATE. THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT AND LAWS OR THE RULES AND REGULATIONS
THEREUNDER."
6.1.2 Except as otherwise provided in this Section 6, each
Warrant or share of Preferred Stock or Common Stock issuable upon conversion
thereon, shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES
LAWS BY REASON OF EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND SUCH STATE SECURITIES LAWS AND MAY
NOT BE SOLD, PLEDGED, ASSIGNED OR OTHERWISE DISPOSED OF IN
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
AND APPLICABLE STATE SECURITIES LAWS OR UNLESS, IN THE OPINION
OF COUNSEL TO
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AMERICASDOCTOR.COM. INC., AN EXEMPTION FROM SUCH REGISTRATION
IS AVAILABLE."
6.2. Notice of Proposed Transfers. Prior to any transfer,
hypothecation or assignment or attempted transfer, hypothecation or assignment
of the Warrant or any Preferred Stock issued upon exercise of the Warrant, the
Holder of such Warrant or Preferred Stock shall give ten (10) days prior written
notice (a "Transfer Notice") to the Corporation of such Holder's intention to
effect such transfer, hypothecation or assignment, describing the manner and
circumstances of the proposed transfer, hypothecation or assignment, and obtain
from Counsel a written opinion addressed to the Corporation that the proposed
transfer, hypothecation or assignment of the Warrant or such Preferred Stock may
be effected without registration under the Securities Act and applicable state
securities or "blue sky" laws. After receipt of the Transfer Notice and written
opinion, the Corporation shall, within five (5) days thereof, so notify the
Holder of the Warrant or such Preferred Stock in writing and such Holder shall
thereupon be entitled to transfer, hypothecate or assign the Warrant or
Preferred Stock, in accordance with the terms of the Transfer Notice. Each
certificate, if any, evidencing such shares of Preferred Stock issued upon such
Transfer shall bear the restrictive legend set forth in Section 6.1.1, and each
Warrant issued upon such Transfer shall bear the legend set forth in Section
6.1.2, unless in the written opinion of Counsel addressed to the Corporation
such legend is not required in order to ensure compliance with the Securities
Act and applicable state securities or "blue sky" laws. The Holder of the
Warrant or such Preferred Stock, as the case may be, giving the Transfer Notice
shall not be entitled to transfer the Warrant or such Preferred Stock until
receipt of notice from the Corporation under this Section 6.2.
7. Fractional Shares. No fractional shares of Preferred Stock will
be issued in connection with any exercise hereof, but in lieu of such fractional
shares, the Corporation shall make a cash payment therefor equal in amount to
the product of the applicable fraction multiplied by the fair value of one share
of Preferred Stock (as determined by mutual agreement between the Corporation
and Two Thirds in Interest of the Holders).
8. Amendment and Waiver. Any term, covenant, agreement or condition
in this Warrant may be amended, or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Corporation and the Holder.
9. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
AND UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES OF AMERICA, IN EACH
CASE LOCATED IN THE COUNTY OF NEW YORK, FOR ANY ACTION, PROCEEDING
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OR INVESTIGATION IN ANY COURT OR BEFORE ANY GOVERNMENTAL AUTHORITY
("LITIGATION") ARISING OUT OF OR RELATING TO THIS WARRANT AND THE TRANSACTIONS
CONTEMPLATED HEREBY (AND AGREES NOT TO COMMENCE ANY LITIGATION RELATING THERETO
EXCEPT IN SUCH COURTS), AND FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS,
NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL TO ITS RESPECTIVE ADDRESS SET FORTH
IN THIS WARRANT SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY LITIGATION BROUGHT
AGAINST IT IN ANY SUCH COURT. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY LITIGATION
ARISING OUT OF THIS WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN THE
COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES OF AMERICA, IN EACH CASE
LOCATED IN THE COUNTY OF NEW YORK, AND HEREBY FURTHER IRREVOCABLY AND
UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT
ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. EACH OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO TRIAL
BY JURY IN CONNECTION WITH ANY LITIGATION ARISING OUT OF OR RELATING TO THIS
WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Dated: June 1, 1999 AMERICASDOCTOR.COM, INC.
Attest: By: /s/ Scott M. Rifkin
-------------------------------------
Scott M. Rifkin, Chief Executive Officer
/s/ Allan Sanders
- -------------------------
Allan Sanders, Secretary
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EXHIBIT A
SUBSCRIPTION FORM
To be executed only upon exercise of Warrant
The undersigned registered owner of the attached Warrant irrevocably
exercises the attached Warrant for the purchase of ________ shares of Preferred
Stock, $0.01 par value, of AmericasDoctor.com. Inc. and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant and requests that certificates for the shares of Preferred hereby
purchased (and any securities or other property issuable upon such exercise) be
issued in the name of and delivered to _______________________ whose address is
______________________________________________ and, if such shares of Preferred
Stock shall not include all of the shares of Preferred Stock issuable as
provided in this Warrant, that a new Warrant of like tenor and date for the
balance of the shares of Preferred Stock issuable hereunder be delivered to the
undersigned.
--------------------------------
Name of Registered Owner
--------------------------------
Signature of Registered Owner
--------------------------------
--------------------------------
Address
--------------------------------
Federal ID Number
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
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EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Preferred Stock set forth below:
Name and Address of Assignee No. of Shares of Preferred Stock
- ---------------------------- --------------------------------
and does hereby irrevocably constitute and appoint __________________
attorney-in-fact to register such transfer on the books of AmericasDoctor.com.
Inc. maintained for the purpose, with full power of substitution in the
premises.
Dated:
-----------------------------
Name:
------------------------------
Signature:
-------------------------
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
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EXHIBIT 10.20
EXECUTION COPY
================================================================================
SECURITIES PURCHASE AGREEMENT
BY AND BETWEEN
AMERICASDOCTOR.COM, INC.
AND
THE PURCHASERS IDENTIFIED ON SCHEDULE A HERETO
DATED: JUNE 1, 1999
================================================================================
<PAGE>
SECURITIES PURCHASE AGREEMENT
TABLE OF CONTENTS
SECTION 1. CERTAIN DEFINITIONS.........................................1
1.1. Defined Terms...................................................1
SECTION 2. AUTHORIZATION AND SALE......................................4
2.1. Authorization of Preferred Stock and Warrants...................4
2.2. Sale and Purchase...............................................4
2.3. The Closing.....................................................5
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION...........6
3.1. Organization and Corporate Power................................6
3.2. Authorization...................................................6
3.3. Equity Investments..............................................7
3.4. Capitalization..................................................7
3.5. Shareholder Lists and Agreements................................8
3.6. Financial Information...........................................8
3.7. Absence of Undisclosed Liabilities..............................9
3.8. Absence of Certain Changes......................................9
3.9. Tax Matters....................................................11
3.10. Title; Encumbrances; Burdensome Restrictions..................11
3.11. Intellectual Property Rights..................................12
3.12. Litigation....................................................13
3.13. No Defaults...................................................13
3.14. Labor Agreements and Actions..................................13
3.15. Compliance....................................................14
3.16. Insurance.....................................................14
3.17. Conflicts.....................................................14
3.18. Accounts; Related Transactions................................15
3.19. Securities Law Compliance.....................................15
3.20. No Consent or Approval Required...............................15
3.21. Agreements....................................................16
3.22. Brokers.......................................................18
3.23. Employee Benefit Plans; Employees.............................18
3.24. Investment Company Act........................................18
3.25. Small Business Concern........................................18
3.26. Real Property Holding Corporation.............................19
3.27. Disclosure....................................................19
3.28. Year 2000.....................................................19
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
PURCHASERS................................................19
SECTION 5. CONDITIONS TO AND DELIVERIES AT CLOSING....................20
5.1. Preferred Stock................................................21
5.2. Accuracy of Representations and Warranties.....................21
5.3. Performance....................................................21
5.4. Corporate Proceedings; Consents, Etc...........................21
5.5. Certificate of Secretary.......................................21
5.6. Shareholders' Agreement and Registration Rights Agreement......21
5.7. Adverse Proceedings; No Material Adverse Effect................22
5.8. Small Business Administration Documentation....................22
5.9. Absence of Liens...............................................22
5.10. Opinion of Counsel............................................22
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5.11. Effectiveness.................................................22
5.12. Approvals.....................................................22
5.13. Other Matters.................................................23
SECTION 6. COVENANTS..................................................23
6.1 Negative Covenants..............................................23
6.2 Equity Security Restrictions....................................25
6.3 Affirmative Covenants...........................................26
6.4 Compliance with Agreements......................................27
6.5 Reservation of Common Stock.....................................27
6.6 Proprietary Information.........................................27
6.7 Public Disclosures..............................................28
6.8 ERISA...........................................................28
6.9 Best Efforts....................................................28
6.10 Remedies of Series A Stock and Preferred Stock.................27
6.11 Notice of Proposals............................................29
SECTION 7. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS,
ETC.......................................................30
SECTION 8. ADDITIONAL REMEDIES........................................30
SECTION 9. EXPENSES...................................................31
SECTION 10. ADDITIONAL PROVISIONS.....................................31
10.1. Successors and Assigns........................................31
10.2. Entire Agreement..............................................32
10.3. Notices.......................................................32
10.4. Changes.......................................................34
10.5. Counterparts..................................................34
10.6. Headings......................................................34
10.7. Nouns and Pronouns............................................34
10.8 Governing Law; Consent to Jurisdiction........................34
10.9 Publicity.....................................................35
10.10. Severability.................................................35
10.11. Construction.................................................35
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement") made as of this 1st
day of June, 1999, by and between AmericasDoctor.com, Inc., a Delaware
corporation (the "Corporation"), and the purchasers identified on Schedule A
hereto (the "Purchasers").
RECITALS:
Subject to the terms and conditions hereof, the Corporation desires to
issue and sell, and the Purchasers desire to purchase, in the aggregate, up to
113,327 shares of Series B Redeemable Convertible Preferred Stock, $0.01 par
value (the "Preferred Stock"), of the Corporation, and warrants to purchase (i)
a number of shares of Common Stock, $0.01 par value, of the Corporation (the
"Common Stock"), substantially in the form of Exhibit A hereto (the "Common
Stock Warrants"), and (ii) up to 37,775 shares of Preferred Stock, substantially
in the form of Exhibit B hereto (the "Preferred Stock Warrants " and,
collectively with the Common Stock Warrants, the "Warrants").
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and intending to be legally bound hereby, the parties hereto agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
1.1. Defined Terms.
As used in this Agreement, the following terms shall have the
following meanings:
"Action" shall mean any action, suit, proceeding, claim, arbitration
or investigation.
"Budget" shall mean the annual operating and capital budget of the
Corporation, with monthly breakdowns prepared by management and signed by the
Chief Executive Officer or the Chief Financial Officer of the Corporation.
"Certificate of Designations" shall mean the Certificate of
Designations for the Series B Redeemable Convertible Preferred Stock of
AmericasDoctor.com, Inc., a copy of which is attached hereto as Exhibit C.
"Certificate of Incorporation" shall mean the Corporation's Restated
Certificate of Incorporation, as amended by the Certificate of Designations.
" Closing" shall mean the Initial Closing and the Subsequent
Closing.
"Closing Date" shall mean the date of the Initial Closing or the
date of the Subsequent Closing, as applicable.
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"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Common Stock" shall have the meaning set forth in the recitals
hereto.
"Common Stock Warrants" shall have the meaning set forth in the
recitals hereto.
"Corporation" shall mean AmericasDoctor.com, Inc., a Delaware
corporation.
"Designated Persons" shall mean the former and present directors,
officers and employees of, and consultants to, the Corporation.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder,
all as the same shall be in effect at the time.
"Fair Market Value" shall mean the amount per share of Preferred
Stock which a willing buyer would pay a willing seller in an arm's-length
transaction, as determined in good faith by the board of directors of the
Corporation based on an opinion of an independent investment banking firm
reasonably acceptable to the holders of a majority of the outstanding shares of
Preferred Stock with an established national reputation as a value of
securities, which opinion may be based on such assumptions as such firm shall
deem to be necessary and appropriate, without any minority or illiquidity
discount.
"Initial Closing" shall mean the closing of the transactions
contemplated under Section 2.3(a) of this Agreement.
"Intellectual Property Rights" shall mean all industrial and
intellectual property rights, including without limitation, Proprietary
Information, patents, patent applications, patent rights, mask works, mask work
applications, trademarks, trademark applications, trade names, service marks,
service mark applications, copyrights, copyright applications, know-how,
certificates of public convenience and necessity, franchises, licenses, trade
secrets, proprietary processes and formulae.
"IRS" shall mean the Internal Revenue Service.
"Javelin" shall mean TD Javelin Capital Fund, L.P., a Delaware
limited partnership, a small business investment Company licensed by the SBA,
and its successors and assigns.
"Operative Documents" shall mean, collectively, this Agreement and
the Exhibits hereto.
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"Person" shall mean and include an individual, a corporation, a
partnership, a trust, an unincorporated organization and a government or any
department, agency or political subdivision thereof.
"Preferred Stock" shall have the meaning set forth in the recitals
hereto.
"Preferred Stock Warrants " shall have the meaning set forth in the
recitals hereto.
"Proprietary Information" shall mean all customer lists, source and
object code, algorithms, architecture, structure, display screens, layouts,
processes, inventions, trade secrets, know-how, development tools, software and
other proprietary rights owned by the Corporation pertaining to any product or
service manufactured, marketed or sold, or proposed to be manufactured, marketed
or sold (as the case may be), by the Corporation or used, employed or exploited
in the development, license, sale, marketing or distribution or maintenance
thereof, and all documentation and media constituting, describing or relating to
the above, including without limitation, manuals, memoranda, know-how,
notebooks, records and disclosures.
"Purchasers" shall mean the persons and entities identified on
Schedule A hereto.
"Recent Balance Sheet" shall have the meaning set forth in Section
3.6(a)(iii).
"Recent Financial Statements" shall have the meaning set forth in
Section 3.6(a)(iii).
"Register", "Registered", "Registration" and "Registration
Statement" shall refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act, and the
declaration or ordering of effectiveness of such registration statement.
"Registration Rights Agreement" shall mean the Second Amended and
Restated Registration Rights Agreement among the Corporation, Premier Research
Worldwide, Ltd., Medical Advisory Systems, Inc., The Wyndhurst Capital Group,
LLC, and the Purchasers substantially in the form attached hereto as Exhibit D.
"Related Transaction" shall have the meaning set forth in Section
3.18.
"SBA" shall mean the United States Small Business Administration.
"SBIC" shall mean each of Javelin or Origen and "SBICs" shall mean
Javelin and Origen, collectively.
"SBIC Act" shall mean the Small Business Investment Act of 1958, as
amended.
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"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission promulgated thereunder, all as
the same shall be in effect at the time.
"Shareholders' Agreement" shall mean the Second Amended and Restated
Shareholders' and Voting Agreement by and among the Corporation, the Purchasers,
the holders of Series A Stock (as defined below), and the Common Stock and
Warrant holders identified therein substantially in the form attached hereto as
Exhibit E.
"Subsequent Closing" shall mean the closing of the transactions
contemplated under Section 2.3(b) of this Agreement.
"Taxes" shall mean all federal, state, county, local and foreign
income, profits, franchise, sales, use, occupation, property, excise, payroll,
withholding and other taxes (including penalties and interest).
"Warrants" shall have the meaning set forth in the recitals hereto.
SECTION 2. AUTHORIZATION AND SALE.
2.1. Authorization of Preferred Stock and Warrants.
The Corporation has duly authorized the sale and issuance, pursuant
to the terms of this Agreement, of up to 113,327 shares of Preferred Stock. The
Corporation has authorized the granting, pursuant to the terms of this
Agreement, of warrants to purchase shares of its Common Stock and Preferred
Stock. Pursuant to the terms of the Warrants, the Corporation has duly
authorized the issuance of 37,775 shares of Preferred Stock upon exercise of the
Preferred Stock Warrants and will authorize, upon the Number of Shares (as
defined therein) being fixed, the Common Stock for which such Warrants are then
exercisable. The Corporation has, or before the Closing will have, filed the
Certificate of Designations with the Secretary of State of the State of
Delaware.
2.2. Sale and Purchase.
a) Subject to the terms and conditions of this Agreement, at the
Closing, the Corporation will sell and issue to GE Capital Equity Investments,
Inc. ("GE") and Tullis-Dickerson Capital Focus II, L.P. ("TD" and together with
GE, the "Initial Purchasers") and the Initial Purchasers will purchase the
number of shares of Preferred Stock and Warrants indicated on Schedule A hereto
opposite each such Initial Purchaser's name for the aggregate purchase price
payable by such Initial Purchaser specified on Schedule A, for an aggregate
purchase price of $6,875,043.
b) As promptly as practicable following Small Business
Administration approvals ("SBA Approvals") of the purchase by TD Origen Capital
Fund, L.P. and TD Javelin Capital Fund, L.P. (together, the "Subsequent
Purchasers"), but in no event later than sixty (60) days after the Initial
Closing, the Subsequent Purchasers will purchase the number of shares of
Preferred Stock and Warrants indicated on Schedule A hereto
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opposite each such Subsequent Purchaser's name for the aggregate purchase price
payable by such Subsequent Purchaser specified on Schedule A, for an aggregate
purchase price of $625,003.92. In the event that SBA Approvals are not obtained
within sixty (60) days after the Initial Closing, TD will purchase the number of
shares of Preferred Stock and Warrants indicated on Schedule A hereto opposite
each Subsequent Purchaser's name for the aggregate purchase price payable by
such Subsequent Purchaser specified on Schedule A, for an aggregate purchase
price of $625,003.92.
c) The Corporation will use the proceeds from the sales of the
Preferred Stock and Warrants for product development, working capital and other
valid corporate purposes.
2.3. The Closing.
a) The closing of the sale and purchase of the Preferred Stock and
Warrants under Section 2.2(a) of this Agreement (the "Initial Closing")shall
take place on the date hereof at the offices of Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, New York, or at such other place as is mutually
agreeable to the Corporation and the Initial Purchasers.
b) The closing of the sale and purchase of the Preferred Stock and
Warrants under Section 2.2(b) of this Agreement (the "Subsequent Closing")shall
take place not later than the earlier of (i) five days after receipt of the SBA
Approvals and (ii) the 60th day following the Initial Closing at the offices of
Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York, or at such
other place as is mutually agreeable to the Corporation and the Subsequent
Purchasers.
c) At each Closing, the Corporation shall deliver to each of the
Purchasers a certificate for the shares of Preferred Stock and Warrants being
purchased by such Purchaser at such Closing as set forth on Schedule A hereto,
registered in the name of such Purchaser (or its nominee), against payment to
the Corporation of the purchase price set forth in Section 2.2(a) and 2.3(b), as
applicable, by wire transfer, check or other method acceptable to the
Corporation.
d) If at the Closing any of the conditions specified in Section 5
shall not have been fulfilled, each of the Purchasers shall, at its election, be
relieved of all of its obligations under this Agreement without thereby waiving
any other rights it may have by reason of such failure or such non-fulfillment.
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SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION.
The Corporation represents and warrants to each of the Purchasers as
follows:
3.1. Organization and Corporate Power.
The Corporation:
a) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware;
b) has all requisite corporate power and authority to own, lease and
operate its properties currently owned, leased and operated, to carry on its
business as currently conducted and to execute, deliver and perform this
Agreement; and
c) is duly qualified as a foreign corporation and in good standing
to do business in all such jurisdictions, if any, in which the conduct of its
business or its ownership, leasing or operation of property as then conducted,
owned, leased or operated, requires such qualification, except for those
jurisdictions in which failure to so qualify would not have a material adverse
effect on the business or assets of the Corporation.
d) will have all requisite power and authority to execute and
deliver the Operative Documents, to carry out the transactions contemplated
thereby, and to issue and deliver the Preferred Stock and the Warrants, and the
Common Stock or Preferred Stock, as the case may be, issuable upon exercise of
the Warrants.
3.2. Authorization.
a) The execution, delivery and performance by the Corporation of the
Operative Documents have been duly authorized by all requisite corporate action
by the Corporation, and the Operative Documents constitute the valid and binding
obligations of the Corporation, enforceable in accordance with their terms,
subject to applicable bankruptcy, reorganization, insolvency, moratorium and
similar laws affecting creditors' rights generally and to general principals of
equity.
b) The issuance, sale and delivery of the Preferred Stock and
Warrants and, upon exercise of the Warrants or the conversion of the Preferred
Stock, the Common Stock or Preferred Stock, as the case may be, issuable with
respect to such exercise or conversion, have been duly authorized by all
requisite corporate action of the Corporation, and when issued, sold and
delivered in accordance with this Agreement and the Warrants, if applicable, the
Preferred Stock will be validly issued and outstanding, fully paid and
nonassessable with only limited liability attaching solely to the ownership
thereof, and not subject to preemptive or any other similar rights of the
stockholders of the Corporation or others. When issued and delivered in
accordance with the terms of the Certificate of Incorporation and the Warrants,
the Common Stock issuable upon the
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conversion of the Preferred Stock and the exercise of the Warrants will be
validly issued and outstanding, fully paid and nonassessable with only limited
liability attaching solely to the ownership thereof, and not subject to
preemptive or any other similar rights of the stockholders of the Corporation or
others.
3.3. Equity Investments.
Except for AmericasDoctor.com Medical Mall, Inc., a Delaware corporation
(the "Subsidiary"), the Corporation has never had, nor does it presently have,
any subsidiaries, nor has it owned, nor does it presently own, any capital stock
or other proprietary interest or other voting control, directly or indirectly,
in any corporation, association, trust, partnership, joint venture or other
entity. The Subsidiary has no material assets, liabilities or operations.
3.4. Capitalization.
a) The authorized capital stock of the Corporation, immediately
prior to the Closing, will consist of (i) 2,500,000 shares of Common Stock,
534,579 of which shares are issued and outstanding and (ii) 1,000,000 shares of
preferred stock, of which 133,333 shares designated as Series A Convertible
Preferred Stock (the "Series A Stock") are issued and outstanding. All of the
issued and outstanding shares of the Corporation's capital stock have been duly
authorized and validly issued and are fully paid and non-assessable and all
securities previously issued and sold by the Corporation were issued and sold in
compliance with applicable Federal securities laws. Except as set forth in
Schedule 3.4 attached hereto, no other shares of the Corporation's capital stock
or securities convertible into or exchangeable for shares of the Corporation's
capital stock have been issued or reserved for issuance, and except as set forth
in Schedule 3.4 attached hereto or contemplated by the Operative Documents, (A)
no subscription, warrant, option, convertible security or other right
(contingent or otherwise) to purchase or acquire any shares of capital stock of
the Corporation is authorized or outstanding, (B) there is not any, commitment
or offer of the Corporation to issue any subscription, warrant, option,
convertible security or other such right, or to issue or distribute to holders
of any shares of its capital stock any evidences of indebtedness or assets of
the Corporation, (C) the Corporation has no obligation (contingent or otherwise)
to purchase, redeem or otherwise acquire any shares of its capital stock or any
interest therein or to pay any dividend or make any other distribution in
respect thereof and (D) there are no restrictions on the transfer of the
Corporation's capital stock other than compliance with applicable Federal and
state securities laws. Except as contemplated by the Operative Documents or as
set forth in Schedule 3.4 attached hereto, no person or entity is entitled to
(1) any preemptive or similar right with respect to the issuance of any capital
stock of the Corporation or (2) any rights with respect to the registration of
any capital stock of the Corporation under the Securities Act.
b) Immediately after consummation of the transactions contemplated
hereby at the Closing, the authorized capital stock of the Corporation will
consist of (i) 2,500,000 shares of Common Stock, of which 534,579 shares will be
issued and
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outstanding, fully paid and nonassessable, and (ii) 1,000,000 shares of
preferred stock, 133,333 of which shares have been designated as Series A Stock
and are issued and outstanding, fully paid and nonassessable and 151,084 shares
will be designated as the Series B Convertible Redeemable Preferred Stock, of
which 113,327 shares will be issued and outstanding, fully paid and non
assessable.
c) All shares of Common Stock issuable upon conversion of the
outstanding Series A Stock and the Series B Stock being issued at the Closings
have been reserved for issuance upon conversion of such Preferred Stock.
3.5. Shareholder Lists and Agreements.
Schedule 3.5 annexed hereto sets forth a true and complete list of
all shareholders and other security holders of the Corporation showing the
number of shares of Common Stock or other securities held by each Shareholder or
security holder. Except as set forth in Schedule 3.5 attached hereto or
otherwise as contemplated by the Operative Documents, there are no agreements,
written or oral, between the Corporation and any of the holders of the
Corporation's capital stock, or between or among any holders of the
Corporation's capital stock, relating to the acquisition, disposition or voting
of such capital stock.
3.6. Financial Information.
a) The Corporation has previously delivered to the Purchasers the
following financial information:
(i) the Corporation's financial projections, dated May, 30 1999
and related statements of income;
(ii) the balance sheet of the Corporation as of March 31, 1999 (the
"Recent Balance Sheet") and the related statements of income
and schedules, prepared by the Corporation (together with the
Recent Balance Sheet, the "Recent Financial Statements");
(iii) the draft audited balance sheet of the Corporation as of June
30, 1998 and the related statements of income and cash flow,
prepared by the Corporation's independent auditors; and
(iv) the balance sheet of the Corporation as of December 31, 1998
and the related statements of income and cash flow.
For purposes of this Agreement, "Financial Statements" mean all of
the financial statements referred to in clauses (ii), (iii), and (iv) of this
Section 3.6(a).
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b) The projections referenced in Section 3.6(a)(i) above were
prepared based upon good faith assumptions and represent the Corporation's
reasonable estimate of future results based upon information available as of the
date of such projections.
c) To the Corporation's best knowledge, (i) the Financial Statements
(together with any notes and schedules thereto) are true, correct and complete,
(ii) are in accordance with the books and records of the Corporation, (iii)
fairly present the financial condition of the Corporation as of the dates
indicated and the results of operations and cash flow of the Corporation for the
periods indicated and (iv) have been prepared in accordance with generally
accepted accounting principles consistently applied.
3.7. Absence of Undisclosed Liabilities.
Except as disclosed in the Recent Financial Statements, as listed on
Schedule 3.7 attached hereto, or for liabilities incurred in the ordinary course
and in amounts not greater than incurred for a comparable period in the prior
fiscal year, and except for changes in such amounts consistent with the growth
of the Corporation's business in subsequent periods, as of the date of this
Agreement, (a) the Corporation has no liability of any nature (matured or
unmatured, fixed or contingent) which was not provided for or disclosed on the
Recent Balance Sheet, (b) all liability reserves, if any, established by the
Corporation were adequate in all respects and were established by the
Corporation in accordance with generally accepted accounting principles
consistently applied, and (c) there are no loss contingencies (as such term is
used in "Statement of Financial Accounting Standards No. 5" issued by the
Financial Accounting Standards Board in March 1975) which were not adequately
disclosed in the Recent Financial Statements as required by said Statement No.
5. There were no loss contingencies (as such term is used in Statement of
Financial Accounting Standards No. 5 issued by the Financial Accounting
Standards Board in March 1975) which were not adequately provided for on the
Recent Balance Sheet.
3.8. Absence of Certain Changes.
Except as listed on Schedule 3.8 attached hereto and, with respect
to the capitalization, as listed on Schedule 3.4 attached hereto, since March
31, 1999, there has not been:
a) any material adverse change in the financial condition, results
of operations, assets, liabilities, business or prospects of the Corporation or
any occurrence or circumstance or combination thereof which could reasonably be
expected to result in any such material adverse change;
b) any funds borrowed or any obligations or liabilities (absolute or
contingent) incurred by the Corporation, except as incurred in the ordinary
course of business consistent with past practices, or any endorsement,
assumption or guaranty of payment or collection of any obligation of any other
person or entity;
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c) any discharge or satisfaction by the Corporation of any lien or
encumbrance or payment of any obligation or liability (absolute or contingent)
other than current liabilities reflected in the Recent Financial Statements;
d) any agreement or arrangement entered into by the Corporation
granting preferential rights to purchase any of the assets, properties or rights
of the Corporation (including management and control thereof), or requiring the
consent of any party to a transfer or assignment of such assets, properties or
rights (or change in the management or control thereof), or providing for the
merger or consolidation of the Corporation with or into another corporation,
association or business entity;
e) any amendment or termination of any material contract, agreement
or license to which the Corporation is a party, except in the ordinary course of
business consistent with past practices;
f) any transaction entered into by the Corporation other than in the
ordinary course of business consistent with past practices;
g) any material asset or property of the Corporation made subject to
a lien of any kind;
h) any waiver of any valuable right of the Corporation, or, except
in the ordinary course of business consistent with past practices, the
cancellation of any debt or claim held by the Corporation;
i) any declaration, setting aside or payment of dividends on, or
other distribution with respect to, or any direct or indirect redemption or
acquisition of, any shares of the capital stock of the Corporation, or any
agreement or commitment therefor;
j) any mortgage, pledge, sale, assignment or transfer of any
tangible or intangible assets of the Corporation except in the ordinary course
of business consistent with past practices;
k) any loan by the Corporation to, or any loan to the Corporation
from, any officer, director, employee or shareholder of the Corporation, or any
agreement or commitment therefor, except advances in the ordinary course of
business for reasonable travel and entertainment expenses in customary amounts;
l) any damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting the assets, property or business
of the Corporation;
m) any change in the accounting methods or practices followed by the
Corporation; or
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n) any agreement entered into to do any of the foregoing described
in clauses (a) through (m) above.
3.9. Tax Matters.
Except as provided on Schedule 3.9 attached hereto, the Corporation
has filed all federal, state, county, and local tax returns and tax reports
required to be filed with the appropriate governmental agencies in all
jurisdictions in which such returns and reports are required to be filed and all
of the foregoing are true, correct and complete. All Taxes required to have been
paid or accrued by the Corporation have been fully paid or are adequately
provided for on the Recent Balance Sheet. No issues have been raised (and are
currently pending) by the IRS or any other taxing authority concerning the
Corporation's liability for Taxes, and no waivers of statutes of limitations
have been given or requested with respect to the Corporation. There is no tax
lien of any kind outstanding against the assets, property, or business of the
Corporation. All deficiencies asserted or assessments (including interest and
penalties) made as a result of any examination by the IRS or by appropriate
state or departmental tax authorities of the federal, state or local income tax,
sales tax or franchise tax returns of or with respect to the Corporation have
been fully paid or are adequately provided for on the Recent Balance Sheet and
no proposed (but unassessed) additional taxes, interest or penalties have been
asserted. The provisions for taxes in the Recent Balance Sheet are sufficient
for the payment of all accrued and unpaid federal, state or local and foreign
taxes as of such date. The Corporation has not (i) elected to be treated as a
collapsible corporation pursuant to Section 341(f) of the Code, nor (ii) made
any other elections pursuant to the Code that would have an adverse effect on
the Corporation, its financial condition, its business as presently conducted or
presently proposed to be conducted or any of its properties or assets. Except as
provided in Schedule 3.9 attached hereto, the Corporation has not made any
material payments, is not obligated to make any material payments and is not a
party to any agreement that under certain circumstances could obligate it to
make any material payments that would be treated as a "golden parachute" payment
under the Code. The Corporation is not a party to any tax allocation or sharing
agreement. The Corporation has not (i) been a member of an affiliated group
filing a consolidated federal income tax return, and (ii) had liability for the
Taxes of any entity under Treasury Regulation ss. 1.502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
3.10. Title; Encumbrances; Burdensome Restrictions.
The Corporation does not own and has never owned any real property.
The items of personal property of the Corporation reflected on the Recent
Financial Statements are in good operating condition and repair, reasonable wear
and tear excepted, are suitable for the purposes for which they are presently
used or then used in the conduct of its business, are structurally sound and
free from patent defects and there is no material expenditure presently required
in order to maintain such condition and state of repair or replace any tangible
personal property. Except as set forth on Schedule 3.10 attached hereto, and,
with respect to certain leasehold interests and licenses for the use of assets,
as
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set forth in the Recent Financial Statements, the Corporation owns good and
valid title (or leasehold title, as the case may be) to all property and assets,
real, personal or fixed, tangible or intangible, used by it in its operations as
presently conducted or as proposed to be conducted, subject to no mortgages,
liens, security interests, pledges, charges or other encumbrances of any kind.
The Corporation is not obligated under any contract or agreement or subject to
any charter or other corporate restriction which adversely affects its business,
properties, assets, prospects or condition (financial or otherwise). The
Corporation is not in violation of any zoning, building or safety ordinance,
regulation or requirement or other law or regulation applicable to the operation
of its owned properties. The Corporation, in its capacity as lessee, is not in
violation of any zoning, building or safety ordinance, regulation or requirement
or other law or regulation applicable to the operation of its leased properties.
The Corporation has not received any notice of violation with which it has not
complied.
3.11. Intellectual Property Rights.
a) A complete list of the Intellectual Property Rights of the
Corporation is set forth on Schedule 3.11 to this Agreement. Except as provided
on Schedule 3.11 attached hereto, there are no Intellectual Property Rights
necessary or required to enable the Corporation to carry on its respective
business as now conducted and as presently proposed to be conducted. Except as
provided on Schedule 3.11 attached hereto, no third party has any ownership
right, title, interest, claim in or lien on any of the Intellectual Property
Rights of the Corporation and there are no restrictions on the Corporation's use
or right to use the Intellectual Property Rights. The Corporation has not
granted or assigned to any other person or entity any right to make, have made,
assemble or sell the products or proposed products or to provide the services or
proposed services of the Corporation. To the best knowledge of the Corporation,
no other Person is using or infringing upon the Corporation's Intellectual
Property Rights.
b) Except as provided on Schedule 3.11 attached hereto, the
Corporation has not violated or infringed, is not currently violating or
infringing, and has not received any communications alleging that it (or any of
its employees or consultants) has violated or infringed or, by conducting its
business as presently conducted or proposed to be conducted, would violate or
infringe, the Intellectual Property Rights of any other person or entity. No
third party has claimed or has reason to claim that any Designated Person has
(a) violated or may be violating any of the terms or conditions of his
employment, non-competition or non-disclosure agreement with such third party,
(b) disclosed or may be disclosing or utilized or may be utilizing any trade
secret or proprietary information or documentation of such third party or (c)
interfered or may be interfering in the employment relationship between such
third party and any of its present or former employees. No third party has
requested information from the Corporation which suggests that such a claim
might be contemplated. No Designated Person has employed or proposes to employ
any trade secret or any information or documentation proprietary to any former
employer, and no Designated Person has violated any confidential relationship
which such Designated Person may have had with any third party, in connection
with the development, manufacture or sale of any product or proposed
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product or the development or sale of any service or proposed service of the
Corporation, and the Corporation has no reason to believe there will be any such
employment or violation. None of the execution or delivery of this Agreement, or
the carrying on of the business of the Corporation as officers, employees or
agents by any Designated Person, or the conduct or proposed conduct of the
business of the Corporation, will conflict with or result in a breach of the
terms, conditions or provisions of or constitute a default under any contract,
covenant or instrument under which any such Designated Person is obligated or
under any judgment, decree or order of any court or administrative agency to
which such Designated Person is subject.
3.12. Litigation.
Except as provided on Schedule 3.12 attached hereto, there is no
Action pending (or, to the best knowledge of the Corporation, currently
threatened) against the Corporation, or its existing or proposed business or
activities, properties or assets or, to the best knowledge of the Corporation,
against any Designated Person in connection with such Designated Person's
relationship with, or actions taken on behalf of, the Corporation. There is no
factual or legal basis for any such Action that might result, individually or in
the aggregate, in any material adverse change in the business, properties or
financial condition of the Corporation. The Corporation is not a party to or
subject to the provisions of any order, writ, injunction, judgment or decree of
any court or governmental agency or instrumentality and there is no Action by
the Corporation currently pending or which the Corporation intends to initiate.
3.13. No Defaults.
The Corporation is not in default under its Certificate of
Incorporation or bylaws. The Corporation is not in default: (a) under any note,
indenture, mortgage, other instrument evidencing indebtedness, lease, purchase
or sales order, or any other material contract, agreement or instrument to which
it is a party or by which it or any of its property is bound or affected or (b)
with respect to any order, writ, injunction, judgment or decree of any court or
any federal, state, municipal or other domestic or foreign governmental
department, commission, board, bureau, agency or instrumentality. To the best
knowledge of the Corporation, there exists no condition, event or act which
constitutes, or which after notice, lapse of time or both, would constitute, a
default under any of the foregoing.
