WARRANT TO PURCHASE SHARES OF THE COMMON STOCK OF ASKMENOW, INC. (Void after Expiration Date - September 11, 2010) Issue Date: September 11, 2007
THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”) OR ANY STATE SECURITIES LAWS. THIS WARRANT AND SUCH SECURITIES MAY NOT BE
SOLD, OFFERED FOR SALE, OR OTHERWISE TRANSFERRED UNLESS
AND UNTIL REGISTERED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS,
OR
UPON RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED.
0000-XX0
XXXXXXX
TO PURCHASE SHARES
OF
THE COMMON STOCK OF
ASKMENOW,
INC.
(Void
after Expiration Date - September 11, 2010)
Issue
Date: September 11, 2007
This
certifies that Xxxxxxxx Xxxxx LLP, a New York limited liability partnership
with
a principal business address of 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 (or
any
valid transferee thereof, the “Holder”),
for
value received, shall be entitled to purchase from AskMeNow, Inc., a Delaware
corporation having its principal place of business at 00 Xxxxxxxxx Xxxx, Xxxxx
000, Xxxxxx, Xxxxxxxxxx 00000 (together with its successors and assigns, the
“Company”),
subject to the terms and conditions set forth herein, Fifty Thousand (50,000)
fully paid and non-assessable shares of the Company’s common stock, par value
$.01 per share (“Common
Stock”),
at a
price equal to $.50 per share, at any time and from time to time commencing
as
of the issue date set forth above (the “Issue
Date”)
and
continuing up to and including 12:00 p.m. (California time) on September 11,
2010 (“Expiration
Date”);
provided,
however,
if such
date is not a Business Day, then on the Business Day immediately following
such
date. The shares purchasable upon exercise of this Warrant, and the purchase
price per share, each as adjusted from time to time pursuant to the provisions
of this Warrant, are hereinafter sometimes referred to as the “Warrant
Shares”
and
the
“Exercise
Price,”
respectively.
The
Holder expressly agrees and acknowledges that this Warrant is being issued
in
exchange and as consideration for the Holder’s agreement to reduce the amount of
legal fees currently due and owing by the Company to the Holder for legal
services rendered by the Holder on the Company’s behalf by ten percent (10%),
such reduction to be reflected in the next invoice submitted by the Holder
to
the Company. In the event no such reduction is so reflected, this Warrant shall
become immediately null and void and of no further force and effect, and the
Company shall not be required to recognize any attempted exercise of this
Warrant unless and until it has received such invoice evidencing such
reduction.
1. Exercise;
Issuance of Certificates; Payment for Shares.
1. General.
This
Warrant is exercisable upon the surrender to the Company at its principal place
of business (or at such other location as the Company may advise the Holder
in
writing) of this Warrant properly endorsed with an exercise notice in
substantially the form attached hereto as Schedule
A
duly
completed and signed and, if applicable, upon payment in cash, certified or
bank
check or other immediately available funds of the aggregate Exercise Price
for
the number of Warrant Shares for which this Warrant is being exercised as
determined in accordance with the provisions hereof. This Warrant is exercisable
in whole or in part, in increments of 5,000 shares, and in no event shall any
exercise hereof be for fewer than 5,000 Warrant Shares unless fewer than 5,000
Warrant Shares are then purchasable under this Warrant. In
the
case of the exercise for less than all of the Warrant Shares represented by
this
Warrant, the Company shall cancel this Warrant certificate upon the surrender
hereof and shall execute and deliver a new Warrant certificate or certificates
of like tenor for the balance of the Warrant Shares for which this Warrant
has
not yet been exercised. The
Company agrees that the shares of Common Stock purchased under this Warrant
shall be deemed to be issued to the Holder hereof, and the Holder deemed to
be
the record owner of such shares, as of immediately prior to the close of
business on the date on which the exercise notice attached hereto as
Schedule
A
is
delivered, and this Warrant surrendered, to the Company as provided herein
(such
date, the “Exercise
Date”).
