EXHIBIT 4.5
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.
THIS SECURITIES REPRESENTED HEREBY ARE NOT EXERCISABLE AT ANY TIME PRIOR TO THAT
DAY WHEN THE CONDITIONS SET FORTH IN SECTION 2 HEREOF HAVE BEEN SATISFIED.
MARCH 3, 2000
408,100 shares Warrant No. C-2
NETCURRENTS, INC.
STOCK PURCHASE WARRANT
Registered Owner: BROWN SIMPSON STRATEGIC GROWTH FUND, L.P.
This certifies that, for value received, NetCurrents, Inc., a Delaware
corporation (the "COMPANY"), grants the following rights to the Registered
Owner, or assigns, of this Warrant:
1. DEFINITIONS. Capitalized terms used herein and not otherwise defined
herein shall have the meanings given to such terms in the Purchase Agreement. As
used in this Warrant, the following terms have the following meanings:
"AFFILIATE" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under direct or indirect
common control with such Person. For the purposes of this definition, "control,"
when used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise; and the terms of "affiliated," "controlling" and
"controlled" have meanings correlative to the foregoing.
"APPRAISER" means a nationally recognized or major regional investment
banking firm.
"APPROVED STOCK PLAN" means any contract, plan or agreement, as amended
from time to time, which has been approved by the Board of Directors of the
Company or any committee thereof, pursuant to which the Company's securities may
be issued to any employee, officer,
director or consultant; PROVIDED, that such issuance or issuances shall not
exceed 35% of the Company's outstanding Common Stock on the date thereof.
"BUSINESS DAY" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the state of
New York or California generally are authorized or required by law or other
government actions to close.
"CHANGE OF CONTROL TRANSACTION" means the occurrence of any of (i) any
acquisition or series of related acquisitions by an individual or legal entity
or "group" (as described in Section 13(d)(3) of the Exchange Act) of in excess
of 50% of the voting power of the Company, (ii) a replacement of more than
one-half of the members of the Company's board of directors which is not
approved by a majority of those individuals who are members of the board of
directors on the date hereof, or their duly elected successors who are directors
immediately prior to such transaction(s), in one or a series of related
transactions, (iii) the merger or consolidation of the Company with or into
another entity, unless the holders of the Company's securities immediately prior
to such transaction or series of transactions continue to hold at least 50% of
such securities following such transaction or series of transactions, (iv) a
sale, conveyance, lease, transfer or disposition of all or substantially all of
the assets of the Company in one or a series of related transactions or (v) the
execution by the Company of an agreement to which the Company is a party or by
which it is bound, providing for any of the events set forth above in (i), (ii),
(iii) or (iv).
"CLOSING" and "CLOSING DATE" have the meanings set forth in Section 1.2
of the Purchase Agreement.
"COMMON STOCK" means the shares of the Company's Common Stock, par
value $.001 per share.
"COMMON STOCK DEEMED OUTSTANDING" means, at any given time, the sum of
the number of shares of Common Stock actually outstanding at such time plus the
number of shares of Common Stock issuable upon the exercise of all options,
rights and warrants and the conversion or exchange of convertible or
exchangeable securities outstanding at such time, whether or not such options,
rights, or warrants, or convertible or exchangeable securities are actually
exercisable, convertible or exchangeable at such time.
"COMPANY" means NetCurrents, Inc., a Delaware corporation.
"EXCLUDED SECURITIES" means (i) shares of Common Stock issued or
issuable pursuant to the Purchase Agreement and the Warrants, (ii) shares of
Common Stock deemed to have been issued by the Company in connection with an
Approved Stock Plan, (iii) shares of Common Stock (including options and
warrants) issuable upon the exercise of any options or warrants outstanding on
the date hereof and included in Schedule 2.1(c) of the Purchase Agreement, (iv)
shares of Common Stock issued or deemed to be issued by the Company in
connection with a strategic acquisition by the Company of the assets or
business, or division thereof, of another Person or (v) shares of Common Stock
issued or deemed issued upon conversion of any convertible securities of the
Company outstanding on the date hereof and included in Schedule 2.1(c) of the
Purchase Agreement.
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"EXERCISE PERIOD" has the meaning assigned to it in Section 5 hereof.
"EXERCISE PRICE" has the meaning assigned to it in Section 4 hereof.
"INITIAL REGISTRATION STATEMENT" has the meaning set forth in the
Registration Rights Agreement.
"MANDATORY EXERCISE" has the meaning assigned to it in Section 8
hereof.
"MANDATORY EXERCISE PERIOD" has the meaning assigned to it in Section 8
hereof.
