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SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the Quarterly Period Ended March 31, 2000
Commission file number 001-15627
eieiHome.com Inc.
(Exact name of small business issuer as specified in its charter)
Delaware 13-4103407
(State of Incorporation) (IRS. Employer ID No.)
67 Wall Street
Suite 2411, New York, NY 10005
(Address of Principal Executive Offices)
(212) 344-0351
('Issuer's Telephone No. including area code)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES |X| NO |_|
The number of shares outstanding of each of the Registrant's class of common
equity, as of May 10, 2000 are as follows:
Class of Securities Shares Outstanding
------------------- ------------------
Common Stock, $.001 par value 18,948,770
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<PAGE>
eieiHome.com Inc.
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INDEX
PART I Financial Information
Item 1. Financial Statements (unaudited)
Balance Sheet............................................ 3
Statements of Operations and Comprehensive (Loss)........ 5
Statements of Cash Flows................................. 6
Notes to Financial Statements............................ 7
Item 2. Management's Discussion and Analysis or Plan of Operation....... 8
PART II. Other Information
Item 1. Legal Proceedings............................................... 11
Item 2. Change in Securities and Use of Proceeds........................ 11
Item 3. Defaults Upon Senior Securities................................. 11
Item 4. Submission of Matters to a Vote of Security Holders............. 11
Item 5. Other Information............................................... 12
Item 6. Exhibits and Reports on Form 8-K................................ 12
A) Exhibit Schedule
B) Reports Filed on Form 8-K
Signatures................................................................ 13
<PAGE>
PART I. Financial Information
Item 1. Financial Statements
eieiHome.com Inc.
Balance Sheet
ASSETS March 31, December 31,
--------- ------------
2000 1999
---- ----
(Unaudited)
Current Assets:
Cash 78,840 2,188
Accounts receivable 13,081 15,597
Marketable securities 799,000 --
Other current assets 3,527 --
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Total current assets 894,448 17,785
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Property and equipment:
Furniture and equipment 35,371 22,304
Data processing equipment 29,753 20,958
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65,124 43,262
Less: Accumulated depreciation (11,060) (9,961)
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Net property and equipment 54,064 33,301
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TOTAL ASSETS 948,512 51,086
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See accompanying notes to financial statements.
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eieiHome.com Inc.
Balance Sheet
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' (DEFICIT) March 31, December 31,
--------- ------------
2000 1999
---- ----
(Unaudited)
<S> <C> <C>
Current Liabilities:
Accounts payable 35,466 204,686
Accrued expenses - other 15,503 58,747
Accrued expenses - legal 77,614 75,725
Accrued expenses - interest 62,418 -
Deferred revenue 6,929 2,696
Note payable - shareholder 200,000 500,000
Due to related parties -- 260,095
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Total current liabilities 397,930 1,101,949
Long term debt:
Convertible debenture 2,000,000 2,000,000
Senior subordinated convertible debenture (note 3) 1,735,500 110,500
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Total liabilities 4,133,430 3,212,449
Stockholders' (deficit)
Common stock, $.001 par value, 75,000,000 shares authorized, 18,199 181,988
18,198,770 shares, issued and outstanding at March 31, 2000 and on
December 31, 1999.
Preferred stock, $100 par value, 8%, non-voting, convertible, -- --
redeemable, 2,000 shares authorized, No shares issued and outstanding
at March 31, 2000 or December 31, 1999.
Additional paid-in capital 163,789
Accumulated deficit (3,685,906) (3,343,351)
Accumulated other comprehensive income 319,000 -
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Total stockholders' (deficit) (3,184,918) (3,161,363)
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TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) 948,512 51,086
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</TABLE>
See accompanying notes to financial statements.
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eieiHome.com Inc.
Statements of Operations and Comprehensive (Loss)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
---- ----
<S> <C> <C>
Revenue 23,786 4,796
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Expenses:
Selling, general & administrative 288,097 19,069
Occupancy 14,727 1,644
Interest 62,418 --
Depreciation - property and equipment 1,099 --
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366,341 20,713
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Net loss (342,555) (15,917)
Basic net loss per share of common stock (0.02) 0.00
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Weighted average number of common shares outstanding 18,198,770 18,198,770
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Other comprehensive( loss):
Unrealized holding gain on marketable securities 319,000 --
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Comprehensive (loss) (23,555) (15,917)
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</TABLE>
See accompanying notes to financial statements.
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eieiHome.com Inc.
Statements of Cash Flows
(UNAUDITED)
Three Months Ended
March 31,
2000 1999
---- ----
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Net cash used in operations
Net loss (342,555) (15,917)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization 1,099 --
Changes in:
Accounts receivable 2,516 --
Other current assets (3,527) --
Accounts payable (169,220) --
Accrued expenses - other (43,244) (13,841)
Accrued expenses - legal 1,889 --
Accrued expenses - interest 62,418 --
Deferred revenue 4,233 --
Due to related parties (260,095) 33,477
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Net cash provided by (used in) operating activities (746,486) 4,079
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Cash flows from investing activities:
Purchase of marketable securities (480,000) --
Purchase of fixed assets (21,862) --
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Net cash (used in) investing activities (501,862) --
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Cash flows from financing activities:
(Repayment) of notes payable - shareholder (300,000) --
Proceeds on issuance of senior subordinated --
convertible debentures 1,625,000
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Net cash provided by (used in) financing activities: 1,325,000 --
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Increase in cash 76,652 4,079
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Cash, beginning of period 2,188 299
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Cash, end of period 78,840 4,378
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See accompanying notes to financial statements.
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eieiHome.com Inc.
Notes to Financial Statements
March 31, 2000
Note 1 - Basis of Presentation
The accompanying unaudited financial statements of eieiHome.com Inc.
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-QSB and
Item 310(b) of Regulation S-B. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management of eieiHome.com
Inc., all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three months ended March 31, 2000, are not necessarily indicative of the results
that may be expected for the year ending December 31, 2000. For further
information, refer to the financial statements and footnotes thereto included in
the Company's annual report on Form 10-KSB for the year ended December 31, 1999
The balance sheet at December 31, 1998 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
Note 2 - Summary of significant accounting policies
Nature of business
The principal business of the Company is conducted through its wholly
owned subsidiary eieiHome.com Inc., a Canadian company (eieiHome Canada), which
operates an Internet service, information and e-commerce web site. The web site
provides information and related products and services for homeowners, home
buyers, and home service providers. This Internet service was introduced in two
Canadian test markets, Vancouver and Toronto, in June 1999 with the intent of
expanding to additional metropolitan markets in Canada and the United States.
The Company sells advertising space to national and local home service providers
and manufacturers of home-related products. For local and national accounts, the
Company also provides Internet web hosting, web page design, and e-mail
services.
Use of estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the period. Actual results could differ from these estimates, and such
differences could be material.
Marketable securities
Available-for-sale securities are stated at fair value, with the
unrealised gains and losses, net of tax, reported in comprehensive income
(loss). Realized gains and losses and declines in
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value judged to be other-than- temporary on available-for-sale securities are
included in investment income. The cost of securities sold is based on the
specific identification method. Interest and dividends on securities classified
as available-for-sale are included in investment income.
Net loss per share
Net loss per share has been computed using the net loss for the period
divided by the weighted average shares outstanding. Diluted loss per share is
not presented as the effects of convertible debentures, warrants and options are
anti-dilutive.
Foreign currency
The functional currency of the Company is the Canadian dollar.
For reporting purposes, the financial statements are presented in
United States dollars and in accordance with Statement of Financial Accounting
Standard No. 52, "Foreign Currency Translation". The balance sheets are
translated into United States dollars at the exchange rates prevailing at the
balance sheet dates and the statements of operations and cash flows at the
average rates for the relevant periods. Gains and losses resulting from
translation will be included as a component of accumulated other comprehensive
income (loss). To date such transactions have not been material.
Note 3 - Senior subordinated convertible debentures
The senior subordinated convertible debentures earn interest at 8% per
annum. Each $0.25 of principal amount is convertible into one common share and
one three year warrant to purchase an additional share of the Company at $0.50
per share.
Item 2. Management's Discussion and Analysis or Plan of Operation.
Overview
During the quarter ended March 31, 2000 management's efforts were
primarily focused on raising funds for the growth of the business. In addition,
the Board of Directors and management have decided that diversification of the
business strategy is an important factor for the ultimate success of the
Company. The Company has begun to make strategic investments and build key
growth relationships for the future. The first investment was made in the first
quarter and already has provided an unrealized gain for the Company. Management
is in discussions with international parties to expand the eieiHome concept
abroad at little risk to the Company. Management is hopeful that some of these
strategic relationships will be announced shortly.
Results of operations
For the three month period ended March 31, 2000
Revenues for the three month period ended March 31, 2000 were $23,786
representing $13,713 from national accounts, $6,219 from local accounts, $3,801
from web-design fees and
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$53 of miscellaneous revenues.
Selling, general & administrative expenses during the three-month
period ended March 31, 2000 were $288,097. Occupancy costs were $14,727
representing costs for the operating group's offices in Toronto. Operating
expenses are significantly higher than the previous year due to the launch of
the new website in June 1999.
The Company recorded interest of $62,418 during the
three-month period ended March 31, 2000. This amount represents accrued but
unpaid interest on the Simmonds Capital Limited (SCL) $500,000 short term note
payable (which has been reduced to $200,000 at March 31, 2000) and $2,000,000
long term convertible note payable and the new long term senior subordinated
convertible notes.
Depreciation on property and equipment totaled $1,099 during the
quarter ended March 31, 2000.
The net loss from operations during the three month period ended March
31, 2000 was $342,555 or $.02 per share.
The comprehensive loss after the unrealized holding gain on marketable
securities was $23,555.
For the three month period ended March 31, 1999
Revenues for the three month period ended March 31, 1999 were $4,796
representing revenues from a small group of National accounts prior to the
relaunch of the business in June 1999.
Operating expenses were $20,713 during the three-month period ended
March 31, 1999 representing primarily the employment costs of small group of
technical consultants and employees developing the web site prior to relaunch.
The net loss from operations was $15,917.
Financial Condition
Total assets increased from $51,086 at December 31, 1999 to $948,512 on
March 31, 2000. The most significant asset owned by the Company on March 31,
2000 was its investment in Vianet Technologies, Inc. During the three month
period ended March 31, 2000, the Company made an investment in 160,000 common
shares of Vianet Technologies, Inc., a publicly listed entity involved in
Internet based technology. The securities were acquired at a cost of $3.00 per
share and the closing share price on March 31, 2000 was $5.875. The shares are
restricted shares but are held for resale. After applying a 15% discount to the
March 31, 2000 closing share price the Company recorded an unrealized holding
gain on marketable securities of $319,000 and recorded the investment at
$799,000.
Current assets, including the marketable securities described above,
were $894,448 on March 31, 2000 up from $17,785 at December 31, 1999.
The net book value of property and equipment on March 31, 2000 was
$54,064,
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representing asset acquisitions of $21,862 and depreciation of $1,099 since
prior year end.
Current liabilities totaled $397,930 on March 31, 2000 down from
$1,101,949 at December 31, 1999. The most significant changes in current
liabilities during the three month was the repayment of amounts due to SCL. SCL
was repaid $260,095 that it had advanced to support operations prior to the
Company financing itself and $300,000 of its short term note payable. Accounts
payable were also brought current during the quarter.
The Company raised significant funding during the quarter ended March
31, 2000 by issuing $1,625,000 in new senior subordinated convertible
debentures. The debentures are convertible into common shares of the Company at
$0.25 per share at anytime during the next five years. Upon conversion, each
common share will have a warrant issued to purchase another common share at
$0.50 at anytime during the following three years. As debentures, prior to
conversion, interest accrues at a rate of 8%.
The Company recorded an unrealized holding gain on marketable
securities of $319,000. This gain has been recorded as accumulated other
comprehensive income in the Stockholders' deficit section of the balance sheet
on March 31, 2000.
Liquidity and Capital Resources
During the three month period ended, the Company used $746,486 in
operating activities, $501,862 in investing activities and increased the cash
balance by $76,652. These funds were provided by $1,325,000 in new financing
activities.
