Contract
THIS
INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN
THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AGREEMENT
(AS THE SAME MAY BE AMENDED OR OTHERWISE MODIFIED FROM TIME TO TIME PURSUANT TO
THE TERMS THEREOF, THE “SUBORDINATION AGREEMENT”) DATED AS OF FEBRUARY 28, 2005,
BY AND AMONG XXX
XXXXXXXX, XXXX XXXXXXXX, XXXXXX XXXXXXXX, XXXXXX XXXXXXXX A/C/F XXX XXXXXXXX,
XXXXXXX XXXXXXX, XXXXXX XXXXXXX AND XXXXXXX XXXX (COLLECTIVELY, “SUBORDINATED
CREDITOR”), ALLION HEALTHCARE, INC., MAIL ORDER MEDS OF TEXAS, INC., MOMS
PHARMACY, INC. (A NEW YORK CORPORATION), MOMS PHARMACY, INC. (A CALIFORNIA
CORPORATION), MOMS PHARMACY, LLC, MEDICINE MADE EASY, NORTH AMERICAN HOME HEALTH
SUPPLY, INC., AND SPECIALTY PHARMACIES, INC. (COLLECTIVELY, “COMPANY”), AND GE
HFS HOLDINGS, INC. (THE “SENIOR LENDER”), TO THE
INDEBTEDNESS (INCLUDING INTEREST) OWED BY BORROWER TO THE SENIOR LENDER PURSUANT
TO THE SENIOR DEBT DOCUMENTS (AS DEFINED IN THE SUBORDINATION AGREEMENT),
INCLUDING WITHOUT LIMITATION, PURSUANT TO THAT CERTAIN LOAN AND SECURITY
AGREEMENT DATED APRIL 21, 1999, BY AND AMONG
BORROWER AND SENIOR LENDER, AS SUCH LOAN AND SECURITY AGREEMENT MAY BE AMENDED,
RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, AND TO
INDEBTEDNESS TO SENIOR LENDER REFINANCING THE INDEBTEDNESS UNDER THAT AGREEMENT;
AND EACH HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE HEREOF, IRREVOCABLY AGREES
TO BE BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.
THE
ISSUANCE OF THIS WARRANT AND THE OFFER AND SALE OF THE SHARES OF COMMON STOCK
ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE “ACT”) NOR
UNDER ANY STATE SECURITIES LAW AND THIS WARRANT AND ANY SUCH SHARES OF COMMON
STOCK MAY NOT BE PLEDGED, SOLD, ASSIGNED OR OTHERWISE TRANSFERRED UNTIL A
(1) REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAW HAS BECOME EFFECTIVE WITH RESPECT THERETO, OR (2) RECEIPT BY
THE COMPANY OF AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY (IF SO REQUESTED)
TO THE EFFECT THAT REGISTRATION UNDER THE ACT OR APPLICABLE STATE SECURITIES LAW
IS NOT REQUIRED IN CONNECTION WITH THE PROPOSED TRANSFER.
Void
after 5:00 p.m. Eastern Standard Time, on February 28, 2010.
Warrant
to Purchase _______ Shares of
Common Stock.
WARRANT
TO PURCHASE COMMON STOCK
OF
ALLION
HEALTHCARE, INC.
This is
to certify that, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, _________________ (“Holder”) is
entitled to purchase, subject to the provisions of this Warrant, from Allion
Healthcare, Inc., a Delaware corporation (“Company”),
______________________________________________ (_______) fully paid, validly
issued and nonassessable shares of Common Stock, $0.01 par value per share, of
the Company (“Common
Stock”) at a
price initially set at $6.26 per share at any time or from time to
time
during the period from the date hereof to expiration, but not later than 5:00
p.m. Eastern Standard Time, on February 28, 2010. The number of shares of Common
Stock to be received upon the exercise of this Warrant and the price to be paid
for each share of Common Stock may be adjusted from time to time as hereinafter
set forth. The shares of Common Stock deliverable upon such exercise, and as
adjusted from time to time, are hereinafter sometimes referred to as
“Warrant
Shares” and the
exercise price of a share of Common Stock in effect at any time and as adjusted
from time to time is hereinafter sometimes referred to as the “Exercise
Price”.
