EXHIBIT 4.8
THIS WARRANT CERTIFICATE, AND THE SHARES TO BE ISSUED UPON ITS
EXERCISE, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED
FOR SALE, SOLD OR TRANSFERRED UNLESS REGISTERED
UNDER THE ACT, OR UNLESS AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE.
WARRANT CERTIFICATE
Dated: February 2, 1998
Warrant to Purchase up to 18,000 shares of Common Stock,
par value $.0001 per share,
of
KIDEO PRODUCTIONS, INC.
VOID AFTER MIDNIGHT, NEW YORK, NEW YORK LOCAL TIME
ON
FEBRUARY 2, 2003
KIDEO PRODUCTIONS, INC., a Delaware corporation (the "Company"), hereby
certifies that MICHAEL B. SOLOVAY, his successors and assigns (the "Holder"), is
entitled to purchase from the Company at any time after January 31, 1999 and
before Midnight, New York, New York local time on February 2, 2003, up to 18,000
shares of common stock, par value $.0001 per share, of the Company (the "Common
Stock"), at the price of $1.00 per share (the "Exercise Price", subject to
adjustment as provided herein).
1. Exercise of Warrants. In order to exercise the rights to purchase
Common Stock evidenced by this Warrant Certificate, the Holder must, subject to
Section 7 below, present and surrender this Warrant Certificate with the
attached Purchase Form duly executed at the principal office of the Company.
This Warrant Certificate may be exercised with respect to all of the Common
Stock subject hereto or any portion thereof.
2. Exchange and Transfer. This Warrant Certificate at any time prior to
the exercise hereof, upon presentation and surrender to the Company, may be
exchanged, alone or with other Warrant Certificates, if any, of like tenor
registered in the name of the same
Holder, for another Warrant Certificate of like tenor in the name of such Holder
exercisable for the same aggregate number of shares of Common Stock as the
Warrant Certificate(s) surrendered.
3. Rights and Obligations of the Holder of the Warrant Certificate. The
Holder shall not, by virtue hereof, be entitled to any rights of a stockholder
in the Company, either at law or in equity; provided, however, upon exercise of
this Warrant, such Holder shall, for all purposes, be deemed to have become the
holder of record of such Common Stock on the date on which this Warrant,
together with a duly executed Purchase Form, was surrendered and payment of the
Exercise Price was made, irrespective of the date of delivery of the share
certificate. The rights of the Holder of this Warrant are limited to those
expressed herein and the Holder, by acceptance hereof, consents to and agrees to
be bound by and comply with all the provisions of this Warrant. In addition, the
Holder agrees that the Company may deem and treat the person in whose name this
Warrant is registered as the absolute, true and lawful owner for all purposes
whatsoever, unless and until such time as the Company has received written
notice to the contrary.
4. Common Stock.
(a) The Company covenants and agrees that this Warrant is duly and
validly authorized and issued, and free from all stamp-taxes, liens, and charges
with respect to the delivery or purchase thereof. In addition, the Company
agrees at all times to reserve and keep available an authorized number of shares
of Common Stock sufficient to permit the exercise in full of this Warrant.
(b) The Company covenants and agrees that all shares of Common Stock
delivered upon exercise of this Warrant, will, upon delivery, be duly and
validly authorized and issued, fully-paid and non-assessable, and free from all
stamp-taxes, liens, and charges with respect to the purchase thereof.
5. Disposition of the Warrant and Common Stock. The Holder hereby agrees
and represents that (a) this Warrant and the Common Stock issuable upon exercise
are being acquired for the Holder's account, and not with a view to or in
connection with any offering or distribution; and (b) no public distribution of
this Warrant of the Common Stock will be made in violation of the provisions of
the Securities Act of 1933, as amended (the "Act"), or in violation of the
provisions of applicable state laws. The Company shall use its best efforts to
cause its counsel, at the Company's expense, to render any opinion required in
connection with any transfer of this Warrant or the shares of Common Stock
underlying this Warrant. The Holder is responsible for any transfer taxes due as
a result of any transfer of this Warrant.
