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EXHIBIT 8
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MEDPARTNERS, INC.
NONTRANSFERABLE WARRANT AGREEMENT
TALBERT MEDICAL GROUP PHYSICIANS
Dated as of __________, 1997
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TABLE OF CONTENTS
Sections Page(s)
SECTION 1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 3. Exercise Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 4. Term of Warrants; Exercise of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.1. Term of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.2. Exercise of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 5. Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 6. Nontransferability; Limited Exceptions to Transfer Restrictions . . . . . . . . . . . . . . 4
6.1. Limits on Exercise and Transfer . . . . . . . . . . . . . . . . . . . . . 4
6.2. Exceptions to Limits on Transfer . . . . . . . . . . . . . . . . . . . . . 4
SECTION 7. Effect of Termination of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
7.1. Forfeiture after Certain Events . . . . . . . . . . . . . . . . . . . . . 5
7.2. Return of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
7.3. Termination Without Cause Following Change in Control Event . . . . . . . 5
SECTION 8. Effect of Death, Total Disability or Retirement . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 9. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 10. Reservation of Warrant Shares; Purchase and Cancellation of Warrants . . . . . . . . . . . 6
10.1. Reservation of Warrant Shares . . . . . . . . . . . . . . . . . . . . . . 6
10.2. Governmental Approvals and Listings . . . . . . . . . . . . . . . . . . . 6
SECTION 11. Adjustment of Exercise Price and Number of Warrant Shares . . . . . . . . . . . . . . . . . 7
11.1. Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(a) Stock Dividends, Splits, etc. . . . . . . . . . . . . . . . . . . . 7
(b) Distributions of Assets . . . . . . . . . . . . . . . . . . . . . . 7
(c) Computation of Market Price . . . . . . . . . . . . . . . . . . . . 8
(d) Minimum Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . 8
(e) Warrant Share Adjustment . . . . . . . . . . . . . . . . . . . . . . 9
(f) Notice of Adjustment . . . . . . . . . . . . . . . . . . . . . . . . 9
(g) Definition of Common Stock . . . . . . . . . . . . . . . . . . . . . 9
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(h) Company May Reduce Exercise Price or Increase Number
of Warrant Shares Purchasable . . . . . . . . . . . . . . . . . . . 9
11.2. No Adjustment for Dividends . . . . . . . . . . . . . . . . . . . . . . . 9
11.3. Preservation of Purchase Rights and Adjustment of Exercise
Price upon Merger, Consolidation, etc. . . . . . . . . . . . . . . . . . . 9
11.4. No Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 12. No Rights as Stockholders; Notices to Warrant Holders . . . . . . . . . . . . . . . . . . . 10
SECTION 13. Purchase Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 14. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 15. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 16. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 17. Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
PURCHASE FORM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
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THIS NONTRANSFERABLE WARRANT AGREEMENT dated as of the _____
day of __________, 1997, is between MEDPARTNERS, INC., a Delaware corporation
(the "Company"), and _________________, an individual (the "Physician").
W I T N E S S E T H
WHEREAS, pursuant to the Agreement and Plan of Merger (the
"Merger Agreement") dated as of August 12, 1997 among the Company, Talmed
Merger Corporation, a Delaware corporation (the "Subsidiary"), and Talbert
Medical Management Holdings Corporation, a Delaware corporation ("Talbert"),
the Company has proposed to cause the Subsidiary to make a tender offer to
purchase all the outstanding shares of common stock of Talbert, together with
their associated rights (the "Offer"), and subsequently to merge the Subsidiary
with and into Talbert (the "Merger").
WHEREAS, the Physician is employed by one of the Talbert
Medical Groups affiliated with Talbert Medical Management Corporation, a
Delaware corporation ("TMMC"), which is a subsidiary of Talbert.
WHEREAS, the Merger Agreement provides that the Company will
issue to certain physicians employed by the Talbert Medical Groups and
designated by Talbert warrants to purchase its Common Stock, par value $.001
per share (the "Common Stock"); and
WHEREAS, the Company wishes to issue to the Physician,
effective as of the Effective Time (as defined in the Merger Agreement), such
warrants upon the terms and conditions set forth herein.
