Exhibit 10.3
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (this "Agreement"), is dated June 3, 2004, by and
between X.X. Xxxxxx Group Inc., a Delaware corporation (the "Company"), and the
persons whose names are set on Schedule "A" (individually, the "Securities
Holder", or collectively, the "Securities Holders").
WITNESSETH:
WHEREAS, the Securities Holders each acquired Series A Convertible
Preferred Stock (the "Series A Stock") from the Company for an aggregate amount
of Five Million Four Hundred Seventy Two Thousand One Hundred Forty One Dollars
($5,472,141), including interest and dividends through May 31, 2004, pursuant to
that certain Preferred Stock Purchase Agreement dated November 29, 2001 among
X.X. Xxxxxx Group Inc. and the Securities Holders (the "Preferred Stock Purchase
Agreement").
WHEREAS, certain Securities Holders, namely, DMG Legacy International
Ltd., DMG Legacy Institutional Fund LLC, and DMG Legacy Fund LLC (collectively
the "Note Holders") each acquired an interest in a note dated March 27, 2002
issued by the Company for an aggregate amount of One Million Eighty Six Thousand
Five Hundred Forty Eight Dollars ($1,086,548), including interest through May
31, 2004 (the "Note").
WHEREAS, in consideration for the cancellation of all obligations owed by
the Company to the Securities Holders in connection with the Series A
Convertible Preferred Stock and the Note, the Company will, subject to the terms
and provision under this Agreement, issue Warrants to the Securities Holders.
WHEREAS, subject to the terms and provisions of this Agreement, each
warrant (individualy, a "Warrant," and collectively, the "Warrants"), issued
under this Agreement entitles the Securities Holder, upon the exercise of a
Warrant, to receive one Company's Common Share at the price designated as the
"Exercise Price" herein.
NOW, THEREFORE, in consideration of the mutual agreements contained herein
and intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
FORM OF WARRANT
The Warrants shall be evidenced by a certificate (the "Warrant
Certificate"). The text of the Warrant Certificate (and the related forms of
exercise and assignment) shall be substantially in the form attached hereto as
Exhibits A, B, and C, and may have such identification, designation and
information thereon as the Company may deem appropriate and as is not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any law or with any rule or regulation made pursuant thereto.
ARTICLE II
EXERCISE PRICE, TERM, AND METHOD OF EXERCISE
Section 2.01. Agreement to Sell and Purchase; Purchase Price. The Company
agrees to sell to each Securities Holder, and each Securities Holder agrees to
purchase from the Company, the Total Number of Warrants set forth opposite each
Securities Holder's name on Schedule "A" in consideration for (i) each of
Securities Holder's respective Series A Convertible Preferred Stock purchased
pursuant to the Preferred Stock Purchase Agreement; and (ii) each Note Holder's
respective rights in the Note.
Section 2.01 (i) and (ii) are collectively referred to herein as the
Purchase Price (the "Purchase Price")
Section 2.02. Exercise Price. The exercise price ("Exercise Price") for
each of the Common Shares to be received upon exercise of a Warrant issued
hereunder shall be $0.01.
Section 2.03. Warrant Rights and Term.
(a) Each Warrant shall entitle the Securities Holder, upon exercise
thereof and subject to the provisions thereof and of this Agreement, including
provisions relating to adjustments upon the occurrence of certain events as set
forth in Article III hereof to receive from the Company one fully paid and
nonassessable Common Share (i) at any time during the period commencing on the
date hereof, and ending at 5:00 p.m., on June 2, 2011 or, if such date is not a
business day in the City of New York then on the next succeeding business day
(the "Expiration Date"), or (ii) as otherwise provided in Section 2.03(b)
hereof.