Certificates for the shares of Common Stock purchased upon exercise, together
with any other securities or property to which the Holder is entitled upon
such
exercise, shall be delivered to the Holder by the Company at the Company’s
expense within a reasonable time after the rights represented by this Warrant
have been so exercised. Each Common Stock certificate so delivered shall be
in
such denominations as may be requested by the Holder hereof and shall be
registered on the Company’s books in the name(s) designated by such
Holder.
1.2 Exercise
for Cash.
This
Warrant may be exercised, in whole at any time or in part from time to time,
commencing on the Issue Date and prior to 12:00 Noon (California time) on the
Expiration Date, for cash by delivery of the exercise notice attached hereto
as
Schedule
A
and
surrender of this Warrant to the Company, together with proper payment of the
aggregate Exercise Price payable hereunder for the Warrant Shares being
purchased upon such exercise for cash. Payment for the Warrant Shares shall
be
made by cash, certified or bank check or wire transfer of immediately available
funds to the Company. If this Warrant is exercised for cash in part, this
Warrant must be exercised for a number of whole shares of the Common Stock,
and
the Holder is entitled to receive a new Warrant covering the shares for which
this Warrant has not yet been exercised, in accordance with Section 1.1 above.
Upon surrender of this Warrant and payment in full of the aggregate Exercise
Price for the Warrant Shares then being purchased upon such exercise for cash,
the Company will issue a certificate or certificates in the name of the Holder
for the largest number of whole shares of the Common Stock to which the Holder
shall be entitled, and deliver the other securities and properties receivable
upon the exercise of this Warrant, or the proportionate part thereof if this
Warrant is exercised in part, pursuant to the provisions of this Warrant, in
accordance with Section 1.1 above.
1.3 Cashless
Exercise.
In lieu
of exercising this Warrant for cash as set forth in Section 1.2 above, the
Holder may at any time and from time to time elect to receive, without the
payment by the Holder of any additional consideration, shares of Common Stock
equal to the value of this Warrant (or portion thereof) through a cashless
exercise (a “Cashless
Exercise”),
as
hereinafter provided. The Holder may effect a Cashless Exercise by surrendering
this Warrant to the Company and noting on the Holder’s duly executed exercise
notice attached hereto as Schedule
A that
the
Holder wishes to effect a Cashless Exercise, upon which the Company shall issue
to the Holder the number of shares determined as follows:
2
|
X
=
Y * (A-B) / A
|
where:
X
=
the number of Warrant Shares to be issued to the Holder upon the
Cashless
Exercise;
|
Y
=
the number of Warrant Shares with respect to which this Warrant is
being
exercised;
|
A
=
the Market Price (as defined below) of one share of Common Stock
as of the
Exercise Date; and
|
B
=
the Exercise Price (as adjusted, if
applicable).
|
“Market
Price”
means,
for any date, the average of the daily Closing Prices per share of Common Stock
for the 10 consecutive trading days immediately prior to such date. The
“Closing
Price”
per
share of Common Stock for each day shall be the last sale price, regular way,
or, in case no such sale takes place on such day, the average closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or
admitted to trading on the “Over the Counter Market” (“OTC
BB”),
the
NASDAQ National Market System, the New York Stock Exchange or the American
Stock
Exchange, as applicable. If on any such trading day or days such securities
are
not quoted by any such organization, such trading day or days shall be replaced
for purposes of the foregoing calculation by the requisite trading day or days
preceding the commencement of such 10 trading day period on which such
securities are so quoted. If shares of Common Stock are not so listed or traded,
the Market Price shall mean the fair value per share of Common Stock as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a notice to the Holder, based on (a) the
most recently completed arm’s-length transaction between the Company and a
person other than an existing shareholder or other affiliate of the Company,
the
closing of which occurred on such date or within the three-month period
preceding such date, or (b) if no such transaction shall have occurred on such
date or within such three-month period, the good faith reasonable judgment
of
the Board of Directors.
