1
WARRANT AGREEMENT
NEITHER THESE WARRANTS NOR THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE
OF ANY WARRANTS HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE "BLUE SKY" OR SECURITIES LAWS OF ANY STATE AND MAY NOT BE
OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED, DISTRIBUTED OR
OTHERWISE DISPOSED OF UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT COVERING SUCH SALE OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENT
IS AVAILABLE, AND IF AN EXEMPTION SHALL BE AVAILABLE, THE COMPANY RECEIVES AN
OPINION OF COUNSEL STATING THAT SUCH OFFER, SALE, TRANSFER, ASSIGNMENT, PLEDGE,
HYPOTHECATION, DISTRIBUTION OR OTHER DISPOSITION IS EXEMPT FROM THE REGISTRATION
AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT. THE RESTRICTIONS CONTAINED
HEREIN ARE BINDING ON THE HOLDER HEREOF AND HIS SUCCESSORS AND ASSIGNS.
Void after 5:00 P.M. Eastern Standard time, on the Warrant Expiration Date.
WARRANTS TO PURCHASE 30,000 SHARES
OF COMMON STOCK OF
AD-STAR SERVICES, INC.
Ad-Star Services, Inc., a New York corporation (the "Company"), in consideration
of the payment of ONE THOUSAND FIVE HUNDRED DOLLARS ($1,500), receipt of which
is hereby acknowledged, hereby grants, issues and sells to XXXXXXXX XXXXX 30,000
warrants (the "Warrants"), each entitling Xxxxxxxx Xxxxx and his permitted
assigns (each, a "Holder"), on the terms and conditions set forth herein, to
purchase one (1) fully paid and nonassessable share of Common Stock of the
Company, at a purchase price of $7.50 per share (the "Warrant Exercise Price"),
at any time or from time to time during the Warrant Exercise Period (as defined
herein), subject to adjustment as herein provided. (Hereinafter, (i) said
2
shares of Common Stock, together with any other equity securities which may be
issued by the Company with respect thereto or in substitution therefor, is
referred to as the "Common Stock", (ii) the shares of the Common Stock
purchasable under the Warrants are referred to as the "Warrant Shares", (iii)
the holder of the Warrant is referred to as the "Holder," and (iv) the Warrants
and the Warrant Shares are referred to as the "Securities.") The number of
Warrant Shares issuable upon exercise of each Warrant and the Warrant Exercise
Price are subject to adjustment as hereinafter provided. The "Warrant Exercise
Period" shall commence on the date hereof (the "Exercise Commencement Date") and
shall terminate on June 30, 2002 (the "Warrant Expiration Date"). The number of
Warrants, the Warrant Shares and the Warrant Exercise Price have been determined
on the assumption that the Company will be reincorporated in Delaware, that
3,000,000 shares of the Common Stock of the Delaware corporation shall be issued
in connection therewith and that the Delaware corporation shall sell 2,000,000
shares of its Common Stock in an initial public offering ("IPO") at a price to
the public of $7.50 per share in accordance with a letter of intent dated April
16, 1999 between the Company and Xxxxxxx Investment Company, Inc. (the
"Recapitalization"). In the event that the IPO price or the number of shares
sold in the IPO are changed, the Warrant Exercise Price and/or the number of
Warrants shall be appropriately adjusted. For all purposes herein upon the
conclusion of the Recapitalization, the "Company" shall refer to the successor
Delaware corporation and the "Common Stock", "Warrant Shares" and the "Warrant"
shall refer to the Common Stock or Warrant as the case may be of the Delaware
corporation.
2
3
1. EXERCISE OF WARRANTS.
(a) Each Warrant may be exercised at any time during the Warrant
Exercise Period, by the Holder of such Warrant by the surrender of this
agreement (with the subscription form at the end hereof duly executed) at the
address set forth in Section 13(a) hereof, together with proper payment of the
Warrant Exercise Price.
Upon exercise of each Warrant, the Company shall issue and deliver to
the Holder certificates for the Common Stock within ten (10) business days after
such exercise and the person exercising shall be deemed to be the holder of
record of the Common Stock issuable upon such exercise.
No Warrant shall be exercisable after 5:00 P.M., Eastern Standard Time,
on the Warrant Expiration Date.
