EXHIBIT 4 (m)
WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of July 11, 1997, between DIGITAL LAVA INC., a
Delaware corporation (the "Company"), and the persons whose names and addresses
are set forth on Schedule I annexed hereto (the "Holders").
W I T N E S S E T H:
WHEREAS, pursuant to a subscription agreement of even date hereof between
the Company and the Holders, Holders shall be issued an aggregate of up to 36
units of the Company's securities ("Units"), each Unit consisting of (i) a
senior non-negotiable (non-subordinated) promissory note in the principal amount
of [_____] (individually, a "Bridge Note" and collectively, the "Bridge Notes"),
and (ii) warrants to purchase [____] shares of the Company's common stock, par
value $.0001 per share ("Common Stock," shares of Common Stock shall be referred
to as "Common Shares"), at an exercise price of $.97 per share (the "Warrants").
NOW THEREFORE, in consideration of the premises herein set forth and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Issue. The Company shall issue to each Holder a certificate (the
"Warrant Certificate") dated as of the date hereof providing each such Holder
with the right to purchase, at any time, from July 11, 1998, until 5:30 p.m.,
New York time, on July 11, 2003, the number of Common Shares listed next to the
name of each such Holder on Exhibit I (the "Warrant Shares") (subject to
adjustment as provided in Section 9 hereof), at an exercise price (subject to
adjustment as provided in Section 9 hereof) of $.97 per Common Share; provided,
however, that if the Company elects, in its sole discretion, to extend the
maturity date of the Bridge Notes from January 11, 1998 to July 11, 1998, the
exercise price of the Warrants shall be $0.87 per Common Share (subject to
adjustment as provided in Section 9 hereof).
2. Warrant Certificate. The Warrant Certificate to be delivered pursuant to
this Agreement shall be in the form set forth in Exhibit X, attached hereto and
made a part hereof, with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this Agreement.
3. Exercisability of Warrants. The Warrants shall be exercisable at any
time from July 11, 1998, until 5:30 p.m., New York time, on July 11, 2003.
4. Procedure for Exercise of Warrants.
4.1 Cash Exercise. The Warrants are exercisable at an aggregate initial
exercise price per Common Share set forth in Section 7 hereof payable by
certified check or official bank check in New York Clearing House funds. Upon
surrender of a Warrant Certificate with the annexed
Form of Election to Purchase duly executed, together with payment of the
Exercise Price (as hereinafter defined) for the Warrant Shares purchased, at the
Company's principal offices in Los Angeles, California (presently located at
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, XX 90024) the registered
holder of a Warrant Certificate (individually a "Holder" and sometimes
collectively the "Holders") shall be entitled to receive a certificate for the
Warrant Shares so purchased. The purchase rights represented by the Warrant
Certificate are exercisable at the option of the Holder thereof, in whole or in
part (but not as to fractional Common Shares underlying the Warrants). In the
case of the purchase of less than all the Warrant Shares purchasable under the
Warrant Certificate, the Company shall cancel said Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the Warrant Shares purchasable thereunder.
4.2 Cashless Exercise. In addition to the exercise of all or a portion of
the Warrants by the payment of the Exercise Price in cash or check as set forth
in Section 4.1 above, and in lieu of any such payment, the Holder has the right
to exercise the Warrants, in full or in part, by surrendering the Warrant
Certificate with the annexed Form of Election to Purchase duly executed, in
exchange for the number of Common Shares equal to the product of (x) the number
of Common Shares as to which the Warrants are being exercised multiplied by (y)
a fraction, the numerator of which is the Current Market Price of the Common
Shares (as defined below) less the Exercise Price then in effect and the
denominator of which is the Current Market Price.
