UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) February 24, 2000
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efinancial depot.com, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 330809711
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1005 - 750 West Pender Street, Vancouver, British Columbia V6C 2T8
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (877) 739-3812
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(not applicable)
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(Former name or former address, if changed since last report.)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Not applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Not applicable.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 5. OTHER EVENTS
On January 31, 2000, efinancial depot.com, Inc. (the "Company") entered into a
funding agreement (the "Agreement") with Oxford Capital Corporation (the
"Purchaser"), which funding was completed on February 24, 2000 (the "Closing
Date"). Pursuant to the Agreement, the Company issued to the Purchaser 6%
Convertible Debentures (the "Debentures") and a two year warrant to purchase
250,000 shares of common stock in the capital of the Company at US$5.00 per
<PAGE>
share (the "Warrants"), in exchange for funding in the amount of $2,500,000.
The Debentures are due January 31, 2003 and bear interest at the rate of 6% per
year, payable upon conversion, redemption or maturity, whichever occurs first.
Interest is payable, at the Purchaser's option, in cash or in shares of the
Company's common stock (the "Common Stock"). Pursuant to the Agreement, the
Debentures are convertible into shares of Common Stock from time to time, in
amounts specified by the Purchaser, any time after the Closing Date, as follows:
The lower of:
(i) 80% (not lower than a floor price of US$3.00) of
the average closing bid price of the Common Stock for the five (5)
trading days preceding the Conversion Date; or
(ii) US$5.00.
In addition, the Debentures are subject to a forced conversion into Common Stock
when the share price has traded above US$10.00 for 20 consecutive trading days
and the liquidity covenants have not been broken. The underlying warrants will
be acquired and paid for within 30 trading days after forced conversion.
The Debentures are exempt from the registration requirements of the Securities
Act of 1933, as amended, pursuant to SEC Regulation S. The Company must prepare
and file, within 60 days of January 31, 2000, a Registration Statement covering
200% of the shares the Debentures are currently convertible into, and all of the
shares underlying the Warrants. The Company will ensure that the Registration
Statement is declared effective within 120 days. In the event that the
Registration Statement is not filed within 60 days or declared effective within
120 days, the Company will pay damages to the Purchaser of 2% of the principal
value of the Debentures outstanding every 30 day period, or a pro rata portion
thereof. If at any time following the 120 day period after the Closing Date,
the market value of the volume of stock trades less than $100,000 in value for
20 consecutive trading days, the Purchaser has the right to return the
unconverted Debentures to the Company at a premium of 30% of the principal
outstanding.
Pursuant to the Agreement, the Debentures, the Warrants and the Common Stock
underlying the Debentures and Warrants have been delivered to Oxford Capital
Corporation, Calgary (the "Escrow Holder"). As security for the Debentures, the
Company deposited 500,000 shares of restricted common stock with the Escrow
Holder, which shares will be released upon conversion of the Debentures or in
the event that the Company defaults on the Debentures. In addition and upon
funding, the Company paid 10% of the gross amount of the Debentures to Oxford
Capital Corporation, Calgary (the "Placement Agent"), and issued a one year
warrant to purchase 50,000 shares of Common Stock at US$5.00 per share.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS
Not applicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Not applicable.
ITEM 8. CHANGE IN FISCAL YEAR
Not applicable.
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S
Not applicable.
<PAGE>
ITEM 10. EXHIBITS
(10) Material Contracts
10.1 Debenture Purchase Agreement between the Company and Oxford
Capital Corp., dated February 2, 2000
10.2 Escrow Agreement between the Company and Oxford Capital Corp.,
dated February 2, 2000
10.3 Registration Rights Agreement between the Company and Oxford
Capital Corp., dated February 2, 2000
(20) Other Documents
20.1 The Company's Form of Placement Agent Warrant Certificate
20.2 Placement Agent's Warrant - Oxford Capital Corp., Holder
20.3 e-financial depot.com, Inc. 6% Convertible Debenture, dated
February 2, 2000
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EFINANCIAL DEPOT.COM, INC.
Date: April 14, 2000
/s/ John Huguet
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John Huguet, President and Chief Executive Officer
DEBENTURE PURCHASE AGREEMENT
BETWEEN
EFINANCIAL DEPOT.COM, INC.
AND
OXFORD CAPITAL CORP.
FEBRUARY 2, 2000
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DEBENTURE PURCHASE AGREEMENT
This Debenture Purchase Agreement is made as of February 2, 2000, between
Efinancial Deport.Com, Inc. (the "Company"), a Delaware corporation, and Oxford
Capital Corp. (the "Purchaser"), a Cayman Island corporation.
In consideration of the premises, mutual covenants and agreements contained
in this Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchaser agree
as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. DEFINED TERMS. As used in this Agreement, the following terms
have the following meanings (terms defined in the singular to have the same
meaning when used in the plural and vice versa):
"Affiliate" means any Person (1) which directly or indirectly controls, or is
controlled by, or is under common control with the Company or a Subsidiary; (2)
which directly or indirectly beneficially owns or holds five percent (5%) or
more of any class of voting stock of the Company or any Subsidiary; or (3) five
percent (5%) or more of the voting stock of which is directly or indirectly
beneficially owned or held by the Company or a Subsidiary. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise.
"Agreement" means this Debenture Purchase Agreement, as amended, supplemented,
or modified from time to time.
"Business Day" means any day other than a Saturday, Sunday, or other day on
which commercial banks in the United States are authorized or required to close
under the federal laws of the United States of America.
"Capital Lease" means all leases which have been or should be capitalized on the
books of the lessee in accordance with GAAP.
"Closing Date" means February 2, 2000 and any date thereafter that the Purchaser
and the Company agree upon in writing.
"Code" means the US Internal Revenue Code of 1986, as amended from time to time,
and the regulations and published interpretations thereof.
"Common Stock means the Company's common stock, $.001 par value.
"Commonly Controlled Entity" means an entity, whether or not incorporated, which
is under common control with the Company within the meaning of Section 414(b) or
414(c) of the Code.
"Company" means EFinancial Depot. Com, Inc. and its subsidiary companies, joint
ventures or any other related entities;
"Conversion Date" means any date 30 days after the Closing Date.
"Debenture" shall have the meaning assigned to it in Section 2.01
"Debenture Shares" means the shares of Common Stock of the Company underlying
the Debenture into which the Debenture is convertible.
<PAGE>
"Debt" means (1) indebtedness or liability for borrowed money; (2) obligations
evidenced by bonds, Debenture, notes, or other similar instruments; (3)
obligations for the deferred purchase price of property or services (including
trade obligations); (4) obligations as lessee under Capital Leases; (5) current
liabilities in respect of unfunded vested benefits under Plans covered by ERISA;
(6) obligations under letters of credit; (7) obligations under acceptance
facilities; (8) all guaranties, endorsements (other than for collection or
deposit in the ordinary course of business), and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any Person
or entity, or otherwise to assure a creditor against loss; and (9) obligations
secured by any Liens, whether or not the obligations have been assumed.
"Default" means any of the events specified in Section 8.01, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.
"Escrow Agreement" shall have the meaning assigned to such term in Section
2.10(c).
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations and published interpretations thereof.
"Event of Default" means any of the events specified in Section 8.01, provided
that any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Exchange Act" means the US Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles either (i) in the United
States, or (ii) in Canada, whichever is applicable, together with accompanying
adjustments to reflect generally accepted accounting principles in the United
States.
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority, or other security agreement or preferential
arrangement, charge, or encumbrance of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement or other registration or
notification of a debt, obligation or security interest under the law of any
jurisdiction to evidence any of the foregoing).
"Maturity Date" means the date the principle amount outstanding on the Debenture
is due and payable;
"Multiemployer Plan" means a Plan described in Section 4001(a)(3) of ERISA.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation, business trust, joint
stock company, trust, unincorporated association, joint venture, governmental
authority, or other entity of whatever nature.
"Plan" means any pension plan which is covered by Title IV of ERISA and in
respect of which the Company or a Commonly Controlled Entity is an "employer" as
defined in Section 3(5) of ERISA
"Purchaser" means Oxford Capital Corp., a Cayman Island company.
"Principal Office" means 1013-17th Avenue S.W., Calgary, Alberta, T2T 0A7.
"Prohibited Transaction" means any transaction set forth in Section 406 of ERISA
or Section 4975 of the Code.
"Registration Rights Agreement" shall have the meaning assigned to such term in
Section 2.01.
"Reportable Event" means any of the events set forth in Section 4043 of ERISA.
<PAGE>
"SEC" means the US Securities and Exchange Commission.
"Securities" means the Debenture and the Warrant.
"Securities Act" means the US Securities Act of 1933, as amended.
"Subsidiary" means, as to the Company, a corporation of which shares of stock
having ordinary voting power (other than stock having such power only by reason
of the happening of a contingency) to elect a majority of the board of directors
or other managers of such corporation are at the time owned, or the management
of which is otherwise controlled, directly or indirectly through one or more
intermediaries, or both, by the Company.
"Transaction Documents" means this Agreement, the Debenture, the Warrant, the
Registration Rights Agreement, and the Escrow Agreement.
"Warrant" shall have the meaning assigned to that term in Section 2.01.
"Warrant Shares" means the shares Common Stock underlying the Warrant issuable
upon the exercise thereof.
SECTION 1.02. ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP consistent with those
applied in the preparation of the financial statements referred to in Section
4.04, and all financial data submitted pursuant to this Agreement shall be
prepared in accordance with such principles.
ARTICLE II
PURCHASE AND SALE OF SECURITIES
SECTION 2.01. PURCHASE AND SALE OF SECURITIES. The Company agrees to sell
and, subject to the terms and conditions and in reliance on the Company's
representations and warranties contained in this Agreement, the Purchaser agrees
to purchase, $2,500,000 USD in principal amount of the Company's 6% Convertible
Debenture (the "Debenture"), due February 2, 2003, (the "Maturity Date") and a
warrant to purchase up 250,000 the Company's Common Stock (the "Warrant")
exercisable at a price of $5.00 per share on or before February 2, 2002. The
Debenture shall be convertible at a price equal to: (i) the lesser of 80% of the
average closing bid price of the Company's common stock for the 5 trading days
preceding the Conversion Date and (ii) $ 5.00; in no event shall the conversion
price be less than $ 3.00 USD. The Warrant shall be exercisable at a price
equal to $5.00 USD per share. The purchase price of the Debenture shall be 100%
of its face value. The purchase price of the Warrant shall be $.01. The
Debenture shall be in the form of Exhibit A hereto. The Warrant shall be in the
form of Exhibit B hereto. All tax returns filed by the Company shall be
consistent in all material respects with such allocation (including for purposes
of section 1271 et seq. of the Code). Contemporaneously with the execution of
this Agreement, the Company shall execute and deliver to the Purchaser a
registration rights agreement (the "Registration Rights Agreement") in the form
of Exhibit C hereto, covering the Debenture Shares and the Warrant Shares.
SECTION 2.02. FORCED CONVERSION. If at any time following the Closing Date, the
Common Stock trades on the OTC Bulletin Board or NASDAQ National Board at a
price equal to or greater than $10.00 USD, on every day for 20 consecutive
trading days, and the provisions of Section 2.06 have never been exercisable by
the Purchaser, then, within 30 days of the determination of the application of
this provision: (i) the Debenture will be converted into Common Stock in
accordance with the provisions of the Debenture; and (ii) the Warrant will be
exercised in accordance with its terms.
SECTION 2.03. CLOSING. The purchase and sale of the Securities shall take
place on the Closing Date, via facsimile, at the Principal Office and the
offices of Clark Wilson, Barristers and Solicitors, Vancouver, B.C.
SECTION 2.04. PLACEMENT FEE. On the Closing Date, the Company shall pay
the Purchaser a placement fee (the "Placement Fee") in an amount equal to 10% of
the principal amount of Debenture purchased at such Closing. The Company hereby
irrevocably authorizes the Purchaser to deduct the amount of the Placement Fee
from the purchase price of the Debenture, together with any reasonable and
documented out-of-pocket expenses for which such Purchaser is entitled to
reimbursement pursuant to this Section 2.04, including the reasonable and
documented fees and expenses of the Purchaser's counsel. If for any reason the
Purchaser does not deduct the amount of the Placement Fee and such expenses from
the purchase price of Debenture, then promptly upon the Purchaser's request, the
Company shall pay and deliver the Placement Fee and such other expenses to the
<PAGE>
Purchaser or to such other persons as such Purchaser shall direct, by Federal
funds bank wire transfer of same day funds.
SECTION 2.05. PLAEMENT AGENT WARRANTS. On the Closing Date, the Issuer shall
issue the Purchaser, a Placement Agent Warrant to purchase 50,000 shares of the
Common Stock at an exercise price of $5.00 per share, exerciseable on or before
February 2, 2001.
SECTION 2.06. ANTI-DILUTION PROVISIONS. After February 2, 2000, and so long as
the Debenture or the Warrant is outstanding and not fully converted or
exercised, the Company shall not, without the prior consent of the Holder, issue
or sell (i) any Common Stock without consideration or for a consideration per
share less than $3.00; or (ii) issue or sell any warrant, Warrant, right,
contract, call, or other security or instrument granting the holder thereof the
right to acquire Common Stock without consideration or for a consideration per
share less than $3.00.
SECTION 2.07. LIQUIDITY OF COMMON SHARES. If at any time following 120 days
after the Closing Date, the market value of the volume of the Common Stock, as
traded on the OTC Bulletin Board, multiplied by the average closing market
price of the Common Stock, is less than $100,000, on every day for 20
consecutive trading days, the Purchaser has the right to put any principal
amount of the Debenture unconverted back to the Company at a purchase price
equal to the principle amount outstanding plus a premium of 30% of the principle
amount outstanding.
SECTION 2.08. USE OF PROCEEDS. The Company shall use the proceeds from the
Debenture solely for working capital to grow and expand its business.
SECTION 2.09. EXEMPTION FROM US REGISTRATION. The issuance of the
Debenture and the Warrant shall be exempt from the registration requirements of
the Securities Act pursuant to Section 4(2) thereof; and also pursuant to SEC
Regulation S. Accordingly, the Company represents and warrants to the Purchaser
that it has, and covenants and agrees with the Purchaser that it will, comply in
all material respects with the terms and conditions of SEC Regulation S
applicable to the issuance and sale of the Debenture and the Warrant.
SECTION 2.10. REGISTRATION OF COMMON STOCK; (a) As soon as possible, and
in any event on or before March 31, 2000 in accordance with the Registration
Rights Agreement, the Company shall file the appropriate registration statement
or registration statements (each a "Registration Statement" and collectively
"Registration Statements") with the SEC to register 200% of the Debenture Shares
and 100% of the Warrant Shares under the Securities Act pursuant to the
Registration Rights Agreement.
(b) In accordance with the Registration Rights Agreement, the Company
shall use its best efforts to ensure that the Registration Statements become
effective as soon as possible, and shall cause the Registration Statements to
remain effective until the Debenture have been converted or paid, and the
Warrant fully exercised or expired.
(c) Contemporaneously with the execution of this Agreement the Company shall
enter into an escrow agreement (the "Escrow Agreement") with the Purchaser as
escrow holder (the "Escrow Holder") in the form of Exhibit D. Promptly after the
execution of this Agreement, the Company shall deposit 500,000 common shares of
the Common Stock as security for the Debenture (the "Security Shares").
Promptly upon the effectiveness of a Registration Statement, the Corporation
shall deliver unrestricted certificates for those shares registered thereunder
to the Escrow Agent, in DTC form, in exchange for the Security Shares.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. CONDITION PRECEDENT TO INITIAL CLOSING. The Purchaser's
obligation to purchase the Debenture is subject to the conditions precedent that
the Purchaser shall have received on or before the Closing Date each of the
following, in form and substance satisfactory to the Purchaser and its counsel:
(1) Debenture. The Debenture, duly executed by the Company;
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(2) Warrant. The Warrant, duly executed by the Company;
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<PAGE>
(3) Placement Agent Warrant. The Placement Agent Warrant, duly executed by the
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Company;
(4) Registration Rights Agreement. The Registration Rights Agreement, duly
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executed by the Company;
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(5) Escrow Agreement. The Escrow Agreement, duly executed by the Company;
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(6) Evidence of all corporate action by the Company. Certified (as of the
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date of this Agreement) copies of all corporate action taken by the Company,
including resolutions of its Board of Directors, authorizing the execution,
delivery, and performance of the Transaction Documents to which it is a party
and each other document to be delivered pursuant to this Agreement;
(6) Incumbency and signature certificate of the Company. A certificate (dated as
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of the date of this Agreement) of the Secretary of the Company certifying the
names and true signatures of the officers of the Company authorized to sign the
Transaction Documents to which it is a party and the other documents to be
delivered by the Company under this Agreement;
(7) Opinion of counsel for the Company. A favorable opinion of Clark
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Wilson, Barristers & Solicitors, Counsel for the Company, in substantially the
form of Exhibit E, and as to such other matters as the Purchaser may reasonably
request.
ARTICLE IV
COMPANY'S REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Purchaser that:
SECTION 4.01. INCORPORATION, GOOD STANDING, AND DUE QUALIFICATION. The
Company is a corporation duly incorporated, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation and has the
corporate power and authority to own its assets and to transact the business in
which it is now engaged or proposed to be engaged in and is duly qualified as a
foreign corporation and in good standing under the laws of each other
jurisdiction in which such qualification is required.
SECTION 4.02 CORPORATE POWER AND AUTHORITY. The execution, delivery, and
performance by the Company of the Transaction Documents to which each is a party
have been duly authorized by all necessary corporate action and do not and will
not (1) require any consent or approval of the stockholders of such corporation;
(2) contravene such corporation's charter or bylaws; (3) violate any provision
of any law, rule, regulation, order, writ, judgment, injunction, decree,
determination, or award presently in effect having applicability to such
corporation; (4) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease, or
instrument to which such corporation is a party or by which it or its properties
may be bound or affected; (5) result in, or require, the creation or imposition
of any Lien, upon or with respect to any of the properties now owned or
hereafter acquired by such corporation; and (6) cause such corporation to be in
default under any such law, rule, regulation, order, writ, judgment, injunction,
decree, determination, or award or any such indenture, agreement, lease, or
instrument.
SECTION 4.03 LEGALLY ENFORCEABLE AGREEMENT. This Agreement is, and each of
the other Transaction Documents when delivered under this Agreement will be,
legal, valid, and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms, except to the extent that
such enforcement may be limited by applicable bankruptcy, insolvency, and other
similar laws affecting creditors' rights generally.
