SERIES C 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 STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED
OR SOLD UNLESS (I) REGISTERED UNDER THE SECURITIES ACT AND APPLICABLE
STATE SECURITIES LAWS OR (II) AN EXEMPTION FROM REGISTRATION IS
AVAILABLE AT THE TIME OF SUCH TRANSFER OR SALE.
WARRANT, dated as of _______, 1999, issued by NETWORD, INC., a
Delaware corporation (the "Company") with principal offices at 000 Xxxxxxx
Xxxxxx, Xxxxx Xxxxx, Xxxxxxxxxxxx, Xxxxxxxx 00000-0000, Attn: President,
to _______________________________________ (the "Holder") or registered assigns.
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 common stock, par value $.01 per share ("Common Stock"), subject to
adjustment as provided in Section 6, at the exercise price of $1.50 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 and will expire at 5:00 p.m., New York City time, on June 30,
2004 (the "Expiration Date"), subject to the right of the Company to redeem this
Warrant as described in Section 3.
3. Method of Exercise and Redemption of Warrant. Unless this
Warrant has been redeemed by the Company as provided in this Section 3, the
Holder may exercise this Warrant at or prior to its expiration on the Expiration
Date. This Warrant may be exercised by the Holder or redeemed by the Company as
follows:
(a) 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 exercised.
(b) At any time after the Common Stock is first
subject to trading on any national exchange or inter-dealer quotation system, in
addition to the method of payment provided in Section 3(a) hereof and in lieu of
any cash payment required thereunder, the Holder shall have the right at any
time and from time to time to exercise this Warrant by sending written notice to
the Company of such exercise pursuant to this Section 3(b) ("Notice"). Within
the period set forth in Section 3(c), the Company shall deliver to Holder a duly
issued certificate (or certificates in the denominations designated by Holder in
its Notice) representing the number of
shares of Common Stock equal to the product of (x) the number of shares of
Common Stock as to which this Warrant is being exercised, multiplied by (y) a
fraction, the numerator of which is the Market Price of the Common Stock less
the Exercise Price therefor, and the denominator of which is such Market Price.
For the purposes hereof, the "Market Price" on any day shall mean the last
reported sale price on such day or, in case no such reported sale takes place on
such day, the average of the last reported sale prices for the last three
trading days, in either case as officially reported by the principal national
securities exchange (including the Nasdaq National Market) on which the Common
Stock is listed or admitting to trading, or, if the Common Stock is not listed
or admitted to trading on any such national securities exchange, the average
closing bid price as furnished by the National Association of Securities
Dealers, Inc. ("NASD") on the Nasdaq SmallCap Market, or if the Common Stock is
not quoted on the Nasdaq SmallCap Market, the average closing bid price as
furnished by the NASD Over the Counter Bulletin Board (the "Bulletin Board"), or
if the Common Stock is not quoted on the Bulletin Board, the average of the
closing average of bid and asked prices as furnished by the NQB Pink Sheets.
(c) Upon clearance of the check delivered pursuant to
Section 3(a) or receipt of the Notice pursuant to Section 3(b), the Company
shall make immediate delivery of the shares of Common Stock as to which this
Warrant is exercised, provided that if any law or regulation requires the
Company to take any action with respect to such shares of Common Stock 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 exercise of this
Warrant as to less than all of the Warrant Shares, 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.
(d) The Company may 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 its option, at any time if (i) more than 12 months have
elapsed after the Common Stock is first subject to both bid and ask quotations
in the NQB Pink Sheets (or another inter-dealer quotation system) and (ii) at
any time after such 12 month period the average of the closing average of bid
and asked prices for the Common Stock is at least $2.50 per share for 20
consecutive trading days during which the average daily trading volume in the
Common Stock is at least 10,000 shares. From and after the date fixed for
redemption by notice given pursuant to Section 3(e) (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.
(e) 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.
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4. Payment of Taxes. (a) The Company shall pay all documentary
stamp taxes attributable to the issuance of shares of Common Stock 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.
(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. Subject to the
right of the Company's Board of Directors or any committee thereof to disapprove
any such election and require payment of the withholding tax in cash, at any
time after the Common Stock is first subject to both bid and ask quotations in
the NQB Pink Sheets (or another inter-dealer quotation system), the Holder shall
have the right to elect to pay the withholding tax with shares of Common Stock
to be received upon exercise of this Warrant or any portion thereof or which are
otherwise owned by the Holder. Upon the exercise of any portion of this Warrant,
any election to pay withholding taxes with stock shall be irrevocable once made
with respect to such portion. For purposes of this Section 4(b), shares of
Common Stock used to pay withholding tax shall be valued at the Market Price.
