Exhibit 4
WARRANT PURCHASE AGREEMENT
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THIS WARRANT PURCHASE AGREEMENT ("Agreement") is made as of the _22__
day of March, 2001, by and among DUPONT DIRECT FINANCIAL HOLDINGS, INC., a
Georgia corporation (the "Company"), and the investor identified on the
signature page of this Agreement ("Investor").
Recitals:
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A. The Company proposes to issue a series of warrants for the purchase
in the aggregate of 1,100,000 shares of the Common Stock, par value $0.01 per
share ("Shares"), of the Company ("Common Stock"). Investor desires to purchase
a portion of such warrants.
B. The Company desires to establish the terms and conditions of the
warrants and the rights of the registered holders of the warrants, and to
provide for the issuance, transfer and exercise of the warrants and other
matters.
C. The parties have agreed that the Company will act as its own warrant
agent with respect to the warrants to be issued under this Agreement.
Agreement:
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NOW, THEREFORE, the parties hereby agree as follows:
1. Purchase and Sale of Warrants.
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1.1 Sale and Warrants. Subject to the terms and conditions of this
Agreement, Investor agrees to purchase at the Closing, and the Company agrees to
sell and issue to Investor at the Closing, that number of warrants ("Warrants")
for the purchase of Common Stock set forth opposite Investor's name on the
signature page of this Agreement for the Warrant purchase price set forth
thereon.
1.2 Closing. The purchase and sale of the Warrants shall take place at
the offices of the Company, 00 Xxxxxxxx, Xxxxx 0000-00, Xxx Xxxx, Xxx Xxxx
00000, at 10:00 A.M., on the date hereof, or at such other time and place as to
which the Company and Investor mutually agree (which time and place are
designated as the "Closing"). At the Closing, the Company shall deliver to
Investor a certificate representing the Warrants that such Investor is
purchasing against such Investor's payment of the purchase price therefor by
check or wire transfer to an account designated by the Company.
2. Representations and Warranties of the Company.
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The parties make the representations and warranties to each other which
are set forth in this Section 2 and in Section 3. All such representations and
warranties and all representations and warranties which are set forth elsewhere
in this Agreement shall survive the Closing (and none will merge into any
instrument of conveyance), regardless of any investigation or lack of
investigation by any party. The Company hereby represents and warrants to
Investor that, except as set forth on a Schedule of Exceptions (the "Schedule of
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Exceptions") furnished to Investor, specifically identifying the relevant
subparagraph hereof, which exceptions shall be deemed to be representations and
warranties as if made hereunder:
2.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Georgia and has all requisite corporate power and authority to
carry on its business as now conducted and as proposed to be conducted as
reflected in its reports ("SEC Reports") filed with the U.S. Securities and
Exchange Commission ("SEC"). The Company is duly qualified to transact business
and is in good standing in each jurisdiction in which the failure to so qualify
would have a material adverse effect on its business or properties.
2.2 Capitalization and Voting Rights. The authorized capital of the
Company consists of:
(a) Preferred Stock. 1,000,000 shares of Preferred Stock, par
value $0.01 per share (the "Preferred Stock"), none of which are outstanding.
(b) Common Stock. 25,000,000 shares of Common Stock, of which
9,101,756 shares are issued and outstanding.
(c) The outstanding shares of Common Stock are all duly and
validly authorized and issued, fully paid and nonassessable, and we were issued
in accordance with the registration or qualification provisions of the
Securities Act of 1933, as amended (the "Securities Act") and any relevant state
securities laws or pursuant to valid exemptions therefrom.
(d) Except for the Common Stock to be issued on exercise of the
Warrants to be purchased pursuant to this Agreement, there are not outstanding
any options, warrants, rights (including conversion or preemptive rights) or
agreements for the purchase or acquisition from the Company of any shares of its
capital stock. The Company is not a party or subject to any agreement or
understanding, and, to the best of the Company's knowledge, there is no
agreement or understanding between any persons and/or entities, which affects or
relates to the voting or giving of written consents with respect to any security
or by a director of the Company.
2.3 Subsidiaries. The Company does not presently own or control,
directly or indirectly, any interest in any other corporation, association, or
other business entity other than as disclosed in its Report on Form 8-K filed
with the SEC on April 10, 2000 (the "April 2000 8-K"). The Company is not a
participant in any joint venture, partnership, or similar arrangement.
2.4 Authorization. All corporate action on the part of the Company, its
officers, directors and stockholders necessary for the authorization, execution
and delivery of this Agreement and the Warrants, the performance of all
obligations of the Company hereunder and thereunder, and the authorization,
issuance (or reservation for issuance), sale and delivery of the Warrants being
sold hereunder and the Common Stock issuable upon exercise of the Warrants has
been taken or will be taken prior to the Closing, and this Agreement constitutes
the valid and legally binding obligation of the Company, enforceable in
accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement of creditors' rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies, and (iii) to the extent the indemnification provisions
may be limited by applicable federal or state securities laws.
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2.5 Valid Issuance of Common Stock. The Common Stock to be issued on
exercise of the Warrants being purchased by Investor hereunder, when issued,
sold and delivered in accordance with the terms of this Agreement and the
Warrants for the consideration expressed herein and therein, will be duly and
validly issued, fully paid, and nonassessable, and will be free of restrictions
on transfer other than restrictions on transfer under this Agreement and under
applicable state and federal securities laws. The Common Stock issuable upon
exercise of the Warrants purchased under this Agreement has been duly and
validly reserved for issuance and, upon issuance in accordance with the terms of
the Restated Articles, will be duly and validly issued, fully paid, and
nonassessable and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement and under applicable state and
federal securities laws.
2.6 Governmental Consents. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, and
federal, state or local governmental authority on the part of the Company is
required in connection with the consummation of the transactions contemplated by
this Agreement, except for the filing pursuant to SEC Form D, which filing will
be effected within 15 days of the sale of the Warrants hereunder.
2.7 Offering. Subject in part to the truth and accuracy of Investor's
representations set forth in Section 3 of this Agreement, the offer, sale and
issuance of the Warrants as contemplated by this Agreement are exempt from the
registration requirements of the Act, and neither the Company nor any authorized
agent acting on its behalf will take any action hereafter that would cause the
loss of such exemption.
2.8 Litigation. There is no action, suit, proceeding or investigation
pending or currently threatened against the Company that questions the validity
of this Agreement or the Warrants, or the right of the Company to enter into
such agreements, or to consummate the transactions contemplated hereby or
thereby, or that might result, either individually or in the aggregate, in any
material adverse changes in the assets, condition, affairs or prospects of the
Company, financial or otherwise, or any change in the current equity ownership
of the Company, nor is the Company aware that there is any basis for the
foregoing.
2.9 SEC Reports. The Company has timely filed all reports and other
documents required to be filed by it with the Securities and Exchange Commission
("SEC") under the Securities Exchange Act of 1934, as amended ("Exchange Act")
from and after August 8, 2000, and the Company has made available to Investor
complete and correct copies of all annual reports, quarterly reports, proxy
statements and other reports filed by the Company with the SEC under the
Exchange Act from and after such date (collectively, the "SEC Reports"). Each
SEC Report was on the date of its filing in compliance in all material respects
with the requirements of its respective report form and did not on the date of
filing contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were or will be
made, not misleading, and as of the date hereof there is no fact or facts not
disclosed in the SEC Reports that relate specifically to the Company or any of
its subsidiaries and which could, individually or in the aggregate, reasonably
be expected to have a material adverse effect on the Company or its subsidiaries
taken as a whole.
2.10 Patents and Trademarks. To the best of its knowledge (but without
having conducted any special investigation or patent search), the Company has
sufficient title and ownership of all patents, trademarks, service marks, trade
names, copyrights, trade secrets, information, proprietary rights and processes
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necessary for its business as now conducted and as proposed to be conducted as
described in the Company's SEC Reports without any conflict with or infringement
of the rights of others. The Company has not received any communications
alleging that the Company has violated or, by conducting its business as
proposed, would violate any of the patents, trademarks, service marks, trade
names, copyrights or trade secrets or other proprietary rights of any other
person or entity.
2.11 Compliance with Other Instruments.
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The Company is not in violation or default in any material respect of
any provision of its Restated Articles of Incorporation ("Restated Articles") or
bylaws, or in any material respect of any instrument, judgment, order, writ,
decree or contract to which it is a party or by which it is bound, or, to the
best of its knowledge, of any provision of any federal or state statute, rule or
regulation applicable to the Company. The execution, delivery and performance of
this Agreement and the Warrants, and the consummation of the transactions
contemplated hereby and thereby will not result in any such violation or be in
conflict with or constitute, with or without the passage of time and giving of
notice, either a default under any such provision, instrument, judgment, order,
writ, decree or contract or an event that results in the creation of any lien,
charge or encumbrance upon any assets of the Company or the suspension,
revocation, impairment, forfeiture, or nonrenewable of any material permit,
license, authorization, or approval applicable to the Company, its business or
operations or any of its assets or properties.
