THIS WARRANT AND THE SECURITIES THAT MAY BE ACQUIRED UPON THE EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR UNDER THE PROVISIONS OF ANY APPLICABLE STATE
SECURITIES LAWS. NEITHER THIS WARRANT NOR THE SECURITIES THAT MAY BE ACQUIRED
UPON THE EXERCISE OF THIS WARRANT MAY BE SOLD, PLEDGED, TRANSFERRED, ASSIGNED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR UPON DELIVERY
TO THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAW IS NOT
REQUIRED.
DELTA FINANCIAL CORPORATION
---------------------------
STOCK PURCHASE WARRANT
----------------------
VOID AFTER 5:00 P.M., EASTERN STANDARD TIME
ON THE EXPIRATION DATE DEFINED BELOW
Date of Issuance: August 14, 2007 Certificate No.W-__
FOR VALUE RECEIVED, Delta Financial Corporation, a Delaware corporation
(the "Company"), hereby grants to ______________________ or its registered
assigns (the "Registered Holder") warrants (the "Warrants," which defined term
includes any warrant issued in replacement, exchange or substitution for this
Warrant) to purchase from the Company up to _________________ (the "Warrant
Shares") of the Company's common stock, $0.01 par value per share ("Common
Stock" or at a price per share of $5.00 (as adjusted from time to time
hereunder, the "Exercise Price"). Certain capitalized terms used herein are
defined in Section 6 hereof. The amount and kind of securities obtainable
pursuant to the rights granted hereunder and the purchase price for such
securities are subject to adjustment pursuant to the provisions contained in
this Warrant.
This Warrant is subject to the following provisions:
Section 1. EXERCISE OF WARRANT.
1A. EXERCISE PERIOD. The Registered Holder may exercise, in whole or in
part, the purchase rights represented by this Warrant at any time and from time
to time after the Date of Issuance to and including February 16, 2009 (the
"Exercise Period"). If the Company does not obtain stockholder approval for the
issuance of the Warrant Shares, as required by the Investor Rights Agreement
(the "Investor Rights Agreement"), dated August 13, 2007, between the Company
and AG Delta Holdings, LLC, a Delaware limited liability company ("AGDH"), on or
prior to November 14, 2007, then the Exercise Period shall be extended by the
number of days after November 14, 2007 that such stockholder approval is
obtained. The last date of the
1
Exercise Period is referred to herein as the "Expiration Date." The Company
shall give the Registered Holder written notice of the expiration of the rights
hereunder at least 30 days but not more than 90 days prior to the end of the
Exercise Period.
1B. EXERCISE OF WARRANTS
(i) METHOD OF EXERCISE. The Warrant evidenced hereby may be
exercised by the Registered Holder, in whole or in part, by the delivery at the
principal office of the Company (or at such other office or agency of the
Company as it may designate by notice in writing to the Registered Holder),
during normal business hours, of this Warrant and the Exercise Agreement
(substantially in the form attached hereto as Exhibit I), duly completed and
executed, and either (1) payment of the Purchase Price (as such term is defined
in Section 1B(x) below) in cash, by wire transfer of immediately available
United States federal funds or by bank certified, treasurer's or cashier's check
payable to the order of the Company, (2) the reduction of the principal amount
of indebtedness outstanding under the Financing Agreements (as defined in the
Warrant Acquisition Agreement (the "Warrant Acquisition Agreement"), dated
August 13, 2007, between the Company and AGDH) by the Registered Holder or its
affiliates (or any other indebtedness of the Issuer or its affiliates, if so
agreed in writing by the Company or (3) a duly completed and executed Form of
Cashless Exercise. Upon delivery of the Exercise Agreement, this Warrant and the
Purchase Price, the Company shall deliver to the Registered Holder that number
of Warrant Shares which is equal to the Purchase Price divided by the Exercise
Price, as may be adjusted from time to time.
