WARRANT TO PURCHASE COMMON STOCK
Exhibit
4.2
THIS
WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR UNDER THE SECURITIES
LAWS OF ANY STATE. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT
REQUIRED. ANY ATTEMPT TO SELL, PLEDGE, HYPOTHECATE OR OTHERWISE
TRANSFER THIS WARRANT OR THE SECURITIES ISSUABLE UPON THE EXERCISE THEREOF WILL
BE VOID.
Issued
this
WARRANT TO PURCHASE COMMON
STOCK
This Warrant is issued to [INVESTOR]
(the “Holder”), by
Network CN Inc., a Delaware corporation (the “Company”), pursuant to the
terms of that certain Note and Warrant Purchase Agreement dated as of November
19, 2007, as amended by the First Amendment to the Note and Warrant Purchase
Agreement, dated as of January 31, 2008, by and among the Borrower and the
Holder, among others (said Note and Warrant Purchase Agreement, as it may be
amended, restated, supplemented or otherwise modified from time to time, being
the “Purchase
Agreement”). Terms used but not defined herein shall have the
respective meaning set forth in the Purchase Agreement.
1. Purchase of Common
Stock. Subject to the terms and conditions hereinafter set
forth and set forth in the Purchase Agreement, the holder of this Warrant is
entitled, upon surrender of this Warrant at the principal office of the Company
(or at such other place as the Company shall notify the holder hereof in
writing), to purchase from the Company up to the number of fully paid and
nonassessable Common Stock (as defined below) that equals the Warrant Coverage
Amount.
2. Definitions.
(a) Exercise
Price. The exercise price for the Common Stock shall be
US[$2.50]/[$3.50] per share (such price, as adjusted from time to time, is
herein referred to as the “Exercise Price”).
(b) Exercise
Period. This Warrant shall be exercisable, in whole or in
part, during the term commencing on the date hereof, and ending on the
expiration of this Warrant pursuant to Section 12
hereof.
(c) Warrant Coverage
Amount. The term “Warrant Coverage Amount” shall
mean that number of Common Stock which equals to the quotient obtained by
dividing the [First Note Purchase Price]/ [Second Note Purchase Price]/ [Third
Note Purchase Price] (as defined in the Purchase Agreement) by
US$[$2.50]/[$3.50], rounded to the nearest whole Common Stock.
Form
of Warrant
(d) The Common
Stock. The term “Common Stock” shall mean
shares of Common Stock of the Company, par value US$0.001 per
share.
3. Method of
Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 2 above,
the holder may exercise, in whole or in part, the purchase rights evidenced
hereby. Such exercise shall be effected by:
(i) the
surrender of the Warrant, together with a notice of exercise to the Secretary of
the Company at its principal offices; and
(ii) the
payment to the Company of an amount equal to the aggregate Exercise Price for
the number of Common Stock being purchased.
4. Net
Exercise. In lieu of exercising this Warrant
pursuant to Section 3, the Holder may elect to receive, without payment by the
Holder of any additional consideration, shares equal to the value of this
Warrant (or the portion thereof being canceled) by surrender of this Warrant at
the principal office of the Company together with notice of such election, in
which event the Company shall issue to the holder hereof a number of Common
Stock computed using the following formula:
|
Y (A -
B)
X
=
A
|
Where
|
|
X
--
|
The
number of Common Stock to be issued to the holder of this
Warrant.
|
|
|
Y
--
|
The
number of Common Stock purchasable under this Warrant or, if only a
portion of the Warrant is being exercised, the portion of the Warrant
being canceled (at the date of such
calculation).
|
|
|
A
--
|
The
fair market value of one Common Stock (at the date of such
calculation).
|
|
|
B
--
|
The
Exercise Price (as adjusted to the date of such
calculations).
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For
purposes of this Section 4, the
fair market value of one Common Stock shall mean the average of the closing bid
and asked prices of Common Stock quoted in the over-the-counter market in which
the Common Stock is traded or the closing price quoted on any exchange on which
the Common Stock is listed, whichever is applicable, as published in the Western
Edition of The Wall
Street Journal for the ten (10) trading days prior to the date of
determination of fair market value (or such shorter period of time during which
such stock was traded over-the-counter or on such exchange). If the
Common Stock is not traded on the over-the-counter market or on an exchange, the
fair market value shall be as determined in good faith by the Company’s Board of
Directors.
