WARRANT AGREEMENT
November 7, 1997
COMVEST PARTNERS, INC.
0000 Xxxxxxx Xxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Ladies and Gentlemen:
HORIZON Pharmacies, Inc., a Texas corporation (the "Company"), agrees to
issue and sell to you (the "Warrant Holder") warrants (the "Warrants") to
purchase the number of shares of common stock, $0.01 par value per share (the
"Common Stock"), of the Company set forth herein, subject to the terms and
conditions contained herein.
1. ISSUANCE OF WARRANTS; EXERCISE PRICE. The Warrants, which shall be
in the form attached hereto as Exhibit A, shall be issued to the Warrant
Holder concurrently with the execution hereof in consideration of the payment
by the Warrant Holder to the Company of the sum of $0.001 cash per share of
Common Stock subject to the Warrants, the receipt and sufficiency of which
are hereby acknowledged. The Warrant shall provide that the Warrant Holder
(or such other holder or holders of the Warrants to whom transfer is
authorized in accordance with the terms of this Agreement) shall have the
right to purchase an aggregate of 30,000 shares of Common Stock (the "Option
Shares") for an exercise price equal to $6.72 per share (the "Exercise
Price") or $201,600 in the aggregate (both the Option Shares and Exercise
Price give effect to a 3-for-2 split of the Common Stock which has a record
date of November 21, 1997). The number, character and Exercise Price of such
shares of Common Stock are subject to adjustment as hereinafter provided, and
the term "Common Stock" shall mean, unless the context otherwise requires,
the stock and other securities and property receivable upon exercise of the
Warrants. The term "Exercise Price" shall mean, unless the context otherwise
requires, the price per share of the Common Stock purchasable under the
Warrants as set forth in this Section 1, as adjusted from time to time
pursuant to Section 5. Upon exercise of the Warrants by the holder thereof,
the shares of Common Stock with respect to which the Warrants are exercised
will be validly issued, fully paid, and nonassessable, and good and
marketable title to such shares of Common Stock shall be delivered to such
holder free and clear of all liens, encumbrances, equities, claims or
preemptive or similar rights.
2. NOTICES OF RECORD DATE; ETC.. In the event of (i) any taking by
the Company of a record date with respect to the holders of any class of
securities of the Company for purposes of determining which of such holders
are entitled to dividends or other distributions (other than regular
quarterly dividends), or any right to subscribe for, purchase or otherwise
acquire shares of stock of any class or any other securities or property, or
to receive any other right, (ii) any capital reorganization of the Company,
or reclassification or recapitalization of capital stock of the Company or
any transfer in one or more related transactions of all or a majority of the
assets or revenue or income generating capacity of the Company to, or
consolidation or merger of the Company with or into, any other entity or
person, or (iii) any voluntary or involuntary dissolution or winding up of
the Company, then and in each such event the Company will mail or cause to be
mailed to the Warrant Holder a notice specifying, as the case may be, (A) the
date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and stating the amount and character of such
dividend, distribution or right; or (B) the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, conveyance, dissolution, liquidation or winding-up is to take place
and the time, if any is to be fixed, as of which the holders of record of
Common Stock (or any other class of stock or securities of the Company, or
another issuer pursuant to Section 5, receivable upon the exercise of the
Warrants) shall be entitled to exchange their shares of Common Stock (or such
other stock or securities) for securities or other property deliverable upon
such event. Any such notice shall be deposited in the United States mail,
postage prepaid, at least ten (10) days prior to the date therein specified,
and the holders(s) of the Warrant(s) may exercise the Warrant(s) and
participate in such event as a registered holder of Common Stock, upon
exercise of the Warrant(s) so held, within the ten (10) day period from the
date of mailing of such notice.
3. NO IMPAIRMENT. The Company shall not, by amendment of its
organizational documents or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities, or any other
action, avoid or seek to avoid the observance or performance of any of the
terms of this Agreement or of the Warrants, but will at all times in good
faith take any and all action as may be necessary in order to protect the
rights of the Warrant Holder against impairment. Without limiting the
generality of the foregoing, the Company (a) will at all times reserve and
keep available, solely for issuance and delivery upon exercise of the
Warrants, shares of Common Stock issuable from time to time upon exercise of
the Warrants, (b) will not increase the par value of any shares of stock
receivable upon exercise of the Warrants above the amount payable in respect
thereof upon such exercise, and (c) will take all such action as may be
necessary or appropriate in order that the Company may validly and legally
issue fully paid and non-assessable stock upon the exercise of the Warrants,
or any of them.
