Contract
THIS
WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES
LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED FOR SALE
OR
OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER SAID ACT AND
APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES AN OPINION
OF
COUNSEL (WHO MAY BE AN EMPLOYEE OF SUCH HOLDER) REASONABLY SATISFACTORY TO
THE
COMPANY THAT REGISTRATION, QUALIFICATION OR OTHER SUCH ACTIONS ARE NOT REQUIRED
UNDER SAID ACT. THE OFFERING OF THIS SECURITY HAS NOT BEEN REVIEWED OR APPROVED
BY ANY STATE’S SECURITIES ADMINISTRATOR. THIS WARRANT AND THE SHARES OF COMMON
STOCK PURCHASABLE HEREUNDER ARE ALSO BENEFITED BY AND SUBJECT TO A REGISTRATION
RIGHTS AGREEMENT, DATED AS OF AUGUST 18, 2006, BY AND AMONG THE COMPANY AND
THE
OTHER PARTIES LISTED THEREIN, A COPY OF WHICH IS ON FILE WITH THE COMPANY AND
WILL BE FURNISHED UPON WRITTEN REQUEST AND WITHOUT CHARGE.
Dated: August
18, 2006
WARRANT
TO
PURCHASE 200,000 SHARES OF COMMON STOCK
FREEDOM
FINANCIAL GROUP, INC.
EXPIRING
AUGUST 18, 2011
THIS
IS
TO CERTIFY THAT, for value received, Heartland Bank, or registered assigns
(the
“Holder”)
is
entitled to purchase from FREEDOM FINANCIAL GROUP, INC., a Delaware corporation
(the “Company”),
at
the Exercise Price (as hereinafter defined), the number of shares of voting
Common Stock, par value $0.0001 per share (the “Common
Stock”),
of
the Company shown above, all subject to adjustment and upon the terms and
conditions as hereinafter provided, and is entitled also to exercise the other
appurtenant rights, powers and privileges hereinafter described. This Warrant
may be exercised and the Common Stock of the Company purchased in accordance
with the terms hereof at any time and from time to time from the date hereof
until 5:00 p.m., St. Louis, Missouri time on August 18, 2011 (the “Expiration
Date”).
If
the Holder does not exercise the right to purchase all of the Shares of Common
Stock subject to this Warrant by the Expiration Date, any such rights shall
expire as of such Expiration Date and this Warrant shall thereafter be deemed
null and void and of no further effect.
Certain
terms used in this Warrant are defined in Article V.
ARTICLE
I
EXERCISE
OF WARRANTS
1.1. Method
of Exercise.
To
exercise this Warrant in whole or in part, the Holder shall deliver to the
Company, (a) this Warrant, (b) a written notice, in substantially the form
of
the Subscription Notice attached hereto, of such Holder’s election to exercise
this Warrant, which notice shall specify the number of shares of Common Stock
to
be purchased, the denominations of the share certificate or certificates
desired, and the name or names in which such certificates are to be registered,
and (c) payment of the Exercise Price with respect to such shares.
Notwithstanding the foregoing, this Warrant shall be exercisable only to the
extent and at the time or times that the Holder could legally take possession
and title of such shares. Payment made pursuant to clause (c) above may be
made,
at the option of the Holder by cash, money order, certified or bank cashier’s
check or wire transfer.
The
Company shall, as promptly as practicable and in any event within three Business
Days thereafter, execute and deliver or cause to be executed and delivered,
in
accordance with such notice, a certificate or certificates representing the
aggregate number and type of shares of Common Stock specified in said notice.
The share certificate or certificates so delivered shall be in such
denominations as may be specified in such notice or, if such notice shall not
specify denominations, shall be in the amount of the number of shares of Common
Stock for which the Warrant is being exercised, and shall be issued in the
name
of the Holder or such other name or names as shall be designated in such notice,
subject to Section 1.4. Such certificate or certificates shall be deemed to
have
been issued, and such Holder or any other Person so designated to be named
therein shall be deemed for all purposes to have become a holder of record
of
such shares, as of the date the aforementioned notice and payment is received
by
the Company. If this Warrant shall have been exercised only in part, the Company
shall, at the time of delivery of the certificate or certificates, deliver
to
the Holder a new Warrant evidencing the rights to purchase the remaining shares
of Common Stock called for by this Warrant, which new Warrant shall in all
other
respects be identical with this Warrant, or, at the request of the Holder,
appropriate notation may be made on this Warrant which shall then be returned
to
the Holder. The Company shall pay all expenses, taxes and other charges payable
in connection with the preparation, issuance and delivery of share certificates
and new Warrants, except that, if share certificates or new Warrants shall
be
registered in the name or names other than the name of the Holder, funds
sufficient to pay all transfer taxes payable as a result of such transfer shall
be paid by the Holder at the time of delivering the aforementioned notice of
exercise or promptly upon receipt of a written request of the Company for
payment.