2.12 Agreements; Action.
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(a) Except as disclosed in the SEC Reports, there are no
agreements, understandings or proposed transactions between the Company and any
of its officers, directors, affiliates, or any affiliate thereof.
(b) The Company has not (i) declared or paid any dividends or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or any
other liabilities individually in excess of $10,000 or, in the case of
indebtedness and/or liabilities individually less than $10,000, in excess of
$25,000 in the aggregate or, (iii) made any loans or advances to any person,
other than ordinary advances for travel expenses.
(c) The Company is not a party to and is not bound by any
contract, agreement or instrument, or subject to any restriction under its
Restated Articles or Bylaws that adversely affects its business as now conducted
or as proposed to be conducted according to the Company's SEC Reports, its
properties or its financial condition.
2.13 Permits. The Company has all franchises, permits, licenses, and
any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects, or financial condition of the Company, and the
Company believes it can obtain, without undue burden or expense, any similar
authority of the conduct of its business as planned to be conducted. The Company
is not in default in any material respect under any of such franchises, permits,
licenses, or other similar authority.
2.14 Marketing Rights. The Company has not granted rights to license,
market, or sell its services or products to any other person and is not bound by
any agreement that affects the Company's exclusive right to develop, distribute,
market or sell its services and products.
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2.15 Registration Rights. Except as provided in this Agreement and as
otherwise disclosed to Investors in writing, the Company has not granted or
agreed to grant any registration rights, including piggyback rights, to any
person or entity.
2.16 Corporate Documents. The Restated Articles and bylaws of the
Company are in the form previously filed with the SEC Reports.
2.17 Title to Property and Assets. The Company owns its property and
assets free and clear of all mortgages, liens, loans and encumbrances, except
such encumbrances and liens that arise in the ordinary course of business and do
not materially impair the Company's ownership or use of such property or assets.
With respect to the property and assets it leases, the Company is in compliance
with such leases, and, to the best of its knowledge, holds a valid leasehold
interest free of any liens, claims or encumbrances.
2.18 Financial Statements. The consolidated financial statements
contained in the SEC Reports ("Financial Statements") have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated and with each other, except that
unaudited Financial Statements may not contain all footnotes required by
generally accepted accounting principles. The Financial Statements fairly
present the financial condition and operating results of the Company as of the
dates, and for the periods, indicated therein, subject in the case of unaudited
Financial Statements to normal year-end audit adjustments. Except as set forth
in the Financial Statements, the Company has no material liabilities, contingent
or otherwise, other than (i) liabilities incurred in the ordinary course of
business subsequent to December 31,, 2000 and (ii) obligations under contracts
and commitments incurred in the ordinary course of business and not required
under generally accepted accounting principles to be reflected in the Financial
Statements, which in both cases, individually or in the aggregate, are not
material to the financial condition or operating results of the Company. Except
as disclosed in the Financial Statements, the Company is not a guarantor or
indemnitor of any indebtedness of any other person, firm or corporation. The
Company maintains and will continue to maintain a standard system of accounting
established and administered in accordance with generally accepted accounting
principles.
2.19 Changes. Since December 31, 2000, there has not been any change in
the assets, liabilities, financial condition or operating results of the Company
from that reflected in the Financial Statements, except changes in the ordinary
course of business that have not been, in the aggregate, materially adverse.
2.20 Employee Benefit Plans. The Company does not have any Employee
Benefit Plan as defined in the Employee Retirement Income Security Act of 1974.
2.21 Tax Returns, Payments and Elections. The Company has filed all tax
returns and reports as required by law. These returns and reports are true and
correct in all material respects. The Company has paid all taxes and other
assessments due, except any contested by it in good faith that are listed in the
Schedule of Exceptions. The provision for taxes of the Company as shown in the
Financial Statements is adequate for taxes due or accrued as of the date
thereof. Since the date of the Financial Statements, the Company has made
adequate provisions on its books of account for all taxes, assessment sand
governmental charges with respect to its business properties and operations for
such period.
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2.22 Insurance. The Company has in full force and effect fire and
casualty insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of its properties
that might be damaged or destroyed. The Company has in full force and effect
general liability and errors and omissions insurance in amounts customary for
companies similarly situated.
2.23 Minute Books. The minute books of the Company contain a complete
summary of all meetings of directors and stockholders since the time of
incorporation and reflect all transactions referred to in such minutes
accurately in all material respects.
2.24 Labor Agreements and Actions. The Company is not bound by or
subject to (and none of its assets or properties is bound by or subject to) any
written or oral, express or implied, contract, commitment or arrangement with
any labor union, and no labor union has requested or, to the best of the
Company's knowledge, has sought to represent any of the employees,
representatives or agents of the Company. There is no strike or other labor
dispute involving the Company pending, or to the best of the Company's
knowledge, threatened, that could have a material adverse effect on the assets,
properties, financial condition, operating results, or business of the Company
(as such business is presently conducted and as it is proposed to be conducted),
nor is the Company aware of any labor organization activity involving its
employees. The Company is not aware that any officer or key employee, or that
any group of key employees, intends to terminate their employment with the
Company nor does the Company have a present intention to terminate the
employment of any of the foregoing. The employment of each officer and employee
of the Company is terminable at the will of the Company. To the best of its
knowledge, the Company has complied in all material respects with all applicable
state and federal equal employment opportunity and other laws related to
employment.
2.25 Press Releases; Interim Public Filings. The Company shall deliver
to Investor complete and correct copies of all press releases and public filings
made between the date hereof and the date of last exercise of the Warrants. The
Company shall not disclose the name or identity of Investor as an investor in
the Company in any press release or other public announcement or in any document
or material filed with any governmental entity without the prior written consent
of Investor, unless such disclosure is required by applicable Law, in which case
prior to making such disclosure the Company shall give written notice to
Investor, describing in reasonable detail the proposed content of such
disclosure, shall permit Investor to review and comment upon the form and
substance of such disclosure and shall take such comments into account in making
such disclosure.
2.26 Affiliates and Control Persons. The only (a) persons or entities
which may be an "affiliate" (as defined in Rule 405 under the Securities Act) of
the Company; or (b) persons directly or indirectly controlling, or controlled
by, the Company, or under direct or indirect common control with the Company,
are named in the Schedule of Exceptions.
3. Representatives and Warranties of Investor.
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Investor hereby represents and warrants that:
3.1 Authorization. Investor has full power and authority to enter into
this Agreement and such Agreement constitutes Investor's valid and legally
binding obligation, enforceable in accordance with its terms.
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3.2 Purchase Entirely for Own Account. This Agreement is made with
Investor in reliance upon Investor's representation to the Company, which by
Investor's execution of this Agreement Investor hereby confirms, that the
Warrants to be received by Investor and the Common Stock issuable upon exercise
thereof (collectively, the "Securities") will be acquired for investment for
Investor's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that Investor has no present
intention of selling, granting any participation in, or otherwise distributing
the same except in one or more transactions covered by the registration
statement or registration statements provided for in Section 6. By executing
this Agreement, Investor further represents that Investor does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participation's to such person or to any third person, with
respect to any of the Securities.
3.3 Investment Experience. Investor is an investor in securities of
companies in the an early stage and acknowledges that it is able to fend for
itself, can bear the economic risk of its investment, and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment in the Warrants. If other than an individual,
Investor also represents it has not been organized for the purpose of acquiring
the Warrants.
3.4 Accredited Investor. Investor is an "accredited investor" within
the meaning of SEC Rule 501 of Regulation D, as presently in effect.
3.5 Restricted Securities. Investor understands that the Securities it
is purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Act, only in certain limited circumstances. In this connection, Investor
represents that it is familiar with SEC Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the Securities Act.
3.6 Further Limitations on Disposition. Without in any way limiting the
representations set forth above, Investor further agrees not to make any
disposition of all or any portion of the Securities unless and until:
(a) the transferee has agreed in writing for the benefit of the
Company to be bound by this Section 3, provided and to the extent this Section
is then applicable; or
(b) there is then in effect a Registration Statement under the Act
covering such proposed disposition and such disposition is made in accordance
with such Registration Statement and Investor shall have notified the Company of
the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition. It is
agreed that the Company will not require opinions of counsel for transactions
made pursuant to Rule 144 except in unusual circumstances.
Notwithstanding the provisions of paragraphs (a) and (b) above, no such
registration statement or opinion of counsel shall be necessary for a transfer
by Investor that is a corporation to a shareholder of such corporation or that
is a partnership to a partner of such partnership or a retired partner of such
partnership who retires after the date hereof, or to the estate of any such
partner or retired partner or the transfer by gift, will or intestate succession
of any partner to his or her spouse or to the siblings, lineal descendants or
ancestors of such partner or his or her spouse, if the transferee agrees in
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writing to be subject to he terms hereof to the same extent as if he or she were
an original Investor hereunder.
