Exhibit 99.3
WARRANT AGREEMENT
Between
EASTBROKERS INTERNATIONAL INCORPORATED
and
BELLE HOLDINGS, INC.
Dated as of November 8, 1999
THE WARRANTS AND WARRANT SECURITIES TO BE RECEIVED UPON EXERCISE OF THE WARRANTS
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE WARRANTS
AND WARRANT SECURITIES, AS THE CASE MAY BE, MAY NOT BE OFFERED, SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED, WHETHER OR NOT FOR CONSIDERATION, IN THE
ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT AND QUALIFICATION IN EFFECT
WITH RESPECT TO THE WARRANTS AND WARRANT SECURITIES, AS THE CASE MAY BE, UNDER
THE SECURITIES ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAWS OR (2) AN
EXEMPTION FROM SUCH REGISTRATION AND QUALIFICATION.
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (this "AGREEMENT") is dated as of November 9, 1999,
and executed by between Eastbrokers International Incorporated, a Delaware
corporation (the "Company") and Belle Holdings, Inc. (the "Investor").
WHEREAS, the Company has agreed to grant to Investor or its assigns common
stock purchase warrants in substantially the form attached hereto as EXHIBIT A
hereto (the "WARRANTS") to acquire up to an aggregate of 700,000 shares of the
Company's Common Stock (the "Exercise Quantity"). This Agreement sets forth
certain rights and obligations of the Company and Investor with respect to the
Warrants.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, representations, warranties and agreements contained in this
Agreement, the parties hereto agree as follows:
I. DEFINITIONS
Section I.1 DEFINED TERMS. As used in this agreement, the following
capitalized terms shall have the meanings respectively assigned to them below,
which meanings shall be applicable equally to the singular and plural forms of
the terms so defined.
"COMMON STOCK" shall mean the common stock, par value $0.01, of the
Company.
"COMMON STOCK EQUIVALENTS" shall mean all options, warrants (including,
without limitation, the Warrants), securities of any kind (including, without
limitation, securities convertible into or exchangeable or exercisable for
Common Stock) and other rights (in each case whether now existing or hereafter
issued or arising) to acquire from the Company shares of Common Stock (without
regard to whether such options, warrants, securities and other rights are then
exchangeable, exercisable or convertible in full, in part or at all).
"COMPANY" shall have the meaning set forth in the preamble.
"DIVIDEND" means, as to any Person, any declaration or payment of any
dividend or distribution (other than a dividend of Common Stock) on, or the
making of any pro rata distribution, loan, advance, or investment to, any shares
of capital stock of such Person.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder, and any successor
provisions thereto.
2
"EXERCISE PRICE" shall have the meaning given in each Warrant. The
Exercise Price and the number of shares of Common Stock purchasable pursuant to
the Warrants shall be subject to adjustment from time to time as hereinafter set
forth in Article V hereof.
"EXPIRATION PERIOD" means November 9, 2004.
"EXERCISE QUANTITY" shall mean the number of shares of Common Stock,
determined from time to time, taking into account all shares of Common Stock
theretofore issued upon exercise of the Warrants, required to be issued by the
Company to the holders of the Warrants. Exercise Quantity shall initially have
the meaning given in each Warrant, and may be adjusted from time to time,
pursuant to the provisions of the Warrants and this Agreement.
"FAIR VALUE" as of a particular date shall mean the closing asked price of
the Common Stock as reported on a national securities exchange or on the NASDAQ
SmallCap, National Market System or OTC Bulletin Board Service (collectively,
and as applicable, "NASDAQ") or, if a last asked quotation is not available for
the Common Stock, the last sale price of the Common Stock as reported by NASDAQ,
or if not so reported, as listed in the National Quotation Bureau, Inc.'s "Pink
Sheets." If such quotations are unavailable, or with respect to other
appropriate security, property, assets, business or entity, "Fair Value" shall
mean the fair value of such item as determined by mutual agreement reached by
the Holder and the Company in good faith or, in the event the parties are unable
to agree, an opinion of an independent investment banking firm or firms in
accordance with the following procedure. In the case of any event which gives
rise to a requirement to determine "Fair Value" pursuant to this Agreement, the
Company shall notify the Holders of such event as promptly as practicable, but
in any event within ten (10) calendar days following such event and if the
procedures contemplated herein in connection with determining Fair Value have
not been complied with fully, then any such determination of Fair Value for any
purpose of this Agreement shall be deemed to be preliminary and subject to
adjustment pending full compliance with such procedures.
Upon the occurrence of an event requiring the determination of Fair Value,
the Company shall give the Holder(s) of the Warrants notice of such event, and
the Company and the Holders shall engage in direct good faith discussions to
arrive at a mutually agreeable determination of Fair Value. In the event the
Company and the Holder(s) are unable to arrive at a mutually agreeable
determination within ten (10) days of the notice, the Company and the Holder(s)
of the Warrants (who, if more than one, shall agree among themselves by a
majority) shall retain Imperial Capital LLC or, if Imperial Capital LLC is
unavailable or unable to accept such engagement, ▇▇▇▇▇ & Co. Such firm shall
determine the Fair Value of the security, property, assets, business or entity,
as the case may be, in question and deliver its opinion in writing to the
Company and to such Holder within thirty (30) days of its retention. Each of the
Company and the Holders (as a group) shall submit to such investment banking
firm their proposed determination of Fair Value, and any other supporting
documentation reasonably requested by the investment banking firm. In no event
shall the marketability, or lack thereof, or lack of registration of a security
be a factor in determining the "Fair Value" of such security. The determination
so made shall be conclusive and binding on the Company and such Holder(s),
absent clear and manifest error. The fees and expenses of such investment
3
banking firm retained pursuant to this provision shall be borne by the Company
in advance. In the event the Company fails to pay such fees, or the retainer or
deposit requested by such investment banking firm, within 10 days of the
acceptance by such investment banking firm (conditional or unconditional) of
such engagement, then the Holders' proposed determination of Fair Value shall be
conclusive and binding upon the Company.
"HOLDER" or "HOLDERS" shall mean the Person(s) then registered as the
owners of the Warrants or Warrant Securities, as the case may be, on the books
and records of the Company.
"PERSON" shall mean any individual, corporation, partnership, limited
liability company, association, joint-stock company, trust, estate,
unincorporated organization, joint venture, court or governmental or political
subdivision or agency thereof.
"REGISTRABLE SECURITIES" shall have the meaning assigned to it in SECTION
6.01 hereof.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder, and any successor provisions
thereto.
"SUBSIDIARY" of any Person means (i) a corporation, association or other
business entity of which more than 50% of the total voting power of all classes
of the outstanding voting stock or other indicia of ownership is owned, directly
or indirectly, by such Person or by one or more other Subsidiaries of such
Person or by such Person and one or more Subsidiaries thereof, (ii) any
partnership (a) the sole general partner or the managing general partner of
which is such Person or a Subsidiary of such Person or (b) the only general
partners of which are such Person or one or more Subsidiaries of such Person (or
any combination thereof) and (iii) any other Person not described in clauses (i)
and (ii) above in which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, owns 50% ownership and the power, whether by such ownership
interest, pursuant to a written contract or agreement or otherwise, to direct
the policies and management or the financial and other affairs thereof.
"WARRANT SECURITIES" shall mean the shares of Common Stock purchasable or
purchased from time to time under the Warrants or acquirable or acquired upon
any transfer of any such securities, together with all additional securities
receivable or received in payment of Dividends or distributions on or splits of
those securities or receivable or received as a result of adjustments provided
for in ARTICLE V hereof.
4
II. WARRANTS
Section II.1 GRANT OF WARRANTS. The Company hereby grants to Investor, for
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Warrants to purchase a number of shares of Common Stock equal to
the Exercise Quantity, as may be adjusted from time to time as set forth herein,
which Warrants shall be evidenced in substantially the form attached as Exhibit
A. Investor and any subsequent Holder of the Warrants and of Warrant Securities
shall have the rights and obligations provided for in the Warrants and in this
Agreement.