NOW THEREFORE, in consideration the foregoing and the mutual
promises made herein and the mutual benefits to be derived therefrom, the
parties agree as follows:
SECTION 1. DEFINED TERMS. Capitalized terms used herein and
not otherwise defined herein shall have the meaning assigned to such terms in
the Merger Agreement. For the purposes of this Agreement, the following terms
shall have the meanings set forth below.
"Beneficiary" means the person, persons, trust or trusts
designated by the Physician or, in the absence of a designation, entitled by
will or the laws of descent and distribution, to receive the benefits of this
Agreement in the event of the Physician's death, and shall mean the Physician's
executor or administrator if no other Beneficiary is designated and able to act
under the circumstances.
"Change in Control Event" means any of the following:
(1) Approval by the stockholders of the Company of the
dissolution or liquidation of the Company;
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(2) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (i) the then outstanding
shares of common stock of the Company (the "Outstanding Company Common Stock")
or (ii) the combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that for purposes
of this subsection (2), the following acquisitions shall not constitute a
Change in Control Event: (i) any acquisition directly from the Company, (ii)
any acquisition by the Company, (iii) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any entity
controlled by the Company or (iv) any acquisition by any corporation pursuant
to a transaction which complies with clauses (i), (ii) and (iii) of subsection
(4) below; or
(3) Individuals who, as of the effective date of this
Agreement, constitute the Board of Directors of the Company (the "Incumbent
Board") cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board; or
(4) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (a "Business Combination"), in each case, unless,
following such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 70% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction owns
the Company or all or substantially all of the Company's assets either directly
or through one or more subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Business Combination, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as
the case may be, (ii) no Person (excluding any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent
that such ownership existed prior to the Business Combination and (iii) at
least a majority of the
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members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing
for such Business Combination.
"Personal Representative" means the person or persons who,
upon the disability or incompetence of a Physician, shall have acquired on
behalf of the Participant, by legal proceeding or otherwise, the power to
exercise the rights or receive benefits under this Agreement and who shall have
become the legal representative of the Physician.
"QDRO" means a qualified domestic relations order as defined
in Section 414(p) of the Internal Revenue Code of 1986 or Title I, Section
206(d)(3) of the Employee Retirement Income Security Act of 1974, as amended,
or the applicable rules thereunder.
"Subsidiary" means any corporation or other entity a majority
of whose outstanding voting stock or voting power is beneficially owned
directly or indirectly by the Company, or any professional corporation or other
legal entity operating as a medical group and affiliated within the Company or
one of its subsidiaries.
"Total Disability" means a "permanent and total disability"
within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986 and
such other disabilities, infirmities, afflictions or conditions as the Company
may include.
SECTION 2. GRANT. Subject to the terms of this Agreement,
the Company grants to the Physician warrants with respect to an aggregate of
2,000 shares of Common Stock, par value $.001 per share (the "Warrants"). Each
Warrant entitles the Physician to purchase one share of Common Stock (each
share of Common Stock purchasable upon the exercise of a Warrant being referred
to herein as a "Warrant Share").
SECTION 3. EXERCISE PRICE. The price per share at which
Warrant Shares shall be purchasable upon exercise of each Warrant (the
"Exercise Price") shall be the Market Price (as defined in subsection 11.1(c))
of the Common Stock at the date of the Effective Time, subject to adjustment
pursuant to Section 11 hereof.
SECTION 4. TERM OF WARRANTS; EXERCISE OF WARRANTS.
4.1. Term of Warrants. With respect to those Warrants that
have vested and subject to the terms of this Agreement, the Physician shall
have the right until 5:00 P.M., New York time, on __________, 2007 (the tenth
anniversary of the Effective Time) (the "Expiration Date"), to purchase from
the Company the number of fully paid and nonassessable Warrant Shares which the
Physician may at the time be entitled to purchase on exercise of such vested
Warrants.
