EXHIBIT 10.61
DATED: September 25, 2001
THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE
OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS.
--------------------------------------
eUNIVERSE, INC.
COMMON STOCK PURCHASE WARRANT
--------------------------------------
This certifies that, for good and valuable consideration, eUniverse,
Inc., a Nevada corporation (the "Company"), grants to Xxxxxxxx Xxxxxxxxxxx, or
registered assigns (the "Warrantholder"), the right to subscribe for and
purchase from the Company 50,000 validly issued, fully paid and nonassessable
shares (the "Warrant Shares") of the Company's Common Stock, par value $.001 per
share (the "Common Stock") at the purchase price per share of $1.00 (the
"Exercise Price"), from time to time, prior to 5:00PM Eastern Standard Time
within 3 years of September 8, 2000 (the "Expiration Date"), all subject to the
terms, conditions and adjustments herein set forth.
Certificate No. 2001-12.3
Number of Shares 50,000
Name of Warrantholder: Xxxxxxxx Xxxxxxxxxxx
1. Duration and Exercise of Warrant; Limitation on Exercise; Payment of Taxes.
1.1 Duration and Exercise of Warrant. Subject to the terms and conditions
set forth herein, the Warrant may be exercised, in whole or in part, by the
Warrantholder by:
(a) the surrender of this Warrant to the Company, with a duly executed
Exercise Form (substantially in the form attached hereto at Exhibit "A")
specifying the number of Warrant Shares to be purchased, during normal business
hours on any Business Day prior to the Expiration Date; and
(b) the delivery of payment to the Company, for the account of the
Company, by cash or by certified or bank cashier's check, of the applicable
Exercise Price for the number of Warrant Shares specified in the Exercise Form
in lawful money of the United States of America. The Company agrees that such
Warrant Shares shall be deemed to be issued to the Warrantholder as the record
holder of such Warrant Shares as of the close of business on the date on which
this Warrant shall have been surrendered and payment made for the Warrant Shares
as aforesaid (or as provided in Section 1.2 below).
1.2 Conversion Right.
(a) In lieu of the payment of the Exercise Price, the Warrantholder
shall have the right (but not the obligation) to require the Company to convert
this Warrant, in whole or in part, into shares of Common Stock (the "Conversion
Right") as provided for in this Section 1.2. Upon exercise of the Conversion
Right, the Company shall deliver to the Warrantholder (without payment by the
Warrantholder of any of the Exercise Price; provided, however, that the
Warrantholder shall be required to pay the par value for any shares of Common
Stock so delivered) that number of shares of Common Stock equal to the quotient
obtained by dividing (x) the value of the Warrant at the time the Conversion
Right is exercised (determined by subtracting the aggregate Exercise Price in
effect immediately prior to the exercise of the Conversion Right from the
aggregate Fair Market Value for the shares of Common Stock issuable upon
exercise of the Warrant immediately prior to the exercise of the Conversion
Right) by (y) the Fair Market Value of one share of Common Stock immediately
prior to the exercise of the Conversion Right.
(b) The Conversion Right may be exercised by the Warrantholder on any
Business Day prior to the Expiration Date by delivering the Warrant Certificate,
with a duly executed Exercise Form with the conversion section completed to the
Company, exercising the Conversion Right and specifying the total number of
shares of Common Stock the Warrantholder will be issued pursuant to such
conversion.
(c) Fair Market Value of a share of Common Stock as of a particular
date (the "Determination Date") shall mean:
(i) If the Common Stock is listed on a national securities
exchange, then the Fair Market Value shall be the average of the last ten "daily
sales prices" of the Common Stock on the principal national securities exchange
on which the Common Stock is listed or admitted for trading on the last ten
Business Days prior to the Determination Date, or if not listed or traded on any
such exchange, then the Fair Market Value shall be the average of the last ten
"daily sales prices" of the Common Stock on the National Market (the "National
Market") of the National Association of Securities Dealers Automated Quotations
System ("Nasdaq") on the last ten business days prior to the Determination Date.
The "daily sales price" shall be the closing price of the Common Stock at the
end of each day; or
(ii) If the Common Stock is not so listed or admitted to unlisted
trading privileges or if no such sale is made on at least nine of such days,
then the Fair Market Value shall be the higher of (x) the Book Value per share,
and (y) the fair value as reasonably determined in good faith by the Company's
Board of Directors or a duly appointed committee of the Board (which
determination shall be reasonably described in the written notice delivered to
the Warrantholder together with the Common Stock certificates).
2
1.3 Limitations on Exercise. Notwithstanding anything to the contrary
herein, this Warrant may be exercised only upon the delivery to the Company of
any certificates, legal opinions, or other documents reasonably requested by the
Company to satisfy the Company that the proposed exercise of this Warrant may be
effected without registration under the Securities Act. The Warrantholder shall
not be entitled to exercise this Warrant, or any part thereof, unless and until
such certificates, legal opinions or other documents are reasonably acceptable
to the Company.