Section II.2 EXERCISE OF WARRANTS. Subject to the terms of this Agreement,
the Warrant holder shall have the right, at any time and from time to time until
5:00 p.m., Pacific Time, on November 9, 2004, to purchase from the Company up to
the number of fully paid and nonassessable shares of Warrant Securities to which
the Warrant holder may at the time be entitled to purchase pursuant to this
Agreement and the Warrant, upon presentation and surrender of the Warrant (or a
copy thereof) to the Company, together with the Exercise Form duly completed and
executed and payment in the aggregate amount equal to the Exercise Price
multiplied by the number of shares of Common Stock being purchased. Payment of
the Exercise Price shall be made by personal or business check payable to the
order of the Company; PROVIDED, HOWEVER, that upon the consent of a majority of
the Board of Directors of the Company, the Holder shall have the right to pay
the exercise price by surrender to the Company of a number of shares of Common
Stock with a Fair Value equal to the exercise price. Within five business days
of the Company's receipt of the Warrant (or a copy thereof), the completed and
signed Exercise Form and the requisite payment, the Company shall issue and
deliver (or cause to be delivered) to the exercising Holder stock certificates
aggregating the number of shares of Warrant Securities purchased. In the event
the Company fails to deliver or cause to be delivered to the Holder such
certificates (without legend or restriction if such Warrant Securities are then,
or are required to be, registered pursuant to the Warrant Agreement) within such
five business day period, the Company shall pay to the Holder an amount equal to
the greater of (i) $250 per calendar day, (ii) the product of (x) the last sale
price on the date the certificates are properly issued and delivered to the
Holder, less the last sale price on the date of the Exercise Form, multiplied by
(y) the number of shares of Warrant Securities purchased as set forth in the
Exercise Form, or (iii) the quotient of (x) the last reported sale price on the
day prior to the date of the Exercise Form, multiplied by the number of shares
of Warrant Securities issuable to such Holder upon such exercise, divided by (y)
200 (the "Delay Damages"), for each day after the fifth business day following
the delivery of the Warrant and such Exercise Form to the Company through and
including the day such certificates (without legend or restriction if such
Warrant Securities are then, or are required bo be, registered pursuant to the
terms of the Warrant Agreement) are delivered to the Holder at the address set
forth in such Exercise Form. In the event the Company restricts or delays the
transfer or clearance of such certificates by the Holder (whether by stop
transfer order, unreasonable delay or otherwise), the Company shall pay to the
Holder the Delay Damages for each calendar day of such restriction or delay.
Section II.3 PARTIAL EXERCISE. In the event of a partial exercise of the
Warrant, the Company shall issue and deliver to the Holder a new Warrant at the
same time such stock certificates are delivered, which new Warrant shall entitle
the Holder to purchase the balance of the Exercise Quantity not purchased in
5
that partial exercise and shall otherwise be upon the same terms and provisions
as the Warrant.
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company, hereby represents and warrants as follows:
(1) The Company is a corporation duly organized, validly existing, and in
good standing under the laws of Delaware, with full corporate power and
authority to conduct its business as it is now being conducted, to own or use
the properties and assets that it purports to own or use, and to perform all its
obligations under the contracts to which it is a party. The Company is duly
qualified to do business as a foreign corporation and is in good standing under
the laws of each state or other jurisdiction in which either the ownership or
use of the properties owned or used by it, or the nature of the activities
conducted by it, requires such qualification, including, without limitation,
California.
(2) The execution and delivery of this Agreement and the Warrants have
been duly and properly authorized by all requisite corporate action of the
Company and its board of directors, and no consent of any other Person is
required as a prerequisite to the validity, enforceability and performance of
this Agreement and the Warrants that has not been obtained. The Company has the
full legal right, power and authority to execute and deliver this Agreement and
the Warrants and to perform its obligations hereunder and thereunder. When
issued and delivered pursuant to this Agreement, the Warrants will have been
duly and validly executed, issued and delivered and will constitute valid and
legally binding obligations of the Company and the Holder thereof will be
entitled to the benefits provided herein and therein.
(3) The Warrant Securities, when issued, sold and delivered in accordance
with the terms hereof, for the consideration expressed herein, shall be duly and
validly issued and outstanding, fully paid and nonassessable, and will be issued
in compliance with all applicable federal and state securities or blue sky laws.
(4) The Company is not a party to or otherwise subject to any contract or
agreement which restricts or otherwise affects its right or ability to execute
and deliver this Agreement or the Warrants or to perform any obligation
hereunder or thereunder (including, without limitation, issuance of the Warrant
Securities). Neither the execution or delivery of this Agreement or the
Warrants, nor compliance therewith (including, without limitation, issuance of
the Warrant Securities), will conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, or result in any
violation of, or result in the creation of any material lien upon any assets or
properties of the Company under, or require any consent, approval, or other
action by, notice to or filing with any court or governmental agency or division
pursuant to the Certificate of Incorporation or Bylaws of the Company, as
currently in effect, any award of any arbitrator, or any agreement, instrument
or law to which the Company is subject or by which it or its assets or
properties is bound.
6
(5) The Warrants are, and the Warrant Securities will be, issued by the
Company to Investor in a transaction exempt from registration and qualification
under the applicable federal and state securities and blue sky laws.
IV. COVENANTS
Section IV.1 COVENANTS OF THE COMPANY. The Company hereby covenants and
agrees that, during the term of this Agreement, unless Holders of outstanding
Warrants evidencing a majority of the Warrants agree otherwise in writing,
(1) Each of the Warrant Securities issued and delivered upon the exercise
of the Warrants and payment of the Exercise Price will be duly and validly
authorized and issued, will be fully paid and nonassessable, and will not be
subject to any unpaid tax of the Company or any lien imposed on or created by
the Company, whether respecting their issuance to and purchase by the Holder of
the Warrants or otherwise. The Company will take all such actions as may be
necessary to assure that all such Warrant Securities may be so issued without
violation of any applicable law or governmental regulation or any requirements
of any domestic securities exchange or quotation system upon which such Warrant
Securities may be listed.
(2) The Company shall reserve and at all times keep available for issuance
an authorized number of shares of Common Stock or Warrant Securities sufficient
to permit the full and immediate exercise of the Warrants and the full and
immediate exercise, exchange and conversion of all other securities, options,
warrants and other rights issued or granted by the Company.
(3) The Company shall not permit the par value of its Common Stock to
exceed, at any time, the Exercise Price and shall take all such actions as may
be necessary or appropriate to ensure that it does not do so.
(4) As soon as available, and in no event later than the dates filed with
the Securities and Exchange Commission (the "Commission") or any other
governmental agency or division or other regulatory authority, if such documents
are so filed, the Company shall, upon request, deliver to any Holder(s) of the
Warrants and the Warrant Securities copies of (i) all annual, quarterly and
monthly financial statements made available by the Company to its shareholders,
(ii) all reports, notices and proxy or information statements sent or made
available generally by the Company to its shareholders, and (iii) all regular
and periodic reports and all registration statements, prospectuses and other
information filed by the Company with the Commission, relevant state authorities
or any securities exchange, securities quotation system or other self-regulatory
organization.
(5) The Company agrees that to the extent reasonably necessary to permit
the Holders to sell shares of the Common Stock in accordance with and in
reliance on Rule 144, and for so long as such shares are owned by the Holders
7
and such shares are not registered for resale under the Securities Act, the
Company will make and keep public information available within the meaning of
Rule 144 at all times from and after the Closing Date, and file with the SEC in
a timely manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act.
(6) The Company shall cooperate with the Holder(s) of the Warrants and the
Warrant Securities in supplying such information as may be reasonably necessary
for the Holder(s) to complete and file any information or other reporting forms
from time to time required by the Commission, relevant state authorities or any
securities exchange, securities quotation system or other self-regulatory
organization, including, without limitation, information pertaining to or
required for the availability of any exemption from the securities laws for the
sale, transfer or other disposition of the Warrants or any of the Warrant
Securities.
Section IV.2 INDEMNIFICATION.
