WARRANT AGREEMENT
WARRANT AGREEMENT dated as of September 18, 1998, between D.H.
Marketing & Consulting, Inc., a Nevada corporation (the "Company"), and
X.X. Xxxxx Securities, Inc., a Georgia corporation (hereinafter
referred to as "X.X. Xxxxx").
W I T N E S S E T H:
WHEREAS, X.X. Xxxxx has assisted the Company in connection with
the Company's offering (the "Offering") of up to $3,000,000 in
principal amount of Series A Preferred Stock (the "Preferred Stock")
for an aggregate purchase price $3,000,000; and
WHEREAS, the Warrants issued pursuant to this Agreement are being
issued by the Company to X.X. Xxxxx and/or its designees, in
consideration for, and as part of the compensation to be paid in
connection with, the services of X.X. Xxxxx in connection with the
Offering;
NOW, THEREFORE, in consideration of the premises, the agreements
herein set forth and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Grant.
X.X. Xxxxx and/or its designees are hereby granted the right to
purchase, at any time from the date of issuance of the aforementioned
Preferred Stock until 5:00 P.M., Eastern Standard Time, on September
18, 2003 (the "Warrant Exercise Term"), 60,000 Shares at an exercise
price (subject to adjustment as provided in Article 7 hereof) of 100%
of the Closing Bid Price (as defined in the Company's Certificate of
Designations, Preferences and Rights filed by the Company in connection
with the Offering) of the Company's Common Stock, par value $.0003 per
share on the last business day immediately prior to the date of closing
of the Offering, which is equal to $2.875 per share (the "Initial
Exercise Price").
2. Warrant Certificates.
The warrant certificates (the "Warrant Certificates)
delivered and to be delivered pursuant to this Agreement shall be in
the form set forth as Exhibit A, attached hereto and made a part
hereof, with such appropriate insertions, omissions, substitutions and
other variations as required or permitted by this Agreement.
3. Exercise of Warrants.
3.1 Cash Exercise. The Exercise Price may be paid in
cash or by check to the order of the Company, or any combination of
cash or check, subject to adjustment as provided in Article 7 hereof.
Upon surrender of the Warrant Certificate with the annexed Form of
Election to Purchase duly executed, together with payment of the
Exercise Price (as hereinafter defined) for the Shares purchased, at
the Company's executive offices currently located at 000 Xxxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxx 00000, the registered holder of a Warrant
Certificate ("Holder" or "Holders") shall be entitled to receive a
certificate or certificates for the Shares so purchased. The purchase
rights represented by each Warrant Certificate are exercisable at the
option of the Holder hereof, in whole or in part (but not as to
fractional shares of the Common Stock). In the case of the purchase of
less than all the Shares purchasable under any Warrant Certificate, the
Company shall cancel said Warrant Certificate upon the surrender
thereof and shall execute and deliver a new Warrant Certificate of like
tenor for the balance of the Shares
purchasable thereunder.
3.2 Cashless Exercise. At any time during the Warrant
Exercise Term, the Holder may, at its option, exchange this Warrant, in
whole or in part (a "Warrant Exchange"), into the number of Shares
determined in accordance with this Section 3.2, by surrendering this
Warrant 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 Shares to be 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 Shares issuable upon such Warrant Exchange and, if
applicable, a new warrant of like tenor evidencing the balance of the
Shares remaining subject to this Warrant, shall be issued as of the
Exchange Date and delivered to the Holder within seven (7) business
days following the Exchange Date. In connection with any Warrant
Exchange, this Warrant shall represent the right to subscribe for and
acquire the number of Shares (rounded to the next highest integer)
equal to (i) the number of Shares specified by the Holder in its Notice
of Exchange (the "Total Number") less (ii) the number of Shares equal
to the quotient obtained by dividing (A) the product of the Total
Number and the then existing Exercise Price by (B) the current market
value of a share of Common Stock.
4. Issuance of Certificates.
Upon the exercise of the Warrants, the issuance of certificates
for the Shares shall be made forthwith (and in any event within five
business days thereafter) without charge to the Holder thereof
including, without limitation, any tax which may be payable in respect
of the issuance thereof, and such certificates shall be issued in the
name of, or in such names as may be directed by, the Holder thereof;
provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the
issuance and delivery of any such certificates in a name other than
that of the Holder and the Company shall not be required to issue or
deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to satisfaction of the
Company that such tax has been paid.
