exv10w4



 





Exhibit 10.4




WARRANT NO.                     




TRI-ISTHMUS GROUP, INC.

(A Delaware Corporation)




 






WARRANT TO PURCHASE

SHARES OF COMMON STOCK




 






Effective October 29, 2007




THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE
SECURITIES LAWS. THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED, OR OTHERWISE DISPOSED OF OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS.



     THIS CERTIFIES THAT, for value received,                      (“Holder”), is entitled to
purchase, subject to the conditions set forth below, at any time or from time to time during the
Exercise Period (as defined in Section 1.2 below),                     
shares (“Shares”) of fully paid and non-assessable common stock, par value $0.01 per share
(the “Common Stock”), of Tri-Isthmus Group, Inc., a Delaware corporation (the
“Company”), at the per share purchase price (the “Warrant Price”) set forth in
Section 1.1 below, subject to the further provisions of this Warrant.



1. EXERCISE OF WARRANT




     The terms and conditions upon which this Warrant may be exercised, and the Shares subject
hereto may be purchased, are as follows:



     1.1 Warrant Price. The Warrant Price shall be $0.50 per Share, subject to adjustment
as provided in Section 4 below.



     1.2 Method Of Exercise. Holder may at any time beginning on the effective date of
this Warrant and for three (3) years from such date of effectiveness, or such later date as the
Company may in its sole discretion determine (the “Exercise Period”), exercise in whole or
in part the purchase rights evidenced by this Warrant. Such exercise shall be effected by:




     (a) the surrender of this Warrant, together with a duly executed copy of the form of
notice of exercise attached hereto as Exhibit A, to the Secretary of the Company at
its principal offices;




     (b) the payment to the Company, by cash, certified or cashier’s check payable to
Company’s order or wire transfer to the Company’s account, of an amount equal to the
aggregate



 









 







Warrant Price for the number of Shares for which the purchase rights hereunder are
being exercised. Alternatively if then permitted under applicable securities laws, Holder
may exercise this Warrant by delivering to the Company: (i) a properly executed notice of
exercise together with a copy of irrevocable instructions (“Broker Instructions”) to a
NASD-member securities broker to promptly deliver to the Company cash or a check payable to
the Company in the full amount of the Warrant Price for the total number of Shares being
purchased against the Company’s delivery of the Shares for which this Warrant is exercised
(if the Holder and the securities broker comply with such procedures and enter into such
agreements of indemnity and other agreements as the Company may reasonably prescribe as a
condition of that payment procedure) or (ii) shares of Common Stock, free and clear of any
and all liens, claims and encumbrances, having an aggregate Fair Market Value (as defined
herein below) equal to the full amount of the Warrant Price for the total number of Shares
being purchased. The Holder may also make payment in any combination of the permissible
forms of payment described in the preceding sentence. Additionally, if then permitted under
applicable securities laws, if the Fair Market Value of the Shares at time of exercise is
greater than the Warrant Price, the Holder may exercise this Warrant or any portion hereof
by indicating on the notice of exercise that the Holder elects to exercise this Warrant on a
net exercise basis (“Net Exercise Basis”). The Company shall then issue to the Holder a
number of Shares determined using the following formula:



X = Y (A-B)

      A




where





     X = the number of Shares to be issued to the Holder.




     Y = the number of Shares covered by this Warrant in respect of
which the net exercise election is made pursuant to this Section.




     A = the Fair Market Value of one Share, as determined in
accordance with the provisions hereof, as of the date this Warrant is

            exercised.




     B = the Warrant Price in effect as of the date this Warrant is
exercised.




