EXHIBIT 4.10
INVESTMENT AGREEMENT
INVESTMENT AGREEMENT, dated as of July 17, 1998, between MEDIC
COMPUTER SYSTEMS, INC., a North Carolina corporation ("Medic"; and together with
its affiliates, the "Investor"), and MEDE AMERICA CORPORATION, a Delaware
corporation (the "Issuer"). Capitalized terms are defined in the text or in
Section 6.7, and a cross-reference table of defined terms is provided
immediately preceding the signature page hereto.
RECITALS
WHEREAS, the Issuer desires that the Investor enter into an
ongoing commercial relationship with the Issuer and that the Investor
participate in the development of the Issuer's business on an ongoing basis.
WHEREAS, the Issuer wishes to issue to the Investor, and the
Investor wishes to accept, the Warrant.
NOW THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements hereinafter set
forth, and for other good and valuable consideration the receipt and sufficiency
of which are hereby acknowledged by the parties hereto, the parties hereto,
intending to be legally bound hereby, agree as follows:
ARTICLE I
ISSUANCE OF WARRANTS; CLOSING
1.1. Investment. Upon the terms set forth in this Agreement,
and in reliance upon the representations and warranties contained herein, the
Issuer is issuing to the Investor, and the Investor is accepting from the
Issuer, the Warrant (the "Issuance").
1.2. Closing. Subject to the terms and conditions of this
Agreement, the closing of the Issuance (the "Closing") is taking place
concurrently with the execution and delivery hereof at the offices of Debevoise
& Plimpton, 875 Third Avenue, New York, New York. The date on which the Closing
is occurring is hereinafter referred to as the "Closing Date".
1.3. Deliveries at Closing. At the Closing, (a) the Investor
is delivering to the Issuer the Registration Rights Agreement duly executed and
any certificates or other instruments required by this Agreement, and (b) the
Issuer is delivering to the Investor (i) a duly executed Warrant, registered in
the name of the Investor, (ii) the Registration Rights Agreement duly executed
and (iii) any other certificates or other instruments required by this
Agreement. The Stockholders Agreement has been, or concurrently herewith is
being, executed and delivered by the parties thereto.
ARTICLE II
REPRESENTATIONS OF THE ISSUER
The Issuer hereby represents and warrants to the Investor as
follows:
2.1. Corporate Organization. The Issuer is a duly incorporated
and validly existing corporation in good standing under the laws of the State of
Delaware.
2.2. Authorization; Validity.
(a) The Issuer has the corporate power and authority to
execute, deliver and perform its obligations under, and to consummate the
transactions contemplated by, this Agreement and the Other Agreements, and has
taken all necessary corporate action to authorize the execution, delivery and
performance by the Issuer of, and consummation by the Issuer of the transactions
contemplated by, this Agreement and the Other Agreements. This Agreement and the
Other Agreements have been duly and validly executed and delivered by the
Issuer, and this Agreement and the Other Agreements constitute valid and binding
obligations of the Issuer, enforceable against the Issuer in accordance with
their respective terms, subject, as to enforcement of remedies, to applicable
bankruptcy, insolvency, moratorium and other similar laws and to general
principles of equity, and, in the case of the Registration Rights Agreement,
except as rights to indemnity or contribution thereunder may be limited by law
or public policy.
(b) The issuance, sale and delivery of the Warrant in
accordance with this Agreement and the issuance, sale and delivery of Shares
upon exercise of the Warrant have been duly authorized by all requisite
corporate action on the part of the Issuer, and, when issued, sold and delivered
in accordance with this Agreement or the Warrant, as applicable, will be duly
and validly issued and, in the case of the Shares, fully paid and nonassessable,
and such issuance, sale and delivery will not give rise to any preemptive rights
on the part of any person.
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2.3. No Violation. Neither the execution, delivery nor
performance by the Issuer of this Agreement and the Other Agreements, nor
compliance by the Issuer with the terms and provisions hereof and thereof, nor
the consummation by the Issuer of the transactions contemplated herein or
therein, will (a) contravene any applicable provision of any law, statute, rule
or regulation. or any applicable order, writ, injunction or decree of any court
or governmental instrumentality, (b) conflict with or result in any material
breach of any term, covenant, condition or other provision of, or constitute a
material default under the terms of any contractual obligation to which the
Issuer is a party or by which it or any of its properties or assets are bound or
to which it may be subject, or (c) violate or conflict with any provision of the
constituent documents of the Issuer.