(b) Upon each exercise of the Warrants, and upon surrender by the
Holder of this agreement, the Company shall execute and deliver to the Holder a
replacement agreement, which will reflect the exercise of such number of
Warrants.
2. EFFECT OF CERTAIN CHANGES. In case of any reorganization or
reclassification of the Common Stock, or a consolidation or merger of the
Company with any other corporation (other than a wholly-owned subsidiary of the
Company), or in case of any sale or transfer of all or substantially all of the
assets of the Company, pursuant to which all of the outstanding shares of the
Common Stock are converted into other securities or property, the Company shall
make appropriate provision or cause appropriate provision to be made so that
each Holder shall have the right thereafter to obtain upon exercise of each
Warrant the kind and amount of shares of stock and other securities and property
receivable upon such consolidation, merger or sale by a holder of the number of
shares of Common Stock for which the Warrant may be exercised
3
4
prior to the effective date of such consolidation, merger or sale. If, in
connection with any such consolidation, merger or sale, each holder of shares of
Common Stock is entitled to elect to receive either securities, cash, or other
assets upon completion of such transaction, the Company shall provide or cause
to be provided to each Holder the right to elect the securities, cash, or other
assets for which each Warrant may be exercised by the Holder subject to the same
conditions applicable to holders of Common Stock (including, without limitation,
notice of the right to elect, limitations on the period in which such election
shall be made, and the effect of failing to exercise such election). The Company
shall not effect any such transaction unless the provisions of this Section 2
have been complied with. The above provisions shall similarly apply to
successive reorganizations, reclassifications, mergers or consolidations.
3. ADJUSTMENT OF WARRANT EXERCISE PRICE AND NUMBER OF SECURITIES
ISSUABLE UPON EXERCISE OF WARRANTS.
(a) (i) In case the Company shall, at any time or from time to time
after the date hereof, pay a dividend or make a distribution on its shares of
Common Stock in shares of Common Stock, subdivide or reclassify its outstanding
Common Stock into a greater number of shares, or combine or reclassify its
outstanding Common Stock into a smaller number of shares, the Warrant Exercise
Price in effect at the time of the record date for such dividend or distribution
or of the effective date of such subdivision, combination or reclassification
shall be proportionately adjusted so that the holder of each Warrant exercised
after such date shall be entitled to receive the aggregate number and kind of
shares which, if such Warrant had been exercised immediately prior to such time,
he would have owned upon such exercise and been entitled to receive upon such
dividend, subdivision, combination or reclassification. Such
4
5
adjustment shall be made successively whenever any event listed in this Section
3(a) shall occur.
(ii) Whenever the Warrant Exercise Price payable upon exercise
of each Warrant is adjusted pursuant to Section 3(a)(i) hereof, the number of
shares of Common Stock purchasable upon exercise of each Warrant shall
simultaneously be adjusted by multiplying the number of shares issuable upon
exercise of each Warrant in effect on the date immediately prior to such
adjustment by the Warrant Exercise Price in effect on such date and dividing the
product so obtained by the Warrant Exercise Price, as adjusted.
(b) The Company may retain a firm of independent public accountants of
recognized standing selected by the Board of Directors (who may be the regular
accountants employed by the Company) to make any computation or determination
required by this Section 3, and a certificate signed by such firm shall be
conclusive evidence of the correctness of such adjustment.
(c) After each adjustment of the Warrant Exercise Price pursuant to
this Section 3, the Company will promptly prepare a certificate signed by the
President, Vice President or Treasurer of the Company setting forth: (A) the
Warrant Exercise Price as so adjusted, (B) the number of shares of Common Stock
purchasable upon exercise of each Warrant after such adjustment, and (C) a brief
statement of the facts accounting for such adjustment. The Company will promptly
cause such certificate to be sent by first class mail to the Holder at his/her
last address as it shall appear herein. Failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of the
transaction. The affidavit of an officer of the Company that such notice has
been mailed shall, in the absence of fraud, be prima facie evidence of the facts
stated therein. In addition, upon surrender by the Holder of
5
6
this agreement, or of evidence satisfactory to the Company of the loss, theft,
destruction or mutilation of this agreement, and of an unsecured indemnity from
the Holder reasonably satisfactory to the Company, if lost, stolen or destroyed,
the Company shall execute and deliver to the Holder a replacement to this
agreement, which will reflect the Warrant Exercise Price as so adjusted and the
number of shares of Common Stock purchasable upon exercise of each Warrant after
such adjustment.