(b) If at any time during the period commencing on the date hereof
and ending on the date that is three hundred and sixty five (365) calendar days
after the date hereof (i) the Company or any Affiliate of the Company files a
registration statement under the Securities Act of 1933, as amended, with
respect to an offering of equity securities by the Company for its own account,
or an offering for the account of any shareholder of the Company or any group of
such shareholders (other than a registration statement on Form S-4 or Form S-8
or any successor forms or other forms not available for registering capital
stock of the Company for sale to the public), (ii) the Common Shares are
otherwise eligible for inclusion in such registration statement, as determined
in good faith by the Board of the Directors of the Company, in its sole
discretion, and (iii) the exercise of such Warrants during such period will not
result in, or be deemed to result in, a change of control of the Company in a
manner that would cause the Company and/or its Affiliates to lose the benefit of
any or all of the net operating losses of the Company and/or such Affiliates,
then notwithstanding Section 2.03(a), the Warrants may be exercised by the
Securities Holder at any time thereafter. In addition, if requested in writing
by the Securities Holder, the Company shall use commercially reasonable efforts
to include in such registration statement any Common Shares received by the
Securities Holder from the exercise of the Warrants.
(c) When used in this Agreement, "Affiliate" or "Affiliates" means
with respect to any specified Person (as defined herein), any other Person that,
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Person specified (where
control of a Person means the power, direct or indirect, to cause the direction
of the management and policies of such Person whether by contract or otherwise);
"Subsidiary" or "Subsidiaries" (all such Persons collectively) means any Person
that the Company now or hereafter shall at the time own, directly or indirectly
through another Person, at least a majority of the outstanding capital stock or
equity interests (or other beneficial interests) or a majority of the voting
power of such Person; and "Person" means an individual, partnership,
corporation, association, trust, joint venture, unincorporated organization,
limited liability company, joint stock company, and any government, governmental
department or agency or political subdivision thereof or any other entity.
Section 2.04. Expiration. Each Warrant not exercised by 5:00 p.m., New
York time, on the Expiration Date shall become void, and all rights thereunder
and all rights in respect thereof under this Agreement shall thereupon cease.
Section 2.05. Method of Exercise.
(a) The Securities Holder may exercise its rights with respect to
all or any whole number of Warrants evidenced by the Warrant Certificate.
Exercise of the Warrants shall be effected by surrender of the Warrant
Certificate, with the exercise form thereon duly executed, to the Company at its
office as designated in Section 5.04 hereof.
(b) Upon receipt of the Warrant Certificate with the exercise form
duly executed, the Company shall deliver to the Securities Holder certificates
for the total number of whole Common Shares for which the Warrants evidenced by
such Warrant Certificate are being exercised.
(c) In the event that the Securities Holder shall exercise rights
with respect to less that all of the Warrants evidenced by the Warrant
Certificate surrendered upon the exercise of Warrants, a new Warrant Certificate
for the balance of such Warrants shall be delivered by the Company to the W ant
Holder.
(d) The exercise rights of Securities Holder shall be limited such
that, unless Securities Holder gives written notice 75 days in advance to the
Company of Securities Holder's intention to exceed the Limitation on Exercise as
defined herein, with respect to all or a specified amount of the Warrant and the
corresponding number of the underlying shares, in no instance shall Securities
Holder (singularly, together with any Persons who in the determination of the
Securities Holder, together with the Securities Holder, constitute a group as
defined in Rule 13d-5 of the Exchange Act) be entitled to exercise the Warrant
(i) if Securities Holder is the beneficial owner of more than Four and 99/100
percent (4.99%) of the outstanding shares of common stock of the Company, or
(ii) to the extent such exercise would result in Securities Holder beneficially
owning more than Four and 99/100 percent (4.99%) of the outstanding shares of
common stock of the Company. For these purposes, beneficial ownership shall be
defined and calculated in accordance with Rule 13d-3, promulgated under the
Exchange Act (the foregoing being herein referred to as the "Limitation on
Exercise").