3.14. Labor Agreements and Actions.
The Corporation is not bound by or subject to any contract,
commitment or arrangement with any labor union, and no labor union has
requested, sought or attempted to represent any employees, representatives or
agents of the Corporation. There is no strike or other labor dispute involving
the Corporation pending nor, to the best knowledge of the Corporation,
threatened, nor is the Corporation aware of any labor organization activity
involving its employees.
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3.15. Compliance.
Except as provided on Schedule 3.15 attached hereto, the Corporation
(a) has complied in all material respects with all federal, state, local and
foreign laws, ordinances, regulations and orders applicable to its businesses or
the ownership of its assets, and the Corporation has not received notice of any
claimed default with respect to such laws, ordinances, rules and regulations;
and (b) has or has applied for all federal, state, local and foreign
governmental licenses and permits necessary or required to enable it to carry on
its business as now conducted and as proposed to be conducted. To the
Corporation's best knowledge, such licenses and permits, if issued, are in full
force and effect, no violations have been recorded in respect of any such
licenses or permits, and no proceeding is pending or, to the best knowledge of
the Corporation, threatened to revoke or limit any thereof. None of the
aforesaid licenses and permits shall be affected in any material adverse respect
by any Operative Document. The business of the Corporation as presently
conducted and as proposed to be conducted does not and will not, violate any
laws, ordinances, regulations or orders relating to the practice of medicine,
except as could not reasonably be expected to have a material adverse effect on
the financial condition, results of operations, assets, liabilities, business or
prospects of the Corporation.
3.16. Insurance.
To the Corporation's best knowledge, all policies of commercial
general liability, professional liability, theft, fidelity, life, fire, product
liability, worker's compensation, health, excess liability and other forms of
insurance held by the Corporation are valid and enforceable policies and are
outstanding and duly in force and all premiums with respect thereto are paid to
date. The amounts of coverage under such policies of insurance for the assets
and property of the Corporation are (a) adequate against risks usually insured
against by Persons operating similar businesses and operating similar properties
and (b) in compliance in all respects with all federal, state, local and foreign
laws, ordinances, regulations and orders applicable to its business that govern
such amounts. There is no default with respect to any provision contained in any
insurance policy, nor has there been any failure to give any notice or present
any claim under any insurance policy in a timely fashion or in the manner or
detail required by the policy. There are no outstanding claims under any
insurance policy. No insurance policy provides for retrospective or retroactive
premium adjustments. No notice of cancellation or non-renewal with respect to,
or disallowance of any claim under, any insurance policy has been received by
the Corporation. The Corporation has not been refused any insurance, nor has its
coverage been limited by any insurance carrier to which it has applied for
insurance or with which it has carried insurance during the last five years.
3.17. Conflicts.
The execution and delivery of the Operative Documents by the
Corporation, the consummation of the transactions contemplated hereby and
thereby and compliance with the provisions hereof and thereof by the Corporation
and the issuance,
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sale and delivery of Preferred Stock by the Corporation, will not (i) violate
any provision of law, statute, rule or regulation, or any ruling, writ,
injunction, order, judgment or decree of any court, administrative agency or
other governmental body applicable to the Corporation or (ii) conflict with or
result in any breach of any of the terms, conditions or provisions of, or
constitute (with due notice or lapse of time, or both) a default (or give rise
to any right of termination, cancellation or acceleration) under, the
Certificate of Incorporation or bylaws, or under any note, indenture, mortgage,
lease, purchase or sales order or other material contract, agreement or
instrument to which the Corporation is a party or by which it or any of its
property is bound or affected, or (iii) result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
the Corporation.
3.18. Accounts; Related Transactions.
All accounts and notes receivable of the Corporation as of the date
of the Recent Balance Sheet and all accounts and notes receivable arising
between such date and the Closing Date are and will be valid and subsisting and
represent and will represent accounts actually accrued in the ordinary course of
business consistent with past practices. There have been no accounts receivable
of the Corporation converted to notes receivable or otherwise extended. Except
as provided on Schedule 3.18 attached hereto, no current or former stockholder,
director, officer or employee of the Corporation nor any relative or "associate"
(as defined in the rules and regulations promulgated under the Exchange Act) of
any such Person, is presently, directly or indirectly through his or its
affiliation with any other person or entity, a party to any transaction with the
Corporation providing for the furnishing of services (other than employment of
such individuals by the Corporation) by or to, or the sale of products by or to,
or rental of real or personal property from or to, or otherwise requiring cash
payments to or by, any such Person in excess of an aggregate of $1,000.00. For
purposes of this Agreement, a transaction of the type described in this Section
3.18 is sometimes herein referred to as a "Related Transaction".
3.19. Securities Law Compliance.
The Corporation has not offered any Common Stock, or any security or
securities similar to the Common Stock or the Preferred Stock, for sale to, or
solicited any offers to buy any of the foregoing from, or otherwise approached
or negotiated in respect thereof, with any Person or Persons other than a
limited number of institutional or other sophisticated investors deemed to be
"accredited investors" as such term is defined in Rule 501(a) of Regulation D
adopted under the Securities Act and no more than thirty five unaccredited
investors, and in accordance with, the Securities Act.
3.20. No Consent or Approval Required.
Except as provided on Schedule 3.20 attached hereto and for the
filing of any notice subsequent to the Closing that may be required under
applicable federal securities laws (which, if required, shall be filed on a
timely basis as may be so required), no permit, consent, approval or
authorization of, or declaration to, or filing with, any
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Person (governmental or private) is required for the valid authorization,
execution, delivery and performance by the Corporation of the Operative
Documents or for the valid authorization, designation, issuance, sale and
delivery of the Preferred Stock, or the carrying out by the Corporation of the
transactions contemplated hereby.
3.21. Agreements.
a) Except as listed on Schedule 3.21 attached hereto, (x) the
Corporation is not a party to any written or oral contract not made in the
ordinary course of business and (y) whether or not made in the ordinary course
of business, the Corporation is not a party to any written or oral:
(i) contract with any labor union;
(ii) contract for the future purchase of fixed assets or for the
future purchase of materials, supplies or equipment in excess
of normal operating requirements;
(iii) contract for the employment of any officer, individual
employee or other person on a full-time basis or any contract
with any person on a consulting basis;
(iv) bonus, pension, profit-sharing, retirement, stock purchase,
stock option, hospitalization, medical insurance or similar
plan, contract or understanding in effect with respect to
employees or any of them or the employees of others;
(v) agreement or indenture relating to the borrowing of money or
to the mortgaging, pledging or otherwise placing of a lien on
any assets of the Corporation;
(vi) guaranty of any obligation for borrowed money or otherwise;
(vii) lease or agreement under which the Corporation is lessee of or
holds or operates any property, real or personal, owned by any
other party;
(viii)lease or agreement under which the Corporation is lessor of or
permits any third party to hold or operate any property, real
or personal, owned or controlled by the Corporation;
(ix) agreement or other commitment for capital expenditures in
excess of $10,000.00;
(x) distributor, dealer, manufacturer's representative or sales
agency agreement which is not terminable on less than ninety
(90) days' notice without cost or other liability to the
Corporation (except for agreements
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which, in the aggregate, are not material to the business of
the Corporation);
(xi) contract, agreement or commitment under which the Corporation
is obligated to pay any broker's fees, finder's fees or any
such similar fees, to any third party;
(xii) contract, agreement or commitment under which the Corporation
has issued, or may become obligated to issue, any shares of
capital stock of the Corporation, or any warrants, options,
convertible securities or other commitments pursuant to which
the Corporation is or may become obligated to issue any shares
of its capital stock;
(xiii) contract, agreement or commitment under which the Corporation
is obligated to repurchase or otherwise acquire or retire any
shares of its capital stock;
(xiv) contract, agreement or commitment with officers, directors,
employees or shareholder of the Corporation or persons or
entities related to or affiliated with any such persons;
(xv) contract, agreement or commitment relating to product
development;
(xvi) agreements which limit the freedom of the Corporation or its
employees, officers or directors to engage in any area of
business or to compete with any other person or entity; or
(xvii) any other contract, agreement, arrangement or understanding
which is material to the operation of the business of the
Corporation.
The Corporation has furnished to the Purchasers true and correct copies of all
such written agreements and other documents.
b) Except as contemplated by the Operative Documents, no Person has
any right to cause the Corporation to effect the registration under the
Securities Act of any shares of Common Stock, Preferred Stock or any other
securities (including without limitation, debt securities) of the Corporation.
c) Except as provided in Schedule 3.21 attached hereto, the
execution, delivery and performance by the Corporation of the Operative
Documents and the offering, issuance and sale of the Preferred Stock, the
Warrants and the Common Stock issuable upon conversion of the Preferred Stock
and upon the exercise of the Warrants does not and will not conflict with or
result in any violation of, breach of or default under any purchase order issued
by the Corporation for an amount equal to or in excess of $5,000 or any other
contract, obligation or commitment of the Corporation, or any charter provision,
bylaw or corporate restriction of the Corporation, or result in the creation of
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any lien, charge, security interest or encumbrance of any nature upon any of the
properties or assets of the Corporation or violate any instrument, agreement,
judgment, decree, order, statute, rule or governmental regulation applicable to
the Corporation or to which the Corporation is a party or by which it or any of
its properties are bound.
3.22. Brokers.
Except as provided on Schedule 3.22 attached hereto, neither the
Corporation, nor any of its officers, directors, employees or stockholders have
employed any broker or finder in connection with the transactions contemplated
by this Agreement.
3.23. Employee Benefit Plans; Employees.
a) Except as provided on Schedule 3.23 attached hereto, the
Corporation has no employee benefit plans, pension, retirement, deferred
compensation, profit sharing, bonus, incentive, stock option, severance, health,
life, disability, group insurance or other plans, programs or arrangements.
b) No employee of the Corporation will become entitled to any bonus,
retirement, severance or similar benefit or enhanced benefit solely as a result
of the transactions contemplated hereby.
c) The Corporation is not aware that any officer, director,
executive or management employee of or consultant to the Corporation has any
plans to terminate his relationship with the Corporation. Except as provided in
Schedule 3.23 attached hereto, the Corporation is in compliance with and has
been in compliance with all applicable laws relating to the employment of labor,
including without limitation, provisions relating to wages, laws, equal
opportunity, collective bargaining and the payment of social security and other
taxes. Except as provided on Schedule 3.23 attached hereto, all employees of the
Corporation are engaged on a full-time basis.
3.24. Investment Company Act.
The Corporation is not an "investment company" as that term is
defined in, and is not otherwise subject to regulation under, the Investment
Company Act of 1940, as amended.
3.25. Small Business Concern.
The Company represents and warrants to the SBICs that the Company,
taken together with its "affiliates" (as that term is defined in 13 C.F.R.
ss.121.103), is a "Small Business Concern" within the meaning of 15 U.S.C.
ss.662(5), that is Section 103(5) of the Small Business Investment Act of 1958,
as amended (the "Act"), and the regulations thereunder, including 13 C.F.R.
ss.107, and meets the applicable size eligibility criteria set forth in 13
C.F.R. ss.121.301(c)(1) or the industry standard covering the industry in which
the Company is primarily engaged as set forth in 13 C.F.R. ss.121.301(c)(2).
Neither the Company nor any of its subsidiaries presently engages in any
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activities for which a small business investment company is prohibited from
providing funds by the SBIC Act, including 13 C.F.R. ss.107.
3.26. Real Property Holding Corporation.
The Corporation is not a real property holding corporation within
the meaning of Code Section 897(c)(2) and any regulations promulgated
thereunder.
3.27. Disclosure.
Neither this Agreement nor any other written document, certificate,
instrument or statement furnished or made to the Purchasers by or on behalf of
the Corporation in connection with the transactions contemplated hereby contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein and therein not
misleading. There is no fact known to the Corporation which materially adversely
affects the business, properties or financial condition of the Corporation which
has not been set forth in this Agreement or in the other documents,
certificates, instruments or statements furnished to the Purchasers by or on
behalf of the Corporation.
3.28. Year 2000.
The computer systems and software created by the Corporation are
able to accurately process, provide and/or receive date data, including but not
limited to, calculating, comparing and sequencing from, into and between the
twentieth century (through year 1999), the year 2000 and the twenty-first
century including leap year calculations. To the Corporation's knowledge, each
vendor of products or services to the Corporation will continue to furnish its
products or services to the Corporation without interruption or material delay
on and after January 1, 2000. To the Corporation's knowledge, any and all
computer hardware, software, firmware and other product or service furnished by
any vendor to the Corporation, including any and all enhancements, upgrades,
customizations, modifications, maintenance and the like, are able to accurately
process, provide and/or receive date data, including but not limited to,
calculating, comparing and sequencing from into and between the twentieth
century (through year 1999), the year 2000 and the twenty-first century
including leap year calculations.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS.
Each of the Purchasers, severally and not jointly, represents,
warrants and covenants to the Corporation that:
a) the execution, delivery and performance of this Agreement, the
Registration Rights Agreement and the Shareholders' Agreement have been duly
authorized by all requisite action by the Purchasers and each constitutes the
valid and binding obligation of the Purchasers, enforceable in accordance with
its terms;
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b) it is acquiring the Preferred Stock and Warrants for its own
account, for investment and not with a view to the distribution thereof within
the meaning of the Securities Act;
c) it understands that the Preferred Stock and Warrants have not
been, and will not be, registered under the Securities Act, in each case by
reason of its issuance by the Corporation in a transaction exempt from the
registration requirements of the Securities Act; and that the Preferred Stock
and Warrants must be held by it indefinitely unless a subsequent disposition
thereof is registered under the Securities Act or is exempt from registration;
d) it understands that the exemption from registration afforded by
Rule 144 (the provisions of which are known to it) promulgated under the
Securities Act depends on the satisfaction of various conditions, and that, if
and when applicable, Rule 144 may only afford the basis for sales in limited
amounts;
e) it will not transfer the Preferred Stock or Warrants except in
compliance with the Shareholders' Agreement, the Registration Rights Agreement
and applicable law;
f) it has not employed any broker or finder in connection with the
transactions contemplated by this Agreement;
g) (i) it is an "accredited investor" as defined in Rule 501(a)
promulgated under the Securities Act, and by reason of its business and
financial experience, and the business and financial experience of those persons
retained by it to advise it with respect to its investment in the Preferred
Stock, has such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and risks of the
prospective investment, is able to bear the economic risk of such investment
and, at the present time, is able to afford a complete loss of such investment
and (ii) it is familiar with the business of the Corporation and has had the
opportunity to ask questions of the officers and directors of the Corporation
and to obtain such information about the financial condition of the Corporation
as it has requested; and
h) it is aware that each certificate representing shares of
Preferred Stock or Common Stock issued pursuant to the transactions contemplated
hereby (including upon exercise of Warrants or conversion of Preferred Stock)
shall contain a legend substantially to the effect set forth on Exhibit F
hereto.
SECTION 5. CONDITIONS TO AND DELIVERIES AT CLOSING.
The obligations of each of the Purchasers hereunder are subject to
the satisfaction of the following conditions at or before the Initial Closing;
provided, however, that each of the following conditions may be waived in
writing, in advance, by the approval of each of the Purchasers:
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5.1. Preferred Stock.
The Purchasers shall have received the Preferred Stock to be issued
in connection with such Closing which shall have been duly authorized, issued
and executed by the Corporation. The gross proceeds to the Corporation from the
sale of the Preferred Stock and Warrants at the Initial Closing shall be no less
than $6,875,043.
5.2. Accuracy of Representations and Warranties.
To the Corporation's best knowledge, each representation and
warranty contained in Section 3 and in the Operative Documents shall be true on
and as of such Closing Date with the same effect as though such representation
and warranty had been made on and as of that date.
5.3. Performance.
The Corporation shall have performed and complied with all
agreements and conditions contained in this Agreement and in the Operative
Documents required to be performed or complied with by the Corporation prior to
or at the Closing.
5.4. Corporate Proceedings; Consents, Etc.
All corporate and other proceedings to be taken and all waivers and
consents to be obtained in connection with the transactions contemplated by the
Operative Documents shall have been taken or obtained and all documents incident
thereto shall be satisfactory in form and substance to each of the Purchasers
and to their counsel and each of the Purchasers shall have received all such
originals or certified or other copies of such documents it may reasonably have
requested.
5.5. Certificate of Secretary.
The Purchasers shall have received a certificate of the Secretary of
the Corporation, dated the date of the Closing, to the effect that (i) attached
thereto is a true and complete copy of the Certificate of Incorporation and the
bylaws of the Corporation (as amended through such date) as in effect on the
date thereof, (ii) the Certificate of Incorporation and the bylaws are
sufficient in form and substance to permit the transactions contemplated in the
Operative Documents, (iii) attached thereto is a true and complete copy of
resolutions adopted by the Board of Directors authorizing the execution,
delivery and performance of the Operative Documents, the execution, issuance and
delivery of the Preferred Stock and Warrants, and certifying that such
resolutions are the only resolutions of the Board of Directors with respect to
such matters, (iv) the Corporation is in good standing in reliance on a good
standing certificate from the Secretary of State of the State of Delaware as of
a recent date.
5.6. Shareholders' Agreement and Registration Rights Agreement.
The Shareholders' Agreement and the Registration Rights Agreement
shall have each been executed and delivered by the Corporation and such other
parties
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named therein. In addition, the Corporation and such parties shall have complied
with all of the terms and conditions of the Shareholders' Agreement, including
without limitation, the placement of legends required to be placed on securities
owned by such parties.
5.7. Adverse Proceedings; No Material Adverse Effect.
No suit, action, or other proceeding seeking to restrain, prevent or
change the transactions contemplated hereby, in the Registration Rights
Agreement or in the Shareholders' Agreement or otherwise questioning the
validity or legality of such transactions shall have been instituted and be
pending. No event, occurrence, fact, condition, change, development or effect
shall have occurred, exist or come to exist since March 31, 1999, that,
individually or in the aggregate, has constituted or resulted in or could
reasonably be expected to constitute or result in, a material adverse effect on
the Corporation other than as may be due to a change in general economic
conditions.
5.8. Small Business Administration Documentation.
On or before the closing of the Investment, the SBIC shall have
received from the Company SBA Form 480 (Size Status Declaration) and SBA Form
652 (Assurance of Compliance ) which have been completed and executed by the
Company, and SBA Form 1031 (Portfolio Finance Report), Parts A and B of which
has been completed by the Company (the "SBA Documents").
5.9. Absence of Liens.
The Corporation's business and assets shall be free and clear of all
liens, claims, security interests and encumbrances whatsoever except as set
forth on Schedule 3.9 attached hereto.
5.10. Opinion of Counsel.
The Purchasers shall have received opinions from Rifkin, Livingston,
Levitan & Silver, LLC and Simpson Thacher & Bartlett, counsel for the
Corporation, dated the Closing Date, addressed to the Purchasers, and
satisfactory in form and substance to Purchasers.
5.11. Effectiveness.
The Certificate of Designations shall have been filed with the
Secretary of State of the State of Delaware.
5.12. Approvals.
The Board of Directors of the Corporation shall have each duly
approved this Agreement, the Shareholders' Agreement, the Registration Rights
Agreement, the Certificate of Designations, the Warrants and the transactions
contemplated under each of the foregoing, and the Purchasers shall have received
a certificate of an officer of the Corporation certifying the resolutions or the
Board of Directors of the Corporation with respect to such approvals. Any
shareholder approval required in connection with the
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transaction contemplated hereby shall have been obtained, and the Purchasers
shall have received a certificate of an officer of the Corporation certifying
the resolutions of the shareholders of the Corporation with respect to such
approvals.
5.13. Other Matters.
All business and legal due diligence shall have been satisfactorily
completed by each of the Purchasers and their counsel, as determined in each of
the Purchasers' sole discretion. All corporate, legal, governmental,
administrative and other proceedings in connection with the transactions
contemplated by this Agreement and all documents and instruments incident to
such transactions shall be reasonably satisfactory in substance and form to the
Purchasers, and the Purchasers shall have received all such counterpart
originals or certified or other copies of such documents as it may reasonably
request.
SECTION 6. COVENANTS.
6.1 Negative Covenants.
The Corporation will not, without the consent of holders of at least
a majority of the Preferred Stock (other than holders as to which the
Corporation has reasonably withheld its consent to the assignment or transfer of
the benefit of such covenants as contemplated by Section 10.1), from and after
the date hereof:
(i) redeem, purchase or otherwise acquire, or permit any subsidiary
to redeem, purchase or otherwise acquire, any of the Corporation's equity
securities or any securities exercisable for, exchangeable for or
convertible into such equity securities, except to the extent permitted
pursuant to the terms and provisions of the Certificate of Incorporation,
except for redemptions, purchases or acquisitions (i) in connection with
obligations existing on the date hereof under the Shareholders' Agreement
and the Employment Agreement, dated as of February 1, 1999, between the
Corporation and Scott M. Rifkin, M.D.; (ii) in connection with delivery of
equity securities or any securities exercisable for, exchangeable for or
convertible into such equity securities of the Corporation upon the
exercise, conversion or exchange of (a) the warrants, options or
convertible securities outstanding on the date hereof ; (b) the Warrants;
(c) the Series A Stock; (d) the Preferred Stock; and (e) warrants issued
to Wyndhurst in connection with the transactions contemplated hereby;
(iii) using available cash of the Corporation in an amount not to exceed
$500,000 in the aggregate; and (iv) purchases financed through issuances
of equity securities or any securities exercisable for, exchangeable for
or convertible into such equity securities of the Corporation at a price
per share of Common Stock (determined on an as converted basis in the case
of any securities exercisable for, exchangeable for or convertible into
such equity securities) not less than the price per share of Common Stock
being paid in conjunction with such redemption, purchase or acquisition;
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(ii) unless approved by the Corporation's board of directors, make,
or permit any subsidiary to make, any loans or advances to, guarantees for
the benefit of, or investments in, any person (other than a wholly-owned
subsidiary), except for (a) advances to employees in the ordinary course
of business and (b) investments having a stated maturity no greater than
one year from the date the Corporation makes such investment in
obligations of the United States government or any agency thereof or
obligations guaranteed by the United States government, certificates of
deposit of commercial banks having combined capital and surplus of at
least $50 million, commercial paper with a rating of at least "Prime-1"
according to Moody's Investors Service, Inc. or money-market funds with
assets of at least $25 million;
(iii) enter into, or permit any of its subsidiaries to enter into,
any agreement or instrument, which by its terms would restrict the
Corporation's ability to perform any of its obligations pursuant to the
terms of this Agreement, the Registration Rights Agreement, the
Certificate of Incorporation, the Shareholders' Agreement or the Company's
bylaws (including, without limitation, all obligations relating to making
redemptions of the Preferred Stock);
(iv) directly or indirectly, or permit any subsidiary to directly or
indirectly, enter into, amend or terminate any Related Transaction,
without the approval of the Board of Directors of the Corporation, except
for the payment of salary and benefits in the ordinary course of business;
(v) increase the compensation paid to any of the Corporation's
officers, except pursuant to any employment agreement or arrangement as in
existence as of the Closing, or enter into any new or amended employment
agreement or arrangement with any officer of the Corporation, unless such
increase, agreement or arrangement is approved by a majority of the
disinterested members of the Compensation Committee of the Corporation;
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(vi) incur, assume or otherwise suffer to exist any Debt, except (i)
Debt reflected on the Corporation's Recent Balance Sheet and delivered to
the Purchasers in connection with the issuance of the Preferred Stock;
(ii) capitalized lease obligations in an amount not to exceed $500,000 in
the aggregate at any time outstanding; (iii) arising under a bank credit
facility entered into by the Corporation after the date hereof on
commercially reasonable terms in an aggregate amount at any time
outstanding not to exceed $3,000,000; and (iv) each Note (as defined in
the Shareholders' Agreement (for purposes of this Agreement, "Debt" means,
without duplication, (a) all obligations for borrowed money and all
obligations evidenced by bonds, debentures, notes or other similar
instruments on which interest charges are customarily paid, (b) all
obligations, contingent of otherwise, relative to the face amount of all
letters of credit, whether or not drawn, and banker's acceptances issued
for the account of the Corporation or its subsidiaries, (c) all
capitalized lease obligations (to the extent required by generally
accepted accounting principles to be included on the balance sheets) and
(d) all obligations (contingent or otherwise) to guarantee, purchase or
otherwise acquire, or otherwise assure a creditor against loss in respect
of, Debt of another person);
(vii) sell, lease or exchange, or permit any subsidiary to sell,
lease or exchange, any assets of the Corporation and/or any subsidiary
representing in the aggregate more than 10% of the Company's consolidated
net worth determined in accordance with United States generally accepted
accounting principles consistently applied, except for sales, leases,
exchanges and licenses in the ordinary course of business;
(viii) acquire (including pursuant to a merger or consolidation), or
permit any subsidiary to acquire, all or any substantial portion of the
business or assets of any person, where the acquisition involves an
aggregate consideration of more than $7,500,000, unless after giving
effect to such transaction or series of transactions, the Corporation
would be in compliance with the covenants set forth in this Section 6.1;
(ix) declare, pay or set aside any dividends or distributions on any
class of stock; or
(x) engage in any business or line of business other than the
hosting, development and provision of interactive consumer healthcare
networks, related internet health care business and related electronic
commerce.
6.2 Equity Security Restrictions.
The Corporation will not, without the consent of holders of at least
a majority of the Preferred Stock outstanding, authorize, issue or enter into
any agreement providing for the issuance (contingent or otherwise) of any notes
or debt securities containing equity features (including, without limitation,
any notes or debt securities
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convertible into or exchangeable or exercisable for equity securities, issued in
connection with the issuance of equity securities or containing profit
participation features), or any equity securities (or any securities convertible
into, or exchangeable or exercisable for, any equity securities) ranking senior
as to dividends or upon liquidation to the Preferred Stock.
6.3 Affirmative Covenants.
The Corporation will, and will cause each subsidiary to:
(i) at all times cause to be done all things reasonably necessary to
maintain, preserve and renew its corporate existence and all material
licenses, authorizations and permits necessary to the conduct of its
businesses;
(ii) maintain and keep its properties in good repair, working order
and condition, ordinary wear and tear excepted, and from time to time make
all necessary or desirable repairs, renewals and replacements, so that its
businesses may be properly and advantageously conducted at all times,
except where the failure to so comply would not have a material adverse
effect on the business, assets, financial condition, results of operations
or prospects of the Corporation and its subsidiaries taken as a whole;
(iii) pay and discharge when payable all taxes, assessments and
governmental charges imposed upon its properties or upon the income or
profits therefrom (in each case before the same become delinquent and
before penalties accrue thereon) and all claims for labor, materials or
supplies which if unpaid might by law become a lien upon any of its
property, to the extent to which the failure to so pay or discharge might
reasonably be expected to have a material adverse effect upon the
business, assets, financial condition, results of operations or prospects
of the Corporation and its subsidiaries taken as a whole, unless and to
the extent that the same are being contested in good faith and by
appropriate proceedings and adequate reserves (as determined in accordance
with generally accepted accounting principles, consistently applied) have
been established on its books with respect thereto;
(iv) comply with all other obligations which it incurs pursuant to
any contract or agreement, whether oral or written, express or implied, as
such obligations become due to the extent to which the failure to so
comply might reasonably be expected to have a material adverse effect upon
the business, assets, financial condition, results of operations or
prospects of the Corporation and its subsidiaries taken as a whole, unless
and to the extent that the same are being contested in good faith and by
appropriate proceedings and adequate reserves (as determined in accordance
with generally accepted accounting principles, consistently applied) have
been established on its books with respect thereto;
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(v) comply with all applicable laws, rules, regulations and orders
of all domestic and foreign governmental authorities, including, without
limitation, the Foreign Corrupt Practices Act and environmental laws or
regulations or requirements, the violation of which might reasonably be
expected to have a material adverse effect upon the business, assets,
financial condition, results of operations or prospects of the Corporation
and its subsidiaries taken as a whole;
(vi) apply for and use its best efforts to continue in force with
responsible insurance companies adequate insurance covering risks of such
types and in such amounts as are customary for corporations of similar
size engaged in similar lines of business and, without limiting the
foregoing, maintain "key man" life insurance covering Scott M. Rifkin (so
long as such individual is an employee of the Corporation) and naming the
Corporation as beneficiary in the amount of $1,000,000 for such policy,
the proceeds of which will be available for general corporate purposes of
the Corporation; and
(vii) maintain proper books of record and account which fairly
present its financial condition and results of operations and make
provisions on its financial statements for all such proper reserves as in
each case are required in accordance with generally accepted accounting
principles, consistently applied.
6.4 Compliance with Agreements.
The Corporation will use its best efforts to perform and observe (i)
all of its obligations to each holder of the Preferred Stock and Warrants and
all of its obligations to each holder of the underlying Common Stock and
Preferred Stock set forth in the Certificate of Incorporation (as amended prior
to the Closing) and the Corporation's bylaws and (ii) all of its obligations to
each holder of Registrable Securities set forth in the Registration Rights
Agreement.
6.5 Reservation of Common Stock.
The Corporation will at all times reserve and keep available out of
its authorized but unissued shares of Common Stock, solely for the purpose of
issuance upon the conversion of the Preferred Stock, the number of shares of
Common Stock issuable upon the conversion of all outstanding Preferred Stock.
All shares of Preferred Stock and Common Stock which are so issuable will, when
issued, be duly and validly issued, fully paid and nonassessable and free from
all taxes, liens and charges. The Corporation will take all such actions as may
be necessary to assure that all such shares of Preferred Stock and Common Stock
may be so issued without violation of any applicable law or governmental
regulation or any requirements of any domestic securities exchange upon which
shares of stock may be listed (except for official notice of issuance which will
be promptly transmitted by the Corporation upon issuance).
6.6 Proprietary Information.
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The Corporation will, and will cause each subsidiary to, use its
best efforts to possess and maintain all material Proprietary Information which
the Corporation deems necessary to the conduct of their respective businesses
and own all right, title and interest in and to, or have a valid license or
right for, all material Proprietary Information used by the Corporation or any
subsidiary in the conduct of their respective businesses.
6.7 Public Disclosures.
The Corporation will not, nor will it permit any subsidiary to,
disclose any Purchaser's name or identity as an investor in the Corporation in
any press release or other public announcement or in any document or material
filed with any governmental entity, without the prior written consent of such
Purchaser, unless such disclosure is required by applicable law or governmental
regulations or by order of a court of competent jurisdiction in which case prior
to making such disclosure the Corporation will use reasonable efforts to give
written notice to such Purchaser describing in reasonable detail the proposed
content of such disclosure and will permit such Purchaser to review and comment
upon the form and substance of such disclosure.
6.8 ERISA.
Neither the Corporation nor any subsidiary shall incur any material
liability with respect to retiree medical or death benefits or unfunded benefits
payable after termination of employment. All employee benefit plans and
arrangements maintained or contributed to by the Corporation, any subsidiary or
any ERISA Affiliate shall be maintained in compliance in all material respects
with all applicable law, including any reporting requirements. With respect to
any plan maintained by or contributed to by the Corporation or any subsidiary,
neither the Corporation nor any subsidiary will fail to make any contribution
due from it under the terms of such plan or as required by law. An "ERISA
Affiliate" for purposes of this Section is any trade or business, whether or not
incorporated, which, together with the Corporation, is under common control, as
described in Section 414(b) or (c) of the Code.
6.9 Best Efforts.
The Corporation will take or cause to be taken all actions and make
or cause to be made all filings necessary or appropriate in connection with the
consummation of the transactions contemplated by this agreement and the
performance of the Corporation's obligations hereunder.
6.10 Remedies of Preferred Stock.
(a) If on any date (i) the Corporation shall have breached in any
material respect any of the covenants set forth in Section 6.1(i), (iii), (iv),
(v), (vi), (vii), (viii), (ix) or (x) or Section 6.2 of this Agreement and such
breach continues for a period of 30 days after notice in writing by a majority
in interest of the Purchasers, or (ii) any court or regulatory or administrative
agency shall have issued a judgment or ruling that the Corporation or any
subsidiary is engaged in the practice of medicine and such judgment
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or ruling is reasonably likely to result in a material adverse change in the
financial condition, results of operations, assets, liabilities, business or
prospects of the Corporation and its subsidiaries taken as a whole (each of (i)
and (ii), a "Material Breach"), then, within 15 days of the first such
occurrence, the Corporation shall notify the holders in writing that either (A)
the number of directors constituting the Board of Directors of the Corporation
has been increased by one director (the "Additional Director"), and the holders
of the Preferred Stock, by vote of the holders of a majority of the shares of
Preferred Stock, shall have the right to elect such Additional Director who
shall be in addition to the remaining directors; or (B) the Corporation has
granted to each holder of Preferred Stock the right, at such holder's option
(subject to clause (c) below), exercisable by written notice to the Corporation
within 90 days after written notice by the Corporation of its election under
this clause (B), to require the Corporation to repurchase all, but not less than
all, of its shares of Preferred Stock at a redemption price equal to the greater
of (i) the liquidation value of each such share plus all accrued and unpaid
dividends thereon, and (ii) the Fair Market Value per share. Payment of the
redemption price shall be made by the Corporation within 60 days after the date
of receipt of a written notice of redemption and surrender of the certificates
representing the holder's shares of Preferred Stock at the Corporation's
principal office. In the case of any increase in the size of the Board of
Directors pursuant to this paragraph, the Additional Director shall continue as
director and such additional voting rights shall continue, until such time as
such Material Breach shall have been cured. If any Material Breach shall have
occurred and is continuing more than 180 days after such occurrence or if any
further Material Breach shall occur then, notwithstanding the Corporation's
election of the remedy prescribed in clause (A) above, each holder of Preferred
Stock shall thereafter have the option to exercise the rights prescribed in each
of clauses (A) and (B) above.
(b) The rights of the holders of Preferred Stock under paragraph (a)
shall revest in the event of each and every subsequent Material Breach.
(c) The foregoing rights of holders of Preferred Stock to take any
actions as provided in this Section 6.10 may be exercised only by action of the
holders of a majority of the outstanding shares of Preferred Stock, as the case
may be.
(d) If the funds of the Corporation legally available for redemption
of the shares of Preferred Stock surrendered for redemption are insufficient to
redeem the total number of shares of Preferred Stock surrendered for redemption,
those funds which are legally available will be used to redeem the maximum
possible number of shares of Preferred Stock surrendered for redemption ratably
among the shares of Preferred Stock so surrendered. At any time thereafter when
additional funds of the Corporation are legally available for the redemption of
Preferred Stock so surrendered for redemption, such funds will immediately be
used to redeem any such shares of Preferred Stock ratably.
(e) No share of Preferred Stock is entitled to any dividends
declared after the date on which the redemption price of such share is paid. On
such date all rights of
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the holder of such shares will cease, and such shares will not be deemed to be
outstanding.
(f) Any shares of Preferred Stock which are redeemed or otherwise
acquired by the Corporation will be cancelled and will not be reissued, sold or
transferred.
6.11 Notice of Proposals. The Corporation shall notify the
Purchasers promptly of any proposals received by the Corporation or made by the
Corporation with respect to any material business combination transaction and
shall keep the Purchasers informed of the status thereof on a reasonably current
basis.
6.12 Transfers. Prior to a Qualified IPO (as defined in the
Stockholders' Agreement), no Purchaser shall transfer any shares of Preferred
Stock without transferring a pro rata portion of the Warrants held by it.
The covenants set forth in this Section 6 shall expire upon
consummation of a Qualified IPO (as defined in the Shareholders' Agreement).
SECTION 7. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS, ETC.
All representations and warranties hereunder shall survive the
Closing for a period of two years and thereafter shall terminate. All statements
contained in any certificate or other instrument delivered by the Corporation or
by an officer on behalf of the Corporation through the date hereof pursuant to
this Agreement, any agreement delivered in connection herewith, or in connection
with the transactions contemplated by this Agreement shall constitute
representations and warranties by the Corporation under this Agreement. All
agreements contained herein shall survive indefinitely until, by their
respective terms, they are no longer operative, and in any event, so long as any
of the shares of Preferred Stock are outstanding.
SECTION 8. ADDITIONAL REMEDIES.
In case any one or more of the representations, warranties,
covenants and/or agreements set forth in this Agreement or any other agreement
executed in connection herewith shall have been breached by the Corporation, and
in case any claim is made against the Corporation by any shareholder that the
securities issued to it by the Corporation were issued in violation of any state
securities or "blue sky" laws, the Corporation agrees to indemnify, defend and
hold the Purchasers harmless from and against all demands, claims, actions or
causes of action, assessments, losses, damages (including, without limitation,
diminution in value), liabilities, costs and expenses (including, without
limitation, interest, penalties, fines, punitive damages and reasonable
attorneys' fees and disbursement), arising out of or resulting from any
misrepresentation or breach of any representation or warranty, or noncompliance
with any conditions or covenants in this Agreement, or in the schedules and
exhibits attached hereto or in any
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<PAGE>
documents furnished by or on behalf of the Corporation or such violation of
state securities or "blue sky" laws.