4.2. Exercise of Warrants. Warrant Shares may be purchased
upon delivery to the Company at its principal office of the form attached
hereto as Exhibit A (the "Purchase Form") of election to purchase duly filled
in and signed for the number of
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Warrant Shares in respect of which such Warrants are then being exercised.
Payment of the aggregate Exercise Price shall be made by certified or cashier's
check, or by any combination thereof.
Upon such delivery of the Purchase Form and payment of the
Exercise Price, the Company shall issue and cause to be delivered, with all
reasonable dispatch, to or upon the written order of the Physician and in such
name or names as the Physician may designate, a certificate or certificates for
the number of Warrant Shares so purchased upon the exercise of such Warrants.
Such certificate or certificates shall be deemed to have been issued and any
person so designated to be named therein shall be deemed to have become a
holder of record of such Warrant Shares as of the date of the delivery of the
Purchase Form and payment of the Exercise Price; provided, however, that if
such Purchase Form is surrendered, and the Exercise Price is paid, on a
Saturday, Sunday or other day on which banking institutions in the City of New
York are authorized or obligated by law or executive order to close, or on a
day when the Common Stock transfer books of the Company are closed, the
certificates for the Warrant Shares in respect of which such Warrants are then
exercised shall be issuable as of the next succeeding Monday, Tuesday,
Wednesday, Thursday or Friday on which such banking institutions are not so
authorized or obligated to close (whether before or after the Expiration Date)
and which is a day on which the Common Stock transfer books of the Company are
open. The rights of purchase represented by the Warrants shall be exercisable,
at the election of the Physician, either in full or from time to time in part.
SECTION 5. VESTING. The Warrants shall vest and will be
exercisable with respect to one-fifth of the total number of Warrant Shares
(subject to adjustment as set forth in Section 11 below) on each of the first,
second, third, fourth and fifth anniversaries of the Effective Time, so that
Warrants with respect to the total number of Warrant Shares shall have vested
by __________, 2003.
SECTION 6. NONTRANSFERABILITY; LIMITED EXCEPTIONS TO
TRANSFER RESTRICTIONS.
6.1. Limits on Exercise and Transfer. Unless otherwise
expressly provided by applicable law (i) all Warrants are nontransferable and
shall not be subject in any manner to sale, transfer, anticipation, alienation,
assignment, pledge, encumbrance or charge; (ii) Warrants shall be exercised
only by the Physician; and (iii) amounts payable or shares issuable pursuant to
the exercise of a Warrant shall be delivered only to (or for the account of)
the Physician.
6.2. Exceptions to Limits on Transfer. The exercise and
transfer restrictions in subsection 6.1 shall not apply to:
(i) transfers to the Company,
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(ii) the designation of a Beneficiary to receive benefits
in the event of the Physician's death or, if the Physician has died,
transfers to or exercise by the Physician's Beneficiary, or, in the
absence of a validly designated Beneficiary, transfers by will or the
laws of descent and distribution,
(iii) transfers pursuant to a QDRO order, or
(iv) if the Physician has suffered a Total Disability,
permitted transfers or exercises on behalf of the Physician by his or
her Personal Representative.
SECTION 7. EFFECT OF TERMINATION OF EMPLOYMENT.
7.1. Forfeiture after Certain Events. Except as provided
in subsection 7.3 and Section 8, the Warrants shall be forfeited to the extent
such Warrants have not become vested upon the date the Physician's employment
with the Company or one of its Subsidiaries is terminated for Cause or by
reason of the termination of the Physician's employment by the Physician upon
retirement or otherwise. If the Physician's employment with the Company is
terminated without Cause, the Warrants shall not be forfeited, but shall vest
and be exercisable as described in Section 5, and the Physician shall retain
all other rights under this Agreement as if such termination had not occurred.