2.4. Registration Statement. The Registration Statement on
Form S-1 of the Issuer (No. 333-55977) (the "Registration Statement") does not,
in the form filed with the Securities and Exchange Commission (the "SEC") as of
the date hereof, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, provided, that no representation is being made hereby as to the
disclosure in the Registration Statement regarding the transactions contemplated
by this Agreement, the Other Agreements, the Stockholders Agreement or the
Transaction Processing Agreement.
ARTICLE III
REPRESENTATIONS OF THE INVESTOR
The Investor represents and warrants to the Issuer as follows:
3.1. Organization. The Investor is duly organized, validly
existing and in good standing under the laws of the State of North Carolina.
3.2. Authorization; Validity. The Investor has full power and
authority to execute, deliver and perform its obligations under, and to
consummate the transactions contemplated by, this Agreement and the Registration
Rights Agreement. The execution, delivery and performance by the Investor of
this Agreement and the Registration Rights Agreement, and the consummation by
the Investor of the transactions contemplated hereby and thereby have been duly
authorized by the Investor. This Agreement and the Registration Rights Agreement
have been duly and validly executed and delivered by the Investor, and this
Agreement and the Registration Rights Agreement constitute valid and
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binding obligations of the Investor, enforceable against the Investor in
accordance with their respective terms, subject, as to enforcement of remedies,
to applicable bankruptcy, insolvency, moratorium and other similar laws and to
general principles of equity, and, in the case of the Registration Rights
Agreement, except as rights to indemnity or contribution thereunder may be
limited by law or public policy.
3.3. No Violation. Neither the execution, delivery nor
performance by the Investor of this Agreement or the Registration Rights
Agreement, nor compliance by the Investor with the terms and provisions hereof
and thereof, nor the consummation by the Investor of the transactions
contemplated herein or therein, will (a) contravene any applicable provision of
any law, statute, rule or regulation, or any applicable order, writ, injunction
or decree of any court or governmental instrumentality, (b) conflict with or
result in any material breach of any term, covenant, condition or other
provision of, or constitute a material default under, the terms of any
contractual obligation to which the Investor is a party or by which the Investor
or any of its properties or assets are bound or to which the Investor may be
subject, or (c) violate or conflict with any provision of the constituent
documents of the Investor.
3.4. Investment Representations, Etc.
(a) Purchase for Investment. The Warrant being acquired by the
Investor pursuant to this Agreement and the Shares to be purchased by
the Investor upon exercise of the Warrant is being and will be acquired
for investment only and not with a view to any public distribution
thereof in violation of any of the requirements of the Securities Act
of 1933, as amended (the "Securities Act"), or the rules and
regulations thereunder.
(b) Securities Not Registered. The Investor understands that
the Warrant and the Shares to be purchased upon exercise of the Warrant
have not been registered under the Securities Act in reliance upon
exemptions contained in the Securities Act and applicable regulations
promulgated thereunder or interpretations thereof, and cannot be
offered for sale, sold or otherwise transferred unless such sale or
transfer is so registered or qualifies for exemption from registration
under the Securities Act.
(c) Sophistication. The Investor has such knowledge and
experience in financial and business matters that it is capable of
evaluating the merits and risks of its investment in the Warrant and
the Shares to be purchased upon exercise of the Warrant, and the
Investor understands and is able to bear any economic risks associated
with such investment (including the necessity of holding such
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securities for an indefinite period of time, inasmuch as such
securities have not been, and may not in the foreseeable future be,
registered under the Securities Act), including the risk of the loss of
the Investor's entire investment in the Warrant and the Shares to be
purchased upon exercise of the Warrant.
(d) Legends. The Investor understands and agrees that
certificates representing the Warrant and the Shares to be purchased
upon exercise of the Warrant will bear conspicuous legends in
substantially the form set forth below (in addition to any other legend
required by law):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER EITHER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 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 BY REGISTRATION
OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UPON THE ISSUANCE TO THE
COMPANY OF A FAVORABLE OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT ANY SUCH TRANSFER SHALL
NOT BE A VIOLATION OF THE 1933 ACT AND THE STATE ACTS.
Notwithstanding the foregoing, the certificate(s) representing the Warrant or
the Shares to be purchased upon exercise of the Warrant need not continue to
bear such legend (and the Issuer agrees to cause such legend to be removed from
such certificate(s) at the request of the holder thereof) if (i) the sale or
other transfer of such securities referred to in such legend is in accordance
with the provisions of Rule 144 under the Securities Act (or any other rule
permitting public sale without registration under the Securities Act) or (ii)
the opinion of counsel referred to above is to the effect that the Investor and
any subsequent transferee (other than an affiliate of the Issuer) would be
entitled to transfer such securities in a public sale without registration under
the Securities Act.
