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Exhibit 10.1
NEITHER THIS WARRANT NOR THE SECURITIES
ISSUABLE UPON EXERCISE HEREOF NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN
MAY BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED, ENCUMBERED OR IN ANY OTHER
MANNER TRANSFERRED OR DISPOSED OF,
EXCEPT IN COMPLIANCE WITH THE SECURITIES
ACT OF 1933, AS AMENDED, AND THE TERMS
AND CONDITIONS HEREOF. THE HOLDER OF THIS
WARRANT AND THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF ARE SUBJECT TO THE
RESTRICTIONS HEREIN SET FORTH.
VOID AFTER 5:00 P.M. NEW YORK CITY TIME,
MARCH 22, 2014.
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Number 1
WARRANT
to
PURCHASE COMMON STOCK
of
SUNSET FINANCIAL RESOURCES, INC.
****************************************
This
certifies that, for good and valuable consideration, Sunset
Financial Resources, Inc., a Maryland
corporation (the "Company"), grants to
Sapphire Advisors, LLC or permitted
registered assigns (the "Warrantholder" or
"Warrantholders"), the right to subscribe
for and purchase from the Company, at
$13.00 per share (the "Exercise Price"),
two hundred thirty-three thousand
(233,000) shares (the "Warrant Shares") of
the Company's common stock, par value
$0.01 per share (the "Common Stock"),
subject to the provisions and upon the
terms and conditions herein set forth. The
Exercise Price and the number of
Warrant Shares are subject to adjustment
from time to time as provided in
subsection 1.10 herein.
1.
Duration and Exercise of Warrant; Limitation on Exercise;
Payment of Taxes.
1.1 Duration
and Exercise of Warrant.
(a) Subject to
subsection 1.1(c) herein, this Warrant may
be exercised to purchase (i) 100% of the underlying shares from
and
after 9:00 A.M. New York City time on March 22, 2005 (the
"Exercise
Date"); to and including 5:00 P.M. New York
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City time on March 22, 2014 (the "Expiration Date").
(b) Subject to
subsection 1.1(c) herein, the rights
represented by this Warrant may be exercised by the Warrantholder
of
record, in whole, or from time to time in part, by:
(i) Surrender
of this Warrant, accompanied by
either the Exercise Form annexed hereto, or if the
Warrantholder decides to exercise the Warrant pursuant to the
broker-assisted cashless exercise program instituted by the
Company, an applicable exercise form provided by the Company
(the "Exercise Form") duly executed by the Warrantholder of
record and specifying the number of Warrant Shares to be
purchased, to the Company at the office of the Company located
at 10245 Centurion Parkway North, Jacksonville, Florida 32257
(or such other office or agency of the Company as it may
designate by notice to the Warrantholder at the address of
such Warrantholder appearing on the books of the Company)
during normal business hours on any day (a "Business Day")
other than a Saturday, Sunday or a day on which the New York
Stock Exchange is authorized to close or on which the Company
is otherwise closed for business (a "Nonbusiness Day") on or
after 9:00 A.M. New York City time on the Exercise Date but
not later than 5:00 P.M. on the Expiration Date (or 5:00 P.M.
on the next succeeding Business Day, if the Expiration Date is
a Nonbusiness Day);
(ii)
Delivery of payment to the Company in cash
or by certified or official bank check in New York Clearing
House Funds, of the Exercise Price for the number of Warrant
Shares specified in the Exercise Form (such payment may be
made by the Warrantholder directly or by a designated broker
pursuant to the broker-assisted cashless exercise program
instituted by the Company, subject to subsection 1.5 herein)
and
(iii) Such
documentation as to the identity and
authority of the Warrantholder as the Company may reasonably
request.
Such Warrant Shares shall be deemed by the Company to be
issued to the Warrantholder as the record holder of such Warrant
Shares
as of the close of business on the date on which this Warrant
shall
have been surrendered and payment made for the Warrant Shares
as
aforesaid. Certificates for the Warrant Shares specified in the
Exercise Form shall be delivered to the Warrantholder (or
designated
broker, as the case may be) as promptly as practicable, and in
any
event within 10 business days, thereafter. The stock certificates
so
delivered shall be in denominations of at least one thousand
(1,000)
shares each or such other denomination as may be specified by
the
Warrantholder and agreed upon by the Company, and shall be issued
in
the name of the Warrantholder or, if permitted by subsection 1.5
herein
and in accordance with the provisions thereof, such other name as
shall
be designated in the Exercise Form. If this Warrant shall have
been
exercised only in part, the Company shall, at the time of delivery
of
the certificates for the Warrant Shares, deliver to the
Warrantholder
(or designated broker, as the case may
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be) a new Warrant evidencing the rights to purchase the
remaining
Warrant Shares, which new Warrant shall in all other respects
be
identical with this Warrant. No adjustments or payments shall be
made
on or in respect of Warrant Shares issuable on the exercise of
this
Warrant for any cash dividends paid or payable to holders of record
of
Common Stock prior to the date as of which the Warrantholder shall
be
deemed to be the record holder of such Warrant Shares.