(ii) CASHLESS EXERCISE. In lieu of exercising the Warrant
evidenced hereby pursuant to Section 1B(i) above, the Registered Holder shall
have the right during the Exercise Period to exercise this Warrant, in whole or
in part, by surrendering this Warrant to the Company accompanied by the Form of
Cashless Exercise (in the form attached hereto as Exhibit II), duly completed
and executed. Upon delivery of the Form of Cashless Exercise and this Warrant,
the Company shall deliver to the Registered Holder (without payment by the
Registered Holder of any cash or adjustments to the amount of indebtedness under
the Financing Agreements (or other indebtedness, if applicable) in respect of
the Purchase Price) that number of shares of Common Stock which is equal to the
amount obtained by dividing (x) an amount equal to (1) the aggregate Market
Price for the Warrant Shares as to which this cashless exercise right is then
being exercised (the "Cashless Exercise Shares"), determined as of immediately
prior to the effective time of the exercise of this cashless exercise right,
minus (2) the aggregate Exercise Price then applicable to the Cashless Exercise
Shares (such difference, the "Cashless Exercise Amount"), by (y) the Market
Price of one share of Common Stock determined as of the close of trading
immediately after the effective time of the exercise of this cashless exercise
right. Upon exercise of this cashless exercise right, the Cashless Exercise
Amount shall be deemed to have been paid to the Company in respect of the
Warrant Shares so acquired. Any references in this Warrant to the "exercise" of
this Warrant, and the use of the term "exercise" herein, shall be deemed to
include, without limitation, any exercise of the Cashless Exercise right.
(iii) Certificates for shares of Common Stock purchased upon
exercise of this Warrant shall be delivered by the Company to the Registered
Holder as soon as practicable after surrender of the Warrant and either (a)
payment of the Purchase Price (in cash or adjustments to
2
the amount of indebtedness under the Financing Agreements (or other
indebtedness, if applicable)) and delivery of the Exercise Agreement or (b)
delivery of the Form of Cashless Exercise to the Company, and in any event
within ten (10) days after such surrender, payment and delivery to the Company
in the manner described above. Unless this Warrant has expired or all of the
purchase rights represented hereby have been exercised, the Company shall
prepare a new Warrant, substantially identical hereto, in the name of Registered
Holder, representing the rights formerly represented by this Warrant which have
not expired or been exercised and shall, as soon as practicable, and in any
event within ten (10) days after such surrender, payment and delivery to the
Company in the manner described above, deliver such new Warrant to the
Registered Holder or to such Person as the Registered Holder has designated for
delivery.
(iv) The Common Stock issuable upon the exercise of this
Warrant shall be deemed to have been issued to the Registered Holder as of the
close of business on the date on which this Warrant shall have been surrendered
to the Company and delivery of (1) the Purchase Price and Exercise Agreement or
(2) Form of Cashless Exercise has been made to the Company, and the Registered
Holder shall be deemed for all purposes to have become the record holder of such
Warrant Shares on that date.
(v) The issuance of certificates for shares of Common Stock
upon exercise of this Warrant shall be made without charge to the Registered
Holder with respect to any issuance tax or other cost incurred by the Company in
connection with such exercise and the related issuance of shares of Common
Stock. Each share of Common Stock issuable upon exercise of this Warrant shall,
upon payment of the Exercise Price therefor, be duly authorized, validly issued,
fully paid and nonassessable and free from all taxes, liens and charges with
respect to the issuance thereof.
(vi) The Company shall not close its books against the
transfer of this Warrant or of any share of Common Stock issued or issuable upon
the exercise of this Warrant in any manner which interferes with the timely
exercise of this Warrant. The Company shall from time to time take all such
action as may be necessary to insure that the par value per share of the
unissued Common Stock acquirable upon exercise of this Warrant is at all times
equal to or less than the Exercise Price then in effect.
(vii) The Company shall assist and cooperate with any
Registered Holder required to make any governmental filings or obtain any
governmental approvals prior to, or in connection with, the exercise of this
Warrant (including making any filings required to be made by the Company).
