NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR UNDER THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE
REPRESENTATIONS AND AGREEMENTS MADE TO THE RECORD HOLDER HEREOF SET FORTH IN
THIS WARRANT.
COMMON STOCK PURCHASE WARRANT
in favor of
K & D EQUITIES, INC.
DATE: JULY 31 , 1999
WARRANT NO. KD1 400,000 Shares of Common
Stock of TTR Technologies, Inc.
FOR VALUE RECEIVED, TTR TECHNOLOGIES INC., a Delaware company (the
"Company"), hereby grants to K & D EQUITIES, INC. (the "Holder"), the right to
purchase, subject to the terms and conditions hereof, 400,000 fully paid and
non-assessable shares of Common Stock of the Company, par value $0.001, (the
"Shares"). The purchase price for each Share purchased pursuant to this Warrant
shall be equal to $2.75, subject to the terms hereof. Hereinafter, (i) such
Shares, together with any other equity security which may be issued by the
Company in substitution therefor, are referred to as the "Shares"; (ii) the
shares purchasable hereunder are referred to as the "Warrant Shares"; (iii) and
the price payable hereunder for each of the Warrant Shares, as adjusted in the
manner set froth hereinafter, is referred to as the "Per Share Warrant Price";
and (iv) this warrant and all warrants hereafter issued in exchange or
substitution for this Warrant are referred to as the "Warrants". The Per Share
Warrant Price and the number of Warrant Shares are subject to adjustment as
hereinafter provided.
1. Warrant Period; Exercise of Warrant
1.1 This Warrant may be exercised in whole or in part at any time
commencing 9:00 a.m., New York City time, on the date set forth above
through January 31, 2001 (the "Warrant Period") by the surrender of this
Warrant (with a duly executed exercise form in the form attached at the end
hereof as Exhibit A) at the principal office of the Company, together with
the proper payment of the Per Share Warrant Price times the number of
Warrant Shares.
1.2 Upon surrender of this warrant and payment of the Warrant Price as
aforesaid, the Company shall issue and cause to be delivered to Warrant
holder, a certificate or certificates for the number of Warrant Shares
being purchased, and such certificate or certificates shall be deemed to
have been issued and any person so designated to be named therein shall be
deemed to have become a holder of the such Shares as of the close of
business on the date of the surrender of the Warrant and payment of the Per
Share Warrant Price. If this warrant should be exercised in part only, the
Company shall, upon surrender of the Warrant for cancellation, execute and
deliver a new Warrant evidencing the rights of the Holder hereof to
purchase the balance of the Shares purchasable hereunder.
1.3 Any stamp tax attributable to the issuance of the Shares shall be
borne solely by Holder.
1.4 Unless there is an effective registration statement under the
Securities Act of 1933, as amended, (the "Securities Act") covering the
resale of the Warrant Shares, at the option of the Holder, in lieu of
exercising this Warrant in the manner provided in Subsection 1.1 above, the
Holder may elect, pursuant to the terms of this Subsection 1.1, to receive
Shares equal to the value of this Warrant (taking into account only that
portion of this Warrant that is then exercisable) by surrender of this
Warrant at the principal office of the Company together with notice of such
election in which event the Company shall issue to the Holder a number of
Shares using the following formula:
X = Y(A-B)
------
A
where X = The number of Shares to be issued to the Holder.
Y = The number of Shares purchasable under this Warrant (at
the date of such calculation).
A = The fair market value of one Share (at the date of such
calculation).
B = The Per Share Warrant Purchase Price.
2. Representations and Warranties
2.1 The Holder (i) represents, warrants, covenants and agrees that the
Warrant and the underlying Warrant Shares are being acquired by the Holder
for the Holder's own account, for investment purposes only, and not with a
view to or for sale in connection with any distribution thereof or with any
present intention of selling or distributing all or any part of the Warrant
or the underlying Warrant Shares thereof; (ii) understands (x) that if it
should thereafter decide to dispose of such Warrant or Warrant Shares
(which it does not contemplate at such time) it may do so only in
compliance with the Securities Act, (y) this Warrant and the Warrant Shares
are not registered under the Securities Act nor does the Company have any
obligation to register this Warrant and the Warrant Shares (except as
provided in paragraph 3 below) and (z) that it is unlikely that Rule 144
adopted by the Securities and Exchange Commission will be applicable to
permit sales of this Warrant and the Warrant Shares in reliance thereon;
and (iii) acknowledges that, as of the date hereof, it has been given a
full opportunity to ask questions of and to receive answers from the
Company concerning this Warrant and the Warrant Shares and the business of
the Company and to obtain such information as it desired in order to
evaluate the acquisition of this Warrant and the Warrant Shares, and all
questions have been answered to its full satisfaction.
