WARRANT AGREEMENT
Dated as of May 24, 2000
WARRANT AGREEMENT dated as of May 24, 2000 between eConnect, a
Nevada corporation (the "Company"), GunnAllen Financial, Inc.,
having an address at 0000 X. Xxxxxxxxx Xxxx., 0xx Xxxxx, Xxxxx,
Xxx. 00000, and Xxxxx Xxxx Xxxxxxx, having an address at 00000
Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxx Xxxxx, XX 00000
("Investors").
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Grant. The Company hereby grants to Investors warrants
("Warrants"), which shall entitle the registered holder thereof
("Holder") to purchase from the Company, at any time or from
time to time hereafter until 5:00 P.M., New York time, on May 24,
2005 (the "Expiration Date"), 500,000 shares of common stock of
the Company ("Common Stock") at the exercise price of
$0.50 per share, subject to adjustment as provided in Section 5
(the "Exercise Price"), all subject to the terms and upon the
conditions set forth herein, as follows:
Name Number of Shares under Warrant
GunnAllen Financial, Inc. 482,500
Xxxxx Xxxx Xxxxxxx 17,500
Each Warrant not exercised or deemed exercised on or prior to the
Expiration Date shall become invalid and all rights thereunder,
and all rights in respect thereof under this Agreement, shall
cease as of that time.
2. Warrant Certificates. The Warrants shall be evidenced by
certificates issued pursuant to this Agreement (the "Warrant
Certificates") in the form set forth in Exhibit A hereto, with
such appropriate insertions, omissions, substitutions, and other
variations as required or permitted by this Agreement.
3. Exercise of Warrant.
3.1 General. Subject to the provisions of this Agreement, upon
surrender to the Company (at its principal office as set forth in
Section 10) of a Warrant Certificate with the annexed Form of
Election to Purchase duly executed, together with payment of the
Exercise Price then in effect, the Company shall cause to be
issued and delivered promptly to the registered holder of such
Warrant Certificate, a certificate or certificates for the shares
of Common Stock thereby purchased registered in the name of such
registered holder or, upon the written order of such registered
holder, in such name or names as such registered holder may
designate. Such certificate or certificates shall be deemed to
have been issued and any person so designated to be named therein
shall be deemed to have become the holder of record of the shares
of Common Stock evidenced thereby as of the date of the surrender
of such Warrant Certificate (together with such duly executed
Form of Election to Purchase) and payment of the Exercise Price.
3.2 Payment. Payment of the Exercise Price shall be (i) in cash,
(ii) by wire transfer payable to the order of the Company, (iii)
or delivery or deemed delivery of certificates representing
shares of Common Stock (other than shares received upon exercise
of the Warrants) having a fair market value equal to such
Exercise Price or (iv) by any combination of (i), (ii) or (iii).
For purposes of this Agreement, the "Fair Market Value" of a
share of Common Stock means:
(i) if the Common Stock is listed on a national securities
exchange or admitted to unlisted trading privileges on such
exchange or listed for trading on the Nasdaq National Market
System maintained by the National Association of Securities
Dealers, Inc., -- the average last reported sale price of the
Common Stock for the last 15 trading days prior to the date of
exercise of this Warrant;
(ii) if clause (i) does not apply, and if the prices are reported
by the National Quotation Bureau, Inc., -- the mean of the last
reported bid and asked prices reported on the last trading day
prior to the date of exercise of this Warrant; and
(iii) in all other cases -- the per share value as determined by
the board of directors in good faith.
