This Warrant has not been registered under the Securities Act of 1933, as
amended, or applicable state securities laws, nor the securities laws of any
other jurisdiction. This Warrant may not be sold or transferred in the
absence of an effective registration statement under those securities laws or
an opinion of counsel, in form and substance satisfactory to the Company,
that the sale or transfer is pursuant to an exemption to the registration
requirements of those securities laws.
_________________
NCT GROUP, INC.
(Incorporated under the laws of the State of Delaware)
Void after 5:00 p.m., New York City time, on December 20, 2006
Warrant to Purchase
1,250,000 Shares of
Common Stock
Warrant for the Purchase of Shares of Common Stock
No.CS-6
FOR VALUE RECEIVED, NCT GROUP, INC. (the "Company"), a Delaware
corporation, on this 20th day of December, 2001(the "Grant Date") hereby
issues this warrant (the "Warrant") and certifies that Xxxxxx Xxxxxxx (the
"Holder") is granted the right, subject to the provisions of the Warrant, to
purchase from the Company, at any time, or from time to time during the
period commencing at 9:00 a.m. New York City local time on December 20, 2001,
and expiring, unless earlier terminated as hereinafter provided, at 5:00 p.m.
New York City local time on December 20, 2006 up to Eight hundred thousand
(800,000) fully paid and nonassessable shares of Common Stock, $.01 par
value, of the Company at a price of $0.071 per share (hereinafter referred to
as the "Exercise Price").
The term "Common Stock" means the shares of Common Stock, $.01 par
value, of the Company constituted on the Grant Date of this Warrant, together
with any other equity securities that may be issued by the Company in
addition thereto or in substitution therefor. The number of shares of Common
Stock to be received upon the exercise of this Warrant may be adjusted from
time to time as hereinafter set forth. The shares of Common Stock
deliverable upon such exercise, and as adjusted from time to time, are
hereinafter sometimes referred to as "Warrant Stock".
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 reasonably satisfactory
indemnification, and upon surrender and cancellation of this Warrant, if
mutilated, the Company shall execute and deliver a new Warrant of like tenor
and date. Any such new Warrant executed and delivered shall constitute an
additional contractual obligation on the part of the Company, whether or not
this Warrant so lost, stolen, destroyed or mutilated shall be at any time
enforceable by anyone.
The Holder agrees with the Company that this Warrant is issued, and
all the rights hereunder shall be held, subject to all of the conditions,
limitations and provisions set forth herein.
1. Exercise of Warrant. This Warrant may be exercised in whole or
in part at any time, or from time to time, during the period commencing at
9:00 a.m., New York City local time, on December 20, 2001, and expiring at
5:00 p.m., New York City local time, on December 20, 2006, or, if such day is
a day on which banking institutions in the City of New York are authorized by
law to close, then on the next succeeding day that shall not be such a day.
Subject to the restrictions and limitations set forth above, this
Warrant may be exercised by presentation and surrender hereof to the Company
at its principal office with the Warrant Exercise Form attached hereto duly
executed and accompanied by payment (either in cash or by certified or
official bank check, payable to the order of the Company) of the Exercise
Price for the number of shares specified in such Form and instruments of
transfer, if appropriate, duly executed by the Holder. If this Warrant
should be exercised in part only, the Company shall, upon surrender of this
Warrant for cancellation, execute and deliver a new Warrant evidencing the
rights of the Holder thereof to purchase the balance of the shares
purchasable hereunder. Upon receipt by the Company of this Warrant, together
with the Warrant Exercise Form and the Exercise Price, at its office, in
proper form for exercise, the Holder shall be deemed to be the holder of
record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such shares of Common Stock shall
not then be actually delivered to the Holder. The Company shall pay any and
all documentary stamp or similar issue or transfer taxes payable in respect
of the issue or delivery of shares of Common Stock on exercise of this
Warrant.
2. Reservation of Shares. The Company will at all times reserve for
issuance and delivery upon exercise of this Warrant all shares of Common
Stock of the Company from time to time receivable upon exercise of this
Warrant. All such shares shall be duly authorized and, when issued upon such
exercise, shall be validly issued, fully paid and nonassessable and free of
all preemptive rights.
