WARRANT AGREEMENT
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This WARRANT AGREEMENT (this "Agreement") is made and entered into as of
, 2001, between E-Net Financial, Inc., a Nevada corporation
(the "Company") and Laguna Pacific Partners, LP, a Delaware limited partnership
("Holder").
R E C I T A L S
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WHEREAS, the Company proposes to issue to Holder $225,000 in warrants,
subject to adjustment set forth herein (the "Warrants"), each such Warrant
entitling the holder thereof to purchase shares of Common Stock of the Company
(the "Exercise Shares," "Shares," or the "Common Stock"); and
WHEREAS, the Warrants which are the subject of this Agreement will be
issued by the Company to Holder as part of consideration payable to Holder in
connection with a loan by the Holder pursuant to the terms of that certain
Secured Promissory Note, of even date herewith (the "Note").
NOW, THEREFORE, in consideration of the promises and the mutual agreements
herein set forth, the parties hereto agree as follows:
A G R E E M E N T
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1. Warrant Certificates. The warrant certificates will be delivered to
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Laguna Pacific Partners, LP immediately upon the signing of this Agreement (the
"Warrant Certificates") and shall be in the form set forth in Exhibit A,
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attached hereto and made a part hereof, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Warrant Agreement.
2. Right to Exercise Warrants. Each Warrant may be exercised from the
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date of this Agreement until 11:59 P.M. (Pacific time) on , 2005
(the "Expiration Date"). The aggregate exercise price of this Warrant,
regardless of the number of shares into which it is exercised, shall be $1.00 in
total (the "Exercise Price"). The number of shares into which this Warrant may
be exercised shall be defined herein as the "Exercise Shares". The price at
which the Exercise shares is to be calculated shall be defined as follows:
(a) If the Exercise Shares are traded in the over-the-counter market
and not on any national securities exchange and not in the NASDAQ Reporting
System, the number of Exercise Shares shall be calculated using 70% of the
trading price calculated as follows: the closing price, for the last business
day prior to the date on which this Warrant is exercised, or, if not so
reported, the average of the closing bid and asked prices for an Exercise Share
as of the date of exercise.
(b) If the Exercise Shares are listed on the NASDAQ Reporting System,
the closing price on the principal national securities exchange on which they
are so listed or traded or in the NASDAQ Reporting System, as the case may be,
on the last business day prior to the date of the exercise of this Warrant. The
closing price referred to in this Clause (b) shall be the last reported sales
price or, in case no such reported sale takes place on such day, the average of
the reported closing bid and asked prices, in either case on the national
securities exchange on which the Exercise Shares are then listed or in the
NASDAQ Reporting system.
3. Mutilated or Missing Warrant Certificates. In case any of the
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Warrant Certificates shall be mutilated, lost, stolen or destroyed prior to its
expiration date, the Company shall issue and deliver, in exchange and
substitution for and upon cancellation of the mutilated Warrant Certificate, or
in lieu of and in substitution for the Warrant Certificate lost, stolen or
destroyed, a new Warrant Certificate of like tenor and representing an
equivalent right or interest.
4. Reservation of Shares. The Company will at all times reserve and
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keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued Shares or its authorized and issued Shares held in its
treasury for the purpose of enabling it to satisfy its obligation to issue
Shares upon exercise of Warrants, the full number of Shares deliverable upon the
exercise of all outstanding Warrants.
The Company covenants that all Shares which may be issued upon exercise of
Warrants will be validly issued, fully paid and nonassessable outstanding Shares
of the Company.
5. Rights of Holder. The Holder shall not, by virtue of anything
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contained in this Warrant Agreement or otherwise, prior to exercise of this
Warrant, be entitled to any right whatsoever, either in law or equity, of a
stockholder of the Company, including without limitation, the right to receive
dividends or to vote or to consent or to receive notice as a shareholder in
respect of the meetings of shareholders or the election of directors of the
Company of any other matter.
6. Investment Intent. Holder represents and warrants to the Company
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that Holder is acquiring the Warrants for investment and with no present
intention or reselling any of the Warrants.
7. Certificates to Bear Language. The Warrants and the certificate or
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certificates therefor shall bear the following legend by which each holder shall
be bound.
"THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK (OR
OTHER SECURITIES) ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THE SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
OR AN OPINION OF COUNSEL THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE."
The Shares and the certificate or certificates evidencing any such Shares shall
bear the following legend:
"THE SHARES (OR OTHER SECURITIES) REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE."
Certificates for Warrants without such legend shall be issued if such
Warrants or Shares are sold pursuant to an effective registration statement
under the Securities Act of 1933 (the "Act") or if the Company has received an
opinion from counsel reasonably satisfactory to counsel for the Company, that
such legend is no longer required under the Act.
8. Piggyback Registration Rights. If the Company at any time proposes
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to register any of its securities under the Act, including under an SB-2
Registration Statement or otherwise, the Company will cause all of the shares of
common stock underlying the Warrants owned by Holder to be registered under the
Act (with the securities which the Company at the time propose to register), all
to the extent requisite to permit the sale or other disposition by the Holder.
9. Indemnification.
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(a) In the event of any registration of any of its securities under the
Act pursuant to this Section, the Company hereby indemnifies and holds harmless
the Holder (which phrase shall include any underwriters of such securities),
their respective directors and officers, and each other person who participates,
in the offering of such securities and each other person, if any, who controls
the Holder or such participating persons within the meaning of the Act, against
any losses, claims, damages or liabilities, joint or several, to which each
Holder or any such director or officer or participating person or controlling
person may become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained, on the effective date thereof, in any registration statement
under which such securities were registered under the Act, any preliminary
Private Placement Memorandum prospectus or final prospectus contained therein,
or any amendment or supplement thereto, or arise out of or are based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading; and
will reimburse each Holder and each director, officer or participating or
controlling person for any legal or any other expenses reasonably incurred by
the Holder or such director, officer or participating or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, preliminary
prospectus or prospectus or amendment or supplement in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by the Holder specifically stating that it is for use
therein. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Holder or such directors, officer or
participating or controlling person, and shall survive the transfer of such
securities by the Holder.
(b) Rule 144. If the Company shall be subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "1934
Act"), the Company will use its best efforts timely to file all reports required
to be filed from time to time with the SEC (including but not limited to the
reports under Section 13 and 15(d) of the 1934 Act referred to in subparagraph
(c)(1) of Rule 144 adopted by the SEC under the Act). If there is a public
market for any securities of the Company at any time that the Company is not
subject to the reporting of either of said Section 13 or 15(d), the Company
will, upon the request of Holder, use its best efforts to make publicly
available the information concerning the Company referred to in subparagraph
(c)(2) of said Rule 144. The Company will furnish to Holder, promptly upon
request, (i) a written statement of the Company's compliance with the
requirements of subparagraphs (c)(1) or (c)(2), as the case may be, of said Rule
144, and (ii) written information concerning the Company sufficient to enable
Holder to complete any Form 144 required to be filed with the SEC pursuant to
said Rule 144.
10. Consolidation, Merger or Sale of the Company. If the Company is a
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party to a consolidation, merger or transfer of assets which reclassifies or
changes its outstanding Common Stock, the successor corporation (or corporation
controlling the successor corporation or the Company, as the case may be) shall
by operation of law assume the Company's obligations under this Warrant
Agreement.
11. Successors. All the covenants and provisions of this Agreement by
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or for the benefit of the Company or Holder shall bind and inure to the benefit
of their respective successor and assigns hereunder.
12. Counterparts. This Agreement may be executed in any number of
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counterparts and each of such counterparts shall for all proposes be deemed to
be an original, and such counterparts shall together constitute by one and the
same instrument.
13. Notices. Any notice, request, instruction, or other document
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required by the terms of this Agreement, or deemed by any of the parties hereto
to be desirable, to be given to any other party hereto shall be in writing and
shall be given by facsimile, personal delivery, overnight delivery, or mailed by
registered or certified mail, postage prepaid, with return receipt requested, to
the principal business address of each of the parties hereto.
The persons and addresses set forth above may be changed from time to time
by a notice sent as aforesaid. If notice is given by facsimile, personal
delivery, or overnight delivery in accordance with the provisions of this
Section, said notice shall be conclusively deemed given at the time of such
delivery. If notice is given by mail in accordance with the provisions of this
Section, such notice shall be conclusively deemed given seven days after deposit
thereof in the United States mail. Any change affecting Holder must be signed
by Both General Partners of Laguna Pacific Partners, LP.