6. Registration Rights. The Holder shall have those registration rights
with respect to the Common Stock issued or issuable upon exercise of this
Warrant set forth in
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the Note and Warrant Purchase Agreement, dated January 30, 1998, between the
Company and Benjamin and Michael Bollag (the "Purchase Agreement").
7. Exercise of This Warrant. Subject to Section 1 of this Warrant, at any
time on or prior to Midnight, New York, New York local time, on February 2,
2003, the Holder shall have the right to acquire up to 18,000 shares of Common
Stock on the following terms and conditions:
(a) Exercise Price: Fractional Shares. The Exercise Price shall be a
price per share of Common Stock equal to One Dollar ($1.00), subject to
reduction as set forth in Section 4.1 of the Purchase Agreement and subject to
adjustment as set forth below and in the Purchase Agreement. All calculations of
shares of Common Stock to be issued in connection with any exercise hereunder
shall be rounded to the nearest one-hundredth of a whole share.
(b) Exercise Procedure.
(1) Payment for Shares. (x) On a date determined by the
Company, but which shall in no event be later than five (5) days after the
Company's receipt of the surrendered Warrant and Purchase Form, the Holder shall
deliver to the Company, at the Company's principal executive office, a certified
or bank cashier's check payable to the Company in the amount of the Exercise
Price then in effect times the number of shares of Common Stock being purchased
(the "Aggregate Stock Purchase Price").
(y) In lieu of paying the Aggregate Stock Purchase Price
upon exercise of this Warrant, for so long as the Common Stock is publicly
traded, the Holder may elect a "cashless exercise" in which event the Holder
will receive upon exercise of this Warrant a reduced number of shares of Common
Stock equal to (i) the number of shares of Common Stock that would be issuable
pursuant to this Warrant upon payment of the Aggregate Stock Purchase Price
minus (ii) the number of shares of Common Stock that have an aggregate fair
market value equal to the Aggregate Stock Purchase Price. For purposes of the
preceding sentence, the fair market value of a share of Common Stock shall mean
the average of the last reported sale prices of the Common Stock on the ten
trading days preceding the date of exercise.
(2) Effective Date of Exercise. Each exercise will be deemed
to have been effected as of the close of business on the later of (i) the date
that the Purchase Form is received by the Company, or (ii) the date on which
this original Warrant is returned to the Company for cancellation, and, if
applicable, reissuance at the principal office of the Company at 611 Broadway,
Suite 515, New York, New York 10012. At such time as such exercise has been
effected, the person (or entity) or persons (or entities) in whose name or names
any certificate(s) for shares of Common Stock are to be issued upon such
exercise will be deemed to have become the holder or holders of record of the
shares of Common Stock represented thereby.
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(c) Delivery of Certificates. As soon as practicable after an
exercise has been effected (but in any event within three (3) business days),
the Company will deliver to the Holder:
(1) a certificate or certificates representing the number of
shares of Common Stock issuable by reason of such exercise in such name(s) and
such denomination(s) as the Holder has specified;
(2) a new Warrant Certificate entitling the Holder to purchase
the number of shares of Common Stock as to which the original Warrant
Certificate was not exercised and reflecting any changes to the Exercise Price
which have theretofore been effectuated and which Warrant Certificate shall
otherwise be in form and substance identical to that delivered by the Holder to
the Company for said exercise.
(d) Closure of Issuer Books. The Company will not close its books
against the transfer of Warrants or of Common Stock issued or issuable upon
exercise of Warrants in any manner which interferes with the timely exercise of
Warrants.
(e) Payment of Taxes. The Company will pay all taxes and other
governmental charges (other than taxes measured by the revenue or income of the
Holder) that may be imposed in respect of the issue or delivery of shares of
Common Stock upon exercise of this Warrant; provided, however, that the Holder
shall pay any such tax which is due because shares of Common Stock are issued in
a name other than such Holder's.
