THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT PURSUANT...
Exhibit
10.123
THIS WARRANT AND THE SECURITIES
ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”),
AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED OR DISPOSED OF
EXCEPT PURSUANT TO (1) A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR (2) UPON
DELIVERY OF A LEGAL OPINION TO THE COMPANY, IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE COMPANY, THAT ANY SUCH TRANSACTION IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
Dated: April
15, 2008
WARRANT
To
Purchase 100,000 shares of
Common
Stock, $.01 par value
of
Performance
Health Technologies, Inc.
Expiring
December 31, 2010
THIS IS
TO CERTIFY THAT, for value received, JACSON LONG, or his registered
assigns (hereinafter referred to as the (“Holder”), is entitled to subscribe and
purchase from PERFORMANCE
HEALTH TECHNOLOGIES, INC., a Delaware corporation (the
“Company”), commencing on the date hereof, 100,000 shares of Common Stock, $.01
par value, of the Company (the “Shares”), at the place where the Warrant Agency
(as hereinafter defined) is located, at the Exercise Price (as hereinafter
defined), all subject to adjustment and upon the terms and conditions as
hereinafter provided, and is entitled also to exercise the other appurtenant
rights, powers and privileges hereinafter described; provided, however, that in
no event shall the Holder be entitled to exercise this Warrant for a number of
Shares in excess of that number of Shares which, upon giving effect to such
exercise, would cause the aggregate number of shares of Company Common Stock
beneficially owned by the Holder and its affiliates to exceed 9.99% of the
outstanding shares of the Company Common Stock following such exercise, except
within sixty (60) days of the Expiration Date. For purposes of the
foregoing proviso, the aggregate number of shares of Common Stock beneficially
owned by the Holder and its affiliates shall include the number of shares of
Common Stock issuable upon exercise of this Warrant with respect to which the
determination of such proviso is being made, but shall exclude shares of Common
Stock which would be issuable upon (i) exercise of the remaining, unexercised
Warrants beneficially owned by the holder and its affiliates and (ii) exercise
or conversion of the unexercised or unconverted portion of any other securities
of the Company beneficially owned by the holder and its affiliates (including,
without limitation, any convertible notes or preferred stock) subject to a
limitation on conversion or exercise analogous to the limitation contained
herein. Except as set forth in the preceding sentence, for purposes
of this paragraph, beneficial ownership shall be calculated in accordance with
Section
- 1
-
13(d) of
the Securities Exchange Act of 1934, as amended. For purposes of this
Warrant, in determining the number of outstanding shares of Common Stock a
Holder may rely on the number of outstanding shares of Common Stock as reflected
in (1) the Company’s most recent Form 10-QSB or Form 10-KSB, as the case may be,
(2) a more recent public announcement by the Company or (3) any other notice by
the Company or its transfer agent setting forth the number of shares of Common
Stock outstanding. Upon the written request of any holder, the
Company shall promptly, but in no event later than one (1) Business Day
following the receipt of such notice, confirm in writing to any such holder the
number of shares of Common Stock then outstanding. In any case, the
number of outstanding shares of Common Stock shall be determined after giving
effect to the exercise of Warrants (as defined below) by such holder and its
affiliates since the date as of which such number of outstanding shares of
Common Stock was reported.
Capitalized
terms used in this Warrant and not otherwise defined shall have the meanings set
forth in Article IV hereof.
ARTICLE
I
EXERCISE
OF WARRANTS
Section
1.01 Method of
Exercise. To exercise this Warrant in whole or in part, the
Holder shall deliver to the Company at the Warrant Agency, (a) this Warrant, (b)
a written notice, in substantially the form of the Subscription Notice attached
hereto, of such Holder's election to exercise this Warrant, which notice shall
specify the number of Shares to be purchased, the denominations of the share
certificate or certificates desired and the name or names in which such
certificates are to be registered and (c) the aggregate Exercise Price for the
Shares purchased (unless the Holder chooses the “cashless exercise” option
provided in the third paragraph of this Section 1.01).