4. Post Closing Covenants.
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4.1 Rule 144; Integration. As long as any Shares issued on exercise of
the Warrants are held by Investor, the Company shall file all reports required
to be filed by it under the Securities Act and the Exchange Act and shall take
such further action as Investor may reasonably request, all to the extent
required to enable Investor to sell any of the foregoing securities pursuant to
and in accordance with Rule 144 under the Securities Act to the extent that a
registration statement covering resales by Investor may not then be in effect.
Such action shall include, but not be limited to, making available adequate
current public information meeting the requirements of paragraph (c) of such
Rule 144.
4.2 Further Assurances. The parties shall execute such further
documents, and perform such further acts, as may be reasonably necessary to
convey the Warrants and the Shares covered thereby, on the terms herein
contained, and to otherwise comply with the terms of this Agreement and
consummate the transactions herein contemplated, in each case at the requesting
party's expense.
5. Warrants.
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5.1 Warrant Terms. Subject to the provisions of this Agreement, each
Warrant shall entitle the Warrant holder by exercising the Warrant to purchase
from the Company one Share at a price of $0.8864 per Share (the "Exercise
Price"). The Warrants will be exercisable subject to the following limitations:
(a) One-third of the Warrants held by Investor will be exercisable
only after the ninetieth (90th) day following the date (the "Effective Date") on
which the SEC declares the first registration statement provided for in Section
6 to be effective.
(b) An additional one-third of the Warrants held by Investor will
be exercisable only after the one hundred eightieth (180th) day following the
Effective Date; and
(c) The final one-third of the Warrants held by Investor will be
exercisable only after the two hundred seventieth (270th) day following the
Effective Date.
Each exercise of the Warrants shall be contingent upon Investor, or its
successors, having previously exercised the Warrants covered by this Agreement
to the fullest extent permitted. The foregoing notwithstanding, the Company
shall have the right to extend (but not accelerate), from time to time, in whole
or in part, the dates on which, and the extent to which, the Warrants are
exercisable. Such extensions shall be set forth in one or more written notices
delivered to Investor not less than thirty (30) days prior to any date on which
exercise would be permitted, as then in effect. The foregoing notwithstanding,
provided that Investor has fully exercised all Warrants theretofore exercisable,
Investor may exercise the Warrants to the extent not therefore exercised, on an
after June 30, 2002. In any event, unless otherwise agreed in writing by the
Company, the Warrants will expire at 5:00pm New York City Time on December 31,
2003 (the "Expiration Date").
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5.2. Detachability. A Warrant may at any time after its issue be split
up, combined, exchanged or transferred on the books of the Company in the manner
provided in this Agreement.
5.3. Warrant Certificates. The Warrant Certificates shall be registered
form only. The text of the Warrant Certificate shall be substantially in the
form set forth in Exhibit A attached to this Agreement. Warrant Certificates
shall be signed by, or shall bear the facsimile signatures of, the president or
a vice president of the Company. If any person whose facsimile signature has
been placed upon any Warrant Certificate as the signature of an officer of the
Company shall have ceased to be such officer before such Warrant Certificate is
countersigned, issued and delivered, such Warrant Certificate may be
countersigned, issued and delivered with the same effect as if such person had
not ceased to be such officer.
5.4. Registration of Transfers and Exchanges. The Company shall from
time to time register the transfer of any outstanding Warrant Certificate upon
records to be maintained by the Company for such purpose upon surrender of such
Warrant Certificate to the Company for transfer, accompanied by appropriate
instruments of transfer in form satisfactory to the Company and duly executed by
the Warrant holder or a duly authorized attorney. Upon any such registration of
transfer, a new Warrant Certificate or Warrant Certificates representing in the
aggregate the same number of Warrants shall be issued in the name of and to the
transferee and the surrendered Warrant Certificate shall be canceled.
5.5. Exercise of Warrants.
(a) Subject to the provisions of subparagraph 5.5(b), any whole
number or all of the Warrants evidenced by any Warrant Certificate may be
exercised at any time, and to the extent, the Warrants are exercisable in
accordance with the other provisions of this Agreement. A Warrant shall be
exercised by surrender to the Company of the Warrant Certificate with the
exercise form thereon duly completed and executed and payment to the Company, in
lawful money of the United States of the Exercise Price for each Share to be
purchased.
(b) If, as a result of the transfer of the Warrant by the original
holder to a subsequent Warrant holder or for any other reason, the Company must
register with or receive the approval, or an exemption from the requirement of a
registration or approval, of a governmental agency or take any other action
before issuing Shares upon the Warrant holder's exercise of a Warrant, the
Company will, in good faith, seek to secure such registration, approval or
exemption as quickly as practicable. The Company shall not issue such Shares and
shall have the authority to suspend the exercise of the subject Warrant until
such registration, approval, or exemption is obtained or such other actions are
taken. Upon the removal of such suspension, the Company shall recognize the
exercise of the subject Warrant upon the conditions in effect on the date of
surrender of the Warrant by the Warrant holder, even if the period of suspension
continues past the Expiration Date.
(c) Upon exercise, the Company shall requisition from any transfer
agent for the Shares, and shall deliver certificates evidencing the total number
of whole Shares for which Warrants are then being exercised to, or in accordance
with the instructions of, the Warrant holder. Such certificates for the Shares
shall be deemed to be issued as of the date of the surrender of such Warrant
Certificate and payment of the Exercise Price, whichever shall last occur.
(d) If less than all of the Warrants evidenced by a Warrant
Certificate are exercised upon a single occasion, a new Warrant Certificate for
the balance of the Warrants not so exercised shall be issued and delivered to,
or in accordance with instructions given by, the Warrant holder.
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(e) All Warrant Certificates surrendered upon exercise of Warrants
shall be canceled.
5.6. Payments of Taxes. The Company shall not be required to pay any
tax in respect of any transfer or exercise of any Warrant.
5.7. Mutilated or Missing Warrant Certificates. Upon receipt of
evidence satisfactory to the Company that any Warrant Certificate has been
mutilated, lost, stolen, or destroyed, the Company may, on such terms as to
indemnity or otherwise as they may in their discretion impose, issue a
substitute Warrant Certificate. If the Warrant holder desires to exercise any
Warrants evidenced by a Warrant Certificate which has been mutilated, lost,
stolen or destroyed, the Company may authorize such exercise in lieu of issuing
a substitute Warrant Certificate.
5.8. Reservation of Shares. The Company will at all times reserve and
keep available for issue the full number of Shares issuable upon the exercise of
all outstanding Warrants.
5.9 Adjustments of Exercise Price and Shares Purchasable. The Exercise
Price and the number of Shares purchasable upon exercise of each Warrant shall
be subject to adjustment from time to time as provided in the form of Warrant
Certificate attached as Exhibit A to this Agreement. The form of Warrant
Certificate need not be changed, but may be changed at the discretion of the
Company to reflect any adjustment in the Exercise Price or the number of Shares
purchasable upon the exercise of a Warrant or the number of Warrants
outstanding.
5.10 Reclassifications; Reorganizations, Mergers, etc. In case of any
capital reclassification or reorganization, any consolidation or merger of the
Company with or into another corporation (other than a merger with a subsidiary
after which the Company is the continuing corporation and which does not result
in any reclassification, capital reorganization or other change of outstanding
Shares) or any sale, lease or conveyance to another corporation of the assets of
the Company as an entirety or substantially as an entirety, the Company shall
provide a reasonable opportunity for Warrant holders to exercise their
outstanding Warrants in order to receive the benefits thereof.
5.11. Fractional Shares. Notwithstanding any other provision of this
Agreement or any Warrant Certificate, the Company shall not be required to issue
fractions of Shares upon exercise of the Warrants or to distribute certificates
which evidence fractional Shares, nor shall it be required to make cash payments
for fractional Shares.
5.12. Rights of Warrant holders.
(a) No Warrant holder, as such, shall have any rights of a
shareholder of the Company, either at law or equity, and the rights of the
Warrant holders, as such, are limited to those rights expressly provided in this
Agreement or in the Warrant Certificates.
(b) The Company may treat the registered Warrant holder in respect
of any Warrant Certificate as the absolute owner thereof for all purposes
notwithstanding any notice to the contrary.
5.13. Supplements and Amendments. With the consent of the Warrant
holders of at least two-thirds of all remaining outstanding Warrants, given as
set forth in this subsection (b), the Company may make any other amendment to
this Section 5 provided that no such change may shorten the time of exercise of
any Warrant or increase the Exercise Price without the consent of all Warrant
holders. Consent of the Warrant holders under this subsection Section 5.13 shall
be evidenced by either (i) consents in writing to the amendment, which consent
need not set forth the specific form of amendment but shall be sufficient if
agreeing to the general substance thereof or (ii) by the affirmative vote of the
requisite Warrant holders at a meeting of Warrant holders called by the Company
and held at such time and place as may be specified in a written notice of the
10
meeting to be mailed to each Warrant holder not less than 15 days nor more than
45 days prior to the date set for the meeting. The Company may establish a
record date for the determination of Warrant holders entitled to vote at any
meeting of Warrant holders, which record date shall be not more than 30 days
prior to the date of mailing notice thereof. The Company may make reasonable
regulations for the conduct of such meeting and for the appointment of a
chairman and a secretary thereof and of inspectors of votes. Proxies may be used
at any such meeting in the same manner as is provided in the Company's Bylaws
with respect to proxies for meetings of its stockholders.
