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THIS WARRANT AND THE SHARES OF 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 LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD
OR OTHERWISE TRANSFERRED UNLESS SUCH OFFER, SALE OR TRANSFER IS REGISTERED OR
QUALIFIED PURSUANT TO THE REGISTRATION REQUIREMENTS OF SUCH ACT AND ANY
APPLICABLE STATE SECURITIES LAWS, OR IS PRECEDED BY AN OPINION OF COUNSEL
ADDRESSED TO HORIZON PHARMACIES, INC. THAT SUCH SALE OR OTHER TRANSFER IS EXEMPT
FROM ALL SUCH REGISTRATION REQUIREMENTS. THE EXERCISE OF THIS WARRANT, THIS
WARRANT, AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF ARE
SUBJECT TO THE TERMS AND PROVISIONS SPECIFIED IN THE CONSULTING AGREEMENT DATED
AS OF FEBRUARY 1, 2000, BY AND BETWEEN HORIZON PHARMACIES, INC. AND 5NET5 CORP.
No. WR-2002
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
HORIZON PHARMACIES, INC.
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TABLE OF CONTENTS
SECTION 1. EXERCISE OF WARRANT.............................................................................1
SECTION 2. RESERVATION.....................................................................................2
SECTION 3. PROTECTION AGAINST DILUTION.....................................................................2
Section 3.1 Stock Dividends, Subdivisions, and Combinations........................................2
Section 3.2 Issuance of Additional Shares of Common Stock..........................................3
Section 3.3 Issuance of Warrants or Other Rights, Convertible Securities...........................3
Section 3.4 Other Provisions Applicable to Adjustments.............................................4
Section 3.5 Extraordinary Dividends................................................................5
Section 3.6 Adjustment of Number of Shares Purchasable.............................................6
Section 3.7 Minimum Adjustment.....................................................................6
Section 3.8 Notice of Adjustments..................................................................6
SECTION 4. MERGERS, CONSOLIDATIONS, SALES..................................................................7
SECTION 5. DISSOLUTION OR LIQUIDATION......................................................................7
SECTION 6. NOTICE OF DIVIDENDS.............................................................................7
SECTION 7. FRACTIONAL SHARES...............................................................................8
SECTION 8. FULLY PAID STOCK; TAXES.........................................................................8
SECTION 9. CLOSING OF TRANSFER BOOKS.......................................................................8
SECTION 10. PARTIAL EXERCISE AND PARTIAL ASSIGNMENT.........................................................8
Section 10.1 Partial Exercise.......................................................................8
Section 10.2 Assignment.............................................................................8
SECTION 11. PIGGYBACK REGISTRATION RIGHTS...................................................................9
Section 11.1 Right to Piggyback.....................................................................9
Section 11.2 Priority on Registration...............................................................9
SECTION 12. DEFINITIONS....................................................................................10
SECTION 13. WARRANT HOLDER NOT SHAREHOLDER.................................................................12
SECTION 14. SEVERABILITY...................................................................................13
SECTION 15. GOVERNING LAW..................................................................................13
i
Warrant
No. WR-2002
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
HORIZON PHARMACIES, INC.
THIS IS TO CERTIFY that, for value received and subject to the provisions
hereinafter set forth,
5NET5 CORP.
or its permitted assigns,
is entitled to purchase from HORIZON Pharmacies, Inc., a Delaware corporation
("COMPANY"), at any time and from time to time during the Exercise Period, up to
300,000 shares of Common Stock, par value $0.01 per share, of Company, subject
to the terms, provisions and conditions hereinafter set forth at a price per
share equal to $2.63. The price per share is subject to adjustment as
hereinafter provided (such price, or such price as last adjusted, as the case
may be, being herein referred to as the "PER SHARE WARRANT PRICE"). The said
number of shares purchasable hereunder is likewise subject to adjustment as
hereinafter provided.
The aggregate price of the Common Stock purchasable hereunder shall at
all times be equal to the price per share set forth in the preceding paragraph
multiplied by the number of shares initially purchasable hereunder. The
aggregate price is herein sometimes referred to as the "Aggregate Warrant Price"
and is not subject to adjustment.
The terms which are capitalized herein shall have the meanings
specified in Section 12 unless the context shall otherwise require.
SECTION 1. EXERCISE OF WARRANT.
Subject to the conditions hereinafter set forth and to the condition
set forth in Paragraph 2A of the Consulting Agreement, dated as of February 1,
2000, by and between the Company and 5Net5 Corp., this Warrant may be exercised
in whole or in part at any time and from time to time during the Exercise Period
by the surrender of this Warrant (with the subscription from at the end hereof
duly executed) at the principal office of Company in Denison, Texas, and upon
payment to Company of a sum equal to the per share Warrant Price multiplied by
the number of shares purchased in such exercise, which payment shall be made by
the wire transfer or other delivery to Company of one or more types of Permitted
Consideration.