The
Company shall, as promptly as practicable and in any event within seventy-two
hours thereafter, execute and deliver or cause to be executed and delivered, in
accordance with such notice, a certificate or certificates representing the
aggregate number of Shares specified in said notice. The Share
certificate or certificates so delivered shall be in such denominations as
determined by the Company, or as may be specified in such notice, and shall be
issued in the name of the Holder or such other name or names as shall be
designated in such notice. Such certificate or certificates shall be
deemed to have been issued, and such Holder or any other person so designated to
be named therein shall be deemed for all purposes to have become holders of
record of such Shares, as of the date the aforementioned notice is received by
the Company. If this Warrant shall have been exercised only in part,
the Company shall, at the time of delivery of the certificate or certificates,
deliver to the Holder a new Warrant evidencing the rights to purchase the
remaining Shares called for by this Warrant, which new Warrant shall in all
other respects be identical with this Warrant, or, at the request of the Holder,
appropriate notation may be made on this Warrant which shall then be returned to
the Holder. The Company shall pay all expenses, payable in connection
with the preparation, issuance and delivery of Share certificates and new
Warrants as contemplated by Section 2.07 below (other than transfer, income or
similar taxes in connection with the transfer of securities), except that, if
Share certificates or new Warrants shall be registered in a name or names other
than the name of the Holder, funds sufficient to pay all transfer taxes payable
as a result of such transfer shall be paid by the Holder at the time of
delivering the aforementioned notice of exercise or promptly upon receipt of a
written request of the Company for payment.
In lieu
of a monetary payment of the aggregate Exercise Price, the Holder may elect to
receive, without the payment of any additional consideration, Shares equal to
the value of this
- 2
-
Warrant
or portion thereof by the surrender of such Warrant to the Company with the
“cashless exercise” election marked in the form of Subscription
Notice. Thereupon, the Company shall issue to the Holder, such number
of fully paid and non-assessable Shares as is computed using the following
formula:
X =
Y(A-B)
A
|
|
Where
|
X=
|
the
number of Shares to be issued to the Holder pursuant to this Section
1.01 upon such cashless exercise
election.
|
|
|
Y=
|
the
number of Shares covered by this Warrant in respect of which the cashless
exercise election is made.
|
|
|
A=
|
the
Fair Market Value (as defined in Article IV hereof) of one Share, as at
the time the cashless exercise election is
made.
|
|
|
B=
|
the
Exercise Price in effect under this Warrant at the time the cashless
exercise election is made.
|
Section
1.02 Shares To Be
Fully Paid and Non-assessable. All Shares issued upon the
exercise of this Warrant (the “Warrant Shares”) pursuant to Section 1.01 above
shall be validly issued, fully paid and nonassessable and the Company shall at
all times reserve and keep available out of its authorized shares of Common
Stock a sufficient number of Shares for the purpose of issuance of the Warrant
Shares upon the exercise of this Warrant.
Section
1.03 No Fractional
Shares To Be Issued. The Company shall not be required to
issue fractions of Shares upon exercise of this Warrant. If any
fraction of a Share would, but for this Section, be issuable upon any exercise
of this Warrant, in lieu of such fractional Share the Company shall pay to the
Holder or Holders, as the case may be, in cash, an amount equal to the same
fraction of the Fair Market Value per share of outstanding Shares on the
Business Day immediately prior to the date of such exercise.
Section
1.04 Share
Legend. Each certificate for Shares issued upon exercise of
this Warrant shall bear the legend set forth below, unless Holder's Counsel (as
defined below) shall render an opinion in form and substance reasonably
satisfactory to the Company that such legend is not required or at the time of
exercise such Shares are registered under the Securities Act:
THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT PURSUANT
TO (1) A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR (2) UPON DELIVERY OF A LEGAL OPINION TO THE
COMPANY, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, THAT ANY
SUCH TRANSACTION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
- 3
-
Any
certificate issued at any time in exchange or substitution for any certificate
bearing such legend (except a new certificate issued upon completion of a public
distribution pursuant to a registration statement under the Securities Act)
shall also bear such legend unless, in the opinion (in form and substance
reasonably satisfactory to the Company) of counsel selected by the Holder of
such certificate and who is reasonably acceptable to the Company (“Holder's
Counsel”), the securities represented thereby need no longer be subject to
restrictions on resale under the Securities Act.
ARTICLE
II
WARRANT
AGENCY; TRANSFER,
EXCHANGE
AND REPLACEMENT OF WARRANTS
Section
2.01 Warrant
Agency. Until such time, if any, as an independent agency
shall be appointed by the Company to perform services with respect to the
Warrants described herein (the “Warrant Agency”), the Company shall perform the
obligations of the Warrant Agency provided herein at its principal office
address or such other address as the Company shall specify by prior written
notice to all Holders.