6. Securities Registration.
------------------------
The Company covenants and agrees as follows:
--------------------------------------------
6.1 Definitions. For purposes of this Section 6:
(a) The term "Holder" means any person owning or having the right
to acquire Registrable Securities or any assignee thereof.
(b) The term "register," "registered," and "registration" refer to
a registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document.
(c) The term "Registrable Securities" means the Common Stock
issuable or issued upon exercise of the Warrants.
6.2 Company Registration. The Company shall, as expeditiously as
reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to the Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for a period of up to one hundred twenty (120)
days following the last exercise of the Warrants or until the distribution
contemplated in the Registration Statement has been completed; provided,
however, that in the case of any registration of Registrable Securities which
are intended to be offered on a continuous or delayed basis, such 120-day period
shall be extended, if necessary, to keep the registration statement effective
until all such Registrable Securities are sold, provided that Rule 415, or any
successor rule under the Securities Act, permits an offering on a continuous
basis, and provided further that applicable rules under the Securities Act
governing the obligation to file a post-effective amendment permit, in lieu of
filing a post-effective amendment which (I) includes any prospectus required by
Section 10(a)(3) of the Securities Act or (II) reflects facts or events
representing a material or fundamental change in the information set forth in
the registration statement, the incorporation by reference of information
required to be included in (I) and (II) above to be contained in periodic
reports filed pursuant to Section 13 or 15(d) of the Exchange Act in the
registration statement.
11
(b) Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders;
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act.
(e) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(f) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed.
(g) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
6.3 Expenses of Registration. The Company shall bear and pay all
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities for each Holder (which right may be assigned as
provided in Section 6.7), including (without limitation) all registration,
filing, and qualification fees, printers and accounting fees relating or
apportionable thereto and the fees and disbursements of counsel for the Company
in its capacity as counsel to the selling Holders hereunder; if Company counsel
does not make itself available for this purpose, the Company will pay the
reasonable fees and disbursements of one counsel for the selling Holders
selected by them.
6.4 Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 6.
6.5 Indemnification. When Registrable Securities are included in a
registration statement under this Section 6:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, any underwriter (as defined in the Securities Act)
for such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Exchange Act, against any
losses, claims, damages, or liabilities (joint or several) to which they may
12
become subject under the Securities Act, or liabilities (joint or several) to
which they may become subject under the Securities Act, or the Exchange Act or
other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue statements of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any state securities law or any
rule or regulation promulgated under the Securities Act, or the Exchange Act, or
any state securities law; and the Company will pay to each such Holder,
underwriter or controlling person, as incurred, any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 6.5(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability, or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability, or action to the extent that
it arises out of or is based upon a Violation which occurs in reliance upon and
in conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter,
any other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any losses,
claims, damages, or liabilities (joint or several) to which any of the foregoing
persons may become subject, under the Securities Act, or the Exchange Act or
other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (any only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such registration;
and each such Holder will pay, as incurred, any legal or other expenses
reasonably incurred by any person intended to be indemnified pursuant to this
subsection 6.5(b), in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this subsection 6.5(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the holder, which consent shall
not be unreasonably withheld; provided, that, in no event shall any indemnity
under this subsection 6.6(b) exceed the gross proceeds from the offering
received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 6.5 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 6.6, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
13
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
6.10, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 6.10.
(d) If the indemnification provided for in this Section 6.5 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) The obligations of the Company and Holders under this Section
6.5 shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 6, and otherwise.
6.6 Reports Under Exchange Act. With a view to making available to the
Holders the benefits of Rule 144 promulgated under the Securities Act and any
other rule or regulation of the SEC that may at any time permit a Holder to sell
securities of the Company to the public without registration or pursuant to a
registration, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements), or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of
the most recent annual or quarterly report of the Company and such other reports
14
and documents so filed by the Company, and (iii) such other information as may
be reasonably requested in availing any Holder of any rule or regulation of the
SEC which permits the selling of any such securities without registration or
pursuant to such form.
6.7 Assignment of Registration Rights. The rights to cause the Company
to register Registrable Securities pursuant to this Section 6 may be assigned
(but only with all related obligations) by a Holder to a transferee or assignee
or such securities who, after such assignment or transfer, holds at least 10,000
shares of Registrable Securities (subject to appropriate adjustment for stock
splits, stock dividends, combinations and other recapitalizations), provided:
(a) the Company is, within a reasonable time after such transfer, furnished with
written notice of the name and address of such transferee or assignee and the
securities with respect to which such registration rights are being assigned;
(b) such transferee or assignee agrees in writing to be bound by and subject to
the terms and conditions of this Agreement; and (c) such assignment shall be
effective only if immediately following such transfer the further disposition of
such securities by the transferee or assignee is restricted under the Securities
Act.
6.8 Limitations on Subsequent Registration Rights. From and after the
date of this Agreement, the Company shall not, without the prior written consent
of the Holders of a majority of the outstanding Registrable Securities, enter
into any agreement with any holder or prospective holder of any securities of
the Company which would allow such holder or prospective holder (a) to include
such securities in any registration filed under Section 6.2 hereof, unless under
the terms of such agreement, such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of his
securities will not reduce the amount of the Registrable Securities of the
Holders which is included or (b) to make a demand registration which could
result in such registration statement being declared effective prior to the
earlier of either of the dates set forth in subsection 6.2(a) or within one
hundred twenty (120) days of the effective date of any registration effected
pursuant to Section 6.2.
6.9 Termination in Event of Certain Registration Delays. If, due to
events or circumstances beyond Investor's control, the SEC does not declare the
first registration statement required by this Section 6 effective within 180
days following the date of this Agreement, Investor may terminate this Agreement
and the Warrants will be cancelled. In such event, Investor shall have no
continuing rights under the Warrants; provided, however, that such termination
and cancellation notwithstanding, the provisions of Sections 2, 4, 6.3, 6.5,
6.6, 6,7, 6.8, 6.9, 7 and 8 of this Agreement shall survive such termination.
7. Mutual Indemnification. Without limitation of the indemnification
provisions contained in Section 6 of this Agreement, the parties agree as
follows:
7.1 To the extent permitted by law, the Company will indemnify and hold
harmless Investor and its officers, directors, employees and agents, and each
person, if any, who controls Investor within the meaning of the Securities Act
or the Exchange Act, against any losses, claims, damages, or liabilities (joint
or several) to which they may become subject under the Securities Act, or the
Exchange Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any inaccuracy in any of the Company's representations and warranties
contained in this Agreement; and the Company will pay to Investor and each such
other person, as incurred, any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 7.1 shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability, or action if such settlement is effected without
15
the consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability, or action to the extent that it arises out of or is based
upon the gross negligence or willful misconduct of Investor or any such other
person.
7.2 To the extent permitted by law, Investor will indemnify and hold
harmless the Company, each of its directors, each of its officers, directors,
employees and agents, and each person, if any, who controls the Company within
the meaning of the Securities Act, or the Exchange Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any inaccuracy in any of the
Investor's representations and warranties contained in this Agreement; and
Investor will pay to the Company and each such other person, as incurred, any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection 7.2
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent of
Investor (which consent shall not be unreasonably withheld), nor shall Investor
be liable in any such case for any such loss, claim, damage, liability, or
action to the extent that it arises out of or is based upon the gross negligence
or willful misconduct of the Company or any such other person.
7.3 Promptly after receipt by an indemnified party under this Section 7
of notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 7, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party (together with all other indemnified parties
which may be represented without conflict by one counsel) shall have the right
to retain one separate counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, if prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 7, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 7.
7.4 If the indemnification provided for in this Section 7 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage, or expense referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage, or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage, or expense as well as any other relevant equitable considerations.
16
7.5 The obligations of Client and CHC under this Section shall survive
the purchase and sale of the Warrants and the purchase and sale of the Common
Stock to be issued on exercise of the Warrants, provided for in this Agreement.
8. Interpretation, Etc..
--------------------
8.1 Survival of Warranties. The warranties, representations and
covenants of the Company and Investor contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Investor or the Company.
8.2 Successors and Assigns. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any Securities). Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
8.3 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of New York as applied to agreements among New York
residents entered into and to be performed entirely within New York, without
giving effect to that state's principles governing conflicts of laws.