---------------
(1) The Company agrees to defend, indemnify and hold harmless, to the full
extent permitted by law, Investor and each other Holder of the Warrants, this
Agreement, or any Warrant Security purchased hereunder, any underwriter(s), and
their respective directors, officers, employees, attorneys and agents, as well
as each other Person (if any) controlling any of the foregoing Persons within
the meaning of Section 15 of the Securities Act, or Section 20 of the Exchange
Act, from and against any and all claims, liabilities, losses and expenses
(including, without limitation, the reasonable disbursements, expenses and fees
of their respective attorneys, accountants and experts) that may be imposed
upon, incurred by, or asserted against any of them, any of their respective
directors, officers, employees, attorneys and agents, or any such control
Person, under the Securities Act, the Exchange Act or any other statute or at
common law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof), arise out of or are related directly or indirectly to (i)
the breach of any of the representations, warranties and/or covenants of the
Company contained herein, or (ii) any alleged untrue statement of any material
fact contained, on the effective date thereof, in any registration statement
under which such securities are or were registered under the Securities Act or
the Exchange Act, or in any preliminary prospectus or final prospectus related
thereto, or any amendment or supplement thereto, or any alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and shall reimburse such Persons for any
legal or any other expenses reasonably incurred by such Persons in connection
with investigating or defending any such loss, claim, damage, liability or
action. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of any such indemnified Person, and shall
survive the transfer of such securities by such Person. Promptly after receipt
of notice of the commencement of any action in respect of which indemnity may be
sought against the Company, the Company shall assume the defense of such action
(including the employment of counsel, who shall be counsel of national
reputation and presence, and who shall be reasonably satisfactory to the party
seeking indemnity hereunder) and the payment of expenses insofar as such action
shall relate to any alleged liability in respect of which indemnity may be
sought against the Company. If the Company assumes the defense of such action,
(i) it will be conclusively established for purposes of this Agreement that the
8
claims made in that action are within the scope of and subject to
indemnification; (ii) no compromise or settlement of such claims may be effected
by the Company without the indemnified party's consent (which shall not be
unreasonably withheld) unless (1) there is no finding or admission of any
violation of law, regulation, rule or order or any violation of the rights of
any other person or entity and no effect on any other claims that may be made
against the indemnified party, and (2) the sole relief provided is monetary
damages that are paid in full by Company; and (iii) the indemnified party will
have no liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to the Company of the
commencement of any action and the Company does not, within ten days after the
indemnified party's notice is given to the Company, give notice to the
indemnified party of its election to assume the defense of such action, the
Company will be bound by any determination made in such action or any compromise
or settlement effected by the indemnified party.
(2) Notwithstanding the foregoing, if an indemnified party determines in
good faith that there is a reasonable probability that a claim or action may
adversely affect it or its affiliates other than as a result of monetary damages
for which it would be entitled to indemnification under this Agreement, or if an
indemnified party determines that there are defenses available to it that are
either not available to the Company or not being raised by the Company, or if
the indemnified party determines that there is a conflict of interest between
the Company and the indemnified party in the claim or action, the indemnified
party may, by notice to the Company and an opinion of counsel concurring with
such indemnified party's determination, assume the exclusive right to defend,
compromise, or settle such claim or action, and the Company will be bound by any
determination of a claim or action so defended or any compromise or settlement
effected.
Section IV.3 LISTING ON THE SECURITIES EXCHANGE. The Company shall, at its
expense, list on NASDAQ or any securities exchange where it lists its Common
Stock, and maintain and increase when necessary such listing of all outstanding
Warrant Securities so long as any shares of Common Stock shall be so listed. The
Company shall also so list on each such securities exchange or NASDAQ, and will
maintain such listing of, any other securities which the Holder(s) shall be
entitled to receive upon the exercise thereof if at the time any securities of
the same class shall be listed on such securities exchange or NASDAQ by the
Company.
V. ANTIDILUTION
Section V.1 NO DILUTION OR IMPAIRMENT: ADJUSTMENTS.
--------------------------------------
(1) PROHIBITED ACTIONS. So long as any Warrants are outstanding, the
Company will not avoid or seek to avoid the observance or performance of any of
the terms of this Agreement or the Warrants or impair the ability of the
Holder(s) to realize the full intended economic value thereof, but will at all
times in good faith assist in the carrying out of all such terms, and of the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Holder(s) of the Warrants against dilution or other
impairment.
9
(2) ADJUSTMENT OF EXERCISE PRICE IN THE EVENT OF CERTAIN ISSUANCES OF
COMMON STOCK OR COMMON STOCK EQUIVALENTS. In case the Company shall at any time
issue or sell Common Stock or Common Stock Equivalents (by merger otherwise) for
less than Fair Value as of the date of such issuance or at a price per share
less than the then current Exercise Price of the Warrants (other than (i)
delivery of shares of Common Stock upon exercise of the Warrants, and (ii) any
Common Stock Equivalents issued and outstanding on the date hereof), or issue
Common Stock or Common Stock Equivalents by way of a Dividend or other
distribution on any stock of the Company or effect a forward stock split of the
outstanding shares of Common Stock, the Exercise Price then in effect shall be
proportionately decreased (on the date of such issuance, sale or split), so that
the new Exercise Price shall be equal to the product of (x) the former Exercise
Price and (y) the lesser of (i) one or (ii) a fraction, the numerator of which
shall be (1) the number of shares of Common Stock outstanding immediately prior
to such issuance or sale (including shares of Common Stock issuable upon
conversion of any outstanding securities convertible into or exchangeable Common
Stock), plus (2) the number of shares of Common Stock which the aggregate
consideration received by the Company for the total number of shares of Common
Stock so issued would purchase at the Fair Value of such shares, and (y) the
denominator of which shall be (1) the number of shares of Common Stock
outstanding immediately prior to such issuance or sale (including shares of
Common Stock issuable upon conversion of any outstanding securities convertible
into or exchangeable Common Stock), plus (2) the number of such shares of Common
Stock so issued or sold. The Exercise Quantity purchasable upon exercise of the
Warrants immediately prior thereto shall be adjusted so that the new Exercise
Quantity shall be equal to the product of (x) the former Exercise Quantity and
(y) the following fraction:
THE EXERCISE PRICE IN EFFECT IMMEDIATELY PRIOR TO SUCH ADJUSTMENT The
Exercise Price in effect immediately after such adjustment
(3) COMPANY TO PREVENT DILUTION. In any case at any time or from time to
time conditions arise by reason of action taken by the Company which are not
adequately covered by the provisions of this Article V, and which might
adversely affect the rights of the Holders under any provision of this
Agreement, unless the adjustment necessary shall be agreed upon by the Company
and the Holders, the Board of Directors of the Company shall appoint a firm of
independent certified public accountants of recognized national standing,
acceptable to the Holders, who at the Company's expense shall give their opinion
upon the adjustment, if any, on a basis consistent with the standards
established in the other provisions of this Article V, necessary with respect to
the Exercise Price and the Exercise Quantity, so as to preserve, without
dilution, the rights of the Holders. Upon the receipt of such opinion, the
Company's Board of Directors shall forthwith make the adjustments described
therein; provide, however, that no such adjustment shall be made to increase the
Exercise Price or decrease the Exercise Quantity.
(4) REORGANIZATION; ASSET SALES; ETC. In case of (i) any capital
reorganization or any reclassification of the capital stock of the Company, (ii)
any consolidation or merger of the Company or any Subsidiary with or into
another Person, (iii) the disposition or transfer of assets of the Company other
than in the ordinary course of the Company's business, (iv) any Dividend or
other distribution to the holders of capital stock of the Company in the form of
any asset, including without limitation securities of the Company, or (v) the
10
dissolution, liquidation or winding up of the Company, the Holders shall
thereafter be entitled to purchase (and it shall be a condition to the
consummation of any such transaction or event that appropriate provision shall
be made so that such Holders shall thereafter be entitled to purchase) the kind
and amount of shares of stock and other securities and property receivable in
such transaction by a holder of the number of shares of Common Stock of the
Company into which this Agreement entitled the Holders to purchase immediately
prior to such capital reorganization, reclassification of capital stock,
non-surviving combination or disposition; and in any such case appropriate
adjustments shall be made in the application of the provisions of this Article V
with respect to rights and interests thereafter purchasable upon the exercise of
a Warrant.
(5) ADJUSTMENT STATEMENT. Whenever the Exercise Price or Exercise Quantity
is adjusted as herein provided, the Company shall, within ten days following the
consummation of the event triggering such adjustment, deliver to the Holders a
statement signed by the President of the Company and by its Treasurer or
Secretary stating the adjusted Exercise Price and Exercise Quantity for which
the Warrants are exercisable, determined as specified herein. The statement
shall show in detail the facts requiring such adjustment, including a statement
of the consideration received by the Company for any additional stock issued.
Irrespective of any adjustments in the Exercise Price or the Exercise Quantity
or the kind of shares purchasable upon the exercise of the Warrants, the
Warrants theretofore or thereafter issued may continue to express the same price
and number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.