(viii) The Company shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of issuance upon the exercise of the Warrants, at least such number
of shares of Common Stock issuable upon the exercise in full of all outstanding
Warrants. The Company shall take all such actions as may be necessary to insure
that all such shares of Common Stock may be so issued without violation of any
applicable law or governmental regulation or any requirements of any domestic
securities exchange upon which shares of Common Stock may be listed (except for
official notice of issuance which shall be immediately delivered by the Company
upon each such issuance). The
3
Company shall not take any action which would cause the number of authorized but
unissued shares of Common Stock to be less than the number of such shares
required to be reserved hereunder for issuance upon exercise of the Warrants.
(ix) If the shares of Common Stock issuable by reason of
exercise of this Warrant are convertible into or exchangeable for any other
stock or securities of the Company, the Company shall, at the Registered
Holder's option and upon surrender of this Warrant by such holder as provided
above, together with any notice, statement or payment required to effect such
conversion or exchange of Common Stock, deliver to such holder (or such other
Person specified by such holder) a certificate or certificates representing the
stock or securities into which the shares of Common Stock issuable by reason of
such conversion are convertible or exchangeable, registered in such name or
names and in such denomination or denominations as such holder has specified.
(x) PURCHASE PRICE. The Purchase Price shall be the amount
equal to the product of the Exercise Price multiplied by the number of shares of
Common Stock being purchased upon such exercise.
(xi) Notwithstanding any other provision hereof, if an
exercise of any portion of this Warrant is to be made in connection with a
registered public offering or the sale of the Company, the exercise of any
portion of this Warrant may, at the election of the holder hereof, be
conditioned upon the consummation of the public offering or sale of the Company,
in which case such exercise shall not be deemed to be effective until the
consummation of such transaction.
1C. FRACTIONAL SHARES. If a fractional share of Common Stock would be
issuable upon exercise of the rights represented by this Warrant, the Company
shall, as soon as practicable after the date of exercise, deliver to the
Registered Holder a check payable to the Registered Holder, in lieu of such
fractional share, in an amount equal to the difference between (x) the Market
Price of such fractional share as of the date of the Exercise Time and (y) the
Exercise Price of such fractional share.
1D. LIMITATION ON EXERCISE. This Warrant represents one of a series of
warrants to purchase up to 10,000,000 shares of Common Stock that were initially
issued on August 14, 2007. Until the issuance of the shares issuable upon
exercise of the warrants of this series have been approved by the Company's
stockholders as required by applicable law and the Warrant Acquisition
Agreement, this Warrant (including any warrant certificates issued upon exchange
of this Warrant), together with the other warrants of the same series, may only
be exercised for an aggregate of 4,700,000 shares of Common Stock; the Company
shall have no obligation to issue any shares of Common Stock upon exercise of
this Warrant that would cause the aggregate of such issuances to exceed
4,700,000 shares prior to the receipt of the required stockholder approval.
Section 2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. In order to
prevent dilution of the rights granted under this Warrant, the Exercise Price
shall be subject to adjustment from time to time as provided in this Section 2,
and the number of shares of Common Stock obtainable upon exercise of this
Warrant shall be subject to adjustment from time to time as provided in this
Section 2.
4
2A. ADJUSTMENTS OF NUMBER OF SHARES/EXERCISE PRICE UPON ISSUANCE OF
COMMON STOCK. (a) If and whenever on or after the Date of Issuance of this
Warrant, the Company issues or sells, or in accordance with paragraph 2B is
deemed to have issued or sold, any share of Common Stock for a consideration per
share less than the Exercise Price in effect immediately prior to such time,
then immediately upon such issue or sale the Exercise Price shall be reduced to
the lowest net price per share at which such share of Common Stock has been
issued or sold or is deemed to have been issued or sold. Upon each such
adjustment of the Exercise Price hereunder, the number of shares of Common Stock
acquirable upon exercise of this Warrant shall be adjusted to the number of
shares determined by multiplying the Exercise Price in effect immediately prior
to such adjustment by the number of shares of Common Stock acquirable upon
exercise of this Warrant immediately prior to such adjustment and dividing the
product thereof by the Exercise Price resulting from such adjustment.