SECTION 9. EXPENSES.
The Corporation shall bear its own expenses and legal fees with
respect to the transactions contemplated by the Operative Documents and shall
pay, and save the Purchasers harmless against all liability for the payment of:
(a) all costs and other expenses incurred in connection with the GE Capital
Equity Investments, Inc.'s due diligence, the preparation of the Operative
Documents and the Corporation's performance of and compliance with all
agreements and conditions contained therein on its part to be performed or
complied with prior to the date hereof, including the fees and disbursements of
counsel to the Purchasers for services rendered in connection therewith up to
$50,000, (b) all costs and other expenses incurred by the Corporation in
connection with delivering to the Purchasers the Preferred Stock, Warrants and
the Common Stock upon conversion or exercise thereof, (c) the fees and
disbursements of one counsel to the Purchasers for services rendered after the
date hereof in connection with (i) any amendment or waiver with respect to any
of the terms or conditions of any of the Operative Documents or (ii) the
enforcement of the rights of the Purchasers pursuant to the terms and conditions
of any of the Operative Documents if such enforcement results from a breach by
the Corporation of any of its obligations under any of the Operative Documents.
The Corporation further agrees that it shall pay, and shall save the Purchasers
harmless from any and all liability with respect to, any stamp, issue or similar
taxes which may be determined to be payable in connection with the execution,
delivery, performance and/or issuance, as the case may be, of the Preferred
Stock, the Warrants or the Common Stock upon conversion or exercise thereof, or
any amendment or waiver of the terms or conditions of any of the Operative
Documents. The Corporation shall reimburse the members of its board of
directors, including any members designated by the holders of the Preferred
Stock, for travel and other out-of-pocket expenses associated with their
services as members of the board of directors, and shall reimburse the
Purchasers for any expenses incurred by Purchasers on behalf of the Corporation.
SECTION 10. ADDITIONAL PROVISIONS.
10.1. Successors and Assigns.
(a) This Agreement shall bind and inure to the benefit of the
Corporation and the Purchasers, and the respective successors, assigns,
transferees, heirs, executors and administrators of the Corporation and the
Purchasers, provided that the covenants in Section 6 shall not inure to the
benefit of any assignee or transferee of a Purchaser if the Corporation has
reasonably withheld its consent (subject to clause (b) of this Section 10.1) to
the assignment or transfer of the benefit of such covenants.
(b) Not less than five (5) days prior to any proposed transfer of
shares of Preferred Stock, the transferring Purchaser shall give written notice
to the Corporation identifying the proposed transferee and the number of shares
proposed to be transferred.
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<PAGE>
Unless within five (5) days of the receipt of such notice, the Corporation shall
notify such Purchaser that it does not consent to the assignment or transfer of
the benefit of the covenants in Section 6, the Corporation shall be deemed to
have consented to the assignment or transfer.
10.2. Entire Agreement.
This Agreement (as amended from time to time) and the other writings
referred to herein or delivered pursuant thereto (including all Schedules and
Exhibits hereto) which form a part hereof contain the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior and
contemporaneous arrangements or understandings with respect thereto.
10.3. Notices.
All notices, requests, consents and other communications hereunder
to any party shall be deemed to be sufficient if contained in a written
instrument delivered in person or duly sent by first class registered or
certified mail, return receipt requested, postage prepaid, by
nationally-recognized overnight courier service or by telecopy, receipt
confirmed, addressed to such party at the address set forth below or such other
address as may hereafter be designated in writing by the addressee to the
addressor listing all parties:
If to the Corporation, to:
AmericasDoctor.com, Inc.
11403 Cronridge Drive, Suite 200
Owings Mills, MD 21117
Attention: Scott M. Rifkin, M.D.
With copies to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Michael Nathan, Esq.
And
Rifkin, Livingston, Levitan & Silver, LLC
Harbor Court, Suite 200
575 South Charles Street
Baltimore, MD 21201
Attention: Jamie Eisenberg
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<PAGE>
If to the Purchasers, to:
GE Capital Equity Investments, Inc.
120 Long Ridge Road
Stamford, CT 06927
Attention: General Counsel
And:
Tullis-Dickerson Capital Focus II, L.P.
One Greenwich Plaza
Greenwich, CT 06830
Attention: Mr. Thomas P. Dickerson
And:
TD Origen Capital Fund, L.P.
150 Washington Avenue, Suite 201
Santa Fe, NM 87501
Attention: J. Michael Schafer
And:
TD Javelin Capital Fund, L.P.
2850 Cahaba Road, Suite 240
Birmingham, AL 35223
Attention: Lyle A. Hohnke
With copies to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
Attention: Warren S. de Wied, Esq.
And:
Law Offices of Gloria M. Skigen
One Greenwich Plaza, Third Floor
Greenwich, CT 06830
Attention: Gloria M. Skigen, Esq.
All such notices, advises and communications shall be deemed to have
been received (a) in the case of personal delivery or overnight courier service,
on the date
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<PAGE>
of such delivery, (b) in the case of telecopy, upon receipt of a confirmation
report, and (c) in the case of mailing, on the third day after the posting
thereof.
10.4. Changes.
The terms and provisions of this Agreement may not be modified or
amended, or any of the provisions hereof waived, temporarily or permanently,
except pursuant to the consent of the Corporation and the Purchasers, or their
permitted transferees.
10.5. Counterparts.
This Agreement may be executed in any number of counterparts, and
each such counterpart hereof shall be deemed to be an original instrument, but
all such counterparts together shall constitute but one agreement.
10.6. Headings.
The headings of the sections of this Agreement have been inserted
for convenience of reference only and shall not be deemed to be a part of this
Agreement.
10.7. Nouns and Pronouns.
Whenever the context may require, any pronouns used herein shall
include the corresponding masculine, feminine or neuter forms, and the similar
form of names and pronouns shall include the plural and vice-versa.
10.8 Governing Law; Consent to Jurisdiction.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS
OF THE STATE OF NEW YORK AND OF THE UNITED STATES OF AMERICA, IN EACH CASE
LOCATED IN THE COUNTY OF NEW YORK, FOR ANY ACTION, PROCEEDING OR INVESTIGATION
IN ANY COURT OR BEFORE ANY GOVERNMENTAL AUTHORITY ("LITIGATION") ARISING OUT OF
OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY (AND
AGREES NOT TO COMMENCE ANY LITIGATION RELATING THERETO EXCEPT IN SUCH COURTS),
AND FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY
U.S. REGISTERED MAIL TO ITS RESPECTIVE ADDRESS SET FORTH IN THIS AGREEMENT SHALL
BE EFFECTIVE SERVICE OF PROCESS FOR ANY LITIGATION BROUGHT AGAINST IT IN ANY
SUCH COURT. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF
THIS AGREEMENT OR THE TRANSACTIONS
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<PAGE>
CONTEMPLATED HEREBY IN THE COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES
OF AMERICA, IN EACH CASE LOCATED IN THE COUNTY OF NEW YORK, AND HEREBY FURTHER
IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY
SUCH COURT THAT ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. EACH OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO
TRIAL BY JURY IN CONNECTION WITH ANY LITIGATION ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
10.9 Publicity.
Each of the parties hereto agrees that it will make no statement
regarding the transactions contemplated hereby which is inconsistent with any
press release agreed to by the parties hereto. Notwithstanding the foregoing,
each of the parties hereto may, in documents required to be filed by it with any
regulatory body, make such statements with respect to the transactions
contemplated hereby as each may be advised is legally necessary upon advice of
its counsel.
10.10. Severability.
Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
10.11. Construction.
The parties acknowledge that each party and its counsel have
reviewed and revised this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits hereto.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed on their behalf.
THE CORPORATION:
AMERICASDOCTOR.COM, INC.
By: /s/ Scott M. Rifkin
-------------------------------------
Name: Scott M. Rifkin
Title: Chief Executive Officer
PURCHASERS:
GE CAPITAL EQUITY INVESTMENTS, INC.
By: /s/ Richard J. Miller
-------------------------------------
Name: Richard J. Miller
Title: Senior Vice President
TULLIS-DICKERSON CAPITAL FOCUS II, L.P.
By: Tullis-Dickerson Partners II, LLC,
its general partner
By: /s/ Thomas P. Dickerson
-------------------------------------
Thomas P. Dickerson, Principal
TD ORIGEN CAPITAL FUND, L.P.
By: TD II Regional Partners, Inc.,
its general partner
By: /s/ Thomas P. Dickerson
-------------------------------------
Thomas P. Dickerson, Vice President
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<PAGE>
TD JAVELIN CAPITAL FUND, L.P.
By: JVP, L.P., its general partner
By: JVP, Inc., its general partner
By: /s/ Thomas P. Dickerson
--------------------------------
Thomas P. Dickerson,
Vice President
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<PAGE>
Exhibit F
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY
APPLICABLE STATE SECURITIES LAWS (COLLECTIVELY REFERRED TO AS THE
"ACTS") AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS
FROM THE REGISTRATION REQUIREMENTS OF THE ACTS. THE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND WITHOUT A VIEW TO
DISTRIBUTION. THE SECURITIES MAY NOT BE RESOLD OR TRANSFERRED EXCEPT
(i) UPON REGISTRATION PURSUANT TO THE ACTS, OR (ii) PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE RESPECTIVE REGISTRATION PROVISIONS OF
THE ACTS, UPON RECEIPT BY THE ISSUER OF AN OPINION OF ACCEPTABLE
COUNSEL THAT REGISTRATION UNDER THE ACTS, OR ANY OF THEM, IS NOT
REQUIRED FOR RESALE OR TRANSFER."
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<PAGE>
Schedule A
Purchasers
<TABLE>
<CAPTION>
Aggregate
Preferred Common Stock Preferred Purchase
Name and Address Stock Warrants Stock Warrants Price
- ---------------- ----- -------- -------------- -----
<S> <C> <C> <C> <C>
GE Capital Equity 75,551 tbd 25,183 $4,999,965.12
Investments, Inc.
120 Long Ridge Road, CT
06927
Stamford
TD Javelin Capital Fund, 4,722 tbd 1,574 $312,501.96
L.P.
2850 Cahaba Road, Suite 240
Birmingham, AL 35223
TD Origen Capital Fund, L.P. 4,722 tbd 1,574 $312,501.96
One Technology Center
1155 University Blvd., S.E.
Albuquerque, NM 87106
Tullis-Dickerson Capital 28,332 tbd 9,444 $1,875,011.70
Focus II, L.P. ------- ---
One Greenwich Plaza
Greenwich, CT 06830
TOTAL: 113,327 37,775 $7,499,980.62
</TABLE>
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EXHIBIT 10.21
COMMON STOCK PURCHASE AGREEMENT
Among
AMERICA'S DOCTOR, INC.,
MEDICAL ADVISORY SYSTEMS, INC.
and
PREMIER RESEARCH WORLDWIDE, LTD.
Dated July 2, 1998
<PAGE>
COMMON STOCK PURCHASE AGREEMENT, dated July 2, 1998, between
AMERICA'S DOCTOR, INC., a Delaware corporation (the "Company"), and MEDICAL
ADVISORY SYSTEMS, INC., a Delaware corporation ("MAS"), and PREMIER RESEARCH
WORLDWIDE, LTD., a Delaware corporation ("PRWW"). MAS and PRWW are at times
herein individually referred to as a "Purchaser" and collectively as the
"Purchasers".
WHEREAS the Company wishes to issue and sell to each Purchaser an
aggregate of 50,000 shares of Series A Common Stock, $0.01 par value, of the
Company (the "Stock"), at a purchase price of $20 per share, payable as provided
herein;
WHEREAS each Purchaser wishes to purchase said shares, all on the
term and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants herein contained, the parties hereby agree as follows:
I.
THE SHARES
SECTION 1.01 Purchase and Sale of the Shares.
(a) Subject to the terms and conditions set forth herein, the
Company shall sell to each Purchaser, and each Purchaser shall purchase
from the Company, on the Closing Date, 50,000 authorized but unissued
shares of Stock (said shares being herein called the "Shares") at a
purchase price of $20 per share for an aggregate purchase price equal to
$1,000,000, and the Company shall issue and deliver a stock certificate or
certificates in definitive form, registered in the name of the Purchaser,
evidencing the Shares being purchased by it hereunder.
<PAGE>
(b) As payment in full for the Shares to be purchased by it, and
against delivery of the stock certificate or certificates therefor as
aforesaid, PRWW shall deliver to the Company on the Closing Date a
certified or official bank check in Philadelphia Clearing House funds
payable to the order of the Company in the amount of $1,000,000, or shall
transfer such sum to the account of the Company by wire transfer.
(c) As payment in full for the Shares to be purchased by MAS
hereunder, MAS shall:
(i) Provide to the Company during the Pre-Start-Up Period (as
such term is defined in the MAS Service Agreement referred to in paragraph 4(i)
below) the systems hardware, software and ongoing support specified more fully
in paragraph 13(a) of the MAS Service Agreement, for which MAS shall receive a
credit of $360,000, representing the purchase price for 18,000 shares of the
Stock hereunder; and
(ii) Make the twelve consecutive monthly payments specified
below (with the first such payment due in the month following the end of the
Pre-Start-Up Period), representing payment of the purchase price for the
indicated number of shares of the Stock:
A. Eleven monthly payments of $53,320 each, each
representing the purchase price for 2,666 shares.
B. A twelfth payment of $53,480, representing the
purchase price for 2,674 shares.
At the Closing, the Company shall execute 13 stock certificates
representing the respective shares of the Stock, the purchase price for which is
to be satisfied by MAS pursuant to clauses (i) and (ii) above. The Company shall
deliver each such certificate to MAS as the purchase
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<PAGE>
price for the Stock represented thereby has been satisfied or paid in
accordance with the above provisions.
SECTION 1.02 Closing Date. The closing of the sale and purchase of
the Shares shall take place at the office of Archer & Greiner, A Professional
Corporation, One Centennial Square, Haddonfield, New Jersey 08033, at 10:00
a.m., on July 2, 1998, or at such other date and time as may be mutually agreed
upon between the Purchasers and the Company (such date and time of closing being
herein called the "Closing Date").
II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchasers as follows:
SECTION 2.01 Organization, Qualifications and Corporate Power. The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware, and is duly licensed or
qualified as a foreign corporation in each other jurisdiction in which the
nature of the business transacted by it or the character of the properties owned
or leased by it makes such licensing or qualification necessary and where the
failure to be so qualified would have a material adverse effect upon the
business or assets of the Company. The Company has the corporate power and
authority to own and hold its properties and to carry on its business as
currently conducted, to execute, deliver and perform this Agreement, the
Registration Rights Agreement, the PRWW Service Agreement, the MAS Service
Agreement, the Stockholders Agreement and the Warrants (as such terms are
defined in Article IV or VI below) (collectively, the "Operative Documents"),
and to issue, sell and deliver the Shares and the Warrant Shares. The copies of
the Company's Certificate of Incorporation and by-laws heretofore delivered to
the Purchasers are complete and correct. The
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<PAGE>
Company does not own any capital stock of or other equity interest in any other
corporation or organization.
SECTION 2.02 Authorization of Agreement, Etc.
(a) The execution, delivery and performance by the Company of the
Operative Documents and the issuance, sale and delivery of the Shares and the
Warrant Shares, have been fully authorized by all requisite corporate action and
will not violate any provision of law, any order of any court or other agency of
government, the Certificate of Incorporation or By-laws of the Company, or any
provision of any indenture, agreement or other instrument by which the Company
or any of its properties or assets is bound or affected, or conflict with,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any such indenture, agreement or other instrument, or result in
the creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the properties or assets of the Company.
(b) The Shares and the Warrant Shares have been duly authorized and,
when issued and delivered in accordance with this Agreement or the Warrant (as
applicable), will be validly issued, fully paid and non-assessable shares of
Stock. The issuance, sale and delivery of the Shares and the Warrant Shares is
not subject to any preemptive rights of shareholders of the Company or to any
right of first refusal or other similar right in favor of any person.
SECTION 2.03 Validity. This Agreement has been fully executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable in accordance with its terms. The other Operative
Documents, when executed and delivered in accordance with this Agreement, will
constitute the legal, valid and binding obligation of the Company, enforceable
in accordance with their respective terms.
4--
<PAGE>
SECTION 2.04 Capital Stock. The authorized capital stock of the
Company consists of 1,000,000 shares of the Stock. The shareholders of the
Company and the number of shares of capital stock owned by each are set forth in
Schedule 2.04A hereto. Except for the options, warrants and convertible
unsecured promissory notes, the terms of which are fully described in Schedule
2.04B hereto, (i) no subscription, warrant, option, convertible security or
other right (contingent or other) to purchase or acquire any shares of any class
of capital stock of the Company is authorized or outstanding, (ii) there is not
any commitment of the Company to issue any shares, warrants, options or other
such rights or to distribute to holders of any class of its capital stock any
evidences of indebtedness or assets, (iii) the Company has no obligation
(contingent or other) to purchase, redeem or otherwise acquire any shares of its
capital stock or any interest therein or to pay any dividend or make any other
distribution in respect thereof, and (iv) to the Company's knowledge, there are
no existing rights of first refusal, registration rights or voting agreements
with respect to any of the Company's outstanding shares, except as described on
Schedule 2.04C. A true and correct copy of the Stock Option Agreement to Scott
Rifkin, M.D., is set forth as Schedule 2.04D. All of the outstanding shares of
the Stock have been issued in compliance with all applicable Federal securities
law.
SECTION 2.05 Financial and Other Data. All financial and other data
pertaining to the Company and its business, assets and affairs, which has been
or hereafter prior to the Closing shall be furnished to either Purchaser by the
Company, are or will be at the time the same are so furnished, true, accurate
and complete in all material respects. To the best knowledge and belief of the
Company, except as described herein or in the Business Plan (as defined below),
the Company has no obligations or liabilities, absolute, accrued or contingent,
which in accordance with generally accepted accounting
5--
<PAGE>
principles should be listed on a balance sheet or described on the notes
thereto. To the date hereof, the Company has operated in a pre-start-up phase
consistent with the Business Plan.
SECTION 2.06 Events Subsequent to January 1, 1998. Since January 1,
1998 except as set forth in Schedule 2.06 hereto, the Company has not (i) issued
any stock, bonds or other corporate securities, (ii) borrowed any amount or
incurred any liabilities (absolute or contingent), except current liabilities
incurred, and liabilities under contracts entered into, in the ordinary course
of business, none of which, individually or in the aggregate, are material to
the Company, (iii) discharged or satisfied any lien or incurred or paid any
obligation or liability (absolute or contingent) other than current liabilities
incurred in the ordinary course of business, (iv) declared or made any payment
or distribution to shareholders or purchased or redeemed any shares of its
capital stock or other securities, (v) mortgaged, pledged or subjected to lien
any of its assets, tangible or intangible, other than liens of taxes not yet due
and payable, (vi) sold, assigned or transferred any of its tangible assets,
except in the ordinary course of business, or canceled any debts or claims,
(vii) sold, assigned or transferred any patents, trademarks, trade names,
copyrights, trade secrets or other intangible assets, (viii) suffered any
losses, or waived any rights of substantial value, whether or not in the
ordinary course of business, (ix) made any changes in officer compensation,
except in the ordinary course of business and consistent with past practice, or
(x) entered into any transaction except in the ordinary course of business
(recognizing that the Company is in a start-up phase of its business). Since
such date, except as set forth in said Schedule 2.06, there has been no material
change in the accounting methods or practices of the Company.
Between the date hereof and the Closing Date, the Company will not
do any of the things listed in Section 2.06 above, except as contemplated by
Schedule 2.06 hereto.
6--
<PAGE>
SECTION 2.07 Actions Pending. There is no action, suit,
investigation or proceeding pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its properties or rights,
before any court or by or before any governmental body or arbitration board or
tribunal. To the best knowledge and belief of the Company, there does not exist
any basis for any such action, suit, investigation or proceeding. The foregoing
includes, without limiting its generality, actions pending or threatened (or any
basis therefor known to the Company) involving the prior employment of any
employees or prospective employees of the Company or their use, in connection
with the Company's business, of any information or techniques which might be
alleged to be proprietary to their former employers. There are no decrees,
injunctions or orders of any court or governmental department or agency
outstanding against the Company.
SECTION 2.08 Trade Secrets. No third party has claimed that any
person affiliated with the Company has, in respect of his activities to date,
violated any of the terms or conditions of his employment contract with such
third party, or disclosed or utilized any trade secrets or proprietary
information or documentation of such third party, or interfered in the
employment relationship between such third party and any of its employees. The
Company is not aware that any person affiliated with it has employed or will
employ any trade secrets or any information or documentation proprietary to any
former employer, or that any person affiliated with the Company has violated any
confidential relationship which such person may have had with any third party,
in connection with the development, manufacture and sale of any products of the
Company. To the Company's knowledge, there is no infringement by the Company of
any third party intellectual property right. All employees of the Company with
access to confidential information and who have executed employment agreements
have executed and delivered to the Company a non-disclosure and non-competition
agreement.
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SECTION 2.09 Title to Properties. The Company has good and
marketable title to all its real property and owns outright all its other
properties and assets, free and clear of mortgages/pledges, security interests,
liens, charges and other encumbrances, except (i) as described in Schedule 2.09
hereto, (ii) liens for current taxes not yet due and (iii) minor imperfections
of title, if any, not material in amount and not materially detracting from the
value or impairing the use of the property subject thereto or impairing the
operations or proposed operations of the Company.
SECTION 2.10 Leasehold Interests. Each lease or agreement to which
the Company is a party under which it is a lessee of any property, real or
personal, owned by any third party is a valid and subsisting agreement, without
any default of the Company thereunder and, to the best knowledge and belief of
the Company, without any default thereunder of the other party thereto. The
Company's possession of such property has not been disturbed nor has any claim
been asserted against the Company adverse to its rights in such leasehold
interests.
SECTION 2.11 Taxes. The Company has filed or caused to be filed all
Federal, state and local tax returns and reports which are required to be filed
and has paid or caused to be paid all taxes as shown on all Federal, state and
local tax returns filed by it or on any assessment received by it to the extent
that such taxes have become due, and all of the foregoing are correct and
complete in all material respects. All accruals for taxes owed by the Company
are adequately reflected on the financial statements described in Section 2.05
above. No issues have been raised or deficiencies asserted by any taxing
authority with respect to the Company's tax liabilities or any of its tax
returns or reports.
SECTION 2.12 Patents, Trademarks, Etc. To the best knowledge and
belief of the Company, the Company owns the patents, trademarks, service marks,
trade names, copyrights and
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licenses listed in Schedule 2.12 hereto without conflict with the rights of
others, the same constitute all the patents, trademarks, service marks, trade
names, copyrights and licenses necessary in the conduct of the business of the
Company, and, except as indicated in said Schedule 2.12, there exists no right
of any person to receive a royalty with respect thereto or to utilize or
otherwise appropriate the same, and the Company has no distribution, marketing
or other agreements granting rights to third parties relating in whole or in
part to any items of the foregoing categories, except licenses granted in the
ordinary course of its business. All technical information developed by and
belonging to the Company which has not been patented by it is and will continue
to be protected by measures deemed prudent by the Company for the maintenance of
secrecy relating thereto.
SECTION 2.13 Governmental Approvals. No registration or filing with,
or consent or approval of, or other action by, any Federal, state or other
governmental agency or instrumentality is or will be necessary for the valid
execution, delivery and performance of the Operative Documents and the issuance,
sale and delivery of the Shares, the Warrants and the Warrant Shares hereunder.
SECTION 2.14 Use of Proceeds. Unless otherwise agreed to by the PRWW
board representative, the Company will apply the proceeds of the issuance and
sale of the Shares for start up and operating costs as described in the Business
Plan. In no event will the proceeds of the issuance and sale of the Shares to
PRWW be utilized to retire any portion of the Bridge Loan (as defined in
subparagraph (k) of Article IV below).
SECTION 2.15 Disclosure. The Company has furnished to the Purchasers
a copy of the Company's business plan attached as Schedule 2.15A, used in
connection with its offer of the Shares (the "Business Plan"). In addition, the
Purchasers have had lengthy discussions regarding this investment and the
Company in general with representatives of the Company. To the Company's best
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knowledge and belief, after due inquiry, the Business Plan and this Agreement do
not contain any untrue statement of material fact or omit to state any material
fact necessary in order to make the statements contained therein or herein, in
light of the circumstances under which they are made, not misleading. The
projections of financial results contained in the Business Plan were in all
material respects prepared accurately based upon the assumptions described
therein, which assumptions the Company believes to be realistic. The Company is
a start-up company without any meaningful financial or operating history and the
Purchasers were made aware of the speculative nature and high degree of risk of
loss involved with this purchase as set forth in Schedule 2.15 B hereto.
SECTION 2.16 Offering of the Shares. Neither the Company nor any
person authorized or employed by the Company as agent, broker, dealer or
otherwise in connection with the offering or sale of the Shares or any similar
security of the Company has offered the Shares or any such security for sale to,
or solicited any offers to buy the Shares or any similar security of the Company
from, or otherwise approached or negotiated with respect thereto with, any
person or persons other than the Purchasers and not more than 35 non-accredited
investors (including, if applicable, the Purchasers). Neither the Company nor
any person acting on its behalf has taken or will take any action (including,
without limitation, any offer, issuance or sale of any security of the Company,
pursuant to the Business Plan or otherwise), under circumstances which might
require the integration of such security with the Shares under the Securities
Act of 1933 (the "Securities Act") or the rules and regulations of the
Securities and Exchange Commission (the "Commission") thereunder which might
subject the offering, issuance or sale of the Shares to the registration
provisions of the Securities Act. The offering, issuance and sale of the Shares
hereunder is exempt from the federal registration requirements.
SECTION 2.17 Employment Contracts. Etc.; Certain Material
Transactions. Except
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as set forth in Schedule 2.17 hereto, (i) the Company is not a party to any
employment or deferred compensation agreements, (ii) the Company does not have
any bonus, incentive or profit-sharing plans, (iii) the Company does not have
any pension, retirement or similar plans or obligations, and (iv) there are no
existing material arrangements or proposed material transactions between the
Company and any officer or director or holder of more than 10% of the capital
stock of the Company. The Company is not a party to any collective bargaining
agreement and, to the best of its knowledge, no organizational efforts are
currently being made with respect to any of its employees. Any employment
agreements to be entered into in the future or contemplated and listed on
Schedule 2.17 but not executed on or before the Closing Date, will be approved
by the Company's Compensation Committee.
SECTION 2.18 Other Contracts and Commitments. The Company is not in
default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in the Company's Certificate of Incorporation
or by-laws or in any agreement or instrument to which it is a party which may
result in any material adverse change in the condition, financial or other, of
the Company, and, to the best knowledge and belief of the Company, there are no
existing such defaults by the other parties thereto. Attached hereto as Schedule
2.18 is a true, complete and correct copy of the Interactive Services Agreement
between the Company and America Online, Inc. (the "AOL Agreement"). The AOL
Agreement is a valid and subsisting agreement, and no default has occurred
thereunder by the Company or AOL.
SECTION 2.19 Compliance With Law. The Company is not in default
under any order of any court, governmental authority or arbitration board or
tribunal to which the Company is or was subject or in violation of any laws,
ordinances, governmental rules or regulations to which the Company is or was
subject, except for such violations which do not, individually or in the
aggregate,
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have a material adverse effect on the Company. The Company has not failed to
obtain any licenses, permits, franchises or other governmental authorizations
necessary to the ownership of the properties of the Company or to the conduct of
the business of the Company and the failure of which to obtain would have a
material adverse effect on the Company.
SECTION 2.20 Employee Benefits Plans. The Company has never been a
party to a multi-employer retirement plan. The Company has no Employee Benefit
Plans subject to the provisions of the Employee Retirement Income Security Act
of 1974 (as such term is defined therein).
SECTION 2.21 Insurance. The Company maintains insurance with
responsible and reputable insurance companies in such amounts and covering such
risks as is usually carried by companies engaged in similar businesses and
owning similar properties in the same general area in which the Company operates
or owns such properties.
III.
REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER
Each Purchaser represents and warrants to the Company (for itself
and not for the other Purchaser) that it is acquiring the Shares for its own
account for the purpose of investment and not with a view to or for sale in
connection with any distribution thereof. Each Purchaser represents and warrants
that it is an "accredited investor" as such term is defined under the Securities
Act of 1933, as amended (the "Securities Act") or that it has sufficient
knowledge and experience in financial and business matters to be capable of
evaluating the merits and risks of this purchase. Each Purchaser further
represents that it understands that (i) the Shares have not been registered
under the Securities Act by reason of their issuance in a transaction exempt
from the registration requirements of the Securities Act pursuant to Section
4(2) and 4(6) thereof, (ii) the Shares must be held indefinitely unless
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a subsequent disposition thereof is registered under the Securities Act or is
exempt from such registration, (iii) the Shares will bear a legend to such
effect (to be removed when such restrictions are no longer applicable), and (iv)
the Company will make a notation on its transfer books to such effect. The
Purchaser further understands that the exemption from registration afforded by
Rule 144 under the Securities Act depends on the satisfaction of various
conditions and that, if applicable, Rule 144 affords the basis of sales of the
Shares in limited amounts under certain conditions. The Purchaser acknowledges
that it has had a full opportunity to request from the Company all instruments,
documents, records and books pertaining to this investment, all of which
requested documentation has been made available by the Company, and the
Purchaser has received such information that it deems relevant in making a
decision to purchase the Shares being purchased by it hereunder. The Purchaser
has had the full and fair opportunity to have the Company's Business Plan, other
documents and this Agreement reviewed thoroughly by independent, competent
advisors and counsel or, if not, then the Purchaser has made the fully informed,
independent decision not to do so, and the Purchaser has duly considered the
factors listed on Schedule 2.15 hereto (provided that the review and receipt of
any such information shall not in any manner qualify or diminish the
representations of the Company contained in Article II). The Purchaser will
comply with any restrictions on transferability of the Shares contained in the
Registration Rights Agreement and the Stockholders Agreement.
IV.
CONDITIONS TO THE OBLIGATIONS
OF EACH PURCHASER
The obligation of each Purchaser to purchase and pay for the Shares
being purchased by it on the Closing Date is, at its option, subject to the
simultaneous Closing of the purchase of Shares
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hereunder by the other Purchaser and, at its option, is further subject to the
satisfaction, on or before such date, of the following conditions:
(a) Opinion of Counsel. The Purchaser shall have received from
Rifkin, Livingston, Levitan & Silver, LLC, counsel for the Company, an opinion
dated the Closing Date, in form and substance satisfactory to the Purchaser and
its counsel, to the effect that:
(i) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware. The
Company has the corporate power and authority to own and hold its properties and
to carry on its business as currently conducted, to execute, deliver and perform
the Operative Documents, and to issue, sell and deliver the Shares and the
Warrant Shares.
(ii) The authorized capital stock of the Company consists of
1,000,000 shares of Series A Common Stock, of which 234,651 shares are
outstanding, which outstanding shares have been validly issued and are fully
paid and non-assessable.
(iii) Such counsel, without independent investigation, is not
aware of any non-compliance with any Federal securities laws in connection with
the original issuance of the presently outstanding shares of the Company's
capital stock.
(iv) The execution, delivery and performance by the Company of
the Operative Documents, and the issuance, sale and delivery of the Shares and
the Warrant Shares, have been duly authorized by all requisite corporate action,
and will not violate any provision of law, the Certificate of Incorporation or
by-laws of the Company or, to the knowledge of such counsel, without independent
investigation, any provision of any material agreement or other instrument by
which the Company or any of its properties or assets is bound or affected, or
conflict with, result in a breach of or constitute a
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default under any such agreement or other instrument.
(v) Each of the Operative Documents has been duly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable in accordance with its terms (subject, as to
enforcement of remedies, to applicable bankruptcy, reorganization, insolvency
and similar laws, to moratorium laws from time to time in effect and to general
equity principles), except that such counsel need express no opinion as to the
indemnification provisions of the Registration Rights Agreement.
(vi) The Shares have been issued, sold and delivered by the
Company pursuant to this Agreement and are duly authorized, validly issued,
fully paid and nonassessable shares of Stock.
(vii) The issuance, sale and delivery of the Shares to the
Purchaser, under the circumstances contemplated by this Agreement, are exempt
from the registration requirements of the Federal securities laws.
(viii) Such counsel does not represent the Company with
respect to pending or overtly threatened litigation, and to its knowledge
without independent investigation there is no such pending or threatened
litigation outstanding.
(ix) Such counsel is not aware of any material default by the
Company under any agreement or instrument of the Company or any failure by the
Company to comply with applicable law.
(x) To the knowledge of such counsel, all consents and
approvals required for the execution, delivery and performance by the Company of
this Agreement have been duly obtained.
(b) Representations and Warranties to be True and correct:
Performance. The representations and warranties contained in Article II hereof
shall be true and correct on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and
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as of such date; the Company shall have performed and complied with all
agreements and conditions contained herein required to be performed or complied
with by it prior to or at the Closing Date; and each Purchaser shall have
received a certificate dated the Closing Date, executed by the Company's
president or vice president, to each such effect.
(c) Consents and Approvals. All necessary consents and approvals
from governmental and third parties required for the sale and issuance of the
Shares hereunder and the other actions contemplated hereby shall have been duly
obtained.
(d) Secretary's Certificate. Each Purchaser shall have received a
certificate from the Secretary or Assistant Secretary of the Company, with
respect to the Company's Certificate of Incorporation and by-laws and
resolutions of the Company's Board of Directors authorizing the transactions
contemplated hereby.
(e) Election of Directors. Each Purchaser's designee shall have been
elected to the Company's Board of Directors.
(f) Stockholders' and Voting Agreement. On the Closing Date, the
Company and the other parties thereto shall have executed and delivered the
Stockholders' and Voting Agreement among the Company and its shareholders, in
the form of Annex III hereto (the "Stockholders Agreement").
(g) Registration Rights Agreement. On the Closing Date the Company
shall have executed and delivered the Registration Rights Agreement, in the form
of Annex IV hereto (the "Registration Rights Agreement").
(h) [(RESERVED]
(i) MAS Service Agreement. On the Closing Date, the Company and MAS
shall have executed and delivered the Services Agreement in the form of Annex V
hereto (the "MAS Service
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Agreement").
(j) PRWW Service Agreement. On the Closing Date, the Company and
PRWW shall have executed and delivered the Services Agreement in the form of
Annex VI hereto (the "PRWW Service Agreement").
(k) Bridge Loan. At or prior to the Closing, the Company shall have
received a $900,000 bridge loan from Mercantile Safe Deposit & Trust Co., on
terms and conditions satisfactory to each Purchaser, guaranteed by the
individuals listed on Schedule 4(k) hereto (the "Loan Guarantors"), for which
the Loan Guarantors shall receive in the aggregate warrants to acquire not more
than 7,500 shares of the Stock, on terms and conditions satisfactory to each
Purchaser.
(l) Additional Equity Funding. Unless otherwise agreed to by the
PRWW board representative, at or prior to the Closing, the Company shall have
issued and sold 25,000 shares of the Stock to the individual investors listed in
Part A of Amex VII hereto (the "Wyndhurst Group"), for an aggregate
consideration, paid in cash, of $500,000, and shall have issued and sold 25,000
shares of the Stock to the individual investors listed in Part B of said Annex
(the "Seidman Group"), for an aggregate consideration, paid in cash, of
$500,000.
V.
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
The obligation of the Company to issue and sell the Shares to the
Purchasers on the Closing Date is, at its option, subject to the satisfaction,
on or before such date, of the following conditions:
(a) Representations and Warranties to be True and Correct. The
representations and warranties contained in Article III hereof shall be true and
correct on and as of the Closing Date with
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the same effect as though such representations and warranties had been made on
and as of such date.
(b) Operative Documents. The other parties thereto shall have
executed and delivered to the Company the Operative Documents.
(c) Consents and Approvals. All necessary consents and approvals
from governmental and third parties required for the sale and issuance of the
Shares hereunder shall have been duty obtained.
VI.