Working capital changed from a deficit of $1,084,164 at December 31,
1999 to a working capital surplus of $496,518 at March 31, 2000. At March 31,
2000 the working capital ratio was 2.2 to 1. The improvement in working capital
is attributable to the Company's investment in Vianet Technologies, Inc. which
has increased in value. As of May 10, 2000 the trading price of Vianet common
shares was $4.00.
Total liabilities increased from $3,212,449 at December 31, 1999 to
$4,133,430 at March 31, 2000.
As at March 31, 2000 the Company had raised an aggregate of $1,735,500
through the sale of senior subordinated convertible debentures. The debentures
pay interest at 8% and are convertible into common shares at $.25 per share.
Upon conversion, a warrant is issued to purchase an additional common share at
$.50 per share. The Board of Directors has approved the issuance of up to
$2,500,000 of these debentures. As of May 10, 2000, an aggregate of $2,051,950
in principal amount had been received.
The Company's operating revenues continue to be insignificant, so the
Company's ability to meet its obligations when they come due is contingent upon
its ability to raise additional financing. To date, the Company has been able to
finance its operations. There can be no assurance that it will continue to be
able to do so indefinitely.
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PART II. Other Information
Item 1. Legal Proceedings.
The Company does not believe that it is presently a party to any
pending litigation or any proceeding contemplated by a government authority the
outcome of which could reasonably be expected to have a material adverse effect
on its financial condition or results of operations.
Item 2. Changes in Securities and Use of Proceeds.
(a) Effective March 3, 2000, the Company was reincorporated, which, among other
things, changed its state of incorporation from Massachusetts to Delaware,
increased the number of authorized shares of common stock of the Company from
20,000,000 to 75,000,000, and changed the par value of the common stock from
$0.01 to $0.001. The effect of these changes on the rights of the holders of the
Company's common stock is discussed in the proxy statement attached as Exhibit
20 to this Report (the "Proxy Statement") and which is incorporated herein by
reference with respect to the matters described therein and to the additional
exhibits included therewith.
(c) As of March 31, 2000, the Company had issued an aggregate of U.S.$1,735,500
in principal amount of its 8% Senior Subordinated Convertible Debentures dated
as of March 6, 2000, each U.S.$0.25 of principal amount of which is convertible
into one share of the Company's common stock and one three-year warrant to
purchase an additional share of common stock at an exercise price of U.S.$0.50
per share, adjusted in each case as provided therein. The offering was made to
qualified persons in the United States and Canada in a private placement under
Section 4(2) of the Securities Act and pursuant to Regulation S. The proceeds of
the sale of the Debentures are to be used for general corporate purposes. The
Board of Directors of the Company has authorized the issuance of up to an
aggregate of $2,500,000 in principal amount of the Debentures.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
The Company held a Special Meeting of Shareholders on February 29, 2000
to approve and ratify a proposal to reincorporate the Company under the laws of
Delaware (the "Reincorporation") through an Agreement and Plan of Merger between
the Registrant and its wholly-owned subsidiary, eieiHome.com Inc., a Delaware
corporation. Over two thirds of the holders of common stock of the Company
entitled to notice of and to vote at the Special Meeting voted in favor of the
Reincorporation. The specific voting results are as follows:
For: 14,493,666
Against: 2,251
Non-vote: 109,670
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Total Outstanding: 18,198,770
PROPOSAL APPROVED
The Reincorporation was effective as of March 3, 2000. By approving the
Reincorporation, the
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shareholders also effectively approved the change in the Company's name from
HyComp, Inc. to eieiHome.com Inc., the increase in the number of authorized
shares of common stock of the Company from 20,000,000 to 75,000,000, the change
of the par value of the common stock from $0.01 to $0.001, and the adoption of
the 2000 Stock Option Plan in the form attached to the Proxy Statement. The
Company's five directors remained the same.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit 4.1* Form of Securities Purchase Agreement dated as of March 6,
2000 by and between the Company and the purchasers listed on
the signature pages thereof.
Exhibit 4.2* Form of 8% Senior Subordinated Convertible Debentures due
March 6, 2003.
Exhibit 20 Proxy Statement, dated February 7, 2000, in respect of the
Special Meeting of Stockholders of the Company (filed as
Exhibit 99.1 to the Company's Registration Statement on Form
10-SB, No. 1-15627 on February 17, 2000) and hereby
incorporated by reference and made a part of this report with
the same effect as if filed herewith.
Exhibit 27* Financial Data Schedule
- --------------------------
* Filed herewith
(b) Reports Filed on Form 8-K
On March 7, 2000, the Company filed a Report on Form 8-K dated as of
March 6, 2000 reporting under Item 5 that the Company had
reincorporated in Delaware, effective as of March 3, 2000, pursuant to
approval by the Company's shareholders given at a Special Meeting of
Shareholders held on February 29, 2000 as described in Item 4 of this
Report.
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SIGNATURES
Pursuant to the registration requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereto duly authorized.
DATE: MAY 15, 2000 BY: /s/ Angelo G. MacDonald
-----------------------
Angelo G. MacDonald
CEO / Director
(principal executive officer)
DATE: MAY 15, 2000 BY: /s/ Gary N. Hokkanen
--------------------
Gary N. Hokkanen
Chief Financial Officer,
(principal financial officer)
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as
of March 6, 2000 is entered into by and between eieiHome.com Inc., a Delaware
corporation (the "Company"), and the purchaser listed on the signature pages
hereof ("Purchaser").
WHEREAS, the Company desires to raise additional funds for
general corporate purposes;
WHEREAS, in order to provide the funds required for such
purposes the Company desires to raise funds by the sale of up to U.S.$2,500,000
in principal amount of its 8% Senior Subordinated Convertible Debentures
("Debentures"), each U.S.$0.25 of principal amount of which shall be convertible
into one share of its common stock, par value U.S.$0.001 per share ("Common
Stock") and one three-year warrant (a "Warrant") to purchase an additional share
of Common Stock at an exercise price of U.S.$0.50 per share, adjusted in each
case as provided therein; and
WHEREAS, the Purchaser desires to purchase such Debentures.
In consideration of the premises, mutual covenants and
agreements hereinafter contained and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
PURCHASE AND SALE OF SECURITIES
1.1 Commitments to Purchase and Fund. Subject to the terms and
conditions set forth herein and in reliance on the representations and
warranties of the parties contained herein, the Company agrees to sell and the
Purchaser agrees to purchase the principal amount of Debentures noted on
Schedule I attached hereto, which shall be convertible into that number of
shares of Common Stock set forth on Schedule I.
1.2 Fractional Interests. The Company shall not be required to
issue fractional shares of Common Stock or scrip representing fractional shares
of Common Stock upon consummation of the transactions contemplated by this
Agreement. The number of shares of Common Stock that are issuable upon any
conversion shall be rounded down to the nearest whole share. The Company may, at
its option, make a payment in cash in respect of any fractional shares which
might otherwise be issuable upon conversion of the Debentures, calculated by
multiplying the fractional share amount by the lowest sales price of one share
of the Company's Common Stock on the date of conversion as reported by the
principal United States Stock Exchange (including the Nasdaq Stock Market) on
which the Common Stock is then listed, or, if the Common Stock is not then
listed on a stock exchange but is quoted on the NASD OTC Bulletin Board, the
lowest price per share for the Common Stock quoted thereon on such date.
<PAGE>
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
To induce the Purchaser to purchase Debentures as herein provided, the
Company makes the following representations, warranties and covenants to the
Purchaser, each and all of which representations and warranties shall be true
and correct as of the date of the execution and delivery of this Agreement, and
all of which representations, warranties and covenants shall survive the
execution and delivery of this Agreement:
2.1 Corporate Existence. The Company (a) is duly organized and validly
existing under the laws of the jurisdiction of its organization, and (b) has all
requisite corporate power and authority to carry on its business as now being or
as proposed to be conducted. The Company has all requisite corporate power and
authority to consummate the transactions contemplated by this Agreement.
2.2 Authorization; Binding Agreement. The Company has all requisite
corporate power and authority to enter into this Agreement, issue the Debentures
as provided herein and perform its obligations hereunder and thereunder. The
execution, delivery and performance of this Agreement have been duly authorized
by all necessary corporate action on the part of the Company, and this Agreement
has been duly executed and delivered by the Company. This Agreement constitutes
the legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms subject, as to enforceability, to
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other laws of general applicability affecting the rights of creditors and to
general principles of equity.
2.3 No Conflict. The execution, delivery and performance by the Company
of this Agreement does not and will not (a) violate or contravene or be in
conflict with (i) any provision of the Articles of Incorporation or By-Laws of
the Company, (ii) any provision of any law, rule or regulation applicable to the
Company, or (iii) any order, judgment or decree of any court or other agency, or
(b) violate, result in a breach of or constitute a default under any term of any
material agreement to which the Company or any subsidiary of the Company is a
party or by which the Company or any subsidiary of the Company or any of their
property is bound.
2.4 Issuance. The Debentures to be issued and sold hereunder, the
Common Stock issuable upon conversion thereof and the Common Stock issuable upon
exercise of the Warrants, when issued and sold in accordance with the provisions
of this Agreement and the Debentures, as the case may be, will be duly
authorized, validly issued, fully paid and non-assessable.
2.5 Reservation of Shares. The Company shall at all times after April
1, 2000 reserve out of its authorized and unissued shares of Common Stock
sufficient shares to provide for the conversion of the Debentures and the
exercise of the Warrants issuable upon the conversion thereof.
2
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ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS
3.1 Purchaser Acknowledgements. The Purchaser understands and
acknowledges that:
(a) the offering and sale of Debentures hereunder, the
issuance of Common Stock and Warrants upon conversion thereof and the
issuance of the Common Stock upon exercise of the Warrants, are
intended to be exempt from registration under the Securities Act of
1933, as amended (the "Securities Act"), by virtue of the provisions of
either Section 4(2) of the Securities Act, Regulation S promulgated
under the Securities Act or Regulation D ("Regulation D") promulgated
under the Securities Act and the Company's reliance on such exemption
is based in part upon the representations made by the Purchaser herein;
(b) none of the Debentures to be issued and sold
hereunder, the Common Stock and Warrants to be issued upon conversion
thereof or the Common Stock to be issued upon exercise of the Warrants,
has been registered under the Securities Act or any securities or "Blue
Sky" laws of any state;
(c) there is no existing public or other market for
the Debentures, the Warrants or the Common Stock and there can be no
assurance that the Purchaser will be able to sell or dispose of any of
the Debentures, the Warrants or shares of Common Stock acquired by the
Purchaser hereunder or thereunder;
(d) neither the Debentures to be issued and sold
hereunder, nor the Common Stock or Warrants issuable upon conversion
thereof, nor the Common Stock issuable upon exercise of the Warrants
may be offered, sold, transferred, pledged, hypothecated or otherwise
assigned unless they are registered under the Securities Act or an
exemption from such registration is available, in each case in
accordance with any applicable securities or "Blue Sky" laws of any
state; and
(e) the Debentures to be purchased hereunder, the
certificates representing any Warrants or Common Stock acquired upon
conversion thereof, the certificates representing any Common Stock
issued upon exercise of the Warrants and each Debenture or certificate
issued to any subsequent transferee thereof shall bear legends in
substantially the following form:
The securities represented by this
certificate have not been registered under the Securities Act
of 1933, as amended (the "Act"), or any state securities laws
and neither such securities nor any interest therein may be
offered, sold, pledged, assigned or otherwise transferred
unless (1) a registration statement with respect thereto is
effective under the Act and any applicable state securities
laws or (2) the Company receives an opinion of counsel to the
holder of such securities, which counsel and opinion are
reasonably satisfactory to the Company, that such securities
may
3
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be offered, sold, pledged, assigned or transferred in the
manner contemplated without an effective registration
statement under the Act or applicable state securities laws.
Hedging transactions involving the securities represented by
this certificate may not be conducted unless in compliance
with the Act.
