Exhibit 4(aj)
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.
WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK
(void after 5:00 p.m., New York City time, on October 11, 2007)
No. FP-1 2,000,000 Shares Dated as of October 11, 2002
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FOR VALUE RECEIVED, NCT GROUP, INC., a Delaware corporation (the
"Company"), as of the date hereof (the "Grant Date"), hereby issues this warrant
(the "Warrant") and certifies that FairPoint Communications, Inc. (the "Holder")
is granted the right, subject to the provisions of this Warrant, to purchase
from the Company, during the period commencing at 9:00 a.m. New York City local
time on the Grant Date and expiring, unless earlier terminated as hereinafter
provided, at 5:00 p.m. New York City local time on October 11, 2007 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 (the "Exercise Period"), up to Two Million (2,000,000) fully paid and
non-assessable shares of common stock, par value $.01 per share, of the Company
at a price of $0.15 per share (the "Exercise Price"). As used herein, "Common
Stock" means the shares of common stock, par value $.01 per share, of the
Company as constituted on the Grant Date, 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 Common Stock deliverable upon such exercise, as adjusted from
time to time, is sometimes referred to herein as the "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. This Warrant is issued,
and all the rights hereunder are held, subject to all of the conditions,
limitations and provisions set forth herein.
1. Exercise of Warrant.
1.1 Standard Exercise Procedure. This Warrant may be exercised in whole or
in part, at any time or from time to time, during the Exercise Period. Subject
to the restrictions and limitations set forth above, this Warrant may be
exercised by presentation and surrender of this Warrant to the Company at its
principal office, together with a completed and duly executed Warrant Exercise
Form in the form attached hereto as Exhibit 1 (the "Exercise Form"), 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 of Common Stock
specified in the Exercise Form and instruments of transfer, if appropriate, duly
executed by the Holder. If this Warrant is 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 to purchase the balance of the
shares purchasable hereunder. Upon receipt by the Company of this Warrant, an
executed Exercise Form, the Exercise Price and any appropriate instruments of
transfer, 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 upon exercise of this Warrant.
1.2 Warrant Exchange. Notwithstanding the foregoing or anything herein to
the contrary, at any time (prior to the expiration of the Exercise Period) in
which the Warrant Stock is not registered with the Securities and Exchange
Commission (the "SEC") under an effective registration statement, the Holder
may, at its option, exchange this Warrant, in whole or in part (a "Warrant
Exchange"), into the number of shares of Warrant Stock determined in accordance
with this Section 1.2, by surrendering this Warrant at the principal office of
the Company, accompanied by the Warrant Exchange Subscription Form, in the form
attached hereto as Exhibit 2, stating such Holder's intent to effect such
exchange, the portion of this Warrant which the Holder wishes to be exchanged
for shares of Warrant Stock and the date on which the Holder requests that such
Warrant Exchange occur (the "Notice of Exchange"). The Warrant Exchange shall
take place on the date specified in the Notice of Exchange or, if later, the
date the Notice of Exchange is received by the Company (the "Exchange Date").
Certificates for the shares of Warrant Stock issuable upon such Warrant Exchange
and, if applicable, a new Warrant of like tenor evidencing the rights of the
Holder to purchase the balance of the shares purchasable hereunder, shall be
issued as of the Exchange Date and delivered to the Holder within seven (7) days
following the Exchange Date. In connection with any Warrant Exchange, this
Warrant shall represent the right to subscribe for and acquire the number of
shares of Warrant Stock (rounded to the next highest integer) equal to (i) the
number of shares of Warrant Stock specified by the Holder in its Notice of
Exchange (the "Total Number") less (ii) the number of shares of Warrant Stock
equal to the quotient obtained by dividing (A) the product of the Total Number
and the Exercise Price by (B) the Market Price of Common Stock on the date of
the Notice of Exchange. "Market Price" means the closing price of the class of
stock of which the Warrant Stock is a part on the public market on which such
class of stock is predominantly traded (as of the date of this Warrant, the NASD
Over-The-Counter Electronic Bulletin Board) for the trading day immediately
preceding the date on which the Notice of Exchange is received by the Company.
If, at the time of the Warrant Exchange, the shares of stock of which the
Warrant Stock are a part are not publicly traded, the "Market Price" shall be
determined by independent appraisal.
2. Reservation of Shares. The Company shall 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, non-assessable and free of all pre-emptive
rights.
3. Warrant Stock.
3.1 Transfer Restrictions. The Warrant Stock may not be sold, exchanged,
transferred, assigned or otherwise disposed of unless it is 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
delivered to the Company 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.
