THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR
TRANSFER.
AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. HOLDERS
MUST RELY ON THEIR OWN ANALYSIS OF THE INVESTMENT AND ASSESSMENT OF THE
RISKS INVOLVED. SEE THE RISK FACTORS SET FORTH UNDER THAT CERTAIN
INVESTMENT AGREEMENT BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT J.
Warrant to Purchase
"N" shares Warrant Number ____
Warrant to Purchase Common Stock
of
ECOM XXXX.XXX, INC.
THIS CERTIFIES that Xxxxxx Private Equity, LLC or any subsequent
holder hereof ("Holder"), has the right to purchase from eCom xXxx.xxx,
Inc., a Florida corporation (the "Company"), up to "N" fully paid and
nonassessable shares, wherein "N" is defined below, of the Company's common
stock, $.0001 par value per share ("Common Stock"), subject to adjustment
as provided herein, at a price equal to the Exercise Price as defined in
Section 3 below, at any time beginning on the Date of Issuance (defined
below) and ending at 5:00 p.m., New York, New York time the date that is
five (5) years after the Date of Issuance (the "Exercise Period");
provided, that, with respect to each "Put," as that term is defined in that
certain Investment Agreement (the "Investment Agreement") by and between
the initial Holder and Company, dated on or about May 12, 1999, "N" shall
equal eight percent (8%) of the number of shares of Common Stock purchased
by the Holder in that Put.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of the Company (this "Warrant") is issued and all rights hereunder
shall be held subject to all of the conditions, limitations and provisions
set forth herein.
1. Date of Issuance and Term.
This Warrant shall be deemed to be issued on _____________, ______
("Date of Issuance"). The term of this Warrant is five (5) years from the
Date of Issuance.
2. Exercise.
(a) Manner of Exercise. During the Exercise Period, this Warrant may
be exercised as to all or any lesser number of full shares of Common Stock
covered hereby (the "Warrant Shares") upon surrender of this Warrant, with
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the Exercise Form attached hereto as Exhibit A (the "Exercise Form") duly
completed and executed, together with the full Exercise Price (as defined
below) for each share of Common Stock as to which this Warrant is
exercised, at the office of the Company, Attention: Xxxxx X. Xxxxxx, 0000
Xxxxxxxx Xx., Xxxxx X0, Xxxxxxx Xxxxx, XX 00000, Telephone: (000) 000-0000
x104, Facsimile: (000) 000-0000, or at such other office or agency as the
Company may designate in writing, by overnight mail, with an advance copy
of the Exercise Form sent to the Company and its Transfer Agent by
facsimile (such surrender and payment of the Exercise Price hereinafter
called the "Exercise of this Warrant").
(b) Date of Exercise. The "Date of Exercise" of the Warrant shall be
defined as the date that the advance copy of the completed and executed
Exercise Form is sent by facsimile to the Company, provided that the
original Warrant and Exercise Form are received by the Company as soon as
practicable thereafter. Alternatively, the Date of Exercise shall be
defined as the date the original Exercise Form is received by the Company,
if Holder has not sent advance notice by facsimile. The Company shall not
be required to deliver the shares of Common Stock to the Holder until the
requirements of Section 2(a) above are satisfied.
(c) Cancellation of Warrant. This Warrant shall be canceled upon the
Exercise of this Warrant, and, as soon as practical after the Date of
Exercise, Holder shall be entitled to receive Common Stock for the number
of shares purchased upon such Exercise of this Warrant, and if this Warrant
is not exercised in full, Holder shall be entitled to receive a new Warrant
(containing terms identical to this Warrant) representing any unexercised
portion of this Warrant in addition to such Common Stock.
(d) Holder of Record. Each person in whose name any Warrant for
shares of Common Stock is issued shall, for all purposes, be deemed to be
the Holder of record of such shares on the Date of Exercise of this
Warrant, irrespective of the date of delivery of the Common Stock purchased
upon the Exercise of this Warrant. Nothing in this Warrant shall be
construed as conferring upon Holder any rights as a stockholder of the
Company.
3. Payment of Warrant Exercise Price.
The Exercise Price ("Exercise Price"), shall initially equal $Y per
share ("Initial Exercise Price"), where "Y" shall equal 110% of the Market
Price ending on the Pricing Period End Date (as both are defined in the
Investment Agreement) for the applicable Put or, if the Date of Exercise is
more than six (6) months after the Date of Issuance, the lesser of (i) the
Initial Exercise Price or (ii) the "Lowest Reset Price," as that term is
defined below. The Company shall calculate a "Reset Price" on each six-
month anniversary date of the Date of Issuance which shall equal one
hundred and ten percent (110%) of the Market Price ending on such six-month
anniversary date of the Date of Issuance. The "Lowest Reset Price" shall
equal the lowest Reset Price determined on any six-month anniversary date
of the Date of Issuance preceding the Date of Exercise, taking into
account, as appropriate, any adjustments made pursuant to Section 5 hereof.