1.4 Warrant Shares Certificate. A stock certificate or certificates for the
Warrant Shares specified in the Exercise Form shall be delivered to the
Warrantholder within ten (10) Business Days after receipt of the Exercise Form
and receipt of payment of the purchase price. If this Warrant shall have been
exercised only in part, the Company shall, at the time of delivery of the stock
certificate or certificates, deliver to the Warrantholder a new Warrant
evidencing the rights to purchase the remaining Warrant Shares, which new
Warrant shall in all other respects be identical with this Warrant.
1.5 Payment of Taxes. The issuance of certificates for Warrant Shares shall
be made without charge to the Warrantholder for any stock transfer or other
issuance tax in respect thereto; provided, however, that the Warrantholder shall
be required to pay all costs and expenses related to registration of ownership
of the Warrant Shares, all income or other gains tax applicable to the issuance
or sale of the Warrant Shares and any and all taxes which may be payable in
respect of any transfer involved in the issuance and delivery of any certificate
in a name other than that of the then Warrantholder as reflected upon the books
of the Company.
1.6 Transfer of Warrant. Upon surrender of this Warrant to the Company with
a duly executed assignment agreement (an "Assignment") and funds sufficient to
pay any transfer tax, the Company shall, without charge, execute and deliver a
new Warrant of like tenor in the name of the assignee named in such Assignment,
and this Warrant shall promptly be canceled. Each Warrantholder agrees that
prior to any proposed transfer of this Warrant, such Warrantholder shall give
ten (10) days prior written notice to the Company of such Warrantholder's
intention to effect such transfer. Each such notice shall describe the manner
and circumstances of the proposed transfer in sufficient detail, and, if
requested by the Company, shall be accompanied by a written opinion of legal
counsel, which opinion shall be addressed to the Company and be reasonably
satisfactory in form and substance to the Company's counsel, to the effect that
the proposed transfer of this Warrant may be effected without registration under
the Securities Act. In addition, the Warrantholder and the transferee shall
execute any documentation reasonably required by the Company to ensure
compliance with the Securities Act. The Warrantholder shall not be entitled to
transfer this Warrant, or any part thereof, if such legal opinion is not
acceptable to the Company or if such documentation is not provided. The term
"Warrant" as used in this Agreement shall be deemed to include any Warrants
issued in substitution or exchange for this Warrant.
2. Restrictions on Transfer; Restrictive Legends.
Except as otherwise permitted by this Section 2, each Warrant shall
(and each Warrant issued upon direct or indirect transfer or in substitution for
any Warrant pursuant to Section 1.6 or Section 4 herein shall) be stamped or
otherwise imprinted with a legend in substantially the following form:
THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST
THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR
SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS.
Except as otherwise permitted by this Section 2, each stock certificate
for Warrant Shares issued upon the exercise of any Warrant and each stock
certificate issued upon the direct or indirect transfer of any such Warrant
Shares shall be stamped or otherwise imprinted with a legend in substantially
the following form:
3
THE SHARES REPRESENTED BY THIS CERTIFICATE (THE "SHARES") HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR THE APPLICABLE
SECURITIES LAWS OF ANY OTHER JURISDICTION AND ARE "RESTRICTED SECURITIES"
AS THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT. THE SHARES MAY NOT BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED OTHER THAN (I) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM UNDER THE ACT
AND THE APPLICABLE SECURITIES LAWS OF ANY OTHER JURISDICTION, AND (II) UPON
RECEIPT BY THE CORPORATION OF EVIDENCE SATISFACTORY TO IT OF COMPLIANCE
WITH THE ACT AND THE APPLICABLE SECURITIES LAWS OF ANY OTHER JURISDICTION.
Notwithstanding the foregoing, the Warrantholder may require the
Company to issue a Warrant or a stock certificate for Warrant Shares, in each
case without a legend, if either (i) such Warrant or such Warrant Shares, as the
case may be, have been registered for resale under the Securities Act, or (ii)
the Warrantholder has delivered to the Company an opinion of legal counsel,
which opinion shall be addressed to the Company and be reasonably satisfactory
in form and substance to the Company's counsel, to the effect that such
registration is not required with respect to such Warrant or such Warrant
Shares, as the case may be.
3. Reservation and Registration of Shares.
The Company covenants and agrees as follows:
(a) all Warrant Shares which are issued upon the exercise of this
Warrant will, upon issuance, be validly issued, fully paid, and nonassessable,
not subject to any preemptive rights, and free from all taxes, liens, security
interests, charges, and other encumbrances with respect to the issue thereof,
other than taxes with respect to any transfer occurring contemporaneously with
such issue;
(b) during the period within which this Warrant may be exercised,
the Company will at all times have authorized and reserved, and keep available
free from preemptive rights, a sufficient number of shares of Common Stock to
provide for the exercise of the rights represented by this Warrant; and
(c) the Company will, from time to time, take all such action as
may be required to assure that the par value per share of the Warrant Shares is
at all times equal to or less than the then effective Exercise Price.
