Contract
THIS
COMMON STOCK PURCHASE WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT
OF 1933, AS AMENDED (THE "1933 ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
COMMON STOCK PURCHASE WARRANT, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH
SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE
COMPANY, (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT,
OR
(C) IF REGISTERED UNDER THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.
a21,
Inc.
FORM
OF
Number
of
shares: ________
Holder:
_________
Expiration
Date: May 15, 2010
Exercise
Price per Share: $1.00
a21,
Inc., a company organized and existing under the laws of the State of Texas
(the
“Company”),
hereby certifies that, for value received,_______________, or its registered
assigns (the “Warrant
Holder”),
is
entitled, subject to the terms set forth below, to purchase from the Company
___________ shares (the “Warrant
Shares”)
of
common stock, $0.001 par value (the “Common
Stock”),
of
the Company (each such share, a “Warrant Share” and all such shares, the
“Warrant
Shares”)
in
exchange for (a) one (1) Warrant and (b) $1.00 per Warrant Share (as adjusted
from time to time as provided in Section 7 (the “Exercise
Price”),
at
any time and from time to time from and after the date thereof and through
and
including 5:00 p.m. New York City time on May 15, 2010 (the “Expiration
Date”),
subject to the following terms and conditions:
1. Registration
of Warrant.
The
Company shall register this Warrant upon records to be maintained by the Company
for that purpose (the “Warrant
Register”),
in
the name of the record Warrant Holder hereof from time to time. The Company
may
deem and treat the registered Warrant Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to
the
Warrant Holder, and for all other purposes, and the Company shall not be
affected by notice to the contrary.
2. Investment
Representation.
The
Warrant Holder by accepting this Warrant represents that the Warrant Holder
is
acquiring this Warrant for its own account or the account of an affiliate for
investment purposes and not with the view to any offering or distribution and
that the Warrant Holder will not sell or otherwise dispose of this Warrant
or
the underlying Warrant Shares in violation of applicable securities laws. The
Warrant Holder acknowledges that the certificates representing any Warrant
Shares will bear a legend indicating that they have not been registered under
the Securities Act of 1933, as amended (the “1933
Act”)
and
may not be sold by the Warrant Holder except pursuant to an effective
registration statement or pursuant to an exemption from the registration
requirements of the 1933 Act and in accordance with federal and state securities
laws.
3. Validity
of Warrant and Issue of Shares.
The
Company represents and warrants that this Warrant has been duly authorized
and
validly issued and warrants and agrees that all the shares of Common Stock
that
may be issued upon the exercise of the rights represented by this Warrant will,
when issued upon such exercise, be duly authorized, validly issued, fully paid
and nonassessable and free from all taxes, liens and charges with respect to
the
issue thereof. The Warrant Holder understands that the Company does not
currently have a sufficient number of authorized shares of its Common Stock
available to issue upon exercise of this Warrant. The Company hereby agrees
to
use commercially reasonable efforts to increase the number of its authorized
shares of Common Stock to cover the number of shares of Common stock that would
be issuable upon exercise of the Warrant. After such increase in its authorized
shares of Common Stock, the Company agrees that during the period within which
the rights represented by this Warrant may be exercised, the Company will at
all
times have authorized and reserved a sufficient number of shares of Common
Stock
to provide for the exercise of the rights represented by this
Warrant.
4. Registration
of Transfers and Exchange of Warrants.
a. Subject
to compliance with the legend set forth on the face of this Warrant, the Company
shall register the transfer of any portion of this Warrant in the Warrant
Register upon surrender of this Warrant with the Form of Assignment attached
hereto duly completed and signed, to the Company at the office specified in
or
pursuant to Section 11 hereof. Upon any such registration or transfer, a new
warrant to purchase Common Stock, in substantially the form of this Warrant
(any
such new warrant, a “New
Warrant”),
evidencing the portion of this Warrant so transferred shall be issued to the
transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Warrant Holder.
The acceptance of the New Warrant by the transferee thereof shall be deemed
the
acceptance of such transferee of all of the rights and obligations of the New
Warrant.
b. This
Warrant is exchangeable, upon the surrender hereof by the Warrant Holder to
the
office of the Company specified in Section 11 hereof for one or more New
Warrants, evidencing in the aggregate the right to purchase the number of
Warrant Shares which may then be purchased hereunder. Any such New Warrant
will
be dated the date of such exchange.