1.2. Shares
To Be Fully Paid and Nonassessable.
All
shares of Common Stock issued upon the exercise of this Warrant shall be validly
issued, fully paid and nonassessable and free from all preemptive rights of
any
stockholder, and from all taxes, liens and charges with respect to the issue
thereof (other than transfer taxes).
1.3. No
Fractional Shares To Be Issued.
The
Company shall not be required to issue fractions of shares of Common Stock
upon
exercise of this Warrant. If any fraction of a share would, but for this
Section, be issuable upon any exercise of this Warrant, and if the Company
shall
have elected not to issue such fraction of a share, in lieu of such fractional
share the Company shall pay to the Holder, in cash, an amount equal to such
fraction of the Fair Market Value per share of outstanding Common Stock of
the
Company on the Business Day immediately prior to the date of such
exercise.
2
1.4. Share
Legend.
Each
certificate for shares of Common Stock issued upon exercise of this Warrant,
unless at the time of exercise such shares are registered under the Securities
Act, shall bear the following legend:
“THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT
BE
SOLD, OFFERED FOR SALE OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED
UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY
RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT
REGISTRATION, QUALIFICATION OR OTHER SUCH ACTIONS ARE NOT REQUIRED UNDER SAID
ACT. THE OFFERING OF THIS SECURITY HAS NOT BEEN REVIEWED OR APPROVED BY ANY
STATE SECURITIES ADMINISTRATOR. THIS SECURITY IS ALSO BENEFITED BY AND SUBJECT
TO A REGISTRATION RIGHTS AGREEMENT, DATED AS OF AUGUST 18, 2006, BETWEEN THE
COMPANY AND THE OTHER PARTIES LISTED THEREIN, A COPY OF WHICH IS ON FILE WITH
THE COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST AND WITHOUT
CHARGE.”
Any
certificate issued at any time in exchange or substitution for any certificate
bearing such legend (except a new certificate issued upon completion of a public
distribution pursuant to a registration statement under the Securities Act)
shall also bear such legend unless, in the opinion of counsel selected by or
reasonably satisfactory to, the Company, the securities represented thereby
are
no longer subject to restrictions on resale under the Securities
Act.
1.5. Reservation;
Authorization.
The
Company has reserved and will keep available for issuance upon exercise of
the
Warrants the total number of shares of Common Stock deliverable upon exercise
of
all Warrants from time to time outstanding. The issuance of such shares has
been
duly and validly authorized and, when issued and sold in accordance with the
Warrants, such shares will be duly and validly issued, fully paid and
nonassessable.
ARTICLE
II
TRANSFER,
EXCHANGE AND REPLACEMENT OF WARRANTS
2.1. Transfer
Agent.
The
Company shall perform the obligations provided herein at its address at 0000
Xxxx Xxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxx 00000 or such other address as the
Company shall specify by notice to all Warrantholders, or at the offices of
the
Company’s transfer agent (the “Transfer
Agent”).
3
2.2. Ownership
of Warrant.
The
Company may deem and treat the Person in whose name this Warrant is registered
as the holder and owner hereof (notwithstanding any notations of ownership
or
writing hereon made by any Person other than the Transfer Agent) for all
purposes and shall not be affected by any notice to the contrary, until
presentation of this Warrant for registration of transfer as provided in this
Article II.
2.3. Transfer
of Warrant.
The
Company agrees to maintain at the Transfer Agent books for the registration
of
transfers of the Warrants, and transfer of this Warrant and all rights hereunder
shall be registered, in whole or in part, on such books, upon surrender of
this
Warrant at the Transfer Agent, together with a written assignment of this
Warrant duly executed by the Holder or his duly authorized agent or attorney,
with (unless the Holder is the original Warrantholder) signatures guaranteed
by
a bank or trust company or a broker or dealer registered with the NASD, and
funds sufficient to pay any transfer taxes payable upon such transfer. Upon
surrender, the Company shall execute and deliver a new Warrant or Warrants
in
the name of the assignees and in the denominations specified in the instrument
of assignment, and this Warrant shall promptly be cancelled. Notwithstanding
the
foregoing, a Warrant may be exercised by a new holder in accordance with the
procedures set forth herein without having a new Warrant issued. The Transfer
Agent shall not be required to register any transfers if the Holder fails to
furnish to the Company, after a request therefor, an opinion of counsel
reasonably satisfactory to the Company that such transfer is exempt from the
registration requirements of the Securities Act.
