THIS WARRANT
AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISES OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF EFFECTIVE REGISTRATION
STATEMENTS UNDER SUCH SECURITIES ACT AND LAWS OR AN OPINION OF
COUNSEL REASONABLY ACCEPTABLE TO THE ISSUER OF THIS WARRANT THAT
SUCH REGISTRATION IS NOT REQUIRED.
COMMON STOCK PURCHASE
WARRANT
NATIONSHEALTH,
INC. , a Delaware corporation (the “ Company
”), hereby agrees that COMVEST NATIONSHEALTH HOLDINGS,
LLC , a Delaware limited liability company (the “
Holder ”), for value received, is entitled, subject to
the provisions of this Common Stock Purchase Warrant (this “
Warrant ”), to purchase from the Company, in whole or
in part, One Million (1,000,000) fully paid and non-assessable
shares of the Company’s common stock, $0.0001 par value per
share (“ Common Stock ”), at the Exercise Price
set forth below.
1.
Certain Definitions . When used herein, the following
terms shall have the following meanings:
(a) “
Affiliate ” means, as to any Person, any other Person
that, directly or indirectly, controls, or is controlled by, or is
under common control with, such Person. For this purpose,
“control” (including, with its correlative meanings,
“controlled by” and “under common control
with”) shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of management or
policies of a Person, whether through the ownership of securities
or partnership or other ownership interests, by contract or
otherwise.
(b) “
Effective Date ” means fifteen (15) days after
the date that the Merger Agreement is terminated pursuant to
(i) Section 7.1(c)(i) or Section 7.1(c)(iii) of the
Merger Agreement and the Company’s breach triggering such
termination shall have been willful or
(ii) Section 7.1(b)(iii), Section 7.1(c)(ii), or
Section 7.1(d)(iii) of the Merger Agreement.
(c) “
Exercise Notice ” means a notice of exercise of all or
any portion of this Warrant, in the form attached hereto as
Exhibit A .
(d) “
Exercise Price ” means $0.01 per share of Common
Stock, as adjusted as provided herein.
(e) “
Expiration Date ” means the earliest to occur of the
following: (i) the exercise of all of the rights represented
by this Warrant, (ii) the ten (10) year anniversary of
the Effective Date, or (iii) the Effective Time (as defined in
the Merger Agreement).
(f) “
Merger Agreement ” means that certain Agreement and
Plan of Merger dated April 30, 2009, by and among Holder,
NationsHealth Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of the Holder, and the Company.
(g) “
Person ” means and includes an individual, limited
liability company, partnership, corporation, trust, joint venture,
incorporated organization and a government or any department or
agency thereof.
(h) “
Securities Act ” means the Securities Act of 1933, as
amended.
(i) “
Warrant Shares ” means the shares of Common Stock
issuable to the Holder upon any exercise of this
Warrant.
2.
Warrant Exercise; Issuance of Stock Certificates . This
Warrant may be exercised by the Holder, in whole or in part, at any
time on or after the Effective Date until and including the
Expiration Date, as follows:
(a) This Warrant
may be exercised in whole, or in part, by the Holder by delivery of
an Exercise Notice and, promptly thereafter, surrender of this
Warrant (properly endorsed if required), each at the office of the
Company (or such other office or agency of the Company as it may
designate by notice in writing to the Holder at the address set
forth in Section 11 hereof), and payment by the Holder of the
aggregate Exercise Price for the Warrant Shares to be purchased.
Upon such surrender and payment, the Holder shall be entitled to
receive a certificate or certificates representing the Warrant
Shares so purchased. The Company agrees that the Warrant Shares so
purchased shall be deemed to be issued to the Holder as the record
owner of such Warrant Shares as of the close of business on the
date on which this Warrant shall have been surrendered for such
Warrant Shares and payment made for such Warrant Shares as
aforesaid. As promptly as practicable on or after such date, and in
any event within five (5) days thereafter, the Company shall,
at its expense, issue and deliver to the person or persons entitled
to receive the same (i) a certificate or certificates for the
Warrant Shares; (ii) in the event that this Warrant is
exercised in part, a new Warrant of like tenor representing the
portion of the shares of Common Stock, with respect to which this
Warrant will not then have been exercised and exercisable for the
number of shares for which this Warrant may then be exercised; and
(iii) an amount in cash in lieu of any fractional shares as
provided in Section 5 hereof.