ARTICLE III
ADJUSTMENTS TO WARRANTS UPON CERTAIN EVENTS
Section 3.01. Mechanical Adjustments. The number of Common Shares to be
received upon the exercise of each Warrant (such shares being referred to in
this Agreement as the "Warrant Shares" shall be subject to adjustment as follows
if any off the events so listed in clause (a), clause (b) or clause (c) below
occur after the date hereof and prior to exercise of each Warrant:
(a) In case the Company shall (i) pay a dividend in Common Shares or
make a distribution in Common Shares, (ii) subdivide or reclassify its
outstanding Common Shares into a greater number of shares, or (iii) combine or
reclassify its outstanding Common Shares into a smaller number of shares, the
number of Warrant Shares to be received upon the exercise of each Warrant
immediately or thereto shall be adjusted so that the number of Warrant Shares to
be received upon exercise of each Warrant shall be determined by multiplying the
number of Warrant Shares theretofore to be received upon the exercise of each
Warrant by a fraction, of which the numerator shall be the number of Common
Shares outstanding immediately following such action and of which the
denominator shall be the nun ber of Common Shares outstanding immediately prior
thereto.
(b) Effect of Sale, Merger or Consolidation. In the event of (i) any
conversion or reclassification of the Common Shares into securities of another
corporation, or (ii) the consolidation of the Company with, or the merger of the
Company with or into, any other corporation where the Common Shares are
converted into other securities, each Warrant shall be exercisable, upon the
terms and conditions specified in this Agreement, only for the number of
securities of the Person into which Common Shares are converted or resulting
from such consolidation or surviving such merger, as the case may be, to which
the Common Shares issuable (immediately prior to such event) upon exercise of
each Warrant would have been entitled upon such event. In any such case, if
necessary, the provisions set forth in this Article III with respect to the
rights and interests thereafter of the Securities Holder shall be appropriately
adjusted so as to be reasonably applicable to any securities thereafter
deliverable on the exercise of the Warrants.
(c) If on the date immediately preceding the date that the Warrants
first become exercisable pursuant to Section 2.03(a) hereof, the Securities
Holder's margin brokerage account with the Company reflects a debit balance, the
number of Warrant Shares to be received upon the exercise of each Warrant
immediately prior thereto shall be reduced by one (1) Warrant Share for each
$.01 of liability due and payable by the Securities Holder to the Company as
reflected in the debit balance of such Securities Holder's margin brokerage
account with the Company.
(d) In the event that the provisions of this Article III fail as a
result of an unintentional oversight to provide expressly for the adjustment of
the number of Warrant Shares to be received up on exercise of each Warrant under
circumstances that, based upon the purposes and intentions expressed herein,
would otherwise have been addressed, the Board of Directors of the Company
shall, in good faith, cause an equitable adjustment to be made to the number of
Warrant Shares to be received upon exercise of each Warrant to correct such an
oversight.
Section 3.02. Notice of Adjustment. Whenever the number of Warrant Shares
to be received upon the exercise of each Warrant is adjusted, as herein
provided, the Company shall promptly cause to be prepared a certificate signed
by its President or a Vice President and by its Treasurer or Assistant Treasurer
or its Secretary or Assistant Secretary, setting forth in reasonable detail the
event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated (including a description of the basis on
which the Board of Directors of the Company made any determination hereunder),
the number of Warrant Shares to be received upon the exercise of Warrant, and
shall promptly cause copies of such certificate to be mailed (by first class and
pos prepaid) to the Securities Holder in accordance with Section 5.04 hereof.
Section 3.03. Notice of Certain Events. In the event that at any time
prior to the expiration the Warrants and prior to their exercise in full:
(a) the Company shall (i) pay a dividend in Common Shares or make a
distribution in Common Shares, (ii) subdivide or reclassify its outstanding
Common Shares into a greater number of shares, or (iii) combine or reclassify
its outstanding Common Shares into a smaller number of shares;
(b) there shall be a voluntary or involuntary dissolution,
liquidation or winding up o the Company (other than in connection with a
consolidation, merger or sale of all or substantially all o its property, assets
and business as an entity);
(each such event hereinafter referred to as a "Notification Event"), the Company
shall mail to the Securities Holder, not less than fifteen (15) days prior to
the record date, if any, in connection with such Notification Event (provided,
however, that, if there is no record date, or, if fifteen (15) days prior notice
is impracticable, as soon as practicable) written notice specifying the nature
of such event and the effective date of, or the date on which the books of the
Company shall close or a record shall be taken with respect to, such event. Such
notice shall also set forth facts indicating the effect of such action (to the
extent such effect may be known at the date of such notice) on the kind and
amount of the Common Shares or other securities or property deliverable upon
exercise of the Warrants.