5. Exercise
of Warrants.
a. Upon
surrender of this Warrant with the Form of Election to Purchase attached hereto
duly completed and signed to the Company, at its address set forth in Section
11
hereof, and upon payment and delivery of the Exercise Price per Warrant Share
multiplied by the number of Warrant Shares that the Warrant Holder intends
to
purchase hereunder, in lawful money of the United States of America, in cash,
by
certified or official bank check to the Company, or with a reduction in the
aggregate principal amount of notes of the Company or any of the Company’s
subsidiaries made in favor of the Warrant Holder (as specified by the Warrant
Holder in the Form of Election to Purchase), the Company shall promptly issue
and deliver to or, upon the written order of the Warrant Holder, in such name
or
names as the Warrant Holder may designate (subject to the restrictions on
transfer described in the legend set forth on the face of this Warrant), a
certificate for the Warrant Shares issuable upon such exercise, with such
restrictive legend as required by the 1933 Act. Any person so designated by
the
Warrant Holder to receive Warrant Shares shall be deemed to have become the
holder of record of such Warrant Shares as of the Date of Exercise of this
Warrant. In the event that the Warrant Holder chooses to exercise this Warrant
by reducing the aggregate principal amount of notes made by the Company or
any
of its subsidiaries in favor of the Warrant Holder, the Warrant Holder shall
deliver the original note to the Company (provided that the Warrant Holder
has
complied with all applicable terms of any escrow agreement pursuant to which
the
notes are being held). In addition to issuing the Warrant Shares as described
above, the Company shall, or shall cause its subsidiary to, issue a new note
to
the Warrant Holder with an aggregate principal amount equal to the aggregate
principal amount of the original note less the exercise price of the Warrant
attributable to such note. In the event that the Date of Exercise (as defined
below) is prior to the date that the Company has increased it authorized shares
of Common Stock to accommodate the exercise of the Warrants, the Warrant Holder
agrees that the Warrant Holder will not be entitled to receive the Warrant
Shares issuable to him upon such exercise until such time as the Company has
increased its number of authorized shares of Common Stock to accommodate the
exercise of the Warrants, provided that, as promptly as practicable after the
date the Company has increased its authorized shares of Common Stock to
accommodate the issuance of the Warrant Shares, the Company shall issue such
number of Warrant Shares as the Warrant Holder would have been entitled to
receive on the Date of Exercise.
b. A
“Date
of Exercise”
means
the date on which the Company shall have received (i) this Warrant (or any
New
Warrant, as applicable), with the Form of Election to Purchase attached hereto
(or attached to such New Warrant) appropriately completed and duly signed,
and
(ii) payment of the Exercise Price for the number of Warrant Shares to be
purchased by the Warrant Holder.
c. If
less
than all of the Warrant Shares which may be purchased under this Warrant are
exercised at any time, the Company shall issue or cause to be issued, at its
expense, a New Warrant evidencing the right to purchase the remaining number
of
Warrant Shares for which no exercise has been evidenced by this
Warrant.
d. (i)
Notwithstanding anything contained herein to the contrary, at any time on
or
after May ___, 2009, the holder of this Warrant may, at its election exercised
in its sole discretion, exercise this Warrant in whole or in part and, in
lieu
of making the cash payment otherwise contemplated to be made to the Company
upon
such exercise in payment of the aggregate Exercise Price, elect instead to
receive upon such exercise the “Net
Number”
of
shares of Common Stock determined according to the following formula (a
“Cashless
Exercise”):
Net
Number = (A x (B - C))/B
(ii) For purposes of the foregoing formula:
A=
the
total number shares with respect to which this Warrant is then being
exercised.
B=
the
average of the last reported sale prices (as reported by Bloomberg) of the
Common Stock on each of 20 trading days immediately preceding the date of the
Exercise Notice.
C=
the
Warrant Exercise Price then in effect at the time of such exercise.
e. If
(i)
this Warrant has not been exercised in full by the Expiration Date, or (ii)
the
Company calls this Warrant pursuant to Section 6, and (iii) the average of
the
last reported sale prices (as reported by Bloomberg) of the Common Stock on
each
of 20 trading days immediately preceding the date of the Exercise Notice is
greater than the Exercise Price, then, immediately prior to the Expiration
Date
or the date that the Warrant may be repurchased by the Company pursuant to
Section 6, as applicable, the Warrant Holder shall be deemed to have exercised
this Warrant pursuant to Section 5(d).