8.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.5 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
8.6 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given: (i) upon personal delivery to the party to be notified; (ii)
when sent by confirmed telex or facsimile if sent during normal business hours
of the recipient, if not, then on the next business day; (iii) five days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid; or (iv) one day after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written verification of
receipt. All communications shall be sent to the party to be notified at the
address indicated for such party on the signature page hereof, or at such other
address as such party may designate by ten (10) days' advance written notice to
the other parties.
8.7 Finder's Fee. Each party represents that it neither is nor will be
obligated for any finders' fee or commission in connection with this
transaction. Investor agrees to indemnify and to hold harmless the Company from
any liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which Investor or any of its officers, partners, employees, or
representatives is responsible. The Company agrees to indemnify and hold
harmless Investor from any liability for any commission or compensation in the
nature of a finders' fee (and the costs and expenses of defending against such
liability or asserted liability) for which the Company or any of its officers,
employees or representatives is responsible.
17
8.8 Expenses. Irrespective of whether the Closing is effected, each
party shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement. If any
action at law or in equity is necessary to enforce or interpret the terms of
this Agreement or the Warrants, the prevailing party shall be entitled to
reasonable attorney's fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled.
8.9 Disputes. The parties agree that any and all disputes, claims or
controversies between the Company and Investor and their successors and assigns
arising out of or relating to this Agreement that are not resolved by their
mutual agreement shall be submitted to final and binding arbitration before a
single arbitrator selected in accordance with the Commercial Arbitration Rules
of the American Arbitration Association in effect at the time of filing the
demand for arbitration, pursuant to the United States Arbitration Act, 9 U.S.C.
Sec. 1 et seq. Either party may commence the arbitration process called for in
this Agreement by filing a written demand for arbitration, with a copy to the
other party. The parties will cooperate with one another in selecting an
arbitrator from an appropriate panel of neutrals, and in scheduling the
arbitration proceedings. The parties covenant that they will participate in the
arbitration in good faith, and that they will share equally in its costs. The
provisions of this Section 8.9 may be enforced by any Court of competent
jurisdiction, and the party seeking enforcement shall be entitled to an award of
all costs, fees and expenses, including attorneys fees, to be paid by the party
against whom enforcement is ordered.
8.10 Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the holders of a sixty percent (60%)
or more of the Common Stock issued or issuable upon exercise of the Warrants.
Any amendment or waiver effected in accordance with this paragraph shall be
binding (including securities into which such securities are convertible), each
future holder of all such securities, and the Company.
8.11 Effect of Amendment or Waiver. Investor acknowledges that by the
operation of Section 8.10 hereof the holders of a majority of the Common Stock
not previously sold to the public that is issued or issuable upon exercise of
the Warrants sold pursuant to this Agreement will have the power to diminish or
eliminate all rights of Investor under this Agreement.
8.12 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
8.13 Aggregation of Stock. All Warrants and/or shares of the Common
Stock held or acquired by affiliated entities or persons shall be aggregated
together for the purpose of determining the availability of any rights under
this Agreement.
8.14 Entire Agreement. This Agreement and the documents referred to
herein constitute the entire agreement among the parties with respect to the
subject matter of this Agreement and no party shall be liable or bound to any
other party in any manner by any warranties, representations, or covenants with
respect to such subject matter except as specifically set forth herein or
therein.
[Signatures appear on next page]
18
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY:
-------
DUPONT DIRECT FINANCIAL HOLDINGS,
INC.
By:______________________________
Xxxxx X. Xxxxxxxxxx, President
00 Xxxxxxxx, Xxxxx 0000-00
Xxx Xxxx, XX 00000
(Fax) 000-000-0000
Number of Warrants to be Purchased by INVESTOR:
--------
Investor:
*Warrants covering 550,000 Shares COVE HILL CONSULTING, INC.
--------------------------
*Aggregate Warrant purchase price for all By______________________________
of the Warrants being purchased by Investor: Xxxxx Xxxxxxx, Jr. , President
$1,750 Address: Box 8B
----- -------------------------
Xxx Xxx Xxxxx Xx.
-------------------------
Xxxx Xxxxxxx, XX 00000
-------------------------
Fax No: 000-000-0000
-------------------------
19
Exhibit A
To
Warrant Purchase Agreement
Form of Warrant Certificate
(Attached)
20
WARRANT CERTIFICATE
-------------------
WARRANTS TO PURCHASE SHARES OF COMMON STOCK
DUPONT DIRECT FINANACIAL HOLDINGS, INC.
W- __ 550,000 Warrants
Warrant Certificate number [Number of Warrants]
This Warrant Certificate certifies that the investor listed on the signature
page attached hereto or registered assignee (the "Holder"), is the owner of Five
Hundred Fifty Thousand (550,000) Warrants (subject to adjustment as provided
herein), each of which represents the right to subscribe for and purchase from
DuPont Direct Financial Holdings, Inc., a Georgia corporation (the "Company"),
one share of the common stock, par value $0.01 per share, of the Company (the
common stock, including any stock into which it may be changed, reclassified or
converted, is herein referred to as the "Common Stock") at the purchase price
(the "Exercise Price") of $0.8864 per share (subject to adjustment as provided
herein). This Warrant Certificate represents Warrants issued pursuant to a
series of Warrant Purchase Agreements dated as of march 22, 2001, between the
Company and the investor identified on each signature page attached thereto
covering in the aggregate Warrants exercisable for 1,100,000 shares of Common
Stock (the "Warrant Purchase Agreement").
THIS WARRANT CERTIFICATE AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ARE
SUBJECT TO CERTAIN RESTRICTIONS, CONTAINED IN PARAGRAPHS 5 AND 6 HEREOF, WITH
RESPECT TO THEIR TRANSFER.
The Warrants represented by this Warrant Certificate are subject to the
following provisions, terms and conditions:
1. EXERCISE OF WARRANTS.
--------------------
A. The Warrants may be exercised by the Holder, in whole or in part
(but not as to a fractional share of Common Stock), by surrender of this Warrant
Certificate at the principal office of the Company at 00 Xxxxxxxx, Xxxxx
0000-00, Xxx Xxxx, XX 00000 (or such other office or agency of the Company as
may be designated by notice in writing to the Holder at the address of such
Holder appearing on the books of the Company), with the appropriate form
attached hereto duly exercised, at any time within the period beginning on the
date described in Section1B hereof and expiring at 5:00PM on the "Expiration
Date" (defined below) (the "Exercise Period") and by payment to the Company by
certified check or bank draft of the purchase price for such shares. The Company
agrees that the shares of Common Stock so purchased shall be and are deemed to
be issued to the Holder as the record owner of such shares of Common Stock as of
the close of business on the date on which the Warrant Certificate shall have
been surrendered and payment made for such shares of Common Stock. Certificates
representing the shares of Common Stock so purchased, together with any cash for
fractional shares of Common Stock paid pursuant to Section 2E, shall be
delivered to the Holder promptly and in no event later than ten (10) days after
the Warrants shall have been so exercised, and, unless the Warrants have
expired, a new Warrant Certificate representing the number of Warrants
represented by the surrendered Warrant Certificate, if any, that shall not have
been exercised shall also be delivered to the Holder within such time.
21
B. The Warrants will be exercisable subject to the following
limitations:
(1) One-third of the Warrants held by Investor will be exercisable
only after the ninetieth (90th) day following the date (the "Effective
Date") on which the Securities and Exchange Commission ("SEC") declares
the first registration statement provided for in Section 6 of the
Warrant Purchase Agreement to be effective.
(2) An additional one-third of the Warrants held by Investor will
be exercisable only after the one hundred eightieth (180th) day
following the Effective Date; and
(3) The final one-third of the Warrants held by Investor will be
exercisable only after the two hundred seventieth (270th) day following
the Effective Date.
Each exercise of the Warrants shall be contingent upon the Holder, or
its successors, having previously exercised the Warrants to the fullest extent
permitted. The foregoing notwithstanding, the Company shall have the right to
extend (but not accelerate), from time to time, in whole or in part, the dates
on which, and the extent to which, the Warrants are exercisable. Such extensions
shall be set forth in one or more written notices delivered to Investor not less
than thirty (30) days prior to any date on which exercise would be permitted, as
then in effect. The foregoing notwithstanding, provided that Investor has fully
exercised all Warrants theretofore exercisable, Investor may exercise the
Warrants to the extent not therefore exercised, on an after June 30, 2002. In
any event, unless otherwise agreed in writing by the Company, the Warrants will
expire at 5:00pm New York City Time on December 31, 2003 (the "Expiration
Date").