Section 3.04. Effect of Adjustment on Warrant Certificates. Except as
provided in is Section 3.04, the form of Warrant Certificate need not be changed
because of any change in the number of Warrant Shares issuable upon the exercise
of a Warrant, and Warrant Certificates issued before or after such change may
state the same number of Warrant Shares issuable upon exercise of Warrants as
are stated in the Warrant Certificates theretofore issued pursuant to this
Agreement. The Company may, however, at any time, in its sole discretion, make
any change in the form of Warrant Certificate that it may deem appropriate and
that does not affect the substance thereof, and any Warrant Certificates
thereafter issued, whether in exchange or substitution for an outstanding
Warrant Certificate or otherwise, may be in the form as so changed.
Section 3.05. Cash Dividends. Notwithstanding the providions of this
Article III, in the event the Company declares a cash dividend, the Securities
Holder shall be entitled to such cash dividend which shall be equal to number of
Common Shares to be received upon the exercise of each Warrant times the dollar
value of the cash dividend payable per each Common Stock.
ARTICLE IV
RIGHTS, COVENANTS AND REPRESENTATIONS OF WARRANT HOLDERS
Section 4.01. No Rights as Shareholders. The Securities Holder, as such,
shall not be entitle to vote or to receive dividends or otherwise be deemed to
be the holder of Common Shares for any purpose, nor shall anything contained
herein or in any Warrant Certificate be construed to confer upon any Securities
Holder, as such, any of the rights of a holder of shares of beneficial interest
of the Company or any right to vote upon or give or withhold consent to any
action of the Company (whether upon any reorganization, issuance of securities,
reclassification or conversion of Common Shares, consolidation, merger, sale,
lease, conveyance or otherwise), receive notice of meetings or other action
affecting shareholders (except for notices expressly provided for in this
Agreement) or receive dividends or subscription rights, until such Warrant
Certificates shall have been surrendered for exercise accompanied by an Election
to Exercise. If, at the date of surrender of such Warrant Certificate, the
transfer books for the Common Shares shall be closed, certificates for the
Common Shares shall be issuable on the date on which such books shall next be
open (whether before, on or after the Expiration Date). The Securities Holder
shall, upon the exercise of Warrants, not be entitled to any dividends if the
record date with respect to payment of such dividends shall be a date prior to
the date such Common Shares became issuable upon the exercise of such Warrants.
Section 4.02. Replacement Warrants. If any Warrant Certificate is lost,
stolen, mutilated or destroyed, the Company may, upon receipt of evidence
satisfactory to the Company of such loss, theft, mutilation or destruction and
on such terms as to indemnity or otherwise as the Company may it its discretion
require (which shall, in the case of a mutilated Warrant Certificate, include
the surrender thereof), issue a new Warrant Certificate of like denomination and
tenor as the lost, stolen, mutilated or destroyed Certificate. Applicants for
such substitute Warrant Certificates shall also comply with such other
reasonable regulations and pay any such reasonable charges as the Company may
prescribe. In the event any Warrant Certificate is lost, stolen, mutilated or
destroyed, and the owner thereof desire; to exercise the Warrants evidenced
thereby, the Company may, in lieu of issuing a substitute Warrant Certificate,
authorize the exercise thereof upon receipt of the above evidence and on such
terms of indemnity as it may require.
Section 4.03. Maintenance of Sufficient and Proper Common Shares. The
Company shall at all times from and after the date that the Warrants are first
exercisable until the Expiration Date reserve and keep available a number of
authorized Common Shares sufficient to permit the exercise in full of all
outstanding Warrants.