(6) PRIOR NOTICE TO THE HOLDERS. If at any time:
---------------------------
(1) The Company shall pay any Dividend payable in Common Stock
or Common Stock Equivalents upon its capital stock or make any distribution to
the holders of its capital stock, in each case other than Series A Preferred
Stock; or
(2) The Company shall offer for subscription pro rata to the
holders of its capital stock any additional shares of stock of any class or any
other rights; or
(3) The Company shall effect any capital reorganization or any
reclassification of or change in the outstanding capital stock of the Company
(other than a change in par value, or a change from par value to no par value,
or a change from no par value to par value, or a change resulting solely from a
subdivision of outstanding shares), or any consolidation or merger, or any sale,
transfer or other disposition of all or substantially all of its property,
assets, business and goodwill as an entirety, or the liquidation, dissolution or
winding up of the Company; or
(4) The Company shall declare a Dividend upon its capital
stock ;
11
then, in any such event, the Company shall cause at least thirty (30) days'
prior written notice to be mailed to the Holders at the address of each such
Holder shown on the books of the Company. The notice shall also specify the date
on which the books of the Company shall close or a record be taken for such
stock dividend, distribution or subscription rights, or the date on which such
reclassification, reorganization, consolidation, merger, sale, transfer,
disposition, liquidation, dissolution, winding up, or Dividend, as the case may
be, shall take place, and the date of participation therein by the holders of
shares of capital stock if any such date is to be fixed, and shall also set
forth such facts with respect thereto as shall be reasonably necessary to
indicate the effect of such action on the rights of the Holder.
(7) DISPUTES. If there is any dispute as to the computation of the
Exercise Price or the Exercise Quantity, the Company's will retain the
independent certified public accountant which provided the most recent report on
the Company's most recent audited financial statements to conduct an audit of
the computations pursuant to the terms hereof involved in such dispute,
including the financial statements or other information upon which such
computations were based. The determination of such accounting firm shall, in the
absence of manifest error, be conclusive and binding.
VI. REGISTRATION RIGHTS
Section VI.1 "PIGGYBACK" REGISTRATION RIGHTS. If at any time the Company
shall determine to register under the Securities Act (including pursuant to a
demand of any security holder of the Company exercising registration rights) any
of its Common Stock, it shall send to Investor and to each of the Holder(s)
written notice of such determination at least thirty (30) days prior to each
such filing and, if within twenty (20) days after receipt of such notice, any
Holder shall so request in writing, the Company shall include in such
registration statement (to the extent permitted by applicable regulation) all or
any part of the Warrant Securities (collectively referred to in this Agreement
as "Registrable Securities") that such Holder requests to be registered. Any
Registrable Securities which are included in any underwritten offering under
this Section 6.01 shall be sold upon such terms as the managing underwriters
shall reasonably request but in any event shall be upon terms not less favorable
than those upon which any other selling security holder or the Company shall
sell any of its securities. If any Holder disapproves of the terms of such
underwriting, such Holder may elect to withdraw therefrom by written notice to
the Company and the underwriter. Notwithstanding the provisions of this Section
6.01, the Company shall have the right, at any time after it shall have given
written notice pursuant to this Section 6.01 (irrespective of whether a written
request for inclusion of Registrable Securities shall have been made), to elect
not to file any such proposed registration statement or to withdraw the same
after the filing and prior to the effective date thereof.
12
Section VI.2 DEMAND REGISTRATION RIGHTS. So long as the Registrable
Securities are not then covered by an effective registration statement, if
Investor or the Holders of a 25% or more of the Warrants shall so request in
writing (a "Demand Request"), at any time and from time to time after December
31, 2002 but prior to the later of (a) expiration of the term hereof, or (b) one
year after the exercise of the Warrants, the Company shall file with the
Commission within 30 days of the date of such Demand Request and cause to become
effective no later than 90 days following the date of such Demand Request, a
registration statement under the Securities Act for the offering and sale of the
Registrable Securities.
Section VI.3 EFFECTIVENESS. If necessary to permit unrestricted and
unlimited distribution of the Registrable Securities, the Company shall maintain
the effectiveness of the registration statement pursuant to which any of the
Registrable Securities are being offered, and from time to time will amend or
supplement such registration statement and the prospectus related thereto as and
to the extent necessary to comply with the Securities Act and any applicable
state securities statute or regulation. If the registration by the Company of
the resale of Registrable Securities is eligible for Form S-3 or any successor
to such form, the Company shall maintain the effectiveness of the registration
statement until all registered Registrable Securities are sold, or until two
years after the date all of the Warrants have been exercised.
Section VI.4 FURTHER OBLIGATIONS OF THE COMPANY. Whenever, under the
preceding Sections of this Article VI, the Company is required hereunder to
register Registrable Securities, it agrees that it shall also do the following:
(1) Furnish to each selling Holder such copies of each preliminary and
final prospectus and any other documents as such Holder may reasonably request
to facilitate the public offering of its Registrable Securities;
(2) Register or qualify the Registrable Securities to be registered
pursuant to this Article VI under the applicable securities or blue sky laws of
such jurisdictions as any selling Holder may reasonably request; PROVIDED,
HOWEVER, the Company shall not be required to take any action which would cause
the Company to be subject to general service or material income or other
taxation in such jurisdictions;
(3) Furnish to each selling Holder, in the event such registration is in
connection with an underwritten public offering: (i) a signed counterpart of an
opinion of counsel for the Company, dated the effective date of the registration
statement; and (ii) a copy of any "comfort" letters signed by the Company's
independent public accountants who have examined and reported on the Company's
financial statements included in the registration statement, covering the same
matters as are customarily covered in opinions of issuer's counsel and in
accountants' "comfort" letters delivered to the underwriters in underwritten
public offerings of securities;
(4) Permit each selling Holder or such Holder's counsel or other
representatives to inspect and copy such corporate documents and records as may
reasonably be requested by them in connection with such registration; and
13
(5) Furnish to each selling Holder, upon request, a copy of all documents
filed and all correspondence from or to the Commission in connection with any
such offering.
Section VI.5 EXPENSES. Except for underwriters' discounts and brokerage
commissions allocable to the Registrable Securities, the Company shall bear all
costs and expenses of each registration contemplated in Sections 6.01, 6.02 and
6.03 including, but not limited to, printing, legal and accounting fees and
expenses, Commission and NASD filing fees and blue sky fees and expenses in any
jurisdiction in which the securities to be offered are to be registered or
qualified.
Section VI.6 TRANSFER OF REGISTRATION RIGHTS. The registration rights of
the Holders of Registrable Securities under this Article VI shall inure to the
benefit of and shall be exercisable by any transferee of Registrable Securities.
VII. TRANSFER OF WARRANTS AND WARRANT SECURITIES
Section VII.1 TRANSFER. Except as set forth in Section 7.02 below, the
Warrants and all rights thereunder are transferable, in whole or in part, on the
books of the Company to be maintained for such purpose, upon surrender of such
Warrant at the office of the Company maintained for such purpose, together with
a written assignment of such Warrant duly executed by the Holder hereof or its
agent or attorney. Upon such surrender and payment, the Company shall execute
and deliver a new Warrant or Warrants in the name of the assignee or assignees
and in the denominations specified in such instrument of assignment, and the
surrendered Warrant shall promptly be canceled. The transferred Warrant, if
properly assigned in compliance herewith, may be exercised by an assignee for
the purchase of shares of Common Stock without having a new Warrant issued. The
Company will not close its stock transfer books against a transfer of the
Warrants or the Warrant Securities or any exercise of the Warrants. Any such
transfer or exercise tendered while such stock transfer books shall be closed
shall be deemed effective immediately prior to such closure.
Subject to Section 7.02 below, the Warrants may be divided or combined
with other Warrants upon presentation at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by the Holder thereof or its agent or
attorney. Subject to compliance with this, as to any transfer which may be
involved in such division or combination, the Company shall execute and deliver
a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice.
The Company shall pay all expenses, taxes (other than income taxes, if
any, of the transferee) and other charges incurred by the Company in the
performance of its obligations in connection with the preparation, issue and
delivery of Warrants under this Section. The Company agrees to maintain at its
aforesaid office books for the registration and transfer of the Warrants.
Notwithstanding any provision to the contrary contained herein, the Warrants and
the Warrant Securities shall be transferable only in compliance with the
14
provisions of the Securities Act and applicable state securities laws in respect
of the transfer of any Warrant or any Warrant Securities.
Section VII.2 TRANSFER RESTRICTIONS. Neither this Warrant Agreement, the
Warrants nor the Warrant Securities, when issued, have been registered under the
Securities Act or under the securities laws of any state. Neither this
Agreement, the Warrants nor the Warrant Securities, when issued, may be
transferred: (a) if such transfer would constitute a violation of any federal or
state securities laws or a breach of the conditions to any exemption from
registration thereunder and (b) unless and until one of the following has
occurred: (i) registration of the Warrants or the Warrant Securities, as the
case may be, under the Securities Act, and such registration or qualification as
may be necessary under the securities laws of any state, have become effective,
(ii) the Holder has delivered an opinion of counsel, or other evidence
reasonably satisfactory to the Company, that such registration or qualification
is not required, or (iii) such transfer would be permitted under Rule 144 under
the Securities Act.
