THE WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NEITHER THE WARRANT NOR
THE SHARES ISSUABLE HEREUNDER MAY BE SOLD, ASSIGNED OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF A REGISTRATION STATEMENT FOR THE WARRANT OR THOSE SHARES OR
UNLESS THE HOLDER HEREOF IS ABLE TO DEMONSTRATE THROUGH EVIDENCE SATISFACTORY TO
THE ISSUER, THAT SUCH SALE, ASSIGNMENT OR OTHER TRANSFER IS EXEMPT FROM SUCH
REGISTRATION REQUIREMENTS.
COMMON STOCK EXCHANGE WARRANT AGREEMENT
VIRTUAL WALL STREET, INC.
For consideration, receipt of which is duly acknowledged, Virtual Wall
Street, Inc., a California Corporation, (the "Issuer") hereby grants to the
person or persons whose signatures appear below (the "Holder") a warrant (the
"Warrant") to purchase from the Issuer at any time during the Exercise Period
shares of fully paid and non-assessable shares of Common Stock of the Issuer set
forth above upon exchange of the Preferred Stock of Virtual Stock Market, Inc.,
held by the Holder, subject to the terms and conditions set forth herein.
1 Definitions
1.1 Common Stock. "Common Stock" shall mean the Common Stock of the
Issuer.
1.2 Exercise Period. The term "Exercise Period" shall mean that period
during which the Holder may exercise the Warrant. The Exercise Period will begin
on December 31, 1999 at 9:00am Pacific Time and continue until December 31, 2000
at 5:00pm Pacific Time. If either of such dates fall on a weekend or a federal
holiday, then such dates shall be deemed to be the next business day thereafter.
The Issuer, in its sole discretion, may extend the Exercise Period for an
additional term of as long as one year thereafter. The Issuer will provide
notice of any such extension to the Holder by no later than December 20, 2000.
1.3 Exchange Ratio. The term "Exchange Ratio" shall mean the number of
shares of Common Stock issuable upon the delivery and assignment to the Issuer
of each share of VSM Stock. As of the date of this Agreement, the Exchange Ratio
shall be one share of Common Stock for every two shares of VSM Stock delivered
and assigned. The Exchange Ratio shall be subject to adjustment as provided in
Section 3 of the Warrant.
1.4 VSM. "VSM" shall mean Virtual Stock Market, Inc., a California
corporation
1.5 VSM Stock. The term "VSM Stock" shall mean the Series A Convertible
Preferred Stock of Virtual Stock Market, Inc. If the VSM Stock is converted or
exchanged into another class of security of VSM or any successor entity of VSM,
the term "VSM Stock" shall refer to those securities which were issued upon
conversion of or in exchange for the VSM Stock.
2. Warrant Certificate. The Warrant shall be evidenced by one or more
certificates setting forth the number of shares of Common Stock which may be
acquired upon exercise of the Warrant and the date of issuance.
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The Warrant shall be signed on behalf of the Company by the facsimile signature
of the President and the Secretary of the Company. The Company may adopt and use
the facsimile signature of any person who holds one of these offices at the time
a Warrant is executed, or of any person now or subsequently holding one of these
offices, notwithstanding the fact that at the time the Unit Warrant is issued
the person has ceased to hold that office.
3 Method of Exercise.
3.1 Exchange of Shares. The Warrant may be exercised only through the
delivery and assignment of VSM Stock to the Issuer. No other form of
consideration will be accepted for the purpose of exercising the Warrant.
3.2 Delivery of Documents. The Holder may exercise the Warrant in full
or in part at any time during the Exercise Period by delivering the Warrant,
together with a duly executed notice of exercise in the form attached to the
Warrant, to the Issuer at the Issuer's principal address accompanied by the
delivery to the Issuer of a certificate or certificates, duly endorsed for
transfer to the Issuer, representing the VSM Stock being exchanged therefor. The
Holder shall be treated for all purposes as the holder of such shares of record
as of the close of business on the date that the Holder completes all steps
necessary to exercise the Warrant and the Issuer receives the documents
described above. If the Warrant is exercised in part, the Holder shall surrender
the Warrant in the manner and at the place above. Upon any such partial
exercise, the Issuer, at its expense, will issue and deliver to the Holder a new
Warrant certificate containing the same expiration date and provisions as the
Warrant which had been surrendered, and for the number of shares with respect to
which the Warrant was not yet exercised.
3.3 Delivery of Stock Certificates upon Exercise. As soon as
practicable after the exercise of the Warrant, and in any event within 30 days
thereafter, the Issuer, at its expense, will cause to be issued in the name of,
and delivered to, Holder a certificate or certificates for the number of fully
paid and non-assessable shares of Common Stock to which the Holder shall be
entitled. In lieu of any fractional share to which the Holder would otherwise be
entitled, the Issuer may pay the Holder cash equal to such fraction multiplied
by the then current fair market value of one full share, together with any other
stock or other securities or property (including cash, where applicable) to
which the Holder is entitled upon such exercise.