(d) Any determination as to whether an adjustment in the Warrant
Exercise Price in effect hereunder is required pursuant to Section 3, or as to
the amount of any such adjustment, if required, shall be binding upon the Holder
if made in good faith by the Board of Directors of the Company.
4. FRACTIONAL WARRANTS AND FRACTIONAL SHARES. If the number of shares
of Common Stock purchasable upon the exercise of each Warrant is adjusted
pursuant to Section 3 hereof, the Company shall not be required to issue
fractions of shares upon exercise of the Warrants. When multiple Warrants are
exercised by a Holder at the same time, the aggregate number of Warrant Shares
issuable as a result of such exercise (including fractional shares) shall be
rounded down to the nearest whole number of shares and such whole number of
shares only shall be issued to the Holder. With respect to any such fraction of
a share called for upon any exercise of a Warrant, the Company shall pay to the
Holder an amount in cash equal to such fraction multiplied by the Warrant
Exercise Price then in effect.
5. RESERVATION OF WARRANT SHARES. The Company agrees that, prior to the
expiration of the Warrants, the Company will at all times have authorized and
reserved, and will keep available, solely for issuance or delivery upon the
exercise of the Warrants, the
6
7
number of shares of the Common Stock as from time to time shall be receivable
upon the exercise of the Warrants.
6. FULLY PAID STOCK; TAXES. The Company agrees that the shares of the
Common Stock represented by each and every certificate for Warrant Shares
deliverable on the exercise of each Warrant shall, at the time of such delivery,
be validly issued and outstanding, fully paid and nonassessable, and not subject
to preemptive rights, and the Company will take all such actions as may be
necessary to ensure that the par value or stated value, if any, per share of the
Common Stock is at all times equal to or less than the then Warrant Exercise
Price. The Company further covenants and agrees that it will pay, when due and
payable, any and all Federal and state stamp, original issue or similar taxes
that may be payable in respect of the issue of any Warrant Shares or certificate
therefor.
7. TRANSFER.
(a) SECURITIES LAWS. The Securities have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or under any state
securities laws, and, unless so registered, may not be transferred, sold,
pledged, hypothecated or otherwise disposed of unless an exemption from such
registration is available. In the event the Holder desires to transfer any
Securities issued and such transfer is not otherwise prohibited, the Holder must
give the Company prior written notice of such proposed transfer including the
name and address of the proposed transferee. Such transfer may be made only
either (i) upon publication by the Securities and Exchange Commission (the
"Commission") of a ruling, interpretation, opinion or "no action letter" based
upon facts presented to said Commission, or (ii) upon receipt by the Company of
an opinion of counsel to the Company to the effect that the proposed transfer
will not violate the provisions of the Securities Act, the Securities and
7
8
Exchange Act of 1934, as amended (the "Exchange Act"), the rules and regulations
promulgated under either such act, or any applicable state securities or "blue
sky" laws, or in the case the Security to be sold or transferred has been
registered under the Securities Act, that there is in effect a registration
statement in which is included a prospectus meeting the requirements of Section
10(a) of the Securities Act, which is being or will be delivered to the
purchaser or transferee at or prior to the time of delivery of the certificates
or agreements evidencing the Securit(ies) to be sold or transferred.
(b) CONDITIONS TO TRANSFER. Prior to any such proposed transfer, and as
a condition thereto, if such transfer is not made pursuant to an effective
registration statement under the Securities Act, the Holder will, if requested
by the Company, deliver to the Company (i) an investment covenant signed by the
proposed transferee, (ii) an agreement by such transferee to the impression of
the restrictive investment legend set forth herein on the certificate,
certificates or agreement representing the Securities acquired by such
transferee, (iii) an agreement by such transferee that the Company may place a
"stop transfer order" with its transfer agent or registrar, and (iv) an
agreement by the transferee to indemnify the Company to the same extent as set
forth in the next succeeding paragraph.