Section
2.02 Ownership of
Warrant. The Company may deem and treat the person in whose
name this Warrant is registered as the holder and owner hereof (notwithstanding
any notations of ownership or writing hereon made by any person other than the
Company) for all purposes and shall not be affected by any notice to the
contrary, until presentation of this Warrant for registration of transfer as
provided in this Article II.
Section
2.03 Transfer of
Warrant. The Company agrees to maintain at the Warrant Agency
books for the registration of transfers of this Warrant and all rights hereunder
shall be registered, in whole or in part, on such books, upon surrender of this
Warrant at the Warrant Agency, together with a written assignment of this
Warrant duly executed by the Holder or its duly authorized agent or
attorney. Subject to applicable law and regulation and Section 2.04
hereof, upon surrender of this Warrant as provided for herein, the Company shall
execute and deliver a new Warrant or Warrants in the name of the assignee or
assignees and in the denominations specified in the instrument of assignment,
and this Warrant shall promptly be canceled. Notwithstanding the
foregoing, a Warrant may be exercised by a new Holder which has become the
registered Holder of such Warrant without having a new Warrant
issued.
Section
2.04 Restrictions on
Transfer. The Holder, by its acceptance hereof, represents
that this Warrant is being acquired for its own account, as an investment and
not with a view towards the further resale or the distribution thereof in
violation of the Securities Act, and agrees that this Warrant may not be
transferred, sold, assigned, hypothecated or otherwise disposed of, in whole or
in part, except as provided in the legend on the first page hereof and provided
that the Holder shall have furnished to the Company an opinion of Holder's
Counsel, in form and substance reasonably satisfactory to the Company, to the
effect that such transfer is exempt from the registration requirements of the
Securities Act and any applicable state securities laws.
Section
2.05 Division or
Combination of Warrants. This Warrant may be divided or
combined with other Warrants upon surrender hereof and of any Warrant or
Warrants with which this Warrant is to be combined at the Warrant Agency,
together with a written notice specifying the names and denominations in which
the new Warrant or Warrants are to be issued, signed by the holders hereof and
thereof or their respective duly authorized agents or
attorneys. Subject to compliance with Section 2.04 as to any transfer
which may be involved in the division or
- 4
-
combination,
the Company shall execute and deliver a new Warrant or Warrants in exchange for
the Warrant or Warrants to be divided or combined in accordance with such
notice.
Section
2.06 Loss, Theft,
Destruction of Warrant Certificates. Upon receipt by the
Company of a written notice (or other evidence reasonably satisfactory to the
Company) of the loss, theft, destruction or mutilation of any Warrant and, in
the case of any such loss, theft or destruction, upon receipt of indemnity or
security reasonably satisfactory to the Company or, in the case of any such
mutilation, upon surrender and cancellation of such Warrant, the Company will
make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant,
a new Warrant of like tenor and representing the right to purchase the same
aggregate number of Shares.
Section
2.07 Expenses of
Delivery of Warrants. The Company shall pay all expenses
(other than transfer taxes) and other charges payable in connection with the
preparation, issuance and delivery of Warrants and Warrant Shares
hereunder.
ARTICLE
III
COMPANY
COVENANTS AND REPRESENTATIONS
Section
3.01 Company
Covenants. In case at any time the Company shall (a) declare
any dividend or distribution on its Shares, whether payable in cash, stock or
other property, (b) offer to all holders of Shares any additional shares of
Common Stock, or any option, right or warrant to subscribe therefore, or (c)
declare a dissolution, liquidation or winding up of the Company (other than in
connection with a consolidation or merger) or propose a sale of substantially
all of its property, assets and business as an entirety, then the Company shall
give written notice to the Holder of the date on which the books of the Company
shall close or a record shall be taken for such action. Such notice
shall also specify the date as of which the holders of Shares of record shall
participate in such dividend or distribution. Such written notice
shall be given at least 30 days and not more than 90 days prior to the action in
question, and not less than 15 days prior to the relevant record date or the
date fixed for determining stockholders entitled to participate therein, as the
case may be.
Section
3.02 Authority,
Execution and Delivery. The Company hereby represents and
warrants that the Company has full corporate power and authority to enter into
this Warrant and to issue Shares in accordance with the terms
hereof. The execution, delivery and performance of this Warrant by
the Company have been duly and effectively authorized by the
Company. This Warrant has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
Section
3.03 Information
Requirements. To the extent applicable, the Company shall
promptly furnish the Holder with copies of all reports, proxy statements and
similar materials that it mails to holders of its Common Stock.