| (a) |
EXERCISE
OF WARRANT. |
| (1) |
This
Warrant may be exercised in whole or in part at any time or from time to
time on or after the date hereof and until 5:00 p.m Eastern Standard Time
on February 28, 2010; provided, however, that if either such day is a day
on which banking institutions in the State of New York are authorized by
law to close, then on the next succeeding day which shall not be such a
day. This Warrant may be exercised by presentation and surrender hereof to
the Company at its principal office, or at the office of its stock
transfer agent, if any, with the Purchase Form annexed hereto duly
executed and accompanied by payment of the Exercise Price for the number
of Warrant Shares specified in such form. As soon as practicable after
each such exercise of this Warrant, but not later than seven (7) days from
the date of such exercise, the Company shall issue and deliver to the
Holder a certificate for the Warrant Shares issuable upon such exercise,
registered in the name of the Holder or its designee. If this Warrant
should be exercised in part only, the Company shall, upon surrender of
this Warrant for cancellation, execute and deliver a new Warrant
evidencing the rights of the Holder thereof to purchase the balance of the
Warrant Shares purchasable thereunder. Upon receipt by the Company of this
Warrant at its office, or by the stock transfer agent of the Company, if
any, at its office, in proper form for exercise together with payment in
full of the exercise price for the Warrant Shares to be purchased, the
Holder shall be deemed to be the holder of record of the shares of Common
Stock issuable upon such exercise, notwithstanding that the stock transfer
books of the Company shall then be closed or that certificates
representing such shares of Common Stock shall not then be physically
delivered to the Holder. |
| (2) |
In
lieu of delivering the Exercise Price in cash or check, the Holder may
elect to receive shares equal to the value of the Warrant or portion
thereof being exercised (“Net
Issue Exercise”).
If the Holder wishes to elect the Net Issue Exercise, the Holder shall
notify the Company of its election in writing at the time it delivers the
Purchase Form to the Company. In the event the Holder shall elect Net
Issue Exercise, the Holder shall receive the number of shares of Common
Stock equal to the product of (a) the number of shares of Common Stock
purchasable under the Warrant, or portion thereof being exercised, and (b)
the current market value, as defined in paragraph (c) below, of one share
of Common Stock minus the Exercise Price, divided by (c) the current
market value, as defined in paragraph (c) below, of one share of Common
Stock. |
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| (b) |
RESERVATION
OF SHARES.
The Company shall at all times reserve for issuance and/or delivery upon
exercise of this Warrant such number of shares of its Common Stock as
shall be required for issuance and delivery upon exercise of this
Warrant. |
| (c) |
FRACTIONAL
SHARES.
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of this Warrant. With respect to any fraction of
a share called for upon any exercise hereof, the Company shall pay to the
Holder an amount in cash equal to such fraction multiplied by the current
market value of a share, determined as
follows: |
| (1) |
If
the Common Stock is listed on a national securities exchange or admitted
to unlisted trading privileges on such exchange or listed for trading on
the NASDAQ system, the current market value shall be the last reported
sale price of the Common Stock on such exchange or system on the last
business day prior to the date of exercise of this Warrant or if no such
sale is made on such day, the mean of the last reported bid and asked
prices for such day on such exchange or system;
or |
| (2) |
If
the Common Stock is not so listed or admitted to unlisted trading
privileges, the current market value shall be the mean of the last
reported bid and asked prices reported by the National Quotation Bureau,
Inc. on the last business day prior to the date of the exercise of this
Warrant; or |
| (3) |
If
the Common Stock is not so listed or admitted to unlisted trading
privileges and bid and asked prices are not so reported, the current
market value of a share of Common Stock shall be an amount, not less than
book value thereof as at the end of the most recent fiscal year of the
Company ending prior to the date of the exercise of the Warrant,
determined in such reasonable manner as may be prescribed by the Board of
Directors of the Company. |
| (d) |
EXCHANGE,
TRANSFER, ASSIGNMENT OR LOSS OF WARRANT.
