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COMMON STOCK WARRANT AGREEMENT

Warrant Agreement

COMMON STOCK WARRANT AGREEMENT | Document Parties: BISON CAPITAL EQUITY PARTNERS II-A, LP | BISON CAPITAL EQUITY PARTNERS II-B, LP | BISON CAPITAL PARTNERS II, LLC | Warrant Holder, Company | WOUND HEALING, INC | THE CENTER FOR WOUND HEALING, INC You are currently viewing:
This Warrant Agreement involves

BISON CAPITAL EQUITY PARTNERS II-A, LP | BISON CAPITAL EQUITY PARTNERS II-B, LP | BISON CAPITAL PARTNERS II, LLC | Warrant Holder, Company | WOUND HEALING, INC | THE CENTER FOR WOUND HEALING, INC

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Title: COMMON STOCK WARRANT AGREEMENT
Governing Law: California     Date: 4/7/2008
Law Firm: Sheppard Mullin;King Spalding    

COMMON STOCK WARRANT AGREEMENT, Parties: bison capital equity partners ii-a  lp , bison capital equity partners ii-b  lp , bison capital partners ii  llc , warrant holder  company , wound healing  inc , the center for wound healing  inc
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Exhibit 4.3

COMMON STOCK WARRANT AGREEMENT

BY AND AMONG

THE CENTER FOR WOUND HEALING, INC.

AND

BISON CAPITAL EQUITY PARTNERS II-A, L.P. and

BISON CAPITAL EQUITY PARTNERS II-B, L.P

DATED AS OF MARCH 31, 2008

 


TABLE OF CONTENTS

 

          Page
SECTION 1.    Issuance of Warrants    1
SECTION 2.    Investment Representations    2
SECTION 3.    Warrant Certificate    3
SECTION 4.    Registration    3
SECTION 5.    Registration of Transfers and Exchanges    4
SECTION 6.    Vesting; Exercise of Warrants    4
SECTION 7.    Payment of Taxes    8
SECTION 8.    Mutilated or Missing Warrant Certificates    8
SECTION 9.    Reservation of Warrant Securities    8
SECTION 10.    Adjustment of Exercise Price and Number of Warrant Securities Issuable    8
SECTION 11.    Other Rights of Warrant Holder    15
SECTION 12.    Representations and Warranties of Company    16
SECTION 13.    Notices to Warrant Holders    17
SECTION 14.    Survival of Rights    18
SECTION 15.    Certain Information    18
SECTION 16.    Notices to Company and Warrant Holder    18
SECTION 17.    Consents and Best Efforts    19
SECTION 18.    Successors    19
SECTION 19.    Governing Law    20
SECTION 20.    Arbitration    20
SECTION 21.    Jurisdiction, Venue, Etc    20
SECTION 22.    Prevailing Party; Attorney’s Fees    21
SECTION 23.    Benefits of This Agreement    21

 

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SECTION 24.

   Interpretation    21

SECTION 25.

   Severability    21

SECTION 26.

   Amendment and Waiver    22

SECTION 27.

   Counterparts    22

SECTION 28.

   Time of Essence    22

 

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THIS COMMON STOCK WARRANT AGREEMENT (the “Agreement”) is dated as of March 31, 2008 and entered into by and between THE CENTER FOR WORLD HEALING, INC., a Nevada corporation (“Company”), on the one hand, and BISON CAPITAL EQUITY PARTNERS II-A, L.P., a Delaware limited partnership, and BISON CAPITAL EQUITY PARTNERS II-B, L.P., a Delaware limited partnership (collectively, “Warrant Holder”), on the other hand.