ADDITIONAL EQUITY OFFERING; ISSUANCE OF WARRANTS
SECTION 6.01 Equity Offering. The Company shall use its best efforts
to sell, within 45 days of the Closing Date, 150,000 shares of the Stock to as
yet undetermined investors (the "Prospective Investors"), for an aggregate
consideration of $3,000,000, payable in cash. Such issuance shall be on terms
(for example, purchase price, payment terms, registration rights, etc.) no more
favorable than those provided hereunder to MAS and PRWW.
SECTION 6.02 Issuance of Warrants. On the 45th day following the
Closing Date, the Company will issue warrants to purchase its Stock,
substantially in the form in Annex VIII hereto (the "Warrants"), to PRWW, MAS,
the Wyndhurst Group and the Seidman Group, pro rata to the Stock owned by each.
The Warrants will permit the holder thereof to purchase the number of shares of
Stock represented thereby (herein, the "Warrant Shares"), at any time during a
10 year period, for a purchase price of $.01 per share. The aggregate number of
Warrant Shares issuable under all of the Warrants shall equal the result of (a)
$3,000,000, minus (b) the aggregate purchase price received from the Prospective
Investors, divided by (c) $3,000,000, multiplied by, (d) 50,000 shares.
VII.
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COVENANTS OF THE COMPANY
The Company covenants and agrees that, unless the Purchasers shall
otherwise consent in writing:
(a) Financial Statements. The Company shall furnish to each
Purchaser the financial statements and other information required to be provided
to holders of the Common Stock pursuant to the Stockholders Agreement.
(b) Insurance. The Company will maintain insurance with responsible
and reputable insurance companies in such amounts, and covering such risks as is
usually carried by companies engaged in similar businesses and owning similar
properties in the same general area in which the Company operates or owns such
properties.
(c) Key Man Insurance. The Company will use best efforts to obtain
within 90 days of the Closing Date, and thereafter will maintain in effect, key
man life insurance in an amount of not less than $1,000,000 on the life of its
CEO.
(d) Non-Disclosure Agreements. The Company will maintain in effect
with each of its employees who are privy to confidential information of the
Company, and who have or shall execute an employment agreement, a covenant, in
form and substance reasonably deemed to be appropriate by the Company, pursuant
to which each such employee shall agree not to disclose or utilize confidential
or proprietary information of the Company or to compete with the Company.
(e) Access to Records. The Company shall afford to each Purchaser
and its employees, counsel and other authorized representatives free and full
access, on a reasonable basis during normal business hours, to all of the books,
records and properties of the Company and to all officers and employees of the
Company for any reasonable purpose whatsoever; provided that such
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free and full access does not unreasonably interfere with the normal business
operations of the Company. The Purchaser shall use its best efforts to maintain
the confidentiality of any confidential and proprietary information so obtained
by it which is not otherwise available from other sources; provided, however,
that the foregoing shall in no way limit or otherwise restrict the ability of
the Purchaser or such authorized representatives to disclose any such
information concerning the Company which it may be required to disclose (i) to
its partners to the extent required to satisfy its fiduciary obligations to such
persons, or (ii) otherwise pursuant to or required by law.
(f) Budgets and Operating Forecast. The Company will promptly
provide each Purchaser with copies of any budgets which it may from time to time
adopt, which in any event shall include an annual budget to be prepared and
distributed not later than 45 days after the commencement of each fiscal year.
(g) Existence; Maintenance of Property. The Company shall do or
cause to be done all things necessary to maintain, preserve and keep in full
force and effect its corporate existence and all rights, licenses, permits and
franchises necessary to the proper conduct of its business and the ownership,
leasing or operation of its properties. The Company shall maintain and operate
its business and properties in accordance with all applicable laws and
regulations and take all reasonable action which may be required to obtain,
preserve, renew and extend all licenses, permits, authorizations, trade names,
trademarks, copyrights and patents which may be necessary for the continuance of
the operation of any such property by it. The Company shall at all times
maintain and preserve all property necessary in the conduct of its business and
keep the same in good repair, working order and condition, and from time to time
make, or cause to be made, all necessary and proper repairs, renewals,
replacements, betterments and improvements thereto so that the business carried
on in
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connection therewith may properly and advantageously be conducted at all times.
(h) Payment of Debts, Taxes. The Company shall pay all indebtedness
and obligations promptly and in accordance with normal terms and pay and
discharge promptly all taxes, assessments and governmental charges or liens
imposed upon it or upon its income or receipts or in respect of any of its
property, before the same shall become in default, as well as all lawful claims
which, if unpaid, might result in the creation of a lien or charge upon such
properties or any part thereof; provided, however, that the Company shall not be
required to pay and discharge or to cause to be paid and discharged any such
indebtedness, obligation or tax so long as the validity or amount thereof shall
be contested in good faith and the Company shall set aside on its books such
reserves as are required by generally accepted accounting principles with
respect to any such indebtedness, obligation or tax.
(i) Litigation or Other Notices. The Company shall deliver to each
Purchaser promptly following the occurrence thereof written notice of the
following:
(A) all events of default under any of the terms or provisions of
any material note, or of any other evidence of material indebtedness or
agreement or contract governing the borrowing of money of the Company;
(B) levy of an attachment, execution or other process against any of
the property or assets, real or personal, of the Company or any of its
subsidiaries, unless the same is reasonably discharged within thirty days and is
so discharged;
(C) the filing or commencement of any action, suit or proceeding by
or before any court or any federal, state, municipal or other governmental
department, commission, instrumentality or agency which may result in material
liability to, or otherwise materially adversely affect, the Company;
(D) any matter of non-general effect which has resulted in, or which
may result in, a
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material adverse change in the financial condition or operations of the Company.
(j) Performance of Obligations. The Company shall do and perform
every act and discharge all of the obligations required to be performed and
discharged under any of the Operative Documents at the time or times and in the
manner therein and herein specified.
(k) Meetings of the Board of Directors. The Company shall call, and
use its best efforts to have, regular meetings of the Board of Directors of the
Company not less than quarterly.
(l) Board of Directors; Membership Thereto. The Board of Directors
shall be of such size and composed of such designees as is more fully specified
in the Stockholders Agreement.
VIII.
[RESERVED]
IX.
MISCELLANEOUS
SECTION 9.01 Expenses. Each party hereto will pay its own expenses
in connection with the transactions contemplated hereby, whether or not such
transactions shall be consummated, provided, however, that the Company shall pay
one half of the fees and disbursements of each Purchaser's counsel. With the
Purchasers' prior knowledge and approval, closing costs of this transaction
payable to third parties have been incurred by the Company which are to be
satisfied by (i) cash payments equal to 8% of the proceeds of the offering
hereunder due out of the offering and (ii) issuance of shares of the Common
Stock equal to 9% of the Company's Common Stock outstanding after the sale and
purchase hereunder; the cash payments will accrue until such time as the Company
has sufficient funds to pay this cost, at the prudent discretion of management.
The Company further confirms that its legal and accounting fees arising from
this offering shall not exceed $50,000.
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SECTION 9.02 Survival of Agreements. All covenants, agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the issuance, sale and delivery of the Shares
pursuant hereto.
SECTION 9.03 Brokerage. Each party hereto represents and warrants to
the other that it has incurred no brokerage or other commissions relative to
this Agreement or to the transactions contemplated hereby, based in any way on
agreements, arrangements or understandings made or claimed to have been made by
such party with any third party, except for the consulting fees payable by the
Company included within the closing costs referred to in Section 9.01 above.
Notwithstanding the foregoing, each party hereto will indemnify and hold
harmless the other against and in respect of any claim for brokerage or other
commissions relative to this Agreement or to the transactions contemplated
hereby (other than such consulting fees), based in any way on agreements,
arrangements or understandings made or claimed to have been made by such party
with any third party.
SECTION 9.04 Parties in Interest. All covenants and agreements
contained in this Agreement by or on behalf of any of the parties hereto shall
bind and inure to the benefit of the parties hereto and their respective
successors and assigns.
SECTION 9.05 Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be mailed by first class
registered mail, postage prepaid, addressed as follows:
(a) if to the Company, at:
11403 Cronridge Drive
Suite 200
Owings Mills, MD 21117
(b) if to PRWW, at:
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Premier Research Worldwide, Ltd.
124 S. 15th Street
Philadelphia, Pennsylvania 19102-3010
Attn: CEO
(c) If to MAS, at:
8050 Southern Maryland Boulevard
Owings, MD 20736
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others in accordance with this Section
9.05.
SECTION 9.06 Law Governing; Construction. This Agreement shall be
governed by and construed in accordance with the laws of the State of Maryland.
In the event any provision of this Agreement shall be held to be invalid or
unenforceable for any reason, such invalidity or unenforceability shall attach
only to such provision and shall not affect or render invalid or unenforceable
any other provision of this Agreement.
SECTION 9.07 Entire Agreement. This Agreement constitutes the entire
Agreement of the parties with respect to the subject matter hereof and may not
be modified, waived or amended except in writing.
SECTION 9.08 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Company and the Purchaser have executed this
Agreement as of the day and year first above written.
AMERICA'S DOCTOR, INC.
By: /s/ Scott M. Rifkin, M.D.
--------------------------------
President
MEDICAL ADVISORY SYSTEMS, INC.
By: /s/ Ron Pickett, President
--------------------------------
PREMIER RESEARCH WORLDWIDE, LTD.
By: /s/ Fred M. Powell
--------------------------------
Chief Financial Officer
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EXHIBIT 10.22
EXECUTION COPY
==============================================================================
SECOND AMENDED AND RESTATED
SHAREHOLDERS' AND VOTING AGREEMENT
by and among
AMERICASDOCTOR.COM. INC.,
MEDICAL ADVISORY SYSTEMS, INC.,
PREMIER RESEARCH WORLDWIDE, LTD.,
TULLIS-DICKERSON CAPITAL FOCUS II, L.P.,
TD ORIGEN CAPITAL FUND, L.P.,
TD JAVELIN CAPITAL FUND, L.P.,
GE CAPITAL EQUITY INVESTMENTS, INC. and
SCOTT RIFKIN
Dated as of June 1, 1999
==============================================================================
<PAGE>
SECOND AMENDED AND RESTATED
SHAREHOLDERS' AND VOTING AGREEMENT
THIS SECOND AMENDED AND RESTATED SHAREHOLDERS' AND VOTING AGREEMENT is
made as of June 1, 1999 by and among AMERICASDOCTOR.COM. INC., a Delaware
corporation whose principal place of business is located at 11403 Cronridge
Drive, Suite 200, Owings Mills, MD 21117 (the "Company"), MEDICAL ADVISORY
SYSTEMS, INC., a Delaware corporation whose principal place of business is
located at 8050 Southern Maryland Boulevard, Owings, MD 20736 ("MAS"), PREMIER
RESEARCH WORLDWIDE, LTD. a Delaware corporation whose principal place of
business is located at 30 South 17th Street, Philadelphia, PA 19103 ("PRWW"),
TULLIS-DICKERSON CAPITAL FOCUS II, L.P., a Delaware limited partnership whose
principal place of business is located at One Greenwich Plaza, Third Floor,
Greenwich, CT 06830 ("TD Capital"), TD ORIGEN CAPITAL FUND, L.P., a Delaware
limited partnership whose principal place of business is located at 150
Washington Avenue, Suite 201, Santa Fe, New Mexico 87501 ("TD Origen"), TD
JAVELIN CAPITAL FUND, L.P., a Delaware limited partnership whose principal place
of business is located at 2850 Cahaba Road, Suite 240, Birmingham, Alabama 94025
("Javelin" and collectively with TD Capital and TD Origen, the "Preferred A
Shareholders"), GE CAPITAL EQUITY INVESTMENTS, INC., a Delaware corporation
whose principal place of business is located at 120 Long Ridge Road, Stamford,
CT 06927 ("GE"), and SCOTT RIFKIN, an individual, whose residence is located at
11 Aston Court, Owings Mills, MD 21117 ("Rifkin").
WITNESSETH:
WHEREAS, on July 2, 1998, MAS and PRWW each purchased 50,000 shares of
Common Stock, par value $.01 per share, of the Company (the "Common Stock")
pursuant to that certain Stock Purchase Agreement dated as of July 2, 1998 and,
in connection therewith, entered into with the Company and Rifkin that certain
Shareholders' and Voting Agreement (the "Old Shareholders' Agreement");
WHEREAS, on October 30, 1998, MAS purchased 40,000 shares of Common Stock
at $25 per share;
WHEREAS, on February 1, 1999, the Preferred A Shareholders purchased
133,333 shares of Series A Convertible Preferred Stock, par value $.01 per
share, of the Company (the "Series A Stock") and a warrant to purchase a number
of shares of Common Stock of the Company pursuant to that certain Securities
Purchase Agreement dated as of February 1, 1999 (the "Series A Securities
Purchase Agreement") and, in connection therewith, entered into with the
Company, MAS, PRWW and Rifkin that certain Amended and Restated Shareholders'
and Voting Agreement (the "Restated Shareholders' Agreement");
WHEREAS, as of the date hereof, GE and TD Capital (in their capacity as
holders of the Series B Stock (as defined below), together with TD Origen and
Javelin if they purchase shares of Series B Stock, the "Preferred B
Shareholders" and, collectively with the Preferred A
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Shareholders, the "Preferred Shareholders") are purchasing 113,327 shares of
Series B Redeemable Convertible Preferred Stock, par value $.01 per share, of
the Company (the "Series B Stock") and warrants to purchase a number of shares
of Common Stock and/or Preferred Stock of the Company pursuant to that certain
Securities Purchase Agreement dated as of the date hereof (the "Series B
Securities Purchase Agreement").
WHEREAS, as one of the founders and member and Chairman of the Board of
the Company, Rifkin has been issued, and currently owns, 83,419 shares of Common
Stock of the Company;
WHEREAS, pursuant to that certain Stockholders' Voting Agreement dated as
of June 30, 1998 among Rifkin and certain holders of Common Stock (the "Voting
Agreement"), Rifkin has a power-of-attorney, including voting rights, with
respect to not less than 35,000 shares of Common Stock of the Company for a
period of five (5) years from July 2, 1998; and
WHEREAS, each of the Shareholders wishes to supersede the Restated
Shareholders' Agreement with this Agreement and to provide, with respect to any
Stock now owned or hereafter acquired by them, as provided herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and obligations hereinafter set forth, the parties hereto hereby agree
as follows:
SECTION 1. Definitions.
As used herein, the following terms shall have the following meanings:
"Affiliate" means (i) with respect to any Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person and (ii) with respect to any
individual, shall also mean the spouse, parent, sibling, child, step-child,
grandchild, niece or nephew of such Person, or the spouse thereof.
"Agreement" means this Second Amended and Restated Shareholders' and
Voting Agreement as it may be amended, restated or modified from time to time.
"Board" has the meaning assigned to it in Section 3.1 (a).
"By-laws" means the By-laws of the Company as in effect on the date
hereof, as they may be amended from time to time hereafter.
"Certificate of Incorporation" means the Amended and Restated Certificate
of Incorporation of the Company as filed with the Secretary of State of Delaware
on February 1, 1999, as amended by any Certificates of Designation adopted by
the Board of Directors from time to time.
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"Change in Control" shall mean, with respect to the Company, the earlier
to occur of the following: (i) a liquidating distribution to the Company'
shareholders (or similar event); (ii) a contribution, consolidation or merger
where a majority of the members of the Board of Directors after such
contribution, consolidation or merger were not members of the Board of Directors
three months prior to such contribution, consolidation or merger; and (iii) any
sale, exchange or other disposition of all, or substantially all, of the
Company's assets.
"Closing" has the meaning assigned to it in Section 5(d).
"Closing Date" has the meaning assigned to it in Section 5(d).
"Code" has the meaning assigned to it in Section 5(a).
"Common Stock" means the Common Stock, par value $.01 per share, of the
Company and any equity securities issued or issuable with respect to the Common
Stock in connection with a reclassification, split or combination of shares.
"Common Stock Equivalents" means securities convertible into, or
exchangeable or exercisable for, shares of Common Stock, including without
limitation the Series A Stock and Series B Stock and the warrants issued under
the Series A Securities Purchase Agreement and Series B Securities Purchase
Agreement.
"Company" has the meaning assigned to it in the Preamble.
"Company Acceptance Period" has the meaning assigned to it in Section
6(b).
"Compensation Committee" has the meaning assigned to it in Section 3.2.
"Disability" (with respect to a Management Shareholder) shall have the
meaning set forth in such Management Shareholder's employment agreement with the
Company, and if no such agreement exists, as determined by the Board in the
exercise of its reasonable discretion.
"Disabled Shareholder" has the meaning assigned to it in Section 5(b).
"Effective Date" means June 1, 1999.
"Excluded Securities" means (i) warrants issued to The Wyndhurst Capital
Group, LLC ("Wyndhurst") exercisable at a nominal price for a number of shares
of Common Stock equal to 3/8ths of 1% of the increase in the number of the
Company's total shares of Common Stock and Common Stock Equivalents outstanding
after any financing for every $1 million raised by Wyndhurst, up to a maximum of
$10 million (including amounts payable with respect to the purchase evidenced by
the Series A Securities Purchase Agreement and Series B Securities Purchase
Agreement), (ii) options or warrants issued by the Company to officers,
directors or employees of, or consultants to, the Company for up to 190,000
shares of Common Stock pursuant to any stock option, incentive, bonus or
compensation program previously or hereafter
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approved by the compensation committee of the Board of Directors, (iii) options
or warrants issued by the Company to officers, directors or employees of, or
consultants to, the Company pursuant to any additional stock option, incentive,
bonus or compensation program approved by the compensation committee of the
Board of Directors, including the directors appointed by the Preferred
Shareholders, (iv) shares issued by way of dividend or other distribution on
shares of Series A Stock or Series B Stock, (v) shares of Series A Stock or
Series B Stock authorized as of the date of this Agreement; provided that, in
the case of MAS only, Excluded Securities shall not include the Series B Stock
issuable upon exercise of warrants to purchase Series B Stock, (vi) shares of
Common Stock issuable upon conversion, exchange or exercise of any Common Stock
Equivalents outstanding as of the date hereof or shares of Series B Stock, (vii)
shares issued to Scott M. Rifkin for up to 100,000 shares of Common Stock issued
pursuant to a stock option, incentive, bonus or compensation program previously
or hereafter approved by the Board of Directors or the compensation committee of
the Board of Directors, (viii) shares issued in connection with mergers or
acquisitions approved by the Board and (ix) shares issued in amounts less than
$1 million in any single transaction where the per share purchase price of the
shares issued (on an as converted basis) is not less than the conversion price
of the shares issued (on an as converted basis) of the Series B Stock, provided
that the aggregate amount of all such transactions shall not exceed $2.5
million.
"Fair Market Value" means the fair market value as determined (unless
expressly otherwise provided herein) by mutual agreement between the Company and
the Transferring Shareholder(s) (collectively, the "Selling Party") and if the
Company and Selling Party are unable to agree, then as determined by an outside
third party familiar with transactions of this nature selected by the mutual
agreement of the Company and the Selling Party. The Selling Party (and its
designees to the Board of Directors) shall abstain from participating in any
decisions to be made by the Company pursuant to this definition.
"First Offer Percentage" means, as to each Offered Shareholder, the
quotient obtained (expressed as a percentage) by dividing (i) the number of
shares of Common Stock owned by such Offered Shareholder and shares of Common
Stock issuable to such Offered Shareholder upon the conversion of such Offered
Shareholder's Common Stock Equivalents on the first day of the Shareholder
Acceptance Period by (ii) the aggregate number of shares of Common Stock owned
and shares of Common Stock issuable upon the conversion of Common Stock
Equivalents on the first day of the Shareholder Acceptance Period by all Offered
Shareholders who exercise their option to purchase Subject Stock.
"First Offer Shares" has the meaning assigned to it in Section 6(c).
"GAAP" means United States generally accepted accounting principles, as in
effect from time to time.
"GE" has the meaning assigned to it in the Preamble.
"GE Threshold" has the meaning assigned to it in Section 3.1(a)(iv).
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"Investment Shareholder" shall mean, collectively, MAS, the Preferred
Shareholders and, so long as Joel Morganroth is the PRWW Director hereunder,
PRWW.
"IPO" means the initial underwritten offering pursuant to which Common
Stock becomes registered under the Securities Act of 1933, as amended or Section
12 of the Securities Exchange Act of 1934, as amended.
"Issuance" has the meaning assigned to it in Section 8.
"Issuance Acceptance Period" has the meaning assigned to it in Section
8(a).
"Issuance Notice" has the meaning assigned to it in Section 8(a).
"Issuance Offer" has the meaning assigned to it in Section 8(a).
"Issuance Period" has the meaning assigned to it in Section 8(b).
"Issuance Stock" has the meaning assigned to it in Section 8(a).
"Issue" has the meaning assigned to it in Section 8.
"Major Shareholder" means any of the Senior Management Shareholders or any
other Shareholder who owns, directly or indirectly, at least 5% of the
outstanding Common Stock (calculated as if all Common Stock Equivalents had been
converted, exchanged or exercised) at the time of determination.
"Management Shareholder" means each Senior Management Shareholder, person
holding the office of Vice President and above, and each other individual who
has been identified by the Executive Committee as a member of the Company's
executive management team and to whom Stock has been issued by the Company.
"MAS" has the meaning assigned to it in the Preamble.
"MAS Director" has the meaning assigned to it in Section 3.1(a)(i).
"MAS Threshold" has the meaning assigned to it in Section 3.1(a)(i).
"Note" has the meaning assigned to it in Section 5(d).
"Offer" has the meaning assigned to it in Section 6(a).
"Offer Notice" has the meaning assigned to it in Section 6(a).
"Offered Shareholders" has the meaning assigned to it in Section 6(a).
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"Oversubscribed Shareholder" has the meaning assigned to it in Section
6(c).
"Person" means any individual, corporation, limited liability company,
limited or general partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivisions thereof.
"Preferred A Shareholder Director" has the meaning assigned to it in
Section 3.1(a)(iii).
"Preferred A Shareholder Threshold" has the meaning assigned to it in
Section 3.1(a)(iii).
"Preferred B Shareholder Director" has the meaning assigned to it in
Section 3.1(a)(iv).
"PRWW" has the meaning assigned to it in the Preamble.
"PRWW Director" has the meaning assigned to it in Section 3.1(a)(i).
"PRWW Threshold" has the meaning assigned to it in Section 3.1(a)(i).
"Public Sale" means a Transfer pursuant to a bona fide underwritten public
offering pursuant to an effective registration statement filed under the
Securities Act.
"Qualified IPO" means a bona fide, firm commitment, underwritten public
offering of Common Stock pursuant to an effective registration statement under
the Securities Act (i) at a before the money market capitalization of not less
than $75,000,000 and (ii) an offering of not less than $15,000,000.
"Remaining Shares" has the meaning assigned to it in Section 6(c).
"Rifkin" has the meaning assigned to it in the Preamble.
"Rifkin Director" has the meaning assigned to it in Section 3.1(a)(v).
"Rifkin Threshold" has the meaning assigned to it in Section 3.1(a)(v).
"Sale Period" has the meaning assigned to it in Section 6(d).
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" has the meaning assigned to it in Section 7.
"Senior Management Shareholder" means any of Scott Rifkin, Allan Sanders,
Laura Gill and Jeffrey Lefko.
"Shareholder Acceptance Period" has the meaning assigned to it in Section
6(c).
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"Shareholder" means each of the parties to this Agreement (other than the
Company), each of the Management Shareholders, Wyndhurst, and any other
subsequent holders of Stock who become bound by the terms of this Agreement.
"Stock" means (i) any shares of Common Stock and (ii) any Common Stock
Equivalents, in each case, whether owned on the date hereof or acquired
hereafter.
"Subject Stock" has the meaning assigned to it in Section 6(a).
"Subsidiary" means with respect to any Person, (i) any corporation,
partnership or other entity of which shares of capital stock or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other similar managing body of such corporation, partnership or
other entity are at the time owned by such Person, or (ii) the management of
which is otherwise controlled, directly or indirectly, through one or more
intermediaries by such Person.
"Tag-Along Seller" has the meaning assigned to it in Section 7.
"Terminated Manager's Stock" has the meaning assigned to it in Section
5(a).
"Terminated Senior Manager" has the meaning assigned to it in Section
5(b).
"Transfer" as to any Stock, means to sell, or in any other way directly or
indirectly transfer, assign, distribute, pledge, encumber or otherwise dispose
of, either voluntarily or involuntarily.
"Voting Shares" means any securities of the Company the holders of which
are entitled to vote for one or more members of the Board.
"Voting Agreement" has the meaning assigned to it in the Preamble.
Whenever the context may require, any pronouns used herein shall include the
corresponding masculine, feminine or neuter forms and the singular form of names
and pronouns shall include the plural and vice-versa.
SECTION 2. Methodology for Calculations.
For purposes of this Agreement, the Transfer of a Common Stock Equivalent
shall be treated as the Transfer of the shares of Common Stock into which such
Common Stock Equivalent can be converted, exchanged or exercised. Except as
otherwise provided in this Agreement, for purposes of calculating (i) the amount
of outstanding Stock or Common Stock as of any date, (ii) the amount of Stock or
Common Stock owned by a Person hereunder and (iii) related percentages, Common
Stock Equivalents shall be treated as having been converted, exchanged or
exercised. Notwithstanding the foregoing, the warrants issued under the
Securities Purchase Agreement or the Series A Securities Purchase Agreement
shall not be treated as having been converted, exchanged or exercised unless the
number of shares for which such
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warrants are exercisable has then been fixed.
SECTION 3. Corporate Governance.
3.1. Composition of the Board.
(a) The Board of Directors of the Company (the "Board") shall be
comprised of nine (9) members:
(i) So long as MAS holds 2.0% or more of the Common Stock (the "MAS
Threshold"), MAS shall have the right to designate one (1) person to serve
as a member of the Board (an "MAS Director");
(ii) So long as PRWW holds 2.0% or more of the Common Stock (the
"PRWW Threshold"), PRWW shall have the right to designate one (1) person
to serve as a member of the Board (a "PRWW Director");
(iii) So long as the Preferred A Shareholders hold 2.0% or more of
the Common Stock (the "Preferred A Shareholder Threshold"), the Preferred
A Shareholders shall have the right to designate one (1) person to serve
as a member of the Board as provided in the Certificate of Incorporation
(a "Preferred A Shareholder Director");
(iv) So long as GE holds 2.0% or more of the Common Stock (the "GE
Threshold"), GE shall have the right to designate one (1) person to serve
as a member of the Board as the representative of the Preferred B
Shareholders as provided in the Certificate of Incorporation (a "Preferred
B Shareholder Director");
(v) Until July 2, 2000, Rifkin shall be a member of and shall serve
as Chairman of the Board and shall have the right to designate four (4)
additional persons to serve as members of the Board, including two
directors who are independent and are reasonably satisfactory to the
Preferred A Shareholders and the Preferred B Shareholders, each voting as
a separate class (each, a "Rifkin Director"), except if during this period
Rifkin becomes deceased or:
(a) in his capacity as either an employee or director of the
Company, engages in conduct which is grossly negligent,
unprofessional, unethical, immoral, fraudulent or detrimental
to the reputation of the Company, which conduct results in a
material detriment to the Company;
(b) is convicted of a felony or any crime involving dishonesty or
theft;
(c) becomes disabled and unable to perform his duties to the
Company for (i) a period of 120 consecutive days or (ii) 180
days during any 12-month period; or
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(d) a failure of the Company to have accomplished any of the
following (i.e., if the Company shall have achieved any one of
the following, no "failure" shall have occurred):
(i) gross revenues of $5 million for the six month period
ended December 31, 1999, or
(ii) prior to December 31, 1999, having sold shares of its
Common Stock pursuant to an effective registration
statement under the Securities Act at a before the money
market capitalization of not less than $100 million, or
(iii) prior to December 31, 1999, having sold the Company
(whether by sale of all or substantially all of the
Company's assets, sale of all of the Company's stock, or
by merger or consolidation) where the gross proceeds to
the Company or the shareholders, as the case may be, is
not less than $100 million;
thereafter, so long as Rifkin holds 2.0% or more of the Common Stock (the
"Rifkin Threshold"), Rifkin shall have the right to designate at least one (1)
person to serve as member of the Board.
(b) Notwithstanding anything to the contrary in this Section 3.1(a)
and Section 3.1(c), from and after the date on which PRWW, MAS, the Preferred A
Shareholders or GE Transfer any Stock, such transferring Shareholder shall no
longer be entitled to designate a director to be elected as a member of the
Board and the Shareholders shall not be required to vote for such transferring
Shareholder's director.
(c) Subject to Section 3.1(b), the Company and the Shareholders
shall each use their best efforts to cause the MAS Director, the PRWW Director,
the Rifkin Director, the Preferred A Shareholder Director and the Preferred B
Shareholder Director to be elected to, and to be maintained as a member of, the
Board (including (i) in the case of the Company, recommending to the
shareholders of the Company the election of such directors to the Board and
opposing any proposal to remove any of such directors at each meeting of the
shareholders of the Company at which the election or removal of members of the
Board is on the agenda and (ii) in the case of the Shareholders, voting all of
their Voting Shares in favor of such directors, and voting such shares against
any person opposing such directors), and shall take no action that would
diminish the prospects of such directors being elected to the Board or increase
the prospects of such directors being removed from the Board.
(d) In all other cases, subject to the rights of the holders of
Series B Stock under Section 9 of Article Fourth, paragraph (b) of the
Certificate of Incorporation, the holders of a majority of the outstanding
shares of Common Stock, Series A Stock and Series B Stock, voting together as a
single class, shall have the right to elect the members of the Board.
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3.2. Committees.
(a) The Board shall designate a four member Compensation Committee
consisting of one (1) Preferred A Shareholder representative, one (1) GE
representative, one (1) Rifkin designee who shall not be a member of management
or otherwise an Affiliate of the Company (it being understood that Lewis Goodman
and Wyndhurst are not members of management nor an affiliate of the Company and
will be considered disinterested persons so long as Wyndhurst's compensation is
determined by the members of the Compensation Committee (other than Lewis
Goodman) and Joel Morganroth as the one (1) PRWW designee. The Compensation
Committee shall determine issues relating to the compensation of employees of
the Company, including the distribution of employee stock options. In the event
that the Compensation Committee cannot agree on a matter properly before the
Compensation Committee, the Compensation Committee shall then consult with an
outside third party familiar with transactions of a similar nature, selected by
the mutual agreement of the Preferred A Shareholder representative, the GE
representative and the Rifkin designee then serving on the Compensation
Committee, to determine the issue. Notwithstanding the foregoing, in the event
of a Transfer of any Stock by PRWW, the Preferred A Shareholders or GE, such
Transferring Shareholder shall no longer be entitled to designate a member of
the Compensation Committee and the remaining members of the Compensation
Committee shall fill such position by mutual agreement.
(b) If an audit and/or executive committee of the Board is
established, until GE has Transferred any shares of the Company held by it
(other than Transfers to Affiliates), each such committee shall include one (1)
GE representative.
3.3. Vacancies: Removal.
(a) Vacancies. If any director designated as such pursuant to the
provisions of Sections 3.1 or 3.2 shall cease to serve as a director of the
Company or any Subsidiary for any reason, the vacancy resulting thereby shall be
filled by another person designated in accordance with the provisions of Section
3.1 or Section 3.2, as applicable, and the Certificate of Incorporation.
(b) Removal. No director shall be removed from office without the
consent of the Shareholders entitled to designate such director so long as such
Shareholder is entitled to designate such director.
3.4. Directors' Indemnification.
(a) The Company shall obtain and cause to be maintained in effect,
with financially sound insurers, a policy of directors' and officers' liability
insurance covering each member of the Board in an amount of at least One Million
Dollars ($1,000,000) per occurrence and Three Million Dollars ($3,000,000) in
the aggregate.
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(b) The Certificate of Incorporation, By-laws and other
organizational documents of the Company and each of its Subsidiaries shall at
all times, to the fullest extent permitted by law, provide for indemnification
of, advancement of expenses to, and limitation of the personal liability of, the
members of the Board and each committee thereof, and the members of the boards
of directors or other similar managing bodies of each of the Company's
Subsidiaries and such other persons, if any, who, pursuant to a provision of
such Certificate of Incorporation, By-laws or other organizational documents,
exercise or perform any of the powers or duties otherwise conferred or imposed
upon members of the Board and each committee thereof, or the boards of directors
or other similar managing bodies of each of the Company's Subsidiaries. Such
provisions may not be amended, repealed or otherwise modified in any manner
adverse to any member of the Board or any committee thereof, or any member of
the boards of directors or other similar managing bodies of any of the Company's
Subsidiaries, until at least one (1) year following the last to occur of the
following: (i) the date that MAS is no longer entitled to designate a MAS
Director; (ii) the date that PRWW is no longer entitled to designate a PRWW
Director; (iii) the date that Rifkin is no longer entitled to designate or
nominate any Rifkin Director; (iv) the date that the Preferred A Shareholders
are no longer entitled to designate a Preferred A Shareholder Director; and (v)
the date that the Preferred B Shareholders are no longer entitled to designate a
Preferred B Shareholder Director.
3.5. Irrevocable Proxy.
In order to secure each Shareholder's obligation to vote his Voting
Shares in accordance with the provisions of this Section 3 pursuant to which
MAS, PRWW, the Preferred Shareholders and Rifkin have rights hereunder, each
Shareholder hereby irrevocably appoints MAS, PRWW, the Preferred Shareholders
and Rifkin jointly as his, her, its or their true and lawful proxies and
attorneys-in-fact, with full power of substitution, to vote all of his Voting
Shares of the Company for the election of each MAS, PRWW, the Preferred
Shareholders and Rifkin Director(s) as a member of the Board and to take all
such other actions as are necessary to enforce the rights of MAS, PRWW, the
Preferred Shareholders and Rifkin under this Section 3. Such irrevocable proxies
shall become effective and MAS, PRWW, the Preferred Shareholders and Rifkin may
exercise the irrevocable proxies jointly granted to them hereunder at any time
any Shareholder fails to comply with any provision of this Agreement granting
MAS, PRWW, the Preferred Shareholders and Rifkin rights under this Section 3.
The proxies and powers granted by each Shareholder pursuant to this Section 3.5
are coupled with an interest and are given to secure the performance of the
Shareholders' obligations to MAS, PRWW, the Preferred Shareholders and Rifkin
under this Section 3. Such proxies and powers shall survive the death,
incompetence and disability of each Shareholder. Such proxies and powers will be
effective with respect to each such Director until the MAS, PRWW, the Preferred
Shareholders and Rifkin, whichever is applicable, no longer owns at least the
MAS, PRWW, the Preferred A Shareholder, the GE or Rifkin Threshold, as the case
may be, at which time such proxies and powers shall terminate with respect to
such party.
3.6. Expenses.
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The Company shall pay the reasonable out-of-pocket expenses incurred
by each Director of MAS, PRWW, Rifkin, the Preferred A Shareholders and the
Preferred B Shareholders, and any representative of the foregoing, in connection
with performing his or her duties, including without limitation the reasonable
out-of-pocket expenses incurred by such person attending meetings of the Board
or any committee thereof or meetings of any board of directors or other similar
managing body (and any committee thereof) of any Subsidiary of the Company.
3.7. Cooperation.
(a) Each Shareholder shall vote all of its Voting Shares and shall
take all other necessary or desirable actions within its control (including,
without limitation, attending all meetings in person or by proxy for purposes of
obtaining a quorum, executing all written consents in lieu of meetings and
voting to remove members of the Board, as applicable), and the Company shall
take all necessary and desirable actions within his control (including, without
limitation, calling special Board and shareholder meetings and voting to remove
members of the Board, as applicable), to effectuate the provisions of this
Section 3.
(b) Each Shareholder agrees to take all actions required to
effectuate the provisions of Section 6.10 of the Series B Securities Purchase
Agreement by voting its respective Stock in favor of (i) an increase in the
number of directors on the Board to accommodate the Additional Director (as
defined in the aforesaid Section 6.10) and to elect the Additional Director in
accordance with Section 6.10 of the Series B Securities Purchase Agreement, and
(ii) the redemption of the Series B Stock and any and all actions ancillary
thereto in accordance with Section 6.10 of the Series B Securities Purchase
Agreement.
SECTION 4. Restrictions on Transfers of Stock.
