1
Exhibit 10.4
THIS WARRANT HAS NOT BEEN REGISTERED UNDER FEDERAL OR STATE SECURITIES
LAWS. IT MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF REGISTRATION
UNDER SUCH LAWS OR THE AVAILABILITY OF AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH LAWS EVIDENCED BY AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE COMMON STOCK
COMPLETE WELLNESS CENTERS, INC.
THIS CERTIFIES THAT, for value received, Roan Capital Partners, L.P. (Holder) is
entitled to purchase, on the terms hereof, shares of common stock of Complete
Wellness Centers, Inc., a Delaware corporation (Company). The following terms
shall apply to this Warrant:
1. EXERCISE OF WARRANT.
The terms and conditions upon which this Warrant may be exercised and the common
stock covered hereby (Warrant Stock) may be purchased are as follows:
1.1. Voluntary Exercise.
(a) This Warrant may be exercised upon or after the first to occur of (i) the
effectiveness of a registration statement (other than a registration statement
on Form S-4 or S-8) under the Securities Act of 1933, as amended, for a firm
commitment underwritten initial public offering of shares of common stock of the
Company or (ii) June 30, 1997. In no case may this Warrant be exercised later
than 5:00 p.m. eastern time on December 31, 1999 (Expiration Date), after which
time this Warrant shall terminate and shall be void.
(b) The Company will mail to the Holder a notice specifying the date on which
the registration statement for any such initial public offering is expected to
be declared effective by the Securities and Exchange Commission (Effective
Date). Such notice shall be mailed at least 60 days prior to the date therein
specified.
1.2. Number of Shares. The number of shares of common stock for which this
Warrant is initially exercisable is (i) that number of shares of common stock of
the Company equal to the quotient obtained by dividing $20,000 by the price per
share of common stock offered to the public in an initial public offering
subject to Section 1.1(a)(i) hereof, or (ii) if such an initial public offering
is not completed on or before June 30, 1997, 9,600 shares of the Company's
common stock, par value $0.0000555 per share, subject to adjustment pursuant to
Section 2 of this Warrant.
1.3. Purchase Price. The per share purchase price for the shares of common stock
to be issued upon exercise of this Warrant shall be $0.001, subject to
adjustment as provided herein.
2
2
1.4. Method of Exercise. The exercise of the purchase rights evidenced by this
Warrant shall be effected by the following actions if taken within 20 days after
receipt of the notice from the Company of a proposed initial public offering or,
in the absence of such a notice, if taken after June 30, 1997 and prior to the
Expiration Date: (a) the surrender of the Warrant, together with a duly executed
copy of the form of subscription attached hereto, to the Company at its
principal offices and (b) the delivery of the purchase price by check or bank
draft payable to the Company's order or by wire transfer to the Company's
account for the number of shares for which the purchase rights hereunder are
being exercised or any other form of consideration approved by the Company's
board of directors.
1.5. Issuance of Shares. Upon the exercise of the purchase rights evidenced by
this Warrant, a certificate or certificates for the purchased shares shall be
issued to the Holder as soon as practicable. The Holder shall for all purposes
be deemed to have become the holder of record of the number of shares of common
stock evidenced by such certificate from the date on which this Warrant was
surrendered and payment of the purchase price was received by the Company,
regardless of the date of delivery of such certificate.
2. CERTAIN ADJUSTMENTS.
The provisions of this Section 2 shall apply if and only if an initial public
offering subject to Section 1.1(a)(i) hereof is not completed on or before June
30, 1997:
2.1. Common Stock Dividends. If the Company at any time prior to the expiration
of this Warrant shall pay a dividend with respect to common stock payable in
shares of common stock, then the purchase price per share shall be adjusted,
from and after the date of determination of the stockholders entitled to receive
such dividend, to that price determined by multiplying the per share purchase
price in effect by a fraction (i) the numerator of which shall be the total
number of shares of common stock outstanding immediately prior to such dividend
and (ii) the denominator of which shall be the total number of shares of common
stock outstanding immediately after such dividend; provided, however, that the
aggregate purchase price shall not be adjusted.
