Exhibit 4(bm)
THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE
OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO NCT GROUP, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.
-----------------
NCT GROUP, INC.
(Incorporated under the laws of the State of Delaware)
Void after 5:00 p.m., New York City time, on December 6, 2007
Warrant to Purchase
15,000,000 Shares of
Common Stock
Warrant for the Purchase of Shares of Common Stock
No. ACA-2
FOR VALUE RECEIVED, NCT GROUP, INC. (the "Company"), a Delaware
corporation, on this 6th day of December, 2002 (the "Grant Date") hereby issues
this warrant (the "Warrant") and certifies that Alpha Capital Aktiengesellschaft
(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 the Grant Date and
expiring, unless earlier terminated as hereinafter provided, at 5:00 p.m. New
York City local time on December 6, 2007 (the "Expiration Date") up to fifteen
million (15,000,000) fully paid and nonassessable shares of Common Stock, $.01
par value, of the Company at a per share price equal to $0.01 (the "Exercise
Price"), and subject to further adjustment as set forth herein.
The term "Common Stock" means the shares of Common Stock, $.01 par value,
of the Company as 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.
1.1. Period of Exercise. 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 the Vesting Date (as defined in Section 1.7
hereof), and expiring at 5:00 p.m., New York City local time, on the Expiration
Date, 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.
1.2 Exercise For Payment. 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.
1.3 Cashless Exercise. This Section 1.3 shall apply only if both (a) there
is no registration statement then in effect covering the Warrant Stock as to
which an exercise under this Section 1.3 is being effected and (b) the method of
exercise described in this Section 1.3 would be necessary for the Holder
lawfully to sell the Warrant Stock acquired pursuant to this Section 1.3
immediately after such acquisition in accordance with Rule 144 under the
Securities Act of 1933, as amended (the "1933 Act"). As the alternative to the
payment method of exercise described in Section 1.2 above, the Holder may
exercise this Warrant by surrendering this Warrant in exchange for the number of
shares of Warrant Stock equal to the product of (a) the number of shares of
Warrant Stock as to which the Warrant is being exercised, multiplied by (b) a
fraction, the numerator of which is the Market Price (as defined below) of the
Common Stock less the Exercise Price of the Warrant Stock and the denominator of
which is the Market Price of Common Stock. Solely for the purposes of the
foregoing calculation, the "Market Price" of the Common Stock shall be based on
the date on which the Warrant Exercise Form attached hereto is deemed to have
been sent to the Company pursuant to Section 12 hereof, and shall be equal to
the last sale price of the Common Stock on the Nasdaq National Market System
(the "Nasdaq-NM") as reported by Bloomberg Financial Markets ("Bloomberg"), or,
if the Nasdaq-NM is not the principal trading market for such security, then on
the principal securities exchange or trading market where such security is
listed or traded as reported by Bloomberg, or if the foregoing do not apply,
then in the over-the-counter market on the pink sheets or bulletin board for
such security as reported by Bloomberg (as applicable, the "Principal Market").
For purposes of this Warrant, the method of exercise described in this Section
1.3 shall be known as "Cashless Exercise."
1.4 Partial Exercise. 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.
1.5 Transfer Books and Certificates. 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.
1.6 Certain Taxes. 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.
1.7 Vesting. This Warrant shall vest and become exerciseable in its
entirety as of the date, if any, that both of the following events have occurred
(the "Vesting Date"):
(a) The Company has failed to pay when due and payable any amount owed
by it under the Promissory Note, dated as of the date hereof, in the
principal amount of $385,000.00, made by the Company to the Holder (the
"Note"); and
(b) The Company has failed, as of the date that the Note becomes due
and payable, to pay any amount owed by the Company under any Registration
Penalty Provision (as defined in Exhibit A hereto) and such payment
obligation has not been otherwise discharged.
If the event described in clause (b) above occurs but the event described in
clause (a) above does not occur, then this Warrant shall vest and become
exerciseable as to two million (2,000,000) shares of Warrant Stock only.
1.8 Certain Beneficial Ownership. The Holder shall not be entitled to
exercise this Warrant to the extent that (a) the number of shares of Common
Stock issuable upon such exercise and (b) the number of shares of Common Stock
beneficially owned by the Holder and its affiliates on the date of such exercise
would result in beneficial ownership by the Holder and its affiliates of more
than 9.99% of the outstanding shares of Common Stock on the date of such
exercise. For the purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Rule 13d-3 thereunder. Subject to the
foregoing, the Holder shall not be limited to aggregate exercises of only 9.99%.
The Holder may void the exercise limitation described in this paragraph upon 75
days' prior written notice to the Company. The Holder may allocate which of the
equity of the Company deemed beneficially owned by the Holder shall be included
in the 9.99% amount described above and which shall be allocated to the excess
above 9.99%.
2. [OMITTED]
3. 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.
4. Warrant Stock Registration and Transfer.
4.1 Registration. The Company shall include the Warrant Stock on the next
available registration statement the Company files with the Securities and
Exchange Commission (the "SEC") that relates to shares of Common Stock;
provided, however, that the availability of a registration statement hereunder
may not be negated or delayed by a commitment the Company undertakes to a third
party after the date hereof. The Company shall use best efforts to cause such
registration statement to be declared effective by the SEC and to remain
effective until the earlier of (a) the date on which Holder has sold all of the
Warrant Stock or (b) the date on which this Warrant expires.
4.2 Transfer. The Warrant Stock may not be sold 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 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.
5. 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.
6. 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.
7. 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.
8. Redemption. This Warrant is not redeemable by the Company.
9. Anti-Dilution Provisions.
9.1 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.
9.2 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.
9.3 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 Price. The Company will forthwith mail a copy of each
such certificate to the holder of this Warrant.
9.4 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.
10. 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 not then registered for sale to the public under the 1933 Act shall bear
on the face thereof substantially the following legend, insofar as is consistent
with Delaware law:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES
ONLY AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, ASSIGNED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF
COUNSEL, REASONABLY SATISFACTORY TO NCT GROUP, INC., THAT REGISTRATION
IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR
UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT."
11. 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.
12. 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, XX 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 6, 2002
NCT GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------------
Xxxxxxx X. Xxxxxxxx
Chairman & Chief Executive Officer
EXHIBIT A
REGISTRATION PENALTY PROVISIONS
[COPY LIST FROM 3(a)(10) COMPLAINT]
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.
The undersigned hereby makes payment for the foregoing shares of Common
Stock at the rate of $.01 per share, or an aggregate of $___________. In the
alternative, if "Cashless Exercise" as described in Section 1.3 of the within
Warrant is available and is desired, then check the following: __________ (If
checked, the number of shares of Common Stock will be calculated per Section 1.3
of the within Warrant.)
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 Securities Act of 1933, as amended (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: ______________