3. Reservation of Shares.
The Company has reserved, and shall at all times so long as any Warrant
remains outstanding, keep reserved, out of its authorized and unissued capital
stock, such number of shares of Common Stock, par value $0.001, as shall be
subject to purchase under the Warrant.
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.
2
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.
6. Stock Dividends, Reclassifications, Reorganization, Anti-Dilution Provisions,
Etc.
6.1 In case prior to the expiration of this Warrant by exercise or by
its terms the Company shall issue any shares of its Common Stock as a stock
dividend or subdivide the number of outstanding shares of Common Stock into
a greater number of shares, then, in either of such cases, the Exercise
Price per share of the Warrant Shares purchasable pursuant to this Warrant
in effect at the time of such action shall be proportionately reduced and
the number of Warrant Shares purchasable at that time shall be
proportionately increased; and, conversely, in the event the Company shall
contract the number of outstanding shares of Common Stock by combining such
shares into a smaller number of shares, then, in such case, the Exercise
Price per share of the Warrant Shares purchasable pursuant to this Warrant
shall be proportionately decreased. Any dividend paid or distributed upon
the Common Stock in stock of any other class of securities convertible into
shares of Common Stock shall be treated as a dividend paid in Common Stock
to the extent that shares of Common Stock are issuable upon conversion
thereof.
6.2 In case of any consolidation or merger of the Company with or into
another corporation (other than a merger or consolidation in which the
Company is the surviving or the continuing corporation) or in the case of
any sale or conveyance to another corporation or other entity of the
property, assets or business of the Company as an entirety or substantially
as an entirety, in any such case, the Company or such successor or
purchasing corporation or entity, as the case may be, shall (i) execute
with the Holder an agreement that the Holder shall have the right
thereafter to receive upon the exercise of the Warrant the kind and amount
of shares and/or other securities or other property which he would have
owned or have been entitled to receive after the happening of such
consolidation, merger, sale or conveyance had the Warrant been exercised
immediately prior to such action, (ii) make effective provision in its
certificate of its incorporation or otherwise, if necessary, in order to
effect such agreement, and (iii) set aside or reserve for the benefit of
the Holder, the stock, securities, property and cash to which the Holder
would be entitled to upon exercise of this Warrant.
6.3 In case of any reclassification or change of the Warrant Shares
issuable upon exercise of this Warrant (other than a change in par value or
from no par value to a specific par value, or as a result of a subdivision
or combination, including any change in the shares into two or more classes
or series of shares), or in the case of any consolidation or merger of
another corporation into the Company in which the Company is the continuing
corporation and in which there is a reclassification or change (including a
change in the right to receive cash or other property) of the Shares (other
than a change in the par value, or from no par value to a specific par
value or, as a result of a subdivision or combination, including any change
in the shares into two or more classes or series of shares), Holder shall
have the right thereafter to receive upon exercise of this Warrant solely
the kind and amount of shares of stock and other securities, property, cash
or combination thereof receivable upon such reclassification, change,
consolidation or merger by a holder of the number of Shares for which this
Warrant might have been exercised immediately prior to such
reclassification, change, consolidation or merger.
6.4 Upon the occurrence of each event requiring an adjustment of the
Exercise Price and the number of Warrant Shares purchasable at such
adjusted Exercise Price by reason of such event in accordance with the
provision of this Section 6, the Company shall compute the adjusted
Exercise Price and the adjusted number of Warrant Shares purchasable at
such
3
adjusted Exercise Price by reason of such event in accordance with the
provisions of this Section 6 and shall prepare a certificate setting forth
such adjusted Exercise Price and the adjusted number of Warrant Shares and
showing in reasonable detail the facts upon which such determination is
made. The Company shall mail to the holder of this Warrant a copy of such
Certificate, and thereafter said certificate shall be conclusive and shall
be binding upon such holder unless contested by such holder in a written
notice furnished to the Company within 15 days of the receipt thereof
setting forth in reasonable detail the basis of such contention.