14. Supplements and Amendments. The Company may from time to time
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supplement or amend this Warrant Agreement without the approval of any Holders
of Warrants in order to cure any ambiguity or to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provision, or to make any other provisions in regard to matters or questions
herein arising hereunder which the Company may deem necessary or desirable and
which shall not materially or adversely affect the interest of the Holder.
15. Severability. If for any reason any provision, paragraph or term
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of this Warrant Agreement is held to be invalid or unenforceable, all other
valid provisions herein shall remain in full force and effect and all terms,
provisions and paragraphs of this Warrant shall be deemed to be severable.
16. Governing Law and Venue. This Warrant shall be governed by the
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laws of the state of Delaware, as Laguna Pacific Partners is a limited
partnership formed under the laws of Delaware. Any proceeding arising under
this Warrant Agreement shall be instituted in the Orange, State of California.
17. Headings. Paragraphs and subparagraph headings, used herein are
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included herein for convenience of reference only and shall not affect the
construction of this Warrant Agreement nor constitute a part of this Warrant
Agreement for any other purpose.
18. Independent Counsel. It is acknowledged that the Company has been
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advised to seek independent counsel in connection with this agreement and the
associated documentation. Neither Xxxxxxxx X. Xxxxxxx, nor Xxxx Xxxxxxx
Xxxxxxxxx, LLP are providing any legal advice to the Company in connection with
this transaction, their sole representation is legal representation of Laguna
Pacific Partners, LP.
[SIGNATURES FOLLOW NEXT PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, as of the date and year first above written.
"COMPANY"
E NET XXXXXXXXX.XXX, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
Its: President & CEO
"HOLDER"
LAGUNA PACIFIC PARTNERS, LP
By: /s/ Xxxxxxxx X. Xxxxxxx
Xxxxxxxx X. Xxxxxxx
Its: President of General Partner,
Strawberry Canyon Capital, Inc.
By: /s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Its: President of General Partner,
Manhattan Network, Inc.
APPENDIX "A"
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FORM OF
NOTICE OF EXERCISE
Appendix "A"
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NOTICE OF EXERCISE
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF
CERTAIN STATES, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED
OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE EXTENT
APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH
OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS AVAILABLE.
ELECTION TO PURCHASE
The undersigned hereby elects irrevocably to exercise the within Warrant and to
purchase _______________________ shares of Common Stock of E-Net Xxxxxxxxx.xxx,
Inc. and hereby makes payment of $1.00 in payment of the Exercise Price pursuant
hereto. Please issue the shares as to which this Warrant is exercised in
accordance with the instructions given below.
The undersigned represents and warrants that the exercise of the within Warrant
was solicited by the member firm of the National Association of Securities
Dealers, Inc. ("NASD") listed below. If not solicited by an NASD member, please
write "unsolicited" in the space below.
___________________________________________________
(Insert Name of NASD Member or "Unsolicited")
Dated: ________________________ Signature: ________________________________
INSTRUCTIONS FOR REGISTRATION OF SHARES
Name (print) __________________________________________________________________
Address (print) _______________________________________________________________
ASSIGNMENT
FOR VALUE RECEIVED, _______________________________________________ does hereby
sell, assign and transfer unto _______________________________________________,
the right to purchase ________________shares of Common Stock of E-Net
Xxxxxxxxx.xxx, Inc., evidenced by the within Warrant, and does hereby
irrevocably constitute and appoint __________________________________________
attorney to transfer such right on the books of E-Net Xxxxxxxxx.xxx, Inc., with
full power of substitution on the premises.
Dated: ________________, ________
Signature: _____________________________________________
Notice: The signature of Election to Purchase or Assignment must correspond with
the name as written upon the face of the within Warrant in every particular
without alteration or enlargement or any change whatsoever. The signature(s)
must by guaranteed by an eligible guarantor institution (Banks, Stockbrokers,
Savings and Loan Associations and Credit Unions with membership in an approved
signature guarantee Medallion Program), pursuant to S.E.C. Rule 17Ad-15.
_____________________________________________
Signature Guarantee