The Warrant Certificates and the certificates representing the
Shares shall be executed on behalf of the Company by the manual or
facsimile signature of the present or any future Chairman or Vice
Chairman of the Board of Directors, Chief Executive officer or
President or Vice President of the Company under its corporate seal
reproduced thereon, attested to by the manual or facsimile signature of
the present or any future Secretary or Assistant Secretary of the
Company. Warrant Certificates shall be dated the date of execution by
the Company upon initial issuance, division, exchange, substitution or
transfer.
The Warrant Certificates and, upon exercise of the Warrants, in
part or in whole, certificates representing the Shares shall bear a
legend substantially similar to the following:
The securities represented by this certificate have not
been registered under the Securities Act of 1933, as
amended (the "Act"), and may not be offered or sold except
(i) pursuant to an effective registration statement under
the Act, (ii) to the extent applicable, pursuant to Rule
144 under the Act (or any similar rule under such Act
relating to the disposition of securities), or (iii) upon
the delivery by the holder to the Company of an opinion of
counsel, reasonably satisfactory to counsel to the issuer,
stating that an exemption from registration under such Act
is available.
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5. Price.
5.1 Adjusted Exercise Price. The adjusted Exercise Price
shall be the price which shall result from time to time from any and
all adjustments of the Initial Exercise Price in accordance with the
provisions of Article 7 hereof.
5.2 Exercise Price. The term "Exercise Price" herein
shall mean the Initial Exercise Price or the adjusted Exercise Price,
depending upon the context.
6. Registration Rights.
6.1 Registration Under the Securities Act of 1933.
The Warrants and the Shares have not been registered for purposes of
public distribution under the Securities Act of 1933, as amended ("the
Act").
6.2 Registrable Securities. As used herein the term
"Registrable Security" means each of the Warrants, the Shares and any
shares of Common Stock issued upon any stock split or stock dividend in
respect of such Shares; provided, however, that with respect to any
particular Registrable Security, such security shall cease to be a
Registrable Security when, as of the date of determination, (i) it has
been effectively registered under the Securities Act and disposed of
pursuant thereto, (ii) registration under the Securities Act is no
longer required for the immediate public distribution of such security
or (iii) it has ceased to be outstanding. The term "Registrable
Securities" means any and/or all of the securities falling within the
foregoing definition of a "Registrable Security." In the event of any
merger, reorganization, consolidation, recapitalization or other change
in corporate structure affecting the Common Stock, such adjustment
shall be made in the definition of "Registrable Security" as is
appropriate in order to prevent any dilution or enlargement of the
rights granted pursuant to this Article 6.
6.3 Piggyback Registration. If, at any time during the
five years following the date of this Agreement, the Company proposes
to prepare and file any registration statement or post-effective
amendments thereto covering equity or debt securities of the Company,
or any such securities of the Company held by its shareholders (in any
such case, other than in connection with a merger, acquisition or
pursuant to Form S-8 or successor form), (for purposes of this Article
6, collectively, a "Registration Statement"), it will give written
notice of its intention to do so by registered mail ("Notice"), at ten
(10) business days prior to the filing of each such Registration
Statement, to all holders of the Registrable Securities. Upon the
written request of such a holder (a "Requesting Holder"), made within
ten (10) business days after receipt of the Notice, that the Company
include any of the Requesting Holder's Registrable Securities in the
proposed Registration Statement, the Company shall, as to each such
Requesting Holder, use its best efforts to effect the registration
under the Securities Act of the Registrable Securities which it has
been so requested to register ("Piggyback Registration"), at the
Company's sole cost and expense and at no cost or expense to the
Requesting Holders; Notwithstanding the provisions of this Section 6.3,
the Company shall have the right at any time after it shall have given
written notice pursuant to this Section 6.3 (irrespective of whether
any written request for inclusion of such securities shall have already
been made) to elect not to file any such proposed Registration
Statement, or to withdraw the same after the filing but prior to the
effective date thereof.
6.4 Demand Registration.
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(a) At any time, commencing ninety (90) days from
the date of this Agreement and during the Warrant Exercise Term, any
"Majority Holder" (as such term is defined in Section 6.4(d) below) of
the Registrable Securities shall have the right (which right is in
addition to the piggyback registration rights provided for under
Section 6.3 hereof), exercisable by written notice to the Company (the
"Demand Registration Request"), to have the Company prepare and file
with the Securities and Exchange Commission (the "Commission"), on one
occasion, at the sole expense of the Company, a Registration Statement
and such other documents, including a prospectus, as may be necessary
(in the opinion of both counsel for the Company and counsel for such
Majority Holder), in order to comply with the provisions of the Act, so
as to permit a public offering and sale of the Registrable Securities
by the holders thereof, for nine (9) consecutive months.
