THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAW. THESE SECURITIES MAY NOT BE TRANSFERRED WITHOUT SUCH
REGISTRATION OR EXEMPTION THEREFROM.
STOCK PURCHASE WARRANT
[Additional Warrant]
This Warrant is issued this __________ day of __________, _____, by
DIPLOMAT DIRECT MARKETING CORPORATION, a Delaware corporation (the "Company"),
to SIRROM CAPITAL CORPORATION d/b/a TANDEM CAPITAL, a Tennessee corporation
(SIRROM CAPITAL CORPORATION and any subsequent assignee or transferee hereof are
hereinafter referred to collectively as "Holder" or "Holders"). Capitalized
terms not defined herein shall have the meanings assigned by the Debenture
Purchase Agreement referred to in Section 1.
Agreement:
1. Issuance of Warrant; Term. For and in consideration of Sirrom
Capital Corporation d/b/a Tandem Capital purchasing from the Company and other
Borrowers a Subordinated Debenture in the original principal amount of Five
Million Dollars ($5,000,000.00) (the "Debenture") pursuant to the terms of a
Debenture Purchase Agreement dated June ____, 1998 (the "Debenture Purchase
Agreement"), and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company hereby grants to
Holder the right to purchase at any time and from time to time, in whole or in
part, on or after ___________ ___, ____ the earlier of (i) February 28, 1999, or
(ii) five Business Days after the closing of an offering of securities by the
Company following the Closing Date realizing gross proceeds of at least
$5,000,000, up to the number of Shares of the Company's Common Stock $.0001 par
value (the "Common Stock") equal to (A) 416,600, multiplied by (B) the quotient
of (x) the principal amount of Debentures outstanding as of such date, divided
by (y) $5,000,000. The shares of Common Stock issuable upon exercise of this
Warrant are hereinafter referred to as the "Shares." This Warrant shall be
exercisable at any time and from time to time from _____________, 19 ____, [date
of issue] until ___________ ____, 20___ [five years from date of issue].
2. Exercise Price. The exercise price (the "Exercise Price") per share
for which all or any of the Shares may be purchased shall be equal to 80% of the
average closing bid price of the Company's Common Stock for the 20 consecutive
trading days preceding the date of issuance, and shall be further adjusted as
provided herein. If on June ______, 1999, the average closing bid price of the
Common Stock for the 20 consecutive trading days immediately prior to June
_____, 1999, is less than the Exercise Price, then the Exercise Price shall
automatically be reset on June ______, 1999, at the greater of (i) $2.00, or
(ii) 80% of the average closing bid price of the Company's Common Stock for the
20 consecutive trading days immediately preceding June ______, 1999, provided
that no adjustment shall be made which increases the then effective Exercise
Price.
3. Exercise. This Warrant may be exercised by the Holder hereof as to
all or any increment or increments of 100 Shares (or the balance of the Shares
if less than such number), upon delivery of written notice of intent to exercise
to the Company at the address set forth in the Debenture Purchase Agreement, or
such other address as the Company shall designate in a written notice to the
Holder hereof, together with this Warrant and payment to the Company of the
aggregate Exercise Price of the Shares so purchased. The Exercise Price shall be
payable, at the option of the Holder, (i) by certified or bank check, (ii) by
the surrender of the Debenture or portion thereof having an outstanding
principal balance equal to the aggregate Exercise Price, or (iii) by the
surrender of a portion of this Warrant where the excess of (A) the Fair Market
Value of the Shares subject to the portion of this Warrant that is surrendered
(the "Surrendered Shares"), over (B) the aggregate Exercise Price of the
Surrendered Shares, is equal to the aggregate Exercise Price for the Shares to
be issued. Upon payment of the Exercise Price, the Holder shall be deemed to be
the holder of record of the Shares, notwithstanding that the stock transfer
books of the Company may then be closed or that certificates representing such
Shares may not then be actually delivered to the Holder. The Company shall as
promptly as practicable thereafter, and in any event within 15 days thereafter,
execute and deliver to the Holder of this Warrant a certificate or certificates
for the total number of whole Shares for which this Warrant is being exercised
in such names and denominations as are requested by such Holder. If this Warrant
shall be exercised with respect to less than all of the Shares, the Holder shall
be entitled upon surrender of the old Warrant to receive a new Warrant covering
the number of Shares in respect of which this Warrant shall not have been
exercised, which new Warrant shall in all other respects be identical to this
Warrant. The Company covenants and agrees that it will pay when due any and all
state and federal issue taxes which may be payable in respect of the issuance of
this Warrant or the issuance of any Shares upon exercise of this Warrant.