2.4. Division
or Combination of Warrants.
This
Warrant may be divided or combined with other Warrants upon surrender hereof
and
of any Warrant or Warrants with which this Warrant is to be combined, together
with a written notice specifying the names and denominations in which the new
Warrant or Warrants are to be issued, signed by the holders hereof and thereof
or their respective duly authorized agents or attorneys. Subject to compliance
with Section 2.3 as to any transfer which may be involved in the division or
combination, the Company shall execute and deliver a new Warrant or Warrants
in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice.
2.5. Loss,
Theft, Destruction or Mutilation of Warrants.
Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security reasonably satisfactory
to
the Company (the original Warrantholder’s indemnity being satisfactory indemnity
in the event of loss, theft or destruction of any Warrant owned by such holder),
or, in the case of any such mutilation, upon surrender and cancellation of
such
Warrant, the Company will make and deliver, in lieu of such lost, stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing
the
right to purchase the same aggregate number of shares of Common Stock as
provided for in such lost, stolen, destroyed or mutilated Warrant.
2.6. Expenses
of Delivery of Warrants.
The
Company shall pay all expenses, taxes (other than transfer taxes or income
taxes
of a Holder) and other charges payable in connection with the preparation,
issuance and delivery of Warrants and shares issuable upon exercise of the
Warrants hereunder.
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2.7. Restrictions
on Transfer and Division.
No
division, assignment or transfer of the rights of a Warrantholder under a
Warrant shall be effective with respect to other than whole shares of Common
Stock, unless such assignment or transfer is of all of the rights of such
Warrantholder under such Warrant.
ARTICLE
III
CERTAIN
RIGHTS
3.1. Registration
Rights.
The
Common Stock issuable upon exercise of this Warrant is entitled to the benefits
of the Registration Rights Agreement dated as of August _____, 2006, by and
between the Company and Heartland Bank (the “Registration
Rights Agreement”).
The
Company shall keep a copy of the Registration Rights Agreement, and any
amendments thereto, at the Transfer Agent and shall furnish copies thereof
to
the Holder upon request.
3.2. Contest
and Appraisal Rights.
Upon
each determination of Fair Market Value hereunder (other than a determination
relating solely to setting the value of fractional shares), the Company shall
promptly give notice thereof to all Warrantholders, setting forth in reasonable
detail the calculation of such Fair Market Value and the method and basis of
determination thereof, as the case may be. If the Holders shall disagree with
such determination and shall, by notice to the Company given within 30 days
after the Company’s notice of such determination, elect to dispute such
determination, such dispute shall be resolved in accordance with this Section
3.2. In the event that a determination of Market Price, or a determination
of
Fair Market Value solely involving Market Price, is disputed, such dispute
shall
be submitted, at the Company’s expense, to a New York Stock Exchange member firm
selected by the Company and acceptable to the Warrantholders, whose
determination of Fair Market Value and/or Market Price, as the case may be,
shall be binding on the Company and the Warrantholders. In the event that a
determination of Fair Market Value, other than a determination solely involving
Market Price, is disputed, such dispute shall be resolved through the Appraisal
Procedure.
3.3. Certain
Covenants.
The
Company covenants and agrees that, until exercise or cancellation of this
Warrant, the Company will deliver, as soon as available: reports similar to
that
provided to other stockholders; any and all reports filed by the Company under
the Securities Act and the Exchange Act including without limitation forms
10-K,
10-Q and 8-K; and any and all press releases of the Company.
3.4. Voting
Rights.
The
Company’s Certificate of Incorporation and bylaws shall not be amended or
modified if such amendment or modification changes the existing voting rights
of
the shares of Common Stock into which this Warrant may be converted and the
voting rights of other shares of common stock are not so amended or modified.
Issuance of other classes of capital stock of the Company with different voting
rights than those of the Common Stock shall not be treated as amending or
modifying the voting rights of the existing Common Stock.