(b) The provisions of this Section 2A shall not apply to: (i) the
issuance of shares of securities pursuant to a split or
subdivision of the outstanding shares of Common Stock or the
determination of 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 (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration
by such holder for the additional shares of Common Stock or the
Common Stock Equivalents (including the additional shares of
Common Stock issuable upon conversion or exercise thereof); (ii)
the issuance of shares of Common Stock or options therefor to
employees, consultants, officers or directors (if in transactions
with primarily non-financing purposes) of the Company pursuant to
a stock option plan or restricted stock purchase plan or similar
grant outside of a plan approved by the Board of Directors of the
Company; (iii) the issuance of shares of Common Stock pursuant to
the conversion or exercise of convertible or exercisable
securities outstanding as of the date hereof (provided that
amendments to the terms of such securities shall be subject to
this Section 2A if they affect the exercise price, conversion
price or number of shares of Common Stock that may be issued
thereunder); (iv) the issuance of shares of Common Stock in
connection with a bona fide business acquisition of or by the
Company, whether by merger, consolidation, sale of assets, sale or
exchange of stock or otherwise, each as approved by the Board of
Directors of the Company (which such shares, for the avoidance of
doubt, may only be used pursuant to this clause (iv) as the
consideration for the entity, stock or assets to be acquired, and
not for the purpose of obtaining financing for the proposed
acquisition); (v) the issuance or sale of stock, warrants or other
securities or rights to Persons or entities with which the Company
has business relationships provided such issuances are for other
than primarily equity financing purposes and provided that at the
time of any such issuance, the aggregate of such issuance and
similar issuances do not exceed shares of Common Stock with an
aggregate value of $2,000,000 (as reasonably determined by the
Company's Board of Directors, and which such amount may be
increased upon the written consent of the Registered Holder, which
such consent shall not be unreasonably withheld); (vi) shares of
Common Stock issuable upon exercise of this Warrant; and (vii)
transactions with the Registered Holder or its affiliates.
5
2B. EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For purposes of
determining the adjusted Exercise Price under paragraph 2A, the following shall
be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If the Company in any
manner grants or sells any Options and the lowest price per share for which any
one share of Common Stock is issuable upon the exercise of any such Option, or
upon conversion or exchange of any Convertible Security issuable upon exercise
of such Option, is less than the Exercise Price in effect immediately prior to
the time of the granting or sale of such Option, then such share of Common Stock
shall be deemed to have been issued and sold by the Company at such time for
such price per share. For purposes of this paragraph, the "lowest price per
share for which any one share of Common Stock is issuable" shall be equal to the
sum of the lowest amounts of consideration (if any) received or receivable by
the Company with respect to any one share of Common Stock upon the granting or
sale of the Option, upon exercise of the Option and upon conversion or exchange
of the Convertible Security. No further adjustment of the Exercise Price shall
be made upon the actual issue of such Common Stock or of such Convertible
Security upon the exercise of such Options or upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible Security.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the Company in any
manner issues or sells any Convertible Security and the lowest price per share
for which any one share of Common Stock is issuable upon conversion or exchange
thereof is less than the Exercise Price in effect immediately prior to the time
of such issue or sale, then such share or shares of Common Stock shall be deemed
to have been issued and sold by the Company at such time for such price per
share. For the purposes of this paragraph, the "lowest price per share for which
any one share of Common Stock is issuable" shall be equal to the sum of the
lowest amounts of consideration (if any) received or receivable by the Company
with respect to any one share of Common Stock upon the issuance of the
Convertible Security and upon the conversion or exchange of such Convertible
Security. No further adjustment of the Exercise Price shall be made upon the
actual issue of such Common Stock upon conversion or exchange of any Convertible
Security, and if any such issue or sale of such Convertible Security is made
upon exercise of any Options for which adjustments of the Exercise Price had
been or are to be made pursuant to other provisions of this Section 2, no
further adjustment of the Exercise Price shall be made by reason of such issue
or sale.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If the
purchase price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are convertible into
or exchangeable for Common Stock changes at any time, the Exercise Price in
effect at the time of such change shall be adjusted immediately to the Exercise
Price which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed purchase
price, additional consideration or changed conversion rate, as the case may be,
at the time initially granted, issued or sold and the number of shares of Common
Stock issuable hereunder shall be correspondingly adjusted; provided that if
such adjustment would result in an increase of the Exercise Price then in
effect, such adjustment shall not be effective until 30 days after written
notice thereof has been given by the Company to
6
all holders of the Warrants. For purposes of this paragraph 2B, if the terms of
any Option or Convertible Security which was outstanding as of the date of
issuance of this Warrant are changed in the manner described in the immediately
preceding sentence, then such Option or Convertible Security and the Common
Stock deemed issuable upon exercise, conversion or exchange thereof shall be
deemed to have been issued as of the date of such change; provided that no such
change shall at any time cause the Exercise Price hereunder to be increased.