3.2 Purchaser Representations and Warranties. The Purchaser represents
and warrants to the Company that:
(a) the Debentures to be acquired by it pursuant to
this Agreement and any Warrants or Common Stock to acquired by it upon
conversion of the Debentures or exercise of the Warrants, as the case
may be, are or will be acquired for its own account, not as a nominee
or agent for any other Person, and without a view to the distribution
or resale of such shares or any interest therein in violation of the
Securities Act; and
(b) the Purchaser is an "accredited investor" within
the meaning of Rule 501(a) under Regulation D, as presently in effect,
and alone, or together with such Purchaser's "purchaser representative"
within the meaning of Rule 501(h) under Regulation D, as presently in
effect, has such knowledge and experience in financial and business
matters so as to be capable of evaluating the merits and risks of an
investment in the Debentures, the Warrants and the Common Stock, as the
case may be, and the Purchaser is capable of bearing the economic risks
of such investment and is able to bear the complete loss of an
investment in such Debentures, Warrants and Common Stock.
3.3 Authorization; Binding Agreement. The Purchaser further represents
that the execution, delivery, and performance of this Agreement is within the
Purchaser's powers (corporate or otherwise) and has been duly authorized by all
requisite action (corporate or otherwise) and that this Agreement constitutes
the legal, valid and binding obligation of the Purchaser, enforceable against
the Purchaser in accordance with its terms subject, as to enforceability, to
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other laws of general applicability affecting the rights of creditors and to
general principles of equity.
3.4 Residence. If the Purchaser is an individual, the Purchaser's
principal place of residence is in the state or other jurisdiction so designated
below his name on his signature page hereto, and if the Purchaser is not an
individual, the Purchaser's principal place of business is in the state or other
jurisdiction so designated below its name on its signature page hereto.
3.5 Information. The Purchaser acknowledges that he has been afforded
the opportunity to ask such questions as he has deemed necessary of, and to
receive answers from, representatives of the Company concerning the terms and
conditions of the offering of the Debentures and the merits and risks of
investing in the Debentures, the Warrants and the Common Stock. The Purchaser
further represents and warrants that the Purchaser has received all documents
and information relating to an investment in the Debentures, the Warrants and
the Common Stock requested by or on behalf of the Purchaser, including such
information relating to the Company as the Purchaser has deemed appropriate in
making a decision to invest in the Debentures, the Warrants and the Common
Stock.
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3.6 Condition to Conversion and Exercise. The Purchaser covenants and
acknowledges that as a condition precedent to the conversion of the Debentures
or exercise of the Warrants, the Company may require of the holder thereof, as
of the date of such conversion or exercise, to make such representations and
warranties, in the Company's view upon advice of counsel reasonably necessary to
establish that such conversion or exercise is a transaction exempt from Section
5 of the Securities Act or any successor provision thereto.
ARTICLE IV
MISCELLANEOUS
4.1 Notices. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or by Federal Express, Express Mail or similar
overnight delivery or courier service or delivered (in person or by facsimile)
against receipt to the party to whom it is to be given, addressed as follows (or
at such other address as may be substituted by notice given as herein provided):
If to the Company:
eieiHome.com Inc.
67 Wall Street, Suite 2411
New York, New York 10005
Attention: Angelo G. MacDonald
With copies to (which shall not constitute notice):
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
Facsimile: (212) 715-8000
Attention: Scott S. Rosenblum, Esq.
If to the Purchaser, at its address listed on the signature
pages hereof.
In either case, the addresses provided for notice above shall be
changed to any other address as the party shall have furnished in writing in
accordance with the provisions of this Section 4.1. Notice to the estate of any
party shall be sufficient if addressed to the party as provided in this Section
4.1. Any notice or other communication shall be deemed to have been duly given
and received when delivered in person, three days after the date when posted by
certified mail, the next business day when posted via Federal Express, Express
Mail or similar overnight delivery or courier service, on the date of delivery
if delivered during normal business hours and, otherwise, the next business day
when transmitted by facsimile, except for a notice changing a party's address,
which shall be deemed given at the time of receipt thereof. Any notice given by
other means permitted by this Section 4.1 shall be deemed given at the time of
receipt thereof.
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4.2 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.
(a) This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York applicable to
contracts made and to be wholly performed within such State, without reference
to principles of conflicts of laws.
(b) The parties hereto irrevocably and unconditionally submit
to the exclusive jurisdiction of any State or Federal court sitting in the State
of New York, over any suit, action or proceeding arising out of or relating to
this Agreement, any document or instrument delivered pursuant to, in connection
with or simultaneously with this Agreement, or a breach of this Agreement or any
such document or instrument. In any such action or proceeding, each party hereto
waives personal service of any summons, complaint or other process and agrees
that service thereof may be made in accordance with Section 4.1. Within 30 days
after such service, or such other time as may be mutually agreed upon in writing
by the attorneys for the parties to such action or proceeding, the party so
served shall appear or answer such summons, complaint or other process. The
parties hereto irrevocably and unconditionally waive any objection to the laying
of venue of any such suit, action or proceeding brought in any such court and
any claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum. A final judgment in any suit, action or
proceeding brought in any such court shall be conclusive and binding upon the
parties and may be enforced in any other court to whose jurisdiction a party is
or may be subject, by suit upon such judgment.
(c) The parties hereto hereby unconditionally waive trial by
jury in any suit, action or proceeding relating to this Agreement.
4.3 Successors and Assigns. This Agreement shall be binding upon the
Company, the Purchaser and each of their respective successors and assigns.
4.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original and all of which taken together shall constitute one agreement. This
Agreement may be delivered by facsimile transmission with the same effect as if
delivered in person.
4.5 Severability. In case any provision in this Agreement shall be held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and the
remaining provisions shall not in any way be affected or impaired thereby.
4.6 No Waiver; Amendments.
(a) No failure or delay on the part of the Company or 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 at law, in equity or otherwise.
(b) Any provision of this Agreement may be amended if, but
only if, such amendment is in writing and is signed by the Company and the
Purchaser.
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(c) Any provision of this Agreement may be waived if, but only
if, such waiver is in writing and is signed by the Company or the other party
against which such waiver is operative.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
EIEIHOME.COM INC. [Name of Purchaser]
By: ____________________ [By]: ______________________
Name: __________________ [Name]: ____________________
Title: ___________________ [Title]: ____________________
Social Security Number or other
Taxpayer Identification Number:
-----------------------------
Address:_____________________
-----------------------------
-----------------------------
-----------------------------
Facsimile: __________________
If the Debentures will be
held as joint tenants,
tenants in common, or
community property, please
complete the following:
-----------------------------
Print name of spouse or other
co-subscriber
-----------------------------
Signature of spouse or other
co-subscriber
-----------------------------
Print manner in which Debentures
will be held
-----------------------------
Social Security Number
SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT
8
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Schedule I
Name
Date of Issuance Principal Amount of Debentures No. of Common Shares
- ---------------- ----------------------------- --------------------
9
<PAGE>
Schedule 2.4
Warrant Holder Date of Issue Number Exercise Term
- -------------- ------------- ------ -------- ----
10
THIS DEBENTURE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAWS AND NEITHER THEY NOR ANY INTERESTS THEREIN MAY BE
OFFERED, SOLD, TRANSFERRED, PLEDGED, ASSIGNED OR OTHERWISE DISPOSED OF UNLESS
(i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS IS EFFECTIVE AND CURRENT WITH REGARD THERETO, OR (ii) AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE, TRANSFER,
PLEDGE, ASSIGNMENT OR OTHER DISPOSAL. ANY EXERCISE OR CONVERSION OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE SUBJECT TO CONDITIONS SET
FORTH IN ARTICLE III OF THE SECURITIES PURCHASE AGREEMENT, DATED AS OF MARCH 6,
2000, BETWEEN THE OWNER AND THE ORIGINAL LENDER THEREOF.
No. _ $_________
8% SENIOR SUBORDINATED CONVERTIBLE DEBENTURE DUE MARCH 6, 2003
THIS 8% SENIOR SUBORDINATED CONVERTIBLE DEBENTURE is one of a duly
authorized issue of Debentures of eieiHome.com Inc., (whose wholly owned
subsidiary is eieiHome.com Inc.), a corporation organized under the laws of the
Commonwealth of Delaware and having its principal address at 67 Wall Street,
Suite 2411, New York, New York 10005 (the "Company"), designated as its 8%
Senior Subordinated Convertible Debentures due March 6, 2003 in an aggregate
principal amount not exceeding Two Million Five Hundred Thousand U.S. Dollars
(U.S. $2,500,000) (the "Debentures").
FOR VALUE RECEIVED, the Company promises to pay to the order of
_________ having an address at _____________________________, the holder hereof,
or its registered assigns (the "Holder"), the principal sum of ____________
United States Dollars (U.S. $______) on March 6, 2005 (the "Maturity Date") and
to pay interest on the principal sum outstanding under this Debenture, at the
rate of 8% per annum. Interest shall be payable in arrears annually on March 6th
of each year, commencing on March 6, 2001 (each such date, an "Interest Payment
Date") and on the Maturity Date. Interest shall be calculated based on a 360 day
year. Interest shall accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from the date of original issuance and
shall continue until the following Interest Payment Date. The interest so
payable will be paid to the person in whose name this Debenture is registered on
the records of the Company regarding registration and transfers of the
Debentures (the "Debenture Register") at the close of business on the record
date for interest payable on such Interest Payment Date; provided, however, that
the Company's obligation to a permitted transferee of this Debenture arises only
if the transfer, sale or other disposition is made in accordance with the terms
and conditions of the Securities Purchase Agreement, dated as of March 6, 2000,
among the Company and the purchasers of the original issue of the Debentures
<PAGE>
(as amended from time to time and in effect, the "Securities Purchase
Agreement"). The record date for any interest payment is the close of business
on the date fifteen days prior to the Interest Payment Date, unless such date
shall not be a business day, in which case on the next preceding business day.
The Company shall be entitled to withhold from all payments of interest on this
Debenture any amounts required to be withheld under the applicable provisions of
the United States or Canadian income tax laws as evidenced by an opinion of
counsel of the Company.
The principal and interest of this Debenture are payable in United
States Dollars at the address last appearing on the Debenture Register of the
Company as designated in writing by the Holder hereof from time to time.
This Debenture is subject to the following additional provisions:
1. Subordination to Senior Indebtedness. The Company covenants and
agrees, and each holder of Debentures, by his acceptance thereof, likewise
covenants and agrees, that the indebtedness evidenced by the Debentures,
including the principal of and interest thereon, shall be subordinate and
subject in right of payment, to the extent and in the manner hereinafter set
forth, to the prior payment in full of all Senior Indebtedness of the Company,
whether now outstanding or hereinafter incurred, and each holder of Debentures,
by his acceptance thereof, agrees to and shall be bound by the provisions of
this Paragraph 1.
(a) "Senior Indebtedness" shall mean the principal of and
premium, if any, on and interest on any indebtedness of the Company, and any
indebtedness of another entity for the payment of which the Company is at the
time of determination responsible or liable as guarantor or otherwise, which
indebtedness in either case is for money borrowed from a bank or other unrelated
lending institution.
(b) Upon any distribution of the assets of the Company upon
any dissolution, winding up or total liquidation or reorganization relative to
the Company or to its property (whether in bankruptcy, insolvency or
receivership proceedings, or upon an assignment for the benefit of creditors, or
any other marshaling of the assets and liabilities of the Company or otherwise),
(i) all principal of (premium, if any) and interest on all
Senior Indebtedness (including interest thereon accruing after the
commencement of any bankruptcy or insolvency proceedings) shall first
be paid in full, or provision made for such payment in cash, before any
payment is made on account of the principal of or interest on the
Debentures;
(ii) any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities (other
than securities of the Company as reorganized or readjusted or
securities of the Company or any other corporation provided for by a
plan of reorganization or readjustment the payment of which is
subordinate, at least to the extent provided in this Paragraph 1 with
respect to the Debentures, to the payment of all Senior Indebtedness,
provided that the rights of the holders of Senior Indebtedness at the
time outstanding are not altered by such reorganization or
readjustment) on account of the indebtedness evidenced by the
Debentures to which the
2
<PAGE>
holders of the Debentures would be entitled except for the provisions
of this Paragraph 1, shall be paid or delivered by the trustee in
bankruptcy, receiver, assignee for the benefit of creditors or other
liquidating agent making such payment or distribution directly to the
holders of Senior Indebtedness, or their representative or
representatives or to the trustee or trustees under any indenture
pursuant to which any instruments evidencing any of such Senior
Indebtedness may have been issued, pro rata, as their respective
interests may appear for application to the payment of all Senior
Indebtedness remaining unpaid to the extent necessary to pay all Senior
Indebtedness in full after giving effect to any concurrent payment or
distribution, or provision therefor in cash, to the holders of such
Senior Indebtedness.