ARTICLE
IV
CERTAIN
DEFINITIONS
The
following terms, as used in this Warrant, have the following respective
meanings:
“Business
Days” means each day in which banking institutions in New York are not required
or authorized by law or executive order to close.
“Exercise
Price” means $0.30 per share, subject to adjustment pursuant to Article
V.
- 5
-
“Fair
Market Value” means the value of a share of Common Stock on a particular date,
determined as follows: (i) if the Common Stock is not listed on such date on any
national securities exchange but is traded in the over-the-counter market, the
closing “bid” quotations of a share of Common Stock on such date (or if none, on
the most recent date on which there were bid quotations of a share of Common
Stock), as reported on the National Association of Securities Dealers, Inc.
Automated Quotation System, or, if not so reported, as reported by the National
Quotation Bureau, Incorporated, or any other similar service selected by the
Board; or (ii) if the Common Stock is listed on such date on one or more
national securities exchanges, the last reported sale price of a share of Common
Stock on such date as recorded on the composite tape system, or, if such system
does not cover the Common Stock, the last reported sale price of a share of
Common Stock on such date on the principal national securities exchange on which
the Common Stock is listed, or if no sale of Common Stock took place on such
date, the last reported sale price of a share of Common Stock on the most recent
day on which a sale of a share of Common Stock took place as recorded by such
system or on such exchange, as the case may be; or (iii) if the Common Stock is
neither listed on such date on a national securities exchange nor traded in the
over-the-counter market, as determined by the Company.
ARTICLE
V
ANTIDILUTION
PROVISIONS
Section 5.01 Adjustments
Generally. The Exercise Price and the number of Shares (or
other securities or property) issuable upon exercise of this Warrant shall be
subject to adjustment from time to time upon the occurrence of certain events,
as provided in this Article V.
Section 5.02 Share
Reorganization. If the Company shall subdivide its outstanding
Shares into a greater number of Shares or consolidate its outstanding Shares
into a smaller number of Shares (any such event being called a “Share
Reorganization”), then (a) the Exercise Price shall be adjusted,
effective immediately after the record date at which the holders of Shares are
determined for purposes of such Share Reorganization, to a price determined by
multiplying the Exercise Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of Shares outstanding
on such record date before giving effect to such Share Reorganization and the
denominator of which shall be the number of Shares outstanding immediately after
giving effect to such Share Reorganization, and (b) the number of Shares subject
to purchase upon exercise of this Warrant shall be adjusted, effective at such
time, to a number determined by multiplying the number of Shares subject to
purchase immediately before such Share Reorganization by a fraction, the
numerator of which shall be the number of Shares outstanding immediately after
giving effect to such Share Reorganization and the denominator of which shall be
the number of Shares outstanding immediately before such Share
Reorganization.
Section 5.03 Below Market
Distribution.
(a) If the Company shall
issue or otherwise sell or distribute any Shares, other than pursuant to a Share
Reorganization (any such event, including any event described in paragraphs (c)
and (d) below, being herein called a “Below-Market
Distribution”) for a consideration per share less than the Exercise Price
per Share on the date of such issue, sale or distribution (before giving effect
to such issue, sale or distribution), then, effective upon such issue, sale or
distribution, the Exercise Price shall be reduced to the price determined by
multiplying the Exercise Price in effect immediately prior to such Below-Market
Distribution by a fraction, the numerator of which shall be the sum of (i) the
number of Shares outstanding immediately prior to such Below-Market
- 6
-
Distribution
multiplied by the Exercise Price per share on the date of such Below-Market
Distribution plus (ii) the consideration received by the Company upon such
Below-Market Distribution, and the denominator of which shall be the product of
(A) the total number of Shares outstanding immediately after such Below-Market
Distribution, multiplied by (B) the Exercise Price per share on the date of such
Below-Market Distribution. If any Below-Market Distribution shall
require an adjustment to the Exercise Price pursuant to the foregoing provisions
of this paragraph (a), then effective at the time such adjustment is made, the
number of Shares subject to purchase upon exercise of this Warrant shall be
increased to a number determined by multiplying the number of Shares subject to
purchase immediately before such Below-Market Distribution by a fraction, the
numerator of which the numerator of which shall be the Exercise Price in effect
immediately before such Below-Market Distribution and the denominator of which
shall be the Exercise Price in effect immediately after such Below-Market
Distribution.