(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED CONVERTIBLE
SECURITIES. Upon the expiration of any Option or the termination of any right to
convert or exchange any Convertible Securities without the exercise of such
Option or right, the Exercise Price then in effect shall be adjusted immediately
to the Exercise Price which would have been in effect at the time of such
expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination, never
been issued; provided that if such expiration or termination would result in an
increase in the Exercise Price then in effect, such increase shall not be
effective until 30 days after written notice thereof has been given to all
holders of the Warrants. For purposes of this paragraph 2B, the expiration or
termination of any Option or Convertible Security which was outstanding as of
the date of issuance of this Warrant shall not cause the Exercise Price
hereunder to be adjusted unless, and only to the extent that, a change in the
terms of such Option or Convertible Security caused it to be deemed to have been
issued after the date of issuance of this Warrant.
(v) CALCULATION OF CONSIDERATION RECEIVED. If any Common
Stock, Options or Convertible Securities are issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor shall be
deemed to be the net amount received by the Company therefor. In case any Common
Stock, Options or Convertible Securities are issued or sold for a consideration
other than cash, the amount of the consideration other than cash received by the
Company shall be the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of consideration
received by the Company shall be the Market Price thereof as of the date of
receipt. In case any Common Stock, Options or Convertible Securities are issued
to the owners of the non-surviving entity 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 value of such portion of the net assets and
business of the non-surviving entity as is attributable to such Common Stock,
Options or Convertible Securities, as the case may be. The fair value of any
consideration other than cash or securities shall be determined jointly by the
Company and the Registered Holders of Warrants representing a majority of the
shares of Common Stock obtainable upon exercise of such Warrants. If such
parties are unable to reach agreement within a reasonable period of time, such
fair value shall be determined by an appraiser jointly selected by the Company
and the Registered Holders of Warrants representing a majority of the shares of
Common Stock obtainable upon exercise of such Warrants. If the Company and such
Registered Holders cannot agree upon an appraiser, each of the Company and such
Registered Holders shall select an appraiser, and such two appraisers shall
determine a third party that will act as appraiser. The determination of such
appraiser shall be final and binding on the Company and the Registered Holders
of the Warrants, and the fees and expenses of such appraiser shall be paid by
the Company.
7
(vi) INTEGRATED TRANSACTIONS. In case any Option is issued in
connection with the issue or sale of other securities of the Company, together
comprising one integrated transaction in which no specific consideration is
allocated to such Options by the parties thereto, the Options shall be deemed to
have been issued without consideration.
(vii) TREASURY SHARES. The number of shares of Common Stock
outstanding at any given time does not include shares owned or held by or for
the account of the Company or any Subsidiary, and the disposition of any shares
so owned or held shall be considered an issue or sale of Common Stock.
