Exhibit 10.18
NOTE PURCHASE AGREEMENT
By and Between
Best Finance Investments Limited
as the Purchaser
and
▇▇▇▇▇▇▇▇.▇▇▇, Inc. d/b/a vFinance, Inc.
as the Company
Dated:
November 28, 2001
NOTE PURCHASE AGREEMENT
THIS NOTE PURCHASE AGREEMENT (this "Agreement"), is made as of November
28, 2001 by and between ▇▇▇▇▇▇▇▇.▇▇▇, Inc. d/b/a vFinance, Inc. (the "Company")
and Best Finance Investments Limited (the "Buyer").
RECITALS
A. The Buyer desires to purchase from the Company, and the Company
desires to issue to the Buyer, a note in the principal amount of $1,500,000 (the
"Note") convertible into shares (the "Note Shares") of the Company's issued and
outstanding common stock, par value $.01 per share ("Common Stock");
B. In partial consideration of the Buyer purchasing the Note, the
Company has agreed to issue an option (the "Option") in favor of the Buyer or
its designee to purchase up to that number of shares (the "Option Shares") of
Common Stock equal to 1,500,000 divided by the average closing bid and ask price
of the Common Stock for the twenty consecutive trading days prior to the date(s)
of the applicable option exercise but in no event shall such number be more than
$.336 or less than $.23. The Option may be exercised from time to time up to
June 30, 2002 and shall be substantially in the form of Exhibit A attached
hereto;
C. The Company and the Buyer are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("Regulation D") or Regulation S ("Regulation
S") as promulgated by the United States Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as amended (the "Securities Act"); and
D. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a (a) Registration Rights
Agreement (the "Registration Rights Agreement") substantially in the form of
Exhibit B attached hereto pursuant to which the Company has agreed to provide
certain registration rights under the Securities Act and the rules and
regulations promulgated thereunder and applicable state securities laws with
respect to the Note Shares and Option Shares (collectively, the "Shares"); and
(b) an Investor's Rights Agreement (the "Investor Rights Agreement"),
substantially in the form of Exhibit C attached hereto pursuant to which the
Buyer (i) will have the right to designate one member to the Company's Board of
Directors, (ii) is granted certain preemptive rights, and (iii) is granted
certain approval rights with respect to corporate action to be taken by the
Company. This Agreement, the Note, the Option, the Registration Rights Agreement
and the Investor Rights Agreement are sometimes hereinafter collectively
referred to as the "Transaction Documents."
AGREEMENTS
NOW, THEREFORE, in consideration of their respective promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by the parties, the Company and the Buyer hereby
agree as follows:
1. ISSUANCE SALE AND DELIVERY OF SECURITIES.
a. ISSUANCE OF NOTE. Subject to the terms and conditions set
forth in this Agreement and in reliance upon the representations and warranties
contained herein, the Company agrees to issue and sell to Buyer, and Buyer
hereby agrees to purchase from the Company the Note. Concurrently with the
execution of this Agreement, the Buyer shall deposit into escrow by wire
transfer $1,500,000. The escrow shall be with the law firm of Loeb & Loeb LLP,
counsel to the Buyer. The Note shall be (a) for a term of 48 months, with no
interest and no amortization payable during the term, (b) convertible in whole
or in part into Note Shares at a conversion price of $0.285 per Option Share,
(c) subject to the right of the Company to redeem the Note for $1,750,000 at any
time prior to the third anniversary of the Closing, and (d) substantially in the
form attached hereto as Exhibit D. The purchase and issuance of the Note shall
be effected at a Closing (the "Closing"). In the event that the Closing does not
occur by December 31, 2001, for any reason, the Buyer may instruct Loeb & Loeb
LLP to pay over the escrow funds to the Buyer. In such event, the Note and the
Option shall be returned to the Company and this Agreement shall be deemed
terminated. At the Closing, the Company shall deliver the Note and the Option to
the Buyer and the Buyer shall pay $1,500,000 to the Company by instructing Loeb
& Loeb LLP to remit such amount in good funds to the Company for credit to the
Company's account on the date of the Closing.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
The Buyer understands, agrees with, and represents and warrants to the
Company with respect to its purchase hereunder, that:
a. INVESTMENT PURPOSES; COMPLIANCE WITH SECURITIES ACT. The
Buyer is purchasing the Note and the Option and, upon conversion of the Note or
the exercise of the Option, the Shares for its own account for investment only
and not with a view towards, or in connection with, the public sale or
distribution thereof, except pursuant to sales registered under or exempt from
the Securities Act.
b. ACCREDITED INVESTOR STATUS. The Buyer is an "accredited
investor" as that term is defined in Rule 501 (a) of Regulation D. The Buyer is
a sophisticated investor and has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of an
investment made pursuant to this Agreement. The Buyer is aware that it may be
required to bear the economic risk of an investment made pursuant to this
Agreement for an indefinite period of time, and is able to bear such risk for an
indefinite period.
c. OFFSHORE TRANSACTION. No offer of the Note, the Option or
the Shares was made to the Buyer in the United States. At the time the offer of
the Note, the Option or the Shares was made, the Buyer was located outside of
the United States.
d. RELIANCE ON EXEMPTIONS. The Buyer understands the Note and
the Option and, upon conversion of the Note or the exercise of the Option, the
Shares are being offered and sold to it in reliance on specific exemptions from
the registration requirements of the applicable United States federal and state
securities laws and that the Company is relying upon the truth and accuracy of,
and the Buyer's compliance with, the representations, warranties,
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acknowledgments, understandings, agreements and covenants of the Buyer set forth
herein in order to determine the availability of such exemptions and the
eligibility of the Buyer to acquire the Note the Option and the Shares.
e. INFORMATION. The Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Note, the
Option and the Shares that have been requested by the Buyer. The Buyer and its
advisors, if any, have been afforded the opportunity to ask all such questions
of the Company as they have in their discretion deemed advisable. The Buyer
understands that its investment in the Note, the Option and the Shares involves
a high degree of risk. The Buyer has sought such accounting, legal and tax
advice as it has considered necessary to an informed investment decision with
respect to the investment made pursuant to this Agreement.
f. NO GOVERNMENT REVIEW. The Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Note, the Option
and the Shares or the fairness or suitability of the investment in the Note, the
Option and the Shares, nor have such authorities passed upon or endorsed the
merits of the offering of the Note, the Option and the Shares.
g. TRANSFER OR RESALE. The Buyer understands that: (i) except
as provided in the Registration Rights Agreement, the Note, the Option, the Note
Shares and the Option Shares (collectively the "Securities") have not been and
are not being registered under the Securities Act or any state securities laws,
and may not be offered for sale, sold, assigned or transferred unless either (a)
subsequently registered thereunder or (b) the Buyer shall have delivered to the
Company an opinion by counsel reasonably satisfactory to the Company, in form,
scope and substance reasonably satisfactory to the Company, to the effect that
the Securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration, (ii) any sale of
such Securities made in reliance on Rule 144 (as hereafter defined) may be made
only in accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of such Securities under circumstances in which the
Company (or the person though whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the SEC thereunder, and (iii) neither the Company nor any other
person is under any obligation to register such Securities under the Securities
Act or any state securities laws or to comply with the terms and conditions of
any exemption thereunder (in each case, other than pursuant to this Agreement or
the Registration Rights Agreement).
h. NO SHORT SALES OF THE OPTION SHARES AND THE NOTE SHARES. So
long as the Buyer beneficially owns all or any portion of the Option Shares or
Note Shares, the Buyer and its "affiliates" shall not engage in any short sales
or third party short sales of such Shares, in violation of Regulation M as
promulgated under the Securities Exchange Act of 1934, as amended, or hold a
similar "put equivalent" with respect to such Shares. For purposes of this
Agreement, "affiliate" shall mean, with respect to the Buyer, any other person
or entity that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, the Buyer.
"Control" (including the terms "controlling," "controlled by"
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and "under common control with", with respect to the relationship between or
among two or more persons or entities, shall mean the possession, directly or
indirectly or as trustee or executor, of the power to direct or cause the
direction of the affairs or management of any entity, whether through the
ownership of voting securities, as trustee or executor, by contract or
otherwise, including, without limitation, the ownership, directly or indirectly,
of securities having the power to elect a majority of the board of directors or
similar body governing the affairs of such entity.
i. LEGEND. The Buyer understands that until such time as the
Option Shares and/or the Note Shares, (if any), have been registered under the
Securities Act as contemplated by the Registration Rights Agreement or otherwise
may be resold by the Buyer pursuant to Rule 144 (as amended, or any applicable
rule which operates to replace said Rule) promulgated under the Securities Act
("Rule 144"), the stock certificates representing the Securities will bear a
restrictive legend (the "Legend") in substantially the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS
(COLLECTIVELY, THE "LAWS"). THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF
EITHER (I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
LAWS, OR (II) AN OPINION OF COUNSEL (REASONABLY ACCEPTABLE TO THE ISSUER)
PROVIDED TO THE ISSUER IN FORM, SUBSTANCE AND SCOPE REASONABLY ACCEPTABLE TO THE
ISSUER TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER THE LAWS DUE TO AN
AVAILABLE EXCEPTION TO OR EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
LAWS.
The Legend shall be removed and the Company will issue certificates
without the Legend to the holder of the applicable Option Shares and/or Note
Shares upon which the Legend is stamped, in accordance with Section 5(b).
j. AUTHORIZATION; ENFORCEMENT. This Agreement, the Investor
Rights Agreement and the Registration Rights Agreement have been duly and
validly authorized, executed and delivered by the Buyer and are each and
collectively valid and binding agreements of the Buyer enforceable in accordance
with their terms, subject as to enforceability to general principles of equity
and to bankruptcy, insolvency, moratorium, and other similar laws affecting the
enforcement of creditors' rights generally.
k. BROKERS. The Buyer has taken no action that would give rise
to any claim by any person for brokerage commissions, finder's fees or similar
payments relating to this Agreement and the transactions contemplated hereby.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company understands, agrees with, and represents and warrants to
the Buyer that:
a. ORGANIZATION AND QUALIFICATION. The Company and its
subsidiaries are duly organized and existing in good standing under the laws of
the respective jurisdictions
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in which they are incorporated and have the requisite corporate power to own
their properties and to carry on their business as now being conducted. Each of
the Company and its subsidiary is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which the nature of
the business conducted by it makes such qualification necessary and where the
failure so to qualify would have a Material Adverse Effect. "Material Adverse
Effect" as used herein means any material adverse effect on the operations,
properties or financial condition of the Company and its subsidiaries taken as a
whole. The Common Stock is eligible to trade and is listed for trading on the
Over the Counter Bulletin Board ("OTCBB"). The Company has received no notice,
either written or oral, with respect to the continued eligibility of the Common
Stock for such listing, and the Company has maintained all requirements for the
continuation of such listing, and the Company does not reasonably anticipate
that the Common Stock will be delisted from the OTCBB for the foreseeable
future. The Company shall use its best efforts to continue to have its stock
eligible to trade on the OTCBB or a comparable national securities market or
exchange. The Company has complied with all requirements of the SEC, the
National Association of Securities Dealers applicable blue sky laws and the
OTCBB with respect to the issuance of the Securities.
b. AUTHORIZATION; ENFORCEMENT. Subject to the Company amending
its Certificate of Incorporation in accordance with Section 4(d) hereof, (i) the
Company has the requisite corporate power and authority to enter into and
perform this Agreement, the Investor Rights Agreement, and the Registration
Rights Agreement, to issue and sell the Note, the Option, the Option Shares and
the Note Shares in accordance with the terms hereof, and to perform its
obligations under the Notes in accordance with the requirements of the same,
(ii) the execution, delivery and performance of this Agreement the Investor
Rights Agreement, the Option, the Note and the Registration Rights Agreement by
the Company and the consummation by it of the transactions contemplated hereby
and thereby have been duly authorized by the Company's Board of Directors and no
further consent or authorization of the Company, its Board of Directors, or its
shareholders is required, (iii) this Agreement, the Investor Rights Agreement,
the Option, the Registration Rights Agreement and the Note, have been duly and
validly authorized, executed and delivered by the Company, and (iv) this
Agreement, the Note, the Investor Rights Agreement, the Option and the
Registration Rights Agreement constitute the valid and binding obligations of
the Company enforceable against the Company in accordance with their respective
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting, generally, the enforcement of creditors' rights and remedies or by
other equitable principles of general application.
c. CAPITALIZATION. As of the date hereof, the authorized
capital stock of the Company consists of 25,000,000 shares of Common Stock of
which 20,933,021 shares were issued and outstanding; and 2,500,000 shares of
preferred stock, par value $0.01, of which 122,500 shares of Series A preferred
stock and 50,000 shares of Series B preferred stock are issued and outstanding.
All of such outstanding shares have been validly issued and are fully paid and
nonassessable. No shares of Common Stock are subject to preemptive rights or any
other similar rights or any liens or encumbrances. Except as disclosed in
Schedule 3(c) attached, as of the effective date of this Agreement, (i) there
are no outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
subsidiaries,
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or arrangements by which the Company or any of its subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of its
subsidiaries, (ii) there are no outstanding debt securities, and (iii) there are
no agreements or arrangements under which the Company or any of its subsidiaries
is obligated to register the sale of any of its or their securities under the
Securities Act (except as disclosed in Schedule 3(c) attached and as provided
herein and in the Registration Rights Agreement).
d. ACKNOWLEDGMENT REGARDING BUYER'S PURCHASE OF THE
SECURITIES. The Company acknowledges and agrees that the Buyer is not acting as
financial advisor to or fiduciary of the Company (or in any similar capacity
with respect to this Agreement or the transactions contemplated hereby), that
this Agreement and the transactions contemplated hereby, and the relationship
between the Buyer and the Company, are and will be considered "arms-length"
notwithstanding any other or prior agreements or nexus between the Buyer and the
Company, whether or not disclosed, and that any statement made by the Buyer, or
any of its representatives or agents, in connection with this Agreement and the
transactions contemplated hereby is not advice or a recommendation, is merely
incidental to the Buyer's purchase of the Securities and has not been relied
upon in any way by the Company, its officers or directors. The Company further
represents to the Buyer that the Company's decision to enter into this Agreement
and the transactions contemplated hereby have been based solely upon an
independent evaluation by the Company, its officers and directors.
e. INVESTMENT COMPANY ACT. Neither the Company nor any of its
subsidiaries is subject to regulation under The Investment Company Act of 1940,
as amended.
f. NO INTEGRATED OFFERING. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any Securities or solicited any offers to
buy any Securities under circumstances which would prevent the parties hereto
from consummating the transactions contemplated hereby pursuant to an exemption
from registration under the Securities Act and specifically in accordance with
the provisions of Regulation D or Regulation S, as the case may be. The
transactions contemplated hereby are exempt from the registration requirements
of the Securities Act and all state securities laws, assuming the accuracy of
the representations and warranties contained herein of the Buyer.
g. NO CONFLICTS. Subject to the Company amending its
Certificate of Incorporation in accordance with Section 4(d) hereof, the
execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby will not (i)
result in a violation of the Certificate of Incorporation or Bylaws or (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its subsidiaries is a
party, or result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations) applicable
to the Company or any of its subsidiaries or by which any property or asset of
the Company or any of its subsidiaries is bound or affected (except for such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect).
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h. CONSENTS. Except as set forth in Schedule 3(h) and the
filing of a Form D with the United States Securities and Exchange Commission,
the Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency in order
for it to execute, deliver or perform any of its obligations under this
Agreement, the Investor Rights Agreement, the Note, the Option, and the
Registration Rights Agreement in accordance with the terms hereof and thereof.
i. FINANCIAL STATEMENTS. The Company has delivered to the
Buyer as requested by the Buyer true and complete copies of the Company's
audited financial statements. As of their respective dates, the financial
statements of the Company complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto. Such financial statements have been prepared in
accordance with generally accepted accounting principles, consistently applied,
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No other written
information provided by or on behalf of the Company to the Buyer contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstance under which they are or were made, not misleading. Except as set
forth in the financial statements of the Company or set forth in the Schedule
3(i) to this Agreement, the Company has no liabilities, contingent or otherwise,
other than (i) liabilities incurred in the ordinary course of business
subsequent to the date of such financial statements and (ii) obligations under
contracts and commitments incurred in the ordinary course of business and not
required under generally accepted accounting principles to be reflected in such
financial statements, in each case of clause (i) and (ii) next above which,
individually or in the aggregate, are not material to the financial condition,
business, operations, properties, operating results or prospects of the Company.
j. ABSENCE OF CERTAIN CHANGES. Except as disclosed in Schedule
3(j), since the date of the financial statements, there has been no material
adverse change and no material adverse development in the business, properties,
operation, financial condition, results of operations or prospects of the
Company. The Company has not taken any steps, and does not currently have any
reasonable expectation of taking any steps, to seek protection pursuant to any
bankruptcy law nor does the Company have any knowledge that its creditors intend
to initiate involuntary bankruptcy proceedings.
k. ABSENCE OF LITIGATION. Except as set forth in Schedule 3(k)
and in the Company's filings with the United States Securities and Exchange
Commission, there is no action, suit, proceeding, inquiry or investigation
before or by any court, public board or body pending or, to the knowledge of the
Company, threatened against or affecting the Company, wherein an unfavorable
decision, ruling or finding would have a Material Adverse Effect or which would
adversely affect the validity or enforceability of, or the authority or ability
of the Company to perform its obligations under, this Agreement or any of the
documents contemplated herein.
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l. BROKERS; NO GENERAL SOLICITATION. The Company has taken no
action that would give rise to any claim by any person for brokerage
commissions, finder's fees or similar payments relating to this Agreement and
the transactions contemplated hereby and other than fees to be paid by the
Company to the persons identified in Schedule 3(l) attached hereto. Neither the
Company nor any distributor participating on the Company's behalf in the
transactions contemplated hereby nor any person acting for the Company, or any
such distributor, has conducted any "general solicitation," as described in Rule
502(c) under Regulation D, with respect to the securities being offered hereby.
m. NON-DISCLOSURE OF NON-PUBLIC INFORMATION.
(a) The Company shall in no event disclose non-public
information to the Buyer, advisors to or representatives of the Buyer unless
prior to such disclosure of information the Company marks such information as
"non-public information - confidential" and provides the Buyer, such advisors
and representatives with the opportunity to accept or refuse to accept such
non-public information for review. The Company may, as a condition to disclosing
any non-public information hereunder, require the Buyer, its advisors and
representatives to enter into a confidentiality agreement in form reasonably
satisfactory to the Company and the Buyer.
(b) Nothing herein shall require the Company to
disclose non-public information to the Buyer, its advisors or representatives,
and the Company represents that it does not disseminate non-public information
to investors who purchase stock in the Company in a public offering, to money
managers or to securities analysts; provided, however, that notwithstanding
anything herein to the contrary, the Company will, as hereinabove provided,
immediately notify the advisors and representatives of the Buyer and, if any,
underwriters, of any event or the existence of any circumstance (without any
obligation to disclose the specific event or circumstance) of which it becomes
aware, constituting non-public information (whether or not requested of the
Company specifically or generally during the course of due diligence by such
persons or entities), which, if not disclosed in the prospectus included in the
registration statement to be filed pursuant to the Registration Rights
Agreement, would cause such prospectus to include a material misstatement or to
omit a material fact required to be stated therein in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading. Nothing herein shall be construed to mean that such persons or
entities other than the Buyer (without the written consent of the Buyer prior to
disclosure of such information) may not obtain non-public information in the
course of conducting due diligence in accordance with the terms of this
Agreement and nothing herein shall prevent any such persons or entities from
notifying the Company of their opinion that, based upon such due diligence by
such persons or entities, that the registration statement contains an untrue
statement of a material fact or omits a material fact required to be stated in
such registration statement or necessary to make the statements contained
therein, in light of the circumstances in which they were made, not misleading.
n. SECURITIES FILINGS. The Company's securities filings as at
the respective dates of such filings did not make any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made not misleading.
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4. COVENANTS.
a. BEST EFFORTS. Each party shall use its best efforts timely
to satisfy each of the conditions to be satisfied by it as provided in Sections
6 and 7 of this Agreement.
b. SECURITIES LAWS. The Company agrees to timely file all
reports and other documents required to be filed with the SEC, specifically, a
Form D (or equivalent form required by applicable state law) with respect to the
Securities if and as required under Regulation D and applicable state securities
laws and to provide a copy thereof to the Buyer promptly after such filing.
c. COMPANY'S BOARD OF DIRECTORS. On or before the Closing, the
Company shall amend its charter documents if necessary so that the size of its
Board of Directors will be changed from two to three.
d. AUTHORIZE ADDITIONAL SHARES. As soon as reasonably
practicable after the date hereof, the Company shall amend its Certificate of
Incorporation to increase the total number of authorized shares of Common Stock
to at least 50,000,000.
e. REPORTING STATUS. As of the date of this Agreement, the
Company is subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). So long as the
Buyer beneficially owns any of the Shares, the Company shall file all reports
required to be filed by the Company with the SEC pursuant to the Exchange Act,
and the Company shall not terminate its status as an issuer required to file
reports under the Exchange Act even if the Exchange Act or the rules and
regulations hereunder would permit such termination.
f. USE OF PROCEEDS. The Company shall use the proceeds from
the issuance of the Note for working capital in accordance with Schedule 4(f).
g. COORDINATION OF INVESTMENT BANKING SERVICES.
Contemporaneously with the Closing, (i) the employees ("Employees of SBI ▇▇
▇▇▇▇▇▇▇") ▇▇ ▇▇▇ ▇▇ (▇▇▇) Capital ("SBI") listed in Schedule 4(g) shall become
employees of the Company or one of its affiliates, except that the employment of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall be subject to the execution of an employment agreement
acceptable to ▇▇. ▇▇▇▇▇▇▇ which will provide, inter alia, that until June 30,
2002, ▇▇. ▇▇▇▇▇▇▇ shall be permitted to continue to work for SBI as specified in
such agreement, (ii) the Company will assume all of the operational obligations
of SBI listed on Schedule 4(g), (iii) the Company shall grant SBI the right of
first refusal, which right shall expire on June 30, 2002, to review deals
undertaken by the Company's corporate finance group and determine whether or not
to make such SBI deals ("SBI Deals"). Such right of first refusal shall only
apply to Initial Public Offerings and registered secondary offerings, (iv) a
management fee of ten percent (10%) will be paid to SBI for each SBI Deal. This
fee shall be paid whether or not the deal is sourced by SBI, (v) for each deal
sourced by SBI or any of its affiliates, SBI shall receive additional
compensation at a rate of ten percent (10%) of the management fees paid. It is
assumed that for all deals sourced by SBI or its affiliates the SBI name will
appear on the cover of any such prospectus, and (vi) for all deals distributed
by SBI or its affiliates SBI shall receive sales commissions in addition to
investment banking fees, if any. Additionally, prior to the Closing,
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the parties shall negotiate in good faith for an agreement pertaining to the
future allocation and coordination of investment banking services and fees
between the Company and its affiliates and the Buyer and its affiliates.
h. LISTING. The Company shall at all times comply in all
respects with the Company's reporting, filing and other obligations under the
by-laws or rules of the National Association of Securities Dealers and the OTCBB
(or if applicable NASDAQ or such national securities exchange on which the
Common Stock may be listed, as applicable).
i. EXPENSES. Except as set forth in Section 8(n) below, each
party shall pay their own respective expenses in connection with the
transactions contemplated by the Agreement.