3. Warrant Stock Transfer to Comply with the Securities Act of
1933. The Warrant Stock may not be sold or otherwise disposed of unless
registered pursuant to the provisions of the Securities Act of 1933, as
amended (the "1933 Act"), or an opinion of counsel in form and content
satisfactory to the Company is obtained stating that such sale or other
disposition is made in compliance with an available exemption from such
registration. Any sale or other disposition of the Warrant Stock must also
comply with all applicable state securities laws and regulations.
4. Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant, but the
Company shall issue one additional share of its Common Stock in lieu of each
fraction of a share otherwise called for upon any exercise of this Warrant.
5. Exchange, Transfer, Assignment of Loss of Warrant. This Warrant
is not registered under the 1933 Act nor under any applicable state
securities law or regulation. This Warrant cannot be sold, exchanged,
transferred, assigned or otherwise disposed of unless registered pursuant to
the provisions of the 1933 Act or an opinion of counsel in form and content
satisfactory to the Company is obtained stating that such disposition is in
compliance with an available exemption from registration. Any such
disposition must also comply with applicable state securities laws and
regulations.
6. Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder of the Company, either at law or in
equity, and the rights of the Holder are limited to those expressed in this
Warrant.
7. Redemption. This Warrant is not redeemable by the Company.
8. Anti-Dilution Provisions.
8.1 Adjustment for dividends in Other Securities, Property,
Etc.: Reclassification, Etc. In case at any time or from time to time after
the Grant Date the holders of Common Stock (or any other securities at the
time receivable upon the exercise of this Warrant) shall have received, or on
or after the record date fixed for the determination of eligible
stockholders, shall have become entitled to receive without payment therefor:
(a) other or additional securities or property (other than cash) by way of
dividend, (b) any cash paid or payable except out of earned surplus of the
Company at the Grant Date as increased (decreased) by subsequent credits
(charges) thereto (other than credits in respect of any capital or paid-in
surplus or surplus created as a result of a revaluation of property) or (c)
other or additional (or less) securities or property (including cash) by way
of stock-split, spin-off, split-up, reclassification, combination of shares
or similar corporate rearrangement, then, and in each such case, the Holder
of this Warrant, upon the exercise thereof as provided in Section 1, shall be
entitled to receive, subject to the limitations and restrictions set forth
above, the amount of securities and property (including cash in the cases
referred to in clauses (b) and (c) above) which such Holder would hold on the
date of such exercise if on the Grant Date it had been the holder of record
of the number of shares of Common Stock (as constituted on the Grant Date)
subscribed for upon such exercise as provided in Section 1 and had
thereafter, during the period from the Grant Date to and including the date
of such exercise, retained such shares and/or all other additional (or less)
securities and property (including cash in the cases referred to in clauses
(b) and (c) above) receivable by it as aforesaid during such period, giving
effect to all adjustments called for during such period by Section 8.2.
8.2 Adjustment for Reorganization, Consolidation, Merger, Etc.
In case of any reorganization of the Company (or any other corporation, the
securities of which are at the time receivable on the exercise of this
Warrant) after the Grant Date or in case after such date the Company (or any
such other corporation) shall consolidate with or merge into another
corporation or convey all or substantially all of its assets to another
corporation, then, and in each such case, the Holder of this Warrant upon the
exercise thereof as provided in Section 1 at any time after the consummation
of such reorganization, consolidation, merger or conveyance, shall be
entitled to receive, in lieu of the securities and property receivable upon
the exercise of this Warrant prior to such consummation, the securities or
property to which such Holder would have been entitled upon such consummation
if such Holder had exercised this Warrant immediately prior thereto, all
subject to further adjustment as provided in Section 8.1; in each such case,
the terms of this Warrant shall be applicable to the securities or property
receivable upon the exercise of this Warrant after such consummation.
8.3 Certificate as to Adjustments. In each case of an
adjustment in the number of shares of Common Stock (or other securities or
property) receivable on the exercise of the Warrant, the Company at its
expense will promptly compute such adjustment in accordance with the terms of
the Warrant and prepare a certificate setting forth such adjustment and
showing in detail the facts upon which such adjustment is based, including a
statement of (a) the consideration received or to be received by the Company
for any additional shares of Common Stock issued or sold or deemed to have
been issued or sold, (b) the number of shares of Common Stock outstanding or
deemed to be outstanding, and (c) the pro forma adjusted Exercise. The
Company will forthwith mail a copy of each such certificate to the holder of
this Warrant.