5. Updated Registry of
Shareholders; Certificates for Common Stock. Upon the exercise
of the purchase rights evidenced by this Warrant, the stock register of the
Company shall be updated and one or more certificates for the number of Common
Stock so purchased shall be issued as soon as practicable thereafter, and in any
event within thirty (30) days of the delivery of the subscription
notice.
Form
of Warrant
6. Issuance of Common
Stock. The Company covenants that the Common Stock, when
issued pursuant to the exercise of this Warrant, will be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens, and charges
with respect to the issuance thereof. During the period within which
the rights represented by this Warrant may be exercised, the Company will at all
times have authorized and reserved for the purpose of issue upon exercise of the
purchase rights evidenced by this Warrant, a sufficient number of Common Stock
to provide for the exercise of the rights represented by this
Warrant. In the event that there is an insufficient number of Common
Stock reserved for issuance pursuant to the exercise of this Warrant, the
Company will take appropriate action to authorize an increase in the capital
stock to allow for such issuance or similar issuance acceptable to the
Holder.
7. Adjustment of Exercise Price
and Number of Common Stock. The number of and kind of
securities purchasable upon exercise of this Warrant and the Exercise Price
shall be subject to adjustment from time to time as follows:
(a) Subdivisions, Combinations
and Other Issuances. If the Company shall at any time prior to
the expiration of this Warrant subdivide the Common Stock, by split-up or
otherwise, or combine its Common Stock, or issue additional shares of its Common
Stock as a dividend, the number of Common Stock issuable on the exercise of this
Warrant shall forthwith be proportionately increased in the case of a
subdivision or stock dividend, or proportionately decreased in the case of a
combination. Appropriate adjustments shall also be made to the
purchase price payable per share, but the aggregate purchase price payable for
the total number of Common Stock purchasable under this Warrant (as adjusted)
shall remain the same. Any adjustment under this Section 7(a)
shall become effective at the close of business on the date the subdivision or
combination becomes effective, or as of the record date of such dividend, or in
the event that no record date is fixed, upon the making of such
dividend.
(b) Reclassification,
Reorganization and Consolidation. In case of any
reclassification, capital reorganization, or change in the capital stock of the
Company (other than as a result of a subdivision, combination, or stock dividend
provided for in Section 7(a)
above), then the Company shall make appropriate provision so that the holder of
this Warrant shall have the right at any time prior to the expiration of this
Warrant to purchase, at a total price equal to that payable upon the exercise of
this Warrant, the kind and amount of shares of stock and other securities and
property receivable in connection with such reclassification, reorganization, or
change by a holder of the same number of Common Stock as were purchasable by the
holder of this Warrant immediately prior to such reclassification,
reorganization, or change. In any such case appropriate provisions
shall be made with respect to the rights and interest of the holder of this
Warrant so that the provisions hereof shall thereafter be applicable with
respect to any shares of stock or other securities and property deliverable upon
exercise hereof, and appropriate adjustments shall be made to the purchase price
per share payable hereunder, provided the aggregate purchase price shall remain
the same.
(c) Other Adjustment
Event. If at any time prior to the expiration of this
Warrant, the conversion price of the Notes is adjusted in accordance
with Section 3
of the Notes, the Exercise Price shall be adjusted as follows:
|
Y *
[2.50]/[3.50]
X
= 1.65
|
Form
of Warrant
Where
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|
X
--
|
The
Exercise Price of this Warrant after the
adjustment.
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|
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Y
--
|
The
conversion price of the Notes after the adjustment in accordance with
Section 3
of the Notes.
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(d) Notice of
Adjustment. When any adjustment is required to be made in the
number or kind of shares purchasable upon exercise of the Warrant, or in the
Exercise Price, the Company shall promptly notify the holder of such event and
of the number of Common Stock or other securities or property thereafter
purchasable upon exercise of this Warrant.
8. No Fractional Shares or
Scrip. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant, but in lieu of such
fractional shares the Company shall make a cash payment therefor on the basis of
the Exercise Price then in effect.