4. EXERCISE OF WARRANTS. At any time and from time to time on and
after the first anniversary of the date hereof and expiring on the fifth
anniversary of the effective date of this Agreement at 5:00 p.m., Dallas,
Texas time, the Warrants may be exercised as to all or any portion of the
whole number of shares of Common Stock covered by the Warrants by the Warrant
Holder by surrender of the Warrants, accompanied by a subscription for shares
to be purchased in the form attached hereto as Exhibit B and by a check
payable to the order of the Company in the amount required for purchase of
the shares as to which the Warrant is being exercised, delivered to the
Company at its principal office at 000 X. Xxxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxx
00000, Attention: President. Certificates for shares of Common Stock issuable
by reason of the exercise of the Warrant or Warrants shall be dated and shall
be effective as of the date of the surrendering of the Warrant for exercise,
notwithstanding any delays in the actual execution, issuance or delivery of
the certificates for the shares so purchased. In the event a Warrant or
Warrants is exercised as to less than the aggregate amount of all shares of
Common Stock issuable upon exercise of all Warrants held by the Warrant
Holder, the Company shall issue a new Warrant to the Warrant Holder so
exercised covering the aggregate number of shares of Common Stock as to which
Warrants remain unexercised.
5. PROTECTION AGAINST DILUTION. The Exercise Price for the shares of
Common Stock and number of shares of Common Stock issuable upon exercise of
the Warrants is subject to adjustment from time to time as follows:
(a) STOCK DIVIDENDS, SUBDIVISIONS, RECLASSIFICATIONS, ETC.. In
case at any time or from time to time after the date of execution of this
Agreement, the Company shall (i) take a record of the holders of Common Stock
for the purpose of entitling them to receive a dividend or a distribution on
shares of Common Stock payable in shares of Common Stock or other class of
securities; (ii) subdivide or reclassify its outstanding shares of Common
Stock into a greater number of shares; or (iii) combine or reclassify its
outstanding Common Stock into a smaller number of shares, then, and in each
such case, the Exercise Price in effect at the time of the record date for
such dividend or distribution or the effective date of such subdivision,
combination or reclassification shall be adjusted in such a manner that the
Exercise Price for the shares issuable upon exercise of the Warrants
immediately after such event shall bear the same ratio to the Exercise Price
in effect immediately prior to any such event as the total number of shares
of Common Stock outstanding immediately prior to such event shall bear to the
total number of shares of Common Stock outstanding immediately after such
event.
(b) ADJUSTMENT OF NUMBER OF SHARES PURCHASABLE. When any
adjustment is required to be made in the Exercise Price under this Section 5:
(i) the number of shares of Common Stock issuable upon exercise of the
Warrants shall be changed (upward to the nearest full share) to the number of
shares determined by dividing (x) an amount equal to the number of shares
issuable pursuant to the exercise of the Warrants immediately prior to the
adjustment, multiplied by the Exercise Price in effect immediately prior to
the adjustment, by (y) the Exercise Price in effect immediately after such
adjustment; and (ii) upon exercise of the Warrant, the Warrant Holder will be
entitled to receive the number of shares of other securities referred to in
Section 5(a) that such Warrant Holder would have received had the Warrant
been exercised prior to the events referred to in Section 5(a).
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(c) ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC.. In
case of any reorganization or consolidation of the Company with, or any
merger of the Company with or into, another entity (other than a
consolidation or merger in which the Company is the surviving corporation) or
in case of any sale or transfer to another entity of the majority of assets
of the Company, the entity resulting from such reorganization or
consolidation or surviving such merger or to which such sale or transfer
shall be made, as the case may be, shall make suitable provision (which shall
be fair and equitable to the Warrant Holder) and shall assume the obligations
of the Company hereunder (by written instrument executed and mailed to the
Warrant Holder) pursuant to which, upon exercise of the Warrants, at any time
after the consummation of such reorganization, consolidation, merger or
conveyance, the Warrant Holder shall be entitled to receive the stock or
other securities or property that the Warrant Holder would have been entitled
to upon consummation if such Warrant Holder had exercised the Warrants
immediately prior thereto, all subject to further adjustment as provided in
this Section 5.