3.3. Cashless Exercise. At any time until the Expiration Date,
the Holder may, at the Holder's option, exchange, in whole or in
part, the Warrants represented by this Warrant Certificate (a
"Warrant Exchange"), into the number of Warrant Shares determined
in accordance with this Section 1.2, by surrendering this Warrant
Certificate at the principal office of the Company or at the
office of its transfer agent, accompanied by a notice stating
such Holder's intent to effect such exchange, the number of
Warrants to be so exchanged and the date on which the Holder
requests that such Warrant Exchange occur (the "Notice of
Exchange"). The Warrant Exchange shall take place on the date
specified in the Notice of Exchange or, if later, the date the
Notice of Exchange is received by the Company (the "Exchange
Date"). Certificates for the Warrant Shares issuable upon such
Warrant Exchange and, if applicable, a new Warrant Certificate of
like tenor representing the Warrants which were subject to the
surrendered Warrant Certificate and not included in the Warrant
Exchange, shall be issued as of the Exchange Date and delivered
to the Holder within three (3) days following the Exchange Date.
In connection with any Warrant Exchange, the Holder shall be
entitled to subscribe for and acquire (i) the number of Warrant
Shares (rounded to the next highest integer) which would, but for
the Warrant Exchange, then be issuable pursuant to the provision
of Section 1.1 above upon the exercise of the Warrants specified
by the Holder in its Notice of Exchange (the"Total Number"
less (ii) the number of Warrant Shares equal
to the quotient obtained by dividing (a) the product of the Total
Number and the existing Exercise Price (as hereinafter defined)
by (b) the Market Price (as hereinafter defined) of a share of Common
Stock on the day preceding the Warrant Exchange. "Market Price" at any
date shall be deemed to be the Fair Market Value as defined in Section
3.2 above.
3.4 Exercise in Whole or in Part. The purchase rights evidenced
by a Warrant Certificate shall be exercisable, at the election of
the registered holder thereof, in whole or in part. If less than
all of the shares of Common Stock purchasable under any Warrant
Certificate are purchased, the Company shall cancel such Warrant
Certificate upon the surrender thereof and shall execute and deliver a
new Warrant Certificate of like tenor for the remaining number of shares
of Common Stock purchasable thereunder.
4. Restriction on Transfer of Warrants and Warrant Shares. Each
holder of a Warrant Certificate, by such holder's acceptance
thereof, hereby acknowledges and agrees that the Warrants
evidenced thereby have not been registered for sale under any
federal or state securities laws and that such Warrants are being
offered and sold to such holder pursuant to the exemption
from registration provided for under Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act"); such
holder is acquiring such Warrants and the Warrant Shares
underlying such Warrants for such holder's own account for
investment and without any view to any distribution thereof; and
neither the Warrants nor such Warrant Shares may be sold,
transferred, assigned, hypothecated or otherwise disposed of, in whole
or in part, unless subsequently registered under such laws or unless an
exemption from such registration is available.
5. Adjustment of Exercise Price and Number of Warrant Shares.
The Exercise Price and the number of shares of Common Stock
issuable upon the exercise of the Warrants are subject to
adjustment from time to time as follows:
5.1 Adjustments for Change in Capital Stock. If the Company at
any time after the date of this Agreement (the "Original Issue
Date"):
(i) declares a dividend on the Common Stock payable in shares of
its capital stock or other securities;
(ii) subdivides the outstanding Common Stock;
(iii) combines the outstanding shares of Common Stock into a
smaller number of shares; or
(iv) issues any shares of its capital stock in a
reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in
which the Company is the continuing corporation) the Exercise Price in
effect at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and the number
and kind of shares of Common Stock issuable hereunder on such date shall be
proportionately adjusted so that the holder of any Warrant
exercised after such time shall be entitled to receive the
aggregate number and kind of shares of Common Stock and/or other
shares of capital stock or other securities which, if such
Warrant had been exercised immediately prior to such date, it
would have owned upon such exercise and been entitled to receive
by virtue of such dividend, subdivision, combination or
reclassification. The adjustment shall become effective
immediately after the record date in the case of a dividend or
distribution and immediately after the effective date in the case
of a subdivision, combination or reclassification. Such
adjustment shall be made successively whenever any event listed
above shall occur.