1
In the event that Warrants shall be delivered to Company as payment of
all or any portion of the purchase price payable hereunder ("Cashless
Exercise"), the amount of such purchase price deemed to be paid by means of such
delivery shall equal (a) the aggregate number of shares of Underlying Shares
related to that portion of the Warrants so delivered, multiplied by (b) the
result, not less than zero, equal to (i) the Current Market Price then in effect
as to which exercise is being effected (with the date of the exercise of the
Warrant being deemed to be the "Issuance Date" for purposes of making
determinations under the definition of "Current Market Price") MINUS (ii) the
per share Warrant Price then in effect. The number of shares of Common Stock to
be issued to 5Net5 Corp. would equal the result of the previous equation divided
by Current Market Price.
Example of the herein described Cashless Exercise Warrant Exercise Provision (Example assumes a Current Market Price of $6.00)
-------------------------------------------------------------------------------------------------------------------------------
Shares of
Current Warrant Current Px Value Current Common Stock
Market Exercise MINUS of Warrants Market Issuable
Price Price Warr. Ex. Px Warrant being Delivered Price to 5Net5 Corp.
------------ ------------ --------------- ----------- ------------------ -------- ------------------
$6.00 - $2.63 = $3.57 X 300,000 = $1,001,000 / $6.00 = 168,500
If this Warrant is exercised in respect of less than all of the shares
of Common Stock at the time purchasable hereunder, following such exercise this
Warrant shall be returned to the holder hereof and shall remain exercisable in
respect of such number of shares of Common Stock into which the warrant remains
exercisable.
This Warrant shall expire to the extent that it has not been exercised
on or before the Expiration Date.
Company shall pay all reasonable expenses, stamp, documentary and
transfer taxes and other charges payable in connection with the preparation,
execution and delivery of stock certificates pursuant to this Section,
regardless of the name or names in which such stock certificates shall be
registered.
SECTION 2. RESERVATION.
Company will at all times reserve and keep available such number of
authorized shares of its Common Stock, solely for the purpose of issue upon the
exercise of the rights represented by this Warrant as herein provided for, as
may at any time be issuable (based upon the number of shares of Common Stock
outstanding at any such time) upon the exercise of this Warrant.
SECTION 3. PROTECTION AGAINST DILUTION.
The per share Warrant Price and the number of shares deliverable
hereunder shall be adjusted from time to time as hereinafter set forth:
SECTION 3.1 STOCK DIVIDENDS, SUBDIVISIONS, AND COMBINATIONS. In case
after the date hereof Company shall:
(a) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend and declared to be
payable in, or other declared distribution of, Common Stock, or
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(b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
then the per share Warrant Price shall be adjusted to that price determined by
multiplying the per share Warrant Price in effect immediately prior to such
event by a fraction (i) the numerator of which shall be the total number of
outstanding shares of Common Stock immediately prior to such event, and (ii) the
denominator of which shall be the total number of outstanding shares of Common
Stock immediately after such event.
SECTION 3.2 ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. In case
after the date hereof Company shall (except as hereinafter provided) issue any
Additional Shares of Common Stock for a consideration per share less than the
Current Market Price per share, then the per share Warrant Price on each such
issuance shall be adjusted to that price determined by multiplying the per share
Warrant Price in effect immediately prior to such event by a fraction:
(a) the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to the issuance of such
Additional Shares of Common Stock plus the number of full shares of
Common Stock which the aggregate consideration for the total number of
such Additional Shares of Common Stock so issued would purchase at the
Current Market Price per share, and
(b) the denominator of which shall be the number of shares of
Common Stock outstanding immediately prior to the issuance of such
Additional Shares of Common Stock plus the number of such Additional
Shares of Common Stock so issued.
The provisions of this Section 3.2 shall not apply to any Additional
Shares of Common Stock which are distributed to holders of Common Stock as a
stock dividend or subdivision, for which an adjustment is provided for under
Section 3.1. No adjustment of the Warrant Price shall be made under this
Section 3.2 upon the issuance of any Additional Shares of Common Stock which are
issued pursuant to the exercise of any warrants or other subscription or
purchase rights or pursuant to the exercise of any conversion or exchange rights
in any Convertible Securities, if any such adjustment shall previously have been
made upon the issuance of such warrants or other rights or upon the issuance of
such Convertible Securities (or upon the issuance of any warrants or other
rights therefor) pursuant to Section 3.3.