2.2. Mergers, Consolidations, or Sale of Assets. If at any time there shall be a
capital reorganization (other than a combination or subdivision of Warrant Stock
provided for herein), or a merger or consolidation of the Company with or into
another corporation, or the sale of the Company's properties and assets as, or
substantially as, an entirety to any other person, then, as a part of such
reorganization, merger, consolidation or sale, lawful provision shall be made so
that the Holder shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified in this Warrant and upon payment of the
purchase price, the number of shares of stock or other securities or property of
the Company or the successor corporation resulting from such reorganization,
merger, consolidation or sale, to which a holder of the common stock deliverable
upon exercise of this Warrant would have been entitled under the provisions of
the agreement in such reorganization, merger, consolidation or sale if this
Warrant had been exercised immediately before that reorganization, merger,
consolidation or sale. In any such case, appropriate
3
3
adjustment (as determined in good faith by the Company's board of directors)
shall be made in the application of the provisions of this Warrant with respect
to the rights and interests of the Holder after the reorganization, merger,
consolidation or sale to the end that the provisions of this Warrant (including
adjustment of the purchase price then in effect and the number of shares of
Warrant Stock) shall be applicable after that event, as near as reasonably may
be, in relation to any shares or other property deliverable after that event
upon exercise of this Warrant; provided, however, that the aggregate purchase
price shall not be adjusted.
2.3. Splits and Subdivisions. In the event the Company should at any time or
from time to time fix a record date for the effectuation of a split or
subdivision of the outstanding shares of common stock or the determination of
the holders of common stock entitled to receive a dividend or other
distribution payable in additional shares of common stock or other securities
or rights convertible into, or entitling the holder thereof to receive directly
or indirectly, additional shares of common stock (Common Stock Equivalents)
without payment of any consideration by such holder for the additional shares
of common stock or Common Stock Equivalents (including the additional shares of
common stock issuable upon conversion or exercise thereof), then, as of such
record date (or the date of such distribution, split, or subdivision if no
record date is fixed), the purchase price shall be appropriately decreased and
the number of shares of Warrant Stock shall be appropriately increased in
proportion to such increase of outstanding shares; provided, however, that the
aggregate purchase price shall not be adjusted.
2.4. Combination of Shares. If the number of shares of common stock outstanding
at any time after the date hereof is decreased by a combination of the
outstanding shares of common stock, the purchase price per share shall be
appropriately increased and the number of shares of Warrant Stock subject to
Section 1.2(ii) hereof shall be appropriately decreased in proportion to such
decrease in outstanding shares; provided, however, that the aggregate purchase
price shall not be adjusted.
2.5. Adjustments for Other Distributions. In the event the Company shall declare
a distribution payable in securities of other persons, evidences of
indebtedness issued by the Company or other persons, assets (excluding cash
dividends) or options or rights not referred to in subsections 2.1 or 2.3,
then, in each such case for the purpose of this subsection 2.5, upon exercise
of this Warrant the holder hereof shall be entitled to a proportionate share of
any such distribution as though such holder was the holder of the number of
shares of common stock into which this Warrant may be exercised as of the
record date fixed for the determination of the holders of common stock entitled
to receive such distribution; provided, however, that the aggregate purchase
price shall not be adjusted.
2.6. Certificate as to Adjustments. In the case of each adjustment or
readjustment of the purchase price pursuant to this Section 2, the Company will
promptly compute such adjustment or readjustment in accordance with the terms
hereof and cause a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment is
based to be delivered to the holder of this Warrant. The Company will, upon the
4
4
written request at any time of the holder of this Warrant, furnish or cause to
be furnished to such holder a certificate setting forth:
(a) Such adjustments and readjustments;
(b) The purchase price at the time in effect; and
(c) The number of shares of Warrant Stock and the amount, if any, of
other property at the time receivable upon exercise of this Warrant.
2.7 Notices of Record Date, etc. In the event of:
(a) Any taking by the Company of a record of the holders of any class
of securities of the Company for the purpose of determining the holders thereof
who are entitled to receive any dividend (other than a cash dividend payable
out of earned surplus at the same rate as that of the last such cash dividend
theretofore paid) or other distribution, or any right to subscribe for,
purchase, or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right; or
(b) Any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any transfer of all or
substantially all of the assets of the Company to any other person or any
consolidation or merger involving the Company; or
(c) Any voluntary or involuntary dissolution, liquidation, or
winding-up of the Company, the Company will mail to the holder of this Warrant
at least five (5) days prior to the earliest date specified therein, a notice
specifying:
(i) The date on which any such record is to be taken for the
purpose of such dividend, distribution or right, and the amount and character
of such dividend, distribution or right; and
(ii) The date on which any such reorganization,
reclassification, transfer, consolidation, merger, dissolution, liquidation, or
winding-up is expected to become effective and the record date for determining
stockholders entitled to vote thereon.