Subject to the restrictions noted at the beginning of this Warrant, this
Warrant is exchangeable, without expense, at the option of the Holder,
upon presentation and surrender hereof to the Company or at the office of
its stock transfer agent, if any, for other warrants of different
denominations entitling the holder thereof to purchase in the aggregate
the same number of shares of Common Stock purchasable hereunder. Upon
surrender of this Warrant to the Company at its principal office or at the
office of its stock transfer agent, if any, with the Assignment Form
annexed hereto duly executed and funds sufficient to pay any transfer tax,
the Company shall, without charge, execute and deliver a new Warrant in
the name of the assignee named in such instrument of assignment and this
Warrant shall promptly be cancelled. This Warrant may be divided or
combined with other warrants which carry the same rights upon presentation
hereof at the principal office of the Company or at the office of its
stock transfer agent, if any, together with a written notice specifying
the names and denominations in which new Warrants are to be issued and
signed by the Holder hereof. The term “Warrant”
as used herein includes any Warrants into which this Warrant may be
divided or exchanged. Upon receipt by the Company of evidence satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant, and
(in the case of loss; theft or destruction) of reasonably satisfactory
indemnification, and upon surrender and cancellation of this Warrant, if
mutilated, the Company will execute and deliver a new Warrant of like
tenor and date. Any such new Warrant executed and delivered shall
constitute an additional contractual obligation on the part of the
Company, whether or not this Warrant so lost, stolen, destroyed, or
mutilated shall be at any time enforceable by
anyone. |
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| (e) |
RIGHTS
OF THE HOLDER.
The Holder shall not, by virtue hereof, be entitled to any rights of a
shareholder in the Company, either at law or equity, and the rights of the
Holder are limited to those expressed in the Warrant and are not
enforceable against the Company except to the extent set forth
herein. |
| (f) |
ANTI-DILUTION
AND ADJUSTMENT PROVISIONS.
The Exercise Price in effect at any time and the number of securities
purchasable upon the exercise of the Warrant shall be subject to
adjustment from time to time upon the happening of certain events as
follows: |
| (1) |
In
case the Company shall (i) declare a dividend or make a distribution on
its outstanding shares of Common Stock in shares of Common Stock,
(ii) subdivide or reclassify its outstanding shares of Common Stock
into a greater number of shares, or (iii) combine or reclassify its
outstanding shares of Common Stock into a smaller number of shares, the
Exercise Price in effect at the time of the record date for such dividend
or distribution, or of the effective date of such subdivision, combination
or reclassification shall be adjusted so that it shall equal the price
determined by multiplying the Exercise Price by a fraction, the
denominator of which shall be the number of shares of Common Stock
outstanding after giving effect to such action, and the numerator of which
shall be the number of shares of Common Stock outstanding immediately
prior to such action. Such adjustment shall be made successively whenever
any event listed above shall occur. |
| (2) |
In
case the Company shall fix a record date for the issuance of rights or
warrants to all holders of its Common Stock entitling them to subscribe
for or purchase shares of Common Stock (or securities convertible into
Common Stock) at a price (the “Subscription
Price”)
(or having a conversion price per share) less than the Exercise Price on
such record date, the Exercise Price shall be adjusted so that the same
shall equal the price determined by multiplying the Exercise Price in
effect immediately prior to the date of issuance by a fraction, the
numerator of which shall be the sum of the number of shares outstanding on
the record date mentioned above and the number of additional shares of
Common Stock which the aggregate offering price of the total number of
shares of Common Stock so offered (or the aggregate conversion price of
the convertible securities so offered) would purchase at the Exercise
Price in effect immediately prior to the date of such issuance, and the
denominator of which shall be the sum of the number of shares of Common
Stock outstanding on the record date mentioned above and the number of
additional shares of Common Stock offered for subscription or purchase (or
into which the convertible securities so offered are convertible). Such
adjustment shall be made successively whenever such rights or warrants are
issued and shall become effective immediately after the record date for
the determination of shareholders entitled to receive such rights or
warrants; and to the extent that shares of Common Stock are not delivered