(f) Notices of Record Date. In the event of (i) any taking by the
Company of a record of the holders of any class or series of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend or other distribution or (ii) any reclassification or recapitalization
of the capital stock of the Company, any merger or consolidation of the Company,
or any transfer of all or substantially all the assets of the Company to any
other corporation, entity or person, or any voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company, the
Company shall mail to the Holder at least twenty (20) days prior to the record
date specified therein (the "Notice Period"), a notice specifying (A) the date
on which any such record is to be taken for the purpose of such dividend or
distribution and a description of such dividend or distribution, (B) the date on
which any such reorganization, reclassification, transfer, consolidation,
merger, dissolution, liquidation or winding up is expected to become effective,
and (C) the time, if any is to be fixed, as to when the holders of record of
Common Stock (or other securities) shall be entitled to exchange their shares of
Common Stock (or other securities) for securities or other property deliverable
upon such reorganization, reclassification, transfer, consolidation, merger,
dissolution, liquidation or winding up. During the Notice Period, the Holder
shall have the exercise rights provided elsewhere in this Warrant.
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8. Adjustment of Exercise Price and Number of Shares. The Exercise Price
and the number of shares purchasable upon the exercise of this Warrant shall be
subject to adjustment from time to time as set forth below; however, no
adjustment in the Exercise Price need be made unless the adjustment would
require an increase or decrease of at least 1% in the Exercise Price. Any
adjustments that are not made shall be carried forward and taken into account in
any subsequent adjustment. Upon each adjustment of the Exercise Price, the
holder of this Warrant shall thereafter be entitled to purchase, at the Exercise
Price resulting from such adjustment, the number of shares obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of shares purchasable pursuant hereto immediately prior to such
adjustment, and dividing the product thereof by the Exercise Price resulting
from such adjustment.
(a) Adjustment for Common Stock Splits and Combinations. If the
Company shall at any time or from time to time after the date hereof effect a
subdivision of the outstanding Common Stock, the Exercise Price then in effect
immediately before that subdivision shall be proportionately decreased;
conversely, if the Company shall at any time or from time to time after the date
hereof reduce the outstanding shares of Common Stock by combination or
otherwise, the Exercise Price then in effect immediately before the combination
shall be proportionately increased. Any adjustment under this Section 8(a) shall
become effective at the close of business on the date the subdivision or
combination becomes effective.
(b) Adjustment for Certain Dividends and Distributions of Common
Stock. In the event the Company at any time or from time to time after the date
hereof shall make or issue, or fix a record date for the determination of
holders of Common Stock entitled to receive, a dividend or other distribution
payable in additional shares of Common Stock, then and in each such event the
Exercise Price then in effect shall be decreased as of the time of such issuance
or, in the event such a record date shall have been fixed, as of the close of
business on such record date, by multiplying the Exercise Price then in effect
by a fraction:
(1) the numerator of which shall be the total number of shares
of Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and
(2) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date, plus the number of
shares of Common Stock issuable in payment of such dividend or distribution;
provided, however, if such record date shall have been fixed and such dividend
is not fully paid or if such distribution is not fully made on the date fixed
therefor, the Exercise Price shall be recomputed accordingly as of the close of
business on such record date and thereafter the Exercise Price shall be adjusted
pursuant to this Section 8(b) as of the time of actual payment of such dividends
or distributions.
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(c) Adjustment for Other Dividends and Distributions. In the event
the Company at any time or from time to time after the date hereof shall make or
issue, or fix a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in securities of
the Company other than shares of Common Stock, then and in each such event
provision shall be made so that Holder shall receive upon exercise of this
Warrant in addition to the number of shares of Common Stock receivable
thereupon, the amount of securities of the Company that it would have received
had this Warrant been exercised on the date of such event and had thereafter,
during the period from the date of such event to and including the exercise
date, retained such securities receivable by it as aforesaid during such period
giving application to all adjustments called for during such period under this
Warrant with respect to the rights of the Holder.
(d) Adjustment for Reclassification, Exchange or Substitution. If
the Common Stock issuable upon the exercise of this Warrant shall be changed
into the same or a different number of shares of any class or classes of stock,
whether by reclassification, exchange, substitution or other change (other than
a reorganization, merger, consolidation or sale of assets provided for in
Section 8(e) below), then and in each such event, the Holder shall have the
right thereafter to exercise this Warrant into the kind and amounts of shares of
stock and other securities and property receivable upon such reclassification,
exchange, substitution or other change, by holders of the number of shares of
Common Stock into which this Warrant might have been exercised immediately prior
to such reclassification, exchange, substitution, or other change, all subject
to further adjustment as provided herein.