4.3 Current Market Price. The term "Current Market Price" shall mean (i) if
the Shares are traded in the over-the-counter market or on the National
Association of Securities Dealers, Inc. Automated Quotations System ("NASDAQ"),
the average per Share closing bid prices on the 20 consecutive trading days
immediately preceding the date of exercise, as reported by NASDAQ or an
equivalent generally accepted reporting service, or (ii) if the Shares are
traded on a national securities exchange, the average for the 20 consecutive
trading days immediately preceding the exercise date of the daily per Share
closing prices on the principal stock exchange on which the Shares are listed,
as the case may be. The closing price referred to in clause (ii) above shall be
the last reported sales price or, if no such reported sale takes place on such
day, the average of the reported closing bid and asked prices, in either case on
the national securities exchange on which the Shares are then listed.
5. Issuance of Certificate. Upon the exercise of the Warrants, the issuance
of a certificate for Warrant Shares (or Other Securities) shall be made
forthwith (and in any event within five (5) business days thereafter) without
charge to the Holder thereof including, without limitation, any tax which may be
payable in respect of the issuance thereof, and such certificate shall (subject
to the provisions of Sections 6 and 8 hereof) be issued in the name of, or in
such names as may be directed by, the Holder thereof; 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 issuance and delivery of any such certificate in
a name other than that of the Holder and the Company shall not be required to
issue or deliver such certificate 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 Warrant Certificate and the certificate representing the Warrant Shares
(or Other Securities) shall be executed on behalf of the Company by the manual
or facsimile signature of the then present Chairman or Vice Chairman of the
Board of Directors or President or any Vice President of the Company under its
corporate seal reproduced thereon, attested to by the manual or facsimile
signature of the then present Secretary or any Assistant Secretary of the
Company. The Warrant Certificate shall be dated the date of execution by the
Company upon initial issuance, division, exchange, substitution or transfer.
6. Transfer of Warrants. The Holder of the Warrant Certificate, by its
acceptance thereof, covenants and agrees that the Warrants are being acquired as
an investment and not with a view to the distribution thereof. The Warrants may
be sold, transferred, assigned, hypothecated or otherwise disposed of, in whole
or in part, without restriction, subject to compliance with applicable
securities laws.
7. Exercise Price.
7.1 Initial and Adjusted Exercise Price. Except as otherwise provided in
Section 9 hereof, the initial exercise price of each Warrant shall be the price
set forth in Section 1 hereof per Warrant Shares issued thereunder. The adjusted
exercise price shall be the price which shall result from time to time from any
and all adjustments of the initial exercise price in accordance with the
provisions of Section 9 hereof.
7.2 Exercise Price. The term "Exercise Price" herein shall mean the initial
exercise price or the adjusted exercise price, depending upon the context.
8. Registration Under the Securities Act of 1933. Subject to the
Registration Rights Agreement between the Company and the Holders dated as of
the date hereof, the Warrants, the Warrant Shares and any of the Other
Securities issuable upon exercise of the Warrants have not been registered under
the Securities Act of 1933, as amended (the "Act"). Upon exercise, in whole or
in part, of the Warrants, a certificate representing the Warrant Shares
underlying the Warrants, and any of the Other Securities issuable upon exercise
of the Warrants (collectively, the "Warrant Securities") shall bear the
following legend unless such Warrant Shares previously have been registered
under the Act in accordance with the terms hereof:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), AND MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii)
TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE
ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL,
IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT
AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS AVAILABLE.
9. Adjustments to Exercise Price and Number of Securities. The Exercise
Price and, in some cases, the number of Warrant Shares purchasable upon the
exercise of the Warrants, shall
be subject to adjustment from time to time upon the occurrence of certain events
described in this Section 9.
9.1 Subdivision or Combination of Common Shares and Common Share Dividend.
In case the Company shall at any time subdivide its outstanding Common Shares
into a greater number of Common Shares or declare a dividend upon its Common
Shares payable solely in Common Shares, the Exercise Price in effect immediately
prior to such subdivision or declaration shall be proportionately reduced, and
the number of Warrant Shares issuable upon exercise of the Warrants shall be
proportionately increased. Conversely, in case the outstanding Common Shares of
the Company shall be combined into a smaller number of Common Shares, the
Exercise Price in effect immediately prior to such combination shall be
proportionately increased, and the number of Warrant Shares issuable upon
exercise of the Warrants shall be proportionately reduced.
