Exhibit 10.19
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS AND CANNOT BE OFFERED, SOLD, HYPOTHECATED, TRANSFERRED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF REGISTRATION OR THE AVAILABILITY OF AN EXEMPTION
FROM REGISTRATION UNDER SUCH LAWS AS PROVIDED IN THIS WARRANT
No. of Shares: 500,000 Warrant No. _____
Original Issue Date: May 14, 1999
WARRANT
To Purchase Shares of Common Stock of
LABONE, INC.
This certifies that, for value received, HealthPlan Services,
Inc. ("HealthPlan") is entitled to purchase from LABONE, INC., a Delaware
corporation, from time to time prior to the Expiration Date in accordance with
the terms and conditions hereof, up to 500,000 shares of Common Stock of the
Company at a Purchase Price per share set forth below. The number of shares of
Common Stock purchasable hereunder and the Purchase Price therefor are subject
to adjustment as hereinafter set forth in Section 6.
1. Certain Definitions. For all purposes of this Warrant the
following terms shall have the meanings indicated:
(a) "Agreement" shall mean the Agreement dated April 1, 1999
between the Company and HealthPlan.
(b) "Common Stock" shall mean the Company's presently
authorized shares of Common Stock, par value $.01 per share, and any other
securities into which or for which the Common Stock may be converted or
exchanged pursuant to a plan of recapitalization, reorganization, merger, sale
of assets or otherwise.
(c) "Commencement Date" shall mean the first anniversary of
the date hereof.
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(d) "Company" shall mean LABONE, INC., a Delaware corporation,
and any company that shall succeed to, or assume, the obligations of said
corporation hereunder.
(e) "Expiration Date" shall mean 12:01 o'clock a.m. Central
Time on July 13, 2005, which is twenty (20) calendar quarters plus sixty (60)
days after the Commencement Date.
(f) "Lab Revenues" shall mean all gross revenues received by
the Company during the applicable calendar quarter from Payors under the
Agreement from and after the Commencement Date, whether or not the Agreement has
been terminated, provided that the term "Lab Revenues" shall not include
revenues received by the Company after (i) a termination of the Agreement by
HealthPlan without cause under Section 8.A of the Agreement or (ii) a
termination of the Agreement by the Company for cause under Section 8.B of the
Agreement.
(g) "Purchase Price" or "Purchase Price per share" shall mean
the purchase price per Warrant Share (as defined below), which shall equal
$12.375, being the closing sale price or, if no sales were reported, then
average of the closing bid and asked prices of the Common Stock, as reported by
the NASDAQ Stock Market, on the last business day prior to the Original Issue
Date of this Warrant, as set forth above, as such purchase price may thereafter
be adjusted from time to time pursuant to the provisions of Section 6 hereof
(rounded to the nearest whole cent).
(h) "Warrantholder" or "Registered Holder" shall mean
HealthPlan, or its registered transferee.
(i) "Warrant" shall mean this Warrant and all Warrants issued
in exchange therefor or replacement thereof.
(j) "Warrant Shares" shall mean the shares of Common Stock
purchasable by the Registered Holder upon the exercise of this Warrant pursuant
to Section 2 hereof, as adjusted from time to time pursuant to Section 6 hereof.
All terms used in this Warrant which are not defined in Section 1 have
the meanings respectively set forth therefor elsewhere in this Warrant.
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2. Exercise of Warrant.
(a) Subject to the terms and conditions hereof, from and after
the Commencement Date and prior to the Expiration Date, this Warrant may be
exercised in whole or in part in respect of vested shares. Shares of Common
Stock shall become vested under this Warrant as follows:
(i) for each calendar quarter commencing after the
Commencement Date in which the Lab Revenues reach $500,000 and are less
than $1,000,000, this Warrant will vest in respect of 5,000 shares of
Common Stock subject to this Warrant;
(ii) for each calendar quarter commencing after the
Commencement Date in which the Lab Revenues reach $1,000,000 and are
less than $1,500,000, this Warrant will vest in respect of 10,000
shares of Common Stock subject to this Warrant;
(iii)for each calendar quarter commencing after the
Commencement Date in which the Lab Revenues reach $1,500,000 and are
less than $2,000,000, this Warrant will vest in respect of 15,000
shares of Common Stock subject to this Warrant;
(iv) for each calendar quarter commencing after the
Commencement Date in which the Lab Revenues reach $2,000,000 and are
less than $2,500,000, this Warrant will vest in respect of 20,000
shares of Common Stock subject to this Warrant; and
(v) for each calendar quarter commencing after the
Commencement Date in which the Lab Revenues reach $2,500,000, this
Warrant will vest in respect of 25,000 shares of Common Stock subject
to this Warrant.