RECITALS

A. Pursuant to that certain Securities Purchase Agreement, dated as of even date herewith (as amended, restated, supplemented or otherwise modified from time to time, the “Purchase Agreement”) by and between Company and Warrant Holder, Company has agreed to issue to Warrant Holder warrants representing the right to acquire up to twenty percent (20%) of the total outstanding common stock, $0.001 par value per share, of the Company (the “Common Stock”), on a Fully Diluted Basis (as defined in the Purchase Agreement), as hereinafter described (each warrant to acquire one share of Common Stock, a “Warrant”, and collectively, the “Warrants”).

B. Each Warrant entitles the holder to purchase one (1) share of Common Stock at an initial exercise price of $5.00 (the Common Stock issuable upon exercise of the Warrants being referred to herein as the “Warrant Securities”). The exercise price of each Warrant, as adjusted pursuant to the terms of this Agreement, is referred to as the “Exercise Price”. Capitalized terms used but not defined in this Agreement shall have the meanings given such terms in the Purchase Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereto agree as follows:

SECTION 1. Issuance of Warrants .

(a) In consideration of monies provided by Warrant Holder to Company pursuant to the Purchase Agreement, and subject to the conditions and restrictions contained in this Agreement and in the Purchase Agreement, Company hereby agrees to issue 7,080,363 Warrants to Warrant Holder to purchase up to twenty percent (20%) of the total outstanding Common Stock on a Fully Diluted Basis as of the date hereof, based on the assumption that the total Common Stock outstanding as of the date hereof is 35,401,817 shares on a Fully Diluted Basis (including the Warrant Securities).

(b) In the event that at any time hereafter it is determined that the total outstanding Common Stock (on a Fully Diluted Basis) as of the date hereof was greater than 35,401,817 shares (the date of determination will be the date on which the original Warrant Holder provides notice to Company and is referred to as the “Determination Date”), then:

(i) the Company shall cause additional Warrants to be issued to the original Warrant Holder so that such original Warrant Holder holds on the date of such additional issuance (taking into account any splits, divisions, consolidations, reclassifications or

 

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other changes in the Common Stock and any adjustments pursuant to this Agreement, in each case, that have occurred since the date hereof) that amount of Warrants that such original Warrant Holder would have held on the Determination Date if such original Warrant Holder had been issued on the date hereof Warrants to purchase up to twenty percent (20%) of the total Common Stock (on a Fully Diluted Basis) outstanding as of the date hereof.

(ii) the Exercise Price shall be adjusted in accordance with the following:

 

  E’ = Ex  

O

  
    A   

Where:

 

E’ =

  the adjusted Exercise Price.

E =

  the current Exercise Price.

O =

  35,401,817.

A =

  the actual number of shares of Common Stock outstanding as of the date hereof on a Fully Diluted Basis, excluding the Warrant Securities.

(c) The adjustment to the Exercise Price and number of Warrants issued to the original Warrant Holder shall be made successively on each Determination Date, and the adjustments and issuances shall become effective on such Determination Date.

SECTION 2. Investment Representations . Warrant Holder represents and warrants to Company as follows:

(a) Authority; Enforceability . The execution, delivery, and performance by Warrant Holder of this Agreement has been duly authorized by all necessary action on the part of Warrant Holder. This Agreement has been duly executed and delivered by Warrant Holder, and constitutes the valid and legally binding obligation of Warrant Holder, enforceable in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting enforcement of creditors’ rights generally, and as limited by laws relating to the availability of a specific performance, injunctive relief, or other equitable remedies, or (ii) to the extent that the indemnification provisions contained in the Registration Rights Agreement may be limited by applicable federal or securities laws.

(b) Investment Intention . Warrant Holder is acquiring the Warrants for investment for its own account and not with a view to or for sale in connection with any distribution of the Warrants or the Warrant Securities in violation of the Securities Act of 1933, as amended (the Securities Act ), or any other applicable federal or state securities laws and Warrant Holder has no present intention of selling, granting any participation in, or otherwise distributing the Warrants or the Warrant Securities.

