NEITHER THIS WARRANT NOR THE SECURITIES REPRESENTED BY THIS WARRANT
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
`SECURITIES ACT'), OR THE SECURITIES OR BLUE SKY LAWS OF ANY STATE.
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION, AND NEITHER SUCH
SECURITIES NOR ANY INTEREST OR PARTICIPATION THEREIN MAY BE SOLD,
ASSIGNED PLEDGED, HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER
TRANSFERRED OR DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF AND IN
COMPLIANCE WITH THE REGISTRATION PROVISIONS OF APPLICABLE STATE
SECURITIES OR BLUE SKY LAWS.
AMERICAN INTERACTIVE MEDIA, INC.
WARRANT
Dated: December 4, 1997
AMERICAN INTERACTIVE MEDIA, INC., a Nevada corporation (the "Company"),
hereby certifies that, for value received, Xxxxxxxxx Digital, Inc., or its
designee or its registered assigns ("Holder"), is entitled, subject to the terms
set forth below, to purchase from the Company in a single transaction up to that
number of shares of Common Stock, par value $0.001 per share (the "Common
Stock"), of the Company (each such share, a "Warrant Share" and all such shares,
the "Warrant Shares") as shall immediately following the exercise be equal to
that number of shares determined by subtracting from (i) that number of shares
equal to forty percent (40%) of the outstanding shares of Common Stock and
Preferred Stock (if any) of the Company plus all shares and other securities
which are then and potentially issuable pursuant to all then outstanding
options, warrants and other securities convertible into or exchangeable for
shares of Common Stock, (ii) all shares of Common Stock issued to Holder
pursuant to conversion of the Floating Rate Convertible Debentures of the
Company issued to the Holder pursuant to that certain Securities Purchase
Agreement between the Company and Holder of even date herewith and all shares
received by the Holder pursuant to its exercise of the Common Stock Purchase
Option of even date herewith and any and all shares otherwise acquired by Holder
pursuant to purchases in public or private transactions for up to 10% of the
fully-diluted amount of the Common Stock as permitted under that certain Voting
and Standstill Agreement of even date herewith at an exercise price per share
equal to the Current Market Price per share of Common Stock on the exercise
date. The "Current Market Price" shall be deemed to be the average of the daily
closing prices for the 30 consecutive trading days immediately
preceding the exercise date. The closing price for each day shall be the last
reported sales price regular way or, in case no such reported sale takes place
on such day, the closing bid price regular way, in either case on the principal
national securities exchange (including, for purposes hereof, the NASDAQ
National Market System) on which the Common Stock is listed or admitted to
trading or, if the Common Stock is not listed or admitted to trading on any
national securities exchange, the highest reported bid price for the Common
Stock as furnished by the National Association of Securities Dealers Inc.
through NASDAQ or a similar organization if NASDAQ is no longer reporting such
information or if the Common Stock is not reported on NASDAQ, as quoted on the
OTC Bulletin Board. The Warrant Shares and the exercise price shall be adjusted
from time to time as provided in Section 7 ("Exercise Price"). This Warrant may
be exercised at any time after the Holder shall have completed conversion of the
Floating Rate Convertible Debentures in full and shall have exercised the Common
Stock Purchase Option in full, until and including the date that is one (1) year
after the date the Floating Rate Convertible Debentures shall have been
converted in full (the "Expiration Date"). This Warrant is subject to the
following terms and conditions:
1. Registration of Warrant. The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, and the Company shall not be affected by
notice to the contrary.
