Exhibit 10.4

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND, ACCORDINGLY, MAY NOT BE TRANSFERRED UNLESS (I) SUCH SECURITIES
HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF 1933, AS
AMENDED, (II) SUCH SECURITIES MAY BE SOLD PURSUANT TO RULE 144, OR (111) THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT
SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED.

 

PURSUANT TO THE TERMS OF SECTION 1 OF THIS WARRANT, ALL OR A PORTION OF THIS
WARRANT MAY HAVE BEEN EXERCISED, AND THEREFORE THE ACTUAL NUMBER OF WARRANT
SHARES REPRESENTED BY THIS WARRANT MAY BE LESS THAN THE AMOUNT SET FORTH ON THE
FACE HEREOF.

 

Pursuant to an Agreement and Plan of Merger by and between Canfield Medical
Supply Inc. (the “Company”) SBG Acquisition Inc. (the “Sub”), a wholly-owned
subsidiary of the Company and Splash Beverage Group, Inc. (“Splash”), pursuant
to which Sub will be merged into Splash (the “Merger”).

 

THIS WARRANT IS BEING ISSUED IN CONNECTION WITH THE MERGER AND REPLACES THE
WARRANT THAT WAS ORIGINALLY ISSUED BY SPLASH TO THE HOLDER ON______________.

 

 

CANFIELD MEDICAL SUPPLY, INC

 

FORM OF WARRANT TO PURCHASE COMMON STOCK

 

Warrant No.: ______-__

Number of Shares of Common Stock: _______

Date of lssuance: February __, 2020 ("Issuance Date")

 

Canfield Medical Supply, Inc., a Colorado corporation (the "Company"), hereby
certifies that, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged,____________, the registered holder hereof or
its permitted assigns (the "Holder"), is entitled, subject to the terms set
forth below, to purchase from the Company, at the Exercise Price (as defined
below) then in effect, upon surrender of this Warrant to Purchase Common Stock
(including any Warrants to Purchase Common Stock issued in exchange, transfer or
replacement hereof, the "Warrant"), at any time or times on or after the
Issuance Date, but not after 11:59 p.m., New York time, on the Expiration Date
(as defined below), __________fully paid non-assessable shares of Common Stock
(as defined below) (the "Warrant Shares"). Except as otherwise defined herein,
capitalized terms in this Warrant shall have the meanings set forth in Section
15. This Warrant is one of a series of warrants containing substantially
identical terms and conditions issued to purchasers in connection with a Unit
Purchase Agreement dated, by and among the Company and the respective purchasers
thereto (collectively, the "Warrants"). For avoidance of doubt, all Warrants
issued in connection with the Unit Purchase Agreement, are considered one and
the same series and are all "Warrants" hereunder.

 

1.                           EXERCISE OF WARRANT.

 

 1 

 