6.5 In case:
(a) the Company shall take a record of the holders of its Common Stock for
the purpose of entitling them to receive a dividend or any other
distribution in respect of the Common Stock (including cash), pursuant to
without limitation, any spin-off, split-off or distribution of the
Company's assets; or
(b) the Company shall take a record of the holders of its Common Stock for
the purpose of entitling them to subscribe for or purchase any shares of
stock of any class or to receive any other rights; or
(c) of any classification, reclassification or other reorganization of the
capital stock of the Company, consolidation or merger of the Company with
or into another corporation, or conveyance of all or substantially all of
the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or winding up
of the Company;
then, and in any such case, the Company shall mail to the Holder, at least
twenty (20) days prior thereto, a notice stating the date or expected date on
which a record is to be taken for the purpose of such dividend or distribution
of rights, or the date on which such classification, reclassification,
reorganization, consolidation, merger, conveyance, dissolution, liquidation, or
winding up is to take place, as the case may be. Such notice shall also specify
the date or expected date, if any is to be fixed, as of which holders of Common
Stock of record shall be entitled to participate in said dividend on
distribution of rights, or shall be entitled to exchange their shares of Common
stock for securities or other property deliverable upon such classification,
reclassification, reorganization, consolidation, merger, conveyance,
dissolution, liquidation, or winding up, as the case may be. The failure to give
such notice shall not affect the validity of any such proceeding or transaction
and shall not affect the right of the holder of this Warrant to participate in
said dividend, distribution of rights, or any such exchange and acquire the kind
and amount of cash, securities or other property as the Holder would have been
entitled to acquire if it was the record holder of the Warrant Shares which
could be obtained upon the exercise of the Warrants immediately before such
proceeding or transaction; provided that the Holder exercises the Warrants
within 30 days after discovery that such action or proceeding has taken place.
6.6 In case the Company at any time while this Warrant shall remain
unexpired and unexercised, shall dissolve, liquidate, or wind up its
affairs, the holder of this Warrant may thereafter receive upon exercise
hereof in lieu of each share of Common Stock of the Company which it would
have been entitled to receive, the same kind and amount of any securities
or assets as may be issuable, distributable or payable upon any such
dissolution, liquidation or winding up with respect to each share of Common
Stock of the Company.
7. Limited Transfer
7.1 The Company may treat the registered holder of record as the
holder for all purposes.
4
7.2 In no event shall the Company be obligated to effect any transfer
of Warrants or Warrant Shares unless a registration statement is in effect
with respect thereto under applicable state and Federal securities laws or
unless the Company shall have received an opinion in substance reasonably
satisfactory to it from counsel that such registration is not required.
Unless registered, the Warrant Shares issued upon exercise of the Warrant
shall be subject to a stop transfer order and the certificate or
certificates evidencing such Warrant Shares shall bear the following
legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, PURSUANT
TO A REGISTRATION STATEMENT. ACCORDINGLY, SUCH SHARES MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO A REGISTRATION STATEMENT UNDER
SUCH ACT, OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT."
8. Registration Rights
The Holder understands that the Company is in the process of filing
with the Securities and Exchange Commission a registration statement under the
Securities Act relating to certain Company securities held by certain Company
shareholders or the holders of certain rights in Company securities, (the
"Registration Statement"). That Registration Statement is being filed pursuant
to the terms of a Registration Rights Agreement, dated as May 13, 1999, between
the Company and the Initial Investors named therein (the "Initial Investors").
Subject to the Holder executing a lock-up agreement in form and substance
acceptable to the Company and the Initial Investors, the Company shall include
the Warrant Shares in the Registration Statement.
9. Representations and Warranties of the Company.
The Company represents and warrants to the holder as follows:
9.1 The Company is duly organized and, as of the date of the original
issuance hereof, validly existing and in good standing under the laws of
the State of Delaware.
9.2 The Company shall at all times reserve and keep available out of
its authorized shares of Common Stock, solely for the purpose of issuing
Warrant Shares upon the exercise of this Warrant, such shares as may be
issuable upon the exercise hereof.
9.3 The Warrant Shares, when issued and paid for in accordance with
the terms of this Warrant, will be fully paid and not assessable.
9.4 This Warrant has been duly authorized and approved by all required
corporate action by the Company and does not violate the certificate of
incorporation or the bylaws of the Company.
10. Notices
Any notice or other communication required or permitted hereunder shall
be in writing and shall be delivered personally or sent by certified, registered
or express mail, postage prepaid. Any such notice shall be deemed given when
delivered personally or, if mailed, three days after the date of deposit, to
each party at its address designated in writing by it to the other party.
5
11. Governing Law
This Agreement shall be construed in accordance with and governed by
the laws of the State of New York, without giving effect to the conflict of laws
provisions.
IN WITNESS WHEREOF, the Company has caused this Common Stock Purchase
Warrant to be executed as of the date first written above.
TTR TECHNOLOGIES INC.
By: /s/ XXXX XXXXXXX
-------------------------
Marc. X. Xxxxxxx
Title: President
6
ELECTION TO PURCHASE
TTR Technologies, Inc.
[address]
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant for and to purchase thereunder the
full amount of shares represented thereby, and requests that certificates
representing such shares be issued in the name of :
--------------------------------------------------------------------------------
-----------------------------------------------------------
please print name, address and other pertinent information)
Sincerely,
7