(a) Except the Investment Shareholders, no Shareholder shall
Transfer any Stock, whether owned on the date hereof or acquired hereafter,
without first, if applicable, complying with the provisions of Section 6 hereof
and then, in each case as applicable, complying with the provisions of Section 7
hereof. Prior to the date which is 90 days after the date hereof, no Investment
Shareholder shall Transfer any Stock, whether owned on the date hereof or
acquired hereafter, without first, if applicable, complying with the provisions
of Section 6 hereof and then, in each case as applicable, complying with the
provisions of Section 7 hereof. In the event that, on or after the date that is
90 days after the date hereof, an Investment Shareholder Transfers any Stock,
such Investment Shareholder shall lose its rights to elect a director under
Section 3.1(a)(i), (ii) or (iii), as applicable, and the right to designate a
member of the Compensation Committee of the Board under Section 3.2.
Notwithstanding any other provision hereof, no Management Shareholder or
Wyndhurst may Transfer any Stock for so long as such Management Shareholder is a
director, officer or employee of the Company or, in the case of Wyndhurst, for
so long as Wyndhurst is a consultant under contract to the Company or has a
representative who is a member of the Board, except that (i) a Management
Shareholder or
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Wyndhurst may Transfer Stock in connection with the bona fide merger of the
Company or bona fide sale of all or substantially all of the assets or equity
securities of the Company, and (ii) a Management Shareholder or Wyndhurst may
Transfer Stock as set forth in Section 5. Except with respect to Transfers of
Stock by Management Shareholders and Wyndhurst described in Section 5, each
Management Shareholder and Wyndhurst shall, prior to any Transfer of Stock
permitted by this Section 4, comply with the provisions of Sections 6 and 7
hereof, in each case as applicable, provided, however, that nothing in this
Agreement (including the prior sentence) shall prevent or restrict any Senior
Management Shareholder or Wyndhurst from transferring Stock to its respective
Affiliate, family trust or family partnership or up to fifteen percent (15%) of
its Stock to a recognized charitable organization.
(b) Except in connection with a Public Sale, any Transferee of Stock
(including any Transferee that is an Affiliate of a Transferor) who is not a
Shareholder shall upon consummation of, and as a condition to, such Transfer
execute and deliver to the Company (which the Company shall then deliver to all
other Shareholders) an agreement pursuant to which it agrees to be bound by the
terms of this Agreement for the benefit of the parties hereto and such
Transferee shall thereafter be deemed to be a Shareholder for all purposes of
this Agreement.
(c) Any Transfer or attempted Transfer of Stock in violation of any
provision of this Agreement shall be void, and the Company shall not record such
Transfer on its books or treat any purported Transferee of such Stock as the
owner of such Stock for any purpose.
SECTION 5. Management Shareholders.
(a) Termination of Employment of Management Shareholders other than Scott
Rifkin.
(i) Termination Without Cause; Death; Disability. If the
employment of a Management Shareholder other than Scott Rifkin is terminated
without "cause" as contemplated in such Management Shareholder's employment
agreement, then the remaining Management Shareholders shall have the option for
a period of forty (40) days from the date of such termination to purchase, and
if such option is exercised, the terminated Management Shareholder may, but
shall not be obligated to, sell all of the Stock held by such terminated
Management Shareholder (the "Terminated Manager's Stock") on terms substantially
identical to those set forth in Section 5(d) (other than subsection (iii)
thereof) and at the price set forth in Section 5(c). If the employment of a
Management Shareholder other than Scott Rifkin is terminated due to death or
disability (as such terms are defined in such Management Shareholder's
employment agreement), then such Management Shareholder's or such Management
Shareholder's personal representative may, for a period of forty (40) days from
the date of appointment of such personal representative or disability, as the
case may be, offer to the remaining Management Shareholders the option to
purchase, and if such option is exercised, the deceased or disabled Management
Shareholder may, but shall not be obligated to, sell all of such Terminated
Manager's Stock on terms substantially identical to those set forth in Section
5(d) (other than subsection (iii) thereof) and at the price set forth in Section
5(c). If all of the
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Terminated Manager's Stock is not purchased by the remaining Management
Shareholders, the Investment Shareholders shall have the option, upon such
terminated Management Shareholder's request, to purchase, within sixty (60) days
after the date of said termination, and such terminated Management Shareholder
shall sell, all of the Terminated Manager's Stock at the price set forth in
Section 5(c), and upon the terms set forth in Section 5(d) hereof. If all of the
Terminated Manager's Stock is not purchased by the remaining Management
Shareholders and the Investment Shareholders, the Company shall, upon such
terminated Management Shareholder's request, purchase, within ninety (90) days
after the date of said termination, and such terminated Management Shareholder
shall sell, all of the Terminated Manager's Stock at the price set forth in
Section 5(c), and upon the terms set forth in Section 5(d) hereof. Purchases by
the remaining Management Shareholders or the Investment Shareholders shall be in
such proportions as they shall agree or, if they cannot agree, in proportion to
their ownership of outstanding Common Stock (on an as converted basis) other
than the Stock of the terminated Management Shareholder.
(ii) Termination Under Other Circumstances. If the employment
of a Management Shareholder other than Scott Rifkin is terminated by the Company
for "cause" as contemplated by the Management Shareholder's employment
agreement, or, if no such agreement is in effect, for "good cause" under
applicable law, then the Company shall have the option (but not the obligation)
to purchase, within ninety (90) days after the date of such termination, and, if
such option is exercised, such Management Shareholder shall sell, all of the
shares of Stock held by such Management Shareholder at a price equal to the
lesser of such Management Shareholder's acquisition cost for his stock or $.01
per share, and upon the terms set forth in Section 5(d) hereof. If the
employment of a Management Shareholder other than Scott Rifkin is terminated due
to expiration of the term of his employment agreement, then the Company shall
have the option (but not the obligation) to purchase, within 90 days after the
date of such termination, and, if such option is exercised, such Management
Shareholder shall sell, all of the shares of Stock held by such Management
Shareholder at a price determined pursuant to Section 5(c) and upon the terms
set forth in Section 5(d).
(iii) Change in Control. If the employment of a Management
Shareholder other than Scott Rifkin is terminated by the Company without "cause"
as contemplated in such Management Shareholder's employment agreement and there
occurs a Change in Control within the first twelve (12) months following the
date of such termination, the purchasers of his stock shall pay or cause to be
paid to such terminated Management Shareholder (or to his heirs, legatees and/or
guardians), in addition to the purchase price for such terminated Management
Shareholder's Stock, the value of such terminated Management Shareholder's share
of any consideration that would have been payable to such terminated Management
Shareholder (less any such consideration actually received by such Management
Shareholder as a result of a sale of his Stock, whether to another Management
Shareholder, the Investment Shareholders, the Company or another person) upon,
and as a result of, such a Change in Control of the Company within such twelve
(12) month period. Such payment shall be made when and as the Company or the
Company's remaining Shareholders receive consideration as a result of such a
Change in Control, and shall be paid by the purchasers based upon such
terminated Management Shareholder's pro-rata equity interest in the Company at
the time of termination. Any payment
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pursuant to this Section 5(a)(iii) as a result of a Change in Control may, at
the purchaser's option, be made by delivery of any combination of cash,
promissory notes with a term of not more than ten (10) years and interest at a
rate calculated pursuant to Section 1274(d) of the Internal Revenue Code of
1986, as amended (the "Code"), or an appropriate in-kind distribution of any
consideration received by the Company or its Shareholders as a result of such
Change in Control.
(b) Termination of Employment of Rifkin.
(i) Termination of Employment for Good Cause. If the
employment of Scott Rifkin (a "Terminated Senior Manager") with the Company is
terminated by the Company for any of the specific reasons enumerated in the
termination for "cause" provisions of Rifkin's employment agreement (or, if no
such agreement is then in effect, for "good cause" under applicable law), then
the Company shall have the option (but not the obligation) to purchase, within
ninety (90) days after the date of termination, and, if such option is
exercised, such Terminated Senior Manager shall sell, all of the Stock then
registered in such Terminated Senior Manager's name or held, in trust or
otherwise, for his benefit at the price and upon the terms provided in Sections
5(d) and 5(e) hereof. The Company may assign its rights under this Section
5(b)(i).
(ii) Death; Disability. Upon the Disability of Scott Rifkin (a
"Disabled Shareholder"), or death of Scott Rifkin, and the appointment and
qualification of his personal representative, for a period of sixty (60) days
from the date of such appointment and qualification or Disability, as the case
may be, such personal representative or such Disabled Shareholder, as the case
may be, may offer to the other Management Shareholders and the Investment
Shareholders the option to purchase (in such proportions as they shall agree
upon, or if they cannot agree, in proportion to their respective ownership of
outstanding Common Stock), all of the shares of Stock held by such personal
representative, or Disabled Shareholder, on terms substantially identical to
those set forth in Section 5(d) hereof (other than subsection (iii) thereof) and
at a price determined in accordance with the terms of Section 5(c) hereof. If
the option to purchase all of the shares of Stock so offered is not exercised or
accepted within such sixty (60) day period, then such Disabled Shareholder or
such personal representative, as the case may be, shall be entitled to sell, by
providing written notice to the Company, and the Company shall be required to
purchase upon receipt of such written notice, all or a portion of such shares of
Stock held by the Disabled Shareholder or such personal representative as such
number of shares set forth in such written notice, at the price and upon the
terms provided in Sections 5(d) and 5(e) hereof. The Company may assign its
rights under this Section 5(b)(ii).
(iii) Termination of Employment Under Other Circumstances. If
Scott Rifkin's employment is terminated by the Company without "cause" as
contemplated by his employment agreement (or if no such agreement is then in
effect, without "good cause" under applicable law), then Rifkin shall be
entitled to sell, by providing written notice to the Company, and the Company
shall be required to purchase upon receipt of such written notice all or a
portion of such shares of stock acquired by Rifkin and set forth in such written
notice, at the price set forth in Section 5(c) and subject to the terms set
forth in Section 5(d). If the employment of Rifkin is terminated due to
expiration of the term of his employment agreement,
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then the Company shall have the option (but not the obligation) to purchase,
within ninety (90) days after the date of such termination, and, if such option
is exercised, and Rifkin shall sell, all of the shares of Stock held by Rifkin
at a price determined pursuant to Section 5(c) and upon the terms set forth in
Section 5(d)
(c) Purchase Price. With respect to purchases of Stock made pursuant
to Sections 5(b)(i), the second sentence of 5(b)(ii), 5(c)(i), 5(c)(ii) and
5(c)(iii), if the purchaser of Stock hereunder, on the one hand, and the
Transferring Shareholder, on the other hand, agree in writing as to the purchase
price for such Stock, such agreed price shall be the purchase price for such
Stock. If the purchase price of such Stock is not agreed upon (x) with respect
to an event described in Sections 5(b)(i), the second sentence of 5(b)(ii) or
5(c)(i) within thirty (30) days from the date of such event and (y) with respect
to an event described in Sections 5(c)(ii) and (iii), within thirty (30) days
after the receipt of the notice required to be determined thereunder, then the
purchase price of such Stock shall be its Fair Market Value. The Transferring
Shareholder and the purchasers shall each pay one-half of all expenses incurred
in connection with the determination of the Fair Market Value of Stock under
this Section 5(c).
(d) Payment of Purchase Price. The payment of any purchase price for
Stock Transferred pursuant to this Section 5 hereof may be made on such terms as
are agreed upon by the parties or, absent such agreement, as follows:
(i) Cash. (A) In the event of any Transfer pursuant to this
Section 5 (other than as a result of the death of a Management Shareholder), (1)
if the Company is the purchaser, fifty percent (50%) of the total purchase price
of the Stock shall be paid in cash by bank wire transfer by the Company on the
Closing Date, and (2) if anyone other than the Company is the purchaser, the
entire amount of the purchase price of the Stock shall be paid in cash by bank
wire transfer by such purchaser(s) on the Closing Date, and (B) in the event of
any Transfer as a result of the death of a Management Shareholder, the Company
shall pay in cash by bank wire transfer on the Closing Date the greater of (1)
the proceeds of any life insurance policy or policies purchased by the Company
as contemplated by Section 5(e) (but not in excess of the purchase price to be
paid by the Company pursuant to this Section 5), and excluding any key man life
insurance proceeds purchased by the Company, and (2) fifty percent (50%) of the
total purchase price to be paid by the Company with respect to the stock
formerly held by such deceased Management Shareholder. Notwithstanding the
foregoing, if the Company is a purchaser of Stock pursuant to this Section 5 but
is prohibited by law and/or the Company By-laws to make all or any portion of
any cash payment otherwise payable on the Closing Date with respect to the
purchase of such Stock, the Company shall pay the maximum amount permitted by
law and the Company's By-laws, if any, and the balance of such purchase price
shall be made in accordance with Section 5(d)(ii).
(ii) Promissory Note. After payment in cash of the amount set
forth in Section 5(d)(i), the balance of the purchase price to be paid by the
Company pursuant to this Section 5 shall be represented by a promissory note of
the Company (the "Note"), payable in five (5) equal annual installments of
principal and interest, the first of which shall be due and payable on the first
anniversary of delivery of the Note, and otherwise in form and substance
satisfactory
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to the Company and the Transferring Shareholder or the representative thereof.
Interest shall accrue on, and be payable with, the unpaid balance of the Note
from the Closing Date at a rate equal to the applicable federal rate for
long-term debt instruments under Code Section 1274(d)(1) in effect as of the
Closing Date. As security for payment of the amounts due under the Note, the
Company shall, to the extent provided by agreements and instruments to which the
Company is a party, pledge to the Transferring Shareholder the Stock being
purchased pursuant to this Section 5 until such time as all payments due
thereunder have been paid in full; provided that such selling Shareholder shall
not be entitled to exercise any voting or other rights with respect to such
shares of Stock so long as the Company is not in default of any payment due
under such Note.
(iii) Debt Due From Shareholder. Any debt due by a
Transferring Shareholder to the Company shall be payable according to its terms,
as shall any debt due by the Company to the Transferring Shareholder; provided,
however, that regardless of the terms of any such debt due by the Shareholder to
the Company, any cash payment due under Section 5(d)(i), as well as any
insurance proceeds payable under Section 5(d)(i) with respect to the purchase of
the Transferring Shareholder's Stock, shall be applied first, to offset any such
indebtedness until all such indebtedness is fully discharged and, second, as
payment of the purchase price for the Transferring Shareholder's Stock. The
provisions of this subparagraph (iii) shall also apply to any purchases of Stock
by the Company pursuant to Section 6 hereof.
(iv) Closing. The closing of a purchase and sale of Stock in
accordance with this Section 5 (the "Closing"), unless otherwise provided herein
or agreed to in writing by the purchaser(s) and the Transferring Shareholder,
shall be held at the principal place of business of the Company (1) thirty (30)
days after (x) with respect to any option to purchase such Stock pursuant to
this Section 5, the later of (i) the date that the last applicable period for
exercising an unexercised option to purchase has lapsed and (ii) the date an
option to purchase is accepted or exercised, (y) in connection with the
Disability of Scott Rifkin, the date of delivery of the notice required with
respect thereto, and (2) with respect to the death of a Management Shareholder,
ninety (90) days after the appointment and qualification of such deceased
Management Shareholder's personal representative (collectively, the "Closing
Date"); provided that if determination of a purchase price requires a
determination of Fair Market Value, then the Closing Date shall not be later
than 30 days after such determination. At the Closing, upon payment of the
purchase price (including delivery of the Note), the certificates representing
the Stock to be purchased and sold pursuant to this Section 5 shall be delivered
by the Transferring Shareholder (or his personal or legal representatives, as
the case may be) to the purchaser(s) appropriately free and clear of all liens
and endorsed in blank for transfer. If the certificates representing any shares
of Stock to be so transferred have not been surrendered by the selling
Shareholder, all rights of the holder thereof hereunder with respect to said
Stock (including, without limitation, voting rights) nonetheless shall cease and
terminate without any further action by any Person.
(e) Life Insurance. The Company, in its discretion, may purchase a
life insurance policy on the life of each Management Shareholder in such
amounts, if any, as the Board deems reasonable and appropriate. The Company
shall be the owner and beneficiary of
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each such life insurance policy, and any proceeds received thereunder shall be
held by the Company in trust for the purposes of satisfying the Company's
obligations under this Section 5. Each Management Shareholder agrees to
cooperate with the Company in obtaining, and in keeping in full force and
effect, all such policies. The Company shall maintain each such insurance policy
in full force and effect and shall not, without the prior written consent of the
affected Management Shareholder, cancel any such policy or take or omit to take
any action that might give rise to termination or cancellation thereof. The
Company shall pay premiums on all such insurance policies as they become due.
The Company may, when it deems appropriate, apply any dividends declared and
paid on such policies to the payment of premiums. Notwithstanding the foregoing,
the Company shall have no obligations under this Section 5(e) with respect to
purchasing a life insurance policy covering the life of a Management Shareholder
to the extent a Management Shareholder is either uninsurable or may not be
insured as herein contemplated upon commercially reasonable terms. If a
Management Shareholder transfers all of his Stock during his lifetime pursuant
to this Section 5, or if this Agreement is terminated without being superseded
by a similar agreement prior to such Management Shareholder's death, such
Management Shareholder, or any designee of such Management Shareholder, shall
have the right, during the sixty (60) day period beginning with the date of
Transfer or termination of this Agreement, to purchase any life insurance policy
insuring the life of such Management Shareholder owned by the Company by paying
the Company an amount equal to the cash surrender value of such insurance policy
(determined after payment of all policy loans incurred to pay premiums due
thereunder and interest thereon) as of the date of purchase, plus the unearned
portion of any premiums that shall have been paid thereon. Notwithstanding the
provisions contained in Section 5(e) herein, any life insurance purchased by the
Company pursuant to this Section 5(e) shall be separate and distinct from, and
shall not include, any key man life insurance purchased by the Company.
(f) Irrevocable Proxy. In order to ensure that the Company may
lawfully effect the transactions contemplated by this Section 5, each Management
Shareholder hereby irrevocably appoints the duly elected Secretary of the
Company as his, her or its true and lawful proxy and attorney-in-fact, with full
power of substitution, to vote all of his Voting Shares of the Company to
approve each aspect of the transactions contemplated by this Section 5 and to
take all such other actions as are necessary to enforce the rights of the
Company under this Section 5. The proxies and powers granted by each Shareholder
pursuant to this Section 5 are coupled with an interest and are given to secure
the performance of the Shareholders' respective obligations under this Section
5. Such proxies and powers shall survive the death, incompetence and disability
of each Shareholder.
SECTION 6. Right of First Offer.
In addition to and not in limitation of any other restrictions on
Transfers of Stock contained in this Agreement, any Transfers of Stock by a
Shareholder (other than an Investment Shareholder, unless such Transfer occurs
prior to 90 days after the date hereof) shall be consummated only in accordance
with the following procedures:
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(a) The Transferring Shareholder shall first deliver to the Company
and each Major Shareholder other than the Transferring Shareholder and, if the
Transferring Shareholder is a Management Shareholder, each other Management
Shareholder (collectively, the "Offered Shareholders") a written notice (an
"Offer Notice") that shall (i) state the Transferring Shareholder's intention to
Transfer Stock to one or more Persons in a bona fide, arm's length transaction,
the amount and type of Stock to be Transferred (the "Subject Stock"), the
purchase price therefor (which shall be payable in cash) and a summary of the
other material terms of the proposed Transfer and (ii) offer the Company and the
Offered Shareholders the option to acquire all or a portion of such Subject
Stock upon the terms and subject to the conditions of the proposed Transfer as
set forth in the Offer Notice (the "Offer"). The Offer shall remain open and
irrevocable for the periods set forth below (and, to the extent the Offer is
accepted during such periods, until the consummation of the sale contemplated by
the Offer).
(b) The Company shall have the right and option, for a period of
twenty (20) days after delivery of the Offer Notice (the "Company Acceptance
Period"), to accept all or any part of the Subject Stock so offered at the cash
purchase price and on the terms stated in the Offer Notice. Such acceptance
shall be made by delivering a written notice to the Transferring Shareholder and
each of the Offered Shareholders within the Company Acceptance Period specifying
the maximum number of Shares the Company will purchase. The Transferring
Shareholder (and its designees to the Board of Directors, as applicable) shall
abstain from participating in any decision to be made by the Company pursuant to
this Section 6(b).
(c) If the Company shall fail to accept all of the Subject Stock
offered pursuant to, or shall reject in writing, the Offer, then, upon the
earlier of the expiration of the Company Acceptance Period or the giving of such
written notice of rejection or failure to accept such Offer by the Company, each
Offered Shareholder shall have the right and option, for a period of twenty (20)
days (the "Shareholder Acceptance Period"), to accept all or any part of the
Subject Stock not accepted by the Company at the cash purchase price and on the
terms stated in the Offer Notice. Such acceptance shall be made by delivering a
written notice to the Company and the Transferring Shareholder within the
Shareholder Acceptance Period specifying the maximum number of shares such
Offered Shareholder will purchase (the "First Offer Shares"). If, upon the
expiration of the Shareholder Acceptance Period, the aggregate amount of First
Offer Shares exceeds the amount of Subject Stock, the Subject Stock shall be
allocated among the Offered Shareholders as follows: (i) first, each Offered
Shareholder shall be entitled to purchase no more than its First Offer
Percentage of Subject Stock; (ii) second, if any shares of Subject Stock have
not been allocated for purchase pursuant to (i) above (the "Remaining Shares"),
each Offered Shareholder (an "Oversubscribed Shareholder") that had offered to
purchase a number of shares of Subject Stock in excess of the amount of stock
allocated for purchase to it in accordance with previous allocations of such
shares of Subject Stock, shall be entitled to purchase an amount of Remaining
Shares equal to no more than its First Offer Percentage (treating only
Oversubscribed Shareholders as Offered Shareholders for these purposes) of the
Remaining Shares; and (iii) third, the process set forth in (ii) above shall be
repeated with respect to any shares of Subject Stock not allocated for purchase
until all shares of Subject Stock are allocated for purchase.
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(d) If effective acceptance shall not be received pursuant to
Sections 6(b) and/or 6(c) above with respect to all of the Subject Stock offered
for sale pursuant to the Offer Notice, then the Transferring Shareholder may
Transfer all or any portion of the Stock so offered for sale and not so accepted
at a cash price not less than the price, and on terms not more favorable to the
purchaser thereof than the terms, stated in the Offer Notice at any time within
ninety (90) days after the expiration of the Shareholder Acceptance Period (the
"Sale Period"). In the event that all of the Stock is not sold by the
Transferring Shareholder during the Sale Period, the right of the Transferring
Shareholder to Transfer such Stock shall expire and the obligations of this
Section 6 shall be reinstated.
(e) All Transfers of Subject Stock to the Company and/or the Offered
Shareholders pursuant to this Section 6 shall be made free and clear of all
liens (other than a lien to secure payment on the stock transferred if payment
is in the form of a promissory note) and shall be consummated contemporaneously
at the offices of the Company on a mutually satisfactory business day within
twenty (20) days after the expiration of the later of the Company Acceptance
Period or the Shareholder Acceptance Period, as applicable or at such other time
and/or place as the parties may agree. The delivery of certificates or other
instruments evidencing such Subject Stock duly endorsed for Transfer shall be
made on such date against payment of the purchase price for such Subject Stock.
(f) The requirements of this Section 6 shall not apply to (i) any
Transfer of Stock by a Shareholder to an Affiliate of such Shareholder; (ii) any
Transfer of Stock pursuant to Sections 5 or 8 of this Agreement; or (iii) any
Transfer of Stock pursuant to a Public Sale.
SECTION 7. Tag-Along Rights.
If a Shareholder or group of Shareholders (collectively, a "Seller")
proposes to transfer, in a bona fide arms-length transaction or series of
transactions to any third party or parties (a "Buyer"), other than pursuant to a
registration statement under the Securities Act, shares of Common Stock which,
together with all other shares of Common Stock sold or to be sold to such Buyer
in such transaction or series of transactions, exceeds 33 1/3% of the
outstanding Stock of the Company, the Seller shall so notify the remaining
Shareholders (the "Tag-Along Sellers"), describing in such notification the
material terms of such proposed sale. The Tag-Along Sellers shall have the
option, exercisable by written notice to the Seller, within ten (10) business
days after the Tag-Along Sellers give notice to the Seller of their intention to
effect such sale, to require the Seller to provide as part of its proposed sale
that the Tag-Along Sellers be given the right to participate, pro rata in
proportion to the respective numbers of shares of Stock owned by the Seller and
the Tag-Along Sellers, in such transaction or series of transactions on the same
terms and conditions (including but not limited to obligations with respect to
indemnification) as the Seller, and, if such option is exercised by the
Tag-Along Seller, the Seller shall not proceed with such sale unless the
Tag-Along Sellers who have exercised such option are given the right so to
participate.
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SECTION 8. Issuance Rights.
The Company shall not issue, sell or exchange, or agree to issue, sell or
exchange (collectively, "Issue," and any issuance, sale or exchange resulting
therefrom, an "Issuance") any shares of Stock (other than Excluded Securities),
except as authorized by the Board and in accordance with the following
procedures:
(a) The Company shall deliver to Rifkin and the Investment
Shareholders a written notice (an "Issuance Notice") that shall (i) state the
Company's intention to Issue Stock to one or more Persons, the amount and type
of Stock to be Issued (the "Issuance Stock"), the purchase price therefore and a
summary of the other material terms of the proposed Issuance and (ii) offer
Rifkin and the Investment Shareholders the option to acquire a share of the
Issuance Stock in proportion to the respective Stock ownership of each of Rifkin
and the Investment Shareholders (the "Issuance Offer"). The Issuance Offer shall
remain open and irrevocable for the periods set forth below (and, to the extent
the Issuance Offer is accepted during such periods, until the consummation of
the Issuance contemplated by the Issuance Offer). Rifkin and the Investment
Shareholders shall each have the right and option, for a period of thirty (30)
days after delivery of the Issuance Notice (the "Issuance Acceptance Period"),
to accept all or any part of the Issuance Offer at the purchase price and on the
terms stated in the Issuance Notice (it being understood that the rights of
Javelin, TD Capital and TD Origen under this Section may be allocated among such
entities as such entities shall determine). Such acceptance shall be made by
delivering a written notice to the Company within the Issuance Acceptance Period
specifying the maximum number of shares of the Issuance Stock that will be
purchased by Rifkin and the Investment Shareholders, as the case may be.
(b) If effective acceptance shall not be received pursuant to
Section 8(a) above with respect to all of the Issuance Stock offered for sale
pursuant to the Issuance Notice, then the Company may Issue all or any portion
of such Stock so offered for sale and not so accepted, at a price not less than
the price, and on terms not more favorable to the purchaser thereof than the
terms, stated in the Issuance Notice at any time within ninety (90) days after
the expiration of the Issuance Acceptance Period (the "Issuance Period"). In the
event that all of the Issuance Stock is not Issued by the Company during the
Issuance Period, the right of the Company to Issue such unsold Issuance Stock
shall expire and the obligations of this Section 8 shall be reinstated.
(c) All sales of Issuance Stock to Rifkin and the Investment
Shareholders subject to any Issuance Notice shall be consummated
contemporaneously at the offices of the Company on a mutually satisfactory
business day within twenty (20) days after the expiration of the Issuance
Acceptance Period or at such other time and/or place as the Company, Rifkin, and
the Investment Shareholders may agree or as otherwise required by law. The
delivery of certificates or other instruments evidencing such Issuance Stock
shall be made by the Company on such date against payment of the purchase price
for such Issuance Stock.
(d) The provisions of this Section 8 shall not apply to (i) any
Excluded Securities or (ii) any Issuance by the Company in connection with an
IPO or any subsequent
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registered public offering of Stock or (iii) any issuance in connection with a
merger or consolidation of the Company.
SECTION 9. Holdback Agreement; Adjustments.
(a) Each Shareholder hereby agrees that, for a period of duration
specified by the Company and an underwriter of common stock or other securities
of the Company (such period not to exceed 180 days) following the effective date
of the first registration statement of the Company filed under the Securities
Act which covers securities to be sold on the Company's behalf to the public in
an underwritten offering, it shall not, to the extent requested by the Company
and its underwriter, directly or indirectly sell, offer to sell, contract to
sell (including, without limitation, any short sale), grant any option to
purchase or otherwise transfer or dispose of (other than to donees who agree to
be similarly bound) any securities of the Company held by it at any time during
such period except securities included in such registration. In order to enforce
the foregoing covenant, the Company may impose stop-transfer instructions with
respect to the Stock of each Shareholder until the end of such period.
(b) The Company shall take all reasonable steps necessary to effect
a subdivision of shares if, with respect to any demand registration request
under that certain Second Amended and Restated Registration Rights Agreement,
dated the date hereof, as the same may be amended from time to time, in the
reasonable judgment of the managing underwriter for the offering in respect of
such demand registration, such subdivision would enhance the marketability of
the securities proposed to be registered thereunder. Each Shareholder agrees to
vote all of its shares of Stock in a manner, and to take all other actions
necessary, to permit the Company to carry out the intent of the preceding
sentence including, without limitation, voting in favor of an amendment to the
Certificate of Incorporation in order to increase the number of authorized
shares of capital stock of the Company.
SECTION 10. Certain Covenants.
The Company covenants and agrees that it will observe and perform the
following covenants and provisions:
10.1. Inspection.
The Company will permit each Investment Shareholder or its
representative, at such Investment Shareholder's expense, and examiners of the
Small Business Administration (the "SBA") to visit and inspect the properties
and assets of the Company, to examine its books of account and records, and to
discuss the Company's affairs, finances and accounts with the Company's
officers, senior management and accountants, all at such reasonable times as may
be requested by such Investment Shareholder or the SBA. Each of the Investment
Shareholders shall maintain the confidentiality of any confidential and
proprietary information so obtained by it which is not otherwise available from
other sources that are free from similar restrictions;
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provided, however, that the foregoing shall in no way limit or otherwise
restrict the ability of each Investment Shareholder or its authorized
representatives to disclose any such information concerning the Company which it
may be required to disclose (a) to its partners, board members or stockholders,
to the extent required to satisfy its fiduciary obligations to such persons, or
(b) otherwise pursuant to or as required by law.
10.2. Financial Statements.
The Company will furnish or cause to be furnished to each
Shareholder:
(a) Monthly Reports. Within 15 days after the end of each month,
monthly financial statements (including a balance sheet and a statement of
operations for the month and year-to-date, each in comparative form with the
previous month) for the previous month (all prepared in accordance with
generally accepted accounting principles consistently applied), with
management's analysis of results, a comparison of such results to the Company's
annual plan and the corresponding prior fiscal year period, and a statement of
the Chief Financial Officer explaining any material differences from budget. The
foregoing financial statements shall be certified by the Chief Executive Officer
or Chief Financial Officer of the Company to the effect that such statements
fairly present the financial position and financial results of the Company for
the fiscal period covered. In addition, if requested by any Investment
Shareholder, the Company shall submit bi-weekly financial results to the
Shareholders within five days following the end of each bi-weekly period.
(b) Annual Financial Statements. Within ninety (90) days after the
end of each fiscal year of the Company (i) the consolidated and consolidating
balance sheets of the Company and its subsidiaries as at the end of such year,
and (ii) the related consolidated and consolidating statements of income,
retained earnings and cash flows for such year, setting forth in comparative
form with respect to such consolidated financial statements figures for the
previous fiscal year, all in reasonable detail, together with the opinion
thereon of the Company's independent certified public accountants, which
accountants shall be a nationally recognized accounting firm reasonably
acceptable to the Investment Shareholders, and which opinion shall state that
such financial statements have been prepared in accordance with generally
accepted accounting principles applied on a basis consistent with that of the
preceding fiscal year (except for changes, if any, which shall be specified and
approved in such opinion) and that the audit by such accountants in connection
with such financial statements has been made in accordance with generally
accepted auditing standards related to reporting.
(c) Budget and Operating Forecast. For each fiscal year of the
Company commencing with the fiscal year ending June 30, 2000, at least 30 days
prior to the beginning of each fiscal year, a business plan, projections and
monthly budget for the coming year, together with a capital expenditures budget,
approved by the Company's Board of Directors; and such budget shall be accepted
as the Company's budget for such fiscal year when it has been approved by a 66
2/3% vote of the Board of Directors. The approved budget shall be reviewed by
the Company periodically and all necessary changes or revisions to such budget
shall be resubmitted to the Board of Directors and shall be accepted when
approved in accordance with, and the Company shall not make any such changes to
the budget without such approval in accordance
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with, 66 2/3% approval of the Board of Directors. Prior to the date hereof, the
Company has prepared and presented to the Investment Shareholders, and the
Investment Shareholders have approved, the business plan, projections and
monthly budget for the fiscal year ending June 30, 1999, together with a capital
expenditures budget.
(d) Termination of Certain Provisions. The provisions of paragraph
(a), (b) and (c) of this Section 10.2 shall terminate at the time the Company
becomes subject to the reporting provisions of the Securities Exchange Act of
1934, as amended.
(e) Auditor's Letters. Promptly following receipt by the Company,
each audit response letter, accountant's management letter and other written
report submitted to the Company by its independent public accountants in
connection with an annual or interim audit of the books of the Company.
(f) Other Information. Promptly, from time to time, such other
information regarding the business, prospects, financial condition, operations,
property or affairs of the Company as the Investment Shareholders reasonably may
request including any information required for SBA Form 468 and any other
information reasonably requested or required by any governmental agency
asserting jurisdiction over any Investment Shareholder.
(g) Economic Impact. Promptly after the end of each fiscal year (but
in any event within sixty (60) days after December 31st of each year), the
Company shall provide to the Investment Shareholders a written assessment, in
form and substance satisfactory to the Investment Shareholders, of the economic
impact of the financing by the Investment Shareholders under the Series A
Securities Purchase Agreement and Series B Securities Purchase Agreement,
specifying the full-time equivalent jobs created and retained, and the impact of
the financing on the revenues and profits of the Company's business and on taxes
paid by the Company and its employees.
10.3. Use of Proceeds.
The Company certifies that it will use the proceeds from the
investment by the Investment Shareholders (the "Investment") for the purposes
and in the amounts set forth on Schedule I attached to this Agreement. The
Company will deliver to the Investment Shareholders from time to time promptly
following any Investment Shareholder's request, a written report, certified as
correct by the Company's chief financial officer, verifying the purposes and
amounts for which proceeds from the Investment have been disbursed. The Company
will supply to the Investment Shareholders such additional information and
documents as any Investment Shareholder reasonably requests with respect to its
use of proceeds and will permit the Investment Shareholders to have access to
any and all Company records and information and personnel as any Investment
Shareholder deems necessary to verify how such proceeds have been or are being
used, and to assure that the proceeds have been used for the purposes specified
on Schedule I.
10.4. Information Covenant.
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Within sixty (60) days after the end of the fiscal year of the
Company, the Company will furnish or cause to be furnished to the Investment
Shareholders information required by the SBA concerning the economic impact of
the Investment Shareholders' Investment, for (or as of the end of) each fiscal
year, including but not limited to, information concerning full-time equivalent
employees; Federal, state and local income taxes paid; gross revenue; source of
revenue growth; after-tax profit or loss; and Federal, state and local income
tax withholding. Such information shall be forwarded by the Company on a form
provided by the Preferred Shareholder. The Company also will furnish or cause to
be furnished to the Investment Shareholders such other information regarding the
business, affairs and condition of the Company as any Investment Shareholder may
from time to time reasonably request.
10.5. Permitted Activities and Proceeds.
So long as any Preferred Shareholder is a holder of Preferred Stock
in the Company, or until such Preferred Shareholder waives its rights under this
Section 10.5:
(a) Neither the Company nor any of its affiliates will engage in any
activities or use directly or indirectly the proceeds from the Investment for
any purpose for which a small business investment company is prohibited from
providing funds by the Small Business Investment Company Act of 1958, as amended
(the "SBIC Act"), including 13 C.F.R. ss.107. The general categories are (i)
relenders or reinvestors, (ii) passive businesses, (iii) real estate businesses,
(iv) project financing, and (v) foreign investment.
(b) Without obtaining the prior written approval of the Preferred
Shareholders, the Company will not change within one (1) year of the date hereof
the Company's business activity from that described on Schedule II to a business
activity which a small business investment company is prohibited from providing
funds by the SBIC Act. The Company agrees that any such changes in its business
activity without such prior written consent of the Preferred Shareholders will
constitute a material breach of the obligations of the Company under this
Agreement and the financing documents for the Investment (an "Activity Event of
Default"). If an Activity Event of Default occurs, each of the Preferred
Shareholders has the right to demand immediate repayment of the securities
evidencing the Investment, together with interest on the aggregate amount
invested from the date of the closing to the date of repayment, and the Company
will immediately make such payment within thirty (30) days of receipt of a
demand. The payment remedy is in addition to any and all other rights and
remedies against the Company and others to which the Preferred Shareholders may
be entitled.