Each certificate for Warrant Securities issued upon exercise of a Warrant
and each certificate issued to a subsequent transferee, unless at the time of
exercise such Warrant Securities are registered under the Securities Act, shall
bear a legend substantially in the following form (and any additional legends
required by applicable law) on the face thereof:
THE WARRANT SECURITIES TO BE RECEIVED UPON EXERCISE OF THE WARRANTS HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE WARRANT SECURITIES MAY NOT
BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED, WHETHER
OR NOT FOR CONSIDERATION, IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION
STATEMENT AND QUALIFICATION IN EFFECT WITH RESPECT TO THE WARRANT
SECURITIES UNDER THE SECURITIES ACT AND UNDER ANY APPLICABLE STATE
SECURITIES LAWS OR (2) AN EXEMPTION FROM SUCH REGISTRATION AND
QUALIFICATION.
Section VII.3 REPLACEMENT OF INSTRUMENTS. Within five business days
following receipt by the Company of evidence reasonably satisfactory to it of
the ownership of and the loss, theft, destruction or mutilation of any
certificate or instrument evidencing any Warrants or Warrant Securities, and (a)
in the case of loss, theft or destruction, upon receipt by the Company of
indemnity reasonably satisfactory to it (provided that, the Holder's own
agreement of indemnification shall be deemed to be satisfactory), or (b) in the
case of mutilation, upon surrender and cancellation thereof, the Company, at its
expense, will execute, register and deliver, in lieu thereof, a new certificate
or instrument for (or covering the purchase of) an equal number of Warrants or
Warrant Securities.
VIII. MISCELLANEOUS
15
Section VIII.1 TERM. Except as otherwise expressly provided in this
Agreement or the Warrants, this Agreement shall expire on November 9, 2004,
provided that the Company's obligations to honor an exercise of the Warrants
given prior to such expiration or to perform any obligation continue and survive
notwithstanding the expiration of this Agreement.
Section VIII.2 NO WAIVER UNDER OTHER AGREEMENTS. The terms and provisions
contained in this Agreement are not intended and shall not be construed to
waive, modify, repeal, stay, diminish or otherwise impair or affect in any
manner whatsoever any right or remedy of Investor or the Holder(s) under the
Company's Certificate of Incorporation, Bylaws or similar agreements, or any
other agreements between the Company and/or its affiliates and Investor.
Section VIII.3 RELIANCE. Each party to this Agreement shall be entitled to
rely upon any notice, consent, certificate, affidavit, statement, paper,
document, writing or other communication reasonably believed by that party to be
genuine and to have been signed, sent or made by the proper Person or Persons.
Section VIII.4 NOTICE. All notices and other communications provided for
or permitted hereunder shall be made in writing and be by hand-delivery or
certified mail, return receipt requested, or by telecopy, (a) if to Investor, to
the address set forth on the signature page hereof or such other address given
by Investor to the Company in writing, (b), if to a subsequent Holder of
Warrants or Warrant Securities issued pursuant to the exercise of the Warrants,
at the most current address given by such Holder to the Company in writing; or
(c)if to the Company, as follows:
Eastbrokers International Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
All such notices and communications shall be deemed to have
been duly given when delivered by hand, if personally delivered; four business
days after being deposited in the mail, postage prepaid, if mailed, when receipt
is acknowledged, if telecopied, or the next business day, if timely delivered to
an air courier guaranteeing overnight delivery.
Section VIII.5 ENFORCEMENT. The Company acknowledges that the Holders may
proceed to exercise or enforce any right, power, privilege, remedy or interest
that they may have under this Agreement or applicable law without notice, except
as otherwise expressly provided herein, without pursuing, exhausting or
otherwise exercising or enforcing any other right, power, privilege, remedy or
interest that they may have against or in respect of any other party, or any
other Person or thing, and without regard to any act or omission of such party
or any other Person. The Company's obligations hereunder, including, without
limitation the obligation to issue the Warrant Securities upon exercise of the
Warrant, are absolute and unconditional and are not subject to any abatement,
reduction, setoff, defense, counterclaim or recoupment due or alleged to be due
16
to, or by reason of, any past, present or future claims which the Company may
have against the Investor, any Holder, or any assignee, thereof, for any reason
whatsoever. All rights and remedies of the party hereto are cumulative of each
other and of every other right or remedy such party may otherwise have at law or
in equity, and the exercise of one or more rights or remedies shall not
prejudice or impair the concurrent or subsequent exercise of other rights or
remedies.
Section VIII.6 EQUITABLE RELIEF. Each party acknowledges and agrees that
it would be impossible to measure in money the damage in the event of a breach
of any of the terms and provisions of this Agreement by any party hereto, and
that, in the event of any such breach, there may not be an adequate remedy at
law, although the foregoing shall not constitute a waiver of any of the party's
rights, powers, privileges and remedies against or in respect of a breaching
party, any other person or thing under this Agreement or applicable law. It is
therefore agreed that, in addition to all other such rights, powers, privileges
and remedies that it may have, each party shall be entitled, without the
obligation to post bond, to injunctive relief, specific performance or such
other equitable relief as such party may request to exercise or otherwise
enforce any of the terms and provisions of this Agreement and to enjoin or
otherwise restrain any act prohibited thereby, and no party will urge, and each
party hereby waives, any defense that there is an adequate remedy available at
law.
Section VIII.7 MERGER OR CONSOLIDATION OF THE COMPANY. So long as the
Warrant remains outstanding, the Company will not merge or consolidate with or
into, or sell, transfer or lease all or substantially all of its property to,
any other corporation unless the successor or purchasing corporation, as the
case may be (if not the Company), shall expressly assume, by supplemental
agreement, the due and punctual performance and observance of each and every
covenant and condition of this Agreement to be performed and observed by the
Company.
Section VIII.8 INTERPRETATION; HEADINGS, SEVERABILITY.
--------------------------------------
(1) The parties acknowledge and agree that since each party and its
counsel have had the opportunity to review and negotiate the terms and
provisions of this Agreement and have contributed to its revision, the normal
rule of construction to the effect that any ambiguities are resolved against the
drafting party shall not be employed in the interpretation of this Agreement,
and its terms and provisions shall be construed fairly as to all parties hereto
and not in favor of or against any party, regardless of which party was
generally responsible for the preparation of this Agreement.
(2) The Section and other headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
(3) In the event that any term or provision of this Agreement shall be
finally determined to be superseded, invalid, illegal or otherwise unenforceable
pursuant to applicable law by a governmental authority having jurisdiction and
venue, such determination shall not impair or otherwise affect the validity,
legality or enforceability: (i) by or before that authority of the remaining
17
terms and provisions of this Agreement, which shall be enforced as if the
superseded, invalid, illegal or otherwise unenforceable term or provision were
modified to the extent required to permit such provision to be not superseded,
invalid, illegal or unenforceable, or (ii) by or before any other authority of
any of the terms and provisions of this Agreement.
(4) If any period of time specified in this Agreement expires on a day
that is not a Business Day, that period shall be extended to and expire on the
next succeeding Business Day.
Section VIII.9 SURVIVAL OF COVENANTS. Each of the covenants and other
agreements of the parties contained in this Agreement shall be absolute and,
except as otherwise expressly provided, unconditional, shall survive the
execution and delivery of this Agreement and shall continue in full force and
effect until the term of this Agreement has expired, and thereafter with respect
to events occurring prior thereto.
Section VIII.10 NO REQUIRED EXERCISE. No term or provision of the Warrants
or this Agreement is intended to require, nor shall any such term or provision
be construed as requiring, any Holder of the Warrants to exercise or sell the
Warrants.
Section VIII.11 BINDING EFFECT. This Agreement shall be binding upon and
enforceable against the parties hereto and their respective successors and
assigns.
Section VIII.12 NO WAIVER BY ACTION OR COURSE OF DEALING. No course of
dealing or any delay or failure to exercise any right hereunder on the part of
any party hereto shall operate as a waiver of such right or otherwise prejudice
the rights, powers or remedies of such party.