For purposes of this Agreement, "Cause" shall mean that the Company, acting in
good faith based upon the information then known to it, determines that the
Physician has: (a) failed to perform in a material respect the duties
associated with his or her position without proper cause, (b) been convicted of
a felony, (c) committed a material act of fraud, dishonesty or gross misconduct
that is materially injurious to the Company, or (d) not maintained in good
standing the necessary professional licenses or certifications required by
state and federal law in connection with the Physician's practice of medicine.
"Retirement" shall mean termination of the Physician's employment by the
Physician (i) with the consent of the Company, (ii) after age 55 with 10 years
of service, or (iii) after age 65.
7.2. Return of Warrants. Upon the occurrence of any
forfeiture of Warrants hereunder, such unvested, forfeited Warrants shall,
without payment of any consideration by the Company for such transfer, be
automatically transferred to the Company, without any other action by the
Physician. The Company may take any action necessary or advisable to evidence
such transfer. The Physician shall deliver any additional documents of
transfer that the Company may request to confirm the transfer of such unvested,
forfeited Warrants to the Company.
7.3. Termination Without Cause Following Change in Control
Event. If following a Change in Control Event, the Physician's employment with
the Company is terminated other than for Cause, then any Warrants that have not
previously vested shall thereupon vest.
SECTION 8. EFFECT OF DEATH, TOTAL DISABILITY OR RETIREMENT.
If the Physician dies while employed by the Company, then any Warrants that
have not previously
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vested shall thereupon vest. If the Physician incurs a Total Disability while
employed by the Company, the Warrants shall not be forfeited, but shall vest
and be exercisable as described in Section 5, and the Physician shall retain
all other rights under this Agreement as if such Total Disability had not
occurred. If the Physician retires from employment by the Company, the Company
may, on a case-by-case basis and in its sole discretion, provide for partial or
complete vesting prior to retirement of the Warrants that have not previously
vested.
SECTION 9. PAYMENT OF TAXES. The Company will pay all
documentary stamp taxes, if any, attributable to the issuance of certificates
for Warrant Shares issuable upon the exercise of Warrants; provided, however,
that the Company shall not be required to pay, and the Physician shall pay, any
tax or taxes that may be payable in respect of any transfer involved in the
issue or delivery of any certificates for Warrant Shares in a name other than
that of the Physician and the Company shall not be required to issue or deliver
such certificates for Warrant Shares unless or until the persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been
paid.
SECTION 10. RESERVATION OF WARRANT SHARES; PURCHASE AND
CANCELLATION OF WARRANTS.
10.1. Reservation of Warrant Shares. There have been
reserved, and the Company shall at all times keep reserved out of its
authorized Common Stock, a number of shares of Common Stock sufficient to
provide for the exercise of the right of purchase represented by the
outstanding Warrants. The Company covenants that all Warrant Shares will, upon
issuance, be duly authorized, validly issued, fully paid and nonassessable.
Before taking any action that would cause an adjustment reducing the Exercise
Price below the then par value, if any, of the shares of Common Stock issuable
upon exercise of the Warrants, the Company shall take any corporate action
which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable shares of
such Common Stock, at such adjusted Exercise Price. The transfer agent for the
Common Stock and every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of any of the rights of
purchase aforesaid will be irrevocably authorized and directed at all times to
reserve such number of authorized shares as shall be requisite for such
purpose. The Company will keep a copy of this Agreement on file with the
transfer agent for the Common Stock and with every subsequent transfer agent
for any shares of the Company's capital stock issuable upon the exercise of the
rights of purchase represented by the Warrants.
10.2. Governmental Approvals and Listings. The Company
will as promptly as practicable take all action which may be necessary to
obtain and keep effective (a) any and all permits, consents and approvals of
governmental agencies and authorities, and will make any and all filings under
federal and state securities laws, necessary in connection with the issuance
and distribution of the Warrants to the Physician, the exercise of the Warrants
by the Physician, and the issuance, sale, transfer and delivery of Warrant
Shares and (b) if any
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of the Warrant Shares have been listed on any securities exchange, the listing
of the Warrant Shares on any securities exchange on which the Common Stock may
be listed (it being understood that the Company has no obligation to list any
Warrant Shares with any securities exchange).