(b) The Company covenants and agrees to give
written notice of any Demand Registration Request to all holders of the
Registrable Securities within ten (10) days from the date of the
Company's receipt of any such Demand Registration Request. After
receiving notice from the Company as provided in this Section 6.4(b),
holders of Registrable Securities may request the Company to include
their Registrable Securities in the Registration Statement to be filed
pursuant to Section 6.4(a) hereof by notifying the Company of their
decision to include such securities within twenty (20) days of their
receipt of the Company's notice.
(c) In addition to the registration rights provided
for under Section 6.3 and subsection (a) of this Section 6.4, at any
time during the Warrant Exercise Term, any Majority Holder (as defined
below in Section 6.4(d)) of Registrable Securities shall have the
right, exercisable by written request to the Company, to have the
Company prepare and file with the Commission, on one occasion in
respect of all holders of Registrable Securities, a Registration
Statement so as to permit a public offering and sale of such
Registrable Securities for nine (9) consecutive months, provided,
however, that all costs incident thereto shall be at the expense of the
holders of the Registrable Securities included in such Registration
Statement. If a Majority Holder shall give notice to the Company at
any time of its or their desire to exercise the registration right
granted pursuant to this Section 6.4(c), then within ten (10) days
after the Company's receipt of such notice, the Company shall give
notice to the other holders of Registrable Securities, advising them
that the Company is proceeding with such registration and offering to
include therein the Registrable Securities of such holders, provided
they furnish the Company with such appropriate information in
connection therewith as the Company shall reasonably request in
writing.
(d) The term "Majority Holder" as used in this
Section 6.4 shall mean any holder or any combination of holders of
Registrable Securities, if included in such holders, Registrable
Securities are that aggregate number of Shares (including Shares
already issued and Shares issuable pursuant to the exercise of
outstanding Warrants) as would constitute a majority of the aggregate
number of Shares (including Shares already issued and Shares issuable
pursuant to the exercise of outstanding Warrants) included in all of
the Registrable Securities.
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6.5 Covenants of the Company With Respect to
Registration. The Company covenants and agrees as follows:
(a) In connection with any registration under
Section 6.4 hereof, the Company shall file the Registration Statement
as expeditiously as possible, but in no event later than twenty (20)
business days following receipt of any demand therefor, shall use its
best efforts to have any such Registration Statements declared
effective at the earliest possible time, and shall furnish each holder
of Registrable Securities such number of prospectuses as shall
reasonably be requested.
(b) The Company shall pay all costs, fees and
expenses (excluding fees of holders for their counsel, transfer taxes
and underwriting discounts or commissions) in connection with all
Registration Statements filed pursuant to Sections 6.3 and 6.4(a)
hereof including, without limitation, the Company's legal and
accounting fees, printing expenses, and blue sky fees and expenses.
The holders of Registrable Securities included in any Registration
Statement filed pursuant to Section 6.4(c) hereof will pay all costs,
fees and expenses in connection with such registration.
(c) The Company will take all necessary action
which may be required in qualifying or registering the Registrable
Securities included in a Registration Statement for offering and sale
under the securities or blue sky laws of such states as are requested
by the holders of such securities.
(d) The Company shall indemnify any holder of the
Registrable Securities to be sold pursuant to any Registration
Statement and any underwriter or person deemed to be an underwriter
under the Act and each person, if any, who controls such holder or
underwriter or person deemed to be an underwriter within the meaning of
Section 15 of the Act or Section 20(a) of the Securities Exchange Act
of 1934, as amended ("Exchange Act"), against all loss, claim, damage,
expense or liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to
which any of them may become subject under the Act, the Exchange Act or
otherwise, arising from such Registration Statement to the same extent
and with the same effect as the provisions pursuant to which the
Company has agreed to indemnify the purchasers of the Company's
Preferred Stock contained in the Registration Rights Agreement dated of
even date herewith.
(e) Any holder of Registrable Securities to be sold
pursuant to a Registration Statement, and its successors and assigns,
shall severally, and not jointly, indemnify, the Company, its officers
and directors and each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, against all loss, claim, damage or expense or liability (including
all expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which they may become
subject under the Act, the Exchange Act or otherwise, arising from
information furnished in writing by or on behalf of such holder, or its
successors or assigns, for specific inclusion in such Registration
Statement to the same extent and with the same effect as the provisions
pursuant to which purchasers of the Company's Preferred Stock have
agreed to indemnify the Company contained in the Registration Rights
Agreement dated of even date herewith.
(f) Nothing contained in this Agreement shall be
construed as requiring any Holder to exercise his Warrants prior to the
initial filing of any Registration Statement or the effectiveness
thereof.