If at any time, as a result of an adjustment made pursuant to
this Section 5.1, the holder of any Warrant thereafter exercised
becomes entitled to receive any shares of capital stock of the
Company other than shares of Common Stock, the number of such
other shares so receivable upon exercise of such Warrant shall be
subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the
provisions with respect to the shares contained in this Section
5.1, and the provisions of this Agreement with respect to the
shares of Common Stock shall apply on like terms to any such
other shares.
5.2 Notices to Holders. Upon any adjustment of the Exercise
Price (or number of shares of Common Stock issuable upon exercise
of the Warrants, as the case may be) pursuant to this Section 5,
the Company shall promptly thereafter, at its own expense, cause
to be given to the registered holder of the Warrants at its
address appearing on the Company's books written
notice of such adjustments by first class mail, postage prepaid,
setting forth (i) the Exercise Price (or number of shares of
Common Stock issuable upon exercise of the Warrants, as the case
may be) after such adjustment, (ii) the method of calculation in
reasonable detail and the facts upon which such calculations are
based, and (iii) the number of shares of Common Stock issuable
after such adjustment in the Exercise Price (or number of shares
of Common Stock, as the case may be), upon exercise of the
Warrants, which Certificate, if not objected to within fifteen
(15) days of receipt by the holder of this Option, shall be
conclusive evidence of the correctness of the matters set forth therein.
Where appropriate, such notice may be given in advance and included as a part
of the notice required to be mailed under the other provisions of this Section.
5.3 Fractional Shares. No fractional shares of Common Stock
shall be issued upon conversion. If any fractional interest in a
share of Common Stock would otherwise be deliverable upon
exercise of the Warrants, the Company shall purchase such
fractional interest for an amount in cash equal to the fair
market value of such fractional interest as determined in good
faith by the Company's Board of Directors.
5.4 Reservation of Shares. The Company will at all times
reserve and keep available out of its authorized Common Stock
solely for the purpose of issue upon exercise of the Warrants as
herein provided, such number of shares of Common Stock as shall
from time to time be issuable upon the exercise of all
outstanding Warrants. All shares of Common Stock that may be
issued upon exercise of the Warrants will, upon issuance, be
validly issued, fully paid and nonassessable and free from all
taxes, liens, and charges with respect to the issuance thereof,
and not subject to preemptive rights of any stockholder.
6. Exchange and Replacement of Warrant Certificates. Each
Warrant Certificate is exchangeable without expense, upon the
surrender thereof by the registered holder thereof at the
principal executive office of the Company, for a new Warrant
Certificate of like tenor and date representing in the aggregate
the right to purchase the same number of shares of Common Stock
in such denominations as shall be designated by the holder
thereof at the time of such surrender. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it (an indemnity letter executed by any holder that is a
financial institution being deemed acceptable), and reimbursement to the
Company of all reasonable expenses incidental thereto, and upon surrender and
cancellation of such Warrant Certificate, if mutilated, the Company will make
and deliver a new Warrant Certificate of like tenor, in lieu thereof.
7. Delivery of New Warrant Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Warrants to the contrary, the Company may, at its option, and
will, at the request of any registered holder of Warrant
Certificates, deliver new Warrant Certificates evidencing
Warrants in such form as may be approved by the Company's Board
of Directors and reasonably acceptable to the holder or
holders thereof, to reflect any adjustment or change in the
Exercise Price and the number or kind or class of shares of stock
or other securities or property purchasable under the Warrant
Certificates made in accordance with the provisions of this
Agreement; provided, however, that the failure of the Company to
issue such new Warrant Certificates shall not in any way change,
alter, or otherwise impair, the rights of the holder as set forth
herein.
8. Certificates to Bear Legends.
The Warrants shall be subject to a stop-transfer order and the
Warrant Certificates shall bear the following legend by which
each holder thereof shall be bound:
The securities represented by this certificate and the shares of
common stock and other securities issuable upon exercise hereof
have not been registered under the Securities Act of 1933, as
amended, or any state securities laws. Such securities may not
be sold or transferred unless registered under such Act and all
applicable state securities laws or unless an exemption from such
registrations is available at the time of such sale or transfer.
