CAYENNE ENTERTAINMENT, INC. WARRANT PACKAGE FOR MERGED COMPANIES
THIS WARRANT CERTIFICATE AND THE WARRANTS EVIDENCED HEREBY HAVE NOT BEEN AND
THE COMMON STOCK TO BE ISSUED UPON EXERCISE OF SUCH WARRANTS HAS NOT BEEN OR
WILLNOT, UPON THE ISSUANCE THEREOF, HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR QUALIFIED UNDER STATE
SECURITIES LAWS BUT HAVE BEEN, OR WILL BE, AS THE CASE MAY BE, ISSUED PURSUANT
TO AN EXEMPTION FROM SUCH REGISTRATION AND MAY NOT BE SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (I) THE ISSUER THEREOF
SHALL HAVE RECEIVED AN OPINION OF COUNSEL TO THE EFFECT THAT NO REGISTRATION
OR QUALIFICATION THEREOF IS LEGALLY REQUIRED FOR SUCH TRANSFER OF (ii) COVERED
BY AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND QUALIFIED
UNDER APPLICABLE STATE SECURITIES LAWS.
THE NUMBER OF SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THE
WARRANTS PROVIDED FOR IN THIS WARRANT CERTIFICATE IS SUBJECT TO REDUCTION AS
PROVIDED FOR IN SECTION 2 HEREOF AND THE SHARES ISSUABLE UPON ITS EXERCISE ARE
SUBJECT TO REPURCHASE BY THE COMPANY AS PROVIDED FOR IN SUCH SECTION.
No. W-3-31-01 M/A
Warrants to Purchase One Share Each -
Date of Issue: March 31, 2001
WARRANT CERTIFICATE
To subscribe for and purchase shares of Common Stock, no par value (the
"Common Stock"), of
CAYENNE ENTERTAINMENT, INC.
THIS CERTIFIES that, for value received, _______________ of (its)
registered successors and assigns, is the owner of the number of Warrants
named above of (the "Warrants"), Cayenne Entertainment, Inc., a Colorado
Corporation (herein called the "Company") one share of Common Stock of the
Company (individually a "Common Share: and collectively the "Common Shares"),
subject to adjustment as provided in Sections 2 and 3 hereof, commencing on
the date hereof, priced at $0.01 per share (the "Exercise Price"). To the
extent any Warrants remain unexercised, such Warrants shall automatically and
without further action by the Company or the holder hereof, terminate at the
end of the third year after issuance (the "Termination Date").
The number of shares of Common Stock to be received upon the exercise of each
Warrant and the Exercise Price to be paid for a share of Common Stock are
subject to adjustment from time to time as hereinafter set forth.
1.Exercise of Warrants. The Warrants evidenced hereby may be
exercised by the registered holder hereof, in Whole or in part, by the
surrender of this Warrant Certificate, duly endorsed (unless endorsement is
waived by the Company), at the principal office of the Company(or at such
other office or agency of the company as it may designate by notice in writing
to the registered holder hereof at such holder's last address appearing on the
books of the Company) and upon payment to the Company of the purchase price of
the Common Shares purchased. Payment of the purchase price shall be made by
(x) certified or official bank check or checks payable to the order of the
Company or (y) surrender to the Company of Warrants. The Company agrees that
the Common Shares purchased shall be deemed to be issued to the registered
holder hereof on the date on which this Warrant Certificate shall have been
surrendered and payment made for such Common Shares as aforesaid; provided,
however that no such surrender and payment on any date when the stock transfer
books of the Company shall be closed shall be effective to constitute the
person entitled to receive such Common Shares as the record holder thereof on
such date, but such surrender and payment shall be effective to constitute the
person entitled to receive such Common Shares as the record holder thereof for
all purposes immediately after the opening of business on the next succeeding
day on which such stock transfer books are open. The certificate(s) for such
Common Shares shall be delivered to the registered holder hereof within a
reasonable time, not exceeding five (5) days, after the Warrants evidenced
hereby shall have been so exercised and a new Warrant Certificate evidencing
the number of Common Shares remaining to be issued upon exercise of the
Warrants shall also be issued to the registered holder within such time unless
such Warrants shall have expired. No fractional Common Shares of the Company,
or scrips for any such fractional shares, shall be issued upon the exercise of
any Warrant.
2.Anti-Dilution Provisions. Upon each adjustment of the Exercise
Price, the holder of the Warrants evidenced hereby shall thereafter be
entitled to purchase, at the Exercise Price resulting from such adjustment,
the number of shares obtained per warrant by dividing the Exercise Price in
effect immediately prior to such adjustment by the Exercise Price resulting
from such adjustment.
(a)Warrant Purchase Price Adjustments. If and whenever after
the date hereof the Company shall issue or sell any shares of its Common Stock
for consideration per share less than the Exercise Price in effect immediately
prior to the time of such issue or sale, or shall be deemed under the
provisions of this Section 3 to have effected any such issuance or sale, then,
forthwith upon such issue by delivery of such amount to the relevant holder no
later than 30 days following the Warrant Reduction Date or sale, the Exercise
Price shall be reduced to a price equal to (calculated to the nearest
$0.0001):the price determined by dividing (i) an amount equal to the sum of
(A) the number of shares of Common Stock outstanding immediately prior to such
issue or sale multiplied by the then existing Exercise Price and (B) the
consideration, if any, received by the Company upon such issue or sale by (ii)
the total number of shares of Common Stock outstanding immediately after such
issue or sale; and
Notwithstanding the foregoing, no adjustment of the Exercise Price shall be
made in an amount less than $0.0001 per share, but any such be made at the
time of and together with the next subsequent adjustment which together with
any adjustments so carried forward shall amount to $0.0001 per share or more.
