Exhibit 4(m)
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS, NOR THE SECURITIES LAWS OF ANY
OTHER JURISDICTION. THIS WARRANT MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THOSE SECURITIES LAWS OR AN OPINION
OF COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY, THAT THE SALE OR
TRANSFER IS PURSUANT TO AN EXEMPTION TO THE REGISTRATION REQUIREMENTS OF THOSE
SECURITIES LAWS.
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No. CS-40 Dated as of April 11, 2003
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Void after 5:00 p.m., New York City time, on April 11, 2008
WARRANT
for the Purchase of 2,000,000 Shares of Common Stock
FOR VALUE RECEIVED, NCT GROUP, INC. (the "Company"), a Delaware
corporation, on this 11th day of April, 2003 (the "Grant Date") hereby issues
this warrant (the "Warrant") and certifies that Xxxxxx Xxxxxxx (the "Holder") is
granted the right, subject to the provisions of the Warrant, to purchase from
the Company, at any time, or from time to time during the period commencing at
9:00 a.m. New York City local time on April 11, 2003, and expiring, unless
earlier terminated as hereinafter provided, at 5:00 p.m. New York City local
time on April 11, 2008 up to Two Million (2,000,000) fully paid and
nonassessable shares of Common Stock, $.01 par value, of the Company at a price
per share (the "Exercise Price") equal to the closing sale price of the Common
Stock (as defined below) on the Trading Day (as defined below) immediately
preceding the date of this Warrant; provided, however, that if, on the date of
this Warrant and the three Trading Days thereafter (the "Window"), neither the
Holder nor any Related Party (as defined below) sells or, whether in writing or
otherwise, agrees to sell any shares of Common Stock or any option, warrant,
instrument or right to convert into, exchange for or acquire Common Stock, then
the Exercise Price shall be reduced to a price equal to the lowest closing sale
price, if lower than the price specified above in this sentence, of the Common
Stock during the Window on the principal securities exchange or market on which
the Common Stock is then traded as reported on Bloomberg Financial Markets. If
any closing sale price of the Common Stock during the Window is lower than the
price specified in the immediately preceding sentence, the Holder shall give the
Borrower prompt written notice of any sale of or agreement to sell any Common
Stock or option, warrant, instrument or right to convert into, exchange for or
acquire Common Stock made by the Holder or a Related Party during the Window.
"Trading Day" shall mean any day on which the applicable common stock is traded
for any period on the NASDAQ National Market, or on the principal securities
exchange or other securities market on which the applicable common stock is then
being traded. "Related Party" shall mean a member of the Holder's immediate
family, including spouse (even if separated or not residing with the Holder) and
adult children (even if not residing with the Holder), or an entity (other than
the Company) of which the Holder or any such immediate family member is an
officer, director or beneficial shareholder (determined under Rule 13d-3 under
the Securities Exchange Act of 1934, as amended).
The term "Common Stock" means the shares of Common Stock, $.01 par value,
of the Company constituted on the Grant Date of this Warrant, together with any
other equity securities that may be issued by the Company in addition thereto or
in substitution therefor. The number of shares of Common Stock to be received
upon the exercise of this Warrant may be adjusted from time to time as
hereinafter set forth. The shares of Common Stock deliverable upon such
exercise, and as adjusted from time to time, are hereinafter sometimes referred
to as "Warrant Stock".
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant, and (in the case of
loss, theft or destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Warrant, if mutilated, the Company shall
execute and deliver a new Warrant of like tenor and date. Any such new Warrant
executed and delivered shall constitute an additional contractual obligation on
the part of the Company, whether or not this Warrant so lost, stolen, destroyed
or mutilated shall be at any time enforceable by anyone.
The Holder agrees with the Company that this Warrant is issued, and all the
rights hereunder shall be held, subject to all of the conditions, limitations
and provisions set forth herein.
1. Exercise of Warrant. This Warrant may be exercised in whole or in part
at any time, or from time to time, during the period commencing at 9:00 a.m.,
New York City local time, on April 11, 2003, and expiring at 5:00 p.m., New York
City local time, on April 11, 2008, or, if such day is a day on which banking
institutions in the City of New York are authorized by law to close, then on the
next succeeding day that shall not be such a day.
Subject to the restrictions and limitations set forth above, this Warrant
may be exercised by presentation and surrender hereof to the Company at its
principal office with the Warrant Exercise Form attached hereto duly executed
and accompanied by payment (either in cash or by certified or official bank
check, payable to the order of the Company) of the Exercise Price for the number
of shares specified in such Form and instruments of transfer, if appropriate,
duly executed by the Holder. If this Warrant should be exercised in part only,
the Company shall, upon surrender of this Warrant for cancellation, execute and
deliver a new Warrant evidencing the rights of the Holder thereof to purchase
the balance of the shares purchasable hereunder. Upon receipt by the Company of
this Warrant, together with the Warrant Exercise Form and the Exercise Price, at
its office, in proper form for exercise, the Holder shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such shares of Common Stock shall not
then be actually delivered to the Holder. The Company shall pay any and all
documentary stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of shares of Common Stock on exercise of this Warrant.
