SERIES A-1 WARRANT NO.________________
_________________ SHARES
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR THE RULES AND REGULATIONS PROMULGATED THEREUNDER, OR UNDER ANY STATE
SECURITIES LAW AND MAY NOT BE PLEDGED, SOLD, ASSIGNED, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT WITH RESPECT THERETO IS
EFFECTIVE UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (ii)
THE COMPANY RECEIVES AN OPINION OF ITS COUNSEL OR OTHER COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH WARRANT OR SHARES MAY BE DISPOSED OF
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS.
WARRANT, dated as of February 18, 1999, issued by NETWORD,
INC., a Delaware corporation (the "Company") with principal offices at 000
Xxxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxxxxxxxx, Xxxxxxxx 00000-2606, Attn: President,
to _________________ (the "Holder").
The Company hereby agrees as follows:
1. Grant. The Company hereby grants to the Holder, the right,
privilege and option to purchase from the Company__________________ shares (the
"Warrant Shares") of the Company's common stock, par value $.01 per share
("Common Stock"), subject to adjustment as provided in Section 6 hereof, at the
exercise price of $1.25 per share (the "Exercise Price"), all subject to the
terms and upon the conditions set forth herein.
2. Exercise of Warrant. This Warrant is exercisable commencing
on the date hereof until 5:00 p.m., N.Y. time, on February 17, 2004 (the
"Expiration Date"), subject to the right of the Company to redeem this Warrant
as described in Section 3 hereof. This Warrant shall expire and all rights of
the Holder will terminate upon the Expiration Date.
3. Method of Exercise and Redemption of Warrant. Subject to
the redemption of this Warrant by the Company as provided in this Section 3, the
Holder may exercise this Warrant at or prior to the close of business on the
Expiration Date. This Warrant may be exercised by the Holder or redeemed by the
Company as follows:
(a) Subject to compliance with the provisions of
Section 5 hereof, this Warrant may be exercised in whole at any time, or in part
from time to time, by delivery of this
Warrant to the Company at its principal place of business, accompanied by a
check payable to the Company in payment of the Exercise Price for the number of
Warrant Shares as to which this Warrant is being exercised.
(b) Upon clearance of the check delivered pursuant to
Section 3(a) hereof, the Company shall make immediate delivery of the Warrant
Shares as to which this Warrant is being exercised, provided that if any law or
regulation requires the Company to take any action with respect to such Warrant
Shares before the issuance thereof, then the date of delivery of such shares
shall be extended for the period necessary to take such action. In case of the
purchase of less than all the shares purchasable under this Warrant, the Company
shall cancel this Warrant upon surrender hereof and shall execute and deliver to
the Holder a new Warrant of like tenor and date for the balance of the Warrant
Shares.
(c) In the event that a registration statement shall
become effective under the Securities Act of 1933, as amended (the "Securities
Act") covering the purchase and/or resale of the Warrant Shares, then the
Company may, at its option, redeem this Warrant as to all or any of the Warrant
Shares, at a price of $0.05 per Warrant Share (the "Redemption Price"), at any
time after the first date on which the average of the closing bid prices for the
shares of the Company's Common Stock in any inter-dealer quotation system on
which the Common Stock has been the subject of both bid and ask quotations shall
have exceeded $2.50 per share on any 10 consecutive trading days that commenced
on or after the effective date of such registration statement. From and after
the date fixed for redemption by notice given pursuant to Section 3(d) hereof
(the "Redemption Date"), the right to purchase Warrant Shares with respect to
the redeemed portion of this Warrant shall cease, and the Holder shall be
entitled to payment of the Redemption Price with respect to the portion of this
Warrant so redeemed (and to receive a new Warrant of like tenor and date with
respect to the unredeemed portion of this Warrant) upon surrender of this
Warrant to the Company.
(d) Notice of redemption of this Warrant shall be
given at least 30 days prior to the Redemption Date by mailing, by registered or
certified mail, return receipt requested, a copy of such notice to the Holder at
its address appearing on the books or transfer records of the Company or such
other address as may be designated by the Holder by notice to the Company.
Notwithstanding the giving of such notice, the Holder shall be entitled to
exercise this Warrant at any time prior to the Redemption Date.
4. Payment of Taxes. (a) The Company shall pay all documentary
stamp taxes attributable to the issuance of Warrant Shares upon the exercise of
this Warrant; provided, however, that the Company shall not be required to pay
any tax that may be payable in respect of any transfer involved in the issuance
and delivery of any Warrants, warrant certificates or certificates for Warrant
Shares purchased pursuant hereto in a name other than that of the Holder, and
the Company shall not be required to issue or deliver such Warrants, warrant
certificates or other certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.