For the purposes of this Section 2 (a), the following shall also be
applicable:
(i) In the event that at any time the Company shall in any manner
grant (directly, by assumption in a merger or otherwise) any rights to
subscribe for or to purchase, or any options for the purchase of (x) Common
Stock or (y) any stock or securities convertible into or exchangeable for
Common Stock (such rights or options being herein called "Options" and such
convertible or exchangeable stock or securities being herein called
"Convertible Securities"), or shall fix a record date for determination of
holders of any class of securities entitled to receive any such Options,
whether or not such Options or the right to convert or exchange any such
Convertible Securities are immediately exercisable, and whether or not the
price per share for which Common Stock is issuable upon the exercise of such
Options or upon conversion or exchange of such Convertible Securities
(determined by dividing (A) the total amount, if any, received or receivable
by the Company as consideration for the granting of such Options, plus the
minimum aggregate amount of additional consideration payable to the Company
upon the exercise of all such Options, plus, in the case of any such Options
that relate to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable upon the issue of sale of such
Convertible Securities and upon the conversion or exchange thereof, by (B) the
total number of shares of Common Stock issuable upon the exercise of such
Options or upon the conversion or exchange of all such Convertible Securities
issuable upon the exercise of such Options) shall be less than the Exercise
Price in effect immediately prior to the time of the granting of such Options,
then the total number of shares of Common Stock issuable upon the exercise of
such Options or upon conversion or exchange of the total amount of such
Convertible Securities issuable upon the exercise of such Options (as of the
date of granting such Options) shall be deemed to be outstanding and to have
been issued for such price per share. Except as otherwise provided in Section
2 (a) (iii), no further adjustment of the Exercise Price shall be made upon
the actual issue of such Common Stock or of such Convertible Securities upon
exercise of such Options or upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities.
(ii) In the event that the Company shall in any manner issue
(directly, by assumption in a merger or otherwise) or sell any Convertible
Securities (other than pursuant to the exercise of Options to purchase such
Convertible Securities covered by Section 2 (a) (I)), or shall fix a record
date for the determination of holders of any class of securities entitled to
receive any such Convertible Securities, whether or not the rights to exchange
or convert thereunder are immediately exercisable, and whether or not the
price per share for which Common Stock is issuable upon such conversion or
exchange (determined by dividing (A) the total amount received or receivable
by the Company as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the conversion or exchange thereof, by (B)
the total maximum number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities) shall be less than
the Exercise Price in effect immediately prior to the time of such issue, then
the total maximum number of shares of Common Stock issuable upon conversion or
exchange of all such Convertible Securities shall (as of the date of the issue
or sale of such Convertible Securities) be deemed to be outstanding and to
have been issued for such price per share, provided that, except as otherwise
provided in Section 2 (a) (iii), no further adjustment of the Exercise Price
shall be made upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities.
(iii) In connection with any change in, or the expiration or
termination of, the purchase rights under any Convertible Securities, the
following provisions shall apply:
(A) If the purchase price provided for in any Option referred to
in Section 2 (a) (i), the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities referred to in Section 2
(a) (i) or 2 (a) (ii), or the rate at which any Convertible Securities
referred to in Section 2 (a) (i) or 2 (a) (ii) are convertible into or
exchangeable for Common Stock shall change at any time (other than under or by
reason of provisions designed to protect against dilution), then the Exercise
Price in effect at the time of such change shall forthwith be increased or
decreased to the Exercise Price that would be in effect immediately after such
change is (a) the adjustments that were made upon the issuance of such Options
or Convertible Securities had been made upon the basis of (and taking into
account the total consideration received for) (i) the issuance at that time of
the Common Stock, if any, actually issued upon the exercise of any such
Options or upon the conversion or exchange of any such Convertible Securities
before such change, and (ii) the issuance at the time of all such Options or
Convertible Securities, with terms and provisions reflecting such change that
are still outstanding after such change, and (b) the Exercise Price as
adjusted pursuant to clause (a) preceding had been used as the basis for the
adjustments required hereunder in connection with all other issues or sales of
Common Stock, Options or Convertible Securities by the Company subsequent to
the issuance or such Options or Convertible Securities.
(B) On the partial or complete expiration of any Options or
termination of any right to convert or exchange Convertible Securities which
have not been fully exercised, the Exercise Price then in effect hereunder
shall be forthwith increased or decreased to the Exercise Price that would be
in effect at the time of such expiration or termination if (a) the adjustments
that were made upon the issuance of such Options or Convertible Securities had
been made upon the basis of (and taking into account the total consideration
received for) (i) the issuance at that time of the Common Stock, if any,
actually issued upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities before such expiration or termination,
and (ii) the issuance at that time of only those such Options or Convertible
Securities that remain outstanding after such expiration or termination, and
(b) the Exercise Price as adjusted pursuant to clause (a) preceding had been
used as the basis for adjustments required hereunder in connection with all
other issues or sales of Common Stock, Options or Convertible Securities by
the Company subsequent to the issuance of such Options or Convertible
Securities.
(C) If the purchase price provided for in any Option referred to
in Section 2 (a) (i) or the rate at which any Convertible Securities referred
to in Section 2 (a) (i) or 2 (a) (ii) are convertible into or exchangeable for
Common Stock shall be reduced at any time under or by reason of provisions
with respect thereto designed to protect against dilution, and the event
causing the reduction is one that did not also require an adjustment in the
Exercise Price under other provisions of this Section 2 (a), then in case of
the delivery of shares of Common Stock upon the exercise of any such Option or
upon conversion or exchange of any such Convertible Securities, the Exercise
Price then in effect hereunder shall forthwith be adjusted to such amount as
would have obtained if such Option or Convertible Securities had never been
issued and if the adjustments made upon the issuance of such Option or
Convertible Securities had been made upon the basis of the issuance of (and
taking into account the total consideration received for) the shares of Common
Stock delivered as aforesaid; provided that no such adjustment shall be made
unless the Exercise Price then in effect would be reduced thereby.
