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WARRANT TO PURCHASE COMMON STOCK of NationsHealth, Inc.

Warrant Agreement

WARRANT TO PURCHASE COMMON STOCK of NationsHealth, Inc. | Document Parties: NATIONSHEALTH, INC. | MHR Advisors LLC You are currently viewing:
This Warrant Agreement involves

NATIONSHEALTH, INC. | MHR Advisors LLC

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Title: WARRANT TO PURCHASE COMMON STOCK of NationsHealth, Inc.
Governing Law: New York     Date: 5/5/2009
Industry: Medical Equipment and Supplies     Sector: Healthcare

WARRANT TO PURCHASE COMMON STOCK of NationsHealth, Inc., Parties: nationshealth  inc. , mhr advisors llc
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Exhibit 4.18

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE. PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE WARRANT UNDER SUCH ACT AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

 

 

 

No. WB — 2

 

Warrant to Purchase 684,722 Shares of
Common Stock (subject to adjustment)

 

 

 

 

 

Warrant Issue Date: April 30, 2009

WARRANT TO PURCHASE COMMON STOCK
of
NationsHealth, Inc.
Void after April 30, 2019

     This certifies that, for value received, MHR Capital Partners (100) LP, a Delaware limited partnership, or registered assigns (“ Holder ”) is entitled, subject to the terms set forth below, to purchase from NationsHealth, Inc. (the “ Company ”), a Delaware corporation, 684,722 shares of the Common Stock of the Company, as constituted on the “Warrant Exercisability Date” (as defined below), upon surrender hereof, at the principal office of the Company referred to below, with the subscription form attached hereto duly executed, and simultaneous payment therefor in lawful money of the United States or otherwise as hereinafter provided, at the Exercise Price as set forth in Section 2 below. The number, character and Exercise Price of such shares of Common Stock are subject to adjustment as provided below. The term “ Warrant ” as used herein shall include this Warrant, which is one of a series of warrants issued for the Common Stock of the Company (collectively, the “ Note Warrants ”, and any warrants delivered in substitution or exchange therefor as provided herein. Capitalized terms used but not otherwise defined herein shall have the meaning set forth in the Limited Waiver and Consent to the 7 3 / 4 % Convertible Secured Notes, dated April 30, 2009, by and among the Company, NationsHealth Holdings, L.L.C., a Florida limited liability company and a wholly-owned subsidiary of the Company, United States Pharmaceutical Group, L.L.C., a Delaware limited liability company and an indirect wholly-owned subsidiary of the Company, Diabetes Care & Education, Inc., a South Carolina corporation, National Pharmaceuticals and Medical Products (USA) LLC, a Florida limited liability company, MHR Capital Partners Master Account LP (as assignee of MHR Capital Partners (500) LP (f/k/a MHR Capital Partners LP), OTQ LLC, MHR Capital Partners (100) LP and MHR Capital Partners (500) LP, as collateral agent.

     1.  Term of Warrant . Subject to the terms and conditions set forth herein, this Warrant shall become exercisable, in whole or in part, in the event that (i) the Agreement of Merger, dated as of April 30, 2009, by and among ComVest NationsHealth Holdings, LLC, NationsHealth Acquisition Corp. and the Company (the “ Merger Agreement ”) is terminated, (ii)

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the Issuers do not pay all of the outstanding principal and accrued and unpaid interest that become due under the Bridge Loan on or before the Maturity Date or the applicable due date and (iii) Parent shall have exercised its option to convert the outstanding obligations under the Bridge Loan into shares of Series A-1 Preferred Stock pursuant to the terms of the Merger Agreement (the “ Warrant Exercisability Date ”), and shall remain exercisable until 5:00 p.m. Eastern time on the tenth (10 th ) anniversary of the Warrant Exercisability Date, and shall be void thereafter; provided however, this Warrant shall be deemed null and void, and of no further force and effect on the Effective Time (as such term is defined in the Merger Agreement).

     2.  Exercise Price . The Exercise Price at which this Warrant may be exercised shall be $0.05 per share of Common Stock, as adjusted from time to time pursuant to Section 11 hereof.

     3.  Exercise of Warrant .

          (a) The purchase rights represented by this Warrant are exercisable by the Holder in whole or in part, at any time, or from time to time, during the term hereof as described in Section 1 above, by the surrender of this Warrant and the Notice of Exercise annexed hereto duly completed and executed on behalf of the Holder, 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 of the Holder appearing on the books of the Company), upon payment (i) in cash or by check acceptable to the, Company, (ii) by cancellation by the Holder of indebtedness or other obligations of the Company to the Holder, or (iii) by a combination of (i) and (ii), of the purchase price of the shares to be purchased.

          (b) This Warrant shall be deemed to have been exercised immediately prior to the close of business on the date of its surrender for exercise as provided above, and the person entitled to receive the shares of Common Stock issuable upon such exercise shall be treated for all purposes as the holder of record of such shares as of the close of business on such date. 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 number of shares issuable upon such exercise; (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 4 hereof.

          (c) Net Issue Exercise . Notwithstanding any provisions herein to the contrary, if the fair market value of one share of Common Stock is greater than the Exercise Price (at the date of calculation as set forth below), in lieu of exercising this Warrant for cash, the Holder may elect to receive shares equal to the value (as determined below) of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with the properly endorsed Notice of Exercise and notice of such election in which event the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula (and the Holder shall receive the rights and benefits of a record holder of such shares of Common Stock as described in Section 3(b) hereof):

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X =

 

Y (A – B)

 

 

 

 

 

 

 

 

 

A

 

 

 

 

X  = 

 

the number of shares of Common Stock to be issued to the Holder

 

 

Y  = 

 

the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being canceled (at the date of such calculation)

 

 

A  = 

 

the fair market value of one share of the Company’s Common Stock (at the date of such calculation)

 

 

B  = 

 

Exercise Price (as adjusted to the date of such calculation)

For purposes of the above calculation, 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) Automatic Exercise . In the event that the Holder does not exercise this Warrant prior to the tenth anniversary of the Warrant Issue 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 (including for purposes of Section 3(b) hereof) through a Net Issue Exercise as described in Section 3(c) hereof immediately prior to the time at which it would otherwise expire.

