Exhibit 10.2
THIS WARRANT AND THE COMMON
STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED OR
QUALIFIED FOR SALE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAW AND MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR QUALIFICATION OR AN EXEMPTION
THEREFROM UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY
SUCH APPLICABLE STATE LAWS.
THIS WARRANT AND THE COMMON
STOCK ISSUABLE UPON EXERCISE HEREOF (1) ARE SUBJECT TO A CERTAIN
INVESTOR RIGHTS AGREEMENT OF EVEN DATE HEREWITH BETWEEN THE ISSUER
HEREOF AND INITIAL HOLDER HEREOF (THE “ INVESTOR RIGHTS
AGREEMENT ”) THAT RESTRICTS CERTAIN TRANSFERS OF SUCH
SECURITIES AND (2) MAY BE SUBJECT TO CERTAIN RIGHTS AND OBLIGATIONS
PROVIDED FOR IN THAT CERTAIN REGISTRATION RIGHTS AGREEMENT OF EVEN
DATE HEREWITH BETWEEN THE ISSUER HEREOF AND THE INITIAL HOLDER
HEREOF (THE “ REGISTRATION RIGHTS AGREEMENT ”).
A COPY OF SUCH AGREEMENTS SHALL BE FURNISHED WITHOUT CHARGE BY THE
ISSUER HEREOF TO THE HOLDER HEREOF UPON WRITTEN
REQUEST.
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No. 2005 -
01
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Date of Issuance: May 13,
2005
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WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
HEALTHAXIS INC.
THIS IS TO CERTIFY that, for value received, Tak
Investments, Inc., a Delaware corporation (the
“Holder”) is entitled to purchase from Healthaxis Inc.,
a Pennsylvania corporation (the “ Company ”),
and the Company is entitled to require that the Holder purchase at
any time from the date of issuance and on or before the Expiration
Date, up to 3,333,333 shares of Common Stock of the Company (as
adjusted pursuant to Section 2 of this Warrant) at the
Exercise Price on the terms and subject to the conditions
hereinafter set forth.
Capitalized terms used herein without definition
shall have the meanings set forth in Section 8 of this
Warrant.
1.
Exercise of Warrant; Company Put Rights .
(a) Subject to the terms and
conditions set forth herein, the Holder shall have the right, at
the Holder’s option, to exercise this Warrant, in whole or in
part, up to an aggregate of 2,222,222 shares of Common Stock, at
any time during the period commencing on the Issue Date and ending
on the Expiration Date. To exercise this Warrant, the Holder shall
deliver to the Company (i) a notice of exercise in the form
attached hereto (the “ Notice of Exercise ”)
duly completed and executed, (ii) an amount in cash equal to
the Exercise Price, (iii) this Warrant; and (iv) such
documentation as the Company may
reasonably require in connection
with establishing an exemption from registration under federal and
state securities law for the issuance of shares of Common Stock to
Holder upon the exercise hereof, including, without limitation, an
investor questionnaire, and a letter of securities law
representations and warranties concerning Holder and Holder’s
investment in such securities. At the option of the Holder, payment
of the Exercise Price shall be made: (A) by wire transfer of
funds to an account in a bank located in the United States
designated by the Company for such purpose; (B) by certified
or official bank check payable to the order of the Company; or
(C) a combination of such methods.
(b) Upon receipt of the required
deliveries, the Company shall, as promptly as practicable and no
later than three (3) business days after receipt of the Notice of
Exercise, cause to be issued and delivered to the Holder, subject
to the terms of the Investor Rights Agreement, a certificate or
certificates representing shares of Common Stock equal in the
aggregate to the number of shares of Common Stock specified in the
Notice of Exercise. The shares of Common Stock so purchased shall
be deemed to be issued to the Holder, as the record owner of such
shares, as of the close of business on the Exercise Date. The
Company shall pay all reasonable expenses, taxes and other charges
payable in connection with the preparation, execution and delivery
of stock certificates pursuant to this Section 1.