(a)                                                 Mechanics of Exercise.
Subject to the terms and conditions hereof (including, without limitation, the
limitations set forth in Section l(e)), this Warrant may be exercised by the
Holder on any day on or after the Issuance Date, in whole or in part (but not as
to fractional shares), by (i) delivery of a written notice, in the form attached
hereto as Exhibit A (the "Exercise Notice"), of the Holder's election to
exercise this Warrant and (ii) if the Holder is not electing a Cashless Exercise
(as defined below) pursuant to Section 1(d) of this Warrant, payment to the
Company of an amount equal to the applicable Exercise Price multiplied by the
number of Warrant Shares as to which this Warrant is being exercised (the
"Aggregate Exercise Price") in cash or wire transfer of immediately available
funds (a "Cash Exercise") (the items under (i) and (ii) above, the "Exercise
Delivery Documents"). The Holder shall not be required to surrender this Warrant
in order to affect an exercise hereunder; provided, however, that in the event
that this Warrant is exercised in full or for the remaining unexercised portion
hereof, the Holder shall deliver this Warrant to the Company for cancellation
within a reasonable time after such exercise. On or before the first Trading Day
following the date on which the Company has received the Exercise Delivery
Documents (the date upon which the Company has received all of the Exercise
Delivery Documents, the "Exercise Date"), the Company shall transmit by
facsimile or e-mail transmission an acknowledgment of confirmation of receipt of
the Exercise Delivery Documents to the Holder and the Company's transfer agent
for the Common Stock (the "Transfer Agent"). The Company shall deliver any
objection to the compliance of Exercise Delivery Documents to the requirements
hereof on or before the second Trading Day following the date on which the
Company has received all of the Exercise Delivery Documents. On or before the
second Trading Day following the date on which the Company has received all of
the Exercise Delivery Documents (or, if later, the second Trading Day after the
resolution of any reasonable objection by the Company to the Exercise Delivery
Documents) (the "Share Delivery Date"), for any Cash Exercise or Cashless
Exercise, the Company shall, provided that the Transfer Agent is participating
in The Depository Trust Company ("DTC") Fast Automated Securities Transfer
Program (the "FAST Program"), upon the request of the Holder, credit such
aggregate number of shares of Common Stock to which the Holder is entitled
pursuant to such exercise to the Holder's or its designee's balance account with
OTC through its Deposit Withdrawal Agent Commission system; provided, however,
if (i) the Transfer Agent is not participating in the FAST Program, (ii) a Cash
Exercise is made and no effective registration statement for the resale of the
Warrant Shares is available or (iii) a Cashless Exercise is made and the Warrant
Shares cannot be sold without restriction under Rule 144 under the Securities
Act of 1933, as amended , the Company shall issue and dispatch by overnight
courier to the address as specified in the Exercise Notice, a certificate,
registered in the Company's share register in the name of the Holder or its
designee, for the number of shares of Common Stock to which the Holder is
entitled pursuant to such exercise. Upon the delivery of the Exercise Delivery
Documents (or, if the Company reasonably objects to the Exercise Delivery
Documents, upon the resolution of such objection), the Holder shall be deemed
for all corporate purposes to have become the holder of record of the Warrant
Shares with respect to which this Warrant has been exercised, irrespective of
the date such Warrant Shares are credited to the Holder's OTC account or the
date of delivery of the certificates evidencing such Warrant Shares, as the case
may be. If this Warrant is submitted in connection with any exercise pursuant to
this Section l(a) and the number of Warrant Shares represented by this Warrant
submitted for exercise is greater than the number of Warrant Shares being
acquired upon an exercise, then the Company shall as soon as practicable and in
no event later than three Trading Days after any such submission and at its own
expense, issue a new Warrant (in accordance with Section 7(e)) representing the
right to purchase the number of Warrant Shares purchasable immediately prior to
such exercise under this Warrant, less the number of Warrant Shares with respect
to which this Warrant has been and/or is exercised. The Company shall pay any
and all taxes and other expenses of the Company (including overnight delivery
charges) that may be payable with respect to the issuance and delivery of
Warrant Shares upon exercise of this Warrant; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the registration of any certificates for Warrant Shares
or Warrants in a name other than that of the Holder or an affiliate thereof. The
Holder shall be responsible for all other tax liability that may arise as a
result of holding or transferring this Warrant or receiving Warrant Shares upon
exercise hereof.

 

(b)                                               Exercise Price. For purposes
of this Warrant, "Exercise Price" means $1.50, subject to adjustment as provided
herein.

 2 

 

(c)                                                  Company's Failure to Timely
Deliver Securities. If the Company shall fail for any reason or for no reason to
issue to the Holder within three (3) Business Days of the Exercise Date a
certificate for the number of shares of Common Stock to which the Holder is
entitled and register such shares of Common Stock on the Company's share
register or to credit the Holder's balance account with OTC for such number of
shares of Common Stock to which the Holder is entitled upon the Holder's
exercise of this Warrant, and if on or after such Trading Day the Holder, or any
third party on behalf of the Holder or for the Holder's account, purchases (in
an open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of shares of Common Stock issuable upon
such exercise that the Holder anticipated receiving from the Company (a
"Buy-In"), then the Company shall, within three (3) Business Days after the
Holder's written request and in the Holder's discretion, either (i) pay cash to
the Holder in an amount equal to the Holder's total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so purchased (the
"Buy-In Price"), at which point the Company's obligation to deliver such
certificate (and to issue such Warrant Shares) shall terminate, or (ii) promptly
honor its obligation to deliver to the Holder a certificate or certificates
representing such Warrant Shares and pay cash to the Holder in an amount equal
to the excess (if any) of the Buy-In Price over the product of (A) such number
of shares of Common Stock, times (B) the Closing Bid Price on the date of
exercise.