SECTION 3.3 ISSUANCE OF WARRANTS OR OTHER RIGHTS, CONVERTIBLE
SECURITIES OR WARRANTS TO PURCHASE CONVERTIBLE SECURITIES. In case Company shall
issue any warrants or other rights to subscribe for or purchase any Additional
Shares of Common Stock or issue Convertible Securities and the consideration per
share for which Additional Shares of Common Stock may at any time thereafter be
issuable pursuant to such warrants or other rights or pursuant to the terms of
such Convertible Securities shall be less than the Current Market Price per
share, then the per share Warrant Price shall be adjusted as provided in Section
3.2 above on the basis that:
(a) the maximum number of Additional Shares of Common Stock
issuable pursuant to all such warrants or other rights or necessary to
effect the conversion or exchange
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of all such Convertible Securities shall be deemed to have been issued
as of the earlier of: (i) the date on which Company shall enter a firm
contract or commitment for the issuance of such warrants, other rights
or Convertible Securities or (ii) the date of actual issuance of such
warrants, other rights or Convertible Securities, and
(b) the aggregate consideration for such maximum number of
Additional Shares of Common Stock shall be deemed to be the minimum
consideration received and receivable by Company for the issuance of
such Additional Shares of Common Stock pursuant to such warrants or
other rights or pursuant to the terms of such Convertible Securities.
No adjustment of the per share Warrant Price shall be made under this
Section 3.3 upon the issuance of any Convertible Securities which are issued
pursuant to the exercise of any warrants or other subscription or purchase
rights therefor, to the extent such adjustment shall previously have been made
upon the issuance of such warrants or other rights pursuant to this Section 3.3.
SECTION 3.4 OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS. The following
provisions shall be applicable to the making of adjustments in the per share
Warrant Price hereinbefore provided in this Section 3:
(a) COMPUTATION OF CONSIDERATION. To the extent that any
Additional Shares of Common Stock or any Convertible Securities or any
warrants or other rights to subscribe for or purchase any Additional
Shares of Common Stock or any Convertible Securities shall be issued
for a cash consideration, the consideration received by Company
therefor shall be deemed to be the amount of the cash received by
Company therefor, or, if such Additional Shares of Common Stock or
Convertible Securities or warrants or other rights are offered by
Company for subscription, the subscription price, or, if such
Additional Shares of Common Stock or Convertible Securities or warrants
or other rights are sold to underwriters or dealers for public offering
without a subscription offering, the offering price, in any such case
excluding any amounts paid or receivable for accrued interest or
accrued dividends and without deduction of any compensation, discounts
or expenses paid or incurred by Company for and in the underwriting
thereof, or otherwise in connection with the issue thereof. To the
extent that such issuance shall be for a consideration other than cash,
then, except as herein otherwise expressly provided, the amount of such
consideration shall be deemed to be the fair value of such
consideration at the time of such issuance as determined in good faith
by the Board of Directors of Company. The consideration for any
Additional Shares of Common Stock issuable pursuant to any warrants or
other rights to subscribe for or purchase the same shall be the
consideration received by Company for issuing such warrants or other
rights plus the additional consideration payable to Company upon the
exercise of such warrants or other rights. The consideration for any
Additional Shares of Common Stock issuable pursuant to the terms of any
Convertible Securities shall be the consideration received by Company
for issuing any warrants or other rights to subscribe for or purchase
such Convertible Securities plus the consideration paid or payable to
Company in respect of the subscription for or purchase of such
Convertible Securities plus the additional consideration, if any,
payable to Company upon the exercise of the right of conversion or
exchange of such Convertible Securities. In case of the issuance at any
time of any Additional Shares of Common Stock or Convertible Securities
in payment or satisfaction of any dividend upon any class of equity
securities other than Common Stock, Company shall
4
be deemed to have received for such Additional Shares of Common Stock
or Convertible Securities a consideration equal to the amount of such
dividend so paid or satisfied.
(b) READJUSTMENT OF PER SHARE WARRANT PRICE. Upon expiration
of the right of exercise, conversion or exchange of any Convertible
Securities, or upon the expiration of any rights, options or warrants,
or upon the termination of any firm contract or commitment for the
issuance of such rights, options, warrants or Convertible Securities,
or upon any increase in the minimum consideration receivable by Company
for the issuance of Additional Shares of Common Stock pursuant to such
Convertible Securities, rights, options or warrants, if any such
Convertible Securities shall not have been exercised, converted or
exchanged, or if any such rights, options or warrant shall not have
been exercised, the number of shares of Common Stock deemed to be
issued and outstanding by reason of the fact that they were issuable
upon exercise, conversion or exchange of any such Convertible
Securities or upon exercise of any such rights, options or warrants
shall no longer be computed as set forth above, and the per share
Warrant Price shall forthwith be readjusted and thereafter be the price
which it would have been (but reflecting any other adjustments in the
per share Warrant Price made pursuant to the provisions of this
Section 3 after the issuance of such Convertible Securities, rights,
options or warrants) had the adjustment of the per share Warrant Price
made upon the issuance or sale of such Convertible Securities or the
issuance of such rights, options or warrants been made on the basis of
the issuance only of the number of Additional Shares of Common Stock
actually issued upon exercise, conversion or exchange of such
Convertible Securities or upon the exercise of such rights, options or
warrants, or upon the basis of such increased minimum consideration, as
the case may be, and thereupon only the number of Additional Shares of
Common Stock actually so issued plus the number thereof then issuable
upon the basis of such increased minimum consideration shall be deemed
to have been issued and only the consideration actually received plus
increased minimum consideration receivable by Company (computed in
accordance with Section 3.4(a)) shall be deemed to have been received
by Company.