2. ADJUSTMENTS.
-----------
A. Adjustments. The Exercise Price and the number of shares of Common
Stock issuable upon exercise of each Warrant shall be subject to adjustment from
time to time as follows:
(1) Stock Dividends; Stock Splits; Reverse Stock Splits;
Reclassifications. In case the Company shall (i) pay a dividend with
respect to its capital stock in shares of Common Stock, (ii) subdivide
its outstanding shares of Common Stock, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares of any class of
Common Stock or (iv) issue any shares of its capital stock in a
reclassification of the Common Stock (including any such
reclassification in connection with a merger, consolidation or other
business combination in which the Company is the continuing
corporation) (any one of which actions is herein referred to as an
"Adjustment Event"), the number of shares of Common Stock purchasable
upon exercise of each Warrant immediately prior to the record date for
such Adjustment Event shall be adjusted so that the Holder shall
thereafter be entitled to receive the number of shares of Common Stock
or other securities of the Company (such other securities thereafter
enjoying the rights of shares of Common Stock under this Warrant
Certificate) that such Holder would have owned or have been entitled to
receive after the happening of such Adjustment Event, had such Warrant
been exercised immediately prior to the happening of such Adjustment
Event or any record date with respect thereto. An adjustment made
pursuant to this Section 2A(1) shall become effective immediately after
the effective date of such Adjustment Event retroactive to the record
date, if any, for such Adjustment Event.
(2) Distributions of Subscription Rights or Convertible
Securities. In case the Company shall fix a record date for the making
22
of a distribution to all holders of shares of Common Stock of rights,
options, warrants or convertible or exchangeable securities containing
the right to subscribe for or purchase shares of Common Stock
(excluding those referred to in Section 2A(5) below), then in each case
the number of shares of Common Stock purchasable after such record date
upon the exercise of each Warrant shall be determined by multiplying
the number of shares of Common Stock purchasable upon the exercise of
each Warrant immediately prior to such record date by a fraction, the
numerator of which shall be the then Current Market Value (as defined
in Section 2A(3) below) of one share of Common Stock on the record date
for such distribution and the denominator of which shall be the then
Current Market Value of one share of Common Stock on the record date
for such distribution less the then fair value (as determined by the
Independent Financial Expert (as defined in Section 2A(3) below), of
such subscription rights, options or warrants, or of such convertible
or exchangeable securities distributed with respect to one such share
of Common Stock. Such adjustment shall be made whenever any such
distribution is made and shall become effective on the date of
distribution retroactive to the record date for the determination of
stockholders entitled to receive such distribution.
(3) Current Market Value.
--------------------
(i) For the purpose of any computation under this Section 2, the
Current Market Value of one share of Common Stock or of any other
security (herein collectively referred to as a "security") at the date
herein specified shall be (1) if the Company does not have a class of
equity securities registered under the Securities Exchange Act of 1934
(the "Exchange Act"), the value of the security (a) determined in good
faith in the most recently completed arms-length transaction between
the Company and a third party who is not an affiliate of the Company in
which such determination is necessary and the closing of which occurs
on such date or shall have occurred within the six months preceding
such date, provided that the Board of Directors of the Company shall in
good faith determine that any such value represents a reasonable
estimate of the fair value of a share of Common Stock as of such date,
(b) if no such transaction shall have occurred on such date or within
such six-month period, most recently determined as of a date within the
six months preceding such date by an Independent Financial Expert (in
the event of more than one such determination, the determination for
the later date shall be used) or (c) if no such determination shall
have been made within such six month period, determined as of such date
by an Independent Financial Expert, or (2) if the Company does have a
class of equity securities registered under the Exchange Act, deemed to
be the average of the daily market prices of the security for five
trading days before such date or, if the Company has had a class of
equity securities registered under the Exchange Act for less than five
trading days before such date, then the average of the daily market
prices for all of the trading days before such date for which daily
market prices are available. For purposes of this Section 2 an
affiliate of a person shall mean any other person that directly, or
indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such person. For
purposes of this definition, control means the power to direct the
management and policies of a person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise.
(ii) The market price for each such business day shall be: (A) in
the case of a security listed or admitted to trading on any securities
exchange, the closing price, regular way, on such day, or if no sale
takes place on such day, the average of the closing bid and asked
prices on such day, (B) in the case of a security not then listed or
23
admitted to trading on any securities exchange, the last reported sale
price on such day, or if no sale takes place on such day, the average
of the closing bid and asked prices on such day, as reported by a
reputable quotation source designated by the Company, (C) in the case
of a security not then listed or admitted to trading on any security
exchange and as to which no such reported sale price or bid and asked
prices are available, the average of the reported high bid and low
asked prices on such day, as reported by a reputable quotation service,
or a newspaper of general circulation in the Borough of Manhattan, City
and State of New York, customarily published on each business day,
designated by the Company, or if there shall be no bid and asked prices
on such day, the average of the high bid and low asked prices, as so
reported, on the most recent day (not more than five days prior to the
date in question) for which prices have been so reported, and (D) if
there are no bid and asked prices reported during the five days prior
to the date in question, the Current Market Value of the security shall
be determined as if the Company did not have a class of equity
securities registered under the Exchange Act.
(iii) For purposes of this Section 2A(3), an Independent Financial
Expert shall mean a nationally recognized investment banking firm (i)
which does not (and whose directors, officers, employees and affiliates
do not), have a direct or indirect financial interest in the Company
(other than the beneficial ownership, directly or indirectly, of less
than three percent of the outstanding shares of capital stock of the
Company), (ii) which has not been, and, at the time it is called upon
to give independent financial advice to the Company, is not (and none
of whose directors, officers, employees or affiliates is) a promoter,
director or officer of the Company or any of its affiliates or an
underwriter with respect to any of the Company's securities, (iii)
which does not provide any advice or opinions to the Company except as
an Independent Financial Expert and (iv) which is mutually agreeable to
the Company and the holders of a majority of the Warrants. If the
Company and the holders of a majority of the Warrants do not promptly
agree as to the Independent Financial Expert, each shall appoint one
investment banking firm and the two firms so appointed shall select the
Independent Financial Expert to be employed by the Company. An
Independent Financial Expert may be compensated by the Company for
opinions or services it provides as an Independent Financial Expert. In
making its determination of the value of the Common Stock, the
Independent Financial Expert shall use one or more valuation methods
that the Independent Financial Expert, in its best professional
judgment, determines to be most appropriate. After the Independent
Financial Expert has made its determination, the Company shall cause
the Independent Financial Expert to prepare a report (a "Value Report")
stating the methods of valuation considered or used and the value of
the Common Stock or other security it values and containing a statement
as to the nature and scope of the examination made. Such Value Report
shall accompany any Adjustment Notice (as defined in Section 2B) sent
by the Company to the Holder pursuant to Section 2B; provided, that the
adjustment to the Exercise Price that is the subject of such Adjustment
Notice requires the services of an Independent Financial Expert.
(4) Adjustment of Exercise Price. Whenever the number of shares of
Common Stock purchasable upon the exercise of each Warrant is adjusted pursuant
to Sections 2A(1) and 2A(2), the Exercise Price for each share of Common Stock
payable upon exercise of each Warrant shall be adjusted by multiplying such
Exercise Price immediately prior to such adjustment by a fraction, the numerator
of which shall be the number of shares of Common Stock purchasable upon the
exercise of each Warrant immediately prior to such adjustment, and the
denominator of which shall be the number of shares of Common Stock so
purchasable immediately thereafter.
24
(5) Issuance of Common Stock to Stockholders of Less Than Current
Market Value.
(i) In the event that the Company sells and issues to a
stockholder of the Company or to any "affiliate" of such stockholder
shares of any Common Stock, or rights, options, warrants or convertible
or exchangeable securities containing the right to subscribe for or
purchase shares of Common Stock (excluding (i) shares, rights, options,
warrants or convertible or exchangeable securities issued in any of the
transactions described in Sections 2A(1) and 2A(2) above, (ii) the
Warrants and any shares of Common Stock issuable upon exercise thereof,
(iii) shares of Common Stock or other securities, or options or rights
in respect thereof, issued to full-time employees of the Company or its
subsidiaries in the ordinary course of business as compensation for
services rendered or to be rendered or as part of an employee incentive
program, and (iv) shares of common stock or other securities issued
upon exercise, conversion or exchange of rights, options, warrants or
convertible or exchangeable securities issued in any of the
transactions described in Sections 2A(1) and 2A(2) above or in a
transaction with respect to which no adjustment was required pursuant
to this Section 2A (but including shares, rights, options, warrants or
convertible or exchangeable securities issued as consideration in any
merger, consolidation or other business combination)) at a price per
share of Common Stock (determined, in the case of such rights, options,
warrants or convertible or exchangeable securities, by dividing (X) the
total amount receivable by the Company in consideration of the sale and
issuance of such rights, options, warrants or convertible or
exchangeable securities (which amount may be zero if such rights,
options, warrants or convertible or exchangeable securities are issued
without consideration), plus the total consideration payable to the
Company upon exercise, conversion or exchange thereof, by (Y) the total
number of shares of Common Stock covered by such rights, opinions,
warrants or convertible or exchangeable securities) that is lower than
the then Current Market Value per share of such Common Stock (as
determined by the Independent Financial Expert in accordance with
Section 2A(3) above) in effect immediately prior to such sale and
issuance, then the Exercise Price shall be adjusted (calculated to the
nearest $0.01) so that it shall equal the price determined by
multiplying the Exercise Price in effect immediately prior thereto by a
fraction, the numerator of which shall be (i) an amount equal to the
sum of (A) the number of shares of Common Stock outstanding immediately
prior to such sale and issuance plus (B) the number of shares of Common
Stock which the aggregate consideration received (determined as
provided below) for such sale or issuance would purchase at such
Current Market Value per share, and the denominator of which shall be
(ii) the total number of shares of Common Stock outstanding (determined
as provided below) immediately after such sale and issuance. Such
adjustment shall be made successively whenever such an issuance is
made.