3.2 Registration. At the Holder's request, the Company shall use its best
efforts, at its own expense, to register the Warrant Stock under the 1933 Act as
soon as practicable on the Company's next available SEC registration statement
(and thereafter, on any subsequently available registration statement until all
of the Warrant Stock is covered under a registration statement). The Company
shall provide the Holder written notice of its intention to file a registration
statement with the SEC no less than twenty-five (25) days prior to the filing of
such registration statement and the Holder shall have a period of ten (10) days
from its receipt of such notice to notify the Company in writing of its desire
to have the Warrant Stock registered on such registration statement. If a
registration statement covering Warrant Stock is declared effective by the SEC,
the Company shall use its best efforts to keep such registration statement
effective for a period of not less than one hundred eighty (180) days from its
effective date. In connection with the filing and maintenance of effectiveness
of a registration statement covering Warrant Stock, the Holder shall provide all
information reasonably requested of it regarding the Holder, the Warrant Stock
or the Holder's intended method(s) of distribution of the Warrant Stock. In
connection with any such registration, the Company shall undertake all such
actions and deliver to the Holder all such documents as are customarily
undertaken by a similarly situated issuer and customarily delivered to its
selling shareholders in connection with a registration under the 1933 Act.
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 or Assignment of Warrant. This Warrant is not
registered under the 1933 Act nor under any state securities law or regulation.
This Warrant may not 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 delivered
to the Company 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 Certain Dividends and Reclassifications. 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, in each such case, the Holder, upon the
exercise of this Warrant as provided in Section 1 hereof, shall be entitled to
receive, subject to the limitations and restrictions set forth herein, the
amount of securities and property (including cash in the cases referred to in
clauses (b) and (c) above) that 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 hereof 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 hereof.
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, in each
such case, the Holder, upon the exercise of this Warrant as provided in Section
1 hereof 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 hereof. 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
upon the exercise of this Warrant, the Company shall promptly compute such
adjustment in accordance with the terms of this Warrant and deliver to the
Holder 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 Price.
8.4 Notices of Record Date, Etc. In the event (a) the Company takes a
record of the holders of Common Stock (or other securities at the time
receivable upon the exercise of this 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, (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, in each such case, the Company shall deliver to the Holder a
notice specifying, as the case may be, the date on which such 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 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
fixed, in which the holders of record of Common Stock or such other securities
at the time receivable upon the exercise of this 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 of the
corporate event to which it relates, and this Warrant may be exercised no later
than five (5) days prior to the date of such corporate event (if during the
Exercise Period).
9. Legend. In the event of the exercise of this Warrant and the issuance of
any Warrant Stock hereunder, all certificates representing Warrant Stock shall
bear on the face thereof substantially the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL
IN FORM, SUBSTANCE AND SCOPE REASONABLY ACCEPTABLE TO THE
BORROWER THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. ANY SUCH
SALE, TRANSFER OR ASSIGNMENT MUST ALSO COMPLY WITH
APPLICABLE STATE SECURITIES LAWS.
10. Governing Law and Jurisdiction. This Warrant shall be governed by the
internal laws of the State of Delaware, without regard to the conflicts of laws
principles thereof. 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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FairPoint Communications, Inc. Xxxxxxx X. Xxxx, General Counsel
000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000 FairPoint Communications, Inc.
Charlotte, NC 28202 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Attention: Xxxxx X. Xxxxx, Senior V.P. Charlotte, NC 28202
Facsimile: 000-000-0000 Facsimile: 000-000-0000
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 set forth above.
NCT GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
Chairman & C.E.O.
EXHIBIT 1
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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, par value $.01 per
share, 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 common stock received upon exercise of the within Warrant shall be
made (i) pursuant to an effective registration statement under the Securities
Act of 1933, as amended (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.
Instructions if stock is to be issued to other than to the registered holder of
the within Warrant:
Name:
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Address:
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Social Security or Taxpayer Identification Number:
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Dated:
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Name of Warrant Holder
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Signature
EXHIBIT 2
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WARRANT EXCHANGE SUBSCRIPTION FORM
TO: NCT Group, Inc. (the "Company")
00 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Chief Financial Officer
The undersigned irrevocably elects to purchase ______ shares of Warrant
Stock of the Company by exercising the Warrant to which this form is attached by
surrendering _____ Warrants in exchange for such shares of Warrant Stock
determined pursuant to Section 1.2 of the Warrant. The undersigned requests that
the certificates representing the shares of Warrant Stock of the Company as to
which the Warrant is being exercised be registered as follows:
Name:
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Social Security or Employer Identification Number:
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Address:
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Deliver to:
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Address:
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If the number of shares of Warrant Stock as to which the Warrant is being
exercised are fewer than all the shares of Warrant Stock to which the Warrant
relates, please issue a new Warrant for the balance of such shares of Warrant
Stock registered in the name of the undersigned and deliver it to the
undersigned at the following address:
Address:
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Date: Signature:
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(Signature must conform with the name of
the Holder as specified on the face of
the Warrant)
