Contract
Exhibit
10.4
THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER
SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO PATIENTS & PHYSICIANS, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.
Right
to
Purchase up to 621,118 Shares of Common Stock of
Patients
& Physicians, Inc.
(subject
to adjustment as provided herein)
COMMON
STOCK PURCHASE WARRANT
|
No.
W-1
|
Issue
Date: August 22, 2006
|
PATIENTS
& PHYSICIANS, INC., a corporation organized under the laws of the State of
Delaware (the “Company”), hereby certifies that, for value received, LAURUS
MASTER FUND, LTD., or assigns (the “Holder”), is entitled, subject to the terms
set forth below, to purchase from the Company from and after the Issue Date
of
this Warrant and at any time or from time to time before 5:00 p.m., New York
time, through the close of business January 31, 2013 (the “Expiration Date”), up
to 621,118 fully paid and nonassessable shares of Common Stock (as hereinafter
defined), $0.001 par value per share, at the applicable Exercise Price per
share
(as defined below). The number and character of such shares of Common Stock
and
the applicable Exercise Price per share are subject to adjustment as provided
herein.
As
used
herein the following terms, unless the context otherwise requires, have the
following respective meanings:
(a) “Common
Stock” means (i) the Company’s Common Stock, par value $0.001 per share; and
(ii) any other securities into which or for which any of the securities
described in the preceding clause (i) may be converted or exchanged pursuant
to
a plan of recapitalization, reorganization, merger, sale of assets or
otherwise.
(b) “Company”
means Patients & Physicians, Inc. and any person or entity which shall
succeed, or assume the obligations of, Patients & Physicians, Inc.
hereunder.
(c) “Exercise
Price” means a price of $0.92.
(d) “Other
Securities” means any stock (other than Common Stock) and other securities of
the Company or any other person (corporate or otherwise) which the holder of
the
Warrant at any time shall be entitled to receive, or shall have received, on
the
exercise of the Warrant, in lieu of or in addition to Common Stock, or which
at
any time shall be issuable or shall have been issued in exchange for or in
replacement of Common Stock or Other Securities pursuant to Section 4 or
otherwise.
1. Exercise
of Warrant.
1.1 Number
of Shares Issuable upon Exercise.
From
and after the date hereof through and including the Expiration Date, the Holder
shall be entitled to receive, upon exercise of this Warrant in whole or in
part,
by delivery of an original or fax copy of an exercise notice in the form
attached hereto as Exhibit
A
(the
“Exercise Notice”), shares of Common Stock of the Company, subject to adjustment
pursuant to Section 4.
1.2 Fair
Market Value.
For
purposes hereof, the “Fair Market Value” of a share of Common Stock as of a
particular date (the “Determination Date”) shall mean:
(a) If
the
Company’s Common Stock is traded on the American Stock Exchange or another
national exchange or is quoted on the National or SmallCap Market of The Nasdaq
Stock Market, Inc. (“Nasdaq”), then the closing or last sale price,
respectively, reported for the last business day immediately preceding the
Determination Date.
(b) If
the
Company’s Common Stock is not traded on the American Stock Exchange or another
national exchange or on the Nasdaq but is traded on the NASD Over the Counter
Bulletin Board, then the mean of the average of the closing bid and asked prices
reported for the last business day immediately preceding the Determination
Date.
(c) Except
as
provided in clause (d) below, if the Company’s Common Stock is not publicly
traded, then as the Holder and the Company agree or in the absence of agreement
by arbitration in accordance with the rules then in effect of the American
Arbitration Association, before a single arbitrator to be chosen from a panel
of
persons qualified by education and training to pass on the matter to be
decided.
(d) If
the
Determination Date is the date of a liquidation, dissolution or winding up,
or
any event deemed to be a liquidation, dissolution or winding up pursuant to
the
Company’s charter, then all amounts to be payable per share to holders of the
Common Stock pursuant to the charter in the event of such liquidation,
dissolution or winding up, plus all other amounts to be payable per share in
respect of the Common Stock in liquidation under the charter, assuming for
the
purposes of this clause (d) that all of the shares of Common Stock then issuable
upon exercise of the Warrant are outstanding at the Determination
Date.
1.3 Company
Acknowledgment.
