ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC. AND DPEC CAPITAL, INC. WARRANT AGREEMENT Dated as of October 1, 2012
ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC.
AND
DPEC CAPITAL, INC.
Dated as of October 1, 2012
WARRANT AGREEMENT dated as of October 1, 2012 between ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC., a Delaware corporation (the “Company”), and DPEC CAPITAL, INC. (the “Placement Agent”) and its assignees or designees (each hereinafter sometimes referred to as a “Holder” or the “Holders”).
WITNESSETH:
WHEREAS, the Placement Agent has agreed to act as the placement agent in connection with the Company’s proposed private placement up to 7,500,000 shares of Series A Preferred Stock of the Company, $.01 par value per share (the “Preferred Shares”) (plus up to an additional 2,250,000 shares), at an offering price of $2.30 per share (the “Offering”).
WHEREAS, the Company has agreed to issue warrants to the Placement Agent (the “Warrants”) to purchase ten percent (10%) of the aggregate number of Preferred Shares sold in the Offering, or up to 975,000 shares of Preferred Shares.
WHEREAS, as the Offering is being sold on a “best efforts” basis,” the Offering may have multiple closings (each, a “Closing”).
WHEREAS, the Warrants will be issued on the date of each Closing of the Offering by the Company to the Placement Agent in consideration for, and as part of, the Placement Agent’s compensation for serving as Placement Agent.
WHEREAS, the terms and conditions of the Warrants in which the Warrants will
be issued are set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises, the agreements herein set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Grant. The Company agrees to grant to the Placement Agent Warrants to purchase such number of shares which are equal to ten percent (10%) of the aggregate number of shares of Preferred Shares sold on such Closing Date at an initial exercise price of $2.30 per share (the “Exercise Price”). The Warrants shall be exercisable at any time from the date of grant (which shall be the date of each Closing (each, a “Closing Date”) until 5:30 p.m., New York time, on the date which is five years from each Closing Date. The number of shares subject to the Warrants granted hereunder and the Exercise Price shall be subject to adjustment as provided in Section 10 hereof.
In the event that the underlying Preferred Shares are converted in accordance with their terms to common stock, such conversion shall, with respect to all unexercised Warrants issued hereunder, effect a conversion of all such Warrants into warrants to purchase the Company’s common stock on economically equivalent terms.
2. Warrant Certificates. The warrant certificates (the “Warrant Certificates”) delivered and to be delivered pursuant to this Agreement shall be in the form set forth in Exhibit A attached hereto and made a part hereof, with such appropriate insertions, omissions, substitutions, and other variations as required or permitted by this Agreement.
3. Registration of Warrants. The Warrants shall be numbered and shall be registered on the books of the Company when issued.
4. Exercise of Warrants.
| -2- |
4.1 Method of Exercise. The Warrants initially are exercisable at the Exercise Price (subject to adjustment as provided in Section 10 hereof) as set forth in Section 7 hereof payable by certified or official bank check in New York Clearing House funds. Upon surrender of a Warrant Certificate with the annexed Form of Election to Purchase duly executed, together with payment of the Exercise Price for the shares of Preferred Shares purchased, at the Company’s principal offices (presently located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ 10010), the Holder shall be entitled to receive a certificate or certificates for the shares of Preferred Shares so purchased. The purchase rights represented by each Warrant Certificate are exercisable at the option of the Holder thereof, in whole or in part (but not as to fractional shares of Preferred Shares underlying the Warrants). In the case of the purchase of less than all of the shares of Preferred Shares purchasable under any Warrant Certificate, the Company shall cancel said Warrant Certificate upon the surrender thereof and shall execute and deliver a new Warrant Certificate of like tenor for the balance of the shares of Preferred Shares purchasable thereunder.