2C. SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company at any
time subdivides (by any stock split, stock dividend, recapitalization 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 shall be proportionately reduced and the number of shares of Common
Stock obtainable upon exercise of this Warrant shall be proportionately
increased. If the Company at any time combines (by reverse stock split 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 shall be proportionately increased and the number of shares of
Common Stock obtainable upon exercise of this Warrant shall be proportionately
decreased.
2D. REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company's assets or other transaction,
which in each case is effected in such a way that the holders of Common Stock
are entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock is referred
to herein as an "Organic Change." Prior to the consummation of any Organic
Change, the Company shall make appropriate provision (in form and substance
reasonably satisfactory to the Registered Holders of the Warrants representing a
majority of the Common Stock obtainable upon exercise of all Warrants then
outstanding) to insure that each of the Registered Holders of the Warrants shall
thereafter have the right to acquire and receive, in lieu of or in addition to
(as the case may be) the shares of Common Stock immediately theretofore
acquirable and receivable upon the exercise of such holder's Warrant, such
shares of stock, securities or assets as may be issued or payable with respect
to or in exchange for the number of shares of Common Stock immediately
theretofore acquirable and receivable upon exercise of such holder's Warrant had
such Organic Change not taken place. In any such case, the Company shall make
appropriate provision (in form and substance reasonably satisfactory to the
Registered Holders of the Warrants representing a majority of the Common Stock
obtainable upon exercise of all Warrants then outstanding) with respect to such
holders' rights and interests to insure that the provisions of this Section 2
and Sections 1, 3 and 4 hereof shall thereafter be applicable to the Warrants
(including, in the case of any such consolidation, merger or sale in which the
successor entity or purchasing entity is other than the Company, an immediate
adjustment of the Exercise Price to the value for the Common Stock reflected by
the terms of such consolidation, merger or sale, and a corresponding immediate
adjustment in the number of shares of Common Stock acquirable and receivable
upon exercise of the Warrants, if the value so reflected is less than the
Exercise Price in effect immediately prior to such consolidation, merger or
sale). The Company shall not effect
8
any such consolidation, merger or sale, unless prior to the consummation
thereof, the successor entity (if other than the Company) resulting from
consolidation or merger or the entity purchasing such assets assumes by written
instrument (in form and substance satisfactory to the Registered Holders of
Warrants representing a majority of the Common Stock obtainable upon exercise of
all the Warrants then outstanding), the obligation to deliver to each such
holder such shares of stock, securities or assets as, in accordance with the
foregoing provisions, such holder may be entitled to acquire.
2E. NOTICES
(i) Immediately upon any adjustment of Exercise Price, the
Company shall give written notice thereof to the Registered Holder, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered
Holder at least 20 days prior to the date on which the Company closes its books
or takes a record (x) with respect to any dividend or distribution upon the
Common Stock, (y) with respect to any pro rata subscription offer to holders of
Common Stock, or (z) for determining rights to vote with respect to any Organic
Change, dissolution or liquidation.
(iii) The Company also shall give written notice to the
Registered Holder at least 20 days prior to the date on which any Organic
Change, dissolution or liquidation shall take place.
Section 3. LIQUIDATING DIVIDENDS. If the Company declares or pays a dividend
upon the Common Stock that is payable otherwise than in cash out of earnings or
earned surplus (determined in accordance with generally accepted accounting
principles, consistently applied) (except for a stock dividend payable in shares
of Common Stock) (a "Liquidating Dividend"), then the Company shall pay to the
Registered Holder of this Warrant at the time of payment thereof the Liquidating
Dividend which would have been paid to such Registered Holder on the Common
Stock had this Warrant been fully exercised immediately prior to the date on
which a record is taken for such Liquidating Dividend, or, if no record is
taken, the date as of which the record holders of Common Stock entitled to such
dividends are to be determined.
Section 4. PURCHASE RIGHTS. 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 Registered Holder of this Warrant
shall be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which such holder could have acquired if such
holder had held the number of shares of Common Stock acquirable upon complete
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 Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights.
9
Section 5. REGISTRATION RIGHTS.