4. Loss or Destruction of Warrant.
Subject to the terms and conditions hereof, upon receipt by the Company
of evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant and, in the case of loss, theft or destruction, of
such bond or indemnification as the Company may reasonably require, and, in the
case of such mutilation, upon surrender and cancellation of this Warrant, the
Company will execute and deliver a new Warrant of like tenor.
5. Ownership of Warrant.
The Company may deem and treat the person in whose name this Warrant is
registered as the holder and owner hereof (notwithstanding any notations of
ownership or writing hereon made by anyone other than the Company) for all
purposes and shall not be affected by any notice to the contrary, until
presentation of this Warrant for registration of transfer.
6. Certain Adjustments.
6.1 The number of Warrant Shares purchasable upon the exercise of this
Warrant and the Exercise Price
4
shall be subject to adjustment as follows:
(a) Stock Dividends. If at any time after the date of the issuance of
this Warrant (i) the Company shall fix a record date for the issuance of any
stock dividend payable in shares of Common Stock, or (ii) the number of shares
of Common Stock shall have been increased by a subdivision or split-up of shares
of Common Stock, then, on the record date fixed for the determination of holders
of Common Stock entitled to receive such dividend or immediately after the
effective date of subdivision or split up, as the case may be, the number of
shares to be delivered upon exercise of this Warrant will be increased so that
the Warrantholder will be entitled to receive the number of Shares of Common
Stock that such Warrantholder would have owned immediately following such action
had this Warrant been exercised immediately prior thereto, and the Exercise
Price will be adjusted as provided below in paragraph (g).
(b) Combination of Stock. If the number of shares of Common Stock
outstanding at any time after the date of the issuance of this Warrant shall
have been decreased by a combination of the outstanding shares of Common Stock,
then, immediately after the effective date of such combination, the number of
shares of Common Stock to be delivered upon exercise of this Warrant will be
decreased so that the Warrantholder thereafter will be entitled to receive the
number of shares of Common Stock that such Warrantholder would have owned
immediately following such action had this Warrant been exercised immediately
prior thereto, and the Exercise Price will be adjusted as provided below in
paragraph (g).
(c) Reorganization, etc. If any capital reorganization of the Company,
any reclassification of the Common Stock, any consolidation of the Company with
or merger of the Company into any other person, or any sale or lease or other
transfer of all or substantially all of the assets of the Company to any other
person, shall be effected in such a way that the holders of Common Stock shall
be entitled to receive stock, other securities or assets (whether such stock,
other securities or assets are issued or distributed by the Company or another
person) with respect to or in exchange for Common Stock, then, upon exercise of
this Warrant, the Warrantholder shall have the right to receive the kind and
amount of stock, other securities or assets receivable upon such reorganization,
reclassification, consolidation, merger or sale, lease or other transfer by a
holder of the number of shares of Common Stock that such Warrantholder would
have been entitled to receive upon exercise of this Warrant had this Warrant
been exercised immediately before such reorganization, reclassification,
consolidation, merger or sale, lease or other transfer, subject to adjustments
that shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 6.
(d) Notwithstanding any other provision of this Section 6, no
adjustment shall be made in any of the following cases:
(i) Upon the grant or exercise of stock options now or hereafter
granted, or the issuance of shares of Common Stock, under any employee stock
option or stock purchase plan now or hereafter authorized, to the extent that
the aggregate number of shares of Common Stock which may be purchased pursuant
to such options and issued under such employee stock purchase plan is less than
or equal to 10 percent of the number of shares of Common Stock outstanding on
January 1 of the year of the grant or exercise;
(ii) Issuance of shares of Common Stock upon the conversion of any
of the Company's convertible or exchangeable securities;
(iii) Issuance of shares of Common Stock in connection with the
acquisition by the Company or by any subsidiary of the Company of eighty percent
(80%) or more of the assets of another corporation or entity, issuance of shares
of Common Stock in connection with the acquisition by the Company or by any
subsidiary of the Company of eighty percent (80%) or more of the voting shares
of another corporation (including shares of Common Stock issued in connection
with such acquisition of voting shares of such other corporation subsequent to
the acquisition of an aggregate of eighty percent (80%) of such voting shares),
issuance of shares of Common Stock in a merger of or share exchange by the
Company or a subsidiary of the Company with another corporation in which the
Company or the Company's subsidiary is the surviving or acquiring corporation,
and issuance of shares of Common
5
Stock upon the conversion of other securities issued in connection with any such
acquisition or in any such merger or share exchange; or
(iv) Issuance of shares of Common Stock issued pursuant to this
Warrant and pursuant to all stock options and warrants outstanding on the date
hereof.