4.2 Exercise by Surrender of Warrants. In addition to the method of payment set forth in Section 4.1 and in lieu of any cash payment required thereunder, the Holder(s) of the Warrants shall have the right at any time and from time to time to exercise the Warrants in full or in part by surrendering the Warrant Certificate in the manner specified in Section 4.1 in exchange for the number of shares of Preferred Shares equal to the product of (x) the number of shares of Preferred Shares as to which the Warrants are being exercised, multiplied by (y) a fraction, the numerator of which is the Market Price (as hereinafter defined) of the shares of Preferred Shares minus the Exercise Price of the shares of Preferred Shares and the denominator of which is the Market Price per share of Preferred Shares. As used in this Agreement, the phrase “Market Price” at any date shall be deemed to be the last reported sale price, or, in case no such reported sale takes place on such day, the average of the last reported sale prices for the last three (3) trading days, in either case as officially reported by the principal securities exchange on which the Preferred Shares is listed or admitted to trading, or, if the Preferred Shares is not listed or admitted to trading on any exchange, the average closing sale price as furnished by the NASD through The NASDAQ Stock Market, Inc. (“NASDAQ”) or similar organization if NASDAQ is no longer reporting such information, or if the Preferred Shares is not quoted on NASDAQ, as determined in good faith by resolution of the Board of Directors of the Company, based on the best information available to it. Solely for the purposes of this Section 4.2, Market Price shall be calculated either (i) on the date on which the form of election attached hereto is deemed to have been sent to the Company pursuant to Section 15 hereof (“Notice Date”) or (ii) as the average of the Market Price for each of the five trading days immediately preceding the Notice Date, whichever of (i) or (ii) results in a greater Market Price.
| -3- |
5. Issuance of Certificates. Upon the exercise of any Warrants, the issuance of certificates for shares of Preferred Shares, properties or rights underlying such Warrants shall be made forthwith (and in any event within five (5) business days thereafter) without charge to the Holder thereof including, without limitation, any tax, other than income taxes, which may be payable in respect of the issuance thereof, and such certificates shall be issued in the name of, or in such names as may be directed by, the Holder thereof; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any such certificates in a name other than that of the Holder and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the shares of Preferred Shares or other securities, property or rights issued upon exercise of any Warrants shall be executed on behalf of the Company by the manual or facsimile signature of the then present President or any Vice President of the Company under its corporate seal reproduced thereon, attested to by the manual or facsimile signature of the then present Secretary or any Assistant Secretary of the Company. Warrant Certificates shall be dated the date of execution by the Company upon initial issuance, division, exchange, substitution or transfer.
| -4- |
6. Transfer of Warrants. The Warrants shall be transferable only on the books of the Company maintained at its principal office, where its principal office may then be located, upon delivery of the Warrant Certificates representing such Warrants duly endorsed by the Holder or by its duly authorized attorney or representative accompanied by proper evidence of succession, assignment or authority to transfer. Upon any registration transfer, the Company shall execute and deliver the new Warrant Certificates to the person entitled thereto.
7. Exercise Price and Number of Securities. Except as otherwise provided in Section 10 hereof, each Warrant is exercisable to purchase one share of Preferred Shares at an initial exercise price equal to the Exercise Price. The Exercise Price and the number of shares of Preferred Shares for which the Warrant may be exercised shall be the price and the number of shares of Preferred Shares which shall result from time to time from any and all adjustments in accordance with the provisions of Section 10 hereof.
8. Registration Rights.
8.1 Registration Under the Securities Act of 1933. The Holder of a Warrant Certificate, by its acceptance thereof, covenants and agrees that the Warrants are being acquired as an investment and not with a view to the distribution thereof. Each Warrant Certificate and each certificate representing shares of Preferred Shares and any of the other securities issuable upon exercise of the Warrant (collectively, the “Warrant Shares”) shall bear the following legend unless (i) the Warrants or Warrant Shares are distributed to the public or sold to the underwriters for distribution to the public pursuant to this Section 8 or otherwise pursuant to a registration statement filed under the Securities Act of 1933, as amended (the “Act”), or (ii) the Company has received an opinion of counsel, in form and substance reasonably satisfactory to counsel for the Company, that such legend is unnecessary for any such certificate:
| -5- |
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT BETWEEN THE ISSUER AND DPEC CAPITAL, INC. DATED AS OF OCTOBER 1, 2012.