ARTICLE IV
BOARD REPRESENTATION
4.1. Board Membership. The Board of Directors of the Issuer
(the "Board") shall take such action as is necessary to appoint to the Board,
effective as of the earlier of the closing of the initial public offering of
common stock of the Issuer and
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March 31, 1999 (such earlier date, the "Appointment Date"), one person
designated by the Investor (the "Investor Designee"). From the Appointment Date
through the Termination Date, (a) the Issuer shall, upon the written request of
the Investor, nominate and recommend to the holders of the Issuer's voting
securities for election to the Board, one Investor Designee and (b) the Investor
may require that an Investor Designee who is a member of the Board be removed
and replaced by another Investor Designee, in which case, (i) if any action to
effect the foregoing is required on the part of the holders of the Issuer's
voting securities, the Issuer shall take the actions set forth in clause (a)
above, and (ii) in the case of the replacement of an Investor Designee in
connection with his death, resignation or removal, the Issuer, by action of the
Board, shall cause a replacement Investor Designee to be appointed to the Board
to fill the vacancy caused by such death, resignation or removal.
Notwithstanding the foregoing, the Issuer shall not be required to take any
action that would result in more than one Investor Designee being elected to the
Board at the same time. For purposes of this Agreement, the "Termination Date"
shall mean the earlier to occur of (x) the date on which the Investor
collectively own less than seventy-five percent (75%) (based on the number of
Shares owned plus the number of Shares subject to the Warrant) of the number of
Shares subject to the Warrant on the Closing Date (subject to anti-dilution
adjustments) and (y) the termination of the Transaction Processing Agreement.
4.2. Observer and Monitoring Rights. From and after the
Appointment Date and until the Termination Date, the Issuer will permit a
representative designated by the Investor to attend as an observer any meeting
from which the Investor Designee will be absent. The Issuer may require that any
representative designated pursuant to this Section 4.2 execute a confidentiality
agreement in customary form and reasonably acceptable to such representative
with respect to confidential information of the Issuer made available to such
representative pursuant to this Section 4.2, which agreement shall include an
acknowledgment of such representative that in such capacity such representative
may obtain material non-public information concerning the Issuer, and,
accordingly, will be subject to any applicable restrictions pursuant to Rule
10b-5 under the Securities Exchange Act of 1934, as amended, in connection with
such representative's possession of such information. The Investor acknowledges
that the provisions of this Section 4.2 shall not be construed to provide the
Investor with the right to participate in meetings of the Board or to exercise
any control over the affairs of the Issuer.
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ARTICLE V
TERMINATION; AMENDMENT
5.1. Termination. This Agreement may be terminated at any time
by mutual written consent of the Investor and the Issuer.
5.2. Effect of Termination. If this Agreement is terminated
pursuant to Section 5.1 hereof, this Agreement, except for the provisions of
Sections 5.2, 6.1, 6.4 and 6.5, shall terminate, without any liability on the
part of any party or its directors, officers or stockholders. Nothing herein
shall relieve any party to this Agreement of liability for breach of this
Agreement or prejudice the ability of the non-breaching party to seek damages
from any other party for any breach of this Agreement, including without
limitation, attorneys' fees and the right to pursue any remedy at law or in
equity.
5.3. Amendment. This Agreement may not be amended except by
an instrument in writing signed on behalf of both of the parties.
ARTICLE VII
MISCELLANEOUS
6.1. Notices. Any notice required to be given hereunder shall
be sufficient if in writing, and sent by facsimile transmission (with a
confirmatory copy sent by overnight courier), by courier service (with proof of
service), hand delivery or certified or registered mail (return receipt
requested and first-class postage prepaid), addressed as follows:
If to the Issuer: If to the Investor:
Mede America Corporation Medic Computer Systems, Inc.
90 Merrick Avenue 8601 Six Forks Road
Suite 501 Suite 300
East Meadow, New York 11554 Raleigh, North Carolina 27615
Telephone: (516) 542-4500 Telephone: (919) 847-8102
Facsimile: (516) 542-4508 Facsimile: (919) 847-7110
Attention: David M. Goldwin, Esq. Attention: Alan Winchester
General Counsel
With a copy to: With a copy to:
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Reboul, MacMurray, Hewitt, Maynard & Kristol Misys plc
45 Rockefeller Plaza Burleigh House
New York, New York 10111 Chapel Oak
Telephone: (212) 841-5700 Salford Priors, England
Facsimile: (212) 841-5725 Worcs WR11 5SH
Attention: Mark J. Tannenbaum, Esq.
Tel: 011 44 1386 871-373
Fax: 011 44 1386 871-045
Attention: Ross Graham
and
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telephone: (212) 909-6000
Facsimile: (212) 909-6836
Attention: Paul H.Wilson, Jr., Esq.
