Void after 5:00 p.m., New York Time on March 31, 2004
Warrant to Purchase 500,000 Shares of Common Stock
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WARRANT TO PURCHASE COMMON STOCK
OF
D-VINE, LTD.
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THIS WARRANT AND THE SHARES OF COMMON STOCK
ISSUABLE PURSUANT TO THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD,
PLEDGED OR OTHERWISE TRANSFERRED UNLESS PURSUANT TO THE
REGISTERED UNDER THE ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
PROVISIONS OF REGULATION S PROMULGATED UNDER THE ACT.
IN ANY EVENT, UNTIL MARCH 31, 2000 THIS WARRANT AND THE SHARES OF COMMON
STOCK ISSUED OR TO BE ISSUED UPON EXERCISE THEREOF MAY NOT BE SOLD OR
OFFERED FOR SALE BY THE HOLDER OR DELIVERED TO ANY U.S. PERSON OR FOR THE
ACCOUNT OR BENEFIT OF A U.S. PERSON.
IN CONSIDERATION OF MODIFICATION OF EXISTING WARRANT IN ACCORDANCE
WITH A CERTAIN AGREEMENT DATED MARCH ___, 1999, D-Vine, Ltd., a Delaware
corporation (the "Company"), grants the following rights to Ocean Strategic
Holdings Limited, a Guernsey corporation ("Holder"):
ARTICLE 1. DEFINITIONS.
As used herein, the following terms shall have the following meanings, unless
the context shall otherwise require:
(a) "Common Stock" shall mean the common stock, par value
$0.01 per share, of the Company.
(b) "Corporate Office" shall mean the office of the Company
(or its successor) at which at any particular time its principal business shall
be administered.
(c) "Exercise Date" shall mean any date upon which the Holder
shall give the Company a Notice of Exercise.
(d) "Exercise Price" shall mean the price to be paid to the
Company for each share of Common Stock to be purchased upon exercise of this
Warrant in accordance with the terms hereof which shall be $3.00 per share.
(e) "Expiration Date" shall mean 5:00 p.m. (New York time) on
March 31, 2004.
(f) "Regulation S" shall mean Regulation S as promulgated
under the Act.
(g) "SEC" shall mean the United States Securities and Exchange
Commission.
(h) "Transfer Agent" shall mean American Securities Transfer,
as the Company's transfer agent, or its authorized successor, as such.
(i) "Underlying Shares" shall mean the shares of the Common
Stock issuable upon exercise of the Warrant.
ARTICLE 2. EXERCISE AND AGREEMENTS.
2.1 Exercise of Warrant. This Warrant shall entitle Holder to
purchase up to 500,000 shares of Common Stock (the "Shares") at the Exercise
Price. This Warrant shall be exercisable at any time after March 31, 2004 and
from time to time prior to the Expiration Date (the "Exercise Period"). This
Warrant and the right to purchase Shares hereunder shall expire and become void
at the Expiration Date.
2.2 Manner of Exercise.
(a) Holder may exercise this Warrant at any time and from time
to time during the Exercise Period, in whole or in part (but not in
denominations of fewer than 10,000 Shares, except upon an exercise of this
Warrant with respect to the remaining balance of Shares purchasable hereunder at
the time of exercise), by delivering to the Escrow Agent (as defined in an
escrow agreement dated the date of the existing warrant referred to above) (i) a
duly executed Notice of Exercise in substantially the form attached as Appendix
1 hereto and (ii) a bank cashier's or certified check for the aggregate Exercise
Price of the Shares being purchased.
(b) From time to time upon exercise of this Warrant, in whole
or part, in accordance with its terms, the Escrow Agent will deliver stock
certificates to the Holder representing the number of Shares being purchased
pursuant to such exercise, subject to adjustment as described herein.
(c) Promptly following any exercise of this Warrant, if the Warrant
has not been fully exercised and has not expired, the Company will deliver to
the Holder a new Warrant for the balance of the Shares covered hereby.
2.3 Termination. All rights of the Holder in this Warrant, to the
extent they have not been exercised, shall terminate on the Expiration Date.
2.4 No Rights Prior to Exercise. Prior to its exercise pursuant to
Section 2.2 above, this Warrant shall not entitle the Holder to any voting or
other rights as holder of Shares.