10.6. Regulatory Compliance Cooperation.
The Company agrees that the Preferred Shareholders and any SBA
examiner shall have the rights of access and information specified in 13 C.F.R.
ss.107.620 (and any successor provision).
10.7. Management Rights.
The Investment Shareholders shall be entitled to consult with and
advise management of the Company on significant business issues, including
management's proposed annual operating plans, and management will meet with
Investment Shareholders regularly
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during each year at the Company's facilities at mutually agreeable times for
such consultation and advice and to review progress in achieving said plans.
Each Investment Shareholder agrees, and any representative of such Investment
Shareholder will agree, to hold in confidence and trust and not use or disclose
any confidential information provided to or learned by it in connection with its
rights under this Agreement.
10.8. System of Accounting.
The Company shall maintain a system of accounting established and
administered in accordance with generally accepted accounting principles.
10.9. Board Observation Right.
The Company shall invite a representative of the Preferred A
Shareholders and a representative of GE as observers to attend all meeting of
its Board in a nonvoting capacity. The members of the Board designated by the
Preferred A Shareholders and GE may and, if no representative designated by any
such person is then serving as a member of the Board, the Company shall, in that
respect, give such observer representatives copies of all minutes, consents and
other material that the Company provides to its directors; provided, however,
that the Company reserves the right to exclude such observer representatives
from access to any material or meeting or portion thereof if the Company
believes on advice of counsel that such exclusion is reasonably necessary to
preserve attorney client privilege, to protect highly confidential proprietary
information or for other similar reasons. Such observer representatives may
participate in discussions of matters brought to the Board. The Company shall
not be obligated to pay the expenses of such observer representatives.
10.10. Reservation of Conversion Stock.
The Company will, upon any increase in the number of shares of
Common Stock issuable upon conversion of the Preferred Stock and prior to the
exercise of the warrants issued under the Series A Securities Purchase Agreement
and the Series B Securities Purchase Agreement, reserve additional shares of
Common Stock for issuance upon such conversion or exercise, so that the number
of shares of Common Stock so authorized will not at any time be less than the
number of such shares issuable upon such conversion or exercise and agree to
vote their shares of Stock accordingly.
10.11. Employee Confidentiality Agreements.
The Company has executed agreements with its existing employees and
will execute agreements with its future employees (other than clerical and other
employees who will not have access to confidential information) which will
preserve the Company's rights to conduct business including protection of trade
secrets, confidentiality and, as appropriate, non-competition provisions to a
form acceptable to the Investment Shareholders, without limiting the foregoing,
the Company shall require the key employees engaged by it after the date hereof
to enter into a non-disclosure, non-compete and proprietary information
agreement in substantially the form of Schedule III hereto.
10.12. Amendment of Employee Stock Option Plan.
The Company has amended its directors, officers and employees stock
option plan
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to increase the number of shares with respect to which options may be granted
under the plan to 190,000 shares of Common Stock. Such plan is reasonably
satisfactory to the member of the board of directors appointed by the Investment
Shareholders. In general, vesting under the plan shall be no faster than ratably
over three or four years, commencing on the first anniversary of either the
grant of the option or, for certain existing employees, the date of the
commencement of such employee's employment with the Company. Vesting of such
options will accelerate upon a sale of 50% or more of total assets or voting
shares of the Company, or a merger, consolidation or other similar corporate
transaction other than one in which the existing shareholders of the Company
continue to own 75% of the voting shares of the Company, but not upon a sale of
securities of the Company pursuant to a public offering pursuant to an effective
registration statement filed under the Securities Act. The specific terms of
such plan, including the vesting schedule and options granted, have been
approved by the compensation committee of the Board of Directors.
SECTION 11. Conflicting Agreements.
Each Shareholder represents and warrants that such Shareholder has not
granted and is not a party to any proxy, Voting Agreement or other agreement
that is inconsistent with or conflicts with any provision of this Agreement, and
no holder of Stock shall grant any proxy or become party to any Voting Agreement
or other agreement that is inconsistent with or conflicts with any provision of
this Agreement, except for the Voting Agreement.
SECTION 12. Legend.
(a) Each Shareholder and the Company shall take all such action
necessary (including exchanging with the Company certificates representing
shares of Stock issued prior to the date hereof) to cause each certificate
representing outstanding shares of Stock to bear a legend containing the
following words:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY
APPLICABLE STATE SECURITIES LAWS (COLLECTIVELY REFERRED TO AS THE
"ACTS") AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS
FROM THE REGISTRATION REQUIREMENTS OF THE ACTS. THE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND WITHOUT A VIEW TO
DISTRIBUTION. THE SECURITIES MAY NOT BE RESOLD OR TRANSFERRED EXCEPT
(i) UPON REGISTRATION PURSUANT TO THE ACTS, (ii) PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE RESPECTIVE REGISTRATION PROVISIONS OF
THE ACTS, OR (iii) UPON RECEIPT BY THE ISSUER OF AN OPINION OF
ACCEPTABLE COUNSEL THAT
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REGISTRATION UNDER THE ACTS, OR ANY OF THEM, IS NOT REQUIRED FOR
SUCH RESALE."
"IN ADDITION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE RESTRICTIONS ON TRANSFER AND TO THE VOTING AGREEMENTS
SET FORTH IN THE SHAREHOLDERS AND VOTING AGREEMENT DATED AS OF
FEBRUARY 1, 1999, AS AMENDED, BY THE COMPANY AND THE PARTIES
THERETO, A COPY OF WHICH IS ON FILE IN THE OFFICE OF THE COMPANY."
(b) The requirement that the above securities legend be placed upon
certificates evidencing shares of Stock shall cease and terminate upon the
earliest of the following events: (i) when such shares are Transferred in an IPO
or (ii) when such shares are Transferred pursuant to Rule 144 under the
Securities Act. Upon the consummation of any event requiring the removal of a
legend hereunder, the Company, upon the surrender of certificates containing
such legend, shall, at its own expense, deliver to the holder of any such shares
as to which the requirement for such legend shall have terminated, one or more
new certificates evidencing such shares not bearing such legend.
SECTION 13. Representations and Warranties.
Each party hereto represents and warrants to the other parties hereto as
follows:
(i) It has full power and authority to execute, deliver and perform
its obligations under this Agreement.
(ii) This Agreement has been duly and validly authorized, executed
and delivered by it, and constitutes a valid and binding obligation of it,
enforceable against it in accordance with its terms except to the extent that
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights generally.
(iii) The execution, delivery and performance of this Agreement by
it does not (x) violate, conflict with, or constitute a breach of or default
under its organizational documents, if any, or any material agreement to which
it is a party or by which it is bound or (y) violate any law, regulation, order,
writ, judgment, injunction or decree applicable to it.
(iv) No consent or approval of, or filing with, any governmental or
regulatory body is required to be obtained or made by it in connection with the
transactions contemplated hereby.
(v) It is not a party to any agreement that is inconsistent with the
rights of any party hereunder or otherwise conflicts with the provisions hereof.
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SECTION 14. Duration of Agreement.
The rights and obligations of a Shareholder under this Agreement shall
terminate at such time as such Shareholder no longer is the beneficial owner of
any shares of Stock. This Agreement shall terminate upon the consummation of a
Qualified IPO, except that the provisions of Sections 9 and 12 shall survive
until by their terms they are no longer operative.
SECTION 15. Further Assurance.
At any time or from time to time after the date hereof, the parties agree
to cooperate with each other, and at the request of any other party, to execute
and deliver any further instruments or documents and to take all such further
action as the other party may reasonably request in order to evidence or
effectuate the consummation of the transactions contemplated hereby and to
otherwise carry out the intent of the parties hereunder. Each Shareholder who is
a natural Person hereby agrees that he and/or his personal representative, and
each trustee of any permitted trust hereunder, shall be bound to take any and
all actions consistent with the intent and purposes of this Agreement.
SECTION 16. Amendment and Waiver.
Except as otherwise provided herein, no modification, amendment or waiver
of any provision of this Agreement shall be effective against the Company or any
Shareholder unless such modification, amendment or waiver is approved in writing
by the Company, and by Rifkin and the Investment Shareholders so long as the
Investment Shareholders and Rifkin and their respective Affiliates,
collectively, hold, directly and indirectly, at least their respective
Thresholds. Notwithstanding the foregoing, any amendment to Sections 4 or 6
hereof shall require approval in writing by the Company, Shareholders holding at
least a majority of the outstanding Stock, and the Investment Shareholders and
Rifkin and any amendment to Section 10 hereof shall require approval in writing
by the Preferred Shareholders. The failure of any party to enforce any of the
provisions of this Agreement shall in no way be construed as a waiver of such
provisions and shall not affect the right of such party thereafter to enforce
each and every provision of this Agreement in accordance with its terms. No
person or entity may be added as a party to this Agreement without the approval
of all of the parties hereto.
SECTION 17. Severability.
Whenever possible, each provision of this Agreement shall be interpreted
in such a manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
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or any other jurisdiction, but this Agreement shall be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein.
SECTION 18. Entire Agreement.
Except as otherwise expressly set forth herein, this document and the
other documents dated the date hereof embodies the complete agreement and
understanding among the parties hereto with respect to the subject matter hereof
and supersedes and preempts any prior understandings, agreements or
representations by or among the parties, written or oral, that may have related
to the subject matter hereof in any way. Without limiting the generality of the
foregoing, to the extent that any of the term, hereof are inconsistent with the
rights or obligations of any Shareholder under any other agreement with the
Company, the terms of this Agreement shall govern.
SECTION 19. Successors and Assigns.
Except as otherwise provided herein, this Agreement shall bind and inure
to the benefit of and be enforceable by the Company and its successors and
assigns and each Shareholder and their respective successors, assigns, heirs and
personal representatives, so long as they hold Stock. The personal
representative of a deceased Shareholder shall automatically be subject to the
terms and conditions of this Agreement. Each Management Shareholder shall
promptly execute a will or codicil to his will authorizing and directing his
personal representatives to perform all of his obligations under this Agreement,
but the failure to execute such a will shall not affect the rights of the
remaining Shareholders or the obligations of their personal representatives,
heirs, descendants, or estates, as provided in this Agreement.
SECTION 20. Counterparts.
This Agreement may be executed in separate counterparts each of which
shall be an original and all of which taken together shall constitute one and
the same agreement.
SECTION 21. Remedies.
Each Shareholder shall be entitled to enforce its rights under this
Agreement specifically to cover damages by reason of any breach of any provision
of this Agreement and to exercise all other rights existing in their favor. The
parties hereto agree and acknowledge that money damages may not be an adequate
remedy for any breach of the provisions of this Agreement and that each party
may in its sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief (without posting
a bond or other security) in order to enforce or prevent any violation of the
provisions of this Agreement.
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SECTION 22. Notices.
Any notice provided for in this Agreement shall be in writing and shall be
either personally delivered, or mailed first class mail (postage prepaid) or
sent by reputable overnight courier service (charges prepaid) to the recipient
at the address set forth on the signature pages to this Agreement or to such
other address and/or to the attention of such other person as the recipient
party has specified by prior written notice to the Company. Notices shall be
deemed to have been given hereunder when delivered personally, three (3) days
after deposit in the U.S. mail and one (1) day after deposit with a reputable
overnight courier service, to the Company and the Shareholders at the addresses
above written or other such address provided to the Company and Shareholders in
accordance with the terms hereof.
SECTION 23. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO THE PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS
OF THE STATE OF NEW YORK AND OF THE UNITED STATES OF AMERICA, IN EACH CASE
LOCATED IN THE COUNTY OF NEW YORK, FOR ANY ACTION, PROCEEDING OR INVESTIGATION
IN ANY COURT OR BEFORE ANY GOVERNMENTAL AUTHORITY ("LITIGATION") ARISING OUT OF
OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY (AND
AGREES NOT TO COMMENCE ANY LITIGATION RELATING THERETO EXCEPT IN SUCH COURTS),
AND FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY
U.S. REGISTERED MAIL TO ITS RESPECTIVE ADDRESS SET FORTH IN THIS AGREEMENT SHALL
BE EFFECTIVE SERVICE OF PROCESS FOR ANY LITIGATION BROUGHT AGAINST IT IN ANY
SUCH COURT. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN THE COURTS OF THE
STATE OF NEW YORK OR THE UNITED STATES OF AMERICA, IN EACH CASE LOCATED IN THE
COUNTY OF NEW YORK, AND HEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES
AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE
PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY AND ALL RIGHTS TO TRIAL BY JURY IN CONNECTION WITH ANY
LITIGATION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
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SECTION 24. Miscellaneous.
The descriptive headings of this Agreement are inserted for convenience
only and do not constitute a part of this Agreement.
SECTION 25. Construction.
Where specific language is used to clarify by example a general statement
contained herein such specific language shall not be deemed to modify, limit or
restrict in any manner the construction of the general statement to which it
relates. The language used in this Agreement shall be deemed to be the language
chosen by the parties hereto to express their mutual intent, and no rule of
strict construction shall be applied against any party.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, the undersigned parties have executed this Second
Amended and Restated Shareholders' and Voting Agreement as of the day and year
first above written.
AMERICASDOCTOR.COM. INC.
11403 Cronridge Drive, Suite 200
Owings Mills, MD 21117
Attention: Scott M. Rifkin, M.D.
By: /s/ Scott M. Rifkin, M.D.
--------------------------------
Its: CEO
MEDICAL ADVISORY SYSTEMS, INC.
8050 Southern Maryland Boulevard
Owings, MD 20736
Attention: Ron Pickett
By: /s/ Ron Pickett
--------------------------------
Its: President
PREMIER RESEARCH WORLDWIDE, LTD.
30 South 17th Street
Philadelphia, PA 19103
Attention: Joel Morganroth
By: /s/ Joel Morganroth
--------------------------------
Its: CEO
TULLIS-DICKERSON CAPITAL FOCUS II, L.P.
One Greenwich Plaza, Third Floor
Greenwich, CT 06830
Attention: Mr. Thomas P. Dickerson
By: Tullis-Dickerson Partners II, L.L.C.
By: /s/ Thomas P. Dickerson
-----------------------------
Its:____________________________
/s/ Scott M. Rifkin, M.D.
- -------------------------------------
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Scott Rifkin
TD ORIGEN CAPITAL FUND, L.P.
150 Washington Avenue, Suite 201
Santa Fe, NM 87501
Attention: J. Michael Schafer
By: TD II Regional Partners, Inc.,
its general partner
By: /s/ Thomas P. Dickerson
--------------------------------------
Thomas P. Dickerson, Vice President
TD JAVELIN CAPITAL FUND, L.P.
2850 Cahaba Road, Suite 240
Birmingham, AL 35223
Attention: Lyle A. Hohnke
By: JVP, L.P., its general partner
By: JVP, Inc., its general partner
By: /s/ Thomas P. Dickerson
--------------------------------------
Thomas P. Dickerson, Vice President
GE CAPITAL EQUITY INVESTMENTS, INC.
120 Long Ridge Road
Stamford, CT 06927
Attention: General Counsel
By: /s/ Richard J. Miller SVP
--------------------------------------
For the purposes of Sections 4, 5, 6 and 7, each of the undersigned is hereby
executing this Agreement.
THE WYNDHURST CAPITAL GROUP, LLC
575 South Charles Street, Suite 200
Baltimore, MD 21201
Attention: Lewis Goodman
By: /s/ Lewis S. Goodman
--------------------------------------
/s/ Allan Sanders
- ------------------------------------------
Allan Sanders
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/s/ Laura Gill
- ------------------------------------------
Laura Gill
/s/ Jeffrey Lefko
- ------------------------------------------
Jeffrey Lefko
03/270988
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EXHIBIT 10.23
EXECUTION COPY
==============================================================================
SECOND AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
by and among
AMERICASDOCTOR.COM. INC.,
MEDICAL ADVISORY SYSTEMS, INC.,
PREMIER RESEARCH WORLDWIDE, LTD.,
TULLIS-DICKERSON CAPITAL FOCUS II, L.P.,
TD ORIGEN CAPITAL FUND, L.P.,
TD JAVELIN CAPITAL FUND, L.P.,
GE CAPITAL EQUITY INVESTMENTS, INC. and
SCOTT RIFKIN
Dated as of June 1, 1999
==============================================================================
<PAGE>
TABLE OF CONTENTS
SECTION 1. Definitions ..................................................... 2
SECTION 2. Methodology for Calculations .................................... 7
SECTION 3. Corporate Governance ............................................ 8
3.1. Composition of the Board ........................................... 8
3.2. Committees .......................................................... 10
3.3. Vacancies: Removal ................................................. 10
3.4. Directors' Indemnification ......................................... 10
3.5. Irrevocable Proxy .................................................. 11
3.6. Expenses ........................................................... 11
3.7. Cooperation ........................................................ 12
SECTION 4. Restrictions on Transfers of Stock .............................. 12
SECTION 5. Management Shareholders ......................................... 13
SECTION 6. Right of First Offer ............................................ 18
SECTION 7. Tag-Along Rights ................................................ 20
SECTION 8. Issuance Rights ................................................. 21
SECTION 9. Holdback Agreement; Adjustments ................................. 22
SECTION 10. Certain Covenants .............................................. 22
10.1. Inspection ........................................................ 22
10.2. Financial Statements .............................................. 23
10.3. Use of Proceeds ................................................... 24
10.4. Information Covenant .............................................. 24
10.5. Permitted Activities and Proceeds ................................. 25
10.6. Regulatory Compliance Cooperation ................................. 25
10.7. Management Rights ................................................. 25
10.8. System of Accounting .............................................. 26
10.9. Board Observation Right ........................................... 26
10.10. Reservation of Conversion Stock .................................. 26
10.11. Employee Confidentiality Agreements .............................. 26
10.12. Amendment of Employee Stock Option Plan .......................... 26
SECTION 11. Conflicting Agreements ......................................... 27
SECTION 12. Legend ......................................................... 27
SECTION 13. Representations and Warranties ................................. 28
SECTION 14. Duration of Agreement .......................................... 29
SECTION 15. Further Assurance .............................................. 29
SECTION 16. Amendment and Waiver ........................................... 29
SECTION 17. Severability ................................................... 29
SECTION 18. Entire Agreement ............................................... 30
SECTION 19. Successors and Assigns ......................................... 30
SECTION 20. Counterparts ................................................... 30
SECTION 21. Remedies ....................................................... 30
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SECTION 22. Notices ........................................................ 31
SECTION 23. Governing Law .................................................. 31
SECTION 24. Miscellaneous .................................................. 32
SECTION 25. Construction ................................................... 32
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EXECUTION COPY
SECOND AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (the
"Agreement") made and entered into as of this 1st day of June, 1999, among
AMERICASDOCTOR.COM. INC., a Delaware corporation (the "Company"), and MEDICAL
ADVISORY SYSTEMS, INC., a Delaware corporation ("Medical Advisory Systems"),
PREMIER RESEARCH WORLDWIDE, LTD., a Delaware corporation ("Premier"), and
TULLIS-DICKERSON CAPITAL FOCUS II, L.P., a Delaware limited partnership, TD
ORIGEN CAPITAL FUND, L.P., a Delaware limited partnership, TD JAVELIN CAPITAL
FUND, L.P., a Delaware limited partnership (collectively, "TD"), THE WYNDHURST
CAPITAL GROUP, LLC, a Maryland limited liability company ("Wyndhurst") and GE
CAPITAL EQUITY INVESTMENTS, INC., a Delaware corporation ("GE"; each of Medical
Advisory Systems, Premier, TD, Wyndhurst and GE are referred to herein as a
"Holder" and collectively as the "Holders").
BACKGROUND
On July 2, 1998, the Company entered into a Registration Rights Agreement
(the "Old Registration Rights Agreement") with each of Medical Advisory Systems
and Premier in connection with the purchase by Medical Advisory Systems of
50,000 shares of the Company's Common Stock, $0.01 par value per share (the
"Common Stock"), and the purchase by Premier of 50,000 shares of the Company's
Common Stock.
On February 1, 1999, TD purchased 133,333 shares of the Company's Series A
Convertible Preferred Stock, $0.01 par value per share (the "Series A Preferred
Stock"), and a Common Stock warrant pursuant to a Securities Purchase Agreement
dated as of February 1, 1999 among the Company and TD, and subject to the terms
and conditions contained in the Amended and Restated Shareholders' and Voting
Agreement by and among the Company, Medical Advisory Systems, Premier, Scott
Rifkin and TD (the "Restated Shareholders' Agreement").
In connection with TD's investment in the Series A Preferred Stock, the
Company agreed to provide to TD certain registration rights, and Medical
Advisory Systems and Premier agreed to amend and restate their registration
rights and supersede the terms of the Old Registration Rights Agreement (the
"Restated Registration Rights Agreement").
GE and TD are purchasing 113,327 shares of the Company's Series B
Redeemable Convertible Preferred Stock, $0.01 par value per share (the "Series B
Preferred Stock"), and certain Common Stock and Series B Preferred Stock
warrants (the "Warrants") pursuant to a Securities Purchase Agreement dated the
date hereof among the Company, GE and TD, and
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subject to the terms and conditions contained in the Second Amended and Restated
Shareholders' and Voting Agreement by and among the Company, Medical Advisory
Systems, Premier, TD, GE and Scott Rifkin (the "Current Shareholders'
Agreement").
In connection with GE's investment in the Series B Preferred Stock, the
Company has agreed to provide GE certain registration rights, and Medical
Advisory Systems, Premier and TD have agreed to amend and restate their
registration rights and supersede the terms of the Restated Registration Rights
Agreement and to add Wyndhurst as a party. Notwithstanding any provision or
right granted to Holders in this Agreement, each Holder is bound by any and all
restrictions on registration and transfer contained in the Current Shareholders'
Agreement.
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and subject to and on the terms
and conditions herein set forth, the Company and Holders, intending to be
legally bound, hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
In addition to the other terms defined in this Agreement, the following
terms shall be defined as follows:
"Business Day" means any day on which the NYSE is open for trading.
"Company IPO" means the initial underwritten public offering of the
Company's shares of Common Stock or any other securities of the Company that are
convertible into or exchangeable for Common Stock of the Company which becomes
registered under the Securities Act of 1933, as amended, or Section 12 of the
Securities Exchange Act of 1934, as amended.
"Effective Period" means the 5-year period commencing on the earlier to
occur of (i) June 1, 2001 and (ii) the 180th day after the closing date of the
Company IPO and ending on the 5th anniversary of the Company IPO.
"Fair Market Value" means the average of the closing price per share for
the Registrable Securities as to which a registration is being effected as
reported on the NYSE Composite Transactions Tape for the 20 consecutive trading
days immediately prior to the applicable date of determination, or, if such
securities are not then listed and traded on the NYSE, the closing price for
such securities for such period on the principal national securities exchange
(or market) on which they are then traded as reported in the principal
consolidated transaction reporting system with respect to securities listed on
such exchange (or market) or, if such securities are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ or such other organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in such securities selected by the Board of Directors of the Company.
The term "trading day" shall mean a day on which the principal national
securities exchange on which the shares of Common Stock are listed or
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admitted to trading is open for transaction of business or, if the shares of
Common Stock are not listed or admitted to trading on any national securities
exchange, a Business Day.
"NYSE" means the New York Stock Exchange.
"Person" means an individual, a partnership (general or limited),
corporation, limited liability company, joint venture, business trust,
cooperative, association or other form of business organization, whether or not
regarded as a legal entity under applicable law, a trust (inter vivos or
testamentary), an estate of a deceased, insane or incompetent person, a
quasi-governmental entity, a government or any agency, authority, political
subdivision or other instrumentality thereof, or any other entity.
"Registrable Security(ies)" means (i) all shares of Common Stock held by
Holders not previously sold to the public or issuable to Holders upon conversion
of the Series A Preferred Stock or warrants issued in connection with the
original issue of the Series A Stock or Series B Preferred Stock or Warrants or
any other options or warrants held by such holders and (ii) any additional
shares of Common Stock or other equity securities of the Company that may be
issued to Holders in respect of or in exchange for any such shares by way of a
distribution, in connection with a combination, split, exchange, reorganization,
recapitalization or reclassification of the Company's securities, or pursuant to
a merger, division, consolidation, liquidation or other similar business
transaction or combination involving the Company; provided that as to any
particular Registrable Securities, such securities shall cease to constitute
Registrable Securities (i) when a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of thereunder, or (ii) when in the
opinion of counsel to the Company (which counsel shall be reasonably acceptable
to such Holder) such securities are permitted to be distributed pursuant to Rule
144 (or any successor provision to such Rule) under the Securities Act without
volume restrictions or are otherwise freely transferable to the public without
further registration under the Securities Act, or (iii) when such securities
shall have ceased to be issued and outstanding, or (iv) the end of the Effective
Period; and, in the case of clause (ii), the Company, upon request of any
Holder, shall have delivered to such Holder a written opinion of counsel to the
Company (which counsel shall be reasonably acceptable to such Holder) to such
effect.
"Registration Expenses" means all expenses incident to the Company's
performance of or compliance with the registration requirements set forth in
this Agreement including, without limitation, the following: (i) the fees,
disbursements and expenses of the Company's counsel(s), accountants, and experts
in connection with the registration under the Securities Act of Registrable
Securities; (ii) all expenses in connection with the preparation, printing and
filing of the registration statement, any preliminary prospectus or final
prospectus, any other offering document and amendments and supplements thereto,
and the mailing and delivering of copies thereof to the underwriters and
dealers, if any; (iii) the cost of printing or producing any agreement(s) among
underwriters, underwriting agreement(s) and blue sky or legal investment
memoranda, any selling agreements, and any other documents in connection with
the offering, sale or delivery of Registrable Securities to be disposed of; (iv)
the fees and expenses incurred in connection with the listing of Registrable
Securities on each securities exchange on which the
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Company securities of the same class are then listed; and (v) the fees and/or
disbursements of one special counsel for the Holders; provided, however, that
Registration Expenses with respect to any registration pursuant to this
Agreement shall not include Selling Expenses.
"SEC" means the United States Securities and Exchange Commission, or such
other federal agency at the time having the principal responsibility for
administering the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the SEC thereunder, all as the same shall be in
effect at the relevant time.
"Selling Expenses" shall mean, with respect to any registration pursuant
to this Agreement, any underwriting discounts or commissions attributable to
Registrable Securities or counsel fees, if any, in excess of the expenses of one
special counsel for the Holders.
SECTION 2. REGISTRATION RIGHTS.
This Agreement shall become effective immediately and shall terminate upon
the performance by the Company of the last of its obligations hereunder.
SECTION 3. REQUIRED REGISTRATION.
(a) Subject to Section 3(c), at any time during the Effective Period (but
in no event earlier than the 180th day following the closing date of the Company
IPO), if the Company shall receive from the holders of no less than (i) 40% of
the outstanding Registrable Securities or (ii) a majority of the Registrable
Securities issued or issuable upon conversion of (x) the Series A Preferred
Stock or (y) the Series B Preferred Stock issued on the date hereof, a written
request that the Company register under the Securities Act all or any portion of
the Registrable Securities held by (or then issuable to) Holders for sale in the
manner specified in such notice (including, but not limited to, an underwritten
public offering), the Company shall promptly give notice thereof to all Holders
of Registrable Securities. Each Holder shall have the right, by giving notice to
the Company within 15 days following receipt by it of such notice from the
Company, to elect to have included in such registration such of its Registrable
Securities as such Holder shall request in such notice of election, subject to
Section 3(c). Such notice to the Company from the Holders shall specify the
number of Registrable Securities for which registration is requested, the
proposed manner of disposition of such Securities, and the minimum price per
share at which Holders would be willing to sell such securities in an
underwritten offering. The Company shall use its reasonable best efforts to
effect registration of the Registrable Securities specified in such notices,
provided, that the Company shall not be required to effect a registration
pursuant to this Section 3(a) unless the Holders requesting registration propose
to dispose of shares of Registrable Securities having an aggregate price to the
public (before deduction of underwriters discounts and expenses of sale) of at
least $5,000,000. If a majority in aggregate amount of the Registrable
Securities to be included in such offering shall have requested that such
offering be underwritten, the managing underwriter for such offering shall be
chosen by the Company with the written consent of the holders of a majority of
the aggregate Registrable Securities being registered, which consent shall not
be unreasonably withheld. On or before the
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45th day prior to the anticipated filing date specified in writing by the
Company to the Holders, the Holders may give written notice to the Company and
the managing underwriter specifying either that (A) Registrable Securities of
Holders are to be included in the underwriting on the same terms and conditions
as the securities otherwise being sold through the underwriters under such
registration or (B) such Registrable Securities are to be registered pursuant to
such registration statement and sold in the open market without any underwriting
on terms and conditions comparable to those normally applicable to offerings in
reasonably similar circumstances, regardless of the method of disposition
originally specified in Holders' request for registration. The Company shall not
be obligated to file more than three Registration Statements pursuant to this
Section 3(a); provided that a request shall not be counted for this purpose if
(i) the Company elects to sell stock pursuant to a registration at the same time
as the registration requested hereunder and less than all the Registrable
Securities for which registration was requested are included, (ii) the
registration statement does not become effective, or (iii) the requesting
holders are not able to sell at least 90% of the Registrable Securities
requested to be included in such registration statement. The Company shall use
its reasonable best efforts to cause such registration statement to become
effective within 90 days after its filing.
(b) In the event that the Company shall receive from the holders of no
less than (i) 40% of the outstanding Registrable Securities or (ii) a majority
of the Registrable Securities issued or issuable upon conversion of (x) the
Series A Preferred Stock or (y) the Series B Preferred Stock issued on the date
hereof, a written request that the Company effect any registration with respect
to Registrable Securities on Form S-3 (or any successor form to Form S-3
regardless of its designation) at a time when the Company is eligible to
register securities on Form S-3 (or any successor form to Form S-3 regardless of
its designation) for an offering of Registrable Securities, the Company shall
promptly give notice thereof to all holders of Registrable Securities. Each
Holder shall have the right, by giving notice to the Company within 15 days
following receipt by it of such notice from the Company, to elect to have
included in such registration such of its Registrable Securities as such Holder
shall request in such notice of election, subject to Section 3(c). The Company
shall use its reasonable best efforts to effect registration of the Registrable
Securities specified in such request and notice of election; provided that the
Company shall not be required to effect a registration pursuant to this Section
3(b) unless Holders requesting registration propose to dispose of shares of
Registrable Securities having an aggregate price to the public (before deduction
of underwriting discounts and expenses of sale) of at least $2,500,000; and
provided, further, that the Company shall not be required to effect more than
two (2) such registrations pursuant to this Section 3(b) within twelve months of
the effective date of any prior registration pursuant to this Section 3.
(c) Notwithstanding any other provision of this Agreement, the Company
shall have the right to defer the filing or effectiveness of a registration
statement relating to any registration requested under this Section 3 for a
reasonable period of time not to exceed 90 days if (A) the Company is, at such
time, working on an underwritten public offering of Common Shares and is advised
by its managing underwriter(s) that such offering would in its or their opinion
be adversely affected by such filing; or (B) a prior registration statement of
the Company was declared effective by the SEC less than 120 days prior to the
anticipated effective date of the requested registration; or (C) the Company in
good faith determines that such filing or the
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offering of any Registrable Securities would (1) materially impede, delay or
interfere with any material proposed financing, offer or sale of securities,
acquisition, corporate reorganization or other significant transaction involving
the Company or (2) require the disclosure of non-public material information,
the disclosure of which would materially and adversely affect the Company or any
such transactions contemplated by the Company.
(d) In the event that the underwriter's representative limits the number
of shares to be included in a registration pursuant to Section 3(a) or (b), each
Holder requesting registration shall be entitled to include a portion of the
Registrable Securities requested to be included in such registration pro rata
(based on the number of shares held). In such event, such registration shall not
be counted for the registration for purposes of Section 3(a) or 3(b), as the
case may be, if such registration does not include at least 90% of the
Registrable Securities requested to be included in such registration statement
pursuant to Section 3(a) or 3(b), as the case may be.
(e) A registration pursuant to Section 3(a) or (b) may include securities
other than Registrable Securities included in such registration only with the
prior consent of the holders of 50% of the Registrable Securities requesting
such registration; provided, that the Company may include its Common Stock in
such registration without such consent so long as such inclusion does not
prevent in any manner whatsoever the holders of Registrable Securities from
including in such registration all of the Registrable Securities that such
Holders elected to so include pursuant to Section 3(a) or 3(b), as the case may
be.
(f) Notwithstanding any other provision of this Agreement, Holders may
elect by written notice to the Company and the managing underwriters, if any, to
withdraw any Registrable Securities from any registration effected under this
Section 3 up to the effective date of the registration statement.
(g) The Holders agree that, in exercising their rights under Section 3,
they will permit the registration of the Registrable Securities on such forms
issued by the Commission as will minimize the Company's time and expense in
effecting such registration without affecting the liquidity afforded by such
registration or otherwise adversely affecting the Holders, in each case as
reasonably determined by the Holders. If, for example, the Holders wish to
register Registrable Securities pursuant to Section 3(a) at a time when the
Company is eligible to use Form S-3 for purposes of registering such Registrable
Securities, the Holders will permit the Company to fulfill its obligations under
Section 3(a) by effecting such registration on Form S-3; provided, however, that
nothing in this Section 3(g) will permit the Company to fulfill such obligation
by using Form SB-1, SB-2 or similar forms limited to "Small Business Issuers,"
without the consent of the holders of at least 50% of the Registrable
Securities.
SECTION 4. INCIDENTAL REGISTRATION.
(a) If the Company proposes at any time during the Effective Period to
register any shares of Common Stock or other securities issued by it having
terms substantially similar to Registrable Securities ("Other Securities") for
public sale under the Securities Act (whether proposed to be offered for sale by
the Company or by any other Person) on a Form and in a
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manner which would permit registration of Registrable Securities for sale to the
public under the Securities Act, it will give prompt written notice (which
notice shall specify the intended method or methods of disposition) to the
Holders of its intention to do so, and upon the written request of any Holder
delivered to the Company within fifteen (15) Business Days after the giving of
any such notice (which request shall specify the number of Registrable
Securities intended to be disposed of by such Holder) the Company will use all
reasonable efforts to effect, in connection with the registration of the Other
Securities, the registration under the Securities Act of all Registrable
Securities which the Company has been requested by Holders to register;
provided, however, that:
(i) if, at any time after giving such written notice of its
intention to register Other Securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register such Other Securities, the
Company may, at its election, give written notice of such determination to
Holders requesting registration under Section 4(a) and thereupon the Company
shall be relieved of its obligation to register such Registrable Securities in
connection with the registration of such Other Securities (but not from its
obligation to pay Registration Expenses to the extent incurred in connection
therewith as provided in Section 12, without prejudice, however, to the rights
(if any) of Holders to request that such registration be effected as a
registration under Section 3);
(ii) the Company will not be required to effect any registration
pursuant to this Section 4 if the Company shall have been advised in writing
(with a copy to Holders) by a nationally recognized investment banking firm
selected by the Company that, in such firm's opinion, a registration of
Registrable Securities at that time may interfere with an orderly sale and
distribution of or materially and adversely affect the price of such offering;
provided, however, that if an offering of some but not all of the Registrable
Securities requested to be registered by Holders and all other Persons having
rights to include securities held by them in such registration would not
adversely affect the Company's scheduled offering in the opinion of such firm,
first, the aggregate number of shares requested to be included in such offering
by Holders other than GE, TD and their assignees and by any other Persons
exercising "piggyback" rights in such registration shall be reduced pro rata (in
accordance with the proportion that the Fair Market Value of all securities
proposed to be included in such registration by such Holders and other Persons
bears to the Fair Market Value of all securities proposed to be included in such
registration by such Holders and other Persons), and second, thereafter, if
necessary, the aggregate number of Registrable Securities requested to be
included in such offering by GE, TD and their assignees shall be reduced pro
rata in the same manner as set forth above. Unless all Registrable Securities
and such other piggybacking shares requested to be included in such registration
are so included, no other securities may be included in the registration
statement.
(iii) the Company shall not be required to give notice of, or effect
any registration of Registrable Securities under this Section 4 incidental to,
the registration of any of its securities in connection with mergers,
consolidations, acquisitions, exchange offers, subscription offers, dividend
reinvestment plans or stock options or other employee benefits or compensation
plans.
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(b) No registration of Registrable Securities effected under this Section
4 shall relieve the Company of its obligations (if any) to effect registrations
of Registrable Securities pursuant to Section 3.