The
Company will, at the time of the exercise of this Warrant, upon the request
of
the Holder hereof acknowledge in writing its continuing obligation to afford
to
such Holder any rights to which such Holder shall continue to be entitled after
such exercise in accordance with the provisions of this Warrant. If the Holder
shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to such Holder any such
rights.
2
1.4 Trustee
for Warrant Holders.
In the
event that a bank or trust company shall have been appointed as trustee for
the
Holders of this Warrant pursuant to Subsection 3.2, such bank or trust company
shall have all the powers and duties of a warrant agent (as hereinafter
described) and shall accept, in its own name for the account of the Company
or
such successor person as may be entitled thereto, all amounts otherwise payable
to the Company or such successor, as the case may be, on exercise of this
Warrant pursuant to this Section 1.
2. Procedure
for Exercise.
2.1 Delivery
of Stock Certificates, Etc., on Exercise.
The
Company agrees that the shares of Common Stock purchased upon exercise of this
Warrant shall be deemed to be issued to the Holder as the record owner of such
shares as of the close of business on the date on which this Warrant shall
have
been surrendered and payment shall have been made for such shares in accordance
herewith. Each date on which an Exercise Notice is delivered or telecopied
to
the Company in accordance with the provisions hereof shall be deemed a Exercise
Date (the “Exercise Date”). Pursuant to the terms of each Exercise Notice, the
Company at its expense (including the payment by it of any applicable issue
taxes) will issue instructions to the transfer agent within one (1) business
day
of the date of the delivery to the Company of an Exercise Notice and shall
cause
the transfer agent to transmit the certificates representing the Shares of
Common Stock (“Warrant Shares”) purchased and issuable upon such exercise to the
Holder by crediting the account of the Holder’s designated broker with the
Depository Trust Corporation (“DTC”) through its Deposit Withdrawal Agent
Commission (“DWAC”) system within three (3) business days after receipt by the
Company of the Exercise Notice. In the case of the exercise of this Warrant
such
exercise shall be deemed to have been exercised and the Warrant Shares shall
be
deemed to have been issued upon the date of receipt by the Company of the
Exercise Notice. The Holder shall be treated for all purposes as the record
holder of the Warrant Shares.
2.2 Exercise.
(a) Payment
may be made either (i) in cash or by certified or official bank check payable
to
the order of the Company equal to the applicable aggregate Exercise Price,
(ii)
by delivery of this Warrant, or shares of Common Stock and/or Common Stock
receivable upon exercise of this Warrant in accordance with the formula set
forth in subsection (b) below, or (iii) by a combination of any of the foregoing
methods, for the number of Common Shares specified in the Exercise Notice (as
such exercise number shall be adjusted to reflect any adjustment in the total
number of shares of Common Stock issuable to the Holder per the terms of this
Warrant) and the Holder shall thereupon be entitled to receive the number of
duly authorized, validly issued, fully-paid and non-assessable shares of Common
Stock (or Other Securities) determined as provided herein.
(b) Notwithstanding
any provisions herein to the contrary, if the Fair Market Value of one share
of
Common Stock is greater than the Exercise Price (at the date of calculation
as
set forth below), in lieu of exercising this Warrant for cash, the Holder may
elect to receive shares equal to the value (as determined below) of this Warrant
(or the portion thereof being exercised) by surrender of this Warrant at the
principal office of the Company together with the properly endorsed Exercise
Notice in which event the Company shall issue to the Holder a number of shares
of Common Stock computed using the following formula:
3
|
X=
|
Y(A-B)
A
|
|
Where
X =
|
the
number of shares of Common Stock to be issued to the
Holder
|
|
Y
=
|
the
number of shares of Common Stock purchasable under this Warrant or,
if
only a portion of this Warrant is being exercised, the portion of
this
Warrant being exercised (at the date of such
calculation)
|
|
A
=
|
the
Fair Market Value of one share of the Company’s Common Stock (at the date
of such calculation)
|
|
B
=
|
the
Exercise Price per share (as adjusted to the date of such
calculation)
|
3. Effect
of Reorganization, Etc.; Adjustment of Exercise Price.
3.1 Reorganization,
Consolidation, Merger, Etc.
