EXHIBIT 4.3
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
NEW VISUAL CORPORATION
COMMON STOCK PURCHASE WARRANT
1. ISSUANCE; CERTAIN DEFINITIONS. In consideration of good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by NEW VISUAL CORPORATION, a Utah corporation (the "Company"),
XXXXXX MANAGEMENT LTD, or registered assigns (the "Holder") is hereby granted
the right to purchase at any time until 5:00 P.M., New York City time, on the
Expiration Date (as defined below), Six Hundred Thousand (600,000)(1) fully paid
and nonassessable shares of the Company's Common Stock, $0.001 par value per
share (the "Common Stock"), at an initial exercise price per share (the
"Exercise Price") of $0.15 per share, subject to further adjustment as set forth
herein. This Warrant is being issued pursuant to the terms of that certain
Securities Purchase Agreement, dated as of October 31, 2003 (the "Agreement"),
to which the Company and Holder (or Holder's predecessor in interest) are
parties. Capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Agreement.
2. EXERCISE OF WARRANTS.
2.1 GENERAL.
(a) This Warrant is exercisable in whole or in part
at any time and from time to time. Such exercise shall be effectuated by
submitting to the Company (either by delivery to the Company or by facsimile
transmission as provided in Section 8 hereof) a completed and duly executed
Notice of Exercise (substantially in the form attached to this Warrant
Certificate) as provided in this paragraph. The date such Notice of Exercise is
faxed to the Company shall be the "Exercise Date," provided that the Holder of
this Warrant tenders this Warrant Certificate to the Company within five (5)
business days thereafter. The Notice of Exercise shall be executed by the Holder
of this Warrant and shall indicate (i) the number of shares then being purchased
pursuant to such exercise and (ii) if applicable (as provided below), whether
the exercise is a cashless exercise. Upon surrender of this Warrant Certificate,
together with appropriate payment of the Exercise Price for the shares of Common
Stock purchased, the Holder shall be entitled to receive a certificate or
certificates for the shares of Common Stock so purchased.
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(1) Insert number equal to 2 shares for each $1 Purchase Price.
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(b) If the Notice of Exercise form elects a
"cashless" exercise, the Holder shall thereby be entitled to receive a number of
shares of Common Stock equal to (w) the excess of the Current Market Value (as
defined below) over the total cash exercise price of the portion of the Warrant
then being exercised, divided by (x) the Market Price of the Common Stock as of
the trading day immediately prior to the Exercise Date. For the purposes of this
Warrant, the terms (y) "Current Market Value" shall be an amount equal to the
Market Price of the Common Stock as of the trading day immediately prior to the
Exercise Date, multiplied by the number of shares of Common Stock specified in
such Notice of Exercise Form, and (z) "Market Price of the Common Stock" shall
be the closing price of the Common Stock as reported by the Reporting Service
for the relevant date.
(c) If the Notice of Exercise form elects a "cash"
exercise, the Exercise Price per share of Common Stock for the shares then being
exercised shall be payable in cash or by certified or official bank check.
(d) The Holder shall be deemed to be the holder of
the shares issuable to it in accordance with the provisions of this Section 2.1
on the Exercise Date.
2.2 LIMITATION ON EXERCISE. Notwithstanding the
provisions of this Warrant, the Agreement or of the other Transaction
Agreements, in no event (except (i) as specifically provided in this Warrant as
an exception to this provision, (ii) during the forty-five (45) day period prior
to the Expiration Date, (iii) after the Company issues an Early Expiration Date
Notice (as defined below), or (iv) while there is outstanding a tender offer for
any or all of the shares of the Company's Common Stock) shall the Holder be
entitled to exercise this Warrant, or shall the Company have the obligation to
issue shares upon such exercise of all or any portion of this Warrant to the
extent that, after such exercise the sum of (1) the number of shares of Common
Stock beneficially owned by the Holder and its affiliates (other than shares of
Common Stock which may be deemed beneficially owned through the ownership of the
unexercised portion of the Warrants or other rights to purchase Common Stock or
through the ownership of the unconverted portion of the Debentures or other
convertible securities), and (2) the number of shares of Common Stock issuable
upon the exercise of the Warrants with respect to which the determination of
this proviso is being made, would result in beneficial ownership by the Holder
and its affiliates of more than 4.99% of the outstanding shares of Common Stock
(after taking into account the shares to be issued to the Holder upon such
exercise). For purposes of the proviso to the immediately preceding sentence,
beneficial ownership shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), except as
otherwise provided in clause (1) of such sentence. The Holder, by its acceptance
of this Warrant, further agrees that if the Holder transfers or assigns any of
the Warrants to a party who or which would not be considered such an affiliate,
such assignment shall be made subject to the transferee's or assignee's specific
agreement to be bound by the provisions of this Section 2.2 as if such
transferee or assignee were the original Holder hereof.