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(g) If the Company shall fail to comply with the
provisions of this Article 6, the Company shall, in addition to any
other equitable or other relief available to the holders of Registrable
Securities, be liable for any or all incidental, special and
consequential damages sustained by the holders of Registrable
Securities, requesting registration of their Registrable Securities.
(h) Except as otherwise provided to the contrary
herein, the Company shall not permit the inclusion of any securities
other than the Registrable Securities to be included in any
Registration Statement filed pursuant to Section 6.4 hereof, or permit
any other registration statement to be or remain effective during the
effectiveness of a Registration Statement filed pursuant to Section 6.4
hereof, without the prior written consent of the Majority Holders,
which consent shall not be unreasonably withheld.
(i) The Company shall deliver promptly to each
holder of Registrable Securities participating in the offering
requesting the correspondence and memoranda described in this Section
6.5(i) and to the managing underwriter, if any, copies of all
correspondence between the Commission and the Company, its counsel or
auditors and all memoranda relating to discussions with the Commission
or its staff with respect to the Registration Statement and permit each
holder of Registrable Securities and underwriters to do such
investigation, upon reasonable advance notice, with respect to
information contained in or omitted from the Registration Statement as
it deems reasonably necessary to comply with applicable securities laws
or rules of the National Association of Securities Dealers, Inc. Such
investigation shall include access to books, records and properties and
opportunities to discuss the business of the Company with its officers
and independent auditors, all to such reasonable extent and at such
reasonable times and as often as any such holder of Registrable
Securities or underwriter shall reasonably request.
(j) If the Company shall enter into an underwriting
agreement with the managing underwriter selected for such underwriting,
such agreement shall be satisfactory in form and substance to the
Company, each holder of Registrable Securities and such managing
underwriter, and shall contain such representations, warranties and
covenants by the Company and such other terms as are customarily
contained in agreements of that type used by the managing underwriter.
The holders of Registrable Securities shall be parties to any
underwriting agreement relating to an underwritten sale of their
Registrable Securities and may, at their option, require that any or
all the representations, warranties and covenants of the Company to or
for the benefit of such underwriter shall also be made to and for the
benefit of such holders of Registrable Securities. Such holders of
Registrable Securities shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriter except as they may relate to such holders of Registrable
Securities and their intended methods of distribution.
7. Adjustments of Exercise Price and Number of Shares.
7.1 Computation of Adjusted Price. Except as hereinafter
provided, in case the Company shall at any time after the date hereof
issue or sell any shares of Common Stock (other than the issuances or
sales referred to in Section 7.6 hereof), including shares held in the
Company's treasury and shares of Common Stock issued upon the exercise
of any options, rights or warrants to subscribe for shares of Common
Stock (other than the issuances or sales of Common Stock pursuant to
rights to subscribe for such Common Stock distributed to all the
shareholders of the Company and Holders of Warrants pursuant to Section
7.6 hereof) and shares of Common Stock issued upon the direct or
indirect conversion or exchange of securities for shares of Common
Stock, for a consideration per share less than the lesser of either the
Exercise Price in effect immediately prior to the issuance or sale of
such shares or the "Market Price" (as defined in Section 7.1(vi)
hereof) per share of Common Stock or without consideration, then
forthwith upon such issuance or sale, the Exercise Price shall (until
another such issuance or sale) be reduced to the price (calculated to
the nearest full cent) equal to the price
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determined by multiplying the Exercise Price in effect immediately
prior to such issuance or sale by a fraction, the numerator of which
shall be the sum of the number of shares of Common Stock outstanding
immediately prior to such issuance or sale and the number of shares of
Common Stock which the amount of all consideration, if any, received by
the Company upon such issuance or sale would purchase at the Market
Price, and the denominator of which shall be the number of shares of
Common Stock outstanding immediately after such issuance or sale.
For the purposes of any computation to be made in
accordance with this Section 7.1, the following provisions shall be
applicable:
(i) In case of the issuance or sale of shares
of Common Stock for a consideration part or all of which shall be cash,
the amount of the cash consideration therefor shall be deemed to be the
amount of cash received by the Company for such shares (or, if shares
of Common Stock are offered by the Company for subscription, the
subscription price, or, if such securities shall be sold to
underwriters or dealers for public offering without a subscription
offering, the initial public offering price) before deducting therefrom
any compensation paid or discount allowed in the sale, underwriting or
purchase thereof by underwriters or dealers or others performing
similar services, or any expenses incurred in connection therewith.