(D) If a record date for the issuance of any Options or
Convertible Securities shall have been fixed and such Options or Convertible
Securities are not issued on the date fixed therefore, the adjustment
previously made as provided in Section 2 (a) (i) and 2 (a) (ii) above to the
relevant Exercise Price which becomes effective on such record date, and
thereafter such Exercise Price shall be adjusted pursuant to Section 2 (a) (i)
or 2 (a) (ii), as the case may be, as of the actual date of their issuance.
(iv) In the event the Company declares a dividend or makes any
other distribution upon any stock of the Company payable in Common Stock,
Options or Convertible Securities, any Common Stock, Options or Convertible
Securities, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without
consideration. In the event the Company shall grant the holders of Common
Stock the right to subscribe for or purchase shares of Common Stock or any
other security, whether pursuant to pre-emptive rights set forth in the
Certificate of Incorporation of the Company or in an agreement or otherwise,
the Company, from time to time, shall be deemed to have received the amount
actually received upon exercise of the rights.
(v) For purposes of this Section 2 (a), the amount of
consideration received by the Company in connection with the issuance or sale
of Common Stock, Options or Convertible Securities shall be determined in
accordance with the following:
(A) In the event shares of Common Stock, Options or Convertible
Securities are issued or sold for cash, the consideration received therefore
shall be deemed to be the amount payable to the Company therefore, after
deduction therefrom of any expenses incurred and any underwriting commissions
or concessions or discounts paid or allowed by the Company in connection
therewith.
(B) In the event shares of Common Stock, Options or Convertible
Securities are issued or sold for a consideration other then cash, the amount
of the consideration other than cash payable to the Company shall be deemed to
be the fair value of the consideration (after deduction of any dividends or
interest accrued in respect thereof and any underwriting commissions or
concessions or discounts paid or allowed by the Company in connection
therewith) as determined in good faith by the Board of Directors of the
Company, including, without limitation, cancellation or satisfaction of
amounts payable to the purchaser for accrued interest or accrued dividends on
obligations or securities other than the Common Stock, Options or Convertible
Securities then being issued.
(C) The amount of consideration deemed to be received by the
Company pursuant to the foregoing provisions of this Sections 2 (a) (v) upon
any issuance or sale, pursuant to an established compensation plan of the
Company, to directors, officers or employees of the Company in connection with
their employment, of shares of Common Stock, Options or Convertible
Securities, shall be increased by the amount of any tax benefit realized by
the Company as a result of the issuance or sale, the amount of the tax benefit
being the amount by which the federal or state income or other tax liability
of the Company shall be reduced by reason of any deduction or credit in
respect of the issuance and/or sale.
(D) In the event shares of Common Stock, Options or Convertible
Securities are issued in connection with any merger in which the Company is
surviving corporation, the amount of consideration therefore shall be deemed
to be the fair value of such portion of the assets and business of the
non-surviving corporation as shall be attributable to the Common Stock,
Options or Convertible Securities, as the case may be, as determined in good
faith by the Board of Directors of the Company.
(E) In the event Options shall be issued in connection with the
issue and sale of other securities of the Company, together comprising one
integral transaction in which no specific consideration is allocated to such
Options by the parties thereto, the Options shall be deemed to have been
issued without consideration.
(F) In the event of a consolidation or merger of the Company in
which stock or securities of another corporation are issued in exchange for
Common Stock of the Company or in the event of any sale of all or
substantially all the assets of the Company for stock or other securities of
any corporation, the Company shall be deemed to have issued a number of shares
of its Common Stock for stock or securities of the other corporation computed
on the basis of the actual exchange ratio on which the transaction was
predicated and for a consideration equal to the fair market value on the date
of the transaction of the stock or securities of the other corporation, and if
the calculation results in adjustment of the Exercise Price, the determination
of the number of shares of Common stock receivable upon exercise of the
Warrants immediately prior to such merger, consolidation or sale, for purposes
of Section 2 (c), shall be made after giving effect to the adjustment of the
Exercise Price; provided that no such adjustment shall be made unless the
Exercise Price then in effect shall be reduced thereby.
(vi) (A) In the event the Company fixes a record date with
respect to the holders of its Common Stock for the purpose of entitling them
(I) to receive a dividend or other distribution payable in Common Stock,
Options or Convertible Securities or (ii) to subscribe for or purchase Common
Stock, Options or Convertible Securities (whether pursuant to pre-emptive
rights granted by the Certificate of Incorporation of the Company or by
agreement, or otherwise), then the record date shall 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 the dividend or the making of the distribution
or the date of the granting of the right of subscription or purchase, as the
case may be.
(B) If such record date shall have been fixed and such dividend
or distribution shall not have been paid or right of subscription or purchase
fulfilled on the date fixed therefore, the adjustment previously made to the
relevant Exercise Price which became effective on such record date shall be
cancelled as of the close of business on such record date, and thereafter such
Exercise Price shall be adjusted as provided herein as of the time of actual
payment of such dividend, distribution or subscription of Common Stock,
Options or Convertible Securities.
(vii) 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 or any subsidiary thereof, and the disposition of any such shares
shall be considered an issue or sale of Common Stock for the purposes of this
Section 2 (a).