Section VIII.13 WAIVER; MODIFICATION; AMENDMENT. Each and every
modification to and amendment of this Agreement shall be in writing and signed
by the Company, Investor (if at that time Investor is a Holder) and by the
Holders of a majority in interest of all issued and unissued Warrant Securities.
Each and every waiver of and consent to any departure from any term or provision
hereof (except as otherwise provided herein) shall be in writing and signed by
Investor (if at that time it is a Holder) and by the Holders of a majority in
interest of all issued and unissued Warrant Securities and by each party against
whom enforcement of the waiver or consent may be sought. Notwithstanding the
foregoing, no modification, amendment or waiver of any term or provision hereof
with respect to the Exercise Price, the Exercise Quantity, any terms of Article
V hereof, any of the terms of this Section 8.13 or which purports, or has the
effect of, shortening the term of any Warrant or limiting the right or ability
of a Holder thereof to exercise a Warrant shall be enforceable against a Holder
unless such Holder specifically approves, in writing, such modifications,
amendment or modification.
Section VIII.14 ENTIRE AGREEMENT. This Agreement and the Warrants contain
the entire agreement of the parties with respect to the Warrants and supersede
all other representations, warranties, agreements and understandings, oral or
otherwise, among the parties hereto with respect to the Warrants, except as
otherwise provided herein.
18
Section VIII.15 NO INCONSISTENT AGREEMENTS OR RIGHTS. The Company shall
not enter into any agreement with respect to its securities that is inconsistent
with the rights granted to the Holders in this Agreement.
Section VIII.16 TIME OF THE ESSENCE. With regard to all dates and time
periods set forth or referred to in this Agreement, time is of the essence.
Section VIII.17 ATTORNEYS' FEES AND COSTS. Should any party institute any
action, suit or other proceeding arising out of or relating to this Agreement or
the Warrants, the prevailing party shall be entitled to receive from the losing
party reasonable attorneys' fees and costs incurred in connection therewith,
along with all costs of defense, investigation, preparation, experts and
collection.
Section VIII.18 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL. THIS AGREEMENT, THE WARRANTS AND THE WARRANT SECURITIES AND ALL
AMENDMENTS, SUPPLEMENTS, WAIVERS, AND CONSENTS RELATING HERETO OR THERETO SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF CALIFORNIA WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY
HEREBY IRREVOCABLY SUBMITS ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE
AND FEDERAL COURTS SITTING IN THE STATE OF CALIFORNIA, COUNTY OF LOS ANGELES,
AND AGREES AND CONSENTS THAT SERVICES OF PROCESS MAY BE MADE UPON IT IN ANY
LEGAL PROCEEDINGS RELATING HERETO BY ANY MEANS ALLOWED UNDER CALIFORNIA OR
FEDERAL LAW. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
THE COMPANY AND INVESTOR EACH HEREBY AGREE TO WAIVE ITS RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, THE SECURITIES OR ANY OTHER AGREEMENTS RELATING TO THE SECURITIES OR
ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION.
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT, THE WARRANTS, THE WARRANT SECURITIES OR ANY OTHER DOCUMENTS
OR AGREEMENTS RELATING THERETO.
[Signature page follows]
19
IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement
to be executed as of the day and year first above written.
THE COMPANY:
Eastbrokers International Incorporated
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Financial Officer and Secretary
Belle Holdings, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
20
Exhibit A
to
Warrant Agreement
INITIAL WARRANT
THE WARRANT SECURITIES TO BE RECEIVED UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER
ANY STATE SECURITIES LAWS. THE WARRANT SECURITIES MAY NOT BE OFFERED, SOLD,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED, WHETHER OR NOT FOR
CONSIDERATION, IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT AND
QUALIFICATION WITH RESPECT TO THE WARRANT SECURITIES UNDER THE SECURITIES ACT
AND UNDER ANY APPLICABLE STATE SECURITIES LAWS OR (2) AN EXEMPTION FROM SUCH
QUALIFICATION AND REGISTRATION.
Certificate No. 1
COMMON STOCK PURCHASE WARRANT
November 9, 1999
Capitalized terms used and not otherwise defined in this Warrant shall have the
meanings respectively assigned to them in the Warrant Agreement, dated as of the
date hereof, by and between the Company and Holder.
Eastbrokers International Incorporated, a Delaware corporation (the "Company")
does hereby certify and agree that, for good and valuable consideration (the
existence, sufficiency and receipt of which are hereby acknowledged by the
Company), BELLE HOLDINGS, INC., a Nevada corporation, its successor, and assigns
("Holder"), hereby is entitled to purchase from the Company, during the term set
forth in Section 1 hereof, up to an aggregate amount of 490,000 shares (the
"Exercise Quantity") of duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock of the Company (the "Common Stock"), all
upon the terms and provisions and subject to adjustment of such Exercise
Quantity provided in the Warrant Agreement and this Common Stock Purchase
Warrant (the "Warrant"). The exercise price per share of Common Stock for which
this Warrant is exercisable shall be $2.85, as adjusted from time to time
pursuant to the terms of this Warrant and the Warrant Agreement (the "Exercise
Price").
1. TERM OF THE WARRANT. The term of this Warrant commences as of
the date hereof, and shall expire at 5:00 P.M., Pacific time, on November 9,
2004.
2. EXERCISE OF WARRANT.
(a) This Warrant may be exercised by the Holder of this Warrant at
any time during the term hereof, in whole or in part, from time to time (but not
for fractional shares, unless this Warrant is exercised in whole), by
presentation and surrender of this Warrant (or a copy hereof) to the Company,
together with the annexed Exercise Form duly completed and executed and payment
in the aggregate amount equal to the Exercise Price multiplied by the number of
shares of Common Stock being purchased. Payment of the Exercise Price shall be
made by personal or business check payable to the order of the Company;
PROVIDED, HOWEVER, that upon the consent of a majority of the Board of Directors
of the Company, the Holder shall have the right to pay the exercise price by
surrender to the Company of a number of shares of Common Stock with a Fair Value
equal to the exercise price. Within five business days of the Company's receipt
of this Warrant (or a copy thereof), the completed and signed Exercise Form and
the requisite payment (if any), the Company shall issue and deliver (or cause to
be delivered) to the exercising Holder stock certificates aggregating the number
of shares of Warrant Securities purchased. In the event the Company fails to
deliver or cause to be delivered to the Holder such certificates (without legend
or restriction if such Warrant Securities are then, or are required to be,
registered pursuant to the Warrant Agreement) within such five business day
period, the Company shall pay to the Holder the Delay Damages, for each day
after the fifth business day following the delivery of this Warrant and such
Exercise Form to the Company through and including the day such certificates
(without legend or restriction if such Warrant Securities are then, or are
required bo be, registered pursuant to the terms of the Warrant Agreement) are
delivered to the Holder at the address set forth in such Exercise Form. In the
event the Company restricts or delays the transfer or clearance of such
certificates by the Holder (whether by stop transfer order, unreasonable delay
or otherwise), the Company shall pay to the Holder the Delay Damages for each
calendar day of such restriction or delay.
(b) In the event the Holder of this Warrant desires that any or all
of the stock certificates to be issued upon the exercise hereof be registered in
a name or names other than that of the Holder of this Warrant, the Holder must
(i) so request in writing at the time of exercise if the transfer is not a
registered transfer, and (ii) provide to the Company evidence reasonably
satisfactory to the Company to the effect that the proposed transfer may be
effected without registration under the Securities Act.
(c) Upon the due exercise by the Holder of this Warrant, whether in
whole or in part, the Holder (or any other person to whom a stock certificate is
to be so issued) shall be deemed for all purposes to have become the Holder of
record of the shares of Common Stock for which this Warrant has been so
exercised, effective immediately prior to the close of business on the date this
Warrant, the completed and signed Exercise Form and the requisite payment were
duly delivered to the Company, irrespective of the date of actual delivery of
certificates representing such shares of Common Stock so issued.
3. SURRENDER OF WARRANT; EXPENSES.
(a) Whether in connection with the exercise, exchange or
registration of transfer or replacement of this Warrant, surrender of this
Warrant (or a copy hereof) shall be made to the Company during normal business
2
hours on a business day (unless the Company otherwise permits) at the executive
offices of the Company or to such other office or duly authorized representative
of the Company as from time to time may be designated by the Company by written
notice given to the Holder of this Warrant.
(b) The Company shall pay all costs and expenses incurred in
connection with the exercise, registering, exchange, transfer or replacement of
this Warrant, including the costs of preparation, execution and delivery of
warrants and stock certificates, and shall pay all taxes (other than any taxes
measured by the income of any Person other than the Company) and other charges
imposed by law payable in connection with the transfer or replacement of this
Warrant.