8.2 Piggyback Registration. If, at any time commencing after the date hereof and expiring five (5) years thereafter, the Company proposes to register any of its securities under the Act (other than in connection with an initial public offering of shares of Preferred Shares of the Company or in connection with a merger or pursuant to Form S-4 or Form S-8 or successor form thereto) it will give written notice by registered mail, at least thirty (30) days prior to the filing of each such registration statement, to the Holders of the Warrant Shares of its intention to do so. If any of the Holders of the Warrant Shares notify the Company within twenty (20) days after mailing of any such notice of its or their desire to include any such securities in such proposed registration statement, the Company shall afford such Holders of the Warrant Shares the opportunity to have any such Warrant Shares registered under such registration statement. In the event that such registration relates to an underwritten public offering and the managing underwriter for said offering advises the Company in writing that in its opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without causing a diminution in the offering price or otherwise adversely affecting the offering, the Company will include in such registration (a) first, the securities the Company proposes to sell, (b) second, the securities held by the entities that made the demand for registration, (c) third, the Warrant Shares requested to be included in such registration which in the opinion of such underwriter can be sold, pro rata among the Holders of Warrant Shares on the basis of the number of Warrant Shares requested to be registered by such Holders, and (d) fourth, other securities requested to be included in such registration.
| -6- |
Notwithstanding the provisions of this Section 8.2, the Company shall have the right at any time after it shall have given written notice pursuant to this Section 8.2 (irrespective of whether a written request for inclusion of any such securities shall have been made) to elect not to file any such proposed registration statement or to withdraw the same after the filing but prior to the effective date thereof.
8.3 Covenants of the Company With Respect to Registration. In connection with any registration under Section 8.2 hereof, the Company covenants and agrees as follows:
(a) The Company shall pay all costs (excluding fees and expenses of Holder(s)’ counsel and any underwriting or selling commissions), fees and expenses in connection with all registration statements filed pursuant to Section 8.2 hereof including, without limitation, the Company’s legal and accounting fees, printing expenses, blue sky fees and expenses.
| -7- |
(b) The Company will take all necessary action which may be required in qualifying or registering the Warrant Shares included in a registration statement for offering and sale under the securities or blue sky laws of such states as reasonably are requested by the Holder(s), provided that the Company shall not be obligated to execute or file any general consent to service of process or to qualify as a foreign corporation to do business under the laws of any such jurisdiction.
(c) The Company shall indemnify the Holder(s) of the Warrant Shares to be sold pursuant to any registration statement and each person, if any, who controls such Holders within the meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), against all loss, claim, damage, expense or liability (including all expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which any of them may become subject under the Act, the Exchange Act or otherwise, arising from such registration statement.
(d) Nothing contained in this Agreement shall be construed as requiring the Holder(s) to exercise the Warrants prior to the initial filing of any registration statement or the effectiveness thereof.
(e) The Company shall furnish to each Holder participating in the offering and to each underwriter, if any, a signed counterpart, addressed to such Holder or underwriters, of (i) an opinion of counsel to the Company, dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, an opinion dated the date of the closing under the underwriting agreement), and (ii) a “cold comfort” letter dated the effective date of such registration statement (and, if such registration relates to an underwritten public offering, a letter dated the date of the closing under the underwriting agreement) signed by the independent public accountants who have issued a report on the Company’s financial statements included in such registration statement, in each case covering substantially the same matters with respect to such registration statement (and the prospectus included therein) and, in the case of such accountants’ letter, with respect to events subsequent to the date of such financial statements, as are customarily covered in opinions of issuer’s counsel and in accountants’ letters delivered to underwriters in underwritten public offerings of securities.
| -8- |
(f) The Company shall as soon as practicable after the effective date of any registration statement filed pursuant to this Section 8, and in any event within 15 months thereafter, make “generally available to its security holders” (within the meaning of Rule 158 under the Act) an earnings statement (which need not be audited) complying with Section 11(a) of the Act and covering a period of at least 12 consecutive months beginning after the effective date of the registration statement.
(g) For purposes of this Agreement, the term “Majority” in reference to the Warrants or Warrant Shares shall mean in excess of fifty percent (50%) of the then outstanding Warrants or Warrant Shares that (i) are not held by the Company, an affiliate, officer, creditor, employee or agent thereof or any of their respective affiliates, members of their family, persons acting as nominees or in conjunction therewith or (ii) have not been resold to the public pursuant to a registration statement filed with the Commission under the Act.
9. Obligations of Holders. It shall be a condition precedent to the obligations of the Company to take any action pursuant to Section 8 hereof that each of the selling Holders shall:
(a) Furnish to the Company such information regarding themselves, the Warrant Shares held by them, the intended method of sale or other disposition of such securities, the identity of and compensation to be paid to any underwriters proposed to be employed in connection with such sale or other disposition, and such other information as may reasonably be required to effect the registration of their Warrant Shares.
| -9- |
(b) Notify the Company, at any time when a prospectus relating to the Warrant Shares covered by a registration statement is required to be delivered under the Act, of the happening of any event with respect to such selling Holder as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing.