For
purposes of Rule 144, it is intended and acknowledged that the Warrant Shares
issued in a Cashless Exercise transaction shall be deemed to have been acquired
by the Holder, and the holding period for the Warrant Shares required by Rule
144 shall be deemed to have been commenced, on the Issue Date.
1.4 Shares
to be Fully Paid; Reservation of Shares.
The
Company covenants and agrees that all shares of Common Stock which may be issued
upon the exercise of the rights represented by this Warrant will, upon issuance,
be duly authorized, validly issued, fully paid and nonassessable and free from
all preemptive rights of any shareholder and free of all taxes, liens and
charges with respect to the issue thereof. The
Company further covenants and agrees that, during the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized and reserved, for the purpose of issue or transfer upon
exercise of the subscription rights evidenced by this Warrant, a sufficient
number of shares of authorized but unissued Common Stock when and as required
to
provide for the exercise of the rights represented by this Warrant. The
Company will take all such action as may be reasonably necessary to assure
that
such shares of Common Stock may be issued as provided herein without violation
of any applicable law or regulation, or of any requirements of any domestic
securities exchange upon which the Common Stock or other securities may be
listed; provided,
however,
that
the Company shall not be required to effect a registration under federal or
state securities laws with respect to any exercise hereunder.
3
2. Determination
or Adjustment of Exercise Price and Number of Shares.
The
Exercise Price and the number of Warrant Shares purchasable upon the exercise
of
this Warrant shall be subject to adjustment from time to time upon the
occurrence of certain events described in this Section 2. Upon each adjustment
of the Exercise Price, the Holder of this Warrant shall thereafter be entitled
to purchase, at the Exercise Price resulting from such adjustment, the number
of
shares obtained by multiplying the Exercise Price in effect immediately prior
to
such adjustment by the number of shares purchasable pursuant hereto immediately
prior to such adjustment, and dividing the product thereof by the Exercise
Price
resulting from such adjustment.
2.1 Subdivision
or Combination of Common Stock.
If at
any time after the Issue Date hereof and prior to the exercise or Expiration
Date hereof the Company shall subdivide or reclassify its outstanding shares
of
Common Stock into a greater number of shares, the Exercise Price in effect
immediately prior to such subdivision shall be proportionately reduced, and
conversely, in case the outstanding shares of Common Stock of the Company shall
be combined or reclassified into a smaller number of shares, the Exercise Price
in effect immediately prior to such combination shall be proportionately
increased. Any adjustment under this Subsection 2.1 shall become effective
at
the close of business on the date the subdivision or combination becomes
effective.
2.2 Dividends
in Common Stock or Other Stock or Securities.
If at
any time or from time to time after the Issue Date hereof and prior to the
exercise or Expiration Date hereof the holders of Common Stock (or any shares
of
stock or other securities at the time receivable upon the exercise of this
Warrant) shall have received or become entitled to receive, without payment
therefor, shares of Common Stock or any shares of capital stock or other
securities which are at any time directly or indirectly convertible into or
exchangeable for Common Stock, or any rights or options to subscribe for,
purchase or otherwise acquire any of the foregoing by way of dividend or other
distribution, then and in each such case, the Holder shall, upon the exercise
of
this Warrant, be entitled to receive, in addition to the number of shares of
Common Stock or other capital stock receivable thereupon, and without payment
of
any additional consideration therefor, the amount of stock and other securities
which such Holder would hold on the date of such exercise had the Holder been
the holder of record of such Common Stock as of the date on which holders of
Common Stock received or became entitled to receive such shares or all other
additional stock and other securities.
4
2.3 Reorganization,
Reclassification, Consolidation, Merger or Sale.