Payment of the Exercise Price may be made by either of the following,
or a combination thereof, at the election of Holder:
(i) Cash Exercise: cash, bank or cashiers check or wire transfer; or
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(ii) Cashless Exercise: subject to the last sentence of this Section
3, surrender of this Warrant at the principal office of the Company
together with notice of cashless election, in which event the Company shall
issue Holder a number of shares of Common Stock computed using the
following formula:
X = Y (A-B)/A
where: X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock for which this Warrant is
being exercised.
A = the Market Price of one (1) share of Common Stock (for purposes of this
Section 3(ii), the "Market Price" shall be defined as the average Closing
Bid Price of the Common Stock for the five (5) trading days prior to the
Date of Exercise of this Warrant (the "Average Closing Price"), as reported
by the O.T.C. Bulletin Board, National Association of Securities Dealers
Automated Quotation System ("Nasdaq") Small Cap Market, or if the Common
Stock is not traded on the Nasdaq Small Cap Market, the Average Closing
Price in any other over-the-counter market; provided, however, that if the
Common Stock is listed on a stock exchange, the Market Price shall be the
Average Closing Price on such exchange for the five (5) trading days prior
to the date of exercise of the Warrants. If the Common Stock is/was not
traded during the five (5) trading days prior to the Date of Exercise, then
the closing price for the last publicly traded day shall be deemed to be
the closing price for any and all (if applicable) days during such five (5)
trading day period.
B = the Exercise Price.
For purposes hereof, the term "Closing Bid Price" shall mean the
closing bid price on the O.T.C. Bulletin Board, the National Market System
("NMS"), the New York Stock Exchange, the Nasdaq Small Cap Market, or if no
longer traded on the O.T.C. Bulletin Board, the NMS, the New York Stock
Exchange, the Nasdaq Small Cap Market, the "Closing Bid Price" shall equal
the closing price on the principal national securities exchange or the
over-the-counter system on which the Common Stock is so traded and, if not
available, the mean of the high and low prices on the principal national
securities exchange on which the Common Stock is so traded.
For purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is
intended, understood and acknowledged that the Common Stock issuable upon
exercise of this Warrant in a cashless exercise transaction shall be deemed
to have been acquired at the time this Warrant was issued. Moreover, it is
intended, understood and acknowledged that the holding period for the
Common Stock issuable upon exercise of this Warrant in a cashless exercise
transaction shall be deemed to have commenced on the date this Warrant was
issued.
Notwithstanding anything to the contrary contained herein, this
Warrant may not be exercised in a cashless exercise transaction if, on the
Date of Exercise, the shares of Common Stock to be issued upon exercise of
this Warrant would upon such issuance be then registered pursuant to an
effective registration statement filed pursuant to that certain
Registration Rights Agreement dated on or about May 13, 1999 by and among
the Company and certain investors, or otherwise be registered under the
Securities Act of 1933, as amended.
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4. Transfer and Registration.
(a) Transfer Rights. Subject to the provisions of Section 8 of this
Warrant, this Warrant may be transferred on the books of the Company, in
whole or in part, in person or by attorney, upon surrender of this Warrant
properly completed and endorsed. This Warrant shall be canceled upon such
surrender and, as soon as practicable thereafter, the person to whom such
transfer is made shall be entitled to receive a new Warrant or Warrants as
to the portion of this Warrant transferred, and Holder shall be entitled to
receive a new Warrant as to the portion hereof retained.
(b) Registrable Securities. The Common Stock issuable upon the
exercise of this Warrant constitutes "Registrable Securities" under that
certain Registration Rights Agreement dated on or about May 13, 1999
between the Company and certain investors and, accordingly, has the benefit
of the registration rights pursuant to that agreement.
5. Anti-Dilution Adjustments.
(a) Stock Dividend. If the Company shall at any time declare a
dividend payable in shares of Common Stock, then Holder, upon Exercise of
this Warrant after the record date for the determination of holders of
Common Stock entitled to receive such dividend, shall be entitled to
receive upon Exercise of this Warrant, in addition to the number of shares
of Common Stock as to which this Warrant is exercised, such additional
shares of Common Stock as such Holder would have received had this Warrant
been exercised immediately prior to such record date and the Exercise Price
will be proportionately adjusted.