SECTION 11. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF
WARRANT SHARES.
11.1. Adjustments. The number and kind of securities
purchasable upon the exercise of each Warrant and the Exercise Price shall be
subject to adjustment as follows:
(a) Stock Dividends, Splits, etc. In case the Company
shall at any time after the date of this Agreement (w) pay a dividend
or make a distribution on its Common Stock, which is paid or made (A)
in Common Stock or other shares of the Company's capital stock or (B)
in rights to purchase Common Stock or other capital stock of the
Company if such rights are not exercisable, or separable from the
Common Stock except upon the occurrence of a contingency, (x)
subdivide its outstanding Common Stock into a greater number of shares
of Common Stock, (y) combine its outstanding shares into a smaller
number of shares of Common Stock or (z) issue by reclassification of
its Common Stock other securities of the Company, then, in any such
event the number of Warrant Shares purchasable upon exercise of each
Warrant immediately prior thereto shall be adjusted so that the
Physician shall be entitled to receive upon exercise of such Warrant
the kind and number of shares of the Company and rights to purchase
Common Stock or other securities of the Company (or, in the event of
the redemption of any such rights, any cash paid in respect of such
redemption) that he or she would have owned or have been entitled to
receive after the happening of any of the events described above had
such Warrant been exercised immediately prior to the happening of such
event or any record date with respect thereto. An adjustment made
pursuant to this paragraph (a) shall become effective immediately
after the opening of business on the next business day following the
record date in the case of dividends or other distributions and shall
become effective immediately after the opening of business on the next
business day following the effective date in the case of a subdivision
or combination.
(b) Distributions of Assets. In case the Company shall
at any time after the date of this Agreement distribute to all holders
of its Common Stock evidences of indebtedness of the Company or assets
of the Company (including cash dividends or distributions out of
retained earnings other than cash dividends or distributions made on a
quarterly or other periodic basis) or warrants to subscribe for
securities of the Company (excluding those referred to in paragraph
(a) above), then in each case the Exercise Price shall be adjusted to
a price determined by multiplying the Exercise Price in effect
immediately prior to such distribution by a fraction, of which the
numerator shall be the then current market price per share of Common
Stock (as defined in paragraph (c) below) on the record date for
determination of stockholders entitled to receive such distribution,
less the then fair value (as determined in good
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faith by the Board of Directors of the Company, whose determination
shall be conclusive) of the portion of the assets or evidences of
indebtedness so distributed or of such subscription rights or warrants
which are applicable to one share of Common Stock, and of which the
denominator shall be such market price per share of Common Stock;
provided, however, that if the then current market price per share of
Common Stock on the record date for determination of stockholders
entitled to receive such distribution is less than the then fair value
of the portion of the assets or evidences of indebtedness so
distributed or of such subscription rights or warrants which are
applicable to one share of Common Stock, the foregoing adjustment of
the Exercise Price shall not be made and in lieu thereof the Physician
shall be entitled to receive upon exercise of such Warrant in addition
to the Common Stock the kind and number of assets, evidences of
indebtedness, subscription rights and warrants (or, in the event of
the redemption of any such evidences of indebtedness, subscription
rights and warrants, any cash paid in respect of such redemption) that
he or she would have owned or have been entitled to receive after the
happening of such distribution had such Warrant been exercised
immediately prior to the record date for such distribution. Such
adjustment shall be made successively whenever such a record date is
fixed, and in the event that such distribution is not so made, the
Exercise Price shall again be adjusted to be the Exercise Price which
would then be in effect if such record date had not been fixed.