5. LEGEND AND TRANSFER INSTRUCTIONS.
a. TRANSFER AGENT INSTRUCTIONS. The Company shall instruct its
transfer agent to issue certificates, registered in the name of the Buyer or its
nominee, for the Shares in such amounts as specified by the Buyer to the
Company, prior to the conversion of the Note or the exercise of the Option. All
such certificates shall bear the restrictive legend specified in Section 2(g) of
this Agreement only to the extent required by applicable law and as specified in
the Transaction Documents. The Company warrants that no instruction other than
such instructions referred to in this Section 5 will be given by the Company to
its transfer agent and that the Shares shall otherwise be freely transferable on
the books and records of the Company as and to the extent permitted by
applicable law and provided by this Agreement and the Registration Rights
Agreement. Nothing in this Section shall affect in any way the Buyer's
obligations and agreement to comply with all applicable securities laws upon
resale of the Shares. If the Buyer (x) provides the Company with an opinion of
counsel reasonably satisfactory to the Company that registration by the Buyer of
the Shares is not required under the Securities Act, or (y) transfers Securities
to an affiliate which is an accredited investor (in accordance with the
provisions of this Agreement) or in compliance with Rule 144, then in either
instance the Company shall permit the said transfer, and if applicable promptly
(and in all events within two (2) trading days) instruct its transfer agent to
issue one or more certificates in such name and in such denominations as
specified by the Buyer.
b. REMOVAL OF LEGENDS. The Legend shall be removed and the
Company shall issue a certificate without such Legend to the holder of any Share
upon which it is stamped, and a certificate for a Share shall be originally
issued without the Legend, if, unless otherwise required by state securities
laws, (x) the sale of such Share is registered under the Securities Act, or (y)
such holder provides the Company with an opinion by counsel reasonably
satisfactory to the Company, that is in form, substance and scope reasonably
satisfactory to the Company, to the effect that a public sale or transfer of
such Share may be made without registration under the Securities Act or (z) such
holder provides the Company with assurances reasonably satisfactory to the
Company and its counsel, that such Share can be sold pursuant to Rule 144. The
Buyer agrees that its sale of all Securities, including those represented by a
certificate(s) from which the Legend has been removed, or which were originally
issued without the Legend, shall be made only pursuant to an effective
registration statement (and to deliver a prospectus in connection with such
sale) or in compliance with an exemption from the
9
registration requirements of the Securities Act. In the event the Legend is
removed from any Share or any Share is issued without the Legend and thereafter
the effectiveness of a registration statement covering the sales of such Share
is suspended or the Company determines that a supplement or amendment thereto is
required by applicable securities laws, then upon reasonable advance notice to
the holder of such Share, the Company shall be entitled to require that the
Legend be placed upon any such Share which cannot then be sold pursuant to an
effective registration statement or Rule 144 or with respect to which the
opinion referred to in clause (y) next above has not been rendered, which Legend
shall be removed when such Share may be sold pursuant to an effective
registration statement or Rule 144 (or such holder provides the opinion with
respect thereto described in clause (y) next above.
c. INJUNCTIVE RELIEF FOR BREACH. The Company acknowledges that
the remedy at law for a breach of its obligations under Sections 5(a) and 5(b)
above will cause irreparable harm to the Buyer by vitiating the intent and
purpose of the transactions contemplated hereby. Accordingly the Company agrees
that the remedy at law for a breach of its obligations under such Sections would
be inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of such Sections, the Buyer shall be entitled, in
addition to all other remedies at law or in equity, to an injunction restraining
any breach and requiring immediate issuance and transfer, without the necessity
of showing economic loss and without any bond or other Share being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligations of the Company hereunder are subject to the
satisfaction, on or before the Closing, unless otherwise specified, of each of
the following conditions, provided that these conditions are for the Company's
sole benefit and may be waived by the Company at any time in its sole
discretion:
a. The parties shall have executed this Agreement, the
Investor Rights Agreement and the Registration Rights Agreement.
b. The representations and warranties of the Buyer shall be
true and correct in all material respects as of the date made and as of each
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date). The Buyer shall have performed,
satisfied and complied in all material respects with the covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Buyer at or prior to each Closing.
c. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction or any self
regulatory organization having authority over the matters contemplated hereby
which restricts or prohibits the consummation of any of the transactions
contemplated herein.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The obligations of the Buyer are subject to the satisfaction, on or
before the Closing, unless otherwise specified, of each of the following
conditions, provided that these conditions
10
are for the sole benefit of the Buyer and may be waived by the Buyer at any time
in its sole discretion:
a. The Company shall have executed this Agreement, the
Investor Rights Agreement and the Registration Rights Agreement and shall have
issued and delivered the Note and the Option.
b. The representations and warranties of the Company shall be
true and correct in all material respects as of the date made and as of each
Closing as though made at that time (except for representations and warranties
that speak as of a specific date). The Company shall have performed, satisfied
and complied in all material respects with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to each Closing. The Buyer may require a
certificate, executed by the Chief Executive Officer of the Company, dated as of
each Closing, to the foregoing effect and as to such other matters as may be
reasonably requested by the Buyer.
c. The Common Stock shall not have been suspended by the SEC
or other relevant regulatory agency.
d. The Company shall not have received, as of the Closing
Date, from the National Association of Securities Dealers, any written or oral
communication as to its actual or potential ineligibility for continued listing
of the Common Stock on the OTCBB.
e. Company's counsel shall have delivered to the Buyer the
legal opinion attached hereto as Exhibit E.
f. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction or any self
regulatory organization having authority over the matters contemplated hereby
which restricts or prohibits the consummation of any of the transactions
contemplated herein.
g. All consents, approval, authorizations and orders required
to be obtained and all registrations, filings and notices required to be made
with or given to any regulatory authority or person as provided herein shall
have been made.
h. On the Closing, the Employees of SBI E2 (USA) Capital
specified on Schedule 4(g) shall become employees of the Company or one of its
affiliates.
i. Contemporaneously with the Closing, the Company shall have
maintained or increased, as applicable, the size of the Board of Directors at or
to three members and have appointed one designee of the Buyer (reasonably
acceptable to the Company) to the Board of Directors.
j. The Credit Agreement between the Company and UBS Americas
Inc. substantially in the form heretofore delivered to the Buyer shall have
closed.
11
8. GOVERNING LAW; MISCELLANEOUS.
a. GOVERNING LAW AND VENUE. This Agreement shall be governed
by and interpreted in accordance with the laws of the State of California
without regard to the principles of conflict of laws. In the event of any
litigation regarding the interpretation or application of this Agreement, the
parties irrevocably consent to jurisdiction in any of the state or federal
courts located in the City of Los Angeles, State of California and waive their
rights to object to venue in any such court, regardless of the convenience or
inconvenience thereof to any party. Service of process in any civil action
relating to or arising out of this Agreement (including also all Exhibits or
Schedules hereto) or the transaction(s) contemplated herein may be accomplished
in any manner provided by law. The parties hereto agree that a final,
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
b. COUNTERPARTS. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and signature pages from such counterparts have been delivered.
c. HEADINGS; GENDER, ETC. The headings of this Agreement are
for convenience of reference and shall not form a part of, or affect the
interpretation of this Agreement. As used herein, the masculine shall refer to
the feminine and neuter, the feminine to the masculine and neuter, and the
neuter to the masculine and feminine, as the context may require. As used
herein, unless the context clearly requires otherwise, the words "herein,"
"hereunder" and "hereby," shall refer to this entire Agreement and not only to
the Section or paragraph in which such word appears. If any date specified
herein falls upon a Saturday, Sunday or public or legal holidays, the date shall
be construed to mean the next business day following such Saturday, Sunday or
public or legal holiday. For purposes of this Agreement, a "business day" is any
day other than a Saturday, Sunday or public or legal holiday.
d. SEVERABILITY. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
e. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Buyer
makes any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended other than by
an instrument in writing signed by the party to be charged with enforcement.
f. NOTICES. Any notices required or permitted to be given
under the terms of this Agreement shall be sent by U.S. Mail or delivered
personally or by courier or via facsimile (if via facsimile, to be followed
within three (3) business days by an original of the notice document via U.S.
Mail or courier) and shall be effective five (5) days after being placed in the
mail, if mailed, certified or registered, return receipt requested, or upon
receipt, if
12
delivered personally or by courier or by facsimile, in each case
properly addressed to the party to receive the same. The addresses for such
communications shall be:
If to the Company: ▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (561) 981-100
Facsimile: (561)
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, CEO and President
If to the Buyer, at the address on the signature page of this Agreement. Each
party shall provide written notice to the other party of any change in address.
g. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns. Neither the Company nor the Buyer shall assign this Agreement or any
rights or obligations hereunder without the prior written consent of the other
(which consent shall not be unreasonably withheld), and in any event any
assignee of the Buyer shall be an accredited investor (as defined in Regulation
D), in the written opinion of counsel who is reasonably satisfactory to Company
and in form, substance and scope reasonably satisfactory to the Company.
Notwithstanding anything herein to the contrary, Buyer may pledge the Securities
as collateral for a bona fide loan pursuant to a Share agreement with a third
party lender, and such pledge shall not be considered an assignment in violation
of this Agreement so long as it is made in compliance with all applicable law.
h. NO THIRD PARTY BENEFICIARIES. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
i. SURVIVAL. Unless this Agreement is terminated under Section
8(1), the representations and warranties of the Company and the Buyer contained
in Sections 2 and 3 and the agreements and covenants set forth in Sections 4, 5
and 8 shall survive the final Closing of the purchase and sale of Securities
purchased and sold hereby.
j. PUBLICITY. The Company and the Buyer shall have the right
to review before issuance by the other, any press releases or any other public
statements with respect to the transactions contemplated hereby; provided,
however, that the Company shall be entitled, without prior consultation with or
approval of the Buyer, to make any press release or other public disclosure with
respect to such transactions as is required by applicable law and regulations.
k. FURTHER ASSURANCE. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
13
l. TERMINATION. Neither party may unilaterally terminate this
Agreement after the Closing for any reason other than a material breach of this
Agreement by the non-terminating party. Such termination shall not be the sole
remedy for a breach of this Agreement by the non-terminating party, and each
party shall retain all of its rights hereunder at law or in equity.
Notwithstanding anything herein to the contrary, a party whose breach of a
covenant or representation and warranty or failure to satisfy a condition
prevented the Closing shall not be entitled to terminate this Agreement.
m. REMEDIES. No provision of this Agreement providing for any
specific remedy to a party shall be construed to limit such party to the
specific remedy described, and any other remedy that would otherwise be
available to such party at law or in equity shall be so available. Nothing in
this Agreement shall limit any rights a party may have with any applicable
federal or state securities laws with respect to the transactions contemplated
hereby.
n. BUYER'S LEGAL FEES. At the Closing, the Buyer shall be
entitled to deduct from the amount advanced to the Company at the Closing the
amount of legal fees and expenses incurred by the Buyer's legal counsel in
connection with the preparation and negotiation of this Agreement and the other
collateral documents and the transactions provided for herein up to $35,000.
[This balance of this page is intentionally left blank.]
14
IN WITNESS WHEREOF, the Buyer and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
COMPANY:
▇▇▇▇▇▇▇▇.▇▇▇, INC., d/b/a VFINANCE, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: CEO and President
BUYER:
BEST FINANCE INVESTMENTS LIMITED
By: /s/ ▇▇▇▇ Sin Just
-------------------------------------
Name: ▇▇▇▇ Sin Just
Title: Director
BUYER'S ADDRESS:
c/o ▇▇▇▇▇ ▇▇▇▇▇▇
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇ ▇▇▇▇▇'▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
15
EXHIBIT A
THIS OPTION AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS OPTION
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS
OPTION AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS OPTION MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS OPTION UNDER SAID ACT OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO ▇▇▇▇▇▇▇▇.▇▇▇, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.
OPTION AGREEMENT
This Agreement dated as of ______, 2001 (the "Agreement") is made by
and between ▇▇▇▇▇▇▇▇.▇▇▇, Inc. d/b/a vFinance, Inc. (the "Company") and Best
Finance Investments Limited (the "Optionee") with reference to the following:
A. Pursuant to that certain Note Purchase Agreement dated as of
November 28, 2001 (the "Purchase Agreement"), concurrently herewith, Optionee
has advanced to the Company the principal amount of $1,500,000 (the "Loan").
B. As a condition to the Loan, the Company is granting to Optionee an
option (the "Option") to purchase shares of the Common Stock of the Company on
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained in this Agreement, the parties hereto agree as follows:
1. GRANT OF OPTION. Subject to and upon the terms and
conditions of this Agreement, the Company hereby grants to the Optionee the
Option to purchase all or a portion of that number of shares (the "Option
Shares") of Common Stock equal to the difference between (A) 1,500,000 divided
by the following amount (the "Per Share Amount"): the average closing bid and
ask price of the Common Stock for the twenty consecutive trading days prior to
the date(s) that the applicable Notice Exercise is delivered to the Company but
in no event shall the Per Share Amount be more than .336 or less than .23, and
(B) the number of Option Shares previously issued by the Company to Optionee
hereunder. The Optionee may exercise the Option and thereby purchase the Shares
during the period commencing on the date hereof and ending on June 30, 2002. The
period that the Option may be exercised as so provided is referred to herein as
the Option Period. The per share exercise price of the Option shall be the
applicable Per Share Amount at the time of exercise. The consideration for the
Option is the agreement by the Optionee to make the Loan. The Optionee shall
have the right to offset against any amounts due the Company hereunder the
amount owing to Optionee under the Loan.
2. EXERCISE OF THE OPTION. During the Option Period, from time
to time, the Optionee may exercise the Option or portion thereof by delivering
to the Company a duly exercised Notice of Exercise (the "Notice") substantially
in the form of Exhibit A hereto. Such Notice shall constitute an irrevocable
commitment to purchase the amount of Option Shares specified in the Notice.
Concurrently with the execution of the Notice, the Optionee shall wire
transfer the aggregate exercise price for the Option Shares being purchased to
the Company, and the Company shall deliver to the Company the certificate(s)
evidencing the Option Shares within three business days from receipt of such
funds.
3. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company hereby covenants, represents and warrants to the Optionee as follows:
a. This Agreement is enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting, generally, the enforcement of creditors'
rights and remedies or by other equitable principles of general application.
b. The Company has all corporate authority and power to enter
into this Agreement and perform its obligations hereunder.
c. Subject to Company amending its Certificate of
Incorporation to increase the number of authorized shares of Common Stock to at
least 50,000,000, the Company shall at all times reserve a sufficient number of
authorized but unissued shares of Common Stock to satisfy its obligations
hereunder.
4. MISCELLANEOUS.
a. GOVERNING LAW AND VENUE. This Agreement shall be governed
by and interpreted in accordance with the laws of the State of California
without regard to the principles of conflict of laws. In the event of any
litigation regarding the interpretation or application of this Agreement, the
parties irrevocably consent to jurisdiction in any of the state or federal
courts located in the City of Los Angeles, State of California and waive their
rights to object to venue in any such court, regardless of the convenience or
inconvenience thereof to any party. Service of process in any civil action
relating to or arising out of this Agreement or the transaction(s) contemplated
herein may be accomplished in any manner provided by law. The parties hereto
agree that a final, non-appealable judgment in any such suit or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on such
judgment or in any other lawful manner.
b. COUNTERPARTS. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and signature pages from such counterparts have been delivered.
c. HEADINGS; GENDER, ETC. The headings of this Agreement are
for convenience of reference and shall not form a part of, or affect the
interpretation of this Agreement. As used herein, the masculine shall refer to
the feminine and neuter, the feminine to the masculine and neuter, and the
neuter to the masculine and feminine, as the context may require. As used
herein, unless the context clearly requires otherwise, the words "herein,"
"hereunder" and "hereby," shall refer to this entire Agreement and not only to
the Section or paragraph in which such word appears. If any date specified
herein falls upon a Saturday, Sunday or public or legal holidays, the date shall
be construed to mean the next business day
1
following such Saturday, Sunday or public or legal holiday. For purposes of this
Agreement, a "business day" is any day other than a Saturday, Sunday or public
or legal holiday.
d. SEVERABILITY. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
e. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the
instruments referenced herein, including the Note Purchase Agreement, contain
the entire understanding of the parties with respect to the matters covered
herein and therein. No provision of this Agreement may be waived or amended
other than by an instrument in writing signed by the party to be charged with
enforcement.
f. NOTICES. Any notices required or permitted to be given
under the terms of this Agreement shall be sent by U.S. Mail or delivered
personally or by courier or via facsimile (if via facsimile, to be followed
within three (3) business days by an original of the notice document via U.S.
Mail or courier) and shall be effective five (5) days after being placed in the
mail, if mailed, certified or registered, return receipt requested, or upon
receipt, if delivered personally or by courier or by facsimile, in each case
properly addressed to the party to receive the same. The addresses for such
communications shall be:
If to the Company: ▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, CEO and President
If to the Optionee, at the address on the signature page of this Agreement. Each
party shall provide written notice to the other party of any change in address.
g. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns. Neither the Company nor the Buyer shall assign this Agreement or any
rights or obligations hereunder without the prior written consent of the other
(which consent shall not be unreasonably withheld), and in any event any
assignee of the Optionee shall be an accredited investor (as defined in
Regulation D), in the written opinion of counsel who is reasonably satisfactory
to Company and in form, substance and scope reasonably satisfactory to the
Company.
h. FURTHER ASSURANCE. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
2
i. REGISTRATION RIGHTS. The Option Shares are entitled to the
benefit of that certain Registration Rights Agreement dated as of the date
hereof between the Company and Optionee.
j. INVESTMENT REPRESENTATIONS. Optionee hereby confirms the
representations and warranties set forth in the Purchase Agreement and agrees
and acknowledges that the Option Shares shall be subject to such provisions.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
COMPANY:
▇▇▇▇▇▇▇▇.▇▇▇, INC., d/b/a vFINANCE, INC.
By:
-------------------------------------
Name:
Title:
OPTIONEE:
BEST FINANCE INVESTMENTS LIMITED
By:
-------------------------------------
Name:
Title:
OPTIONEE ADDRESS:
c/o ▇▇▇▇▇ ▇▇▇▇▇▇
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇ ▇▇▇▇▇'▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
3
EXHIBIT A
NOTICE OF EXERCISE
The undersigned hereby elects to purchase ________ shares of the Common
Stock of ▇▇▇▇▇▇▇▇.▇▇▇, Inc. (the "Company") pursuant to the terms of that
certain Option Agreement dated as of ___________, 2001 between the undersigned
and the Company.
-------------------------------------
By:
-------------------------------------
DATE: ,
------------- -------------------
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into as of the _____ day of ___________, 2001 by and among ▇▇▇▇▇▇▇▇.▇▇▇,
Inc. d/b/a vFinance, Inc., a Delaware corporation, (hereinafter the "Company")
and Best Finance Investments Limited (hereinafter referred to as "Investor").
RECITALS
A. Reference is made to that certain Note Purchase Agreement
dated as of November 28, 2001 (the "Purchase Agreement") by
and between the Company and the Investor.
B. To induce Investor to consent to the execution of the Purchase
Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as
amended.
AGREEMENT
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by all parties hereto,
the Company and the Investor hereby agree as follows:
1. CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
"COMMISSION" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
"COMPANY'S COMMON STOCK" or "COMMON STOCK" shall mean the
Common Stock of the Company.
A "CONTROLLING PERSON" of a particular entity shall mean a
person that controls such entity within the meaning of Section 15 of the
Securities Act.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
"HOLDER" shall mean Investor and any other person holding
Registrable Securities to whom the rights under the Agreement have been
transferred in accordance with ARTICLE 9.
"REGISTRABLE NOTE SECURITIES" shall mean (i) the Note Shares
and (ii) any Common Stock of the Company issued or issuable in respect of the
Note Shares upon any stock split, stock dividend, recapitalization, or similar
event; PROVIDED, HOWEVER, that shares of Common Stock or other securities shall
only be treated as Registrable Securities if and so long as they have not
been (A) sold to or through a broker, dealer or underwriter in a public
distribution or a public securities transaction, or (B) sold, or are otherwise
available for sale in the opinion of counsel to the Company, in a transaction
(including, without limitation a Rule 144 transaction) exempt from registration
and prospectus delivery requirements, and any restrictive legends with respect
thereto are removed upon the consummation of such sale, or (C) sold by a Holder
without compliance with ARTICLE 9 hereof.
"REGISTRABLE OPTION SECURITIES" shall mean (i) the Option
Shares and (ii) any Common Stock of the Company issued or issuable in respect of
the Option Shares upon any stock split, stock dividend, recapitalization, or
similar event; PROVIDED, HOWEVER, that shares of Common Stock or other
securities shall only be treated as Registrable Securities if and so long as
they have not been (A) sold to or through a broker, dealer or underwriter in a
public distribution or a public securities transaction, or (B) sold, or are
otherwise available for sale in the opinion of counsel to the Company, in a
transaction (including, without limitation a Rule 144 transaction) exempt from
registration and prospectus delivery requirements, and any restrictive legends
with respect thereto are removed upon the consummation of such sale, or (C) sold
by a Holder without compliance with ARTICLE 9 hereof.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" shall
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the declaration or ordering
of the effectiveness of such registration statement.
"REGISTRATION EXPENSES" shall mean all expenses, except as
otherwise stated below, incurred by the Company in complying with ARTICLES 3 and
4 including, without limitation all registration, qualification and filing fees,
printing expenses, escrow fees, messenger and delivery expenses, fees and
disbursements of counsel, accountants, investment bankers and other person
retained by the Company, blue sky fees and expenses, and the expense of any
special audits incident to or required by any such registration (but excluding
the compensation of regular employees of the Company, which shall be paid in any
event by the Company).
"REGISTRATION STATEMENT" means a registration statement of the
Company filed on an appropriate form under the Securities Act providing for the
registration of, and the sale on a continuous or delayed basis by the holders
of, all of the Registrable Securities pursuant to Rule 415 under the Securities
Act, including the Prospectus contained therein and forming a part thereof, any
amendments to such registration statement and supplements to such Prospectus,
and all exhibits to and other material incorporated by reference in such
registration statement and Prospectus.
"RESTRICTED SECURITIES" shall mean the Note Shares and the
Option Shares and any other securities issued in respect of the Shares upon any
stock split, stock dividend, recapitalization, merger, consolidation or similar
event.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLING EXPENSES" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the securities
registered by the Holders.
1
Any other capitalized terms used herein that are not otherwise defined
above shall have the meaning set forth in the Purchase Agreement.
2. SECURITIES SUBJECT TO THIS AGREEMENT
a. REGISTRABLE SECURITIES. The securities entitled to the
benefits of this Agreement are the Registrable Note Securities and the
Registrable Option Securities (collectively, the "Registrable Securities").
b. HOLDERS OF REGISTRABLE SECURITIES. A Person is deemed to be
a holder of Registrable Securities whenever such Person owns Registrable
Securities or has the right to acquire such Registrable Securities, whether or
not such acquisition has actually been effected and disregarding any legal
restrictions upon the exercise of such right.
3. REGISTRATION
a. TIMING OF FILING. The Company shall prepare and file with
the Commission as soon as practicable after the Closing a Registration Statement
relating to the offer and sale of the Note Shares and shall use its best efforts
to cause the Commission to declare such Registration Statement effective under
the Securities Act as promptly as reasonably practicable within ninety (90) days
after the Closing (the "Deadline"). The Company shall promptly (and, in any
event, no more than 24 hours after it receives comments from the Commission),
notify the Holders when and if it receives any comments from the Commission on
the Registration Statement and promptly forward a copy of such comments, if they
are in writing, to the Holders. At such time after the filing of the
Registration Statement pursuant to this Section 3.(a), as the Commission
indicates, either orally or in writing, that it has no further comments with
respect to such Registration Statement or that it is willing to entertain
appropriate requests for acceleration of effectiveness of such Registration
Statement, the Company shall promptly, and in no event later than two (2)
business days after receipt of such indication from the Commission, request that
the effectiveness of such Registration Statement be accelerated within
forty-eight (48) hours of the Commission's receipt of such request. The Company
shall notify the Holders by written notice that such Registration Statement has
been declared effective by the Commission within 24 hours of such declaration by
the Commission.
b. ELIGIBILITY FOR USE OF FORM S-3. The Company agrees that at
such time as it meets all the requirements for the use of Securities Act
Registration Statement on Form S-3 it shall file all reports and information
required to be filed by it with the Commission in a timely manner and take all
such other action so as to maintain such eligibility for the use of such form.
c. OBLIGATION TO SUPPLEMENT AND AMEND. The Company agrees to
supplement or make amendments to such Registration Statement or file a new
Registration Statement, if required by the rules, regulations or instructions
applicable to the registration form utilized by the Company, by the Securities
Act or by rules and regulations thereunder.
d. LIMITATIONS ON REGISTRATION. Notwithstanding anything
contained herein to the contrary, the Company may postpone its obligations under
Sections 3(a) and 3(c) hereof, for a reasonable period of time not to exceed
ninety (90) days (but in any event not to
2
extend beyond the date of public disclosure of the information, or the date of
abandonment or termination of the transactions or negotiations, hereinafter
referred to), if: (i) the Company's Board of Directors determines, in good faith
and in its reasonable business judgment, that (a) complying with the Company's
obligations under Sections 3(a) and 3(c) hereof would require the public
disclosure of material non-public information concerning any pending or ongoing
material transaction or negotiations involving the Company which, in the opinion
of the Company's outside legal counsel, is not yet required to be publicly
disclosed, and (b) such disclosure would materially interfere with such
transaction or negotiations or have a material adverse effect on the Company,
and (ii) the Company diligently and in good faith continues to pursue such
transaction or negotiations throughout the period of such postponement.