Fair Market Value of a share of Common Stock (for purposes of this section) means (a) if the
Shares are traded on a national securities exchange or the Nasdaq Stock Market, the average
of the closing prices for the twenty (20) trading days prior to the date this Warrant is
exercised; (b) if the Shares are traded on the OTC Bulletin Board or another market or
quotation system, or the prices for the shares are published on the “Pink Sheets” operated
by the Pink Sheets LLC, the average of the closing bid and ask prices posted for the Shares
during the twenty (20) trading days prior to the date this Warrant is exercised; or (c) if
the primary market for such Shares is not an exchange or quotation system, the fair market
value thereof as shall be determined in good faith using appropriate valuation methods by
the Board of Directors of the Company as of the date this Warrant is exercised; and




         (c) the delivery to the Company, if necessary in the discretion of counsel for the
Company, to assure compliance with the Securities Act of 1933, as amended (the
“Securities Act”), and applicable state securities laws, of an instrument executed
by holder certifying that the Shares
are being purchased solely for the account of Holder and not with a view to any resale
or distribution in violation of the Securities Act or applicable state securities laws.



2









 





     1.3 Issuance Of Shares and New Warrant. If the purchase rights evidenced by this
Warrant are exercised in whole or in part, one or more certificates for the purchased Shares shall
be issued as soon as practicable thereafter to Holder. If the purchase rights evidenced by this
Warrant are exercised only in part, the Company shall also deliver to Holder at such time a new
Warrant evidencing the purchase rights regarding the number of Shares (if any) for which the
purchase rights under this Warrant remain unexercised and continue in force and effect. All new
Warrants issued in connection with the provisions of this Section 1.3 shall bear the same
date as this Warrant and shall be substantially identical in form and provisions to this Warrant
except for the number of Shares purchasable thereunder. Each person in whose name any certificate
for Shares is to be issued shall for all purposes be deemed to have become the holder of record of
such Shares on the date on which this Warrant was surrendered and payment of the Warrant Price was
made, irrespective of the date of delivery of such stock certificate, except that if the date of
such surrender and payment is a date when the stock transfer books of the Company are closed, such
person shall be deemed to have become the holder of such Shares at the close of business on the
next succeeding date on which the stock transfer books are open.



2. TRANSFERS




     2.1 Transfers. This Warrant and all rights hereunder are transferable in whole or in
part by the Holder subject to the provisions of Section 7 below. The transfer shall be
recorded on the books of the Company upon (i) the surrender of this Warrant (together with a duly
executed and endorsed copy of the form of transfer certificate attached hereto as Exhibit
B) to the Secretary of the Company at its principal offices, and (ii) the payment to the
Company of all transfer taxes and other governmental charges imposed on such transfer. In the
event of a partial transfer, the Company shall issue to the several holders one or more appropriate
new Warrants.



     2.2 Registered Holder. Each holder of this Warrant agrees that until such time as any
transfer pursuant to Section 2.1 above is recorded on the books of the Company, the Company
may treat the registered Holder of this Warrant as the absolute owner.



     2.3 Form Of New Warrants. All new Warrants issued in connection with transfers of
this Warrant shall bear the same date as this Warrant and shall be substantially identical in form
and provisions to this Warrant except for the number of Shares purchasable thereunder.



3. NO FRACTIONAL SHARES




     Notwithstanding any adjustment (as required hereby) to the number of Shares purchasable upon
the exercise of this Warrant, the Company shall not be required to issue any fraction of a Share
upon exercise of this Warrant. If, by reason of any change made pursuant to Section 4
below, the Holder would be entitled, upon the exercise of any rights evidenced hereby, to receive a
fractional interest in a Share, the Company shall, upon such proper exercise of this Warrant,
purchase such fractional interest for an amount in cash equal to the Fair Market Value of such
fractional interest, determined as of the date of such exercise of this Warrant.



4. ANTIDILUTION PROVISIONS




     4.1 Stock Splits And Combinations. If the Common Stock shall at any time be
subdivided into a greater number of shares, then the number of Shares purchasable upon exercise of
this Warrant shall be proportionately increased and the Warrant Price shall be proportionately
decreased; and, conversely, if the Common Stock shall at any time be combined into a smaller number
of shares, then the number of Shares purchasable upon exercise of this Warrant shall be
proportionately reduced and the Warrant Price shall be
proportionately increased. Any adjustments under this Section 4.1 shall become
effective at the close of business on the date the subdivision or combination becomes effective.