(c) ROUNDING OF PER SHARE WARRANT PRICE. Any determination of
per share Warrant Price hereunder shall be expressed in United States
Dollars, cents and portions of cents and shall be rounded to the
nearest 1/1000 of one cent or, if there is no nearest 1/1000 of one
cent, to the next highest 1/1000 of one cent.
SECTION 3.5 EXTRAORDINARY DIVIDENDS. In case Company shall declare a
dividend upon its Common Stock (except a dividend payable in shares of Common
Stock referred to in Section 3.1(a) or a dividend payable in warrants, rights or
Convertible Securities referred to in Section 3.3) payable otherwise than out of
earnings or surplus (other than revaluation surplus or paid-in surplus), the per
share Warrant Price in effect immediately prior to the declaration of such
dividend shall be reduced by an amount equal, in the case of a dividend in cash,
to 10% of the amount thereof payable per share of Common Stock or, in the case
of any other dividend, to the fair value thereof per share of Common Stock as
determined in good faith by the Board of Directors of Company. For the purposes
of the foregoing, a dividend payable other than in cash shall be considered
payable out of earnings or surplus (other than revaluation surplus or paid-in
surplus) only to the extent that such earnings or surplus are charged an amount
equal to the fair value of such dividend as determined by the Board of Directors
of Company. If such dividend is paid or Company declares and becomes legally
liable to pay such dividend, such reduction shall take effect as of the date on
which a record is taken for
5
the purpose of such dividend or, if a record is not taken, the date as of which
the holders of the Common Stock of record entitled to such dividend are to be
determined. Appropriate readjustment of the per share Warrant Price shall be
made in the event that any dividend referred to in this Section 3.5 shall be
lawfully abandoned.
SECTION 3.6 ADJUSTMENT OF NUMBER OF SHARES PURCHASABLE. Upon each
adjustment of the per share Warrant Price, the number of shares of Common Stock
purchasable hereunder shall be adjusted by multiplying the number of shares of
Common Stock purchasable hereunder immediately prior to such adjustment of the
per share Warrant Price by a fraction, the numerator of which shall be the per
share Warrant Price in effect immediately prior to such adjustment and the
denominator of which shall be the per share Warrant Price in effect immediately
following such adjustment.
SECTION 3.7 MINIMUM ADJUSTMENT. Except as hereinafter provided, no
adjustment of the per share Warrant Price hereunder shall be made if such
adjustment results in a change of the per share Warrant Price then in effect of
less than 1%. Any adjustment of less than 1% shall be carried forward and shall
be made at the time of and together with any subsequent adjustment which,
together with the adjustment or adjustments so carried forward, amounts to 1% or
more of the per share Warrant Price then in effect. However, upon the exercise
of this Warrant, Company shall make all necessary adjustments not theretofore
made to the per share Warrant Price up to and including the date upon which this
Warrant is exercised.
SECTION 3.8 NOTICE OF ADJUSTMENTS. (a) Whenever the per share Warrant
Price or number of shares deliverable upon exercise of this Warrant shall be
adjusted pursuant to this Section 3, Company shall promptly prepare a
certificate signed by the President or a Vice President and by the Treasurer of
Company setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method by which such adjustment was calculated
(including a description of the basis on which the Board of Directors of Company
made any determination hereunder), and shall promptly cause copies of such
certificate to be mailed in the manner provided in Section 12.1 of the Warrant
Agreement to the holder of this Warrant.
(b) The adjustment set forth in the certificate furnished
pursuant to Section 3.8(a) shall be final and binding unless, within 90
days after receipt thereof, the Majority Holders of the Warrants
deliver to Company a written statement of objection to such adjustment.
(i) In the event of any such statement of objection
by said Majority Holders, Company's accountants and a firm of
independent public accountants selected by said Majority
Holders shall attempt to prepare a computation in which both
accountants concur. Any such joint computation shall be set
forth in a joint certificate to each holder of the Warrants
and Company and shall be final and binding.