4. PIGGYBACK REGISTRATIONS
a. NOTICE AND REQUEST TO PIGGYBACK. Whenever the Company
commences an underwritten public offering covering the offer and sale of its
Common Stock for the account of the Company or the account of a security holder
to the public other than (i) a registration statement on Form S-8 or otherwise
relating solely to employee benefit plans or (ii) a registration statement on
any other form which does not permit secondary sales, or (iii) on a registration
statement on Form S-4 or similar form, the Company will give written notice to
all holders of Registrable Securities of its intention to effect such a
registration not later than Fifteen (15) days prior to the anticipated filing
date and offer to such holders of Registrable Securities the opportunity to
register the number of Registrable Securities as each such holder may request (a
"Piggyback Registration"). Subject to the provisions of Sections 4(b) and 4(c),
the Company will include in such Piggyback Registration all Registrable
Securities with respect to which the Company has received written requests for
inclusion therein within ten (10) business days after the receipt by the
applicable holder of the Company's notice.
All Persons whose securities are included in the Piggyback Registration
shall be obligated to sell their securities on the same terms and conditions as
apply to the securities being issued and sold by the Company.
b. PRIORITY ON PRIMARY REGISTRATION. If the managing
underwriters advise the Company in writing that in their opinion the total
number of shares of Common Stock requested to be included in such registration
exceeds the number of shares of Common Stock which can be sold in such offering,
the Company will include in such registration:
(a) first, all shares of Common Stock the Company proposes to
sell;
(b) second, all shares of Common Stock of holders who have
superior registration rights in such underwriting; and third, the
Registrable Securities and such other shares of Common Stock requested
to be included in such registration in excess of the number of shares
of Common Stock the Company or such holders of superior registration
rights propose to sell which, in the opinion of such underwriters, can
be sold.
c. SELECTION OF UNDERWRITERS. The Company, in its sole
discretion, will have the right to select the investment banker or investment
bankers and manager or managers to administer the offering.
3
d. UNDERWRITING AGREEMENT. If Holders elect to participate in
an underwritten public offering pursuant to Section 4(a), all Holders proposing
to distribute their Registrable Securities through the applicable Piggyback
Registration shall enter into, and perform such obligations set forth in an
underwriting agreement in customary form, including, without limitation,
indemnification and contribution obligations, with the managing underwriter(s)
selected by the Company for such underwritten public offering.
5. EXPENSES OF REGISTRATION
All Selling Expenses relating to securities registered on behalf of the
Holders in connection with registrations pursuant to Section 4(a) shall be borne
by the Holders of such securities pro rata on the basis of the number of shares
so registered, and all Registration Expenses in connection with registrations
pursuant to the Agreement shall be borne by the Company, provided that the fees
and expenses of counsel, accountants, advisers and other persons retained by the
Holders to represent them in connection with any registrations pursuant to
Section 4.1, and the expenses of special audits, if any, required exclusively by
the inclusion of the Registrable Securities in any registration pursuant to
Section 4(a), shall be borne by the Holders in proportion to the aggregate
selling price of the Registrable Securities of each Holder to be so registered.
6. REGISTRATION PROCEDURES
In the case of each registration, qualification or compliance effected
by the Company pursuant to this Agreement, the Company will keep each Holder
advised in writing as to the initiation of each registration, qualification and
compliance and as to the completion thereof. Additionally, the Company will
furnish to the Holders participating in such registration and to the
underwriters of the securities being registered such reasonable number of copies
of the registration statement, preliminary prospectus, final prospectus and such
other documents as such Holders and underwriters may reasonably request in order
to facilitate the public offering of such securities.
7. INDEMNIFICATION
a. INDEMNIFICATION. To the extent permitted by law, each party
will indemnify the other party and each of its respective officers, directors,
Investors, employees, representatives and partners, and each Controlling Person,
with respect to which registration, qualification or compliance has been
effected pursuant to this Agreement, and each underwriter, if any, and each
Controlling Person of any underwriter, against all reasonable expenses, claims,
losses, damages or liabilities (or actions in respect thereof), including any of
the foregoing incurred in any investigation or inquiry or in any settlement of
any litigation commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, or any violation by of the Securities Act, the Exchange Act, or
any state securities law, or any rule or regulation promulgated under
4
the Securities Act, the Exchange Act or any state securities law applicable in
connection with any such registration, qualification or compliance, and each
party will reimburse the other party and each of its respective officers,
directors, Investors, employees, representatives and partners, and each such
Controlling Person, each such underwriter and each such Controlling Person of
any such underwriter, for any legal and any other expenses reasonably incurred
in connection with investigating, preparing or defending any such claim, loss,
damage, liability or action; provided, however, that the indemnity agreement
contained in this Section 7(a) shall not (i) apply to amounts paid in settlement
of any such loss, claim, damage, liability, or action if such settlement is
effected without the consent of the other party (which consent shall not be
unreasonably withheld); (ii) apply to any such case for any such loss, claim,
damage, liability, or action to the extent that it arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in connection with such registration statement, preliminary
prospectus, final prospectus, or amendments or supplements thereto, in reliance
upon and in conformity with written information furnished to the other party
expressly for use in connection with such registration, underwriter, or
controlling person; or (iii) inure to the benefit of any underwriter from whom
the person asserting any such loss, claim, damage or liability purchased the
Registrable Securities which are the subject thereof (or to the benefit of any
person controlling such underwriter) with respect to a preliminary prospectus or
final prospectus if such underwriter (if required by the Act) failed to send or
give a copy of the most recent prospectus, if the most recent prospectus
furnished by the Company shall correct the untrue statement or alleged untrue
statement or omission or alleged omission which is the basis of the loss, claim,
damage, liability, or action for which indemnification is sought, to such person
at or prior to the written confirmation of the sale of such Registrable
Securities to such person.
Notwithstanding the foregoing, in the case of a registration under
Section 4(a) the liability of any selling Holder of Registrable Securities under
this Section 7(a) shall be limited to an amount equal to the net proceeds
received by such Holder for securities sold by it in such offering, unless such
liability arises out of or is based on willful conduct of the Holder or its
officers, directors, agents or employees. Furthermore, the Company shall only be
obligated under this Section 7(a) to pay the legal expenses of one law firm
which has been chosen to represent all of the Holders.
b. DEFENSE OF CLAIMS. Each party entitled to indemnification
under Sections 7(a) (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party has actual knowledge of any claim as to which indemnity
may be sought, and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom, provided that counsel for
the Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under the Agreement unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action. Notwithstanding the foregoing, however, (i) if the
Indemnified Party reasonably determines that there may be a conflict between the
positions of the Indemnifying Party and of the Indemnified Party in connection
with the defense of such action, suit, investigation, inquiry or other
proceeding or that there may be legal defenses available to such Indemnified
Party different from
5
or in addition to those available to the Indemnifying Party, then, at the sole
cost and expense of such Indemnified Party, counsel for the Indemnified Party
shall be entitled to conduct a defense to the extent reasonably determined by
such counsel to be necessary to protect the interest of the Indemnified Party,
and (ii) in any event, the Indemnified Party shall be entitled to have counsel
chosen by such Indemnified Party participate in, but not to conduct, the
defense. No Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party, consent to entry of
any judgment or enter into any settlement that does not include as a
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
8. INFORMATION FROM HOLDERS
The Holder or Holders of Registrable Securities included in any
registration shall, as a condition precedent to the Company's obligation to
register the securities of such Holder or Holders, furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by such Holder or Holders as the Company may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Agreement. At the request of the
Company, each Holder who is including any Registrable Securities in the
registration shall deposit in escrow with an escrow agent chosen by the Company
those Registrable Securities which such Holder proposes to sell, accompanied by
an irrevocable power of attorney authorizing the escrow agent to, without
limitation, sell such Registrable Securities to the underwriter upon the
effectiveness of the registration statement.
9. TRANSFER OF REGISTRATION RIGHTS
The rights to cause the Company to register securities granted to
Holders under Section 4(a) may be assigned to a transferee or assignee in
connection with any transfer or assignment of Registrable Securities by a
Holder, provided that: (i) such transfer may otherwise be effected in accordance
with applicable securities laws, and (ii) written notice thereof is promptly
given to the Company. Notwithstanding the foregoing, the rights to cause the
Company to register securities may be assigned to any constituent partner or
affiliate of a Holder, without compliance with item (ii) above, provided written
notice thereof is promptly given to the Company.
10. COMPLIANCE WITH RULE 144
The Company covenants that it shall (a) file any reports required to be
filed by it under the Exchange Act and (b) take such further action as each
Holder of Registrable Securities may reasonably request (including providing any
information necessary to comply with Rule 144 under the Securities Act), all to
the extent required from time to time to enable such Holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (i) Rule 144 under the Securities Act, as such
rule may be amended from time to time, or (ii) any similar rules or regulations
hereafter adopted by the SEC. The Company shall, upon the request of any Holder
of Registrable Securities, deliver to such Holder a written statement as to
whether it has complied with such requirements.
6
11. MISCELLANEOUS
a. REMEDIES. Each Holder of Registrable Securities, in
addition to being entitled to exercise all rights provided herein and in the
Purchase Agreement, or granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The Company
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Agreement and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate. However, no Holder shall have any right to take
any action to restrain, enjoin, or otherwise delay any registration proposed to
be undertaken by the Company as the result of any controversy that might arise
with respect to the interpretation or implementation of this Agreement.
b. NO INCONSISTENT AGREEMENTS. The Company will not on or
after the date of this Agreement enter into any agreement with respect to its
securities which is inconsistent with the rights granted to the Holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders of Registrable Securities
hereunder do not in any way conflict with and are not inconsistent with the
rights granted to the holders of the Company's securities under any such
agreements.
c. ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. The Company
will not take any action, or permit any change to occur, with respect to the
Registrable Securities which would adversely affect the ability of the Holders
of Registrable Securities to include such Registrable Securities in a
registration undertaken pursuant to this Agreement.
d. AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least 66-2/3% of the Registrable Securities.
e. NOTICES. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or air courier guaranteeing overnight
delivery:
(a) if to a Holder of Registrable Securities, at the most
current address given by such Holder to the Company in accordance with
the provisions of this Section 11(e), which address initially is, with
respect to the Investor, as follows:
Best Finance Investments Limited
c/o ▇▇▇▇▇ ▇▇▇▇▇▇
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇ ▇▇▇▇▇'▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
7
and thereafter at such other address, notice of which is given in accordance
with the provisions of this Section 11(e).
(b) if to the Company:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, CEO and President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and thereafter at such other address, notice of which is given in accordance
with the provisions of this Section 11(e).
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day if timely delivered to an air courier guaranteeing overnight
delivery.
f. SUCCESSORS AND ASSIGNS. Subject to the provisions of
ARTICLE 9 hereof, this Agreement shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties, including without
limitation and without the need for an express assignment, subsequent Holders of
Registrable Securities.
g. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto 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 agreement.
h. HEADINGS. The headings of this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
i. GOVERNING LAW AND VENUE. This Agreement shall be governed
by and interpreted in accordance with the laws of the State of California
without regard to the principles of conflict of laws. In the event of any
litigation regarding the interpretation or application of this Agreement, the
parties irrevocably consent to jurisdiction in any of the state or federal
courts located in the City of Los Angeles, State of California and waive their
rights to object to venue in any such court, regardless of the convenience or
inconvenience thereof to any party. Service of process in any civil action
relating to or arising out of this Agreement (including also all Exhibits or
Schedules hereto) or the transaction(s) contemplated herein may be accomplished
in any manner provided by law. The parties hereto agree that a final,
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
j. SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other
8
respect and of the remaining provisions contained herein shall not be affected
or impaired thereby.
k. ENTIRE AGREEMENT. This Agreement is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. This Agreement supersedes all
prior agreements and understanding between the parties with respect to such
subject matter.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
"COMPANY"
▇▇▇▇▇▇▇▇.▇▇▇, INC. D/B/A VFINANCE, INC.
a Delaware Corporation
-----------------------------------------
By:
-------------------------------------
Name:
Title:
"INVESTOR"
BEST FINANCE INVESTMENTS LIMITED,
a British Virgin Islands Corporation
-----------------------------------------
By:
-------------------------------------
Name:
Title:
9
EXHIBIT C
INVESTOR RIGHTS AGREEMENT
BETWEEN
▇▇▇▇▇▇▇▇.▇▇▇ d/b/a vFINANCE, Inc.
AND
BEST FINANCE INVESTMENTS LIMITED
AND
THE PERSONS NAMED HEREIN
Dated ___________, 2001
THIS INVESTOR RIGHTS AGREEMENT, dated as of this __ day of _____ 2001,
is by and among ▇▇▇▇▇▇▇▇.▇▇▇ d/b/a vFinance, Inc., Inc., a Delaware corporation
(the "Company"), Best Finance Investments Limited, a British Virgin Islands
corporation ("Investor"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and Genesis
Partners, Inc. (each referred to herein as the "Stockholder" and collectively as
the "Stockholders").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and the Investor have entered into a Note Purchase
Agreement, dated as of November 28, 2001 (the " Purchase Agreement) pursuant to
which the Company has issued to Investor a convertible promissory note and
option to purchase shares of the Company's Common Stock (the "Shares");
WHEREAS, the Stockholders, the Investor and the Company desire to enter
into this Agreement in order to set forth certain rights of Investor; and
WHEREAS, capitalized terms, not otherwise defined herein, shall have
the meanings ascribed thereto in Exhibit A hereto, which is incorporated herein
by reference or the Purchase Agreement;
NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. BOARD OF DIRECTORS
a. ELECTION OF DIRECTORS.
(a) The Board shall be composed of three members, unless the
membership of the Board is increased by a majority vote of the members
of the Board.
(b) Investor shall have the right to nominate one (1) Person
to serve on the Board (the "Investor Director").
b. NOMINATION OF DIRECTORS AT STOCKHOLDER MEETING. At each
annual stockholder meeting of the Company, the Board shall duly nominate for
election to the Board the individual designated as the nominee by the Investor,
provided such person is reasonably acceptable to the majority of the members of
the Board excluding the Investor.
c. ELECTION OF DIRECTORS AND REMOVAL.
(a) The Stockholders shall vote all Shares owned or controlled
by them in favor of the individual nominated in accordance with the
terms hereto to serve as the Investor Director, and the Investor shall
vote all Shares owned or controlled by the Investor and its Affiliates
in favor of all of the other persons nominated by the Board to serve as
directors of the Company.
1
(b) The Stockholders shall vote all Shares owned or controlled
by them in favor of the removal of an Investor Director, if such
removal is requested by the Investor.
d. FILLING DESIGNATED DIRECTOR VACANCIES. If an individual who
was an Investor Director shall, for any reason, cease to be a director of the
Company before the expiration of his/her term, then the Investor, within ten
Business Days after the Investor Director ceases to be a director of the
Company, shall nominate another individual to be the Investor Director and,
provided that such individual is reasonably acceptable to the majority of the
remaining directors of the Company, the Board shall promptly, and in any case
within thirty (30) calendar days thereafter, fill the resulting vacancy by
electing such replacement director to serve as an Investor Director; provided,
however, that until such vacancy is filled, the Board shall take no action other
than such action as is necessary to fill such vacancy.
e. COMMITTEES. The Company and the Stockholders shall cause
the Board of Directors to nominate and appoint the Investor Director to each
committee, if any, of the Board of Directors. Such Investor Director shall be
entitled to receive notice of, observe and attend all meetings of each such
committee.
f. MEETINGS. The Company shall convene meetings of the Board
of Directors at least quarterly. The Company shall reimburse each director for
his/her reasonable out-of-pocket expenses incurred in connection with the
attendance of meetings of the Board of Directors and performance of his/her
other duties as a director.
2. COMPANY GOVERNANCE MATTERS
a. FINANCIAL STATEMENTS AND REPORTS.
(a) The Company will keep adequate and accurate books of
account and will prepare the financial statements referred to herein in
accordance with GAAP.
(b) The Company will furnish to the Investor a copy of each
filing made with the Securities and Exchange Commission.
b. CONDUCT OF BUSINESS.
(a) MANAGEMENT BY BOARD OF DIRECTORS. The Stockholders and the
Investor hereby confirm that it is their intention that the business
and affairs of the Company and its subsidiaries shall be managed by the
Board of Directors in the best interests of the Company and its
stockholders.
(b) SIGNIFICANT TRANSACTIONS. Notwithstanding the fact that no
vote may be required, or that a lesser percentage vote may be specified
by law, the Certificate of Incorporation or the By-Laws, (but subject
to any additional requirements of law or the Certificate of
Incorporation or the By-Laws), the Company shall not take any of the
following actions (individually, a "Significant Transaction") without
the affirmative vote of the Investor Director and the majority of the
other directors:
2
(i) any merger or consolidation involving the Company
or any subsidiary of the Company except for: (A) any transaction relating to the
Company's then current business which presently involves asset management,
investment banking, retail brokerage and products and services relating to the
Company's website, ▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇, provided, however, that the exception set
forth in this subparagraph A shall not apply if, upon the consummation of such
merger or consolidation, the Company has at least $3,000,000 in cash or cash
equivalents and marketable securities, or (B) any transaction involving the
merger or consolidation of a subsidiary with or into the Company or with or into
a wholly-owned subsidiary of the Company;
(ii) any sale, lease, exchange, transfer or other
disposition, directly or indirectly, in a single transaction or series of
related transactions, of all or substantially all of its assets, to or with any
Person other than to or with the Company or a wholly-owned subsidiary of the
Company; (iii) any sale, lease, exchange, transfer or other disposition,
directly or indirectly, of its assets (except sales of inventory in the ordinary
course of business) to or with any Person other than to or with the Company or a
wholly-owned subsidiary of the Company, if the aggregate assets so disposed of
under this subclause
(iii) in such transaction and all other such
transactions from and after the date hereof have a fair market value (determined
in good faith by the Board as of the respective dates of such transactions)
which exceeds 25% of the consolidated assets of the Company and its subsidiaries
(other than any inventory referred to above), as reflected on the most recent
audited consolidated balance sheet of the Company and its subsidiaries existing
at the time of such proposed Significant Transaction;
(iv) any amendment to or modification or repeal of
any provision of the Articles of Incorporation or the By-Laws except as may be
required in order for the Company to be in compliance with the Transaction
Documents; or
(v) the dissolution of the Company, the adoption of a
plan of liquidation of the Company, or any action by the Company to commence any
suit, case, proceeding or other action (A) under any existing or future law of
any jurisdiction relating to bankruptcy, insolvency, reorganization or relief of
debtors seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it, or (B) seeking appointment of a receiver,
trustee, custodian or other similar official for it or for all or any
substantial part of its assets, or making a general assignment for the benefit
of its creditors; provided, however, that the vote of the Investor Director
shall not be required if such dissolution, liquidation, bankruptcy, insolvency,
reorganization or other similar relief from creditors of the Company is
reasonably expected to result in the Investor receiving cash or other property
having a value of at least twice the cash paid by the Investor to the Company to
acquire the Note pursuant to the Purchase Agreement or the Option Shares
pursuant to the Option.
c. DIRECTORS' AND OFFICERS' INDEMNIFICATION. The Company shall
(a) provide for the indemnification of the members of the Board to the fullest
extent permitted under the laws of the State of Delaware and (b) use
commercially reasonable efforts to obtain and
3
maintain in effect officers' and directors' liability insurance; provided that
the Company shall not be required to obtain or maintain such insurance if it is
unavailable.
d. COVENANT TO VOTE. Each Stockholder and the Investor shall
take all actions necessary to call, or cause the Company and the appropriate
officers and directors of the Company to call, a special or annual meeting of
the stockholders of the Company and to vote all Shares owned or held of record
by each of the Stockholders and the Investor and their respective Affiliates at
any such annual or special meeting in favor of, or take all actions by written
consent in lieu of any such meeting necessary to cause, the election as members
of the Board of Directors of those individuals so designated in accordance with,
and otherwise to effect the intent of, this Agreement. In addition, each
Stockholder and the Investor and their respective Affiliates shall vote the
Shares owned or held of record by such Stockholder and the Investor and their
respective Affiliates upon any other matter arising under this Agreement
submitted to a vote of the stockholders of the Company in a manner so as to
implement the terms of this Agreement.
3. TRANSFER AND PURCHASE RIGHT PROVISIONS
a. RESTRICTION ON TRANSFERS. No Stockholder shall directly or
indirectly in any manner Transfer all or any portion of the Shares owned of
record by him or it, or any right or interest therein, except until the
transferee shall execute and deliver to the Company such documents and
instruments of conveyance as may be necessary or appropriate in the opinion of
counsel to the Company to effect such Transfer and to confirm the agreement of
the transferee to be bound by the provisions of this Agreement, provided,
however, that the restriction of Transfer and the agreement of the transferee
contained in this Section 3(a) shall not apply to (a) a Stockholder's Transfer
of an unlimited amount of Shares pursuant to the applicable jurisdiction's laws
of descent and distribution; (b) the public sale of up to five percent (5%) of
the Shares owned by a Stockholder in one or a series of related transactions
pursuant to Rule 144 promulgated under the Securities Act of 1933 (the "1933
Act") (or any similar rule then in effect) or an effective registration
statement filed with the Securities and Exchange Commission, or (c) the Transfer
of up to five percent (5%) of the Shares owned by a Stockholder in one or a
series of related transactions exempt from registration under the 1933 Act. It
is understood and agreed by the parties hereto that a Stockholder shall be
permitted to Transfer more than 5% of the Shares that such Stockholder owns as
long as no more than five percent (5%) of a Stockholder's then-owned Shares are
Transferred in any one or a series of related transactions.
b. PREEMPTIVE RIGHTS.
(a) The Company shall not issue or sell any Shares (other than
(i) in connection with a transaction approved by the Board, which
approval includes the affirmative vote of the Investor Director, in
which the Shares to be issued represent no more than ten percent (10%)
of the Common Stock (when aggregated with all other issuances effected
through this exemption) or (ii) in connection with any other
transaction approved by the unanimous vote of all of the members of the
Board then in office), unless prior to the issuance or sale of such
Shares the Investor shall have been given the opportunity to purchase
(on the same terms as such Shares are proposed to be sold) the same
proportion of such Shares being issued or offered for sale by the
Company as the number of shares of Common Stock beneficially owned (as
such term is defined in
4
Rule 13d-3 under the Securities Exchange Act of 1934, as amended) by
the Investor bears to all of the Common Stock issued and outstanding on
that day as calculated pursuant to such Rule (the "Basic Amount").
(b) Prior to the issuance or sale by the Company of any
Shares, the Company shall give written notice thereof (the "Notice of
Preemptive Rights") to the Investor which shall specify the total
aggregate number of Shares to be issued, the price and other terms of
their proposed issuance, the Basic Amount which the Investor is
entitled to purchase, and the period during which the Investor may
elect to purchase such Shares, which period shall extend for at least
ten (10) calendar days following the delivery of such notice.
(c) If the Investor desires to purchase Shares shall, Investor
notify the Company in writing (the "Notice of Acceptance") within the
specified period of the proportion of the Basic Amount it wishes to
purchase and, if it elects to purchase all of its Basic Amount.