2.5 Adjustments. In case of any reclassification, capital
reorganization, stock dividend or other change of outstanding shares of Common
Stock, or in case of any consolidation or merger of the Company with or into
another corporation (other than a consolidation or merger in which the Company
is the continuing corporation and which does not result in any reclassification,
capital reorganization, stock dividend or other change of outstanding shares or
Common Stock), or in case of any sale or conveyance to another corporation of
the property of the Company as, or substantially as, an entirety (other than a
sale/leaseback, mortgage or other financing transaction), the Company shall
cause effective provision to be made so that the Holder shall have the right
thereafter, by exercising this Warrant, to purchase the kind and number of
shares of stock or other securities or property (including cash) receivable upon
such reclassification, capital reorganization, stock dividend or other change,
consolidation, merger, sale or conveyance as the Holder would have been entitled
to receive had the Holder exercised this Warrant in full immediately before such
reclassification, capital reorganization, stock dividend or other change,
consolidation, merger, sale or conveyance. Any such provision shall include
provision for adjustments that shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 2.5. The foregoing
provisions shall similarly apply to successive reclassifications, capital
reorganizations, stock dividends and other changes of outstanding shares of
Common Stock and to successive consolidations, mergers, sales or conveyances.
Notwithstanding anything to the contrary contained herein, if the Company shall
complete a "reverse split" of its shares into a smaller number of outstanding
shares, the number of shares issuable upon exercise of this Warrant, and the
Exercise Price, shall remain unchanged.
2.6 Fractional Shares. No fractional Shares shall be issuable upon
exercise or conversion of this Warrant and the number of Shares to be issued
shall be rounded down to the nearest whole Share. If a fractional Share interest
arises upon any exercise or conversion of the Warrant, the Company shall
eliminate such fractional Share interest by paying Holder the amount computed by
multiplying the fractional interest by the closing bid price of a full Share on
the date of the Notice of Exercise.
2.7 Limitation on Exercise. In no event shall Holder be entitled to
exercise any portion of this Warrant such that upon giving effect to such
exercise, the aggregate number of shares of Common Stock beneficially owned by
the Holder and its affiliates would exceed 4.9% of the outstanding shares of the
Common Stock following such exercise. For purposes of the foregoing proviso, the
aggregate number of shares of Common Stock beneficially owned by the Holder and
its affiliates shall include the number of shares of Common Stock issuable upon
exercise of the Warrant with respect to which the
determination of such proviso is being made, but shall exclude the number of
shares of Common Stock which would be issuable upon (i) exercise of the
remaining Warrant beneficially owned by the holder and its affiliates and (ii)
exercise or conversion of the unexercised or unconverted portion of any other
securities of the Company (including, without limitation, any warrants) subject
to a limitation on conversion or exercise analogous to the limitation contained
herein beneficially owned by the holder and its affiliates. Except as set forth
in the preceding sentence, for purposes of this paragraph, beneficial ownership
shall be calculated in accordance with Section 13(d) of the Securities Exchange
Act of 1934, as amended. The Holder may waive the foregoing limitations by
written notice to the Company upon not less than 61 days prior notice (with such
waiver taking effect only upon the expiration of such 61 day notice period).
ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
3.1 Representations and Warranties. The Company hereby represents
and warrants to the Holder as follows:
(a) All Shares which may be issued upon the exercise of the
purchase right represented by this Warrant shall, upon issuance, be duly
authorized, validly issued, fully-paid and nonassessable, and free of any liens
and encumbrances except for restrictions on transfer provided for herein or
under applicable federal and state securities laws, and not subject to any
pre-emptive rights.
(b) The Company is a corporation duly organized and validly
existing under the laws of the State of Delaware, and has the full power and
authority to issue this Warrant and to comply with the terms hereof. The
execution, delivery and performance by the Company of its obligations under this
Warrant, including, without limitation, the issuance of the Shares upon any
exercise of the Warrant have been duly authorized by all necessary corporate
action. This Warrant has been duly executed and delivered by the Company and is
a valid and binding obligation of the Company, enforceable in accordance with
its terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting enforceability of
creditors' rights generally and except as the availability of the remedy of
specific enforcement, injunctive relief or other equitable relief is subject to
the discretion of the court before which any proceeding therefor may be brought.
(c) The Company is not subject to or bound by any provision of
any certificate or articles of incorporation or by-laws, mortgage, deed of
trust, lease, note, bond, indenture, other instrument or agreement, license,
permit, trust, custodianship, other restriction or any applicable provision of
any law, statute, rule, regulation, judgment, order, writ, injunction or decree
of any court, governmental body, administrative agency or arbitrator which could
prevent or be violated by or under which there would be a default (or right of
termination) as a result of the execution, delivery and performance by the
Company of this Warrant.