          (e) Company to Reaffirm Obligations . The Company will, at the time of each exercise of this Warrant, upon the request of the Holder, acknowledge in writing its continuing obligation to afford to the Holder all rights to which such Holder shall continue to be entitled after such exercise in accordance with the terms of this Warrant, provided that if the Holder shall fail to make any such request, such failure shall not affect the continuing obligation of the Company to afford such rights to the Holder.

     4.  No Fractional Shares or Scrip . No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. In lieu of any fractional share to which the Holder would otherwise be entitled, the Company shall make a cash payment equal to the Exercise Price multiplied by such fraction.

     5.  Replacement of Warrant . On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant or any stock certificate

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issuable upon exercise of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and substance to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant or stock certificate, the Company at its expense shall execute and deliver, in lieu of this Warrant or stock certificate, a new warrant or stock certificate of like tenor and amount.

     6.  Rights of Stockholders to Receive Information; Other Investor Rights . So long as any of the Warrants remain outstanding, the Company shall cause copies of all quarterly and annual financial reports, information, documents, notices sent or made available by the Company to any of its stockholders, all regular and periodic reports, registration statements, and prospectuses filed by the Company with any securities exchanges or with the U.S. Securities and Exchange Commission (the “ SEC ”), and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) that the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act in effect on the Warrant Issue Date (“ SEC Reports ”), to be mailed or made available, as the case may be, to the Holders promptly upon their becoming available and at the request of the Holder. The Company shall make all such information available to investors, securities analysts and broker dealers who request it in writing.

          At such time as the Company is not subject to the requirements of Section 13 or Section 15(d) of the Exchange Act, the Company shall enter into such agreements with the Holders as would provide the Holders with rights and benefits substantially similar to those provided under Article 4 (Tag-Along) of the Preferred Right of First Refusal and Co-Sale Agreement, entered into as of April 30, 2009, and Article 2 (Preemptive Rights) of the Preferred Stock Investor Rights Agreement, entered into as of April 30, 2009, as well as annual and monthly financial statements and other operating reports and information of the Company on such terms and conditions as such information is provided by the Company to any stockholder.

     7.  Transfer of Warrant .

          (a) Warrant Register . The Company will maintain a register (the “ Warrant Register ”) containing the names and addresses of the Holder or Holders. Any Holder of this Warrant or any portion thereof may change his or her address as shown on the Warrant Register by written notice to the Company requesting such change. Any notice or written communication required or permitted to be given to the Holder may be delivered or given by mail to such Holder as shown on the Warrant Register and at the address shown on the Warrant Register. Until this Warrant is transferred on the Warrant Register of the Company, the Company may treat the Holder as shown on the Warrant Register as the absolute owner of this Warrant for all purposes, notwithstanding any notice to the contrary.

          (b) Closing of Books . The Company will at no time close its transfer books in any manner which interferes with the timely exercise of the rights represented by this Warrant.

          (c) Transferability and Nonnegotiability of Warrant . This Warrant may not be transferred or assigned in whole or in part without compliance with all applicable federal and state securities laws by the transferor and the transferee (including the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, if such are

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requested by the Company). Subject to the provisions of this Warrant with respect to compliance with the Securities Act of 1933, as amended (the “ Act ”), title to this Warrant may be transferred by endorsement (by the Holder executing the Assignment Form annexed hereto) and delivery in the same manner as a negotiable instrument transferable by endorsement and delivery.

          (d) Exchange of Warrant Upon a Transfer . On surrender of this Warrant for exchange, properly endorsed on the Assignment Form and subject to the provisions of this Warrant with respect to compliance with the Act and with the limitations on assignments and transfers contained in this Section 7, the Company at its expense shall issue to or on the order of the Holder a new warrant or warrants of like tenor, in the name of the Holder or as the Holder may direct, for the number of shares issuable upon exercise hereof.

          (e) Issue Tax . The issuance of certificates for shares of Common Stock upon the total or partial exercise of this Warrant shall be made without charge to the Holder for any issuance tax in respect thereof (not including any income or capital tax).

          (f) Compliance with Securities Laws . The Holder of this Warrant, by acceptance hereof acknowledges that this Warrant and the shares of Common Stock or Common Stock to be issued upon exercise hereof or conversion thereof are being acquired solely for the Holder’s own account and not as a nominee for any other party, and for investment, and that the Holder will not offer, sell or otherwise dispose of this Warrant or any shares of Common Stock or Common Stock to be issued upon exercise hereof or conversion thereof except under circumstances that will not result in a violation of the Act or any state securities laws.

     8.  Reservation of Stock . The Company covenants that during the term this Warrant is exercisable, the Company will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock upon the exercise of this Warrant and, from time to time, will take all steps necessary to amend its Certificate of Incorporation (the “ Certificate ”) to provide sufficient reserves of shares of Common Stock issuable upon exercise of the Warrant. The Company further covenants that all shares that may be issued upon the exercise of rights represented by this Warrant and payment of the Exercise Price, all as set forth herein, will be free from all liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously or otherwise specified herein) and will not be subject to any preempti


 
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