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(b) The Company's obligation to deliver Warrant Shares upon
the exercise of this Warrant or any portion thereof shall be subject to the
payment by the Holder of any applicable federal, state and local withholding
tax. The Company shall, to the extent permitted by law, have the right to deduct
from any payment of any kind otherwise due to the Holder any federal, state or
local taxes required to be withheld with respect to such payment.
5. Restriction on Transfer and Exercise of Warrant. The Holder
hereof, by the Holder's acceptance hereof, hereby represents and warrants to,
and agrees with, the Company that the Holder has been informed that neither this
Warrant nor the Warrant Shares have been registered for sale under any federal
or state securities laws and that this Warrant is being offered and sold to the
Holder and, upon the exercise of this Warrant, the Warrant Shares will be sold
to the Holder, pursuant to an exemption from registration under the Securities
Act; Holder is acquiring this Warrant and will acquire the Warrant Shares for
Xxxxxx's own account for investment only and not with a view to the resale or
distribution thereof; this Warrant is not assignable or transferable otherwise
than by will or the laws of descent and distribution, and this Warrant may be
exercised during the Holder's lifetime only by the Holder; any attempt to assign
or transfer this Warrant in contravention of this Section 5 shall be void ab
initio; the Warrant Shares may not be sold, transferred, assigned, hypothecated
or otherwise disposed of, in whole or in part, unless registered under the
Securities Act and applicable state securities laws or unless an exemption from
such registrations is available; and that prior to the exercise of this Warrant,
Holder shall provide to the Company in writing such information as the Company
may reasonably request to establish that the exercise of this Warrant by Holder
is exempt from registration under such securities laws.
6. Anti-Dilution Provisions. (a) In case the Company shall (i)
declare or pay a dividend on its outstanding shares of Common Stock in shares of
Common Stock or make a distribution to all holders of its outstanding shares of
Common Stock in shares of Common Stock, (ii) subdivide its outstanding shares of
Common Stock into a greater number of shares of Common Stock, (iii) combine its
outstanding shares of Common Stock into a smaller number of shares of Common
Stock or (iv) issue by reclassification of its outstanding shares of Common
Stock other securities of the Company (including any such reclassification in
connection with a consolidation, merger or other business combination in which
the Company is the surviving corporation), the number and kind of Warrant Shares
purchasable upon exercise of this Warrant shall be adjusted so that Holder upon
exercise hereof shall be entitled to receive the number and kind of Warrant
Shares or other securities of the Company that the Holder would have owned or
have been entitled to receive after the occurrence of any of the events
described above had this Warrant been exercised immediately prior to the
occurrence of such event or any record date with respect thereto. An adjustment
made pursuant to this Section 6(a) shall become effective on the date of the
dividend payment, distribution, subdivision, combination or reclassification
issuance retroactive to the record date with respect thereto, if any, for such
event. Adjustment by reason of this Section 6(a) shall be made successively
whenever such an event occurs.
(b) In case of any consolidation of the Company with, or merger of the
Company into, another person (whether or not the Company is the surviving
corporation), or in the case of any sale, transfer or lease to another person of
all or substantially all of the assets of the Company,
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the Company or such successor, as the case may be, shall deliver to Holder an
undertaking that Holder shall have the right thereafter upon payment of the
Exercise Price in effect immediately prior to such transaction to purchase upon
exercise of this Warrant the kind and amount of securities, cash and property
which Holder would have owned or have been entitled to receive after the
consummation of such consolidation, merger, sale, transfer or lease had this
Warrant been exercised immediately prior to such transaction, and if the
successor or purchaser is not a corporation, such person shall provide
appropriate tax indemnification with respect to such shares and other securities
and property so that, upon exercise of this Warrant, Holder thereof would have
the same benefits he otherwise would have had if such successor or purchaser
person were a corporation. The provisions of this Section 6(b) shall similarly
apply to successive consolidations, mergers, sales, transfers or leases.
7. Elimination of Fractional Shares. The Company shall not be
required to issue certificates representing fractional shares of Common Stock
upon the exercise of this Warrant, nor shall it be required to issue scrip or
pay cash in lieu of fractional shares, it being the intent of the parties that
all fractional shares shall be eliminated by the Company by rounding down to the
nearest whole number of shares of Common Stock.