The shares of Common Stock issuable hereunder are subject to the
registration rights granted pursuant to the Investor Rights Agreement executed
in connection with the issuance of this Warrant.
Section 6. DEFINITIONS. The following terms have meanings set forth below:
"COMMON STOCK" means, collectively, the Common Stock and any capital
stock of any class of the Company hereafter authorized which is not limited to a
fixed sum or percentage of par or stated value in respect to the rights of the
holders thereof to participate in dividends or in the distribution of assets
upon any liquidation, dissolution or winding up of the Company.
"CONVERTIBLE SECURITIES" means any stock or securities (directly or
indirectly) convertible into or exchangeable for Common Stock.
"MARKET PRICE" means as to any security the average of the closing
prices, averaged over a period of 21 days consisting of the day as of which
"Market Price" is being determined and the 20 consecutive business days prior to
such day, of such security's sales on all domestic securities exchanges on which
such security may be listed at the time, or, if there have been no sales on any
such exchange on that day, the average of the highest bid and lowest asked
prices on all such exchanges at the end of such day, or, if on any day such
security is not so listed, the average of the representative bid and asked
prices quoted in the NASDAQ System as of 4:00 P.M., New York time, on such day,
or, if on any day such security is not quoted in the NASDAQ System, the average
of the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar successor organization; provided that, if such
security is listed on any domestic securities exchange, the term "business days"
as used in this sentence means business days on which such exchange is open for
trading. If at any time such security is not listed on any domestic securities
exchange or quoted in the NASDAQ System or the domestic over-the-counter market,
the "Market Price" shall be the fair value thereof determined jointly by the
Company and the Registered Holders of Warrants representing a majority of the
Common Stock purchasable upon exercise of all the Warrants then outstanding;
provided that if such parties are unable to reach agreement within a reasonable
period of time such fair value shall be determined by an appraiser jointly
selected by the Company and the Registered Holders of Warrants representing a
majority of the Common Stock purchasable upon exercise of all the Warrants then
outstanding. The determination of such appraiser shall be final and binding on
the Company and the Registered Holders of the Warrants, and the fees and
expenses of such appraiser shall be paid by the Company.
"OPTIONS" means any rights or options to subscribe for or purchase
Common Stock or Convertible Securities.
"PERSON" means an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization and a government or any department or agency thereof.
10
Section 7. WARRANT TRANSFERABLE. Subject to the transfer conditions referred to
in the legend endorsed hereon, and any other agreement between the Company and
the Registered Holder, this Warrant and all rights hereunder are transferable,
in whole or in part, without charge to the Registered Holder, upon surrender of
this Warrant with a properly executed Assignment (in the form of Exhibit III
hereto) at the principal office of the Company.
Section 8. WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This Warrant is
exchangeable, upon the surrender hereof by the Registered Holder at the
principal office of the Company, for new Warrants of like tenor representing in
the aggregate the purchase rights hereunder, and each of such new Warrants shall
represent such portion of such rights as is designated by the Registered Holder
at the time of such surrender. The date the Company initially issues this
Warrant shall be deemed to be the "Date of Issuance" hereof regardless of the
number of times new certificates representing the unexpired and unexercised
rights formerly represented by this Warrant shall be issued. All Warrants
representing portions of the rights hereunder are referred herein as the
"Warrants."
Section 9. REPLACEMENT. Upon receipt of evidence reasonably satisfactory to the
Company (an affidavit of the Registered Holder shall be satisfactory) of the
ownership and the loss, theft, or destruction, or mutilation of any certificate
evidencing this Warrant, and in the case of any such loss, theft or destruction,
upon receipt of indemnity reasonably satisfactory to the Company (provided that,
if the holder is a financial institution or other institutional investor, its
own agreement shall be satisfactory), or, in the case of any such mutilation
upon surrender of such certificate, the Company shall (at its expense) execute
and deliver in lieu of such certificate a new certificate of like kind
representing the same rights represented by such lost, stolen, destroyed or
mutilated certificate and dated the date of such lost, stolen, destroyed or
mutilated certificate.