(c) The Holder(s) of the Warrants and/or Warrant Shares to be sold pursuant to a registration statement, and their successors and assigns, shall severally, and not jointly, indemnify the Company, its officers and directors and each person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against all loss, claim, damage or expense or liability (including all expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which they may become subject under the Act, the Exchange Act or otherwise, arising from information furnished by or on behalf of such Holders, or their successors or assigns, for specific inclusion in such registration statement; provided, however, that the indemnity of such Holder(s) shall be limited to the net proceeds received by such Holder(s) in the sale of securities pursuant to the respective registration statement.
10. Adjustments to Exercise Price and Number of Securities. The Exercise Price in effect at any time and the number and kind of securities purchased upon the exercise of any Warrant shall be subject to adjustment from time to time only upon the happening of the following events:
| -10- |
(a) Stock Dividend, Subdivision and Combination. In case the Company shall (i) declare a dividend or make a distribution on its outstanding shares of Preferred Shares in shares of Preferred Shares, (ii) subdivide or reclassify its outstanding shares of Preferred Shares into a greater number of shares, or (iii) combine or reclassify its outstanding shares of Preferred Shares into a smaller number of shares, the Exercise Price in effect at the time of the record date for such dividend or distribution or of the effective date of such subdivision, combination or reclassification shall be adjusted so that it shall equal the price determined by multiplying the Exercise Price by a fraction, the denominator of which shall be the number of shares of Preferred Shares outstanding after giving effect to such action, and the numerator of which shall be the number of shares of Preferred Shares outstanding immediately prior to such action. Such adjustment shall be made successively whenever any event listed above shall occur.
(b) Adjustment in Number of Securities. Upon each adjustment of the Exercise Price pursuant to the provisions of this Section 10, the number of Warrant Shares issuable upon the exercise at the adjusted Exercise Price of each Warrant shall be adjusted to the nearest number of whole shares of Preferred Shares by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares issuable upon exercise of the Warrants immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price.
(c) Definition of Preferred Shares. For the purpose of this Section 10, the term “Preferred Shares” shall mean (i) the class of stock designated as Series A Preferred Shares as approved by the Issuer’s Board of Directors as of the date hereof, or (ii) any other class of stock resulting from successive changes or reclassifications of such Preferred Shares consisting solely of changes in par value, or from par value to no par value, or from no par value to par value.
| -11- |
(d) Merger or Consolidation. In case of any consolidation of the Company with, or merger of the Company into, another corporation (other than a consolidation or merger which does not result in any reclassification or change of the outstanding Preferred Shares), the corporation formed by such consolidation or merger shall execute and deliver to the Holder a supplemental warrant agreement providing that the Holder of each Warrant then outstanding or to be outstanding shall have the right thereafter (until the expiration of such Warrant) to receive, upon exercise of such Warrant, the kind and amount of shares of stock and other securities and property receivable upon such consolidation or merger by a holder of the number of shares of Preferred Shares for which such Warrant might have been exercised immediately prior to such consolidation, merger, sale or transfer. Such supplemental warrant agreement shall provide for adjustments which shall be identical to the adjustments provided in Section 10. The above provision of this subsection shall similarly apply to successive consolidations or mergers.
(e) No Adjustment of Exercise Price in Certain Cases. No adjustment of the Exercise Price shall be made if the amount of said adjustment shall be less than two cents ($.02) per share; provided, however, that in such case any adjustment that would otherwise be required then to be made shall be carried forward and shall be made at the time of and together with the next subsequent adjustment which, together with any adjustment so carried forward, shall amount to at least two cents ($.02) per Warrant.
| -12- |
11. Exchange and Replacement of Warrant Certificates. Each Warrant Certificate is exchangeable, without expense, upon the surrender thereof by the registered Holder at the principal executive office of the Company for a new Warrant Certificate of like tenor and date representing in the aggregate the right to purchase the same number of Warrant Shares in such denominations as shall be designated by the Holder thereof at the time of such surrender. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of any Warrant Certificate, and, in 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 the Warrant, if mutilated, the Company will make and deliver a new Warrant Certificate of like tenor, in lieu thereof.