(c) The obligations of the Company to register any Registrable Securities
held by Holders in accordance with this Section 4 shall expire on the last day
of the Effective Period.
SECTION 5. HOLDBACKS AND OTHER RESTRICTIONS.
Each of the Holders hereby covenants and agrees with the Company that ,
for a period of duration specified by the Company and an underwriter of Common
Stock or other securities of the Company (such period not to exceed 180 days)
following the effective date of the first registration statement of the Company
filed under the Securities Act which covers securities to be sold on the
Company's behalf to the public in an underwritten offering, it shall not, to the
extent requested by the Company and its underwriter, directly or indirectly
sell, offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase or otherwise transfer or dispose of (other
than to donees who agree to be similarly bound) any securities of the Company
held by it at any time during such period except Registrable Securities included
in such registration; provided, however, that such agreement shall not be
required unless all officers and directors of the Company and all other persons
with registration rights (whether or not pursuant to this Agreement) or
purchasing Common Stock of the Company enter into similar agreements. In order
to enforce the foregoing covenant, the Company may impose stop-transfer
instructions with respect to the Registrable Securities of each Holder (and the
shares or securities of every other person subject to the foregoing restriction)
until the end of such period.
SECTION 6. REGISTRATION PROCEDURES.
If and whenever the Company is required by the provisions of this
Agreement to effect or cause a registration as provided in this Agreement, the
Company:
(a) Will use its reasonable best efforts to cause such registration
statement to become and remain effective under the Securities Act until the
earlier of such time as all such Registrable Securities have been disposed of in
accordance with the method of disposition or the expiration of 150 days after
such registration becomes effective, as such period may be extended pursuant to
Section 6(h) or Section 8 hereto;
(b) Prepare and file with the SEC such amendments, post-effective
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective for such period of time as is necessary to complete the
offering and the distribution of the securities covered thereby (but in no event
longer than 150 days after such registration statement becomes effective) as
such period may be extended pursuant to Section 6(h) or Section 8 hereto;
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(c) Comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during the
period during which any such registration statement is required to be in effect;
(d) Furnish to Holders and any underwriter of Registrable Securities, (i)
such number of copies (including manually executed and conformed copies) of such
registration statement and or each amendment thereof and supplement thereto
(including all annexes, appendices, schedules and exhibits), (ii) such number of
copies of the prospectus used in connection with such registration statement
(including each preliminary prospectus, any summary prospectus and the final
prospectus), and (iii) such number of copies of other documents, in each case as
Holders or such underwriter may reasonably request;
(e) Use reasonable efforts to register or qualify all Registrable
Securities covered by such registration statement under the securities or "blue
sky" laws of such jurisdictions as Holders or any underwriter shall reasonably
request, and do any and all other acts and things which may be reasonably
requested by Holders or such underwriter to consummate the offering and
disposition of Registrable Securities in such jurisdictions; provided, however,
that the Company shall not be required to qualify generally to do business as a
foreign corporation or as dealer in securities, subject itself to taxation, or
consent to general service of process in any jurisdiction wherein it is not then
so qualified or subject;
(f) Use, as soon as practicable after the effectiveness of the
registration statement, reasonable efforts to cause the Registrable Securities
covered by such registration statement to be registered with, or approved by,
such other public, governmental or regulatory authorities as may be necessary to
facilitate the disposition of such Registration Securities;
(g) Use reasonable best efforts to list the Registrable Securities covered
by such registration statement on any securities exchange on which any
securities of the Company are then listed, if the listing of such Registrable
Securities is then permitted under the rules of such exchange;
(h) Notify Holders promptly and, if requested by Holders, confirm such
notification in writing, (i) when a prospectus or any prospectus supplement has
been filed with the SEC, and, with respect to a registration statement or any
post-effective amendment thereto, when the same has been declared effective by
the SEC, (ii) of the issuance by the SEC of any stop order or the initiation of
any proceedings for such or a similar purpose, (iii) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of any of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, (iv) of the
occurrence of any event which requires the making of any changes to a
registration statement or related prospectus so that such documents will not
contain any untrue statement of a material fact or omit to the state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (and the Company shall promptly prepare and furnish to Holders a
reasonable number of copies of a supplemented or amended prospectus such that,
as thereafter delivered to the purchasers of such Registrable Securities, such
prospectus shall not include an
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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, in light of the
circumstances under which they are made, not misleading), and (v) of the
Company's determination that the filing of a post-effective amendment to the
Registration Statement shall be necessary or appropriate. Upon the receipt of
any notice from the Company of the occurrence of any event of the kind described
in clause (iv) of this Section 6(h), Holders shall forthwith discontinue any
offer and disposition of Registrable Securities pursuant to the registration
statement covering such Registrable Securities until Holders shall have received
copies of a supplemented or amended prospectus which is no longer defective as
contemplated by clause (v) of this Section 6(h) and, if so directed by the
Company, shall deliver to the Company, at the Company's expense, all copies
(other than permanent file copies) of the defective prospectus covering such
Registrable Securities which are then in Holder's possession. If the Company
shall provide any notice of the type referred to in the preceding sentence, the
period during which the registration statements are required to be effective
shall be extended by the number of days from and including the date such notice
is provided, to and including the date when Holders shall have received copies
of the corrected prospectus contemplated by clause (v) of this Section 6(h);
(i) Enter into such agreements and take such other appropriate actions as
are customary and reasonably necessary to expedite or facilitate the disposition
of such Registrable Securities, and in that regard, deliver to Holders such
documents and certificates as may be reasonably requested by the Holders of a
majority in aggregate principal amount of the Registrable Securities being sold
or, as applicable, the managing underwriters, to evidence the Company's
compliance with this Agreement;
(j) Cooperate with the selling holders of Registrable Securities and the
managing underwriters, if any, to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be sold and not bearing
any restrictive legends; and enable such Registrable Securities to be in such
denominations and registered in such names as the managing underwriters may
request at least 3 days prior to any sale of Registrable Securities to the
underwriters; and
(k) Provide a transfer agent and registrar for all Registrable Securities
registered pursuant hereunder and a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such registration.
SECTION 7. UNDERWRITING.
(a) If requested by the underwriters for any underwritten offering of
Registrable Securities pursuant to a registration hereunder, the Company will
enter into and perform its obligations under an underwriting agreement with the
underwriters for such offering, such agreement to contain such representations
and warranties by the Company and such other terms and provisions as are
customarily contained in underwriting agreements with respect to secondary
distributions, including, without limitation, customary provisions relating to
indemnities and contribution and the provision of opinions of counsel and
accountants' letters. If
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Registrable Securities are to be distributed by such underwriters on behalf of
Holders, Holders shall, subject to Section 7(b), be a party to any such
underwriting agreement and the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of Holders.
Notwithstanding the foregoing, Holders may elect, prior to the effective date of
the registration statement filed in connection with such registration, not to
register such Registrable Securities in connection with any registration.
(b) If any registration pursuant to Section 4 hereof shall involve, in
whole or in part, an underwritten offering, the Company may require Registrable
Securities requested to be registered pursuant to Section 4 to be included in
such underwriting on the same terms and conditions as shall be applicable to the
securities being sold through underwriters under such registration. In such
case, Holders shall be a party to any such underwriting agreement. Such
agreement shall contain such representations and warranties by the Holders and
such other terms and provisions as are customarily contained in underwriting
agreements with respect to secondary distributions, including, without
limitation, provisions relating to indemnities and contribution. The
representations and warranties in such underwriting agreement by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of Holders.
(c) In any offering of Registrable Securities pursuant to a registration
hereunder, Holders shall also enter into such agreements as may be customary in
such transactions, including, among other provisions, such representations and
warranties as Company or the underwriters of such offering may reasonably
request (including, without limitation, such concerning Holders, the Registrable
Securities, Holder's intended plan of distributions and any other information
supplied by the Holders to Company for use in such registration statement), and
customary provisions relating to indemnities and contribution.
(d) It shall be a condition precedent of the Company's obligations under
Section 3 and 4 of this Agreement to any Holder that such Holder furnish to the
Company such information regarding the Holder, the Registrable Securities held
by it and the distribution proposed by the Holder as the Company may reasonably
request to effect any such registration and as are customarily provided by
selling stockholders.
(e) The Company shall have no obligation with respect to any registration
requested pursuant to Section 3(a) or 3(b) hereof if, due to the failure of any
Holder or Holders to provide the information requested pursuant to this Section
7, the number of shares or the anticipated aggregate offering price of the
Registrable Securities to be included in the registration does not equal or
exceed the number of shares or the anticipated aggregate offering price required
to originally trigger the Company's obligation to initiate such registration as
specified in Section 3(a) or 3(b), as applicable.
SECTION 8. INFORMATION BLACKOUT.
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(a) At any time when a registration statement effected pursuant to Section
3(b) relating to Registrable Securities is effective, upon written notice from
the Company to Holders that the Company has determined in good faith that sale
of Registrable Securities pursuant to the registration statement would require
disclosure of non-public material information having an adverse effect on the
Company (an "Information Blackout"), Holders shall suspend sales of Registrable
Securities pursuant to such registration statement until the earlier of:
(i) 60 days after the Company make such good faith determination,
and
(ii) such time as the Company notifies the Holders that such
material information has been disclosed to the public or has ceased to be
material or that sales pursuant to such registration statement may otherwise be
resumed (the number of days from such suspension of sales by the Holders until
the day when such sale may be resumed hereunder is hereinafter called a "Sales
Blackout Period").
(b) Any delivery by the Company of notice of an Information Blackout
during the forty-five (45) days immediately following effectiveness of any
registration statement effected pursuant to Section 3(b) hereof shall give the
holders of a majority of the Registrable Securities being sold the right, by
written notice to the Company within twenty (20) Business Days after the end of
such Information Blackout Period, to cancel such registration, in which event
Holders shall have one additional registration right under Section 3(b) in such
fiscal year.
(c) If there is an Information Blackout and the cancellation right, if
any, pursuant to (b) above, is not available or exercised, the time period set
forth in Section 6(a) shall be extended for a number of days equal to the number
of days in the Sales Blackout Period.
SECTION 9. RULE 144.
The Company shall take all actions reasonably necessary to comply with the
filing requirements described in Rule 144(c)(1) so as to enable Holders to sell
Registrable Securities without registration under the Securities Act.
SECTION 10. PREPARATION; REASONABLE INVESTIGATION, INFORMATION.
In connection with the preparation and filing of each registration
statement registering Registrable Securities under the Securities Act, (a) the
Company will give Holders and the underwriters, if any, and their respective
counsel and accountants, drafts of such registration statements for their review
and comment prior to filing and such reasonable and customary access to its
books and records and such opportunities to discuss the business of the Company
with its officers and the independent public accountants who have certified its
financial statements as shall be necessary, in the opinion of Holders and such
underwriters or their respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act and (b) as a condition precedent to
including any Registrable Securities of Holders in any such registration, the
Company may require the Holders to furnish the Company such
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information regarding the Holders and the distribution of such securities as the
Company from time to time reasonably request in writing or as shall be required
by law or the SEC in connection with any registration.
SECTION 11. INDEMNIFICATION AND CONTRIBUTION.
(a) In the case of each offering of Registrable Securities made pursuant
to this Agreement, the Company shall indemnify and hold harmless each Holder,
its officers and directors, each underwriter of Registrable Securities so
offered and each person, if any, who controls any of the foregoing persons
within the meaning of the Securities Act ("Holder Indemnitees"), from and
against any and all claims, liabilities, losses, damages, expenses and
judgments, joint or several, to which they or any of them may become subject,
under the Securities Act or otherwise, including any amount paid in settlement
of any litigation commenced or threatened, and shall promptly reimburse them, as
and when incurred, for any legal or other expenses incurred by them in
connection with investigating any claims and defending any actions, insofar as
such losses, claims, damages, liabilities or actions shall arise out of, or
shall be based upon, any untrue statement or alleged untrue statement of a
material fact contained in the registration statement (or in any preliminary or
final prospectus included therein) relating to the offering and sale of such
Registrable Securities, or any amendment thereof or supplement thereto, or in
any document incorporated by reference therein, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or shall arise out of
or shall be based upon any violation or alleged violation by the Company of the
Securities Act, any blue sky laws, securities laws or other applicable laws of
any state or country in which the Registrable Securities are offered and
relating to action or inaction required of the Company in connection with such
offering; provided, that the Company shall not be liable to any Holder
Indemnitee in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue statement or
alleged untrue statement, or any omission, if such statement or omission shall
have been made in reliance upon and in conformity with information furnished to
the Company in writing by or on behalf of such Holder for use in the preparation
of the registration statement (or in any preliminary or final prospectus
included therein), or any amendment thereof or supplement thereto. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of Holders and shall survive the transfer of such
securities. The foregoing indemnity agreement is in addition to any liability
which the Company may otherwise have to any Holder Indemnitee.
(b) In the case of each offering of Registrable Securities made pursuant
to this Agreement, each Holder shall indemnify and hold harmless the Company,
its officers and directors and each person, if any who controls any of the
foregoing within the meaning of the Securities Act and (if requested by the
underwriters) each underwriter who participates in the offering and each person,
if any, who controls any such underwriter within the meaning of the Securities
Act (the "Company Indemnitees"), from and against any and all claims,
liabilities, losses, damages, expenses and judgments, joint or several, to which
they or any of them may become subject, under the Securities Act or otherwise,
including any amount paid in settlement of any litigation commenced or
threatened, and shall promptly reimburse them, as and when
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incurred, for any legal or other expenses incurred by them in connection with
investigating any claims and defending any actions, insofar as any such losses,
claims, damages, liabilities or actions shall arise out of, or shall be based
upon, any untrue statement or alleged untrue statement of a material fact
contained in the registration statement (or in any preliminary or final
prospectus included therein) or any amendment thereof or supplement thereto, or
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, but
in each case only to the extent that such untrue statement is contained in, or
such fact is omitted from, information furnished in writing to the Company by or
on behalf of such Holder for use in the preparation of such registration
statement (or in any preliminary or final prospectus included therein). The
foregoing indemnity is in addition to any liability which Holders may otherwise
have to any Company Indemnitee.
(c) Each party indemnified under this Agreement shall, promptly after
receipt of notice of any claim or other commencement of any action against such
indemnified party in respect of which indemnity may be sought, notify the
indemnifying party in writing of the claim or the commencement thereof;
provided, that the failure to notify the indemnifying party shall not relieve
the indemnifying party from any liability which it may have to an indemnified
party on account of the indemnity agreement contained in this Agreement, unless
the indemnifying party was prejudiced by such failure, and in no event shall it
relieve the indemnifying party from any other liability which it may have to
such indemnified party. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein, and, to the extent
that it wishes, jointly with any other similarly notified indemnifying party, to
assume the defense of such a claim or action, and the indemnifying party shall
not be liable to the indemnified party under this Section 11 for any legal or
other expenses subsequently incurred by the indemnified party in connection with
the defense thereof other than reasonable costs of investigation; provided, that
the Holder Indemnitees shall have the right to employ one separate counsel to
represent them if, in the reasonable judgment of Holder or such other person, it
is advisable (by reason of actual or potential legal conflicts of interest) for
them to be represented by separate counsel, and in that event the fees and
expenses of such separate counsel shall be paid by the Company. If the Holder
Indemnitees employ such separate counsel they will not enter into any settlement
agreement which is not approved by the Company, such approval will not be
unreasonably withheld. If the indemnifying party so assumes the defense thereof,
it may not agree to any settlement of any such claim or action as the result of
which any remedy or relief, other than monetary damages for which the
indemnifying party shall be responsible hereunder, shall be applied to or
against the indemnified party, without the prior written consent of the
indemnified party. If the indemnifying party does not assume the defense
thereof, it shall be bound by any settlement to which the indemnified party
agrees, irrespective of whether the indemnifying party consents thereto. In any
action hereunder as to which the indemnifying party has assumed the defense
thereof with counsel satisfactory to the indemnified party, the indemnified
party shall continue to be entitled to participate in the defense thereof, with
counsel of its own choice, but, except as set forth above, the indemnifying
party shall not be obligated hereunder to reimburse the indemnified party for
the costs thereof.
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<PAGE>
(d) If the indemnification agreements contained in Sections 11(a) and (b)
are unavailable to an indemnified party in respect of any losses, claims,
damages or liabilities referred to therein, each indemnifying party under such
paragraphs, in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect not only the relative benefits received by the Company,
Holders and each underwriter from the offering of Registrable Securities, but
also the relative fault of the Company, Holders and each underwriter in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect the
relative benefits received by the Company, Holders and each underwriter from the
offering of Registrable Securities. The relative benefits received by the
Company, Holders and each underwriter shall be deemed to be in the same
respective proportions as the net proceeds from the offering (before deducting
expenses) received by the Company and Holders and the total underwriting
discounts and commissions received by each underwriter. The relative fault of
the Company, Holders and each underwriter shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or, the omission or alleged omission to state a material fact relates to
information supplied by the Company, Holders or an underwriter and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this paragraph shall be deemed to include, for
purposes of this paragraph, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The Company and Holders agree that it would not be just and equitable
if contribution were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in Section 11(d).
SECTION 12. EXPENSES.
In connection with any registration under Section 3 or Section 4, the
Company shall pay all Registration Expenses; provided that Holders shall pay his
or its pro rata share of the Selling Expenses.
SECTION 13. NOTICES.
Except as otherwise provided below, whenever it is provided in this
Agreement that any notice, demand, request, consent, approval, declaration or
other communication shall or maybe given to or served upon either of the parties
hereto, or whenever either of the parties hereto, desires to provide to or serve
upon the other party any other communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
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<PAGE>
communication shall be in writing and either shall be delivered in person or
sent by telecopy, addressed as follows:
(a) If to the Company, to:
AmericasDoctor.com. Inc.
11403 Cronridge Drive, Suite 200
Owings Mills, MD 21117
Phone: (410) 581-1189
Fax: (410) 581-1571
With a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Michael Nathan, Esq.
Phone:
Fax:
And:
Rifkin, Livingston, Levitan & Silver, LLC
Harbor Court, Suite 200
575 South Charles Street
Baltimore, MD 21201
Attention: Jamie Eisenberg, Esq.
Phone:
Fax:
(b) If to Holders, to:
Medical Advisory Systems, Inc.
8050 Southern Maryland Boulevard
Owings, MD 20736
Phone: (301) 855-4958
Fax: (301) 257-2704
And:
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<PAGE>
Premier Research Worldwide, Ltd.
124 South 15th Street
Philadelphia, PA 19102
Phone: (215) 972-0420
Fax: (215) 972-8775
And:
Tullis-Dickerson Capital Focus II, L.P.
One Greenwich Plaza, Third Floor
Greenwich, CT 06830
Attn: Thomas P. Dickerson
Phone: (203) 629-8700
Fax: (203) 629-9293
And:
TD Origen Capital Fund, L.P.
150 Washington Avenue
Suite 201
Santa Fe, NM 87501
Attn: J. Michael Schafer
Phone: (505) 982-7007
Fax: (505) 982-7008
And:
TD Javelin Capital Fund, L.P.
2850 Cahaba Road, Suite 240
Birmingham, AL 35223
Attn: Lyle A. Hohnke
Phone: (205) 870-4811
Fax: (205) 870-4822
And:
GE Equity Investments, Inc.
120 Long Ridge Road
Stamford, CT 06927
Attn: General Counsel
Phone: (203) 357-3100
Fax: (203) 357-3047
With a copy to:
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Law Offices of Gloria M. Skigen
One Greenwich Plaza, Third Floor
Greenwich, CT 06830
Phone: (203) 861-1717
Fax: (203) 861-2498
And:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attn: Warren S. de Wied, Esq.
Phone: (212) 859-8000
Fax: (212) 859-4000
or at such other address as may be substituted by notice delivered as provided
herein. The furnishing of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly furnished or served on the party to which it is addressed, in
the case of delivery in person or by telecopy, on the date when sent (with
receipt personally acknowledged in the case of telecopied notice). Failure or
delay in delivering copies of any notice, demand, request, consent, approval,
declaration or other communication to the persons designated above to receive
copies shall in no way adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
SECTION 14. ENTIRE AGREEMENT.
This Agreement represents the entire agreement and understanding among the
parties hereto with respect to the subject matter hereof and supersedes any and
all prior oral and written agreements, arrangements and understandings among the
parties hereto with respect to such subject matter, including, without
limitation, the Old Registration Rights Agreement; and this Agreement can be
amended, supplemented or changed, and any provision hereof can be waived, only
by a written instrument making specific reference to this Agreement signed by
Company and the holders of 66 2/3% of the Registrable Securities.
SECTION 15. PARAGRAPH HEADINGS.
The purpose of paragraph headings contained in this Agreement are for
general reference purposes only and shall not affect in any manner the meaning,
interpretation or construction of the terms or other provisions of this
Agreement.
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SECTION 16. APPLICABLE LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS
OF THE STATE OF NEW YORK AND OF THE UNITED STATES OF AMERICA, IN EACH CASE
LOCATED IN THE COUNTY OF NEW YORK, FOR ANY ACTION, PROCEEDING OR INVESTIGATION
IN ANY COURT OR BEFORE ANY GOVERNMENTAL AUTHORITY ("LITIGATION") ARISING OUT OF
OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY (AND
AGREES NOT TO COMMENCE ANY LITIGATION RELATING THERETO EXCEPT IN SUCH COURTS),
AND FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY
U.S. REGISTERED MAIL TO ITS RESPECTIVE ADDRESS SET FORTH IN THIS AGREEMENT SHALL
BE EFFECTIVE SERVICE OF PROCESS FOR ANY LITIGATION BROUGHT AGAINST IT IN ANY
SUCH COURT. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN THE COURTS OF THE
STATE OF NEW YORK OR THE UNITED STATES OF AMERICA, IN EACH CASE LOCATED IN THE
COUNTY OF NEW YORK, AND HEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES
AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE
PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY AND ALL RIGHTS TO TRIAL BY JURY IN CONNECTION WITH ANY
LITIGATION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 17. SEVERABILITY.
If at any time subsequent to the date hereof, any provision of this
Agreement shall be held by any court of competent jurisdiction to be illegal,
void or unenforceable, such provision shall be of no force and effect, but the
illegality or unenforceability of such provision shall have no effect upon and
shall not impair the enforceability of any other provision of this Agreement.
SECTION 18. EQUITABLE REMEDIES.
The parties hereto agree that irreparable harm would occur in the event
that any of the agreements and provisions of this Agreement were not performed
fully by the parties hereto in accordance with their specific terms or
conditions or were otherwise breached, and that money damages are an inadequate
remedy for breach of this Agreement because of the difficulty of ascertaining
and quantifying the amount of damage that will be suffered by the parties hereto
in the event that this Agreement is not performed in accordance with the terms
and conditions or its
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otherwise breached. It is accordingly hereby agreed that the parties hereto
shall be entitled to an injunction or injunctions to restrain enjoin and prevent
breaches of this Agreement by the other parties and to enforce specifically the
terms and provisions hereof in any court of the United States or any state
having jurisdiction, such remedy being in addition to and not in lieu of, any
other rights and remedies to which the other parties are entitled to at law or
in equity.
SECTION 19. NO WAIVER.
The failure of any party at any time to require performance of any
provision hereof shall not affect the right at a later time to enforce the same.
No waiver by any party of any condition, and no breach of any provision, term,
covenant, representation or warranty contained in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be
construed as a further or continuing waiver of any such condition or of the
breach of any other provision, term, covenant, representation or warranty of
this Agreement.
SECTION 20. COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute but one
and the same original instrument.
SECTION 21. NO INCONSISTENT AGREEMENTS.
Without the prior consent of the holders of 66 2/3% of the Registrable
Securities, Company will not enter into any agreement which conflicts with or is
inconsistent with the terms and provisions hereof, unless under the terms of
such agreement, such prospective holder may include such securities in any such
registration only to the extent that the inclusion of such securities will not
reduce the amount of the Registrable Securities of the Holders which are
included.
SECTION 22. SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties, including without limitation and
without need for an express assignment, any subsequent holder of Registrable
Securities.
(CONTINUED NEXT PAGE)
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IN WITNESS WHEREOF, this Agreement has been executed and delivered as of
the date first above written.
AMERICASDOCTOR.COM. INC.
By: /s/ Scott M. Rifkin, M.D.
------------------------------------
Its: CEO
MEDICAL ADVISORY SYSTEMS, INC.
By: /s/ Ron Pickett
------------------------------------
Its: President
PREMIER RESEARCH WORLDWIDE, LTD.
By: /s/ Joel Morganroth
------------------------------------
Its: CEO
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TD ORIGEN CAPITAL FUND, L.P.
By: TD II Regional Partners, Inc.,
its general partner
By: /s/ Thomas P. Dickerson
------------------------------
Thomas P. Dickerson,
Vice President
TD JAVELIN CAPITAL FUND, L.P.
By: JVP, L.P., its general partner
By: JVP, Inc., its general partner
By: /s/ Thomas P. Dickerson
------------------------------
Thomas P. Dickerson,
Vice President
GE CAPITAL EQUITY INVESTMENTS, INC.
By: /s/ Richard J. Miller
------------------------------------
THE WYNDHURST CAPITAL GROUP, LLC
By: /s/ Lewis S. Goodman
------------------------------------
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EXHIBIT 10.24
CONFIDENTIAL TREATMENT REQUESTED
AGREEMENT
This Agreement is made and entered into this 12th day of February, 1999 (the
"Effective Date"), between America's Doctor, Inc. (hereinafter "ADOL"), located
at 11403 Cronridge Drive, Suite 200, Owings Mills, Maryland 21117 and Smith &
Nephew Inc., Rehabilitation Division (hereinafter "S&N"), One Quality Drive,
Germantown, Wisconsin, 53022. ADOL and S&N are incorporated in Delaware.
Recitals
ADOL and S&N desire to enter into this Agreement to establish terms and
conditions for engaging in an electronic commerce venture utilizing one or more
Internet sites and pages (the "Site") in which the manufacturing, distribution,
warehousing, product, fulfillment, call center and customer service capabilities
of S&N will be integrated with the Internet-based, interactive medical
information delivery capabilities of ADOL.
Agreement
1. Duties and Responsibilities
1.1 ADOL shall:
i. Maintain its current Internet site on America Online until expiration of
its current America Online agreement;
ii. Establish and maintain a world wide web site no later than March 15, 1999;
iii. Identify, purchase and integrate such electronic commerce software as may
be required to establish an active and functioning electronic commerce
site that can incorporate existing S&N call center capabilities. ADOL
shall be the sole owner of any and all such software and, unless otherwise
provided for, information derived therefrom;
iv. Identify and provide to S&N specific disease management topics to be
maintained on the Site;
v. Create and maintain a generic disease specific template for use on the
Site;
vi. Create and maintain disease specific pages to be used on the Site;
vii. Within 180 days of the Effective Date, or as negotiated, and if requested
by S&N, create and maintain a password protected section of the Site in
order to conduct business to business transactions, such site to include
AD Chatware if requested by S&N;
viii. For each S&N product sold via the Site, pay to S&N shipping and handling
fees and an amount equal to [***]. ADOL will be invoiced daily through
electronic data interchange (EDI) for fulfillment products with payment
due in ten (10) days;
ix. For non-S&N products sold in which S&N acts as a fulfillment center, pay
to S&N shipping and handling fees and a fee equal to [***] percent of
the retail (Internet) selling price,
1
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Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as [***]. A complete version of this
exhibit has been filed separately with the Securities and Exchange Commission.
<PAGE>
excluding shipping, handling, and taxes;
x. For any monthly period in which S&N's call center is utilized by ADOL for
non-S&N products sold in which S&N does not act as a fulfillment center,
and customer support and product information for such products are
supported solely through the S&N call center, pay to S&N a fee equal to
[***] percent of the retail (Internet) selling price of such products,
excluding shipping, handling and taxes sold via the Site. All such
non-fulfillment, retail sales will be transmitted to S&N on a daily basis
under source codes determined by S&N;
xi. Compensate S&N for personnel-related call center expenses directly
associated with ADOL incurred in excess of such existing call center
expenses during the hours between six o'clock p.m. and seven o'clock a.m.,
all times Central Time Zone, by paying monthly an amount equal to one half
of such expenses for the previous month. Such personnel-related expenses
are defined as 115% of the salaries paid during the hours between six
o'clock p.m. and seven o'clock a.m., all times Central Time Zone. The
hiring of such personnel, in excess of two per shift, requires the mutual
approval of ADOL and S&N;
xii. At ADOL's discretion, pay routine and normal costs associated with
producing video clips for non-S&N products;
xiii. Utilize good faith efforts to promote, market and sell S&N Products
included in the Site;
xiv. For all products provided for under this Agreement, provide electronic
order taking, including credit card acceptance for payment (the method of
which shall include but not be limited to VISA, MasterCard, Discover and
American Express), and the revenues of any such transactions credited to
ADOL;
xv. Collect, remit and report any and all applicable taxes related to
electronic commerce conducted via the Site. ADOL will be responsible for
audit assessments arising from these transactions.
1.2 S&N shall:
i. Pay to ADOL a one time portal access fee of [***] structured as follows:
(1) Within 30 days of the Effective Date, a payment of [***], and (2)
beginning March 1, 1999, [***] per month, with the final payment in
February, 2000. All payments will be forwarded to ADOL by the tenth
(10th) day of each month. Such payments will satisfy any and all access
fees required by this Agreement;
ii. Maintain its current call center capabilities in order to provide coverage
during existing current call center hours of operation and, unless
otherwise directed by ADOL, expand its call center capabilities by a
mutually agreed upon date in order to provide coverage 24 hours per day, 7
days per week, but in no case less than two personnel at any given time
dedicated to providing service;
iii. Provide computer hardware as may be required to operate such a call
center. S&N shall be the sole owner of any and all such hardware;
iv. Identify, qualify and hire such customer service personnel as may be
required to staff such a call center;
v. Utilizing the disease management topics as provided by ADOL, provide
recommendations for products to be included in such a disease management
area;
vi. Develop fault trees/decision matrices for disease management topics, as
appropriate, and
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integrate such systems with applicable disease management areas and/or
products. S&N shall own such fault trees/decision matrices;
vii. With the assistance of ADOL IT personnel, provide initial and recurring
training and certification of customer service personnel on (1) web site
software and hardware and (2) products offered for sale via the Site;
viii. Where requested by ADOL, provide fulfillment services for non-S&N
products. Such products will be procured through a consignment
relationship with the vendor or paid for by ADOL;
ix. For S&N products, and non-S&N products handled by S&N in the manner of a
fulfillment center, provide quality assurance, inventory, handling,
shipping and/or distribution as may be required to fulfill consumer
orders, with such shipping to occur in most cases within forty-eight (48)
hours maximum utilizing existing S&N shipping methods and procedures,
except as specified and reimbursed by the consumer for overnight (24 hour)
delivery or as authorized by ADOL. If shipment cannot be made within
forty-eight (48) hours, customer will be contacted by S&N and advised of
shipment date;
x. Maintain detailed information, frequently asked questions and relevant
data on S&N products in a 'pop-up' format that may be used by customer
service personnel;
xi. Utilize good faith efforts to promote and market America's Doctor as a
portal to health care products;
xii. Add the Site address to the priced version of all its consumer direct
product catalogs for the duration of the Agreement;
xiii. During the term of this Agreement, and wherever possible, utilize ADOL for
its business-to-business electronic commerce conducted via the Internet;
xiv. For business-to-business transactions conducted via the Site with
customers introduced by ADOL, pay a fee equal to [***]. For
business-to-business transactions conducted via the Site with customers
not introduced by ADOL, pay a fee of [***] every year thereafter on total
aggregate (cumulative) sales from such transactions. For
business-to-business transactions conducted telephonically with
customers introduced by ADOL, pay a fee to ADOL, the percentage and
duration of which shall be equal to [***];
xv. As requested by ADOL, but no sooner than three months following the
Effective Date, or as negotiated and mutually agreed to by ADOL and S&N,
provide video clips of S&N products for integration into the Site;
xvi. Maintain a video production capability for all products included in the
Site, as agreed by S&N and ADOL;
xvii. Allow ADOL to utilize the S&N call center, at ADOL's discretion, for
non-S&N products sold in which S&N does not act as a fulfillment center,
and customer support and product information is supported solely through
the S&N call center.
1.3 ADOL shall use its best efforts to promote and market its web site.
1.4 For purposes of this agreement, "S&N products" shall include such products
manufactured by S&N and other such products marketed, distributed and/or
sold by S&N.
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1.5 For purposes of this Agreement, "Net Sales" shall mean the gross revenues
received by S&N from its sale of S&N products less taxes, transportation,
duties, discounts and credit for returned products.
1.6 S&N will credit ADOL for the invoice price of properly returned products
purchased by ADOL or consumers using the ADOL site from S&N (for products
returned more than 30 days from the date of purchase, a 15% handling and
restocking fee will be deducted); provided, however, that if the product
shipped to ADOL or ADOL consumer was defective, full credit (without the
15% reduction) will be given regardless of the return date. If the product
is not defective and the returned product cannot be resold, ADOL and S&N
agree that no credit will be given except on a product-by-product basis as
agreed upon by ADOL and S&N. In such case, ADOL and S&N will each bear a
percentage of the return cost based upon the revenue split of the initial
transaction. S&N will provide a monthly returns report. S&N products will
be dealt with as stated above. ADOL will determine disposition of non-S&N
products. S&N bears no responsibility for disputes between customers and
ADOL regarding non-S&N Products.
1.7 To ensure continued sales growth and market acceptance, ADOL and S&N will
work together to improve all facets of the online site and offline
operations. ADOL and S&N agree to review on a regular basis the provisions
of this Agreement and renegotiate in good faith such provisions that
result in a demonstrably unfair burden to one of the parties.
1.8 Unless otherwise specified within this Agreement, all hardware, software
and products shall be owned by the developing or purchasing party.
1.9 The parties shall in good faith negotiate the terms of a separate
agreement with respect to international transactions.
1.10 All customer mailing lists created pursuant to this Agreement shall be
jointly owned by the parties and may not be sold or shared without the
written agreement of both parties.
2. Duration
2.1 This Agreement shall be effective as of the date first set forth above and
shall continue in effect for a period of six (6) years. S&N shall have a
right of first offer to renew this Agreement for an extended term
following the expiration of the initial six (6) year term.
3. Termination
3.1 Either party may terminate this Agreement by written notice (the "Notice")
effective as of delivery of such notice to the other party in the event
that any of the following events occur:
(a) A receiver is appointed over any of the assets of the other party;
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(b) The other party becomes insolvent or unable to pay its debts as they mature
or ceases to pay its debts as they mature in the ordinary course of business or
makes an assignment for the benefit of its creditors; or
(c) Any voluntary proceedings are commenced by or for the other party under any
bankruptcy, insolvency, or debtors relief law; or any involuntary proceedings
are commenced against the other party under any bankruptcy, insolvency, or
debtors relief law and such proceedings are not vacated or set aside within
sixty (60) days from the commencement thereof.
3.2 Any material breach by either party of any term of this Agreement shall
entitle the other party to terminate this Agreement provided it first
gives notice to the other party and permits the other party sixty (60)
days to cure said breach.
3.3 Notwithstanding the terms of paragraph 1.2 (i), S&N shall not be obligated
to pay any portion of the portal access fee which is unaccrued as of the
effective date of termination of this Agreement.
4. Product Restrictions and Changes
4.1 ADOL reserves the right to restrict the inclusion of any product to its
site(s). Material changes by S&N to any S&N product, excepting retail
price, requires ten (10) day prior notification of ADOL.
4.2 For the duration of the Agreement, ADOL may not include in its Site(s) any
product that is a direct competitor of an S&N product without S&N being
given an opportunity to provide to ADOL such an equivalent, similar
quality, similarly priced product. The products of companies that ADOL has
begun negotiating with prior to the Effective Date are exempt from this
provision. For the duration of the Agreement, S&N agrees to prohibit
and/or restrict online sales of S&N products, without prior permission
from ADOL, from any and all health-related information sites and
health-related product sites competing on the same or similar basis as
ADOL. Sites in which S&N products are being sold prior to the Effective
Date are exempt from this provision.
5. Indemnification:
5.1 Indemnification by ADOL: ADOL hereby agrees to indemnify, defend, and hold
S&N, its officers, affiliates, subsidiaries, agents, and employees (the
"S&N Indemnitees") harmless from and against all liabilities, losses,
costs, expenses, damages, claims, demands, suits or judgments (including,
but not limited to, reasonable attorneys' fees, disbursements and the
costs of any legal action) arising out of or in connection with any claim
against any of the S&N Indemnitees in connection with or as a result of
(i) medical information delivered by ADOL and not originating with S&N,
(ii) any non-S&N product, or (iii) ADOL's breach or nonfulfillment of its
obligations under this Agreement.