 

(d)                                                Cashless Exercise.
Notwithstanding anything contained herein to the contrary, from and after the
date hereof, (while this warrant is outstanding and not terminated), the Holder
may, in its sole discretion, exercise this Warrant in whole or in part and, in
lieu of making the cash payment otherwise contemplated to be made to the Company
upon such exercise in payment of the Aggregate Exercise Price, elect instead to
receive upon such exercise the "Net Number" of shares of Common Stock determine
according to the following formula (a "Cashless Exercise"):

 

Net Number= (Ax B) - (A x C)

B

 

For purposes of the foregoing formula:

 

A= the total number of shares with respect to which this Warrant is then being
exercised.

 

B= the arithmetic average of the Closing Sale Prices of the shares of Common
Stock for the five (5) consecutive Trading Days ending on the date immediately
preceding the date of the Exercise Notice.

 

C= the Exercise Price then in effect for the applicable Warrant Shares at the
time of such exercise.

 

(e)                                               Rule 144. For purposes of Rule
144(d) promulgated under the Securities Act, as in effect on the date hereof,
assuming the Holder is not an affiliate of the Company, it is intended that the
Warrant Shares issued in a Cashless Exercise shall be deemed to have been
acquired by the Holder, and the holding period for the Warrant Shares shall be
deemed to have commenced, on the Issuance Date.

 

(f)                                                Disputes. In the case of a
dispute as to the determination of the Exercise Price or the arithmetic
calculation of the Warrant Shares, the Company shall promptly issue to the
Holder the number of Warrant Shares that are not disputed.

 

(g)                                                    Reserved.

 

2.                          ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT
SHARES. The Exercise Price and the number of Warrant Shares shall be adjusted
from time to time as follows:

 

(a)                                                Adjustment upon Subdivision
or Combination of Common Stock. If the Company at any time on or after the
Issuance Date subdivides (by any stock split, stock dividend, recapitalization,
reorganization, scheme, arrangement or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares, the Exercise
Price in effect immediately prior to such subdivision will be proportionately
reduced and the number of Warrant Shares will be proportionately increased. If
the Company at any time on or after the Issuance Date combines (by any stock
split, stock dividend, recapitalization, reorganization, scheme, arrangement or
otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination will be proportionately increased and the number of Warrant Shares
will be proportionately decreased. Any adjustment under this Section 2(a) shall
become effective at the close of business on the date the subdivision or
combination becomes effective.

 3 

 

(b)                                                    [image_011.gif]Dilutive
Issuances. If at any time after the Issuance Date other than in connection with
the Merger, the Company shall issue or sell shares of Common Stock or
Convertible Securities, without consideration or for a consideration per share
less than the then-current Exercise Price, the Exercise Price shall be reduced,
concurrently with such issue, as provided herein. Following any such dilutive
sale or issuance, the Exercise Price shall be reduced to a price equal to one
hundred percent (100%) of the price at which such shares of Common Stock are
issued (or, in the case of Convertible Securities, the price at which the Common
Stock issuable upon the exercise, conversion or exchange of such Convertible
Securities is deemed issued).

 

(c)                                                   Other Events. If any event
occurs of the type contemplated by the provisions of this Section 2 but not
expressly provided for by such provisions (including, without limitation, the
granting of stock appreciation rights or phantom stock rights), then the
Company's Board of Directors will make an appropriate adjustment in the Exercise
Price and the number of Warrant Shares so as to protect the rights of the
Holder; provided that no such adjustment pursuant to this Section 2(b) will
increase the Exercise Price or decrease the number of Warrant Shares as
otherwise determined pursuant to this Section 2.