In case
at any time or from time to time, the Company shall (a) effect a reorganization,
(b) consolidate with or merge into any other person, or (c) transfer all or
substantially all of its properties or assets to any other person under any
plan
or arrangement contemplating the dissolution of the Company, then, in each
such
case, as a condition to the consummation of such a transaction, proper and
adequate provision shall be made by the Company whereby the Holders, on the
exercise hereof as provided in Section 1 at any time after the consummation
of
such reorganization, consolidation or merger or the effective date of such
dissolution, as the case may be, shall receive, in lieu of the Common Stock
(or
Other Securities) issuable on such exercise prior to such consummation or such
effective date, the stock and other securities and property (including cash)
to
which such Holder would have been entitled upon such consummation or in
connection with such dissolution, as the case may be, if such Holder had so
exercised this Warrant, immediately prior thereto, all subject to further
adjustment thereafter as provided in Section 4.
3.2 Dissolution.
In the
event of any dissolution of the Company following the transfer of all or
substantially all of its properties or assets, the Company, concurrently with
any distributions made to holders of its Common Stock, shall at its expense
deliver or cause to be delivered to the Holder the stock and other securities
and property (including cash, where applicable) receivable by the Holder
pursuant to Section 3.1, or, if the Holder shall so instruct the Company, to
a
bank or trust company specified by the Holder and having its principal office
in
New York, NY as trustee for the Holder (the “Trustee”).
3.3 Continuation
of Terms.
Upon
any reorganization, consolidation, merger or transfer (and any dissolution
following any transfer) referred to in this Section 3, this Warrant shall
continue in full force and effect and the terms hereof shall be applicable
to
the shares of stock and other securities and property receivable on the exercise
of this Warrant after the consummation of such reorganization, consolidation
or
merger or the effective date of dissolution following any such transfer, as
the
case may be, and shall be binding upon the issuer of any such stock or other
securities, including, in the case of any such transfer, the person acquiring
all or substantially all of the properties or assets of the Company, whether
or
not such person shall have expressly assumed the terms of this Warrant as
provided in Section 4. In the event this Warrant does not continue in full
force
and effect after the consummation of the transactions described in this Section
3, then the Company’s securities and property (including cash, where applicable)
receivable by the Holder will be delivered to the Holder or the Trustee as
contemplated by Section 3.2.
4
4. Extraordinary
Events Regarding Common Stock.
In the
event that the Company shall (a) issue additional shares of the Common Stock
as
a dividend or other distribution on outstanding Common Stock or any preferred
stock issued by the Company, (b) subdivide its outstanding shares of Common
Stock, or (c) combine its outstanding shares of the Common Stock into a smaller
number of shares of the Common Stock, then, in each such event, the Exercise
Price shall, simultaneously with the happening of such event, be adjusted by
multiplying the then Exercise Price by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
event and the denominator of which shall be the number of shares of Common
Stock
outstanding immediately after such event, and the product so obtained shall
thereafter be the Exercise Price then in effect. The Exercise Price, as so
adjusted, shall be readjusted in the same manner upon the happening of any
successive event or events described herein in this Section 4. The number of
shares of Common Stock that the Holder shall thereafter, on the exercise hereof
as provided in Section 1, be entitled to receive shall be adjusted to a number
determined by multiplying the number of shares of Common Stock that would
otherwise (but for the provisions of this Section 4) be issuable on such
exercise by a fraction of which (a) the numerator is the Exercise Price that
would otherwise (but for the provisions of this Section 4) be in effect, and
(b)
the denominator is the Exercise Price in effect on the date of such exercise
(taking into account the provisions of this Section 4).
5. Certificate
as to Adjustments.
In each
case of any adjustment or readjustment in the shares of Common Stock (or Other
Securities) issuable on the exercise of this Warrant, the Company at its expense
will promptly cause its Chief Financial Officer or other appropriate designee
to
compute such adjustment or readjustment in accordance with the terms of this
Warrant and prepare a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment
is
based, including a statement of (a) the consideration received or receivable
by
the Company for any additional shares of Common Stock (or Other Securities)
issued or sold or deemed to have been issued or sold, (b) the number of shares
of Common Stock (or Other Securities) outstanding or deemed to be outstanding,
and (c) the Exercise Price and the number of shares of Common Stock to be
received upon exercise of this Warrant, in effect immediately prior to such
adjustment or readjustment and as adjusted or readjusted as provided in this
Warrant. The Company will forthwith mail a copy of each such certificate to
the
Holder and any Warrant agent of the Company (appointed pursuant to Section
11
hereof).