Section 10. NOTICES. Except as otherwise expressly provided herein, all notices
referred to in this Warrant shall be in writing and shall be delivered by
registered or certified mail, return receipt requested, postage prepaid or sent
by reputable overnight courier service (charges prepaid) and shall be deemed to
have been given when so mailed or sent (1) to the Company, at its principal
executive offices and (2) to the Registered Holder of this Warrant, at such
holder's address as it appears in the records of the Company (unless otherwise
indicated by any such holder).
Section 11. DESCRIPTIVE HEADINGS; GOVERNING LAW. The descriptive headings of the
several Sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. The corporation laws of the
State of Delaware shall govern all issues concerning the relative rights of the
Company and its shareholders. All other questions concerning the construction,
validity, enforcement and interpretation of this Warrant shall be governed by
the internal law of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York.
11
Section 12. LIMITATIONS OF LIABILITY. No provision hereof, in the absence of
affirmative action by the Registered Holder to purchase Common Stock, and no
enumeration herein of the rights or privileges of the Registered Holder shall
give rise to any liability of such holder for the Exercise Price of Common Stock
acquirable by exercise hereof or as a stockholder of the Company.
Section 13. AMENDMENT AND WAIVER. Except as otherwise provided herein, the
provisions of the Warrants 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 Registered
Holders of Warrants representing a majority of the shares of Common Stock
obtainable upon exercise of the Warrants.
12
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and
attested by its duly authorized officers under its corporate seal and to be
dated the Date of Issuance hereof.
DELTA FINANCIAL CORPORATION
By:
-----------------
Name:
Title:
EXHIBIT I
EXERCISE AGREEMENT
------------------
To: Delta Financial Corporation Dated:
The undersigned, pursuant to the provisions set forth in the attached
Warrant (Certificate No. W-______ ), hereby irrevocably subscribes for
the purchase of _______________ shares of the Common Stock covered by
such Warrant and makes payment herewith in full therefor at the price
per share provided by such Warrant. The undersigned requests that a
certificate for such shares be issued in the name of [the undersigned]
and be delivered to [the undersigned] at the address stated below. The
undersigned further requests that, if the number of shares subscribed
for herein shall not be all of the shares purchasable hereunder, that a
new Warrant of like tenor for the balance of the shares purchasable
hereunder be delivered to [the undersigned].
Signature
--------------------------------------------
Address
----------------------------------------------
I-1
EXHIBIT II
FORM OF CASHLESS EXERCISE
-------------------------
To: Delta Financial Corporation Dated:
The undersigned hereby irrevocably elects a Cashless Exercise of the
Warrant represented by the attached Warrant (Certificate No. W________)
to purchase the shares of Common Stock issuable upon the exercise in
accordance with Section 1B(ii) of the Warrant and requests that
certificates for such shares be issued in the name of:
Please insert social security or other
identifying number
--------------------------------------
--------------------------------------
(Please print name and address)
-------------------------------------------------------------------
-------------------------------------------------------------------
If such number of Warrants shall not be all the Warrants evidenced by
the Warrant, a new Warrant for the balance remaining of such Warrant
shall be registered in the name of and delivered to:
Please insert social security or other
identifying number
--------------------------------------
--------------------------------------
(Please print name and address)
-------------------------------------------------------
-------------------------------------------------------
Dated:________________,___
---------------------------------------
Signature
(Signature must conform in all respects to
name of holder as specified on the face of
this Warrant Certificate)
II-1
EXHIBIT III
FORM OF ASSIGNMENT
------------------
FOR VALUE RECEIVED, ____________ hereby sells, assigns and transfers all of the
rights of the undersigned under the attached Warrant (Certificate No.
W-_____________) with respect to the number of shares of the Common Stock
covered thereby set forth below, unto:
Name of Assignee Address No. of Shares
---------------- ------- -------------
Dated: Signature
-----------------------
Witness
-----------------------
III-1