"MANDATORY EXERCISE PRICE" has the meaning assigned to it in Section 8
hereof.
"NASDAQ" means the SmallCap Market System of the NASDAQ Stock Market.
"PER SHARE MARKET VALUE" means on any particular date (i) the closing
bid price per share of the Common Stock on such date on the NASDAQ or other
Subsequent Market on which the Common Stock is then listed, or if there is no
such price on such date, then the closing bid price on such exchange or
quotation system on the date nearest preceding such date, or (ii) if the Common
Stock is not listed then on the NASDAQ or other Subsequent Market, the closing
bid price for a share of Common Stock in the over-the-counter market, as
reported by the National Quotation Bureau Incorporated (or similar organization
or agency succeeding to its functions of reporting prices) at the close of
business on such date, or (iii) if the Common Stock is not then publicly traded
the fair market value of a share of Common Stock as determined by an Appraiser
selected in good faith by the Company; PROVIDED, HOWEVER, that the registered
owners of a majority of the Warrant Shares and Warrants then outstanding, after
receipt of the determination by such Appraiser, shall have the right to select,
in good faith, an additional Appraiser, in which case the fair market value
shall be equal to the average of the determinations by each such Appraiser; and
PROVIDED, FURTHER that all determinations of the Per Share Market Value shall be
appropriately adjusted for any stock dividends, stock splits or other similar
transactions during such period.
"PERSON" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"PURCHASE AGREEMENT" means that certain Securities Purchase Agreement,
dated as of March 3, 2000, among the Company and the Purchasers.
"PURCHASER" or "PURCHASERS" has the meaning set forth in the Purchase
Agreement.
"REGISTERED OWNER" means the person identified on the face of this
Warrant as the registered owner hereof or their assigns.
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"REGISTRATION RIGHTS AGREEMENT" means that certain Registration Rights
Agreement, dated as of March 3, 2000, among the Company and the Purchasers.
"REGISTRATION STATEMENT" has the meaning set forth in the Registration
Rights Agreement.
"SERIES A WARRANTS" means the Series A Warrants issued to the
Registered Owner pursuant to the Purchase Agreement.
"SERIES B WARRANTS" means the Series B Warrants issued to the
Registered Owner pursuant to the Purchase Agreement.
"SUBSEQUENT MARKET" means the New York Stock Exchange, the NASDAQ
National Market or the American Stock Exchange.
"TRADING DAY(S)" means any day on which the primary market on which
shares of Common Stock are listed is open for trading.
"WARRANT(S)" means the warrants issuable at the Closing, including this
Warrant.
"WARRANT SHARES" has the meaning assigned to it in Section 3 hereof.
2. ISSUE. Upon tender to the Company pursuant to Section 6 hereof, the
Company, within three (3) Business Days of the date thereof, shall issue to the
Registered Owner, or its designee, up to the number of shares specified in
Section 3 hereof of fully paid and nonassessable shares of Common Stock that the
Registered Owner, or assigns, is otherwise entitled to purchase; PROVIDED,
HOWEVER, that this Warrant shall not be exercisable until the conditions which
cause a mandatory exercise with respect to the Series B Warrants have been
satisfied.
3. NUMBER OF SHARES. The total number of shares of Common Stock that
the Registered Owner, or assigns, of this Warrant is entitled to receive upon
exercise of this Warrant is 408,100 shares (the "WARRANT SHARES"), subject to
adjustment from time to time as provided herein and subject to adjustment for
any stock dividends, stock splits or other similar transactions after the
issuance of the Series A Warrants and the Series B Warrants prior to the
Exercise Period hereof. The Company shall at all times reserve and hold
available out of its authorized and unissued shares of Common Stock or other
securities, as the case may be, sufficient shares of Common Stock to satisfy all
conversion, exercise and purchase rights represented by outstanding convertible
securities, options and warrants, including this Warrant. The Company covenants
and agrees that all shares of Common Stock that may be issued upon the exercise
of this Warrant (if exercised in accordance with Section 6 hereof) shall, upon
issuance, be duly and validly issued, fully paid and nonassessable, free from
all taxes, liens and charges with respect to the purchase and the issuance of
the shares, shall not have any legend or restrictions on resale, except as
required by Section 3.2(b) of the Purchase Agreement and, subsequent to the
effectiveness of the Registration Statement (as defined in the Registration
Rights Agreement), shall be freely tradable.
4. EXERCISE PRICE. The initial per share exercise price of this
Warrant, representing the price per share at which each share of Common Stock
issuable upon exercise of this Warrant
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may be purchased, is $9.00, subject to adjustment from time to time pursuant to
the provisions of Section 7 hereof (the "EXERCISE PRICE").