(ii) In case of the issuance or sale
(otherwise than as a dividend or other distribution on any stock of the
Company) of shares of Common Stock for a consideration part or all of
which shall be other than cash, the amount of the consideration
therefor other than cash shall be deemed to be the value of such
consideration as determined in good faith by the Board of Directors of
the Company.
(iii) Shares of Common Stock issuable by way of
dividend or other distribution on any stock of the Company shall be
deemed to have been issued immediately after the opening of business on
the day following the record date for the determination of shareholders
entitled to receive such dividend or other distribution and shall be
deemed to have been issued without consideration.
(iv) The reclassification of securities of the
Company other than shares of Common Stock into securities including
shares of Common Stock shall be deemed to involve the issuance of such
shares of Common Stock for a consideration other than cash immediately
prior to the close of business on the date fixed for the determination
of security holders entitled to receive such shares, and the value of
the consideration allocable to such shares of Common Stock shall be
determined as provided in subsection (ii) of this Section 7.1.
(v) The number of shares of Common Stock at
any one time outstanding shall include the aggregate number of shares
issued or issuable upon the exercise of options, rights, warrants and
upon the conversion or exchange of convertible or exchangeable
securities.
(vi) As used herein, the phrase "Market Price,
at any date shall be deemed to be the last reported sale price, or, in
case no such reported sale takes place on such day, the average of the
last reported sale prices for the last three (3) trading days, in
either case as officially reported by the principal securities exchange
on which the Common Stock is listed or admitted to trading, if the
Common Stock is not listed or admitted to trading on any national
securities exchange, the closing bid price as furnished by the National
Association of Securities Dealers, Inc. through NASDAQ or similar
organization if NASDAQ is no longer reporting such information, or if
the Common Stock is not quoted on NASDAQ, as determined in good faith
by resolution of the Board of Directors of the Company, based on the
best information available to it for the two (2) days immediately
preceding such issuance or sale and the day of such issuance or sale.
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7.2 Options, Rights, Warrants and Convertible and
Exchangeable Securities. Except in the case of the Company issuing
rights to subscribe for shares of Common Stock distributed to all the
shareholders of the Company and Holders of Warrants pursuant to Section
7.8 hereof, if the Company shall at any time after the date hereof
issue options, rights or warrants to subscribe for shares of Common
Stock, or issue any securities convertible into or exchangeable for
shares of Common Stock, (i) for a consideration per share less than (a)
the Exercise Price in effect immediately prior to the issuance of such
options, rights or warrants, or such convertible or exchangeable
securities, or (b) the Market Price, or (ii) without consideration, the
Exercise Price in effect immediately prior to the issuance of such
options, rights or warrants, or such convertible or exchangeable
securities, as the case may be, shall be reduced to a price determined
by making a computation in accordance with the provisions of Section
7.1 hereof, provided that:
(a) The aggregate maximum number of shares of
Common Stock, as the case may be, issuable under all the outstanding
options, rights or warrants shall be deemed to be issued and
outstanding at the time all the outstanding options, rights or warrants
were issued, and for a consideration equal to the minimum purchase
price per share provided for in the options, rights or warrants at the
time of issuance, plus the consideration (determined in the same manner
as consideration received on the issue or sale of shares in accordance
with the terms of the Warrants), if any, received by the Company for
the options, rights or warrants, and if no minimum price is provided in
the options, rights or warrants, then the consideration shall be equal
to zero; provided, however, that upon the expiration or other
termination of the options, rights or warrants, if any thereof shall
not have been exercised, the number of shares of Common Stock deemed to
be issued and outstanding pursuant to this subsection (a) (and for the
purposes of subsection (v) of Section 7.1 hereof) shall be reduced by
such number of shares as to which options, warrants and/or rights shall
have expired or terminated unexercised, and such number of shares shall
no longer be deemed to be issued and outstanding, and the Exercise
Price then in effect shall forthwith be readjusted and thereafter be
the price which it would have been had adjustment been made on the
basis of the issuance only of shares actually issued or issuable upon
the exercise of those options, rights or warrants as to which the
exercise rights shall not have expired or terminated unexercised.