The Company shall give prompt written notice to the holders of
the Debentures of any dissolution, winding up, total liquidation or
reorganization of the Company within the meaning of this Paragraph 1(b). Upon
any payment or distribution of assets of the Company referred to in this
Paragraph 1(b), the holders of the Debentures shall be entitled to rely upon a
certificate of the trustee in bankruptcy, receiver, assignee for the benefit of
creditors or other liquidating agent making such payment or distribution,
delivered to the holders of the Debentures, for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Paragraph 1(b).
(c) No direct or indirect payment (in cash, property,
securities, by set-off or otherwise) shall be made or agreed to be made on
account of the principal of the Debentures, or interest thereon, or in respect
of any redemption, retirement, purchase or other acquisition of any of the
Debentures, and no holder of any Debentures shall be entitled to demand or
receive any such payment (i) if, or to the extent, such payment is restricted by
any Senior Indebtedness or under any agreement or indenture pursuant to which
any instruments evidencing any such Senior Indebtedness may have been issued or
(ii) if at the time of such payment or after giving effect thereto there shall
have occurred and be continuing any event of default under any Senior
Indebtedness or under any agreement or indenture pursuant to which any
instruments evidencing any such Senior Indebtedness may have been issued and the
maturity of such Senior Indebtedness shall have been accelerated as a result of
such default.
(d) In the event that any direct or indirect payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities (other than securities of the Company as reorganized or
readjusted or securities of the Company or any other corporation provided for by
a plan of reorganization or readjustment the payment of which is subordinate, at
least to the extent provided in this Paragraph 1 with respect to the Debentures,
to the payment of all Senior Indebtedness, provided that the rights of the
holders of Senior Indebtedness at the time outstanding are not altered by such
reorganization or readjustment) on account of the indebtedness evidenced by the
Debentures shall be received by the holders of the Debentures in contravention
of Paragraphs 1(b) or 1(c) before all Senior Indebtedness is paid in full, such
payment or distribution shall be held in trust for the benefit of, and shall be
paid over or delivered to, the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any such Senior
Indebtedness may have been issued, pro rata, as their respective interests may
3
<PAGE>
appear, for application to the payment of all Senior Indebtedness remaining
unpaid to the extent necessary to pay all such Senior Indebtedness after giving
effect to any concurrent payment or distribution, or provision therefor in cash,
to the holders of such Senior Indebtedness.
(e) After all Senior Indebtedness is paid in full, the holders
of the Debentures shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions of assets of the Company made
on the Senior Indebtedness until the Debentures and interest shall be paid in
full, and for purposes of such subrogation, no such payments or distributions to
the holders of Senior Indebtedness of cash, property or securities, which
otherwise would be payable or distributable to the holders of the Debentures,
shall, as between the Company, its creditors other than the holders of Senior
Indebtedness, and the holders of the Debentures, be deemed to be a payment by
the Company to or on account of Senior Indebtedness, it being understood that
the provisions of this Paragraph 1 are and are intended solely for the purpose
of defining the relative rights of the holders of the Debentures, on the one
hand, and the holders of Senior Indebtedness, on the other hand.
(f) Nothing contained in this Paragraph 1 or elsewhere in this
Debenture or in the Purchase Agreement is intended to or shall impair, as
between the Company, its creditors other than the holders of Senior Indebtedness
and the holders of the Debentures, the obligation of the Company, which is
absolute and unconditional, to pay to the holders of the Debentures the
principal of the Debentures and interest thereon, as and when the same shall
become due and payable in accordance with their terms, or to affect the relative
rights of the holders of the Debentures and creditors of the Company other than
the holders of Senior Indebtedness, nor shall anything herein or therein prevent
the holder of any Debentures from exercising all remedies otherwise permitted by
applicable law upon default under this Debenture, subject to the rights, if any,
under this Paragraph 1 of the holders of Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.
2. Transfers. This Debenture has been issued subject to investment
representations of the original purchaser hereof and may be transferred or
exchanged in the United States only (a) in compliance with the Securities Act of
1933, as amended (the "Act") and applicable state securities laws, (b) as
expressly permitted by the Securities Purchase Agreement, and (c) in accordance
with other applicable provisions hereof. Prior to due presentment for transfer
of this Debenture, the Company may treat the person in whose name this Debenture
is duly registered on the Company's Debenture Register as the owner hereof for
the purpose of receiving payment as herein provided and all other purposes,
whether or not this Debenture is then overdue, and the Company shall not be
affected by notice to the contrary.
3. Definitions. For purposes hereof, the following terms shall have the
following meanings:
"Change of Control" shall mean (A) the merger or consolidation
of the Company into or with another corporation, partnership, joint venture,
trust or other entity or the merger or consolidation of any other corporation
into or with the Company (in either case, in which consolidation or merger the
stockholders of the Company receive distributions of cash or securities as a
result of such consolidation or merger in complete exchange for their shares of
capital stock of the Company), (B) the sale or other disposition of all or
substantially all the
4
<PAGE>
assets of the Company (unless, in either case, upon consummation of such sale or
other disposition of assets in exchange for equity Securities (and specifically
excluding sales or other dispositions for cash), the holders of voting
securities of the Company immediately prior to such transaction continue to own
directly or indirectly, by virtue of securities issued solely with respect to
their shares of capital stock of the Company, not less than a majority of the
voting power of the surviving corporation).
"Closing Date" shall mean the date of original issuance of
this Debenture.
"Common Stock" shall mean the common shares, par value $.001,
of the Company and any other security into which such common stock shall be
converted or for which it shall be exchanged pursuant to any recapitalization,
reorganization, merger, consolidation, share exchange or similar transaction.
"Conversion Deficiency" shall have the meaning set forth in
Paragraph 8(b).
"Conversion Notice" shall have the meaning set forth in
Paragraph 4(c)
"Conversion Rate" shall have the meaning set forth in
Paragraph 4(b).
"Equity Offerings" shall mean the issuance or sale by the
Company of any Common Stock or securities which are convertible into or
exchangeable for Common Stock, or any warrants or other rights to subscribe for
or to purchase, or any options for the purchase of, Common Stock or any such
convertible or exchangeable securities (other than shares or options issued or
which may be issued pursuant to the Company's employee or director option plans
or shares issued upon exercise of options, warrants or rights outstanding on the
Closing Date and listed in the Company's filings with the Securities and
Exchange Commission ("SEC")).
"Event of Default" shall have the meaning set forth in
Paragraph 15.
"Forced Conversion Date" shall have the meaning set forth in
Paragraph 4(c)(ii).
"Forced Conversion Notice" shall have the meaning set forth in
Paragraph 4(c)(ii).
"Holder Conversion Date" shall have the meaning set forth in
Paragraph 4(c)(i).
"Market Price" shall mean, as of any relevant date, the lowest
sales price of one share of Common Stock on the principal United States Stock
Exchange (including the Nasdaq Stock Market) on which the Common Stock is then
listed, or, if the Common Stock is not then listed on a stock exchange but is
quoted on the Nasdaq OTC Bulletin Board or on the pink sheets as reported by
Bloomberg Financial Markets, the lowest price per share for the Common Stock.
"Minimum Number of Shares" shall mean, at any time, the sum of
(i) the number of shares of Common Stock issued prior to such time upon
conversion of all or any part of the Debentures, plus (ii) the number of shares
(as may be adjusted in accordance with the terms hereof) of Common Stock
issuable at such time upon conversion of the Debentures (without giving effect
to any applicable conversion restrictions), minus (iii) the number of shares of
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<PAGE>
Common Stock described in clause (i) above that have been sold prior to such
time by the Holders pursuant to a registration statement or Rule 144.
"Outstanding Amount" shall mean the principal sum outstanding
under this Debenture and all accrued but unpaid interest thereon.
"Person" shall mean an individual, partnership, venture,
unincorporated association, organization, syndicate, corporation, limited
liability company, or other entity, trust and trustee, executor, administrator
or other legal or personal representative or any government or any agency or
political subdivision thereof.
"Redemption Date" shall have the meaning set forth in
Paragraph 5(a).
"Redemption Debentures" shall have the meaning set forth in
Paragraph 5(c).
"Redemption Price" shall have the meaning set forth in
Paragraph 5(b).
"Warrants" shall have the meaning set forth in Paragraph 4(b).
Other terms defined in the Securities Purchase Agreement and
not otherwise defined herein shall have the same meanings herein as are set
forth for such terms in the Securities Purchase Agreement.
4. Conversion. This Debenture is subject to conversion as
follows:
(a) (i) Holder's Right to Convert. This Debenture shall be
convertible at any time and from time to time after the Closing Date, in whole
or in part, at the option of the Holder hereof, into fully paid, validly issued
and nonassessable shares of Common Stock and fully paid, validly issued and
nonassessable Warrants.
(ii) Company's Right to Force Conversion. (A) The Company
may require conversion of all or any part of the Outstanding Amount of this
Debenture from time to time into fully paid, validly issued and nonassessable
shares of Common Stock and fully paid, validly issued and nonassessable
Warrants; provided, that
(1) the average closing price per share of Common
Stock for the five (5) trading days immediately preceding the delivery of the
Forced Conversion Notice shall have been greater than or equal to $2.00;
(2) (A) no Event of Default as specified in Section
15(b), (c), (d), (e), or (f) shall have occurred and be continuing prior to the
Forced Conversion Date and (B) no Event of Default as specified in Section 15(a)
shall have occurred and be continuing as of the Forced Conversion Date;
(3) no Conversion Deficiency shall have occurred
prior to the Forced Conversion Date; and
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<PAGE>
(4) any such required conversion shall be made from
each Holder, pro rata according to the portion of the total Outstanding Amount
of all Debentures held by each Holder.
(B) Notwithstanding clause (A) of this Paragraph 4(a)(ii),
after the second anniversary of the Closing Date, the Company may require
conversion of all or any part of this Debenture from time to time into fully
paid, validly issued and nonassessable shares of Common Stock and fully paid,
validly issued and nonassessable Warrants; provided, that
(1) (A) no Event of Default as specified in Section
15(b), (c), (d), (e), or (f) shall have occurred and be continuing prior to the
Forced Conversion Date and (B) no Event of Default as specified in Section 15(a)
shall have occurred and be continuing as of the Forced Conversion Date;
(2) no Conversion Deficiency shall have occurred
prior to the Forced Conversion Date; and
(3) any such required conversion shall be made from
each Holder, pro rata according to the portion of the total Outstanding Amount
of all Debentures held by each Holder.
(C) The Company may require conversion of all or any part of
this Debenture from time to time into fully paid, validly issued and
nonassessable shares of Common Stock and fully paid, validly issued and
nonassessable Warrants; provided, that there is a Change of Control.
(iii) Automatic Conversion. At the Maturity Date, the
Outstanding Amount of this Debenture plus any unpaid charges or amounts shall
automatically be converted into fully paid, validly issued and nonassessable
shares of Common Stock and fully paid, validly issued and nonassessable
Warrants, and, except for the Holder's right to receive the Common Stock into
which this Debenture is automatically so converted, and except for any portion
of this Debenture which cannot be converted because of the limitations contained
in Paragraph 8(b), this Debenture shall be deemed to have been canceled whether
or not surrendered upon such automatic conversion.
(iv) Accrued But Unpaid Interest. Notwithstanding anything
in this Debenture to the contrary, the Outstanding Amount of this Debenture on
any Holder Conversion Date or any Forced Conversion Date, as the case may be,
shall include, without limitation, all accrued but unpaid interest under this
Debenture through such date.
