EXHIBIT 10(i)
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF 1933 (THE
"ACT") OR APPLICABLE STATE SECURITIES LAWS (THE "STATE ACTS") AND SHALL NOT BE
SOLD, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED (WHETHER OR NOT
FOR CONSIDERATION) BY THE HOLDER EXCEPT UPON THE ISSUANCE TO THE COMPANY OF A
FAVORABLE OPINION OF COUNSEL AND/OR SUBMISSION TO THE COMPANY OF SUCH EVIDENCE
AS MAY BE SATISFACTORY TO COUNSEL TO THE COMPANY, IN EACH SUCH CASE, TO THE
EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE ACT AND THE STATE
ACTS.
LIMITED TRANSFERABLE WARRANT TO PURCHASE
SHARES OF COMMON STOCK
C.I.S. TECHNOLOGIES,INC.
(a Delaware Corporation)
C.I.S. TECHNOLOGIES,INC., a Delaware corporation (the "Company"), hereby
certifies that Healthcare Research Systems, Inc., its permitted successors and
assigns, registered on the books of the Company maintained f or such purposes as
the registered holder hereof (the "Holder"), for value received, is entitled to
purchase from the Company fully paid and non-assessable shares of Common Stock
of the Company, $0.01 par value ("Shares"), at the purchase price of $3.0625 per
Share (the "Exercise Price") (the number of Shares and Exercise Price being
subject to adjustment as hereinafter provided) upon the terms and conditions
herein provided. Certain capitalized terms used herein which are otherwise not
defined are defined in the Assets Purchase Agreement dated February 2, 1994
(the "Agreement") to which Holder and the Company are parties.
1. Number of Underlying Shares; Conditions to Exercisability. The
maximum number of Shares which the Holder shall be entitled to purchase upon
exercise of this Warrant shall be 200,000,with 40,000 thereof being immediately
so purchasable and such purchase of the remaining 160,000 thereof being subject
to (i) the achievement by December 31, 1999 of certain annual milestones of
financial performance and (ii) certain limitations and conditions, all as set
forth on Exhibit "A" hereto, (hereinafter, the "Annual Milestones").
2. Exercise of Warrants.
(a) Subject to the prior achievement of the Annual Milestones and further
subject to subsection (b) of this Section 2, upon presentation and surrender of
this Warrant Certificate, with the attached Purchase Form duly executed, at the
principal of f ice of the Company at Tulsa, Oklahoma, or at such other place as
the Company may designate by notice to the Holder hereof, together with a
certified or bank cashier's check payable to the order of the
Company in the amount of the Exercise Price times the number of Shares being
purchased, the Company shall deliver to the Holder hereof, as promptly as
practicable, certificates representing the Shares being purchased. To the extent
that applicable Annual Milestones have been achieved, this Warrant may be
exercised in whole or in part; and, in case of exercise hereof in part only, the
Company, upon surrender hereof, will deliver to the Holder a new Warrant
Certificate or Warrant Certificates of like tenor entitling the Holder to
purchase, subject to any subsequently required achievement of Annual Milestones,
the number of Shares as to which this Warrant has not been exercised.
(b) This Warrant must be exercised on or prior to December 31, 2000, after
which time it will be void and of no further force or effect.
3. Rights and Obligations of Warrant Holder.
(a) The Holder of this Warrant Certificate shall not, by virtue hereof, be
entitled to any rights of a shareholder in the Company, either at law or in
equity; provided if any certificate representing the Shares is issued to the
Holder hereof upon exercise of this Warrant, such Holder shall, for all
purposes, be deemed to have become the holder of record of such Shares on the
date on which this Warrant Certificate, together with a duly executed Purchase
Form, was surrendered and payment of the Exercise Price was made, irrespective
of the date of delivery of such Share certificate. The rights of the Holder of
this Warrant are limited to those expressed herein and the Holder of this
Warrant, by its acceptance hereof , consents to and agrees to be bound by and to
comply with all the provisions of this Warrant Certificate. In addition, the
Holder of this Warrant Certificate, by accepting the same, agrees that the
Company may deem and treat the person in whose name this Warrant Certificate is
registered on the books of the Company maintained for such purpose as the
absolute, true and lawful owner for all purposes whatsoever, notwithstanding any
notation of ownership or other writing thereon, and the Company shall not be
affected by any notice to the contrary.