6. Reservation
of Stock, Etc., Issuable on Exercise of Warrant.
The
Company will at all times reserve and keep available, solely for issuance and
delivery on the exercise of this Warrant, shares of Common Stock (or Other
Securities) from time to time issuable on the exercise of this
Warrant.
5
7. Assignment;
Exchange of Warrant.
Subject
to compliance with applicable securities laws, this Warrant, and the rights
evidenced hereby, may be transferred by any registered holder hereof (a
“Transferor”) in whole or in part. On the surrender for exchange of this
Warrant, with the Transferor’s endorsement in the form of Exhibit B attached
hereto (the “Transferor Endorsement Form”) and together with evidence reasonably
satisfactory to the Company demonstrating compliance with applicable securities
laws, which shall include, without limitation, the provision of a legal opinion
from the Transferor’s counsel (at the Company’s expense) that such transfer is
exempt from the registration requirements of applicable securities laws, the
Company at its expense (but with payment by the Transferor of any applicable
transfer taxes) will issue and deliver to or on the order of the Transferor
thereof a new Warrant of like tenor, in the name of the Transferor and/or the
transferee(s) specified in such Transferor Endorsement Form (each a
“Transferee”), calling in the aggregate on the face or faces thereof for the
number of shares of Common Stock called for on the face or faces of the Warrant
so surrendered by the Transferor.
8. Replacement
of Warrant.
On
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of any such loss,
theft or destruction of this Warrant, on delivery of an indemnity agreement
or
security reasonably satisfactory in form and amount to the Company or, in the
case of any such mutilation, on surrender and cancellation of this Warrant,
the
Company at its expense will execute and deliver, in lieu thereof, a new Warrant
of like tenor.
9. Registration
Rights.
The
Holder has been granted certain registration rights by the Company. These
registration rights are set forth in a Registration Rights Agreement entered
into by the Company and Holder dated as of the date hereof, as the same may
be
amended, modified and/or supplemented from time to time.
10. Maximum
Exercise.
Notwithstanding anything contained herein to the contrary, the Holder shall
not
be entitled to exercise this Warrant in connection with that number of shares
of
Common Stock which would exceed the difference between (i) 4.99% of the issued
and outstanding shares of Common Stock and (ii) the number of shares of Common
Stock beneficially owned by the Holder. For the purposes of the immediately
preceding sentence, beneficial ownership shall be determined in accordance
with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation
13d-3 thereunder. The limitation described in the first sentence of this Section
10 shall automatically become null and void following notice to the Company
upon
the occurrence and during the continuance of an Event of Default under and
as
defined in the Note made by the Company to the Holder dated the date hereof
(as
amended, modified or supplemented from time to time, the “Note”), upon 75 days
prior notice to the Company, or upon receipt by the Holder of a Notice of
Redemption (as defined in the Note).
11. Warrant
Agent.
The
Company may, by written notice to the Holder of the Warrant, appoint an agent
for the purpose of issuing Common Stock (or Other Securities) on the exercise
of
this Warrant pursuant to Section 1, exchanging this Warrant pursuant to Section
7, and replacing this Warrant pursuant to Section 8, or any of the foregoing,
and thereafter any such issuance, exchange or replacement, as the case may
be,
shall be made at such office by such agent.
6
12. Transfer
on the Company’s Books.
Until
this Warrant is transferred on the books of the Company, the Company may treat
the registered Holder hereof as the absolute owner hereof for all purposes,
notwithstanding any notice to the contrary.
13. Notices,
Etc.
All
notices and other communications from the Company to the Holder shall be mailed
by first class registered or certified mail, postage prepaid, at such address
as
may have been furnished to the Company in writing by such Holder or, until
any
such Holder furnishes to the Company an address, then to, and at the address
of,
the last Holder who has so furnished an address to the Company.