SECTION 4.04. FINANCIAL STATEMENTS. The financial statements of the
Company, filed with its Form 10-SB at the Securities Exchange Commission, copies
of which have been furnished to the Purchaser, are complete and correct and
fairly present the financial condition of the Company, all in accordance with
GAAP in the United States consistently applied subject to year-end adjustments.
Since the date of the filing of the Form 10-SB, there has been no material
adverse change in the condition (financial or otherwise), business, or
operations of the Company. There are no liabilities of or claims against the
Company, fixed or contingent, which are material but are not reflected in the
financial statements or in the notes thereto, other than liabilities arising in
the ordinary course of business since the filing of the Form 10-SB or as
otherwise disclosed.
<PAGE>
SECTION 4.05. LABOR DISPUTES AND ACTS OF GOD. The business and the
properties of the Company are not affected by any fire, explosion, accident,
strike, lockout or other labor dispute, drought, storm, hail, earthquake,
embargo, act of God or of the public enemy, or other casualty (whether or not
covered by insurance) materially and adversely affecting such business
properties or the operation of the Company.
SECTION 4.06. OTHER AGREEMENTS. The Company is not a party to any indenture,
loan, or credit agreement, or to any lease or other agreement or instrument, or
subject to any charter or corporate restriction which could have a material
adverse effect on the business, properties, assets, operations, or conditions,
financial or otherwise, of the Company, or the ability of the Company to carry
out its obligations under the Transaction Documents other than as disclosed in
the Form 10-SB. The Company is not in default in any respect in the performance,
observance, or fulfillment of any of the obligations, covenants, or conditions
contained in any agreement or instrument material to its business to which it is
a party.
SECTION 4.07. LITIGATION. There is no pending or threatened action or
proceeding against or affecting the Company before any court, governmental
agency, or arbitrator which may, in any one case or in the aggregate, materially
adversely affect the financial condition, operations, properties, or business of
the Company or the ability of the Company to perform its obligation under the
Transaction Documents other than as disclosed in the Form 10-SB.
SECTION 4.08. NO DEFAULTS ON OUTSTANDING JUDGMENTS OR ORDERS. There are no
unsatisfied judgments outstanding against the Company, and the Company is not
in default with respect to any judgment, writ, injunction, decree, rule, or
regulation of any court, arbitrator, or federal, state, municipal, or other
governmental authority, commission, board, bureau, agency or instrumentality,
domestic or foreign.
SECTION 4.09. OWNERSHIP AND LIENS. The Company has title to, or valid leasehold
interests in, all of their properties and assets, real and personal, including
the properties and assets and leasehold interest reflected in the financial
statements referred to in Section 4.04 (other than any properties or assets
disposed of in the ordinary course of business), and none of the properties and
assets owned by the Company and none of its leasehold interests is subject to
any Lien, except such as may be permitted pursuant to Section 6.01 of this
Agreement. Without limiting the generality of the foregoing, this representation
and warrant includes all of the Company's intellectual property (including
software and other technology).
SECTION 4.10. ERISA AND EMPLOYEE BENEFIT LAWS. The Company is in compliance
in all material respects with all applicable provisions of ERISA, and all
applicable national and state employee benefit of the United States, and any
other applicable jurisdictions.
SECTION 4.11. OPERATION OF BUSINESS. The Company possesses all licenses,
permits, franchises, patents, copyrights, trademarks, and trade names, or rights
thereto, to conduct their respective businesses substantially as now conducted
and as presently proposed to be conducted, and the Company and is not in
violation of any valid rights of others with respect to any of the foregoing.
SECTION 4.12. TAXES. The Company has filed all tax returns (national,
federal, provincial, state, and local) required to be filed and has paid all
taxes, assessments, and governmental charges and levies thereon to be due,
including interest and penalties.
SECTION 4.13. ENVIRONMENT. The Company has duly complied with, and their
businesses, operations, assets, equipment, property, leaseholds, or other
facilities are in compliance with, the provisions of all national, federal,
provincial, state, and local environmental, health, and safety laws, codes and
ordinances, and all rules and regulations promulgated thereunder.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as the Debenture is outstanding, or the Warrant has not been fully
exercised or expired, the Company will:
<PAGE>
SECTION 5.01. MAINTENANCE OF EXISTENCE. Preserve and maintain, and cause
each active Subsidiary to preserve and maintain, its corporate existence and
good standing in the jurisdiction of its incorporation, and qualify and remain
qualified, and cause each Subsidiary to qualify and remain qualified, as a
foreign corporation in each jurisdiction in which such qualification is
required.
SECTION 5.02. MAINTENANCE OF RECORDS. Keep, and cause each Subsidiary to
keep, adequate records and books of account, in which complete entries will be
made in accordance with GAAP consistently applied, reflecting all financial
transactions of the Company and its Subsidiaries.
SECTION 5.03. MAINTENANCE OF PROPERTIES. Maintain, keep, and preserve, and
cause each Subsidiary to maintain, keep, and preserve, all of its properties
(tangible and intangible) necessary or useful in the proper conduct of its
business in good working order and condition, ordinary wear and tear excepted.
SECTION 5.04. CONDUCT OF BUSINESS. Continue, and cause each Subsidiary to
continue, to engage in an efficient and economical manner in a business of the
same general type as conducted by it on the date of this Agreement.
SECTION 5.05. MAINTENANCE OF INSURANCE. Maintain, and cause each Subsidiary
to maintain, insurance with financially sound and reputable insurance companies
or associations in such amounts and covering such risks as are usually carried
by companies engaged in the same or a similar business and similarly situated,
which insurance may provide for reasonable deductibility from coverage thereof.
SECTION 5.06. COMPLIANCE WITH LAWS. Comply, and cause each Subsidiary to
comply, in all respects with all applicable laws, rules, regulations, and
orders, such compliance to include, without limitation, paying before the same
become delinquent all taxes, assessments, and governmental charges imposed upon
it or upon its property.
SECTION 5.07. RIGHT OF INSPECTION. At any reasonable time and from time to
time, permit the Purchaser or any agent or representative thereof to examine and
make copies of and abstracts from the records and books of account of, and visit
the properties of, the Company and any Subsidiary, and to discuss the affairs,
finances, and accounts of the Company and any Subsidiary with any of their
respective officers and directors and the Company's independent accountants.
SECTION 5.08. REPORTING REQUIREMENTS. Furnish to the Purchaser:
(1) Quarterly financial statements. As soon as available and in any event
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within forty-five (45) days after the end of each of the first three quarters of
each fiscal year of the Company, consolidated and consolidating balance sheets
of the Company and its Subsidiaries as of the end of such quarter, consolidated
and consolidating statements of income and retained earnings of the Company and
its Subsidiaries for the period commencing at the end of the previous fiscal
year and ending with the end of such quarter, and [consolidated and
consolidating] statements of changes in financial position of the Company and
its Subsidiaries for the portion of the fiscal year ended with the last day of
such quarter, all in reasonable detail and stating in comparative form the
respective figures for the corresponding date and period in the previous fiscal
year and all prepared in accordance with GAAP consistently applied and certified
by the chief financial officer of the Company (subject to year-end adjustments);
(2) Annual financial statements. As soon as available and in any event
-----------------------------
within ninety (90) days after the end of each fiscal year of the Company,
[consolidated and consolidating] balance sheets of the Company and its
Subsidiaries as of the end of such fiscal year and [consolidated and
consolidating] statements of income and retained earnings of the Company and its
Subsidiaries for such fiscal year, and [consolidated and consolidating]
statements of changes in financial position of the Company and its Subsidiaries
for such fiscal year, all in reasonable detail and stating in comparative form
the respective figures for the corresponding date and period in the prior fiscal
year and all prepared in accordance with GAAP consistently applied and as to the
consolidated statements accompanied by an opinion thereon acceptable to the
Purchaser by Stefanou & Company, LLP, Certified Public Accountants, or other
independent accountants selected by the Company and acceptable to the Purchaser;
(3) Management letters. Promptly upon receipt thereof, copies of any
-------------------
reports submitted to the Company or any Subsidiary by independent certified
public accountants in connection with examination of the financial statements of
the Company or any Subsidiary made by such accountants;
<PAGE>
(4) Certificate of no Default. Within forty five (45) days after the end of
-------------------------
each of the quarters of each fiscal year of the Company (or earlier upon the
delivery of the financial statements required by Sections 5.08(1) or (2), a
certificate of the chief financial officer of the Company (a) certifying that to
the best of his knowledge no Default or Event of Default has occurred and is
continuing or, if a Default or Event of Default has occurred and is continuing,
a statement as to the nature thereof and the action which is proposed to be
taken with respect thereto, and (b) with computations demonstrating compliance
with the covenants contained in Article VII;
(5) Accountant's report. Simultaneously with the delivery of the annual
--------------------
financial statements referred to in Section 5.08(2), a certificate of the
independent public accountants who audited such statements to the effect that,
in making the examination necessary for the audit of such statements, they have
obtained no knowledge of any condition or event which constitutes a Default or
Event of Default, or if such accountants shall have obtained knowledge of any
such condition or event, specifying in such certificate each such condition or
event of which they have knowledge and the nature and status thereof;
(6) Notice of litigation. Promptly after the commencement thereof, notice
---------------------
of all actions, suits, and proceedings before any court or governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, affecting the Company or any Subsidiary, which, if determined adversely
to the Company or such Subsidiary, could have a material adverse effect on the
financial condition, properties, or operations of the Company or such
Subsidiary;
(7) Notice of Defaults and Events of Default. As soon as possible and in
------------------------------------------
any event within five (5) days after the occurrence of each Default or Event of
Default, a written notice setting forth the details of such Default or Event of
Default and the action which is proposed to be taken by the Company with respect
thereto;
(8) ERISA reports. As soon as possible, and in any event within thirty (30)
-------------
days after the Company knows or has reason to know that any circumstances exist
that constitute grounds entitling the PBGC to institute proceedings to terminate
a Plan subject to ERISA with respect to the Company or any Commonly Controlled
Entity, and promptly but in any event within two (2) Business Days of receipt by
the Company or any Commonly Controlled Entity of notice that the PBGC intends to
terminate a Plan or appoint a trustee to administer the same, and promptly but
in any event within five (5) Business Days of the receipt of notice concerning
the imposition of withdrawal liability with respect to the Company or any
Commonly Controlled Entity, the Company will deliver to the Purchaser a
certificate of the chief financial officer of the Company setting forth all
relevant details and the action which the Company proposes to take with respect
thereto.
(9) Reports to other creditors. Promptly after the furnishing thereof,
-----------------------------
copies of any statement or report furnished to any other party pursuant to the
terms of any indenture, loan, credit, or similar agreement and not otherwise
required to be furnished to the Purchaser pursuant to any other clause of this
Section 5.08;
(10) Proxy statements, etc. Promptly after the sending or filing thereof,
----------------------
copies of all proxy statements, financial statements, and reports which the
Company or any Subsidiary sends to its stockholders, and copies of all regular,
periodic, and special reports, and all registration statements which the Company
or any Subsidiary files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or with any national
securities exchange; and
(11) General information. Such other information respecting the condition
--------------------
or operations, financial or otherwise, of the Company or any Subsidiary as the
Purchaser may from time to time reasonably request.
SECTION 5.09. ENVIRONMENT. Be and remain, and cause each Subsidiary to be
and remain, in compliance with the provisions of all national, federal,
provincial, state, and local environmental, health, and safety laws, codes and
ordinances, and all rules and regulations issued thereunder; notify the
Purchaser immediately of any notice of a hazardous discharge or environmental
complaint received from any governmental agency or any other party; notify the
Purchaser immediately of any hazardous discharge from or affecting its premises;
immediately contain and remove the same, in compliance with all applicable laws;
promptly pay any fine or penalty assessed in connection therewith; permit the
Purchaser to inspect the premises, to conduct tests thereon, and to inspect all
books, correspondence, and records pertaining thereto; and at the Purchaser's
request, and at the Company's expense, provide a report of a qualified
<PAGE>
environmental engineer, satisfactory in scope, form, and content to the
Purchaser, and such other and further assurances reasonably satisfactory to the
Purchaser that the condition has been corrected.
SECTION 5.10. Be and remain a "reporting company" as defined by the Exchange
Act.
ARTICLE VI
NEGATIVE COVENANTS
So long as the Debenture is outstanding, or the Warrant has not been fully
exercised or expired, Company will not without the written consent of the
Purchaser:
SECTION 6.01. MERGERS, ETC. Wind up, liquidate or dissolve itself, merge
with, or consolidate with another organization unless the other organization is
a subsidiary, or convey, sell, assign, transfer, lease, or otherwise dispose of
(whether in one transaction or in a series of transactions) all or substantially
all of its assets (whether now owned or hereafter acquired) to any Person, or
acquire all or substantially all of the assets or the business of any Person
that is not within the mandate and business plan of the Company, or permit any
Subsidiary to do so, except that (1) any Subsidiary may merge into or transfer
assets to the Company and (2) any Subsidiary may merge into or consolidate with
or transfer assets to any other Subsidiary.
SECTION 6.02 DIVIDENDS. Declare or pay any dividends; or make any
distribution of assets to its stockholders as such whether in cash, assets, or
obligations of the Company; or allocate or otherwise set apart any sum for the
payment of any dividend or distribution on; or permit any of its Subsidiaries to
purchase or otherwise acquire for value any stock of the Company or another
Subsidiary.
SECTION 6.03.SALE OF ASSETS. Sell, lease, assign, transfer, or otherwise
dispose of, or permit any Subsidiary to sell, lease, assign, transfer, or
otherwise dispose of, any of its now owned or hereafter acquired assets
(including, without limitation, shares of stock and indebtedness of
Subsidiaries, receivables, and leasehold interests), except: (1) inventory
disposed of in the ordinary course of business; (2) the sale or other
disposition of assets no longer used or useful in the conduct of its business;
and (3) that any Subsidiary may sell, lease, assign, or otherwise transfer its
assets to the Company.
SECTION 6.04 TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including, without limitation, the purchase, sale, or exchange of property or
the rendering of any service, with any Affiliate, or permit any Subsidiary to
enter into any transaction, including, without limitation, the purchase, sale,
or exchange of property or the rendering of any service, with any Affiliate,
except in the ordinary course of and pursuant to the reasonable requirements of
the Company's or such Subsidiary's business and upon fair and reasonable terms
no less favorable to the Company or such Subsidiary than would obtain in a
comparable arm's-length transaction with a Person not an Affiliate.
ARTICLE VII
CORPORATE GOVERNANCE
So long as the Debenture is outstanding, or the Warrant has not been fully
exercised or expired, Company will ensure that the following are fulfilled:
SECTION 7.01. BOARD OF DIRECTORS. The Company will have and maintain a
board of directors of not less than two members. The Company's board of
directors shall meet not less frequently than quarterly. The Company will
appoint and elect a representative of the Purchaser to the Company's Board
within 30 days of the Closing Date and to nominate the representative for
election to the Company's board of directors annually until the representative
delivers to the Company a written resignation from the Company's board of
directors.
SECTION 7.02. AUDIT COMMITTEE. Within 60 days, the Company's board of
directors shall appoint an Audit Committee of not less than three members and no
more than one (1) of the members of the Audit Committee shall be an officer or
employee of or contractor or consultant to the Company. The Audit Committee
shall meet not less frequently than quarterly. The Audit Committee shall review
the Company's financial statements for accuracy and completeness at least
quarterly and before their release. The Audit Committee shall meet with the
<PAGE>
Company's independent accountants prior to and immediately following the
Company's annual audit, and such other times as the Audit Committee deems
necessary to assure that the Company's financial statements are accurate,
complete and in accordance with GAAP, and to insure that the Company has
adequate financial and reporting policies, procedures, systems and controls in
place.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01. EVENTS OF DEFAULT. If any of the following events shall
occur:
(1) The Company should fail to pay the principal of, or interest payable
pursuant to the Debenture, or any amount of a commitment or other fee, as and
when due and payable;
(2) Any representation or warranty made or deemed made by the Company in
this Agreement or which is contained in any certificate, document, opinion, or
financial or other statement furnished at any time under or in connection with
any Transaction Document shall prove to have been incorrect, incomplete, or
misleading in any material respect on or as of the date made or deemed made;
(3) The Company shall fail to perform or observe any term, covenant, or
agreement contained in Articles V, VI, or VII hereof;
(4) The Company or any of its Subsidiaries shall (a) fail to pay any
indebtedness for borrowed money of the Company or such Subsidiary, as the case
may be, or any interest or premium thereon, when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise), or (b) fail
to perform or observe any term, covenant, or condition on its part to be
performed or observed under any agreement or instrument whose value is in excess
of Ten Thousand ($10,000) Dollars relating to any such indebtedness, when
required to be performed or observed, if the effect of such failure to perform
or observe is to accelerate, or to permit the acceleration of, after the giving
of notice or passage of time, or both, the maturity of such indebtedness;
(5) The Company or any of its Subsidiaries (a) shall generally not pay, or
shall be unable to pay, or shall admit in writing its inability to pay its debts
as such debts become due; or (b) shall make an assignment for the benefit of
creditors, or petition or apply to any tribunal for the appointment of a
custodian, receiver, or trustee for it or a substantial part of its assets; or
(c) shall commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect; or (d) shall have had any
such petition or application filed or any such proceeding commenced against it
in which an order for relief is entered or an adjudication or appointment is
made, and which remains undismissed for a period of thirty (30) days or more; or
(e) shall take any corporate action indicating its consent to, approval of, or
acquiescence in any such petition, application, proceeding, or order for relief
or the appointment of a custodian, receiver, or trustee for all or any
substantial part of its properties; or (f) shall suffer any such custodianship,
receivership, or trusteeship to continue undischarged for a period of thirty
(30) days or more;
(6) One or more judgments, decrees, or orders for the payment of money in
excess of Twenty five Thousand Dollars ($25,000) in the aggregate shall be
rendered against the Company or any of its Subsidiaries and such judgments,
decrees, or orders shall continue unsatisfied and in effect for a period of 30
consecutive days without being vacated, discharged, satisfied, or stayed or
bonded pending appeal;
(8) Any of the following events shall occur or exist with respect to the
Company and any Commonly Controlled Entity under ERISA: any Reportable Event
shall occur; complete or partial withdrawal from any Multiemployer Plan shall
take place; any Prohibited Transaction shall occur; a notice of intent to
terminate a Plan shall be filed, or a Plan shall be terminated; or circumstances
shall exist which constitute grounds entitling the PBGC to institute proceedings
to terminate a Plan, or the PBGC shall institute such proceedings; and in each
case above, such event or condition, together with all other events or
conditions, if any, could subject the Company to any tax, penalty, or other
liability which in the aggregate may exceed Twenty five Thousand Dollars
($25,000); or
(9) If the Purchaser receives its first notice of a hazardous discharge or
an environmental complaint from a source other than the Company, and the
Purchaser does not receive notice (which may be given in oral form, provided
same is followed with all due dispatch by written notice given by Certified
Mail, Return Receipt Requested) of such hazardous discharge or environmental
complaint from the Company within twenty-four (24) hours of the time the
<PAGE>
Purchaser first receives said notice from a source other than the Company; or if
any federal, state, or local agency asserts or creates a Lien upon any or all of
the assets, equipment, property, leaseholds, or other facilities of the Company
by reason of the occurrence of a hazardous discharge or an environmental
complaint; or if any federal, state, or local agency asserts a claim against the
Company and/or its assets, equipment, property, leaseholds, or other facilities
for damages or cleanup costs relating to a hazardous discharge or an
environmental complaint; provided, however, that such claim shall not constitute
a default if, within five (5) Business Days of the occurrence giving rise to the
claim, (a) the Company can prove to the Purchaser's satisfaction that the
Company has commenced and is diligently pursuing either: (i) a cure or
correction of the event which constitutes the basis for the claim, and continues
diligently to pursue such cure or correction to completion or (ii) proceedings
for an injunction, a restraining order, or other appropriate emergent relief
preventing such agency or agencies from asserting such claim, which relief is
granted within ten (10) Business Days of the occurrence giving rise to the claim
and the injunction, order, or emergent relief is not thereafter resolved or
reversed on appeal; and (b) in either of the foregoing events, the Company has
posted a bond, letter of credit, or other security satisfactory in form,
substance, and amount to both the Purchaser and the agency or entity asserting
the claim to secure the proper and complete cure or correction of the event
which constitutes the basis for the claim; then, and in any such event, the
Purchaser may, by notice to the Company, (1) declare its obligation to advance
funds pursuant to the Debenture be terminated, whereupon the same shall
forthwith terminate, and (2) declare the Debenture, all interest thereon, and
all other amounts payable under this Agreement to be forthwith due and payable,
whereupon the Debenture, all such interest, and all such amounts shall become
and be forthwith due and payable, without presentment, demand, protest, or
further notice of any kind, all of which are hereby expressly waived by the
Company.