(d) CERTIFICATE AS TO ADJUSTMENTS. In the event of adjustment as
herein provided in paragraphs of this Section 5, the Company shall promptly
mail to the Warrant Holder a certificate setting forth the Exercise Price and
number of shares of Common Stock issuable upon exercise after such adjustment
and setting forth a brief statement of facts requiring such adjustment. Such
certificate shall also set forth a brief statement of facts requiring such
adjustment. Such certificate shall also set forth the kind and amount of
stock or other securities or property into which the Warrants shall be
exercisable after any adjustment of the Exercise Price as provided in this
Agreement.
(e) MINIMUM ADJUSTMENT. Notwithstanding the foregoing, no
certificate as to adjustment of the Exercise Price hereunder shall be made if
such adjustment results in a change in the Exercise Price then in effect of
less than five cents ($0.05) and any adjustment of less than five cents
($0.05) of any Exercise Price shall be carried forward and shall be made at
the time of and together with any subsequent adjustment that, together with
the adjustment or adjustments so carried forward, amounts to five cents
($0.05) or more; provided however, that upon the exercise of a Warrant, the
Company shall have made all necessary adjustments (to the nearest cent) not
theretofore made to the Exercise Price up to and including the date upon
which such Warrant is exercised.
6. REGISTRATION RIGHTS. The Company agrees that if any time on or
after the first anniversary of the date hereof but before the fifth
anniversary of the date hereof the Company proposes to file a registration
statement under the Act covering a proposed sale of shares of Common Stock,
it shall give to the Warrant Holder notice of such proposed registration at
least 30 days prior to the filing of the registration statement and shall
afford the Warrant Holder who then proposed to sell or distribute publicly
any of the shares subject to the Warrants (including shares of Common Stock
acquired pursuant to the prior exercise of the Warrants) upon giving not less
than 10 days notice prior to such filing, the opportunity to have such shares
included in the securities registered under the registration statement. All
expenses, disbursements and fees (including, but without limitation, fees and
expenses of counsel, auditing fees, printing expenses, SEC filing fees and
expenses, but excluding any underwriting discounts or commissions) incurred
in connection with the registration by the Company of the sale of any shares
for the Warrant Holder under this Section 6 shall be borne by the Company.
7. STOCK EXCHANGE LISTING. In the event the Company's Common Stock
is listed on an national securities exchange at the time of exercise of a
Warrant, the Company will, at its expense, also list on such exchange, upon
exercise of the Warrant, all shares of Common Stock issuable pursuant to such
Warrant.
8. SUCCESSORS AND ASSIGNS; BINDING EFFECT. This Agreement shall be
binding upon and inure to the benefit of the Warrant Holder and the Company
and their respective successors and permitted assigns.
9. NOTICES. Any notice hereunder shall be given by registered or
certified mail, if to the Company, at its principal office referred to in
Section 4 and, if to the Warrant Holder, to its address shown in the Warrant
ledger of the Company, provided that the Warrant Holder may at any time on three
(3) days'
3
written notice to the Company designate or substitute another address where
notice is to be given. Notice shall be deemed given and received after a
certified or registered letter, properly addressed with postage prepaid, is
deposited in the U.S. mail.
10. SEVERABILITY. Every provision of this Agreement is intended to be
severable. If any term or provision hereof is illegal or invalid for any
reason whatsoever, such illegality or invalidity shall not affect the
remainder of this Agreement.
11. ASSIGNMENT; REPLACEMENT OF WARRANTS. If the Warrant or Warrants
are assigned, in whole or in part, the Warrants shall be surrendered at the
principal office of the Company, and thereupon, in the case of a partial
assignment, a new Warrant shall be issued to the Warrant Holder covering the
number of shares not assigned, and the assignee shall be entitled to receive
a new Warrant covering the number of shares so assigned. Upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft,
destruction, or mutilation of any Warrant and appropriate bond or
indemnification protection, the Company shall issue a new Warrant of like
tenor. The Warrants will not be transferred, sold, or otherwise hypothecated
by the Warrant Holder and the Warrants will be nontransferable, except to (i)
one or more persons, each of which on the date of transfer is an officer,
shareholder, or employee of the Warrant Holder; (ii) a partnership or
partnerships, the partners of which are the Warrant Holder and one or more
persons, each of whom on the date of transfer is an officer of the Warrant
Holder; (iii) a successor to the Warrant Holder in merger or consolidation;
(iv) a purchaser of all or substantially all of the Warrant Holder's assets;
or (v) a person that receives a Warrant upon death of the Warrant Holder
pursuant to will, trust, or the laws of intestate succession.
12. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Texas without giving effect to the
principles of choice of laws thereof.