2. Transfers and Exchanges.
(a) This Warrant and the rights hereunder shall be transferable in
whole or in part, subject to the limitations of and in accordance with the
procedures hereinafter set forth in this Section 2(a). This Warrant and the
Warrant Shares received upon the exercise of this Warrant have not been
registered under the United States Securities Act of 1933, as amended (as
then in effect or any similar statute then in effect) (the "Securities
Act"), or the securities laws of any state applicable to such exercise,
issuance or transfer. Any transfer is restricted and may only be made
provided the Company receives such assurances as the Company may reasonably
request that the exercise of this Warrant, the transfer of this Warrant, or
any part thereof, and the issuance of Warrant Shares pursuant to such
exercise, will not violate the Securities Act. Such assurances may include
(but need not be limited to) opinions of counsel, covenants by the holder
or transferee to observe the Securities Act and the securities laws of any
state applicable to such exercise, issuance or transfer and the placement
of a legend on such certificate or certificates restricting subsequent
transfers or sales. In order to transfer this Warrant, Holder shall give
not less than ten (10) days' written notice to the Company, specifying (i)
the name of the proposed transferee, (ii) the number of Warrant Shares to
which the transfer relates and (iii) the amount of consideration to be paid
therefor. The Company shall register the transfer of any portion of this
Warrant in the Warrant Register, upon surrender of this Warrant, with the
Form of Assignment attached hereto duly completed and signed, to the
Company at the office specified in or pursuant to Section 3(b). Upon any
such registration or transfer, a new warrant to purchase Common Stock, in
substantially the form of this Warrant (any such new warrant, a "New
Warrant"), evidencing the portion of this Warrant so transferred shall be
issued to the transferee and a New Warrant evidencing the remaining portion
of this Warrant not so transferred, if any, shall be issued to the
transferring Holder.
(b) This Warrant is exchangeable, upon the surrender hereof by the
Holder at the office of the Company specified in or pursuant to Section
3(b) for one or more New Warrants, evidencing in the aggregate the right to
purchase the number of Warrant Shares which may then be purchased
hereunder. Any such New Warrant will be dated the date of such exchange.
2
3. Duration and Exercise of Warrants.
(a) This Warrant shall be exercisable by the registered Holder on any
business day before 5:00 P.M., New York time, at any time and from time to
time on or after the date hereof (subject to the provisions of the first
paragraph of this Warrant) to and including the Expiration Date. At 5:00
P.M., New York time on the Expiration Date, this Warrant if not exercised
prior thereto shall be and become void and of no value.
(b) Subject to Sections 2(b), 4 and 8, upon surrender of this Warrant,
with the Form of Election to Purchase attached hereto duly completed and
signed, to the Company at its office at 000 Xxxxxxxx, Xxxxx 000, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Secretary, or at such other address as the
Company may specify in writing to the then registered Holder, and upon
payment of the Exercise Price multiplied by the number of Warrant Shares
that the Holder intends to purchase hereunder, in lawful money of the
United States of America, in cash or by certified or official bank check or
checks or by wire transfer in same-day funds, all as specified by the
Holder in the Form of Election to Purchase, the Company shall promptly (but
in no event later than 3 days thereafter) issue and cause to be delivered
to or upon the written order of the Holder and in such name or names as the
Holder may designate, a certificate for the Warrant Shares issuable upon
such exercise. Any person so designated by the Holder to receive Warrant
Shares shall be deemed to have become holder of record of such Warrant
Shares as of the Date of Exercise of this Warrant. Notwithstanding the
foregoing, the Company shall not be obligated to deliver any such
certificate or certificates upon exercise of this Warrant until the Company
shall have received such assurances as the Company may reasonably request
that the exercise of this Warrant and the issuance of Common Stock pursuant
to such exercise will not violate the Securities Act or the securities laws
of any state applicable to such exercise, issuance or transfer. Such
assurances may include (but need not be limited to) opinions of counsel,
covenants by the holder or transferee to observe the Securities Act and the
securities laws of any state applicable to such exercise, issuance or
transfer and the placement of a legend on such certificate or certificates
restricting subsequent transfers or sales.
A "Date of Exercise" means the date on which the Company shall have
received (i) this Warrant (or any New Warrant, as applicable), with the
Form of Election to Purchase attached hereto (or attached to such New
Warrant) appropriately completed and duly signed, and (ii) payment of the
Exercise Price for the number of Warrant Shares so indicated by the holder
hereof to be purchased.
(c) This Warrant must be exercised in its entirety in a single
transaction.
4. Payment of Taxes. The Company will pay all documentary stamp taxes
attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the registration
of any certificates for Warrant Shares in a name other than that of the Holder,
and the Company shall not be required to issue or deliver the certificates for
Warrant Shares unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid. The
Holder shall be responsible for all other tax liability that may arise as a
result of holding or transferring this Warrant or receiving Warrant Shares upon
exercise hereof.
5. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or
destroyed, the Company may in its discretion issue in exchange and substitution
for and upon cancellation hereof, or in lieu of and substitution for this
Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and indemnity, if
requested, satisfactory to it.
3
Applicants for a New Warrant under such circumstances shall also comply with
such other reasonable regulations and pay such other reasonable charges as the
Company may prescribe.
6. Reservation of Warrant Shares. The Company covenants that all Warrant
Shares that shall be issuable and deliverable shall, upon issue, be duly and
validly authorized, issued and fully paid and nonassessable. The Company shall
at all times reserve and keep available out of its authorized and unissued
Common Stock, solely for the purpose of providing for the exercise of this
Warrant, such number of shares of Common Stock as shall, from time to time, be
sufficient for the exercise of this Warrant.
7. Certain Adjustments. The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section 7.
(a) In case the Company shall at any time after the date this Warrant
is first issued (i) declare a dividend on the outstanding Common Stock
payable in shares of its capital stock, (ii) subdivide the outstanding
Common Stock, (iii) combine the outstanding Common Stock into a smaller
number of shares, or (iv) issue any shares of its capital stock by
reclassification of the Common Stock (including any such reclassification
in connection with a consolidation or merger in which the Company is the
continuing corporation), then, in each case, the Exercise Price, and the
number and kind of shares issuable upon exercise of this Warrant, in effect
at the time of the record date for such dividend or of the effective date
of such subdivision, combination, or reclassification, shall be
proportionately adjusted so that the Holder after such time shall be
entitled to receive the aggregate number and kind of shares which, if the
Warrant had been exercised immediately prior to such time, it would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination, or reclassification. Such adjustment
shall be made successively whenever any event listed above shall occur.
(b) In case the Company shall issue or fix a record date for the
issuance to all holders of Common Stock of rights, options, or warrants to
subscribe for or purchase Common Stock (or securities convertible into or
exchangeable for Common Stock) at a price per share (or having a conversion
or exchange price per share, if a security convertible into or exchangeable
for Common Stock) less than the Current Market Price per share of Common
Stock on such record date, then, in each case, the number of shares of
Common Stock into which this Warrant shall be exercisable after such record
date shall be determined by multiplying the number of shares of Common
Stock into which this Warrant was theretofore exercisable by a fraction,
the numerator of which shall be the number of shares of Common Stock
outstanding on such record date plus the number of additional shares of
Common Stock to be offered for subscription or purchase (or into which the
convertible or exchangeable securities so to be offered are initially
convertible or exchangeable) and the denominator of which shall be the
number of shares of Common Stock outstanding on such record date plus the
number of shares of Common Stock which the aggregate offering price of the
total number of shares of Common Stock so to be offered (or the aggregate
initial conversion or exchange price of the convertible or exchangeable
securities so to be offered) would purchase at such Current Market Price.
Such adjustment shall become effective at the close of business on such
record date; provided, however, that, to the extent the shares of Common
Stock (or securities convertible into or exchangeable for shares of Common
Stock) are not delivered, the number of shares of Common Stock issuable
upon exercise of this Warrant shall be readjusted after the expiration of
such rights, options, or warrants (but only with respect to any portion of
this Warrant exercised after such expiration), to the number of shares
which would have been issuable upon exercise of this Warrant had the
adjustments made upon the issuance of such rights, options, or warrants
been made upon the basis of delivery of only the number of shares of Common
Stock (or securities convertible into or exchangeable for shares of Common
Stock) actually issued. In case any subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as
4
determined in good faith by the board of directors of the Company, whose
determination shall be conclusive absent manifest error. Shares of Common
Stock owned by or held for the account of the Company or any majority-owned
subsidiary shall not be deemed outstanding for the purpose of any such
computation.