(b) Recapitalization or Reclassification. If the Company shall at any
time effect a recapitalization, reclassification or other similar
transaction of such character that the shares of Common Stock shall be
changed into or become exchangeable for a larger or smaller number of
shares, then upon the effective date thereof, the number of shares of
Common Stock which Holder shall be entitled to purchase upon Exercise of
this Warrant shall be increased or decreased, as the case may be, in direct
proportion to the increase or decrease in the number of shares of Common
Stock by reason of such recapitalization, reclassification or similar
transaction, and the Exercise Price shall be, in the case of an increase in
the number of shares, proportionally decreased and, in the case of decrease
in the number of shares, proportionally increased. The Company shall give
Holder the same notice it provides to holders of Common Stock of any
transaction described in this Section 5(b).
(c) Distributions. If the Company shall at any time distribute for no
consideration to holders of Common Stock cash, evidences of indebtedness or
other securities or assets (other than cash dividends or distributions
payable out of earned surplus or net profits for the current or preceding
years) then, in any such case, Holder shall be entitled to receive, upon
Exercise of this Warrant, with respect to each share of Common Stock
issuable upon such exercise, the amount of cash or evidences of
indebtedness or other securities or assets which Holder would have been
entitled to receive with respect to each such share of Common Stock as a
result of the happening of such event had this Warrant been exercised
immediately prior to the record date or other date fixing shareholders to
be affected by such event (the "Determination Date") or, in lieu thereof,
if the Board of Directors of the Company should so determine at the time of
such distribution, a reduced Exercise Price determined by multiplying the
Exercise Price on the Determination Date by a fraction, the numerator of
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which is the result of such Exercise Price reduced by the value of such
distribution applicable to one share of Common Stock (such value to be
determined by the Board of Directors of the Company in its discretion) and
the denominator of which is such Exercise Price.
(d) Notice of Consolidation or Merger. In the event of a merger,
consolidation, exchange of shares, recapitalization, reorganization, or
other similar event, as a result of which shares of Common Stock shall be
changed into the same or a different number of shares of the same or
another class or classes of stock or securities or other assets of the
Company or another entity or there is a sale of all or substantially all
the Company's assets (a "Corporate Change"), then this Warrant shall be
exerciseable into such class and type of securities or other assets as
Holder would have received had Holder exercised this Warrant immediately
prior to such Corporate Change; provided, however, that Company may not
affect any Corporate Change unless it first shall have given thirty (30)
days notice to Holder hereof of any Corporate Change.
(e) Exercise Price Adjusted. As used in this Warrant, the term
"Exercise Price" shall mean the purchase price per share specified in
Section 3 of this Warrant, until the occurrence of an event stated in
subsection (a), (b) or (c) of this Section 5, and thereafter shall mean
said price as adjusted from time to time in accordance with the provisions
of said subsection. No such adjustment under this Section 5 shall be made
unless such adjustment would change the Exercise Price at the time by $.01
or more; provided, however, that all adjustments not so made shall be
deferred and made when the aggregate thereof would change the Exercise
Price at the time by $.01 or more. No adjustment made pursuant to any
provision of this Section 5 shall have the net effect of increasing the
Exercise Price in relation to the split adjusted and distribution adjusted
price of the Common Stock. The number of shares of Common Stock subject
hereto shall increase proportionately with each decrease in the Exercise
Price.
(f) Adjustments: Additional Shares, Securities or Assets. In the
event that at any time, as a result of an adjustment made pursuant to this
Section 5, Holder shall, upon Exercise of this Warrant, become entitled to
receive shares and/or other securities or assets (other than Common Stock)
then, wherever appropriate, all references herein to shares of Common Stock
shall be deemed to refer to and include such shares and/or other securities
or assets; and thereafter the number of such shares and/or other securities
or assets shall be subject to adjustment from time to time in a manner and
upon terms as nearly equivalent as practicable to the provisions of this
Section 5.
6. Fractional Interests.
No fractional shares or scrip representing fractional shares shall
be issuable upon the Exercise of this Warrant, but on Exercise of this
Warrant, Holder may purchase only a whole number of shares of Common Stock.
If, on Exercise of this Warrant, Holder would be entitled to a fractional
share of Common Stock or a right to acquire a fractional share of Common
Stock, such fractional share shall be disregarded and the number of shares
of Common Stock issuable upon exercise shall be the next higher number of
shares.
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7. Reservation of Shares.
The Company shall at all times reserve for issuance such number of
authorized and unissued shares of Common Stock (or other securities
substituted therefor as herein above provided) as shall be sufficient for
the Exercise of this Warrant and payment of the Exercise Price. The
Company covenants and agrees that upon the Exercise of this Warrant, all
shares of Common Stock issuable upon such exercise shall be duly and
validly issued, fully paid, nonassessable and not subject to preemptive
rights, rights of first refusal or similar rights of any person or entity.