(b) The aggregate maximum number of shares of
Common Stock issuable upon conversion or exchange of any convertible or
exchangeable securities shall be deemed to be issued and outstanding at
the time of issuance of such securities, and for a consideration equal
to the consideration (determined in the same manner as consideration
received on the issue or sale of shares of Common Stock in accordance
with the terms of the Warrants) received by the Company for such
securities, plus the minimum consideration, if any, receivable by the
Company upon the conversion or exchange thereof; provided, however,
that upon the termination of the right to convert or exchange such
convertible or exchangeable securities (whether by reason of redemption
or otherwise), the number of shares deemed to be issued and outstanding
pursuant to this subsection (b) (and for the purpose of subsection (v)
of Section 7.1 hereof) shall be reduced by such number of shares as to
which the conversion or exchange rights shall have expired or
terminated unexercised, and such number of shares shall no longer be
deemed to be issued and outstanding and the Exercise Price then in
effect shall forthwith be readjusted and thereafter be the price which
it would have been had adjustment been made on the basis of the
issuance only of the shares actually issued or issuable upon the
conversion or exchange of those convertible or exchangeable securities
as to which the conversion or exchange rights shall not have expired or
terminated unexercised.
(c) If any change shall occur in the price per
share provided for in any of the options, rights or warrants referred
to in subsection (a) of this Section 7.2, or in the price per share at
which the securities referred to in subsection (b) of this Section 7.2
are convertible or exchangeable, the options, rights or warrants or
conversion or exchange rights, as the case may be, shall be deemed to
have expired or terminated on
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the date when such price change became effective in respect of shares
not theretofore issued pursuant to the exercise or conversion or
exchange thereof, and the Company shall be deemed to have issued upon
such date new options, rights or warrants or convertible or
exchangeable securities at the new price in respect of the number of
shares issuable upon the exercise of such options, rights or warrants
or the conversion or exchange of such convertible or exchangeable
securities.
7.3 Subdivision and Combination. In case the Company
shall at any time subdivide or combine the outstanding shares of Common
Stock, the Exercise Price shall forthwith be proportionately decreased
in the case of subdivision or increased in the case of combination.
7.4 Adjustment in Number of Shares. Upon each adjustment
of the Exercise Price pursuant to the provisions of this Article 7, the
number of Shares issuable upon the exercise of each Warrant shall be
adjusted to the nearest full Share by multiplying a number equal to the
Exercise Price in effect immediately prior to such adjustment by the
number of Shares issuable upon exercise of the Warrants immediately
prior to such adjustment and dividing the product so obtained by the
adjusted Exercise Price.
7.5 Reclassification, Consolidation, Merger, etc. In
case of any reclassification or change of the outstanding shares of
Common Stock (other than a change in par value to no par value, or from
no par value to par value, or as a result of a subdivision or
combination), or in the case of any consolidation of the Company with,
or merger of the Company into, another corporation (other than a
consolidation or merger in which the Company is the surviving
corporation and which does not result in any reclassification or change
of the outstanding shares of Common Stock, except a change as a result
of a subdivision or combination of such shares or a change in par
value, as aforesaid), or in the case of a sale or conveyance to another
corporation of the property of the Company as an entirety, the Holders
shall thereafter have the right to purchase the kind and number of
shares of stock and other securities and property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance as
if the Holders were the owners of the shares of Common Stock underlying
the Warrants immediately prior to any such events at a price equal to
the product of (x) the number of shares issuable upon exercise of the
Warrants and (y) the Exercise Price in effect immediately prior to the
record date for such reclassification, change, consolidation, merger,
sale or conveyance as if such Holders had exercised the Warrants.
7.6 No Adjustment of Exercise Price in Certain Cases.
No adjustment of the Exercise Price shall be made:
(a) Upon the issuance or sale of shares of Common
Stock upon the exercise of the Warrants; or
(b) Upon (i) the issuance of options pursuant to
the Company's employee stock option plan in effect on the
date hereof or the issuance or sale by the Company of any
shares of Common Stock pursuant to the exercise of any such
options, or (ii) the issuance or sale by the Company of any
shares of Common Stock pursuant to the exercise of any
options or warrants previously issued and outstanding on
the date hereof; or
(c) Upon the issuance of shares of Common Stock
pursuant to contractual obligations existing on the date
hereof; or
(d) If the amount of said adjustment shall be less
than 2 cents (2 cents) per Share, provided, however, that in
such case any adjustment that would otherwise be required
then to
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be made shall be carried forward and shall be made at the
time of and together with the next subsequent adjustment
which, together with any adjustment so carried forward,
shall amount to at least 2 cents (2 cents) per Share.
7.7 Dividends and Other Distributions with Respect to
Outstanding Securities. In the event that the Company shall at any
time prior to the exercise of all Warrants declare a dividend (other
than a dividend consisting solely of shares of Common Stock or a cash
dividend or distribution payable out of current or retained earnings)
or otherwise distribute to its shareholders any monies, assets,
property, rights, evidences of indebtedness, securities (other than
shares of Common Stock), whether issued by the Company or by another
person or entity, or any other thing of value, the Holder or Holders of
the unexercised Warrants shall thereafter be entitled, in addition to
the shares of Common Stock or other securities receivable upon the
exercise thereof, to receive, upon the exercise of such Warrants, the
same monies, property, assets, rights, evidences of indebtedness,
securities or any other thing of value that they would have been
entitled to receive at the time of such dividend or distribution. At
the time of any such dividend or distribution, the Company shall make
appropriate reserves to ensure the timely performance of the provisions
of this Subsection 7.7.