(c) The Company shall deliver or cause to be delivered to the Holder
exercising this Warrant or any portion hereof certificates representing the
shares of Common Stock issuable upon such exercise within five business days of
the surrender and delivery by such Holder to the Company of this Warrant and a
duly completed Exercise Form. In the event the Company fails to deliver or cause
to be delivered to the Holder such certificates (without legend or restriction
if such Warrant Securities are then, or are required to be, registered pursuant
to the Warrant Agreement) within such five business day period, the Company
shall pay to the Holder the Delay Damages. In the event the Company restricts or
delays the transfer or clearance of such certificates by the Holder (whether by
stop transfer order, unreasonable delay or otherwise), the Company shall pay to
the Holder the Delay Damages for each calendar day of such restriction or delay.
4. WARRANT REGISTER; EXCHANGE; TRANSFER; LOSS.
------------------------------------------
(a) The Company at all times shall maintain at its chief executive
offices an open register for all Warrants, in which the Company shall record the
name and address of each Person to whom a Warrant has been issued or
transferred, the number of shares of Common Stock or other securities
purchasable hereunder and the corresponding purchase prices.
(b) This Warrant may be exchanged for two or more warrants entitling
the identical Holder hereof to purchase the same aggregate Exercise Quantity at
the same Exercise Price per share and otherwise having the same terms and
provisions as this Warrant. The identical Holder may request such an exchange by
surrender of this Warrant to the Company, together with a written exchange
request specifying the desired number of warrants and allocation of the Exercise
Quantity purchasable under the existing Warrant.
(c) This Warrant may be transferred only in accordance with the
provisions of Article VII of the Warrant Agreement, in whole or in part, by the
Holder or any duly authorized representative of such Holder. A transfer may be
registered with the Company by submission to it of this Warrant, together with
the annexed Assignment Form duly completed and executed, and if the transfer is
not a registered transfer, evidence reasonably satisfactory to the Company that
such transfer is in compliance with federal and state securities laws. Within
five business days after the Company's receipt of this Warrant and the
Assignment Form so completed and executed, the Company will issue and deliver to
3
the transferee a new Warrant representing the portion of the Exercise Quantity
transferred at the same Exercise Price per share and otherwise having the same
terms and provisions as this Warrant, which the Company will register in the new
Holder's name.
(d) Upon receipt by the Company of evidence reasonably satisfactory
to it of the ownership of and the loss, theft, destruction or mutilation of this
Warrant, and (a) in the case of loss, theft or destruction, upon receipt by the
Company of indemnity reasonably satisfactory to it (provided that, the Holder's
own agreement of indemnity shall be deemed to be satisfactory), or (b) in the
case of mutilation, upon surrender and cancellation thereof, the Company, at its
expense, will execute, register and deliver, in lieu thereof, a new certificate
or instrument for (or covering the purchase of) this Warrant.
(e) The Company will not close its books against the transfer of
this Warrant or any of the Warrant Securities in any manner which interferes
with the timely exercise of this Warrant. The Company will from time to time
take all such action as may be necessary to assure that the par value per share
of the unissued Common Stock acquirable upon exercise of this Warrant is at all
times equal or less than the Exercise Price then in effect.
5. RIGHTS AND OBLIGATIONS OF THE COMPANY AND THE HOLDER. The Company and
the Holder of this Warrant are entitled to the rights and bound by the
obligations set forth in the Warrant Agreement, all of which rights and
obligations are hereby incorporated by reference herein. This Warrant shall not
entitle its Holder to any rights of a stockholder in the Company (other than as
provided in SECTION 2(C) of this Warrant and the Warrant Agreement).
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized representative and its corporate seal, if any, to be
impressed hereupon and attested to by its Secretary or Assistant Secretary.
Eastbrokers International Incorporated
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Chief Executive Officer
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Financial Officer and Secretary
4
Eastbrokers International Incorporated
EXERCISE FORM
Eastbrokers International Incorporated (the "Company")
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant Certificate for, and to purchase
thereunder, shares of common stock of the Company (the "Warrant Securities"),
and requests that certificates for the Warrant Securities be issued in the name
of:
------------------------------------------
(Please print or Type Name, Address and Social Security Number)
------------------------------------------
------------------------------------------
and, if said number of shares of Warrant Securities shall not be all the Warrant
Securities purchasable hereunder, that a new Warrant Certificate for the balance
of the Warrant Securities purchasable under the within Warrant Certificate be
registered in the name of the undersigned Holder or his Assignee as below
indicated and delivered to the address stated below.
Dated:_________________
Name of Holder
or Assignee: _________________________
(Please Print)
Address: _________________________
_________________________
Signature: _________________________
Note: The above signature must correspond with the name as it appears upon the
face of this Warrant Certificate in every particular, without alteration or
enlargement or any change whatever, unless these Warrants have been assigned.
5
ASSIGNMENT
(To be signed only upon assignment of Warrants)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
the right to purchase shares of common stock represented by the within Warrant
Certificate unto, and requests that a certificate for such Warrant be issued in
the name of:
-------------------------------------
(Name and Address of Assignee Must be Printed or Typewritten)
-------------------------------------
-------------------------------------
The undersigned hereby irrevocably constitutes and appoints _______________
Attorney to transfer said Warrants on the books of the Company, with full power
of substitution in the premises and, if said number of shares of common stock
shall not be all of the common stock purchasable under the within Warrant
Certificate, that a new Warrant Certificate for the balance of the common stock
purchasable under the within Warrant Certificate be registered in the name of
the undersigned Holder and delivered to such Holder's address as then set forth
on the Company's books.
Dated:_______________ _______________________________
Signature of Registered Holder
Note: The above signature must correspond with the name as it appears upon the
face of this Warrant Certificate in every particular, without alteration or
enlargement or any change whatever.
6
THE WARRANT SECURITIES TO BE RECEIVED UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER
ANY STATE SECURITIES LAWS. THE WARRANT SECURITIES MAY NOT BE OFFERED, SOLD,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED, WHETHER OR NOT FOR
CONSIDERATION, IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT AND
QUALIFICATION WITH RESPECT TO THE WARRANT SECURITIES UNDER THE SECURITIES ACT
AND UNDER ANY APPLICABLE STATE SECURITIES LAWS OR (2) AN EXEMPTION FROM SUCH
QUALIFICATION AND REGISTRATION.
Certificate No. 2
COMMON STOCK PURCHASE WARRANT
November 9, 1999
Capitalized terms used and not otherwise defined in this Warrant shall have the
meanings respectively assigned to them in the Warrant Agreement, dated as of the
date hereof, by and between the Company and Holder.
Eastbrokers International Incorporated, a Delaware corporation (the "Company")
does hereby certify and agree that, for good and valuable consideration (the
existence, sufficiency and receipt of which are hereby acknowledged by the
Company), BELLE HOLDINGS, INC., a Nevada corporation, its successor, and assigns
("Holder"), hereby is entitled to purchase from the Company, during the term set
forth in Section 1 hereof, up to an aggregate amount of 210,000 shares (the
"Exercise Quantity") of duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock of the Company (the "Common Stock"), all
upon the terms and provisions and subject to adjustment of such Exercise
Quantity provided in the Warrant Agreement and this Common Stock Purchase
Warrant (the "Warrant"). The exercise price per share of Common Stock for which
this Warrant is exercisable shall be $2.85, as adjusted from time to time
pursuant to the terms of this Warrant and the Warrant Agreement (the "Exercise
Price").
1. TERM OF THE WARRANT. The term of this Warrant commences as of
the date hereof, and shall expire at 5:00 P.M., Pacific time, on November 9,
2004.