If at
any time after the Issue Date hereof and prior to the exercise or Expiration
Date hereof any
recapitalization, reclassification or reorganization of the capital stock of
the
Company, or any consolidation or merger of the Company with another corporation,
or the sale of all or substantially all of its assets or other transaction
shall
be effected in such a way that holders of Common Stock shall be entitled to
receive stock, securities, or other assets or property (an “Organic
Change”),
then,
as a condition of such Organic Change, lawful and adequate provisions shall
be
made by the Company whereby the Holder hereof shall thereafter have the right,
upon exercise of this Warrant, to purchase and receive (in lieu of the shares
of the Common Stock of the Company immediately theretofore purchasable and
receivable upon the exercise of the rights represented by this Warrant) such
shares of stock, securities or other assets or property as may be issued or
payable with respect to or in exchange for a number of outstanding shares of
such Common Stock equal to the number of shares of such stock immediately
theretofore purchasable and receivable upon the exercise of the rights
represented by this Warrant. In the event of any Organic Change, appropriate
provision shall be made by the Company with respect to the rights and interests
of the Holder of this Warrant to the end that the provisions hereof (including,
without limitation, provisions for adjustments of the Exercise Price and of
the
number of shares purchasable and receivable upon the exercise of this Warrant)
shall thereafter be applicable, in relation to any shares of stock, securities
or assets thereafter deliverable upon the exercise hereof.
2.4 No
Adjustments in Certain Cases.
No
adjustment in the number of Warrant Shares purchasable pursuant to this Warrant
shall be required unless the adjustment would require an increase or decrease
of
at least one percent (1.0%) in the number of Warrant Shares then purchasable
upon the exercise of this Warrant. Except as provided in this Section 2, no
other adjustments in the number, kind or price of shares constituting Warrant
Shares shall be made during the term, or upon the exercise, of this Warrant.
Further, no adjustments shall be made pursuant to this Section 2 hereof in
connection with the grant or exercise of presently authorized or outstanding
options to purchase, or the issuance of shares of Common Stock under, the
Company’s director or employee benefit, option and incentive plans.
3. Issue
Tax. The
issuance of certificates for shares of Common Stock issuable upon the exercise
of this Warrant shall be made without charge to the Holder for any issue tax
(other than any applicable income taxes) in respect thereof; provided,
however,
that
the Company shall not be required to pay any tax which may be payable in respect
of any transfer of this Warrant or any Warrant Shares.
4. No
Voting or Dividend Rights; Limitation of Liability.
Nothing
contained in this Warrant shall be construed as conferring upon the Holder
hereof the right to vote, give consent or receive notices as a shareholder
of
the Company. No dividends or interest shall be payable or accrued in respect
of
this Warrant, the interest represented hereby, or the shares purchasable
hereunder until, and only to the extent that, this Warrant shall have been
exercised. No provisions hereof, in the absence of affirmative action by the
Holder to purchase shares of Common Stock, and no mere enumeration herein of
the
rights or privileges of the Holder hereof, shall give rise to any liability
of
such Holder for the Exercise Price or as a shareholder of the Company, whether
such liability is asserted by the Company or by its creditors.
5
5. Piggyback
Registration Rights.
If, at
any time during the three-year period commencing on the date hereof, the Company
proposes or is required to file a registration statement registering any shares
of Common Stock or securities convertible into or exchangeable for Common Stock
(other than on Form S-4 or Form S-8, or such other forms as the U.S. Securities
and Exchange Commission may hereafter promulgate for registration of securities
in transactions for which Form S-4 or Form S-8 may be used as of the date
hereof), whether or not for its own account, the Company shall give at least
20
days prior written notice to the Holder of its intention to do so. Upon written
request by the Holder within 10 days after receipt of such notice, the Company
shall use its commercially reasonable efforts to include in the securities
to be
registered by such registration statement all Warrant Shares that the Holder
indicates in such notice that the Holder desires to sell, subject to the
following terms and conditions: (a) if such registration statement is for a
prospective underwritten offering, the Holder shall agree to (i) enter into
an
underwriting agreement, if required, in customary form with the underwriter
or
underwriters selected by the Company, and (ii) sell the Holder’s securities, if
the Company so requests, on the same basis and upon the same terms as the other
securities covered by such registration statement, other than securities