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(b)
Notwithstanding anything contained herein to the contrary, the
Holder may, at its election exercised in its sole discretion,
exercise this Warrant in whole or in part and, in lieu of making
the cash payment otherwise contemplated to be made to the Company
upon such exercise in payment of the Exercise Price, elect instead
to receive upon such exercise a certificate or certificates
representing the number of Warrant Shares (up to the total number
of Warrant Shares which are subject to this Warrant) multiplied by
a fraction, the numerator of which shall be the difference between
the then fair market value of one share of the Common Stock and the
Exercise Price, and the denominator of which shall be the then fair
market value of one share of the Common Stock (a “
Cashless Exercise ”).
(c) For purposes
of the calculation set forth in Section 2(b) above, fair market
value of one share of Common Stock shall be determined by the
Company’s Board of Directors in good faith; provided,
however, that where there exists a public market for the
Company’s Common Stock at the time of such exercise, the fair
market value per share shall be the average of the closing bid and
asked prices of the Common Stock quoted in the Over-The-Counter
Market Summary or the last reported sale price of the Common Stock
or the closing price quoted on the Nasdaq National Market or on any
exchange on which the Common Stock is listed, whichever is
applicable, as published in the Western Edition of The Wall Street
Journal over a five (5) day period ending with the third
business day before the date of determination of fair market value.
Notwithstanding the foregoing, in the event the Warrant is
exercised in connection with the Company’s initial public
offering of Common Stock, the fair market value per share shall be
the per share offering price to the public of the Company’s
initial public offering.
(d) In the event
that the Holder does not exercise this Warrant prior to the
Expiration Date, to the extent that this Warrant is then
exercisable and such exercise would result in the issuance of
shares of Common Stock to the Holder, this Warrant shall be deemed
automatically exercised for all purposes hereof through a Cashless
Exercise as described in Section 2(b) hereof immediately prior to
the time at which it would otherwise expire.
3.
Affirmative Covenants . The Company covenants and agrees
that the Warrant Shares will, upon exercise of this Warrant and
issuance of the Warrant Shares in accordance herewith, be duly
authorized, validly issued, fully paid and nonassessable, free from
all liens and charges with respect to the issuance thereof, and
will not be subject to preemptive rights other than pursuant to the
Preferred Stock Investment Documents. The Company further covenants
and agrees that during the period within which the rights
represented by this Warrant may be exercised, the Company will use
its best efforts to at all times have authorized and reserved a
sufficient number of Common Stock to provide for the exercise of
the rights represented by this Warrant, and, from time to time,
will take all steps necessary to amend its Second Restated
Certificate of Incorporation (as may be amended or restated from
time to time, the “ Certificate ”) to provide
sufficient reserves of shares of its capital stock for the Warrant
Shares. The Company agrees that its issuance of this Warrant shall
constitute full authority to its officers who are charged with the
duty of executing stock certificates to execute and issue the
necessary certificates for the Warrant Shares.
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4.
Adjustments of Exercise Price and Warrant Shares
.
(a) If at any time
prior to the Expiration Date the Company shall (i) pay a
dividend or make a distribution on its Common Stock in shares of
its capital stock of any class, (ii) subdivide its outstanding
shares of Common Stock into a greater number of shares,
(iii) combine its outstanding shares of Common Stock into a
smaller number of shares, or (iv) reclassify, reorganize or
effect any similar transaction with respect to any of its shares of
Common Stock, or in substitution or exchange therefor (other than a
transaction referred to in Section 4(b)), then thereafter the
number of Warrant Shares (or other class of capital stock, if
applicable) shall be automatically increased or decreased, as the
case may be, in direct proportion to the increase or decrease in
the number of shares of Common Stock (or other class of capital
stock, if applicable) by reason of such action, and the Exercise
Price after such action shall, in case of an increase in the number
of shares, be proportionately decreased and, in case of a decrease
in the number of shares, be proportionately increased so that the
aggregate Exercise Price of this Warrant shall be
unchanged.
(b) If at any time
prior to the Expiration Date, the Company is a party to (1) a
share exchange or merger of the Company with and into another
company (other than the transaction contemplated by the Merger
Agreement) (a “ Merger ”), (2) any
agreement providing for the sale of substantially all of the
Company’s assets (an “ Asset Sale ”), or
(3) a “ Stock Sale ”, which means any
transaction or series of transactions (related or unrelated) which
result in the person or persons currently owning the shares of
Common Stock of the Company no longer owning, immediately after
such transaction or series of transactions, in excess of fifty
percent (50%) of the issued and outstanding shares of Common Stock
of the Company, other than pursuant to a conversion of the
outstanding obligations under the Bridge Loan into shares of
Preferred Stock pursuant to the Bridge Loan Documents (any Merger,
Asset Sale or Stock Sale shall be considered a “ Sale of
the Company ”), this Warrant shall pertain and apply to
the Warrant Shares or other securities and/or property to which the
Holder would have otherwise been entitled had this Warrant been
exerc
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