(c) Computation of Market Price. For the purpose of any
computation under this Agreement, the current market price per share
of Common Stock at any date shall be deemed to be the average of the
daily Market Price (as defined below) per share for the 10 consecutive
Trading Days (as defined below) immediately prior to the date which is
2 days before the date in question. "Market Price" is defined as the
closing sale price (or, if no closing sale price is reported, the
closing bid price) for the Common Stock on the New York Stock
Exchange. If Market Price cannot be established as described above,
Market Price shall be the fair market value of the Common Stock as
determined in good faith by the Board of Directors. "Trading Day"
shall mean a Monday, Tuesday, Wednesday, Thursday or Friday on which
banking institutions in the City of Los Angeles and the State of
California or New York, New York, are not authorized or obligated by
law or executive order to close or, if the Common Stock is listed or
admitted to trading on a national securities exchange, a day on which
the principal national securities exchange on which the Common Stock
is listed or admitted to trading is open for the transaction of
business.
(d) Minimum Adjustment. No adjustment in the number of
Warrant Shares purchasable hereunder or the Exercise Price shall be
required unless such adjustment would require an increase or decrease
of at least one per cent (1%) in the number of Warrant Shares
purchasable upon the exercise of each Warrant, or the Exercise Price,
as the case may be; provided, however, that any adjustments which by
reason of this paragraph (d) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the nearest
cent or the nearest ten-thousandth of a share, as the case may be
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(e) Warrant Share Adjustment. Upon each adjustment of
the Exercise Price as a result of the calculations made in paragraph
(a) or (b) above, each Warrant outstanding immediately prior to the
making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Exercise Price, that number of shares
(calculated to the nearest ten-thousandth) obtained by (i) multiplying
(x) the number of shares covered by a Warrant immediately prior to
such adjustment of the Exercise Price by (y) the Exercise Price in
effect immediately prior to such adjustment of the Exercise Price and
(ii) dividing the product so obtained by the Exercise Price in effect
immediately after such adjustment of the Exercise Price.
(f) Notice of Adjustment. Whenever the number of Warrant
Shares purchasable upon the exercise of Warrants or the Exercise Price
of such Warrant Shares is adjusted, as herein provided, the Company
shall promptly mail by first class mail, postage prepaid, to the
Physician notice of such adjustment or adjustments.
(g) Definition of Common Stock. For the purpose of this
subsection 11.1, the term "Common Stock" shall mean (i) the class of
stock designated as the Common Stock of the Company at the date of
this Agreement or (ii) any other class of stock resulting from
successive changes or reclassifications of such shares consisting
solely of changes in par value, or from par value to no par value or
from no par value to par value. In the event that at any time, as a
result of an adjustment made pursuant to paragraph (a) above, the
Physician shall become entitled to purchase any securities of the
Company other than Common Stock, thereafter the number of such other
securities so purchasable upon exercise of each Warrant and the
Exercise Price of such securities shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Warrant Shares
contained in this subsection 11.1 and subsections 11.2 and 11.3,
inclusive, with respect to the Warrant Shares, shall apply on like
terms to any such other securities.
(h) Company May Reduce Exercise Price or Increase Number
of Warrant Shares Purchasable. The Company may, at its sole option,
at any time during the term of the Warrants, reduce the then current
Exercise Price, or increase the number of Common Shares purchasable
upon exercise of each Warrant, to any amount deemed appropriate by the
Board of Directors of the Company.
11.2. No Adjustment for Dividends. Except as provided in
subsection 11.1, no adjustment in respect of any dividends made on a quarterly
or other periodic basis out of retained earnings shall be made during the term
of a Warrant or upon the exercise of a Warrant.