9.2 Dilutive Issuances. In the event that the Company shall sell or issue
at any time after the date of this Warrant and prior to its termination, Shares
(other than Excluded Shares, as defined in Section 9.2.5) at a consideration per
Share less than $.97, then the Exercise Price shall be adjusted to a new
Exercise Price (calculated to the nearest cent) determined by dividing
(a) an amount equal to (i) the total number of Shares Outstanding (as
defined below and subject to adjustment in the manner set forth in Section 9.1)
on the date of issuance of this Warrant multiplied by the Exercise Price in
effect on the date of issuance of this Warrant (subject, however, to adjustment
in the manner set forth in Section 9.1), plus (ii) the aggregate of the amount
of all consideration, if any, received by the Company for the issuance or sale
of Shares since the date of issuance of this Warrant, by
(b) the total number of Shares Outstanding immediately after such issuance
or sale.
In no event shall any such adjustment be made pursuant to this Section 9.2
if it would increase the Exercise Price in effect immediately prior to such
adjustment, except as provided in Sections 9.2.3 and 9.2.4. Upon each adjustment
of the Exercise Price pursuant to this Section 9.2, the holder of this Warrant
shall thereafter be entitled to purchase, at the Exercise Price resulting from
such adjustment, the number of Warrant Shares obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares purchasable pursuant hereto immediately prior to such adjustment,
and dividing the product thereof by the Exercise Price resulting from such
adjustment.
9.2.1 Definitions. For purposes of this Section 9.2, the following
definitions shall apply:
(a) "Convertible Securities" shall mean any indebtedness or securities
convertible into or exchangeable for Shares.
(b) "Options" shall mean any rights, warrants or options to subscribe for
or purchase Shares or Convertible Securities other than rights, warrants or
options to purchase Excluded Securities (as defined in Section 9.2.5).
(c) "Shares Outstanding" shall mean the aggregate of all Shares outstanding
and all Shares issuable upon exercise of all outstanding Options and conversion
of all outstanding Convertible Securities.
9.2.2 For the purposes of this Section 9.2, the following provisions shall
also be applicable:
9.2.2.1 Cash Consideration. In case of the issuance or sale of additional
Shares for cash, the consideration received by the Company therefor shall be
deemed to be the amount of cash received by the Company for such Shares (or, if
such Shares are offered by the Company for subscription, the subscription price,
or, if such Shares are sold to underwriters or dealers for public offering
without a subscription offering, the public offering price), without deducting
therefrom any compensation or discount paid or allowed to underwriters or
dealers or others performing similar services or for any expenses incurred in
connection therewith.
9.2.2.2 Non-Cash Consideration. In case of the issuance (otherwise than
upon conversion or exchange of Convertible Securities) or sale of additional
Shares, Options or Convertible Securities for a consideration other than cash or
a consideration a part of which shall be other than cash, the fair value of such
consideration as determined by the Board of Directors (if any, otherwise by the
Managers) of the Company in the good faith exercise of its business judgment,
irrespective of the accounting treatment thereof, shall be deemed to be the
value, for purposes of this Section 9, of the consideration other than cash
received by the Company for such securities.
9.2.2.3 Options and Convertible Securities. In case the Company shall in
any manner issue or grant any Options or any Convertible Securities, the total
maximum number of Shares of issuable upon the exercise of such Options or upon
conversion or exchange of the total maximum amount of such Convertible
Securities at the time such Convertible Securities first become convertible or
exchangeable shall (as of the date of issue or grant of such Options or, in the
case of the issue or sale of Convertible Securities other than where the same
are issuable upon the exercise of Options, as of the date of such issue or sale)
be deemed to be issued and to be outstanding for the purpose of this Section 9.2
and to have been issued for the sum of the amount (if any) paid for such Options
or Convertible Securities and the amount (if any) payable upon the exercise of
such Options or upon conversion or exchange of such Convertible Securities at
the time such Convertible Securities first become convertible or exchangeable;
provided that, subject to the provisions of Section 9.2.3, no further adjustment
of the Exercise Price shall be made upon the actual issuance of any such Shares
or Convertible Securities or upon the conversion or exchange of any such
Convertible Securities.