(ii) If Company's accountants and said Majority
Holders' accountants are unable to resolve their differences
within 30 days after the receipt by Company of said Majority
Holders' statement of objection, they shall submit the matter
to a third firm of independent certified public accountants of
nationally recognized standing agreed upon by said Majority
Holders and Company or, if said Majority Holders and Company
are unable to agree within 10 days after the expiration of
said 30-day
6
period, to such firm designated by the then president of the
state society of certified public accountants for the state in
which Company maintains its principal place of business. Such
third firm of accountants shall thereupon compute the amount
of the adjustment and, upon completion of such computation,
shall transmit its certificate to each holder of the Warrants
and Company setting forth such computations, which shall be
final and binding.
(iii) The fees and expenses of all accountants
referred to in this Section 3.8(b) shall be borne by Company.
SECTION 4. MERGERS, CONSOLIDATIONS, SALES.
In the case of any consolidation or merger of Company with another
entity, or the sale of all or substantially all of its assets to another entity,
or any reorganization, recapitalization or reclassification of the Common Stock
or other equity securities of Company, then, as a condition of such
consolidation, merger, sale, reorganization, recapitalization or
reclassification, lawful and adequate provision shall be made whereby the holder
of this Warrant shall thereafter have the right to receive upon the basis and
upon the terms and conditions specified herein and in lieu of the shares of
Common Stock immediately theretofore purchasable hereunder, such shares of
stock, securities or assets as may (by virtue of such consolidation, merger,
sale, reorganization or reclassification) be issued or payable with respect to
or in exchange for a number of outstanding shares of Common Stock equal to the
number of shares of Common Stock immediately theretofore so purchasable
hereunder had such consolidation, merger, sale, reorganization, recapitalization
or reclassification not taken place. In any such case, appropriate provisions
shall be made with respect to the rights and interest of the holder of this
Warrant to the end that the provisions hereof shall thereafter be applicable, as
nearly as may be, in relation to any shares of stock, securities or assets
thereafter deliverable upon exercise of this Warrant. Company shall not effect
any such consolidation, merger or sale, unless prior to or simultaneously with
the consummation thereof, the successor entity (if other than Company) resulting
from such consolidation or merger or the entity purchasing such assets shall
assume by written instrument executed and mailed or delivered to the holder of
this Warrant, the obligation to deliver to such holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to receive.
SECTION 5. DISSOLUTION OR LIQUIDATION.
In the event of any proposed distribution of the assets of Company in
dissolution or liquidation except under circumstances when the foregoing Section
4 shall be payable, Company shall mail notice (including specific details and
amounts to be distributed) thereof to the holder of this Warrant and shall make
no distribution to shareholders until the expiration of 30 days from the date of
receipt of the aforesaid notice and, in any such case, the holder of this
Warrant may exercise the purchase rights with respect to this Warrant within 30
days from the date of receipt such notice and all rights herein granted not so
exercised within such 30-day period shall thereafter become null and void.
SECTION 6. NOTICE OF DIVIDENDS.
If the Board of Directors of Company proposes to declare any dividend
or other distribution on its Common Stock, except by way of a stock dividend
payable on its Common Stock, Company
7
shall mail notice thereof to the holder of this Warrant as soon as possible
(such notice being referred to as the "DISTRIBUTION NOTICE"). Company shall not
fix a record date until the lapse of a 10-day period beginning on the date of
delivery of the Distribution Notice. The holder of this Warrant shall not
participate in such dividend or other distribution or be entitled to any rights
on account or as a result thereof unless and to the extent that this Warrant is
exercised prior to such record date. The provisions of this paragraph shall not
apply to distributions made in connection with transactions covered by
Section 4.
SECTION 7. FRACTIONAL SHARES.
No fractional shares may be issued upon the exercise of this Warrant.
In the event that a Holder would otherwise be entitled to a fractional share
except for the operation of the previous sentence, in lieu of such fractional
share such Holder shall be paid a cash amount equal to (i) such fraction
multiplied by (ii) the Current Market Value of one full share of Common Stock on
the date of exercise.
SECTION 8. FULLY PAID STOCK; TAXES.
Company covenants and agrees that the shares of stock represented by
each and every certificate for its Common Stock to be delivered on the exercise
of the purchase rights and the payment of the applicable purchase price herein
provided for shall, at the time of such delivery, be validly issued and
outstanding and be fully paid and nonassessable. Company further covenants and
agrees that it will pay when due and payable any and all federal and state taxes
(other than income taxes) which may be payable in respect of this Warrant or any
Common Stock or certificates therefor upon the exercise of the rights herein and
in the Warrant Agreement provided for pursuant to the provisions hereof and
thereof. Company shall not, however, be required to pay any tax which may be
payable solely in respect of any transfer and delivery of stock certificates in
a name other than that of the holder exercising this Warrant, and any such tax
shall be paid by such holder at the time of presentation.