11.3. Preservation of Purchase Rights and Adjustment of
Exercise Price upon Merger, Consolidation, etc. In case the Company shall
consolidate or merge with or into any other corporation (other than a
consolidation or merger in which the Company is the surviving corporation and
each share of Common Stock outstanding immediately prior to
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such consolidation or merger is to remain outstanding immediately after such
consolidation or merger and no cash, securities or other property is
distributed with respect to such shares) or shall sell or transfer all or
substantially all of its assets to any corporation, the Company or such
successor or purchasing corporation, as the case may be (collectively, the
"acquiring corporation"), the Physician shall have the right thereafter upon
payment of the Exercise Price in effect immediately prior to such action to
purchase upon exercise of each Warrant the kind and amount of shares and other
securities, cash and other property that he or she would have owned or have
been entitled to receive after the happening of such consolidation, merger or
sale had such Warrant been exercised immediately prior to such action (assuming
that such Physician, as a holder of Common Stock prior to such action, would
not have exercised any rights of election as a holder of Common Stock as to the
kind or amount of securities, cash or other property receivable upon such
consolidation, merger or sale; provided, that if the kind or amount of
securities, cash or other property receivable upon such consolidation, merger
or sale is not the same for each non-electing share of Common Stock, then the
kind and amount of securities, cash or other property receivable shall be
deemed to be the kind and amount so receivable by a plurality of the
non-electing shares). The Company shall mail by first-class mail, postage
prepaid, to the Physician, notice of the execution of any agreement with an
acquiring corporation as provided in the first sentence of this subsection
11.3. In addition to any adjustments required by this subsection 11.3, such
agreement shall provide for adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 11. The
provisions of this subsection 11.3 shall similarly apply to successive
consolidations, mergers, sales or conveyances.
11.4. No Fractional Shares. The Company will not issue
fractions of Warrant Shares. In lieu of such fractional Warrant Shares, the
Company will pay to the Physician to whom such fractional Warrant Shares would
otherwise be issuable an amount in cash equal to the product of such fraction
of a Warrant Share multiplied by the current Market Price per share of Common
Stock.
SECTION 12. NO RIGHTS AS STOCKHOLDERS; NOTICES TO WARRANT
HOLDERS.
Nothing contained in this Agreement or in any of the Warrants
shall be construed as conferring upon the Physician the right to vote
or to receive dividends or to consent or to receive notice as
stockholders in respect of any meeting of stockholders for the
election of directors of the Company or any other matter, or any
rights whatsoever as stockholders of the Company. If prior to the
expiration of the Warrants:
(a) the Company shall declare a dividend or other
distribution on its Common Shares, other than (i) in cash as described
in subsection 11.2, (ii) in other shares of Common Stock, or (iii) in
rights to purchase shares of Common Stock or other securities of the
Company of the character described in paragraph (a) of subsection
11.1; or
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(b) the Company shall authorize the issuance to all
holders of its Common Stock of rights or warrants entitling them to
subscribe for or purchase any Common Stock or any other subscription
rights or warrants (other than rights of the character described in
paragraph (a) of subsection 11.1); or
(c) there shall occur a reclassification of the capital
stock of the Company (other than a subdivision or combination of its
outstanding Common Stock); or
(d) the Company shall propose to effect any consolidation
or merger into or with, or to effect any sale or other transfer
requiring an adjustment pursuant to subsection 11.3; or
(e) the Company shall take an action ("Adjustment
Action") which would cause an adjustment pursuant to Section 11 hereof
of the number or kind of Common Stock (or other securities)
purchasable upon the exercise of each Warrant or of the Exercise Price
that would have the effect of reducing the price payable for a share
of the Company's capital stock by the Physician upon exercise of a
Warrant to an amount which is less than the current value of such
share; or
(f) a voluntary or involuntary dissolution, liquidation
or winding up of the Company shall be proposed;
then, in any such event, the Company shall cause to be mailed to the Physician
in the manner provided in Section 14 hereof, at least 20 days prior to the
applicable record or effective date hereinafter specified, a notice stating (i)
the date as of which the holders of record of Common Stock to be entitled to
such dividend, distribution, rights or warrants are to be determined, or (ii)
the date on which such reclassification, Adjustment Action, consolidation,
merger, sale, transfer, dissolution, liquidation, or winding up is expected to
become effective, and the date as of which it is expected that holders of
record of Common Stock shall be entitled to exchange their shares of securities
or other property, if any, deliverable upon such reclassification, Adjustment
Action, consolidation, merger, sale, transfer, dissolution, liquidation or
winding up. Such notice shall also state whether such transaction will result
in any adjustment of the number or kind of Common Stock (or other securities)
purchasable upon the exercise of a Warrant or of the Exercise Price and, if so,
shall set forth the nature thereof and the date upon which it will become
effective. In the event the Company gives notice to the holders of its Common
Stock of the declaration or distribution of rights to purchase Common Stock or
other securities of the Company of the character described in paragraph (a) of
subsection 11.1, the Company will give concurrently a similar notice to the
Holders in the manner provided in Section 14 hereof. The failure to give the
notices required by this Section 12, or any defect therein, shall not affect
the legality or validity of any such dividend, distribution, right, warrant,
reclassification, Adjustment Action, dissolution, liquidation or winding up or
other action, or the vote on any action authorizing the same.