2. EXERCISE OF WARRANT.
1
(a) This Warrant may be exercised by the Holder of this Warrant at
any time during the term hereof, in whole or in part, from time to time (but not
for fractional shares, unless this Warrant is exercised in whole), by
presentation and surrender of this Warrant (or a copy hereof) to the Company,
together with the annexed Exercise Form duly completed and executed and payment
in the aggregate amount equal to the Exercise Price multiplied by the number of
shares of Common Stock being purchased. Payment of the Exercise Price shall be
made by personal or business check payable to the order of the Company;
PROVIDED, HOWEVER, that upon the consent of a majority of the Board of Directors
of the Company, the Holder shall have the right to pay the exercise price by
surrender to the Company of a number of shares of Common Stock with a Fair Value
equal to the exercise price. Within five business days of the Company's receipt
of this Warrant (or a copy thereof), the completed and signed Exercise Form and
the requisite payment (if any), the Company shall issue and deliver (or cause to
be delivered) to the exercising Holder stock certificates aggregating the number
of shares of Warrant Securities purchased. In the event the Company fails to
deliver or cause to be delivered to the Holder such certificates (without legend
or restriction if such Warrant Securities are then, or are required to be,
registered pursuant to the Warrant Agreement) within such five business day
period, the Company shall pay to the Holder the Delay Damages, for each day
after the fifth business day following the delivery of this Warrant and such
Exercise Form to the Company through and including the day such certificates
(without legend or restriction if such Warrant Securities are then, or are
required bo be, registered pursuant to the terms of the Warrant Agreement) are
delivered to the Holder at the address set forth in such Exercise Form. In the
event the Company restricts or delays the transfer or clearance of such
certificates by the Holder (whether by stop transfer order, unreasonable delay
or otherwise), the Company shall pay to the Holder the Delay Damages for each
calendar day of such restriction or delay.
(b) In the event the Holder of this Warrant desires that any or all
of the stock certificates to be issued upon the exercise hereof be registered in
a name or names other than that of the Holder of this Warrant, the Holder must
(i) so request in writing at the time of exercise if the transfer is not a
registered transfer, and (ii) provide to the Company evidence reasonably
satisfactory to the Company to the effect that the proposed transfer may be
effected without registration under the Securities Act.
(c) Upon the due exercise by the Holder of this Warrant, whether in
whole or in part, the Holder (or any other person to whom a stock certificate is
to be so issued) shall be deemed for all purposes to have become the Holder of
record of the shares of Common Stock for which this Warrant has been so
exercised, effective immediately prior to the close of business on the date this
Warrant, the completed and signed Exercise Form and the requisite payment were
duly delivered to the Company, irrespective of the date of actual delivery of
certificates representing such shares of Common Stock so issued.
3. SURRENDER OF WARRANT; EXPENSES.
(a) Whether in connection with the exercise, exchange or
registration of transfer or replacement of this Warrant, surrender of this
Warrant (or a copy hereof) shall be made to the Company during normal business
2
hours on a business day (unless the Company otherwise permits) at the executive
offices of the Company or to such other office or duly authorized representative
of the Company as from time to time may be designated by the Company by written
notice given to the Holder of this Warrant.
(b) The Company shall pay all costs and expenses incurred in
connection with the exercise, registering, exchange, transfer or replacement of
this Warrant, including the costs of preparation, execution and delivery of
warrants and stock certificates, and shall pay all taxes (other than any taxes
measured by the income of any Person other than the Company) and other charges
imposed by law payable in connection with the transfer or replacement of this
Warrant.
(c) The Company shall deliver or cause to be delivered to the Holder
exercising this Warrant or any portion hereof certificates representing the
shares of Common Stock issuable upon such exercise within five business days of
the surrender and delivery by such Holder to the Company of this Warrant and a
duly completed Exercise Form. In the event the Company fails to deliver or cause
to be delivered to the Holder such certificates (without legend or restriction
if such Warrant Securities are then, or are required to be, registered pursuant
to the Warrant Agreement) within such five business day period, the Company
shall pay to the Holder the Delay Damages. In the event the Company restricts or
delays the transfer or clearance of such certificates by the Holder (whether by
stop transfer order, unreasonable delay or otherwise), the Company shall pay to
the Holder the Delay Damages for each calendar day of such restriction or delay.
4. WARRANT REGISTER; EXCHANGE; TRANSFER; LOSS.
(a) The Company at all times shall maintain at its chief executive
offices an open register for all Warrants, in which the Company shall record the
name and address of each Person to whom a Warrant has been issued or
transferred, the number of shares of Common Stock or other securities
purchasable hereunder and the corresponding purchase prices.
(b) This Warrant may be exchanged for two or more warrants entitling
the identical Holder hereof to purchase the same aggregate Exercise Quantity at
the same Exercise Price per share and otherwise having the same terms and
provisions as this Warrant. The identical Holder may request such an exchange by
surrender of this Warrant to the Company, together with a written exchange
request specifying the desired number of warrants and allocation of the Exercise
Quantity purchasable under the existing Warrant.
(c) This Warrant may be transferred only in accordance with the
provisions of Article VII of the Warrant Agreement, in whole or in part, by the
Holder or any duly authorized representative of such Holder. A transfer may be
registered with the Company by submission to it of this Warrant, together with
the annexed Assignment Form duly completed and executed, and if the transfer is
3
not a registered transfer, evidence reasonably satisfactory to the Company that
such transfer is in compliance with federal and state securities laws. Within
five business days after the Company's receipt of this Warrant and the
Assignment Form so completed and executed, the Company will issue and deliver to
the transferee a new Warrant representing the portion of the Exercise Quantity
transferred at the same Exercise Price per share and otherwise having the same
terms and provisions as this Warrant, which the Company will register in the new
Holder's name.
(d) Upon receipt by the Company of evidence reasonably satisfactory
to it of the ownership of and the loss, theft, destruction or mutilation of this
Warrant, and (a) in the case of loss, theft or destruction, upon receipt by the
Company of indemnity reasonably satisfactory to it (provided that, the Holder's
own agreement of indemnity shall be deemed to be satisfactory), or (b) in the
case of mutilation, upon surrender and cancellation thereof, the Company, at its
expense, will execute, register and deliver, in lieu thereof, a new certificate
or instrument for (or covering the purchase of) this Warrant.
(e) The Company will not close its books against the transfer of
this Warrant or any of the Warrant Securities in any manner which interferes
with the timely exercise of this Warrant. The Company will from time to time
take all such action as may be necessary to assure that the par value per share
of the unissued Common Stock acquirable upon exercise of this Warrant is at all
times equal or less than the Exercise Price then in effect.
5. RIGHTS AND OBLIGATIONS OF THE COMPANY AND THE HOLDER. The Company and
the Holder of this Warrant are entitled to the rights and bound by the
obligations set forth in the Warrant Agreement, all of which rights and
obligations are hereby incorporated by reference herein. This Warrant shall not
entitle its Holder to any rights of a stockholder in the Company (other than as
provided in SECTION 2(C) of this Warrant and the Warrant Agreement).
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized representative and its corporate seal, if any, to be
impressed hereupon and attested to by its Secretary or Assistant Secretary.
Eastbrokers International Incorporated
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Chief Executive Officer
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Financial Officer and Secretary
4
Eastbrokers International Incorporated
EXERCISE FORM
Eastbrokers International Incorporated (the "Company")
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant Certificate for, and to purchase
thereunder, shares of common stock of the Company (the "Warrant Securities"),
and requests that certificates for the Warrant Securities be issued in the name
of:
------------------------------------------
(Please print or Type Name, Address and Social Security Number)
------------------------------------------
------------------------------------------
and, if said number of shares of Warrant Securities shall not be all the Warrant
Securities purchasable hereunder, that a new Warrant Certificate for the balance
of the Warrant Securities purchasable under the within Warrant Certificate be
registered in the name of the undersigned Holder or his Assignee as below
indicated and delivered to the address stated below.
Dated:_________________
Name of Holder
or Assignee: _________________________
(Please Print)
Address: _________________________
_________________________
Signature: _________________________
Note: The above signature must correspond with the name as it appears upon the
face of this Warrant Certificate in every particular, without alteration or
enlargement or any change whatever, unless these Warrants have been assigned.
5
ASSIGNMENT
(To be signed only upon assignment of Warrants)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
the right to purchase shares of common stock represented by the within Warrant
Certificate unto, and requests that a certificate for such Warrant be issued in
the name of:
-------------------------------------
(Name and Address of Assignee Must be Printed or Typewritten)
-------------------------------------
-------------------------------------
The undersigned hereby irrevocably constitutes and appoints _______________
Attorney to transfer said Warrants on the books of the Company, with full power
of substitution in the premises and, if said number of shares of common stock
shall not be all of the common stock purchasable under the within Warrant
Certificate, that a new Warrant Certificate for the balance of the common stock
purchasable under the within Warrant Certificate be registered in the name of
the undersigned Holder and delivered to such Holder's address as then set forth
on the Company's books.
Dated:_______________ ______________________________
Signature of Registered Holder
Note: The above signature must correspond with the name as it appears upon the
face of this Warrant Certificate in every particular, without alteration or
enlargement or any change whatever.
6