12. Elimination of Fractional Interests. The Company shall not be required to issue certificates representing fractions of shares of Preferred Shares upon the exercise of any Warrant, nor shall it be required to issue scrip or pay cash in lieu of fractional interests, it being the intent of the parties that all fractional interests shall be eliminated by rounding any fraction up to the nearest whole number of shares of Preferred Shares or other securities, properties or rights.
| -13- |
13. Reservation and Listing of Securities. The Company shall at all times reserve and keep available out of its authorized shares of Preferred Shares, solely for the purpose of issuance upon the exercise of the Warrants, such number of shares of Preferred Shares or other securities, properties or rights as shall be issuable upon the exercise thereof. Every transfer agent (“Transfer Agent”) for the Preferred Shares and other securities of the Company issuable upon the exercise of the Warrants will be irrevocably authorized and directed at all times to reserve such number of authorized shares of Preferred Shares and other securities as shall be requisite for such purpose. The Company will keep a copy of this Agreement on file with every Transfer Agent for the Preferred Shares and other securities of the Company issuable upon the exercise of the Warrants. The Company will supply every such Transfer Agent with duly executed stock and other certificates, as appropriate, for such purpose. The Company covenants and agrees that, upon exercise of the Warrants and payment of the Exercise Price therefor, all shares of Preferred Shares and other securities issuable upon such exercise shall be duly and validly issued, fully paid, non-assessable and not subject to the preemptive rights of any stockholder. As long as any Warrants shall be outstanding, the Company shall use its best efforts to cause all shares of Preferred Shares issuable upon the exercise of the Warrants to be listed (subject to official notice of issuance) on all securities exchanges on which the Preferred Shares issued to the public in connection herewith may then be listed and/or quoted on The NASDAQ Stock Market.
14. No Rights as Stockholder; Notices to Holders in Certain Circumstances. Nothing contained in this Agreement shall be construed as conferring upon the Holders the right to vote or to consent or to receive notice as a stockholder in respect of any meetings of stockholders for the election of directors or any other matter, or as having any rights whatsoever as a stockholder of the Company. If, however, at any time prior to the expiration of the Warrants and their exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its shares of Preferred Shares for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of current or retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company; or
| -14- |
(b) the Company shall offer to all the holders of its Preferred Shares any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any option, right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company (other than in connection with a consolidation or merger) or a sale 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 written notice of such event at least fifteen (15) days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the stockholders entitled to such dividend, distribution, convertible or exchangeable securities or subscription rights, or entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify such record date or the date of closing the transfer books, as the case may be. Failure to give such notice or any defect therein shall not affect the validity of any action taken in connection with the declaration or payment of any such dividend, or the issuance of any convertible or exchangeable securities, or subscription rights, options or warrants, or any proposed dissolution, liquidation, winding up or sale.
15. Notices. All notices, requests, consents and other communications hereunder shall be in writing and shall be deemed to have been duly made and sent when delivered, or mailed by registered or certified mail, return receipt requested:
(a) if to the registered Holder(s) of the Warrants, to the addresses of such Holder as shown on the books of the Company; or
(b) if to the Company, to the address set forth in Section 4 hereof or to such other address as the Company may designate by notice to the Holders.
16. Supplements; Amendments; Entire Agreement. This Agreement contains the entire understanding between the parties hereto with respect to the subject matter hereof and may not be modified or amended except by a writing duly signed by the party against whom enforcement of the modification or amendment is sought. The Company and the Placement Agent may from time to time supplement or amend this Agreement without the approval of any holders of Warrant Certificates (other than the Placement Agent) in order to cure any ambiguity, to correct or supplement any provision contained herein which may be defective or inconsistent with any provisions herein, or to make any other provisions in regard to matters or questions arising hereunder which the Company and the Placement Agent may deem necessary or desirable and which the Company and the Placement Agent deem shall not adversely affect the interests of the Holders.
| -15- |
17. Successors. All of the covenants and provisions of this Agreement shall be binding upon and inure to the benefit of the Company, the Placement Agent and their respective successors and assigns hereunder.
18. Survival of Representations and Warranties. All statements in any schedule, exhibit or certificate or other instrument delivered by or on behalf of the parties hereto, or in connection with the transactions contemplated by this Agreement, shall be deemed to be representations and warranties hereunder. Notwithstanding any investigations made by or on behalf of the parties to this Agreement, all representations, warranties and agreements made by the parties to this Agreement or pursuant hereto shall survive.