 

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(c) Unregistered Securities . Warrant Holder understands that the Warrants and the Warrant Securities have not been registered under the Securities Act, or registered or qualified under the securities laws of any state and that Warrant Holder may not sell or otherwise transfer the Warrants or Warrant Securities unless they are subsequently registered under the Securities Act and registered or qualified under applicable state securities laws, or unless an exemption is available which permits sale or other transfer without such registration and qualification. Warrant Holder acknowledges that the Warrant Securities must be held indefinitely unless subsequent registration under the Securities Act or an exemption from such registration is available.

(d) Legend . Warrant Holder understands that the Warrant Securities, and any securities issued in respect thereof or exchange therefor, may bear one or more legends in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED OR OTHERWISE DISPOSED OF WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii) AN OPINION OF COUNSEL (SUCH COUNSEL TO BE REASONABLY SATISFACTORY TO COMPANY) THAT SUCH REGISTRATION IS NOT REQUIRED, OR (iii) RECEIPT OF NO ACTION LETTERS FROM THE APPROPRIATE GOVERNMENTAL AUTHORITIES.”

Notwithstanding the foregoing, this Section 2(e) shall not apply to the Warrant Securities, and any securities issued in respect thereof or exchange therefor, if (i) a registration statement related thereto is effective as of the date of the issuance or Transfer (as defined below) of such Warrant Securities and any securities issued in respect thereof or exchange therefor or (ii) such Warrant Securities, and any securities issued in respect thereof or exchange therefor, are sold, assigned, transferred, pledged, hypothecated, or otherwise disposed pursuant to Rule 144 under the Securities Act.

(e) Accredited Investor . Warrant Holder is an accredited investor as defined in Rule 501 (a) of Regulation D promulgated under the Securities Act.

SECTION 3. Warrant Certificate . Each certificate evidencing the Warrants (each, a “Warrant Certificate” ) to be delivered pursuant to this Agreement shall be in registered form only and shall be substantially in the form set forth in Annex 1 attached hereto. Company shall deliver to Warrant Holder on the date hereof a Warrant Certificate representing all vested Warrants, and upon the vesting of any Warrants that were not vested on the date hereof, Company shall deliver a Warrant Certificate evidencing such vested Warrants. The Company shall deliver on the date hereof a Warrant Certificate for 469,074 Warrants to BISON CAPITAL EQUITY PARTNERS II-A, L.P., and 6,611,289 Warrants to BISON CAPITAL EQUITY PARTNERS II-B, L.P.

SECTION 4. Registration . Company shall number and register each Warrant Certificate in a register as it is issued.

 

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SECTION 5. Registration of Transfers and Exchange .

(a) Transfer . Prior to any Transfer (as defined below) or attempted Transfer of the Warrants, unless the Transfer is made pursuant to Rule 144 under the Securities Act or an effective registration statement under the Securities Act, the holder of the Warrants shall obtain from counsel to such Warrant Holder (who may be an employee of such Warrant Holder), an opinion that the proposed transfer of such Warrants may be effected without registration under the Securities Act; provided , however, that an opinion from counsel shall not be required in connection with any Transfer of the Warrants to an Affiliate of such Warrant Holder. Each Warrant Certificate issued upon such transfer shall bear the restrictive legends set forth on the Warrant Certificate, unless, with respect to the first such legend, (i) the Transfer is made pursuant to Rule 144 under the Securities Act or pursuant to an effective registration statement under the Securities Act, or (ii) in the opinion of any such counsel such legend is not required in order to ensure compliance with the Securities Act. As used herein, Transfer means sell, assign, transfer, pledge, hypothecate, mortgage, encumber, dispose by gift or bequest, or otherwise transfer or dispose. Notwithstanding anything to the contrary herein, Warrant Holder may Transfer any Warrants in connection with a Disposition Transaction (as defined in Section 10(j) ) without any requirement to exercise such Warrants.