4. Covenants and Conditions. The above provisions are subject to the
following:
4.1 Restrictive Legend. Each certificate representing Shares
shall bear the following legend:
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAW. THESE SECURITIES MAY NOT BE TRANSFERRED WITHOUT SUCH
REGISTRATION OR EXEMPTION THEREFROM.
4.2 Validity; Reservation of Shares. The Company covenants and
agrees that all Shares which may be issued upon exercise of this Warrant will,
upon issuance and payment therefor pursuant to this Warrant, be validly issued
and outstanding, fully paid and nonassessable, free from all taxes, liens,
charges and preemptive rights, if any, with respect thereto or to the issuance
thereof. The Company shall at all times reserve and keep available for issuance
upon the exercise of this Warrant such number of authorized but unissued shares
of Common Stock as will be sufficient to permit the exercise in full of this
Warrant.
-2-
5. Transfer and Replacement of Warrant. Subject to the provisions of
Section 4, this Warrant may be transferred, in whole or in part, but only in
multiples of 10,000 Shares, to any person or business entity, by presentation of
the Warrant to the Company with written instructions for such transfer; provided
that the transferee is an accredited investor as defined in Regulation D of the
Securities Act of 1933, and such transfer is in compliance with all applicable
federal and state securities laws, provided that no transfer may be made to a
competitor of the Company without the Company's prior written consent. Upon such
presentation for transfer, the Company shall promptly execute and deliver a new
Warrant or Warrants in the form hereof in the name of the transferee or
transferees and in the denominations specified in such instructions. Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft or destruction of this Warrant, and of indemnity or security reasonably
satisfactory to it, or upon surrender of this Warrant if mutilated, the Company
will make and deliver a new Warrant of like tenor, bearing the restrictive
legend set forth above, in lieu of this Warrant. This Warrant shall be promptly
canceled by the Company upon the surrender hereof in connection with any
transfer or replacement. The Company shall pay all expenses incurred by it in
connection with the preparation, issuance and delivery of Warrants under this
Section.
6. Warrant Holder Not Shareholder; Rights Offering; Preemptive Rights.
Except as otherwise provided herein, this Warrant does not confer upon the
Holder, as such, any right whatsoever as a shareholder of the Company.
Notwithstanding the foregoing, if the Company should offer to all of the
Company's shareholders the right to purchase any securities of the Company, then
all shares of Common Stock that are then issuable upon exercise of this Warrant
shall be deemed to be outstanding and owned by the Holder and the Holder shall
be entitled to participate in such rights offering. The Company shall not grant
any preemptive rights with respect to any of its Common Stock without the prior
written consent of the Holder.
7. Adjustment of Number of Shares and Exercise Price.
7.1 Recapitalizations -- Adjustment of Number of Shares. If
all or any portion of this Warrant shall be exercised subsequent to any
transaction in which the Company shall (i) pay a stock dividend or otherwise
make a distribution or distributions on shares of its Common Stock payable in
shares of its capital stock (whether payable in shares of its Common Stock or of
capital stock of any other class), (ii) subdivide outstanding shares of Common
Stock into a larger number of shares, (iii) combine outstanding shares of Common
Stock into a smaller number of shares, (iv) issue by reclassification of shares
of Common Stock any shares of capital stock of the Company, or (v) otherwise
change its capital structure, occurring after the date hereof, as a result of
which shares of Common Stock shall be changed into the same or a different
number of shares of the same or another class or classes of securities of the
Company, then the Holder exercising this Warrant shall receive, for the
aggregate price paid upon such exercise, the aggregate number and class of
shares and such other securities which such Holder would have received if this
Warrant had been exercised immediately prior to the record date for such
transaction.