5
ARTICLE
IV
ANTIDILUTION
PROVISIONS
4.1. Adjustments
Generally.
The
Exercise Price and the number of shares of Common Stock (or other securities
or
property) issuable upon exercise of this Warrant shall be subject to adjustment
from time to time upon the occurrence of certain events, as provided in this
Article IV.
4.2. Common
Stock Reorganization.
(a) If
the Company shall after the date of issuance of this Warrant subdivide its
outstanding shares of Common Stock into a greater number of shares or
consolidate its outstanding shares of Common Stock into a smaller number of
shares (any such event being called a “Common
Stock Reorganization”),
then
(i) the Exercise Price shall be adjusted, effective immediately after the record
date at which the holders of shares of Common Stock are determined for purposes
of such Common Stock Reorganization, to a price determined by multiplying the
Exercise Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of shares of Common Stock outstanding
on such record date before giving effect to such Common Stock Reorganization
and
the denominator of which shall be the number of shares of Common Stock
outstanding after giving effect to such Common Stock Reorganization, and (ii)
the number of shares of Common Stock subject to purchase upon exercise of this
Warrant shall be adjusted, effective at such time, to a number determined by
multiplying the number of shares of Common Stock subject to purchase immediately
before such Common Stock Reorganization by a fraction, the numerator of which
shall be the number of shares outstanding after giving effect to such Common
Stock Reorganization and the denominator of which shall be the number of shares
of Common Stock outstanding immediately before such Common Stock
Reorganization.
(b) If
the
Company shall after the date of issuance of this Warrant issue or distribute
to
all holders of shares of Common Stock, additional Common Stock of the Company,
(a “Stock
Dividend”),
then
(i) the Exercise Price shall be adjusted, effective immediately after the record
date at which the holders of shares of Common Stock are determined for purposes
of such Stock Dividend, to a price determined by multiplying the Exercise Price
in effect immediately prior to such record date by a fraction, the numerator
of
which shall be the number of shares of Common Stock outstanding on such record
date and the denominator of which shall be the number of shares of Common Stock
outstanding after giving effect to such Stock Dividend, and (ii) the number
of
shares of Common Stock subject to purchase upon exercise of this Warrant shall
be adjusted, effective at such time, to a number determined by multiplying
the
number of shares of Common Stock subject to purchase immediately before such
Stock Dividend by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding after giving effect to such Stock Dividend
and the denominator of which shall be the number of shares of Common Stock
outstanding immediately before such Stock Dividend.
4.3. Common
Stock Distribution.
(a) If
the Company shall, before the Loan Liquidation Date, issue or otherwise sell
or
distribute any shares of Common Stock, sell, distribute or otherwise grant
in
any manner (whether directly or by assumption in a merger or otherwise) any
rights to subscribe for or to purchase, or any warrants or options (excluding
warrants or options to employees of the Company or its subsidiaries) for the
purchase of, Common Stock or any stock or securities convertible into or
exchangeable for Common Stock (such rights, warrants or options being herein
called “Options” and such convertible or exchangeable stock or securities being
herein called “Convertible Securities”), otherwise than pursuant to a Common
Stock Reorganization or Stock Dividend (any such event, being herein called
a
“Common Stock Distribution”), if such Common Stock Distribution shall be for a
consideration per share less than the Exercise Price in effect on the date
of
such Common Stock Distribution, then, effective upon such Common Stock
Distribution, the Exercise Price for each Warrant shall be reduced to a price
determined by multiplying such Exercise Price by a fraction, (A) the numerator
of which shall be (1) the number of shares of Common Stock outstanding (or
deemed to be outstanding) immediately prior to such Common Stock Distribution,
plus (2) the number of shares of Common Stock which the aggregate consideration
received by the Company in such Common Stock Distribution would purchase at
the
Exercise Price (as hereinafter defined), and (B) the denominator of which shall
be (1) the number of shares of Common Stock outstanding (or deemed to be
outstanding) immediately prior to such Common Stock Distribution, plus (2)
the
number of shares of such additional stock so issued or sold (or deemed issued
or
sold) in the Common Stock Distribution.
6
The
provisions of this paragraph (a) shall not operate to increase the Exercise
Price or to reduce the number of shares of Common Stock subject to purchase
upon
exercise of this Warrant.