(b) Conversion Price for Holder Converted Shares. The
Outstanding Amount of this Debenture shall be convertible into the number of
validly issued, fully paid and non-assessable shares of Common Stock determined
by dividing the aggregate amount of the Debenture being converted by $0.25, as
adjusted pursuant to Section 6. Upon conversion, each share of Common Stock will
be accompanied by one three-year warrant, substantially in the form of Exhibit C
hereto, to purchase a share of Common Stock for the purchase price of $0.50 per
share, as adjusted, before such conversion, pursuant to Section 6 (the
"Warrants").
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The number of shares of Common Stock, and number of Warrants to
purchase Common Stock, into which the Outstanding Amount of this Debenture may
be converted pursuant to this paragraph is herein referred to as the "Conversion
Rate."
(c) (i) Mechanics of Conversion by Holder. In order to convert
this Debenture (in whole or in part) into shares of Common Stock and Warrants,
the Holder shall surrender this Debenture, duly endorsed, by overnight courier,
to the Company, and, in case of any conversion pursuant to Paragraph 4(a)(i),
shall give written notice in the form of Exhibit A hereto (the "Conversion
Notice") by facsimile (with the original of such notice forwarded with the
foregoing courier) to the Company that the Holder elects to convert all or the
portion of the Outstanding Amount of this Debenture specified therein, which
notice and election shall be irrevocable by the Holder unless the Company shall
default in or fail to fulfill any or all of its obligations arising hereunder or
otherwise by reason of such notice or election, in which case, in addition to
and not in lieu of any and all other rights and remedies to which the Holder may
thereby be and become entitled, such notice and election, by further notice to
the Company may be revoked and rescinded at the election of the Holder exercised
in its sole discretion; provided, however, that the Company shall not be
obligated to issue certificates evidencing the shares of Common Stock issuable
upon conversion unless this Debenture with evidence of the principal amount
hereof to be converted is delivered to the Company as provided above; and
provided, further, that each Conversion Notice shall provide for the Holder's
election to convert either (A) at least $2,500 of the Outstanding Amount of this
Debenture, or (B) if such Outstanding Amount shall then be less than $7,500, the
entire Outstanding Amount. The date on which a Conversion Notice is given (the
"Holder Conversion Date") shall be deemed to be the date the Company received by
facsimile the Conversion Notice, as evidenced by a printed confirmation of
receipt received by the Holder and confirmed by telephone conference between the
Holder and the Company. Upon receipt of any Conversion Notice, the Company shall
immediately verify the Holder's calculation of the Conversion Rate. Unless the
Company objects, in writing, to the Holder's calculation within four (4)
business days after the Holder Conversion Date, the Company will be deemed to
have accepted such calculation.
(ii) Mechanics of Forced Conversion by Company. In order
to require conversion of this Debenture pursuant to Paragraph 4(a)(ii) or
4(a)(iii), the Company shall give written notice in the form of Exhibit B
hereto, appropriately completed (the "Forced Conversion Notice"), by facsimile
(with the original of such notice forwarded by overnight courier) to each Holder
of Debentures. Such Forced Conversion Notice shall state that the Company elects
to force conversion of all or a specified portion of the Outstanding Amount of
the Debentures of each Holder, which notice and election shall be irrevocable by
the Company and shall be delivered at least 10 trading days prior to the date of
conversion specified in the Forced Conversion Notice (the "Forced Conversion
Date"). Each Holder will, within two business days after the Forced Conversion
Date, to the extent the Debenture has not been converted by such Holder prior to
the Forced Conversion Date, deliver such Debenture evidencing the Outstanding
Amount of such Debenture to be converted to the Company, duly endorsed, by
overnight courier. Notwithstanding anything herein to the contrary, any Holder
may convert any portion of its Debentures prior to the Forced Conversion Date.
(iii) Issuance of Certificates. In the case of any
Conversion Notice given by the Holder or any Forced Conversion Notice given by
the Company, the Company shall
8
<PAGE>
use reasonable commercial efforts to cause the Company's transfer agent for the
Common Stock to issue and deliver as promptly as practicable to such Holder or
to its designee, a certificate or certificates for the number of shares of
Common Stock to which the Holder shall be entitled, together with a Debenture
for the principal amount not submitted for conversion or forced to convert, as
the case may be. The person or persons entitled to receive the shares of Common
Stock issuable upon conversion shall be treated for all purposes as the record
holder or holders of such shares of Common Stock on the Holder Conversion Date
or the Forced Conversion Date, as the case may be.
5. Redemption.
(a) Company Option To Redeem. Any portion of this Debenture
may be redeemed at the Company's option expressed by a written notice (a
"Redemption Notice") to the Holder; provided that
[(i) the average closing price per share of Common Stock
for five (5) trading days immediately preceding the delivery of the Redemption
Notice shall have been less than $0.48 per share, such price to be
proportionately adjusted in the event of a subdivision, split-up, spin-off or
combination in accordance with Section 6;]
(ii) the Redemption Notice delivered by the Company shall
be received by the Holder at least ten (10) trading days (but not more than
forty (40) trading days) prior to the date (the "Redemption Date") of
redemption;
(iii) on the date of the Redemption Notice, the Company
shall not be prohibited under the terms of any financing or other agreements or
applicable law from redeeming the Debentures on the Redemption Date; and
(iv) no Conversion Deficiency, as defined in Paragraph
8(b), shall have occurred prior to the Redemption Date; or
(v) notwithstanding clauses (i) - (iv) of this paragraph
5(a), there is a Change of Control.
(b) Redemption Price. The redemption price for the portion of
this Debenture being redeemed shall equal the Outstanding Amount of this
Debenture being so redeemed, plus all late payment charges and all other amounts
accrued, if any, under this Debenture and not previously paid (the "Redemption
Price"). The Redemption Price shall be payable in cash in United States Dollars.
(c) Mechanics of Redemption. If less than all of the
Outstanding Amount of Debentures are to be redeemed at any time, selection of
Debentures for redemption will be made by the Company on a pro rata basis. In
the event the Company shall be required or elects to redeem any part or all of
the Outstanding Amount of the Debentures, the Company shall send by facsimile
(with the original of such notice forwarded by overnight courier) confirmation
of such determination or obligation to the record Holders of the Debentures
being redeemed (the "Redemption Debentures"), which confirmation shall be
included in the Redemption Notice. Such confirmation shall specify the
Redemption Date, which shall be at least 20 trading days
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<PAGE>
(but not more than 40 trading days) after receipt by the Holder of the
Redemption Notice, as applicable. On the Redemption Date, the Redemption
Debentures shall be redeemed automatically without any further action by the
Holders of such Debentures and whether or not the Debentures are surrendered to
the Company (but only to the extent that the Company complies with its
obligation to pay the Redemption Price therefor); provided, that the Company
shall be obligated to pay the cash consideration due to a Holder of such
Debentures upon redemption when such Debentures are delivered to the principal
office of the Company. Thereupon, there shall be promptly issued and delivered
to such Holder, within seven (7) business days after the Redemption Date and
delivery to the Company of such Debentures at the address of such Holder on the
books of the Company, payment in immediately available funds to the name as
shown on the books of the Company in the amount of the Redemption Price as
calculated as set forth in Paragraph 5(b). If the Company shall not have the
funds available to pay the aggregate Redemption Price of all Redemption
Debentures, then, without limiting the Company's obligation to redeem all
Redemption Debentures, such redemption shall be made from each Holder, pro rata
according to the portion of the total Outstanding Amount of all Redemption
Debentures then held by each Holder and the Company shall not be permitted to
require any further redemption in accordance with Paragraph 5(a).
Notwithstanding anything to the contrary contained herein, the Holders'
rights of conversion pursuant to Paragraph 4 hereof shall not be limited in any
manner by the Company's rights of redemption pursuant to this Paragraph 5.
6. Stock Splits, Dividends, Reorganizations.
(a) Stock Splits. After the date hereof, in case the Company
shall at any time subdivide its outstanding shares of Common Stock into a
greater number of shares, whether by stock dividend, stock split or otherwise,
the Conversion Rate in effect immediately prior to such subdivision shall be
proportionately reduced and the number of shares of Common Stock and Warrants
convertible shall be proportionately increased. In case the outstanding shares
of Common Stock of the Company shall be combined into a smaller number of
shares, the Conversion Rate in effect immediately prior to such combination
shall be proportionately increased and the number of shares of Common Stock and
Warrants convertible hereunder shall be proportionately reduced.
(b) Reclassifications. After the date hereof, in case of any
reclassification or change in the outstanding shares of Common Stock (except
under the circumstances contemplated in Paragraph 6(a), or in case of any
consolidation or merger to which the Company is a party (except a merger in
which the Company is the surviving corporation and which does not result in any
reclassification or change in the outstanding shares of Common Stock), or in
case of any sale or conveyance to another person or entity of all or
substantially all of the property of the Company, effective provision shall be
made by the Company or by the successor or purchasing person or entity that the
Holder shall have the right, upon conversion of this Debenture, at a Conversion
Rate in effect immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance for the number of shares of Common
Stock and number of Warrants that but for such transaction would have been
received upon conversion hereunder, to receive the kind and amount of stock and
other securities and property receivable in such transaction by a holder of such
number of shares.
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<PAGE>
(c) No Other Antidilution Rights. Except as expressly set
forth herein, the Holder shall not be entitled to any anti-dilution rights with
respect to either (i) the number and kind of shares subject to this Debenture or
(ii) the Conversion Rate.
7. Fractional Shares. No fractional shares of Common Stock or scrip
representing fractional shares of Common Stock shall be issuable hereunder. The
number of shares of Common Stock that are issuable upon any conversion shall be
rounded down to the nearest whole share.
8. Reservation of Stock Issuable Upon Conversion.
(a) Reservation Requirement. The Company shall reserve and
keep available at all times after April 1, 2000, free of preemptive rights,
shares of Common Stock for the purpose of enabling the Company to satisfy any
obligation to issue shares of its Common Stock upon conversion of the
Debentures. The number of shares so reserved may be reduced by the number of
shares actually delivered pursuant to conversion of Debentures (provided that in
no event shall the number of shares so reserved be less than the Minimum Number
of Shares applicable to any Debenture) and the number of shares so reserved
shall be increased or decreased proportionally to reflect stock splits, stock
dividends and other distributions. In the event that the number of shares so
reserved (either in the aggregate or as to any Debenture) shall be insufficient
for issuance upon conversion of the Debentures (without giving effect to an
applicable conversion restrictions), or if the Holders of the Debentures would
at any time upon conversion thereof be entitled to the issuance of shares of
Common Stock in excess of the limitation in Paragraph 8(b) herein, then in
either case, upon receipt by the Company of notice from any Holder, the Company
shall use its best efforts and all due diligence to increase the number of
shares so reserved (without giving effect to any applicable conversion
restrictions) to cure all such deficiencies (either in the aggregate or as to
any Debenture) and, if necessary, to obtain the approval by its shareholders
therefor.
(b) Conversion Deficiency. If, upon receipt of a Conversion
Notice, the Company does not have a sufficient number of shares of Common Stock
available to satisfy the Company's obligations to issue Common Stock upon
conversion of all or any of the Debentures to be so converted (a "Conversion
Deficiency"), any Holder of the Debentures shall have the right to demand from
the Company immediate redemption of any portion of the Debentures with respect
to which the Company does not have a sufficient number of shares available to
satisfy such conversion obligations, in cash at the Redemption Price pursuant to
Paragraph 6 hereof, without regard to Paragraph 5(c) hereof. Within three
business days of the occurrence of any Conversion Deficiency, the Company shall
notify each Holder in writing of such occurrence.
Within three business days of the receipt of written demand for
redemption from any Holder pursuant to this Paragraph 8(b), the Company shall
notify each such Holder whether such redemption is prohibited under the terms of
any financing or other agreements or applicable law.
9. Other Covenants of the Company.
The Company shall not redeem (other than pursuant to Paragraph
5), retire, purchase or otherwise acquire, directly or indirectly, Debentures
held by any holder unless the
11
<PAGE>
Company shall have offered to redeem, retire, purchase or otherwise acquire, as
the case may be, the same proportion of the aggregate principal amount of
Debentures held by each other holder of Debentures at the time outstanding upon
the same terms and conditions and such offer shall remain open for a period of
at least twenty (20) business days.