2.3 CERTAIN DEFINITIONS. As used herein, each of the
following terms has the meaning set forth below, unless the context otherwise
requires:
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(a) "Closing Price" means the closing price during
regular trading hours of the Common Stock (in U.S. Dollars) on the Principal
Trading Market, as reported by the Reporting Service.
(b) "Expiration Date" means the earlier of September
30, 2006 or the Early Expiration Date (as defined below).
(c) "Principal Trading Market" means the Over the
Counter Bulletin Board or such other market on which the Common Stock is
principally traded at the relevant time, but shall not include the "pink
sheets."
(d) "Reporting Service" means Bloomberg LP or if that
service is not then reporting the relevant information regarding the Common
Stock, a comparable reporting service of national reputation selected by the
Holder and reasonably acceptable to the Company.
(e) "Target Price" means $0.78 per share, subject to
further adjustment in the same manner as adjustments to the Exercise Price are
made herein.
(f) "Trading Day" means any day during which the
Principal Trading Market shall be open for business.
2.4 EARLY EXPIRATION DATE. So long as an effective
registration statement exists with respect to the resale of the shares issuable
on exercise of this Warrant, if the Closing Price for the Common Stock is more
than the Target Price for each of twenty (20) consecutive Trading Days (the
twentieth of such consecutive Trading Days, the "Target Trading Day"), then the
Company will have the right to give the Holder a written notice (an "Early
Expiration Date Notice") within five (5) Trading Days after the Target Trading
Day. The Early Expiration Date Notice shall state that the Expiration Date shall
be a date specified in such notice (the "Early Expiration Date"), which date
shall not be earlier than sixty (60) days after the Target Trading Day.
3. RESERVATION OF SHARES. The Company hereby agrees that at
all times during the term of this Warrant there shall be reserved for issuance
upon exercise of this Warrant such number of shares of its Common Stock as shall
be required for issuance upon exercise of this Warrant (the "Warrant Shares").
4. MUTILATION OR LOSS OF WARRANT. Upon receipt by the Company
of evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) receipt of
reasonably satisfactory indemnification, and (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor and date and any such lost, stolen, destroyed or
mutilated Warrant shall thereupon become void.
5. RIGHTS OF THE HOLDER. The Holder shall not, by virtue
hereof, be entitled to any rights of a stockholder in the Company, either at law
or equity, and the rights of the Holder are limited to those expressed in this
Warrant and are not enforceable against the Company except to the extent set
forth herein.
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6. PROTECTION AGAINST DILUTION AND OTHER ADJUSTMENTS.
6.1 ADJUSTMENT MECHANISM. If an adjustment of the
Exercise Price is required pursuant to this Section 6, the Holder shall be
entitled to purchase such number of shares of Common Stock as will cause (i) (x)
the total number of shares of Common Stock Holder is entitled to purchase
pursuant to this Warrant following such adjustment , multiplied by (y) the
adjusted Exercise Price per share, to equal the result of (ii) (x) the dollar
amount of the total number of shares of Common Stock Holder is entitled to
purchase before adjustment, multiplied by (y) the total Exercise Price before
adjustment.(2)
6.2 CAPITAL ADJUSTMENTS. In case of any stock split
or reverse stock split, stock dividend, reclassification of the Common Stock,
recapitalization, merger or consolidation (where the Company is not the
surviving entity), the provisions of this Section 6 shall be applied as if such
capital adjustment event had occurred immediately prior to the date of this
Warrant and the original Exercise Price had been fairly allocated to the stock
resulting from such capital adjustment; and in other respects the provisions of
this Section shall be applied in a fair, equitable and reasonable manner so as
to give effect, as nearly as may be, to the purposes hereof. A rights offering
to stockholders shall be deemed a stock dividend to the extent of the bargain
purchase element of the rights.