(b) If
any
shares of Common Stock, Options or Convertible Securities shall be issued,
sold
or distributed for cash, the consideration received therefor shall be deemed
to
be the amount received by the Company therefor net of any underwriting
commissions or concessions paid or allowed by the Company in connection
therewith. If any shares of Common Stock, Options or Convertible Securities
shall be issued, sold or distributed for a consideration other than cash, the
amount of the consideration other than cash received by the Company shall be
deemed to be the Fair Market Value of such consideration, after deduction of
any
expenses incurred and any underwriting commissions or concessions paid or
allowed by the Company in connection therewith. If any shares of Common Stock
Options or Convertible Securities shall be issued in connection with any merger
in which the Company is the surviving corporation, the amount of consideration
therefor shall be deemed to be the Fair Market Value of such portion of the
assets and business of the nonsurviving corporation as shall be attributable
to
such Common Stock, Options or Convertible Securities, as the case may be. If
any
Options shall be issued in connection with the issue and sale of other
securities of the Company, together comprising one integral transaction in
which
no specific consideration is allocated to such Options by the parties thereto,
such Options shall be deemed to have been issued without
consideration.
(c) If
the
Company shall take a record of the holders of the Common Stock for the purpose
of entitling them to receive a dividend or other distribution payable in Common
Stock, Options or Convertible Securities or to subscribe for or purchase Common
Stock, Options or Convertible Securities, then such record date shall be deemed
to be the date of the issue, sale, distribution or grant of the shares of Common
Stock deemed to have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
(d) For
purposes of determining whether any adjustment is required pursuant to this
Article IV any security of the Company having rights substantially equivalent
to
the Common Stock as to dividends or upon liquidation dissolution or winding
up
of the Company shall be treated as if such security were Common
Stock.
7
4.4. Notice
of Adjustment.
Not
less than 30 nor more than 40 days prior to the record date or effective date,
as the case may be, of any action which requires or might require an adjustment
or readjustment pursuant to this Article IV, the Company shall give notice
to
each Warrantholder of such event, describing such event in reasonable detail
and
specifying the record date or effective date, as the case may be, and, if
determinable, the required adjustment and the computation thereof. It the
required adjustment is not determinable at the time of such notice, the Company
shall give notice to each Warrantholder of such adjustment and computation
promptly after such adjustment becomes determinable. If no Holder objects to
any
such notice within 30 days of receipt of the Company’s notice, the adjustment
will be deemed accepted by the Holders.
4.5. Exercise
in Event of a Dividend or Capital Reorganization.
After
the date of the issuance of this Warrant, in the event the Company (i) issues
any dividend on the Common Stock other than a Stock Dividend or (ii)
participates in a consolidation or merger, other than a consolidation or merger
in which the Company is a continuing corporation and does not result in any
reclassification or change (other than a Common Stock Reorganization, Stock
Dividend or a change in par value), in outstanding shares of Common Stock,
or
(iii) participates in any sale or conveyance of the property of the Company
as
an entirety or substantially as an entirety, the Holder shall have not less
than
fifteen (15) days following receipt of written notice of such transaction (or
the possibility of such transaction) in which to exercise the Holder’s rights
under this Warrant to purchase shares of Common Stock hereunder prior to the
date such transaction becomes effective and thereby be treated as holder of
Common Stock as of the date such transaction is consummated.
4.6. Preferred
Stock Conversion.
As of
the date of issuance of this Warrant, the Company is in the process of
converting certain preferred stock to common stock pursuant to a plan approved
by the Bankruptcy Court on March 27, 2006 (the “PS
Conversion”).
The
Holder is aware of the PS Conversion and, notwithstanding anything in this
Warrant to the contrary, none of the Anti-Dilution provisions of Article IV
shall apply to any modification or change in the capital structure or any
distributions made in connection with the PS Conversion. This Warrant is
expressly granted in contemplation of, and the rights hereunder shall be
effective as if, the PS Conversion has been completed. The maximum number of
shares of Common Stock to be issued under the PS Conversion shall not exceed
8,994,357 (excluding the Common Stock to be issued pursuant to the warrants
granted to the holders of this Warrant and the warrants granted to Flagstone
Securities).