(e) Fractional Shares. No fractional shares of Common Stock or scrip
will be issued to any Warrantholder in connection with the exercise of this
Warrant, no cash will be paid in lieu of fractional shares, and the total number
of shares of Common Stock issued to the Warrantholder shall be rounded to the
nearest whole number.
(f) Exercise Price Adjustment. Whenever the number of Warrant Shares
purchasable upon the exercise of the Warrant is adjusted, as herein provided,
the Exercise Price payable upon the exercise of this Warrant shall be adjusted
by multiplying such Exercise Price immediately prior to such adjustment by a
fraction, of which the numerator shall be the number of Warrant Shares
purchasable upon the exercise of the Warrant immediately prior to such
adjustment, and of which the denominator shall be the number of Warrant Shares
purchasable immediately thereafter.
6.2 Notice of Adjustments. Whenever the number of Warrant Shares or the
Exercise Price of such Warrant Shares is adjusted, as herein provided, the
Company shall promptly mail by first class, postage prepaid, to the
Warrantholder, notice setting forth such adjustment or adjustments.
6.3 Notice of Extraordinary Corporate Events. In case the Company after the
date hereof shall propose to (i) distribute any dividend (whether stock or cash
or otherwise) to the holders of shares of Common Stock or to make any other
distribution to the holders of shares of Common Stock, (ii) offer to the holders
of shares of Common Stock rights to subscribe for or purchase any additional
shares of any class of stock or any other rights or options, or (iii) effect any
reclassification of the Common Stock (other than a reclassification involving
merely the subdivision or combination of outstanding shares of Common Stock),
any sale, transfer or other disposition of all or substantially all of its
property, assets and business, or the liquidation, dissolution or winding up of
the Company, then, in each such case, the Company shall mail to each
Warrantholder notice of such proposed action, which notice shall specify the
date on which (a) the books of the Company shall close, or (b) a record shall be
taken for determining the holders of Common Stock entitled to receive such stock
dividends or other distribution or such rights or options, or (c) such
reclassification, sale, transfer, other disposition, liquidation, dissolution or
winding up shall take place or commence, as the case may be, and the date, if
any, as of which it is expected that holders of record of Common Stock shall be
entitled to receive securities or other property deliverable upon such action.
Such notice shall be mailed in the case of any action covered by clause (i) or
(ii) above at least 10 days prior to the record date for determining holders of
Common Stock for purposes of receiving such payment or offer, or in the case of
any action covered by clause (iii) above at least 30 days prior to the date upon
which such action takes place and 20 days prior to any record date to determine
holders of Common Stock entitled to receive such securities or other property.
6.4 Effect of Failure to Notify. Failure to file any certificate or notice
or to mail any notice, or any defect in any certificate or notice, pursuant to
Sections 6.4 and 6.5 shall not affect the legality or validity of the adjustment
to the Exercise Price, the number of shares purchasable upon exercise of this
Warrant, or any transaction giving rise thereto.
7. Incidental Registration Rights.
(a) If at any time after June 12, 2002, the Company proposes to
register any of its Common Stock under the Securities Act in connection with a
public offering of such securities solely for cash by registration on any form
other than Form S-4 or S-8 or any form that does not include substantially the
same information as would be required to be included in a registration statement
covering the sale of such securities, whether or not for sale for its own
account, the Company shall each such time give prompt written notice to all
registered
6
Holders of Registrable Securities of its intention to do so and of such Holders'
rights under this Section 7. Upon the written request of any such Holder (a
"Requesting Holder") made as promptly as practicable and in any event within 10
days after the receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such Requesting Holder and
the intended method of disposition), the Company shall use its reasonable best
efforts to effect the registration under the Securities Act of all Registrable
Securities that the Company has been so requested to register by the Requesting
Holders thereof to the extent required to permit the disposition of such
Registrable Securities in accordance with the intended methods thereof described
as aforesaid; provided, however, that prior to the effective date of the
registration statement filed in connection with such registration, immediately
upon notification to the Company from the managing underwriter of the price at
which such securities are to be sold, if such price is below the price which any
Requesting Holder shall have indicated to be acceptable to such Requesting
Holder, the Company shall so advise such Requesting Holder of such price, and
such Requesting Holder shall then have the right to withdraw its request to have
its Registrable Securities included in such registration statement; provided
further, that if, at any time after giving written notice of its intention to
register any securities and prior to the effective date of the registration
statement filed in connection with such registration, the Company shall
determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to each Requesting Holder of Registrable Securities and (i) in the
case of a determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from any obligation of the Company to pay the registration expenses in
connection therewith), and (ii) in the case of a determination to delay
registering, shall be permitted to delay registering any Registrable Securities,
for the same period as the delay in registering such other securities.