(c) INDEMNITY. The Holder acknowledges that the Holder understands the
meaning and legal consequences of this Section 7, and the Holder hereby agrees
to indemnify and hold harmless the Company, its representatives and each officer
and director thereof from and against any and all loss, damage or liability
(including all attorneys' fees and costs incurred in enforcing this indemnity
provision) due to or arising out of (a) the inaccuracy of any representation or
the breach of any warranty of the Holder contained in, or any other breach of,
this agreement, (b) any transfer of the Securities in violation of the
Securities Act, the
8
9
Exchange Act or the rules and regulations promulgated under either of such acts,
(c) any transfer of the Securities not in accordance with this agreement, or (d)
any untrue statement or omission to state material fact in connection with the
investment representations or with respect to the facts and representations
supplied by the Holder to counsel to the Company upon which its opinion as to a
proposed transfer shall have been based.
(d) TRANSFER. The Warrants and the Warrant Shares may be transferred by
the Holder in whole or in part at any time or from time to time, except as
otherwise restricted hereby. Upon surrender of the Warrants to the Company or at
the office of its stock transfer agent, if any, with assignment documentation
duly executed and funds sufficient to pay any transfer tax, and upon compliance
with the foregoing provisions, the Company shall, without charge, execute and
deliver a new agreement covering the Securities in the name of the assignee
named in such instrument of assignment, and this agreement shall promptly be
canceled. Any assignment, transfer, pledge, hypothecation or other disposition
of the Securities attempted contrary to the provisions hereby, or any levy of
execution, attachment or other process attempted upon the Warrants, shall be
null and void and without effect.
(e) LEGEND AND STOP TRANSFER ORDERS. Unless the Warrant Shares have
been registered under the Securities Act, upon exercise of any of the Warrants
and the issuance of any of the Warrant Shares, the Company shall instruct its
transfer agent to enter stop transfer orders with respect to such shares, and
all certificates representing Warrant Shares shall bear on the face thereof
substantially the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE "BLUE
SKY" OR SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED,
SOLD, PLEDGED, HYPOTHECATED, ASSIGNED
9
10
OR TRANSFERRED, AND ANY TRANSFER OR PURPORTED TRANSFER SHALL
NOT BE OPERABLE UNDER THE UNIFORM COMMERCIAL CODE, AND THE
COMPANY SHALL HAVE NO DUTY TO REGISTER A TRANSFER OF THESE
SECURITIES EXCEPT (i) PURSUANT TO A REGISTRATION STATEMENT
UNDER THE SECURITIES ACT WHICH HAS BECOME EFFECTIVE AND IS
CURRENT WITH RESPECT TO THESE SECURITIES, OR (ii) PURSUANT TO
A SPECIFIC EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF ANY APPLICABLE "BLUE SKY" OR SIMILAR STATE SECURITIES
LAWS, BUT ONLY UPON A HOLDER HEREOF FIRST HAVING OBTAINED THE
WRITTEN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY THAT THE PROPOSED DISPOSITION IS CONSISTENT WITH ALL
APPLICABLE PROVISIONS OF THE SECURITIES ACT AS WELL AS ANY
APPLICABLE "BLUE SKY" OR SIMILAR STATE SECURITIES LAW. THESE
SECURITIES ARE GOVERNED BY THE TERMS OF A WARRANT AGREEMENT
BETWEEN THE COMPANY AND THE HOLDER HEREOF, DATED AS OF JUNE
__, 1999. THE RESTRICTIONS CONTAINED HEREIN ARE BINDING ON THE
HOLDER HEREOF AND HIS/HER SUCCESSORS AND ASSIGNS.
8. REGISTRATION OPTIONS.
(a) PIGGYBACK REGISTRATION.
(i) The Company shall advise the Holder (or permitted assignee
thereof) by written notice at least thirty (30) days prior to the filing of any
registration statement or post-effective amendment to a registration statement
under the Securities Act covering Common Stock of the Company (other than a
registration statement on Form S-4 or Form S-8 or any successor forms thereto),
which will qualify as a Qualified Offering (defined below), and shall, upon the
written request of the Holder to be received no later than 15 (fifteen) days
thereafter and subject to Section 8(a)(iv) hereof, include in any such
registration statement or post-effective amendment to a registration statement,
such information as may be required to permit
10
11
a public offering of the Warrant Shares held by or issuable upon the exercise of
the Holder's Warrants (the "Registrable Securities"). (A "Qualified Offering"
shall be defined as an underwritten public offering, other than an initial
public offering, of securities of the Company, for the Company's own account,
pursuant to the Securities Act for cash, which offering places a market
capitalization on the Company, calculated prior to receipt of the proceeds of
the offering, of no less than thirty-seven million, five hundred thousand
dollars ($37,500,000).)