6. Call
of Warrant(s) by Company.
In the
event that the average of the last reported sale price of the Common Stock
of
the Company (as reported by Bloomberg) for a period of twenty consecutive
trading days is 150% of the Exercise Price, the Company may call the Warrant
on
10 days written notice to the Warrant Holder. In the event that the Warrant
Holder does not fully exercise the Warrant prior to the end of such 10 day
notice period, the Warrant Holder shall be deemed to have waived such Warrant
Holder’s right to exercise the Warrant and the Company may repurchase the
Warrant from the Warrant Holder for a price equal to the product of $.01 and
the
number of Warrant Shares the Warrant is exercisable for. If the Company does
not
repurchase the Warrant within 30 days from the expiration of the 10 day notice
period through no fault of the Warrant Holder, the Warrant Holder's right to
exercise the Warrant will be deemed to be reinstated.
7. Adjustment
of Exercise Price and Number of Shares.
The
character of the shares of stock or other securities at the time issuable upon
exercise of this Warrant and the Exercise Price therefore, are subject to
adjustment upon the occurrence of the following events:
a. Adjustment
for Stock Splits, Stock Dividends, Recapitalizations, Etc.
The
Exercise Price of this Warrant and the number of shares of Common Stock or
other
securities at the time issuable upon exercise of this Warrant shall be
appropriately adjusted to reflect any stock dividend, stock split, combination
of shares, reclassification, recapitalization or other similar event affecting
the number of outstanding shares of stock or securities.
b. Adjustment
for Reorganization, Consolidation, Merger, Etc.
In case
of any consolidation or merger of the Company with or into any other
corporation, entity or person, or any other corporate reorganization, in which
the Company shall not be the continuing or surviving entity of such
consolidation, merger or reorganization (any such transaction being hereinafter
referred to as a "Reorganization"),
then,
in each case, the holder of this Warrant, on exercise hereof at any time after
the consummation or effective date of such Reorganization (the "Effective
Date"),
shall
receive, in lieu of the Warrant Shares issuable upon the exercise of the
Warrant, the stock and other securities and property (including cash) to which
such holder would have been entitled upon the Effective Date if such holder
had
exercised this Warrant immediately prior thereto (all subject to further
adjustment as provided in this Warrant).
c. Certificate
as to Adjustments.
In case
of any adjustment or readjustment in the price or kind of securities issuable
on
the exercise of this Warrant, the Company will promptly give written notice
thereof to the holder of this Warrant in the form of a certificate, certified
and confirmed by an officer of the Company, setting forth such adjustment or
readjustment and showing in reasonable detail the facts upon which such
adjustment or readjustment is based.
8. Fractional
Shares.
The
Company shall not be required to issue or cause to be issued fractional Warrant
Shares on the exercise of this Warrant. The number of full Warrant Shares that
shall be issuable upon the exercise of this Warrant shall be computed on the
basis of the aggregate number of Warrants Shares purchasable on exercise of
this
Warrant so presented. If any fraction of a Warrant Share would, except for
the
provisions of this Section 8, be issuable on the exercise of this Warrant,
the
Company shall, at its option, (i) pay an amount in cash equal to the Exercise
Price multiplied by such fraction or (ii) round the number of Warrant Shares
issuable up to the next whole number.
9. Lock-up.
If this
Warrant is exercised at any time before May 15, 2009 and the Warrant Shares
issued upon exercise of this Warrant are legally salable or transferable by
the
holder thereof at any time after the issuance of the Warrant Shares,
then:
a. 1/3
of
the Warrant Shares issued upon such exercise may be sold or otherwise
transferred by the holder of the Warrant Shares at any time after
exercise;
b. 1/3
of
the Warrant Shares issued upon such exercise may be sold or otherwise
transferred by the holder of the Warrant Shares at any time after the three
month anniversary of the date the Warrant was exercised; and
c. any
remaining Warrant Shares issued upon such exercise may be sold or otherwise
transferred by the holder of the Warrant Shares at any time after the six month
anniversary of the date the Warrant was exercised.