(b) No Holder of this Warrant Certificate, as such, shall be entitled to
vote or receive dividends or to be deemed the holder of Shares for any purpose,
nor shall anything contained in this Warrant Certificate be construed to confer
upon any Holder of this Warrant Certificate, as such, any of the rights of a
shareholder of the Company or any right to vote, give or withhold consent to any
action by the Company, whether upon any recapitalization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise,
receive notice of meetings or other action affecting shareholders (except for
notices provided for herein), receive dividends, subscription rights or
otherwise, until this Warrant shall have become exercisable and been exercised
and the Shares purchasable upon the exercise thereof shall have become
deliverable
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as provided herein; provided that any such exercise on any date when the stock
transfer books of the Company shall be closed shall constitute the person or
persons in whose name or names the certificate or certificates for those Shares
are to be issued as the record holder or holders thereof for all purposes at the
opening of business on the next succeeding day on which such stock transfer
books are open, and the Warrant surrendered shall not be deemed to have been
exercised, in whole or in part as the case may be, until the next succeeding day
on which the stock transfer books are open for the purpose of determining
entitlement to dividends on the Company's common stock.
4. Shares Underlying Warrants. The Company covenants and agrees that all
Shares delivered upon exercise of this Warrant shall, upon delivery and payment
therefor, be duly and validly authorized and issued, fully-paid and non-
assessable, and free from all stamp-taxes, liens, and charges with respect to
the purchase thereof. In addition, the Company agrees at all times to reserve
and keep available an authorized number of Shares sufficient to permit the
exercise in full of this Warrant.
5. Limitations on Transferability of Warrant. This Warrant is not
transferable prior to the achievement of the Annual Milestones and, then, only
to the extent of that number of shares underlying this Warrant which are
issuable upon exercise hereof subsequent to the achievement of each Annual
Milestone. Notwithstanding the foregoing, this Warrant may be subdivided into
two or more warrants ("Subdivided Warrants") which may at any time be
transferred by Holder to and among any or all of its shareholders ("Individual
Holders"), provided, however, the exercisability hereof at any given point in
time shall be allocated among each Individual Holder in the same percentage that
such Subdivided Warrant is of this entire Warrant.
6. Disposition of Warrants or Shares. The Holder of this Warrant
Certificate and any transferee hereof or of the Shares issuable upon the
exercise of this Warrant Certificate, by their acceptance hereof, hereby
understand and agree that the Warrant, and the Shares issuable upon the exercise
hereof, have not been registered under either the Securities Act of 1933 (the
"Act") or applicable state securities laws (the "State Acts") and shall not be
sold, pledged, hypothecated, donated or otherwise transferred (whether or not
for consideration) except upon the issuance to the Company of a favorable
opinion of counsel and/or submission to the Company of such evidence as may be
satisfactory to counsel for the Company, in each such case, to the effect that
any such transfer shall not be in violation of the Act and the State Acts. It
shall be a condition to the transfer of this Warrant that any transferee thereof
deliver to the Company its written agreement to accept and be bound by all of
the terms and conditions of this Warrant Certificate.
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7. Adjustments.
(a) Stock Dividends. If after the date hereof, the number of outstanding
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Shares is increased by a stock dividend payable in Shares or by a split-up of
Shares, then, on the day following the date fixed for the determination of
holders of Shares entitled to receive such stock dividend or split-up, the
number of Shares issuable on exercise of the Warrants shall be increased in
proportion to such increase in outstanding Shares and the then applicable
Exercise Price shall be correspondingly decreased.
(b) Aggregation of Shares. If after the date hereof, the number of
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outstanding Shares is decreased by a combination or reclassification of Shares,
then, after the effective date of such combination or reclassification, the
number of Shares issuable on exercise of the Warrants shall be decreased in
proportion to such decrease in outstanding Shares and the then applicable
Exercise Price shall be correspondingly increased.
(c) Special Stock Dividend. If after the date hereof, shares of any class
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of the Company (other than common stock) are issued by way of a stock dividend
on outstanding common stock then, commencing with the day following the date
fixed for the determination of holders of common stock entitled to receive such
stock dividend, in addition to any Shares receivable upon exercise of the
Warrants, the Holder shall, upon such exercise of the Warrants, be entitled to
receive, as nearly as practicable, the same number of shares of dividend stock,
plus any shares issued upon any subsequent change, replacement, subdivision or
combination thereof to which the holders would have been entitled had their
Warrants been exercised immediately prior to such stock dividend.