5. EXERCISE PERIOD. This Warrant may be exercised, in whole or in part,
from the date of the mandatory exercise of the Series B Warrants until the fifth
anniversary thereof (5 years less 1 day) (the "EXERCISE Period"). If not
exercised during this period, this Warrant and all rights granted under this
Warrant shall expire and lapse.
6. TENDER; ISSUANCE OF CERTIFICATES.
a. This Warrant may be exercised, in whole or in part, by (a)
delivery of the applicable Exercise Price for the number of Warrant
Shares in respect of which this Warrant is exercisable, (b) delivery
of a duly executed Warrant Exercise Form, a copy of which is attached
to this Warrant as EXHIBIT A, properly executed by the Registered
Owner, or assigns, of this Warrant and (c) surrender of this Warrant.
The number of Warrant Shares so purchased shall be designated on the
Warrant Exercise Form and shall be deemed to be issued to the
Registered Owner as of the close of business on the date on which this
Warrant shall have been surrendered, the completed Warrant Exercise
Form shall have been delivered and payment shall have been made for
such shares as set forth above. The payment and Warrant Exercise Form
must be delivered to the registered office of the Company or of the
Company's transfer agent, either in person or as set for in Section 13
hereof.
b. Commencing on the first day that the Securities and Exchange
Commission declares effective the Initial Registration Statement (as
defined in the Registration Rights Agreement), if, and only if, at the
time of exercise of this Warrant, the Warrant Shares are not saleable
pursuant to an effective registration statement, then in addition to
the exercise of all or a part of this Warrant by payment of the
Exercise Price in cash as provided above, and in lieu of such payment,
the Registered Owner shall have the right to effect a cashless
exercise (a "CASHLESS EXERCISE"). In the event of a Cashless Exercise
the Registered Owner may exercise this Warrant in whole or in part by
surrendering this Warrant in exchange for the number of shares of
Common Stock equal to the product of (i) the number of shares as to
which this Warrant is being exercised multiplied by (ii) a fraction,
the numerator of which is the Per Share Market Value on such date less
the Exercise Price then in effect and the denominator of which is the
Per Share Market Value on such date (in each case adjusted for
fractional shares as herein provided).
c. In lieu of physical delivery of this Warrant, provided the
Company's transfer agent is participating in the Depositary Trust
Company ("DTC") Fast Automated Securities Transfer (FAST) program,
upon request of the Registered Owner and in compliance with the
provisions hereof, the Company shall use its best efforts to cause its
transfer agent to electronically transmit the Warrant Shares to the
Registered Owner by crediting the account of the Registered Owner's
Prime Broker with DTC through its Deposit Withdrawal Agent Commission
system. The time period for delivery described herein shall apply to
any such electronic transmittals.
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d. Certificates for the Warrant Shares so purchased, representing
the aggregate number of shares specified in the Warrant Exercise Form,
and any cash payments due under Section 15 hereof shall be delivered
to the Registered Owner, or its designee, within three (3) Business
Days after this Warrant shall have been so exercised. The certificates
so delivered shall be in such denominations as may be requested by the
Registered Owner and shall be registered in the name of the Registered
Owner or such other name as shall be designated by such Registered
Owner. If this Warrant shall have been exercised only in part then,
unless this Warrant has expired, the Company shall, at its expense and
at the time of delivery of such certificates, deliver to the
Registered Owner a new Warrant representing the number of shares with
respect to which this Warrant shall not then have been exercised.
7. ADJUSTMENT OF EXERCISE PRICE.
a. COMMON STOCK DIVIDENDS; COMMON STOCK SPLITS; RECLASSIFICATION.
If the Company, at any time while this Warrant is outstanding, (a)
shall pay a stock dividend on its Common Stock, (b) subdivide
outstanding shares of Common Stock into a larger number of shares or
(c) issue by reclassification of shares of Common Stock any shares of
capital stock of the Company, then (i) the Exercise Price shall be
multiplied by a fraction, the numerator of which shall be the number
of shares of Common Stock outstanding before such event and the
denominator of which shall be the number of shares of Common Stock
outstanding after such event and (ii) the number of Warrant Shares
shall be multiplied by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which shall be the number of shares of
Common Stock outstanding immediately prior to such event. Any
adjustment made pursuant to this paragraph 7(a) shall become effective
immediately after the record date for the determination of
shareholders entitled to receive such dividend or distribution or, in
the case of a subdivision or re-classification, shall become effective
immediately after the effective date thereof.