10. Registration
Rights.
a. Rights
to Piggyback.
i) If
(and
on each occasion that) the Company proposes to register any of its securities
under the 1933 Act, either for the Company’s own account or for the account of
any of its stockholders (other than pursuant to a Form S-4 or Form S-8 or
comparable form and other than pursuant to a demand registration right granted
to other persons to the extent that such rights prohibit the Company from
including securities of any other person in such registration statement) (each
such registration not withdrawn or abandoned prior to the effective date thereof
being herein called a “Piggyback Registration”), the Company will give written
notice to the Warrant Holder of such proposal not later than the tenth day
following the receipt by the Company of notice of exercise of any registration
rights by any persons.
ii) Subject
to the provisions contained in Section 10(b) and in the last sentence of this
paragraph (ii), (A) the Company will be obligated and required to include in
each Piggyback Registration all Warrant Shares with respect to which the Company
shall receive from the Warrant Holder, within 15 days after the date on which
the Company shall have given written notice of such Piggyback Registration
to
the Warrant Holder, the written requests of the Warrant Holder for inclusion
in
such Piggyback Registration, and (B) the Company will use commercially
reasonable efforts in good faith to effect promptly the registration of all
such
shares. The Warrant Holder shall be permitted to withdraw all or any part of
the
Warrant Shares of the Warrant Holder from any Piggyback Registration at any
time
prior to the effective date of such Piggyback Registration unless the Warrant
Holder shall have entered into a written agreement with the Company’s
underwriters establishing the terms and conditions under which the Warrant
Holder would be obligated to sell such securities in such Piggyback
Registration. The Company will not be obligated or required to include any
Warrant Shares in any registration effected solely to implement an employee
benefit plan or a transaction to which Rule 145 of the SEC is
applicable.
b. Priority
on Piggyback Registrations.
If a
Piggyback Registration is an underwritten registration, and the managing
underwriters shall give written advice to the Company of a number of securities
to which such registration should, in the opinion of the managing underwriters
of such registration in the light of marketing factors, be limited (the
“Underwriters’ Maximum Number”), then: (i) the Company shall be entitled to
include in such registration that number of securities which the Company
proposes to offer and sell for its own account in such registration and/or
number of securities requested to be included in such registration by persons
exercising demand registration rights which does not exceed the Underwriters’
Maximum Number; (ii) if the Underwriters' Maximum Number exceeds the number
of
securities which the Company proposes to offer and sell for its own account
in
such registration, then the Company will be obligated and required to include
in
such registration that number of Warrant Shares requested by the Warrant Holder
to be included in such registration and which does not exceed such excess and
such securities to be registered shall be allocated pro rata among the Warrant
Holder on the basis of the number of Warrant Shares requested to be included
therein by the Warrant Holder and any other person to whom the Company has
granted piggyback registration rights; (iii) if the Underwriters' Maximum Number
exceeds the sum of the number of Warrant Shares which the Company shall be
required to include in such registration pursuant to clause (ii) above and
the
number of securities which the Company proposes to offer and sell for its own
account in such registration, then the Company may include in such registration
that number of other securities which persons shall have requested be included
in such registration and which shall not be greater than such
excess.
c. Selection
of Underwriters.
In any
Piggyback Registration, the Company shall have the right to select the
investment bankers and managing underwriters in such registration.
d. Right
to Terminate Registration.
The
Company shall have the right to terminate or withdraw any registration initiated
by it under this Section 10 prior to the effectiveness of such registration
whether or not the Warrant Holder has elected to include shares in such
registration.
e. Other
Rights of Warrant Holders.
The
Company acknowledges that the Warrant Holders have certain other rights relating
to their registration rights as provided in Sections 8.6 through 8.11 of the
Merger Agreement, dated as of the date hereof, by and among the Company, AE
Acquisition Corp., ArtSelect, Inc. (“ASI”), the stockholders of ASI who are
signatories thereto, and Xxx Xxxxxxxx, the terms of which are incorporated
by
reference herein and shall be deemed fully set forth herein.
f. Registration
Procedures.
If and
whenever the Company is required by the provisions hereof to effect the
registration of any Warrant Shares under the Securities Act, the Company will,
as expeditiously as possible:
i) respond
as promptly as commercially reasonable to any comments received from the
Securities and Exchange Commission (the “Commission”), and use its commercially
reasonable efforts to cause such Piggyback
Registration to
become
effective;
ii) furnish
to the Warrant Holder such number of copies of the Piggyback Registration and
the prospectus included therein as the Warrant Holder reasonably may request
to
facilitate the public sale or disposition of the Warrant Shares covered by
such
Registration Statement;
iii) use
its
commercially reasonable efforts to register or qualify the Warrant Shares
covered by such Piggyback Registration under the securities or “blue sky” laws
of such jurisdictions within the United States as such Warrant Holder may
reasonably request, provided, however, that the Company shall not for any such
purpose be required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to consent
to
general service of process in any such jurisdiction; and
iv) list
the
Warrant Shares covered by such Piggyback Registration with any securities
exchange on which the Common Stock of the Company is then listed.