Section 4.04. Legend. In addition to any other legends required by law,
the certificates evidencing Warrants shall bear substantially the legend set
forth in Exhibit A hereto and the Common Shares issuable upon the exercise of
the Warrants shall bear substantially the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
THE SECURITIES LAWS OF ANY STATE, AND NEITHER THE SECURITIES NOR ANY
INTEREST THEREIN MAY BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF EXCEPT IN COMPLTANCE WITH, OR PURSUANT TO AN
EXEMPTION FROM, THE REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
Section 4.05. Assignment. The Securities Holder may assign, subject to
compliance with Section 4.06 hereof, in whole or in part, its rights under this
Warrant Agreement, and any such transferee shall be entitled to all rights and
subject to all obligations hereunder.
Section 4.06. Compliance with Securities Act. The Securities Holder, by
acceptance hereof, agrees that this Warrant and the Warrant Shares to be issued
to the Securities Holder upon exercise hereof are being acquired for investment,
solely for the Securities Holder's own account and not as a nominee for any
other Person, and that the Securities Holder will not offer, sell, transfer,
assign or otherwise dispose of this Warrant or any such Warrant Shares except
under circumstances which will not result in a violation of the Securities Act
of 1933, as amended, and further agrees that, notwithstanding the foregoing, the
Company may reasonably require an opinion of counsel (such opinion to be
reasonably acccptable to the Company) under the Securities Act of 1933, as
amended, in connection with any transfer of the Warrant or the Warrant Shares
issuable thereunder.
Section 4.07. Representations and Warranties. The Securities Holder hereby
represents and warrants to the Company that: (i) the Securities Holder is an
"accredited investor" as such term is defined in Rule 501(a) of Regulation D of
the Securities Act of 1933, as amended; (ii) the Securities Holder as
substantial experience in evaluating transactions and investing in securities
similar to those contemplated by this Agreement so that it is capable of
evaluating the merits of its investment in the Company and has the capacity to
protect its own interests; (iii) the Securities Holder understands that the
purchase of the Warrants and the Warrant Shares hereunder are speculative
investments which involve a high degre of risk of loss of its investment therein
and such Securities Holder is able to bear the economic risk of its investment
in the Warrants and the Warrant Shares for an indefinite period of time,
including the risk of a complete loss of such Securities Holder's investment in
such securities; (iv) the Securities Holder acknowledges that the Warrants and
the Warrant Shares have not been registered under the Securities Act of 1933, as
amended and, therefore, cannot be sold unless subsequently registered under such
Act or an exemption from such registration is available; (v) the Securities
Holder acknowledges that it has had a full opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of the
Warrants and the Warrant Shares and has had full access to the Company's
officers and such other information concerning the Company as it has requested;
and (vi) the Securities Holder has reviewed with its own tax advisors the
federal, state, local and foreign tax consequences of this investment and the
transactions contemplated by this Agreement and the Securities Holder relies
solely on such advisors and not on any statements or representations of the
Company, its directors, officers, employees or agents to such tax consequences
and the Securities Holder understands that it (and not the Company) shal be
responsible for any of its own tax liability that may arise as a result of this
investment or the transactions contemplated by this Agreement.
ARTICLE V
CONDITIONS
Section 5.01. Condition Precedent to Company's obligation to Preform. The
obligation of the Company to issue the Warrants shall not become effetive unitl
the date on which each of the following conditions is satisfied (or waived by
the Company):
(i) the Company shall receive (a) the original Series A Stock
certificates from each Securities Holder, in negotiable form, duly endorsed in
blank, or with stock transfer powers attached thereto, and (b) the original Note
from each Note Holder, in negotiable form, duly endorsed in blank, or with stock
transfer powers attached thereto. All securities transferred hereunder shall be
transferred with good and marketable title, free and clear of any and all liens,
claims, encumbrances and adverse interests of any kind; and
(ii) the Company shall receive releases to all financing statements
filed by the Securities Holders againt the Company.