proposed to be registered by the holders of the Preferred Stock (as defined
below), and provided
that if
the number of shares requested by the Holder to be registered in such offering
exceeds the amount of shares which the underwriters reasonably believe is
compatible with the success of such underwritten offering, the Company shall
only be required to include in such offering that number of shares requested
to
be registered by the Holder as the underwriters believe will not jeopardize
the
success of such offering, (b) if
the
number of shares the Company is able to register is limited due to Rule 415
or
other SEC shelf registration rules, the Company shall only be required to
register the Warrant Shares the Holder elects to include on a pari
passu basis
with the other shares being registered, other than any shares proposed to be
registered by the holders of the Preferred Stock; and (c) the Company may
withdraw any such registration statement before it becomes effective or postpone
the offering of securities contemplated by such registration statement without
any obligation to the Holder or any other holder. The Company shall have
exclusive control over the preparation and filing of any registration statement
proposed to be filed under this Section 5 as well as any amendments and
supplements thereto and the withdrawal or revocation thereof. The Company’s
obligations pursuant to this Section 5 are subject to the Holder’s cooperation
with respect to any such proposed registration, including but not limited to
the
provision of such information as may reasonably be requested by the Company,
the
underwriter(s) or any other authorized parties and the execution and delivery
of
such agreements (including indemnification and contribution agreements),
instruments and documents as may be reasonably requested thereby, and the
Holder’s compliance with all applicable laws. The Company shall pay all
reasonable expenses incurred in connection with the registration contemplated
hereby, including without limitation registration and filing fees, printing
expenses, and fees and expenses of counsel for the Company. Notwithstanding
the
foregoing, underwriting discounts and commissions and transfer taxes relating
to
the Holder’s registered securities included in any registration hereunder, and
all fees and expenses for counsel to the Holder, shall be borne and paid by
the
Holder. The registration rights and other rights granted in this Section 5
are
not assignable, in whole or in part, without the prior written consent of the
Company. Notwithstanding anything to the contrary set forth herein, the Holder
hereby expressly agrees and acknowledges that any registration rights of the
Holder hereunder are subordinate to those of the holders of the Company’s 10%
(PIK) Series A Preferred Stock and the Company’s 10% (PIK) Series B Preferred
Stock (together, the “Preferred Stock”) and warrants issued to such holders in
connection with the purchase and sale of the Preferred Stock.
6
6. Modification
and Waiver.
This
Warrant and any provision hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of the same is sought.
7. Transfer;
Legends.
(a) The
Holder may sell, transfer, assign, pledge or otherwise dispose of this Warrant
or the Warrant Shares, in whole or in part, so long as such sale or other
disposition is made pursuant to an effective registration statement or an
exemption from the registration requirements of the Act and applicable state
securities laws, and provided
that no
sale, transfer, pledge or other disposition may be made to a competitor, direct
or indirect, of the Company at any time. Upon such transfer or other disposition
(other than a pledge), the Holder shall deliver this Warrant to the Company
together with a written notice to the Company, substantially in the form of
the
transfer notice attached hereto as Schedule
B,
indicating the person or persons to whom this Warrant shall be transferred
and,
if less than all of this Warrant is transferred, the number of Warrant Shares
to
be covered by the part of this Warrant to be transferred to each such person.
Within ten (10) business days of receiving a transfer notice and the original
of
this Warrant, the Company shall deliver to the each transferee designated by
the
Holder another Warrant(s) of like tenor and terms for the appropriate number
of
Warrant Shares and, if less than all this Warrant is transferred, shall deliver
to the Holder another Warrant for the remaining number of Warrant Shares not
so
transferred. Until this Warrant is transferred on the books of the Company
(with
the Company’s consent), the Company may treat the person in whose name this
Warrant is issued as the absolute
owner hereof for all purposes, notwithstanding any notice to the
contrary.
(b) Each
Warrant and certificate representing Warrant Shares shall bear a legend
substantially in the following form:
“THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”) OR ANY STATE SECURITIES LAWS. THIS WARRANT AND SUCH SECURITIES MAY NOT BE
SOLD, OFFERED FOR SALE, OR OTHERWISE TRANSFERRED UNLESS
AND UNTIL REGISTERED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS,
OR
UPON RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED.”