11. Notice.
All
notices and other communications hereunder shall be in writing and shall be
deemed to have been given (i) on the date they are delivered if delivered in
person; (ii) on the date initially received if delivered by facsimile
transmission followed by registered or certified mail confirmation; (iii) on
the
date delivered by an overnight courier service; or (iv) on the third business
day after it is mailed by registered or certified mail, return receipt requested
with postage and other fees prepaid as follows:
If
to
the Company:
a21,
Inc.
Attention:
President
0000
Xxxxxxxxx Xxxxxxx
Xxxxxxxxxxxx,
XX 00000
Direct
Dial:
Facsimile:
If
to
the Warrant Holder:
To
the
address on the signature page to this Warrant.:
12. Miscellaneous.
a. This
Warrant shall be binding on and inure to the benefit of the parties hereto
and
their respective successors and permitted assigns. This Warrant may be amended
only in writing and signed by the Company and the Warrant Holder.
b. Nothing
in this Warrant shall be construed to give to any person or corporation other
than the Company and the Warrant Holder any legal or equitable right, remedy
or
cause of action under this Warrant; this Warrant shall be for the sole and
exclusive benefit of the Company and the Warrant Holder.
c. This
Warrant shall be governed by, construed and enforced in accordance with the
internal laws of the State of New York without regard to the principles of
conflicts of law thereof.
d. The
headings herein are for convenience only, do not constitute a part of this
Warrant and shall not be deemed to limit or affect any of the provisions
hereof.
e. In
case
any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonably
substitute therefore, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
f. The
Warrant Holder shall not, by virtue hereof, be entitled to any voting or other
rights of a shareholder of the Company, either at law or equity, and the rights
of the Warrant Holder are limited to those expressed in this
Warrant.
g. The
Company will pay, when due and payable, any and all federal and state stamp,
original issue or similar taxes which may be payable in respect of the
issue of any Warrant Share or any certificate representing the Warrant Shares.
IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
the
authorized officer as of the date first above stated.
| Company | ||
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a21,
Inc.
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By:
______________________________
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Name: Xxxxxx
Xxxxx
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Title: President
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| Warrant Holder: | ||
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If
an entity:
|
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Name:
____________________________
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By:
______________________________
Name:
Title:
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If
an individual:
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______________________________
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Name:
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FORM
OF ELECTION TO PURCHASE
(To
be
executed by the Warrant Holder to exercise the right to purchase shares of
Common Stock under the foregoing Warrant)
To:
a21,
Inc.:
In
accordance with the Warrant enclosed with this Form of Election to Purchase,
the
undersigned hereby irrevocably elects to purchase ______________ shares of
Common Stock (“Common Stock”), $0.001 par value, of a21, Inc. and encloses one
warrant and $1.00 for each Warrant Share being purchased or an aggregate of
$________________ in cash or certified or official bank check or checks, which
sum represents the aggregate Exercise Price (as defined in the Warrant) together
with any applicable taxes payable by the undersigned pursuant to the
Warrant.
The
undersigned requests that certificates for the shares of Common Stock issuable
upon this exercise be issued in the name of:
(Please
print name and address)
(Please
insert Social Security or Tax Identification Number)
If
the
number of shares of Common Stock issuable upon this exercise shall not be all
of
the shares of Common Stock which the undersigned is entitled to purchase in
accordance with the enclosed Warrant, the undersigned requests that a New
Warrant (as defined in the Warrant) evidencing the right to purchase the shares
of Common Stock not issuable pursuant to the exercise evidenced hereby be issued
in the name of and delivered to:
(Please
print name and address)
Dated:
______________________
Name
of
Warrant Holder:
(Print)
_____________________________________
(By:)
______________________________________
(Name:)
____________________________________
(Title:)
_____________________________________
Signature
must conform in all respects to name of Warrant Holder as specified on the
face
of the Warrant