19. Governing Law. This Agreement and each Warrant Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be construed in accordance with the laws of said State without giving effect to the rules of said State governing the conflicts of laws.
20. Severability. If any provision of this Agreement shall be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision of this Agreement.
| -16- |
21. Captions. The caption headings of the Sections of this Agreement are for convenience of reference only and are not intended, nor should they be construed as, a part of this Agreement and shall be given no substantive effect.
22. Benefits of this Agreement. Nothing in this Agreement shall be construed to give to any person or corporation other than the Company and the Placement Agent and any other registered Holder(s) of the Warrant Certificates or Warrant Shares any legal or equitable right, remedy or claim under this Agreement; and this Agreement shall be for the sole and exclusive benefit of the Company and the Placement Agent and any other Holder(s) of the Warrant Certificates or Warrant Shares.
23. Counterparts. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and such counterparts shall together constitute but one and the same instrument.
| -17- |
IN WITNESS HEREOF, the parties hereto have caused this Agreement to be duly executed, as of the day and year first above written.
| ATTEST: | ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC. | ||
| /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ | By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |
| Director of Compliance | Name: | ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |
| Title: | Chief Executive Officer | ||
| DPEC CAPITAL, INC. | |||
| By: | /s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | ||
| Name: | ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | ||
| Title: | Financial and Operations Principal | ||
| -18- |
WARRANT CERTIFICATE
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT DATED AS OF OCTOBER 1, 2012 BETWEEN THE ISSUER AND DPEC CAPITAL, INC.
EXERCISABLE ON OR BEFORE
5:30 P.M., NEW YORK TIME, March 31, 2018
Warrant No. ___
____________ Shares of Preferred Shares
This Warrant Certificate certifies that DPEC Capital, Inc., or registered assigns, is the registered holder of Warrants to purchase initially, at any time from March 31, 2013 until 5:30 p.m., New York time on March 31, 2018 (“Expiration Date”), up to ____,000 shares of fully-paid and non-assessable Series A Preferred Shares, $.01 par value per share (the “Preferred Shares”) of ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC., a Delaware corporation (the “Company”), at the initial exercise price, subject to adjustment in certain events, of $2.30 per share of Preferred Shares (the “Exercise Price”) upon surrender of this Warrant Certificate and payment of the Exercise Price at an office or agency of the Company, but subject to the conditions set forth herein and in the Warrant Agreement dated as of October 1, 2012 between the Company and DPEC Capital, Inc. (the “Warrant Agreement”). Payment of the Exercise Price shall be made by certified or official bank check in New York Clearing House funds payable to the order of the Company.
No Warrant may be exercised after 5:30 p.m., New York time, on the Expiration Date, at which time all Warrants evidenced hereby, unless exercised prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants issued pursuant to the Warrant Agreement, which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Company and the holders (the words “holders” or “holder” meaning the registered holders or registered holder) of the Warrants.
| -19- |
The Warrant Agreement provides that upon the occurrence of certain events the Exercise Price and the type and/or number of the Company’s securities issuable thereupon may, subject to certain conditions, be adjusted. In such event, the Company will, at the request of the holder, issue a new Warrant Certificate evidencing the adjustment in the Exercise Price and the number and/or type of securities issuable upon the exercise of the Warrants; provided, however, that the failure of the Company to issue such new Warrant Certificates shall not in any way change, alter, or otherwise impair, the rights of the holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant Certificate at an office or agency of the Company, a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee(s) in exchange for this Warrant Certificate, subject to the limitations provided herein and in the Warrant Agreement, without any charge except for any tax or other governmental charge imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this Certificate, the Company shall forthwith issue to the holder hereof a new Warrant Certificate representing such numbered unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, and of any distribution to the holder(s) hereof, and for all other purposes, and the Company shall not be affected by any notice to the contrary.
All terms used in this Warrant Certificate which are defined in the Warrant Agreement shall have the meanings assigned to them in the Warrant Agreement.
This Warrant Certificate does not entitle any holder thereof to any of the rights of a shareholder of the Company.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed under its corporate seal.
| Dated: ______________, 2012 | ||
| ATTEST: | ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC. | |
| By:______________________________ | ||
| Secretary | Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |
| Title: Chairman |
| -20- |