(b) The
provisions of paragraph (a) above, including by operation of paragraph (c) or
(d) below, shall not operate to increase the Exercise Price or reduce the number
of shares of Shares subject to purchase upon exercise of this
Warrant. The provisions of paragraph (a) above, including operation
of paragraph (c) or (d) below, shall not apply to the issuance of any Shares,
the issuance of or exercise of any options, warrants, or other rights, the
conversion of any debt or any other convertible security (collectively,
“Securities”) to the extent (i) now or hereafter issued or granted pursuant to
the Company’s Incentive Stock Plan as in effect on Xxxxx 0, 0000, (xx) issued in
connection with any of the Company’s Securities outstanding on the date hereof,
or (iii) arising under transactions or agreements of the Company prior to March
1, 2008.
(c) If
the Company shall issue, sell, distribute or otherwise grant in any manner
(whether directly or by assumption in a merger or otherwise) any rights to
subscribe for or to purchase, or any warrants or options for the purchase of,
Shares or any stock or securities convertible into or exchangeable for Shares
(such rights, warrants or options being herein called “Options” and such
convertible or exchangeable stock or securities being herein called “Convertible
Securities”), whether or not such Options or the rights to convert or
exchange any such Convertible Securities are immediately exercisable, and the
price per share for which securities are issuable upon exercise of such Options
upon conversion or exchange of such Convertible Securities (determined by
dividing (i) the aggregate amount, if any, received or receivable by the Company
as consideration for the granting of such Options, plus the minimum aggregate
amount of additional consideration payable to the Company upon the exercise of
all such Options, plus, in the case of Options to acquire Convertible
Securities, the minimum aggregate amount of additional consideration, if any,
payable upon the issue or sale of such Convertible Securities and upon the
conversion or exchange thereof, by (ii) the total maximum number of Shares
issuable upon the exercise of such Options or upon the conversion or exchange of
all such Convertible Securities issuable upon the exercise of such Options)
shall be less than the Exercise Price per share of outstanding Shares on the
date of granting such Options (before giving effect to such grant), then, for
purposes of paragraph (a) above, the total maximum number of Shares issuable
upon the exercise of such Options or upon conversion or exchange of the
Convertible Securities issuable upon the exercise of such Options shall be
deemed to have been issued as of the date of granting of such Options and
thereafter shall be deemed to be outstanding and the Company shall be deemed to
have received as consideration such price per share, determined as
provided above, therefor. Except as otherwise provided in
paragraph (e) below, no additional adjustment of the Exercise Price shall be
made upon the actual exercise of such Options or upon conversion or exchange of
such Convertible Securities. The adjustment provided for in this
paragraph (c) shall give effect to the change in the Exercise Price and the
number of Shares issuable upon the exercise hereof only with respect to such
Options as remain outstanding.
- 7
-
(d) If
the Company shall issue, sell or otherwise distribute (whether directly or
otherwise) any Convertible Securities, whether or not the rights to exchange or
convert thereunder are immediately exercisable, and the price per share for
which Shares are issuable upon such conversion or exchange (determined by
dividing (i) the aggregate amount received or receivable by the Company as
consideration for the issue, sale or distribution of such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the conversion or exchange thereof, by (ii) the
total maximum number of Shares issuable upon the conversion or exchange of all
such Convertible Securities) shall be less than the Exercise Price per share of
outstanding Shares on the date of such issue, sale or distribution (before
giving effect to such issue, sale or distribution), then, for purposes of
paragraph (a) above, the total maximum number of Shares issuable upon conversion
or exchange of all such Convertible Securities shall be deemed to have been
issued as of the date of the issue, sale or distribution of such Convertible
Securities and thereafter shall be deemed to have received as consideration such
price per share, determined as provided above, therefor. Except as
otherwise provided in paragraph (e) below, no additional adjustment of the
Exercise Price shall be made upon the actual conversion or exchange of such
Convertible Securities.