(c) Subject to the terms and
conditions otherwise set forth herein, the Company shall have the
right, at its option, to compel the exercise of this Warrant, in
whole or in part and from time to time:
(i) with respect to not more than
2,222,222 shares of Common Stock, at any time during the period
commencing six months after the Issue Date and ending on the
Expiration Date if, and only if:
(A) at the time of the exercise of
this Warrant, there are no actions, suits, proceedings, claims,
complaints, disputes, arbitrations or investigations (collectively,
“Litigation”) pending or, to the knowledge of the
Company or any of its subsidiaries, threatened, at law, in equity,
in arbitration or before any governmental authority against the
Company or any of its subsidiaries, such that a loss contingency in
excess of $1,000,000 is required or could reasonably be anticipated
to be required (provided, that any such amount shall be exclusive
of any amounts reasonably expected to be paid by any insurance
company on the Company’s or any Company subsidiary’s
behalf);
(B) the Company shall use the
proceeds of such compelled exercise of this Warrant pursuant to
this Section 1(c)(i) exclusively to effectuate, in whole or in
part, in whole or in part, an acquisition of another entity or for
another business purpose (in either case, a “Permitted
Business Purpose”), in either case as approved by the Board
of Directors of the Company;
(C) at the time of the exercise of
this Warrant, the Company is not the subject of, and has not been
the subject of, any voluntary or involuntary bankruptcy,
receivership or other insolvency proceedings and has not entered
into an assignment or other arrangement for the benefits of its
creditors; and
2
(D) the Board of Directors of the
Company, including the director designee(s) of the initial Holder
(to the extent any such designee(s) serve on the Board of Directors
at the time of the consideration of the Permitted Business Purpose
by the Board of Directors), unanimously agrees to compel the
exercise of this Warrant;
(ii) with respect to not more than
an additional 1,111,111 shares of Common Stock, at any time during
the period commencing on the Issue Date and ending on the
Expiration Date if, and only if:
(A) at the time of the exercise of
this Warrant, there is no Litigation pending or, to the knowledge
of the Company or any of its subsidiaries, threatened, at law, in
equity, in arbitration or before any governmental authority against
the Company or any of its subsidiaries, such that a loss
contingency in excess of $1,000,000 is required or could reasonably
be anticipated to be required (provided, that any such amount shall
be exclusive of any amounts reasonably expected to be paid by any
insurance company on the Company’s or any Company
subsidiary’s behalf);
(B) the Company shall use the
proceeds of such compelled exercise of this Warrant pursuant to
this Section 1(c)(ii) exclusively to effectuate, in whole or in
part, a Permitted Business Purpose as approved by the Board of
Directors;
(C) at the time of the exercise of
this Warrant, the Company is not the subject of, and has not been
the subject of, any voluntary or involuntary bankruptcy,
receivership or other insolvency proceedings and has not entered
into an assignment or other arrangement for the benefits of its
creditors; and
(D) the Board of Directors of the
Company, including the director designee(s) of the initial Holder
(to the extent any such designee(s) serve on the Board of Directors
at the time of the consideration of the Permitted Business Purpose
by the Board of Directors), unanimously agrees to compel the
exercise of this Warrant.
In the event of the
Company’s election to exercise all or a portion of its rights
pursuant to this Section 1(c), the Holder shall deliver, within 5
business days of its receipt of the notice specified above, to the
Company the Exercise Price, the Warrant, such documentation with
respect to the establishment of an exemption from registration
under federal and state securities laws for the issuance of shares
of Common Stock to Holder, and the Company shall promptly
thereafter deliver to the Holder the shares of Common Stock with
respect to which this Warrant is exercised. The Company shall, as
promptly as practicable and no later than three (3) business days
after receipt of the Exercise Price, cause to be issued and
delivered to the Holder, subject to the terms of the Investor
Rights Agreement, a certificate or certificates representing shares
of Common Stock equal in the aggregate to the number of shares of
Common Stock specified in the Notice of Exercise. Such shares of
Common Stock shall be deemed to be issued on the Exercise Date. At
the option of Holder, payment of the Exercise Price shall be made:
(A) by wire transfer of funds to an account in a bank located in
the United States designated by the Company for that purpose; (B)
by certified or official bank check payable to the order of the
Company; or (C) a combination of such methods.
3
2.
Adjustment of Exercise Price and Number of Shares . The
Exercise Price and the number of shares of Common Stock obtainable
upon exercise of this Warrant shall be subject to adjustment from
time to time as provided in this Section 2.
(a) If the Company at any time after
the Issue Date: (i) pays or makes a stock dividend on its Common
Stock in shares of Common Stock, (ii) subdivides outstanding shares
of Common Stock into a larger number of shares, (iii) issues
any shares of Common Stock by reclassification of shares of Common
Stock, or (iv) effects a reverse stock split of Common Stock,
then this Warrant shall thereafter be exercisable for that number
of shares that would have derived had the Warrant been exercised
immediately prior to the events listed in (i), (ii), (iii) or (iv)
above (and the Exercise Price thereof shall be correspondingly
adjusted). In the case of a subdivision or re-classification, any
adjustment made pursuant to this Section 2(a) shall become
effective immediately after the effective date of such subdivision
or re-classification. Such adjustments shall be made successively
whenever any event listed above shall occur.
(b) If at any time after the Issue
Date, the Common Stock issuable upon the exercise of the Warrant is
changed into the same or a different number of shares of any class
or classes of stock, whether by recapitalization, reclassification,
exchange, substitution or otherwise, and other than a capital
reorganization, merger or consolidation (the adjustment for which
is provided for in Section 2(c)), in any such event the Holder
shall have the right thereafter to exercise this Warrant for stock
into the kind and amount of stock and other securities and property
receivable in connection with such recapitalization,
reclassification or other change that it would have been entitled
to receive had it exercised this Warrant immediately prior
to