7.8 Subscription Rights for Shares of Common Stock or
Other Securities. In the case the Company or an affiliate of the
Company shall at any time after the date hereof and prior to the
exercise of all the Warrants issue any rights to subscribe for shares
of Common Stock or any other securities of the Company or of such
affiliate to all the shareholders of the Company, the Holders of the
unexercised Warrants shall be entitled, in addition to the shares of
Common Stock or other securities receivable upon the exercise of the
Warrants, to receive such rights at the time such rights are
distributed to the other shareholders of the Company.
8. Exchange and Replacement of Warrant Certificates.
Each Warrant Certificate is exchangeable without expense, upon
the surrender hereof by the registered Holder 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 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, and reimbursement to the
Company of all reasonable expenses incidental thereto, and upon
surrender and cancellation of the Warrants, if mutilated, the Company
will make and deliver a new Warrant Certificate of like tenor, in lieu
thereof.
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9. Elimination of Fractional Interests.
The Company shall not be required to issue certificates
representing fractions of shares of Common Stock and shall not be
required to issue scrip or pay cash in lieu of fractional interests, it
being the intent of the parties that all fractional interests shall be
eliminated by rounding any fraction up to the nearest whole number of
shares of Common Stock.
10. Reservation and Listing of Securities.
The Company shall at all times reserve and keep available out of
its authorized shares of Common Stock, solely for the purpose of
issuance upon the exercise of the Warrants, such number of shares of
Common Stock as shall be issuable upon the exercise thereof. The
Company covenants and agrees that, upon exercise of the Warrants and
payment of the Exercise Price therefor, all shares of Common Stock
issuable upon such exercise shall be duly and validly issued, fully
paid, nonassessable and not subject to the preemptive rights of any
shareholder. As long as the Warrants shall be outstanding, the Company
shall use its best efforts to cause all shares of Common Stock issuable
upon the exercise of the Warrants to be listed on or quoted on the
electronic bulletin board, by NASDAQ or listed on such national
securities exchanges as requested by the Placement Agent.
11. Notices to Warrant Holders.
Nothing contained in this Agreement shall be construed as
conferring upon the Holder or Holders the right to vote or to consent
or to receive notice as a shareholder in respect of any meetings of
shareholders for the election of directors or any other matter, or as
having any rights whatsoever as a shareholder of the Company. If,
however, at any time prior to the expiration of the Warrants and their
exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its
shares of Common Stock for the purpose of entitling them to
receive a dividend or distribution payable otherwise than in
cash, or a cash dividend or distribution payable otherwise than
out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the
books of the Company; or
(b) the Company shall offer to all the holders of its
Common Stock any additional shares of capital stock of the
Company or securities convertible into or exchangeable for shares
of capital stock of the Company, or any option, right or warrant
to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or merger)
or a sale of all or substantially all of its property, assets and
business as an entirety shall be proposed;
then, in any one or more of said events, the Company shall give written
notice of such event at least fifteen (15) days prior to the date fixed
as a record date or the date of closing the transfer books for the
determination of the shareholders entitled to such dividend,
distribution, convertible or exchangeable securities or subscription
rights, options or warrants, or entitled to vote on such proposed
dissolution, liquidation, winding up or sale. Such notice shall
specify such record date or the date of closing the transfer books, as
the case may be. Failure to give such notice or any defect therein
shall not affect the validity of any action taken in connection with
the declaration or payment of any such dividend or distribution, or the
issuance of any convertible or exchangeable securities or subscription
rights, options or warrants, or any proposed dissolution, liquidation,
winding up or sale.
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12. 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 mailed by registered or certified mail, return
receipt requested:
(a) If to a registered Holder of the Warrants, to the
address of such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in
Section 3 of this Agreement or to such other address as the
Company may designate by notice to the Holders.
13. Supplements and Amendments.
The Company and the Placement Agent may from time to time
supplement or amend this Agreement without the approval of any Holders
of Warrant Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or
inconsistent with any provisions herein, or to make any other
provisions in regard to matters or questions arising hereunder which
the Company and the Placement Agent may deem necessary or desirable and
which the Company and the Placement Agent deem not to adversely affect
the interests of the Holders of Warrant Certificates.