The transfer of the Warrants represented by this certificate is
restricted in accordance with the Warrant Agreement referred to
herein.
The Warrant Shares shall be subject to a stop-transfer order and
the certificate or certificates evidencing any such Warrant
Shares shall bear the following legend by which each holder
thereof shall be bound:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR
TRANSFERRED UNLESS REGISTERED UNDER SUCH ACT AND ALL APPLICABLE
STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATIONS IS AVAILABLE AT THE TIME OF SUCH SALE OR TRANSFER.
9. Registration Rights.
If (but without any obligation to do so) the Company proposes to
register (including for this purpose a registration effected by
the Company for shareholders other than the Holders) any of its
Common Stock under the Act in connection with the public offering
of such securities solely for cash (other than a registration
relating solely to the sale of securities to participants in a
Company stock plan or a registration on Form S-4 promulgated
under the Act or any successor or similar form registering stock
issuable on upon a reclassification, upon a business combination
involving an exchange of securities or upon an exchange offer for
securities of the issuer or another entity), the Company shall, at such time,
promptly give each Holder written notice of such registration,
and shall include in such registration all shares of Common Stock
obtained or obtainable upon exercise of this Warrant, and the
Company shall cause to be registered under the Act all of those
shares of Common Stock obtained or obtainable on exercise of this Warrant.
10. Notices.
All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been
duly made when delivered or sent by facsimile transmission, or,
if mailed by registered mail, postage prepaid, return receipt
requested, five days after the date of deposit in the United
States mail, addressed as follows (or to such other place or
places as either of the parties shall designate by written notice
to the other):
(a) If to Investor(s), to the address indicated on page 1 of this
Agreement, (b) If to the Company, to: 0000 Xxx Xxxxxxxx Xxxxxx,
Xxx Xxxxx, XX 00000.
11. Amendment.
The Company, with the consent of the holders of Warrants
evidencing 51% of the Warrant Shares underlying the Warrants, may
amend or supplement this Agreement or waive compliance by the
Company in a particular instance with any provision of this
Agreement, provided that no amendment shall increase the exercise
price.
12. Successors. Except as otherwise provided herein, all the
covenants and provisions of this Agreement by or for the benefit
of the Company and the registered holders of the Warrants shall
inure to the benefit of their respective successors and assigns
hereunder.
13. Governing Law. This Agreement and each Warrant Certificate
issued hereunder shall be deemed to be a contract made under the
laws of the State of Florida and for all purposes shall be
construed in accordance with the laws of such State (without
regard to the conflicts of law principles thereof).
14. Benefits of This Agreement. Nothing in this Agreement shall
be construed to give to any person other than the Company and the
holders of the Warrant Certificates any legal or equitable right,
remedy or claim under this Agreement; and this Agreement shall be
for the sole and exclusive benefit of the Company and such
holders.
15. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and such counterparts shall
together constitute but one and the same instrument.
16. Headings. The headings in this Agreement are intended solely
for convenience of reference and shall be given no effect in the
construction or interpretation of this Agree-ment.
17. Representations and Warranties of the Company. The Company
hereby represents and warrants to Investor that:
17.1 Organization and Standing. The Company is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Nevada, and has full corporate power and
authority to execute the Agreement and perform its obligations
hereunder.
17.2 Authority Relative to this Agreement. The execution,
delivery and performance of this Agreement by the Company have
been duly and validly authorized by all necessary corporate
proceedings and no other authorization or approval is required to
permit consummation of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation
of the Company enforceable against the Company in accordance with
its terms.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and year first above written.
eConnect
By: /s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, President
GunnAllen Financial, Inc.