(d) Any Shares which are not purchased in accordance with the
provisions of this Section 3.2 may, within a period of sixty (60) days
after the expiration of the time for making such election, be sold by
the Company to the other Person or Persons at not less than the price
and upon other terms and conditions not less favorable to the Company
than those set forth in the Notice of Preemptive rights.
c. STOCK CERTIFICATES. Each certificate representing Shares
shall be imprinted with the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE HELD SUBJECT TO THE
TERMS OF THAT CERTAIN INVESTOR RIGHTS AGREEMENT, DATED AS OF _________
____________ [ ], 2001. A COPY OF THE INVESTOR RIGHTS AGREEMENT IS
AVAILABLE FOR INSPECTION DURING NORMAL BUSINESS HOURS AT THE PRINCIPAL
OFFICES OF THE ISSUER OF THE SHARES REPRESENTED BY THIS CERTIFICATE.
NEITHER THIS CERTIFICATE NOR THE SHARES REPRESENTED HEREBY MAY BE SOLD,
ASSIGNED, TRANSFERRED, MORTGAGED, PLEDGED, HYPOTHECATED, OR OTHERWISE
DISPOSED OR ENCUMBERED, DIRECTLY OR INDIRECTLY, EXCEPT IN ACCORDANCE
WITH THE PROVISIONS OF SUCH INVESTOR RIGHTS AGREEMENT. THE INVESTOR
RIGHTS AGREEMENT SHOULD BE READ CAREFULLY PRIOR TO PURCHASING THE
SHARES REPRESENTED HEREBY."
d. RECAPITALIZATION, EXCHANGES, ETC. The provisions of this
Agreement shall apply, to the full extent set forth herein, to any and all
Shares in the Company or the securities of any successor or assign of the
Company (whether by merger, consolidation, sale of assets or otherwise) that may
issued in respect of, in exchange for, or in substitution of the Shares, by
reason of any combination, recapitalization, reclassification, merger,
consolidation or otherwise.
5
4. REPRESENTATIONS AND WARRANTIES
a. EXECUTION BY STOCKHOLDERS. Each Stockholder, severally and
not jointly, represents and warrants that (a) he or it owns the number of Shares
indicated on Exhibit B attached hereto; (b) he or it has the power (corporate or
other) and capacity to execute, deliver and perform this Agreement and all
related agreements, documents or consents; (c) this Agreement and all related
agreements, documents or consents have been duly authorized, executed and
delivered by all necessary action (corporate or other) of such party; (d) this
Agreement and all related agreements and consents constitute legal, valid and
binding obligations of such party, enforceable against such party in accordance
with their terms, except that (i) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which a proceeding therefor
maybe brought, and (ii) enforceability of this agreement or related agreements,
documents and consents may be affected by bankruptcy, insolvency,
reorganization, moratorium or similar laws of general applicability related to
creditors rights.
b. EXECUTION BY THE COMPANY. The Company hereby represents and
warrants that (a) it has all the requisite corporate power and authority to
execute, deliver and perform this Agreement and all related agreements,
documents or consents; (b) this Agreement and all related agreements, documents
or consents have been duly authorized, executed and delivered by all necessary
corporate action on behalf of the Company; and (c) this Agreement and all
related agreements, documents and consents constitute legal, valid and binding
obligations of the Company, enforceable against it in accordance with their
terms except that (i) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which a proceeding therefor may be brought, and
(ii) enforceability of this Agreement or related agreements, documents and
consents may be affected by bankruptcy, insolvency, reorganization, moratorium
or similar laws of general applicability related to creditors rights.
c. EXECUTION BY THE INVESTOR. The Investor hereby represents
and warrants that (a) it has all the requisite corporate power and authority to
execute, deliver and perform this Agreement and all related agreements,
documents or consents; (b) this Agreement and all related agreements, documents
or consents have been duly authorized, executed and delivered by all necessary
corporate action on behalf of the Investor; and (c) this Agreement and all
related agreements, documents and consents constitute legal, valid and binding
obligations of the Investor, enforceable against it in accordance with their
terms except that (i) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which a proceeding therefor may be brought, and
(ii) enforceability of this Agreement or related agreements, documents and
consents may be affected by bankruptcy, insolvency, reorganization, moratorium
or similar laws of general applicability related to creditors rights.
5. TERM
The obligations and rights of the parties pursuant to this Agreement
shall terminate at such time as Investor and any Affiliate of Investor own
beneficially (as such term is defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended) in the aggregate
6
less than 5% of the issued and outstanding shares of the Company's Common Stock
(as calculated pursuant to such Rule).
6. MISCELLANEOUS
a. COMMUNICATIONS. All notices required or permitted hereunder
shall be in writing and shall be deemed effectively given: (i) upon personal
delivery to the party to be notified; (ii) when sent by confirmed facsimile if
sent during normal business hours of the recipient; if not, then on the next
business day; (iii) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid; or (iv) one (1) day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt.
If to the Company:
▇▇▇▇▇▇▇▇.▇▇▇.▇▇▇.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTN: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, CEO and President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Investor:
Best Finance Investments Limited
c/o ▇▇▇▇▇ ▇▇▇▇▇▇
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇ ▇▇▇▇▇'▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
Telephone: ▇▇▇-▇▇▇▇-▇▇▇▇
Facsimile:
If to any Stockholder:
In accordance with the information provided therefor on Exhibit B.
Or at such other address as the Company, Investor or any Stockholder
may designate in writing in accordance with the foregoing notice provisions.
b. WAIVERS. No wavier of any provision, condition or covenant
of this Agreement made after the date hereof shall be effective as against the
waiving parties unless such waiver is in writing signed by the waiving parties.
Waiver by a party as provided in this Section 5.2 shall not be construed as, or
constitute, either a continuing waiver of such provision, condition or covenant
or a waiver of any other provision, condition or covenant hereof. The failure of
any party at any time to require performance by the other party of any
provision, condition or covenant of this Agreement shall in no way affect its
right thereafter to enforce the provision, condition or covenant.
7
c. AMENDMENTS. Except as amended in Article III hereof, this
Agreement may be modified, supplemented or amended only with the agreement of
the parties hereto.
d. ENTIRE AGREEMENT. This Agreement (together with the
Exhibits expressly identified in this Agreement) constitutes the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings of the parties, oral and
written, with respect to such subject matter.
e. APPLICABLE LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without giving
regard to the conflict of laws provisions thereof.
f. ASSIGNMENTS. Except with respect to a Transfer of Shares or
any portion thereof in accordance with Article III, this Agreement may not be
assigned by any party hereto without the prior written consent of the other
parties.
g. BINDING EFFECT; BENEFITS. This Agreement shall inure to the
benefit of, and be binding upon, the parties hereto and their respective
successors and permitted assigns. Nothing contained in this Agreement, express
or implied, is intended to confer upon any Person other than the parties hereto
and their respective successors and permitted assigns, any rights or remedies
under or by reason of this Agreement.
h. FURTHER ASSURANCES. Each party to this Agreement agrees to
execute, acknowledge, deliver, file and record such further certificates,
amendments, instruments and documents and to do all such other acts and things,
as may be required by law, or as may, in the opinion of independent legal
counsel to any other party hereto, be necessary or advisable to carry out the
purposes of this Agreement.
i. SEVERABILITY. If any provision, sentence, phrase or word of
this Agreement or the application thereof to any Person or circumstance shall be
held to be unenforceable or invalid, then such provision, sentence, phrase or
word shall be ineffective only to the extent of such unenforceability or
invalidity, and the remainder of this Agreement shall be unaffected thereby;
provided, however, that notwithstanding the above, the Stockholders agree to act
in a manner fully consistent with the excised provision, sentence, phrase or
word so as to implement the intent thereof and to reach the same result as if it
were still in the Agreement; provided, further, that to the extent such intent
could otherwise be implemented under the laws of the State of New York directly
or through a series of acts, assuming sufficient votes therefor under such law,
then notwithstanding anything to the contrary in this Agreement, such intent
shall be implemented and the desired result shall be accomplished to the fullest
extent permitted by law.
j. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
8
k. EXHIBITS.
(a) The Exhibits and other agreements specifically referred to
in, and delivered pursuant to, this Agreement are an integral part of
it.
(b) The following are the Exhibits annexed hereto and
incorporated by reference and deemed to be a part hereof:
Exhibit A Glossary
Exhibit B Stockholders Holdings
9
IN WITNESS WHEREOF, the parties have executed this Agreement
on the following signature page as of the day and year first written above.
▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: CEO and President
BEST FINANCE INVESTMENTS LIMITED
By:
-------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
-----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
GENESIS PARTNERS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: CEO and President
10
EXHIBIT A
DEFINITIONS
1.1 DEFINITIONS. Capitalized terms and other terms contained and used in this
Agreement which are not specifically defined herein shall have the meanings
ascribed to them in the Purchase Agreement. The capitalized terms contained and
used in this Agreement which are defined below shall have the respective
meanings ascribed to them as follows:
"Affiliate" means, with respect to any Person, (i) any Person directly
or indirectly Controlling, Controlled by or under common Control with such
Person (including, if any of the foregoing is a natural Person, the parent,
spouse, child, brother or sister of such natural Person), (ii) any Person owning
or Controlling fifty percent (50%) or more of the outstanding voting interests
of such Person, (iii) any officer, director or general partner of such Person,
or (iv) any Person who is an officer, director, general partner, trustee or
holder of fifty percent (50%) or more of the voting interests of any Person
described in clauses (i) through (iii) of this sentence.
"Basic Amount" has the meaning set forth in Section 3.2(a).
"Board" means the Board of Directors of the Company.
"Business Day" means any calendar day other than a Saturday, a Sunday,
or a day on which the commercial banks in California and Florida, are required
or authorized by law to be closed.
"Common Stock" means the common stock of the Company, par value $0.01
per share.
"Company" means ▇▇▇▇▇▇▇▇.▇▇▇, Inc. d/b/a vFinance, Inc.
"Control" means (i) when used with respect to any entity, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such entity, whether through the
ownership of voting securities, by contract or otherwise, and (ii) when used
with respect to any security, the possession, directly or indirectly, of the
power to vote, or to direct the voting of, such security or the power to dispose
of, or to direct the disposition of, such security.
"Dollars" means United States Dollars.
"Investor Director" has the meaning ascribed thereto in Section 1.1(b).
"Notice of Acceptance" has the meaning set forth in Section 3.2(c).
"Notice of Preemptive Rights" has the meaning set forth in Section
3.2(b).
"Person" means any human being, organization, general partnership,
limited partnership, corporation, limited liability company, joint venture,
trust, business trust, association, governmental entity or other legal entity.
"Securities Purchase Agreement" means the Stock Purchase Agreement of
even date herewith between the Company and Investor.
"Share" means the shares of capital stock of the Company, any
securities convertible into or exchangeable for such capital stock, any warrants
or options to purchase such capital stock, and any other equity or voting
interest of the Company.
"Stockholder" means Genesis Partners, Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
"Transfer" means any sale, transfer, exchange, assignment, pledge,
disposition, hypothecation, gift or any contract for the foregoing or any voting
trust or other agreement or arrangement respecting voting rights or any
beneficial interest in a Share.
1.2 INTERPRETATION. When the context in which words are used in the
Agreement indicates that such is the intent, words in the singular number shall
include the plural, and vice versa, the masculine gender shall include the
neuter or female gender, and "or" is used in the inclusive sense (and/or). The
words "include," "includes" and "including" shall be deemed to be followed by
the phrase "without limitation." All references to an Article or Section shall
be deemed references to such portions of the Agreement, unless the context shall
otherwise require. Headings or titles contained herein are inserted only as a
matter of convenience and in no way define, limit, extend or interpret the scope
of this Agreement or any particular Article or Section hereof. All references
herein to Exhibits shall be deemed to be references to the Exhibits attached to
the Agreement. The terms "this Agreement," "hereof," "hereunder" and similar
expressions refer to this Agreement as a whole and not to any particular Article
or Section or other portion hereof and include any agreement supplemental
hereto.
2
EXHIBIT B
Stockholders Beneficial Holdings
Stockholder Name and Number of Shares
Address of Common Stock
-------------------- ----------------
Genesis Partners, Inc. 3,343,135
and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ , #▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 3,343,135
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ , #▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇)▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT D
THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE AND THE
COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO ▇▇▇▇▇▇▇▇.▇▇▇, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.
CONVERTIBLE NOTE
FOR VALUE RECEIVED, ▇▇▇▇▇▇▇▇.▇▇▇, Inc. d/b/a vFinance, Inc. ("Borrower"), hereby
promises to pay to Best Finance Investments Limited, c/o ▇▇▇▇▇ ▇▇▇▇▇▇, 4/F
▇▇▇▇▇▇▇ Building, 5 Queen's Road, Central Hong Kong, , telecopier number _______
_______________ (the "Holder") or order, without demand, the sum of One Million
Five Hundred Thousand Dollars ($1,500,000.00), without interest, on ____________
____________________ (the "Maturity Date").
The following terms shall apply to this Note:
ARTICLE I
PAYMENT
On the Maturity Date, the entire principal amount shall be paid to the
Holder without offset or deduction of any kind, including, without limitation,
any amounts otherwise required to be withheld by the Borrower and payable to any
taxing authority. Notwithstanding the foregoing, the principal amount of this
Note shall be reduced from time to time by the amount credited by the Holder in
lieu of payment pursuant to the exercise of Holder's rights under that certain
Option issued by Borrower in favor of Holder.
ARTICLE II
CONVERSION RIGHTS
The Holder shall have the right to convert the principal amount under
this Note into shares of the Borrower's Common Stock as set forth below.
2.1. CONVERSION INTO THE BORROWER'S COMMON STOCK.
(a) The Holder shall have the right from and after the issuance of this
Note and then at any time until this Note is fully paid, to convert any
outstanding and unpaid principal portion of this Note by delivering to Borrower
a Notice of Conversion substantially in the form of Exhibit A (the date of
giving of such notice of conversion being a "Conversion Date") into fully paid
and nonassessable shares of common stock of Borrower as such stock exists on the
date of issuance of this Note, or any shares of capital stock of Borrower into
which such stock shall hereafter be changed or reclassified (the "Common Stock")
at the conversion price as defined in Section 2.1(b) hereof (the "Conversion
Price"), determined as provided herein. Upon
delivery to the Borrower of a Notice of Conversion of the Holder's written
request for conversion, Borrower shall issue and deliver to the Holder within
three business days from the Conversion Date that number of shares of Common
Stock for the portion of the Note converted in accordance with the foregoing.
The number of shares of Common Stock to be issued upon each conversion of this
Note shall be determined by dividing that portion of the principal of the Note
to be converted, by the Conversion Price.
(b) Subject to adjustment as provided in Section 2.1(c) hereof, the
Conversion Price per share shall be $0.285.
(c) The Conversion Price described in Section 2.1(b) above and the
number and kind of shares or other securities to be issued upon conversion
determined pursuant to Section 2.1(a) shall be subject to adjustment from time
to time upon the happening of certain events while this conversion right remains
outstanding, as follows:
A. Merger, Sale of Assets, etc. If the Borrower at any time
shall consolidate with or merge into or sell or convey all or substantially all
its assets to any other corporation, this Note, as to the unpaid principal
portion thereof, shall thereafter be deemed to evidence the right to purchase
such number and kind of shares or other securities and property as would have
been issuable or distributable on account of such consolidation, merger, sale or
conveyance, upon or with respect to the securities subject to the conversion or
purchase right immediately prior to such consolidation, merger, sale or
conveyance. The foregoing provision shall similarly apply to successive
transactions of a similar nature by any such successor or purchaser. Without
limiting the generality of the foregoing, the anti-dilution provisions of this
Section shall apply to such securities of such successor or purchaser after any
such consolidation, merger, sale or conveyance.
B. Reclassification, etc. If the Borrower at any time shall,
by reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Note, as to the
unpaid principal portion thereof, shall thereafter be deemed to evidence the
right to purchase an adjusted number of such securities and kind of securities
as would have been issuable as the result of such change with respect to the
Common Stock immediately prior to such reclassification or other change.
C. Stock Splits, Combinations and Dividends. If the shares of
Common Stock are subdivided or combined into a greater or smaller number of
shares of Common Stock, or if a dividend is paid on the Common Stock in shares
of Common Stock, the Conversion Price shall be proportionately reduced in case
of subdivision of shares or stock dividend or proportionately increased in the
case of combination of shares, in each such case by the ratio which the total
number of shares of Common Stock outstanding immediately after such event bears
to the total number of shares of Common Stock outstanding immediately prior to
such event.
D. Subject to the Borrower amending its Certificate of
Incorporation to increase the number of authorized shares of Common Stock to at
least 50,000,000, during the period the conversion right exists, Borrower will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of Common Stock upon
1
the full conversion of this Note. Borrower represents that upon issuance, such
shares will be duly and validly issued, fully paid and non-assessable. Borrower
agrees that its issuance of this Note shall constitute full authority to its
officers, agents, and transfer agents who are charged with the duty of executing
and issuing stock certificates to execute and issue the necessary certificates
for shares of Common Stock upon the conversion of this Note.
2.2 METHOD OF CONVERSION. This Note may be converted by the Holder in
whole or in part as described in Section 2.1(a) hereof. Upon partial conversion
of this Note, a new Note containing the same date and provisions of this Note
shall, at the request of the Holder, be issued by the Borrower to the Holder for
the principal balance of this Note which shall not have been converted or paid.
ARTICLE III
REDEMPTION
At any time prior to the third anniversary of the date hereof, so long
as no Event of Default has occurred that has not been cured, the Borrower shall
have the right to redeem the remaining principal balance of this Note in whole
(but not in part) upon no less than 30 days notice given to the Holder at
116.66% of the then principal balance. During the period between the delivery of
the notice and the effective date of the redemption, the Holder shall continue
to have the right to convert all or a portion of this Note, in which case the
redemption price shall be correspondingly reduced.
ARTICLE IV
EVENTS OF DEFAULT
4.1 EVENTS OF DEFAULT. The occurrence of any of the following events of
default ("Event of Default") shall, at the option of the Holder hereof, make the
principal balance then remaining unpaid hereon and all other amounts payable
hereunder immediately due and payable, all without demand, presentment or
notice, or grace period, all of which hereby are expressly waived, except as set
forth below:
(a) FAILURE TO PAY PRINCIPAL. The Borrower fails to pay any
installment of principal hereon when due and such failure continues for a period
of ten (10) days after the due date.
(b) BREACH OF COVENANT. The Borrower breaches any material
covenant or other term or condition of this Note, the Note Purchase Agreement
entered into by the Holder and Borrower in connection with this Note (the "Note
Purchase Agreement") or any other agreement executed by the Borrower pursuant to
the Note Purchase Agreement (together with the Note Purchase Agreement, the
"Transactional Documents") in any material respect and such breach, if subject
to cure, continues for a period of ten (10) days after written notice to the
Borrower from the Holder.
2
(c) BREACH OF REPRESENTATIONS AND WARRANTIES. Any material
representation or warranty of the Borrower made herein in any Transactional
Document shall be false or misleading in any material respect.
(d) RECEIVER OR TRUSTEE. The Borrower shall make an assignment
for the benefit of creditors, or apply for or consent to the appointment of a
receiver or trustee for it or for a substantial part of its property or
business; or such a receiver or trustee shall otherwise be appointed.
(e) JUDGMENTS. Any money judgment, writ or similar final
process shall be entered or filed against Borrower or any of its property or
other assets for more than $100,000, and shall remain unvacated, unbonded or
unstayed for a period of forty-five (45) days.
(f) BANKRUPTCY. Bankruptcy, insolvency, reorganization or
liquidation proceedings or other proceedings or relief under any bankruptcy law
or any law for the relief of debtors shall be instituted by or against the
Borrower and if instituted against Borrower are not dismissed within 60 days of
initiation.
(g) DELISTING. Delisting of the Common Stock from the Over the
Counter Bulletin Board or other market (the "Principal Market") on which the
Common Stock is listed for trading; Borrower's failure to comply with the
conditions for listing; or notification that the Borrower is not in compliance
with the conditions for such continued listing.
(h) CROSS DEFAULT. The Borrower shall default in any of its
obligations under any mortgage, indenture or instrument under which there may be
issued any indebtedness of the Borrower in an amount exceeding $100,000 and such
default shall result in such indebtedness becoming or being declared due and
payable prior to the date on which it would otherwise become due and payable.
(i) STOP TRADE. An SEC stop trade order or Principal Market
trading suspension for a period of more than 10 business days.
(j) FAILURE TO DELIVER COMMON STOCK OR REPLACEMENT NOTE.
Borrower's failure to timely deliver Common Stock to the Holder pursuant to and
in the form required by this Note, or if required, a replacement Note.
4.2 ENFORCEMENT. The Holder may thereupon proceed to protect and
enforce its rights either by suit in equity and/or by action at law or by other
appropriate proceedings whether for the specific performance (to the extent
permitted by law) of any covenant or agreement contained in this Note or in aid
of the exercise of any power granted in this Note, and proceed to enforce the
payment of this Note held by it, and to enforce any other legal or equitable
right of such Holder.
4.3 WAIVER; RELEASE. Except as expressly provided for herein, the
Company specifically (i) waives all rights it may have (A) to notice of
nonpayment, notice of default, demand, presentment, protest and notice of
protest with respect to any of the obligations hereunder or the shares of Common
Stock and (B) notice of acceptance hereof or of any other action taken in
reliance hereon, notice and opportunity to be heard before the exercise by the
3
Holder of the remedies of self-help, set-off, or other summary procedures and
all other demands and notices of any type or description except for cure
periods; and (ii) releases the Holder, its officers, directors, agents,
employees and attorneys from all claims for loss or damage caused by any act or
failure to act on the part of the Holder, its officers, attorneys, agents,
directors and employees except for gross negligence or willful misconduct.
ARTICLE V
MISCELLANEOUS
5.1 FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part
of Holder hereof in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege. All rights and remedies existing
hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
5.2 NOTICES. Any notice herein required or permitted to be given shall
be in writing and may be personally served or sent by fax transmission (with
copy sent by certified or registered mail or by overnight courier). For the
purposes hereof, the address and fax number of the Holder is as set forth on the
first page hereof. The address and fax number of the Borrower shall be
▇▇▇▇▇▇▇▇.▇▇▇, Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
telecopier number: (▇▇▇) ▇▇▇-▇▇▇▇. Both Holder and Borrower may change the
address and fax number for service by service of notice to the other as herein
provided. Notice of Conversion shall be deemed effecting five days after being
placed in the mail, if mailed, or upon receipt of delivery personally or by
courier or by facsimile, in each case properly addressed to the party to receive
same.
5.3 AMENDMENT PROVISION. The term "Note" and all reference thereto, as
used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or
supplemented.
5.4 ASSIGNABILITY. This Note shall be binding upon the Borrower and its
successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns, and may be assigned by the Holder.
5.5 COST OF COLLECTION. If default is made in the payment of this Note,
Borrower shall pay the Holder hereof reasonable costs of collection, including
reasonable attorneys' fees.
5.6 MAXIMUM PAYMENTS. Notwithstanding any other provisions of this Note
or any other instrument or document executed in connection herewith, it is
expressly agreed and understood that the Borrower does not intend or expect to
pay, nor does the Holder intend or expect to charge, accept or collect any
interest which, when added to any other charge upon the principal, shall be in
excess of the highest lawful rate allowable under applicable law. Should
acceleration, prepayment, redemption or any other charges upon the principal or
any portion thereof result in the computation or earning of interest in excess
of the highest lawful rate
4
allowable under applicable law, any and all such excess is hereby waived and
shall be credited to the outstanding principal balance or returned to the
Borrower.
5.7 PREPAYMENT. This Note may be prepaid prior to the Maturity Date
upon at least 30 days notice subject to the right of the Holder to convert all
or part of this Note prior to receipt of the prepayment amount.
5.8 GOVERNING LAW AND VENUE. This Note shall be governed by and
interpreted in accordance with the laws of the State of California without
regard to the principles of conflict of laws. In the event of any litigation
regarding the interpretation or application of this Note, the parties
irrevocably consent to jurisdiction in any of the state or federal courts
located in the City of Los Angeles, State of California and waive their rights
to object to venue in any such court, regardless of the convenience or
inconvenience thereof to any party. Service of process in any civil action
relating to or arising out of this Agreement or the transaction(s) contemplated
herein may be accomplished in any manner provided by law. The parties hereto
agree that a final, non-appealable judgment in any such suit or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on such
judgment or in any other lawful manner.
IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its
name by its Chief Executive Officer on this _____ day of ______________, ______.
▇▇▇▇▇▇▇▇.▇▇▇, Inc. d/b/a vFinance, Inc.
By:
-------------------------------------
WITNESS:
-------------------------------
5
EXHIBIT A
NOTICE OF CONVERSION
(To be executed by the Registered Holder in order to convert the Note)
The undersigned hereby elects to convert $_________ of the principal
due on the Note issued by ▇▇▇▇▇▇▇▇.▇▇▇ d/b/a vFinance, Inc. into Shares of
Common Stock of the Company according to the conditions set forth in such Note,
as of the date written below.
Date of Conversion:
------------------------------------------------------------
Conversion Price:
--------------------------------------------------------------
Shares To Be Delivered:
--------------------------------------------------------
Signature:
---------------------------------------------------------------------
Print Name:
--------------------------------------------------------------------
Address:
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EXHIBIT E
COMPANY'S COUNSEL OPINION LETTER
Dated as of November ___, 2001
Best Finance Investments Limited
c/o ▇▇▇▇▇ ▇▇▇▇▇▇
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇ ▇▇▇▇▇'▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
Re: Note Purchase Agreement between ▇▇▇▇▇▇▇▇.▇▇▇, Inc.
and Best Finance Investment Limited
Ladies and Gentlemen:
This opinion is furnished to you pursuant to the Note Purchase
Agreement dated as of November 28, 2001 (the "Purchase Agreement") between
▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation (the "Company"), and Best Finance
Investments Limited, a British Virgin Islands corporation (the "Investor"),
which provides, among other things, for the issuance and sale by the Company of
(i) a promissory note (the "Note") in the aggregate principal amount of
$1,500,000, which will be (a) for a term of 48 months, with no interest and no
amortization payable during the term, (b) convertible in whole or in part into
shares of the Company's common stock, par value $.01 per shares (the "Common
Stock"), at a conversion rate of $.285 for each share of Common Stock, and (c)
subject to the right of the Company to redeem the Note for $1,750,000 at any
time prior to the third anniversary of the closing of the Purchase Agreement,
and (ii) an option (the "Option") exercisable from time to time up to June 30,
2002 to purchase up to that number of shares of Common Stock equal to 1,500,000
divided by the average closing bid and asked price of the Common Stock for the
20 consecutive trading days prior to the date(s) of the applicable option
exercise but in no event will the number be more than $.336 or less than $.23.
We have acted as special counsel for the Company in connection with the
Purchase Agreement, the Note, the Option, the Registration Rights Agreement and
the Investor Rights Agreement (collectively, the "Transaction Documents"). In
rendering this opinion letter, we have relied, with your approval, as to factual
matters solely on our examination of the following documents ("Documents"), and
have made no independent verification of the facts asserted to be true and
correct in the Documents, including, without limitation, the factual
representations and warranties contained in the Transaction Documents:
(a) The Company's Certificate of Incorporation filed with the
office of the Secretary of State of Delaware on February 12,
1992, Certificate of Renewal, filed with the office of the
Secretary of State of Delaware on March 15, 1996, Certificate
of Amendment to the Certificate of Incorporation, filed with
the office of the Secretary of State of Delaware on April 28,
1999, Certificate of Amendment to the Certificate of
Incorporation, filed with the office of the Secretary of State
of Delaware on March 13, 2000, Certificate of Designation of
Series A Convertible Preferred Stock, Certificate of
Designation of Series B Convertible Preferred Stock, filed
with the office of the Secretary of State of Delware on
January 3, 2001 (collectively, the "Certificate of
Incorporation");
(b) The Company's Bylaws, effective January 24, 1994, ("Bylaws"),
as provided to us by the Company;
(c) The Officer's Certificate ("Officer's Certificate") delivered
to us by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the Chief Executive Officer and
President of the Company, a copy of which is attached hereto
as Exhibit "B";
(d) The resolutions of the Company's board of directors with
respect to the Transaction Documents, included as a schedule
to the Officer's Certificate;
(e) A certificate dated November 14, 2001, issued by the Delaware
Secretary of State; and
(f) Copies of or forms of each of the Transaction Documents and
the certificates and exhibits delivered pursuant to the
Transaction Documents on the date hereof or thereof.
Except to the extent we specifically and expressly opine on any such
matters in this opinion, in our examination of the Documents and in rendering
the following opinions, in addition to the assumptions contained elsewhere in
this opinion, we have, with your consent, assumed without investigation (and we
express no opinion regarding) each of the following: (a) that all parties to the
Transaction Documents (other than the Company) are duly organized and are
validly existing in the jurisdictions in which they were organized, and that all
parties to the Transaction Documents are duly qualified to transact business as
foreign corporations and in good standing in the jurisdictions in which they
transact business; (b) other than with respect to the Company, the due
authorization, execution and delivery of the Transaction Documents by the
parties thereto; (c) other than with respect to the Company, the full legal
power and authority of the parties to the Transaction Documents to execute,
deliver and perform their respective obligations thereunder; (d) that the
Transaction Documents constitute the legal, valid and binding obligations of the
parties thereto, enforceable in accordance with their respective terms against
each of them; (e) that the parties to the Transaction Documents have acted in
good faith, without notice of adverse claims, and other than with respect to the
Company have complied with all laws applicable to each of them that affect the
Transaction Documents except as qualified herein;
2
(f) that none of the Transaction Documents has been modified, supplemented or
subject to any waiver; (g) that the Transaction Documents comply with all
standards of good faith, fairness, public policy and conscionability required by
law; (h) that with respect to the Transaction Documents, sufficient
consideration has been received by each of the parties in respect of their
respective obligations thereunder; (i) the constitutionality and validity of all
relevant laws, regulations and agency actions unless a reported case has
otherwise held; (j) that there are no agreements or understandings among the
parties, written or oral, and there is no usage of trade or course of prior
dealing among the parties that would, in either case, define, supplement,
qualify or alter the terms of the Transaction Documents; (k) the Investor has no
reason to believe that the opinions set forth herein are incorrect or that there
has been any mutual mistake of fact or misunderstanding, fraud, duress or undue
influence relating to the matters which are the subject of our opinions; (l) the
fulfillment of and timely compliance by the parties thereto with all the terms
and conditions of the Transaction Documents and the accuracy of all
representations and warranties contained in the Transaction Documents and in the
certificates delivered pursuant thereto on the date hereof or thereof; (m) that
there was no misrepresentation, omission or deceit by any person in connection
with the execution, delivery or performance of any of the documents referred to
herein or any of the transactions contemplated by such documents; (n) that the
Certificate of Incorporation and Bylaws as presented to us are true, complete
and include all amendments thereto to date; (o) no offer of the Note, the
Option, the Note Shares or the Option Shares was made to the Investor in the
United States, and at the time the offer and sale of the Note, the Option, the
Note Shares and the Option Shares were made, the Investor was located outside of
the United States; (p) each instrument, when issued, and each Transaction
Document when executed, delivered and filed, if necessary, with the appropriate
regulatory authority, will conform to the form presented to and reviewed by us;
(q) the accuracy and completeness of all documents and records that we have
reviewed and the genuineness of all signatures contained therein; (r) that all
individuals executing documents individually or on behalf of any of the parties
thereto are in fact the individuals they purport to be; (s) the legal capacity
of all individuals who executed documents individually or on behalf of the
parties thereto; and (t) the authenticity of documents submitted to us as
originals and the conformity to authentic originals of documents submitted to us
as copies or facsimiles or exhibits.
As to factual matters, we have assumed the correctness of and relied
upon the statements and other representations of the parties in the Documents,
and upon certificates of public officials, and we have made no independent
inquiries or investigations.
We have not conducted any independent investigation in rendering the
opinions set forth in this letter other than the examination of the Documents
described herein, and our opinion is qualified in all respects by the scope of
such document examination.
Our opinions are limited solely to the laws of the State of Florida,
the Delaware General Corporation Law ("Delaware Law") and United States federal
law, excluding conflict of laws rules. We note that the Purchase Agreement, the
Note, the Option and the Registration Rights Agreement are governed by the laws
of the State of California and that the Investor Rights Agreement is governed by
the laws of the State of Delaware. To the extent that the matters that are the
subject of this opinion may be affected by the laws of a jurisdiction other than
the laws of the State of Florida, Delaware Law and United States federal law,
our opinions are necessarily
3
made upon the assumption, which we have made with your permission, that the
relevant law of such other jurisdiction is identical to that of the State of
Florida, Delaware Law and United States federal law in all applicable respects.
Notwithstanding the foregoing, the opinions contained herein shall not be
construed as expressing any opinion regarding local statutes, ordinances,
administrative decisions, or regarding the rules and regulations of counties,
towns, municipalities or special political subdivisions (whether created or
enabled through legislative action at the state or regional level), or regarding
judicial decisions to the extent that they deal with any of the foregoing.
Based solely upon our examination and consideration of the Documents,
and in reliance thereon, and in reliance upon the factual representations
contained in the Documents, and our consideration of such matters of law as we
have considered necessary or appropriate for the expression of the opinions
contained herein, and subject to the assumptions and the limitations, exceptions
and qualifications expressed herein (including Exhibit "A" hereto), we are of
the opinion that:
1. The Company is a corporation duly organized, validly
existing and in good corporate standing under the laws of the State of Delaware.
2. The Company has the requisite corporate power and corporate
authority to enter into and, subject to the Company amending its Certificate of
Incorporation in accordance with Section 4(d) of the Purchase Agreement, perform
its obligations under the Transaction Documents and to issue the Securities. The
Transaction Documents have been duly executed and delivered by the Company and
the consummation by the Company of the transactions contemplated thereby has
been duly authorized by all necessary corporate action and no further consent or
authorization of the Company or its Board of Directors or shareholders is
required, except as such consent or authorization may be required from time to
time to meet the Company's obligations with respect to the reservation and
issuance of the Option Shares and the Note Shares. Each of such Transaction
Documents will, upon receipt of the consideration recited therein, constitute a
valid and binding obligation of the Company enforceable against the Company in
accordance with its respective terms. (We call your attention to the
limitations, exceptions and qualifications set forth on Exhibit "A".)
3. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated thereby, including, without limitation, the issuance of the
Securities, do not and will not (i) subject to the Company amending its
Certificate of Incorporation in accordance with Section 4(d) of the Purchase
Agreement, result in a violation of the Company's Certificate of Incorporation
or Bylaws; or (ii) result in a violation of any federal or state law, rule or
regulation applicable to the Company or by which any property or asset of the
Company is bound or affected, except for such violations as would not,
individually or in the aggregate, have an effect on the business, operations,
properties, prospects or financial condition of the Company that is material and
adverse to the Company and/or any condition, circumstance, or situation that
would prohibit or otherwise interfere with the ability of the Company to enter
into and perform any of its obligations under the Transaction Documents in any
material respect.
4
4. Assuming the accuracy of the representations and warranties
made by the Investor set forth in the Purchase Agreement and assuming no offer
or sale (as such terms are defined in Sections 517.021(14) and 517.021(18) of
the Florida Statutes) of the Securities has occurred or will occur in the State
of Florida, the issuance of the Securities in accordance with the Purchase
Agreement will be exempt from registration under the Securities Act of 1933, as
amended, and will be in compliance with state securities laws of the State of
Florida. The Note Shares and the Option Shares, when issued in accordance with
the Transaction Documents (including payment of consideration therefor), will be
validly issued and fully paid and non-assessable, and free of any preemptive or
similar rights contained in the Certificate of Incorporation or Bylaws. We note
that the issuance of the Note Shares and the Option Shares would be in excess of
the shares of Common Stock authorized to be issued under the Certificate of
Incorporation. Accordingly, further action by the Board of Directors and the
stockholders of the Company would be required to amend the Certificate of
Incorporation. (The foregoing opinion regarding the valid issuance and fully
paid and non-assessable nature of the Company's capital stock is based solely
upon the facts as set forth in the representations in the Officer's
Certificate).
5. Under Florida's choice of law principles, the contractual
selection of governing law in each of the Transaction Documents will be applied,
provided there is a reasonable relationship between each of the Transaction
Documents and the jurisdiction whose laws is selected and the selected law does
not conflict with Florida law or confer an advantage on a non-resident party
which a Florida resident does not have. A United States federal court sitting in
diversity is bound to apply the conflict of laws doctrine of the state in which
it sits.
6. Under Florida law, a court will recognize and enforce a
final judgment rendered by a court of a foreign jurisdiction under principles of
comity. Such a judgment will be enforced unless the court rendering the judgment
lacked jurisdiction or failed to afford the judgment defendant with due process
of law, or the judgment offends Florida's public policies. A United States
federal court sitting in diversity should apply the law of the foreign state in
determining this issue.
This opinion is subject to the assumptions, limitations, exceptions and
qualifications set forth herein and on Exhibit "A" hereto which is incorporated
herein with the same effect as if set forth herein.
This opinion is limited to the matters stated herein and no opinions
may be implied or inferred beyond the matters expressly stated herein.
The opinions herein are given and based upon the law of Florida,
Delaware Law and United States federal law as of the date hereof and the facts
presented to us. We expressly disclaim any obligation to update or supplement
our opinions to reflect any facts or circumstances which may come to our
attention or any changes in law which may occur, including changes that might
affect the opinions set forth herein.
This opinion is for the sole benefit of the Investor and solely in
connection with the transaction contemplated by the Purchase Agreement and may
not be relied upon by any other person or entity without the express written
consent of the undersigned. Without our prior written consent, this opinion
letter may not be quoted in whole or in part or otherwise referred to in any
document or report and may not be furnished to any person or entity.
Very truly yours,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
5
Exhibit "A" to Legal Opinion
ADDITIONAL LIMITATIONS, EXCEPTIONS AND QUALIFICATIONS
No opinion is expressed herein as to the enforceability of any
agreement or instrument to the extent that enforceability of any rights,
obligations and agreements is in any way affected or limited by: (a) applicable
liquidation, conservatorship, bankruptcy, insolvency, moratorium, reorganization
or similar state or federal laws affecting the rights and remedies of creditors
generally (including without limitation, fraudulent transfer laws); (b)
considerations of public policy and general principles of equity (whether
considered in a proceeding in equity or at law); (c) the exercise of the
discretionary powers of any court or other authority before which may be brought
any proceeding seeking equitable remedies, including, without limitation,
specific performance and injunctive relief; (d) the applicability of concepts of
materiality, reasonableness, good faith and fair dealing; and (e) the limitation
or determination of rights or remedies by a court of competent jurisdiction or
other tribunal as unconscionable as a matter of law or contrary to public
policy, or limiting a remedy where another remedy has been elected.
Specifically, we express no opinion as to enforceability relating to
any provisions (a) allowing any party to declare indebtedness due and payable
without notice (as some courts have held that acceleration may not be made
except by an unequivocal act of the holder evidencing acceleration, which may
include notice to the debtor), (b) providing for specific performance and the
appointment of a receiver, (c) providing that a failure to exercise any right,
remedy or option shall not operate as a waiver or that a selection of a remedy
will not limit the availability of another remedy, (d) restricting access to
legal or equitable remedies or requiring submission to the jurisdiction of the
courts of a particular state where enforcement thereof is deemed to be
unreasonable in light of the circumstances or waiving any rights to object to
venue or an inconvenient forum, (e) which purport to establish methods for the
service of process which are not permitted pursuant to applicable law, (f) which
provide for the waiver of any right to trial by jury, (g) which provide that
oral modifications, course of conduct and course of dealing shall not be
effective, (h) waiving rights granted by law where the waivers are against
public policy or prohibited by law, (i) waiving or affecting rights to notices
or waiving vaguely or broadly stated rights or future rights, (j) which purport
to grant rights of indemnification or to hold harmless or exculpate, (k) which
provide that rights or remedies are not exclusive, that every right or remedy is
cumulative and may be exercised in addition to or with any other right or remedy
or that the election of some particular remedy or remedies does not preclude
recourse to one or more other remedies, (l) establishing severability
provisions, (m) providing for the reimbursement by the non-prevailing party of
the prevailing party's legal fees and expenses, (n) purporting to create or
perfect security interests, (o) purporting to establish evidentiary standards
for suits or proceedings to enforce any of the Transaction Documents, (p)
providing that forum selection clauses are binding on the court or courts in the
forum selected, (q) limiting judicial discretion regarding the determination of
damages and entitlement to attorneys' fees and other costs, (r) which deny a
party that has materially failed to render or offer performance required by the
contract the opportunity to cure that failure unless permitting a cure would
unreasonably hinder the non-defaulting party from making substitute arrangements
for performance, (s) which purport to grant rights of setoff to parties that are
not in privity of contract with the party against whom such setoff is sought or
with whom such parties do not share an identity of obligations, (t) which
provide for any power of sale or confession of judgment; (u) which deem or
acknowledge certain
factual matters which may not be fully consistent with a judicial determination
of such matters; (v) which provide for payment of damages in specified amounts
or pursuant to a specified formula in the event of a party's nonperformance of
certain obligations; (w) purporting to preclude the modification thereof through
conduct, custom or course of performance, action or dealing; (x) purporting to
require the payment or reimbursement of fees, costs, expenses, or other amounts
that are unreasonable in nature or amount; (y) purporting to bind third parties
who are not parties thereto; and (z) purporting to assign or convey any
agreement, contract or right which by its terms may not be assigned without the
consent of a third party if such consent is not obtained. None of the
qualifications as to enforceability set forth in this paragraph will materially
interfere with the practical realization of the benefits provided to the
Investor by the Transaction Documents except for the economic consequences of
any procedural delay which may result therefrom.
We express no opinion regarding the effect of or the applicability of
any tax or other impositions, including, without limitation, intangible,
documentary, stamp, mortgage, transfer and recording taxes and similar charges
and franchise taxes and taxes measured on or with respect to the net income or
gross receipts of any person or entity.
The opinions set forth herein are based in part upon applicable laws
and regulations as they are currently compiled and reported on by customary
reporting services. It is possible that laws and regulations affecting the
opinions expressed herein might have been enacted that are not reflected in such
reporting services. We are not currently aware of the enactment of any such laws
and regulations.
The opinions expressed herein are (a) limited to the matters expressly
set forth herein, and no opinion is to be inferred or implied beyond the matters
so stated, (b) subject to there being no material change in the law effective
after the date hereof, and (c) subject to applicable laws respecting limitations
of actions. This opinion is given and based upon the laws of the State of
Florida, Delaware Law and United States federal law as of the date hereof and
the facts presented to us.
[SPACE BELOW THIS LINE IS INTENTIONALLY LEFT BLANK]
EXHIBIT B
▇▇▇▇▇▇▇▇.▇▇▇, INC.
OFFICER'S CERTIFICATE
The undersigned, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, does hereby certify that he is,
and at all times herein mentioned has been, the duly elected Chief Executive
Officer and President of ▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation (the
"Company"), is familiar with the facts herein certified, is authorized to
certify the same and executes and delivers this Officer's Certificate on behalf
of the Company in connection with the Note Purchase Agreement dated as of
November 28, 2001 (the "Purchase Agreement"), between the Company and Best
Finance Investments Limited (the "Investor"). Capitalized terms not otherwise
defined herein are defined as set forth in the Purchase Agreement. The
undersigned further certifies that:
1. The representations and warranties of the Company set forth in the
Purchase Agreement, or any agreement or certificate delivered in connection
therewith, were true and correct in all respects as of the date thereof and are
true and correct in all respects as of the date hereof.
2. The Company has provided or caused to be provided to ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, LLP (a) true, correct and complete copies of the Bylaws of the Company
as in effect on the date hereof, and (b) true, correct and complete copies of
the minutes of all meetings of the Board of Directors (including any committees
thereof) and stockholders relating directly or indirectly to the Purchase
Agreement, the Note, the Option, the Registration Rights Agreement, and the
Investor Rights Agreement (collectively, the "Agreements").
3. Attached hereto as SCHEDULE A are true, correct and complete copies
of the written consent of the Board of Directors of the Company, dated November
___, 2001, authorizing the Company to enter into and execute the Purchase
Agreement, the Note, the Option, the Registration Rights Agreement and the
Investor Rights Agreement.
4. There are no (a) claims against any of the securities to be issued
in connection with the Purchase Agreement, (b) encumbrances or liens against the
Company's interests in such securities, or (c) agreements which restrict the
Company's ability to issue or transfer the securities to be issued in accordance
with the Purchase Agreement.
5. The authorized capital stock of the Company consists of: (a)
25,000,000 shares of common stock, par value $.01 per share ("Common Stock"),
10,879,278 shares of which underlie outstanding stock options, warrants or other
contractual arrangements to issue shares of Common Stock, and (b) 2,500,000
shares of preferred stock, par value $.01 per share.
6. As of November ___, 2001, the Company had 20,933,021 outstanding
shares of Common Stock, 3,011,511 treasury shares of Common Stock, 122,500
issued and outstanding shares of Series A Convertible Preferred Stock and 50,000
issued and outstanding shares of Series B Convertible Preferred Stock.
7. All issued and outstanding securities of the Company are validly
issued and fully paid and the Company has received valid and sufficient
consideration therefore; the holders thereof have no rights of rescission; and
none of such securities were issued in violation of the preemptive rights of any
holder of any security of the Company.
8. The Company has paid all taxes and made all filings required under
Delaware law or regulations.
9. The Company's execution and delivery of each of the Purchase
Agreement, the Note, the Option, the Registration Rights Agreement and the
Investor Rights Agreement have been duly authorized by all necessary corporate
action on the part of the Company and each such document has been duly executed
and delivered by the Company pursuant to the Purchase Agreement.
10. The Company is not a party to or subject to the provisions of any
order, writ, injunction, judgment or decree of any court or government agency or
instrumentality.
11. The Company's principal place of business is in the State of
Florida.
12. The Company has not made any offers or sales of the securities to
be issued pursuant to the Purchase Agreement in any state or other jurisdiction
of the United States.
13. I hereby certify, confirm and attest that I am the duly elected,
qualified and acting Chief Executive Officer and President of the Company,
authorized to execute and deliver each of the Agreements on behalf of the
Company and that I executed and delivered on behalf of the Company the following
documents as of the date set forth opposite such document:
Document Date
-------- ----
Purchase Agreement November ___, 2001
Registration Rights Agreement November ___, 2001
Note November ___, 2001
Option November ___, 2001
Investor Rights Agreement November ___, 2001
IN WITNESS WHEREOF, the undersigned has executed this Officer's
Certificate on behalf of the Company as of November ___, 2001.
▇▇▇▇▇▇▇▇.▇▇▇, INC.
By:
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Executive Officer and President
I, ▇. ▇▇▇▇ ▇▇▇▇▇, do hereby certify that I am the duly elected,
qualified acting Secretary of the Company and that the signature subscribed to
the foregoing certificate purporting to be the signature of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
is the genuine signature of said person and such person is the duly elected,
qualified and acting Chief Executive Officer and President of the Company as of
the date hereinabove written.
By:
-------------------------------------
▇. ▇▇▇▇ ▇▇▇▇▇, Secretary
SCHEDULE A
VFINANCE. INC.
WRITTEN CONSENT TO ACTION IN LIEU
OF MEETING OF THE BOARD OF DIRECTORS
Pursuant to Section 141(f) of the General Corporation Law of the State
of Delaware, the undersigned, constituting all of the members of the Board of
Directors of vFinance, Inc., a Delaware corporation (the "Company"), do hereby
waive any notice of, and dispense with the holding of, a meeting of the Board of
Directors, and do hereby consent to the adoption of, and do hereby adopt, the
following resolutions:
WHEREAS, the Company desires to enter into a Note Purchase Agreement
("Purchase Agreement") between the Company and Best Finance Investments Limited
("Best Finance"), pursuant to which the Company will issue and Best Finance will
acquire, (i) a promissory note (the "Note") in the aggregate principal amount of
$1,500,000, which will be (a) for a term of 48 months, with no interest and no
amortization payable during the term, (b) convertible in whole or in part into
shares of the Company's common stock, par value $.01 per share (the "Common
Stock") at a conversion rate of $.285 for each share of Common Stock, and (c)
subject to the right of the Company to redeem the Note for $1.75 million at any
time prior to the third anniversary of the closing of the transaction, and (ii)
an option (the "Option") exercisable from time to time up to June 30, 2002 to
purchase up to that number of shares of Common Stock equal to 1,500,000 divided
by the average closing bid and ask price of the Common Stock for the twenty
consecutive trading days prior to the date(s) of the applicable option exercise
but in no event will the number be more than $.336 or less than $.23.