9.2.3 Change in Option Price or Conversion Rate. In the event that the
purchase price provided for in any Option referred to in subsection 9.2.2.3, or
the rate at which any Convertible Securities referred to in subsection 9.2.2.3
are convertible into or exchangeable for Shares shall change at any time (other
than under or by reason of provisions designed to protect against dilution),
then, for purposes of any adjustment required by Section 9.2, the Exercise Price
in effect at the time of such event shall forthwith be readjusted to the
Exercise Price that would have been in effect at such time had such Options or
Convertible Securities still outstanding
provided for such changed purchase price, additional consideration or conversion
rate, as the case may be, at the time initially granted, issued or sold,
provided that if such readjustment is an increase in the Exercise Price, such
readjustment shall not exceed the amount (as adjusted by Sections 9.1 and 9.2)
by which the Exercise Price was decreased pursuant to Section 9.2 upon the
issuance of the Option or Convertible Security. In the event that the purchase
price provided for in any such Option referred to in subsection 9.2.2.3, or the
additional consideration (if any) payable upon the conversion or exchange of any
Convertible Securities referred to in subsection 9.2.2.3, or the rate at which
any Convertible Securities referred to in subsection 9.2.2.3 are convertible
into or exchangeable for Shares, shall be reduced at any time under or by reason
of provisions with respect thereto designed to protect against dilution, then in
case of the delivery of Shares upon the exercise of any such Option or upon
conversion or exchange of any such Convertible Security; the Exercise Price then
in effect hereunder shall, upon issuance of such Shares, be adjusted to such
amount as would have obtained had such Option or Convertible Security never been
issued and had adjustments been made only upon the issuance of the Shares
delivered as aforesaid and for the consideration actually received for such
Option or Convertible Security and the Shares, provided that if such
readjustment is an increase in the Exercise Price, such readjustment shall not
exceed the amount (as adjusted by Sections 9.1 and 9.2) by which the Exercise
Price was decreased pursuant to Section 9.2 upon the issuance of the Option or
Convertible Security.
9.2.4 Termination Of Option or Conversion Rights. In the event of the
termination or expiration of any right to purchase Shares under any Option
granted after the date of this Warrant or of any right to convert or exchange
Convertible Securities issued after the date of this Warrant, the Exercise Price
shall, upon such termination, be readjusted to the Exercise Price that would
have been in effect at the time of such expiration or termination had such
Option or Convertible Security, to the extent outstanding immediately prior to
such expiration or termination, never been issued, and the Shares issuable
thereunder shall no longer be deemed to be Shares Outstanding, provided that if
such readjustment is an increase in the Exercise Price, such readjustment shall
not exceed the amount (as adjusted by Sections 9.1 and 9.2) by which the
Exercise Price was decreased pursuant to Section 9.2 upon the issuance of the
Option or Convertible Security. The termination or expiration of any right to
purchase Shares under any Option granted prior to the date of this Warrant or of
any right to convert or exchange Convertible Securities issued prior to the date
of this Warrant shall not trigger any adjustment to the Exercise Price, but the
Shares issuable under such Options or Convertible Securities shall no longer be
counted in determining the number of Shares Outstanding on the date of issuance
of this Warrant for purposes of subsequent calculations under this Section 9.2.