10. Holder's Acknowledgements. Holder acknowledges and agrees as
follows:
(a) This Debenture will not be registered under the Securities
Act, or any state securities laws, and will be issued in reliance upon available
exemptions from registration. This Debenture may not be sold, transferred or
assigned by the Holder, in whole or in part, without the consent of the Company
except in accordance with the terms described herein. The Common Stock and
Warrants receivable upon conversion hereof may not be sold, transferred,
assigned or otherwise disposed of without an effective registration statement
covering the Common Stock and/or Warrants under the Securities Act and any
applicable state securities laws, or an opinion of counsel satisfactory to the
Company that registration is not required under the Securities Act and
applicable state securities laws.
(b) There are restrictions imposed by law upon the transfer of
and resale of such Common Stock and Warrants and the Holder may be required to
hold such shares of Common Stock and such Warrants for an extended period of
time or indefinitely unless such shares and/or Warrants are subsequently
registered under the Act and applicable state securities laws, or an exemption
from such registration is available.
(c) A legend in substantially the following form shall be
placed on the certificates for shares of Common Stock and for Warrants purchased
upon exercise of this Debenture:
The securities represented by this
certificate have not been registered under the Securities Act
of 1933, as amended (the "Securities Act"), or any state
securities laws and neither such securities nor any interest
therein may be offered, sold, transferred, pledged, or
otherwise disposed of unless (1) a registration statement
under the Securities Act and applicable state securities laws
is effective and current with respect thereto, or (2) an
exemption from registration under the Securities Act and
applicable state securities laws is available in connection
with such offer, sale, transfer, pledge or other disposal and
the Company receives an opinion of counsel to the holder of
such securities, which counsel and opinion are reasonably
satisfactory to the Company, to such effect. Hedging
transactions involving the securities represented by this
certificate may not be
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<PAGE>
conducted unless in compliance with the Securities Act.
(d) The Holder shall have no rights as a stockholder with
respect to any shares of Common Stock receivable upon conversion of this
Debenture until the date of issuance of a certificate for the Common Stock so
received in accordance with the terms hereof. Except as expressly set forth
herein, no adjustment shall be made for dividends or other rights for which the
record date occurs prior to the date of such issuance.
11. Representations of the Holder. Holder represents and warrants to
the Company that:
(a) This Debenture, the Warrants and the shares of Common
Stock receivable upon conversion hereunder are being acquired for its own
account, not as a nominee or agent for any other Person, and without a view to
the distribution or resale of such shares or any interest therein in violation
of the Securities Act; and
(b) The Holder is an "accredited investor" within the meaning
of Rule 501(a) under Regulation D, as presently in effect, and has such
knowledge and experience in financial and business matters so as to be capable
of evaluating the merits and risks of an investment in the Common Stock and
Warrants, and the Holder is capable of bearing the economic risks of such
investment and is able to bear the complete loss of an investment in the Common
Stock and Warrants.
(c) The execution, delivery, and performance of this Debenture
is within the Holder's powers (corporate or otherwise) and has been duly
authorized by all requisite action (corporate or otherwise) and that this
Debenture constitutes the legal, valid and binding obligation of the Holder,
enforceable against the Holder in accordance with its terms subject, as to
enforceability, to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws of general applicability affecting the
rights of creditors and to general principles of equity.
(d) If the Holder is an individual, the Holder's principal
place of residence is in the state or other jurisdiction so designated in
Section 21 herein, and if the Holder is not an individual, the Holder's
principal place of business is in the state or other jurisdiction so designated
in Section 21 herein.
(e) The Holder acknowledges that he or she has received all
documents and information relating to an investment in the Debenture, the
Warrants and the Common Stock requested by or on behalf of the Holder, including
such information relating to the Company as the Holder has deemed appropriate in
making a decision to invest in the Debenture, the Warrants and the Common Stock.
12. Obligations Absolute. No provision of this Debenture, other than
those provisions relating to the conversion of the Debentures shall alter or
impair the obligation of the Company, which is absolute and unconditional, to
pay the principal of, and interest on, this Debenture at the time, place and
rate, and in the manner, herein prescribed.
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<PAGE>
13. Waivers of Demand, Etc. The Company hereby expressly waives demand
and presentment for payment, notice of nonpayment, protest, notice of protest,
notice of dishonor, notice of intent to accelerate, prior notice of bringing of
suit and diligence in taking any action to collect amounts called for hereunder
and will be directly and primarily liable for the payments of all sums owing and
to be owing hereon, regardless of and without any notice (except as required by
law), diligence, act or omission as or with respect to the collection of any
amount called for hereunder.
14. Replacement Debentures. Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Debenture, and, in the case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
this Debenture, if mutilated, the Company will make and deliver a replacement
Debenture of like tenor, in lieu of this Debenture. Further, if the Holder of
this Debenture exercises the conversion rights granted hereunder in part but not
in whole, the Company agrees that it will deliver to the Holder a replacement
Debenture which will entitle the Holder thereof to convert this Debenture into
the number of shares of Common Stock that remain as yet unconverted under this
Debenture on the terms and conditions set forth herein.
15. Defaults. If one or more of the following events hereinafter called
"Events of Default") shall occur:
(a) The Company shall fail to perform or observe any
material covenant or agreement in the Securities
Purchase Agreement or any other covenant, term,
provision, condition, agreement or obligation of the
Company under this Debenture, and such failure shall
continue uncured for a period of twenty (20) business
days after notice from the Holder of such failure; or
(b) The Company shall fail to make any payments of
principal or interest when due under this Debenture
or upon redemption of this Debenture when due or fail
to issue shares of Common Stock upon conversion of
this Debenture (other than in accordance with the
terms of this Debenture), and such failure shall
continue uncured for a period of five (5) business
days after notice from the Holder of such failure; or
(c) The Company shall (i) become insolvent; (ii) admit in
writing its inability to pay its debts generally as
they mature; (iii) make a general assignment for the
benefit of creditors or commence proceedings for its
dissolution; or (iv) apply for or consent to the
appointment of a trustee, liquidator or receiver for
it or for a substantial part of its property or
business; or
(d) A trustee, liquidator or receiver shall be appointed
for the Company or for a substantial part of its
property or business without its consent and shall
not be discharged within sixty (60) days after such
appointment; or
(e) Any governmental agency or any court of competent
jurisdiction shall assume custody or control of the
whole or any substantial portion of the
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<PAGE>
properties or assets of the Company and shall not be
dismissed within sixty (60) days thereafter; or
(f) Bankruptcy, reorganization, insolvency or liquidation
proceedings or other proceedings, or relief under any
bankruptcy law or any law for the relief of debt,
shall be instituted by or against the Company and, if
instituted against the Company, shall not be
dismissed within sixty (60) days after such
institution, or the Company shall by any action or
answer approve of, consent to, or acquiesce in any
such proceedings or admit to any material allegations
of, or default in answering a petition filed in, any
such proceeding;
then, or at any time thereafter prior to the date on which all continuing Events
of Default have been cured, and in each and every such case, unless such Event
of Default shall have been waived in writing by the Holder (which waiver shall
not be deemed to be a waiver of any subsequent default) at the option of the
Holder and in the Holder's sole discretion, the Holder may, by notice to the
Company declare this Debenture immediately due and payable, and the Holder may
immediately, and without expiration of any period of grace, enforce any and all
of the Holder's rights and remedies provided herein or any other rights or
remedies afforded by law. In such event, the Debenture shall be redeemed at a
redemption price per Debenture equal to the redemption price provided in
Paragraph 5(b).
16. Savings Clause. In case any provision of this Debenture is held by
a court of competent jurisdiction to be excessive in scope or otherwise invalid
or unenforceable, such provision shall be adjusted rather than voided, if
possible, so that it is enforceable to the maximum extent possible, and the
validity and enforceability of the remaining provisions of this Debenture will
not in any way be affected or impaired thereby.
17. Entire Agreement. This Debenture and the agreements referred to in
this Debenture constitute the full and entire understanding and agreement
between the Company and the Holder with respect to the subject hereof. Neither
this Debenture nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the Company and
two-thirds-in-interest of the Holders.
18. Assignment Etc. The Holder may, subject to compliance with the
Securities Purchase Agreement, transfer or assign this Debenture or any interest
herein (but in no event in an amount less than $2,500 in Outstanding Amount or,
if less than $7,500, the total Outstanding Amount hereof); provided, however,
that it shall be a condition of such transfer or assignment (other than a
transfer or assignment pursuant to an effective registration statement) that the
Holder will furnish the Company in advance with an opinion of counsel, in form
and substance reasonably acceptable to the Company, to the effect that such
transfer or assignment is exempt from the registration requirements under the
Securities Act and applicable state securities laws. This Debenture shall be
binding upon the Company and its successors and shall inure to the benefit of
the Holder and its successors and assigns. Prior to due presentment for transfer
of this Debenture, the Company may treat the person in whose name this Debenture
is duly registered on the Company's Debenture Register as the owner hereof for
the purpose of receiving payment
15
<PAGE>
as herein provided and all other purposes, whether or not this Debenture is then
overdue, and the Company shall not be affected by notice to the contrary.
19. No Waiver. No failure on the part of the Holder to exercise, and no
delay in exercising, any right, remedy or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by the Holder of any
right, remedy or power hereunder preclude any other or future exercise of any
other right, remedy or power. Each and every right, remedy or power hereby
granted to the Holder or allowed it by law or other agreement shall be
cumulative and not exclusive of any other, and may be exercised by the Holder
from time to time.
20. No Rights As Shareholders. Nothing contained in this Debenture
shall be construed as conferring upon the Holder the right to vote or to receive
dividends or to consent or to receive notice as a shareholder in respect of any
meeting of shareholders of the Company for the election of the directors of the
Company or any matter, or any rights whatsoever as a shareholder of the Company.
21. Miscellaneous. Unless otherwise provided herein, any notice or
other communication to a party hereunder shall be deemed to have been duly given
if personally delivered or sent by registered or certified mail, return receipt
requested, postage prepaid with a copy in each case sent on the same day to the
party by facsimile, Federal Express or other overnight delivery service to said
party at its address set forth herein or such other address as either may
designate for itself in such notice to the other and communications shall be
deemed to have been received when delivered personally or, if sent by mail, when
actually received by the party to whom it is addressed. Copies of all notices to
the Company shall be sent to:
eieiHome.com Inc.
67 Wall Street, Suite 2411
New York, New York 10005
Facsimile No. (212) 943-2300
Attention: Angelo G. MacDonald
and to
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
Facsimile No. (212) 715-8000
Attention: Scott S. Rosenblum
Copies of all notices to the Holder shall be sent to:
_____________________________
_____________________________
_____________________________
_____________________________
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<PAGE>
Whenever the sense of this Debenture requires, words in the singular shall be
deemed to include the plural and words in the plural shall be deemed to include
the singular. Paragraph headings are for convenience only and shall not affect
the meaning of this document.
22. Choice of Law and Venue: Waiver of Jury Trial. THIS DEBENTURE SHALL
BE CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW OR CHOICE OF LAW THEREOF. The Company hereby (i)
irrevocably submits to the exclusive jurisdiction of the United States District
Court for the Southern District of New York for the purposes of any suit, action
or proceeding arising out of or relating to this Debenture and (ii) waives, and
agrees not to assert in any such suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. The Company consents to process
being served in any such suit, action or proceeding by mailing a copy thereof to
the Company at the address in effect for notices to it under this Debenture and
agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing in this paragraph shall affect or limit any right to
serve process in any other manner permitted by law.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
Dated as of: _______________, 20___
EIEIHOME.COM INC.