7.2 Mergers, Etc. -- Adjustment of Number of Shares. If all or
any portion of this
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Warrant shall be exercised subsequent to any merger, consolidation, exchange of
shares, separation, reorganization, or liquidation of the Company, or other
similar event, occurring after the date hereof, as a result of which Shares of
Common Stock shall be changed into the same or a different number of shares of
the same or another class or classes of securities of the Company or another
entity, or the holders of Common Stock are entitled to receive cash or other
property, then the Holder exercising this Warrant shall receive, for the
aggregate price paid upon such exercise, the aggregate number and class of
shares, cash or other property which such Holder would have received if this
Warrant had been exercised immediately prior to such merger, consolidation,
exchange of shares, separation, reorganization or liquidation, or other similar
event.
7.3 Adjustment of Exercise Price Upon Issuance of Shares,
Warrants, Rights, Etc.
(a) Initial Exercise Price. The initial Exercise Price shall
be equal to 80% of the average closing bid price of the Company's Common Stock
for the 20 consecutive trading days preceding the date of issuance. If on June
______, 1999, the average closing bid price of the Common Stock for the 20
consecutive trading days immediately prior to June _____, 1999, is less than the
Exercise Price, then the Exercise Price shall automatically be reset on June
______, 1999, at the greater of (i) $2.00, or (ii) 80% of the average closing
bid price of the Company's Common Stock for the 20 consecutive trading days
immediately preceding June ______, 1999, provided that no adjustment shall be
made which increases the then effective Exercise Price.
(b) Recapitalizations. If the Company, at any time prior to
the expiration of this Warrant, shall (i) pay a stock dividend or otherwise make
a distribution or distributions on shares of its Common Stock payable in shares
of its capital stock (whether payable in shares of its Common Stock or of
capital stock of any class), (ii) subdivide outstanding shares of Common Stock
into a larger number of shares, (iii) combine outstanding shares of Common Stock
into a smaller number of shares, (iv) issue by reclassification of shares of
Common Stock any shares of capital stock of the Company, or (v) otherwise change
its capital structure, then the Exercise Price then in effect shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock of the Company outstanding before such event and of which the
denominator shall be the number of shares of Common Stock outstanding after such
event. Such adjustment shall become effective immediately after the record date
in the case of a dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, combination or
reclassification.
(c) Distributions of Warrants or Rights, Issuance of Stock or
Warrants at Less Than Fair Market Value or Exercise Price. If the Company, at
any time prior to the expiration of this Warrant, shall (i) issue rights or
warrants to all holders of Common Stock entitling them to subscribe for or
purchase shares of Common Stock at a price per share less than the lesser of the
Fair Market Value of Common Stock or the Exercise Price then in effect at the
record date mentioned below, or (ii) issue additional Common Stock, or warrants,
options, or other securities convertible into Common Stock, at a price or
exercise or conversion price per share less than the lesser of the Fair Market
Value of the Common Stock or the Exercise Price then in effect at the date of
issuance
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or grant, the Exercise Price then in effect shall be adjusted to equal (x) the
sum of (A) the total number of shares of Common Stock issuable upon exercise of
this Warrant immediately prior to such issuance or grant, multiplied by the
Exercise Price then in effect, plus (B) the aggregate consideration to be paid
for such Common Stock or other securities (upon issuance and/or exercise or
conversion), divided by (y) the sum of (C) the total number of shares of Common
Stock issuable upon exercise of this Warrant immediately prior to such issuance
or grant, plus (D) the number of shares of Common Stock or common stock
equivalents issued or granted. Provided, that no such adjustment shall be made
which has the effect of increasing the Exercise Price. Further provided, that
the adjustment provided by this Section 7.3(c) shall not apply to issuance of
(i) securities pursuant to options, warrants, or conversion rights outstanding
on the date this Warrant is issued, (ii) up to a maximum of 100,000 shares of
Common Stock pursuant to the Company's 1992 Stock Option Plan, August 1996 Stock
Option Plan, November 1996 Stock Option Plan and the 1998 Stock Option Plan, and
(iii) up to a maximum of 475,000 shares of Common Stock in settlement of Xxxxx
v. Diplomat Corporation, New York Supreme Court, No. 98/601194. Such adjustment
shall be made whenever such rights, warrants, Common Stock, or securities are
issued, and shall become effective immediately after (i) the record date for the
determination of stockholders entitled to receive such rights or warrants, or
(ii) the issuance of such Common Stock or common stock equivalents. Provided,
that upon the expiration of any right or warrant to purchase or convert into
Common Stock the issuance of which resulted in an adjustment in the Exercise
Price pursuant to this Section 7.3(c), if such right or warrant shall expire and
shall not have been exercised, the Exercise Price shall immediately upon such
expiration be recomputed and effective immediately upon such expiration be
increased to the price which it would have been (but reflecting any other
adjustments in the Exercise Price made pursuant to the provisions of this
Section 7 after the issuance of such rights or warrants) had the adjustment of
the Exercise Price made upon the issuance of such rights or warrants been made
on the basis of offering for subscription or purchase only that number of shares
of Common Stock actually purchased or obtained upon the exercise of such rights
or warrants actually exercised.