The number of shares vested for an applicable calendar quarter shall be limited
to the number of shares in the highest category set forth in 2(a)(i) - (v)
above, if any, which is satisfied for such calendar quarter. The number of
shares vested for each applicable calendar quarter, if any, shall be cumulative
with shares vested from all other applicable calendar quarters. Once shares
become vested under this Warrant, they shall remain vested until the Expiration
Date. Anything in this Warrant to the contrary notwithstanding, this Warrant may
not be exercised
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at any time after a material breach by HealthPlan of the Agreement, provided
that HealthPlan receives notice of such breach, unless and until such breach is
cured under the applicable provisions, if any, of such Agreement prior to the
Expiration Date. Anything in this Warrant to the contrary notwithstanding, this
Warrant may not be exercised in whole or in part at any time after the
Expiration Date.
(b) In order to exercise this Warrant in whole or in part, the
Registered Holder shall complete the "Notice of Intention to Exercise Warrant"
attached hereto (the "Notice Form"), and deliver this Warrant, the completed
Notice Form and either cash, a cashier's check payable to the order of the
Company or a wire transfer of funds in an amount equal to the then aggregate
Purchase Price of the Warrant Shares being purchased, to the Corporate Secretary
of the Company at the Company's office located at 10101 Renner Road, Lenexa,
Kansas 66219 (or such other office or agency of the Company as the Company may
designate by notice in writing to the Registered Holder). In no event may the
Warrantholder exercise the Warrant with respect to more than 500,000 shares of
Common Stock in the aggregate, subject to adjustment as provided in this
Warrant.
3. Delivery of Stock Certificate, Etc. Upon Exercise. As soon as
practicable after exercise of this Warrant, the Company shall cause to be issued
and delivered to the Registered Holder (a) a certificate or certificates
representing the aggregate number of shares of Common Stock specified in said
Notice Form, all of which shares shall be duly authorized and validly issued,
fully paid and nonassessable, (b) cash in lieu of any fractional share based
upon the fair market value of a share of Common Stock, as determined by the
Company and (c) any other securities or property (including cash) to which such
Registered Holder is entitled upon such exercise pursuant to the terms of this
Warrant. Each stock certificate representing shares of Common Stock so issued
and delivered shall be registered in the name of the Registered Holder or,
subject to the provisions of Sections 4 and 5 hereof, such other name as shall
be designated by the Registered Holder. Such certificate or certificates shall
be deemed to have been issued and the Warrantholder or any other person so
designated to be named therein shall be deemed to have become a holder of record
of such shares of Common Stock only as of the date the certificate representing
such shares is issued by the Company.
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4. Ownership and Transfer of Warrant and Warrant Shares.
(a) Registered Holder. The Company may deem and treat the
Registered Holder of this Warrant as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes, notwithstanding any notice to the
contrary, until presentation of this Warrant for registration of transfer as
provided in this Section 4.
(b) No Transfer. This Warrant may not be sold, transferred, or
assigned by the Registered Holder in whole or in part at any time.
5. Compliance with Securities Laws.
(a) Accredited Investor. By acceptance of this Warrant, the
Registered Holder represents and warrants that it is an "accredited investor"
within the meaning of Rule 501(a)(3) of Regulation D promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), the Registered Holder
being a corporation with total assets in excess of $5,000,000 not formed for the
specific purpose of acquiring the Warrant or the Warrant Shares.