5. Restriction on Transfer of Warrants. The Holder hereof, by the
Holder's acceptance hereof, hereby represents and warrants to, and agrees with,
the Company that (a) 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, or
pursuant to a registration statement filed by the Company pursuant to
registration rights granted in connection with the issuance of this Warrant; (b)
the Holder is an "accredited investor" (as defined in Rule 501(a) of Regulation
D under the Securities Act) and is acquiring this Warrant and, if the exercise
of this Warrant is not registered under the Securities Act and applicable state
securities laws, will acquire the Warrant Shares for the Holder's own account
for investment only and not with a view to distribution; (c) this Warrant and
the Warrant Shares may not be transferred or sold, in whole or in part, unless
such transfer or sale is registered under the Securities Act and applicable
state securities laws or exempt from such registration; and (d) if the exercise
of this Warrant is not registered under the Securities Act and applicable state
securities laws, prior to the exercise of this Warrant, the 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 the Holder is exempt from
registration under the Securities Act and applicable state securities laws.
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If a transfer of this Warrant is permitted pursuant to the
preceding paragraph of this Section 5, the Holder shall execute and deliver to
the Company, a completed Assignment in the form attached hereto as Exhibit A.
Upon the Company's determination that the requirements for transfer of this
Warrant have been satisfied, receipt of the completed and duly executed
Assignment, and surrender of this Warrant, the Company shall, as promptly as
practicable, deliver to the transferee a new Warrant of like tenor and date for
that portion of the Warrant Shares as to which this Warrant is being transferred
and shall deliver to the Holder a new Warrant of like tenor and date for the
balance, if any, of the Warrant Shares.
6. Anti-Dilution Provisions. (a) In the event 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 issuable upon exercise of this Warrant and/or the
Exercise Price shall be adjusted as the Company's Board of Directors determines
to be equitable so that the 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 been entitled to receive after the occurrence of any
of such events 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,
retroactive to any record date with respect thereto. The provisions of this
Section 6(a) shall similarly apply to successive events on a cumulative basis.
(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, the Company or such
successor, as the case may be, shall deliver to the Holder an undertaking that
the 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 the Holder
would 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, the Holder will have the same benefits the Holder otherwise
would have had if such successor or purchaser 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 Interests. The Company shall not
be required to issue certificates representing fractions of Common Stock upon
the exercise of this Warrant, nor
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shall it be required to issue scrip or pay cash in lieu of fractional interests,
it being the intent of the parties that all fractional interests 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 Common Stock as shall be issuable upon the exercise hereof. The Company
covenants and agrees that, upon exercise of this Warrant for and payment of the
exercise price therefor, all shares of Common Stock issuable upon such exercise
shall be duly authorized, validly issued, fully paid, nonassessable and not
subject to preemptive rights of any stockholder.
9. Right to Notice. 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.
10. No Rights as a Stockholder. 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 stockholder in respect of any meetings of
stockholders for the election of directors or any other matter, or as having any
rights whatsoever as a stockholder of the Company.
11. 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.
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12. Amendment. This Warrant may not be amended or supplemented
except by an instrument in writing executed by the Company and the Holder.
13. 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
conflict of laws principles thereof).
14. Jurisdiction. Any legal action or proceeding with respect
to 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. 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 to
the jurisdiction of such courts 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 11. 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.
15. Benefits of This Warrant. Nothing in this Warrant shall be
construed to give to any person other than the Company and the Holder and its
assigns any legal or equitable right, remedy or claim under this Warrant, and
this Warrant shall be for the exclusive benefit of the Company and the Holder
and its assigns.
16. 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.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed on its behalf.
NETWORD, INC.
By:______________________________
Name:
Title:
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EXHIBIT A
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if the
holder desires to transfer the Warrant)
FOR VALUE RECEIVED ____________________________________ hereby
sells, assigns and transfers the within Series C Warrant No.____of NETWORD, INC.
(the "Company"), dated _________, 1999, to the extent of the rights evidenced by
said Warrant to purchase _______________________________________ Warrant Shares,
unto ___________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT NAME AND ADDRESS OF ASSIGNEE)
together with all right, title and interest therein, and does hereby irrevocably
constitute and appoint __________________________________ attorney, to transfer
said Warrant on the books of the Company, with full power of substitution.
If this assignment is made as to less than all of the Warrant
Shares evidenced by said Xxxxxxx, a new Warrant of like tenor and date shall be
issued in the name of and delivered to the registered holder for the balance of
the Warrant Shares evidenced by said Xxxxxxx.
DATED: ____________________________
Signature:
___________________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant, in every particular,
without alteration or enlargement
or any change whatever.)
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