9.2.5 Excluded Shares. Notwithstanding anything herein to the contrary, the
Exercise Price shall not be adjusted pursuant to this Section 9.2 by virtue of
the issuance and/or sale of Excluded Shares, which shall mean the following: (a)
Shares issuable upon the exercise of the Warrants; (b) Shares, Options or
Convertible Securities to be issued and/or sold to employees, advisors
(including, without limitation, financial, technical and legal advisers),
directors, or officers of, or consultants to, the Company or any of its
subsidiaries pursuant to a share grant, share option plan, share purchase plan,
pension or profit sharing plan or other share agreement or arrangement existing
as of the date hereof or approved by the Company's Board of Directors (if any,
otherwise by the Managers); (c) the issuance of Shares, Options and/or
Convertible
Securities pursuant to Options and Convertible Securities outstanding as of the
date of this Warrant; (d) the issuance of Shares, Options or Convertible
Securities as a share dividend or upon any subdivision or combination of Shares
or Convertible Securities; (e) the issuance of Shares, Options or Convertible
Securities in connection with strategic partnerships or other business and/or
product consolidations or joint ventures and (f) the issuance of Shares, Options
or Convertible Securities by the Company in connection with a contemplated
equity financing currently in progress as of the date hereof. For all purposes
of this Section 9.2, all Shares of Excluded Shares shall be deemed to have been
issued for an amount of consideration per Share equal to the initial Exercise
Price (subject to adjustment in the manner set forth in Section 9.1). In
addition, if the amount of any adjustment pursuant to this Section 9 shall be
less than two cents (2(cent)) per Warrant Share no adjustment to the Exercise
Price or to the number of Warrant Shares issuable upon the exercise of the
Warrants shall be made; provided, however, that in such case any adjustment that
would otherwise be required then to be made shall be carried forward and shall
be made at the time of and together with the next subsequent adjustment which,
together with any adjustment so carried forward, shall amount to at least two
cents (2(cent)) per Warrant Share.
9.3 Notice of Adjustment. Promptly after adjustment of the Exercise Price
or any increase or decrease in the number of Warrant Shares purchasable upon the
exercise of this Warrant, the Company shall give written notice thereof, by
first class mail, postage prepaid, addressed to the registered holder of this
Warrant at the address of such holder as shown on the books of the Company. The
notice shall be signed by the Company's chief financial officer and shall state
(i) the effective date of the adjustment and the Exercise Price resulting from
such adjustment and (ii) the increase or decrease, if any, in the number of
Common Shares purchasable at such price upon the exercise of this Warrant,
setting forth in reasonable detail the method of calculation and the facts upon
which such calculation is based.
9.4 Other Notices. If at any time:
(a) the Company shall declare any cash dividend upon its Common Shares;
(b) the Company shall declare any dividend upon its Common Shares payable
in securities (other than a dividend payable solely in Common Shares) or make
any special dividend or other distribution to the holders of its Common Shares;
(c) there shall be any consolidation or merger of the Company with another
corporation, or a sale of all or substantially all of the Company's assets to
another corporation; or
(d) there shall be a voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
then, in any one or more of said cases, the Company shall give, by certified or
registered mail, postage prepaid, addressed to the registered holder of this
Warrant at the address of such holder as shown on the books of the Company, (i)
at least 15 days' prior written notice of the date on which the books of the
Company shall close or a record shall be taken for such dividend, distribution
or subscription rights or for determining rights to vote in respect of any such
dissolution, liquidation or winding-up; (ii) at least 10 days' prior written
notice of the date on which the books of the Company shall close or a record
shall be taken for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger or sale, and (iii) in
the case of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up, at least 15 days' written notice
of the date when the same shall take place. Any notice given in accordance with
clause (i) above shall also specify, in the case of any such dividend,
distribution or option rights, the date on which the holders of Common Shares
shall be entitled thereto. Any notice given in accordance with clause (iii)
above shall also specify the date on which the holders of Common Shares shall be
entitled to exchange their Common Shares for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up, as the case may be. If the Holder
of the Warrant does not exercise this Warrant prior to the occurrence of an
event described above, except as provided in Sections 9.1 and 9.5, the Holder
shall not be entitled to receive the benefits accruing to existing holders of
the Common Shares in such event.