(b) Investment Intent. By acceptance of this Warrant, the
Registered Holder represents and warrants that it is acquiring this Warrant and
any Warrant Shares for its own account and for the purpose of investment and not
with a view to the sale or distribution thereof. The Registered Holder
understands that this Warrant and the Warrant Shares that may be issued upon
exercise of this Warrant will not have been registered under the Securities Act
of 1933, as amended (the "Securities Act") or any state securities laws (the
Company being under no obligation to effect such registration) and that this
Warrant and the Warrant Shares must be held indefinitely unless a subsequent
disposition thereof is registered under the Securities Act and applicable state
securities laws or is exempt from registration as provided herein.
(c) Limitation on Transfer. By acceptance of this Warrant, the
Registered Holder represents, covenants, and agrees that it will not sell or
otherwise dispose of this Warrant or of the Warrant Shares in the absence of (i)
registration under the Securities Act and applicable state securities laws or
(ii) an opinion acceptable in form and substance to the Company from counsel
reasonably satisfactory to the Company, or an opinion of
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counsel to the Company, to the effect that no registration is required for
such disposition.
(d) Restrictive Legend. Each Warrant shall bear on the face
thereof a legend substantially in the form of the notice set forth on the first
page of this Warrant. Upon exercise of any part of the Warrant and the issuance
of any Warrant Shares, the Company shall instruct its transfer agent to enter
stop transfer orders with respect to such Warrant Shares, and the certificates
representing such Warrant Shares shall have stamped or imprinted thereon or
affixed thereto a legend to the following effect:
The securities represented by this certificate have not been
registered under the Securities Act of 1933 or any state securities
laws and may not be sold, transferred or otherwise disposed of in the
absence of registration under such laws or an opinion in form and
substance acceptable to the Company from counsel reasonably
satisfactory to the Company to the effect that no such registration is
required.
(e) State Securities Laws. This Warrant has been offered to
and accepted by the Registered Holder at its principal executive office in the
State of Florida and has not been offered to the Registered Holder in any other
State.
6. Adjustments to the Purchase Price and Number of Warrant Shares.
(a) Subdivision of Stock, etc. In the event of a stock
dividend or other distribution payable in Common Stock, or any stock split or
subdivision of Common Stock into a greater number of shares, the number of
Warrant Shares subject to the Warrant immediately prior to such event shall be
proportionately increased and the Purchase Price in effect immediately prior to
such event shall be proportionately reduced, and in the event that the
outstanding shares of Common Stock of the Company shall be combined into a
smaller number of shares, the number of Warrant Shares subject to the Warrant
immediately prior to such combination shall be proportionately reduced and the
Purchase Price in effect immediately prior to such combination shall be
proportionately increased.
(b) Reorganization, Consolidation, Merger, etc. In the event
that the Company shall (i) effect a reorganization or recapitalization pursuant
to which all of the outstanding shares
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of Common Stock are converted into or exchanged for other securities or property
(including cash), (ii) consolidate with or merge into any other person, or (iii)
transfer all or substantially all of its properties or assets to any other
person in such a way that holders of Common Stock shall be entitled to receive
securities or property (including cash) with respect to or in exchange for
Common Stock; then, in each such case, the Warrantholder, upon the exercise
hereof as provided in Section 2 at any time after the consummation of such
reorganization or recapitalization, consolidation, merger or sale of assets, as
the case may be, shall be entitled to receive (and the Company shall be required
to deliver) in lieu of the Warrant Shares issuable upon such exercise prior to
such and other securities and property (including cash) to which such holder
would have been entitled upon such consummation, if such Warrantholder had so
exercised this Warrant immediately prior thereto. The above provision shall
apply to successive reorganizations, recapitalizations, consolidations, mergers
or transfers described therein. Notwithstanding the foregoing, in the event of a
merger between the Company and Lab Holdings, Inc. prior to the exercise hereof,
then upon the exercise hereof as provided in Section 2, the Warrantholder shall
be entitled to receive (and the Company shall be required to deliver), in lieu
of the Warrant Shares issuable upon such exercise, the securities to which the
Warrantholder would have been entitled upon such consummation, if such
Warrantholder had so exercised this Warrant immediately prior to such merger.