(b) Registration of Transfer . Subject to Section 5(a) , Company shall from time to time register the transfer of each Warrant Certificate in a warrant register to be maintained by Company upon surrender of such Warrant Certificate accompanied by a written instrument or instruments of transfer in a form reasonably satisfactory to Company, duly executed by the registered holder or holders thereof or by the duly appointed legal representative thereof or by a duly authorized attorney. Upon any such registration of transfer, a new Warrant Certificate shall be issued to the transferee(s), and the old Warrant Certificate shall be (i) surrendered by the holder thereof, and (ii) canceled and disposed of by Company. A Warrant Certificate may be exchanged at the option of Warrant Holder, when surrendered to Company at its office, for another warrant certificate or other warrant certificates of like tenor and representing in the aggregate a like number of Warrant Securities. Any Warrant Certificate surrendered for exchange shall be canceled and disposed of by Company.

SECTION 6. Vesting; Exercise of Warrants .

(a) Grant; Vesting . All of the Warrants are granted as of the date hereof, and shall be subject to vesting as follows:

(i) sixty-percent (60%) of the Warrants (4,248,218 of the Warrants) are vested as of the date hereof; and

(ii) forty-percent (40%) of the Warrants (2,832,145 of the Warrants) shall vest in thirty-six (36) equal monthly installments on the first day of each month commencing on April 1, 2008 (such 36-month period, the Vesting Period ), subject to the following terms:

(A) if Warrant Holder receives evidence reasonably satisfactory to Warrant Holder that (1) Consolidated Adjusted EBITDA (as defined in the Purchase

 

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Agreement) for any trailing twelve (12) month period during the Vesting Period is at least twenty-million dollars ($20,000,000) and (2) the Consolidated Leverage Ratio (as defined in the Purchase Agreement) at all times during such period is less than three-and-one-half (3.5) (the conditions in the foregoing clauses (1) and (2) are referred to herein as the “Reset Conditions” ), then, as of the fifteenth day of the month immediately following the month in which such evidence is provided, any then-unvested Warrants shall cease vesting and be canceled; provided , that in order to demonstrate that the Reset Conditions have been satisfied, the entire trailing twelve (12) month period in question shall have been audited by Company’s independent public accountants (which audit opinion shall not include any “going concern”, internal control, material weakness or other qualification); and provided further, that, solely for purposes of determining whether the condition in the foregoing clause (1) has been met, any expense for operating leases of the Company or its Subsidiaries that would (but for this proviso) otherwise be taken into account in determining Consolidated Adjusted EBITDA, may instead be treated as debt relating to a capital lease. The foregoing sentence shall in no way affect the definition of Consolidated Adjusted EBITDA as otherwise used herein (including, without limitation, Section 10 ) or in any other Transaction Document.

(B) if Company pays off any portion of the principal amount of the Note (as defined in the Purchase Agreement) during the Vesting Period and no Default or Event of Default (as such terms are defined in the Purchase Agreement) is then existing, then the number of then-unvested Warrants shall be reduced by a percentage equal to the quotient resulting from (1) the amount of principal under the Note that is paid off by Company divided by (2) twenty million dollars ($20,000,000); provided , however , that this paragraph shall not apply to any payment of the principal amount of the Note that is made within 120 days prior to a Change of Control (as defined in the Purchase Agreement). Solely for purposes of illustration, if two (2) years following the date hereof, Company repays five million dollars ($5,000,000) of the principal amount under the Note (and no Change of Control follows 120 days from the date of such payment), then for the remaining twelve (12) month period of the Vesting Period, only seventy-five percent (75%) of the unvested Warrants at that time shall be subject to further vesting, and the other twenty-percent (25%) shall be canceled.

(C) If (i) there is a Change of Control, (ii) an Event of Default (as defined in the Purchase Agreement) has occurred and remains uncured for more than the applicable cure period in the Purchase Agreement), or (iii) the Note is accelerated for any reason, then all unvested Warrants shall immediately become vested.