The
foregoing legend shall be removed from the certificates representing any Warrant
Shares, at the request of the holder thereof, at such time as they become
eligible for resale pursuant to Rule 144 under the Act.
8. Notices.
Any
notice required or permitted hereunder shall be given in writing (unless
otherwise specified herein) and shall be deemed effectively given upon (a)
personal delivery, against written receipt thereof, (b) delivery via facsimile
with written confirmation, (c) one business day after deposit with Federal
Express or another nationally recognized overnight courier service, or (d)
five
business days after being mailed, postage paid, via certified or registered
mail, return receipt requested, addressed to each of the other parties thereunto
entitled, at the addresses set forth on in the introductory paragraph hereof
or
at such other addresses as a party may designate by 10 days advance written
notice.
7
9. Binding
Effect.
This
Warrant shall be binding upon and inure to the benefit of the parties hereto
and
their respective heirs, personal representatives, successors and permitted
assigns.
10. Descriptive
Headings and Governing Law.
The
description headings of the several sections and paragraphs of this Warrant
are
inserted for convenience only and do not constitute a part of this Warrant.
This
Warrant shall be construed and enforced in accordance with, and the rights
of
the parties shall be governed by the laws of the State of Delaware.
11. Lost
Warrants.
Upon
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction, or mutilation of this Warrant and, in the case of any such loss,
theft or destruction, upon receipt of an indemnity agreement or bond reasonably
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of this Warrant, the Company, at its expense, will
make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant.
12. Fractional
Shares.
No
fractional shares shall be issued upon exercise of this Warrant. The Company
shall,
in
lieu
of issuing any fractional share, pay the Holder entitled to such fraction a
sum
in cash equal to such fraction multiplied by the then-effective Market
Price.
8
SCHEDULE
A
EXERCISE
NOTICE
Date:
_________________, _______
AskMeNow,
Inc.
Attn:
Chief Executive Officer
Ladies
and Gentlemen:
The
undersigned hereby elects to exercise the Warrant issued to it by AskMeNow,
Inc.
(“Company”)
dated
___________ __, 2007, which Warrant shall be surrendered herewith, and pursuant
to the terms thereof hereby elects to exercise rights represented by said
Warrant for, and to purchase thereunder, __________________ shares of the
Company's Common Stock covered by said Warrant, at an Exercise Price of $____
per share, and tenders herewith payment of the purchase price in full for such
shares of $_________, by:
|
(a)
|
cash,
through the delivery of a certified or official bank check, or wire
transfer or immediately available funds; or
|
(b)
|
exercising
the Cashless Exercise right provided under Section 1.3 of the Warrant
by
the surrender of said Warrant.
|
The
undersigned hereby requests that certificates for such shares (or any other
securities or other property issuable upon such exercise) be issued in the
name
of and delivered to the undersigned at the address set forth below, or as
otherwise set forth below.
Very
truly yours,
|
|
Name:
|
|
Address:
|
10
SCHEDULE
B
TRANSFER
NOTICE
To
Be
Executed by the Holder
in
Order
to Assign Warrants
FOR
VALUE
RECEIVED, ________________________________________ hereby sells, assigns and
transfers all of the rights of the undersigned under the attached Warrant (No.
____) with respect to the number of shares of Common Stock of AskMeNow, Inc.
covered thereby set forth below, unto:
Name
of Assignee
|
Address
|
No.
of Shares
|
The
undersigned hereby irrevocably constitutes and appoints the Chief Executive
Officer of the Company as the undersigned’s attorney to transfer this Warrant
certificate on the books of the Company, with full power of substitution in
the
premises.
Dated:
|
Signature:
|
||||
Signature
Guaranteed:
|
|||||
By:
|
The
signature should be guaranteed by an eligible guarantor institution (banks,
stockbrokers, savings and loan associations and credit unions with membership
in
an approved signature guarantee medallion program) pursuant to Rule 17A
under the Securities Exchange Act of 1934, as amended.
11