(c) In case the Company shall distribute to all holders of Common
Stock (including any such distribution made to the stockholders of the
Company in connection with a consolidation or merger in which the Company
is the continuing corporation) evidences of its indebtedness or assets
(other than cash dividends or distributions and dividends payable in shares
of Common Stock), or rights, options, or warrants to subscribe for or
purchase Common Stock, or securities convertible into or exchangeable for
shares of Common Stock (excluding those with respect to the issuance of
which an adjustment is provided for pursuant to Section 7(b) of this
Warrant), then, in each case, the number of shares of Common Stock into
which this Warrant shall be exercisable shall be determined by multiplying
the number of shares of Common Stock into which this Warrant was
exerciseable immediately prior to the record date for the determination of
stockholders entitled to receive such distribution by a fraction, the
numerator of which shall be the Current Market Price per share of Common
Stock on such record date, and the denominator of which shall be such
Current Market Price per share of Common Stock less the fair market value
(as reasonably determined in good faith by the board of directors of the
Company) of the portion of the evidences of indebtedness or assets so to be
distributed, or of such rights, options, or warrants or convertible or
exchangeable securities, applicable to one share. Such adjustment shall be
made whenever any such distribution is made, and shall become effective on
the date of such distribution retroactive to the record date for the
determination of stockholders entitled to receive such distribution.
(d) In case the Company shall issue shares of Common Stock or rights,
options, or warrants to subscribe for or purchase Common Stock, or
securities convertible into or exchangeable for Common Stock (excluding
shares, rights, options, warrants, or convertible or exchangeable
securities issued or issuable (i) in a private placement of shares or
convertible securities of up to $6,000,000 provided that the Company shall
consult with Holder with respect to such issuance or in private placements
of shares or convertible securities over the $6,000,000 amount if Holder
has approved such transaction, (ii) in any of the transactions with respect
to which an adjustment is provided for pursuant to Sections 7(a), (b) or
(c) of this Warrant, or (iii) upon exercise of this Warrant or exercise or
conversion of the Floating Rate Convertible Secured Debentures, the Common
Stock Purchase Option and all other options, warrants or securities
outstanding on the date hereof) at a price per share (determined, in the
case of such rights, options, warrants, or convertible or exchangeable
securities, by dividing (x) the total amount received or receivable by the
Company in consideration of the sale and issuance of such rights, options,
warrants, or convertible or exchangeable securities, plus the minimum
aggregate consideration payable to the Company upon exercise, conversion,
or exchange thereof, by (y) the maximum number of shares covered by such
rights, options, warrants, or convertible or exchangeable securities) lower
than the Current Market Price per share of Common Stock in effect
immediately prior to such issuance, then the number of shares of Common
Stock into which this Warrant shall be exercisable shall be determined by
multiplying the number of shares of Common Stock into which this Warrant
was exercisable immediately prior to such issuance by a fraction, the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately after such issuance and the denominator of which
shall be an amount equal to the sum of (A) the number of shares of Common
Stock outstanding immediately prior to such issuance, plus (B) the quotient
obtained by dividing the consideration received by the Company upon such
issuance by such Current Market Price. For the purposes of such
adjustments, the maximum number of shares which the holders of any such
rights, options, warrants, or convertible or exchangeable securities shall
be entitled to initially subscribe for or purchase or convert or exchange
such securities into shall be deemed to be issued and outstanding as of the
date of such issuance, and the consideration received by the Company
therefor shall be deemed to be the consideration received by the Company
for such rights,
5
options, warrants, or convertible or exchangeable securities, plus the
minimum aggregate consideration or premiums stated in such rights, options,
warrants, or convertible or exchangeable securities to be paid for the
shares covered thereby. No further adjustment shall be made as a result of
the actual issuance of shares of Common Stock on exercise of such rights,
options, or warrants or on conversion or exchange of such convertible or
exchangeable securities. On the expiration or the termination of such
rights, options, or warrants, or the termination of such right to convert
or exchange, the number of shares of Common Stock issuable upon exercise of
this Warrant shall be readjusted to such number of shares as would have
been issuable had the adjustments made upon the issuance of such rights,
options, warrants, or convertible or exchangeable securities been made upon
the basis of the delivery of only the number of shares of Common Stock
actually delivered upon the exercise of such rights, options, or warrants
or upon the conversion or exchange of any such securities; and on any
change of the number of shares of Common Stock deliverable upon the
exercise of any such rights, options, or warrants or conversion or exchange
of such convertible or exchangeable securities or any change in the
consideration to be received by the Company upon such exercise, conversion,
or exchange, including, but not limited to, a change resulting from the
antidilution provisions thereof, the number of shares of Common Stock
issuable upon exercise of this Warrant, as then in effect, shall forthwith
be readjusted to such number of shares as would have been issuable had an
adjustment been made upon the issuance of such rights, options, or warrants
not exercised prior to such change, or securities not converted or
exchanged prior to such change, on the basis of such change. In case the
Company shall issue shares of Common Stock or any such rights, options,
warrants, or convertible or exchangeable securities for a consideration
consisting, in whole or in part, of property other than cash or its
equivalent, then the "price per share" and the "consideration received by
the Company" for purposes of the first sentence of this Section 7(d) shall
be as determined in good faith by the board of directors of the Company,
whose determination shall be conclusive absent manifest error. Shares of
Common Stock owned by or held for the account of the Company or any
majority-owned subsidiary shall not be deemed outstanding for the purpose
of any such computation.