(e) Reorganization, Mergers, Consolidations or Sales of Assets. If
at any time or from time to time there shall be a reorganization of the Common
Stock (other than a reclassification, exchange or substitution of shares
provided for in Section 8(d) above) or a merger or consolidation of the Company
with or into another corporation, or the sale of all or substantially all the
Company's properties and assets to any other person, then, as a part of such
reorganization, merger, consolidation or sale, provision shall be made so that
the Holder shall thereafter be entitled to receive upon exercise of this
Warrant, the number of shares of stock or other securities or property of the
Company or of the successor corporation resulting from such reorganization,
merger, consolidation or sale, to which a holder of that number of shares of
Common Stock deliverable upon exercise of this Warrant would have been entitled
on such reorganization, merger, consolidation or sale. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Warrant with respect to the rights of the Holder after the reorganization,
merger, consolidation or sale to the end that the provisions of this Warrant
(including adjustment of the number of shares issuable upon exercise of this
Warrant) shall be applicable after that event as nearly equivalent as may be
practicable.
(f) Sales of Shares Below Exercise Price.
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(1) Adjustment of Exercise Price. Subject to Subsection
8(f)(5) below, if at any time or from time to time after the date hereof, the
Company shall issue or sell Additional Shares of Common Stock (as hereinafter
defined), other than as a dividend as provided in Section 8(b) above, and other
than upon a subdivision or combination of shares of Common Stock as provided in
Section 8(a) above, for a consideration per share less than the then effective
Exercise Price, then and in each case the Exercise Price shall be reduced, as of
the opening of business on the date of such issuance or sale, to a price equal
to the price at which such Additional Shares of Common Stock are sold. In no
event shall any adjustment under this Subsection 8(f)(1) result in an increase
in the Exercise Price.
(2) Determination of Consideration. For the purpose of making
any adjustment in the Exercise Price or number of shares of Common Stock
purchasable on exercise of this Warrant as provided above, the consideration
received by the Company for any issue or sale of securities shall,
i. to the extent it consists of cash, be computed at the
gross amount of cash received by the Company in connection with such issue or
sale,
ii. to the extent it consists of services or property
other than cash, be computed at the fair value of such services or property as
determined in good faith by the Company's Board of Directors (the "Board"), and
iii. if Additional Shares of Common Stock, Convertible
Securities (as hereinafter defined), or rights or options to purchase either
Additional Shares of Common Stock or Convertible Securities are issued or sold
together with other stock or securities or other assets of the Company for a
consideration that covers both, be computed as the portion of the consideration
so received that may be reasonably determined in good faith by the Board to be
allocable to such Additional Shares of Common Stock, Convertible Securities or
rights or options.
(3) Convertible Securities. For the purpose of the adjustment
provided in Subsection 8(f)(1) hereof, if at any time or from time to time after
the date hereof the Company shall issue any rights or options for the purchase
of, or stock or other securities convertible into, Additional Shares of Common
Stock (such convertible stock or securities being hereinafter referred to as
"Convertible Securities"), then, in each case, if the Effective Price (as
hereinafter defined) of such rights, options or Convertible Securities shall be
less than the then existing Exercise Price, the Company shall be deemed to have
issued at the time of the issuance of such rights or options or Convertible
Securities the maximum number of Additional Shares of Common Stock issuable upon
exercise or conversion thereof and to have received as consideration for the
issuance of such shares an amount equal to the total amount of the
consideration, if any, received by the Company for the issuance of such rights
or options or Convertible Securities, plus, in the case of such options or
rights, the minimum amounts of consideration, if any, payable to the Company
upon
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exercise or conversion of such options or rights. For purposes of the foregoing,
"Effective Price" shall mean the quotient determined by dividing the total of
all such consideration by such maximum number of Additional Shares of Common
Stock. No further adjustment of the Exercise Price adjusted upon the issuance of
such rights, options or Convertible Securities shall be made as a result of the
actual issuance of Additional Shares of Common Stock on the exercise of any such
rights or options or the conversion of any such Convertible Securities. If all
such rights or options or the conversion privilege represented by any such
Convertible Securities shall expire without having been exercised, the Exercise
Price adjusted upon the issuance of such rights, options or Convertible
Securities shall be readjusted to the Exercise Price that would be in effect had
no adjustment been made with respect to such rights or options or rights of
conversion of such Convertible Securities.