(c)
Notwithstanding anything to the contrary in this
Warrant, the Warrantholder hereby irrevocably agrees not to,
directly
or indirectly (i) sell, offer, contract to sell, sell any option
or
contract to purchase, purchase any option or contract to sell,
grant
any option right or warrant to purchase, transfer the economic risk
of
ownership in, make any short sale, pledge or otherwise dispose of
this
Warrant or the Warrant Shares, or (ii) enter into any swap or
other
arrangement that transfers to another, in whole or in part, any of
the
economic consequences of ownership of this Warrant or the
Warrant
Shares, whether any such transaction described in clause (i) or
(ii)
above is to be settled by delivery of this Warrant or the
Warrant
Shares, for a period commencing on the date hereof and, (A)
with
respect to 33 1/3% of the Warrant Shares, ending March 22, 2005,
(B)
with respect to an additional 33 1/3% of the Warrant Shares,
ending
March 22, 2006 and (C) with respect to the remaining 33 1/3% of
the
Warrant Shares, ending March 22, 2007.
Notwithstanding the foregoing: (a) if the Warrantholder is an
individual, he or she may transfer this Warrant or the Warrant
Shares
either during his or her lifetime or on death (i) by gift, will
or
intestacy or (ii) to a member or members of his or her immediate
family
or to a
partnership or trust, the partners or beneficiaries of which
are exclusively the Warrantholder and/or a member or members of his
or
her immediate family and (b) if the Warrantholder is a
partnership,
trust, corporation or similar entity, it may distribute any such
shares
or securities to its partners or shareholders; provided, however,
that
in each such case, prior to any such transfer or distribution,
each
transferee or distributee shall execute an agreement,
reasonably
satisfactory to the Company, pursuant to which such transferee
or
distributee shall agree to receive and hold such Warrant or
Warrant
Shares, subject to the provisions hereof, and there shall be no
further
transfer except in accordance with the provisions hereof. For
the
purposes of this paragraph, "immediate family" shall mean
spouse,
domestic partner, lineal descendant, father, mother, brother or
sister
of the Warrantholder.
The Warrantholder understands that the Company is relying on
this agreement in issuing this Warrant. The Warrantholder hereby
waives
any rights of the Warrantholder under any agreement, instrument
or
understanding to sell this Warrant or the Warrant Shares except
in
accordance with the terms of this Warrant.
The Warrantholder understands that this agreement is
irrevocable and shall be binding upon the Warrantholder's heirs,
legal
representatives, successors and assigns.
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1.2 Limitation
on Exercise. If this Warrant is not exercised prior
to 5:00 P.M. on the Expiration Date (or the
next succeeding Business Day, if the
Expiration Date is a Nonbusiness Day), this
Warrant, or any new Warrant issued
pursuant to subsection 1.1 herein, shall
cease to be exercisable and shall
become void and all rights of the
Warrantholder hereunder shall cease. This
Warrant shall not be exercisable, and no
Warrant Shares shall be issued
hereunder, prior to 9:00 A.M. New York City
time on the Exercise Date.
1.3 Exercise
Upon a Change of Control. At any time during the term
of this Warrant following a Change in
Control (as defined below), this Warrant
shall immediately vest in its entirety with
respect to the Warrantholder's right
to purchase all of the shares underlying
the Warrant and may be exercised in
whole or in part for 90 days after a Change
in Control. A "Change in Control"
shall be deemed to have occurred if:
(i) Any
person, other than the Company or an
employee benefit plan of the Company, acquires directly or
indirectly the Beneficial Ownership (as defined in Section
13(d) of the Securities and Exchange Act of 1934, as amended
(the" Exchange Act")) of any voting security of the Company
and immediately after such acquisition such Person is,
directly or indirectly, the Beneficial Owner of voting
securities representing 50% or more of the total voting power
of all of the then-outstanding voting securities of the
Company;
(ii)
At any time during any 12-month period, the
Board of Directors of the Company in office at the beginning
of such period shall have ceased to constitute a majority of
the Board of Directors without the approval of the nomination
of such directors by a majority of the Board of Directors
consisting of directors who were serving at the beginning of
such period;
(iii) The
stockholders of the Company shall
approve a merger, consolidation, recapitalization, or
reorganization of the Company, a reverse stock split of
outstanding voting securities, or consummation of any such
transaction if stockholder approval is not sought or obtained,
other than any such transaction which would result in at least
50% of the total voting power represented by the voting
securities of the surviving entity outstanding immediately
after such transaction being Beneficially Owned by at least
50% of the holders of outstanding voting securities of the
Company immediately prior to the transaction, with the voting
power of each such continuing holder relative to other such
continuing holders not substantially altered in the
transaction; or
(iv)
The stockholders of the Company shall
approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the