8. Restrictions on Transfer.
(a) Registration or Exemption Required. This Warrant has been
issued in a transaction exempt from the registration requirements of the
Act by virtue of Regulation D and exempt from state registration under
applicable state laws. The Warrant and the Common Stock issuable upon the
Exercise of this Warrant may not be pledged, transferred, sold or assigned
except pursuant to an effective registration statement or an exemption to
the registration requirements of the Act and applicable state laws.
(b) Assignment. If Holder can provide the Company with
reasonably satisfactory evidence that the conditions of (a) above regarding
registration or exemption have been satisfied, Holder may sell, transfer,
assign, pledge or otherwise dispose of this Warrant, in whole or in part.
Holder shall deliver a written notice to Company, substantially in the form
of the Assignment attached hereto as Exhibit B, indicating the person or
persons to whom the Warrant shall be assigned and the respective number of
warrants to be assigned to each assignee. The Company shall effect the
assignment within ten (10) days, and shall deliver to the assignee(s)
designated by Holder a Warrant or Warrants of like tenor and terms for the
appropriate number of shares.
9. Benefits of this Warrant.
Nothing in this Warrant shall be construed to confer upon any
person other than the Company and Holder any legal or equitable right,
remedy or claim under this Warrant and this Warrant shall be for the sole
and exclusive benefit of the Company and Holder.
10. Applicable Law.
This Warrant is issued under and shall for all purposes be
governed by and construed in accordance with the laws of the state of
Florida, without giving effect to conflict of law provisions thereof.
11. Loss of Warrant.
Upon receipt by the Company of evidence of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft
or destruction) of indemnity or security reasonably satisfactory to the
Company, and upon surrender and cancellation of this Warrant, if mutilated,
the Company shall execute and deliver a new Warrant of like tenor and date.
12. Notice or Demands.
Notices or demands pursuant to this Warrant to be given or made by
Holder to or on the Company shall be sufficiently given or made if sent by
certified or registered mail, return receipt requested, postage prepaid,
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and addressed, until another address is designated in writing by the
Company, to the Attention: Xxxxx X. Xxxxxx, 0000 Xxxxxxxx Xx., Xxxxx X0,
Xxxxxxx Xxxxx, XX 00000, Telephone: (000) 000-0000 x000, Facsimile: (561)
841-7422. Notices or demands pursuant to this Warrant to be given or made
by the Company to or on Holder shall be sufficiently given or made if sent
by certified or registered mail, return receipt requested, postage prepaid,
and addressed, to the address of Holder set forth in the Company's records,
until another address is designated in writing by Holder.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of
the ______ day of ________________, _______.
ECOM XXXX.XXX, INC.
By: _______________________________
Xxxxx X. Xxxxxx, President
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EXHIBIT A
EXERCISE FORM FOR WARRANT
TO: ECOM XXXX.XXX, INC.
The undersigned hereby irrevocably exercises the right to purchase
_________________ of the shares of Common Stock (the "Common Stock") of
ECOM XXXX.XXX, INC., a Florida corporation (the "Company"), evidenced by
the attached warrant (the "Warrant"), and herewith makes payment of the
exercise price with respect to such shares in full, all in accordance with
the conditions and provisions of said Warrant.
1. The undersigned agrees not to offer, sell, transfer or otherwise dispose
of any of the Common Stock obtained on exercise of the Warrant, except in
accordance with the provisions of Section 8(a) of the Warrant.
2. The undersigned requests that stock certificates for such shares be
issued free of any restrictive legend, if appropriate, and a warrant
representing any unexercised portion hereof be issued, pursuant to the
Warrant in the name of the undersigned and delivered to the undersigned at
the address set forth below:
Dated:
________________________________________________________________________
Signature
________________________________________________________________________
Print Name
________________________________________________________________________
Address
NOTICE
The signature to the foregoing Exercise Form must correspond to the name as
written upon the face of the attached Warrant in every particular, without
alteration or enlargement or any change whatsoever.
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EXHIBIT B
ASSIGNMENT
(To be executed by the registered holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned holder of the attached warrant (the
"Warrant") hereby sells, assigns and transfers unto the person or persons
below named the right to purchase _______ shares of the Common Stock of
ECOM XXXX.XXX, INC., evidenced by the attached Warrant and does hereby
irrevocably constitute and appoint _______________________ attorney to
transfer the said Warrant on the books of the Company, with full power of
substitution in the premises.
Dated: ______________________________
Signature
Fill in for new registration of Warrant:
_________________________________________
Name
_________________________________________
Address
_________________________________________
Please print name and address of assignee
(including zip code number)
NOTICE
The signature to the foregoing Assignment must correspond to the name as
written upon the face of the attached Warrant in every particular, without
alteration or enlargement or any change whatsoever.
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