8.4 Notices of Record Date, Etc.
In case:
(a) the Company shall take a record of the holders of its
Common Stock (or other securities at the time receivable upon the exercise of
the Warrant) for the purpose of entitling them to receive any dividend (other
than a cash dividend) or other distribution, or any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities, or to receive any other right; or
(b) of any capital reorganization of the Company (other
than a stock split or reverse stock split), any reclassification of the
capital stock of the Company, any consolidation or merger of the Company with
or into another corporation (other than a merger for purposes of change of
domicile) or any conveyance of all or substantially all of the assets of the
Company to another corporation; or
(c) of any voluntary or involuntary dissolution,
liquidation or winding-up of the Company, then, and in each such case, the
Company shall mail or cause to be mailed to each holder of the Warrant at the
time outstanding a notice specifying, as the case may be, (i) the date on
which a record is to be taken for the purpose of such dividend, distribution
or right, and stating the amount and character of such dividend, distribution
or right, or (ii) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding-up is
to take place, and the time, if any, is to be fixed, as to which the holders
of record of Common Stock (or such other securities at the time receivable
upon the exercise of the Warrant) shall be entitled to exchange their shares
of Common Stock (or such other securities) for securities or other property
deliverable upon such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up. Such notice
shall be mailed at least twenty (20) days prior to the date therein specified
and the Warrant may be exercised prior to said date during the term of the
Warrant no later than five (5) days prior to said date.
9. Legend. In the event of the exercise of this Warrant and the
issuance of any of the Warrant Stock hereunder, all certificates representing
Warrant Stock shall bear on the face thereof substantially the following
legends, insofar as is consistent with Delaware law:
"The shares of common stock represented by this
certificate have not been registered under the
Securities Act of 1933, as amended, or the Securities
laws of any state or other jurisdiction, and may not be
sold, offered for sale, assigned, transferred or
otherwise disposed of, unless registered pursuant to
the provisions of that Act and of such Securities laws
or an opinion of counsel acceptable to the Corporation
is obtained stating that such disposition is in
compliance with an available exemption from such
registration."
10. Applicable Law. This Warrant is issued under and shall for all
purposes be governed by and construed in accordance with the laws of the
State of Delaware and of the United States of America.
11. Notice. Notices and other communications to be given to the
Holder of the Warrant evidenced by this certificate shall be deemed to have
been sufficiently given, if delivered or mailed, addressed in the name and at
the address of such owner appearing on the records of the Company, and if
mailed, sent registered or certified mail, postage prepaid. Notices or other
communications to the Company shall be deemed to have been sufficiently given
if delivered by hand or mailed, by registered or certified mail, postage
prepaid, to the Company at 00 Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx, 00000
Attn: Chief Financial Officer, or at such other address as the Company shall
have designated by written notice to such registered owner as herein
provided, Notice by mail shall be deemed given when deposited in the United
States mail as herein provided.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
on its behalf, in its corporate name, by its duly authorized officer, all as
of the day and year set forth below.
Dated: December 20, 2001
NCT GROUP, INC.
__/s/____________________________________
Xx X. Xxxxxxx
Senior Vice President,
Chief Financial Officer
WARRANT EXERCISE FORM
(To be executed by the Holder in order to Exercise the Warrant)
TO: NCT Group, Inc.
00 Xxxxxxx Xxxxxx
Xxxxxxxx, Xx. 00000
Attention: Xx X. Xxxxxxx
Senior Vice President, Chief Financial Officer
The undersigned hereby irrevocably elects to exercise the within
Warrant to the extent of purchasing _________ shares of Common Stock of NCT
Group, Inc. and hereby makes payment at the rate of $______ per share, or an
aggregate of $________, in payment therefor.
The undersigned represents, warrants and certifies that all offers and
sales of the Warrant Stock shall be made: (i) pursuant to an effective
registration statement under the 1933 Act or pursuant to an exemption from,
or in a transaction not subject to, the registration requirements of the 1993
Act; and (ii) in compliance with applicable state securities laws and those
of any other applicable jurisdiction.
Dated:
Name of Warrant Holder
Signature
INSTRUCTIONS FOR ISSUANCE OF STOCK
(IF OTHER THAN TO THE REGISTERED HOLDER OF THE WITHIN WARRANT)
Name: ________________________________________________________
(Please type or print in block letters)
Address: ________________________________________________________
Social Security or Taxpayer Identification Number: ______________