b. RIGHTS; OPTIONS; WARRANTS OR OTHER SECURITIES. If the Company,
at any time while this Warrant is outstanding, shall fix a record date
for the issuance of rights, options, warrants or other securities to
the holders of its Common Stock entitling them to subscribe for or
purchase, convert to, exchange for or otherwise acquire shares of
Common Stock for no consideration or at a price per share less than
the Exercise Price, the Exercise Price shall be multiplied by a
fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to such issuance or sale
plus the number of shares of Common Stock which the aggregate
consideration received by the Company would purchase at the Exercise
Price, and the denominator of which shall be the number of shares of
Common Stock outstanding immediately prior to such issuance date plus
the number of additional shares of Common Stock offered for
subscription, purchase, conversion, exchange or acquisition, as the
case may be. Such adjustment shall be made whenever such rights,
options, warrants or other securities are issued, and shall become
effective immediately after the record date for the determination of
shareholders entitled to receive such rights, options, warrants or
other securities.
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c. SUBSCRIPTION RIGHTS. If the Company, at any time while this
Warrant is outstanding, shall fix a record date for the distribution,
to holders of its Common Stock, of any cash or other assets, evidence
of its indebtedness, or rights, options, warrants or other security
entitling them to subscribe for or purchase, convert to, exchange for
or otherwise acquire any security (excluding those referred to in
paragraphs 7(a) and (b) above), then in each such case the Exercise
Price at which this Warrant shall thereafter be exercisable shall be
determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction, the numerator of which shall
be the Per Share Market Value on such record date less the then fair
market value at such record date of the portion of such assets or
evidence of indebtedness so distributed applicable to one outstanding
share of Common Stock as determined by the Board of Directors in good
faith, and the denominator of which shall be the Exercise Price as of
such record date; PROVIDED, HOWEVER, that in the event of a
distribution exceeding ten percent (10%) of the net assets of the
Company, such fair market value shall be determined by an Appraiser
selected in good faith by the registered owners of a majority of the
Warrants and Warrant Shares then outstanding; and PROVIDED, FURTHER,
that the Company, after receipt of the determination by such Appraiser
shall have the right to select in good faith an additional Appraiser
meeting the same qualifications, in which case the fair market value
shall be equal to the average of the determinations by each such
Appraiser. Such adjustment shall be made whenever any such
distribution is made and shall become effective immediately after the
record date mentioned above.
d. ROUNDING. All calculations under this Section 7 shall be made
to the nearest cent or the nearest l/l00th of a share, as the case may
be.
e. NOTICE OF ADJUSTMENT. Whenever the Exercise Price is adjusted
pursuant to this Section 7 the Company shall promptly deliver to the
Registered Owner a notice setting forth the Exercise Price after such
adjustment and setting forth a brief statement of the facts requiring
such adjustment. Such notice shall be signed by the chairman,
president or chief financial officer of the Company.
f. TREASURY SHARES. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held
by or for the account of the Company, and the disposition of any
shares so owned or held shall be considered an issue or sale of Common
Stock by the Company.
g. CHANGE OF CONTROL; COMPULSORY SHARE EXCHANGE. In case of (A)
any Change of Control Transaction or (B) any compulsory share exchange
pursuant to which the Common Stock is converted into other securities,
cash or property (each, an "EVENT"), lawful provision shall be made so
that the Registered Owner shall have the right thereafter to exercise
this Warrant for shares of stock and other securities, cash and
property receivable upon or deemed to be held by holders of Common
Stock following such Event, and the Registered Owner shall be entitled
upon such Event to receive such amount of shares of stock and other
securities, cash or property as the shares of the Common Stock of the
Company into which this Warrant could have been exercised immediately
prior to such Event (without taking into account any limitations or
restrictions on the exercisability of this Warrant) would have been
entitled; PROVIDED,
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HOWEVER, that in the case of a transaction specified in (A), above, in
which holders of the Company's Common Stock receive cash, the
Registered Owner shall have the right to exercise the Warrant for such
number of shares of the surviving company equal to the amount of cash
into which this Warrant is then exercisable, divided by the fair
market value of the shares of the surviving company on the effective
date of such Event. The terms of any such Event shall include such
terms so as to continue to give to the Registered Owner the right to
receive the securities, cash or property set forth in this Section
7(g) upon any exercise or redemption following such Event, and, in the
case of an Event specified in (A), above, the successor corporation or
other entity (if other than the Company) resulting from such
reorganization, merger or consolidation, or the person acquiring the
properties and assets, or such other controlling corporation or entity
as may be appropriate, shall expressly assume the obligation to
deliver the securities or other assets which the Registered Owner is
entitled to receive hereunder. The provisions of this Section 7(g)
shall similarly apply to successive Events.