(e) For the purpose of any computation under this Section 7, the
Current Market Price per share of Common Stock on any date shall be deemed
to be the average of the daily closing prices for the 30 consecutive
trading days immediately preceding the date in question. The closing price
for each day shall be the last reported sales price regular way or, in case
no such reported sale takes place on such day, the closing bid price
regular way, in either case on the principal national securities exchange
(including, for purposes hereof, the NASDAQ National Market System) on
which the Common Stock is listed or admitted to trading or, if the Common
Stock is not listed or admitted to trading on any national securities
exchange, the highest reported bid price for the Common Stock as furnished
by the National Association of Securities Dealers, Inc. through NASDAQ or a
similar organization if NASDAQ is no longer reporting such information or
if the Common Stock is not reported on NASDAQ, as quoted on the OTC
Bulletin Board. If on any such date the Common Stock is not listed or
admitted to trading on any national securities exchange and is not quoted
by NASDAQ or any similar organization, the fair value of a share of Common
Stock on such date, as reasonably determined in good faith by the board of
directors of the Company shall be used. The foregoing provisions shall also
be applied to determine the Current Market Price of any shares of capital
stock of the Company issued by the Company by reclassification of the
Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the surviving corporation).
(f) No adjustment in the number of shares of Common Stock into which
this Warrant is convertible shall be required unless such adjustment would
require an increase or decrease of at least 1/20th of a share in the number
of shares of Common Stock into which this Warrant is exercisable; provided,
however, that any adjustments which by reason of this Section 7(f) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment.
6
(g) Upon each adjustment to the number of shares of Common Stock
issuable upon exercise of this Warrant as a result of the calculations made
in Sections 7(b), (c) and (d) hereof, the Exercise Price shall
simultaneously be adjusted to the price obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by a
fraction, the numerator of which shall be the number of shares of Common
Stock into which this Warrant was exercisable immediately prior to such
adjustment and the denominator of which shall be the number of shares of
Common Stock into which this Warrant is convertible immediately after such
adjustment.
(h) Whenever there shall be an adjustment as provided in this Section
7, the Company shall promptly cause written notice thereof to be sent to
the Holder, which notice shall be accompanied by an officer's certificate
setting forth the number of Warrant Shares issuable upon the exercise of
the Warrant and the Exercise Price after such adjustment and setting forth
a brief statement of the facts requiring such adjustment and the
computation thereof, which officer's certificate shall be conclusive
evidence of the correctness of any such adjustment absent manifest error.
(i) The Company shall not be required to issue fractions of shares of
Common Stock or other capital stock of the Company upon the exercise of the
Warrant. If any fraction of a share would be issuable on any exercise of
the Warrant (or specified portions thereof), the Company shall purchase
such fraction for an amount in cash equal to the same fraction of the
Current Market Price of such share of Common Stock or other capital stock
on the date of exercise of the Warrant.
(j) For the purposes of this Section, the following clauses shall
also be applicable:
A. Record Date. In case the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them (A) to
receive a dividend or other distribution payable in Common Stock or in
convertible securities, or (B) to subscribe for or purchase Common
Stock or convertible securities, then such 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 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.
B. 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 such
shares shall be considered an issue or sale of Common Stock for the
purposes of this subsection (j).
(k) All calculations under this Section 7 shall be made to the nearest
cent or the nearest 1/100th of a share, as the case may be.