9.5 Changes in Common Shares. In case at any time the Company shall be a
party to any transaction (including, without limitation, a merger,
consolidation, sale of all or substantially all of the Company's assets or
recapitalization of the Common Shares) in which the previously outstanding
Common Shares shall be changed into or exchanged for different securities of the
Company or common stock or other securities of another corporation or interests
in a non-corporate entity or other property (including cash) or any combination
of any of the foregoing (each such transaction being herein called the
"Transaction" and the date of consummation of the Transaction being herein
called the "Consummation Date"), then, as a condition of the consummation of the
Transaction, lawful and adequate provisions shall be made so that each Holder,
upon the exercise hereof at any time on or after the Consummation Date, shall be
entitled to receive, and this Warrant shall thereafter represent the right to
receive, in lieu of the Common Shares issuable upon such exercise prior to the
Consummation Date, the highest amount of securities or other property to which
such Holder would actually have been entitled as a holder of an Common Share
upon the consummation of the Transaction if such Holder had exercised such
Warrant immediately prior thereto. The provisions of this Section 9.5 shall
similarly apply to successive Transactions.
10. Exchange and Replacement of Warrant Certificate. The Warrant
Certificate is exchangeable without expense, upon the surrender thereof by the
registered Holder at the principal executive office of the Company, for a new
Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Warrant Shares in such denominations as
shall be designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of the Warrant Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
11. Elimination of Fractional Interests. The Company shall not be required
to issue certificates representing fractions of Common Shares upon the exercise
of the Warrants, nor shall it be required to issue scrip or pay cash in lieu of
fractional interests, it being the intent of the parties that all fractional
interests shall be eliminated by rounding any fraction up to the nearest whole
number of Common Shares or Other Securities.
12. Reservation of Securities. The Company shall at all times reserve and
keep available out of its authorized Common Shares, solely for the purpose of
issuance upon the exercise of the Warrants, such number of Common Shares or
Other Securities as shall be issuable upon the exercise thereof. The Company
covenants and agrees that, upon exercise of the Warrants and payment of the
Exercise Price therefor, all Common Shares or Other Securities issuable upon
such exercise shall be duly and validly issued, fully paid, non-assessable and
not subject to the preemptive rights of any holder of Common Shares.
13. Notices to Warrant Holder. Except as otherwise provided in Section 9.4,
nothing contained in this Agreement shall be construed as conferring upon the
Holder by virtue of his holding the Warrant the right to vote or to consent or
to receive notice as a holder of an Common Share in respect of any meetings of
such holders for the election of directors or any other matter, or as having any
rights whatsoever as such a holder of the Company.
14. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made and
sent when delivered, or mailed by registered or certified mail, return receipt
requested:
(a) If to the registered Holder of the Warrants, to the address of such
Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 4 hereof (with
copy to: Xxxxxxxxx & Xxxxxx, 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX
10017/Attn. Xxxxxxx X. Xxxxx, Esq.) or to such other address as the Company may
designate by notice to the Holder.
15. Supplements and Amendments. The Company and Holder may from time to
time supplement or amend this Agreement in order to cure any ambiguity, to
correct or supplement any provision contained herein which may be defective or
inconsistent with any provisions herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and Holder
may deem necessary or desirable.
16. Successors. All the covenants and provisions of this Agreement shall be
binding upon and inure to the benefit of the Company, the Holder and their
respective successors and assigns hereunder.
17. Termination. This Agreement shall terminate at the close of business on
the tenth anniversary of the issuance of the Warrants.
18. Governing Law. This Agreement and the Warrant Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
New York and for all purposes
shall be construed in accordance with the laws of the State of New York without
giving effect to the rules of the State of New York governing the conflicts of
laws.