ARTICLE V
GENERAL
Section 5.01. Taxes on Issuance of Common Shares. All Common Shares issued
upon the exercise of a Warrant shall be validly issued, fully paid and
nonassessable, and the Company shall pay all taxes and other governinental
charges that may be imposed in respect to the issue or delivery thereof other
than taxes imposed on net income of the Securities Holder as a result of the
exercise of the Warrants and receipt of Common Shares. The Company shall not be
required, however, to pay any tax or other charge imposed in connection with any
transfer involved in the issue of any certificate for Common Share in any name
other than that of the registered holder of the Warrant or its designee
surrendered in connection with the receipt of such Common Shares, and in such
case the Company shall not be required to issue or deliver any share certificate
until such tax or other charge has been paid or it has been established to the
Company's satisfaction that no tax or other charge is due.
Section 5.02. Dates and Time. If any date set forth in this Warrant
Agreement shall fall on a day other than a day that is a full "business day"
(which means a day other than a Saturday, a Sunday or any day on which banking
institutions in the State of New York are authorized or obligated by law or
executive order to be closed) in New York, New York, said date shall be deemed
to be the next full business day succeeding that date. All times shall be the
legal time then in effect in New York, New York.
Section 5.03. Binding Agreement. All of the covenants and provisions of
this Agreement by or for the benefit of the Company shall bind and inure to the
benefit of its respective successors and assigns hereunder. Nothing expressed in
this Agreement and nothing that may be implied from any of the provisions hereof
is intended, or shall be construed, to confer upon or give to any Person, other
than the Company and the Securities Holder, any legal or equitable right, remedy
or claim under or by reason of his Agreement or of any covenant, condition,
stipulation, promise or agreement herein, and all covenants, conditions,
stipulations, promises and agreements contained in this Agreement shall be for
the sole and exclusive benefit of the Company, the Securities Holder and their
respective successors and assigns.
Section 5.04. Notices. Any communication, notice or otherwise deemed to be
given hereunder shall be duly given if in writing and delivered, or sent by
first class mail, certified or registered, postage prepaid and addressed as
follows:
(a) If to the Company:
X.X. Xxxxxx Group Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: J. Amore
with a copy to:
Gottbetter & Partners, LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxxx, Esq.
Facsimile: (000) 000-0000
(b) If to the Securities Holder:
See Schedule A
Any party may change the address to which any communication, notice or
demand shall be given by giving notice of such change in conformity with the
provisions of this Section.
Section 5.05. Governing Law. This Agreement and each Warrant issued
hereunder shall be governed by and construed in accordance with the laws of the
State of New York, without giving effect to the conflict of laws rules and
principles thereof.
Section 5.06. Amendment. This Agreement and each Warrant Certificate
issued hereunder may not be modified or amended except by written agreement of
the Company and the Securities Holder.
Section 5.07. Headings. The Article and Section headings herein are for
convenience only and are not part of this Agreement and shall not affect the
interpretation thereof.
Section 5.08. Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original, and all such counterparts shall together constitute but one and the
same instrument.
Section 5.09. Mutual Release.
(a) Except with regard to the provisions of this Agreement, each of
the parties hereby fully and forever release, acquit, and discharge the others
together with their respective partners, employees, agents, parents,
subsidiaries, affiliates or other representatives, heirs, executors, successors
and assigns, as the case may be, of and from any and all claims, causes of
action, demands, rights, liabilities, charges, obligations, costs, expenses, and
attorney's fees of every kind, nature and description, whether legal or
equitable, civil or criminal, liquidated or unliquidated, know or unknown, which
the parties now have, ever had, now have or hereafter can, shall or may have
for, upon, or by reason of their dealings with each other from the beginning of
the world to the date of this Agreement.
(b) Except to enforce the terms of this Agreement, each of the
parties agrees not to initiate or voluntarily participate in any legal action,
charge or complaint against the others. If any party voluntarily participates in
any such action, charge, or complaint, the other shall be entitled to recover
their attorney's fees incurred in defending such action, charge or complaint.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Warrant Purchase Agreement, all as of the day and year first above written.
X.X. XXXXXX GROUP INC.
By:
Name:
Title:
SECURITIES HOLDERS:
SDS MERCHANT FUND, L.P. DMG LEGACY INTERNATIONAL LTD.