3. FRACTIONAL SHARES.
No fractional share shall be issued in connection with any exercise of this
Warrant. In lieu of the issuance of such fractional share, the Company shall
make a cash payment equal to the then fair market value of such fractional
share as determined in good faith by the Company's board of directors.
5
5
4. RESERVATION OF COMMON STOCK.
The Company shall at all times reserve and keep available out of its authorized
but unissued shares of commons stock, solely for the purpose of effecting the
exercise of this Warrant, such number of its shares of common stock as shall
from time to time be sufficient to effect the exercise of this Warrant; and if
at any time the number of authorized but unissued shares of common stock shall
not be sufficient to effect the exercise of this Warrant in its entirety, in
addition to such other remedies as shall be available to the holder of this
Warrant, the Company will use its reasonable best efforts to take such
corporate action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of common stock to such number of
shares as shall be sufficient for such purpose.
5. PRIVILEGE OF STOCK OWNERSHIP.
Prior to the exercise of this Warrant, the Holder shall not be entitled, by
virtue of holding this Warrant, to any rights of a stockholder of the Company,
including (without limitation) the right to vote, receive dividends or other
distributions exercise preemptive rights or be notified of stockholder
meetings, and the Holder shall not be entitled to any notice or other
communication concerning the business or affairs of the Company. Nothing in
this Section 5, however, shall limit the right of the Holder to participate in
distributions to the extent set forth in Section 2 or be provided the notices
described in Section 2 if the Holder ultimately exercises this Warrant.
6. LIMITATION OF LIABILITY.
Except as otherwise provided herein, the absence of affirmative action by the
Holder to purchase the Warrant Stock, no mere enumeration herein of the rights
or privileges of the holder hereof shall give rise to any liability of such
holder for the purchase price or as a stockholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.
7. TRANSFERS AND EXCHANGES.
7.1 Transfers. Subject to the terms and conditions of the Agreement and
compliance with applicable federal and state securities laws, this Warrant is
transferable in whole or in part by the Holder.
7.2 Exchanges. All new warrants issued in connection with transfers or
exchanges shall be identical in form and provision to this Warrant except as to
the number of shares and the identify of the Holder.
8. SUCCESSORS AND ASSIGNS.
The terms and provisions of this Warrant shall be binding upon the Company and
the Holder and their respective successors and assigns, subject to the
restrictions set forth in the Agreement.
6
6
9. LOSS, THEFT, DESTRUCTION, OR MUTILATION OF WARRANT.
Upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction, or mutilation of this Warrant, and in case of loss,
theft, or destruction, of indemnity or security reasonably satisfactory to the
Company, and upon reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of this Warrant, if
mutilated, the Company will make and deliver a new warrant of like tenor and
dated as of such cancellation, in lieu of this Warrant.
10. WEEKENDS, HOLIDAYS, ETC.
If the last or appointed day for the taking of any action or the expiration of
any right required or granted herein shall be a Saturday, Sunday, or legal
holiday, then such action may be taken or such right may be exercised on the
next succeeding day that is not a Sunday or legal holiday.
11. GOVERNING LAW
The terms and conditions of this Warrant shall be governed by and construed in
accordance with Delaware law as such laws are applied to agreements which are
entered into solely between Delaware residents and are to be performed entirely
within that state.
Dated: August 15, 1996
COMPLETE WELLNESS CENTERS, INC.
By:____________________________
Its:
7
SUBSCRIPTION
TO: Complete Wellness Centers, Inc.
-------------------------------
-------------------------------
-------------------------------
Ladies and Gentlemen:
The undersigned, _____________________________________, hereby elects to
purchase, pursuant to the provisions of the Warrant dated August 15, 1996 held
by the undersigned, _________ shares of the common stock of Complete Wellness
Centers, Inc., a Delaware corporation, and tenders herewith payment of the
purchase price of such shares in full.
The undersigned hereby represents and warrants that the undersigned is acquiring
such stock for the undersigned's own account and not for resale or with a view
to, or for resale in connection with, the distribution of any part thereof.
If the number of shares being purchased hereunder is not all of the shares
covered by the Warrant, the undersigned requests that a new warrant for the
balance of shares covered by such Warrant be registered in the name of and
delivered to the undersigned.
Date: _____________________
By: ___________________________
(Signature)
Name:___________________________
Address:___________________________
__________________________