(l) If:
A. the Company shall declare a dividend (or any other distribution)
on its Common Stock; or
B. the Company shall declare a special nonrecurring cash dividend on
or a redemption of its Common Stock; or
7
C. the Company shall authorize the granting to all holders of the
Common Stock rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any rights; or
D. the approval of any stockholders of the Company shall be required
in connection with any reclassification of the Common Stock of
the Company, 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
E. 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 mailed to each Holder at their last
addresses as they shall appear upon the Warrant Register, at least 30
calendar days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) 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 (y)
the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is 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, share exchange, dissolution,
liquidation or winding up; 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.
(m) If at any time conditions shall arise by reason of action taken by
the Company which in the opinion of the Board of Directors are not
adequately covered by the other provisions hereof and which might
materially and adversely affect the rights of the Holders (different than
or distinguished from the effect generally on rights of holders of any
class of the Company's capital stock) or if at any time any such conditions
are expected to arise by reason of any action contemplated by the Company,
the Company shall mail a written notice briefly describing the action
contemplated and the material adverse effects of such action on the rights
of the Holders at least 30 calendar days prior to the effective date of
such action, and the Board of Directors of the Company shall determine in
good faith the appropriate adjustments to the Exercise Price and the number
of Warrant Shares issuable upon exercise of this Warrant, which
determination shall be conclusive absent manifest error.
(n) Notwithstanding the provisions of the introductory paragraph to
this Warrant, the maximum number of shares for which this Warrant shall be
exerciseable on the exercise date shall equal that number of shares
determined by subtracting from (i) that number of shares equal to forty
percent (40%) of the then outstanding Common Stock of the Company following
such exercise, (ii) all shares of Common Stock issued to Holder pursuant to
conversion of the Floating Rate Convertible Debentures of the Company
issued to Holder pursuant to that certain Securities Purchase Agreement
between the Company and Holder of even date herewith and all shares
received by Holder pursuant to its exercise of the Common Stock Purchase
Option of even date herewith and any and all shares otherwise acquired by
Holder pursuant to purchases in public or private transactions for up to
10% of the fully-diluted amount of the Common Stock as permitted under that
certain Voting and Standstill Agreement of even date herewith (such amount
including the amount pursuant to this Warrant, the "40% Amount"). On
8
the exercise date, all options and warrants and other securities
convertible into or exchangeable for Common Stock (without taking into
account any sales of Common Stock by Holder and without adjustment for any
subsequent issuances) as such Extra Securities are exercised for, converted
into or exchanged for Common Stock. This right granted to Holder shall
survive so long as any Extra Security is outstanding and not expired. The
exercise price for any additional shares purchased shall be the Current
Market Price on the original exercise date.
8. Fractional Shares. The Company shall not be required to issue fractional
Warrant Shares on the exercise of this Warrant. The number of full Warrant
Shares which shall be issuable upon the exercise of this Warrant shall be
computed on the basis of the aggregate number of Warrant Shares purchasable on
exercise of this Warrant so presented. If any fraction of a Warrant Share would,
except for the provisions of this Section 8, be issuable on the exercise of this
Warrant, the Company shall pay an amount in cash equal to the Exercise Price
multiplied by such fraction.
9. Notices. Any and all notices or other communications or deliveries
hereunder shall be in writing and shall be delivered personally, by facsimile,
sent by a nationally recognized overnight courier service or sent by registered
or certified mail, postage prepaid, addressed as follows: (1) if to the Company,
to AMERICAN INTERACTIVE MEDIA, INC., 000 Xxxxxxxx, Xxxxx 000, Xxx Xxxx, Xxx Xxxx
00000, Attention: Secretary, or to facsimile number (000) 000-0000; or (ii) if
to the Holder, to the Holder at the address or facsimile number appearing on the
Warrant Register or such other address or facsimile number as the Holder may
provide to the Company in accordance with this Section 9. Any notice or other
communications or deliveries hereunder shall be deemed given and effective on
the earliest of (i) the date of transmission, if delivered via facsimile at the
facsimile number specified in this Section 9, (ii) four (4) days after deposit
in the United States mails, (iii) the date when posted, if sent by nationally
recognized overnight courier service or (iv) upon actual receipt by the party to
whom such notice is required to be given.