3









 





     4.2 Reclassification, Exchange and Substitution. If the Common Stock shall be changed
into shares of any other class or classes of stock or other securities of the Company, whether by
capital reorganization, reclassification, or otherwise, Holder shall, upon exercise of this
Warrant, be entitled to purchase for the same aggregate consideration, in lieu of the Shares that
Holder would have become entitled to purchase but for such change, such number, class and series of
securities of the Company as would have been issuable in connection with such event to a holder of
that number of shares of Common Stock purchasable upon exercise of this Warrant immediately prior
to such reorganization, reclassification or other change. The Warrant Price shall be appropriately
adjusted to reflect that reorganization, reclassification or other change. Any adjustments under
this Section 4.2 shall become effective at the close of business on the date such change of
the Common Stock into shares of any other class or classes of stock or other securities of the
Company becomes effective.



     4.3 Reorganizations, Mergers, Consolidations Or Sale Of Assets. If at any time there
shall be a reorganization involving the Common Stock (other than a stock split, combination,
reclassification, exchange, or subdivision of shares provided for in Sections 4.1 and
4.2 above) or a merger or consolidation of the Company with or into another corporation, or
the sale of all or substantially all of the Company’s assets to any other person, then, as a part
of such reorganization, merger, consolidation or sale, lawful provision shall be made so that
Holder shall thereafter be entitled to receive upon exercise of this Warrant, in accordance with
the terms hereof, in lieu of the Shares that Holder would have become entitled to purchase but for
such event, such other securities or property of the Company, or of the successor corporation
resulting from such event, to which Holder would have been entitled 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 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 Holder after the reorganization, merger,
consolidation, or sale to the end that the provisions of this Warrant (including adjustment of the
Warrant Price then in effect and number of Shares purchasable upon exercise of this Warrant) 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. The Company shall provide
Holder with at least twenty (20) days’ prior written notice of any of the events described in the
first sentence of this Section 4.3.



     4.4 Adjustments of Other Distributions. If the Company shall at any time declare and
pay or deliver to the holders of Common Stock 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, in any case of a kind not referred to above, then, upon exercise
of this Warrant, Holder shall be entitled to receive a proportionate share of any such distribution
as though 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.



     4.5 Certificate as to Adjustments. In the case of each adjustment (including a
readjustment) under this Section 4, the Company will promptly, and in any event within
thirty (30) days after the event requiring the adjustment, compute such adjustment in accordance
with the terms hereof and deliver or cause to be delivered to Holder a certificate describing in
reasonable detail the event requiring the adjustment and setting forth such adjustment and the
calculations and results of such adjustment.



     4.6 Reservation of Stock Issuable Upon Exercise. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common Stock such number of
shares of Common Stock as shall from time to time be sufficient to effect the exercise of this
Warrant. 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, the Company will 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.



4









 





     4.7 Method of Calculation. All calculations under this Section 4 shall be
made to the nearest one hundredth of a share.



5. RIGHTS PRIOR TO EXERCISE OF WARRANT




     This Warrant does not entitle Holder to any of the rights of a stockholder of the Company,
including (without limitation) the right to receive dividends or other distributions, to vote or
consent, or to receive notice as a stockholder of the Company. If, however, at any time prior to
the expiration of this Warrant and prior to its exercise,




     (a) the Company shall declare any dividend payable in any securities upon outstanding
shares of Common Stock or make any other distribution (other than a regular cash dividend)
to the holders of shares of Common Stock;




     (b) the Company shall offer to the holders of shares of Common Stock any additional
shares of Common Stock or securities convertible into or exchangeable for shares of Common
Stock or any right to subscribe for or purchase any thereof; or




     (c) a dissolution, liquidation or winding-up of the Company (other than in connection
with a reorganization, consolidation, merger, or sale of all or substantially all of its
assets as an entirety) shall be approved by the Company’s Board of Directors,


then, in any one or more of such events the Company shall give notice in writing of such event to
Holder, at its address as it shall then appear on the Company’s records, at least twenty (20) days
prior to the date fixed as a record date or the date of closing the transfer books for the
determination of the stockholders entitled to such dividends, distribution, or subscription rights,
or for the determination of stockholders entitled to vote on such proposed dissolution, liquidation
or winding-up. Such notice shall specify such record date or the date of closing the transfer
books, as the case may be.