SECTION 9. CLOSING OF TRANSFER BOOKS.
The right to exercise this Warrant shall not be suspended during any
period that the stock transfer books of Company for its Common Stock may be
closed. Company shall not be required, however, to deliver certificates of its
Common Stock upon such exercise while such books are duly closed for any
purpose, but Company may postpone the delivery of the certificates for such
Common Stock until the opening of such books, and they shall, in such case, be
delivered forthwith upon the opening thereof, or as soon as practicable
thereafter.
SECTION 10. PARTIAL EXERCISE AND PARTIAL ASSIGNMENT.
SECTION 10.1 PARTIAL EXERCISE. If this Warrant is exercised in part
only, the holder hereof shall surrender this Warrant upon such exercise for
endorsement thereon of the number of shares of Common Stock as to which it has
been exercised.
SECTION 10.2 ASSIGNMENT. (a) Subject to the conditions set forth in
Section 10.2(b) hereof, this Warrant may be assigned either in whole or in part
by surrender of this Warrant at the principal office of Company in Denison,
Texas (with the assignment or, as the case may be, partial assignment
8
form at the end hereof duly executed). If this Warrant is being assigned in
whole, the assignee shall receive a new Warrant (registered in the name of such
assignee or its nominee) which new Warrant shall cover 100% of the number of
shares of Common Stock then purchasable hereunder and shall set forth the
Aggregate Warrant Price. If this Warrant is being assigned in part, the assignor
and assignee shall each receive a new Warrant (which, in the case of the
assignee, shall be registered in the name of the assignee or its nominee), which
new Warrants shall cover the number of shares of Common Stock then purchasable
hereunder not so assigned and so assigned, respectively, and shall set forth the
proportionate Aggregate Warrant Price applicable to such shares.
(b) Neither this Warrant nor any Warrant Shares may be sold, assigned
or otherwise transferred unless such sale, assignment or transfer is registered
or qualified pursuant to the registration requirements of the Securities Act of
1933, as amended, and all applicable state securities laws, or is preceded by an
opinion of counsel addressed to Company that such sale, assignment or other
transfer is exempt from all such registration requirements; PROVIDED, HOWEVER,
that no such opinion of counsel shall be required in connection with any such
sale, assignment or transfer to any affiliate of the holder of this Warrant or
any Warrant Shares issued in respect hereof. The fees and expenses of such
counsel incurred in respect of such sales, assignments or transfers shall be
paid by the holder of this Warrant or any Warrant Shares which are the subject
of such proposed sale, assignment or transfer. All certificates representing the
Warrant Shares shall be stamped or imprinted with an appropriate restrictive
legend, substantially as set forth on the cover page hereof.
SECTION 11. PIGGYBACK REGISTRATION RIGHTS.
SECTION 11.1 RIGHT TO PIGGYBACK. Each time the Company proposes to
register any of its equity securities under the Securities Act of 1933 for sale
to the public, whether for the account of the Company or otherwise for the
account of any securityholder of the Company, and the form of registration
statement to be used permits the registration of Registrable Shares, the Company
shall give prompt written notice to 5Net5 Corp. (which notice shall be given not
less than 30 days prior to the effective date of the Company's registration
statement), which notice shall offer 5Net5 Corp. the opportunity to include any
or all of its Registrable Shares in such registration statement, subject to the
limitations contained in Section 11.2 hereof. If 5Net5 Corp. desires to have its
Registrable Shares included in such registration statement, it shall so advise
the Company in writing (stating the number of shares desired to be registered)
within 20 days after the date of such notice from the Company. 5Net5 Corp. shall
have the right to withdraw its request for inclusion of its Registrable Shares
in any registration statement pursuant to this Section 11.1 by giving written
notice to the Company of such withdrawal. Subject to Section 11.2 below, the
Company shall include in such registration statement all such Registrable Shares
so requested to be included therein; provided, however, that the Company may at
any time withdraw or cease proceeding with any such registration if it shall at
the same time withdraw or cease proceeding with the registration of all other
equity securities originally proposed to be registered.