(b) Stock Splits and Reverse Splits. In the event the Company
subdivides its outstanding shares of Common Stock into a greater number of
shares, the Exercise Price in effect immediately prior to the subdivision
shall be proportionately reduced and the number of Common Shares purchasable
pursuant to the Warrants evidenced hereby immediately prior to the subdivision
shall be proportionately increased, and conversely, in the event the
outstanding shares of Common Stock of the company are combined into a smaller
number of shares, the Exercise Price in effect immediately prior to the
combination shall be proportionately increased and the number of Common Shares
purchasable upon the exercise of the Warrants evidenced hereby immediately
prior to the combination shall be proportionately reduced. Except as provided
in this Section 2 (c), no adjustment in the Exercise Price and no change in
the number of Common Shares purchasable shall be made under this Section 2 as
a result, or by reason, of any subdivision or combination.
(c) Reorganizations and Asset Sales. If any capital
reorganization or reclassification of the capital stock of the Company, or any
consolidation or merger of the Company with another corporation, or the sale
of all or substantially all its assets to another corporation be effected in
such a way that holders of Common Stock shall be entitled to receive stock,
securities or assets with respect to, or in exchange for, Common Stock (and
which shall not constitute a dividend subject to Section 2 (c)), then the
following provisions shall apply:
(i) As a condition of the reorganization, reclassification,
consolidation, merger or sale (except as otherwise provided below in this
Section 2 (c)), lawful and adequate provisions shall be made whereby each
holder of Warrants shall thereafter have the right to purchase and receive
upon the terms and conditions specified in this Warrant Certificate and in
lieu of the Common Shares immediately theretofore receivable upon the exercise
of the rights represented hereby, the shares of stock, securities or assets as
may be issued or payable with respect to, or in exchange for, a number of
outstanding shares of Common Stock equal to the number of Common Shares
immediately theretofore receivable had the reorganization, reclassification,
consolidation, merger or sale not taken place, and in any such case
appropriate provision shall be made with respect to the rights and interests
of such holder to the end that the provisions hereof (including, without
limitation, provisions for adjustments of the Exercise Price and of the number
of shares receivable upon the exercise) shall thereafter be applicable, as
nearly as may be practicable, in relation to any shares of stock, securities
or assets thereafter deliverable upon the exercise of Warrants consolidation
or merger, of the Exercise Price to the value for the Common Stock reflected
by the terms of the consolidation or merger if the value so reflected is less
than the Exercise Price in effect immediately prior to the consolidation or
merger).
(ii) In the event of a merger or consolidation of the Company
with or into another corporation as a result of which a number of shares of
Common Stock of the surviving corporation are greater or lesser than the
number of shares of Common Stock of the Company outstanding immediately prior
to the merger or consolidation are issuable to holders of Common Stock of the
Company, then the Exercise Price in effect immediately prior to the merger or
consolidation shall be adjusted in the same manner as though there were a
subdivision or combination of the outstanding shares of Common Stock of the
Company.
(d) Excluded Securities. "Excluded Securities" shall mean the
following securities and the securities issuable upon their exercise or
conversion of options granted or to be granted pursuant to the Company's Stock
Incentive Plan.
3. Other Notices. If at any time prior to the expiration of the
Warrant evidenced hereby:
(a) The Company shall declare any dividend on the Common Stock
payable in shares of capital stock of the company, cash or other property; or
(b) The Company shall authorize the issue of any options,
warrants or rights pro rata to all holders of Common Stock entitling them to
subscribe for or purchase any shares of stock of the Company or to receive any
other rights; or
(c) The Company shall authorize the distribution pro rata to all
holders of Common Stock of evidences of its indebtedness or assets (excluding
cash dividends or cash distributions paid out of retained earnings or retained
surplus); or
(d) There shall occur any reclassification of the Common Stock,
or any consolidation or merger of the Company with or into another corporation
or other entity (other than a consolidation or merger in which the Company is
the continuing corporation and which does not result in any reclassification
of the Common Stock) or a sale or transfer to another corporation or other
entity of all or substantially all of the properties of the Company; or
(e) There shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Company; then, and in each of
such cases, the Company shall deliver to the registered holder hereof at its
last address appearing on the books of the Company, as promptly as practicable
but in any event at least 15 days prior to the applicable record date ( or
determination date) mentioned below, a notice stating, to the extent such
information is available, (i) the date on which a record is to be taken for
the purpose of such dividend, distribution or rights, or if a record is not to
be taken, the date as of which the holders of Common Stock or record to be
entitled to such dividend, distribution or rights are to be determined, or
(ii) the date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution or winding up is expected to become
effective and the date as of which it is expected that holders of Common stock
of record shall be entitled to exchange their Common Stock for securities or
other property deliverable upon such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution or winding up.
4. Termination of Warrant. Notwithstanding any provision herein
to the contrary, this Warrant Certificate and the Warrants evidenced hereby,
and all rights and obligations hereunder and thereunder shall be of no further
force and effect on the Termination Date.
5. Representation, Warranties and Covenants of the Company. The
Company represents and warrants to and covenants with the registered holder
hereof as follows:
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Arizona, is duly qualified
and in good standing under the laws of any foreign jurisdiction where the
failure to be so qualified would have a material adverse effect on its ability
to perform its obligations under the Warrants evidenced by this Warrant
Certificate and it has full corporate power and authority to issue the
Warrants and to carry out the provisions of the Warrants evidenced by this
Warrant Certificate.