(d) [Reserved]
(e) Distributions of Other Property. If the Company, at any
time prior to the expiration of this Warrant, shall distribute to all holders of
Common Stock (and not to holders of Warrants on an as-exercised basis) evidences
of its indebtedness, or any of its assets, or rights or warrants to subscribe
for or purchase any security (excluding those referred to in Section 7.3(c) or
Section 7.3(d) above), the Exercise Price at which this Warrant shall thereafter
be exercisable shall be determined by multiplying the Exercise Price in effect
prior to the record date fixed for determination of stockholders entitled to
receive such distribution by a fraction of which (x) the denominator shall be
the per share Fair Market Value of Common Stock determined as of the record date
mentioned above, and of which (y) the numerator shall be such per share Fair
Market Value of the Common Stock on such record date less the then fair market
value at such record date of the portion of such evidence of indebtedness,
assets, or rights or warrants so distributed applicable to one outstanding share
of Common Stock, as determined by the Board of Directors of the Company in good
faith; provided, however that in the event of a distribution exceeding ten
percent of the net
-5-
assets of the Company, then such fair market value shall be determined by a
nationally recognized or major regional investment banking firm or firm of
independent certified public accountants of recognized standing (which may be
the firm that regularly examines the financial statements of the Company) (an
"Appraiser") selected in good faith by the Holders of majority in interest of
the Warrants, at the Holders' sole expense; and provided, further, that the
Company, after receipt of the determination by such Appraiser shall have the
right to select an additional Appraiser, at the Company's sole expense, in which
case the fair market value shall be equal to the average of the determination by
each such Appraiser. Provided, that no such adjustment shall be made which has
the effect of increasing the Exercise Price. In either case the adjustments
shall be described in a statement provided to all Holders of Warrants. Such
adjustment shall be made whenever any such distribution is made and shall become
effective immediately after the record date mentioned above.
7.4 Other Adjustments, Etc.
(a) Rounding. All calculations under this Section 7 shall be
made to the nearest cent or the nearest 1/100th of a share, as the case may be.
(b) Notice of Adjustments. Whenever the Exercise Price is
adjusted pursuant to this Section 7, the Company shall promptly mail to each
holder of Warrants, a notice setting forth the Exercise Price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment.
(c) Exercise After Reclassification, Merger, Share Exchange,
or Sale of Assets. In case of any reclassification of the Common Stock, any
consolidation or merger of the Company with or into another person, any sale or
transfer of all or substantially all of the assets of the Company, or any
compulsory share exchange pursuant to which share exchange the Common Stock is
converted into other securities, cash or property, then the holders of Warrants
shall have the right thereafter to purchase upon exercise of such Warrants only
the kind and amount of shares of stock and other securities and property
receivable upon or deemed to be held following such reclassification,
consolidation, merger, sale, transfer, or share exchange by a holder of the
number of shares of the Common Stock which the holder of this Warrant would have
received upon exercise of this Warrant immediately prior to such
reclassification, consolidation, merger, sale, transfer, or share exchange. The
terms of any such consolidation, merger, sale transfer or share exchange shall
include such terms so as to continue to give to the holder of this Warrant the
right to receive the securities or property set forth in this Section 7.4(c)
upon any exercise following such consolidation, merger, sale, transfer, or share
exchange. This provision shall similarly apply to successive reclassifications,
consolidations, mergers, sales, transfers, or share exchanges.