By:__________________________
Name:________________________
Title:
ATTEST:
________________________
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<PAGE>
EXHIBIT A
(To Be Executed by Registered Holder
in order to Convert Debenture)
CONVERSION NOTICE
FOR
8% CONVERTIBLE DEBENTURES DUE [FEBRUARY ___, 2005]
The undersigned, as Holder of the 8% Convertible Debenture Due [February ___,
2005] of eieiHome.com Inc. (the "Company"), No. _, in the outstanding principal
amount of U.S.$________ (the "Debenture"), hereby irrevocably elects to convert
U.S.$___________ of the outstanding principal amount of the Debenture and
U.S.$___________ of interest accrued but unpaid under the Debenture into shares
of the common stock, par value $.001 (the "Common Stock"), of the Company, and
an equal number of Warrants to purchase Common Stock of the Company, according
to the conditions of the Debenture, as of the date written below. The
undersigned hereby requests that share certificates for the Common Stock and
Warrants to purchase Common Stock to be issued to the undersigned pursuant to
this Conversion Notice, be issued in the name of, and delivered to, the
undersigned or its designee as indicated below. If shares or Warrants are to be
issued in the name of a person other than the undersigned, the undersigned will
pay all transfer taxes payable with respect thereto. No fee will be charged to
the Holder for any conversion, except for transfer taxes, if any.
The undersigned (as to itself only) represents and warrants to the
Company that:
(i) the shares of Common Stock and Warrants received upon
Conversion hereby are being acquired for its own account, not as a
nominee or agent for any other Person, and without a view to the
distribution or resale of such shares or any interest therein in
violation of the Securities Act; and
(ii) the undersigned is an "accredited investor" within the
meaning of Rule 501(a) under Regulation D, as presently in effect, and
has such knowledge and experience in financial and business matters so
as to be capable of evaluating the merits and risks of an investment in
the Common Stock and Warrants, and such Holder is capable of bearing
the economic risks of such investment and is able to bear the complete
loss of an investment in the Common Stock and Warrants.
The undersigned further represents that the execution, delivery, and
performance of this Conversion Notice is within its powers (corporate or
otherwise) and has been duly authorized by all requisite action (corporate or
otherwise) and that this Conversion Notice constitutes the legal, valid and
binding obligation of the undersigned, enforceable against it in accordance with
its terms subject, as to enforceability, to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other laws of general applicability
affecting the rights of creditors and to general principles of equity.
If the undersigned is an individual, the undersigned's principal place
of residence is in the state or other jurisdiction so designated below his name,
and if the undersigned is not an
18
<PAGE>
individual, the undersigned's principal place of business is in the state or
other jurisdiction so designated below its name.
The undersigned acknowledges that it has received all documents and
information relating to an investment in the Common Stock and Warrants requested
by or on behalf of the undersigned, including such information relating to the
Company as the undersigned has deemed appropriate in making a decision to invest
in the Common Stock and Warrants.
Accompanying this Conversion Notice is a Conversion Rate Computation
Schedule setting forth the determination by the undersigned of the number of
shares of Common Stock issuable pursuant to this Conversion Notice.
Conversion Information: ___________________________________
By:________________________________
Print Name:
Print Title:
Print Address of Holder:
___________________________________
___________________________________
Issue Common Stock and Warrants to:
___________________________________
at:________________________________
___________________________________
Date of Conversion
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<PAGE>
CONVERSION RATE COMPUTATION SCHEDULE
Outstanding Amount To Be Converted: $_________
Divided by $0.25, adjusted pursuant to
Section 6 of the Debenture per above: $_________
Shares of Common Stock to be
issued on conversion _________
Warrants to be issued on Conversion _________
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<PAGE>
EXHIBIT B
FORCED CONVERSION NOTICE
FOR
8% CONVERTIBLE DEBENTURES DUE [FEBRUARY ___, 2005]
The undersigned, an authorized officer of eieiHome.com Inc. (the "Company"),
issuer of the 8% Convertible Debenture Due [February ___, 2005] of the Company,
No. __, held by _________ (the "Holder") in the outstanding principal amount of
U.S.$___________ and accrued but unpaid interest thereon in the amount of
U.S.$_____________ (the "Debenture"), hereby irrevocably elects to require
conversion of U.S. $____________ of the outstanding principal amount of the
Debenture and U.S. $____________ of interest, fees and other amounts accrued but
unpaid under the Debenture into shares of the common stock, par value $.001 (the
"Common Stock"), of the Company, and an equal number of Warrants to purchase
Common Stock of the Company, according to the terms and conditions of the
Debenture, on the Forced Conversion Date written below.1 Capitalized terms used
in this Forced Conversion Notice and not otherwise defined shall have the
meanings ascribed thereto in or by reference in the Debenture.
The undersigned (as to itself only) represents and warrants to the Company that:
(i) the shares of Common Stock and Warrants received upon Conversion
hereby are being acquired for its own account, not as a nominee or agent for any
other Person, and without a view to the distribution or resale of such shares or
any interest therein in violation of the Securities Act; and
(ii) the undersigned is an "accredited investor" within the meaning of
Rule 501(a) under Regulation D, as presently in effect, and has such knowledge
and experience in financial and business matters so as to be capable of
evaluating the merits and risks of an investment in the Common Stock and
Warrants, and such Holder is capable of bearing the economic risks of such
investment and is able to bear the complete loss of an investment in the Common
Stock and Warrants.
The undersigned further represents that the execution, delivery, and performance
of this Conversion Notice is within its powers (corporate or otherwise) and has
been duly authorized by all requisite action (corporate or otherwise) and that
this Conversion Notice constitutes the legal, valid and binding obligation of
the undersigned, enforceable against it in accordance with its terms subject, as
to enforceability, to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws of general applicability affecting the
rights of creditors and to general principles of equity.
- ---------------------
(1) The Forced Conversion Date shall be at least 10 trading days from the date
of delivery of this Forced Conversion Notice.
21
<PAGE>
If the undersigned is an individual, the undersigned's principal place of
residence is in the state or other jurisdiction so designated below his name,
and if the undersigned is not an individual, the undersigned's principal place
of business is in the state or other jurisdiction so designated below its name.
The undersigned acknowledges that it has received all documents and information
relating to an investment in the Common Stock and Warrants requested by or on
behalf of the undersigned, including such information relating to the Company as
the undersigned has deemed appropriate in making a decision to invest in the
Common Stock and Warrants.
The undersigned hereby certifies on behalf and in the name of and the Company
that all of the relevant conditions set forth in Paragraph 4(a)(ii) of the
Debenture have been satisfied.
Accompanying this Forced Conversion Notice is a Computation Schedule completed
by the Company setting forth the determination by the Company of the Outstanding
Amount of such Debenture, plus fees and other charges and amounts, to be
converted. The calculation of the number of shares of Common Stock and Warrants
issuable pursuant to this Forced Conversion Notice shall be made in accordance
with the terms of the Debenture.
The Company shall issue and deliver to the Holder share certificates and
Warrants for the Common Stock issuable pursuant to this Forced Conversion
Notice. If the Holder desires the shares certificates or Warrants to be issued
in the name of, and delivered to a person other than the Holder, the Holder
should so indicate below and deliver a copy of this Forced Conversion Notice to
the Company at 67 Wall Street, Suite 2411, New York, New York 10005, Attention:
Angelo G. MacDonald, at least two business days prior to the Forced Conversion
Date. No fee will be charged to the Holder for this conversion, except for
transfer taxes, if any.
_______________________________
Forced Conversion Date
EIEIHOME.COM INC.
By:____________________________
Name:
Title:
Issue Common Stock and Warrants to:
_______________________________
_______________________________
At:____________________________
_______________________________
22
<PAGE>
CONVERSION RATE COMPUTATION SCHEDULE
Outstanding Amount To Be Converted: $_________
Divided by $0.25, as adjusted pursuant
to Section 6 of the Debenture: $_________
Shares of Common Stock to be
issued on conversion _________
Warrants to be issued on Conversion _________
23
<PAGE>
EXHIBIT C
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF
COMMON STOCK ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAW, AND NEITHER THEY NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION
STATEMENT, OR (ii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY
SATISFACTORY TO COUNSEL FOR THIS CORPORATION, THAT AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS,
IS AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR OTHER TRANSFER. HEDGING
TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.
No. [__]
COMMON STOCK PURCHASE WARRANT
For the purchase of up to
[- -]
Shares of Common Stock
of
EIEIHOME.COM INC.
This certifies that, for value received, [________________]
(the "Holder"), is entitled to purchase from EIEIHOME.COM INC., a corporation
organized under the laws of the Commonwealth of Delaware (the "Company"), the
aggregate number of shares of Common Stock, at the option of the Holder, shown
above at any time after 9:00 a.m., New York City time, on [______________,
20___] (the "Issue Date") until 5:00 p.m., New York City time, on the Expiration
Date, at a purchase price per share equal to the Warrant Price.
Section 1. Definitions. As used in this Warrant, and unless
the context requires otherwise, the following terms have the meaning indicated:
"Common Stock" means the Common Stock of the Company, par
value $.001 per share.
"Expiration Date" means the Third anniversary of the Issue
Date.
"Warrant Price" has the meaning assigned in Section 8 hereof,
subject to adjustment as provided in Section 9.
"Warrant" means this Warrant, as the same may be amended,
supplemented or modified in accordance with the terms hereof.
24
<PAGE>
"Warrant Shares" means the shares of Common Stock issued or
issuable upon exercise of this Warrant.
Section 2. Term of Warrant; Exercise of Warrant.
2.1 Term of Warrant. Subject to the terms hereof, the Holder
shall have the right, which may be exercised at any time from and after 9:00
a.m., New York City time, on the Issue Date and until 5:00 p.m., New York City
time, on the Expiration Date, to purchase from the Company the number of fully
paid and nonassessable Warrant Shares which the Holder may at the time be
entitled to purchase on exercise hereof. If and to the extent this Warrant is
not exercised prior to 5:00 p.m., New York City time, on the Expiration Date, it
shall become void and all rights hereunder and all rights in respect hereof
shall cease as of such time.
2.2 Exercise of Warrant. The Warrant may be exercised upon
surrender to the Company (at its address as specified in Section 14 herein) of
this Warrant, together with the Purchase Form included herein duly completed and
signed and upon payment to the Company of the Warrant Price (as defined in and
determined in accordance with the provisions of Sections 8 and 9 hereof), for
the number of Warrant Shares in respect of which this Warrant is then being
exercised.
Unless otherwise agreed to by the Company, all payments of
such Warrant Price shall be made by certified or official bank check payable to
the order of the Company.
Subject to Section 3 hereof, upon the surrender of the Warrant
and payment of the Warrant Price as aforesaid, the Company shall cause to be
issued and delivered with all reasonable dispatch to or upon the written order
of the Holder and in such name or names as the Holder may designate, a
certificate or certificates for the number of full Warrant Shares so purchased
upon the exercise of this Warrant, together with cash, as provided in Section 10
hereof, in respect of any fractional Warrant Shares otherwise issuable upon
surrender. If permitted by applicable law, such certificate or certificates
shall be deemed to have been issued and any person so designated to be named
therein shall be deemed to have become a holder of record of such Warrant Shares
as of the date of the surrender of this Warrant and payment of the Warrant
Price, as aforesaid. Each share of Common Stock that may be issued upon exercise
of this Warrant will, upon such issuance, be validly issued, fully paid,
nonassessable, and free from all taxes, liens and charges with respect to the
issue thereof. The rights of purchase represented by this Warrant shall be
exercisable, at the election of the Holder hereof (subject to Section 2.1
hereof), either in full or from time to time in part and, in the event that this
Warrant is exercised in respect of less than all of the Warrant Shares
purchasable on such exercise at any time prior to the Expiration Date, a new
Warrant evidencing the right to purchase the remaining Warrant Shares will be
issued.
Section 3. Payment of Taxes. The Company will pay all
documentary stamp and other taxes, if any, attributable to the initial issuance
of Warrant Shares upon the exercise hereof; provided, however, that the Company
shall not be required to pay any tax or other governmental charge which may be
payable in respect of any transfer involved in the issue or delivery of any
certificates or certificates for Warrant Shares in a name other than that of the
Holder, and the
25
<PAGE>
Company shall not register any such transfer or issue any such certificate until
such tax or governmental charge, if required, shall have been paid.