(b) If the managing underwriter of any underwritten offering under this
Section 7 shall inform the Company by letter that, in its opinion, the number or
type of Registrable Securities requested to be included in such registration
would adversely affect such offering, and the Company has so advised the
Requesting Holders in writing, then the Company will include in such
registration, to the extent of the number and type that the Company is so
advised can be sold in (or during the time of) such offering, first, all
securities proposed by the Company to be sold for its own account, second,
such Registrable Securities requested to be included in such registration
pursuant to this Agreement, pro rata among such Requesting Holders on the basis
of the estimated proceeds from the sale thereof and, third, all other securities
proposed to be registered.
8. Obligations of the Company.
In connection with the registration of the Registrable Securities as
contemplated by Section 7, the Company shall:
(a) prepare and file with the SEC a registration statement or
statements or similar documents (the "Registration Statement") with respect to
the securities to be sold by the Company together with the Registrable
Securities to be sold by the Requesting Holders, and thereafter use its best
efforts to cause the Registration Statement to become effective, which
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein), in each case, shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading;
(b) prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective and to comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement for 180 days after
such effective date;
(c) furnish to each Holder whose Registrable Securities are included in
the Registration Statement such number of copies of a prospectus, including a
preliminary prospectus and all amendments and supplements thereto and such other
documents, as such Holder may reasonably request in order to facilitate the
disposition of
7
the Registrable Securities owned by such Holder;
(d) use reasonable efforts to (i) register and qualify the Registrable
Securities covered by the Registration Statement under such other securities or
Blue Sky laws of such jurisdictions as the Holders who hold a majority in
interest of the Registrable Securities reasonably request, (ii) prepare and file
in those jurisdictions all required amendments (including post-effective
amendments) and supplements, (iii) take such other actions as may be necessary
to maintain such registrations and qualifications in effect at all times the
Registration Statement is in effect, and (iv) take all other actions necessary
or advisable to enable the disposition of such securities in all such
jurisdictions; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 8(d);
(e) (1) in the event of an underwritten offering, enter into and
perform its obligations under an underwriting agreement with the managing
underwriter of such offering, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, and (2) in
the case of any non-underwritten offering, provide to broker-dealers
participating in any distribution of Registrable Securities reasonable
indemnification substantially similar to that provided by Section 11.1;
(f) promptly notify each Holder who holds Registrable Securities being
sold (or, in the event of an underwritten offering, the managing underwriters)
of the issuance by the SEC of any stop order or other suspension of
effectiveness of the Registration Statement, and make every reasonable effort to
obtain the withdrawal of any order suspending the effectiveness of the
Registration Statement at the earliest possible time;
(g) permit a single firm of counsel designated as selling stockholders'
counsel by the Holders who hold a majority in interest of the Registrable
Securities being sold to review a draft of the Registration Statement and all
amendments and supplements thereto a reasonable period of time prior to their
filing with the SEC;
(h) if Registrable Securities are delivered to an underwriter for sale
in connection with the Registration Statement, at the request of the Holders who
hold a majority in interest of the Registrable Securities being sold, furnish on
the date that Registrable Securities are delivered to an underwriter for sale in
connection with the Registration Statement (1) a letter, dated such date, from
the Company's independent certified public accountants, in form and substance as
is customarily given by independent certified public accountants to underwriters
in an underwritten public offering, addressed to the underwriters; and (2) an
opinion, dated such date, from counsel representing the Company for purposes of
such Registration Statement, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the underwriters;
(i) make available for inspection by any Holder, any underwriter
participating in any disposition pursuant to the Registration Statement, and any
attorney, accountant, or other agent retained by any such Holder or underwriter
(collectively, the "Inspectors"), all pertinent financial and other records,
pertinent corporate documents and properties of the Company, as shall be
reasonably necessary to enable each Inspector to exercise its due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such Inspector in connection
with the Registration Statement;
(j) use its best efforts either to (1) cause all the Registrable
Securities covered by the Registration Statement to be listed on a national
securities exchange and on each additional national securities exchange on which
similar securities issued by the Company are then listed, if any, if the listing
of such Registrable Securities is then permitted under the rules of such
exchange, or (2) secure designation of all the Registrable Securities covered by
the Registration Statement as a Nasdaq "National Market Security" within the
meaning of Rule 11Aa2-l of the SEC and the quotation of the Registrable
Securities on the Nasdaq National Market;
(k) provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective date of the
Registration Statement;
8
(l) cooperate with the Holders who hold Registrable Securities being
sold and the managing underwriter or underwriters, if any, to facilitate the
timely preparation and delivery of certificates (not bearing any restrictive
legends) representing Registrable Securities to be sold pursuant to the
Registration Statement and enable such certificates to be in such denominations
or amounts, as the case may be, and registered in such names as the managing
underwriter or underwriters, if any, or the Holders may reasonably request; and
(m) take all other reasonable actions necessary to expedite and
facilitate disposition by the Holders of the Registrable Securities pursuant to
the Registration Statement.