9. Representations of the
Company. The Company represents that all corporate actions on
the part of the Company, its officers, directors and stockholders necessary for
the sale and issuance of this Warrant have been taken.
10. Transfers. Subject to
compliance with the applicable federal and other securities laws and the
provisions of this Section 10, this Warrant and all rights hereunder are
transferable or assignable, in whole or in part, without charge to the Holder
(except for transfer taxes), to any person or entity upon surrender of this
Warrant properly endorsed or accompanied by written instructions of
transfer.
11. Restrictive
Legend. Each certificate representing the Common Stock shall
be endorsed with the following legend (in addition to any legend required under
applicable state securities laws):
THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (AS AMENDED,
THE “ACT”) OR UNDER THE SECURITIES LAWS OF ANY STATE. THIS
SECURITY MAY NOT BE TRANSFERRED, SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT,
(B) AN EXEMPTION OR QUALIFICATION UNDER APPLICABLE SECURITIES LAWS OR
(C) DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED. ANY ATTEMPT TO TRANSFER, SELL, PLEDGE OR HYPOTHECATE THIS
SECURITY IN VIOLATION OF THESE RESTRICTIONS SHALL BE VOID.
12. Expiration of
Warrant. This Warrant shall expire and shall no longer be
exercisable after 5:00 p.m., New York local time, on June 30, 2011; provided, however, if any of
the Notes have not been paid in full on or prior to June 30, 2011, this Warrant
shall continue in full force and effect until such time as the Notes have been
paid in full.
Form
of Warrant
13. Notices. Except
as otherwise set forth in this Warrant, any notice required or permitted
pursuant to this Warrant shall be given in writing and shall be given either
personally or by sending it by next-day or second-day courier service, fax,
electronic mail or similar means to the address as shown below (or at such other
address as such party may designate by fifteen (15) days’ advance written notice
to the other parties to this Warrant given in accordance with this
section):
If to the Company, to:
00X,
Xxxxxxxxx Xxxxxxx Xxxxx,
000
Xxxxxxxxxx Xxxx,
Xxxxxxx,
Xxxx Xxxx
Tel:
(000) 0000-0000
Fax:
(000) 0000-0000
Attention:
Xxxxx Xxx
with a
copy to:
[Address
1]
[Address
2]
Attention:
[Name]
If to the
Holder, to:
[Address
1]
[Address
2]
with a
copy to:
c/o
[Address 1]
[Address
2]
Where a
notice is sent by next-day or second-day courier service, service of the notice
shall be deemed to be effected by properly addressing, pre-paying and sending by
next-day or second-day service through an internationally-recognized courier a
letter containing the notice, with a confirmation of delivery, and to have been
effected at the expiration of two (2) days after the letter containing the same
is sent as aforesaid. Where a notice is sent by fax or electronic mail, service
of the notice shall be deemed to be effected by properly addressing, and sending
such notice through a transmitting organization, with a written confirmation of
delivery, and to have been effected on the day the same is sent as
aforesaid.
14. Governing
Law. This Warrant and all actions arising out of or in
connection with this Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the conflicts of law
provisions of the State of New York or of any other state.
Form
of Warrant
15. Cooperation. The Company will not, by amendment of
its bylaws or certificate of incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder
by the Company, but will at all times in good faith assist in the carrying out
of all the provisions of this Warrant and in the taking of all such action
as may be necessary or appropriate in order to protect the rights of the
holder of the Warrant against impairment.
16. Waiver and
Amendment. Any
provision of this Warrant may be amended, waived or modified only upon the
written consent of the Company and the Holder.
17. Payment of
Taxes. The
Company shall pay all stamp taxes attributable to the initial issuance of Common
Stock issuable upon any exercise of the Warrant, excluding any tax
or taxes which may be payable because of the transfer involved in the
issuance or delivery of any certificates for Common Stock in a name other
than that of the exercising Holder in respect of which such Common Stock
are issued.
Form
of Warrant
| “THE COMPANY” | |||
| NETWORK CN INC. | |||
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By:
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| Name: | |||
| Title: | |||
| “THE HOLDER” | |||
| [INVESTOR] | |||
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By:
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| Name: | |||
| Title: | |||
Form
of Warrant