(e) If
the purchase price provided for in any Option referred to in paragraph (c)
above, the additional consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in paragraph (c) or (d)
above, or the rate at which any Convertible Securities referred to in paragraph
(c) or (d) above are convertible into or exchangeable for Shares shall change at
any time (other than under or by reason of provisions designed to protect
against dilution upon an event which results in a related adjustment pursuant to
this Article V), including the cancellation and/or expiration or termination of
the Options and/or Convertible Securities, the Exercise Price then in effect
shall forthwith be readjusted (effective only with respect to any exercise of
this Warrant after such readjustment) to the Exercise Price which would then be
in effect had the adjustment made upon the issue, sale, distribution or grant of
such Options or Convertible Securities been made based upon such changed
purchase price, additional consideration or conversion rate, or in the event of
the cancellation, termination or expiration of the same, such adjustment shall
be made to reflect as if such issuance had never occurred, as the case may be;
provided, however, that such
readjustment (other than in the event of a cancellation, termination or
expiration) shall give effect to such change only with respect to such Options
and Convertible Securities as then remain outstanding.
(f) If
the Company shall pay a dividend or make any other distribution upon any capital
stock of the Company payable in Shares, Options or Convertible Securities, then,
for purposes of paragraph (a) above, such Shares, Options or Convertible
Securities, as the case may be, shall be deemed to have been issued or sold
without consideration.
(g) If
any Shares, Options or Convertible Securities shall be issued, sold or
distributed for cash, the consideration received therefor shall be deemed to be
the amount received by the Company therefor, after deduction therefrom of any
expenses incurred and any underwriting commission or concessions paid or allowed
by the Company in connection therewith. If any Shares, Options or
Convertible Securities shall be issued, sold or distributed for a consideration
other than cash, the amount of the consideration other than cash received by the
Company for purposes of this Section 5.03 shall be deemed to be the Fair Market
Value of such consideration, after deduction of any expenses incurred and any
underwriting commissions or concessions paid or allowed by the Company in
connection therewith. If any Shares, Options or Convertible
Securities shall be issued in connection with any merger in which the Company is
the surviving corporation, the amount of consideration therefor shall be deemed
to be the Fair Market Value of such portion of the assets and business of the
nonsurviving corporation as shall be attributable to such Shares, Option or
- 8
-
Convertible
Securities, as the case may be. If any Options shall be issued in
connection with the issue and sale of other securities of the Company, together
comprising one integral transaction in which no specific consideration is
allocated to such Options by the parties thereto, such Options shall be deemed
to have been issued without consideration.
Section 5.04 Special
Dividends. If the Company shall issue or distribute to any
holders of Shares, evidences of indebtedness, any other securities of the
Company or any cash, property or other assets, and if such issuance or
distribution does not constitute (a) a cash dividend or distribution out of
surplus or net profits legally available therefor; (b) a Share Reorganization;
or (c) a Below Market Distribution (any such nonexcluded event being
herein called a “Special Dividend”),
then (i) the Exercise Price shall be decreased, effective immediately after the
record date at which the holders of Shares are determined for purposes of such
Special Dividend, to a price determined by multiplying the Exercise Price then
in effect by a fraction, the numerator of which shall be the Exercise Price per
share of outstanding Shares on such record date less the then Fair Market Value
of the evidences of indebtedness, securities or property or other assets issued
or distributed in such Special Dividend with respect to one Share, and the
denominator of which shall be the Exercise Price per share on such record date,
and (ii) the number of Shares subject to purchase upon exercise of this Warrant
shall be increased to a number determined by multiplying the number of Shares
subject to purchase immediately before such Special Dividend by a fraction, the
numerator of which shall be the Exercise Price in effect immediately before such
Special Dividend and the denominator of which shall be the Exercise Price in
effect immediately after such Special Dividend.
Section 5.05 Merger, Consolidation, Asset
Sale, Capital Reorganization. If there shall be any
consolidation or merger to which the Company is a party, other than a
consolidation or a merger in which the Company is a continuing corporation and
which does not result in any reclassification of, or change (other than a Share
Reorganization or a change in nominal value) in, outstanding Shares, or any sale
or conveyance of the property of the Company as an entirety or substantially as
an entirety (any such event being called a “Capital
Reorganization”), then, effective upon the effective date of such Capital
Reorganization, the Holder shall have the right to purchase, upon exercise of
this Warrant, the kind and amount of shares of stock and other securities and
property (including cash) which the Holder would have owned or have been
entitled to receive after such Capital Reorganization if this Warrant had been
exercised immediately prior to such Capital Reorganization and this Warrant
shall expire.