9. Obligations of the Holders.
9.1 It shall be a condition precedent to the obligations of the Company to
take any action pursuant to this Agreement with respect to each Holder that such
Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of such
securities as shall be reasonably required to effect the registration of the
Registrable Securities and shall execute such documents and agreements in
connection with such registration as the Company may reasonably request. At
least ten days prior to the first anticipated filing date of the Registration
Statement, the Company shall notify each Holder of the information the Company
requires from each such Holder (the "Requested Information") if he elects to
have any of his Registrable Securities included in the Registration Statement.
If within three Business Days of the filing date the Company has not received
the Requested Information from a Holder (a "Non-Responsive Holder"), then the
Company may file the Registration Statement without including Registrable
Securities of such Non-Responsive Holders;
9.2 Each Holder, by his acceptance of the Registrable Securities, agrees to
cooperate with the Company in connection with the preparation and filing of any
registration statement hereunder, unless, such Holder has decided not to
participate;
9.3 In the event of an underwritten offering, each Holder agrees to enter
into and perform his obligations under an underwriting agreement, in usual and
customary form, including without limitation customary indemnification and
contribution obligations, with the managing underwriter of such offering and
take such other actions as are reasonably required in order to expedite or
facilitate the disposition of the Registrable Securities, unless such Holder has
decided not to participate;
9.4 Each Holder agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 8(f) herein, such
Holder will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until such Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 8(f) herein and, if so directed by the
Company, such Holder shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of such
destruction) all copies, other than permanent file copies then in such Holder's
possession, of the prospectus covering such Registrable Securities current at
the time of receipt of such notice; and
9.5 No Holder may participate in any underwritten registration hereunder
unless such Holder (i) agrees to sell such Holder's Registrable Securities on
the basis provided in any underwriting arrangements approved by the Holders
entitled hereunder to approve such arrangements, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements and (iii) agrees to pay such Holder's pro rata portion of all
underwriting discounts and commissions.
10. Expenses of Registration. Except as otherwise set forth herein, all
expenses other than underwriting discounts and commissions incurred in
connection with registration, filings or qualifications pursuant to Section 8,
including, without limitation, all registration, listing, filing and
qualification fees, printers and accounting fees, the fees and disbursements of
counsel for the Company and the reasonable fees and dis-
9
bursements of one firm of counsel for the Holders shall be borne by the Company.
11. Indemnification. In the event any Registrable Securities are included in a
Registration Statement under this Agreement:
11.1 To the extent permitted by law, the Company will indemnify and hold
harmless each Holder who holds such Registrable Securities, the directors, if
any, of such Holder, the officers, if any, of such Holder, who sign the
Registration Statement, each person, if any, who controls such Holder, any
underwriter (as defined in the Securities Act) for the Holders, and each person,
if any, who controls any such underwriter within the meaning of the Securities
Act or the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(each, an "Indemnified Holder") against any losses, claims, damages, expenses,
liabilities (joint or several) (collectively, "Claims") to which any of them may
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such Claims (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively, a "Violation"): (i) any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement or any post-effective amendment thereof, or 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, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented if
the Company files any amendment thereof or supplement thereto with the SEC), or
the omission or alleged omission to state therein a material fact required to be
stated therein, or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading, or (iii) any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law, or any rule or regulation promulgated
under the Securities Act, the Exchange Act, or any state securities law. Subject
to the restrictions set forth in Section 11.4 with respect to the number of
legal counsel, the Company shall reimburse the Holders and each such underwriter
or controlling person, promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim, whether or not such
claim, investigation or proceeding is brought or initiated by the Company or a
third party. If multiple claims are brought against an Indemnified Holder in an
arbitration proceeding, and indemnification is permitted under applicable law
and is provided for under this Section 11 with respect to at least one such
claim, the Company agrees that any arbitration award shall be conclusively
deemed to be based on claims as to which indemnification is permitted and
provided for, except to the extent the arbitration award expressly states that
the award, or any portion thereof, is based solely on a claim as to which
indemnification is not available. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 11.1
(a) shall not apply to a Claim arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished in writing
to the Company by any Indemnified Holder expressly for use in connection with
the preparation of the Registration Statement or any such amendment thereof or
supplement thereto; and (b) shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Indemnified Holder and shall survive the transfer of the
Registrable Securities by the Holders pursuant to Section 14.