(d) The Company is eligible to issue securities exempt from
registration pursuant to Regulation S promulgated under the Securities Act.
ARTICLE 4. REPRESENTATIONS OF THE HOLDER.
4.1 Representations and Warrants. The Holder hereby represents and
warrants to the Holder as follows:
(a) The Holder is not a "U.S. person" within the meaning of
Regulation S. In general, "U.S. person" means (A) any natural person resident in
the United States; (B) any partnership or corporation organized or incorporated
under the laws of the United States; (C) any estate of which any executor or
administrator is a U.S. person; (D) any trust of which any trustee is a U.S.
person; (E) any agency or branch of a foreign entity located in the United
States; (F) any non-discretionary or similar account (other than an estate or
trust) held by a dealer or other fiduciary for the benefit or account of a U.S.
person; (G) any partnership or corporation if (i) organized or incorporated
under the laws of any foreign jurisdiction, and (ii) formed by a U.S. person
principally for the purpose of investing in securities not registered under the
Act, unless it is organized or incorporated, and owned, by accredited investors
(as defined in Rule 501(a) promulgated under the Act who are not natural
persons, estates or trusts. For purposes of this Agreement, the United States
includes the United States of America, its territories and possessions, any
state of the United States and the district of Columbia.
(b) The Holder is not organized under the laws of any jurisdiction
within the United States, its territories or possessions, and was not formed for
the purpose of investing in Regulation S securities; (ii) at the time this
Warrant was acquired by Holder and the time this Warrant was executed and any
offer to purchase this Warrant or the Underlying Shares hereunder was made, the
Holder was physically outside the United States; (iii) the Holder has acquired
this Warrant and the Underlying Shares (the Warrant and the Underlying Shares
are herein collectively referred to as the "Securities") for its own account and
not on behalf of or for the benefit of any U.S. person and the sale of the
Securities has not been prearranged with any buyer in the United States; (iv)
the Holder hereby agrees that to its knowledge all offers and sales of the
Securities prior to the expiration of a period commencing on the date hereof and
ending forty days thereafter (the "Restricted Period") shall not be made to U.S.
persons or for the account or benefit of U.S. Persons and shall otherwise be
made in compliance with the provisions of Regulation S. The Holder is not a
distributor or dealer.
(c) The Holder is acquiring this Warrant and the Underlying Shares
for its own account for investment and not as a nominee and not with a view to
the distribution thereof. Holder represents and warrants to the Company that it
has no preexisting plan to sell the Warrant or the Underlying Shares in the
United States at any particular time following the expiration of the Restricted
Period. Holder covenants that neither Holder nor its affiliates nor any person
acting on its or their behalf has the intention of entering, or will enter,
during the Restricted Period, into any put option, short position or other
similar instrument or position with respect to the Underlying Shares or
securities of the same class as the Underlying Shares and neither Holder nor any
of its affiliates nor any person acting on its or their behalf will use at any
time Underlying Shares acquired pursuant to this Agreement or upon conversion of
the shares to settle any put option, short position or
other similar instrument or position that may have been entered into prior to
the execution of this Agreement.
ARTICLE 5. MISCELLANEOUS.
5.1 Transfer. This Warrant may not be transferred or assigned, in
whole or in part, at any time, except in compliance with applicable federal and
state securities laws by the transferor and the transferee (including, without
limitation, the delivery of an investment representation letter and a legal
opinion reasonably satisfactory to the Company) and the Company will refuse to
register any transfer of this Warrant or the Underlying Shares not made in
accordance with the provisions of Regulation S. This Warrant may not be
transferred or assigned such that either the Holder or any transferee will,
following such transfer or assignment, hold a Warrant for the right to purchase
fewer than 5,000 Shares.
5.2 Transfer Procedure. Subject to the provisions of Section 5.1,
Holder may transfer or assign this Warrant by giving the Company notice setting
forth the name, address and taxpayer identification number of the transferee or
assignee, if applicable (the "Transferee") and surrendering this Warrant to the
Company for reissuance to the Transferee (and the Holder, in the event of a
transfer or assignment of this Warrant in part). (Each of the persons or
entities in whose name any such new Warrant shall be issued are herein referred
to as a Holder").