ARTICLE
V
DEFINITIONS
The
following terms, as used in this Warrant, have the following respective
meanings:
“Appraisal
Procedure”
means
a
procedure whereby two independent appraisers, one chosen by the Company and
one
by the Holder, shall mutually agree upon the determinations then the subject
of
appraisal. Each party shall deliver a notice to the other appointing its
appraiser within 15 days after the Appraisal Procedure is invoked. If within
30
days after appointment of the two appraisers they are unable to agree upon
the
amount in question, a third independent appraiser shall be chosen within 10
days
thereafter by the mutual consent of such first two appraisers or, if such first
two appraisers fail to agree upon the appointment of a third appraiser, such
appointment shall be made by the American Arbitration Association, or any
organization successor thereto, from a panel of arbitrators having experience
in
the appraisal of the subject matter to be appraised. The decision of the third
appraiser so appointed and chosen shall be given within 30 days after the
selection of such third appraiser. If three appraisers shall be appointed and
the determination of one appraiser is disparate from the middle determination
by
more than twice the amount by which the other determination is disparate from
the middle determination, then the determination of such appraiser shall be
excluded, the remaining two determinations shall be averaged and such average
shall be binding and conclusive on the Company and the Warrantholders; otherwise
the average of all three determinations shall be binding and conclusive on
the
Company and the Warrantholders. The costs of conducting any Appraisal Procedure
shall be borne by the Warrantholders requesting such Appraisal Procedure, except
(a) the fees and expenses of the appraiser appointed by the Company and any
costs incurred by the Company shall be borne by the Company and (b) if such
Appraisal Procedure shall result in a determination that is disparate by 10%
or
more to the benefit of the holder from the Company's initial determination,
all
costs of conducting such Appraisal Procedure shall be borne by the
Company.
8
“Business
Day”
shall
mean (a) if any class of Common Stock is listed or admitted to trading on a
national securities exchange, a day on which the principal national securities
exchange on which such class of Common Stock is listed or admitted to trading
is
open for business or (b) if no class of Common Stock is so listed or admitted
to
trading, a day on which any New York Stock Exchange member firm is open for
business.
“Closing
Price”
with
respect to any security on any day means (a) if such security is listed or
admitted for trading on a national securities exchange, the reported last sales
price regular way or, if no such reported sale occurs on such day, the average
of the closing bid and asked prices regular way on such day, in each case as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which
such
class of security is listed or admitted to trading, or (b) if such security
is
not listed or admitted to trading on any national securities exchange, the
last
quoted sales price, or, if not so quoted, the average of the high bid and low
asked prices in the over the counter market on such day as reported by NASDAQ
or
any comparable system then in use or, if not so reported, as reported by any
New
York Stock Exchange member firm reasonably selected by the Company for such
purpose.
“Common
Stock”
shall
have the meaning set forth in the first paragraph of this Warrant subject to
adjustment pursuant to Article IV.
“Common
Stock Distribution”
shall
have the meaning set forth in Section 4.3(a).
“Common
Stock Reorganization”
shall
have the meaning set forth in Section 4.2.
9
“Company”
shall
have the meaning set forth in the first paragraph of this Warrant.
“Convertible
Securities”
shall
have the meaning set forth in Section 4.3(a).
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended, and any similar or successor
federal statute, and the rules and regulations of the Securities and Exchange
Commission (or its successor) thereunder, all as the same shall be in effect
at
the time.
“Exercise
Price”
shall
mean $0.70.
“Fair
Market Value”
means
the fair market value of the business or property in question, as determined
in
good faith by the Board of Directors of the Company, provided, however, that
the
Fair Market Value of any security for which a Closing Price is available shall
be the Market Price of such security. The Fair Market Value of the Company
shall
be the Fair Market Value of the Company and its subsidiaries as a going concern.
Notwithstanding the foregoing, if, at any date of determination of the Fair
Market Value of the Company, the Common Stock of any class shall then be
publicly traded, the Fair Market Value of the Company on such date shall be
the
Market Price on such date multiplied by the number of shares of Common Stock
on
a fully diluted basis, giving effect to any consideration to be paid to the
Company in connection with the exercise or conversion of any security.
Notwithstanding the foregoing, the Fair Market value of shares of Common Stock
to be issued in connection with the grant of employee stock options will be
deemed to be, if lower, the Closing Price on the date of such sale or
grant.
“Holder”
shall
have the meaning set forth in the first paragraph of this Warrant.
“Loan
Liquidation Date”
means
the date of the satisfaction and retirement in full of the indebtedness owing
from the Company to Heartland Bank, its successors and assigns, as such
indebtedness is evidenced by a Revolving Credit Loan and Security Agreement
of
even date herewith between Company and Heartland Bank, providing for a revolving
credit facility in the principal face amount of $3,000,000, as said Agreement
may be extended, amended, renewed or restated.