(b) Exercise Period, Exercise Price; Net Exercise . Subject to the terms of this Agreement, Warrant Holder shall have the right, which may be exercised commencing on the date hereof and until 5:00 p.m., Los Angeles time, on the last to occur of (i) the first anniversary following the payment in full of all amounts due under the Note or (ii) the seventh anniversary of the date hereof (the period from the date hereof until such later date, the Exercise Period ), to receive from Company the number of fully paid and nonassessable Warrant Securities which Warrant Holder may at the time be entitled to receive upon exercise of the Warrants and payment to Company of the Exercise Price (as defined below) then in effect for such Warrant Securities; provided, however, that the Exercise Period shall be extended by the number of days during which any Event of Default existed. In the alternative, the Warrant Holder may exercise its right, during the Exercise Period, to receive Warrant Securities on a net basis, such that, without

 

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the exchange of any funds, such Warrant Holder receives that number of Warrant Securities otherwise issuable (or payable) upon exercise of its Warrants less that number of Warrant Securities, having a Current Market Price (as defined in Section 10(g)(l) ) one Business Day (as defined in the Purchase Agreement) prior to the time of exercise, that is equal to the Aggregate Exercise Price (as defined below) that would otherwise have been paid by such Warrant Holder. Aggregate Exercise Price means, with respect to the exercise of any Warrants, the Exercise Price (as defined below) multiplied by the number of shares of Warrant Securities being acquired through the exercise of such Warrants. If not exercised by the end of the Exercise Period, then any un-exercised Warrants shall become void and all rights thereunder and all rights in respect thereof under this Agreement shall cease as of such time; provided , however , that if the Exercise Price is less than the Current Market Price per share of Common Stock at the end of the Exercise Period, then any un-exercised Warrants shall be automatically exercised on a net basis without any further action on the part of Warrant Holder immediately prior to the end of the Exercise Period.

(c) Procedure . The Warrants may be exercised upon written notice of surrender to Company at its office designated for such purpose (the address of which is set forth in Section 16 hereof), which notice shall include the certificate or certificates evidencing the Warrants to be exercised, the form of election to purchase duly filled in and signed, and payment to Company of the Aggregate Exercise Price. Payment of the Aggregate Exercise Price shall be made, at Warrant Holder’s option (i) in cash in immediately available funds or by certified or official bank check payable to the order of Company, (ii) on a net exercise basis as provided herein, or (iii) by assigning to Company all or any part of the unpaid principal amount of the Note held by the applicable Warrant Holder in a principal amount equal to the Aggregate Exercise Price. If, pursuant to clause (iii) above, less than the entire unpaid principal amount of the Note is applied toward payment of the Aggregate Exercise Price, then Warrant Holder shall surrender the Note and Company shall (A) pay to Warrant Holder the amount of unpaid interest accrued to the date of surrender on the portion of the principal amount of the Note which has been applied toward the Aggregate Exercise Price, such payment to be in the form of a certified or official bank check or checks, and (B) issue a new Note (dated the date of the Note being surrendered) representing the balance of the unpaid principal amount of the Note so surrendered plus any accrued but unpaid interest thereon, payable to Warrant Holder or as Warrant Holder may otherwise direct (unless the Note provides for a different form of payment at such time, in which case Warrant Holder shall receive such form of payment).

(d) Delivery of Warrant Securities . Upon receipt of such written notice of surrender of any Warrants and payment of the Aggregate Exercise Price therefor (or simply upon receipt of such written notice of surrender of such Warrants alone if Warrant Holder exercises such Warrants on a net exercise basis as provided herein), Company shall issue and cause to be delivered within five (5) Business Days to or upon the written order of Warrant Holder and in such name or names as Warrant Holder may designate, a certificate or certificates for the number of full Warrant Securities issuable upon the exercise of such Warrants (the date on which the Warrant Securities are to be delivered, the Warrant Securities Delivery Date ). Subject to Section 5(a), 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 Securities as of the date of the surrender of such Warrants and payment of the Aggregate Exercise Price therefor (or simply upon receipt of such written notice of surrender of such Warrants alone if Warrant Holder exercises such Warrants on a net exercise basis as provided herein).