(d) Reorganization. If after the date hereof any capital reorganization or
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reclassification of the common stock of the Company, or consolidation or merger
of the Company with another Corporation, or the sale of all or substantially all
of its assets to another corporation shall be effected, then, as a condition of
such reorganization, reclassification, consolidation, merger or sale, lawful and
fair provisions shall be made whereby the Holders shall thereafter have the
right to purchase and receive in lieu of the Shares immediately theretofore
purchasable and receivable upon the exercise of the rights represented hereby,
such shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for a number of outstanding Shares equal to the number
of Shares immediately theretofore purchasable and receivable upon the exercise
of the rights represented by the Warrants had such reorganization,
reclassification, consolidation, merger or sale not taken place and in any such
case appropriate provisions shall be made with respect to the rights and
interests of the Holders to the end that the provisions hereof (including,
without limitation, provisions for adjustments of the Exercise Price and the
number of Shares purchasable upon the exercise of the Warrants) shall thereaf-
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ter be applicable as nearly as may be in relation to any share of stock,
securities, or assets thereafter deliverable upon the exercise hereof. The
Company shall not effect any such consolidation, merger or sale unless prior to
the consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger, or the corporation purchasing such
assets, shall assume by written instrument executed and delivered to the Holders
the obligation to deliver to the Holders such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such holders may be
entitled to purchase.
(e) Notice to Warrant Holders of Adjustment. Whenever the number of Shares
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purchasable or the Exercise Price hereunder is adjusted as herein provided, the
Company shall cause to be mailed to the Holder in accordance with the provisions
of this Section a notice (i) stating that the number of Shares purchasable upon
exercise or the Exercise Price of this Warrant have been adjusted, (ii) setting
forth the adjusted number of Shares purchasable upon the exercise of this
Warrant or the adjusted Exercise Price, and (iii) showing in reasonable detail
the computations and the facts, including the amount of consideration received
or deemed to have been received by the Company, upon which such adjustments are
based.
8. Loss or Destruction. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant
Certificate and, in the case of any such loss, theft or destruction, upon
delivery of an indemnity agreement or bond satisfactory in form, substance and
amount to the Company or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant Certificate, the Company at its expense will
execute and deliver, in lieu thereof, a new Warrant Certificate of like tenor.
9. Survival. The various rights and obligations of the Holder hereof as
set forth herein shall survive the exercise of the Warrants represented hereby
and the surrender of this Warrant Certificate.
10. Notices. Whenever any notice, payment of any purchase price, or other
communication is required to be given or delivered under the terms of this
Warrant, it shall be in writing and delivered by hand delivery or United States
registered or certified mail, return receipt requested, postage prepaid, and
will be deemed to have been given or delivered on the date such notice, purchase
price or other communication is so delivered or posted, as the case may be; and,
if to the Company, it will be addressed as follows:
C.I.S. Technologies, Inc.
6100 South Yale, Suite 1900
Tulsa, Oklahoma 74136
and if to the Holder, it will be addressed to the registered Holder
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at his address as it appears on the books of the Company.
C.I.S. TECHNOLOGIES, INC.
By: ______________________________________
Title: ___________________________________
ATTEST:
______________________________
____________________ Secretary
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PURCHASE FORM
Date______________________
TO: C.I.S. TECHNOLOGIES, INC.
The undersigned hereby irrevocably elects to exercise the attached Warrant
Certificate to the extent of ____________ shares of the Common Stock, $0.01 par
value, of C.I.S. Technologies, Inc. and hereby makes payment of $______________
in accordance with the provisions of Section 2 of the Warrant Certificate in
payment of the purchase price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name:
(Please typewrite or print in block letters)
Address:
Soc. Sec. or Employer I.D. No.
By:
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EXHIBIT "A"
to
LIMITED TRANSFERABLE WARRANT
TO PURCHASE SHARES OF COMMON STOCK
ANNUAL MILESTONES
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The Warrant to which this Exhibit forms a part is not exercisable as to
160,000 of the underlying Shares unless and until the following conditions,
limitations and annual milestones of financial performance have been met,
complied with and achieved.
1. Definitions. For purposes hereof, the following words shall have the
meanings indicated:
1.1 "Anti-Dilution Amount" shall mean that number of Shares which,
when added to the Outstanding Shares, would cause the CIS+HRS EPS to be
reduced to the Company EPS.