(ii) The Company shall (i) supply prospectuses and such other
documents as the Holder may request in order to facilitate the public sale or
other disposition of the Registrable Securities, (ii) use its best efforts to
register and qualify any of the Registrable Securities for sale in such states
as the Holder designates, provided that the Company shall not be required to
qualify as a foreign corporation or a dealer in securities or execute a general
consent to service of process in any jurisdiction in any action, (iii) shall do
any and all other acts and things which may be reasonably necessary or desirable
to enable the Holder to consummate the public sale or other disposition of the
Registrable Securities, and (iv) furnish indemnification in the manner provided
in Section 8(a)(vi) hereof.
(iii) The Holder shall furnish information and indemnification
as set forth in Section 8(a)(vi) hereof, except that the maximum indemnification
amount which may be recovered from the Holder shall be limited to the amount of
proceeds received by the Holder from the sale of the Registrable Securities.
(iv) The Company shall use its best efforts to cause the
managing underwriter or underwriters to permit the Holder of Registrable
Securities requested to be included in the registration to include such
securities in such underwritten offering on the same terms and
11
12
conditions as any similar securities of the Company included therein.
Notwithstanding the foregoing, if the managing underwriter or underwriters of
such offering advises the Holder of the Registrable Securities that the total
amount of securities which they intend to include in such offering is such as to
materially and adversely affect the success of such offering, then the amount of
securities to be offered for the account of the Holder of Registrable Securities
shall be eliminated, reduced, or limited to the extent necessary to reduce the
total amount of securities to be included in such offering to the amount, if
any, recommended by such managing underwriter or underwriters (any such
reduction or limitation in the total amount of Registrable Securities to be
included in such offering to be borne by the holders of Securities of other
stockholders proposed to be included therein on a pro rata basis).
(v) The holder of Registrable Securities shall be responsible
for his/her own separate legal fees and expenses and any underwriting discounts
and commissions on the securities sold by the Holder, and shall not be
responsible for any other expenses of such registration, including the
incremental state and federal filing fees associated with the securities sold by
the Holder.
(vi) (1) Whenever, pursuant to and in accordance with this
Section 8(a), a registration statement is filed, amended or supplemented, the
Company shall indemnify and hold harmless each holder of the securities covered
by such registration statement, amendment or supplement (a "Distributing
Holder") against any losses, claims, damages, or liabilities, joint or several,
to which the Distributing Holder, or any such controlling person (within the
meaning of the Securities Act) thereof, may become subject, under the Securities
Act or otherwise, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of material fact
12
13
contained in any such registration statement or any preliminary prospectus or
final prospectus constituting a part thereof or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; and shall reimburse the Distributing
Holder for any legal and other expenses reasonably incurred by the Distributing
Holder in connection with investigating or defending any such loss, claim,
damage, or liability, or action; provided, however, that the Company shall not
be liable in any such case to the extent, but only to the extent, that any such
loss, claim, damage or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, such preliminary prospectus, such final prospectus,
or such amendment or supplement in reliance upon and in conformity with written
information furnished by such Distributing Holder in his/her capacity as such,
for use in the preparation thereof.
(2) The Distributing Holder shall indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed such registration statement or any preliminary prospectus or final
prospectus constituting a part thereof or such amendments and supplements
thereto, each person, if any, who controls the Company (within the meaning of
the Securities Act) against any losses, claims, damages, or liabilities, joint
or several, to which the Company or any such director, officer or controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any such registration statement or any preliminary
prospectus or final prospectus constituting a part thereof or any amendment or
13
14
supplement thereto, or arise out of or are based upon the omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in such registration statement, such preliminary
prospectus, such final prospectus, or such amendment or supplement in reliance
upon and in conformity with written information furnished by such Distributing
Holder, in his/her capacity as such, for use therein, and shall reimburse the
Company or any such director, officer or controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action.
(3) Promptly after receipt by an indemnified party of
notice of the commencement of any action covered by this Section 8(a)(vi), such
indemnified party shall, if a claim in respect thereof is to be made by the
indemnified party against any indemnifying party, give the indemnifying party
notice of the commencement thereof. The omission so to notify the indemnifying
party of the commencement of any such action shall not relieve the indemnifying
party from any liability which it may have to any indemnified party under this
Section 8(a)(vi), unless and to the extent the relevant indemnifying party is
prejudiced as a result of such omission.