(or securities convertible into Common Stock are not delivered) after the
expiration of such rights or warrants, the Exercise Price shall be
readjusted to the Exercise Price which would then be in effect had the
adjustments made upon the issuance of such rights or warrants been made
upon the basis of delivery of only the number of shares of Common Stock
(or securities convertible into Common Stock) actually
delivered. |
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| (3) |
In
case the Company shall hereafter distribute to the holders of its Common
Stock evidences of its indebtedness or assets (excluding cash dividends or
distributions and dividends or distributions referred to in Subsection (1)
above) or subscription rights or warrants (excluding those referred to in
Subsection (2) above), then in each such case the Exercise Price in effect
thereafter shall be determined by multiplying the Exercise Price in effect
immediately prior thereto by a fraction, the numerator of which shall be
the total number of shares of Common Stock outstanding multiplied by the
current market price per share of Common Stock (as defined in Section (c)
above), less the fair market value (as determined by the Company’s Board
of Directors) of said assets or evidences of indebtedness so distributed
or of such rights or warrants, and the denominator of which shall be the
total number of shares of Common Stock outstanding multiplied by such
current market price per share of Common Stock. Such adjustment shall be
made successively whenever such a record date is fixed. Such adjustment
shall be made whenever any such distribution is made and shall become
effective immediately after the record date for the determination of
shareholders entitled to receive such
distribution. |
| (4) |
Whenever
the Exercise Price payable upon exercise of each Warrant is adjusted
pursuant to Subsections (1), (2), and (3) above, the number of Shares
purchasable upon exercise of this Warrant shall simultaneously be adjusted
by multiplying the number of Shares initially issuable upon exercise of
this Warrant by the Exercise Price in effect on the date hereof and
dividing the product so obtained by the Exercise Price, as
adjusted. |
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| (5) |
In
the case of the issuance of securities convertible into or exchangeable
for shares of Common Stock, the aggregate consideration received therefor
shall be deemed to be the consideration received by the Company for the
issuance of such securities plus the additional minimum consideration, if
any, to be received by the Company upon the conversion or exchange thereof
the consideration in each case to be determined in the same manner as
provided in clauses (A) and (B) of this Subsection
(5). |
| (6) |
No
adjustment in the Exercise Price shall be required unless such adjustment
would require an increase or decrease of at least five cents ($0.05) in
such price; provided, however, that any adjustments which by reason of
this Subsection (6) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment required to be made
hereunder. All calculations under this Section (f) shall be made to the
nearest cent or to the nearest one-hundredth of a share, as the case may
be. Anything in this Section (f) to the contrary notwithstanding, the
Company shall be entitled, but shall not be required, to make such changes
in the Exercise Price, in addition to those required by this Section (f),
as it shall determine, in its sole discretion, to be advisable in order
that any dividend or distribution in shares of Common Stock, or any
subdivision, reclassification or combination of Common Stock, hereafter
made by the Company shall not result in any federal income tax liability
to the holders of Common Stock or securities convertible into Common Stock
(including Warrants). |
| (7) |
The
Company may retain a firm of independent certified public accountants
selected by the Board of Directors (who may be the regular accountants
employed by the Company) to make any computation required by this Section
(f), and a certificate signed by such firm shall be conclusive evidence of
the correctness of such adjustment. |
| (8) |
In
the event that at any time, as a result of an adjustment made pursuant to
Subsection (1) above, the Holder of this Warrant thereafter shall become
entitled to receive any shares of the Company, other than Common Stock,
thereafter the number of such other shares so receivable upon exercise of
this Warrant shall be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the provisions with
respect to the Common Stock contained in Subsections (1) to (6) inclusive
above. |
| (9) |
Irrespective
of any adjustments in the Exercise Price or the number or kind of shares
purchasable upon exercise of this Warrant, Warrants theretofore or
thereafter issued may continue to express the same price and number and
kind of shares as are stated in the similar Warrants initially issuable
pursuant to this Agreement. |
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| (g) |
OFFICER’S
CERTIFICATE.