19. Entire Agreement; Modification. This Agreement contains the entire
understanding between the parties hereto with respect to the subject matter
hereof and may not be modified or amended except by a writing duly signed by the
party against whom enforcement of the modification or amendment is sought.
20. Severability. If any provision of this Agreement shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Agreement.
21. Captions. The caption headings of the Sections of this Agreement are
for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
22. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and Holder
any legal or equitable right, remedy or claim under this Agreement; and this
Agreement shall be for the sole and exclusive benefit of the Company and Holder.
23. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement to be
duly executed, as of the day and year first above written.
Very truly yours,
DIGITAL LAVA INC.
By: /s/ Xxxxx Xxxxxx
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Authorized Officer
ACCEPTED AND AGREED TO:
/s/ Xxxx Xxxxx Xxxxxxxxxx
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Xxxx Xxxxx Xxxxxxxxxx
/s/ Xxxxx Xxxx
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Xxxxx Xxxx
/s/ Nuvrty, Inc.
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Nuvrty, Inc.
/s/ Redwood Forest Investments
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Redwood Forest Investments
/s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
/s/ Xxxx Xxxxxx
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Xxxx Xxxxxx
/s/ Xxxxxxxx Xxxxxxxx
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Shakhrokh "Xxxxx" Xxxxxxxx
EXHIBIT X
TO
WARRANT AGREEMENT
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT") (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY
SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii)
AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO
COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS
AVAILABLE.
EXERCISABLE FROM JULY 11, 1998
UNTIL
5:30 P.M., NEW YORK TIME, JULY 11, 0000
Xx. X-XXXX-00-[ ] [ ] Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that ______________ or his/her
registered assigns ("Holder"), is the registered holder of [ ] Warrants to
purchase initially at any time from July 11, 1998, until 5:30 p.m. New York time
on July 11, 2003 ("Expiration Date"), up to [ ] fully-paid and non-assessable
shares of common stock, par value $.0001 per share ("Common Shares") of DIGITAL
LAVA INC., a Delaware corporation (the "Company"), at an initial exercise price,
subject to adjustment in certain events (the "Exercise Price"), equal to $.97
per Common Share, upon surrender of this Warrant Certificate and payment of the
initial exercise price at an office or agency of the Company, but subject to the
conditions set forth herein and in the Warrant Agreement dated as of the date
hereof between the Company and Holder (the "Warrant Agreement"). Payment of the
Exercise Price shall be made by certified check or official bank check in New
York Clearing House funds payable to the order of the Company, unless exercise
is made pursuant to Section 4.2 of the Warrant Agreement.
No Warrant may be exercised after 5:30 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder
of the Company and the Holder (the word "Holder" meaning the registered holder)
of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Warrants; provided,
however, that the failure of the Company to issue such new Warrant Certificate
shall not in any way change, alter, or otherwise impair, the rights of the
holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax or other governmental charge
imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed.
Dated as of July 11, 1997
DIGITAL LAVA INC.
By: /s/ Xxxxx Xxxxxx
----------------------------
Authorized Officer
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase _________ Common Shares and
herewith tenders in payment for such securities a certified check or official
bank check payable in New York Clearing House Funds to the order of DIGITAL LAVA
INC. in the amount of $_____, all in accordance with the terms of Section 4 of
the Warrant Agreement dated as of [June 13, 1997] between DIGITAL LAVA INC. and
the undersigned (or its assignor). The undersigned requests that a certificate
for such securities be registered in the name of _______________ whose address
is _______________ and that such Certificate be delivered to whose address is
_______________.
Dated:
Signature _____________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate.)
_______________________________________
(Insert Social Security or Other
Identifying Number of Assignee)
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED __________ hereby
sells, assigns and transfers unto
_____________________________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______ Attorney, to transfer
the within Warrant Certificate on the books of the within-named Company, with
full power of substitution.
Dated: ________________
Signature _____________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate.)
_______________________________________
(Insert Social Security or Other
Identifying Number of Assignee)