(10) The Company shall fail to perform or observe any of the provisions
contained in any other section of this Agreement, the Debenture, or any of the
Transaction Documents, and such failure shall continue for more than thirty (30)
days after the Purchaser has given written notice to the Company.
SECTION 8.02. REMEDIES. Upon the occurrence and during the continuance of
any Event of Default as set out in Section 8.01, or in the Debenture, then, or
at any thereafter, and in each and every case, the Purchaser shall have the
rights and remedies as set out in Paragraph 9 of the Debenture.
ARTICLE IX
PURCHASER'S REPRESENTATIONS & WARRANTIES
SECTION 9.01. UNREGISTERED SECURITIES. The Purchaser acknowledges that none
of the Debenture, the Warrant, the Placement Warrant, the Debenture Shares, the
Warrant Shares, or the Placement Warrant Shares have been registered under the
Securities Act and unless so registered may not be offered or sold in the United
States or to U.S. persons, as that term is defined in Regulations under the
Securities Act, except pursuant to an exemption from, or in a transaction not
subject to the registration requirements of the Securities Act.
SECTION 9.02. U.S NON-RESIDENT. The Purchaser is outside the United States
when receiving and executing this Agreement, is not a U.S. person and is not
acquiring the Debenture, the Warrant Placement and/or the Warrant for the
account of or benefit of, directly or indirectly, a U.S. person.
SECTION 9.03. PURCHASER AS PRINCIPAL. The Purchaser is acquiring the
Debenture, the Warrant, and the Placement Warrant as principal for its own
account for investment purposes only and not with a view to, or for resale,
distribution or fractionalization thereof, in whole or in part.
SECTION 9.04. LEGENDED SECURITIES. The Purchaser acknowledges that the
unless registered under the Securities Act, the Debenture, the Warrant, the
Placement Warrant, the Debenture Shares, the Warrant Shares and the Placement
Warrant Shares will be restricted from transfer under the Securities Act and the
certificate representing such securities may bear a legend with respect to such
restriction.
SECTION 9.05. CANADIAN RESALE RESTRICTIONS. The Purchaser acknowledges that
the Company is not currently a reporting issuer in any jurisdiction in Canada
nor does it have any current intention to become one and as a result the
Debenture, the Warrant, the Debenture Shares, the Warrant Shares, and the
Placement Warrant Shares and may be subject to indefinite resale restrictions.
<PAGE>
ARTICLE X
MISCELLANEOUS
SECTION 10.01. AMENDMENTS, ETC. No amendment, modification, termination, or
waiver of any provision of any Transaction Document to which the Company is a
party, nor consent to any departure by the Company from any Transaction Document
to which it is a party, shall in any event be effective unless the same shall be
in writing and signed by the Purchaser, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
SECTION 10.02. NOTICES, ETC. All notices and other communications provided
for under this Agreement and under the other Transaction Documents to which the
Company is a party shall be in writing (including telegraphic, telex, and
facsimile transmissions) and mailed or transmitted or delivered;
If to the Company: If to the Purchaser:
Efinancial Depot.Com, Inc. Oxford Capital Corp.
150-1875 Century Park East c/o 1013-17th Avenue S.W.
Century City California Calgary, Alberta
90067 T2T 0A7
Ph: (403) 508-5055
Fax: (403) 508-5055
With a copy that does not With a copy that does not
constitute notice to: constitute notice to:
Clark,Wilson, Ian H. Kennedy,
Barristers & Solicitors Barrister & Solicitor
800-885 W.Georgia St. 1013 - 17th Avenue
Vancouver,Canada Calgary, Alberta
V6C 3H1 T2T 0A7
Attention: David Cowan Attn: Ian H. Kennedy
Tel: (604) 643-3178 Tel: (403) 508-5055
Fax: (604) 687-6314 Fax: (403) 508-5058
; or, as to each party, at such other address as shall be designated by such
party in a written notice to the other party complying as to delivery with the
terms of this Section 10.02. Except as otherwise provided in this Agreement, all
such notices and communications shall be effective when deposited in the mails
or delivered to the telegraph company, or sent, answerback received,
respectively, addressed as aforesaid, except that notices to the Purchaser
pursuant to the provisions of Article II shall not be effective until received
by the Purchaser.
SECTION 10.03. NO WAIVER. No failure or delay on the part of the Purchaser
in exercising any right, power, or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, power, or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power, or remedy hereunder. The rights and remedies provided herein
are cumulative, and are not exclusive of any other rights, powers, privileges,
or remedies, now or hereafter existing, at law or in equity or otherwise.
SECTION 10.04. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the Company and the Purchaser and their respective
successors and assigns, except that the Company may not assign or transfer any
of its rights under any Transaction Document to which the Company is a party
without the prior written consent of the Purchaser.
SECTION 10.05. COSTS, EXPENSES, AND TAXES. The Company agrees to pay on
demand all costs and expenses incurred by the Purchaser in connection with the
preparation, execution, delivery, filing, and administration of the Transaction
Documents, and of any amendment, modification, or supplement to the Transaction
Documents, including, without limitation, the fees and out-of-pocket expenses of
counsel for the Purchaser incurred in connection with advising the Purchaser as
<PAGE>
to its rights and responsibilities hereunder up to $10,000 USD. The Company also
agrees to pay all such costs and expenses, including court costs, incurred in
connection with enforcement of the Transaction Documents, or any amendment,
modification, or supplement thereto, whether by negotiation, legal proceedings,
or otherwise. In addition, the Company shall pay any and all stamp and other
taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing, and recording of any of the Transaction Documents
and the other documents to be delivered under any such Transaction Documents,
and agrees to hold the Purchaser harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or omission to
pay such taxes and fees. This provision shall survive termination of this
Agreement.
SECTION 10.06. INTEGRATION. This Agreement and the Transaction Documents
contain the entire agreement between the parties relating to the subject matter
hereof and supersede all oral statements and prior writings with respect
thereto.
SECTION 10.07. INDEMNITY. The Company hereby covenants and agrees to protect,
indemnify and hold harmless the Purchaser and its directors, officers,
employees, solicitors, agents, affiliates, assignees, transferees and successors
in interest (individually, an "Indemnified Party" and, collectively, the
"Indemnified Parties") from and against all losses, claims, expenses, costs,
damages or liabilities, whether joint or several (including the aggregate amount
paid in reasonable settlement of any actions, suits, proceedings or claims)
which they may suffer or incur caused by or arising directly or indirectly by
reason of: (a) any information or statement (except any information or statement
relating solely to the Purchaser) contained in the Registration Statements being
or being alleged to be a misrepresentation; (b) the omission to state in the
Registration Statements, or any amendment to such document a material fact
required to be stated therein or necessary to make the statements therein not
misleading (except the omission to state a material fact relating solely to the
Purchaser); (c) the Company not complying with any requirement of any securities
legislation or regulatory requirements of any jurisdiction in which Purchasers
reside in connection with the Debenture, the Warrant and the Common Stock
underlying the Debenture and the Warrant; (d) any order made or any inquiry,
investigation or proceeding commenced or threatened by any regulatory authority
based upon an allegation that any untrue statement or alleged omission or any
misrepresentation or alleged misrepresentation in the Registration Statements or
any amendment to such document exists (except information and statements
relating solely to the Purchaser) which prevents or restricts the trading in of
the Common Stock under Canadian or US law; (e) the inaccuracy of any of the
Company's representations or warranties contained in any of the Transaction
Documents; and (e) the Company's failure to comply with any of its obligations
contained in any of the Transaction Documents.
If any action or claim shall be asserted against an Indemnified Party in respect
of which indemnity may be sought from the Company pursuant to the provisions
hereof, or if any potential claim contemplated by this section shall come to the
knowledge of an Indemnified Party, the Indemnified Party shall promptly notify
the Company in writing of the nature of such action or claim (provided that any
failure to so notify shall not affect the Company's liability under this
paragraph unless such delay has prejudiced the defense to such claim). The
Company shall be entitled but not obliged to participate in or assume the
defense thereof, provided, however that the defense shall be through legal
counsel acceptable to the Indemnified Party, acting reasonably. In addition,
the Indemnified Party shall also have the right to employ separate counsel in
any such action and participate in the defense thereof, and the fees and expense
of such counsel shall be borne by the Indemnified Party unless (i) the
employment thereof has been specifically authorized in writing by the Company;
(ii) the Indemnified Party has been advised by counsel acceptable to the
Company, acting reasonably, that representation of the Company and the
Indemnified Party by the same counsel would be inappropriate due to actual or
potential differing interests between them; or (iii) the Company has failed
within a reasonable time after receipt of such written notice to assume the
defense of such action or claim. It is understood and agreed that the Company
shall not, in connection with any suit in the same jurisdiction, be liable for
the legal fees and expenses of more than one separate legal firm to represent
the Indemnified Parties. Neither party shall effect any settlement of any such
action or claim or make any admission of liability without the written consent
of the other party, such consent not to be unreasonably withheld or delayed.
The indemnity hereby provided for shall remain in full force and effect and
shall not be limited to or affected by any other indemnity in respect of any
matters specified in this section obtained by the Indemnified Party from any
other person.
To the extent that any Indemnified Party is not a party to this Agreement, the
Purchaser shall obtain and hold the right and benefit of this section in trust
for and on behalf of such Indemnified Party. The Company hereby waives its
right to recover contribution from the Purchaser with respect to any liability
of the Company by reason of or arising out of any misrepresentation contained in
<PAGE>
any Registration Statement or any amendment thereto; provided, however, that
such waiver shall not apply in respect of liability caused or incurred by reason
of or arising out of any misrepresentation which is based upon or results from
information relating solely to the Purchaser contained in such document.
The Company hereby consents to personal jurisdiction and service and venue
in any court in which any claim which is subject to indemnification hereunder is
brought against the Purchaser or any Indemnified Party and to the assignment of
the benefit of this section to any Indemnified Party for the purpose of
enforcement provided that nothing herein shall limit the Company's right or
ability to contest the appropriate jurisdiction or forum for the determination
of any such claims.
SECTION 10.08 GOVERNING LAW; JURISDICTION. This Agreement and the Debenture
shall be governed by, and construed in accordance with, the laws of the State of
Delaware. The courts of the State of Delaware, shall have exclusive jurisdiction
and venue for the adjudication of any civil action between them arising out of
relating to this Agreement, and hereby irrevocably consent to such jurisdiction
and venue.
SECTION 10.09. SEVERABILITY OF PROVISIONS. Any provision of any Transaction
Document which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of such
Transaction Document or affecting the validity or enforceability of such
provision in any other jurisdiction.
SECTION 10.10. HEADINGS. Article and Section headings in the Transaction
Documents are included in such Transaction Documents for the convenience of
reference only and shall not constitute a part of the applicable Transaction
Documents for any other purpose.
SECTION 10.11. CURRENCY. Unless otherwise specifically stated to the
contrary, all currency and dollar amounts stated herein is currency of the
United States of America.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective officers thereunto duly authorized, as of the date first above
written.
THE COMPANY: THE PURCHASER:
EFINANCIAL DEPOT.COM, INC. OXFORD CAPITAL CORP.
By /s/ John Huguet By /s/ Riaz Mamdani
------------------ -----------------
Chairman and CEO Chief Financial Officer
Date signed: January , 2000. Dated signed: January , 2000.
<PAGE>
Exhibit A - Page 1
EXHIBIT A
FORM OF DEBENTURE
<PAGE>
Exhibit B - Page 1
EXHIBIT B
FORM OF WARRANT
<PAGE>
Exhibit C - Page 1
EXHIBIT C
FORM OF REGISTRATION RIGHTS AGREEMENT
<PAGE>
Exhibit D - Page 1
EXHIBIT D
FORM OF ESCROW AGREEMENT
<PAGE>
Exhibit E - Page 1
EXHIBIT E
FORM OF LEGAL OPINION
OF COMPANY'S COUNSEL
THESE SECURITIES SUBJECT TO THIS ESCROW AGREEMENT HAVE NOT BEEN REGISTERED
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WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
- --------------------------------------------------------------------------------
COMMISSION OF ANY STATE. THE SECURITIES HAVE BEEN OFFERED PURSUANT TO A SAFE
- --------------------------------------------------------------------------------
HARBOR FROM REGISTRATION UNDER REGULATION S PROMULGATED UNDER THE SECURITIES ACT
- --------------------------------------------------------------------------------
OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES ARE "RESTRICTED" AND MAY NOT BE
- --------------------------------------------------------------------------------
OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS (AS SUCH TERM IS DEFINED
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IN REGULATION S PROMULGATED UNDER THE ACT) UNLESS THE SECURITIES ARE REGISTERED
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UNDER THE ACT, PURSUANT TO REGULATION S OR PURSUANT TO AVAILABLE EXEMPTIONS FROM
- --------------------------------------------------------------------------------
THE REGISTRATION REQUIREMENTS OF THE ACT AND THE COMPANY IS PROVIDED WITH
- --------------------------------------------------------------------------------
OPINION OF COUNSEL OR OTHER SUCH INFORMATION AS IT MAY REASONABLY REQUIRE TO
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CONFIRM THAT SUCH EXEMPTIONS ARE AVAILABLE. FURTHER, HEDGING TRANSACTIONS
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INVOLVING THE SECURITIES MAY BE MADE ONLY IN COMPLIANCE WITH THE ACT.
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ESCROW AGREEMENT
This Escrow Agreement is effective the 2nd day of February, 2000 by and
among EFINANCIAL DEPOT.COM, INC. (the "Company") and OXFORD CAPITAL CORP. (the
"Escrow Agent").
1. Escrow
------
The Company will be filing a registration statement under the United States
Securities Act of 1933, as amended (the "Act") relating to the Company shares of
Common Stock issuable in accordance with a Debenture Purchase Agreement (the
"Agreement") dated February 2, 2000 between the Company and the Escrow Agent.
As security for the $2,500,000 debenture (the "Debenture"), the shares
underlying the Warrant to purchase 250,000 common shares in the capital stock of
the Company (the "Warrant") issuable by the Company and the shares underlying
the Placement Agents Warrant to purchase 50,000 common shares in the capital
stock of the Company (the "Agents Warrant") pursuant to the Agreement, the
Company hereby agrees to place with the Escrow Agent 500,000 shares in the
Capital Stock of the Company.
For convenience one total share certificate in the amount of 500,000 shares in
the Common Stock of Company have been issued to the Escrow Agent in the name of
the Escrow Agent (the "Security Shares").
<PAGE>
2. Release of the Security Shares
----------------------------------
The Escrow Agent shall release the Security Shares from Escrow as follows:
(a) Upon any conversion of the Debenture, a copy of the Conversion
Notice attached hereto shall be promptly faxed to the Company by the Escrow
Agent simultaneously as it is sent by overnight courier service to the Company.
Unless the Escrow Agent receives a written objection sent by facsimile within 5
business days of sending the fax to the Company provided for in the immediately
preceding sentence and the Company takes the action provided for in Section 6
hereof within five business days, that number of Security Shares equivalent to
the number of shares issuable upon conversion of the Debenture as set forth in
the Conversion Notice shall be released by the Escrow Agent.
(b) Upon any exercise of the Warrants or the Agents Warrant, a copy of
the Exercise Form attached hereto and evidence of payment for the Warrants or
Agents Warrant being exercised shall be promptly faxed by the Escrow Agent
simultaneously as such Exercise Form and payment is sent by overnight courier
service to the Company. Unless the Escrow Agent receives a written objection
sent by facsimile within forty-eight hours of sending the fax to the Company
provided for in the immediately preceding sentence and the Company takes the
action provided for in Section 6 hereof within 5 business days, that number of
Security Shares equivalent to the number of shares issuable upon exercise of the
Warrant as set forth in the Exercise Form shall be released by the Escrow Agent.
(c) upon any event of default under the terms of the Agreement or the
Debenture then a notice of default shall be sent to the Escrow Agent and the
Company. Unless the Escrow Agent receives a written objection sent by facsimile
within forty-eight hours of sending the fax to the Company provided for in the
immediately preceding sentence and the Company takes the action provided for in
Section 6 hereof within 5 business days then all the Security Shares shall be
released by the Escrow Agent.