1.2 "Business" shall mean that business of providing health care
data to third parties which was formerly conducted by Holder and which,
upon the consummation of the Agreement and the resultant acquisition of the
Business and Acquired Assets by the Company's wholly owned subsidiary, CIS
Healthcare Research Systems, Inc. a Delaware corporation ("CIS-HRS"), is
now conducted by CIS-HRS. "Business" shall also include all third party
health care data sales activities conducted by or through the Company or
other subsidiaries of the Company.
1.3 "Company EPS" shall mean the amount of consolidated earnings per
share of the Company for a given Fiscal Year calculated in accordance with
generally accepted accounting principals ("GAAP"), exclusive of the portion
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thereof attributable to the HRS Gross Margin for such Fiscal Year.
1.4 "Company+HRS EPS" shall mean the amount of consolidated earnings
per share of the Company for a given Fiscal Year calculated in accordance
with GAAP, including the portion thereof attributable to the HRS Gross
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Margin for such Fiscal Year. For purposes hereof, the portion of
Company+HRS EPS for a given Fiscal Year attributable to the HRS Gross
Margin for such Fiscal Year shall be the HRS Gross Margin for such Fiscal
Year divided by the Outstanding Shares as of the end of such Fiscal Year.
1.5 "Cumulative Annual Maximum" shall mean, following the Fiscal
Year ended December 31, 1994, 100,000 Shares; following the Fiscal Year
ended December 31, 1995, 160,000 Shares, and following the Fiscal Year
ended December 31, 1996, 200,000 Shares, all of which amounts are inclusive
of those 40,000 Shares which are initially purchasable upon exercise of
this Warrant.
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1.6 "Fiscal Year" shall mean the fiscal year of the Company.
1.7 "HRS Gross Margin" shall mean the direct revenues attributable
to the Business less the direct expenses attributable to the Business.
1.8 "Outstanding Shares" shall mean the weighted average number of
Shares outstanding calculated in accordance with GAAP as of the end of a
given Fiscal Year.
All other capitalized terms not otherwise defined are defined in the Warrant
Certificate to which this Exhibit is attached.
2. Annual Calculations and Determinations. As soon as practicable
following the completion of a given Fiscal Year, but in no event later than the
date upon which the Company's audited financial statements for such Fiscal Year
are completed, the amounts of HRS Gross Margin, Outstanding Shares, Company EPS,
Company+HRS EPS and Annual Dilution Amount attributable to such Fiscal Year
shall be calculated and the number of Shares thereafter acquirable upon exercise
of this Warrant shall be determined as follows:
2.1 Limitations on Exercise. The following limitations shall apply
to the number of Shares which would otherwise become acquirable upon
exercise of this Warrant:
2.1.1 Minimum HRS Gross Margin. This Warrant shall not be
exercisable (except to the extent it previously became exercisable)
unless the total of the HRS Gross Margins for each Fiscal Year
commencing with the Fiscal Year ending December 31, 1994 exceeds
$55,000 time the number of such Fiscal Years.
2.1.2 No Exercisability in Excess of Cumulative Annual Maximum.
In no event shall the aggregate number of Shares otherwise acquirable
upon exercise of this Warrant, together with the total of the Shares
previously so acquired, exceed the Cumulative Annual Maximum
applicable to any particular point in time.
2.1.3 No Exercisability in Excess of Anti-Dilution Amount. In
no event shall the number of additional Shares for which this Warrant
otherwise becomes exercisable following any particular Fiscal Year
exceed the Anti-Dilution Amount.
2.2 Shares Acquirable Upon Exercise. Subject to the foregoing
limitations, the number of Shares for which this Warrant may be exercised
following a given Fiscal Year shall be
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one-half of the Anti-Dilution Amount ("Earned Shares") plus such portion of
any previously Earned Shares as did not previously become exercisable (due
to a prior Cumulative Annual Maximum) as does not, when taken together with
the current Earned Shares, exceed the lesser of the most recent (i) Anti-
Dilution Amount or (ii) Cumulative Annual Maximum.
3. Termination of Non-Exercisable Warrants. Following the determination
of the exercisability of this Warrant attributable to the Fiscal Year ended
December 31, 1998, this Warrant shall not thereafter become further exercisable
and the number of Shares underlying this Warrant shall be reduced to that number
which are then acquirable upon exercise of this Warrant.
4. Adjustments. In the event any adjustments to the number of Shares and
Exercise Price are effected pursuant to Section 7 of this Warrant, corresponding
adjustments to this Exhibit A will likewise apply.
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