     Any failure to give such notice or any defect therein, however, shall not affect the validity
of any action taken in connection with such dividend, distribution or subscription rights, or such
proposed dissolution, liquidation or winding-up.



6. SUCCESSORS AND ASSIGNS




     The terms and provisions of this Warrant shall inure to the benefit of, and be binding upon,
the Company and its successors and assigns and Holder and its successors and permitted assigns.



7. RESTRICTED SECURITIES




     To enable the Company to comply with the Securities Act and applicable state securities laws,
the Company may require Holder, as a condition of the transfer or exercise of this Warrant, to give
written assurance satisfactory to the Company that this Warrant, or in the case of an exercise
hereof the Shares, are being acquired for its own account, for investment only, with no view to the
distribution of the same in violation of the Securities Act or applicable state securities laws.
Any disposition of all or any portion of this Warrant or the Shares shall not be made unless and
until:




     (a) There is then in effect a registration statement under the Securities Act covering
such proposed disposition and such disposition is made in accordance with such registration
statement; or




     (b) Holder has (i) notified the Company of the proposed disposition and furnished the
Company with a detailed statement of the circumstances surrounding the proposed disposition,
and



5









 






(ii) furnished the Company with an opinion of counsel, satisfactory to the Company, that
such disposition will not require registration of such securities under the Securities Act
and applicable state securities laws.



     Holder acknowledges that this Warrant is, and each of the Shares issuable upon the exercise
hereof will be, a restricted security, and that the certificate or certificates evidencing such
Shares will bear a legend substantially similar to the following:



“The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or under the
securities laws of any state. They may not be sold, transferred or
otherwise disposed of in the absence of an effective registration
statement covering these securities under such Act or laws, or an
opinion of counsel satisfactory to the Company and its counsel that
registration is not required thereunder.”



8. LOSS OR MUTILATION




     Upon receipt by the Company of satisfactory evidence of the ownership of and the loss, theft,
destruction, or mutilation of this Warrant, and (i) in the case of loss, theft, or destruction,
upon receipt by the Company of indemnity satisfactory to it, or (ii) in the case of mutilation,
upon receipt of this Warrant and upon surrender and cancellation of this Warrant, the Company shall
execute and deliver in lieu thereof a new Warrant representing the right to purchase an equal
number of Shares.



9. NOTICES




     All notices, requests, demands and other communications under this Warrant shall be in writing
and shall be deemed to have been duly given on the date of receipt (or refusal of receipt) if
delivered personally or by courier by the party to whom notice is to be given, or on the earlier of
the third business day after the date of mailing or receipt if mailed to the party to whom notice
is to be given by first class mail, registered or certified, postage prepaid, and properly
addressed as follows: if to Holder, at its address as shown in the Company’s records; and if to the
Company, at its principal office. Either party may change its address for purposes of this
Section 9 by giving the other party written notice of the new address in the manner set
forth above.



10. GOVERNING LAW; JURISDICTION




     This Warrant shall be construed and enforced in accordance with, and all questions concerning
the construction, validity, interpretation and performance of this Warrant and all disputes arising
hereunder shall be governed by, the laws of the State of Delaware, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of Delaware or any other
jurisdictions) that would cause the application of the laws of any jurisdictions other than the
State of Delaware. Any suit, action or proceeding seeking to enforce any provision of, or based on
any dispute or matter arising out of or in connection with, this Warrant must be brought in the
state and federal courts located in Los Angeles, County, California. The Company and the Holder
each (a) consent to the exclusive jurisdiction of such courts (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding, (b) irrevocably waive, to the fullest
extent permitted by law, any objection which it may now or hereafter have
to the laying of the venue of any such suit, action or proceeding in any such court or that
any such suit, action or proceeding which is brought in any such court has been brought in an
inconvenient forum, (c) will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court, and (d) will not bring any action relating to this
Warrant in any other court.