(d) If prior to the conversion of a Debenture or the exercise of the
Warrants, such securities have been transferred, then:
(i) the transferee shall become a party to this Escrow Agreement by
executing an amended thereto reasonably acceptable to the Company and the Escrow
Agent;
<PAGE>
(ii) the transfer must comply with the terms of the respective security and
with the terms and conditions of the Agreement between the Company and the
Escrow Agent, dated February 2, 2000 and further, any exercise of the Warrants
must be in strict compliance with their respective terms; and
(iii) upon conversion of the Debenture, the Conversion Notice and upon
exercise of the Warrants, the Exercise Form and the payment shall be delivered
to the Escrow Agent and the Escrow Agent shall then promptly comply with
Section 2(a), (b), (c) or (d) as is applicable.
3. Dividends and Other Distributions
------------------------------------
As long as any Security Shares are held in Escrow pursuant to this
Agreement, then no dividends or other distributions shall be payable with
respect to such Security Shares. However, any shares of Common Stock resulting
from a stock split, reverse stock split or stock dividend which would be
receivable upon conversion of the Debenture or exercise of the Warrants or
Agents Warrants shall be placed in Escrow.
4. Voting Rights
--------------
During the term of this Agreement, and so long as any of the Security
Shares are in Escrow, no one may vote the Security Shares on any matter.
5. Payment of the Debenture and Expiration of the Warrants
---------------------------------------------------------------
Upon the payment in full or conversion of all of the Debenture as evidenced
in writing signed by the Company and the then holder of the Debenture, and upon
the expiration or exercise in full of the Warrants or Agents Warrants, the
Escrow Agent shall release all the remaining Security Shares relating to such
Debenture and have the Security Shares transferred into the name of the Company.
6. Objections
----------
(a) If the Company shall notify by fax the Escrow Agent that it has any
objections to releasing any of the Security Shares pursuant to Section 2 hereof,
the Company shall also within the 5 business days provided for in Sections 2(a),
(b) or (c), as the case may be also deliver to the Escrow Agent (i) a
Certificate signed by an Officer of the Company setting forth the reasons for
the objection, (ii) an opinion from the counsel to the Company, Clark, Wilson,
Barristers & Solicitors, that the conversion or the exercise, as the case may
be, would violate either the United States Securities Act of 1933, as amended,
or the United States Securities Exchange Act of 1934, as amended or some other
law applicable to the objection, and an indemnity bond from a person licensed to
issue such bonds in the State of Delaware, in an amount equal to the number of
Security Shares being objected to being released from Escrow time Two Hundred
Percent of the average closing bid price of the Common Stock of the Company on
the principal market for such Common Stock for the three (3) trading days
immediately preceding the date of the Conversion Notice or the Exercise Form, as
the case may, with such bond lasting until the dispute is settled by agreement
<PAGE>
of the parties thereto or a final action of a court of competent jurisdiction
without the right to appeal or the expiration of the right to appeal.
(b) If the Escrow Agent does NOT receive within 5 business days all of
the originally signed documents and bond provided for in Section 6(a) hereof, it
shall at the end of 5 business days, release the Security Shares in question as
requested in the respective Conversion Notice or Exercise Form.
(c) If the Escrow Agent does receive within 5 business days all of
the original signed documents and bond provided for in Section 6(a) hereof, it
shall at the end of such 5 business days, if the objection has not be withdrawn
or the parties to the Debenture and the Warrants otherwise agree, surrender the
Security Shares in question to an appropriate court in the State of Delaware and
submit the issue to the court to resolve in the nature of an interpleader
action.
7. Escrow Agent
-------------
The Escrow Agent, when acting as the Escrow Agent, shall not be liable for
any action taken or omitted by it in good faith, and believed by it to be
authorized or within the rights or powers conferred upon it by this Escrow
Agreement, and may rely and shall be protected in acting or refraining from
acting in reliance upon any notice or certificate, instrument, request, paper or
other documents believed by it to be genuine and made, sent, signed or presented
by the proper party or parties. The Escrow Agent, when acting as Escrow Agent,
shall not be liable for anything it does or may not do as Escrow Agent under
this Agreement, except for its own gross negligence, willful misconduct.
The Escrow Agent shall not be responsible for the validity or sufficiency
of any stock certificate or other instru-ment evidencing any security delivered
to it pursuant hereto, or for the identity or authority of any person delivering
any such certificate or other instrument to it.
Until the Escrow Agent shall receive from some person interested in this
Agreement written notice of any event upon which the right to receive any
release, distribution or payment may depend, it shall incur no liability for
actions taken in good faith.
<PAGE>
The Escrow Agent shall not be obligated to take any action to enforce this
Agreement, or to appear in, prose-cute or defend any action or legal proceeding
or to file any income or other tax return if any such action, in its opinion,
would or might involve cost, expense, loss or liability unless, and as often as
required by it, it shall be furnished with security and an indemnity
satisfactory to it from the Company against all such cost, expense, loss or
liability.
The Escrow Agent shall not be responsible for the validity of any provision
of this Agreement or for the execution thereof by any other party, or for the
truth of any recitals or other statements of fact herein contained. The Escrow
Agent shall be considered as a fiduciary under this Agreement and is not
required or entitled to act in any capacity hereunder other than as a Escrow
Agent.
8. Notices
-------
Except as otherwise provided herein, all notices, instructions or other
communications required or permitted hereunder shall be in writing and sent by
registered mail, postage prepaid, addressed as follows:
If to the Company:
Efinancial Depot.Com, Inc. If to the Purchaser:
150-1875 Century Park East; Oxford Capital Corp.
Century City California C/o 1013-17th Avenue S.W.
90067 Calgary, Alberta
T2T 0A7
Attention: John Huguet Ph: (403) 508-5055
Fax: (403) 508-5055
With a copy that does not With a copy that does not
constitute notice to: constitute notice to:
Clark,Wilson, Barristers & Solicitors Ian H. Kennedy
800-885 W.Georgia St. Barrister & Solicitor
Vancouver,Canada 1013 - 17th Avenue S.W.
V6C 3H1 Calgary, Alberta
Attention: David Cowan T2T OA7
Tel: (604) 643-3178 Tel: (403) 508-5055
Fax: (604) 687-6314 Fax: (403) 508-5058
or such other address, telephone numbers or contact persons as shall be
furnished in writing by such party to the other parties hereto. Any such
notice, instruction or communication shall be deemed to have been given three
(3) business days after the date mailed by registered mail or if sent by fax,
upon electronic confirmation or receipt.
<PAGE>
9. Deliveries
----------
The Escrow Agent shall make the deliveries of the Security Shares pursuant
to this Agreement at the addresses set forth herein, by overnight deliver
service with the ability to trace the delivery or through the Depository Trust
Company accounts.
10. Successors and Assigns
------------------------
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns.
11. Choice of Law and Venue.
---------------------------
This Agreement shall be governed by and construed under the laws of the
State of Delaware, without regard to choice of laws in force from time to time.
Any proceeding arising out of this Agreement shall be brought in the State of
Delaware, U.S.A.
12. Counterparts
------------
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original.
13. Attorneys' Fees
----------------
If an action is brought to enforce the terms and provisions of this
Agreement, the prevailing party in said action shall be entitled to reasonable
attorneys' fees and costs of suit.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.
The Company: EFINANCIAL DEPOT.COM, INC.
By: /s/ John Huguet
-----------------
President and CEO
Escrow Agent: OXFORD CAPITAL CORP.
By: /s/ Riaz Mamdani
------------------
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement"), is made and entered into
as of February 2, 2000 (the "Closing Date"), by and among EFINANCIAL DEPOT.COM,
INC. a Delaware corporation (the "Company"), and OXFORD CAPITAL CORP., a Cayman
Island corporation, as investor (the "Investor"). Capitalized terms used in this
Agreement and not otherwise defined herein shall have the meanings ascribed to
them in the Debenture Purchase Agreement and the Purchaser Warrants as described
below.
BACKGROUND
The Company has agreed, upon the terms and subject to the conditions of the
Debenture Purchase Agreement, to issue and sell to the Investor a 6% convertible
debenture in the principle amount of $2,500,000 USD, due February 2, 2003 (the
"Debenture"), a warrant (the "Purchaser Warrant") to purchase 250,000 shares in
the Common Stock of the Company at a price of $5.00 USD per share, exercisable
on or before February 2, 2002, and a placement agents warrant (the "Agents
Warrant") to purchase 50,000 shares of the Common Stock at an exercise price of
$5.00 per share on the later of (i) February 2, 2001 or (ii) the twelve month
anniversary date of the effective registration of the Agent Shares. The
Debenture, the Warrant and the Agents Warrant are hereinafter collectively
referred to as the "Purchased Securities." The Debenture is convertible into
shares of the Company's common stock at a conversion price equal to the the
lesser of (i) 80% of the 5 day average closing bid price of the common stock
prior to the Conversion Date or (ii) $5.00; in no event shall the conversion
price be less than $3.00. The Common Stock issuable upon conversion of the
Debenture is hereinafter called the "Debenture Shares," and the Common Stock
issuable upon exercise of the Warrant is hereinafter called the "Warrant
Shares,"and the Common Stock issuable upon exercise of the Agents Warrant is
hereinafter called the "Agent Shares." To induce Investor to purchase Debenture,
the Company has agreed to file a Registration Statement covering the Debenture
Shares, the Warrant Shares and the Agent Shares under the Securities Act of
1933, as amended, and the rules and regulations thereunder, or any similar
successor statute (collectively, the "1933 Act"), and applicable state
securities laws.
AGREEMENT
For and 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, the Company and the Investor hereby agree as
follows:
SECTION 1. DEFINITIONS.
As used in this Agreement, the following capitalized terms are used with
the meanings hereinafter described:
(a) "INVESTOR" means Oxford Capital Corp. and any transferee or
assignee thereof to whom the Investor assigns its rights under this Agreement
and who agrees to become bound by the provisions of this Agreement in accordance
with Section 9.
(b) "PERSON" means a corporation, a limited liability company, an
association, a partnership, an organization, a business, an individual, a
governmental or political subdivision thereof, or a governmental agency.
(c) "REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration
effected by preparing and filing one or more Registration Statements in
compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any
successor rule providing for offering securities on a continuous basis ("Rule
415"), and the declaration or ordering of effectiveness of such Registration
Statement(s) by the United States Securities and Exchange Commission (the
"SEC").
<PAGE>
(d) "REGISTRABLE SECURITIES" means the Debenture, the Warrant, the Agents
Warrant and any shares of capital stock issued or issuable with respect to the
Debenture Shares, the Warrant Shares, or the Agent Shares including those shares
registrable as a result of any stock split, stock dividend, recapitalization,
exchange, or similar event.
(e) "REGISTRATION STATEMENT" means a registration statement of the Company
filed under the 1933 Act.
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings set forth in the Debenture Purchase Agreement.
SECTION 2. REGISTRATION.
(a) MANDATORY REGISTRATION. The Company shall prepare and file with
the SEC a Registration Statement or Registration Statements (as are necessary)
in such form as is available for such a registration, covering the issuance (and
resale, if required by the SEC as a condition of effectiveness) of 200% of the
Debenture Shares and 100% of both the Warrant Shares and Agent Shares, by March
31, 2000 (the "Filing Deadline"). The Company shall have the Registration
Statement declared effective by the SEC by May 31, 2000 (the "Registration
Deadline"). The Company shall permit the registration statement to become
effective within five (5) business days after receipt of a "no review" notice
from the SEC. Such Registration Statement shall be kept current and effective
for a period thirty (30) days following the last to occur of (i) the day on
which the all of the Debenture have been fully converted or paid, and (ii) the
Warrant expires or becomes fully exercised. If a Registration Statement with
respect to the Registrable Securities is not effective on the Registration
Deadline date, the Company agrees to and shall pay liquidated damages to the
Investor in an amount equal to 2% per every 30 day period of the principal
amount of the Debenture until the Registration Statement is effective, or pro
rata portion thereof.
(b) UNDERWRITTEN OFFERING. If any offering pursuant to a Registration
Statement in accordance with Section 2(a), involves an underwritten offering,
the Investor shall have the right to select one legal counsel and an investment
banker or bankers and manager or managers to administer their interest in the
offering, which investment banker or bankers or manager or managers shall be
reasonably satisfactory to the Company.
(c) PIGGY-BACK REGISTRATIONS. If at any time prior to the expiration of the
Registration Deadline (as defined above) the Company proposes to file with the
SEC a Registration Statement relating to an offering for its own account or the
account of others under the 1933 Act, of any of its securities (other than on
Form S-4 or Form S-8 or their then equivalents relating to securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans) the Company shall promptly send to the Investor, who is entitled
to registration rights under Section 2(a) written notice of the Company's
intention to file a Registration Statement and of the Investor's rights under
this Section 2(c) and, if within twenty (20) days after receipt of such notice,
the Investor shall so request in writing, the Company shall include in such
Registration Statement all or any part of the Registrable Securities the
Investor requests to be registered. No right to registration of Registrable
Securities under this Section 2(c) shall be construed to limit any registration
required under Section 2(a). The obligations of the Company under this Section
2(c) may be waived by the Investor. If the offering in connection with which
the Investor is entitled to registration under this Section 2(c) is an
underwritten offering, then the Investor whose Registrable Securities are
included in such Registration Statement shall, unless otherwise agreed by the
Company, offer and sell such Registrable Securities in an underwritten offering
using the same underwriter or underwriters and, subject to the provisions of
this Agreement, on the same terms and conditions as other shares of Common Stock
included in such underwritten offering.
SECTION 3. RELATED OBLIGATIONS.
Whenever the Investor has requested that any Registrable Securities be
registered pursuant to Section 2(c), or at such time as the Company is obligated
<PAGE>
to file a Registration Statement with the SEC pursuant to Section 2(a), the
Company will use its best efforts to effect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof and,
pursuant thereto, the Company shall have the following obligations:
(a) The Company shall promptly prepare and file with the SEC a
Registration Statement with respect to the Registrable Securities (on or prior
to the Registration Deadline), for the registration of Registrable Securities
pursuant to Section 2(a) and use its best efforts to cause such Registration
Statement(s) relating to Registrable Securities to become effective as soon as
possible after such filing and in any event by the Registration Deadline, and
keep the Registration Statement(s) effective pursuant to Rule 415 at all times
until the later of (i) the date as of which the Investor may sell all of the
Registrable Securities without restriction pursuant to Rule 144(k) promulgated
under the 1933 Act (or successor thereto) or (ii) the date on which (A) the
Investor shall have sold all the Registrable Securities and (B) none of the
Debenture are outstanding (both (A) and (B) together defined as the
"Registration Period"), which Registration Statement(s) (including any
amendments or supplements thereto and prospectuses contained therein) shall not
contain any untrue statement of a material fact or omit to state 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.
(b) The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement(s) and the prospectus(es) used in connection with the Registration
Statement(s), which prospectus(es) are to be filed pursuant to Rule 424
promulgated under the 1933 Act, as may be necessary to keep the Registration
Statement(s) effective at all times during the Registration Period, and, during
such period, comply with the provisions of the 1933 Act with respect to the
disposition of all Registrable Securities of the Company covered by the
Registration Statement(s) until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in the Registration
Statement(s). In the event the number of shares available under a Registration
Statement filed pursuant to this Agreement is insufficient to cover all of the
Registrable Securities, the Company shall amend the Registration Statement, or
file a new Registration Statement (on the short form available therefor, if
applicable), or both, so as to cover all of the Registrable Securities, in each
case, as soon as practicable, but in any event within fifteen (15) days after
the necessity therefor arises (based on the market price of the Common Stock and
other relevant factors on which the Company reasonably elects to rely). The
Company shall use its best efforts to cause such amendment and/or new
Registration Statement to become effective as soon as practicable following the
filing thereof. For purposes of determining the sufficiency of the shares
available under a Registration Statement, any restrictions on the convertibility
of the Debenture or exercise of the Warrant shall be disregarded and such
calculation shall assume that the Debenture are then convertible into shares of
Common Stock at the then prevailing Conversion Price (as defined in the
Debenture) and that the Warrant are exercised at the then current exercise
price.
(c) The Company shall furnish to the Investor whose Registrable
Securities are included in the Registration Statement(s) and its legal counsel,
without charge, (i) promptly after the same is prepared and filed with the SEC
at least one copy of the Registration Statement and any amendment thereto,
including financial statements and schedules, all documents incorporated therein
by reference, and all exhibits, the prospectus(es) included in such Registration
Statement(s) (including each preliminary prospectus) and all correspondence by
or on behalf of the Company to the SEC or the staff of the SEC and all
correspondence from the SEC or the staff of the SEC to the Company or its
representatives, related to such Registration Statement(s), (ii) upon the
effectiveness of any Registration Statement, ten (10) copies of the prospectus
included in such Registration Statement and all amendments and supplements
thereto (or such other number of copies as such Investor may reasonably
request), and (iii) such other documents, including any preliminary prospectus,
as the Investor may reasonably request in order to facilitate the disposition of
the Registrable Securities owned by such Investor.
(d) The Company shall use reasonable efforts to (i) register and
qualify the Registrable Securities covered by the Registration Statement(s)
<PAGE>
under such other securities or "blue sky" laws of such jurisdictions in the
United States as any Investor reasonably requests, (ii) prepare and file in
those jurisdictions, such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; PROVIDED HOWEVER, that
the Company shall not be required in connection therewith or as a condition
thereto to (A) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d) hereof, (B) subject
itself to general taxation in any such jurisdiction, or (C) file a general
consent to service of process in any such jurisdiction. The Company shall
promptly notify the Investor who holds Registrable Securities of the receipt by
the Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for sale
under the securities or "blue sky" laws of any jurisdiction in the United States
or its receipt of actual notice of the initiation or threatening of any
proceeding for such purpose.
(e) As promptly as practicable after becoming aware of the above events, the
Company shall notify the Investor in writing of the happening of any event, of
which the Company has knowledge, as a result of which, the prospectus included
in a Registration Statement, as then in effect, includes an untrue statement of
a material fact or omission to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and promptly prepare a
supplement or amendment to the Registration Statement to correct such untrue
statement or omission, and deliver ten (10) copies of such supplement or
amendment to the Investor (or such other number of copies as such Investor may
reasonably request). The Company shall also promptly notify the Investor in
writing (i) when a prospectus or any prospectus supplement or post-effective
amendment has been filed, and when a Registration Statement or any
post-effective amendment has become effective (notification of such
effectiveness shall be delivered to the Investor by facsimile on the same day of
such effectiveness and by overnight mail), (ii) of any request by the SEC for
amendments or supplements to a Registration Statement or related prospectus or
related information, and (iii) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate.