(4) Rights or Options for Convertible Securities. For the
purpose of the adjustment provided for in Subsection 8(f)(1) hereof, if at any
time or from time to time after the date hereof, the Company shall issue any
rights or options for the purchase of Convertible Securities, then, in each such
case, if the Effective Price thereof is less than the current Exercise Price,
the Company shall be deemed to have issued at the time of the issuance of such
rights or options the maximum number of Additional Shares of Common Stock
issuable upon conversion of the total amount of Convertible Securities covered
by such rights or options and to have received as consideration for the issuance
of such Additional Shares of Common Stock an amount equal to the amount of
consideration, if any, received by the Company for the issuance of such rights
or options, plus the minimum amounts of consideration, if any, payable to the
Company upon the conversion of such Convertible Securities. For purposes of the
foregoing, "Effective Price" shall mean the quotient determined by dividing the
total amount of such consideration by such maximum number of Additional Shares
of Common Stock. No further adjustment of such Exercise Price adjusted upon the
issuance of such rights or options shall be made as a result of the actual
issuance of the Convertible Securities upon the exercise of such rights or
options or upon the actual issuance of Additional Shares of Common Stock upon
the conversion of such Convertible Securities. The provisions of Subsection
8(f)(3) above for the readjustment of such Exercise Price upon the expiration of
rights or options or the rights of conversion of Convertible Securities shall
apply mutatis mutandis to the rights, options and Convertible Securities
referred to in this Subsection 8(f)(4).
(5) Certain Exceptions. Notwithstanding the provisions of
Subsection 8(f)(1) above, no adjustment shall be made to the Exercise Price with
respect to the issuance or sale of Additional Shares of Common Stock for a
consideration per share equal to or greater than the then current Exercise Price
nor shall any adjustment be made related to the issuance of 12,500 shares of
Common Stock as a fee for arranging the transactions in which this Warrant was
issued. For the purposes of this Section 8(f), the issuance of not more than
500,000 shares of Common Stock to employees or consultants or the Company
pursuant to stock option or stock purchase plans approved by the Board
(including the reissuance of shares purchased by the Company from employee or
consultants of the Company) shall not be considered the issuance or sale of
Additional Shares of
8
Common Stock; provided, that any such employee or consultant options may not be
exercised by the recipient thereof for a period of at least one year from the
date of issuance.
(6) Definition. The term "Additional Shares of Common Stock"
as used herein shall mean all shares of Common Stock issued or deemed issued by
the Company after the date hereof, whether or not subsequently reacquired or
retired by the Company. Notwithstanding anything to the contrary contained
herein, Common Stock issuable upon conversion of any Preferred Stock of the
Company outstanding on the date hereof or the convertible notes issued by the
Company to any party concurrently with this Warrant and other warrant
certificates pursuant to the terms of the Purchase Agreement shall not be deemed
to be Additional Shares of Common Stock or Convertible Securities for purposes
of causing an adjustment to the Exercise Price.