By: /s/ Xxxxxxx Xxxx
Xxxxxxx Xxxx, President
/s/ Xxxxx Xxxx Peteler
Xxxxx Xxxx Xxxxxxx
EXHIBIT A
FORM OF WARRANT CERTIFICATE
THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF
COMMON STOCK AND OTHER SECURITIES ISSUABLE UPON EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT
BE SOLD OR TRANSFERRED UNLESS REGISTERED UNDER SUCH ACT AND ALL
APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATIONS IS AVAILABLE AT THE TIME OF SUCH SALE OR TRANSFER.
THE TRANSFER OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO
HEREIN.
EXERCISABLE ON OR BEFORE 500 P.M., NEW YORK TIME, on MAY 24,
2005.
This Warrant Certificate certifies that, for value received,
GunnAllen Financial, Inc., having an address at 1715 N. Westshore
Blvd., 7th Floor, Tampa, Fla. 33607 ("Investor"), is the
registered holder of Warrants to purchase, at any time and from
time to time after the date hereof until 5:00 P.M. New York time, on
May 24, 2005,___ (____) fully-paid and non-assessable shares (subject to
adjustment in certain events) of common stock ("Common Stock"), of eConnect,
a Nevada corporation (the "Company"), at the exercise price per share of
$0.50, subject to adjustment in certain events (the "Exercise
Price"), upon surrender of this Warrant Certificate, together
with the attached Form of Election to Purchase duly executed, and
payment of the Exercise Price at an office or agency of the
Company, but subject to the terms and conditions set forth herein
and in the Warrant Agreement dated as of May 24, 2000, between
the Company and Investor (the "Warrant Agreement"). Payment of
the Exercise Price shall be (i) in cash, (ii) by wire transfer
payable to the order of the Company, (iii) by delivery or deemed
delivery of certificates representing shares of Common Stock
(other than shares received upon exercise of the Warrants) having
a fair market value equal to the Exercise Price or (iv) by any
combination of (i), (ii) or (iii).
This Warrant may be exercised at such times and in such amounts
as are provided for in the Warrant Agreement. Each Warrant not
exercised on or prior to May 24, 2005 shall become invalid and
all rights thereunder, and all rights in respect thereof under
the Warrant Agreement, shall cease as of that time.
The Warrants evidenced by this Warrant Certificate are issued
pursuant to the Warrant Agreement, which Warrant Agreement is
hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the
rights, limitation of rights, obligations, duties and immunities
thereunder of the Company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of
the Warrants. A copy of the Warrant Agreement may be obtained by
the holder(s) hereof upon written request directed to the
Company.
The Warrant Agreement provides that upon the occurrence of
certain events, the Exercise Price and the type and/or number of
the Company's securities issuable thereupon may, subject to
certain conditions, be adjusted. In such event, the Company may,
at its option, and will, at the request of the holder, issue a
new Warrant Certificate evidencing Warrants in such form as may
be approved by the Company's Board of Directors and reasonably
acceptable to the holder, to reflect any adjustment or change in
the Exercise Price and the number or kind or class of shares of
stock or other securities or property purchasable hereunder made
in accordance with the provisions of the Warrant Agreement;
provided, however, that the failure of the Company to issue such
new Warrant Certificates shall not in any way change, alter, or
otherwise impair, the rights of the holder as set forth in the
Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing
in the aggregate a like number of Warrants shall be issued to the
transferee(s) in exchange for this Warrant Certificate, subject
to the limitations provided herein and in the Warrant Agreement,
without any charge except for any tax or other governmental
charge imposed in connection therewith.
Upon the exercise of less than all of the Warrants evidenced by
this Certificate, the Company shall forthwith issue to the holder
hereof a new Warrant Certificate representing such numbered
unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as
the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing
hereon made by anyone), for the purpose of any exercise hereof,
and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any
notice to the contrary.
All terms used in this Warrant Certificate which are defined in
the Warrant Agreement shall have the meanings assigned to them in
the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed under its corporate seal.
Dated: May 24, 2000
eConnect
By: /s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, President