 

3.                            RIGHTS UPON DISTRIBUTION OF ASSETS.

 

(a)                                                 If the Company shall declare
or make any dividend or other distribution of its assets (or rights to acquire
its assets) to holders of shares of Common Stock, by way of return of capital or
otherwise (including, without limitation, any distribution of cash, stock or
other securities, property or options by way of a dividend, spin off,
reclassification, corporate rearrangement, scheme of arrangement or other
similar transaction) (a "Distribution"), at any time after the issuance of this
Warrant, then, in each such case, the Holder shall be entitled to participate in
such Distribution to the same extent that the Holder would have participated
therein if the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any limitations on
exercise hereof, including without limitation, the Maximum Percentage)
immediately before the date of which a record is taken for such Distribution,
or, if no such record is taken, the date as of which the record holders of
shares of Common Stock are to be determined for the participation in such
Distribution (provided, however, to the extent that the Holder's right to
participate in any such Distribution would result in the Holder exceeding the
Maximum Percentage, then the Holder shall not be entitled to participate in such
Distribution to such extent (or in the beneficial ownership of any shares of
Common Stock as a result of such Distribution to such extent) and the portion of
such Distribution shall be held in abeyance for the benefit of the Holder until
such time, if ever, as its right thereto would not result in the Holder
exceeding the Maximum Percentage.

 

4.                          PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.

 

(a)                                                Purchase Rights. In addition
to any adjustments pursuant to Section 2 above, if at any time the Company
grants, issues or sells any Options, Convertible Securities or rights to
purchase stock, warrants, securities or other property pro rata to the record
holders of any class of Common Stock (the "Purchase Rights"), then the Holder
will be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which the Holder could have acquired if the Holder
had held the number of shares of Common Stock acquirable upon complete exercise
of this Warrant (without regard to any limitations on the exercise of this
Warrant) immediately before the date on which a record is taken for the grant,
issuance or sale of such Purchase Rights, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights.

 

 4 

 

(b)                                               Fundamental Transactions. The
Company shall not enter into or be party to a Fundamental Transaction unless (i)
the Successor Entity assumes in writing (unless the Company is the Successor
Entity) all of the obligations of the Company under this Warrant and the other
Transaction Documents in accordance with the provisions of this Section (4)(b)
pursuant to written agreements in form and substance reasonably satisfactory to
the Required Holders and approved by the Required Holders prior to such
Fundamental Transaction, including agreements to deliver to each holder of the
Warrants in exchange for such Warrants a security of the Successor Entity
evidenced by a written instrument substantially similar in form and substance to
this Warrant, including, without limitation, an adjusted exercise price equal to
the value for the shares of Common Stock reflected by the terms of such
Fundamental Transaction, and exercisable for a corresponding number of shares of
capital stock equivalent to the shares of Common Stock acquirable and receivable
upon exercise of this Warrant (without regard to any limitations on the exercise
of this Warrant) prior to such Fundamental Transaction, and reasonably
satisfactory to the Required Holders and (ii) the Successor Entity (including
its Parent Entity) is a publicly traded corporation whose common stock is quoted
on or listed for trading on an Eligible Market. Upon the occurrence of any
Fundamental Transaction, the Successor Entity shall succeed to, and be
substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Warrant referring to the "Company" shall
refer instead to the Successor Entity), and may exercise every right and power
of the Company and shall assume all of the obligations of the Company under this
Warrant with the same effect as if such Successor Entity had been named as the
Company herein. Upon consummation of the Fundamental Transaction, the Successor
Entity shall deliver to the Holder confirmation that there shall be issued upon
exercise of this Warrant at any time after the consummation of the Fundamental
Transaction, in lieu of the shares of Common Stock (or other securities, cash,
assets or other property) issuable upon the exercise of the Warrant prior to
such Fundamental Transaction, such shares of the publicly traded common stock or
common shares (or its equivalent) of the Successor Entity (including its Parent
Entity) which the Holder would have been entitled to receive upon the happening
of such Fundamental Transaction had this Warrant been converted immediately
prior to such Fundamental Transaction, as adjusted in accordance with the
provisions of this Warrant. In addition to and not in substitution for any other
rights hereunder, prior to the consummation of any Fundamental Transaction
pursuant to which holders of shares of Common Stock are entitled to receive
securities or other assets with respect to or in exchange for shares of Common
Stock (a "Corporate Event"), the Company shall make appropriate provision to
insure that the Holder will thereafter have the right to receive upon an
exercise of this Warrant at any time after the consummation of the Corporate
Event but prior to the Expiration Date, in lieu of shares of Common Stock (or
other securities, cash, assets or other property) purchasable upon the exercise
of this Warrant prior to such Corporate Event, such shares of stock, securities,
cash, assets or any other property whatsoever (including warrants or other
purchase or subscription rights) which the Holder would have been entitled to
receive upon the happening of such Corporate Event had this Warrant been
exercised immediately prior to such Corporate Event. Provision made pursuant to
the preceding sentence shall be in a form and substance reasonably satisfactory
to the Required Holders. The provisions of this Section 4(b) shall apply
similarly and equally to successive Fundamental Transactions and Corporate
Events and shall be applied without regard to any limitations on the exercise of
this Warrant.