i. ISSUANCE'S BELOW EXERCISE PRICE. If the Company, at any time
while this Warrant is outstanding:
(i) issues or sells, or is deemed to have issued or sold,
any Common Stock (other than Excluded Securities);
(ii) in any manner grants, issues or sells any rights,
options, warrants, options to subscribe for or to purchase Common
Stock or any stock or other securities convertible into or
exchangeable for Common Stock (other than any Excluded
Securities) (such rights, options or warrants being herein called
"OPTIONS" and such convertible or exchangeable stock or
securities being herein called "CONVERTIBLE SECURITIES"); or
(iii) in any manner issues or sells any Convertible
Securities (other than Excluded Securities);
for (a) with respect to paragraph (h)(i), above, a price per share, or
(b) with respect to paragraphs h(ii) or h(iii), above, a price per
share for which Common Stock issuable upon the exercise of such
Options or upon conversion or exchange of such Convertible Securities
is, less than the Exercise Price in effect immediately prior to such
issuance or sale, then, immediately after such issuance, sale or
grant, the Exercise Price shall be reduced to the amount determined by
dividing (1) the sum of (x) the product derived by multiplying the
Exercise Price in effect immediately prior to such issue or sale by
the number of shares of Common Stock Deemed Outstanding immediately
prior to such issue or sale, plus (y) the consideration, if any,
received or deemed to have been received by the Company upon such
issue or sale, by (2) the number of shares of Common Stock Deemed
Outstanding immediately after such issue or sale. No modification of
the issuance terms shall be made upon the actual issuance of such
Common Stock upon conversion or exchange of such Options or
Convertible Securities. If there is a change at any time in (i) the
exercise price provided for in any Options, (ii) the additional
consideration, if any, payable upon the issuance, conversion or
exchange of any Convertible Securities or (iii) the rate at which any
Convertible Securities are convertible
Page 8
into or exchangeable for Common Stock, then immediately after such
change the Exercise Price shall be adjusted to an Exercise Price which
would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed exercise price,
additional consideration or changed conversion rate, as the case may
be, at the time initially granted, issued or sold; PROVIDED, that no
adjustment shall be made if such adjustment would result in an
increase of the Exercise Price then in effect.
i. EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For purposes of
determining the adjusted Exercise Price under Section 7(h), the
following shall be applicable:
(i) CALCULATION OF CONSIDERATION RECEIVED. If any Common
Stock, Options or Convertible Securities are issued or sold or
deemed to have been issued or sold for cash, the consideration
received therefor will be deemed to be the net amount received by
the Company therefor, without deducting any expenses paid or
incurred by the Company or any commissions or compensation paid
or concessions or discounts allowed to underwriters, dealers or
others performing similar services in connection with such issue
or sale. In case any Common Stock, Options or Convertible
Securities are issued or sold for a consideration other than
cash, the amount of the consideration other than cash received by
the Company will be the fair value of such consideration, except
where such consideration consists of securities listed or quoted
on a national securities exchange or national quotation system,
in which case the amount of consideration received by the Company
will be the arithmetic average of the closing sale price of such
security for the five (5) consecutive Trading Days immediately
preceding the date of receipt thereof. In case any Common Stock,
Options or Convertible Securities are issued to the owners of the
non-surviving entity in connection with any merger in which the
Company is the surviving entity, the amount of consideration
therefor will be deemed to be the fair value of such portion of
the net assets and business of the non-surviving entity as is
attributable to such Common Stock, Options or Convertible
Securities, as the case may be. The fair value of any
consideration other than cash or securities listed or quoted on a
national securities exchange or national quotation system will be
determined jointly by the Company and the registered owners of a
majority of the Warrant Shares and Warrants then outstanding. If
such parties are unable to reach agreement within ten (10) days
after the occurrence of an event requiring valuation (the
"VALUATION EVENT"), the fair value of such consideration will be
determined within forty-eight (48) hours of the tenth (10th) day
following the Valuation Event by an Appraiser selected in good
faith by the Company and agreed upon in good faith by the
registered owners of a majority of the Warrant Shares and
Warrants then outstanding. The determination of such Appraiser
shall be binding upon all parties absent manifest error.
(ii) INTEGRATED TRANSACTIONS. In case any Option is issued
in connection with the issue or sale of other securities of the
Company, together comprising one integrated transaction in which
no specific consideration is allocated to such Options by the
parties thereto, the Options will be deemed to have been issued
for an aggregate consideration of $.001.