WHEREAS, the Board of Directors of the Company has reviewed the
Purchase Agreement, together with the Exhibits thereto and all other ancillary
documents; and
WHEREAS, the Board of Directors deems it to be in the best interest of
the Company and its stockholders to enter into the Purchase Agreement and
consummate the transactions contemplated thereby;
NOW, THEREFORE, it is:
RESOLVED, that the Purchase Agreement and such other documents to which
the Company is required to be a party pursuant to the Purchase Agreement,
including, but not limited to, the Note, the Option, the Registration Rights
Agreement and the Investor Rights Agreement (collectively, together with the
Purchase Agreement, the "Agreements"), be, and they hereby are, approved,
authorized and ratified as the acts and deeds of the Company;
RESOLVED FURTHER, that the Chairman of the Board, Chief Executive
Officer, the President or any Vice President of the Company be, and each of them
hereby is, in all respects, authorized, empowered and directed, in the name and
on behalf of the Company, to negotiate,
prepare, approve, modify, execute, deliver and perform the Agreements, and any
modifications or amendments thereto as any such officer executing and delivering
the same may deem necessary or desirable to effectuate the transactions
contemplated by the Agreements, the approval of such actions to be conclusively
evidenced by such officer's signature thereto;
RESOLVED FURTHER, that the number of members of the Board of Directors
of the Company be, and hereby is, expanded to include three persons, thereby
creating a vacancy of one position, and that effective after the closing of the
Credit Agreement with UBS Americas Inc. ▇▇▇▇ ▇▇▇▇ is hereby appointed to fill
such vacancy and to serve as a member of the Board of Directors of the Company
until his successor is duly elected or appointed to the Board of Directors;
RESOLVED FURTHER, that the seal of the Company and the attestation of
the signature of the Chairman of the Board, Chief Executive Officer, the
President or any Vice President of the Company by the Secretary or any Assistant
Secretary of the Company will not be necessary, but if the seal or such
attestation is required by any party in connection with any of the transactions
contemplated under the Purchase Agreement, the Secretary or any Assistant
Secretary of the Company is hereby authorized to attest, for and on behalf of
the Company, the signature of the Chairman of the Board, Chief Executive
Officer, the President or any Vice President upon any instrument, document or
other writing on behalf of the Company by the Chairman of the Board, Chief
Executive Officer, the President or any Vice President thereof and to affix the
seal of the Company thereto;
RESOLVED FURTHER, that all actions heretofore or hereafter taken and
expenses incurred by any officer or director of the Company in furtherance of
any of the actions authorized by the foregoing resolutions are hereby expressly
ratified, confirmed, adopted and approved as acts and deeds of the Company; and
RESOLVED FURTHER, that the officers of the Company be, and each of them
hereby is, in all respects authorized, empowered and directed to take or cause
to be taken such further action, and to execute and deliver, or cause to be
executed and delivered, in the name and on behalf of the Company all such
further agreements, certificates, instruments and documents as they may deem to
be necessary, appropriate or desirable in order to effect the purposes and
intent of the foregoing resolutions and to be in the best interest of the
Company (as conclusively evidenced by the taking of such action or the execution
and delivery of such agreements, certificates, instruments and documents, as the
case may be), and that all actions heretofore taken by the officers of the
Company in connection with the subject of the foregoing resolutions be, and they
hereby are, in all respects approved, adopted, ratified and confirmed as the
acts and deeds of the Company.
This action by Unanimous Written Consent may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
1
IN WITNESS WHEREOF, the undersigned constituting all of the members of
the Board of Directors of the Company, have executed this written consent to
action as of November 28, 2001.
----------------------------------- ----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
2
SCHEDULES
Schedule 3(c)
Capitalization
VFIN Capitalization Table
Number of Shares Total vFin Shares Less: Treasury Total vFin Shares
Name Issued Issued Shares Outstanding
---- ---------------- ----------------- -------------- -----------------
Pre-Colonial Merger Public Float 1,049,600 1,049,600 1,049,600
Genesis Partners, Inc./ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (1) 350,000 1,399,600 1,399,600
River Rapids, Ltd. (1) 100,000 1,499,600 1,499,600
▇▇▇▇▇▇▇▇ Venture Capital Limited (1) 933,334 2,432,934 2,432,934
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (1) 933,333 3,366,267 3,366,267
Genesis Partners, Inc. (1) 933,333 4,299,600 4,299,600
Highlands Group / ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (1) 2,175,000 6,474,600 6,474,600
Genesis Partners, Inc./ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (1) 1,825,000 8,299,600 8,299,600
Bayard Management Services (BVI) Limited (1) 15,000 8,314,600 8,314,600
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (2) 100,000 8,414,600 8,414,600
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (2) 5,000 8,419,600 8,419,600
▇▇▇▇▇▇ ▇'▇▇▇▇▇ (2) 5,000 8,424,600 8,424,600
Pierre Esneau (2) 5,000 8,429,600 8,429,600
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (2) 2,500 8,432,100 8,432,100
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (2) 2,500 8,434,600 8,434,600
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (1) 2,500 8,437,100 8,437,100
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (2) 37,500 8,474,600 8,474,600
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (2) 37,500 8,512,100 8,512,100
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇. (3) 400,000 8,912,100 8,912,100
▇▇▇▇ ▇▇▇▇▇▇▇ (3) 300,000 9,212,100 9,212,100
▇▇▇▇▇ ▇▇▇▇▇▇ (3) 73,500 9,285,600 9,285,600
Stock Exposure, Inc. (2) 10,000 9,295,600 9,295,600
Union Atlantic Partners I, Ltd. (2) 8,400 9,304,000 9,304,000
Investors First Round (1) 1,166,667 10,470,667 10,470,667
Investors Second Round (1) 1,166,667 11,637,334 11,637,334
Del Mar Consulting Group (2) 333,333 11,970,667 11,970,667
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇. (redeemed) 1,279,922 13,250,589 1,279,922 11,970,667
▇▇▇▇ ▇▇▇▇▇▇▇ (redeemed) 1,279,922 14,530,511 1,279,922 11,970,667
Number of Shares Total vFin Shares Less: Treasury Total vFin Shares
Name Issued Issued Shares Outstanding
---- ---------------- ----------------- -------------- -----------------
▇▇▇▇▇ ▇▇▇▇▇▇ (redeemed) 451,667 14,982,178 451,667 11,970,667
First Level (3) 1,700,000 16,682,178 13,670,667
Colonial Direct (2) 5,750,000 22,432,178 19,420,667
▇▇ ▇▇▇▇▇▇▇▇▇ (2) 50,000 22,482,178 19,470,667
▇▇▇▇▇ ▇▇▇▇ (2) 50,000 22,532,178 19,520,667
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇▇▇, Jr. (4) 80,000 22,612,178 19,600,667
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (3) 400,000 23,012,178 20,000,667
Insight Capital Consultants Corporation (3) 25,000 23,037,178 20,025,667
Calp II Block Sold to Insiders (1) (778,426) 22,258,752 19,247,241
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (1) 25,000 22,283,752 19,272,241
▇▇▇▇ ▇▇▇▇▇▇▇ (1) 25,000 22,308,752 19,297,241
▇▇▇▇ ▇▇▇▇ (1) 25,000 22,333,752 19,322,241
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (1) 39,215 22,372,967 19,361,456
▇▇▇▇ ▇▇▇▇▇▇▇▇ (1) 25,000 22,397,967 19,386,456
▇▇▇▇ ▇▇▇▇▇▇ (1) 100,000 22,497,967 19,486,456
▇▇▇▇▇ ▇▇▇▇▇▇▇ (1) 234,802 22,732,769 19,721,258
▇▇▇ ▇▇▇▇▇▇▇ (1) 234,802 22,967,571 19,956,060
▇▇▇▇ ▇▇▇▇▇▇ (1) 25,000 22,992,571 19,981,060
▇▇▇▇ ▇▇▇▇ (1) 25,000 23,017,571 20,006,060
▇▇▇▇ ▇▇▇▇▇▇ (1) 19,608 23,037,179 20,025,668
Insight Capital Consultants Corporation (3) 25,000 23,062,179 20,050,668
Reef Trading Program Trading (3) 235,294 23,297,473 20,285,962
▇▇▇▇ ▇▇▇▇▇ (3) 411,765 23,709,238 20,697,727
Reef Trading Program Trading (3) 235,294 23,944,532 20,933,021
(1) Registered via the Company's sb-2, which became effective on July 31,
2001.
(2) No registration rights.
(3) Piggyback registration rights.
(4) Demand registration rights; 120 days from the date of issuance.
Schedule 3(c)
Capitalization
VFIN Options and Warrants Table
Number of Options
Options/ Exercise Vesting or Options Warants
Name Grant Date Warrants Price Expiration Date Schedule Warrants Total Total
---- ------------------ --------- ------ ------------------ -------------- -------- ------- -------
River Rapids,
Ltd. September 27, 1999 210,000 $3.000 September 27, 2002 March 31, 2000 Options 210,000 NA
September 27, 1999 210,000 $4.000 September 27, 2002 March 31, 2000 Options 210,000 NA
September 27, 1999 210,000 $5.000 September 27, 2002 March 31, 2000 Options 210,000 NA
▇▇▇▇ ▇▇▇▇▇▇▇ June 18, 2000 3,000 $4.250 June 18, 2005 June 18, 2000 Options 3,000 NA
June 18, 2000 3,000 $4.250 June 18, 2005 July 18, 2000 Options 3,000 NA
June 18, 2000 3,000 $4.250 June 18, 2005 August 18, 2000 Options 3,000 NA
June 18, 2000 3,000 $4.250 June 18, 2005 September 18, 2000 Options 3,000 NA
June 18, 2000 3,000 $4.250 June 18, 2005 October 18, 2000 Options 3,000 NA
June 18, 2000 3,000 $4.250 June 18, 2005 November 18, 2000 Options 3,000 NA
June 18, 2000 3,000 $4.250 June 18, 2005 December 18, 2000 Options 3,000 NA
June 18, 2000 3,000 $4.250 June 18, 2005 January 18, 2001 Options 3,000 NA
June 18, 2000 3,000 $4.250 June 18, 2005 February 18, 2001 Options 3,000 NA
June 18, 2000 3,000 $4.250 June 18, 2005 March 18, 2001 Options 3,000 NA
June 18, 2000 3,000 $4.250 June 18, 2005 April 18, 2001 Options 3,000 NA
June 18, 2000 3,000 $4.250 June 18, 2005 May 18, 2001 Options 3,000 NA
June 18, 2000 19,500 $4.250 June 18, 2005 June 18, 2001 Options 19,500 NA
June 18, 2000 19,500 $4.250 June 18, 2005 June 18, 2002 Options 19,500 NA
December 19, 2000 3,000 $1.000 December 18, 2005 December 19, 2000 Options 3,000 NA
December 19, 2000 3,000 $1.000 December 18, 2005 December 19, 2000 Options 3,000 NA
December 19, 2000 3,000 $1.000 December 18, 2005 December 19, 2000 Options 3,000 NA
December 19, 2000 3,000 $1.000 December 18, 2005 December 19, 2000 Options 3,000 NA
December 19, 2000 3,000 $1.000 December 18, 2005 December 19, 2000 Options 3,000 NA
December 19, 2000 3,000 $1.000 December 18, 2005 December 19, 2000 Options 3,000 NA
December 19, 2000 3,000 $1.000 December 18, 2005 December 19, 2000 Options 3,000 NA
December 19, 2000 3,000 $1.000 December 18, 2005 December 19, 2000 Options 3,000 NA
December 19, 2000 3,000 $1.000 December 18, 2005 December 19, 2000 Options 3,000 NA
December 19, 2000 3,000 $1.000 December 18, 2005 December 19, 2000 Options 3,000 NA
December 19, 2000 3,000 $1.000 December 18, 2005 December 19, 2000 Options 3,000 NA
December 19, 2000 3,000 $1.000 December 18, 2005 December 19, 2000 Options 3,000 NA
December 19, 2000 19,500 $1.000 December 18, 2005 December 19, 2000 Options 19,500 NA
December 19, 2000 19,500 $1.000 December 18, 2005 October 28, 2001 Options 19,500 NA
December 19, 2000 3,000 $1.000 December 18, 2005 December 19, 2000 Options 3,000 NA
December 19, 2000 3,000 $1.000 December 18, 2005 December 19, 2000 Options 3,000 NA
December 19, 2000 3,000 $1.000 December 18, 2005 December 19, 2000 Options 3,000 NA
December 19, 2000 3,000 $1.000 December 18, 2005 December 19, 2000 Options 3,000 NA
December 19, 2000 3,000 $1.000 December 18, 2005 December 19, 2000 Options 3,000 NA
December 19, 2000 3,000 $1.000 December 18, 2005 December 19, 2000 Options 3,000 NA
December 19, 2000 3,000 $1.000 December 18, 2005 December 19, 2000 Options 3,000 NA
December 19, 2000 3,000 $1.000 December 18, 2005 January 18, 2001 Options 3,000 NA
December 19, 2000 3,000 $1.000 December 18, 2005 February 18, 2001 Options 3,000 NA
December 19, 2000 3,000 $1.000 December 18, 2005 March 18, 2001 Options 3,000 NA
December 19, 2000 3,000 $1.000 December 18, 2005 April 18, 2001 Options 3,000 NA
December 19, 2000 3,000 $1.000 December 18, 2005 May 18, 2001 Options 3,000 NA
December 19, 2000 19,500 $1.000 December 18, 2005 June 18, 2001 Options 19,500 NA
December 19, 2000 19,500 $1.000 December 18, 2005 June 18, 2002 Options 19,500 NA
October 16, 2001 56,250 $0.650 October 16, 2006 October 16, 2002 Options 56,250 NA
October 16, 2001 56,250 $0.650 October 16, 2006 October 16, 2003 Options 56,250 NA
October 16, 2001 56,250 $0.650 October 16, 2006 October 16, 2004 Options 56,250 NA
October 16, 2001 56,250 $0.650 October 16, 2006 October 16, 2005 Options 56,250 NA
▇▇▇▇▇ ▇▇▇▇▇▇ January 3, 2000 5,000 $2.500 December 24, 2004 December 24, 1999 Warrants NA 5,000
January 3, 2000 95,000 $2.500 January 3, 2005 December 24, 1999 Warrants NA 95,000
January 3, 2000 95,000 $2.500 January 3, 2005 December 24, 1999 Warrants NA 95,000
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ January 3, 2000 5,000 $2.500 December 24, 2004 December 24, 1999 Warrants NA 5,000
January 3, 2000 95,000 $2.500 January 3, 2005 December 24, 1999 Warrants NA 95,000
January 3, 2000 95,000 $2.500 January 3, 2005 December 24, 1999 Warrants NA 95,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ December 13, 1999 5,000 $4.125 December 13, 2004 December 13, 2000 Options 5,000 NA
December 13, 1999 5,000 $4.125 December 13, 2004 December 13, 2001 Options 5,000 NA
December 13, 1999 5,000 $4.125 December 13, 2004 December 13, 2002 Options 5,000 NA
December 13, 1999 5,000 $4.125 December 13, 2004 December 13, 2003 Options 5,000 NA
October 16, 2001 10,000 $0.625 October 16, 2006 October 16, 2002 Options 10,000 NA
October 16, 2001 10,000 $0.625 October 16, 2006 October 16, 2003 Options 10,000 NA
October 16, 2001 10,000 $0.625 October 16, 2006 October 16, 2004 Options 10,000 NA
October 16, 2001 10,000 $0.625 October 16, 2006 October 16, 2005 Options 10,000 NA
October 16, 2001 10,000 $0.625 October 16, 2006 October 16, 2005 Options 10,000 NA
▇▇▇▇ ▇▇▇▇▇▇▇ December 13, 1999 2,500 $4.125 December 13, 2004 December 13, 2000 Options 2,500 NA
December 13, 1999 2,500 $4.125 December 13, 2004 December 13, 2001 Options 2,500 NA
December 13, 1999 2,500 $4.125 December 13, 2004 December 13, 2002 Options 2,500 NA
December 13, 1999 2,500 $4.125 December 13, 2004 December 13, 2003 Options 2,500 NA
October 16, 2001 5,000 $0.625 October 16, 2006 October 16, 2002 Options 5,000 NA
October 16, 2001 5,000 $0.625 October 16, 2006 October 16, 2003 Options 5,000 NA
October 16, 2001 5,000 $0.625 October 16, 2006 October 16, 2004 Options 5,000 NA
October 16, 2001 5,000 $0.625 October 16, 2006 October 16, 2005 Options 5,000 NA
October 16, 2001 5,000 $0.625 October 16, 2006 October 16, 2005 Options 5,000 NA
Equis Capital
Corp. December 1, 1999 5,000 $4.000 December 1, 2004 January 1, 2000 Options 5,000 NA
December 1, 1999 5,000 $4.000 December 1, 2004 February 1, 2000 Options 5,000 NA
December 1, 1999 5,000 $5.000 December 1, 2004 March 1, 2000 Options 5,000 NA
December 1, 1999 5,000 $5.000 December 1, 2004 April 1, 2000 Options 5,000 NA
December 1, 1999 5,000 $6.000 December 1, 2004 May 1, 2000 Options 5,000 NA
December 1, 1999 5,000 $6.000 December 1, 2004 June 1, 2000 Options 5,000 NA
▇. ▇▇▇▇ ▇▇▇▇▇ March 24, 2000 12,500 $5.625 March 24, 2005 March 24, 2000 Options 12,500 NA
March 24, 2000 12,500 $5.625 March 24, 2005 March 24, 2001 Options 12,500 NA
March 24, 2000 12,500 $5.625 March 24, 2005 March 24, 2002 Options 12,500 NA
March 24, 2000 12,500 $5.625 March 24, 2005 March 24, 2003 Options 12,500 NA
February 10, 2001 12,500 $1.000 February 10, 2005 February 10, 2001 Options 12,500 NA
February 10, 2001 12,500 $1.000 February 10, 2005 February 10, 2002 Options 12,500 NA
February 10, 2001 12,500 $1.000 February 10, 2005 February 10, 2003 Options 12,500 NA
February 10, 2001 12,500 $1.000 February 10, 2005 February 10, 2004 Options 12,500 NA
Chichester
Securities March 31, 2000 100,000 $2.500 March 31, 2004 March 31,2000 Warrants NA 100,000
Placement
Agent - TK March 31, 2000 58,333 $6.000 See Notes March 31, 2000 Warrants NA 58,333
First Level
Securities March 31, 2000 25,000 $6.000 See Notes March 31, 2000 Warrants NA 25,000
Amro International
S.A. Investors March 31, 2000 100,000 $7.200 See Notes March 31, 2000 Warrants NA 100,000
Calp II March 31, 2000 350,000 $7.200 See Notes March 31, 2000 Warrants NA 350,000
Investors
▇▇▇▇▇▇▇ Trust Reg March 31, 2000 35,000 $7.200 See Notes March 31, 2000 Warrants NA 35,000
Investors
Balmore SA Investors March 31, 2000 35,000 $7.200 See Notes March 31, 2000 Warrants NA 35,000
▇▇▇▇▇▇ Investments March 31, 2000 25,000 $7.200 See Notes March 31, 2000 Warrants NA 25,000
LLP
Investors
Worldventures March 31, 2000 25,000 $7.200 See Notes March 31, 2000 Warrants NA
Fund I, LLC
Investors
RBB Bank
Aktiengesellschaft
Investors March 31, 2000 130,000 $7.200 See Notes March 31, 2000 Warrants NA 130,000
▇▇▇▇ et. al. March 31, 2000 19,833 $6.000 See Notes March 31, 2000 Warrants NA
▇▇▇▇ ▇▇▇▇▇▇▇ March 31, 2000 19,833 $6.000 See Notes March 31, 2000 Warrants NA
▇▇▇▇▇ ▇▇▇▇▇▇ March 31, 2000 7,000 $6.000 See Notes March 31, 2000 Warrants NA
▇▇▇▇ ▇▇▇▇▇▇ May 2, 2000 5,000 $5.000 May 3, 2005 May 2, 2001 Options 5,000 NA
May 2, 2000 5,000 $5.000 May 3, 2005 May 2, 2002 Options 5,000 NA
May 2, 2000 5,000 $5.000 May 3, 2005 May 2, 2003 Options 5,000 NA
May 2, 2000 5,000 $5.000 May 3, 2005 May 2, 2004 Options 5,000 NA
▇▇▇▇▇ ▇▇▇▇▇▇ June 12, 2000 5,000 $5.000 June 12, 2005 June 12, 2001 Options 5,000 NA
June 12, 2000 5,000 $5.000 June 12, 2005 June 12, 2002 Options 5,000 NA
June 12, 2000 5,000 $5.000 June 12, 2005 June 12, 2003 Options 5,000 NA
June 12, 2000 5,000 $5.000 June 12, 2005 June 12, 2004 Options 5,000 NA
▇▇▇▇▇ ▇▇▇▇▇▇▇ July 6, 2001 125,000 $0.625 July 6, 2005 July 6, 2001 Options 125,000 NA
July 6, 2001 125,000 $0.625 July 6, 2005 July 6, 2002 Options 125,000 NA
July 6, 2001 125,000 $0.625 July 6, 2005 July 6, 2003 Options 125,000 NA
July 6, 2001 125,000 $0.625 July 6, 2005 July 5, 2004 Options 125,000 NA
▇▇▇ ▇▇▇▇▇▇▇ July 6, 2001 125,000 $0.625 July 6, 2005 July 6, 2001 Options 125,000 NA
July 6, 2001 125,000 $0.625 July 6, 2005 July 6, 2002 Options 125,000 NA
July 6, 2001 125,000 $0.625 July 6, 2005 July 6, 2003 Options 125,000 NA
July 6, 2001 125,000 $0.625 July 6, 2005 July 5, 2004 Options 125,000 NA
▇▇▇ ▇▇▇▇-▇▇▇▇▇▇▇ July 24, 2000 25,000 $3.250 July 24, 2005 July 24, 2001 Options 25,000 NA