(b) The issuance, execution and delivery of this Warrant
Certificate has been duly authorized by all necessary corporate action on the
part of the Company and the Warrants evidenced by this Warrant Certificate
constitutes the valid and legally binding obligation of the Company,
enforceable against it in accordance with the terms hereof, except as such
enforceability may be limited by bankruptcy, insolvency or other laws
affecting generally the enforceability of creditors' rights, by general
principles of equity and be limitations on the availability of equitable
remedies.
(c) Neither the execution and delivery of the Warrants evidenced
by this Warrant Certificate by the Company, nor compliance by the Company with
the provisions hereof, violates any provision of its Certificate of
Incorporation or By-Laws, as amended, or any law, statute, ordinance,
regulation, order, judgment or decree of any court or governmental agency, or
conflicts with or will result in any breach of the terms of or constitute a
default under or result in the termination of or the creation of any lien
pursuant to the terms of any agreement or instrument to which the Company is a
party or by which it or any of its properties is bound.
(d) The Company covenants and agrees that all shares of
capital stock of the Company which may be issued upon the exercise of the
Warrants evidenced hereby will be duly authorized, validly issued an fully
paid and nonassessable and free from all taxes, liens and charges with respect
to the issue thereof to the registered holder hereof. The Company further
covenants and agrees that during the period within which the Warrants
evidenced hereby may be exercised, the Company will at all times reserve such
number of shares of its capital stock as may be sufficient to permit the
exercise in full of the Warrants evidenced hereby.
6. Registration Rights.
(a) Demand Registered Rights. (i) After the earlier to occur of
(A) the closing date of a public offering of the Company's securities
registered pursuant to the Securities Act in which the Company received gross
proceeds of $5,000,000 or such lesser amount as may be determined by the board
of directors of the Company (a "Qualified IPO"), or (B) the date on which the
Company merges with any other publicly-owned company, and for a period of five
(5) years thereafter (the "Registration Period"), upon any written request of
the Majority Holders (as defined below) from time to time delivered to the
Company, the Company shall in each case promptly prepare and file, and use its
best efforts to cause to become effective, a registration statement under the
Securities Act (in each case, a "Demand Registration") covering such shares of
Common Stock issuable upon the exercise of Warrants (the "Warrant Shares") as
are requested by the Majority Holders to be covered thereby, all in accordance
with the following provisions of this Section 6. "Majority Holders" as used
herein shall mean the holder or holders of a majority of the aggregate of the
Warrant Shares then outstanding which (x) are not registered under the
Securities Act or (y) are not eligible for sale under circumstances in which
all of the applicable conditions of Rule 144 (or any similar provisions then
in effect ) under the Securities Act are met or (z) may not be sold pursuant
to Rule 144 (k), and the company has not delivered a new certificate or other
evidence of ownership for such shares not bearing a restrictive legend
("Registrable Stock"). The Majority Holders requesting a registration under
this Section 6 may, at any time prior to the filing date of the registration
statement relating to such registration, revoke such request, without
liability to any of the other holders of Registrable Stock, by providing a
written notice to the Company revoking such request, in which case such
request, so revoked, shall not be considered a Demand Registration.
Notwithstanding anything contained requiring the Company to register any of
its securities other than Common Stock.
(ii) If a registration pursuant to this paragraph 6 (a) involves
an underwritten public offering and the managing underwriter shall advise the
company that, in its view, the number of shares of Common Stock which the
Company and such holders of Registrable Stock intend to include in such
registration exceeds the Maximum Offering Size, the number of shares to be
included in such registration shall be limited by excluding the shares to be
registered in such offering, to the extent required by such limitation, in the
following order: (A) first any securities or shares (other than Registrable
Stock and any other "Registrable Stock" described in clause (B) hereof)
subject to registration rights granted after the date hereof, (B) next, on a
pro rata basis, the shares of Registrable Stock and any other "Registrable
Stock" issued to the holders of any other securities subject to registration
rights granted prior to the date hereof, allocated among all such registrable
stock in proportion, as nearly as practicable, to the respective amounts of
such stock which would otherwise be entitled to be included in such
registration, and (C) last, the shares being registered by the Company.
(b) Piggy-back Registration Rights. In addition to the demand
registration rights set forth in Section 6 (a) above, in the case of any
proposed registration during the Registration Period of Common Stock or other
securities of the Company under the Securities Act (other than a registration
(A) on Form S-8 or S-4 or any successor or similar forms, (B) relating to
Common Stock issuable upon exercise of employee stock options or in connection
with any employee benefit or similar plan of the Company or (C) in connection
with a direct or indirect acquisition by the Company of another company),
whether or not for the sale of its own account and including in connection
with a Demand Registration, the Company will give at least thirty (30) days'
prior written notice of the filing thereof to all holders of Warrants") and
Registrable Stock.
(i) The Company's notice shall afford the holders of all
Registrable Warrants and of Registrable Stock an opportunity to elect within
thirty (30) days after receipt thereof to include in such filing their
Registrable Stock.
(ii) The inclusion of Registrable Stock in any such registration
involving an underwritten public offering shall be upon the condition that the
holders thereof (A) must sell their Registrable Stock through the
underwriters selected as provided in Section 6 (d) (vi) below on the same
terms and conditions as are applicable to the Company or other selling
stockholders of the Company, and (B) complete and execute all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonable required under the terms of such underwriting arrangements and the
provisions hereof in respect of registration rights.
(iii) For so long as any Registrable Stock remains outstanding,
the Company shall be obligated under this Section 6 (b) to afford the holders
thereof the right to participate in each and every such registration of Common
Stock of the Company. If, at any time after giving written notice of its
intention to register any Common Stock pursuant to this Section 6 (b) and
prior to the effective date of the registration statement filed in connection
with such registration, the Company shall determine for any reason not to
register such stock, the Company shall give written notice to all such holders
of Registrable Stock and, thereupon, shall be relieved of its obligation to
register any Registrable Stock in connection with such registration (without
prejudice, however, to rights of any such holder under Section 6 (a) above).