7. Notice of Record Date, Etc.. In the event of:
(a) any taking by the Company of a record of the holders of
Common Stock for the purpose of determining the holders thereof who are entitled
to receive any dividend (excluding any cash dividend payable out of earnings or
earned surplus of the Company), or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right, or
(b) any transfer of all or substantially all of the assets of
the Company to or consolidation or merger of the Company with or into any other
person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then and in each event the Company shall cause to be mailed to the Warrantholder
a notice containing a brief description of the
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proposed action and stating the date on which either a record is to be taken for
the purpose of such dividend, distribution or rights, or the date upon which
such transfer, consolidation, merger, dissolution, liquidation or winding-up is
to take place and the time, if any is to be fixed, as of which the holders of
Common Stock or other securities shall receive cash or other property
deliverable upon such transfer, consolidation, merger, dissolution, liquidation
or winding-up. Such notice shall also state that the action in question or the
record date is subject to the effectiveness of a registration statement under
the Securities Act or a favorable vote of stockholders, if either is required.
Such notice shall be mailed to the Warrantholder at least ten (10) days prior to
the date specified in such notice on which any such action is to be taken or the
record date, whichever is earlier.
8. Reservation of Warrant Shares; Authority; Validity. During the term
of this Warrant, the Company shall at all times reserve and keep available from
its authorized but unissued or treasury shares such number of shares of its
Common Stock as shall be issuable upon exercise of the Warrant. The Company has
all requisite corporate power and authority to execute, deliver, and perform its
obligations under this Warrant. Upon the Company's execution of this Warrant,
this Warrant shall have been duly authorized, executed, and delivered, and shall
constitute legal, valid, and binding obligations of the Company, enforceable in
accordance with its terms.
9. Listing or Qualification for Trading. The Company shall use its best
efforts to cause the Warrant Shares, immediately upon official notice of
issuance upon exercise of this Warrant, to be listed or admitted for trading on
such principal securities exchange, interdealer quotation system or market
within the United States of America, if any, on which other shares of Common
Stock are then listed or quoted, and to maintain such listing or qualification
for trading for so long as other shares of Common Stock are listed or quoted
thereon. The Company is under no obligation to register or qualify this Warrant
or the Warrant Shares under the Securities Act or any state securities laws.
10. Notices. Any notice or other document required or permitted to be
given or delivered to the Registered Holder shall be delivered at, or sent by
certified or registered mail to the Registered Holder at the last address shown
on the books of the Company maintained for the registry and transfer of the
Warrants.
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11. No Rights as Stockholder. This Warrant shall not entitle the
Registered Holder to any voting or other rights as a stockholder of the Company.
12. Replacement of Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of such loss, theft or destruction, upon delivery
of an indemnity bond reasonably satisfactory in form and amount to the Company
or, in the case of any such mutilation, upon surrender and cancellation of such
Warrant, the Company at its expense will execute and deliver, in lieu thereof, a
new Warrant of like tenor.
13. Law Governing. This Warrant shall be governed by, and construed and
enforced in accordance with, the laws of the State of Delaware (excluding the
choice of law provisions thereof).
14. Miscellaneous. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party (or any predecessor in interest thereof) against which
enforcement of the same is sought. The headings in this Warrant are for purposes
of reference only and shall not affect the meaning or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, this Warrant is executed effective as of the
day and year first above written.
LABONE, INC.
By:
W. Thomas Grant II
Its Chairman of the Board, President,
and Chief Executive Officer
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NOTICE OF INTENTION TO EXERCISE WARRANT ____
The undersigned hereby notifies LabOne, Inc. that he has elected to
exercise its right under the within Warrant to purchase ________ shares of
Common Stock, and has effected a wire transfer to LabOne, Inc. or enclosed
herewith cash or a cashier's check payable to LabOne, Inc. in the total amount
of $_________ in payment of the Purchase Price for such shares. The
certificate(s) representing the shares of Common Stock being purchased should be
delivered in the denominations and to the persons described below:
No. of
Name Address Shares
---- ------- ------
HEALTHPLAN SERVICES, INC.
Date: By:
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(Signature)
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(Print Name)
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(Title)