(ii) Upon the occurrence of a sale and issuance described in the
preceding paragraph, the number of shares of Common Stock purchasable
under the exercise of this Warrant shall be that number determined by
multiplying the number of shares of Common Stock issuable upon exercise
immediately prior to such adjustment by a fraction, the numerator of
which is the Exercise Price in effect immediately prior to such
adjustment and the denominator of which is the Exercise Price as so
adjusted.
(iii) For the purposes of such adjustments, the shares of Common
Stock which the holder of any such rights, options, warrants or
convertible or exchangeable securities shall be entitled to subscribe
for or purchase shall be deemed to be issued and outstanding as of the
date of such sale and issuance and the consideration received by the
Company therefor shall be deemed to be the consideration received by
the Company for such rights, options, warrants or convertible or
25
exchangeable securities (which consideration may be zero if such
rights, options, warrants or convertible or exchangeable securities are
issued without consideration), plus the consideration or premiums
stated in such rights, options, warrants or convertible or exchangeable
securities to be paid for the shares of any Common Stock covered
thereby. In case the Company shall sell and issue, in a transaction to
which this Section 2A(5) applies, shares of Common Stock or rights,
options, warrants or convertible or exchangeable securities containing
the right to subscribe for or purchase shares of Common Stock, for
consideration consisting, in whole or in part, of property other than
cash or its equivalent, then determining the "price per share of Common
Stock" and the "consideration received by the Company" for purposes of
the first sentence of this Section 2A(5), the Board of Directors of the
Company shall determine, in good faith, the fair value of the rights,
options, warrants or convertible or exchangeable securities then being
sold as part of such unit. There shall be no adjustment of the Exercise
Price pursuant to this Section 2A(5) if the amount of such adjustment
shall be less than $0.01 per share of Common Stock; provided, however,
that any adjustments which by reason of this provision are not required
to be made shall be carried forward and taken into account in any
subsequent adjustment.
(6) Expiration of Rights, Options and Conversion Privileges. Upon the
expiration without being exercised of any rights, options, warrants or
conversion or exchange privileges for which an adjustment has been made pursuant
to this Warrant, the Exercise Price and the number of shares of Common Stock
purchasable upon the exercise of each Warrant shall, upon such expiration, be
readjusted and shall thereafter, upon any future exercise, be such as they would
have been had they been originally adjusted (or had the original adjustment not
be required, as the case may be) as if (A) the only shares of Common Stock so
issued were the shares of such Common Stock, if any, actually issued or sold
upon the exercise of such rights, options, warrants or conversion or exchange
rights and (B) such shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such exercise plus the
consideration, if any, actually received by the Company for issuance, sale or
grant of all such rights, options, warrants or conversion or exchange rights
whether or not exercised; provided, that no such readjustment shall have the
effect of increasing the Exercise Price by an amount, or decreasing the number
of shares purchasable upon exercise of each Warrant by a number, in excess of
the amount or number of the adjustment initially made in respect to the
issuance, sale or grant of such rights, options, warrants or conversion or
exchange rights.
(7) De Minimis Adjustments. Except as provided in Section 2A(5) with
reference to adjustments required by such Section 2A(5), no adjustment in the
number of shares of Common Stock purchasable hereunder shall be required unless
such adjustment would require an increase or decease of at least 1.0 percent in
the number of shares of Common Stock purchasable upon an exercise of each
Warrant; provided, however, that any adjustments which by reason of this Section
2A(7) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations shall be made to the
nearest full share.
(8) Duty to Make Fair Adjustments in Certain Cases. If any event occurs
as to which in the opinion of the Board of Directors the other provisions of
this Section 2A are not strictly applicable or if strictly applicable would not
fairly protect the purchase rights of the Warrants in accordance with the
essential intent and principles of such provisions, then the Board of Directors
shall make an adjustment in the application of such provisions, in accordance
with such essential intent and principles, so as to protect such purchase rights
as aforesaid.
26
(9) Adjustment for Asset Distributions. If the Company shall fix a
record date for the making of a distribution to all holders of shares of Common
Stock of evidence of indebtedness of the Company or other assets (other than
ordinary cash dividends not in excess of the retained earnings of the Company
determined by the application of generally accepted accounting principles), then
the Exercise Price for each share of Common Stock payable upon exercise of each
Warrant shall be reduced by the then fair value (as determined by the
Independent Financial Expert (as defined in Section 2A(3) above)) of the
indebtedness or other assets distributed in respect of one such share. Such
adjustment shall be made whenever any such distribution is made and shall become
effective on the date of distribution retroactive to the record date for the
determination of stockholders entitled to receive such distribution.
B. Notice of Adjustment. Whenever the number of shares of Common Stock
purchasable upon the exercise of each Warrant or the Exercise Price is adjusted,
as herein provided, the Company shall promptly notify the Holder in writing
(such writing referred to as an "Adjustment Notice") of such adjustment or
adjustments and shall deliver to such Holder a certificate of a firm of
independent public accountants selected by the Board of Directors of the Company
(who may be the regular accountants employed by the Company) or of the
Independent Financial Expert, if any, which makes a determination of Current
Market Value with respect to any such adjustment setting forth the number of
shares of Common Stock purchasable upon the exercise of each Warrant and the
Exercise Price after such adjustment, setting forth a brief statement of the
facts requiring such adjustment and setting forth the computation by which such
adjustment was made.
C. Statement on Warrant Certificates. The form of this Warrant
Certificate need not be changed because of any change in the Exercise Price or
in the number of kind of shares purchasable upon the exercise of a Warrant and
any Warrant Exercise Price and the same number and kind of shares as are stated
in this Warrant Certificate. However, the Company may at the time in its sole
discretion make any change in the form of the Warrant Certificate that it may
deem appropriate and that does not affect the substance thereof and any Warrant
Certificate thereafter issued, whether in exchange or substitution for any
outstanding Warrant Certificate or otherwise, may be in the form so changed.
D. Notice to Holder of Record Date, Dissolution, Liquidation or Winding
Up. The Company shall cause to be mailed (by first class mail, postage prepaid)
to the Holder of such of the record date for any dividend, distribution or
payment, in cash or in kind (including, without limitation, evidence of
indebtedness and assets), with respect to shares of Common Stock at least 20
calendar days before any such date. In case at any time after the date hereof,
there shall be a voluntary or involuntary dissolution, liquidation or winding up
of the Company, then the Company shall cause to be mailed (by first class mail,
postage prepaid) to the Holder at such Holder's address as shown on the books of
the Company, at the earliest practicable time (and, in any event, not less than
20 calendar days before any date set for definitive action), notice of the date
on which such dissolution, liquidation or winding up shall take place, as the
case may be. The notices referred to above shall also specify the date as of
which the holders of the shares of Common Stock of record or other securities
underlying the Warrants shall be entitled to receive such dividend, ties, money
or the property deliverable upon such dissolution, liquidation or winding up, as
the case may be (the "Entitlement Date"). In the case of a distribution of
evidence of indebtedness or assets (other than in dissolution, liquidation or
winding up) which has the effect of reducing the Exercise Price to zero or less
pursuant to Section 2A(9), if the Holder elects to exercise the Warrants in
accordance with Section 1 and become a holder of the Common Stock on the
Entitlement Date, the Holder shall thereafter receive the evidence of
indebtedness or assets distributed in respect of shares of Common Stock. In the
27
case of any dissolution, liquidation or winding up of the Company, the Holder
shall receive on the Entitlement Date the cash or other property, less the
Exercise Price for the Warrants then in effect, that such Holder would have been
entitled to receive had the Warrants been exercisable and exercised immediately
prior to such dissolution, liquidation or winding up (or, if appropriate, record
date therefor) and any right of a Holder to exercise the Warrants shall
terminate.
E. Fractional Interest. The Company shall not be required to issue
fractional shares of Common Stock on the exercise of the Warrants. If more than
one Warrant shall be presented for exercise in full at the same time by the same
holder, the number of full shares of Common Stock which shall be issuable upon
such exercise shall be computed on the basis of the aggregate number of whole
shares of Common Stock purchasable on exercise of the Warrants so presented. If
any fraction of a share of Common Stock would, except for the provisions of this
Section 2E be issuable on the exercise of the Warrants (or specified proportion
thereof), the Company shall pay an amount in cash calculated by it to be equal
to the then fair value of one share of Common Stock, as determined by the Board
of Directors of the company in good faith, multiplied by such fraction computed
to the nearest whole cent.