6.3 ADJUSTMENT FOR SPIN OFF. If, for any reason,
prior to the exercise of this Warrant in full, the Company spins off or
otherwise divests itself of a part of its business or operations or disposes all
or of a part of its assets in a transaction (the "Spin Off") in which the
Company does not receive compensation for such business, operations or assets,
but causes securities of another entity (the "Spin Off Securities") to be issued
to security holders of the Company, then the Company shall cause (i) to be
reserved Spin Off Securities equal to the number thereof which would have been
issued to the Holder had all of the Holder's unexercised Warrants outstanding on
the record date (the "Record Date") for determining the amount and number of
Spin Off Securities to be issued to security holders of the Company (the
"Outstanding Warrants") been exercised as of the close of business on the
trading day immediately before the Record Date (the "Reserved Spin Off Shares"),
and (ii) to be issued to the Holder on the exercise of all or any of the
Outstanding Warrants, such amount of the Reserved Spin Off Shares equal to (x)
the Reserved Spin Off Shares, multiplied by (y) a fraction, of which (I) the
numerator is the amount of the Outstanding Warrants then being exercised, and
(II) the denominator is the amount of the Outstanding Warrants.
7. TRANSFER TO COMPLY WITH THE SECURITIES ACT; REGISTRATION
RIGHTS.
7.1 TRANSFER. This Warrant has not been registered
under the Securities Act of 1933, as amended, (the "Act") and has been issued to
the Holder for investment and not with a view to the distribution of either the
Warrant or the Warrant Shares. Neither this Warrant nor any of the Warrant
Shares or any other security issued or issuable upon exercise of this Warrant
may be sold, transferred, pledged or hypothecated in the absence of an effective
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2 Example: Assume 100,000 shares remain under Warrant at original stated
Exercise Price of $0.15. Total exercise price (clause (y) in text) is (i)
100,000 x (ii) $0.15, or $15,000. Company effects 2:1 stock split. Exercise
Price is adjusted $0.075. Number of shares covered by Warrant is adjusted to
200,000, because (applying clause (x) in text) (i) 200,000 x (ii) $0.075 =
$15,000.
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registration statement under the Act relating to such security or an opinion of
counsel satisfactory to the Company that registration is not required under the
Act. Each certificate for the Warrant, the Warrant Shares and any other security
issued or issuable upon exercise of this Warrant shall contain a legend on the
face thereof, in form and substance satisfactory to counsel for the Company,
setting forth the restrictions on transfer contained in this Section.
7.2 REGISTRATION RIGHTS. Reference is made to
Registration Rights Provisions in Section 4(g) of the Securities Purchase
Agreement, the terms of which are incorporated herein by reference.
8. NOTICES. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally, sent
by facsimile transmission or sent by certified, registered or express mail,
return receipt requested, postage pre-paid. Any such notice shall be deemed
given when so delivered personally, or sent by confirmed and acknowledged
facsimile transmission, or, if so mailed, two days after the date of deposit in
the United States mails, as follows:
(i) if to the Company, to:
NEW VISUAL CORPORATION
0000 Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attn: President
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxx & XxXxxxxx
Attn: Xxxxxxxx X. Xxxxxxx, Esq.
2300 Xxxxxxxx Xxxx Center
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
(ii) if to the Holder, to:
Attn:
Telephone No.: ( ) -
Telecopier No.: ( ) -
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with a copy to:
Xxxxxxx & Xxxxxx LLP, Esqs.
00 Xxxxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No. (000) 000-0000
Any party may, by notice given in accordance with this Section to the other
parties, designate another address or person for receipt of notices hereunder.