SECTION 11.2 PRIORITY ON REGISTRATION. If, in connection with a
proposed registration of the Company's equity securities, the managing
underwriter advises the Company that the inclusion of Registrable Shares would
have a material adverse effect on the price or success of the offering, then (i)
the number of 5Net5 Corp.'s Registrable Shares to be included in the
registration statement shall be reduced to an amount which, in the judgment of
the managing underwriter, would eliminate such
9
material adverse effect or (ii) if no such reduction would, in the judgment of
the managing underwriter, eliminate such material adverse effect, then the
Company shall have the right to exclude all such Registrable Shares from such
registration statement. Any partial reduction in the number of Registrable
Shares to be included in the registration statement pursuant to clause (i) of
the immediately preceding sentence shall be effected PRO RATA based on the ratio
which 5Net5 Corp.'s requested shares bear to the total number of shares
requested to be included in such registration statement by all persons who have
requested that their shares be included in such registration statement pursuant
to piggyback registration rights. It is acknowledged by the Company and 5Net5
Corp., that pursuant to the foregoing provision, the securities to be included
in such registration shall be allocated (x) if such registration has been
initiated by the Company for securities to be offered by the Company, (1) first,
to the Company, and (2) second, to 5Net5 Corp. and all other persons that have
piggyback registration rights with respect to such registration and who request
that securities be included therein in accordance with the above described
ratio, and (y) if such registration is a demand registration, (1) first, to
securities offered by persons exercising their right to cause a demand
registration, (2) second, to the Company, and (3) third, to 5Net5 Corp. and all
other persons that have piggyback registration rights with respect to such
registration and who request that securities be included therein in accordance
with the above described ratio. If as a result of the provisions of this Section
11.2 5Net5 Corp. shall not be entitled to include all Registrable Securities in
a registration that 5Net5 Corp. has requested to be so included, 5Net5 Corp. may
withdraw its request to include Registrable Shares in such registration
statement. 5Net5 Corp. may only participate in any registration statement
hereunder if 5Net5 Corp. (x) agrees to sell its Registrable Shares on the basis
provided in any underwriting arrangements approved by the Company and (y)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements, and other documents reasonably required under the terms
of such underwriting arrangements. 5Net5 Corp. shall be entitled to exercise its
right to have its Registrable Shares included in a registration statement only
on two separate occasions and thereafter 5Net5 Corp. shall no longer have any
rights, and the Company shall no longer have any obligations to 5Net5 Corp.
under Section 11.
SECTION 12. DEFINITIONS.
Terms not otherwise defined herein shall have the respective meanings
assigned thereto in the Warrant Agreement and the Credit Agreement. In addition
to the terms defined elsewhere in this Warrant, the following terms have the
following respective meanings:
"ADDITIONAL SHARES OF COMMON STOCK" shall mean all shares of Common
Stock issued by Company after the Closing Date, except:
(a) Common Stock issued upon exercise of the Warrants;
(b) Common Stock issued upon exercise of warrants issued under
the Existing Warrant Agreements; and
(c) Common Stock issued to officers, directors or employees
of, or consultants to, Company pursuant to any existing or future stock option,
incentive, bonus or compensation plan or program approved by the Company's
shareholders (no later than 12 months following adoption of the plan or program
by the Company's Board of Directors).
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"AGGREGATE WARRANT PRICE" has the meaning specified on the first page
of this Warrant.
"CASHLESS EXERCISE" has the meaning specified in Section 1.
"COMMON STOCK" shall mean the shares of Common Stock, par value $0.01
per share, of Company described in the Certificate of Incorporation.
"CONVERTIBLE SECURITIES" shall mean evidences of indebtedness, equity,
rights, options, warrants or other securities which are convertible into or
exchangeable for shares of Common Stock, either immediately or upon the arrival
of a specified date or the happening of a specified event, or otherwise.