 

(c)                                               Applicability to Successive
Transactions. The provisions of this Section shall apply similarly and equally
to successive Fundamental Transactions and Corporate Events and shall be applied
without regard to any limitations on the exercise of this Warrant.

 

5.                        NONCIRCUMVENTION. The Company hereby covenants and
agrees that the Company will not, by amendment of its Certificate of
Incorporation, Bylaws or through any reorganization, transfer of assets,
consolidation, merger, scheme of arrangement, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, and will at all times in
good faith comply with all the provisions of this Warrant and take all actions
consistent with effectuating the purposes of this Warrant. Without limiting the
generality of the foregoing, the Company (i) shall not increase the par value of
any shares of Common Stock receivable upon the exercise of this Warrant above
the Exercise Price e then in effect, (ii) shall take
[image_011.gif][image_011.gif]all such actions as may be necessary or
appropriate in order that the Company may validly and leg ally issue fully paid
and non-assessable shares of Common Stock upon the exercise of this Warrant, and
(iii) shall, so long as this Warrant is outstanding, take all action necessary
to reserve and keep available out of its authorized and unissued shares of
Common Stock, solely for the purpose of effecting the exercise of this Warrant,
100% of the number of shares of Common Stock issuable upon exercise of this
Warrant then outstanding (without regard to any limitations on exercise).

 

6.                             WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except
as otherwise specifically provided herein, the Holder, solely in such Person's
capacity as a holder of this Warrant, shall not be entitled to vote or receive
dividends or be deemed the holder of share capital of the Company for any
purpose, nor shall anything contained in this Warrant be construed to confer
upon the Holder, solely in such Person's capacity as the Holder of this Warrant,
any of the rights of a stockholder of the Company or any right to vote, give or
withhold consent to any corporate action (whether any reorganization, issue of
stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares
which such Person is then entitled to receive upon the due exercise of this
Warrant. In addition, nothing contained in this Warrant shall be construed as
imposing any liabilities on the Holder to purchase any securities (upon exercise
of this Warrant or otherwise) or as a stockholder of the Company, whether such
liabilities are asserted by the Company or by creditors of the Company.

 

 5 

 

7.                           REISSUANCE OF WARRANTS.

 

(a)                                                Transfer of Warrant. If this
Warrant is to be transferred, the Holder shall surrender this Warrant to the
Company and deliver the completed and executed Assignment Form, in the form
attached hereto as Exhibit B, whereupon the Company will forthwith issue and
deliver upon the order of the Holder a new Warrant (in accordance with Section
7(d)), registered as the Holder may request, representing the right to purchase
the number of Warrant Shares being transferred by the Holder and, if less than
the total number of Warrant Shares then underlying this Warrant is being
transferred, a new Warrant (in accordance with Section 7(d)) to the Holder
representing the right to purchase the number of Warrant Shares not being
transferred.

 

(b)                                                Lost, Stolen or Mutilated
Warrant. Upon receipt by the Company of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant, and, in
the case of loss, theft or destruction, of any indemnification undertaking by
the Holder to the Company in customary form and, in the case of mutilation, upon
surrender and cancellation of this Warrant, the Company shall execute and
deliver to the Holder a new Warrant (in accordance with Section 7(d))
representing the right to purchase the Warrant Shares then underlying this
Warrant.