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(iii) RECORD DATE. If the Company takes a record of the
holders of Common Stock for the purpose of entitling them (a) to
receive a dividend or other distribution payable in Common Stock,
Options or in Convertible Securities or (b) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then
such record date will be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such
other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
(iv) OTHER EVENTS. If any event occurs that would adversely
affect the rights of the Registered Owner of this Warrant but is
not expressly provided for by Section 7 hereof (including,
without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features), then
the Company's Board of Directors will make an appropriate
adjustment in the Exercise Price so as to protect the rights of
the Registered Owner; PROVIDED, HOWEVER, that no such adjustment
will increase the Exercise Price.
j. NOTICE OF CERTAIN EVENTS. If:
(i) the Company shall declare a dividend (or any other
distribution) on its Common Stock;
(ii) the Company shall declare a special nonrecurring cash
dividend on or a redemption of its Common Stock;
(iii) the Company shall authorize the granting to the
holders of its Common Stock rights or warrants to subscribe for
or purchase any shares of capital stock of any class or of any
rights;
(iv) the approval of any shareholders of the Company shall
be required in connection with any reclassification of the Common
Stock, any consolidation or merger to which the Company is a
party, any sale or transfer of all or substantially all of the
assets of the Company, or any compulsory share exchange whereby
the Common Stock is converted into other securities, cash or
property; or
(v) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the
Company;
then the Company shall cause to be filed at each office or agency
maintained for the purpose of exercise of this Warrant, and shall
cause to be delivered to the Registered Owner, at least thirty
(30) calendar days prior to the applicable record or effective
date hereinafter specified, a notice (provided such notice shall
not include any material non-public information) stating (a) the
date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a
record is not to be taken, the date as of which the holders of
Common Stock of record to be entitled to such dividend,
distributions, redemption, rights or warrants are to be
determined or (b) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is
Page 10
expected to become effective or close, and the date as of which
it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities,
cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange;
provided, HOWEVER, that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the
validity of the corporate action required to be specified in such
notice. Nothing herein shall prohibit the Registered Owner from
exercising this Warrant during the 30-day period commencing on
the date of such notice.
k. INCREASE IN EXERCISE PRICE. In no event shall any provision in
this Section 7 cause the Exercise Price to be greater than the
Exercise Price on the date of issuance of this Warrant.
8. MANDATORY EXERCISE. If, at any time after the Initial Registration
Statement has been declared effective, the Per Share Market Value equals or
exceeds $14.00 (the "MANDATORY EXERCISE PRICE") for any period of twenty (20)
consecutive Trading Days (the "MANDATORY EXERCISE PERIOD"), then so long as (i)
any Registration Statement (including the Initial Registration Statement)
required to be effective pursuant to the Registration Rights Agreement is then
in effect, (ii) the Company has a sufficient number of authorized shares of
Common Stock reserved for issuance upon full exercise of the Warrants and (iii)
the Company is not, and during the Mandatory Exercise Period has not been, in
breach of Section 6 hereof, the Registered Owner shall be required to exercise
this Warrant in full (the "MANDATORY EXERCISE") in accordance with the
provisions of Section 6 hereof. This Warrant shall be exercised pursuant to the
Mandatory Exercise on no later than the third (3rd) Business Day following the
Mandatory Exercise Period.
9. RESTRICTION ON EXERCISE BY EITHER THE REGISTERED OWNER OR THE
COMPANY. Notwithstanding anything herein to the contrary, and except as provided
in Section 8 hereof, in no event shall the Registered Owner or the Company have
the right or be required to exercise this Warrant if as a result of such
exercise the aggregate number of shares of Common Stock beneficially owned by
such Registered Owner and its Affiliates would exceed 9.99% of the outstanding
shares of the Common Stock following such exercise. For purposes of this Section
9, beneficial ownership shall be calculated in accordance with Section 13(d) of
the Securities Exchange Act of 1934, as amended. The provisions of this Section
9 may be waived by a Registered Owner as to itself (and solely as to itself)
upon not less than 65 days prior written notice to the Company, and the
provisions of this Section 9 shall continue to apply until such 65th day (or
later, if stated in the notice of waiver).
10. REGISTRATION ON COMPANY BOOKS. This Warrant shall be numbered and
shall be registered upon issuance in a warrant register maintained by the
Company. The Company may deem and treat the Registered Owner of this Warrant as
the absolute owner thereof, unless the Registered Owner shall have presented
this Warrant to the Company for transfer and the transferee shall have been
entered in the register as a subsequent holder. The ownership of this Warrant
shall be proven by such register, absent manifest error.