(e) The Company shall use its best efforts to prevent the issuance of any
stop order or other suspension of effectiveness of a Registration Statement, or
the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction and, if such an order or suspension is issued, to
obtain the withdrawal of such order or suspension at the earliest possible
moment, and to notify the Investor who holds Registrable Securities being sold
(and, in the event of an underwritten offering, the managing underwriters) of
the issuance of such order and the resolution thereof, or its receipt of actual
notice of the initiation, or threatened initiation of any proceeding for such
purpose.
(f) The Company shall permit the Investor a single firm of counsel, to
review and comment upon the Registration Statement(s) and all amendments and
supplements thereto at least seven (7) days prior to their filing with the SEC,
and not file any document in a form to which such counsel reasonably objects.
The Company shall not submit a request for acceleration of the effectiveness of
a Registration Statement(s) or any amendment or supplement thereto without the
prior approval of such counsel, which consent shall not be unreasonably
withheld.
(g) At the request of the Investor, the Company shall furnish, on the
date that Registrable Securities are delivered to an underwriter, if any, for
sale in connection with the Registration Statement (i) if required by an
underwriter, a letter, dated such date, from the Company's independent certified
public accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, and (ii) an opinion, dated as of such date, of
counsel representing the Company for purposes of such Registration Statement, in
form, scope, and substance as is customarily given in an underwritten public
offering, addressed to the underwriters and the Investor.
<PAGE>
(h) The Company shall make available for inspection by (i) the Investor,
(ii) any underwriter participating in any disposition pursuant to a Registration
Statement, (iii) one firm of attorneys and one firm of accountants retained by
the Investor, and (iv) one firm of attorneys retained by all such underwriters
(collectively, the "Inspectors") all pertinent financial and other records, and
pertinent corporate documents and properties of the Company (collectively, the
"Records"), as shall be reasonably deemed necessary by each Inspector to enable
each Inspector to exercise its due diligence responsibility, and cause the
Company's officers, directors, and employees to supply all information which any
Inspector may reasonably request for purposes of such due diligence PROVIDED
HOWEVER, that each Inspector shall hold in strict confidence and shall not make
any disclosure (except to an Investor) or use of any Record or other information
which the Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (A) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement or is otherwise required under the 1933 Act, (B) the
release of such Records is ordered pursuant to a final, non-appealable subpoena
or order from a court or government body of competent jurisdiction, or (C) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement. The
Investor agrees that it shall, upon learning that disclosure of such Records is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to the Company and allow the Company, at
its expense, to undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, the Records deemed confidential.
(i) The Company shall hold in confidence and not make any disclosure of
information concerning the Investor provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this or any other agreement.
The Company agrees that it shall, upon learning that disclosure of such
information concerning an Investor is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt written
notice to such Investor and allow such Investor, at the Investor's expense, to
undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, such information.
(j) The Company shall use its best efforts either to secure designation and
quotation of all the Registrable Securities covered by the Registration
Statement on the OTC BULLETIN BOARD, and to arrange for at least two market
makers to register with the National Association of Securities Dealers, Inc.
("NASD") as such with respect to such Registrable Securities. The Company shall
pay all fees and expenses in connection with satisfying its obligation under
this Section 3(1).
(k) The Company shall cooperate with the Investor and, to the extent
applicable, any managing underwriter or underwriters, to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive legend)
representing the Registrable Securities to be offered pursuant to a Registration
Statement and enable such certificates to be in such denominations or amounts,
as the case may be, as the managing underwriter or underwriters, if any, or, if
there is no managing underwriter or underwriters, the Investor may reasonably
request and registered in such names as the managing underwriter or
underwriters, if any, or the Investor may request. Not later than the date on
which any Registration Statement registering the resale of Registrable
Securities is declared effective, the Company shall deliver to its transfer
Investor instructions, accompanied by any reasonably required opinion of
counsel, that permit sales of unlegended securities in a timely fashion that
complies with then mandated securities settlement procedures for regular way
market transactions.
(l) The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by the Investor of Registrable Securities
pursuant to a Registration Statement.
<PAGE>
(m) The Company shall provide a transfer agent and registrar of all such
Registrable Securities not later than the effective date of such Registration
Statement.
(n) If requested by the managing underwriters or the Investor, the
Company shall immediately incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriters and the
Investor agrees should be included therein relating to the sale and distribution
of Registrable Securities, including, without limitation, information with
respect to the number of Registrable Securities being sold to such underwriters,
the purchase price being paid therefor by such underwriters, and with respect to
any other terms of the underwritten (or best efforts underwritten) offering of
the Registrable Securities to be sold in such offering; make all required
filings of such prospectus supplement or post-effective amendment as soon as
notified of the matters to be incorporated in such prospectus supplement or
post-effective amendment; and supplement or make amendments to any Registration
Statement if requested by a shareholder or any underwriter of such Registrable
Securities.
(o) The Company shall use its best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to consummate the disposition of such Registrable Securities.
(p) The Company shall otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC in connection with any registration
hereunder.
SECTION 4. OBLIGATIONS OF THE INVESTOR.
(a) At least seven (7) days prior to the first anticipated filing date
of the Registration Statement, the Company shall notify the Investor in writing
of the information the Company requires from the Investor if the Investor elects
to have any of the Investor's Registrable Securities included in the
Registration Statement. It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement with respect
to the Registrable Securities of the Investor that such Investor shall furnish
to the Company such information regarding itself, the Registrable Securities
held by it, and the intended method of disposition of the Registrable Securities
held by it as shall be reasonably required to effect the registration of such
Registrable Securities, and shall execute such documents in connection with such
registration as the Company may reasonably request.
(b) The Investor, by such Investor's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement(s) hereunder, unless such Investor has notified the Company in writing
of such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement.
(c) In the event the Investor is determined to engage the services of an
underwriter, the Investor agrees to enter into and perform the Investor's
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of the Registrable Securities, unless such Investor notifies the
Company in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement(s).
(d) The Investor agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 3(d), such Investor
will immediately discontinue disposition of Registrable Securities pursuant to
the Registration Statement(s) covering such Registrable Securities until the
Investor's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(e) and, if so directed by the Company, the Investor
shall deliver to the Company (at the expense of the Company) or destroy all
copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
<PAGE>
(e) The Investor may not participate in any underwritten registration
hereunder unless such Investor (i) agrees to sell the Investor's Registrable
Securities on the basis provided in any underwriting arrangements (ii) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements, and other documents reasonably required under the terms of such
underwriting arrangements, and (iii) agrees to pay its pro rata share of all
underwriting discounts and commissions.
SECTION 5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and commissions,
incurred in connection with registrations, filings, or qualifications pursuant
to Sections 2 and 3, including, without limitation, all registration, listing
and qualifications fees, printers and printing fees, accounting fees, fees and
disbursements of counsel for the Company and $1,000.00 USD of fees and
disbursements of one counsel for the Investor, shall be borne by the Company.
SECTION 6. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
(a) To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless, and defend the Investor who holds such
Registrable Securities, the directors, officers, partners, employees, and each
Person, if any, who controls the Investor within the meaning of the 1933 Act or
the Securities Exchange Act of 1934, as amended (the "1934 Act"), and any
underwriter (as defined in the 1933 Act) for the Investor, and the directors and
officers of, and each Person, if any, who controls, any such underwriter within
the meaning of the 1933 Act or the 1934 Act (each, an "Indemnified Person"),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, attorneys' fees, amounts paid in settlement or expenses, joint
or several (collectively, "Claims") incurred in investigating, preparing, or
defending any action, claim, suit, inquiry, proceeding, investigation, or appeal
taken from the foregoing by or before any court or governmental, administrative,
or other regulatory agency, body or the SEC, whether pending or threatened,
whether or not an indemnified party is or may be a party thereto ("Indemnified
Damages"), to which any of them may become subject insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon: (i) any untrue statement or alleged untrue
statement of a material fact in a Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the qualification of
the offering under the securities or other "blue sky" laws of any jurisdiction
in which Registrable Securities are offered ("Blue Sky Filing"), or the omission
or alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which the statements therein were made, not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, or, (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, "Violations"). Subject to the
restrictions set forth in Section 6(d) with respect to the number of legal
counsel, the Company shall reimburse the Investor and each such underwriter or
controlling person, promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a): (i) shall not apply to a Claim arising out of
or based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by any Indemnified Person or
underwriter for such Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment thereof or
supplement thereto, if such prospectus was timely made available by the Company
pursuant to Section 3(c); (ii) with respect to any preliminary prospectus, shall
not inure to the benefit of any such person from whom the person asserting any
such Claim purchased the Registrable Securities that are the subject thereof (or
to the benefit of any person controlling such person) if the untrue statement or
<PAGE>
mission of material fact contained in the preliminary prospectus was corrected
in the prospectus, as then amended or supplemented, if such prospectus was
timely made available by the Company pursuant to Section 3(c), and the
Indemnified Person was promptly advised in writing not to use the incorrect
prospectus prior to the use giving rise to a violation and such Indemnified
Person, notwithstanding such advice, used (iii) shall not be available to the
extent such Claim is based on a failure of the Investor to deliver or to cause
to be delivered the prospectus made available by the Company, and (iv) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified Person
and shall survive the transfer of the Registrable Securities by the Investor
pursuant to Section 9.
(b) In connection with any Registration Statement in which an Investor is
participating, each such Investor agrees to severally and not jointly indemnify,
hold harmless and defend, to the same extent and in the same manner as is set
forth in Section 6(a), the Company, each of its directors, each of its officers
who signs the Registration Statement, each Person, if any, who controls the
Company within the meaning of the 1933 Act or the 1934 Act (collectively and
together with an Indemnified Person, an "Indemnified Party"), against any Claim
or Indemnified Damages to which any of them may become subject, under the 1933
Act, the 1934 Act, or otherwise, insofar as such Claim or Indemnified Damages
arise out of or are based upon any Violation, in each case to the extent, and
only to the extent, that such Violation occurs in reliance upon and in
conformity with written information furnished to the Company by such Investor
expressly for use in connection with such Registration Statement; and, subject
to Section 6(d), such Investor will reimburse any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such Claim; provided howEVER, that the indemnity agreement contained in this
Section 6(b) and Section 7 shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of such
Investor, which consent shall not be unreasonably withheld; provided further
however, that the Investor shall be liable under this Section 6(b) for only that
amount of a Claim or Indemnified Damages as does not exceed the net proceeds to
such Investor as a result of the sale of Registrable Securities pursuant to such
Registration Statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified Party
and shall survive the transfer of the Registrable Securities by the Investor
pursuant to Section 9. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(b) with
respect to any preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact contained
in the preliminary prospectus was corrected on a timely basis in the prospectus,
as then amended or supplemented.
(c) The Company shall be entitled to receive indemnities from underwriters,
selling brokers, dealer managers, and similar securities industry professionals
participating in any distribution, to the same extent as provided above, with
respect to information such persons so furnished in writing expressly for
inclusion in the Registration Statement.
(d) Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving a Claim such
Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is
to be made against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided howEVER, that an Indemnified
Person or Indemnified Party shall have the right to retain its own counsel with
the fees and expenses to be paid by the indemnifying party, if, in the
reasonable opinion of counsel retained by the indemnifying party, the
<PAGE>
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding. The Company shall
pay reasonable fees for only one separate legal counsel for the Investor, and
such legal counsel shall be selected by the Investor holding a majority in
interest of the Registrable Securities included in the Registration Statement to
which the Claim relates. The Indemnified Party or Indemnified Person shall
cooperate fully with the indemnifying party in connection with any negotiation
or defense of any such action or claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action or claim.
The indemnifying party shall keep the Indemnified Party or Indemnified Person
fully apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. No indemnifying party shall be liable for
any settlement of any action, claim or proceeding effected without its written
consent, provided however, that the indemnifying party shall not unreasonably
withhold, delay or condition its consent. No indemnifying party shall, without
the consent of the Indemnified Party or Indemnified Person, consent to entry of
any judgment or enter into any settlement or other compromise which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party or Indemnified Person of a release from all liability
in respect to such claim or litigation. Following indemnification as provided
for hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties,
firms, or corporations relating to the matter for which indemnification has been
made. The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party under this Section 6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.
(e) The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or Indemnified Damages are incurred.
(f) The indemnity agreements contained herein shall be in addition to (i)
any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.
SECTION 7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; PROVIDED HOWEVER, that: (i) no
contribution shall be made under circumstances where the maker would not have
been liable for indemnification under the fault standards set forth in Section
6; (ii) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any seller of Registrable Securities who was not
guilty of fraudulent misrepresentation, and (iii) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.
SECTION 8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investor the benefits of Rule 144
promulgated under the 1933 Act or any other similar rule or regulation of the
SEC that may at any time permit the Investor to sell securities of the Company
to the public without registration ("Rule 144"), the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the 1933 Act and the 1934 Act so long as the
Company remains subject to such requirements (it being understood that nothing
herein shall limit the Company's obligations under Section 4.5 of the Debenture
Purchase Agreement) and the filing of such reports and other documents is
required for the applicable provisions of Rule 144; and
<PAGE>
(c) furnish to the Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the 1933 Act, and
the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested to permit the Investor to
sell such securities pursuant to Rule 144 without registration.
SECTION 9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights to have the Company register Registrable Securities pursuant to
this Agreement shall be automatically assignable by the Investor to any
transferee of all or any portion of the Debenture, the Warrant, or the
Registrable Securities if: (i) the Investor agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company within a reasonable time after such assignment; (ii)
the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (A) the name and address of such transferee or
assignee, and (B) the securities with respect to which such registration rights
are being transferred or assigned; (iii) immediately following such transfer or
assignment the further disposition of such securities by the transferee or
assignee is restricted under the 1933 Act and applicable state securities laws;
(iv) at or before the time the Company receives the written notice contemplated
by clause (ii) of this sentence the transferee or assignee agrees in writing
with the Company to be bound by all of the provisions contained herein; (v) such
transfer shall have been made in accordance with the applicable requirements of
the Debenture Purchase Agreement; (vi) such transferee shall be an "accredited
investor" as that term is defined in Rule 501 of Regulation D promulgated under
the 1933 Act; and (vii) in the event the assignment occurs subsequent to the
date of effectiveness of the Registration Statement required to be filed
pursuant to Section 2(a), the transferee agrees to pay all reasonable expenses
of amending or supplementing such Registration Statement to reflect such
assignment.
SECTION 10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or prospectively), only with the written consent of the Company and the
Investor. Any amendment or waiver effected in accordance with this Section 10
shall be binding upon the Investor and the Company.
SECTION 11. MISCELLANEOUS.
(a) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices, or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice, or election received from the registered owner of such Registrable
Securities.
(b) Any notices consents, waivers, or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile, provided a copy is mailed
by U.S. certified mail, return receipt requested; (iii) three (3) days after
being sent by U.S. certified mail, return receipt requested, or (iv) one (1) day
after deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
if to the Investor:
If to the Company:. . . . . . . . . . Oxford Capital Corp.
C/o 1013 - 17th Avenue S.W.
Efinancial Depot.Com, Inc.. . . . . . Calgary, Alberta, Canada
150-1875 Century Park East; . . . . . T2T OA7
Century City California . . . . . . . Attention: Riaz Mamdani
90067 . . . . . . . . . . . . . . . . Telephone: (403) 508-5055
Facsimile: (403) 508-5058
With a copy that does not
constitute notice to:. . . . . . with a copy (which shall not constitute notice) to:
Clark,Wilson, Barristers & Solicitors Ian H. Kennedy.
800-885 W.Georgia St. . . . . . . . . Barrister & Solicitor
Vancouver,Canada. . . . . . . . . . . 1013-17th Avenue S.W.,
V6C 3H1 . . . . . . . . . . . . . . . Calgary, Alberta
Attention: David Cowan. . . . . . . . T2T 0A7
Tel: (604) 643-3178 . . . . . . . . . Telephone: (403) 244-0621
Fax: (604) 687-6314 . . . . . . . . . Facsimile: (403) 209-6125
- ------------------------------------- ---------------------------------------------------
</TABLE>
Each party shall provide five (5) day's prior written notice to the other
party of any change in address or facsimile number.
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(d) This Agreement shall be governed by and interpreted in accordance with
the laws of the State of Florida; The parties agree that the courts of the State
of Florida, shall have exclusive jurisdiction and venue for the adjudication of
any civil action between them arising out of relating to this Agreement, and
hereby irrevocably consent to such jurisdiction and venue.
(e) This Agreement and the Debenture Purchase Agreement constitute the
entire agreement among the parties hereto with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties, or
undertakings, other than those set forth or referred to herein and therein.
This Agreement supersede all prior agreements and understandings among the
parties hereto with respect to the subject matter hereof.
(f) Subject to the requirements of Section 9, this Agreement shall
inure to the benefit and of and be binding upon the permitted successors and
assigns of each of the parties hereto.
(g) The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.
(h) This Agreement may be executed in two or more identical counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a copy of this
Agreement bearing the signature of the party so delivering this Agreement.
(i) 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
<PAGE>
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.
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
COMPANY:
EFINANCIAL DEPOT.COM, INC.
By: /s/ John Huguet
Name: John Huguet
Title: President
INVESTOR:
OXFORD CAPITAL CORP.
By: /s/ Riaz Mamdani
Name: Riaz Mamdani
Title: Chief Financial Officer
Form of Placement Agent Warrant Certificate
-------------------------------------------
THE SECURITIES EVIDENCED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"),
OR UNDER THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (II) TO THE
EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (III) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY IN FORM AND SUBSTANCE TO COUNSEL
TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
Void after 2:00 p.m., Los Angeles time, on the later of: (1) first anniversary
date of the effectiveness of the Registration Statement (as defined herein), or
(2) February 2, 2001 (the "Expiration Date").
Warrant to Purchase Shares of Common Stock
EFINANCIAL DEPOT.COM, INC.
COMMON STOCK PURCHASE WARRANT CERTIFICATE
50,000 WARRANTS
This is to Certify that, FOR VALUE RECEIVED, Oxford Capital Corp., or
assigns (the "Holder"), is entitled to purchase, subject to the provisions of
this Warrant, from EFINANCIAL DEPOT.COM, INC. ("Company"), 50,000 of the fully
paid, validly issued and nonassessable shares of common stock, par value $.001
per share, of the Company ("Common Stock") at any time or from time to time
during the period from the date hereof, through and including the later of
February 2, 2001 and the 12 month anniversary of the effective time of the
registration of the shares underlying this Warrant (the "Expiration Date"), but
not later than 2:00 p.m. Los Angeles time, on the applicable Expiration Date
("Exercise Period"). The price to be paid for each share of Common Stock shall
be U.S.$5.00 per share (the "Exercise Price"). The shares of Common Stock
deliverable upon such exercise, and as adjusted from time to time, are
hereinafter sometimes referred to as "Warrant Shares" and the respective
exercise price of a share of Common Stock in effect at any time and as adjusted
from time to time is hereinafter sometimes referred to as the "Exercise Price."