No registration effected under this Section 6 (b) shall relieve the Company of
its obligations to effect a Demand Registration to the extent required by
Section 6 (a) above.
(iv) If a registration pursuant to this section 6 (b) involves an
underwritten public offering and the managing underwriter shall advise the
Company that, in its view, the number of shares of Common Stock which the
Company and such holders of Registrable Stock intend to include in such
registration exceeds the Maximum Offering Size, the number of shares to be
included in such registration shall be limited by excluding the shares to be
registered in such offering, to the extent required by such limitation, in the
following order: (A) first any securities or shares (other than Registrable
Stock and any other "Registrable Stock" described in clause (B) hereof)
subject to registration rights granted after the date hereof, (B) next, on a
pro rata basis, the shares of Registrable Stock and any other "Registrable
Stock" issued to the holders of any other securities subject to registration
rights granted prior to the date hereof, allocated among all such registrable
stock in proportion, as nearly as practicable, to the respective amounts of
such stock which would otherwise be entitled to be included in such
registration, and (C) last, the shares being registered by the Company.
(c ) Form S-3 Registration. If at any time after a date twelve
(12) months after the effective date of a Qualified IPO, but prior to the
final day of the Registration Period (as defined in Section 6 (a) above), the
Company shall receive from any holder or holders of Registrable Stock a
written request or requests that the Company effect a registration on Form S-3
and any related qualification or compliance with respect to all or a part of
the Registrable Stock owned by such holder or holders, the Company will:
(i) Promptly mail written notice of the proposed registration,
and any related qualification or compliance, to all other holders of
Registrable Stock and
(ii) as soon as practicable, use its best efforts to effect such
registration and all such qualifications and compliances as may be so
requested and as would permit or facilitate the sale and distribution of all
or such portion of such holder's or holders' Registrable Stock as are
specified in such request, together with all or such portion of the
Registrable Stock of any other holder or holders joining in such request as
are specified in a written request received by the Company within twenty (20)
days after the mailing of such written notice from the Company; provided,
however that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this subsection (A) if
Form S-3 (or a similar successor form) is not available for such offering by
the Company or by the requesting holders; (B) if the requesting holders,
together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable Stock and such
other securities (if any) at an aggregate price to the public (net of any
underwriters discounts or commissions) of less than $1,000,000; (C) with
respect to any Registrable Stock regarding which the requesting holder or
holders has received an opinion of counsel to the Company that registration is
not required under the Securities Act in order to effect the sale or other
distribution contemplated by such holder or holders.
(iii) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Stock so requested to be
registered as soon as practicable after receipt of the request or requests of
the holders. Registrations effected pursuant to this subsection shall not be
counted as demands for registration or registrations, respectively, effected
pursuant to Section 6 (a) above.
(iv) Each such registration shall be kept effective until the
earlier of (A) the sale of all securities registered thereunder and (B) the
date 120 days after the effective date thereof.
(v) If the Company is required to file or files a registration
statement pursuant to this subsection ( c), if the Board of Directors of the
Company, in its good faith judgment, determines, at the time of such filing,
that the filing of such registration statement or the sale of securities
pursuant to such registration statement should not be made or continued
because it would materially interfere with any material financing,
acquisition, corporate reorganization or merger or other transaction involving
the Company or any of its subsidiaries (a "Valid Business Reason"), the
Company may postpone the filing of such registration statement or the sale of
securities pursuant to it, and no holder or holders of Registrable Stock shall
sell any such securities pursuant to such registration statement until such
Valid Business Reason for such postponement no longer exists, but in no event
for more than six months; and the Company shall give written notice of its
determination to so postpone and of the fact that the Valid Business Reason
for such postponement no longer exists, in each case, promptly after the
occurrence thereof.
(d) Expenses of Registration. The costs and expenses (other than
underwriting discount or commission) of the registrations effected pursuant to
Section 6 (a) above, of all registrations effected pursuant to Section 6 (b)
and 6 (c) above, and of all other actions which the Company is required to
take or effect pursuant to this Section 6 shall be paid by the Company
(including, without limitation, all federal, state, NYSE or NASD registration
and filing fees, printing expenses, costs of special audits incidental to or
required by any such registration, and fees and disbursements of counsel for
the Company and for the holders of Registrable Stock (including allocated
costs of internal counsel)), except that all such expenses in connection with
any amendment or supplement to the registration statement or the prospectus
used in connection therewith required to be filed more than nine (9) months
after the date on which such registration statement becomes effective under
the Securities Act because any holder has not effected the disposition of
Registrable Stock covered by such registration statement shall be borne by
such holder or holders, in such proportions as they may agree. All such costs
and expenses of any such subsequent registration effected pursuant to this
Section 6 (d) in connection with a Demand Registration shall be borne by the
Majority Holders in such proportions as they may agree; provided, that an
additional request for a Demand Registration made pursuant to Section 6 (a)
above by the Majority Holders and otherwise in accordance with the terms
thereof with respect to the registration of Registrable Stock which is made
more than nine (9) months after a prior such demand shall be deemed a separate
demand and not a supplement or amendment requested by any holder pursuant to
this Section 6 (d).