Section 5.06 Certain Other
Events. If any event occurs as to which the foregoing
provisions of this Article V are not strictly applicable or, if strictly
applicable, would not, in the good faith judgment of the Board of Directors of
the Company, fairly protect the purchase rights of the Warrants in accordance
with the essential intent and principles of such provisions or would violate
applicable law, then such Board shall make such adjustments in the application
of such provisions (or if necessary make alternative provisions including taking
all reasonable efforts to amend the Company's organizational documents), in
accordance with such essential intent and principles, as shall be reasonably
necessary, in the good faith opinion of such Board, to protect such purchase
rights as aforesaid, but in no event shall any such adjustment have the effect
of increasing the Exercise Price or decreasing the number of Shares
subject to purchase upon exercise of this Warrant.
Section 5.07 Adjustment
Rules.
(a) Any
adjustments pursuant to this Article V shall be made successively whenever an
event referred to herein shall occur.
- 9
-
(b) If
the Company shall set a record date to determine the holders of Shares for
purposes of a Share Reorganization, Below Market Distribution, Special Dividend
or Capital Reorganization and shall legally abandon such action prior to
effecting such action, then no adjustment shall be made pursuant to this Article
V in respect of such action.
(c) No
adjustment of the Exercise Price or number of Warrant Shares issuable upon
exercise hereof shall be made in an amount less than 1% of such Exercise Price
or number of Warrant Shares so issuable upon exercise hereof, respectively, but
any such lesser adjustment shall be carried forward and shall be made at the
time and together with the next subsequent adjustment which together with any
adjustments so carried forward shall amount to 1% or more of such Exercise Price
or number of Warrant Shares so issuable upon exercise,
respectively.
Section 5.08 Proceeding Prior to Any
Action Requiring Adjustment. As a condition precedent to the
taking of any action which would require an adjustment pursuant to this Article
V, the Company shall take any action which may be reasonably necessary,
including obtaining regulatory approvals or exemptions, in order that the
Company may thereafter validly and legally issue as fully paid and nonassessable
all Shares which the holders of Warrants are entitled to receive upon exercise
thereof.
Section 5.09 Notice of
Adjustment. Not less than 30 nor more than 90 days prior to
the effective date or 15 days prior to the record date, as the case may be, of
any action which requires or might require an adjustment or readjustment
pursuant to this Article V, the Company shall give notice to the Holder of such
event, describing such event in reasonable detail and specifying the record date
or effective date, as the case may be, and, if determinable, the required
adjustment and the computation thereof. If the required adjustment is
not determinable at the time of such notice, the Company shall give notice to
the Holder of such adjustment and computation promptly after such adjustment
becomes determinable.
ARTICLE
VI
MISCELLANEOUS
Section
6.01 Notices. Any
notice or other communication to be given hereunder shall be in writing and
shall be delivered by recognized courier, telecopy or certified mail, return
receipt requested, and shall be conclusively deemed to have been received by a
party hereto and to be effective on the day on which delivered or telecopied to
such party at its address set forth below (or at such other address as such
party shall specify to the other parties hereto in writing), or, if sent by
certified mail, on the third business day after the day on which mailed,
addressed to such party at such address. In the case of the Holder,
such notices and communications shall be addressed to its address as shown on
the books maintained by the Warrant Agency, unless the Holder shall notify the
Company and the Warrant Agency that notices and communications should be sent to
a different address, in which case such notices and communications shall be sent
to the address specified by the Holder, and in either case a copy of such
notices and communications shall be sent to Xxxxxx X. Gallagher, Gallagher,
Xxxxxx & Xxxxxx, 000 Xxxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000 Fax:
(000) 000-0000. In the case of the Company, such notices and
communications shall be addressed as follows (until notice of a change is given
as provided herein): Performance Health Technologies, Inc., 000 Xxxxx Xxxx
Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000, Attention: Xxxxxx Xxxxxxxx,
Fax: (000) 000-0000.
Section
6.02 Waivers;
Amendments. No failure or delay of the Holder in exercising
any power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of
- 10
-
such
right or power, or any abandonment or discontinuance of steps to enforce such a
right or power, preclude any other or further exercise thereof or the exercise
of any other right or power. The rights and remedies of the Holder
are cumulative and not exclusive of any rights or remedies which it would
otherwise have. The provisions of this Warrant may be amended,
modified or waived with (and only with) the written consent of the Company and
Holders holding a majority of Warrants at the time outstanding (or any permitted
transferee of all of the Warrant). In the event of any such
amendment, modification or waiver the Company shall give prompt notice thereof
to all Holders of Warrants and, if appropriate, notation thereof shall be made
on all Warrants thereafter surrendered for registration of transfer or
exchange. No notice or demand on the Company in any case shall
entitle the Company to any other or further notice or demand in similar or other
circumstances.