2. Reservation of Shares. The Company will at all times reserve for
issuance and delivery upon exercise of this Warrant all shares of Common Stock
of the Company from time to time receivable upon exercise of this Warrant. All
such shares shall be duly authorized and, when issued upon such exercise, shall
be validly issued, fully paid and nonassessable and free of all preemptive
rights.
3. Warrant Stock Transfer to Comply with the Securities Act of 1933. The
Warrant Stock may not be sold or otherwise disposed of unless registered
pursuant to the provisions of the Securities Act of 1933, as amended (the "1933
Act"), or an opinion of counsel in form and content satisfactory to the Company
is obtained stating that such sale or other disposition is made in compliance
with an available exemption from such registration. Any sale or other
disposition of the Warrant Stock must also comply with all applicable state
securities laws and regulations.
4. Fractional Shares. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant, but the Company shall
issue one additional share of its Common Stock in lieu of each fraction of a
share otherwise called for upon any exercise of this Warrant.
5. Exchange, Transfer, Assignment of Loss of Warrant. This Warrant is not
registered under the 1933 Act nor under any applicable state securities law or
regulation. This Warrant cannot be sold, exchanged, transferred, assigned or
otherwise disposed of unless registered pursuant to the provisions of the 1933
Act or an opinion of counsel in form and content satisfactory to the Company is
obtained stating that such disposition is in compliance with an available
exemption from registration. Any such disposition must also comply with
applicable state securities laws and regulations.
6. Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder of the Company, either at law or in
equity, and the rights of the Holder are limited to those expressed in this
Warrant.
7. Redemption. This Warrant is not redeemable by the Company.
8. Anti-Dilution Provisions.
8.1 Adjustment for Dividends in Other Securities, Property, Etc.:
Reclassification, Etc. In case at any time or from time to time after the
Grant Date the holders of Common Stock (or any other securities at the time
receivable upon the exercise of this Warrant) shall have received, or on or
after the record date fixed for the determination of eligible stockholders,
shall have become entitled to receive without payment therefor: (a) other
or additional securities or property (other than cash) by way of dividend,
(b) any cash paid or payable except out of earned surplus of the Company at
the Grant Date as increased (decreased) by subsequent credits (charges)
thereto (other than credits in respect of any capital or paid-in surplus or
surplus created as a result of a revaluation of property) or (c) other or
additional (or less) securities or property (including cash) by way of
stock-split, spin-off, split-up, reclassification, combination of shares or
similar corporate rearrangement, then, and in each such case, the Holder of
this Warrant, upon the exercise thereof as provided in Section 1, shall be
entitled to receive, subject to the limitations and restrictions set forth
above, the amount of securities and property (including cash in the cases
referred to in clauses (b) and (c) above) which such Holder would hold on
the date of such exercise if on the Grant Date it had been the holder of
record of the number of shares of Common Stock (as constituted on the Grant
Date) subscribed for upon such exercise as provided in Section 1 and had
thereafter, during the period from the Grant Date to and including the date
of such exercise, retained such shares and/or all other additional (or
less) securities and property (including cash in the cases referred to in
clauses (b) and (c) above) receivable by it as aforesaid during such
period, giving effect to all adjustments called for during such period by
Section 8.2.
8.2 Adjustment for Reorganization, Consolidation, Merger, Etc. In case
of any reorganization of the Company (or any other corporation, the
securities of which are at the time receivable on the exercise of this
Warrant) after the Grant Date or in case after such date the Company (or
any such other corporation) shall consolidate with or merge into another
corporation or convey all or substantially all of its assets to another
corporation, then, and in each such case, the Holder of this Warrant upon
the exercise thereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation, merger or conveyance,
shall be entitled to receive, in lieu of the securities and property
receivable upon the exercise of this Warrant prior to such consummation,
the securities or property to which such Holder would have been entitled
upon such consummation if such Holder had exercised this Warrant
immediately prior thereto, all subject to further adjustment as provided in
Section 8.1; in each such case, the terms of this Warrant shall be
applicable to the securities or property receivable upon the exercise of
this Warrant after such consummation.
8.3 Certificate as to Adjustments. In each case of an adjustment in
the number of shares of Common Stock (or other securities or property)
receivable on the exercise of the Warrant, the Company at its expense will
promptly compute such adjustment in accordance with the terms of the
Warrant and prepare a certificate setting forth such adjustment and showing
in detail the facts upon which such adjustment is based, including a
statement of (a) the consideration received or to be received by the
Company for any additional shares of Common Stock issued or sold or deemed
to have been issued or sold, (b) the number of shares of Common Stock
outstanding or deemed to be outstanding, and (c) the pro forma adjusted
Exercise. The Company will forthwith mail a copy of each such certificate
to the holder of this Warrant.