(4) In case any action covered by this Section
8(a)(vi) is brought against any indemnified party, and the indemnified party
notifies an indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate in, and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party,
and after
14
15
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 8(a)(vi) for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof.
(vii) The piggyback registration rights provided in this
Section 8(a) shall remain in effect until the Warrant Expiration Date.
(b) NO OTHER REGISTRATION OPTIONS. Except as otherwise provided in this
Section 8, the Company shall have no obligation to register the Securities.
9. REDEMPTION.
(a) On not less than thirty (30) days written notice given, at any time
after 6 months following the Exercise Commencement Date, the Warrants may be
redeemed at the option of the Company, at a redemption price of $0.01 per
Warrant, provided that (i) the Market Price of the Warrant Shares issuable upon
exercise of the Warrant shall equal or exceed 4 x an amount equal to the Warrant
Exercise Price per share (the "Target Price"), subject to adjustment as set
forth in Section 3 above, (ii) the resale of the Warrant Shares issuable upon
exercise of the Warrants shall be subject to an effective registration statement
under the Securities Act or are fully saleable under Rule 144 under the
Regulations under the Securities Act, and (iii) the Holder of the Warrants is
not then subject to a lock-up agreement or restriction on resale of Common
Stock. "Market Price" for the purpose of this Section 9 shall mean (i) the
average closing bid price for any ten (10) consecutive trading days within a
period of thirty (30) consecutive trading days ending within five (5) days prior
to the date of the notice of redemption, which notice shall be mailed no later
than five (5) days thereafter, of the Common Stock as reported by the National
Association of Securities Dealers, Inc. Automatic
15
16
Quotation System, or (ii) the last reported sale price, for ten (10) consecutive
business days, ending within five (5) days of the date of the notice of
redemption, which notice shall be mailed no later than five (5) days thereafter,
on the primary exchange on which the Common Stock is traded, if the Common Stock
is traded on a national securities exchange.
(b) If the Company desires to exercise its right to redeem the
Warrants, it shall mail a notice of redemption to each Holder of the Warrants to
be redeemed, first class, postage prepaid, not later than the thirtieth day
before the date fixed for redemption, at his or her last address as shall appear
on the records maintained by the Company. Any notice mailed in the manner
provided herein shall be conclusively presumed to have been duly given whether
or not the Holder receives such notice.
(c) The notice of redemption shall specify (i) the redemption price,
(ii) the date fixed for redemption, (iii) the place where the Warrants shall be
delivered and the redemption price paid, and (iv) that the right to exercise the
Warrants shall terminate at 5:00 P.M. New York City local time on the business
day immediately preceding the date fixed for redemption. The date fixed for the
redemption of the Warrant shall be the Redemption Date. No failure to mail such
notice nor any defect therein or in the mailing thereof shall affect the
validity of the proceedings for such redemption except as to a Holder (a) to
whom notice was not mailed or (b) whose notice was defective. An affidavit of
the Secretary or an Assistant Secretary of the Company (or Warrant Agent, if
applicable) that notice of redemption has been mailed shall, in the absence of
fraud, be prima facie evidence of the facts stated therein.
(d) Any right to exercise a Warrant shall terminate at 5:00 P.M. (New
York City local time) on the business day immediately preceding the Redemption
Date. On and after the
16
17
Redemption Date, the Holder of the Warrants shall have no further rights except
to receive, upon surrender of the Warrant, the Redemption Price.
(e) From and after the Redemption Date specified, the Company shall, at
the place specified in the notice of redemption, upon presentation and surrender
to the Company by or on behalf of the Holder thereof of one or more warrant
agreements evidencing Warrants to be redeemed, deliver or cause to be delivered
to or upon the written order of the Holder a sum in cash equal to the redemption
price of each such Warrant. From and after the Redemption Date and upon the
deposit or setting aside by the Company of a sum sufficient to redeem all the
Warrants called for redemption, such Warrants shall expire and become void and
all rights hereunder and under the warrant agreement, except the right to
receive payment of the redemption price, shall cease.