3. RESERVATION AND AUTHORIZATION OF COMMON STOCK. The Company covenants
and agrees (a) that all shares of Common Stock which may be issued upon the
exercise of the Warrants represented by this Warrant Certified will, upon
issuance, be validly issued, fully paid and nonassessable and free of all
insurance or transfer taxes, liens and charges with respect to the issue
thereof, (b) that during the Exercise Period, the Company will at all times have
authorized, and reserved for the purpose of issue or transfer upon exercise of
the Warrants evidenced by this Warrant Certificate, sufficient shares of Common
Stock to provide for the exercise of the Warrants represented by this Warrant
Certificate, and (c) that the Company will take all such action as may be
necessary to ensure that the shares of Common Stock issuable upon the exercise
of the Warrants may be so issued without violation of any applicable law or
regulation, or any requirements of any domestic securities exchange upon which
any capital stock of the Company may be listed, provided, however, that nothing
contained herein shall impose upon the Company any obligation to register the
warrants evidenced by this Warrant Certificate of such Common Stock under
applicable securities laws except as provided in the Investment Agreement. In
the event that any securities of the Company other than the Common Stock are
issuable upon exercise of the Warrants, the Company will take or refrain from
taking any action referred to in clauses (a) through (c) of this Section 3 as
though such clauses applied, mutatis mutandis to such other securities then
issuable upon the exercise the Warrants.
4. NO VOTING RIGHTS. This Warrant Certificate shall not entitle the
holder hereof to any voting rights or other rights as a stockholder of the
Company.
5. EXERCISE OR TRANSFER OF WARRANTS OR COMMON STOCK. The Holder of this
Warrant Certificate agrees to be bound by the provisions contained in the
Warrant Purchase Agreement with respect to the limitations, including
limitations imposed for Securities Act compliance, on the transfer of the
Warrants and the shares of Common Stock or other securities issuable upon
exercise of the Warrants.
6. WARRANTS TRANSFERABLE. Subject to the provision of Section 5, this
Warrant Certificate and the Warrants it evidences are transferrable, in whole or
in part, without charge to the Holder, at the office or agency of the Company
referred to in Section 1, by the Holder in person or by duly authorized
attorney, upon surrender of this Warrant Certificate properly endorsed. Each
taker and Holder of this Warrant Certificate, by taking or holding the same,
28
consents and agrees that this Warrant Certificate, when endorsed in blank, shall
be deemed negotiable, and that the Holder, when this Warrant Certificate shall
have been so endorsed, may be treated by the Company and all other persons
dealing with this Warrant Certificate as the absolute owner hereof for any
purpose and as the person entitled to exercise the rights represented by this
Warrant Certificate, or to the transfer hereof on the books of the Company, any
notice to the contrary notwithstanding; but until such transfer on such books,
the Company may treat the registered holder hereof as the owner for all
purposes.
7. REGISTRATION RIGHTS. The Holder and certain successors of the Holder
are entitled to the benefits of Section 6 of the Warrant Purchase Agreement
(pertaining to registration rights), a copy of which is on file at the offices
of the Company.
8. CLOSING OF BOOKS. The Company will at no time close its transfer
books against the transfer of any Warrant or of any shares of Common Stock or
other securities issuable upon the exercise of any Warrant in any manner which
interferes with the timely exercise of the Warrants.
9. WARRANTS EXCHANGEABLE, LOSS, THEFT. This Warrant Certificate is
exchangeable, upon the surrender hereof of any Holder at the office or agency of
the Company referred to in Section 1, for new Warrant Certificates of like tenor
representing in the aggregate the right to subscribe for and purchase the number
of shares of Common Stock which may be subscribed for and purchased hereunder,
each such new Warrant to represent the right to subscribe and purchase such
number of shares of Common Stock as shall be designed by said holder hereof at
the time of such surrender. Upon receipt of evidence satisfactory to the Company
of the loss, theft, destruction or mutilation, upon surrender or cancellation of
this Warrant Certificate, the Company will issue to the holder hereof a new
Warrant Certificate of like tenor, in lieu of this Warrant Certificate,
representing the right to subscribe for and purchase the number of shares of
Common Stock which may be subscribed for and purchased hereunder.
10. MERGERS, CONSOLIDATIONS, ETC.
-----------------------------
A. Except as may otherwise be provided in Section 2A(5), if the Company
shall merge or consolidate with another corporation, the holder of this Warrant
shall thereafter have the right, upon exercise hereof and payment of the
Exercise Price, to receive solely the kind and amount of shares of stock
(including, if applicable, Common Stock), other securities, property or cash or
any combination thereof receivable by a holder of the number of shares of Common
Stock for which this Warrant might have been exercised immediately prior to such
merger or consolidation (assuming, if applicable, that the holder of such Common
Stock failed to exercise its rights of election, if any, as to the kind or
amount of shares of stock, other securities, property or cash or combination
thereof receivable upon such merger or consolidation).
B. In case of any reclassification or change of the shares of Common
Stock issuable upon exercise of this Warrant (other than elimination or par
value, a change in par value, or from par value to no par value, or as the
result of a subdivision or combination of shares (which is provided for
elsewhere herein), but including any reclassification of the shares of Common
stock into two or more classes or series of shares) or in case of any merger or
consolidation of another corporation into the Company in which the Company is
the surviving corporation and in which there is a reclassification or change of
the shares of Common Stock (other than a change in par value, or from par value
to no par value, or as a result of a subdivision or combination which is
provided for elsewhere herein), but including any reclassification of the shares
of Common Stock, this Warrant shall thereafter have the right, upon exercise
hereof and payment of the Exercise Price, to receive solely the kind and amount
of shares of stock (including, if applicable, Common Stock), other securities,
property or cash or any combination thereof receivable upon such
reclassification, change, merger or consolidation by a holder of the number of
29
shares of Common Stock for which this Warrant might have been exercised
immediately prior to such reclassification, change, merger or consolidation
(assuming, if applicable, that the holder of such Common Stock failed to
exercise its rights of election, if any, as to the kind or amount of shares of
stock, other securities, property or cash or combination thereof receivable upon
such reclassification, change, merger or consolidation).
11. RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF WARRANTS. The rights and
obligations of the Company, of the Holder, and of the holders of shares of
Common Stock or other securities issued upon exercise of the Warrants, contained
in Sections 5 and 7 of this Warrant Certificate shall survive the exercise of
the Warrants.
IN WITNESS WHEREOF, the Company has signed this Warrant Certificate by
its duly authorized officer as of March __, 2001.
DUPONT DIRECT FINANCIAL HOLDINGS, INC.
By: ____________________________
Xxxxx X. Xxxxxxxxxx, President.
NAME AND ADDRESS OF REGISTERED HOLDER:
-------------------------------------
Company Name
Address:
---------------------------
---------------------------
IRS ID Number: _________________
30
SUBSCRIPTION AGREEMENT
Date: [date]
TO: DuPont Direct Financial Holdings, Inc.
The undersigned, pursuant to the provisions set forth in the attached
Warrant Certificate and the Warrant Purchase Agreement, hereby agrees to
subscribe for and purchase [number] shares of the Common Stock covered by such
Warrant Certificate, and tenders payment herewith in full thereof at the price
per share provided by such Warrant Certificate.
Holder: _________________________
By: _________________________
Signature
Print Name: ______________________
Title: _________________________
Address: _________________________
31
WARRANT ASSIGNMENT
------------------
FOR VALUE RECEIVED, the undersigned registered holder of the attached
Warrant Certificate hereby sells, assigns, and transfers unto the Assignee(s)
named below (including the undersigned with respect to any Warrants that are
evidenced by the Warrant Certificate that are not being assigned hereby) all of
the right of the undersigned under the Warrant Certificate, with respect to the
number of Warrants set forth below:
------------------------------- -------------------------- ------------------- --------------------
Name of Assignee Address of Assignee Social Security Number of Warrants
of other Assigned
Identifying
Number of Assignee
------------------------------- -------------------------- ------------------- --------------------
------------------------------- -------------------------- ------------------- --------------------
------------------------------- -------------------------- ------------------- --------------------
------------------------------- -------------------------- ------------------- --------------------
and does hereby irrevocably constitute and appoint _______________________ to be
the undersigned's attorney in fact to make such transfer on the books of DuPont
Direct Financial Holdings, Inc. maintained for the purpose, with full power of
substitution in the premises.
Date: _________________________, 200_
Holder: _________________________
By: _________________________
Signature
Print Name: ______________________
Title: _________________________
Address: _________________________
NOTE: The signature must correspond with the name as written upon the
face of the Warrant Certificate in every particular, without alteration or
enlargement or any change whatsoever, and must be guaranteed by a national bank
or trust company or by a member of a national securities exchange.]
32