(e) Registration Procedures. Whenever holders of Registrable
Stock request that any Registrable Stock be registered pursuant to Section 6
(a), 6 (b) or 6 (c) above, the Company will , subject to provisions of such
Sections, use its best efforts to effect the registration of such disposition
thereof as quickly as practicable, and in connection with any such request:
(i) The Company will as expeditiously as possible prepare and
file with the Commission a registration statement on any form for which the
Company then qualifies and which shall be available for the sale of the
Registrable Stock to be registered thereunder in accordance with the intended
method of distribution thereof, and use its best efforts to cause such filed
registration statement to become and remain effective for a period of not less
than nine (9) months (or such shorter period in which all of the Registrable
Stock of the holders thereof included in such registration statement shall
have actually been sold thereunder).
(ii) The Company will, if requested, prior to filing a
registration statement or prospectus or any amendment or supplement thereto,
furnish to each holder of Registrable Stock and each underwriter, if any, of
the Registrable Stock covered by such registration statement copies of such
registration statement as proposed to be file, and thereafter the Company will
furnish to such holder and underwriter, if any, such number of copies of such
registration statement, each amendment and supplement thereto (in each case
including all exhibits thereto and documents incorporated by reference
therein), the prospectus included in such registration statement (including
each preliminary prospectus) and such other documents as such holder or
underwriter may reasonable request in order to facilitate the disposition of
the Registrable Stock owned by such holder.
(iii) After the filing of the registration statement, the Company
will promptly notify each holder holding Registrable Stock covered by such
registration statement of any stop order issued or threatened by the
Commission and take all reasonable actions required to prevent the entry of
such stop order or to remove it if entered.
(iv) The Company will use its best efforts to (A) register or
qualify the Registrable Stock covered by such registration statement under
such other securities or blue sky laws of such jurisdictions in the United
States as any holder holding such Registrable Stock reasonably (in light of
such holder's intended plan of distribution) requests and (B) cause such
Registrable Stock to be registered with or approved by such other governmental
agencies or authorities as may be necessary by virtue of the business and
operations of the Company and do any and all other acts and things that may be
reasonably necessary or advisable to enable such holder to consummate the
disposition of the Registrable Stock owned by such holder; provided, that the
Company will not be required to (A) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
subsection (iv), or (B) subject itself to taxation in any such jurisdiction,
or (C) consent to general service of process in any such jurisdiction.
(v) The Company will immediately notify each holder holding such
Registrable Stock, at any time when a prospectus relating thereto is required
to be delivered under the Securities Act, of the occurrence of an event
requiring the preparation of a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such Registrable Stock,
such prospectus will not contain an untrue statement of a material fact or
omit state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading and promptly prepare and make available to each
such holder any such supplement or amendment.
(iv) If the Majority Holders request a Demand Registration
pursuant to Section 6 (a) above, such Majority Holders will have the right to
select an underwriter or underwriters reasonably satisfactory to the Company
in connection with any public offering resulting from such request. In any
other case, the Company may select, in its sole discretion, such underwriter
or underwriters as it may deem appropriate. The Company will enter into
customary agreements (including an underwriting agreement in customary form)
and take such other actions as are reasonably required in order to expedite or
facilitate the disposition of such Registrable Stock, including the engagement
of a "qualified independent underwriter" in connection with the qualification
of the underwriting arrangements with the NYSE or the NASD, as applicable.
(vii) Upon the execution of confidentiality agreements in form
and substance satisfactory to the Company, the company will make available for
inspection by any holder of Registrable Stock and any underwriter
participating in any disposition of Registrable Stock pursuant to a
registration statement being filed by the Company pursuant to this Section 6
(e) and any attorney, accountant or other professional retained by any such
holder or underwriter (collectively, the "Inspectors"), all financial and
other record, pertinent corporate documents and properties of the Company
(collectively, the "Records") as shall be reasonably necessary to enable them
to exercise their due diligence responsibility and cause the Company's
officers, directors and employees to supply all information reasonably
requested by any Inspectors in connection with such registration statement.
Records which the Company determines, in good faith, to be confidential and
which it disclosed to any third party by the inspectors unless (A) the
disclosure of such records in the registration statement is necessary to avoid
or correct a misstatement or omission in the registration statement or (B) the
release of such Records is ordered pursuant to a subpoena or other order from
a court of competent jurisdiction. Each such holder agrees that information
obtained by it as a result of such inspections shall be deemed confidential an
shall not be used by it as the basis for any market transactions in the
securities of the Company or its Affiliates unless and until such information
is made generally available to the public. Each such holder further agrees
that it will, upon learning that disclosure of such Records is sought in a
court of competent jurisdiction. Each such holder agrees that information
obtained by it as a result of such inspections shall be deemed confidential
and shall not be used by it as the basis for any market transactions in the
securities of the Company or its Affiliates unless and until such information
is made generally available to the public. Each such holder further agrees
that it will, upon learning that disclosure of such Records is sought in a
court of competent jurisdiction, give notice to the Company and allow the
Company, at the Company's own expense, to undertake appropriate action to
prevent disclosure of any such Records deemed confidential.
(viii) The Company will furnish to each such holder of
Registrable Stock and to each such underwriter, if any, a signed counterpart,
addressed to such underwriter, of (A) an opinion or opinions of counsel to
the Company and (B) a comfort letter or comfort letters from the Company's
independent public accountants, each in customarily covered by opinions or
comfort letters in offerings of securities, as the case may be, as a majority
of such holders of the managing underwriter therefore reasonable requests.
(ix) The Company will otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonable practicable, an
earnings statement covering a period of 12 months, beginning within three
months after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act.
(x) The Company may require each such holder to promptly furnish
in writing to the Company such information regarding the distribution of the
Registrable Stock as the Company may from time to time reasonably request and
such other information as may be legally required in connection with such
registration.