1. EXERCISE OF WARRANT. The Holder may exercise this Warrant in whole or in
part, at any time or from time to time on any Business Day on or prior to the
Expiration Date, by delivering to the Company a duly executed notice (a "Notice
of Exercise") in the form of Annex A hereto, by payment to the Company of the
Exercise Price per Warrant Share in an amount equal to the product of (i) the
Exercise Price times (ii) the number of Warrant Shares as to which this Warrant
is being exercised.
<PAGE>
(i) As soon as practicable after the Company shall have received such Notice
of Exercise and any required payment, the Company shall execute and deliver or
cause to be executed and delivered, in accordance with such Notice of Exercise,
to the Holder at the address set forth in such Notice of Exercise a certificate
or certificates representing the number of shares of Common Stock specified in
such Notice of Exercise. The Warrant shall be deemed to have been exercised and
such share certificate or certificates shall be deemed to have been issued, and
the Holder shall be deemed for all purposes to have become a holder of record of
shares of Common Stock, as of the date that such Notice of Exercise and any
required payment shall have been received by the Company.
(ii) The Holder shall surrender this Warrant certificate of the Company when
it delivers the Notice of Exercise, and in the event of a partial exercise of
the Warrant, the Company shall execute and deliver to the Holder, at the time
the Company delivers the share certificate or certificates issued pursuant to
such Notice of Exercise, a new Warrant certificate for the unexercised portion
of the Warrant, but in all other respect identical to this Warrant certificate.
(iii) The Company shall not be require to issue fractional shares of Common
Stock upon an exercise of the Warrant. If any fraction of a share would, but for
this restriction, be issuable upon an exercise of the Warrant, in lieu of
delivering such fractional share, the Company shall pay to the Holder, in cash,
an amount equal to the same fraction times the Current Market Value (as defined
in Sections 3(1), 3(2), and 3(3) below, as applicable) for the Common Stock
immediately prior to the date of such exercise. The Company shall pay all
expenses, taxes and other charges payable in connection with the preparation,
issuance and delivery of certificates for the Warrant Shares and any new Warrant
certificates.
2. RESERVATION OF SHARES. The Company shall at all times reserve for
issuance and/or delivery upon exercise of this Warrant such number of shares of
its Common Stock as shall be required for issuance and delivery upon exercise of
the Warrants.
3. FRACTIONAL SHARES. No fractional shares or script representing fractional
shares shall be issued upon the exercise of this Warrant. With respect to any
fraction of a share called for upon any exercise hereof, the Company shall pay
to the Holder an amount in cash equal to such fraction multiplied by the Current
Market Value of a share, which shall have the following meaning:
(1) If the Common Stock is listed on a National Securities Exchange or
admitted to unlisted trading privileges on such exchange or included for
quotation on the NASDAQ system, the Current Market Value shall be the last
reported sale price of the Common Stock on such exchange or automated quotation
system on the last business day prior to the date of exercise of this Warrant or
<PAGE>
if no such sale is made (or reported) on such day, the average closing bid and
asked prices for such day on such exchange or system; or
(2) If the Common Stock is not so listed or admitted to unlisted trading
privileges, the Current Market Value shall be the mean of the last reported bid
and asked prices reported by the Electronic Bulletin Board or National Quotation
Bureau, Inc. on the last business day prior to the date of the exercise of this
Warrant; or
(3) If the Common Stock is not so listed or admitted to unlisted trading
privileges and bid and asked prices are not so reported, the Current Market
Value shall be an amount, not less than book value thereof as at the end of the
most recent fiscal year of the Company ending prior to the date of the exercise
of the Warrant, determined in such reasonable manner as may be prescribed by the
Board of Directors of the Company (the "Board").
4. EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company for other warrants of different
denominations entitling the holder thereof to purchase in the aggregate the same
number of shares of Common Stock purchasable hereunder. Upon surrender of this
Warrant to the Company at its principal office, with the Assignment Form annexed
hereto duly executed and funds sufficient to pay any transfer tax, the Company
shall, without charge, execute and deliver a new Warrant in the name of the
assignee named in such instrument of assignment and this Warrant shall promptly
be canceled. This Warrant may be divided or combined with other warrants which
carry the same rights upon presentation hereof at the principal office of the
Company, together with a written notice specifying the names and denominations
in which new Warrants are to be issued and signed by the Holder hereof. The term
"Warrant" as used herein includes any warrants into which this Warrant may be
divided or exchanged. Upon receipt of the Company of evidence satisfactory to it
of the loss, theft, destruction or mutilation of this Warrant, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Warrant, if mutilated, the Company will
execute and deliver a new Warrant of like tenor and date. Any such new Warrant
executed and delivered shall constitute an additional contractual obligation on
the part of the Company, whether or not this Warrant so lost, stolen, destroyed,
or mutilated shall be at any time enforceable by anyone.
5. RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be entitled
to any rights of a shareholder in the Company, either at law or equity, and the
rights of the Holder are limited to those expressed in the Warrant and are not
enforceable against the Company except to the extent set forth herein.
6. ANTI-DILUTION PROVISIONS. The respective Exercise Price in effect at any
time and the number and kind of securities purchasable upon the exercise of the
Warrants shall be subject to adjustment from time to time upon the happening of
certain events as follows:
<PAGE>
(1) In case the Company shall (i) declare a dividend or make a distribution
on its outstanding shares of Common Stock in shares of Common Stock, (ii)
subdivide or reclassify its outstanding shares of Common Stock into a greater
number of shares, or (iii) combine or reclassify its outstanding shares of
Common Stock into a smaller number of shares, the respective Exercise Price in
effect at the time of the record date for such dividend or distribution or of
the effective date of such subdivision, combination or reclassification shall be
adjusted so that it shall equal the price determined by multiplying the
respective Exercise Price by a fraction, the denominator of which shall be the
number of shares of Common Stock Outstanding (as defined below) after giving
effect to such action, and the numerator of which shall be the number of shares
of Common Stock Outstanding immediately prior to such action. Such adjustment
shall be made successively whenever any event listed above shall occur.
(2) In the event that the Company shall distribute to all holders of shares
of Common Stock (including any such distribution made to the shareholders of the
Company in connection with a consolidation or merger in which the Company is the
surviving or continuing corporation) evidences of its indebtedness, cash or
assets (other than distributions and dividends payable in Shares of Common
Stock), or rights, options or warrants to subscribe for or purchase shares of
Common Stock or securities convertible or exchangeable into shares of Common
Stock, then, in each case, the Exercise Price shall be adjusted by multiplying
the Exercise Price in effect immediately prior to the record date for the
determination of shareholders entitled to receive such distribution by a
fraction, the numerator of which shall be the Current Market Value of a share of
Common Stock for the twenty (20) days ending on the seventh trading day
proceeding such distribution on such record date, less the fair market value (as
determined by the Board) of the portion of the evidences of indebtedness or
assets to be distributed, or of such rights, options or warrants or convertible
or exchangeable securities, or the amount of such cash, applicable to one share
of Common Stock Outstanding on such record date and the denominator of which
shall be such Current Market Value per share. Such adjustment shall become
effective at the close of business on such record date.
(3) In the event that the Company shall sell or issue at any time after the
date hereof shares of Common Stock (other than the Excluded Stock, as defined
below) at a consideration per share less than the Current Market Value in effect
immediately prior to the time of such sale or issuance, then, upon such sale or
issuance, the Exercise Price shall be reduced to an adjusted price (calculated
to the nearest cent) determined by dividing (i) the sum of (A) the total number
of shares of Common Stock Outstanding (as defined below) immediately prior to
<PAGE>
such sale or issuance multiplied by the then-existing Exercise Price, plus (B)
the aggregate of the amount of all consideration, if any, received by the
Company upon such sale or issuance, by (ii) the total number of shares of Common
Stock Outstanding immediately after such sale or issuance; provided, however,
that the Exercise Price shall not be reduced unless the issuance is at a per
share price below the Current Market Value and is also below $3.00; provided,
further, however, that if the Exercise Price is reduced pursuant to the
foregoing provision, it shall be reduced only to the extent of the difference
between the applicable per share amount calculated pursuant to the preceding
clauses (i) and (ii) and the applicable issuance price per share.
Notwithstanding anything herein to the contrary, the Exercise Price shall not be
adjusted pursuant to Section 6(3) by virtue of the issuance and/or sale of
"Excluded Stock" which shall mean the following: (i) shares of Common Stock,
Options (as defined below), or Convertible Securities (as defined below) to be
issued and/or sold to employees, advisors, directors or officers of, or
consultants to, the Company or any of its subsidiaries pursuant to a stock
grant, stock option plan, restricted stock agreements, stock purchase plan,
pension or profit sharing plan or other stock agreement or arrangement, (ii)
shares of Common Stock, Options and/or Convertible Securities to be issued
pursuant to Options and/or Convertible Securities outstanding as of the date of
this Warrant, (iii) shares of Common Stock and/or Options to be issued pursuant
to the Debenture Purchase Agreement, and (iv) shares of Common Stock, Options or
Convertible Securities to be issued and/or sold in connection with any
acquisition by the Company of any assets or capital stock of any other person or
entity involved in the e-financial business. For purposes of this Section 6,
all shares of Excluded Stock shall be deemed to have been issued for an amount
of consideration per share equal to the initial Exercise Price (subject to
adjustment in the manner set forth herein.
(4) Whenever the respective Exercise Price payable upon exercise of each
Warrant is adjusted pursuant to Section 6(1), f(2) or f(3) above, the number of
Shares purchasable upon exercise of this Warrant shall be adjusted
simultaneously by multiplying the respective number of Shares issuable upon
exercise of this Warrant immediately prior thereto by the respective Exercise
Price in effect on the date hereof and dividing the product so obtained by the
respective Exercise Price, as adjusted.
(5) No adjustment in the respective Exercise Price shall be required unless
such adjustment would require an increase or decrease of at least one cent
($0.01) in such price; provided, however, that any adjustment which by reason of
this Section 6(5) is not required to be made shall be carried forward and taken
into account in any subsequent adjustment required to be made hereunder. All
calculations under this Section 6. shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be. Anything in this Section 6
to the contrary notwithstanding, the Company shall be entitled, but shall not be
required, to make such changes in the respective Exercise Price, in addition to
those required by this Section 6, as it shall determine, in its sole discretion,
to be advisable in order that any dividend or distribution in shares of Common
<PAGE>
Stock, or any subdivision, reclassification or combination of Common Stock,
hereafter made by the Company shall not result in any Federal Income tax
liability to the holders of Common Stock or securities convertible into Common
Stock (including the Warrants).
(6) In the event that at any time, as a result of an adjustment made
pursuant to Section6(1) to 6(3) above, the Holder of this Warrant thereafter
shall become entitled to receive any shares of the Company, other than Common
Stock, thereafter the number of such other shares so receivable upon exercise of
this Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in Sections 6(1) to 6(3) inclusive above.
(7) Irrespective of any adjustments in the respective Exercise Price or the
related number or kind of share purchasable upon exercise of this Warrant,
Warrants theretofore or thereafter issued may continue to express the same price
and number and kind of shares as are stated in the similar Warrants initially
issuable pursuant to this Agreement.
(8) For purposes of Section 6(3), the following definitions shall apply:
(i) "Convertible Securities" shall mean any indebtedness or equity
securities convertible into or exchangeable for shares of Common Stock.
(ii) "Common Stock Outstanding" shall mean the aggregate of all shares of
Common Stock outstanding and all shares issuable upon exercise of all
outstanding Options and conversion of all outstanding Convertible Securities.
(iii) "Options" shall mean any rights, warrants or options to subscribe for
or purchase shares of Common Stock or Convertible Securities.
(9) For purposes of Section 6(3), the following provisions shall also be
applicable:
<PAGE>
(i) Cash Consideration. In the event of the sale or issuance (otherwise
-------------------
than conversion or exchange of Convertible Securities) of additional shares of
Common Stock, Options or Convertible Securities for cash, the consideration
received by the Company therefor shall be deemed to be the amount of cash
received by the Company for such securities (or, if such securities are offered
by the Company for subscription, the subscription price, or, if such securities
are sold to underwriters or dealers for public offering without a subscription
offering, the public offering price), without deducting therefrom any
compensation or discount paid or allowed to underwriters or dealers or others
performing similar services or for any expenses incurred in connection
therewith.
<PAGE>
(ii) Non-Cash Consideration. In the event of the sale or issuance
-----------------------
(otherwise than upon conversion or exchange of Convertible Securities) of
additional shares of Common Stock, Options or Convertible Securities for
consideration other than cash or consideration a part of which shall be other
than cash, the fair value of such consideration as determined by the Board in
the good faith exercise of its business judgment, irrespective of the accounting
treatment thereof, shall be deemed to be the value, for purposes of Section
-------
f(3), of the consideration other than cash received by the Company for such
securities.
(iii) Options and Convertible Securities. In the event the Company shall in
----------------------------------
any manner issue or grant any Options or any Convertible Securities, the total
maximum number of shares of Common Stock issuable upon the exercise of such
Options or upon conversion or exchange of the total maximum amount of such
Convertible Securities at the time such Convertible Securities first become
convertible or exchangeable shall (as of the date of issue or grant of such
Options or, in the case of the sale or issue of Convertible Securities (other
that where the same are issuable upon the exercise of Options), as of the date
of such sale or issue) be deemed to be issued and to be outstanding for the
purpose of Section f(3) and to have been issued for the sum of the amount (if
any) paid for such Options or Convertible Securities and the amount (if any)
payable upon the exercise of such Options or upon conversion or exchange of such
Convertible Securities at the time such Convertible Securities first became
convertible or exchangeable; provided that, subject to the provisions of Section
f(10), no further adjustment of the Exercise Price shall be made upon the actual
issuance of any such Shares or Convertible Securities or upon the conversion or
exchange of any such Convertible Securities.
(10) In the event that the purchase price provided for in any Option
referred to in Section 6(9)(iii) or the rate at which any Convertible Securities
referred to in Section 6(9)(iii) are convertible into or exchangeable for shares
of Common Stock shall change at any time or any additional consideration shall
be payable in connection with the exercise of any Option or the conversion or
exchange of any Convertible Securities (other than under or by reason of
provisions designed to protect against dilution upon the occurrence of events of
the type described in this Section 6), then, for purposes of any adjustment
required by Section 6(3), the Exercise Price in effect at the time of such event
shall forthwith be readjusted to the Exercise Price that would have been in
<PAGE>
effect at such time had such Options or Convertible Securities still outstanding
provided for such changed purchase price, conversion rate or additional
consideration, as the case may be, at the time initially granted, issued or
sold; provided, that if such readjustment is an increase in the Exercise Price,
such readjustment shall not exceed the amount (as adjusted by Section 6(1), 6(2)
or 6(3)) by which the Exercise Price was decreased pursuant to Section 6(3) upon
the issuance of the Option or Convertible Securities.
(11) In the event of the termination or expiration of any right to purchase
shares of Common Stock under any Option granted after the date of this Warrant
or of any right to convert or exchange Convertible Securities issued after the
date of this Warrant, the Exercise Price shall, upon such termination or
expiration, be readjusted to the Exercise Price that would have been in effect
at the time of such termination or expiration had such Option or Convertible
Securities, to the extent outstanding immediately prior to such expiration or
termination, never been issued, and the Share issuable thereunder shall no
longer be deemed to be Common Stock Outstanding; provided, that if such
readjustment is an increase in the Exercise Price, such readjustment shall not
exceed the amount (as adjusted by Section 6(1), 6(2) or 6(3)) by which the
Exercise Price was decreased pursuant to Section 6(3) upon the issuance of the
Option or Convertible Securities. The termination or expiration of any right to
purchase shares of Common Stock under any Option granted prior to the date of
this Warrant or of any right to convert or exchange Convertible Securities
issued prior to the date of this Warrant shall not trigger any adjustment to the
Exercise Price, but the shares of Common Stock issuable under such Options or
Convertible Securities shall no longer be counted in determining the number of
shares of Common Stock Outstanding on the date of issuance of this Warrant for
purposes of subsequent calculations under Section 6(3).
(12) Whenever there shall be adjustment as provided in this Section 6, the
Company shall within 30 days thereafter cause written notice thereof to be sent
by registered mail, postage prepaid, to the Holder, at its address as it shall
appear in the Warrant Register, which notice shall be accompanied by an
officer's certificate setting forth the adjusted number of Warrant Shares
issuable hereunder and the exercise price thereof after such adjustment and
setting forth a brief statement of the facts requiring such adjustment and the
computation thereof, which officer's certificate shall be conclusive evidence of
the correctness of any such adjustment absent manifest error.
7. OFFICER'S CERTIFICATE. Whenever the respective Exercise Price shall be
adjusted as required by the provisions of the foregoing Section 6, the Company
shall forthwith file in the custody of its Secretary or an Assistant Secretary
at its principal office, an officer's certificate showing the adjusted
respective Exercise Price determined as herein provided, setting forth in
reasonable detail the facts requiring such adjustment, including a statement of
the number of related additional shares of Common Stock, if any, and such other
facts as shall be necessary to show the reason for and the manner of computing
such adjustment. Each such officer's certificate shall be made available at all
<PAGE>
reasonable times for inspection by the holder or any holder of a Warrant
executed and delivered pursuant to Section 1 and the Company shall, forthwith
after each such adjustment, mail a copy by certified mail of such certificate to
the Holder or any such holder.
8. NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be outstanding,
(i) if the Company shall pay any dividend or make any distribution upon the
Common Stock or (ii) if the Company shall offer to the holders of Common Stock
for subscription or purchase by them any share of any class or any other rights
or (iii) if the capital reorganization of the Company, reclassification of the
capital stock of the Company, consolidation or merger of the Company with or
into another corporation, sale, lease or transfer of all or substantially all of
the property and assets of the Company to another corporation, or voluntary or
involuntary dissolution, liquidation or winding up of the Company shall be
effected, then in any such case, the Company shall cause to be mailed by
certified mail to the Holder, at least fifteen days prior the date specified in
(x) or (y) below, as the case may be, a notice containing a brief description of
the proposed action and stating the date on which (x) action is to be taken for
the purpose of such dividend, distribution or rights, or (y) such
reclassification, reorganization, consolidation, merger, conveyance, lease,
dissolution, liquidation or winding up is to take place and the date, if any is
to be fixed, as of which the holders of Common Stock or other securities shall
receive cash or other property deliverable upon such reclassification,
reorganization, consolidation, merger, conveyance, dissolution, liquidation or
winding up. The failure to give such notice shall not otherwise effect the
action taken by the Company.