July 24, 2000 25,000 $3.250 July 24, 2005 July 24, 2002 Options 25,000 NA
July 24, 2000 25,000 $3.250 July 24, 2005 July 24, 2003 Options 25,000 NA
July 24, 2000 25,000 $3.250 July 24, 2005 July 24, 2004 Options 25,000 NA
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ October 15, 2000 33,333 $2.250 October 15, 2005 October 15, 2001 Options 33,333 NA
October 15, 2000 33,333 $2.250 October 15, 2005 October 15, 2002 Options 33,333 NA
October 15, 2000 33,333 $2.250 October 15, 2005 October 15, 2003 Options 33,333 NA
▇▇▇▇▇ ▇▇▇▇▇▇▇ January 4, 2001 431 $2.250 January 4, 2006 January 4, 2002 Options 431 NA
January 4, 2001 431 $2.250 January 4, 2006 January 4, 2003 Options 431 NA
January 4, 2001 431 $2.250 January 4, 2006 January 4, 2004 Options 431 NA
January 4, 2001 431 $2.250 January 4, 2006 January 4, 2005 Options 431 NA
▇▇▇ ▇▇▇▇▇▇ January 4, 2001 302 $2.250 January 4, 2006 January 4, 2002 Options 302 NA
January 4, 2001 302 $2.250 January 4, 2006 January 4, 2003 Options 302 NA
January 4, 2001 302 $2.250 January 4, 2006 January 4, 2004 Options 302 NA
January 4, 2001 302 $2.250 January 4, 2006 January 4, 2005 Options 302 NA
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ January 4, 2001 86 $2.250 January 4, 2006 January 4, 2002 Options 86 NA
January 4, 2001 86 $2.250 January 4, 2006 January 4, 2003 Options 86 NA
January 4, 2001 86 $2.250 January 4, 2006 January 4, 2004 Options 86 NA
January 4, 2001 86 $2.250 January 4, 2006 January 4, 2005 Options 86 NA
▇▇▇▇ Gefin January 4, 2001 3,765 $2.250 January 4, 2006 January 4, 2002 Options 3,765 NA
January 4, 2001 3,765 $2.250 January 4, 2006 January 4, 2003 Options 3,765 NA
January 4, 2001 3,765 $2.250 January 4, 2006 January 4, 2004 Options 3,765 NA
January 4, 2001 3,765 $2.250 January 4, 2006 January 4, 2005 Options 3,765 NA
▇▇▇▇▇▇▇ Gefin January 4, 2001 1,088 $2.250 January 4, 2006 January 4, 2002 Options 1,088 NA
January 4, 2001 1,088 $2.250 January 4, 2006 January 4, 2003 Options 1,088 NA
January 4, 2001 1,088 $2.250 January 4, 2006 January 4, 2004 Options 1,088 NA
January 4, 2001 1,088 $2.250 January 4, 2006 January 4, 2005 Options 1,088 NA
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ January 4, 2001 345 $2.250 January 4, 2006 January 4, 2002 Options 345 NA
January 4, 2001 345 $2.250 January 4, 2006 January 4, 2003 Options 345 NA
January 4, 2001 345 $2.250 January 4, 2006 January 4, 2004 Options 345 NA
January 4, 2001 345 $2.250 January 4, 2006 January 4, 2005 Options 345 NA
January 4, 2001 500 $2.250 January 4, 2006 January 4, 2002 Options 500 NA
January 4, 2001 500 $2.250 January 4, 2006 January 4, 2003 Options 500 NA
January 4, 2001 500 $2.250 January 4, 2006 January 4, 2004 Options 500 NA
January 4, 2001 500 $2.250 January 4, 2006 January 4, 2005 Options 500 NA
▇▇▇▇▇▇▇ ▇▇▇▇▇ January 4, 2001 431 $2.250 January 4, 2006 January 4, 2002 Options 431 NA
January 4, 2001 431 $2.250 January 4, 2006 January 4, 2003 Options 431 NA
January 4, 2001 431 $2.250 January 4, 2006 January 4, 2004 Options 431 NA
January 4, 2001 431 $2.250 January 4, 2006 January 4, 2005 Options 431 NA
▇▇▇▇▇▇ ▇▇▇▇▇-
Jeunne January 4, 2001 173 $2.250 January 4, 2006 January 4, 2002 Options 173 NA
January 4, 2001 173 $2.250 January 4, 2006 January 4, 2003 Options 173 NA
January 4, 2001 173 $2.250 January 4, 2006 January 4, 2004 Options 173 NA
January 4, 2001 173 $2.250 January 4, 2006 January 4, 2005 Options 173 NA
▇▇▇▇▇ ▇▇▇▇▇▇ January 4, 2001 1,725 $2.250 January 4, 2006 January 4, 2002 Options 1,725 NA
January 4, 2001 1,725 $2.250 January 4, 2006 January 4, 2003 Options 1,725 NA
January 4, 2001 1,725 $2.250 January 4, 2006 January 4, 2004 Options 1,725 NA
January 4, 2001 1,725 $2.250 January 4, 2006 January 4, 2005 Options 1,725 NA
▇▇▇▇▇▇▇ ▇▇▇▇ January 4, 2001 3,450 $2.250 January 4, 2006 January 4, 2002 Options 3,450 NA
January 4, 2001 3,450 $2.250 January 4, 2006 January 4, 2003 Options 3,450 NA
January 4, 2001 3,450 $2.250 January 4, 2006 January 4, 2004 Options 3,450 NA
January 4, 2001 3,450 $2.250 January 4, 2006 January 4, 2005 Options 3,450 NA
▇▇▇▇▇ ▇▇▇▇▇▇ January 4, 2001 431 $2.250 January 4, 2006 January 4, 2002 Options 431 NA
January 4, 2001 431 $2.250 January 4, 2006 January 4, 2003 Options 431 NA
January 4, 2001 431 $2.250 January 4, 2006 January 4, 2004 Options 431 NA
January 4, 2001 431 $2.250 January 4, 2006 January 4, 2005 Options 431 NA
▇▇▇▇▇ ▇▇▇▇ January 4, 2001 863 $2.250 January 4, 2006 January 4, 2002 Options 863 NA
January 4, 2001 863 $2.250 January 4, 2006 January 4, 2003 Options 863 NA
January 4, 2001 863 $2.250 January 4, 2006 January 4, 2004 Options 863 NA
January 4, 2001 863 $2.250 January 4, 2006 January 4, 2005 Options 863 NA
▇▇▇▇▇▇▇▇ ▇▇▇▇ January 4, 2001 6,313 $2.250 January 4, 2006 January 4, 2002 Options 6,313 NA
January 4, 2001 6,313 $2.250 January 4, 2006 January 4, 2003 Options 6,313 NA
January 4, 2001 6,313 $2.250 January 4, 2006 January 4, 2004 Options 6,313 NA
January 4, 2001 6,313 $2.250 January 4, 2006 January 4, 2005 Options 6,313 NA
▇▇▇▇▇ ▇▇▇▇▇▇▇ January 4, 2001 1,725 $2.250 January 4, 2006 January 4, 2002 Options 1,725 NA
January 4, 2001 1,725 $2.250 January 4, 2006 January 4, 2003 Options 1,725 NA
January 4, 2001 1,725 $2.250 January 4, 2006 January 4, 2004 Options 1,725 NA
January 4, 2001 1,725 $2.250 January 4, 2006 January 4, 2005 Options 1,725 NA
▇▇▇▇ ▇▇▇▇▇▇▇ January 4, 2001 1,851 $2.250 January 4, 2006 January 4, 2002 Options 1,851 NA
January 4, 2001 1,851 $2.250 January 4, 2006 January 4, 2003 Options 1,851 NA
January 4, 2001 1,851 $2.250 January 4, 2006 January 4, 2004 Options 1,851 NA
January 4, 2001 1,851 $2.250 January 4, 2006 January 4, 2005 Options 1,851 NA
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ January 4, 2001 345 $2.250 January 4, 2006 January 4, 2002 Options 345 NA
January 4, 2001 345 $2.250 January 4, 2006 January 4, 2003 Options 345 NA
January 4, 2001 345 $2.250 January 4, 2006 January 4, 2004 Options 345 NA
January 4, 2001 345 $2.250 January 4, 2006 January 4, 2005 Options 345 NA
▇▇▇▇▇ ▇▇▇▇ January 4, 2001 1,725 $2.250 January 4, 2006 January 4, 2002 Options 1,725 NA
January 4, 2001 1,725 $2.250 January 4, 2006 January 4, 2003 Options 1,725 NA
January 4, 2001 1,725 $2.250 January 4, 2006 January 4, 2004 Options 1,725 NA
January 4, 2001 1,725 $2.250 January 4, 2006 January 4, 2005 Options 1,725 NA
▇▇▇▇▇▇ ▇▇▇▇ January 4, 2001 431 $2.250 January 4, 2006 January 4, 2002 Options 431 NA
January 4, 2001 431 $2.250 January 4, 2006 January 4, 2003 Options 431 NA
January 4, 2001 431 $2.250 January 4, 2006 January 4, 2004 Options 431 NA
January 4, 2001 431 $2.250 January 4, 2006 January 4, 2005 Options 431 NA
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ January 4, 2001 431 $2.250 January 4, 2006 January 4, 2002 Options 431 NA
January 4, 2001 431 $2.250 January 4, 2006 January 4, 2003 Options 431 NA
January 4, 2001 431 $2.250 January 4, 2006 January 4, 2004 Options 431 NA
January 4, 2001 431 $2.250 January 4, 2006 January 4, 2005 Options 431 NA
▇▇▇ ▇▇▇▇▇ January 4, 2001 302 $2.250 January 4, 2006 January 4, 2002 Options 302 NA
January 4, 2001 302 $2.250 January 4, 2006 January 4, 2003 Options 302 NA
January 4, 2001 302 $2.250 January 4, 2006 January 4, 2004 Options 302 NA
January 4, 2001 302 $2.250 January 4, 2006 January 4, 2005 Options 302 NA
January 4, 2001 6,250 $2.250 January 4, 2006 January 4, 2002 Options 6,250 NA
January 4, 2001 6,250 $2.250 January 4, 2006 January 4, 2003 Options 6,250 NA
January 4, 2001 6,250 $2.250 January 4, 2006 January 4, 2004 Options 6,250 NA
January 4, 2001 6,250 $2.250 January 4, 2006 January 4, 2005 Options 6,250 NA
1999 Pvt
Investors January 4, 2001 122,500 $2.250 January 4, 2006 January 4, 2002 Warrants NA 122,500
January 4, 2001 122,500 $2.250 January 4, 2006 January 4, 2003 Warrants NA 122,500
January 4, 2001 122,500 $2.250 January 4, 2006 January 4, 2004 Warrants NA 122,500
January 4, 2001 122,500 $2.250 January 4, 2006 January 4, 2005 Warrants NA 122,500
Snow Bridge
Investor January 4, 2001 6,923 $2.250 January 4, 2006 January 4, 2002 Warrants NA 6,923
January 4, 2001 6,923 $2.250 January 4, 2006 January 4, 2003 Warrants NA 6,923
January 4, 2001 6,923 $2.250 January 4, 2006 January 4, 2004 Warrants NA 6,923
January 4, 2001 6,923 $2.250 January 4, 2006 January 4, 2005 Warrants NA 6,923
▇▇▇▇▇▇▇ Bridge
Investor January 4, 2001 6,923 $2.250 January 4, 2006 January 4, 2002 Warrants NA 6,923
January 4, 2001 6,923 $2.250 January 4, 2006 January 4, 2003 Warrants NA 6,923
January 4, 2001 6,923 $2.250 January 4, 2006 January 4, 2004 Warrants NA 6,923
January 4, 2001 6,923 $2.250 January 4, 2006 January 4, 2005 Warrants NA 6,923
Toscano Bridge
Investor January 4, 2001 4,154 $2.250 January 4, 2006 January 4, 2002 Warrants NA 4,154
January 4, 2001 4,154 $2.250 January 4, 2006 January 4, 2003 Warrants NA 4,154
January 4, 2001 4,154 $2.250 January 4, 2006 January 4, 2004 Warrants NA 4,154
January 4, 2001 4,154 $2.250 January 4, 2006 January 4, 2005 Warrants NA 4,154
▇▇▇▇▇▇▇▇ January 4, 2001 500 $2.250 January 4, 2006 January 4, 2002 Warrants NA 500
January 4, 2001 500 $2.250 January 4, 2006 January 4, 2003 Warrants NA 500
January 4, 2001 500 $2.250 January 4, 2006 January 4, 2004 Warrants NA 500
January 4, 2001 500 $2.250 January 4, 2006 January 4, 2005 Warrants NA 500
Ferrari January 4, 2001 250 $2.250 January 4, 2006 January 4, 2002 Warrants NA 250
January 4, 2001 250 $2.250 January 4, 2006 January 4, 2003 Warrants NA 250
January 4, 2001 250 $2.250 January 4, 2006 January 4, 2004 Warrants NA 250
January 4, 2001 250 $2.250 January 4, 2006 January 4, 2005 Warrants NA 250
Spoll January 4, 2001 2,000 $2.250 January 4, 2006 January 4, 2002 Warrants NA 2,000
January 4, 2001 2,000 $2.250 January 4, 2006 January 4, 2003 Warrants NA 2,000
January 4, 2001 2,000 $2.250 January 4, 2006 January 4, 2004 Warrants NA 2,000
January 4, 2001 2,000 $2.250 January 4, 2006 January 4, 2005 Warrants NA 2,000
▇▇▇▇▇▇▇ January 4, 2001 1,500 $2.250 January 4, 2006 January 4, 2002 Warrants NA 1,500
January 4, 2001 1,500 $2.250 January 4, 2006 January 4, 2003 Warrants NA 1,500
January 4, 2001 1,500 $2.250 January 4, 2006 January 4, 2004 Warrants NA 1,500
January 4, 2001 1,500 $2.250 January 4, 2006 January 4, 2005 Warrants NA 1,500
▇▇▇▇▇ January 4, 2001 1,500 $2.250 January 4, 2006 January 4, 2002 Warrants NA 1,500
January 4, 2001 1,500 $2.250 January 4, 2006 January 4, 2003 Warrants NA 1,500
January 4, 2001 1,500 $2.250 January 4, 2006 January 4, 2004 Warrants NA 1,500
January 4, 2001 1,500 $2.250 January 4, 2006 January 4, 2005 Warrants NA 1,500
▇▇▇▇ ▇▇▇▇▇▇ February 6, 2001 115,000 $0.625 February 6, 2006 February 6, 2001 Options 115,000 NA
February 6, 2001 87,500 $0.625 February 6, 2006 February 6, 2002 Options 87,500 NA
February 6, 2001 87,500 $0.625 February 6, 2006 February 6, 2003 Options 87,500 NA
February 6, 2001 87,500 $0.625 February 6, 2006 February 6, 2004 Options 87,500 NA
February 6, 2001 87,500 $0.625 February 6, 2006 February 6, 2005 Options 87,500 NA
▇▇▇▇▇ and
▇▇ ▇▇▇▇▇▇ January 4, 2001 115,000 $2.250 January 4, 2006 January 4, 2001 Options 115,000 NA
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ February 6, 2001 103,500 $0.625 February 6, 2006 February 6, 2001 Options 103,500 NA
February 6, 2001 31,625 $0.625 February 6, 2006 February 6, 2002 Options 31,625 NA
February 6, 2001 31,625 $0.625 February 6, 2006 February 6, 2003 Options 31,625 NA
February 6, 2001 31,625 $0.625 February 6, 2006 February 6, 2004 Options 31,625 NA
February 6, 2001 31,625 $0.625 February 6, 2006 February 6, 2005 Options 31,625 NA
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ January 4, 2001 115,000 $2.250 January 4, 2006 January 4, 2001 Options 115,000 NA
▇▇▇▇ ▇▇▇▇ February 6, 2001 115,000 $0.625 February 6, 2006 February 6, 2001 Options 115,000 NA
February 6, 2001 28,750 $0.625 February 6, 2006 February 6, 2002 Options 28,750 NA
February 6, 2001 28,750 $0.625 February 6, 2006 February 6, 2003 Options 28,750 NA
February 6, 2001 28,750 $0.625 February 6, 2006 February 6, 2004 Options 28,750 NA
February 6, 2001 28,750 $0.625 February 6, 2006 February 6, 2005 Options 28,750 NA
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ January 4, 2001 11,500 $2.250 January 4, 2006 January 4, 2001 Options 11,500 NA
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ February 27, 2001 75,000 $1.000 February 27, 2006 August 27, 2001 Options 75,000 NA
February 27, 2001 75,000 $1.000 February 27, 2006 February 27, 2002 Options 75,000 NA
February 27, 2001 100,000 $1.000 February 27, 2006 February 27, 2003 Options 100,000 NA
February 27, 2001 100,000 $1.000 February 27, 2006 February 28, 2004 Options 100,000 NA
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ February 27, 2001 5,000 $1.000 February 27, 2006 February 27, 2002 Options 5,000 NA
February 27, 2001 5,000 $1.000 February 27, 2006 February 27, 2003 Options 5,000 NA
February 27, 2001 5,000 $1.000 February 27, 2006 February 27, 2004 Options 5,000 NA
February 27, 2001 5,000 $1.000 February 27, 2006 February 27, 2005 Options 5,000 NA
▇▇▇▇▇▇▇▇ ▇▇▇▇ March 5, 2001 25,000 $0.625 January 4, 2006 March 5, 2002 Options 25,000 NA
March 5, 2001 25,000 $0.625 January 4, 2006 March 5, 2003 Options 25,000 NA
March 5, 2001 25,000 $0.625 January 4, 2006 March 5, 2004 Options 25,000 NA
March 5, 2001 25,000 $0.625 January 4, 2006 March 5, 2005 Options 25,000 NA
▇▇▇▇▇▇▇ ▇▇▇▇ March 26, 2001 18,750 $0.625 March 26, 2006 March 26, 2002 Options 18,750 NA
March 26, 2001 18,750 $0.625 March 26, 2006 March 26, 2003 Options 18,750 NA
March 26, 2001 18,750 $0.625 March 26, 2006 March 25, 2004 Options 18,750 NA
March 26, 2001 18,750 $0.625 March 26, 2006 March 26, 2005 Options 18,750 NA
▇▇▇▇▇▇▇ ▇▇▇▇▇ March 26, 2001 6,250 $0.625 March 26, 2006 March 26, 2002 Options 6,250 NA
March 26, 2001 6,250 $0.625 March 26, 2006 March 26, 2003 Options 6,250 NA
March 26, 2001 6,250 $0.625 March 26, 2006 March 25, 2004 Options 6,250 NA
March 26, 2001 6,250 $0.625 March 26, 2006 March 26, 2005 Options 6,250 ▇▇
▇▇▇▇ Group March 26, 2001 15,000 $0.625 March 26, 2006 March 26, 2002 Options 15,000 NA
▇▇▇▇▇ ▇▇▇▇
(20,000), March 26, 2001 15,000 $0.625 March 26, 2006 March 26, 2003 Options 15,000 NA
▇▇▇▇▇ ▇▇▇▇▇▇▇
(20,000) March 26, 2001 15,000 $0.625 March 26, 2006 March 25, 2004 Options 15,000 NA
& ▇▇▇▇▇ ▇▇▇▇▇▇
(20,000) March 26, 2001 15,000 $0.625 March 26, 2006 March 26, 2005 Options 15,000 NA
▇▇▇▇ ▇▇▇▇▇▇ March 26, 2001 25,000 $0.625 March 26, 2006 March 26, 2002 Options 25,000 NA
March 26, 2001 25,000 $0.625 March 26, 2006 March 26, 2003 Options 25,000 NA
March 26, 2001 25,000 $0.625 March 26, 2006 March 25, 2004 Options 25,000 NA
March 26, 2001 25,000 $0.625 March 26, 2006 March 26, 2005 Options 25,000 NA
▇▇▇▇▇ ▇▇▇▇▇▇ April 18, 2001 25,000 $0.625 January 4, 2006 Vest upon
performance Options 25,000 NA
April 18, 2001 25,000 $0.625 January 4, 2006 Vest upon
performance Options 25,000 NA
April 18, 2001 25,000 $0.625 January 4, 2006 Vest upon
performance Options 25,000 NA
April 18, 2001 25,000 $0.625 January 4, 2006 Vest upon
performance Options 25,000 NA
▇▇▇▇▇▇ ▇▇▇▇ April 18, 2001 25,000 $0.625 January 4, 2006 Vest upon
performance Options 25,000 NA
April 18, 2001 25,000 $0.625 January 4, 2006 Vest upon
performance Options 25,000 NA
April 18, 2001 25,000 $0.625 January 4, 2006 Vest upon
performance Options 25,000 NA
April 18, 2001 25,000 $0.625 January 4, 2006 Vest upon
performance Options 25,000 NA
▇▇▇▇▇▇▇ ▇▇▇▇▇ April 19, 2001 6,250 $0.625 April 19, 2006 April 19, 2002 Options 6,250 NA
April 19, 2001 6,250 $0.625 April 19, 2006 April 19, 2003 Options 6,250 NA
April 19, 2001 6,250 $0.625 April 19, 2006 April 18, 2004 Options 6,250 NA
April 19, 2001 6,250 $0.625 April 19, 2006 April 19, 2005 Options 6,250 NA
Topeka (OSJ) April 19, 2001 12,500 $0.625 April 19, 2006 April 19, 2002 Options 12,500 NA
▇▇▇▇▇ ▇▇▇▇
(2,500), April 19, 2001 12,500 $0.625 April 19, 2006 April 19, 2003
▇▇▇ Case (2,500), Options 12,500 NA
▇▇▇▇ ▇▇▇▇▇
(15,000), April 19, 2001 12,500 $0.625 April 19, 2006 April 18, 2004
▇▇▇▇▇▇ ▇▇▇▇▇
(15,000) Options 12,500 NA
& ▇▇▇▇▇ ▇▇▇▇▇
(15,000) April 19, 2001 12,500 $0.625 April 19, 2006 April 19, 2005 Options 12,500 NA
▇▇▇ ▇▇▇▇▇▇ April 19, 2001 20,000 $0.625 April 19, 2006 April 19, 2002 Options 20,000 NA
April 19, 2001 20,000 $0.625 April 19, 2006 April 19, 2003 Options 20,000 NA
April 19, 2001 20,000 $0.625 April 19, 2006 April 18, 2004 Options 20,000 NA
April 19, 2001 20,000 $0.625 April 19, 2006 April 19, 2005 Options 20,000 NA
▇▇▇▇▇ ▇▇▇▇ April 19, 2001 5,000 $0.625 April 19, 2006 April 19, 2002 Options 5,000 NA
April 19, 2001 5,000 $0.625 April 19, 2006 April 19, 2003 Options 5,000 NA
April 19, 2001 5,000 $0.625 April 19, 2006 April 18, 2004 Options 5,000 NA
April 19, 2001 5,000 $0.625 April 19, 2006 April 19, 2005 Options 5,000 NA
Houston (OSJ) April 19, 2001 5,000 $0.625 April 19, 2006 April 19, 2002 Options 5,000 ▇▇
▇▇▇▇▇▇▇▇ &
Heirs April 19, 2001 5,000 $0.625 April 19, 2006 April 19, 2003 Options 5,000 NA
April 19, 2001 5,000 $0.625 April 19, 2006 April 18, 2004 Options 5,000 NA
April 19, 2001 5,000 $0.625 April 19, 2006 April 19, 2005 Options 5,000 NA
▇▇▇▇ ▇▇▇▇▇▇ May 9, 2001 17,500 $0.625 May 9, 2006 May 9, 2002 Options 17,500 NA
May 9, 2001 17,500 $0.625 May 9, 2006 May 9, 2003 Options 17,500 NA
May 9, 2001 17,500 $0.625 May 9, 2006 May 8, 2004 Options 17,500 NA
May 9, 2001 17,500 $0.625 May 9, 2006 May 9, 2005 Options 17,500 NA
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ May 9, 2001 7,500 $0.625 May 9, 2006 May 9, 2002 Options 7,500 NA
May 9, 2001 7,500 $0.625 May 9, 2006 May 9, 2003 Options 7,500 NA
May 9, 2001 7,500 $0.625 May 9, 2006 May 8, 2004 Options 7,500 NA
May 9, 2001 7,500 $0.625 May 9, 2006 May 9, 2005 Options 7,500 NA
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ May 16, 2001 2,500 $0.625 May 16, 2006 May 16, 2002 Options 2,500 NA
May 16, 2001 2,500 $0.625 May 16, 2006 May 16, 2003 Options 2,500 NA
May 16, 2001 2,500 $0.625 May 16, 2006 May 15, 2004 Options 2,500 NA
May 16, 2001 2,500 $0.625 May 16, 2006 May 16, 2005 Options 2,500 NA
▇▇▇▇▇▇▇ ▇▇▇▇▇ July 1, 2001 500 $1.000 July 1, 2006 July 1, 2002 Options 500 NA
July 1, 2001 500 $1.000 July 1, 2006 July 1, 2003 Options 500 NA
July 1, 2001 500 $1.000 July 1, 2006 July 1, 2004 Options 500 NA
July 1, 2001 500 $1.000 July 1, 2006 July 2, 2005 Options 500 NA
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ July 1, 2001 1,500 $1.000 July 1, 2006 July 1, 2002 Options 1,500 NA
July 1, 2001 1,500 $1.000 July 1, 2006 July 1, 2003 Options 1,500 NA