(g) Certificate of Adjustment. In each case of an adjustment or
readjustment of the Exercise Price, the Company, at its expense, shall prepare a
certificate showing such adjustment or readjustment signed by the duly elected
Treasurer or Chief Financial Officer of the Company (the "Adjustment
Certificate) and shall mail the Adjustment Certificate, by first class mail,
postage prepaid, to the Holder at the Holder's address as shown in the Company's
books. The Adjustment Certificate shall set forth such adjustment or
readjustment, showing in detail the facts upon which such adjustment or
readjustment is based including a statement of the Exercise Price and the number
of shares of Common Stock or other securities issuable upon exercise of this
Warrant immediately before and after giving effect to the applicable adjustment
or readjustment. If the holders of a majority of the shares of Common Stock
represented by all outstanding Warrants being issued concurrently herewith do
not in good faith believe that such adjustment or readjustment was calculated in
accordance with the terms of this Warrant, such holders shall have the right to
challenge such adjustment or readjustment, or method of calculating the same, by
delivering written notice to the Company at 611 Broadway, Suite 515, New York,
New York 10012, Attention: Richard L. Bulman, within thirty (30) days after the
Holder's receipt of the Adjustment Certificate. In the event such holders
deliver such written notice to the Company, the Company, at its expense, shall
cause independent certified public accountants of recognized standing selected
by the Company (who may be the independent certified public accountants then
auditing the books of the Company) to recompute such adjustment or readjustment
in accordance herewith and prepare a certificate signed by such accountants (the
"Accountant's Adjustment Certificate") showing such adjustment or readjustment.
The Company shall then mail the Accountant's Adjustment Certificate, by first
class mail, postage prepaid, to the Holder at the Holder's address as shown in
the Company's books. In the event of any conflict between the Adjustment
Certificate and the Accountant's Adjustment Certificate, the Accountant's
Adjustment Certificate shall control.
9. Survival. The various rights and obligations of the Holder hereof and
of this Company as set forth in Sections 5, 6, and 7 hereof, as may be
applicable, shall survive the exercise of this Warrant or the surrender of this
Warrant, and upon the surrender of this Warrant and the exercise of all the
rights represented hereby, each party shall, if requested,
9
deliver to the other hereof its written acknowledgement of its continuing
obligations under said Sections.
10. Mutilated or Missing Warrants. In case this Warrant Certificate shall
be mutilated, lost, stolen or destroyed, the Company will, upon request, issue
and deliver in exchange and substitution for and upon cancellation of the
mutilated Warrant Certificate, or in lieu of and substitution of the Warrant
Certificate lost, stolen or destroyed, a new Warrant Certificate of like tenor
and representing an equivalent right or interest, but only upon receipt of
evidence satisfactory to the Company of such loss, theft, or destruction of such
Warrant Certificate and, in the case of a lost, stolen or destroyed Warrant
Certificate, indemnity, if requested, also satisfactory to the Company.
Applicants for such substitute Warrant Certificate shall also comply with such
other reasonable regulations and pay such reasonable charges as the Company may
prescribe.
11. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been made when
delivered or mailed first class registered or certified mail, postage prepaid,
return receipt requested, as follows: if the Holders, at the address of the
Holder as shown on the Company's registry books, and, if to the Company, at 611
Broadway, Suite 515, New York, New York, 10012, Attention: Richard L. Bulman.
12. Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of New York, without reference to
principles of conflicts of law.
13. Binding Effect. This Warrant shall be binding upon and inure to the
benefit of the Company and the Holder. Nothing in this Warrant is intended or
shall be construed to confer upon any other person any right, remedy or claim,
in equity or at law, or to impose upon any other person any duty, liability or
obligation.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed as of the date first above written.
KIDEO PRODUCTIONS, INC.
By:
-----------------------------------
Richard L. Bulman, President
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PURCHASE FORM
------------, -----
KIDEO PRODUCTIONS, INC.
611 Broadway
Suite 515
New York, NY 10012
The undersigned hereby irrevocably elects to exercise the attached Warrant
Certificate to the extent of __________ shares of common stock of Kideo
Productions, Inc., $.0001 par value per share, and hereby makes payment of
$__________ in payment of the purchase price thereof. Alternatively, the
undersigned hereby elects a "cashless" exercise to the extent of __________
shares represented by the attached Warrant Certificate.
INSTRUCTIONS FOR REGISTRATION OF SECURITIES
Name: ____________________________________________________________________
(Please typewrite or print in block letters)
DELIVER SECURITIES TO:
Address: __________________________
__________________________
__________________________
Holder: __________________________________________________
[Signature of Holder of Warrant
Certificate, if an individual]
Holder: __________________________________________________
By: ______________________________________________
Its: _______________________________________
[Signature of Holder of Warrant Certificate, if a
corporation, partnership or other entity]