“Market
Price”
with
respect to any security on any day means the average of the daily Closing Prices
of a share or unit of such security for the 10 consecutive Business Days ending
on the most recent Business Day for which a Closing Price is available;
provided, however, that in the event that, in the case of Common Stock, the
Market Price is determined during a period following the announcement by the
Company of (A) a dividend or distribution of Common Stock, or (B) any
subdivision, combination or reclassification of Common Stock and prior to the
expiration of 20 Business Days after the ex dividend date for such dividend
or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the Market Price shall be
appropriately adjusted to reflect the current market price per share equivalent
of Common Stock.
“NASD”
means
The National Association of Securities Dealers, Inc.
“NASDAQ”
means
The National Association of Securities Dealers, Inc. Automated Quotation
System.
10
“Options”
shall
have the meaning set forth in Section 4.3(a).
“Registrable
Security”
shall
have the meaning set forth in the Registration Rights Agreement among the
Company and the Holders of the Warrants.
“Registration
Rights Agreement”
shall
have the meaning set forth in Section 3.1.
“Securities
Act”
shall
mean the Securities Act of 1933, as amended, and any similar or successor
federal statute, and the rules and regulations of the Securities and Exchange
Commission for its successor) thereunder, all as the sane shall be in effect
at
the time.
“Warrantholder”
means
a
holder of a Warrant.
“Warrants”
shall
have the meaning set forth in the first paragraph of this Warrant.
ARTICLE
VI
MISCELLANEOUS
6.1. Notices.
All
notices, requests, consents and other communications provided for herein shall
be in writing and shall be effective upon delivery in person, faxed, mailed
by
certified or registered mail, return receipt requested, postage pre paid, or
by
national overnight delivery service (e.g. Federal Express or UPS), addressed
as
follows:
(i) if
to the
Company, to Freedom Financial Group, Inc., 0000 Xxxx Xxx Xxxxxx, Xxxxxxxxxxx,
Xxxxxxxx 00000, Attention: President; with a copy to Xxxxxxxx Xxxxxxx &
Xxxxxx, 000 Xx. Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxxx, Xxxxxxxx 00000,
Attention: Xxx X’Xxxx;
(ii) if
to the
initial Holder of Warrants, to Heartland Bank, at 000 Xxxxx Xxxxxxx, Xxxxx
000,
Xx. Xxxxx, Xxxxxxxx 00000-0000 with a copy to Xxxxxxx XxxXxxxxx P.C., 000 Xxxxx
Xxxxxxx Xxxxxx, Xxxxx 0000, Xx. Xxxxx, Xxxxxxxx 00000, Attention: Xxxx X.
Xxxxxx, and if to any subsequent Holder of Warrants, to it at such address
as
may have been furnished to the Company in writing by such Holder;
or,
in
any case, at such other address or addresses as shall have been furnished in
writing to the Company (in the case of a holder of Warrants) or to the Holders
of Warrants (in the case of the Company) in accordance with the provisions
of
this paragraph.
6.2. Waivers;
Amendments.
No
failure or delay of the Holder in exercising any power or right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the Holder
are
cumulative and not exclusive of any rights or remedies which it would otherwise
have. The provisions of this Warrant may be amended, modified or waived with
(and only with) the written consent of the Company and the Holder. The
provisions of the Registration Rights Agreement may be amended, modified or
waived only in accordance with the respective provisions
thereof.
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Any
such
amendment, modification or waiver effected pursuant to this Section or the
applicable provisions of the Registration Rights Agreement shall be binding
upon
the holders of all Warrants and Warrant Shares, upon each future holder thereof
and upon the Company. In the event of any such amendment, modification or waiver
the Company shall give prompt notice thereof to all Warrantholders and, if
appropriate, notation thereof shall be made on all Warrants thereafter
surrendered for registration of transfer or exchange.
No
notice
or demand on the Company in any case shall entitle the Company to any other
or
further notice or demand in similar or other circumstances.
6.3. Governing
Law.
This
Warrant shall be construed in accordance with and governed by the laws of the
State of Delaware without regard to principles of conflicts of law.
6.4. Survival
of Agreements; Representations and Warranties etc.