6









 





     IN WITNESS WHEREOF, the Company has caused this Warrant to be executed on its behalf by one of
its officers thereunto duly authorized as of October 29, 2007.



	 	 	 	 	 
	 	TRI-ISTHMUS GROUP, INC.

 	 
	 	By:  	 	 
	 	 	DAVID HIRSCHHORN 	 
	 	 	Chief Executive Officer 	 
	 




7









 








EXHIBIT “A”




NOTICE OF EXERCISE




Tri-Isthmus Group, Inc.

149 South Barrington Avenue, Suite 808

Los Angeles, CA 90049




Gentlemen:



The undersigned,                     , hereby elects to purchase, pursuant to the provisions to
the foregoing Warrant held by the undersigned,                     shares of the Common Stock, par value
$0.01 (the “Common Stock”), of Tri-Isthmus Group, Inc.



The undersigned (check one and complete):



                     herewith encloses the Warrant and cash or a certified or cashier’s check (drawn in favor of
the Company) in the amount of $                     in payment of the Warrant Price.



                     herewith encloses the Warrant and a copy of the applicable Broker Instructions, as defined
in Section 1.2 of the Warrant.



                     herewith encloses the Warrant and hereby elects to exercise the Warrant on a Net Exercise
Basis in accordance with the provisions of Section 1.2 of the Warrant.



The undersigned hereby represents and warrants as follows:





     (a) the undersigned is acquiring such shares of Common Stock for its own account for
investment and not for resale or with a view to distribution thereof in violation of the Securities
Act of 1933, as amended, and the regulations promulgated thereunder (the “Securities Act”); and



     (b) the undersigned is an “accredited investor” as defined in Rule 501 of Regulation D
promulgated under the Securities Act and, if an entity, was not organized for the purpose of
acquiring the Warrant or such shares of Common Stock. The undersigned’s financial condition is
such that it is able to bear the risk of holding such securities for an indefinite period of time
and the risk of loss of its entire investment. The undersigned has sufficient knowledge and
experience in investing in companies similar to the Company so as to be able to evaluate the risks
and merits of its investment in the Company.



     Please issue a certificate or certificates for such shares of Common Stock in the following
name or names and denominations and deliver such certificate or certificates to the person or
persons listed below at their respective address set forth below:



	 	 	 	 	 
	 

	 	 

	 
	 
	 	 	 	 
	 

	 	 

	 
	 
	 	 	 	 
	 

	 	 

	 
	 
	 	 	 	 
	 

	 	 

	 






     If said number of shares of Common Stock shall not be all the shares of Common Stock issuable
upon exercise of the attached Warrant, a new Warrant is to be issued in the name of the undersigned
for the remaining balance of such shares of Common Stock less any fraction of a share of Common
Stock paid in cash pursuant to Section 3 of the attached warrant.



 









 





	 	 	 	 	 	 	 
	DATED:                     ,                     .
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Signature:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 

	 	 






 









 





EXHIBIT “B”




ASSIGNMENT FORM




     FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby sells, assigns and
transfers unto the Assignee named below all of the rights of the undersigned under this Warrant,
with respect to the number of Shares of Common Stock set forth below:



	 	 	 	 	 	 	 
	 	 	 	 	 	 	No. of Shares
	Name and Address of Assignee	 	 	 	 	 	Common Stock


















and does hereby irrevocably constitute and appoint as Attorney                                          to
register such transfer on the books of                                          maintained for the
purpose, with full power of substitution in the premises.




	 	 	 	 	 
	Dated:                     ,                     .
	 	 	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

	 	 





NOTICE: The signature to this assignment must correspond with the name as written upon the face of
the within Warrant in every particular, without alternation or enlargement or any change
whatsoever.