Whenever the Exercise Price shall be adjusted as required by the
provisions of Section (f), the Company shall promptly and in no event
later than 20 days after the effective date of adjustment cause to be
mailed by certified mail to each Holder at his last address appearing in
the Warrant Register and shall forthwith file, in the custody of its
Secretary or an assistant Secretary at its principal office and with its
stock transfer agent, if any, an officer’s certificate showing the
adjusted Exercise Price determined as herein provided, setting forth in
reasonable detail the facts requiring such adjustment, including a
statement of the number of additional shares of Common Stock, if any, and
such other facts as shall be necessary to show the reason for and the
manner of computing such adjustment. Each such officer’s certificate shall
be made available at all reasonable times for inspection by the Holder or
any holder of a Warrant executed and delivered pursuant to Section
(a). |
| (h) |
NOTICES
TO WARRANT HOLDERS.
So long as this Warrant shall be outstanding, (i) if the Company shall pay
any dividend or make any distribution upon the Common Stock or (ii) if the
Company shall offer to the holders of Common Stock for subscription or
purchase by them any share of any class or any other rights or (iii) if
any capital reorganization of the Company, reclassification of the capital
stock of the Company, consolidation or merger of the Company with or into
another corporation, sale, lease or transfer of all or substantially all
of the property and assets of the Company to another corporation, or
voluntary or involuntary dissolution, liquidation or winding up of the
Company shall be effected, then in any such case, the Company shall cause
to be mailed by certified mail to the Holder, at least fifteen days prior
to the date specified in (x) or (y) below, as the case may be, a notice
containing a brief description of the proposed action and stating the date
on which (x) a record is to be taken for the purpose of such dividend,
distribution or rights, or (y) such reclassification, reorganization,
consolidation, merger, conveyance, lease, dissolution, liquidation or
winding up is to take place and the date, if any is to be fixed, as of
which the holders of Common Stock or other securities shall receive cash
or other property deliverable upon such reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding
up. |
| (i) |
RECLASSIFICATION
REORGANIZATION OR MERGER.
In case of any reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the Company, or in case of any
consolidation or merger of the Company with or into another corporation
(other than a merger with a subsidiary in which merger the Company is the
continuing corporation and which does not result in any reclassification,
capital reorganization or other change or outstanding shares of Common
Stock of the class issuable upon exercise of this Warrant) or in case of
any sale, lease or conveyance to another corporation of the property of
the Company as an entirety, the Company shall, as a condition precedent to
such transaction, cause effective provisions to be made so that the Holder
shall have the right thereafter by exercising this Warrant at any time
prior to the expiration of the Warrant, to purchase the kind and amount of
shares of stock and other securities and property receivable upon such
reclassification, capital reorganization and other change, consolidation,
merger, sale or conveyance by a holder of the number of shares of Common
Stock which might have been purchased upon exercise of this Warrant
immediately prior to such reclassification, change, consolidation, merger,
sale or conveyance. Any such provision shall include provision for
adjustments which shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Warrant. The foregoing provisions of
this Section (i) shall similarly apply to successive reclassifications,
capital reorganizations and changes of shares of Common Stock and to
successive consolidations, mergers, sales or conveyances. In the event
that in connection with any such capital reorganization or
reclassification, consolidation, merger, sale or conveyance, additional
shares of Common Stock shall be issued in exchange, conversion,
substitution or payment, in whole or in part, for a security of the
Company other than Common Stock, any such issue shall be treated as an
issue of Common Stock covered by the provisions of Subsection (1) of
Section (f) hereof. |
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| (j) |
RESTRICTIVE
LEGEND.