(xi) Each such holder of Registrable Stock agrees that, upon
receipt of any notice from the Company of the happening of any event of the
kind described in Section 6 (e) (iii) or 6 (e) (v) above (a "Stop-sale
Notice"), such holder will forthwith discontinue disposition of Registrable
Stock pursuant to the registration statement covering such notice from the
Company that such stop-order has been removed and/or the copies of the
supplemented or amended prospectus contemplated by Section 6 (e) (v) above,
and, if so directed by the Company, such holder will deliver to the Company
all copies, other than any permanent file copies then in such holder's
possession, of the most recent prospectus covering such Registrable Stock at
the time of receipt of such Stop-sale Notice. In the event that the Company
shall give such Stop-sale Notice, the Company shall extend the period during
which such registration statement shall be maintained effective (including the
period referred to in Section 6 (e) (I) above) by the number of days during
the period from and including the date of the giving of notice pursuant to
Section 6 (e) (iii) or 6(e) (v) above, as applicable, to the date when the
Company shall give the holders of Registrable Stock notice that the Stop-sale
Notice has been removed and/or make available to such holders a prospectus
supplemented or amended to conform with the requirement s of Section 6 (e) (v)
above.
(f) Restriction on Sale. In the event the Company registers its
securities under the Securities Act pursuant to a firm commitment
underwriting, each holder of Registrable Stock will not, for such period of
time specified by the managing underwriter, but not in excess of eighteen (18)
months following the effective date of such registration statement, sell or
otherwise transfer any of the Warrants or any shares of Registrable Stock
without the prior written consent of such underwriter, provided that each of
the Company's executive officers and directors agree to the same restriction
for the same period of time.
(g) Survival of Provisions. The provisions of this Section with
respect to Warrant Shares, shall survive the exercise of any Registrable
Warrants.
7. Registered Holder. The registered holder of this Warrant
Certificate shall be deemed the owner hereof and of the Warrants evidenced
hereby for all purposes. The registered holder of this Warrant Certificate
shall not be entitled by virtue of ownership of this Warrant Certificate shall
not be entitled by virtue of ownership of this Warrant Certificate to any
rights whatsoever as a shareholder of the Company.
8. Transfer. This Warrant Certificate and any unexercised
warrants evidenced hereby may not be transferred unless the Company shall
otherwise consent to the transfer hereof and the warrants evidenced hereby,
which consent shall not be unreasonably withheld, and otherwise is accordance
with this Section 9. This Warrant Certificate and The Warrants evidenced
hereby may not be sold, pledged, hypothecated or transferred at any time
unless the Company shall have received an opinion of counsel to the effect
that such transfer would not result in a violation of the provisions of the
Securities Act. Any transfer of this Warrant Certificate and the Warrants
evidenced hereby to a transferee, in whole or in part, shall be effected upon
surrender of this Warrant Certificate, duly endorsed (unless endorsement is
waived by the Company), at the principal office or agency of the Company. If
the Warrants evidenced hereby is being sold, pledged, hypothecated or
otherwise transferred, the Company shall issue a new Warrant Certificate
registered in the name of the appropriate transferee(s). If less than all of
the Common Stock issuable upon exercise hereof are being sold, pledged,
hypothecated or otherwise transferred, the Company shall issue new Warrant
Certificates, in each case for the number of Warrants exercisable for the
appropriate number of shares of Common Stock, registered in the name of the
registered holder hereof and the transferee (s), as applicable. Common Stock
of the Company issued upon any exercise hereof may not be sold, pledged,
hypothecated or otherwise transferred at any time unless the Company shall
have received an opinion of counsel to the effect that such transfer would not
result in a violation of the Securities Act.
9. Each taker and holder of this Warrant Certificate, the Warrant
Certificate, the Warrants evidenced hereby and any shares of capital stock of
the Company issued upon exercise of such Warrants, by taking or holding the
same, (x) consents to and agrees to be bound by the terms hereof and (y)
acknowledges and agrees that this Warrant Certificate and the unexercised
Warrants evidenced hereby may be subject to a right of repurchase by the
Company, at the option of the Company, in whole or in part, in accordance with
the terms and conditions of that certain Subscription Agreement dated on or
about the date hereof entered into between the Company and the initial holder
hereof (a copy of which agreement will be provided to any holder hereof upon
written request to the Company therefore), the provisions of which agreement,
to the extent they relate to such right of repurchase, shall be deemed a part
of the terms and conditions of this Warrant Certificate and the unexercised
Warrants evidenced hereby as if the same were specifically set forth herein.
IN WITNESS WHEREOF, Cayenne Entertainment, Inc. has caused this Warrant
Certificate to be signed by duly authorized officer and this Warrant
Certificate dated as of March 31, 2001.
Cayenne Entertainment, Inc.
By /s/ Gordon LeBlanc, Jr.
Name: Gordon LeBlanc, Jr.
Title: Chief Executive Officer
FORM OF EXERCISE
----------------
(to be executed by the registered holder hereof)
The undersigned hereby exercises __________ Warrants for the purchase of
one share each of common stock, par value $.01 (Common Stock"), of Cayenne
Entertainment, Inc. evidenced by the within Warrant Certificate and herewith
makes payment of the purchase price in full. Kindly issue certificates for
the Common Stock in accordance with the instructions given below. The
certificate for the unexercised balance of the Warrants evidenced by the
within Warrant Certificate, if any, will be registered in the name of the
undersigned.
Dated: __________________________
Instructions for registration of shares:
_____________________________________________
Name (please print)
Social Security or other Identifying
Number: _____________________________
Address:
_____________________________________________
Street