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
6.2. Assignment; Binding Effect; Third Party Beneficiaries.
Neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any party hereto (whether by operation of law or otherwise)
without the prior written consent of the other party provided that Medic may
assign its rights hereunder to an affiliate, but nothing shall relieve the
assignor from its obligations hereunder. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Notwithstanding anything
contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their respective heirs, successors, executors, administrators and
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
6.3. Entire Agreement. This Agreement, the Registration Rights
Agreement, the Warrant, and the Transaction Processing Agreement constitute the
entire agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings among the parties with respect
thereto.
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6.4. Fees and Expenses. Each party will bear its own legal and
other expenses with respect to this Agreement and the transactions contemplated
hereby.
6.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
its rules of conflict of laws. Each of the Issuer and the Investor 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
located in the State of New York (the "New York Courts") for any 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), waives any objection to the laying of venue of any such litigation
in the New York Courts and agrees not to plead or claim in any New York Court
that such litigation brought therein has been brought in an inconvenient forum.
6.6. Headings. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
6.7. Interpretation; Certain Definitions. In this Agreement,
unless the context otherwise requires, words describing the singular number
shall include the plural and vice versa, and words denoting any gender shall
include all genders and words denoting natural persons shall include
corporations and partnerships and vice versa. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." As used in this Agreement, the words
"Subsidiary" and "affiliate" shall have the meanings ascribed thereto in Rule
12b-2 under the Securities Exchange Act of 1934, as amended. The following terms
shall have the following meanings ascribed to them:
"Other Agreements" means the Warrant and the Registration
Rights Agreements.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, between the Issuer and the
Investor, in the form attached hereto as Exhibit A.
"Share" means a share of common stock of the Issuer, $0.01 par
value per share.
"Stockholders Agreement" means the Stockholders Agreement
between the Investor, Welsh, Carson, Anderson & Stowe V, L.P., Welsh
Carson,
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Anderson & Stowe VI, L.P., WCAS Capital Partners II, L.P., William
Blair Capital Parners V, L.P. and William Blair Leveraged Capital Fund
Limited Partnership, dated as of the date hereof, in the form attached
hereto as Exhibit B.
"Transaction Processing Agreement" means the Transaction
Processing Agreement between the Issuer and the Investor, dated as of
the date hereof.
"Warrant" means the warrant issued by the Issuer to purchase
1,250,000 Shares, identical to the form attached hereto as Exhibit C.
6.8. Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
6.9. Enforcement of Agreement.
(a) The parties hereto agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were
not performed in accordance with its specific terms or was otherwise
breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any New
York Court, this being in addition to any other remedy to which they
are entitled at law or in equity.
(b) The prevailing party in any judicial action shall be
entitled to receive from the other party reimbursement for the
prevailing party's reasonable attorneys' fees and disbursements, and
court costs.
6.10. Issuer Acknowledgment. The Issuer hereby acknowledges
that nothing in this Agreement, the Other Agreements, the Stockholders
Agreement, the Transaction Processing Agreement or any other agreement
contemplated hereby or thereby shall in any way restrict the right of the
Investor from purchasing any securities of the Issuer from third parties, in the
market, or otherwise.
6.11. Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an
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original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all, of the parties hereto.
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DEFINITIONS
Defined Term Section Reference
------------ -----------------
"Affiliate" Section 6.7
---------
"Appointment Date" Section 4.1
----------------
"Board" Section 4.1
-----
"Closing" Section 1.2
-------
"Closing Date" Section 1.2
------------
"Investor" First Paragraph
--------
"Investor Designee" Section 4.1
-----------------
"Issuance" Section 1.1
--------
"Issuer" First Paragraph
------
"Medic" First Paragraph
-----
"New York Courts" Section 6.5
---------------
"Registration Rights Agreement" Section 6.7
-----------------------------
"Registration Statement" Section 2.4
----------------------
"Securities Act" Section 3.4
--------------
"SEC" Section 2.4
---
"Share" Section 6.7
-----
"Software Development Agreement" Section 6.7
------------------------------
"Stockholder Agreement" Section 6.7
---------------------
"Termination Date" Section 4.1
----------------
"Transaction Processing Agreement" Section 6.7
--------------------------------
"Warrant" Section 6.7
-------
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IN WITNESS WHEREOF, this Investment Agreement has been duly
executed and delivered as of the day and year first written above.
MEDIC COMPUTER SYSTEMS, INC.
By:
------------------------------
Name:
Title:
MEDE AMERICA CORPORATION
By:
------------------------------
Name:
Title:
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