July 1, 2001 1,500 $1.000 July 1, 2006 July 1, 2004 Options 1,500 NA
July 1, 2001 1,500 $1.000 July 1, 2006 July 2, 2005 Options 1,500 NA
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ July 1, 2001 3,500 $1.000 July 1, 2006 July 1, 2002 Options 3,500 NA
July 1, 2001 3,500 $1.000 July 1, 2006 July 1, 2003 Options 3,500 NA
July 1, 2001 3,500 $1.000 July 1, 2006 July 1, 2004 Options 3,500 NA
July 1, 2001 3,500 $1.000 July 1, 2006 July 2, 2005 Options 3,500 NA
▇▇▇ ▇▇▇▇▇ July 1, 2001 2,000 $1.000 July 1, 2006 July 1, 2002 Options 2,000 NA
July 1, 2001 2,000 $1.000 July 1, 2006 July 1, 2003 Options 2,000 NA
July 1, 2001 2,000 $1.000 July 1, 2006 July 1, 2004 Options 2,000 NA
July 1, 2001 2,000 $1.000 July 1, 2006 July 2, 2005 Options 2,000 NA
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ July 1, 2001 1,000 $1.000 July 1, 2006 July 1, 2002 Options 1,000 NA
July 1, 2001 1,000 $1.000 July 1, 2006 July 1, 2003 Options 1,000 NA
July 1, 2001 1,000 $1.000 July 1, 2006 July 1, 2004 Options 1,000 NA
July 1, 2001 1,000 $1.000 July 1, 2006 July 2, 2005 Options 1,000 NA
▇▇▇▇▇ ▇▇▇▇▇▇ July 1, 2001 3,000 $1.000 July 1, 2006 July 1, 2002 Options 3,000 NA
July 1, 2001 3,000 $1.000 July 1, 2006 July 1, 2003 Options 3,000 NA
July 1, 2001 3,000 $1.000 July 1, 2006 July 1, 2004 Options 3,000 NA
July 1, 2001 3,000 $1.000 July 1, 2006 July 2, 2005 Options 3,000 NA
▇▇▇▇▇▇ ▇▇▇▇▇▇ July 1, 2001 20,000 $1.000 July 1, 2006 July 1, 2002 Options 20,000 NA
July 1, 2001 20,000 $1.000 July 1, 2006 July 1, 2003 Options 20,000 NA
July 1, 2001 20,000 $1.000 July 1, 2006 July 1, 2004 Options 20,000 NA
July 1, 2001 20,000 $1.000 July 1, 2006 July 2, 2005 Options 20,000 NA
▇▇▇▇ ▇▇▇▇▇▇▇ July 1, 2001 15,000 $1.000 July 1, 2006 July 1, 2002 Options 15,000 NA
July 1, 2001 15,000 $1.000 July 1, 2006 July 1, 2003 Options 15,000 NA
July 1, 2001 15,000 $1.000 July 1, 2006 July 1, 2004 Options 15,000 NA
July 1, 2001 15,000 $1.000 July 1, 2006 July 2, 2005 Options 15,000 NA
▇▇▇▇▇▇ ▇▇▇▇ July 1, 2001 4,500 $1.000 July 1, 2006 July 1, 2002 Options 4,500 NA
July 1, 2001 4,500 $1.000 July 1, 2006 July 1, 2003 Options 4,500 NA
July 1, 2001 4,500 $1.000 July 1, 2006 July 1, 2004 Options 4,500 NA
July 1, 2001 4,500 $1.000 July 1, 2006 July 2, 2005 Options 4,500 NA
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ July 1, 2001 1,250 $1.000 July 1, 2006 July 1, 2002 Options 1,250 NA
July 1, 2001 1,250 $1.000 July 1, 2006 July 1, 2003 Options 1,250 NA
July 1, 2001 1,250 $1.000 July 1, 2006 July 1, 2004 Options 1,250 NA
July 1, 2001 1,250 $1.000 July 1, 2006 July 2, 2005 Options 1,250 NA
▇▇▇▇ ▇▇▇▇▇ July 1, 2001 3,000 $1.000 July 1, 2006 July 1, 2002 Options 3,000 NA
July 1, 2001 3,000 $1.000 July 1, 2006 July 1, 2003 Options 3,000 NA
July 1, 2001 3,000 $1.000 July 1, 2006 July 1, 2004 Options 3,000 NA
July 1, 2001 3,000 $1.000 July 1, 2006 July 2, 2005 Options 3,000 NA
▇▇▇▇ ▇▇▇▇▇ July 1, 2001 2,000 $1.000 July 1, 2006 July 1, 2002 Options 2,000 NA
July 1, 2001 2,000 $1.000 July 1, 2006 July 1, 2003 Options 2,000 NA
July 1, 2001 2,000 $1.000 July 1, 2006 July 1, 2004 Options 2,000 NA
July 1, 2001 2,000 $1.000 July 1, 2006 July 2, 2005 Options 2,000 NA
▇▇▇▇▇▇▇ ▇▇▇▇▇ July 1, 2001 2,500 $1.000 July 1, 2006 July 1, 2002 Options 2,500 NA
July 1, 2001 2,500 $1.000 July 1, 2006 July 1, 2003 Options 2,500 NA
July 1, 2001 2,500 $1.000 July 1, 2006 July 1, 2004 Options 2,500 NA
July 1, 2001 2,500 $1.000 July 1, 2006 July 2, 2005 Options 2,500 NA
▇▇▇▇ ▇▇▇▇▇▇ July 1, 2001 1,250 $1.000 July 1, 2006 July 1, 2002 Options 1,250 NA
July 1, 2001 1,250 $1.000 July 1, 2006 July 1, 2003 Options 1,250 NA
July 1, 2001 1,250 $1.000 July 1, 2006 July 1, 2004 Options 1,250 NA
July 1, 2001 1,250 $1.000 July 1, 2006 July 2, 2005 Options 1,250 NA
▇▇▇ ▇▇▇▇ July 1, 2001 1,250 $1.000 July 1, 2006 July 1, 2002 Options 1,250 NA
July 1, 2001 1,250 $1.000 July 1, 2006 July 1, 2003 Options 1,250 NA
July 1, 2001 1,250 $1.000 July 1, 2006 July 1, 2004 Options 1,250 NA
July 1, 2001 1,250 $1.000 July 1, 2006 July 2, 2005 Options 1,250 NA
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ July 1, 2001 750 $1.000 July 1, 2006 July 1, 2002 Options 750 NA
July 1, 2001 750 $1.000 July 1, 2006 July 1, 2003 Options 750 NA
July 1, 2001 750 $1.000 July 1, 2006 July 1, 2004 Options 750 NA
July 1, 2001 750 $1.000 July 1, 2006 July 2, 2005 Options 750 NA
▇▇▇▇ ▇▇▇▇▇▇ July 1, 2001 18,750 $0.625 July 1, 2006 July 1, 2002 Options 18,750 NA
July 1, 2001 18,750 $0.625 July 1, 2006 July 1, 2003 Options 18,750 NA
July 1, 2001 18,750 $0.625 July 1, 2006 July 1, 2004 Options 18,750 NA
July 1, 2001 18,750 $0.625 July 1, 2006 July 2, 2005 Options 18,750 NA
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ July 1, 2001 18,750 $0.625 July 1, 2006 July 1, 2002 Options 18,750 NA
July 1, 2001 18,750 $0.625 July 1, 2006 July 1, 2003 Options 18,750 NA
July 1, 2001 18,750 $0.625 July 1, 2006 July 1, 2004 Options 18,750 NA
July 1, 2001 18,750 $0.625 July 1, 2006 July 2, 2005 Options 18,750 NA
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ July 1, 2001 10,000 $2.250 July 1, 2006 July 1, 2002 Options 10,000 NA
July 1, 2001 10,000 $2.250 July 1, 2006 July 1, 2003 Options 10,000 NA
July 1, 2001 10,000 $2.250 July 1, 2006 July 1, 2004 Options 10,000 NA
July 1, 2001 10,000 $2.250 July 1, 2006 July 2, 2005 Options 10,000 NA
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ August 16, 2001 400,000 $0.625 August 16, 2011 August 16, 2001 Warrants NA 400,000
▇▇▇▇▇▇ ▇▇▇▇▇▇ August 16, 2001 50,000 $0.625 August 16, 2011 December 31, 2001 Options 50,000 NA
August 16, 2001 50,000 $0.625 August 16, 2011 December 31, 2002 Options 50,000 NA
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ August 30, 2001 25,000 $0.350 August 30, 2006 August 30, 2001 Options 25,000 NA
August 30, 2001 25,000 $0.350 August 30, 2006 August 30, 2001 Options 25,000 NA
▇▇▇▇ ▇▇▇▇▇▇▇ August 30, 2001 25,000 $0.350 August 30, 2006 August 30, 2001 Options 25,000 NA
August 30, 2001 25,000 $0.350 August 30, 2006 August 30, 2001 Options 25,000 NA
▇▇▇▇ ▇▇▇▇ August 30, 2001 25,000 $0.350 August 30, 2006 August 30, 2001 Options 25,000 NA
August 30, 2001 25,000 $0.350 August 30, 2006 August 30, 2001 Options 25,000 NA
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ August 30, 2001 39,215 $0.350 August 30, 2006 August 30, 2001 Options 39,215 NA
August 30, 2001 39,215 $0.350 August 30, 2006 August 30, 2001 Options 39,215 NA
▇▇▇▇ ▇▇▇▇▇▇▇▇ August 30, 2001 25,000 $0.350 August 30, 2006 August 30, 2001 Options 25,000 NA
August 30, 2001 25,000 $0.350 August 30, 2006 August 30, 2001 Options 25,000 NA
▇▇▇▇ ▇▇▇▇▇▇ August 30, 2001 100,000 $0.350 August 30, 2006 August 30, 2001 Options 100,000 NA
August 30, 2001 100,000 $0.350 August 30, 2006 August 30, 2001 Options 100,000 NA
▇▇▇▇▇ ▇▇▇▇▇▇▇ August 30, 2001 234,802 $0.350 August 30, 2006 August 30, 2001 Options 234,802 NA
August 30, 2001 234,802 $0.350 August 30, 2006 August 30, 2001 Options 234,802 NA
▇▇▇ ▇▇▇▇▇▇▇ August 30, 2001 234,802 $0.350 August 30, 2006 August 30, 2001 Options 234,802 NA
August 30, 2001 234,802 $0.350 August 30, 2006 August 30, 2001 Options 234,802 NA
▇▇▇▇ ▇▇▇▇▇▇ August 30, 2001 25,000 $0.350 August 30, 2006 August 30, 2001 Options 25,000 NA
August 30, 2001 25,000 $0.350 August 30, 2006 August 30, 2001 Options 25,000 NA
▇▇▇▇ ▇▇▇▇ August 30, 2001 25,000 $0.350 August 30, 2006 August 30, 2001 Options 25,000 NA
August 30, 2001 25,000 $0.350 August 30, 2006 August 30, 2001 Options 25,000 NA
▇▇▇▇ ▇▇▇▇▇▇ August 30, 2001 19,608 $0.350 August 30, 2006 August 30, 2001 Options 19,608 NA
August 30, 2001 19,608 $0.350 August 30, 2006 August 30, 2001 Options 19,608 NA
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ August 6, 2001 200,000 $0.625 August 6, 2006 August 6, 2001 Options 200,000 NA
August 6, 2001 100,000 $0.625 August 6, 2006 August 6, 2002 Options 100,000 NA
August 6, 2001 100,000 $0.625 August 6, 2006 August 6, 2003 Options 100,000 NA
August 6, 2001 100,000 $0.625 August 6, 2006 August 6, 2004 Options 100,000 NA
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ September 30, 2001 112,500 $0.350 September 30, 2006 September 30, 2001 Options 112,500 NA
September 30, 2001 112,500 $0.350 September 30, 2006 September 30, 2002 Options 112,500 NA
September 30, 2001 112,500 $0.350 September 30, 2006 September 30, 2003 Options 112,500 NA
September 30, 2001 112,500 $0.350 September 30, 2006 September 30, 2004 Options 112,500 ▇▇
▇▇▇▇▇▇▇▇▇ September 30, 2001 112,500 $0.350 September 30, 2006 September 30, 2001 Options 112,500 NA
September 30, 2001 112,500 $0.350 September 30, 2006 September 30, 2002 Options 112,500 NA
September 30, 2001 112,500 $0.350 September 30, 2006 September 30, 2003 Options 112,500 NA
September 30, 2001 112,500 $0.350 September 30, 2006 September 30, 2004 Options 112,500 NA
▇▇▇▇▇ Caliccia September 30, 2001 25,000 $0.350 September 30, 2006 September 30, 2001 Options 25,000 NA
September 30, 2001 25,000 $0.350 September 30, 2006 September 30, 2002 Options 25,000 NA
September 30, 2001 25,000 $0.350 September 30, 2006 September 30, 2003 Options 25,000 NA
September 30, 2001 25,000 $0.350 September 30, 2006 September 30, 2004 Options 25,000 NA
Schedule 3 (c)
Capitalization
--------------------------------------------------------------------------------
vFinance, Inc.
Summary of Registration Rights On Options and Warrants Outstanding
--------------------------------------------------------------------------------
Registration
Holder Amount Type Classification
------ ------- ------- --------------
River Rapids 630,000 Options Piggyback
▇▇▇▇▇ ▇▇▇▇▇▇▇ 475,000 Options Piggyback
▇▇▇▇▇ ▇▇▇▇▇▇ 100,000 Warrants Piggyback
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 100,000 Warrants Piggyback
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 60,000 Options Piggyback
▇▇▇▇ ▇▇▇▇▇▇▇ 30,000 Options Piggyback
Equis Capital Corp. 30,000 Options Piggyback
▇▇▇▇ ▇▇▇▇▇ 100,000 Options Piggyback
Chichester Securities 100,000 Warrants Demand
Placement Agent - TK 58,333 Warrants Demand
Placement Agent - First Level 25,000 Warrants Demand
Amro International, S.A 100,000 Warrants Demand
CALP II 350,000 Warrants Demand
▇▇▇▇▇▇▇ Trust Reg 35,000 Warrants Demand
Balmore S.A 35,000 Warrants Demand
▇▇▇▇▇▇ Investments 25,000 Warrants Demand
World Ventures Fund 25,000 Warrants Demand
RBB Bank Aktiengesellschaft 130,000 Warrants Demand
Placement Agents - First Atlanta 46,666 Warrants Demand
▇▇▇▇ ▇▇▇▇▇▇ 20,000 Options Piggyback
▇▇▇▇▇ ▇▇▇▇▇▇ 20,000 Options Piggyback
▇▇▇▇▇ ▇▇▇▇▇▇▇ 734,802 Options Piggyback
▇▇▇ ▇▇▇▇▇▇▇ 734,802 Options Piggyback
▇▇▇ ▇▇▇▇-▇▇▇▇▇▇▇ 100,000 Options Piggyback
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 100,000 Options Piggyback
▇▇▇▇▇ ▇▇▇▇▇▇▇ 1,724 Options Not Registered
▇▇▇ ▇▇▇▇▇▇ 1,208 Options Not Registered
▇▇▇ ▇▇▇▇▇▇ 80,000 Options Piggyback
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 344 Options Not Registered
▇▇▇▇ ▇▇▇▇▇ 15,060 Options Not Registered
▇▇▇▇ ▇▇▇▇▇ 70,000 Options Piggyback
▇▇▇▇▇▇▇ ▇▇▇▇▇ 4,352 Options Not Registered
▇▇▇▇▇▇▇ ▇▇▇▇▇ 30,000 Options Piggyback
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 3,380 Options Not Registered
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 40,000 Options Piggyback
▇▇▇▇▇▇▇ ▇▇▇▇▇ 1,724 Options Not Registered
▇▇▇▇▇▇▇ ▇▇▇▇▇ 25,000 Options Piggyback
▇▇▇▇▇▇▇ ▇▇▇▇▇▇-Louis 692 Options Not Registered
▇▇▇▇▇ ▇▇▇▇▇▇ 6,900 Options Not Registered
▇▇▇▇ ▇▇▇▇ 13,800 Options Not Registered
▇▇▇▇ ▇▇▇▇ 100,000 Options Piggyback
▇▇▇ ▇▇▇▇▇▇ 1,724 Options Not Registered
▇▇▇ ▇▇▇▇▇▇ 100,000 Options Piggyback
▇▇▇▇▇ ▇▇▇▇ 1,724 Options Not Registered
▇▇▇▇▇ ▇▇▇▇ 100,000 Options Piggyback
▇▇▇▇▇ ▇▇▇▇ 3,452 Options Not Registered
▇▇▇▇▇ ▇▇▇▇ 20,000 Options Piggyback
▇▇▇▇▇▇▇▇ ▇▇▇▇ 25,252 Options Not Registered
▇▇▇▇▇▇▇▇ ▇▇▇▇ 100,000 Options Piggyback
▇▇▇▇▇ ▇▇▇▇▇▇▇ 6,900 Options Not Registered
▇▇▇▇ ▇▇▇▇▇▇▇ 7,404 Options Not Registered
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 1,380 Options Not Registered
▇▇▇▇▇ ▇▇▇▇ 6,900 Options Not Registered
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 1,724 Options Not Registered
▇▇▇ ▇▇▇▇▇ 26,208 Options Not Registered
1999 Private Placement 490,000 Warrants Not Registered
Investors
Bridge Investors 72,000 Warrants Not Registered
▇▇▇▇▇▇▇▇ 2,000 Warrants Not Registered
Ferrari 1,000 Warrants Not Registered
Spoll 8,000 Warrants Not Registered
▇▇▇▇▇▇▇ 6,000 Warrants Not Registered
▇▇▇▇▇ 6,000 Warrants Not Registered
▇▇▇▇ ▇▇▇▇▇▇ 565,000 Options Piggyback
▇▇ ▇▇▇▇▇▇ 115,000 Options Piggyback
▇▇▇▇ ▇▇▇▇▇▇▇▇ 255,000 Options Piggyback
▇▇▇▇ ▇▇▇▇ 255,000 Options Piggyback
▇▇▇▇▇▇▇ La ▇▇▇▇▇▇▇ 115,000 Options Piggyback
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 11,500 Options Piggyback
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 389,215 Options Piggyback
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 20,000 Options Piggyback
▇▇▇▇ Group 60,000 Options Piggyback
Topeka OSJ Group 50,000 Options Piggyback
Houston OSJ 20,000 Options Piggyback
▇▇▇▇ ▇▇▇▇▇▇ 125,000 Options Piggyback
▇▇▇▇▇▇▇ ▇▇▇▇▇ 25,000 Options Piggyback
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 10,000 Options Piggyback
▇▇▇▇▇▇▇ ▇▇▇▇▇ 2,000 Options Piggyback
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 6,000 Options Piggyback
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 14,000 Options Piggyback
▇▇▇ ▇▇▇▇▇ 8,000 Options Piggyback
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 4,000 Options Piggyback
▇▇▇▇▇ ▇▇▇▇▇▇ 12,000 Options Piggyback
▇▇▇▇▇▇ ▇▇▇▇▇▇ 80,000 Options Piggyback
▇▇▇▇ ▇▇▇▇▇▇▇ 60,000 Options Piggyback
▇▇▇▇▇▇ ▇▇▇▇ 18,000 Options Piggyback
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 5,000 Options Piggyback
▇▇▇▇ ▇▇▇▇▇ 12,000 Options Piggyback
▇▇▇▇ ▇▇▇▇▇ 8,000 Options Piggyback
▇▇▇▇▇▇▇ ▇▇▇▇▇ 10,000 Options Piggyback
▇▇▇▇ ▇▇▇▇▇▇ 5,000 Options Piggyback
▇▇▇ ▇▇▇▇ 5,000 Options Piggyback
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 3,750 Options Piggyback
▇▇▇▇ ▇▇▇▇▇▇ 94,608 Options Piggyback
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 100,000 Options Piggyback
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ 500,000 Options Piggyback
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 400,000 Warrants Piggyback
▇▇▇▇▇▇ ▇▇▇▇▇▇ 100,000 Options Piggyback
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 500,000 Options Piggyback
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 500,000 Options Piggyback
▇▇▇▇▇ Caliccia 100,000 Options Piggyback
▇▇▇▇ ▇▇▇▇▇ 150,000 Options Piggyback
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 131,250 Options Piggyback
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 20,000 Options Piggyback
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 480,000 Options Piggyback
▇▇▇▇ ▇▇▇▇ 120,000 Options Piggyback
Stoc Repurchase - Second Round 773,500 Options Piggyback
----------
Total 11,784,278
==========
---------- --------- ----------
SUMMARY OPTIONS WARRANTS TOTAL
------- ---------- --------- ----------
TOTAL DEMAND -- 929,999 929,999
TOTAL PIGGYBACK 9,537,427 600,000 10,137,427
TOTAL NOT REGISTERED 131,852 585,000 716,852
---------- --------- ----------
GRAND TOTAL 9,669,279 2,114,999 11,784,278
========== ========= ==========
Schedule 3(h)
Consents
The Company must obtain stockholder approval to amend its Certificate of
Incorporation in accordance with Section 4(d) of this Agreement.
Schedule (i)
Financial Statements
See Schedule 3(k) attached to this Agreement
Schedule 3(j)
Certain Changes
None; BUT SEE Schedule 3(k) attached to this Agreement
Schedule 3(k)
Litigation
1. Brandywine Operating Partnership, L.P. v. First Colonial Securities
Group, Inc., Superior Court of New Jersey.
a. Former lease space, vacated 2001, 6,130 sq. ft.
b. Maximum potential claim/exposure $319,012 based on assuming
full lease term of February 29, 2004 and landlord does not re
lease or fulfill obligation to mitigate damages.
c. Company has fully accrued for approximately $76,000 in its
previously filed financial statements with the SEC and
continues to accrue and reserve approximately $10,809 per
month for related lease costs.
d. Company is attempting to sub-let and/or settle with landlord
utilizing Company's security deposit.
2. ▇▇▇▇▇▇▇▇ Systems Corporation v. Colonial Direct Financial Group, Inc.,
U.S. District Court for the Northern District of Iowa; ▇▇▇▇▇▇▇▇ Systems
Corporation v. Colonial Direct Financial Group, Inc., U.S. District
Court for the Northern Circuit Court, Palm Beach County, Florida.
a. Programming work for Colonial Direct Financial Group, Inc.
("Colonial Direct") web site never delivered/completed by
▇▇▇▇▇▇▇▇ Systems Corporation ("▇▇▇▇▇▇▇▇"); programming work
never properly documented. Neither Company nor any of its
subsidiaries or affiliates uses any of the ▇▇▇▇▇▇▇▇ work
product or software in any form or manner whatsoever.
b. Claims by ▇▇▇▇▇▇▇▇ total approximately $293,000 plus interest.
c. Company has fully accrued for and established reserves of
$255,503 for the disputed payables/invoices and promissory
note in its financial statements in its previously filed
financial statements with the SEC.
d. Claims are being vigorously defended and are only against the
Company's non-Broker Dealer affiliate, Colonial Direct.
e. Company has refused to respond to offers to engage in
settlement discussions with ▇▇▇▇▇▇▇▇ as of the date hereof.
3. Fleet National Bank v. Colonial Direct Financial Group, Inc.
a. Claim and Judgment by Fleet National Bank ("Fleet") against
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (a former controlling shareholder of Colonial
Direct) and Colonial Direct in
the amount of $315,902.94 for Lines of Credit issued prior to
the January 2001 acquisition of Colonial Direct by the
Company.
b. Despite such joint liability, the Company has FULLY accrued
for and established reserves for this disputed claim in its
previously filed financial statements with the SEC.
c. Claim is only against the Company's non-Broker Dealer
affiliate, Colonial Direct.
4. Fleet v. First Colonial Securities, Inc.
a. Claim and Judgment by Fleet against First Colonial Securities,
Inc. in the amount of $210,928.19 for Letter of Credit issued
prior to the January 2001 acquisition by Company.
b. Company has FULLY accrued for and established reserves
(including reserves for net capital purposes) for this
disputed claim in its previously filed financial statements
with the SEC.
Schedule 3(l)
Brokers
ACP Advisors LLC
Schedule 4(f)
Use of Proceeds
Used to fund the operations of the Company and for working capital and future
acquisitions.