13. DEFINITION. All references to the word "Warrant Holder", and to
"ComVest Partners, Inc." in this Agreement shall be deemed to apply with
equal effect to any persons or entities to whom Warrants have been
transferred in accordance with the terms hereof, and, where appropriate, to
any persons or entities holding shares of Common Stock issuable upon exercise
of Warrants.
14. HEADINGS. The headings herein are for purposes of reference only
and shall not limit or otherwise affect the meaning of any of the provisions
hereof.
Very truly yours,
HORIZON PHARMACIES, INC.
By:
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Xxxxx X. XxXxxx, President
Accepted as of the ____ day of November, 1997.
COMVEST PARTNERS, INC.
By:
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EXHIBIT "A"
WARRANT CERTIFICATE
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES
ISSUABLE UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO
(i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933,
(ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE
UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN
OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO THE
ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
No. W-11 30,000 Warrants
HORIZON PHARMACIES, INC.
COMMON STOCK PURCHASE WARRANT
THIS IS TO CERTIFY that ComVest Partners, Inc. (the "Warrant Holder") or
its assigns as permitted in that certain Warrant Agreement (the "Warrant
Agreement") dated November 7, 1997, by and between the Company (as hereinafter
defined) and the Warrant Holder is entitled to purchase at any time or from time
to time on or after November 7, 1998 until 5:00 p.m., Oklahoma City, Oklahoma
time on November 7, 2002, an aggregate of Thirty Thousand (30,000) shares of
Common Stock, par value $0.01 per share, of HORIZON Pharmacies, Inc., a Texas
corporation (the "Company"), for an exercise price per share as set forth in the
Warrant Agreement referred to herein. This Warrant is issued pursuant to the
Warrant Agreement, and all rights of the holder of this Warrant are further
governed by, and subject to the terms and provisions of such Warrant Agreement,
copies of which are available upon request to the Company. The holder of this
Warrant and the shares issuable upon the exercise hereof shall be entitled to
the benefits, rights and privileges and subject to the obligations, duties and
liabilities provided in the Warrant Agreement.
The issuance of this Warrant and the shares issuable upon the due and
timely exercise hereof have not been registered under the Securities Act of
1933, as amended (the "Act"), or any similar state securities law or act, and,
as such, no public offering of either this Warrant of any of the shares of
Common Stock issuable upon exercise of this Warrant may be made other than under
an exemption under the Act or until the effectiveness of a registration
statement under such Act covering such offering. Transfer of this Warrant is
restricted as provided in Section 11 of the Warrant Agreement.
Subject to the provisions of the Act, of the Warrant Agreement and of
this Warrant, this Warrant and all rights hereunder are transferable, in
whole or in part, only to the extent expressly permitted in such documents
and then only at the office of the Company at 000 X. Xxxxxxxxx Xxxxx,
Xxxxxxxxx, Xxxxx 00000, Attention: President, by the Warrant Holder or by a
duly authorized attorney-in-fact, upon surrender of this Warrant duly
endorsed, together with the Assignment hereof duly endorsed. Until transfer
hereof on the books of the Company, the Company may treat the registered
holder hereof as the owner hereof for all purposes.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
and its corporate seal to be hereunto affixed by its proper corporate
officers thereunto duly authorized.
HORIZON PHARMACIES, INC.
By:
-------------------------------
Xxxxx X. XxXxxx, President
(SEAL)
Attest:
---------------------------------
Sy S. Shahid, Secretary
EXHIBIT "B"
WARRANT EXERCISE FORM
The undersigned hereby irrevocably elects to exercise the right to
purchase such number of shares indicated below, of common stock, $.01 par
value ("Common Stock"), of HORIZON Pharmacies, Inc., pursuant to the terms of
the attached Warrant Certificate, at the Purchase Price of $6.72 per share.
The number of shares exercisable under such Warrant Certificate. The
undersigned requests that a certificate for such securities be registered in
the name of _______________________ whose address is _______________________,
and that such certificate be delivered to the undersigned at such address.
Accompanying this Warrant Exercise Form is a check in the amount of the
aggregate Purchase Price for the shares of Common Stock purchased hereby.
The number of shares as to which the Warrants are exercised: ____________.
Dated: WARRANT HOLDER:
--------------- ----------------------------------------
By:
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Name (Print):
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Title:
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(Signature must conform in all respects to name of
holder as specified on the face of the Warrant
Certificate.)
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(Social Security/Employer ID Number of Warrant Holder)