8. Reservation of Securities. The Company shall at all times
reserve and keep available out of its authorized shares of Common Stock, solely
for the purpose of issuance upon the exercise of this Warrant, such number of
shares of Common Stock as shall be issuable upon the exercise thereof. The
Company covenants and agrees that, upon exercise of this Warrant for and payment
of the exercise price therefor, all Warrant Shares issuable upon such exercise
shall be duly authorized, validly issued, fully paid, nonassessable and not
subject to preemptive rights of any shareholder.
9. Notices to Warrant Holder. Nothing contained in this
Warrant shall be construed as conferring upon the Holder the right to vote or to
consent or to receive notice as a shareholder in respect of any meetings of
shareholders for the election of directors or any other matter, or as having any
rights whatsoever as a shareholder of the Company. If the Company shall propose
to engage in any transaction with respect to which adjustment of the Exercise
Price or the kind or amount of securities, property or other assets receivable
upon exercise of this Warrant would be required pursuant to Section 6, the
Company shall cause to be mailed to the Holder, at least 10 days prior to the
applicable date hereinafter specified, a notice describing such transaction and
stating (a) in the case of any dividend, distribution or grant of rights or
warrants to all holders of shares of Common Stock, the date on which a record is
to be taken for such purpose or, if a record is not to be so taken, the date as
of which the holders of Common Stock of record to be entitled thereto are to be
determined, (b) in the case of any other transaction described in Section 6 in
which all holders of Common Stock of record are entitled to participate, the
date on which such transaction is expected to become effective and the date as
of which it is expected that holders of Common Stock of record shall be entitled
to exchange their shares of Common Stock for securities, property or other
assets deliverable upon such transaction, and (c) in the case of any other
transaction, the date on which it is expected to occur or become effective.
Failure to give such notice or any defect therein shall not affect the validity
of any action taken or transaction consummated by the Company.
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10. Notices.
All notices, requests, consents and other communications
hereunder shall be effective only if given in writing and shall be deemed to
have been duly made or given when delivered, or three days after being mailed by
registered or certified mail, return receipt requested:
(a) If to the Holder, to the address of the Holder as
shown on the books of the Company or as otherwise designated
or provided for herein; or
(b) If to the Company, to the address set forth on
the first page of this Warrant or to such other address as the
Company may designate by notice to the Holder.
11. Amendment. This Warrant may not be amended or supplemented
except by an instrument in writing executed by the Company and the Holder.
12. Governing Law. This Warrant shall be deemed to be a
contract made under the laws of the State of New York and for all purposes shall
be construed in accordance with the laws of such State (without regard to the
conflicts of law principles thereof).
13. Jurisdiction. Any legal action or proceeding with respect
to the interpretation or enforcement of this Warrant may be brought exclusively
in the courts of the State of New York or of the United States of America for
the Southern District of New York, and, by acceptance of this Warrant, the
Holder accepts for itself and in respect of its property, generally and
unconditionally, the exclusive jurisdiction of the aforesaid courts with respect
to such matters. By acceptance of this Warrant, the Holder waives and agrees not
to assert, as a defense in any action, suit or proceeding for the interpretation
or enforcement of this Warrant, that the Holder is not subject thereto or that
such action, suit or proceeding may not be brought or is not maintainable in
said courts or that this Warrant may not be enforced in or by said courts or
that the Holder's property is exempt or immune from execution, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper or (provided that process shall be served
in any manner referred to in the following sentence) that service of process
upon the Holder is ineffective. Service of process in any such action, suit or
proceeding may be made upon the Company or the Holder in any manner permitted by
the laws of the State of New York or the federal laws of the United States or as
follows: (i) by personal service or (ii) by certified or registered mail to the
Holder or the Company, as applicable, at its address for notice pursuant to
Section 10. Service of process upon the Holder or the Company in any manner
referred to in the preceding sentence shall be deemed in every respect effective
service of process upon the Holder or the Company.
14. Benefits of This Warrant. Nothing in this Warrant shall be
construed to give to any person other than the Company and the Holder any legal
or equitable right, remedy or claim under this Warrant; and this Warrant shall
be for the sole and exclusive benefit of the Company and the Holder.
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15. Headings. The headings in this Warrant are intended solely
for convenience of reference and shall be given no effect in the construction or
interpretation of this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed as of the day and year first above written.
NETWORD, INC.
By:______________________________
Name: Xxxx Xxxxxx
Title: Chief Operating Officer and
Vice President of Marketing
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