9. SUPPLEMENTS AND AMENDMENTS; WHOLE AGREEMENT. This Warrant
may be amended or supplemented only by an instrument in writing signed by the
parties hereto. This Warrant contains the full understanding of the parties
hereto with respect to the subject matter hereof and thereof and there are no
representations, warranties, agreements or understandings other than expressly
contained herein and therein.
10. GOVERNING LAW. This Warrant shall be deemed to be a
contract made under the laws of the State of New York for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. Each of the parties consents to the jurisdiction
of the federal courts whose districts encompass any part of the County of New
York or the state courts of the State of New York sitting in the County of New
York in connection with any dispute arising under this Warrant and hereby
waives, to the maximum extent permitted by law, any objection, including any
objection based on FORUM NON CONVENIENS, to the bringing of any such proceeding
in such jurisdictions. To the extent determined by such court, the Company shall
reimburse the Holder for any reasonable legal fees and disbursements incurred by
the Buyer in enforcement of or protection of any of its rights under any of the
Transaction Agreements.
11. JURY TRIAL WAIVER. The Company and the Holder hereby waive
a trial by jury in any action, proceeding or counterclaim brought by either of
the Parties hereto against the other in respect of any matter arising out or in
connection with this Warrant.
12. COUNTERPARTS. This Warrant may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
[Balance of page intentionally left blank]
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13. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Warrant are inserted for convenience only and shall not control
or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
the 31ST day of October, 2003.
NEW VISUAL CORPORATION
By: /s/ Xxx Xxxxxxxxxx
Ray Willenberg_____________________________
(Print Name)
Chairman___________________________________
(Title)
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NOTICE OF EXERCISE OF WARRANT
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate dated as of ________________, 20___ , to
purchase ___________ shares of the Common Stock, $0.001 par value, of NEW VISUAL
CORPORATION and tenders herewith payment in accordance with Section 1 of said
Common Stock Purchase Warrant.
_ CASH: $ = (Exercise Price x Exercise Shares)
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Payment is being made by:
_ enclosed check
_ wire transfer
_ other
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_ CASHLESS EXERCISE
Net number of Warrant Shares to be issued to Holder : _________*
* based on: CURRENT MARKET VALUE - (EXERCISE PRICE X EXERCISE SHARES)
Market Price of Common Stock
where:
Market Price of Common Stock ["MP"] = $_______________
Current Market Value [MP x Exercise Shares] = $_______________
It is the intention of the Holder to comply with the provisions of
Section 2.2 of the Warrant regarding certain limits on the Holder's right to
exercise thereunder. Based on the analysis on the attached Worksheet Schedule,
the Holder believe this exercise complies with the provisions of said Section
2.2. Nonetheless, to the extent that, pursuant to the exercise effected hereby,
the Holder would have more shares than permitted under said Section, this notice
should be amended and revised, ab initio, to refer to the exercise which would
result in the issuance of shares consistent with such provision. Any exercise
above such amount is hereby deemed void and revoked.
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Please deliver the stock certificate to:
Dated: ______________________
_____________________________
[Name of Holder]
By: _________________________
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NOTICE OF EXERCISE OF WARRANT
WORKSHEET SCHEDULE
1. Current Common Stock holdings of Holder and Affiliates _____________
2. Shares to be issued on current exercise _____________
3. Other shares eligible to be acquired without restriction _____________
4. Total [sum of Lines 1 through 3] _____________
5. Outstanding shares of Common Stock* _____________
6. Adjustments to Outstanding
a. Shares known to Holder as previously issued
to Holder or others but not included in Line 5 _____________
b. Shares to be issued per Line 2 _____________
c. Total Adjustments [Lines 6a and 6b] _____________
7. Total Adjusted Outstanding [Lines 5 plus 6c] _____________
8. Holder's Percentage [Line 4 divided by Line 7] _____________%
[Note: Line 8 not to be above 4.99%]
* Based on latest SEC filing by Company or information provided by executive
officer of Company, counsel to Company or transfer agent
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