All
representations, warranties and covenants made by the Company herein or in
any
certificate or other instrument delivered by or on behalf of it in connection
with the Warrants shall be considered to have been relied upon by the Holder
and
shall survive the issuance and delivery of the Warrants, regardless of any
investigation made by the Holder, and shall continue in full force and effect
so
long as any Warrant is outstanding. All statements in any such certificate
or
other instrument shall constitute representations and warranties
hereunder.
6.5. Covenants
to Bind Successor and Assigns.
All
covenants, stipulations, promises and agreements in this Warrant contained
by or
on behalf of the Company shall bind its successors and assigns, whether so
expressed or not.
6.6. Severability.
In case
any one or more of the provisions contained in the Registration Rights Agreement
or this Warrant shall be invalid, illegal or unenforceable in any respect,
the
validity, legality or enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired thereby. The
parties shall endeavor in good faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect
of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
6.7. Section
Headings.
The
sections headings used herein are for convenience of reference only, are not
part of this Warrant and are not to affect the construction of or be taken
into
consideration in interpreting this Warrant.
6.8. No
Rights as Stockholder.
This
Warrant shall not entitle the Holder to any rights as a stockholder of the
Company.
6.9. No
Impairment.
The
Company shall not by any action including, without limitation, amending its
certificate of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
at
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may
be
necessary or appropriate to protect the rights of the Holder against impairment.
Without limiting the generality of the foregoing, the Company will (a) not,
directly or indirectly, increase the par value of any shares of Common Stock
receivable upon the exercise of this warrant above the amount payable therefor
upon such exercise immediately prior to such increase in par value, (b) take
all
such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of Common Stock
upon the exercise of this warrant, and (c) use its commercially reasonable
best
efforts to obtain all such authorizations exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this Warrant.
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6.10. Submission
to Jurisdiction; Venue.
(a) Any
legal action or proceeding with respect to this Warrant may be brought in the
courts of the State of Missouri located in Xx. Xxxxx Xxxxxx xx xx xxx Xxxxxx
Xxxxxx for the Eastern District of Missouri, and, by execution and delivery
of
this Warrant, the Company irrevocably accepts for itself and in respect of
its
property, generally and unconditionally, the non-exclusive jurisdiction of
the
aforesaid courts.
(b) The
Company hereby irrevocably waives any objection which it may now or hereafter
have to the laying of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Warrant brought in the courts referred
to in clause (a) above and hereby further irrevocably waives and agrees not
to
plead or claim in any such court that any such action or proceeding brought
in
any such court has been brought in an inconvenient forum.
[Next
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IN
WITNESS WHEREOF, Freedom Financial Group, Inc. has caused this Warrant to be
executed in its corporate name by one of its officers hereunto duly authorized,
and attested by its Secretary or an Assistant Secretary, all as of the day
and
year first above written.
|
FREEDOM
FINANCIAL GROUP, INC.
|
||
| |
|
|
| By: | /s/ Xxxxxx X. Xxxxxxxxxxxx | |
|
Xxxxxx X. Xxxxxxxxxxxx, President |
||
Attest:
|
Name:
|
|
|
Title:
|
14
SUBSCRIPTION
NOTICE
(To
be
executed upon exercise of Warrant)
TO: FREEDOM
FINANCIAL GROUP, INC.
The
undersigned hereby irrevocably elects to exercise the right to purchase
represented by the attached Warrant for, and to purchase thereunder, ___________
shares of voting Common Stock, as provided for therein, and tenders herewith
payment of the Exercise Price in full in accordance with the terms of the
attached Warrant.
Please
issue a certificate or certificates for such shares of Common Stock in the
following name or names and denominations:
If
said
number of shares shall not be all the shares issuable upon exercise of the
attached Warrant, a new warrant is to be issued in the name of the undersigned
for the balance remaining of such shares less any fraction of a share paid
in
cash.
Dated:_________________________,
20____.
|
|
Note:
|
The
above signature should correspond exactly with the name on the face
of the
attached Warrant or with the name of the assignee appearing in the
assignment form below.
|
15
ASSIGNMENT
(To
be
executed upon assignment of Warrant)
For
value
received, _________________________________ hereby sells, assigns and transfers
unto ________________________________ the attached Warrant, together with all
rights, title and interest therein, and does hereby irrevocably constitute
and
appoint ___________ _____________________ attorney to transfer said Warrant
on
the books of Freedom Financial Group, Inc., with full power of substitution
in
the premises,
|
Note:
|
The
above signature should correspond exactly with the name on the face
of the
attached Warrant.
|
16