10. Warrant Agent.
a. The Company shall serve as warrant agent under this Warrant. Upon thirty
(30) days' notice to the Holder, the Company and the Holder may appoint a new
warrant agent. Such new warrant agent shall be a corporation doing business
under the laws of the United States or any state thereof, in good standing and
having a combined capital and surplus of not less than U.S. $50,000,000. The
combined capital and surplus of any such new warrant agent shall be deemed to be
the combined capital and surplus as set forth in the most recent annual report
of its condition published by such warrant agent prior to its appointment;
provided that such reports are published at least annually pursuant to law or to
the requirements of a federal or state supervising or examining authority. After
acceptance in writing of such appointment by the new warrant agent, it shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named herein as the warrant agent, without any further
assurance, conveyance, act or deed, but if for any reason it shall be necessary
or expedient to execute and deliver any further assurance, conveyance, act or
deed the same shall be done at the expense of the Company and shall be legally
and validly executed and delivered by the Company.
b. Any corporation into which the Company or any new warrant agent may be
merged or any corporation resulting from any consolidation to which the Company
or any new warrant agent shall be a party or any corporation to which the
Company or any new warrant agent transfers substantially all of its corporate
trust or shareholders services business shall be a successor warrant agent under
this Warrant without any further act; provided that such corporation (i) would
be eligible for appointment as successor to the warrant agent under the
provisions of this Section 10 or (ii) is a wholly-
9
owned subsidiary of the warrant agent. Any such successor warrant agent shall
promptly cause notice of its succession as warrant agent to be mailed (by first
class mail, postage prepaid) to the Holder at the Holder's last address as shown
on the register maintained by the warrant agent pursuant to this Warrant.
11. Registration Rights.
The Holder and any holder of Warrant Shares issuable upon exercise of this
Warrant shall have registration rights with respect to the Warrant Shares as
provided for in the Securities Purchase Agreement between the Company and Holder
dated of even date herewith
12. Miscellaneous.
a. This Warrant shall be binding on and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. This Warrant may
be amended only in writing signed by the Company and the Holder.
b. Subject to Section 12(a), above, nothing in this Warrant shall be
construed to give to any person or corporation other than the Company, the
Holder and any registered holder of Warrant Shares any legal or equitable right,
remedy or cause under this Warrant; this Warrant shall be for the sole and
exclusive benefit of the Company, the Holder and any other registered holder of
Warrant Shares.
c. 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.
d. The headings herein are for convenience only, do not constitute a part
of this Warrant and shall not be deemed to limit or affect any of the provisions
hereof.
e. In case any one or more of the provisions of this Warrant shall be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Warrant shall not in any way be affected
or impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
10
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
by its authorized officer as of the date first indicated above.
AMERICAN INTERACTIVE MEDIA, INC.
By: /s/ Xxxx Xxxxx
---------------------------------
Name: Xxxx Xxxxx
Title: President
Accepted and agreed:
XXXXXXXXX DIGITAL, INC.
By: /s/ Xxxxxx Xxxxxxxx
---------------------------
Name:
Title:
11
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)
To American Interactive Media, Inc.:
In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase _____________
shares of Common Stock ("Common Stock"), par value $0.001 per share, of American
Interactive Media, Inc. and encloses herewith $________ in cash (or encloses
herewith evidence of payment of such sum), which sum represents the Exercise
Price (as defined in the Warrant) for the number of shares of Common Stock to
which this Form of Election to Purchase relates, together with any applicable
taxes payable by the undersigned pursuant to the Warrant.
The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER
(Please print name and address)
________________________________________________________________________________
Dated: ______________, ____ Name of Holder:
(Print)
(By:)
(Title:)
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the within
Warrant to purchase ____________ shares of Common Stock of AMERICAN INTERACTIVE
MEDIA, INC., to which the within Warrant relates and appoints ________________
attorney to transfer said right on the books of AMERICAN INTERACTIVE MEDIA,
INC., with full power of substitution in the premises.
Dated:
_______________, ____
_________________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant)
_________________________________
Address
In the presence of:
_____________________