11. REGISTRATION RIGHTS. The Company will undertake the registration of
the Common Stock into which this Warrant is exercisable at such times and upon
such terms pursuant to the provisions of the Registration Rights Agreement.
Page 11
12. RESERVATION OF WARRANT SHARES; LISTING. The Company covenants that
it will at all times reserve and keep available out of its authorized shares of
Common Stock, free from preemptive rights, solely for the purpose of issue upon
exercise of this Warrant as herein provided, such number of shares of the Common
Stock as shall then be issuable upon the exercise of all outstanding Warrants
into Common Stock. The Company shall promptly secure the listing of the shares
of Common Stock issuable upon exercise of this Warrant upon each national
securities exchange or automated quotation system upon which shares of Common
Stock are then listed (subject to official notice of issuance upon exercise of
this Warrant) and shall maintain, so long as any other shares of Common Stock
shall be so listed, such listing of all shares of Common Stock from time to time
issuable upon the exercise of this Warrant.
13. NOTICES. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be deemed to have been received
(a) upon hand delivery (receipt acknowledged) or delivery by telex (with correct
answer back received), telecopy or facsimile (with transmission confirmation
report) at the address or number designated below (if received by 5:00 p.m.
Eastern time where such notice is to be received), or the first Business Day
following such delivery (if received after 5:00 p.m. Eastern time where such
notice is to be received) or (b) on the second Business Day following the date
of mailing by express courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first occur. The
addresses for such communications are (i) if to the Company or the Company's
transfer agent to the address set forth in the Purchase Agreement (with copies
to the Company's counsel), and (ii) if to the Registered Owner to the addresses
set forth on the Purchase Agreement (with copies to the Registered Owner's
counsel) or such other address as may be designated in writing hereafter, in the
same manner, by such person.
14. COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. The Company covenants
that if any shares of Common Stock required to be reserved for purposes of
exercise of this Warrant require registration with or approval of any
governmental authority under any federal or state law, or any national
securities exchange, before such shares may be issued upon exercise, the Company
will use its best efforts to cause such shares to be duly registered or
approved, as the case may be.
15. FRACTIONAL SHARES. Upon any exercise hereunder, the Company shall
not be required to issue stock certificates representing fractions of shares of
the Common Stock, but may if otherwise permitted make a cash payment in respect
of any final fraction of a share based on the Per Share Market Value at such
time. If the Company elects not, or is unable, to make such a cash payment, the
Registered Owner shall be entitled to receive, in lieu of the final fraction of
a share, one whole share of Common Stock.
16. PAYMENT OF TAX UPON ISSUE OF TRANSFER. The issuance of certificates
for shares of the Common Stock upon exercise of this Warrant shall be made
without charge to the Registered Owner hereof for any documentary stamp or
similar taxes that may be payable in respect of the issue or delivery of such
certificate, provided that the Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issuance and delivery
of any such certificate upon exercise in a name other than that of the
Registered Owner of this Warrant 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
Page 12
Company the amount of such tax or shall have established to the satisfaction of
the Company that such tax has been paid.
17. WARRANTS OWNED BY COMPANY DEEMED NOT OUTSTANDING. In determining
whether the holders of the outstanding Warrants have concurred in any direction,
consent or waiver under this Warrant, warrants which are owned by the Company or
any other obligor on the warrants shall be disregarded and deemed not to be
outstanding for the purpose of any such determination; PROVIDED, that any
Warrants owned by the Registered Owner shall be deemed outstanding for purposes
of making such a determination.
18. EFFECT OF HEADINGS. The section headings herein are for convenience
only and shall not affect the construction hereof.
19. NO RIGHTS AS STOCKHOLDER. This Warrant shall not entitle the
Registered Owner to any rights as a stockholder of the Company, including
without limitation, the right to vote, to receive dividends and other
distributions, or to receive notice of, or to attend, meetings of stockholders
or any other proceedings of the Company, unless and to the extent exercised into
shares of Common Stock in accordance with the terms hereof.
20. CERTAIN ACTIONS PROHIBITED. The Company will not, by amendment of
its charter or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may reasonably be requested by the Registered Owner
in order to protect the exercise privilege of the Registered Owner against
dilution or other impairment, consistent with the tenor and purpose of this
Warrant. Without limiting the generality of the foregoing, the Company (i) will
not increase the par value of any shares of Common Stock receivable upon the
exercise of this Warrant and (ii) will take all such actions as may be necessary
or appropriate in order that the Company may validly and legally issue fully
paid and nonassessable shares of Common Stock upon the exercise of this Warrant.