5.3 Loss, Theft, Destruction or Mutilation. If this Warrant shall
become mutilated or defaced or be destroyed, lost or stolen, the Company shall
execute and deliver a new Warrant in exchange for and upon surrender and
cancellation of such mutilated or defaced Warrant or, in lieu of and in
substitution for such Warrant so destroyed, lost or stolen, upon the Holder
filing with the Company evidence satisfactory to it that such Warrant has been
so mutilated, defaced, destroyed, lost or stolen. However, the Company shall be
entitled, as a condition to the execution and delivery of such new Warrant, to
demand indemnity satisfactory to it and payment of the expenses and charges
incurred in connection with the delivery of such new Warrant. Any Warrant so
surrendered to the Company shall be canceled.
5.4 Notices. All notices and other communications from the Company
to the Holder or vice versa shall be deemed delivered and effective when given
personally, by facsimile transmission and confirmed in writing or mailed by
first-class registered or certified mail, postage prepaid at such address and/or
facsimile number as may have been furnished to the Company or the Holder, as the
case may be, in writing by the Company or the Holder from time to time.
5.5 Waiver. This Warrant and any term hereof may be changed, waived,
or terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.
5.6 Governing Law. This Warrant shall be governed by and construed
in accordance with the laws of the State of New York, without giving effect to
its principles regarding conflicts of law.
Dated: March 31, 1999
D-Vine, Ltd.
By: ____________________________________
Name:
Title:
APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase ______ shares of the
Common Stock of D-Vine, Ltd. pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price of such shares in full.
2. Please issue a certificate or certificates representing said
shares in the name of the undersigned or in such other name as is specified
below:
3. The undersigned (the "Holder") hereby represents that:
(a) The Holder is not a "U.S. person" within the meaning of
Regulation S. In general, "U.S. person" means (A) any natural person
resident in the United States; (B) any partnership or corporation
organized or incorporated under the laws of the United States; (C) any
estate of which any executor or administrator is a U.S. person; (D) any
trust of which any trustee is a U.S. person; (E) any agency or branch of a
foreign entity located in the United States; (F) any non-discretionary or
similar account (other than an estate or trust) held by a dealer or other
fiduciary for the benefit or account of a U.S. person; (G) any partnership
or corporation if (i) organized or incorporated under the laws of any
foreign jurisdiction, and (ii) formed by a U.S. person principally for the
purpose of investing in securities not registered under the Act, unless it
is organized or incorporated, and owned, by accredited investors (as
defined in Rule 501(a) promulgated under the Act who are not natural
persons, estates or trusts. For purposes of this Agreement, the United
States includes the United States of America, its territories and
possessions, any state of the United States and the district of Columbia.
(b) The Holder is not organized under the laws of any jurisdiction
within the United States, its territories or possessions, and was not
formed for the purpose of investing in Regulation S securities; (ii) at
the time this Warrant was acquired by Holder and the time this Warrant was
executed and any offer to purchase this Warrant or the Underlying Shares
hereunder was made, the Holder was physically outside the United States;
(iii) the Holder has acquired this Warrant and the Underlying Shares (the
Warrant and the Underlying Shares are herein collectively referred to as
the "Securities") for its own account and not on behalf of or for the
benefit of any U.S. person and the sale of the Securities has not been
prearranged with any buyer in the United States; (iv) the Holder hereby
agrees that to its knowledge all offers and sales of the Securities prior
to the expiration of a period commencing on the date hereof and ending one
year thereafter (the "Restricted Period") shall not be made to U.S.
persons or for the account or benefit of U.S. Persons and shall otherwise
be made in compliance with the provisions of Regulation S. The Holder is
not a distributor or dealer.
(c) The Holder is acquiring this Warrant and the Underlying Shares
for its own account for investment and not as a nominee and not with a
view to the distribution thereof. Holder represents and warrants to the
Company that it has no preexisting plan to sell the Warrant or the
Underlying Shares in the United States at any particular time following
the expiration of the Restricted Period. Holder covenants that neither
Holder nor its affiliates nor any person acting on its or their behalf has
the intention of entering,
or will enter, during the Restricted Period, into any put option, short
position or other similar instrument or position with respect to the
Underlying Shares or securities of the same class as the Underlying Shares
and neither Holder nor any of its affiliates nor any person acting on its
or their behalf will use at any time Underlying Shares acquired pursuant
to this Agreement or upon conversion of the shares to settle any put
option, short position or other similar instrument or position that may
have been entered into prior to the execution of this Agreement.
(d) it is acquiring the shares solely for its own account and not as
a nominee for any other party and not with a view toward the resale or
distribution thereof except in compliance with applicable securities laws.
________________________________________
(Signature)
_____________________
(Date)