(f) If the shares of the Company's Common Stock are subdivided or
combined into a greater or smaller number of shares of Common Stock, the Target
Price shall be proportionally adjusted by the ratio which the total number of
shares of Common Stock outstanding immediately prior to such event bears to the
total number of shares of Common Stock to be outstanding immediately after such
event.
10. LOCK-UP. The Holder agrees that, in the event of a public offering
of newly issued securities of Common Stock, for the Company's own account,
pursuant to the Securities Act, for cash, and the underwriter in such offering
requires the principal shareholders of the Company to agree to a lock-up period
during which such shareholders will not dispose of or pledge their shares, the
Holder will agree to the lock-up period prescribed by the underwriter, which
lock-up may include any of the Securities.
17
18
11. LOSS, ETC. OF WARRANT. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this agreement or any
replacement thereto, and of an unsecured indemnity from the Holder reasonably
satisfactory to the Company, if lost, stolen or destroyed, and upon surrender
and cancellation of this agreement, if mutilated, the Company shall execute and
deliver to the Holder a new agreement of like date, tenor and denomination.
12. INJUNCTIVE RELIEF. The parties hereto agree that the remedy at law
for any breach of this agreement is inadequate and that should any dispute arise
concerning the sale or disposition of stock, an injunction may be issued,
including an injunction restraining any sale or disposition pending the
determination of such controversy. Such remedy shall, however, be cumulative and
not exclusive, and shall be in addition to any other remedy which the parties
may have.
13. SUCCESSORS AND ASSIGNS. This Agreement and all of its provisions
shall be binding upon the respective transferees, successors, assigns, heirs,
legatees, executors, administrators and personal representatives of the parties
hereto. This Agreement shall in all respects be governed by, regulated and
construed under and in accordance with the laws of the State of New York.
14. HOLDER NOT HOLDER. Except as otherwise provided herein, this
agreement does not confer upon the Holder any right to vote or to consent to or
receive notice as a stockholder of the Company, as such, in respect of any
matters whatsoever, or any other rights or liabilities as a stockholder, prior
to the exercise hereof.
18
19
15. COMMUNICATION. No notice or other communication under this
agreement shall be effective unless the same is in writing and is mailed by
first-class mail, postage prepaid, addressed to:
(a) the Company at 0000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx xxx Xxx,
Xxxxxxxxxx 00000 or such other address as the Company has designated in writing
to the Holder, with a copy to Morse, Zelnick, Rose & Lander, LLP, 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn.: Xxxxxx X. Xxxxx, Esq.
(b) the Holder at _______________________________ or such other address
as the Holder has designated in writing to the Company, with a copy to
_______________________ Attn.: _______________.
16. RESCISSION. If in connection with any proposed underwritten initial
public offering of any of the Company's capital stock, the Managing Underwriter
or Underwriters advise the Company that this Warrant will be treated as
underwriters compensation by the NASD and will affect the amount of compensation
such underwriters will be entitled to take in connection with such initial
public offering the Company may elect to rescind this agreement by cancelling
the Warrant and returning to the Holder the $1,500 received in connection with
its issuance.
17. HEADINGS. The headings of this agreement have been inserted as a
matter of convenience and shall not affect the construction hereof.
18. APPLICABLE LAW; VENUE. This agreement shall be governed by and
construed in accordance with the laws of the State of New York. Any action
relating to this agreement, the Warrants, the Options or the Warrant Shares
shall be brought in a court located within New York County, New York.
19
20
XXXXXXXX XXXXX
________________________________________
AD-STAR SERVICES, INC.
By: ____________________________________
Name:
Title:
Agreed and Accepted as of ________ __, 1999
20
21
SUBSCRIPTION FORM
To be Executed by the Holder
in Order to Exercise Warrant
The undersigned Holder hereby irrevocably elects to exercise
______ Warrants represented by this agreement, and to purchase the securities
issuable upon the exercise of such Warrants, and requests that certificates for
such securities shall be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
___________________________________________
___________________________________________
___________________________________________
[please print or type name and address]
and be delivered to
___________________________________________
___________________________________________
___________________________________________
[please print or type name and address]
If the exercise of the within Warrant was solicited by a
member of the National Association of Securities Dealers, Inc. please write the
name of the NASD member in the space below.
________________________________________
(Name of NASD Member)
Dated:_____________________ X_______________________________________
________________________________________
________________________________________
________________________________________
Taxpayer Identification Number
________________________________________
Signature Guaranteed
________________________________________