8.4 Notices of Record Date, Etc.
In case:
(a) the Company shall take a record of the holders of its Common
Stock (or other securities at the time receivable upon the exercise of
the Warrant) for the purpose of entitling them to receive any dividend
(other than a cash dividend) or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of
any class or any other securities, or to receive any other right; or
(b) of any capital reorganization of the Company (other than a
stock split or reverse stock split), any reclassification of the
capital stock of the Company, any consolidation or merger of the
Company with or into another corporation (other than a merger for
purposes of change of domicile) or any conveyance of all or
substantially all of the assets of the Company to another corporation;
or
(c) of any voluntary or involuntary dissolution, liquidation or
winding-up of the Company, then, and in each such case, the Company
shall mail or cause to be mailed to each holder of the Warrant at the
time outstanding a notice specifying, as the case may be, (i) the date
on which a record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such
dividend, distribution or right, or (ii) the date on which such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up is to take place, and the time,
if any, is to be fixed, as to which the holders of record of Common
Stock (or such other securities at the time receivable upon the
exercise of the Warrant) shall be entitled to exchange their shares of
Common Stock (or such other securities) for securities or other
property deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or
winding-up. Such notice shall be mailed at least twenty (20) days
prior to the date therein specified and the Warrant may be exercised
prior to said date during the term of the Warrant no later than five
(5) days prior to said date.
9. Legend. In the event of the exercise of this Warrant and the issuance of
any of the Warrant Stock hereunder, all certificates representing Warrant Stock
shall bear on the face thereof substantially the following legends, insofar as
is consistent with Delaware law:
"The shares of common stock represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or the Securities
laws of any state or other jurisdiction, and may not be sold, offered for
sale, assigned, transferred or otherwise disposed of, unless registered
pursuant to the provisions of that Act and of such Securities laws or an
opinion of counsel acceptable to the Corporation is obtained stating that
such disposition is in compliance with an available exemption from such
registration."
10. Governing Law and Jurisdiction. This Warrant shall be governed by the
internal laws of the State of Delaware, without regard to conflicts of laws
principles. The parties hereto hereby submit to the exclusive jurisdiction of
the United States Federal Courts located in the state of New Jersey with respect
to any dispute arising under this Warrant.
11. Notices. Notices, demands and other communications given under this
Agreement shall be in writing and shall be deemed to have been given when
delivered (if personally delivered), on the scheduled date of delivery (if
delivered via commercial courier), three days after mailed (if mailed by
certified or registered mail, return receipt requested) or when sent by
facsimile (if sent by facsimile with evidence of successful transmission
retained by the sender); provided, however, that failure to give proper and
timely notice as set forth in the "with a copy to" provisions below shall not
invalidate a notice properly and timely given to the associated party. Unless
another address or facsimile number is specified by notice hereunder, all
notices shall be sent as follows:
If to the Holder: with a copy to:
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Xx. Xxxxxx Xxxxxxx Xxxxx Xxxxx, Esq.
c/o Sills, Cummis, Radin, Tishman, Xxxxx & Xxxxxxxxx
Xxxxxxx & Xxxxx 000 Xxxxx 00 Xxxx
Xxx Xxxxxxxxxx Xxxxx Xxxxxxxx, XX 00000
Xxxxxx XX 00000
Facsimile: 000-000-0000 Facsimile: 973-361-1644
If to the Company: with a copy to:
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NCT Group, Inc. NCT Group, Inc.
00 Xxxxxxx Xxxxxx 00 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000 Xxxxxxxx, XX 00000
Attention: Chief Financial Officer Attention: General Counsel
Facsimile: 000-000-0000 Facsimile: 000-000-0000
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
on its behalf, in its corporate name, by its duly authorized officer, as of the
date first written above.
NCT GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
Chairman & Chief Executive Officer
WARRANT EXERCISE FORM
(To be executed by the Holder in order to Exercise the Warrant)
TO: NCT Group, Inc.
00 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Chief Financial Officer
The undersigned hereby irrevocably elects to exercise the within Warrant to
the extent of purchasing _________ shares of Common Stock of NCT Group, Inc. and
hereby makes payment at the rate of $______ per share, or an aggregate of
$________, in payment therefor.
The undersigned represents, warrants and certifies that all offers and
sales of the Warrant Stock shall be made: (i) pursuant to an effective
registration statement under the 1933 Act or pursuant to an exemption from, or
in a transaction not subject to, the registration requirements of the 1993 Act;
and (ii) in compliance with applicable state securities laws and those of any
other applicable jurisdiction.
Dated:
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Name of Warrant Holder
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Signature
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INSTRUCTIONS FOR ISSUANCE OF STOCK
(if other than to the registered holder of the within Warrant)
Name: ---------------------------------------------------------
(Please type or print in block letters)
Address: ---------------------------------------------------------
Social Security or Taxpayer Identification Number: -----------------