By: /s/ Xxxxx Xxxxx By: /s/ Xxxxxx X. XxXxxxx
------------------------------------ -----------------------------
Name: Xxxxx Xxxxx Name: Xxxxxx X. XxXxxxx
------------------------------ ---------------------------
Title: Managing Member Title: Managing Member
----------------------------- --------------------------
Dated: Dated:
DMG LEGACY INSTITUTIONAL DMG LEGACY FUND LLC
FUND LLC
By: /s/ Xxxxxx X. XxXxxxx By: /s/ Xxxxxx X. XxXxxxx
------------------------------------ -----------------------------
Name: Xxxxxx X. XxXxxxx Name: Xxxxxx X. XxXxxxx
------------------------------ ---------------------------
Title: Managing Member Title: Managing Member
----------------------------- --------------------------
Dated: Dated:
Schedule A
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NUMBER OF VALUE OF NUMBER OF VALUE OF NUMBER OF
SERIES A SERIES A WARRANTS TO BE NOTE INTEREST WARRANTS TO BE TOTAL
NAME, ADDRESS & TEL/FAX PREFERRED STOCK PREFERRED STOCK ISSUED IN BEING CANCELLED ISSUED IN NUMBER OF
NUMBER OF SECURITIES HOLDER(S) TENDERED FOR (INCLUDING EXCHANGE (INCLUDING EXCHANGE WARRANTS TO
CANCELLATION INTEREST) FOR SERIES A INTEREST) FOR NOTE INTEREST BE ISSUED
------------------------------------------------------------------------------------------------------------------------------------
SDS Merchant Fund, L.P. 275 $2,950,664 2,682,422 $0 0 2,682,422
a Delaware limited
partnership
c/o SDS Capital Partners
Xxx Xxxxx Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx
Fax No.: (000) 000-0000
------------------------------------------------------------------------------------------------------------------------------------
DMG Legacy International Ltd. 141 $1,512,886 1,375,351 $651,929 592,663 1,968,014
a British Virgin
Islands company
c/o DMG Advisors LLC
Xxx Xxxxx Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
Fax No.: (000-000-0000
------------------------------------------------------------------------------------------------------------------------------------
DMG Legacy Institutional
Fund LLC 84 $901,294 819,358 $388,381 353,073 1,172,431
a Delaware limited
liability company
c/o DMG Advisors LLC
Xxx Xxxxx Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
Fax No.: (000)-000-0000
------------------------------------------------------------------------------------------------------------------------------------
DMG Legacy Fund LLC 10 $107,297 97,543 $46,239 42,035 139,578
a Delaware limited
liability company
c/o DMG Advisors LLC
Xxx Xxxxx Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
Fax No.: (000) 000-0000
------------------------------------------------------------------------------------------------------------------------------------
510 $5,472,141 4,974,674 $1,086,548 987,771 5,962,445
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Exhibit A
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE,
AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD, ASSIGNED,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH, OR
PURSUANT TO AN EXEMPTION FROM, THE REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
No. __
June ___, 2004
Warrants for __________ Common Shares
VOID AFTER 5:00 P.M., NEW YORK TIME
ON JUNE 2, 2011
X.X. XXXXXX GROUP INC.
WARRANTS FOR COMMON SHARES
This Warrant Certificate certifies that _________________ (the "Securities
Holder"), or its registered assigns is the registered holder of ___________
Warrants (the "Warrants"), which upon exercise entitles the Securities Holder to
receive shares of common stock, par value $0.001 per share (the "Common
Shares"), of X.X. Xxxxxx Group Inc., a Delaware corporation (the "Company").