9. RECLASSIFICATION, REORGANIZATION OR MERGER. Incase of any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the Company, or in case of any consolidation or merger of the
Company with or into another corporation (other than a merger with a subsidiary
in which merger the Company is the continuing corporation and which does not
result in any reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the class issuable upon exercise of this
Warrant) or in case of any sale, lease or conveyance to another corporation of
the property of the Company as an entirety, the Company shall, as a condition
precedent to such transaction, cause effective provisions to be made so that the
Holder shall have the right thereafter by exercising this Warrant at any time
prior to the expiration of the Warrant, to purchase the kind and amount of
shares of stock and other securities and property receivable upon such
reclassification, capital reorganization and other change, consolidation,
merger, sale or conveyance by a holder of the number of shares of Common Stock
which might have been purchased upon exercise of this Warrant immediately prior
to such reclassification, change, consolidation, merger, sale or conveyance. Any
such provision shall include provision for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Warrant. The foregoing provisions of this Section 9 shall similarly apply to
successive reclassifications, capital reorganizations and changes of shares of
Common Stock and to successive consolidations, mergers, sales or conveyances. In
the event that in connection with any such capital reorganization or
reclassification, consolidation, merger, sale or conveyance, additional shares
<PAGE>
of Common Stock shall be issued in exchange, conversion, substitution or
payment, in whole or in part, for a security of the Company other than Common
Stock, any such issue shall be treated as an issue of Common Stock covered by
the provisions of Subsection(1) of Section 6 hereof.
10. Registration Rights and Adjustment to Exercise Price. Pursuant to the
terms of the Subscription Agreement, by and between the Company and the holder
of this Warrant, the Company has agreed to file a registration statement (the
"Registration Statement"), to register, among other things, the Warrant Shares
issuable upon exercise of this Warrant. This Warrant shall expire if not
exercised on or before the later of (i) the one year anniversary date of the
effectiveness of the Registration Agreement, or (ii) February 2, 2001.
11. VENUE. The terms of this Agreement shall be construed in accordance with
the laws of the State of New York. The exclusive venue with respect to any
claims or disputes under this Agreement shall be the appropriate State or
Federal Courts located in Delaware
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and
attested by the Undersigned, each being duly authorized, as of the date below.
EFINANCIAL DEPOT.COM, INC.
By:/s/ John Huguet
-----------------
Its: President and CEO
Dated:
ATTEST:
- ------------------------------
- ------------------, Secretary
<PAGE>
EXERCISE FORM
The undersigned hereby irrevocably elects to exercise the within Warrant to
the extent of purchasing Shares of Common Stock of EFINANCIAL DEPOT.COM, INC. at
$------ per share (an aggregate of $------).
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name: ---------------------------------------
(Please typewrite or print in block letters)
Address ----------------------------------------------------
Social Security of Federal I.D. Number: --------------------------
THE UNDERSIGNED REPRESENTS AND WARRANTS TO EFINANCIAL DEPOT.COM, INC. THAT THE
CONDITIONS FOR EXERCISE OF THE WITHIN WARRANT SET FORTH IN THE FIRST SENTENCE OF
THE FIRST PARAGRAPH ABOVE HAVE BEEN FULLY COMPLIED WITH.
Payment of $----------- enclosed
Signature ---------------------------------------------
(Sign exactly as your name appears on the first page of this Warrant)
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, ------------------------------------------hereby sells,
assigns and transfers unto
Name ------------------------------- -----------------------
(Please typewrite or print in block letters) Address
Social Security of Federal I.D. Number: -------------------------
the right to purchase shares of Common Stock of EFINANCIAL DEPOT.COM, INC.
represented by this Warrant as to which such right is exercisable and does
hereby irrevocably constitute and appoint
- -------------------------------------Attorney, to transfer the same on the books
of EFINANCIAL DEPOT.COM, INC. with full power of substitution in the premises.
Date:
Signature ----------------------------------------
(Sign exactly as your name appears on the first page of this Warrant)
THIS WARRANT, AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF,
HAVE NOT BEEN FILED OR REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION OR WITH THE SECURITIES REGULATORY AUTHORITY OF ANY STATE, BUT ARE
BEING ISSUED PURSUANT TO CERTAIN EXEMPTIONS THEREUNDER. THIS WARRANT, AND SUCH
SHARES OF COMMON STOCK, ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE, AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION THEREUNDER OR EXEMPTION THEREFROM.
This Warrant Will Be Void On The Expiry Date
PLACEMENT AGENT'S WARRANT
To Purchase 15,000 of Shares Of Common Stock Of
EFINANCIAL DEPOT.COM, INC.
This is to certify, That FOR VALUE RECEIVED
OXFORD CAPITAL CORP.
(the "Holder")
is entitled to purchase, subject to the provisions of this Placement Agent's
Warrant (the "Warrant") from Efinancial Depot.Com, Inc. (the "Company"), a
Delaware Corporation, at any time up to and including the later of (i) the
twelve month anniversary of the effective time of the registration of the shares
in the capital stock of the Company underlying this Warrant, or (ii) February 2,
2001, (the "Expiry Date"), 15,000 shares of the Company's common stock, (the
"Common Stock") at a purchase price equal $5.00 (the "Exercise Price"). The
shares of the Common Stock deliverable upon such exercise are hereinafter
sometimes referred to as "Warrant Shares." This Warrant is the Placement Agent
Warrant referred to in Section 2.05 Debenture Purchase Agreement (the "Purchase
Agreement") entered into between the Company and Oxford Capital Corp. effective
as February 2, 2000.
1. EXERCISE OF WARRANT. This Warrant may be exercised in whole or in
part at any time, and from time to time, up to and including the Expiry Date.
If the date on which the Holder's right to purchase Common Stock expires, is a
day on which national banks in the United States of America are authorized by
law to close, then the right shall expire on the next succeeding business day
that is not such a day. The Holder shall have the following rights of
relinquishment in respect to the exercise of this Warrant:
(i) the Holder, or his or her heirs or other legal representatives to the
extent entitled to exercise the Warrant under the terms thereof, in lieu of
purchasing the entire number of shares subject to purchase thereunder, shall
have the right to relinquish all or any part of the then unexercised portion of
the Warrant (to the extent then exercisable) for a number of shares of Common
Stock, for an amount of cash or for a combination of Common Stock and cash to be
determined in accordance with the following provisions of this clause (i):
(A) The written notice of exercise of such right of relinquishment shall
state the percentage, if any, of the Appreciated Value (as defined below) that
the Holder elects to receive in cash ("Cash Percentage"), such Cash Percentage
to be in increments of 10% of such Appreciated Value up to 100% thereof;
(B) The number of shares of Common Stock, if any, issuable pursuant to such
relinquishment shall be the number of such shares, rounded to the next greater
number of full shares, as shall be equal to the quotient obtained by dividing
(A) the difference between (I) the Appreciated Value and (II) the result
obtained by multiplying the Appreciated Value and the Cash Percentage by (B) the
then current market value per share of Common Stock;
<PAGE>
(C) The amount of cash payable pursuant to such relinquishment shall be an
amount equal to the Appreciated Value less the aggregate current market value of
the Common Stock issued pursuant to such relinquishment, if any, which cash
shall be paid by the Company subject to such conditions as are deemed advisable
to permit compliance by the Company with the withholding provisions applicable
to employers under the Code and any applicable state income tax laws;
(D) For the purpose of this clause (i), "Appreciated Value" means the
excess of (x) the aggregate current market value of the shares of Common Stock
covered by the Warrant or the portion thereof to be relinquished over (y) the
aggregate purchase price for such shares specified in such Warrant;
(ii) That such right of relinquishment may be exercised only upon receipt
by the Company of a written notice of such relinquishment which shall be dated
the date of election to make such relinquishment; and that, for the purposes of
this Plan, such date of election shall be deemed to be the date when such notice
is sent by registered or certified mail, or when receipt is acknowledged by the
Company, if mailed by other than registered or certified mail or if delivered by
hand or by any telegraphic communications equipment of the sender or otherwise
delivered; provided, that, in the event the method just described for
determining such date of election shall not be or remain consistent with the
provisions of Section 16(b) of the Exchange Act or the rules and regulations
adopted by the Commission thereunder, as presently existing or as may be
hereafter amended, which regulations exempt from the operation of Section 16(b)
of the Exchange Act in whole or in part any such relinquishment transaction,
then such date of election shall be determined by such other method consistent
with Section 16(b) of the Exchange Act ;
(iii) That the "current market value" of a share of Common Stock on a
particular date shall be deemed to be its fair market value on that date as
determined in accordance with Paragraph 3; and
(iv) That the Warrant, or any portion thereof, may be relinquished only to
the extent that (A) it is exercisable on the date written notice of
relinquishment is received by the Company, and (B) the holder of such Warrant
pays, or makes provision satisfactory to the Company for the payment of, any
taxes which the Company is obligated to collect with respect to such
relinquishment.
(b) Each Holder who is subject to the short-swing profits recapture
provisions of Section 16(b) of the Exchange Act ("Covered Holder") shall be
entitled to receive payment only in cash when Warrants are relinquished during
any window period commencing on the third business day following the Company's
release of a quarterly or annual summary statement of sales and earnings and
ending on the twelfth business day following such release ("Window Period");
provided, however, that payment shall be so made in cash only in respect of 50%
of the Warrants. A Covered Holder shall be entitled to receive payment only in
shares of Common Stock upon (a) the relinquishment of Warrants outside a Window
Period and (b) the relinquishment of Warrants during a Window Period once such
Holder has received payment in cash for the relinquishment of 50% of the
Warrants.
(c) Warrants hereunder, are exempt from the operation from Section 16(b) of
the Exchange Act or will be amended, if necessary, to permit such exemption. If
a Warrant is relinquished, such Warrant shall be deemed to have been exercised
to the extent of the number of shares of Common Stock covered by the Warrant or
part thereof which is relinquished, and no further Warrants may be granted
covering such shares of Common Stock.
(d) Neither any Warrant nor any right to relinquish the same to the Company
as contemplated by this Paragraph 1 shall be assignable or otherwise
transferable except by will or the laws of descent and distribution or pursuant
to a qualified domestic relations order as defined in the Code, as amended, or
the rules thereunder.
The Holder shall exercise all rights to purchase Common Stock by presenting
and surrendering this Warrant to Oxford Capital Corp. (the "Escrow Agent"), at
1013 - 17th Avenue S.W., Calgary, Alberta, T2T 0A7, with the Purchase Form
annexed hereto duly executed and accompanied by payment by cash, certified
cheque or bank order or relinquishment of Warrants at the Exercise Price for the
number of shares specified in such form. If this Warrant should be exercised or
relinquished in part only the Company shall, upon surrender of this Warrant for
cancellation, execute and deliver a new Warrant evidencing the right of the
<PAGE>
holder to purchase the balance of the shares purchasable hereunder. Upon receipt
by the Escrow Agent of this Warrant, in proper form for exercise, with the
Purchase Form annexed hereto duly executed for the number of shares specified in
such form, the Holder shall be deemed to be the holder of record of the shares
of Common Stock issuable upon such exercise, notwithstanding that certificates
representing such shares of Common Stock shall not then be actually delivered to
the Holder, unless the Company has objected in accordance with the Escrow
Agreement. As soon as practicable after each exercise of this Warrant, the
Company will deliver the shares issuable upon such exercise to the Holder.
2. ISSUANCE AND DELIVERY OF SHARES. The Company hereby represents,
warrants and agrees that at all times there shall be reserved for issuance and
delivered to the Escrow Agent the number of shares of Common Stock as shall be
required for issuance or delivery upon exercise of this Warrant.
3. FRACTIONAL SHARES. No fractional shares or script representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Holder an amount in cash equal to such fraction
multiplied by the current market value of such fractional share, determined as
follows:
(a) If the Common Stock is listed on a national securities exchange or
admitted to unlisted trading privileges on such exchange, the current value
shall be the last reported sales price of the Common Stock on such exchange on
the last business day prior to the date of exercise of this Warrant or if no
such sale is made on such day, the average of the closing bid and asked prices
for such day on such exchange; or
(b) If the Common Stock is not so listed or admitted to unlisted trading
privileges, the current value shall be the mean of the last reported bid and
asked prices reported by the National Association of Securities Dealers
Quotation System ("NASDAQ"), or if not so quoted on NASDAQ then by the National
Quotation Bureau, Inc., on the last business day prior to the date of the
exercise of this Warrant; or
(c) If the Common Stock is not so listed or admitted to unlisted trading
privileges and bid and asked prices are not so reported, the current value shall
be an amount, not less than book value, determined in such reasonable manner as
may be prescribed by the Company's board of directors, and supported by the
written fairness opinion of an independent, nationally-recognized stock
valuation expert.
4. TRANSFER, ASSIGNMENT OR LOSS OF WARRANT.
(a) The Holder may assign this Warrant, in whole or in part, or any
interest herein. This Warrant and the Warrant Shares have not been filed or
registered with the United States Securities and Exchange Commission or with the
securities regulatory authority of any state. This Warrant and the Warrant
Shares are subject to restrictions imposed by federal and state securities laws
and regulations on transferability and resale, and may not be transferred
assigned or resold except as permitted under the Securities Act of 1933, as
amended (the "Act"), and the applicable state securities laws, pursuant to
registration thereunder or exemption therefrom. Upon receipt by the Company of
evidence satisfactory to it that this Warrant or any portion hereof, has been
legally and validly transferred or assigned, the Company will, at the request of
the Holder, upon presentation and surrender hereof to the Company or at the
office of its stock transfer agent, if any, exchange this Warrant for one or
more Warrants, in such denominations as the Holder shall specify, registered in
such name or names as the Holder shall designate. If, at the time of such
transfer or assignment, this Warrant has not been registered under the Act, then
each such transferee and assignee shall furnish the Company with evidence
satisfactory to it that such transferee or assignee is acquiring such Warrant
for his, her or its own account, for investment purposes, and not with a view
towards a distribution thereof or of the Warrant Shares issuable upon its
exercise. The term "Warrant," as used herein, includes any Warrants issued in
substitution for or replacement of this Warrant, or into which this Warrant may
be divided or exchanged.
(c) Upon receipt by the Company of evidence satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant, and in the case of loss, theft
or destruction of reasonably satisfactory indemnification, and upon surrender
and cancellation of this Warrant in the case of mutilation, the Company will
execute and deliver a new Warrant of like tenor and date. Any such new Warrant
executed and delivered shall constitute an additional contractual obligation on
the part of the Company, whether or not this Warrant so lost, stolen, destroyed
or mutilated shall be at any time enforceable by anyone.
<PAGE>
(d) The Company may cause any legend required under the Act and applicable
state securities laws, or advisable in the opinion of its legal counsel, to be
set forth on each Warrant.
5. RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder in the Company, either at law or equity,
and the rights of the Holder as the holder of this Warrant are limited to those
expressed in this Warrant, the Escrow Agreement and the Purchase Agreement.
6. ANTI-DILUTION PROVISIONS. After February 2, 2000, so long as this
Warrant is outstanding and not fully exercised, the Company shall not, without
the prior consent of the Holder, issue or sell (i) any Common Stock without
consideration or for a consideration per share less than $3.00; or (ii) issue or
sell any warrant, Warrant, right, contract, call, or other security or
instrument granting the holder thereof the right to acquire Common Stock without
consideration or for a consideration per share less than $3.00.
7. OFFICER'S CERTIFICATE. Whenever the Company shall determine the
fair market value of the Common Stock pursuant to Section 3 hereof, the Company
shall forthwith file in the custody of its Secretary at its principal office,
with its stock transfer agent and with the Escrow Agent, an officer's
certificate showing the fair market value and the date as of which it was
determined, and setting forth in reasonable detail the facts requiring such
determination and the facts, assumptions, methodology and calculations employed
in determining such value. The Company shall forthwith deliver a copy of each
such officer's certificate to the Holder, and the Company shall make all such
officer's certificates available at all reasonable times for inspection by and
copying by the Holder.
8. NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be
outstanding and any portion of it shall be unexercised, (i) if the Company shall
pay any dividend or make any distribution upon the Common Stock or (ii) if the
Company shall offer to the holders of Common Stock, for subscription or purchase
by them, any shares of stock of any class or any other rights or (iii) if any
capital reorganization of the Company, reclassification of the Company's capital
stock, consolidation or merger of the Company with or into another corporation,
sale, lease or transfer of all or substantially all of the Company's property
and assets to another corporation, or voluntary or involuntary dissolution,
liquidation or winding up of the Company shall be effected, then in any such
case, the Company shall cause to be delivered to the Holder, at least ten days
prior to the date specified in (x) or (y) below, as the case may be, a notice
containing a brief description of the proposed action and stating the date on
which (x) a record is to be taken for the purpose of such dividend, distribution
or rights, or (y) such reclassification, reorganization, consolidation, merger,
conveyance, lease, dissolution, liquidation or winding up is to take place and
the date, if any is to be fixed, as of which the holders of record of Common
Stock shall be entitled to exchange their shares of Common Stock for securities
or other property deliverable upon such reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding up.
9. RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the Company (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of an
issuance of Common Stock by way of dividend or other distribution or of a
subdivision or combination), or in case of any consolidation or merger of the
Company with or into another corporation (other than a merger with a subsidiary
in which merger the Company is the continuing corporation and which does not
result in any reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the class issuable upon exercise of this
Warrant) or in case of any sale or conveyance to another corporation of the
property of the Company as an entirety or substantially as an entirety, the
Company shall cause effective provision to be made so that the Holder shall have
the right thereafter, by exercising this Warrant, to purchase the kind and
amount of shares of stock and other securities and property receivable upon such
classification, capital reorganization or other change, consolidation, merger,
sale or conveyance. Any such provision shall include provision for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Warrant. The foregoing provisions of this Section 9 shall
similarly apply to successive reclassifications, capital reorganizations and
changes of shares of Common Stock and to successive consolidations, mergers,
sales or conveyances. In the event that in any such capital reorganization or
reclassification, consolidation, merger, sale or conveyance, additional shares
of Common Stock shall be issued in exchange, conversion, substitution or
payment, in whole or in part, for or of a security of the Company other than
Common Stock, any such issue shall be treated as an issue of Common Stock
covered by the provisions of Section 6 hereof with the amount of the
consideration received upon the issue thereof being determined by the Company's
board of directors, such determination to be final and binding on the Holder.