14. Successors.
All the covenants and provisions of this Agreement by or for the
benefit of the Company and the Holders inure to the benefit of their
respective successors and assigns hereunder.
15. Termination.
This Agreement shall terminate at the close of business on
September 18, 2003. Notwithstanding the foregoing, this Agreement will
terminate on any earlier date when all Warrants have been exercised and
all the Shares issuable upon exercise of the Warrants have been resold
to the public; provided, however, that the provisions of Article 6
shall survive such termination until the close of business on September
18, 2003.
16. Governing Law.
This Agreement and each Warrant Certificate hereunder shall be
governed by and interpreted in accordance with the laws of the State of
Nevada without regard to the principles of conflict of laws. Any
dispute or controversy between the parties arising in connection with
this Agreement or the subject matter contemplated by this Agreement
shall be resolved by arbitration before a three-member panel of the
American Arbitration Association in accordance with the commercial
arbitration rules of said forum and the Federal Arbitration Act, 9
U.S.C. 1 et seq., with the resulting award being final and conclusive.
Said arbitrators shall be empowered to award all forms of relief and
damages claimed, including, but not limited to, attorney's fees,
expenses of litigation and arbitration, exemplary damages, and
prejudgment interest. The parties further agree that any arbitration
action between them shall be heard in Atlanta, Georgia, and expressly
consent to the jurisdiction and venue of the Superior Court of Xxxxxx
County, Georgia, and the United States District Court for the Northern
District of Georgia, Atlanta Division for the adjudication of any civil
action asserted pursuant to this Paragraph.
17. Benefits of This Agreement.
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Nothing in this Agreement shall be construed to give to any
person or corporation other than the Company and the Placement Agent
and any other registered holder or holders of the Warrant Certificates,
Warrants or the Shares 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 the Placement Agent and any other
holder or holders of the Warrant Certificates, Warrants or the Shares.
18. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed, as of the day and year first above written.
D.H. MARKETING & CONSULTING, INC.
By: /s/ XXXXX X. XXXXX
Name: Xxxxx X. Xxxxx
Title: President and Chief
Executive Officer
Attest: ___________________________
Name: ___________________________
Title:_____________________________
X.X. XXXXX SECURITIES, INC.
By: /s/ XXXXXX X. XXXXXXX
Name: Xxxxxx X. Xxxxxxx
Title: President
Attest: ___________________________
Name: ___________________________
Title:_____________________________
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EXHIBIT A
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES
ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED
OR SOLD EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE, PURSUANT TO RULE 144
UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE
DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO
THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO
COUNSEL FOR THE ISSUER, STATING THAT AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT
REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., EASTERN STANDARD TIME, SEPTEMBER 18, 2003
No. ___________________ 60,000 Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that X.X. Xxxxx Securities,
Inc. ("X.X. Xxxxx") or registered assigns, is the registered holder of
Warrants to purchase, at any time from September 18, 1998, until 5:00
P.M. Eastern Standard Time on September 18, 2003 ("Expiration Date"),
up to 60,000 shares ("Shares") of fully-paid and non-assessable common
stock,$.0003 par value per share ("Common Stock"), of D.H. Marketing &
Consulting, Inc., a Nevada corporation (the "Company"), at the Initial
Exercise Price, subject to adjustment in certain events (the "Exercise
Price"), of $2.875 per Share upon surrender of this Warrant Certificate
and payment of the Exercise Price at an office or agency of the
Company, but subject to the conditions set forth herein and in the
warrant agreement dated as of September 18, 1998, between the Company
and X.X. Xxxxx (the "Warrant Agreement"). Payment of the Exercise
Price may be made in cash, or by certified or official bank check in
New York Clearing House funds payable to the order of the Company, or
any combination of cash or check.
No Warrant may be exercised after 5:00 P.M., Eastern Standard
Time, on the Expiration Date, at which time all Warrants evidenced
hereby, unless exercised prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a
duly authorized issue of Warrants 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 in 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.
The Warrant Agreement provides that upon the occurrence of
certain events, the Exercise Price and/or number of the Company's
securities issuable thereupon may, subject to certain conditions, be
adjusted. In such event, the Company will, at the, request of the
holder, issue a new Warrant Certificate evidencing the adjustment in
the Exercise Price and the number and/or type of securities issuable
upon the exercise of the Warrants; 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 transferees)
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 number of
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: September 18, 1998 D.H. MARKETING & CONSULTING, INC.
By: /s/ XXXXX X. XXXXX
Name: Xxxxx X. Xxxxx
Title: President
Attest:_____________________
Name:_____________________
Title:______________________