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5.2 Indemnification by S&N: S&N hereby agrees to indemnify, defend, and hold
ADOL, its officers, affiliates, subsidiaries, agents, and employees (the
"ADOL Indemnitees") harmless from and against all liabilities, losses,
costs, expenses, damages, claims, demands, suits or judgments (including,
but not limited to, reasonable attorneys' fees, disbursements and the
costs of any legal action) arising out of or in connection with any claim,
directly or indirectly, against any of the ADOL Indemnitees in connection
with or as a result of (i) any and all S&N products, (ii) the abuse,
negligence, or willful misconduct of S&N, (iii) S&N's promotion or
description of its products, or (iv) S&N's breach or nonfulfillment of its
obligations under this Agreement.
5.3 Indemnification Procedures:
(a) Promptly upon learning of any claim for which indemnification is sought from
the Indemnifying Party, the Indemnified Party shall notify the Indemnifying
Party in writing of such claim and shall furnish to the Indemnifying Party all
information known and available to the Indemnified Party related to such claim.
(b) In the event of commencement of litigation on the basis of such claim, the
Indemnified Party shall tender the defense of such litigation to the
Indemnifying Party.
(c) The Indemnified Party shall comply with instructions received from the
Indemnifying Party relating to settlement of such claim, if any, to the extent
that it lies within the power of the Indemnified Party to comply with any such
instructions, excluding any instruction that requires the Indemnified Party to
license or otherwise make available technology, intellectual property, or
confidential information to a third party.
(d) If the Indemnifying Party undertakes defense of such litigation, the
Indemnifying Party shall be entitled to appoint its attorneys to defend the case
in the name of the Indemnified Party, and the Indemnified Party shall cooperate
fully with the Indemnifying Party and its chosen attorneys in the defense of
such litigation. The Indemnified Party shall be free to appoint its own
attorneys in the same litigation, at its sole expense, although all decisions
with respect to the conduct or settlement of such litigation shall remain solely
with the Indemnifying Party.
6. Audits: Each party shall have the right to audit the financial records of
the other party with respect to documentation directly related to the
financial terms and agreements contained herein.
7. Miscellaneous
7.1 Waiver: The waiver by either party of a breach or default in any of the
provisions of this Agreement by the other party shall not be construed as
a waiver of any succeeding breach of the same or any other provision.
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7.2 Provisions: If any provisions of this Agreement shall be held to be
invalid, illegal, or unenforceable, the validity, legality, and
enforceability of the remaining provisions of this Agreement shall not in
any way be affected or impaired thereby.
7.3 Entirety: This Agreement and any exhibit(s) hereto contain the entire
agreement between the parties with respect to the subject matter hereof.
The parties represent that, in entering into this Agreement, they are not
relying upon any previous representation, inducement, or agreement of any
kind.
7.4 Amendments: This Agreement shall be amended or modified only by a written
instrument executed by the duly authorized representatives of both
parties.
7.5 Attorneys' Fees: If litigation is brought concerning this Agreement, the
prevailing party shall be entitled to receive from the non-prevailing
party, and the non-prevailing party shall upon final judgment and
expiration of all appeals immediately pay upon demand, all reasonable
attorneys' fees and expenses of the prevailing party. Except as otherwise
provided in this Agreement, each party shall pay its own legal fees and
disbursements and other expenses incurred in connection with this
Agreement.
7.6 Binding Effect: This Agreement shall be for the benefit of, and shall be
binding upon, the parties and their respective heirs, personal
representatives, executors, legal representatives, successors, and
permitted assigns.
8. Trademarks
8.1 S&N's trade names, trademarks, service marks, logos and other proprietary
symbols shall be and remain the sole and exclusive property of S&N. ADOL's
trade names, trademarks, service marks, logos and other proprietary
symbols shall be and remain the sole and exclusive property of ADOL.
Neither party shall have the right to use in any way or reproduce for any
purpose the corporate trade names, trademarks, service marks, logos or
other proprietary symbols of the other party without that party's prior
written consent. All advertising or promotional materials broadcast,
displayed, published or distributed by either party pursuant to this
Agreement in conjunction with either party's corporate trade names,
trademarks, service marks or logos shall be subject to the parties'
written consent, which shall not unreasonably be withheld.
9. Confidentiality
9.1 The parties acknowledge that during the Term of this Agreement, the
parties will be making use of, acquiring and adding to confidential
information of a special and unique nature and value relating to such
matters as, but not limited to, the parties' business operations, internal
structure, financial affairs, systems, procedures, manuals, confidential
reports and lists of accounts, trade secrets, customers and vendors, as
well as the amount, nature and type of services used and preferred by
ADOL's accounts and customers and the fees paid by such accounts and
customers, all of which shall be deemed to be confidential
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information. In consideration of entering into this Agreement, the parties
agree that during the Term and for a period of two (2) years after
termination of this Agreement, the parties shall not, for any reason or
purpose whatsoever, directly or indirectly, divulge or disclose to any
person or entity any of such confidential information which was obtained
as a result of this Agreement and work performed hereunder, or any
information or knowledge respecting the affairs of the other party or any
of its officers, directors, executives, stockholders, accounts, customers
or referrers of accounts learned during the Term of this Agreement, but
shall hold all of the same inviolate.
10. Information to be contained on the Site(s):
10.1 Except as otherwise provided in this Agreement, all information regarding
S&N products to be contained on the ADOL Site shall be restricted to
information provided by S&N to ADOL (the "Product Information"). S&N shall
be responsible, at its sole cost and expense, for providing Product
Information to ADOL in a format mutually agreeable between S&N and ADOL.
Such specifications may include, but not be limited to, that the Product
Information must be delivered in a readable form usable on a specified
software program. ADOL is permitted to modify the format, including the
design and layout, of the Product Information provided by S&N to ADOL
pursuant to this section. However, ADOL shall make no revisions to the
content of the Product Information provided by S&N (other than price
adjustments) unless S&N agrees to such revisions in writing.
11. Notices: All notices under this Agreement shall be sufficient if
hand-delivered, sent via reputable overnight carrier, or via U.S.
certified mail, postage prepaid, to the following addresses:
If to S&N:
Smith & Nephew, Inc., Rehabilitation Division
Attention: Pat Harkensee
N104 W13400 Donges Bay Road
Germantown, Wisconsin 53022
With a copy to:
Smith & Nephew, Inc.
Attention: General Counsel
1450 Brooks Road
Memphis, Tennessee 38116
If to ADOL, Inc:
America's Doctor, Inc.
Attention: Scott Rifkin, M.D.
11403 Cronridge Drive, Suite 200
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Owings Mills, Maryland 21117
With a copy to:
Rifkin, Livingston, Levitan & Silver, LLC
Attention: Jamie Eisenberg
575 S. Charles Street, Suite 200
Baltimore, Maryland 21201
12. Governing Law: The construction, performance and enforcement of this
Agreement shall be governed by and construed in accordance with the laws
of the State of Wisconsin.
13. Arbitration: Any controversy or claim arising out of or relating to this
Agreement, or any breach thereof, shall be submitted to arbitration in
accordance with the Commercial Rules of the American Arbitration
Association; provided, however, that this clause shall not be construed to
limit or to preclude either party from bringing any action in any court of
competent jurisdiction for injunctive or other provisional relief as
necessary or appropriate. The arbitration shall be conducted in: (a)
Baltimore, Maryland, if the claim is brought by S&N, or (b) Milwaukee,
Wisconsin, if the claim is brought by ADOL, at the office of the American
Arbitration Association. Any award or determination of the arbitration
tribunal shall be final, non-appealable, and conclusive upon the parties,
and judgment thereon may be entered by any court of competent
jurisdiction.
14. Force Majeure: In the event that either party is prevented from
performing, or is unable to perform any of its obligations under this
Agreement due to any act of God, fire, casualty, flood, war, strike,
lockout, failure of public utilities, injunction or any act, exercise,
assertion or requirement of governmental authority, epidemic, or any other
cause beyond the reasonable control of the party invoking this provision,
and if such party shall have used its best efforts to avoid such
occurrence and minimize its duration and has given prompt notice to the
other party, the affected party's performance shall be excused and the
time for performance shall be extended for the period of delay for
inability to perform due to such occurrence.
CONTINUED NEXT PAGE
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Intending to be legally bound, the parties have executed this Agreement by their
duly authorized officers as of the day and year first above written.
America's Doctor, Inc. Smith & Nephew, Inc.
Rehabilitation Division
By: /s/ Scott M. Rifkin, M.D. By: /s/ James M. McHargue
Title: CEO Title: President
Date: 2/16/99 Date: 2/16/99
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Exhibit 10.25
CONFIDENTIAL TREATMENT REQUESTED
CONTENT DEVELOPMENT AGREEMENT
THIS CONTENT DEVELOPMENT AGREEMENT ("Agreement") is entered into as of
the 15th day of June, 1999 by and between CenterWatch, Inc., a Massachusetts
corporation ("CW"), a subsidiary of Medical Economics Company and
AmericasDoctor.com, Inc. ("AD"), a Delaware corporation. AD and CW are sometimes
referred to herein as the "Parties" and individually as a "Party." Capitalized
terms shall have the meanings set forth for such terms in Article XIII hereof or
as otherwise defined in this Agreement.
WHEREAS, AD is engaged in the business of operating an
Internet site located at the URL HTTP://WWW.AMERICASDOCTOR.COM and on America
Online ("AOL") (collectively the "AD Site");
WHEREAS, CW is engaged in the business of operating as
Internet site located at the URL HTTP://WWW.CENTERWATCH.COM ("CW Site");
WHEREAS, CW maintains certain content and services on the CW
Site, including a listing of clinical trials database ("Listing of Clinical
Trials Database") and an e-mail notification service ("E-mail Notification
Service");
WHEREAS, CW intends to gather certain data concerning clinical
trial volunteers through the use of a Trials Volunteer Questionnaire (as defined
herein) and to store such data in the Trial Volunteer Questionnaire Database (as
defined herein); and
WHEREAS, AD desires to obtain a license to use the Trials
Volunteer Questionnaire Database for the purposes set forth herein, and CW is
willing to grant such a license to AD subject to the terms and conditions of
this Agreement.
NOW, THEREFORE, in contemplation of the foregoing recitals and
in consideration of the mutual covenants and promises contained herein, the
Parties hereby agree as follows:
Article I
E-MAIL NOTIFICATION SERVICE AND TRIALS VOLUNTEER QUESTIONNAIRE
1.1 Trials Volunteer Questionnaire. CW shall develop, with input from AD, a
trials volunteer questionnaire (the "Trials Volunteer Questionnaire")
for those Users who are interested in participating in a clinical
trial. The Trials Volunteer Questionnaire shall include: (i) the User
granting permission to AD, its agents and Affiliates to contact
research organizations ("CRO's"), site management organizations
("SMO's") and pharmaceutical companies on the User's behalf, (ii) a
description of the relationship between AD, CW, CROs, SMOs and
pharmaceutical companies and (iii) subject to Section 4.6, the User
granting permission to AD, its agents and Affiliates to use the
information from the Trials Volunteer Questionnaire for purposes of
marketing and selling other AD content, products and services. The
information Users provide pursuant to this Section shall be stored in a
database (the "Trials Volunteer
- --------------
Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as [***]. A complete version of this
exhibit has been filed separately with the Securities and Exchange Commission.
<PAGE>
2
Questionnaire Database") which shall reside on the CW Site. The Trials
Volunteer Questionnaire shall reside on the CW Site.
1.2 Trials Volunteer Questionnaire Button. AD shall create a hyperlink to
the Trials Volunteer Questionnaire from the home page of the AD Site,
the navigation bar displayed on each page of the AD Site and at such
other locations on the AD Site as the Parties may agree. CW shall
create a hyperlink to the Trials Volunteer Questionnaire from the home
page of the CW Site, the E-mail Notification Service page, the
navigation bar displayed on each page of the CW Site and at such other
locations on the CW Site as the Parties may agree.
1.3 Trials Volunteer Questionnaire Database. CW shall provide AD with daily
access to the newly added User information to the Trials Volunteer
Questionnaire Database. CW and AD shall cooperate in determining the
manner and format in which such information shall be made available to
AD.
1.4 Exclusive License. Subject to the terms and conditions contained in
Sections 4.1 and 4.2, CW hereby grants AD an exclusive license during
the term of this Agreement to use the Trials Volunteer Questionnaire
Database for recruiting, organizing or screening of clinical trial
candidates for CROs, SMOs, pharmaceutical companies and any other
similar business and for any other purpose reasonably related thereto.
1.5 Limitation on the Use of the Database. CW shall not permit any Person,
other than its agents or employees or an Affiliate or agents or
employees of an Affiliate, to access or use the Trials Volunteer
Questionnaire Database or any information contained therein for any
purposes whatsoever, other than with the express written permission of
AD. CW shall not enter into any contractual relationship with any other
Person where CW permits, to its knowledge, such Person to use the
Listing of Clinical Trials Database for purposes of recruiting clinical
trial candidates for third Persons. During the term of this Agreement,
CW shall, and shall cause its agents or employees or an Affiliate or
agents or employees of an Affiliate, to refrain from using the User
information to compete with the Trials Volunteer Questionnaire.
1.6 AD Hyperlink to E-mail Notification Service. CW shall permit AD to
create, at its option, one or more hyperlinks from the AD Site or any
site of an AD Affiliate to the CW Site. Any User information obtained
as a result of a User accessing the E-mail Notification Service
pursuant to the terms of this Section shall be governed by the terms
and conditions contained in this Article I.
1.7 Gathering of Other User Information. Any User information from visitors
to other sites on the Internet where such visitors are referred to the
CW Site from other health related sites on the Internet concerning
Persons that may be interested in participating in clinical trials
shall be treated pursuant to the terms of this Article I as if such
information had been obtained from a User on the CW Site.
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Article II
CONTENT DEVELOPMENT; ADDITIONAL OBLIGATIONS
2.1 CW Content. CW shall develop in a timely manner the content set forth
below for display on the AD Site. CW hereby grants AD a fully paid
non-exclusive license during the term of this Agreement to display the
following content on the AD Site:
(i) a summary of the ongoing clinical trials that are seeking
clinical trial candidates with a hyperlink from the AD Site to
the portion of the CW Site containing such clinical trial
information;
(ii) educational materials regarding volunteering for a clinical
trial;
(iii) a glossary of terms applicable to clinical trials;
(iv) a list of recently approved therapies organized by therapeutic
area with a hyperlink from the AD Site to the CW Site; and
(v) summaries of CW consumer newsletters and industry publication,
including CW Weekly.
2.2 AD Editorial Rights. AD shall determine the location on the AD Site
page where such CW content shall be displayed. AD and CW shall jointly
edit the CW content for the AD Site. AD shall have the right to refuse
to display any CW content in the event that such CW content does not
conform with accepted advertising or promotional standards applicable
to such CW content.
2.3 CW Obligations. CW shall use commercially reasonable efforts to
introduce AD to senior executives and board members employed with CROs,
pharmaceuticals companies and SMOs that are known to CW or its
Affiliates.
2.4 AD Obligations. AD shall use commercially reasonable efforts to direct
appropriate Users to the Trials Volunteer Questionnaire and the CW
Site.
Article III
LISTING OF CLINICAL TRIALS DATABASE
3.1 License and Limitations on the Use of the Listing of Clinical Trials
Database. In the event that the listing of Clinical Trials Database is
no longer generally available to the public, CW shall grant AD a fully
paid license during the term of this Agreement the right to use the
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4
Listing of Clinical Trials Database and the information contained
therein in a manner consistent with the purposes of this Agreement.
3.2 Listing of Information in the Database. AD shall use its commercially
reasonable efforts to list clinical trials on behalf of third Persons
in the Listing of Clinical Trials Database to the extent such clinical
trials are not already included in the Listing of Clinical Trials
Database, where AD becomes aware of any such listing. AD shall use
commercially reasonable efforts to, subject to the terms herein,
contract with certain Person concerning recruitment of clinical trial
candidates and CW shall comply with the requests of any such Person
that lists information in the Listing of Clinical Trials Databases for
modifying the information listed in the Listing of Clinical Trials
Database by such Person.
Article IV
PAYMENTS; REPORTS
4.1 Fixed Maintenance Fee. AD shall pay CW an initial one time fee of
[***] upon execution of this Agreement and a quarterly fee of [***]
commencing on the date of this Agreement and continuing for the
duration of this Agreement.
4.2 Fee Sharing Arrangement. During the six month period commencing from
the date hereof, AD shall pay CW a fee as specified in Exhibit A.1
hereto based on a percentage of total fees that AD collects from the
placement of Users into clinical trials or from selling a list of Users
interested in clinical trials, in each case where such Users were
originally from a listing in the Trials Volunteer Questionnaire
Database. After such six month period, AD shall pay CW a fee as
specified in Exhibit A.2 hereto based on a percentage of total fees
that AD collects from the placement of Users into clinical trials or
from selling a list of Users interested in clinical trials, in each
case where such Users were originally from a listing in the Trials
Volunteer Questionnaire Database.
4.3 Payment of Fee Sharing Arrangement. The fee specified in Section 4.2
shall be paid on a quarterly basis in the quarter immediately following
the quarter during which such fees are collected by AD, to the extent
that such fees are collected by AD from third Persons. Each such
payment under Section 4.2 shall be accomplished by a report setting
forth the revenues upon which such fees are based on and any other
information related thereto as may be reasonably requested by CW.
4.4 Audit of Reports. AD shall maintain complete and accurate books and
records sufficient to prepare reports as required by Section 4.3. CW
shall have the right to cause such books and records to be examined and
audited by an independent certified public accountant. Any such audit
shall be performed on five (5) days' written notice, during normal
business hours, no more frequently than once in a six month period and
in such manner as to avoid unreasonable
<PAGE>
5
interference with normal business operation. If such examination
reveals an underpayment the greater of which is $1,000 or 5% of the
total payment due for any quarter, then AD shall pay the cost of such
examination (otherwise CW shall pay the cost of such examination).
4.5 Excluded Users Information. In the event that AD gathers or retains any
information directly from query fields resident on the AD Site or any
other site (except for the CW Site), such User information shall be the
exclusive property of AD and shall be excluded from the terms and
conditions of this Agreement. During the term of this Agreement, AD
shall not use such User information to compete with the Trials
Volunteer Questionnaire.
4.6 Limitation on Use of Information by AD. AD shall use the information
from the Trials Volunteer Questionnaire for (i) the purposes of
recruiting, organizing or screening of clinical trial candidates for
CROs, SMOs, pharmaceutical companies and for any other purpose
reasonably related thereto or (ii) marketing and selling products and
services offered on the AD Site. AD hereby agrees that it shall not
sell to any third Person, other than an Affiliate, any specific User
information obtained from CW except for the purposes of recruiting,
organizing or screening of clinical trial candidates for CROs, SMOs,
pharmaceutical companies or for any purpose reasonably related thereto
or marketing and selling products and services offered on the AD Site.
Article V
REPRESENTATIONS, WARRANTIES AND COVENANTS
5.1 CW Representations and Warranties. CW represents and warrants the
following to AD as of the date hereof:
(i) CW has sufficient rights to the information, content and
databases described in this Agreement to permit CW to convey
the licenses described herein to AD and for the Parties to
perform the terms and conditions contained herein;
(ii) to CW's knowledge, no actions contesting CW's rights in and to
the databases described herein and the information
incorporated therein have been taken by any other Person;
(iii) to CW's knowledge, the licenses granted to AD pursuant to the
terms herein do not infringe upon any copyright, trade name,
trademark, service mark, or other right of any other Person;
(iv) the CW Site has averaged approximately [***] Users per month,
approximately [***] of such Users are Users that are not
pharmaceutical industry professional;
(v) the CW Site has averaged approximately [***] unique page
views per month; and
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6
(vi) the execution and delivery of this Agreement does not conflict
with or result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become
a default) under, or give to others any rights of termination
or cancellation of, or accelerate the performance required by
or maturity of, or result in the creation of any security
interest, lien, charge or encumbrance on any of CW's assets
pursuant to any of the terms, conditions or provisions of, any
note, bond, mortgage, indenture, permit, license, franchise,
lease, contract, or other instrument or obligation to which CW
is a party or by which any of its assets are bound or
affected.
5.2 CW Covenants. CW covenants to AD that on and after the date of this
Agreement:
(i) CW shall maintain the Listing of Clinical Trials Database
indexed by disease category substantially as such database
exists on the date hereof on the CW Site and with the
functionality and User interactivity that such Listing of
Clinical Trials Database demonstrates on the date hereof;
(ii) CW shall use commercially reasonable efforts to ensure that
the data contained in the Listing of Clinical Trials Database
shall be accurate in all material respects and the listing of
such data in such database shall be in material compliance
with all applicable laws, regulations and standards
promulgated by any governmental or non-governmental body;
(iii) CW shall obtain IRB approval for each listing in the Listing
of Clinical Trials database;
(iv) CW shall use its reasonable before efforts to maintain and
promote the Listing of Clinical Trials Database as the leading
and comprehensive source of clinical trial information on the
Internet;
(v) CW shall maintain the E-mail Notification Service
substantially as such service exists on the date hereof on the
CW Site and with the functionality that such E-mail
Notification Service demonstrates on the date hereof;
(vi) CW shall use commercial reasonable efforts to gather
volunteers for clinical trials by means of the E-mail
Notification Service;
(vii) CW shall routinely e-mail those Users that have subscribed to
the E-mail Notification Service to suggest that such Users
complete the Trials Volunteer Questionnaire and generally
promise the clinical trial recruitment process to such Users.
Such e-mail shall contain that information specified in
Exhibit B;
<PAGE>
7
(viii) CW shall not permit any Person, other than an Affiliate of CW,
to access the list of Users that subscribe to the E-mail
Notification Service or any other information related thereto;
and
(ix) CW shall maintain the operation of the CW Site and the
Clinical Trials Questionnaire Database, without material
interruption of service of such site and database.
5.3 AD Representations and Warranties. AD represents and warrants the
following to CW as of the date hereof that:
(i) the execution and delivery of this Agreement does not conflict
with or result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become
a default) under, or give to others any rights of termination
or cancellation of, or accelerate the performance required by
or maturity of, or result in the creation of any security
interest, lien, charge or encumbrance on any of AD's assets
pursuant to any of the terms, conditions or provisions of, any
note, bond, mortgage, indenture, permit, license, franchise,
lease, contract, or other instrument or obligation to which AD
is a party or by which any of its assets are bound or
affected;
(ii) AD has a contractual relationship with AOL to be a tenant on
the AOL site, the term of such agreement expires in June of
2001 unless renewed or terminated prior to such date; and
(iii) For the month of May, 1999, the AD Site received at least
4,000,000 page views.
5.4 AD Covenants. AD covenants to CW that on and after the date of this
Agreement that:
(i) AD shall use commercial reasonable efforts to hire a sales
staff of six or more sales persons within 12 months from the
date hereof and whose responsibilities shall include the
marketing of the clinical trial candidate recruitment services
offered by AD from access to the Trials Volunteer Database;
(ii) AD shall maintain the operation of the AD Site, without
material interruption of service of such site; and
(iii) Within 45 days from the date hereof, AD shall create those
hyperlinks and buttons as depicted on Exhibit C directing
Users to the CW Site and the Trials Volunteer Questionnaire
Database. AD shall provide space on the AD Site to CW for use
as a clinical trial resource area. This section as depicted on
Exhibit C shall be live and accessible by Users on the AD
Site.
<PAGE>
8
5.5 AD Acknowledgements. AD hereby acknowledges that the Trials Volunteer
Questionnaire Database, the E-mail Notification Service and the Listing
of Clinical Trials Database are the exclusive property of CW and AD's
rights to such databases and the information incorporated therein are
limited to the terms and conditions of this Agreement.
5.6 Mutual Representations. Each Party represents to the other Party that:
(i) it has the full power and authority to enter into, execute,
deliver, and perform this Agreement;
(ii) the execution, delivery and performance of this Agreement and
the consummation of all transactions contemplated herein and
therein, have been duly authorized by all necessary corporate
and other actions of such Party; and
(iii) this Agreement, when executed and delivered by such Party,
shall be valid and a binding obligation of such Party,
enforceable against it in accordance with their terms, subject
to bankruptcy, insolvency and other similar laws affecting the
rights of creditors generally and except that the remedies of
specific performance, injunction and other forms of mandatory
equitable relief may not be available.
Article VI
RELATIONSHIP OF PARTIES
6.1 No Joint Venture. Nothing contained in this Agreement shall be
construed as providing for the sharing of profits or losses arising out
of the efforts of either or both of the Parties.
6.2 Independent Contractors. The Parties are and shall conduct themselves
as independent contractors in the performance of this Agreement.
Article VII
INDEMNIFICATION AND LIMITATION ON LIABILITY
7.1 Indemnity. Each Party agrees to indemnify and hold the other Party
harmless from, and to reimburse such other Party for, any loss, cost,
expense, damage, liability or claim (including without limitation, any
attorney's fees and costs of investigation and defense) arising out of,
based upon or resulting from (a) the inaccuracy of any representations
or warranty of the indemnifying Party which is contained in this
Agreement, or (b) the breach of or failure to perform any warranty or
covenant made by the indemnifying Party which is contained in this
Agreement.
<PAGE>
9
7.2 Limitation on Damages. In no event, whether through arbitration or
judicial proceeding, shall any Party be liable to the other Party for
special, incidental, indirect or consequential damages of any kind or
nature, even if advised of the possibility of such damages in advance.
Article VIII
TERM AND TERMINATION
8.1 Term. Subject to Section 8.3, this Agreement shall terminate on the
date 24 months from the date of this Agreement. This Agreement shall
renew automatically without any further action by either Party for
successive one year periods thereafter unless, 180 days prior to end of
any term either Party notifies the other Party in writing of its intent
to not renew this Agreement for an additional one year period. In
addition, AD shall have the option to renew this Agreement at the end
of the original term if AD shall have paid to CW at least [***] if
fees during the first year of this Agreement and at least [***] during
the second year of this Agreement, pursuant to the terms and
conditions of Sections 4.1 and 4.2; provided, that AD may elect, at
its option, to pay CW the difference between the amounts required to
paid pursuant to the preceding clause and the amount of fees actually
paid to CW.
8.2 Survival of Certain Terms. The provisions contained in Articles V, VII,
IX, X, XII and XIII shall survive termination, expiration, or
cancellation of this Agreement. AD shall be obligated to pay those fees
set forth in Sections 4.1 and 4.2 that have accrued on or prior to the
date of termination of this Agreement.
8.3 Termination. Upon the occurrence of any one of the following events,
the Party specified below may elect to terminate this Agreement by
notice to the other Party, such termination to take effect on the date
of the notice unless otherwise advised by the Party giving the notice:
(i) If either Party fails to comply with any material provision of
this Agreement; provided, however, that the breaching Party
first shall be given 30 days to remedy such breach;
(ii) Upon the insolvency or bankruptcy of, or the filing of a
petition for reorganization or liquidation under applicable
bankruptcy or insolvency laws by or against, or an assignment
for the benefit of creditors of, or the appointment of
administrator, liquidator, trustee or receiver of, or any
similar protective proceeding or act or event of bankruptcy
with respect to one of the other Parties;
(iii) If, on an annual basis, at least 20% of the Users listed in
the Trials Volunteer Questionnaire Database do not complete
the Trials Volunteer Questionnaire as a result of viewing such
page from a hyperlink on the CW Site, then AD shall have the
right to terminate this Agreement with 30 days prior written
notice;
<PAGE>
10
(iv) If AD ceases to be a tenant or an AOL property, then CW shall
have the right to terminate this Agreement with 30 days prior
written notice; or
(v) If CW fails to receive in excess of $[***] of fees pursuant
to the terms of the Section 4.1 and an additional $[***] of
fees pursuant to the terms of Section 4.2 by the first
anniversary of the date of this Agreement (including those
fees that AD is obligated to pay CW pursuant to Section 4.2 in
the quarter following the end of such 12 month period), then
either Party may terminate this Agreement with 30 days prior
written notice to the other Party. On the first anniversary of
this Agreement, AD may elect, at its option, to pay CW the
difference between $[***] and the amount of fees actually
paid to CW pursuant to Section 4.2 during such period. If AD
elects to exercise its right pursuant to the preceding
sentence, then CW shall not be allowed to terminate this
Agreement pursuant to this Section 8.3(v).
8.4 Post Termination. In the event that this Agreement is terminated for
any reason whatsoever, AD shall retain all rights to the User
information obtained pursuant to Section 1.1 and CW hereby grants AD a
fully paid license to the Trials Volunteer Questionnaire Database for a
period of 6 months after the date of such termination and AD shall
cease to use such information after such 6 month period.
Article IX
NOTICES
Any notice, demand, request, statement, or other writing required or permitted
by this Agreement shall be deemed to have been sufficiently provided when
personally delivered, sent by telecopy transmission, or dispatched by air
courier, addressed as follows:
To AD: AmericasDoctor.com, Inc.
Attention: Dr. Scott Rifkin, Chief Executive Officer
11403 Cronridge Drive
Suite 200
Owings Mills, Maryland 21117
(410) 581-1189(p)
(410) 581-1571(f)
To CW: CenterWatch, Inc.
Attention: Ken Getz, President
581 Boylston Street, Suite 200
Boston, MA 02116
(617) 247-2327
(617) 247-2535
<PAGE>
11
Article X
APPLICABLE LAW; JURISDICTION
This Agreement shall be governed by and construed in accordance with the laws of
the State of Delaware, United States of America, regardless of its place of
negotiation, execution, or performance and regardless of any principles of
conflict of laws or choice of law which would require the application of the
laws of another jurisdiction. Any legal action or proceeding relating to this
Agreement shall be initiated in any state or federal court in the State of
Delaware. The parties agree to submit to the jurisdiction of, and agree that
venue is proper in, the aforesaid courts in any such legal action or proceeding.
Article XI
INTENTIONALLY OMITTED
Article XII
MISCELLANEOUS
12.1 Successors. Except as otherwise provided in this Agreement, every
covenant, term, and provision of this Agreement shall be binding upon
and inure to the benefit of the Parties and their respective legal
representatives, and successors, permitted transferees, and permitted
assignees.
12.2 Third Party Beneficiaries. This Agreement is for the sole benefit of
the Parties and their permitted assignees and nothing herein expressed
or implied shall give or be construed to give to any Person, other than
the Parties and such assignees, any legal or equitable rights
hereunder.
12.3 Assurances. Each Party agrees to perform all further acts and to
execute, acknowledge, and deliver any documents which may be reasonably
necessary, appropriate, or desirable to carry out the provisions of
this Agreement.
12.4 Counterparts.. This Agreement may be executed in several counterparts,
each of which shall be an original, and such counterparts shall
together constitute but one and the same instrument.
12.5 Assignment. No Party shall assign or delegate this Agreement or any of
its rights or obligations hereunder, other than to an Affiliate
thereof, without the prior written consent of the other Party.
12.6 Unenforceable Terms. If any term, provision, covenant, or condition of
this Agreement is held invalid or unenforceable for any reason, the
remainder of the provisions shall continue in full force and effect as
if this Agreement had been executed with the invalid portion thereof
<PAGE>
12
eliminated. Furthermore, upon the request of any Party, the Parties
shall add, in lieu of such invalid or unenforceable provisions,
provisions as similar in terms to such invalid or unenforceable
provisions as may be possible and legal, valid and enforceable.
12.7 Interpretation. Where the context requires, words in the singular shall
be construed as including the plural and words in the plural shall be
construed as including the singular.
12.8 Headings. Headings are intended only for reference purposes and shall
not be used to construe or limit any provision of this Agreement.
12.9 Entire Agreement. This Agreement constitutes the entire understanding
of and agreement between the Parties and supersedes all prior
representations, understandings, and agreements between the Parties and
their Affiliates with respect to the subject matter hereof.
12.10 Amendments. This Agreement shall be subject at any time to amendment
upon the agreement of the Parties. Such amendments shall be in writing,
shall identify the provisions of this Agreement that are to be amended,
and shall be signed by the Parties.
Article XIII
DEFINITIONS
In this Agreement, the following terms shall have the meanings set forth below:
(i) "Affiliate" means, with respect to any specified Person, (i)
any other Person which owns (directly or indirectly)
individually or as part of a group (as this term is defined
under the Securities Exchange Act of 1934) greater than 50% of
Person of whom greater than 50% of the voting stock or other
capital interest is owned by (directly or indirectly),
individually or as part of a group (as this term is defined
under the Securities Exchange Act of 1934) by such specified
Person.
(ii) "Person" means an individual, partnership, company,
corporation or other legal entity, as the context requires.
(iii) "User" shall mean any Person that views the AD Site or the CW
Site.
Article XIV
CONFIDENTIALITY
14.1 Generally. Each of the Parties agrees not to disclose, and cause each
Party's officers, directors, employees, agents and Affiliates not to
disclose, any terms of the transactions which are the subject of this
Agreement (the "Proposed Transactions"), or to make any public
statement regarding the Proposed Transactions; provided, however, that
the Parties may
<PAGE>
13
prepare mutually agreed to statements concerning the Proposed
Transactions and either Party may make those disclosures required by
applicable law.
14.2 Confidentially Agreements. CW and AD shall conclude a confidentiality
agreement in a form satisfactory to both Parties.
SIGNATURES FOLLOW ON NEXT PAGE
<PAGE>
14
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly-authorized representatives as of the date first above
written.
CenterWatch, Inc.: AmericasDoctor.com, Inc.:
By: /s/ KENNETH A. GETZ By: /s/ SCOTT M. RIFKIN, M.D.
----------------------- ----------------------------
Name: KENNETH A. GETZ Name: SCOTT M. RIFKIN, M.D.
Title: PRESIDENT AND CEO Title: PRESIDENT AND CEO
<PAGE>
15
EXHIBIT A.1
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Amount of fees that AD will pay to CW Amount of fees collected by AD, as
(expressed as a percentage of fees described in Section 4.2
collected by AD)
- ---------------------------------------------------------------------------------------
<S> <C>
[***]% less than or equal to $[***] per year
- ---------------------------------------------------------------------------------------
[***]% greater than $[***] per year
- ---------------------------------------------------------------------------------------
</TABLE>
EXHIBIT A.2
Fee sharing schedule for Users that complete the Trials Volunteer
Questionnaire from a hyperlink on the CW Site
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Amount of fees that AD will pay to CW Amount of fees collected by AD, as
(expressed as a percentage of fees described in Section 4.2
collected by AD)
- ---------------------------------------------------------------------------------------
<S> <C>
[***]% less than or equal to $[***] per year
- ---------------------------------------------------------------------------------------
[***]% greater than $[***] per year
- ---------------------------------------------------------------------------------------
</TABLE>
Fee sharing schedule for Users that complete the Trials Volunteer
Questionnaire from a hyperlink on the AD Site
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Amount of fees that AD will pay to CW Amount of fees collected by AD, as
(expressed as a percentage of fees described in Section 4.2
collected by AD)
- ---------------------------------------------------------------------------------------
<S> <C>
[***]% less than or equal to $[***] per year
- ---------------------------------------------------------------------------------------
[***]% greater than $[***] per year
- ---------------------------------------------------------------------------------------
</TABLE>
<PAGE>
16
EXHIBIT B
CenterWatch.com is now offering in exclusive collaboration with
AmericasDoctor.com an exciting new way for you to learn about and participate in
clinical trials. Complete our brief trial volunteer questionnaire. Based on the
information that you provide, pharmaceutical companies and organizations that
specialize in conducting clinical research will actively contact you through
AmericasDoctor.com for their upcoming studies. If you are selected to
participate in a study, you may be paid for your participation in the study. For
more information and to complete a questionnaire, click here.
<PAGE>
EXHIBIT 21.1
Subsidiaries of the Registrant
SUBSIDIARY JURISDICTION OF INCORPORATION
- ---------- -----------------------------
AmericasDoctor.com Delaware
Medical Mall, Inc.
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
for AmericasDoctor.com, Inc. for the period from August 8, 1997 (inception) to
December 31, 1997 and the year ended December 31, 1998, (and to all references
to our Firm) included in or made part of this Form S-1 Registration Statement
under the Securities Act of 1933.
/s/ Arthur Andersen LLP
Baltimore, Maryland
June 10, 1999