14. Miscellaneous.
This
Warrant and any term hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party against which enforcement
of such change, waiver, discharge or termination is sought. THIS WARRANT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. ANY ACTION BROUGHT
CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS WARRANT SHALL BE BROUGHT ONLY
IN THE STATE COURTS OF NEW YORK OR IN THE FEDERAL COURTS LOCATED IN THE STATE
OF
NEW YORK; PROVIDED, HOWEVER, THAT THE HOLDER MAY CHOOSE TO WAIVE THIS PROVISION
AND BRING AN ACTION OUTSIDE THE STATE OF NEW YORK. The individuals executing
this Warrant on behalf of the Company agree to submit to the jurisdiction of
such courts and waive trial by jury. The prevailing party shall be entitled
to
recover from the other party its reasonable attorneys’ fees and costs. In the
event that any provision of this Warrant is invalid or unenforceable under
any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of this Warrant. The headings in this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof. The Company acknowledges that legal counsel
participated in the preparation of this Warrant and, therefore, stipulates
that
the rule of construction that ambiguities are to be resolved against the
drafting party shall not be applied in the interpretation of this Warrant to
favor any party against the other party.
[BALANCE
OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE
PAGE FOLLOWS]
7
IN
WITNESS WHEREOF, the Company has executed this Common Stock Purchase Warrant
as
of the date first written above.
|
PATIENTS
& PHYSICIANS, INC.
|
|
|
WITNESS:
|
|
|
By:/S/
Xxxx X.
Xxxxx
|
|
|
Name:Xxxx
X.
Xxxxx
|
|
|
/S/
Xxxxxx
Xxxxx
|
Title:CEO
|
Exhibit
A
FORM
OF SUBSCRIPTION
(To
Be
Signed Only On Exercise Of Warrant)
|
TO:
|
Patients
& Physicians, Inc.
|
[432
Park
Avenue South, 13th
Floor
Attention: Chief
Financial Officer
The
undersigned, pursuant to the provisions set forth in the attached Warrant (No.
____), hereby irrevocably elects to purchase (check applicable
box):
| o |
________
shares of the Common Stock covered by such Warrant; or
|
| o |
the
maximum number of shares of Common Stock covered by such Warrant
pursuant
to the cashless exercise procedure set forth in Section
2.
|
The
undersigned herewith makes payment of the full Exercise Price for such shares
at
the price per share provided for in such Warrant, which is $___________. Such
payment takes the form of (check applicable box or boxes):
| o |
$__________
in lawful money of the United States; and/or
|
| o |
the
cancellation of such portion of the attached Warrant as is exercisable
for
a total of _______ shares of Common Stock (using a Fair Market Value
of
$_______ per share for purposes of this calculation);
and/or
|
| o |
the
cancellation of such number of shares of Common Stock as is necessary,
in
accordance with the formula set forth in Section 2.2, to exercise
this
Warrant with respect to the maximum number of shares of Common Stock
purchasable pursuant to the cashless exercise procedure set forth
in
Section 2.
|
The
undersigned requests that the certificates for such shares be issued in the
name
of, and delivered to _________________ whose address is
_____________________________________.
The
undersigned represents and warrants that all offers and sales by the undersigned
of the securities issuable upon exercise of the within Warrant shall be made
pursuant to registration of the Common Stock under the Securities Act of 1933,
as amended (the “Securities Act”) or pursuant to an exemption from registration
under the Securities Act.
|
Dated:
________________________________
|
________________________________________ |
|
(Signature
must conform to name of holder as specified on the face of the
Warrant)
|
|
|
Address:
________________________________
|
|
|
________________________________
|
Exhibit
B
FORM
OF TRANSFEROR ENDORSEMENT
(To
Be
Signed Only On Transfer Of Warrant)
For
value
received, the undersigned hereby sells, assigns, and transfers unto the
person(s) named below under the heading “Transferees” the right represented by
the within Warrant to purchase the percentage and number of shares of Common
Stock of Patients & Physicians, Inc. into which the within Warrant relates
specified under the headings “Percentage Transferred” and “Number Transferred,”
respectively, opposite the name(s) of such person(s) and appoints each such
person attorney to transfer its respective right on the books of Patients &
Physicians, Inc. with full power of substitution in the premises.
|
Transferees
|
Address
|
Percentage
Transferred
|
Number
Transferred
|
|||
|
Dated:
________________________________
|
________________________________________ |
|
(Signature
must conform to name of holder as specified on the face of the
Warrant)
|
|
|
Address:
________________________________
|
|
|
________________________________
|
|
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SIGNED
IN THE PRESENCE OF:
|
|
| ________________________________ | |
|
(Name)
|
|
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ACCEPTED
AND AGREED:
|
|
|
[TRANSFEREE]
|
|
| ________________________________ | |
|
(Name)
|