 

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(e) Partial Exercise . The Warrants shall be exercisable, at the election of Warrant Holder, either in full or from time to time in part and, in the event that a certificate evidencing the Warrants is exercised in respect of fewer than all of the Warrant Securities issuable on such exercise at any time prior to the date of expiration of such Warrants, a new warrant certificate evidencing the right to receive the remaining Warrant Securities will be issued and delivered pursuant to the provisions of this Section.

(f) Conditional Exercise . The Warrants shall also be conditionally exercisable, at the election of Warrant Holder, so that if Warrant Holder exercises the Warrants in contemplation of the consummation of a transaction described in any of clauses (i)—(vi) of Section 12(b) and such transaction is not consummated, Warrant Holder may elect to revoke such exercise, in which case, such Warrant shall be deemed not to have been so exercised.

(g) Surrender . Any Warrant Certificate surrendered upon exercise of a Warrant shall be canceled and disposed of by Company. Company shall keep copies of this Agreement and any notices given or received hereunder available for inspection by Warrant Holder during normal business hours at Company’s principal office.

(h) Fractional Shares . No fractional shares or scrip representing fractional shares shall be issued upon the exercise of a Warrant, but in lieu of such fractional shares Company shall make a cash payment therefor on the basis of the Current Market Price then in effect.

(i) Buy-In . If Company fails to transmit to Warrant Holder a certificate or certificates representing the Warrant Securities by the Warrant Securities Delivery Date, then Warrant Holder will have the right to rescind such exercise. In addition to any other rights available to Warrant Holder, if the Common Stock is then registered under the Exchange Act and Company fails to transmit to Warrant Holder one (1) or more certificates representing the Warrant Securities pursuant to an exercise on or before the Warrant Securities Delivery Date, and if after such date Warrant Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by Warrant Holder of the Warrant Securities which Warrant Holder in good faith anticipated receiving upon such exercise (a Buy-In ), then Company shall (A) pay in cash to Warrant Holder the amount by which (1) Warrant Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (2) the amount equal to (x) the number of Warrant Securities that Company was required to deliver to the Holder in connection with the exercise at issue multiplied by (y) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of Warrant Holder, either reinstate the portion of the Warrants and equivalent number of Warrant Securities for which such exercise was not honored or deliver to Warrant Holder the number of shares of Common Stock that would have been issued had Company timely complied with its exercise and delivery obligations hereunder. For example, if Warrant Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In as a result of an attempted exercise of Warrants with an Aggregate Exercise Price of $10,000 (in which exercise Company failed to deliver the Warrant Securities

 

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by the Warrant Securities Deliver Date), then Company shall be required to pay Warrant Holder $1,000. Warrant Holder shall provide Company written notice indicating the amounts payable to Warrant Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by Company. Nothing herein shall limit a Warrant Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of Warrants as required pursuant to the terms hereof.

SECTION 7. Payment of Taxes . Company shall pay all documentary stamp taxes attributable to the initial issuance of Warrant Securities upon the exercise of any Warrants; provided , however , that Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issuance of any Warrant Certificate or any certificates for Warrant Securities in a name other than that of the registered holder of the Warrant Certificate surrendered upon the exercise of such Warrants, and Company shall not be required to issue or deliver such Warrant Certificate unless or until the person or persons requesting the issuance thereof has paid to Company the amount of such tax or has established to the reasonable satisfaction of Company that such tax has been paid.

SECTION 8. Mutilated or Missing Warrant Certificates . In case a Warrant Certificate (or any other warrant certificate evidencing the Warrants) is mutilated, lost, stolen or destroyed, Company shall within five (5) days after request by the re


 
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