Each Warrant Share, when issued, shall include a legend in substantially
the following form: THE ISSUANCE OF THESE SHARES HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE “ACT”)
NOR UNDER ANY STATE SECURITIES LAW AND THESE SHARES MAY NOT BE PLEDGED,
SOLD, ASSIGNED OR OTHERWISE TRANSFERRED UNTIL A (1) REGISTRATION STATEMENT
UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAW HAS BECOME EFFECTIVE
WITH RESPECT THERETO, OR (2) RECEIPT BY THE COMPANY OF AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY (IF SO REQUESTED) TO THE EFFECT THAT
REGISTRATION UNDER THE ACT OR APPLICABLE STATE SECURITIES LAW IS NOT
REQUIRED IN CONNECTION WITH THE PROPOSED
TRANSFER. |
| (k) |
MARKET
STAND-OFF.
By acceptance of this Warrant, Holder agrees, if requested by an
underwriter of Common Stock, (1) not to sell or otherwise transfer or
dispose of this Warrant or Warrant Shares during the 180-day period
following the effective date of any registration statement of the Company
prepared and filed under the Act and (2) to execute a separate agreement
to the foregoing effect. The Company may impose stop-transfer instructions
with respect to the Warrant and Warrant Shares subject to the foregoing
restriction until the end of said 180-day
period. |
| (l) |
REDEMPTIONS.
|
| (1) |
Within
three (3) business days of the consummation of an underwritten public
offering of any shares of the Company’s capital stock resulting in
aggregate proceeds to the Company in excess of $25 million (an “IPO”), the
Company shall redeem and acquire from Holder, and Holder shall sell,
transfer and assign to the Company, Holder’s right to acquire 50% of the
Warrant Shares issuable under this Warrant as of the date hereof for a
purchase price equal to $_______ (the “Redemption
Price”).
To the extent that the Holder exercises this Warrant for more than 50% of
the Warrant Shares issuable under this Warrant, as
the number of Warrant Shares issuable under this Warrant may have been
adjusted pursuant to Section (f), the Redemption Price shall be
proportionally reduced to take into consideration such
exercise. |
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| (2) |
If
an IPO has not been consummated by June 1, 2006, Holder shall have the
right to sell, transfer and assign to the Company, and the upon exercise
of that right the Company shall redeem and acquire from Holder, all of
Holder’s right to acquire Warrant Shares issuable under this Warrant for a
purchase price equal to $_______; provided,
however,
that this right shall terminate upon the exercise, in whole or in part, by
Holder of this Warrant. If for any reason payment to Holder is not made on
June 1, 2006 (including, without limitation, because such payment is
prohibited by the terms of the Company’s agreements with Senior Lender),
amounts due hereunder shall accrue interest from the date due until the
date paid at a rate equal to the prime rate of interest charged as of June
1, 2006 by the Company’s principal lender plus two percent (2%) per
annum. |
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Dated:
February 28, 2005
ALLION
HEALTHCARE, INC.
By:
Name:
Xxxxxxx Xxxxx
Title:
President & CEO
[signature
page to Warrant]
10
PURCHASE FORM
Dated_______________
__
The
undersigned hereby irrevocably elects to exercise the within Warrant to the
extent of purchasing ________ shares of Common Stock and hereby makes payment of
_______ in payment of the actual exercise price thereof. In lieu of payment of
the actual exercise price, the undersigned may direct the Company to net issue
such shares of Common Stock in accordance with Section (a)(2) of the within
Warrant by writing “net issue” in the space after “payment” of in the preceding
sentence.
INSTRUCTIQNS
FOR REGISTRATION OF STOCK
Name
(Please
typewrite or print in block letters)
Address
Signature
11
ASSIGNMENT
FORM
FOR VALUE
RECEIVED; _____________________ hereby sells, assigns and transfers
unto
Name
(Please
typewrite or print in block letters)
Address
the right
to purchase Common Stock represented by this Warrant to the extent of ________
shares as to which such right is exercisable and does hereby irrevocably
constitute and appoint ______________ attorney, to transfer the same on the
books of the Company with full power of substitution in the
premises.
Date ,
200_
Signature
12