4 Conditions to Exercise - Securities Laws Compliance. As of this date, neither
the Warrant nor the shares of Common Stock which may be purchased upon exercise
hereof have been registered under the Securities Act of 1933, as amended, nor
can there be any assurance that such shares will be so registered at the time
that the Warrant is exercised. Consequently, the Issuer may require as a
condition to issuing the Common Stock upon exercise of the Warrant that the
Holder execute additional documents verifying the net worth, income and
investment experience of the Holder and such other matters as the Issuer deems
appropriate to establish that the Common Stock may be issued to the Holder
without registration under the Act.
5 Adjustment of Number of Shares and Purchase Price. The Number of Shares and
the Exchange Ratio in effect shall be subject to adjustment from time to time as
follows:
5.1 Stock Dividends, Stock Splits, Combinations. If the Issuer pays a
dividend in the form of its Common Stock or effects a split or subdivision of
the Issuer's Common Stock without payment of any consideration by the holders
thereof, then as of the date of such dividend distribution, split or
subdivision, the Exchange Ratio shall be adjusted so that the number of shares
of Common Stock issuable upon the
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surrender of each share of VSM Stock shall be increased in proportion to the
increase in the number of shares of Common Stock outstanding. If the number of
shares of Common Stock is decreased by a reverse stock split or other
combination of the outstanding shares of Common Stock, then, following the
effective date of the reverse stock split or combination, the Exchange Ratio
shall be adjusted so that the number of shares of Common Stock issuable on
exercise of the Warrant shall be decreased in proportion to the decrease in the
number of shares of Common Stock outstanding.
5.2 Conversion/Exchange of Issuer's Common Stock. If the Common Stock
is converted into or exchanged for a different class or type of security, the
Holder shall be entitled to purchase that class or type of security upon
exercise of the Warrant. For the purpose of calculating the Exchange Ratio, each
share or unit of that security will be deemed to equal that number of shares of
Common Stock for which that share or unit was converted or exchanged.
5.3 Stock Dividends, Stock Splits, Combinations and Adjustments of VSM
Stock. If VSM declares and pays a dividend to the holders of VSM Stock which is
payable in VSM Stock, or effects a split or subdivision of the VSM Stock, the
Exchange Ratio shall be adjusted so that the number of shares of the Issuer's
Common Stock issuable upon surrender of each share of VSM Stock shall be
decreased in proportion to the increase in the number of shares of VSM Stock
outstanding. If VSM effects a reverse stock split or other combination of the
VSM Stock, the Exchange Ratio shall be adjusted so that the number of shares of
the Issuer's Common Stock issuable upon surrender of each share of VSM Stock
shall be increased in proportion to the decrease in the number of shares of VSM
Stock outstanding.
5.4 Conversion/Exchange of VSM Stock. If the VSM Stock being delivered
and surrendered upon exercise of the Warrant is a class or type of security
other than the Series A Convertible Preferred Stock of VSM, each share or unit
of that security shall be deemed to equal the number of shares of that security
issuable upon conversion or exchange of the Series A Convertible Preferred Stock
of VSM.
5.5 Notification of Adjustment. The Issuer shall promptly deliver to
the Holder a notice announcing any adjustment in the Exchange Ratio or change in
the securities purchasable under the Warrant, accompanied by a brief statement
of the facts requiring that adjustment.
6 No Separate Assignment. The Warrant has been issued simultaneously with shares
of the Series A Preferred Stock of VSM as a single investment unit. The Warrant
may not be sold, assigned or transferred in any way, including by operation of
law, separately from such shares of VSM Stock.
7 Notices, Etc. All notices and other communications contemplated under the
Warrant shall be in writing and delivered personally, by Federal Express, DHL or
Airborne Express (overnight delivery, paid by sender) or by first class mail,
postage prepaid. Notices and other communications addressed to the Issuer shall
be sent to the address set forth beneath the signature of the Issuer, and
notices and communications addressed to the Holder shall be sent to the address
set forth on the cover page hereof. Each party shall promptly notify the other
of any change of the address to which all notices and other communications shall
be sent. Notices shall be deemed given when delivered, if delivered personally,
or upon deposit with Federal Express, DHL, Airborne Express or with the United
Postal Service.
8 No Shareholder Rights. The Holder shall have no rights as a shareholder of the
Issuer by virtue of possessing the Warrant. The Holder shall have no such rights
with respect to the any of the Common Stock
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issuable upon exercise of the Warrant until, and only to the extent that, the
Holder has taken all actions required to exercise the Warrant.
9 Miscellaneous. The Warrant may not be amended, or any right hereunder waived,
except by an instrument in writing signed by both the Issuer and the Holder. The
Warrant shall be governed by the laws of California, exclusive of any principles
of conflicts of laws which would require application of the laws of another
jurisdiction. The headings in the Warrant are for purposes of reference only,
and shall not limit or otherwise affect any of the terms hereof.
IN WITNESS WHEREOF, this Agreement is entered into as of this __________ day of
__________, 199_.
THE HOLDER VIRTUAL WALL STREET, INC.
___________________________ ___________________________
[Signature of Holder] A. Xxxxxxxx Xxxxxxx, President
___________________________ 00000 Xxxxxxxx Xxxx.,
[Printed Name and Title of Xxxxxx] Xxxxx 0000
Xxx Xxxxxxx, XX 00000
___________________________
[Signature of Joint Holder]
___________________________
[Printed Name and Title of Joint Holder]
Address:
___________________________
___________________________
___________________________
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