Section 4. Transfer. Subject to compliance with the
restrictions on transfer set forth herein and subject to Section 3, this Warrant
shall be transferable upon delivery of the Warrant duly endorsed by the Holder
or by his duly authorized attorney or representative, or accompanied by proper
evidence of succession, assignment or authority to transfer. In all cases of
transfer by an attorney, the original power of attorney, duly approved, or a
copy thereof, duly certified, shall be deposited and remain with the Company. In
case of transfer by executors, administrators, guardians or other legal
representatives, duly authenticated evidence of their authority shall be
produced, and may be required to be deposited and remain with the Company in its
discretion.
Section 5. Exchange of Warrant Certificates. Subject to the
restrictions on transfer contained herein and to such requirements as the
Company may reasonably request to ensure compliance with applicable law, this
Warrant may be exchanged for another certificate or certificates entitling the
Holder hereof to purchase a like aggregate number of Warrant Shares as this
Warrant shall then entitle the Holder to purchase. The Holder shall make such
request in writing delivered to the Company, and shall surrender this Warrant,
properly endorsed. Thereupon, the Company shall countersign and deliver to the
Holder a new certificate or certificates, as the case may be, as so requested.
Section 6. Mutilated or Missing Warrants. In case this Warrant
shall be mutilated, lost, stolen or destroyed, the Company shall issue,
countersign and deliver in exchange or substitution hereof, a new Warrant of
like tenor and representing an equivalent right or interest, but only upon, in
case this Warrant is lost, stolen or destroyed, receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and a reasonable
indemnity therefor. The Holder shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company may prescribe.
Section 7. Reservation of Warrant Shares; Purchase of
Warrants.
7.1 Reservation of Warrant Shares. The Company shall reserve
out of its authorized Common Stock the number of shares of Common Stock set
forth on the first page hereof for issuance upon exercise of this Warrant. The
Company shall at all times hereafter until the Expiration Date keep reserved out
of its authorized Common Stock, for issuance upon exercise of this Warrant, all
of the shares not theretofore issued upon such exercise. If at any time the
number of shares of authorized Common Stock shall not be sufficient to effect
the exercise of this Warrant, the Company will take such corporate action as may
be necessary to increase its authorized but unissued Common Stock, to such
number of shares as shall be sufficient for such purpose.
Section 8. Warrant Price. Subject to Section 9 hereof, the
price at which Warrant Shares shall be purchasable upon exercise of Warrants
(the "Warrant Price) shall be $0.50 per share.
26
<PAGE>
Section 9. Adjustments. The number and kind of securities
purchasable upon the exercise of this Warrant and the Warrant Price shall be
subject to adjustment from time to time upon the happening of certain events, in
each case occurring on and after the date hereof, as hereinafter described.
9.1 Stock Splits. After the date hereof, in case the Company
shall at any time subdivide its outstanding shares of Common Stock into a
greater number of shares, whether by stock dividend, stock split or otherwise,
the Purchase Price in effect immediately prior to such subdivision shall be
proportionately reduced and the number of shares of Common Stock purchasable
shall be proportionately increased. In case the outstanding shares of Common
Stock of the Company shall be combined into a smaller number of shares, the
Purchase Price in effect immediately prior to such combination shall be
proportionately increased and the number of shares of Common Stock purchasable
hereunder shall be proportionately reduced.
9.2 Reclassifications. After the date hereof, in case of any
reclassification or change in the outstanding shares of Common Stock (except
under the circumstances contemplated in Section 9.1, or in case of any
consolidation or merger to which the Company is a party (except a merger in
which the Company is the surviving corporation and which does not result in any
reclassification or change in the outstanding shares of Common Stock), or in
case of any sale or conveyance to another person or entity of all or
substantially all of the property of the Company, effective provision shall be
made by the Company or by the successor or purchasing person or entity that the
Holder shall have the right, upon presentation and surrender of this Warrant,
with written notice from the Holder of its exercise, together with payment of
the Purchase Price in effect immediately prior to such reclassification, change,
consolidation, merger, sale or conveyances for the number of shares that but for
such transaction would have been purchased hereunder, to receive the kind and
amount of stock and other securities and property receivable in such transaction
by a holder of such number of shares.
9.3 No Other Antidilution Rights. Except as expressly set
forth herein, the Holder shall not be entitled to any anti-dilution rights with
respect to either (i) the number and kind of shares subject to this Warrant or
(ii) the Purchase Price.
Section 10. Fractional Interests. The Company shall not be
required to issue fractional Warrant Shares on the exercise of this Warrant. If
(a) any fraction of a Warrant Share would, except for the provisions of this
Section 10, be issuable on the exercise of this Warrant (or specified portion
thereof), and (b) the Holder shall have paid the amount due upon such exercise
with respect to such fractional share, then the Company shall return to such
Holder the amount so paid with respect to such fractional Warrant Share.
Section 11. Registration under the Securities Act. The Holder
represents and warrants to the Company that it will not dispose of this Warrant
or any Warrant Shares except pursuant to (i) an effective registration
statement, or (ii) an opinion of counsel, reasonably satisfactory to counsel for
the Company, that the proposed disposition of the Warrant or Warrant Shares
would not be in violation of the registration requirements of the Securities Act
or any state securities laws. The Holder represents and warrants that it is
acquiring the Warrant and will acquire the Warrant Shares for its own account
and with no intention of distributing or reselling this Warrant or Warrant
Shares or any part thereof in any transaction that would be in violation
27
<PAGE>
of the registration requirements of the securities laws of the United States of
America or any state, without prejudice, however, to its rights, consistent with
the provisions of this Warrant, to sell or otherwise dispose of all or any part
of this Warrant or any Warrant Shares under an effective registration statement
under the Securities Act or under an exemption from such registration available
under the Securities Act.
Section 12. Certificates to Bear Legends. The Warrant Shares
or other securities issued upon exercise of this Warrant shall be subject to a
stop-transfer order and the certificate or certificates evidencing any such
Warrant Shares or securities shall bear the following legend by which the Holder
thereof shall be bound:
"THE SHARES [OR OTHER SECURITIES] REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAW, AND NEITHER THEY NOR
ANY INTEREST THEREIN MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT, OR (ii) AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO COUNSEL FOR THIS CORPORATION, THAT AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR OTHER
TRANSFER. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT."
Section 13. No Rights as Shareholders; Notices to Holders.
Nothing contained in this Warrant shall be construed as conferring upon the
Holder the right to vote or to receive dividends or to consent or to receive
notice as a shareholder in respect of any meeting of shareholders of the Company
for the election of the directors of the Company or any matter, or any rights
whatsoever as a shareholder of the Company. If, however, at any time prior to
the expiration of this Warrant and prior to its exercise, any of the following
events shall occur:
(a) the Company shall declare any dividend payable in cash or
in any securities upon its shares of Common Stock or make any
distribution to the holders of its shares of Common Stock;
(b) the Company shall offer to all holders of its shares of
Common Stock any additional shares of Common Stock or securities
convertible into or exchangeable for shares of Common Stock or any
right to subscribe for or purchase any thereof; or
(c) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation, merger, sale, transfer
or lease of all or substantially all of its property, assets and
business as an entirety) shall be proposed;
then in any one or more of said events the Company shall give notice to the
Holder as provided in Section 14 hereof, such giving of notice to be completed
at least 10 days prior to the record date in the event of a transaction
described in clause (a) above and at least 20 days prior to the record date in
the case of a transaction referred to in clause (b) or (c) above fixed as a
record date
28
<PAGE>
or the date of closing the transfer books for the determination of the
shareholders entitled to such dividend, distribution, or subscription rights, or
for the determination of the shareholders entitled to vote on such proposed
dissolution, liquidation or winding up. Such notice shall specify such record
date or the date of closing the transfer books, as the case may be. Failure to
mail or receive such notice or any defect therein or in the mailing thereof
shall not affect the validity of any action taken in connection with such
dividend, distribution or subscription rights, or such proposed dissolution,
liquidation or winding up.
Section 14. Notices. Any notice pursuant to this Warrant shall
be in writing and shall be given by first class, registered or certified mail,
return receipt requested, telecopy, courier service or personal delivery, if to
the Company, at:
eieiHome.com Inc.
67 Wall Street, Suite 2411
New York, New York 10005
Attn: Chief Executive Officer
(or such other address as shall be communicated by the Company to the Holder by
notice in accordance with this Section 14), and if to the Holder, at such
address as shall be communicated by the Holder to the Company by notice in
accordance with this Section 14 (or, in the absence of such notice, at such
address as otherwise appears on the books and records of the Company).
Section 15. Supplements and Amendments. The provisions of this
Warrant may not be amended, modified or supplemented, and waiver or consents to
departures from the provisions hereof may not be given, without the written
consent of the Holder.
Section 16. Successors. All the covenants and provisions of
this Warrant by or for the benefit of the Company and the Holder shall bind and
inure to the benefit of their respective successors and permitted assigns
hereunder, provided that the Company may not assign its rights and obligations
hereunder except by operation of law.
Section 17. Applicable Law. This Warrant shall be governed by
and construed in accordance with the laws of the State of New York, without
giving effect to principles of conflicts of laws. The United States District
Court for the Southern District of New York or the courts of the State of New
York shall have jurisdiction in any action or proceeding arising out of or
relating to this Warrant.
Section 18. Benefits of this Agreement. Nothing in this
Warrant shall be construed to give to any person or entity other than the
Company and the Holder, any legal or equitable right, remedy or claim under this
Warrant.
Section 19. Captions. The captions of the Sections and
subsections of this Warrant have been inserted for convenience only and shall
have no substantive effect.
29
<PAGE>
IN WITNESS WHEREOF, this Warrant has been duly executed, as of
the date first above written.
EIEIHOME.COM INC.
By:___________________________
Name:
Title:
30
<PAGE>
ASSIGNMENT
(To be executed only upon assignment of Warrant)
For value received, ___________________ hereby sells, assigns
and transfers unto__________________ this Warrant, together with all right,
title and interest therein, and does hereby irrevocably constitute and
appoint_____________________attorney, to transfer this Warrant on the books of
the within-named Company with respect to the number of Warrant Shares set forth
below, with full power of substitution:
Name(s) of No. of
Assignee(s) Address Warrant Shares
----------- ------- --------------
And if said number of Warrant Shares shall not be all the
Warrant Shares issuable upon exercise of this Warrant, a new certificate is to
be issued in the name of said undersigned for the balance remaining of the
Warrant Shares issuable upon exercise of this Warrant.
Dated:________________, 20____
_______________________________
NOTE: The above signature should
correspond exactly with the name
on the face of this Warrant.
31
<PAGE>
SUBSCRIPTION FORM
(To be executed upon exercise of Warrant)
eieiHome.com Inc.:
The undersigned hereby irrevocably elects to exercise the
right of purchase represented by this Warrant for, and to purchase hereunder,
______________ shares of Common Stock, as provided for herein, and tenders
herewith payment of the exercise price in full in the form of cash or a
certified or official bank check in the amount of $_________.
Please issue a certificate or certificates for such shares of
Common Stock in the name of:
Name:_______________________
Address:_______________________________
_______________________________________
Social Security Number:________________
And if said number of shares shall not be all the shares issuable under
this Warrant, a new certificate is to be issued in the name of said undersigned
for the balance remaining of the shares issuable thereunder.
Signature:______________________
NOTE: The above signature should
correspond exactly with the name
on the first page of this Warrant
or with the name of the assignee
appearing in the assignment form
above.
32
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000049397
<NAME> eieiHome.com Inc.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 78,840
<SECURITIES> 799,000
<RECEIVABLES> 13,081
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 894,448
<PP&E> 65,124
<DEPRECIATION> 11,060
<TOTAL-ASSETS> 948,512
<CURRENT-LIABILITIES> 397,930
<BONDS> 3,735,500
0
0
<COMMON> 18,199
<OTHER-SE> (3,203,117)
<TOTAL-LIABILITY-AND-EQUITY> 948,512
<SALES> 0
<TOTAL-REVENUES> 23,786
<CGS> 0
<TOTAL-COSTS> 302,824
<OTHER-EXPENSES> 63,517
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (23,555)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (23,555)
<EPS-BASIC> (.00)
<EPS-DILUTED> (.00)
</TABLE>