(d) Procedure for Other Adjustments. In case at any time
conditions shall arise by reason of action taken by the Company which in the
opinion of the Board of Directors of the Company are not adequately covered by
the other provisions hereof and which might materially and adversely affect the
rights of the holders of Warrants (different than or distinguished from the
effect generally on the rights of holders of any securities of the Company) or
in case at any time any
-6-
such conditions are expected to arise in the opinion of the Board of Directors
of the Company by reason of any action contemplated by the Company, an Appraiser
selected by the Holders of more than 50% of the Warrants, at the Holders' sole
expense, shall give its opinion as to the adjustment, if any (not inconsistent
with the standards established in this Section 7), of the Exercise Price
(including, if necessary, any adjustment as to the securities which may be
acquired upon exercise) and any distribution which is or would be required to
preserve without diluting the rights of the holders of the Warrants; provided,
however, that the Company, after receipt of the determination by such Appraiser,
shall have the right to select an additional Appraiser, at the Company's sole
expense, in which case the adjustment shall be equal to the average of the
adjustments recommended by each such Appraiser. The Board of Directors of the
Company shall make the adjustment recommended forthwith upon the receipt of such
opinion or opinions or the taking of any such action contemplated, as the case
may be; provided, however, that no such adjustment of the Exercise Price shall
be made which in the opinion of the Appraiser(s) giving the aforesaid opinion or
opinions would result in an increase of the Exercise Price then in effect.
(e) No Double Counting. Notwithstanding anything to the
contrary contained in this Warrant, to the extent that any adjustment is made
under the terms of this Section 7 to the Exercise Price or the number of shares
issuable hereunder, no further adjustment shall be made with respect to the
recapitalization, issuance of securities, or distribution requiring adjustment.
No adjustment shall be made with respect to the issuance of Common Stock upon
the exercise of rights for which an adjustment was made under Section 7.4(d), or
for any securities issued in connection with the Debenture Purchase Agreement or
the exercise of any such securities.
(f) Definition of Fair Market Value. "Fair Market Value" per
share of common stock means (i) in the case of a security listed or admitted to
trading on any national securities exchange, the last reported sale price,
regular way (as determined in accordance with the practices of such exchange),
on each day, or if no sale takes place on any day, the last reported sale price,
regular way) as determined in accordance with the practices of such exchange) on
the immediately preceding trading day (and in the case of a security traded on
more than one national securities exchange, at such price upon the exchange on
which the volume of trading during the last calendar year was the greatest),
(ii) in the case of a security not then listed or admitted to trading on any
national 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 service designated by the
Company, (iii) in the case of a security not then listed or admitted to trading
on any securities 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 The
Wall Street Journal, or if there are no bids 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 30 days prior to the date in question) for which prices have
been so
-7-
reported, and (iv) in the case of a security determined by the Company's Board
of Directors as not having an active quoted market or in the case of other
property, if the Common Stock is no longer publicly traded the fair market value
of a share of Common Stock or other property as determined by an Appraiser (as
defined in Section 7.3(e) above) selected in good faith by the Holders of more
than 50% of the Warrants, at the Holders' sole expense; provided, however, that
the Company, after receipt of the determination by such Appraiser, shall have
the right to select an additional Appraiser, at the Company's sole expense, in
which case, the fair market value shall be equal to the average of the
determinations by each such Appraiser.
8. Certain Notices. If at any time the Company shall propose to (i)
declare any cash dividend upon its Common Stock; (ii) declare any dividend upon
its Common Stock payable in stock or make any special dividend or other
distribution to the holders of its Common Stock; (iii) offer for subscription to
the holders of any of its Common Stock any additional shares of stock in any
class or other rights; (iv) reorganize, or reclassify the capital stock of the
Company, or consolidate, merge or otherwise combine with, or sell all or
substantially all of its assets to another corporation; (v) voluntarily or
involuntarily dissolve, liquidate or wind up the affairs of the Company; or (vi)
redeem or purchase any shares of its capital stock or securities convertible
into its capital stock, then the Company shall give to the Holder of this
Warrant, by certified or registered mail, (i) at least 10 days' prior written
notice of the date on which the books of the Company shall close or a record
shall be taken for such dividend, distribution or subscription rights or for
determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, and (ii) in the case of such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at least 15
days' prior written notice of the date when the same shall take place. Any
notice required by clause (i) shall also specify, in the case of any such
dividend, distribution or subscription rights, the date on which the holders of
Common Stock shall be entitled thereto, and any notice required by clause (ii)
shall specify the date on which the holders of Common Stock shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be.