 

(c)                                                Exchangeable for Multiple
Warrants. This Warrant is exchangeable, upon the surrender hereof by the Holder
at the principal office of the Company, for a new Warrant or Warrants (in
accordance with Section 7(d)) representing in the aggregate the right to
purchase the number of Warrant Shares then underlying this Warrant, and each
such new Warrant will represent the right to purchase such portion of such
Warrant Shares as is designated by the Holder at the time of such surrender;
provided, however, that no Warrants for fractional shares of Common Stock shall
be given. Notwithstanding anything to the contrary herein, in no event shall the
original Warrant be subdivided into more than three (3) separate Warrants and
such new Warrants shall not be further subdivided.

 

(d)                                               Issuance of New Warrants.
Whenever the Company is required to issue a new Warrant pursuant to the terms of
this Warrant, such new Warrant (i) shall be of like tenor with this Warrant,
(ii) shall represent, as indicated on the face of such new Warrant, the right to
purchase the Warrant Shares then underlying this Warrant (or in the case of a
new Warrant being issued pursuant to Section 7(a) or Section 7(c). the Warrant
Shares designated by the Holder which, when added to the number of shares of
Common Stock underlying the other new Warrants issued in connection with such
issuance, does not exceed the number of Warrant Shares then underlying this
Warrant), (iii) shall have an issuance date, as indicated on the face of such
new Warrant which is the same as the Issuance Date, and (iv) shall have the same
rights and conditions as this Warrant.

 

8.                     NOTICES. Whenever notice is required to be given under
this Warrant, unless otherwise provided herein, such notice shall be given in
accordance with the Purchase Agreement.

 

9.                   AMENDMENT AND WAIVER. Except as otherwise provided herein,
the provisions of this Warrant may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
Required Holders; provided, that the number of Warrant Shares subject to this
Warrant, the Exercise Price and the Expiration Date may not be amended, and the
right to exercise this Warrant may not be altered or waived, without the written
consent of the Holder. Any such amendment shall apply to all Warrants and be
binding upon all registered holders of such Warrants, whether or not they have
individually consented.

 

 6 

 

10.                GOVERNING LAW; CONSENT TO JUSRISDICTION. WAIVER OF JURY
TRIAL. This Warrant shall be governed by, and construed in accordance with, the
internal laws of the State of Florida, without reference to the choice of law
provisions thereof. The Company and, by accepting this Warrant, the Holder, each
irrevocably submits to the exclusive jurisdiction of the courts of the State of
Florida and the United States District Court for the District of Florida for the
purpose of any suit, action, proceeding or judgment relating to or arising out
of this Warrant and the transactions contemplated hereby. Service of process in
connection with any such suit, action or proceeding may be served on each party
hereto anywhere in the world by the same methods as are specified for the giving
of notices under this Warrant. The Company and, by accepting this Warrant, the
Holder, each irrevocably consents to the jurisdiction of any such court in any
such suit, action or proceeding and to the laying of venue in such court. The
Company and, by accepting this Warrant, the Holder, each irrevocably waives any
objection to the laying of venue of any such suit, action or proceeding brought
in such courts and irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
EACH OF THE COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE HOLDER HEREBY WAIVES ANY
RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS WARRANT
AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

 

11.                      CONSTRUCTION; HEADINGS. This Warrant shall be deemed to
be jointly drafted by the Company and the Holder and shall not be construed
against any person as the drafter hereof. The headings of this Warrant are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Warrant.

 

12.                      DISPUTE RESOLUTION. In the case of a dispute as to the
determination of the Exercise Price or the arithmetic calculation of the Warrant
Shares, the Company shall submit the disputed determinations or arithmetic
calculations via facsimile within two (2) Business Days of receipt of the
Exercise Notice giving rise to such dispute, as the case may be, to the Holder.
If the Holder and the Company are unable to agree upon such determination or
calculation of the Exercise Price or the Warrant Shares within three Business
Days of such disputed determination or arithmetic calculation being submitted to
the Holder, then the Company shall, within two (2) Business Days submit via
facsimile (a) the disputed determination of the Exercise Price to an
independent, reputable investment bank selected by the Company and approved by
the Holder, which approval shall not be unreasonably withheld, or (b) the
disputed arithmetic calculation of the Warrant Shares to the Company's
independent, outside accountant. The Company shall cause the investment bank or
the accountant, as the case may be, to perform the determinations or
calculations and notify the Company and the Holder of the results no later than
ten Business Days from the time it receives the disputed determinations or
calculations. The prevailing party in any dispute resolved pursuant to this
Section 12 shall be entitled to the full amount of all reasonable expenses,
including all costs and fees paid or incurred in good faith, in relation to the
resolution of such dispute. Such investment bank's or accountant's determination
or calculation, as the case may be, shall be binding upon all parties absent
demonstrable error.