21. SHAREHOLDER RIGHTS PLAN. In the event that the Company shall
distribute "poison pill" rights pursuant to a "poison pill" shareholder rights
plan (the "RIGHTS"), the Company shall, in lieu of making any adjustment
pursuant to Section 7 hereof, make proper provision so that each Registered
Owner who exercises this Warrant after the record date for such distribution and
prior to the expiration or redemption of the Rights shall be entitled to receive
upon such exercise, in addition to the shares of Common Stock issuable upon such
exercise, a number of Rights to be determined as follows: (i) if such exercise
occurs on or prior to the date for the distribution to the holders of Rights of
separate certificates evidencing such Rights (the "DISTRIBUTION DATE"), the same
number of Rights to which a holder of a number of shares of Common Stock equal
to the number of shares of Common Stock issuable upon such exercise at the time
of such exercise would be entitled in accordance with the terms and provisions
of and applicable to the Rights; and (ii) if such exercise occurs after the
Distribution Date, the same number of Rights to which a holder of the number of
shares into which this Warrant was exercisable immediately prior to the
Distribution Date would have been entitled on the Distribution Date, in
accordance with the
Page 14
terms and provisions of such Rights, and in each case subject to the terms and
conditions of the Rights.
22. SUCCESSORS AND ASSIGNS. This Warrant shall be binding upon and
inure to the benefit of the Registered Owners and its assigns, and shall be
binding upon any entity succeeding to the Company by merger or acquisition of
all or substantially all the assets of the Company. The Company may not assign
this Warrant or any rights or obligations hereunder without the prior written
consent of the Registered Owner. The Registered Owner may assign this Warrant
without the prior written consent of the Company.
23. GOVERNING LAW. This Warrant shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York without
regard to the principles of conflicts of law thereof. Each party hereby
irrevocably submits to the nonexclusive jurisdiction of the State and Federal
courts sitting in the County of Los Angeles, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Warrant and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
24. REMEDIES. In the event of a breach by the Company of any of its
obligations under this Warrant, the Registered Owner, in addition to being
entitled to exercise all rights granted by law and under the Purchase Agreement,
including recovery of damages, will be entitled to specific performance of its
rights under this Warrant. The Company agrees that monetary damages would not
provide adequate compensation for any losses incurred by reason of a breach by
it of any of the provisions of this Warrant and hereby further agree that, in
the event of any action for specific performance in respect of such breach, it
shall waive the defense that a remedy at law would be adequate.
25. MUTILATED OR MISSING WARRANTS. In case this Warrant shall be
mutilated, lost, stolen or destroyed, the Company, upon request of the
Registered Owner, shall issue and deliver in exchange and substitution for and
upon cancellation of such mutilated Warrant (upon surrender thereof), or in the
event that this Warrant is lost, stolen or destroyed, a new Warrant of like
tenor and representing an equivalent right or interest upon any indemnification
undertaking by the Registered Owner to the Company in customary form as
reasonably required by the Company.
Page 14
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized officer as of the date first set forth above.
NETCURRENTS, INC.
By: /S/ IRWIN MEYER
---------------------------
Name: Irwin Meyer
Title: Chief Executive Officer
EXHIBIT A
WARRANT EXERCISE FORM
TO: NETCURRENTS, INC.
The undersigned hereby: (1) irrevocably subscribes for and offers to
purchase _______ shares of Common Stock of NetCurrents, Inc., pursuant to
Warrant No. ___ heretofore issued to ___________________ on ____________, ____;
(2) encloses either (a) a cash payment of $__________ or (b) a Warrant
representing _____ shares of Common Stock valued at the Per Share Market Price
of $ _____ on ________, ____, for these shares at a price of $____ per share (as
adjusted pursuant to the provisions of the Warrant); and (3) requests that a
certificate for the shares be issued in the name of the undersigned, or the
undersigned's designee, and delivered to the undersigned, or the undersigned's
designee, at the address specified below.
Date: _______________________
Investor Name: _______________________
Taxpayer Identification Number: _______________________
By: _______________________
Printed Name: _______________________
Title: _______________________
Address: _______________________
Cashless Exercise (Y or N): _____________
Note: The above signature should correspond exactly with the
name on the face of this Warrant Certificate or with the name
of assignee appearing in assignment form below.
AND, if said number of shares shall not be all the shares purchasable under the
within Warrant, a new Warrant Certificate is to be issued in the name of said
undersigned for the balance remaining of the shares purchasable thereunder less
any fraction of a share paid in cash and delivered to the address stated above.