9. Article and Section Headings. Numbered and titled article and
section headings are for convenience only and shall not be construed as
amplifying or limiting any of the provisions of this Warrant.
10. Notice. Any and all notices, elections or demands permitted or
required to be made under this Warrant shall be in writing, signed by the party
giving such notice, election or demand and shall be delivered personally,
telecopied, telexed, or sent by certified mail or overnight via nationally
recognized courier service, to the other party at the address set forth below,
or at such other address as may be supplied in writing and of which receipt has
been acknowledged in writing. The date of personal delivery or telecopy; or the
date two business days after the date of mailing, or the date of the next
business day after delivery to a courier service, as the case may be, shall be
deemed to be the date of such notice, election or demand.
-8-
To the Holder: Sirrom Capital Corporation d/b/a Tandem Capital
000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Facsimile No.: (000) 000-0000
with a copy to: C. Xxxxxxxxxxx Xxxxxx, Esq.
0000 Xxxxxx Xxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Facsimile No.: (000) 000-0000
To the Company: Diplomat Corporation
00 Xxx Xxxxx Xxxxx
Xxxxx Xxxxx, Xxx Xxxx 00000
Attention: President
Facsimile No.: (000) 000-0000
with a copy to: Xxx Xxxxxxxxx, Esq.
Gersten, Savage, Xxxxxxxxx & Xxxxxxxxxx, LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
11. Severability. If any provision of this Warrant or the application
thereof to any person or circumstances shall be invalid or unenforceable to any
extent, the remainder of this Warrant and the application of such provisions to
other persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
12. Entire Agreement. This Warrant between the Company and Holder
represents the entire agreement between the parties concerning the subject
matter hereof, and all oral discussions and prior agreement are merged herein.
13. Governing Law and Amendments. This Warrant shall be construed and
enforced under the laws of the State of New York applicable to contracts to be
wholly performed in such State. No amendment or modification hereof shall be
effective except in a writing executed by each of the parties hereto.
14. Counterparts. This Warrant may be executed in any number of
counterparts and by different parties to this Warrant in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same Warrant.
-9-
15. Jurisdiction and Venue. The Company hereby consents to
jurisdiction, service of process, and venue in the courts of the State of
Tennessee or the State of New York, for the purpose of any action arising out of
any of its obligations under this Warrant, and expressly waives jury trial and
any and all objections it may have as to jurisdiction, service of process, and
venue in such courts.
16. Equity Participation. This Warrant is issued in connection with the
Debenture Purchase Agreement. It is intended that this Warrant constitute an
equity participation under and pursuant to T.C.A. ss.00-00-000, et. seq. and
that equity participation be permitted under said statutes and not constitute
interest on the Debenture. If under any circumstances whatsoever, fulfillment of
any obligation of this Warrant, the Debenture Purchase Agreement, or any other
agreement or document executed in connection with the Debenture Purchase
Agreement, shall violate the lawful limit of any applicable usury statute or any
other applicable law with regard to obligations of like character and amount,
then the obligation to be fulfilled shall be reduced to such lawful limit, such
that in no event shall there occur, under this Warrant, the Debenture Purchase
Agreement, or any other document or instrument executed in connection with the
Debenture Purchase Agreement, any violation of such lawful limit, but such
obligation shall be fulfilled to the lawful limit. If any sum is collected in
excess of the lawful limit, such excess shall be applied to reduce the principal
amount of the Debenture.
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IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase Warrant this ____________ day of _______________, ____.
COMPANY: DIPLOMAT DIRECT MARKETING CORPORATION
By: _____________________________________
Title: _____________________________________
HOLDER: SIRROM CAPITAL CORPORATION
d/b/a TANDEM CAPITAL
By: _____________________________________
Title: _____________________________________
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