 

13.                REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.
The remedies provided in this Warrant shall be cumulative and in addition to all
other remedies available under this Warrant, at law or in equity (including a
decree of specific performance and/or other injunctive relief), and nothing
herein shall limit the right of the Holder to pursue actual damages for any
failure by the Company to comply with the terms of this Warrant.

 

14.       TRANSFER. Subject to applicable law and the restrictions on transfer
set forth in the Purchase Agreement, this Warrant may not be offered for sale,
sold, transferred or assigned without the consent of the Company, such consent
not to be unreasonably withheld or delayed.

 

15.       For purposes of this Warrant, the following terms shall have the
following meanings:

 

(a)                 "Bloomberg" means Bloomberg Financial Markets.

 

(b)                 "Business Day" means any day other than Saturday, Sunday or
other day on which commercial banks in The City of New York are authorized or
required by law to remain closed.

 

 7 

 

(c)                 "Closing Bid Price" and "Closing Sale Price" means, for any
security as of any date, the last closing bid price and last closing trade
price, respectively, for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an extended hours
basis and does not designate the closing bid price or the closing trade price,
as the case may be, then the last bid price or the last trade price,
respectively, of such security prior to 4:00:00 p.m., New York time, as reported
by Bloomberg, or, if the Principal Market is not the principal securities
exchange or trading market for such security, the last closing bid price or last
trade price, respectively, of such security on the principal securities exchange
or trading market where such security is listed or traded as reported by
Bloomberg, or if the foregoing do not apply, the last closing bid price or last
trade price, respectively, of such security in the over-the-counter market on
the electronic bulletin board for such security as reported by Bloomberg, or, if
no closing bid price or last trade price, respectively, is reported for such
security by Bloomberg, the average of the bid prices, or the ask prices,
respectively, of any market makers for such security as reported in the "pink
sheets" by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.) . If
the Closing Bid Price or the Closing Sale Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Bid
Price or the Closing Sale Price, as the case may be, of such security on such
date shall be the fair market value as mutually determined by the Company and
the Holder. All such determinations to be appropriately adjusted for any stock
dividend, stock split, stock combination or other similar transaction during the
applicable calculation period.

 

(d)                 "Common Stock" means (i) the Company' s shares of Common
Stock, par value

$0.001 per share, and (ii) any share capital into which such Common Stock shall
have been changed or any share capital resulting from a reclassification of such
Common Stock.

 

(e)                 "Convertible Securities" means any stock or securities
(other than Options) directly or indirectly convertible into or exercisable or
exchangeable for shares of Common Stock. "Eligible Market" means the Principal
Market, the OTC Markets QB tier, The New York Stock Exchange, Inc., NYSE MKT,
The NASDAQ Global Market, The NASDAQ Global Select Market, or The NASDAQ Capital
Market.

 

(f)                  "Expiration Date" means _____________ or, if such date
falls on a day other than a Trading Day or on which trading does not take place
on the Principal Market, or, if the Principal Market is not the principal
trading market for the Common Stock, then on the principal securities exchange
or securities market on which the Common Stock is then traded (a "Holiday"), the
next date that is not a Holiday.

 

(g)                 "Fundamental Transaction" means that the Company shall,
directly or indirectly, in one or more related transactions, (i) consolidate or
merge with or into (whether or not the Company is the surviving corporation)
another Person (but excluding a migratory merger effected solely for the purpose
of changing the jurisdiction of incorporation of the Company), or (ii) sell,
assign, transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of the Company to another Person, or (iii) allow another
Person to make a purchase, tender or exchange offer that is accepted by the
holders of more than the 50% of the outstanding shares of Common Stock (not
including any shares of Common Stock held by the Person or Persons making or
party to, or associated or affiliated with the Persons making or party to, such
purchase, tender or exchange offer), or (iv) consummate a stock purchase
agreement or other business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of arrangement) with
another Person whereby such other Person acquires more than the 50% of the
outstanding shares of Common Stock (not including any shares of Common Stock
held by the other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock purchase
agreement or other business combination), (v) reorganize, recapitalize or
reclassify its Common Stock, or (vi) any "person" or "group" (as these terms are
used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall
become the "beneficial owner" (as defined in Rule l3d-3 under the Exchange Act),
directly or indirectly, of 50% of the aggregate ordinary voting power
represented by issued and outstanding Common Stock.