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SECTION 13. PURCHASE RIGHTS. If at any time or from time to
time on or after the date of the Agreement, the Corporation shall give notice
(a "Purchase Rights Notice") pursuant to paragraph (b) of Section 12 of an
issuance of rights or warrants, (the "Purchase Rights") to all record holders
of Common Stock, such issuance shall not result in an adjustment of the
Exercise Price or the number of Warrants under Section 11 hereof to the extent
that the Physician is granted the right to acquire, upon the terms applicable
to such Purchase Rights, the aggregate Purchase Rights which the Physician
could have acquired if he or she had held the number of shares of Common Stock
acquirable upon exercise of the Warrants immediately before the record date for
the grant, issuance, or sale of such Purchase Rights. The Purchase Rights
Notice shall describe the Purchase Rights and their availability to the
Physician.
SECTION 14. NOTICES. Any notice to be given under the terms
of this Agreement shall be in writing and addressed to the Company at its
principal office located at 3000 Galleria Tower, Suite 1000, Birmingham,
Alabama, to the attention of the Corporate Secretary and to the Physician at
the address given beneath the Physician's signature hereto. Each party hereto
may from time to time change the address to which notices to it are to be
delivered or mailed hereunder by notice in writing to the other party.
SECTION 15. APPLICABLE LAW. This Agreement and each Warrant
issued hereunder shall be deemed to be a contract made under the internal laws
of the State of New York (without reference to conflicts of law principles) and
for all purposes shall be construed in accordance with the laws of said State.
SECTION 16. COUNTERPARTS. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
SECTION 17. CAPTIONS. The captions of the Sections and
subsections of this Agreement have been inserted for convenience only and shall
have no substantive effect.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
MEDPARTNERS, INC.
By
-------------------------------------
Name:
Title:
PHYSICIAN
By
-------------------------------------
(Signature)
-------------------------------------
(Print name)
-------------------------------------
(Address)
-------------------------------------
(City, State, Zip Code)
Instruction: Sign and complete two copies of this Agreement and return one
in the enclosed, addressed envelope to the Company.
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CONSENT OF SPOUSE
In consideration of the execution of the foregoing
Nontransferable Warrant Agreement by MedPartners, Inc., I, __________________,
the spouse of the Physician therein named, do hereby join with my spouse in
executing the foregoing Nontransferable Warrant Agreement and do hereby agree
to be bound by all of the terms and provisions thereof.
Dated: , 1997.
---------------
-------------------------------------
Signature of Spouse
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MEDPARTNERS, INC.
PURCHASE FORM
The undersigned hereby irrevocably elects to exercise the
right of purchase granted under the Agreement with respect to ______ shares of
Common Stock and requests that certificates for such shares of Common Stock be
issued in the name of:
Name:
-------------------------------------------------------------------
Address:
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- - --------------------------------------------------------------------------------
Social Security or Taxpayer's
Identification Number:
-------------------------------------------------------
-------------------------------------
(Signature)
-------------------------------------
(Print name)
-------------------------------------
(Address)
-------------------------------------
(City, State, Zip Code)
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