<PAGE>
10. SPIN-OFFS. In the event the Company spins-off a subsidiary by
distributing to the Company's stockholders as a dividend or otherwise the stock
of the subsidiary, the Company shall reserve for the life of the Warrant shares
of the subsidiary to be delivered to the holders of the Warrants upon exercise
to the same extent as if they were owners of record of the Warrant Shares on the
record date for payment of the shares of the subsidiary.
11. REGISTRATION UNDER THE SECURITIES ACT OF 1933. On or before March
31, 2000, the Company shall file a registration statement to be effective no
later than May 31, 2000, to register the issuance of the Warrant Shares under
the Securities Act of 1933, as amended, in accordance with the terms of the
Registration Rights Agreement between the Company and the Holder, dated February
2, 2000.
12. MISCELLANEOUS. All notices given under this Warrant shall be in
writing, addressed to the parties as set forth below, and shall be effective on
the earliest of (i) the date received, or (ii) if given by facsimile transmittal
on the date given if transmitted before 5:00 p.m. the recipients time, otherwise
it is effective the next day, or (iii) on the second business day after delivery
to a major international air delivery or air courier service (such as Federal
Express or Network Couriers):
If to the Purchaser:
If to the Company: Oxford Capital Corp.
Efinancial Depot.Com, Inc. C/o 1013-17th Avenue S.W.
150-1875 Century Park East; Calgary, Alberta
Century City California T2T 0A7
90067 Ph: (403) 508-5055
Fax: (403) 508-5055
With a copy that does not
With a copy that does not constitute notice to:
constitute notice to:
Ian H. Kennedy,
Clark,Wilson, Barristers & Solicitors Barrister & Solicitor
800-885 W.Georgia St. 1013 - 17th Avenue
Vancouver,Canada Calgary, Alberta
V6C 3H1 T2T 0A7
Attention: David Cowan Attn: Ian H. Kennedy
Tel: (604) 643-3178 Tel: (403) 508-5055
Fax: (604) 687-6314 Fax: (403) 508-5058
(a) This Warrant is binding on and, except for the limitations
on transfer and assignment contained in Section 4, shall enure to the benefit
of the successors in interest of the Company and the Holder, respectively.
(b) This Warrant shall be governed by, and construed in accordance
with the laws of the State of Delaware.
(c) This Warrant shall be governed by and interpreted in accordance
with the laws of the State of Delaware and the federal laws of the United States
of America; The parties agree that the courts of the State of Delaware, shall
have exclusive jurisdiction and venue for the adjudication of any civil action
between them arising out of relating to this Agreement, and hereby irrevocably
consent to such jurisdiction and venue.
EFINANCIAL DEPOT.COM, INC.
By /s/ John Huguet
-----------------
President
Dated as of day of April, 2000.
By -----------------
Secretary
<PAGE>
PURCHASE/ RELINQUISH FORM
Date:
TO: EFinancial Depot.Com, Inc.
.
The undersigned hereby irrevocably elects to exercise the within Warrant to
the extent of purchasing/relinquishing shares of Common Stock.
OXFORD CAPITAL CORP.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name: -----------------------------------------------------------
Address: ---------------------------------------------------------
City, State, Zip Code: ______________________________________________
Signature: ---------------------------------------------------------
<PAGE>
ASSIGNMENT FORM
---------------
To assign this Warrant, fill in the form below:
I or we assign and transfer this Security to
(insert assignee's social security or tax I.D. no.)
(print or type other person's name, address and zip code)
and irrevocably appoint
agent to transfer this Warrant on the books of EFinancial Depot.Com, Inc. The
agent may substitute another to act for him.
Date:, Your Signature:
(Sign exactly as your name appears on the face of this Debenture)
Signature Guarantee:
NOTE: This Warrant and the Common Stock issuable upon conversion or as interest
under this Debenture were issued under Regulation S under the Securities Act of
1933, as amended, and may be transferred only as provided for in the Debenture
Purchase Agreement and in accordance with Rule 904 of Regulation S and by the
execution of the above the Assignor represents that this assignment is being
made in accordance with Rule 904 of Regulation S.
EXHIBIT A
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THE SECURITIES
ARE BEING OFFERED PURSUANT TO A SAFE HARBOR FROM REGISTRATION UNDER REGULATION S
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE
SECURITIES ARE "RESTRICTED" AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES
OR TO U.S. PERSONS (AS SUCH TERM IS DEFINED IN REGULATION S PROMULGATED UNDER
THE ACT) UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT, PURSUANT TO
REGULATION S OR PURSUANT TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND THE COMPANY IS PROVIDED WITH OPINION OF COUNSEL OR
OTHER SUCH INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
EXEMPTIONS ARE AVAILABLE. FURTHER, HEDGING TRANSACTIONS INVOLVING THE SECURITIES
MAY BE MADE ONLY IN COMPLIANCE WITH THE ACT.
EFINANCIAL DEPOT.COM, INC.
6% CONVERTIBLE DEBENTURE
$2,500,000 USD February 2, 2000
EFINANCIAL DEPOT.COM, INC., a Delaware corporation (the "Company"),
for the value received, hereby unconditionally and absolutely promises to pay to
the order of OXFORD CAPITAL CORP., or holder (collectively, the "Holder"), upon
presentation and surrender of this Debenture to the Company at its office at
150-1875 Century Park East, Century City California, 90067, or such other place
as the Company may designate from time to time, the Principal Sum due under this
Debenture, on February 2, 2003, or if such day is not a regular business day,
then on the next business day thereafter or (the "Maturity Date"), plus interest
at the simple rate of six percent (6%) per annum with all accrued and unpaid
interest due and payable on the Maturity Date or on the date this Debenture is
converted into shares of the common stock pursuant to Section 1.
All dollar amounts set forth in this Debenture are United States
Dollars. A regular business day is a day on which banks in the State of New York
and the Province of Alberta are open for business and a trading day is a day in
which the New York Stock Exchange is open for trading.
<PAGE>
1. PRINCIPAL SUM.
The Principal Sum outstanding at any time shall be Two Million Five Hundred
Thousand ($2,500,000) Dollars less any Principal Sum prepaid through the date of
the calculation and less any Principal Sum which had been converted into Common
Stock as provided for in Section 2 hereof through the date of the calculation.
2. CONVERSION.
(a) The Holder of this Debenture shall have the right, at its
option, beginning on the thirtieth (30th) day after the Closing Date through
5:00 p.m. Alberta, Canada time on the last regular business day immediately
prior to the Maturity Date to convert, subject to the terms and provisions of
this Section 2, any or all of the outstanding Principal Sum of this Debenture.
Conversions made pursuant to this Section 2 shall be made at a price (the
"Conversion Price") per share equal to the lesser of: (i) eighty percent (80%)
of the average closing bid price of the Common Stock of the Company on the
principal market for such Common Stock for 5 days preceding the date a
conversion notice is provided to the Company (the "Conversion Date") or (ii)
five ($5.00) dollars; in no event shall the Conversion Price be lower than
$3.00.
To effect conversion of all or any part of the Principal Sum secured
by this Debenture, the Holder shall present the Company with a written Notice of
Conversion by either registered mail or facsimile on the date of Conversion. In
either case, prior to issuance of previously unissued shares in the Common Stock
of the Company to the Holder, this Debenture must be surrendered at the
principal office of the Company, accompanied by the original Notice of
Conversion duly executed, and, accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company duly executed by the
Holder or its attorney duly authorized in writing to specify whether the Holder
desires interest on the amount of the Principal Sum being converted to be paid
in cash by Company check, or in shares of Common Stock of the Company.
(b) As promptly as practicable after the surrender, as herein
provided, of this Debenture for conversion and the completed and executed Notice
of Conversion, the Company shall deliver or cause to be delivered, to or upon
the written order of the Holder of this Debenture so surrendered: (i)
certificates representing the largest number of fully paid and nonassessable
full shares of Common Stock into which this Debenture may be converted in
accordance with the provisions of this Section 2; (ii) a check in payment for
fractional shares, based on amount in cash equal to such fraction multiplied by
the current "Market Price" as defined in Section 4 hereof; (iii) cash or
additional shares of Common Stock of the Company for the accrued but unpaid
interest due on the Principal Sum being converted through the date of the Notice
of Conversion; and (iv) a replacement Debenture identical to this Debenture,
except as to the issue date and as adjusted to reflect the Principal Amount
actually outstanding after the conversion, if less than the then outstanding
Principal Sum is being converted. Such conversion shall be deemed to have been
made at the close of business on the date that this Debenture shall have been
received by the Company for conversion, with a Notice of Conversion duly
executed, in satisfactory form for conversion, so that the rights of the Holder
of this Debenture as a Debenture holder as to the Principal Sum being converted
shall cease at such time and, subject to the provisions of this Section 2(b),
the person or persons entitled to receive the shares of Common Stock upon
conversion of this Debenture shall be treated for all purposes as having become
the record holder or holders of such shares of Common Stock (including any
Common Stock issued for interest) at such time and such conversion shall be at
the Conversion Price in effect at such time.
<PAGE>
(c) After the registration of the Common Stock underlying
this Debenture, and after the shares of the Common Stock have traded above
$10.00 on each day for 20 consecutive trading days, if there has been no Event
of Default under this Debenture, the principal amount of the Debenture will be
converted in accordance with the conversion terms of Section 2(a) above.
3. INTEREST
At the Holder's election, accrued but unpaid interest must be
paid in Common Stock of the Company in an amount of shares equal to the interest
to be paid in Common Stock divided by the Conversion Price applicable to the
Principal hereunder. Not earlier than the sixtieth (60th ) day and not later
than the thirtieth (30th) day prior to the Maturity Date, the Holder shall
notify the Company if it desires to have the accrued but unpaid interest due on
the Maturity Date paid in shares of Common Stock of the Company. If the Holder
does not give any such notice in a timely manner, the interest at Maturity shall
be paid in cash by Company check.
4. ANTI-DILUTION PROVISIONS.
After February 2, 2000, and so long as this Debenture is
outstanding and not fully exercised, the Company shall not, without the prior
consent of the Holder, issue or sell (i) any Common Stock without consideration
or for a consideration per share less than $3.00; or (ii) issue or sell any
warrant, right, contract, call, or other security or instrument granting the
holder thereof the right to acquire Common Stock without consideration or for a
consideration per share less than $3.00.
5. RECLASSIFICATION, REORGANIZATION OR MERGER.
In case of any reclassification, capital reorganization or other
change of outstanding shares of Common Stock of the Company, or in case of any
consolidation or merger of the Company with or into another corporation (other
than a merger with a subsidiary in which merger the Company is the continuing
corporation and which does not result in any reclassification, capital
reorganization or other change of outstanding shares of Common Stock of the
class issuable upon conversion of this Debenture) or in case of any sale, lease
or conveyance to another corporation of the property of the Company as an
entirety, the Company shall, as a condition precedent to such transaction, cause
effective provisions to be made so that the Holder shall have the right
thereafter by converting this Debenture at any time prior to the payment in full
of the Debenture, to acquire the kind and amount of shares of stock and other
securities and property receivable upon such reclassification, capital
reorganization and other change, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock which might have been acquired
upon conversion of this Debenture immediately prior to such reclassification,
change consolidation, merger, sale or conveyance. Any such provision shall
include provision for adjustments which shall be as nearly equivalent as may be
<PAGE>
practicable to the adjustments provided for in this Debenture. The foregoing
provisions of this Section 5 shall similarly apply to successive
reclassifications, capital reorganizations and changes of shares of Common Stock
and to successive consolidations, mergers, sales or conveyances. In the event
that in connection with any such capital reorganization or reclassification,
consolidation, merger, sale or conveyance, additional shares of Common Stock
shall be issued in exchange, conversion, substitution or payment, in whole or in
part, for a security of the Company other than Common Stock, any such issue
shall be treated as an issue of Common Stock covered by the provisions of this
Section 5 hereof.
6. REGISTRATION UNDER THE SECURITIES ACT OF 1933.
The Company shall register the shares of the Common Stock which
may be issued upon the conversion of the principal sum of the Debenture and for
the interest payable thereunder as provided for in Exhibit C to the Debenture
Purchase Agreement, the Registration Rights Agreement.
7. REGULATION S.
This Debenture and the Common Stock issuable upon conversion or
as interest under this Debenture were issued under Regulation S under the
Securities Act of 1933, as amended, and may be transferred only as provided for
in the Debenture Purchase Agreement.
8. EVENTS OF DEFAULT.
If any of one or more of the following described events, or the
events as described in the Debenture Purchase Agreement, occur (each an "Event
of Default") then:
(a) The Company shall fail to pay the principal of, or interest on, this
Debenture within five (5) days after the Holder has given written notice to the
Company that the same has become due; or
(b) The Company shall fail to perform or observe any of the
provisions contained in any other Section of this Debenture or the Debenture
Purchase Agreement and such failure shall continue for more than thirty (30)
days after the Holder has given written notice to the Company; or
(c) Any material representation or warranty made in writing
by or on behalf of the Company in this Debenture shall prove to have been false
or incorrect in any material respect, or omits to state a material fact required
to be stated therein in order to make the statements contained therein, in the
light of the circumstances under which made, not misleading, on the date as of
which made, and the Company shall have failed to cure such false or incorrect
statement within thirty (30) days after the Holder has given written notice to
Borrower; or
(d) The Company shall be adjudicated a bankrupt or insolvent,
or admit in writing its inability to pay its debts as they mature, or make an
assignment for the benefit of creditors; or the Company shall apply for or
consent to the appointment of a receiver, trustee, or similar officer for it or
for all or any substantial part of its property; or such receiver, trustee or
similar officer shall be appointed without the application or consent of the
Company and such appointment shall continue undischarged for a period of thirty
<PAGE>
(30) days; or the Company shall institute (by petition, application, answer,
consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution, liquidation or similar proceeding relating to
it under the laws of any jurisdiction; or any such proceeding shall be
instituted (by petition, application or otherwise) against the Company and shall
remain undismissed for a period of thirty (30) days; or any judgment, writ,
warrant of attachment or execution or similar process shall be issued or levied
against a substantial part of the property of the Company and such judgment,
writ, or similar process shall not be released, vacated or fully bonded within
thirty (30) days after its issue or levy; or
(e) A final judgment for money in excess of Twenty-Five
Thousand ($25,000) Dollars not covered by insurance shall be rendered against
the Company and if, within thirty (30) days after entry thereof, such judgment
shall not have been discharged, satisfied or execution thereof stayed pending
appeal, or if, within thirty (30) days after the expiration of any such stay,
such judgment shall not have been discharged or satisfied; or
(f) The Company shall be enjoined, restrained or in any way
prevented by a court order from continuing to conduct all or any material part
of its business affairs;
THEN, or at any time thereafter, and in each and every case:
(1) Where the Company is in default under the provisions
of Section 8(d) hereof, the entire unpaid principal amount of the Debenture, all
interest accrued and unpaid thereon, and all other amounts payable to the Holder
hereunder shall automatically become and be forthwith due and payable without
offset or counterclaim of any kind and without presentment, demand, protest or
notice of any kind, and without regard to the running of the statute of
limitations, all of which are hereby expressly waived by the Company; and
(2) In any other case referred to in this Section 8, the
Holder may, by written notice to the Company, declare the entire unpaid
principal amount of this Debenture, all interest accrued and unpaid hereon, and
all other amounts payable hereunder to be forthwith due and payable, whereupon
the same shall become immediately due and payable, without offset or
counterclaim of any kind and without presentment, demand, protest or further
notice of any kind, and without regard to the running of any statutes of
limitation, all of which are hereby expressly waived by the Company.
Any declaration made pursuant to Section 8(2) hereof is subject to the
condition that, if at any time after the principal of this Debenture shall have
become due and payable, and before any judgment or decree for the payment of the
moneys so due, or any thereof, shall have been entered, all arrears of interest
upon this Debenture (except that Principal Sum of this Debenture which by such
declaration shall have become payable) shall have been duly paid, and every
Event of Default shall have been made good, waived or cured, then and in every
such case the Holder shall be deemed to have rescinded and annulled such
declaration and its consequences; but no such rescission or annulment shall
<PAGE>
extend to or affect any subsequent Event of Default or impair any right
consequent thereon.
9. CORPORATE OBLIGATION.
It is expressly understood that this Debenture is solely a
corporate obligation of the Company and that any and all personal liability,
either at common law or in equity, or by constitution or statute, of, and any
and all rights and claims against, every stockholder, officer, or director, as
such, past, present or future, are expressly waived and released by the Holder
as a part of the consideration for the issuance hereof.
10. TRANSFER.
Subject to the appropriate provisions of the Act and of Section 7
hereof, this Debenture or any portion of the principal amount hereof in One
Hundred Thousand Dollars ($100,000) increments, or multiples thereof (unless the
entire Principal Sum is being transferred), is transferable on the records of
the Company upon presentation of this Debenture, properly endorsed, at its
principal office; upon such presentation and transfer a new Debenture or
Debentures will be issued; provided, however, no transfer shall be made to any
competitors of the Company. For the purposes of payment and all other purposes,
the Company shall deem and treat the person in whose name this Debenture is
registered as the absolute owner hereof and the Company shall not be affected by
any notice to the contrary.
11. MISCELLANEOUS.
(a) Notwithstanding the foregoing, the Company promises to
pay interest after maturity (whether by acceleration or otherwise, and before as
well as after judgment) at the same rate as above provided prior to maturity on
balances, if any, then outstanding.
(b) Interest under this Debenture shall be computed on the
basis of a thirty (30) day month and a year of 360 days for the actual number of
days elapsed.
(c) In case at any time any Common Stock shall be listed on
any stock exchange or NASDAQ, the Company will list on such exchange or NASDAQ,
and all other exchanges where such stock or other stock, warrants, and
securities at the time issuable upon the conversion of this Debenture may be
listed, and keep listed thereon subject to listing requirements of such exchange
or exchanges, an official notice of issuance upon the conversion of this
Debenture, all shares of common stock and other stock and securities from time
to time issuable upon such conversion.
(d) Unless otherwise specifically proved herein, any notice
required by this Agreement is effective and deemed delivered when faxed to the
numbers set forth herein and receipt of such fax is electronically confirmed.
Any such notice shall also be sent on the day such fax is sent (or if such day
is not a business day, the next business day by overnight courier), properly
addressed. Notices will be sent to the fax numbers and addresses set forth in
this Agreement, unless either party notifies the other of an fax and/or address
change in writing.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Debenture to be executed in
Vancouver, British Columbia as of the day and year first above written.
EFINANCIAL DEPOT.COM, INC.
By: /s/ John Huguet
-----------------
Its: President
---------
OXFORD CAPITAL CORP.
By: /s/ Riaz Mamdani
------------------