 

(i)            "Options" means any rights, warrants or options to subscribe for
or purchase shares of Common Stock or Convertible Securities.

 

(j)                  "Parent Entity" of a Person means an entity that, directly
or indirectly, controls the applicable Person and whose common stock or
equivalent equity security is quoted or listed on an Eligible Market, or, if
there is more than one such Person or Parent Entity, the Person or Parent Entity
with the largest public market capitalization as of the date of consummation of
the Fundamental Transaction.

 

(k)                "Person" means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization, any other entity and a government or any department or agency
thereof.

 

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(l)                  “Principal Market” means the OTC Markets QB tier.

 

(m)              "Required Holders" means, as of any time of determination, the
Holders of at least a majority of the Warrant Shares issuable upon exercise of
all of the outstanding Warrants.

 

(n)                "Successor Entity" means the Person (or, if so elected by the
Holder, the Parent Entity) formed by, resulting from or surviving any
Fundamental Transaction or the Person (or, if so elected by the Holder, the
Parent Entity) with which such Fundamental Transaction shall have been entered
into.

(o)                [image_011.gif]"Trading Day" means any day on which the
Common Stock are traded on the Principal Market, or, if the Principal Market is
not the principal trading market for the Common Stock, then on the principal
securities exchange or securities market on which the Common Stock are then
traded; provided that "Trading Day" shall not include any day on which the
Common Stock are scheduled to trade on such exchange or market for less than 4.5
hours or any day that the Common Stock are suspended from trading during the
final hour of trading on such exchange or market (or if such exchange or market
does not designate in advance the closing time of trading on such exchange or
market, then during the hour ending at 4:00:00 p.m., New York time).

 

 

 9 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock
to be duly executed as of the Issuance Date set out above.

 

 

CANFIELD MEDICAL SUPPLY, INC.

 

By:____________________________ 

 

Name: ____________________________

 

 

Title: ____________________________

 

 10 

 

  

[image_011.gif]EXHIBIT A

 

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT TO PURCHASE
COMMON STOCK

 

CANFIELD MEDICAL SUPPLY, INC.

 

The undersigned holder hereby exercises the right to purchase _ _ _ _ _ _ _ _ of
the shares of Common Stock ("Warrant Shares") of Canfiled Medical Supply Inc., a
Colorado corporation (the "Company"), evidenced by the attached Warrant to
Purchase Common Stock (the "Warrant"). Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.

 

1.       Form of Exercise Price. The Holder intends that payment of the Exercise
Price shall be made as:

a. “Cash Exercise” with respect to the Warrant Shares; and/or

b. “Cash-less Exercise” with respect to the Warrant Shares.

 

2. Payment of Exercise Price. In the event that the holder has elected a Cash
Exercise with respect to some or all of the Warrant Shares to be issued pursuant
hereto, the holder shall pay the Aggregate Exercise Price in the sum of$ to the
Company in accordance with the terms of the

Warrant.

 

3.       Delivery of Warrant Shares. The Company shall deliver to the holder
Warrant Shares in accordance with the terms of the Warrant and, after delivery
of such Warrant Shares, the Warrant Shares remain subject to the Warrant.

 

 

Date:____________________________

 

 

 

By: ____________________________

(Name of Registered Holder)

 

Name:____________________________

 

Title: ____________________________

 

 11 

 

 

 

EXHIBITB

ASSIGNMENT FORM

CANFIELD MEDICAL SUPPLY INC.

 

(To assign the foregoing Warrant, execute this form and supply required
information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are
hereby assigned to Name:

 

Address:

____________________________

____________________________

 

Dated: ___________, __________  

 

Holder's Signature:

____________________________

 

Holder's Address:

____________________________

____________________________

____________________________

 

 

NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.

 

 12