Each Warrant entitles the holder thereof to receive from the Company one fully
paid and nonassessable Common Share, subject to adjustment as provided in the
Warrant Agreement dated June 3, 2004 by and between the Company and the
Securities Holder (the "Warrant Agreement"). Each Warrant shall be exercisable
only upon presentation and surrender of this Warrant Certificate, together with
the Form of Election to Exercise duly executed, at the principal executive
office of the Company (i) during the period commencing on the date of the
Warrant Agreement and ending at 5:00 p.m., New York time, on June 2, 2011 or, if
such date is not a business day iti the City of New York, then on the next
succeeding business day (the "Expiration Date"), or (ii) as otherwise provided
in Section 2.03(b) of the Warrant Agreement. This Warrant will expire at 5:00
p.m., New York time, on the Expiration Date. As provided in the Warrant
Agreement, the number of Common Shares to be received upon the exercise of the
Warrants is, upon the happening of certain events, subject to modification or
adjustment.
This Warrant may be exercised in whole or in part by presentation of this
Warrant with exercise form annexed hereto duly executed at the principal
executive office of the Company in York, New York.
This Warrant Certificate is subject to all of the terms, provisions and
conditions of the Warrant Agreement, including the provisions of such Warrant
Agreement relating to the amendment thereof, which Warrant Agreement is hereby
incorporated herein by reference and made a part hereof. Reference is hereby
made to the Warrant Agreement for a full description of the rights, limitations
of rights, obligations, duties and immunities of the Company and the holder of
this Warrant Certificate.
If this Warrant Certificate shall be exercised in part, the holder hereof
shall be entitled to receive upon surrender hereof another Warrant Certificate
evidencing the number of Warrants not exercised.
No holder of this Warrant Certificate shall be deemed to be the holder of
Common Shares or any other securities of the Company that may at any time be
issuable on the exercise hereof for any purpose, nor shall anything contained in
the Warrant Agreement or herein be construed to confer upon the holder of this
Warrant Certificate as such any of the rights of a shareholder of the Company or
any right to for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, give or withhold consent to any Company
action (whether upon any reorganization, issuance of shares, reclassification or
conversion of shares, change of par value, or exchange of shares, consolidation,
merger, conveyance or otherwise) or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise, until this Warrant Certificate
shall have been exercised and the Common Shares to be received upon the exercise
hereof shall have become issuable as provided in the Warrant Agreement.
Except as specifically set forth in the Warrant Agreement, this Warrant
may not be transferred or otherwise disposed of without the prior consent of the
Company.
WITNESS the signature of the proper officer of the Company.
Dated: _______________ X.X. XXXXXX GROUP INC.
By: _________________________
Name: Xxxxxx Xxxxx
Title: Vice Chairman
EXHIBIT B
ELECTION TO EXERCISE
1. The undersigned hereby elects to purchase ______ shares of Common
Stock, par value $.001 per share, of X.X. Xxxxxx Group Inc. at $0.01 per
share for a total of $______ and pursuant to the terms of the attached
Warrant, and tenders herewith payment of the aggregate Exercise Price of
such Warrant Shares in full.
2. Please issue a certificate or certificates representing said Warrant
Shares in the name of the undersigned or in such other name as is
specified below:
Dated: By: _____________________________
Name: ____________________________
Title: ________________________
EXHIBIT C
ASSIGNMENT FORM
(TO BE EXECUTED BY THE REGISTERED HOLDER IN
ORDER TO TRANSFER WARRANT CERTIFICATES)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
___________** of the Warrants represented by this Warrant Certificate unto
_________________________________
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
_________________________________
_________________________________________
(Print name)
_________________________________________
(Address)
_________________________________________
and does hereby irrevocably constitute and appoint ____________________________
Attorney to transfer this Warrant Certificate on the records of the Company with
full power of substitution in the premises.
Dated: _________________ Signature(s) _________________________
Signature(s) _________________________
Guaranteed: __________________________
** Insert here the number of Warrants evidenced on the face of this Warrant
Certificate (or, in the case of a partial assignment, the portion thereof being
assigned), in either case without making any adjustment for additional Common
Stock or any other securities or property or cash which, pursuant to the
adjustment provisions referred to in this Warrant Certificate, may be
deliverable upon exercise.
NOTICE
The Signature(s) to the Purchase Form or the Assignment Form must correspond to
the name(s) as written upon the face of this Warrant Certificate in every
particular without alteration or enlargement or any change whatsoever.