11.2 In connection with any Registration Statement in which a Holder is
participating, each such Holder agrees to indemnify and hold harmless, to the
same extent and in the same manner set forth in Section 11.1, the Company, each
of its directors, each of its officers who sign the Registration Statement, each
person, if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act, any underwriter and any other stockholder selling
securities pursuant to the Registration Statement or any of its directors or
officers or any person who controls such stockholder or underwriter
(collectively and together with an Indemnified Holder, an "Indemnified Party"),
against any Claim to which any of them may become subject, under the Securities
Act, the Exchange Act or otherwise, insofar as such Claim arises out of or is
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with written
information furnished to the Company by such Holder expressly for use in
connection
10
with such Registration Statement; and such Holder will reimburse any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such Claim; provided, however, that the indemnity agreement
contained in this Section 11.2 shall not apply to amounts paid in settlement of
any Claim if such settlement is effected without the prior written consent of
such Holder, which consent shall not be unreasonably withheld; provided,
further, that the Holder shall be liable under this Section 11.2 for only that
amount of a Claim as does not exceed the net proceeds to such Holder as a result
of the sale of Registrable Securities pursuant to such Registration Statement.
11.3 The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers, and similar securities industry
professionals participating in the distribution to the same extent as provided
above, with respect to information about such persons so furnished in writing by
such persons expressly for inclusion in the Registration Statement.
11.4 Promptly after receipt by an Indemnified Party under this Section 11
of notice of the commencement of any action (including any governmental action),
such Indemnified Party shall, if a Claim in respect thereof is to be made
against any indemnifying party under this Section 11, deliver to the
indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
satisfactory to the Indemnified Parties; provided, however, that an Indemnified
Party shall have the right to retain its own counsel, with the fees and expenses
to be paid by the indemnifying party, if, in the reasonable opinion of counsel
for the Indemnified Party, representation of such Indemnified Party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such Indemnified Party and any other
party represented by such counsel in such proceeding. The Company shall pay for
only one legal counsel for the Holders; such legal counsel shall be selected by
the Holders holding a majority in interest of the Registrable Securities. The
failure to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action shall not relieve such indemnifying
party of any liability to the Indemnified Party under this Section 11, except to
the extent that such failure to notify results in the forfeiture by the
indemnifying party of substantive rights or defenses. The indemnification
required by this Section 11 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as such expense,
loss, damage or liability is incurred and is due and payable.
12. Contribution. To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 11 to the fullest extent permitted by law; provided, however, that
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 11, (ii) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any seller of Registrable Securities who
was not guilty of such fraudulent misrepresentation and (iii) contribution by
any seller of Registrable Securities shall be limited in amount to the net
amount of proceeds received by such seller from the sale of such Registrable
Securities.
13. Reports Under Securities Exchange Act of 1934. With a view to making
available to the Holders the benefits of Rule 144 promulgated under the
Securities Act or any other similar rule or regulation of the SEC that may at
any time permit the Holders to sell securities of the Company to the public
without registration ("Rule 144"), the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144, at all times after the date hereof;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
11
(c) furnish to each Holder so long as such Holder owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144 (at any time after
90 days after the effective date of the first registration statement filed by
the Company), the Securities Act and the Exchange Act (at any time after it has
become subject to such reporting requirements), (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
so filed by the Company, and (iii) such other information as may be reasonably
requested to permit the Holders to sell such securities without registration.
14. Assignment of Registration Rights. The right to have the Company register
Registrable Securities pursuant to this Warrant may be assigned by the Holders,
upon prior (or as soon as practicable) written notice to the Company, to
transferees or assignees of this Warrant or such Registrable Securities,
provided that immediately following such transfer or assignment, the further
disposition of such securities by the transferee or assignee would be subject to
restrictions under the Securities Act. The term "Holders" as used herein shall
include permitted assignees and transferees.
15. Amendments. Any provision of this Warrant (including registration rights)
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Holders who hold a majority in interest
of the Registrable Securities. Any amendment or waiver effected in accordance
with this Section 15 shall be binding upon each Holder and the Company.
16. Expiration of the Warrant. Except with respect to Sections 11, 12, and 13,
the obligations of the Company pursuant to this Warrant shall terminate on the
Expiration Date.
17. Definitions.
As used herein, unless the context otherwise requires, the following terms
have the following respective meanings:
Book Value: per share of Common Stock as of any date herein shall mean the
Consolidated Net Worth of the Company and its Subsidiaries as of such date
divided by the number of shares of Common Stock outstanding as of such date.
Business Day: any day other than a Saturday, Sunday or a day on which
national banks are authorized by law to close in the State of Connecticut.
Claims: the meaning specified in Section 11.1.
Common Stock: the meaning specified on the cover of this Warrant.
Company: the meaning specified on the cover of this Warrant.
Consolidated Net Worth: as of any date herein specified, the total
consolidated assets of the Company and its Subsidiaries minus the total
consolidated liabilities of the Company and its Subsidiaries (exclusive of any
liabilities associated with the Warrant) as determined from the consolidated
balance sheet of the Company and its Subsidiaries from the most recent fiscal
quarter, which consolidated balance sheet shall be prepared in accordance with
generally accepted accounting principles, shall be in reasonable detail, and
shall be certified as complete and correct by the chief financial or accounting
officer of the Company.