"CURRENT MARKET PRICE" shall mean, at the date of determination
thereof, an amount equal to the market price on the Business Day occurring most
recently prior to the subject issuance of such shares of Common Stock (the
"ISSUANCE DATE"). The market price for such Business Day shall be the last sale
price on such day on the American Stock Exchange, or, if the Common Stock is not
then listed or admitted to trading on the American Stock Exchange, on such other
principal stock exchange on which such shares are then listed or admitted to
trading, or, if no sale takes place on such day on any such exchange, the
average of the closing bid and asked prices on such day as officially quoted on
any such exchange, or, if the Common Stock is not then listed or admitted to
trading on any stock exchange, the market price for each such Business Day shall
be the last reported sale price on such day on The Nasdaq Stock Market's
National Market or The Nasdaq Stock Market's Small Cap Market, as furnished by
Nasdaq, or, if no sale takes place on such day on such system, the average of
the closing bid and asked prices on such day as officially quoted by Nasdaq, or,
if such price at the time is not available from such system, the market price
for such Business Day shall be the average of the reported closing bid and asked
prices on such day in the over-the-counter market, as furnished by Nasdaq, or,
if such price at the time is not available from such system, such price shall be
determined in good faith by Company's Board of Directors, which shall be
evidenced by a notice setting forth such determination in reasonable detail
(including computations and assumptions used) (THE "CMP COMPUTATION NOTICE") to
each holder of the Warrants not later than 30 days after the issuance date of
the Common Stock giving rise to such determination (the "CMP COMPUTATION DATE")
setting forth such determination and setting forth in detail the rights and
procedures the holders of the Warrants may take in the event the Majority
Holders do not agree with the valuation set forth in the CMP Computation Notice,
PROVIDED, that if the Majority Holders of such Warrants shall object to the
valuation contained in the CMP Computation Notice in writing to Company within
15 days of the CMP Computation Date, an Appraiser, the expenses of whom shall be
paid by said Majority Holders, shall be selected by Company and said Majority
Holders (on behalf of all of the holders of the Warrants as a class), or, if
said Majority Holders and Company are unable to agree upon the selection of an
Appraiser within 10 days of the date of the written notice from said Majority
Holders to Company objecting to the CMP Computation Notice, by the American
Arbitration Association. Said Majority Holders and Company shall be jointly
responsible for engaging the Appraiser finally selected. In the event that the
Majority Holders do not object to the CMP Computation Notice within 15 days
after receiving the CMP Computation Notice, then the value shall be that which
was determined solely by Company's Board of Directors. The Appraiser appointed
pursuant to the foregoing procedure shall be instructed to determine such value
within 15 days after the selection of such Appraiser, and any such determination
made by the Appraiser shall be final and binding upon the parties.
11
Notwithstanding the foregoing, in the event that, on the Issuance Date, shares
of Common Stock shall be offered for sale to the public in connection with an
underwritten public offering, the Current Market Price in respect of said
Issuance Date shall be deemed to be the price at which said shares are initially
sold to the public.
"EXERCISE DATE" shall mean a date on which this Warrant is exercised.
"EXERCISE PERIOD" means from the Exercise Date until, and including,
the Expiration Date.
"EXPIRATION DATE" means from and after 5:00 p.m. Denison, Texas time on
February 1, 2010, the tenth anniversary of issuance of this Warrant.
"MAJORITY HOLDERS" shall mean, at the time of any determination, the
holders of a majority of the Warrants (determined by the number of shares of
Common Stock represented by each such Warrant as if exercised).
"PER SHARE WARRANT PRICE" is defined in the first paragraph of this
Warrant.
"PERMITTED CONSIDERATION" shall mean each of the following (or any
combination thereof):
(a) cash or other funds immediately available to Company; and
(b) Warrants.
"PRO FORMA SHARES" shall mean, as of the date of any determination
thereof, the sum of (i) the total number of outstanding shares of Common Stock,
plus (ii) the total number of shares of Common Stock issuable upon exercise of
the Warrants and any other warrants, options or other rights and upon the
exercise of any conversion or exchange rights with respect to Convertible
Securities.
"REGISTRABLE SHARES" shall mean the shares of Common Stock purchasable
under the Warrant.
"UNDERLYING SHARES" shall mean the shares of Common Stock issuable upon
exercise of any of the Warrants and any references contained herein to a holder
or holders of any Underlying Shares shall be deemed to refer to the holder of
the Warrants relating thereto.
"WARRANT PRICE" - see the definition of "per share Warrant Price".
"WARRANT SHARES" shall mean shares of Common Stock issued upon exercise
of the warrants.
"WARRANTS" as used herein shall refer to, collectively, this Warrant
and all other warrants issued in exchange or substitution for this Warrant.
SECTION 13. WARRANT HOLDER NOT SHAREHOLDER.
This Warrant does not confer upon the holder hereof any right to vote
or to consent or to receive notice as a shareholder of Company, as such, in
respect of any matters whatsoever, or any other rights or liabilities as a
shareholder, prior to the exercise hereof as hereinbefore provided.
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SECTION 14. SEVERABILITY.
Should any part of this Warrant for any reason be declared invalid or
unenforceable, such decision shall not affect the validity or enforceability of
any remaining portion, which remaining portion shall remain in force and effect
as if this Warrant had been executed with the invalid or unenforceable portion
thereof eliminated, and it is hereby declared the intention of the parties
hereto that they would have executed and accepted the remaining portion of this
Warrant without including therein any such part, parts or portion which may, for
any reason, be hereafter declared invalid or unenforceable.
SECTION 15. GOVERNING LAW.
This Warrant shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the law of the State of Texas
excluding choice-of-law principles of the law of such state that would require
the application of the laws of a jurisdiction other than such state.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, Company has caused this Warrant to be signed by a
duly authorized officer and to be dated this 1st day of February, 2000.
HORIZON PHARMACIES, INC.
By: /s/ Xxxxx X. XxXxxx
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Xxxxx X. XxXxxx
President and Chief Executive Officer
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