Section
6.03 Governing
Law. This Warrant shall be construed in accordance with and
governed by the laws of the State of Delaware without regard to choice of law
doctrine.
Section
6.04 Covenants To Bind
Successor and Assigns. All covenants, stipulations, promises
and agreements in this Warrant contained by or on behalf of the Company shall
bind its successors and assigns, whether so expressed or not.
Section
6.05 Severability. In
case any one or more of the provisions contained in this Warrant shall be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby. The parties shall
endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
Section
6.06 Section
Headings. The section headings used herein are for convenience
of reference only, are not part of this Warrant and are not to affect the
construction of or be taken into consideration in interpreting this
Warrant.
Section
6.07 No Rights as
Stockholder. This Warrant shall not entitle the Holder to any
rights as a stockholder of the Company.
Section
6.08 No Requirement to
Exercise. Nothing contained in this Warrant shall be construed
as requiring the Holder to exercise this Warrant.
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed in its
corporate name by one of its officers thereunto duly authorized, and attested by
its Secretary or an Assistant Secretary, all as of the day and year first above
written.
| PERFORMANCE HEALTH
TECHNOLOGIES, INC.
By: /s/ Xxxxxx X.
Xxxxxxxx
Xxxxxx
X. Xxxxxxxx
President
and Chief Executive Officer
|
- 11
-
SUBSCRIPTION
NOTICE
(To be
executed upon exercise of Warrant)
To: Performance
Health Technologies, Inc. (the “Company”)
The
undersigned hereby irrevocably elects:
(i) to
exercise the right of purchase represented by the attached Warrant for, and to
purchase thereunder, __________ Shares, as provided for therein, and tenders
herewith payment of the Exercise Price in full in the form of certified or bank
cashier's check or wire transfer; or
(ii) the
“cashless exercise” of its rights under the Section 1.01 of the attached Warrant
with respect to ___________ Shares otherwise available for purchase to it under
the Warrant and receive such number of Shares as provided in the formula set
forth in such Section 1.01.
Please
issue a certificate or certificates for such Shares in the following name or
names and denominations:
In
connection with the exercise of the Warrant, the undersigned hereby represents
and warrants that:
(i) it
recognizes that the Shares issuable pursuant to the attached Warrant have not
been registered under the Securities Act and may not be sold, pledged or
otherwise transferred except pursuant to the exceptions set forth on the legend
on such Shares which is also set forth in Section 1.04 of the attached
Warrant;
(ii) it
has received all material information with respect to the Company which it deems
necessary with its decision to exercise the attached Warrant and it has been
given an opportunity to ask questions and receive answers from representatives
of the Company;
(iii) it
is purchasing the Shares for its own account, for the purpose of investment
only, and not with a view towards the further resale or distribution thereof;
and
(iv) it
is an “Accredited Investor” within the meaning of Rule 501 of Regulation D under
the Securities Act of 1933, as amended.
If said
number of Shares shall not be all the Shares issuable upon exercise of the
attached Warrant, a new Warrant is to be issued in the name of the undersigned
for the balance remaining of such Shares less any fraction of a Share paid in
cash.
By:
_____________________________
Name:
___________________________
Its:
_____________________________
Dated:
__________________________
NOTE: The
above signatory should correspond exactly with the name on the face of the
attached Warrant or with the name of the assignee appearing in the assignment
form below.
- 12
-
ASSIGNMENT
(To be
executed upon assignment of Warrant)
For value
received and in accordance with Section 2.03 of the attached Warrant,
____________________ hereby sells, assigns and transfers unto
___________________________ the attached Warrant, together with all right, title
and interest therein, and does hereby irrevocably constitute and appoint
__________________ attorney to transfer said Warrant on the books of Performance
Health Technologies, Inc. with full power of substitution in the
premises.
|
By:
___________________________
Name:
__________________________
Its:
_____________________________
|
Dated:____________________
|
|
NOTE: The
above signatory should correspond exactly with the name on the face of the
attached Warrant.
|
Consented
to and approved in accordance with
Section
2.03 of the attached Warrant
PERFORMANCE
HEALTH TECHNOLOGIES, INC.
By: _________________________________
Name:
___________________________
Its:
______________________________
- 13
-