Exchange Act: the meaning specified in Section 11.1 or any similar Federal
statute, and the rules and regulations of the SEC thereunder, all as the same
shall be in effect at the time. Reference to a particular section of the
Exchange Act shall include a reference to a comparable section, if any, of any
such similar Federal statute.
12
Exercise Form: an Exercise Form in the form annexed hereto as Exhibit A.
Exercise Price: the meaning specified on the cover of this Warrant.
Expiration Date: the meaning specified on the cover of this Warrant.
Holder(s): holder(s) of Registrable Securities.
Indemnified Holder: the meaning specified in Section 11.1 herein.
Indemnified Party: the meaning specified in Section 11.2 herein.
Inspectors: the meaning specified in Section 8(i) herein.
Non-Responsive Holder: the meaning specified in Section 9.2 herein.
Registrable Securities: (i) the Warrant Shares and other securities issued
or issuable upon exercise of the Warrants that are not eligible to be sold under
Rule 144, and (ii) any securities issued or issuable with respect to any Common
Stock or other securities referred to in subdivision (i) by way of stock
dividend or stock split or in connection with a combination or other
reorganization or otherwise.
Registration Statement: the meaning specified in Section 8(a) herein.
Requested Information: the meaning specified in Section 9.1 herein.
Requesting Holder: the meaning specified in Section 7 herein.
Rule 144: the meaning specified in Section 13 herein.
SEC: the Securities and Exchange Commission or any other Federal agency at
the time administering the Securities Act or the Exchange Act, whichever is the
relevant statute for the particular purpose.
Securities Act: the meaning specified on the cover of this Warrant, or any
similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Act, shall include a reference to the
comparable section, if any, of any such similar Federal statute.
Subsidiary: any corporation or association (a) more than 50% (by number of
votes) owned by the Company by one or more of its Subsidiaries, or any other
business entity in which the Company or one or more of its Subsidiaries owns
more than a 50% interest in either the capital or profits of such business
entity, or (b) whose net earnings or portions thereof are consolidated with the
net earnings of the Company and are recorded in the books of the Company for
financial reporting purposes in accordance with generally accepted accounting
principles.
Violation: the meaning specified in Section 11.1 herein.
Warrantholder: the meaning specified on the cover of this Warrant.
Warrant Shares: the meaning specified on the cover of this Warrant.
18. Miscellaneous.
18.1 Entire Agreement. This Warrant constitutes the entire agreement
between the Company and the
13
Warrantholder with respect to the Warrants.
18.2 Binding Effects; Benefits. This Warrant shall inure to the benefit of
and shall be binding upon the Company and the Warrantholder and their respective
heirs, legal representatives, successors and assigns. Nothing in this Warrant,
expressed or implied, is intended to or shall confer on any person other than
the Company and the Warrantholder, or their respective heirs, legal
representatives, successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Warrant.
18.3 Section and Other Headings. The section and other headings contained
in this Warrant are for reference purposes only and shall not be deemed to be a
part of this Warrant or to affect the meaning or interpretation of this Warrant.
18.4 Pronouns. All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.
18.5 Further Assurances. Each of the Company and the Warrantholder shall do
and perform all such further acts and things and execute and deliver all such
other certificates, instruments and documents as the Company or the
Warrantholder may, at any time and from time to time, reasonably request in
connection with the performance of any of the provisions of this Agreement.
18.6 Notices. All notices and other communications required or permitted to
be given under this Warrant shall be in writing and shall be deemed to have been
duly given if delivered personally or sent by United States mail, postage
prepaid, to the parties hereto at the following addresses or to such other
address as any party hereto shall hereafter specify by notice to the other party
hereto:
(a) if to the Company, addressed to:
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx #0000
Xxx Xxxxxxx, XX 00000
Attention: President
(b) if to the Warrantholder, addressed to: Xxxxxxxx Xxxxxxxxxxx at
the address of such Warrantholder appearing on the books of the
Company.
Except as otherwise provided herein, all such notices and communications shall
be deemed to have been received on the date of delivery thereof, if delivered
personally, or on the third Business Day after the mailing thereof.
18.7 Separability. Any term or provision of this Warrant which is invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the terms and provisions of this Warrant or
affecting the validity or enforceability of any of the terms or provisions of
this Warrant in any other jurisdiction.
18.8 Governing Law. This Warrant shall be deemed to be a contract made
under the laws of Connecticut and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to such
agreements made and to be performed entirely within such State.
18.9 No Rights or Liabilities as Stockholder. Nothing contained in this
Warrant shall be determined as conferring upon the Warrantholder any rights as a
stockholder of the Company or as imposing any liabilities on the Warrantholder
to purchase any securities whether such liabilities are asserted by the Company
or by creditors or stockholders of the Company or otherwise.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
14
eUNIVERSE, INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxx
Its: Co-President
Date: September 25, 2001
15
