WARRANT TO PURCHASE COMMON STOCK
EXHIBIT
4.2
THIS
WARRANT AND THE SECURITIES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY
NOT
BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE
OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER
SUCH
ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
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Number
of Shares:
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Warrant
Price:
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$5.00
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Issuance
Date:
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December
27, 2005
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Expiration
Date:
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December
20, 2010
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THIS
WARRANT CERTIFIES THAT
for
value
received,
_____, or its registered assigns (hereinafter called the “Holder”)
is
entitled to purchase from Interactive Television Networks, Inc., Nevada
corporation (hereinafter called the “Company”),
the
above referenced number of fully paid and nonassessable shares (the
“Shares”)
of
common stock (the “Common
Stock”),
of
Company, at the Warrant Price per Share referenced above; the number of shares
purchasable upon exercise of this Warrant referenced above being subject
to
adjustment from time to time as described herein. This Warrant is issued
in
connection with that certain Subscription Agreement dated as of December
21
2005, by and between the Company and Holder (the “Subscription
Agreement”).
The
exercise of this Warrant shall be subject to the provisions, limitations
and
restrictions contained herein.
1. Term
and Exercise.
1.1 Term.
This
Warrant is exercisable in whole or in part (but not as to any fractional
share
of Common Stock), at any time and from time to time after the date hereof
prior
to 6:00 p.m. on the Expiration Date set forth above.
1.2 Warrant
Price.
The
Warrant shall be exercisable at the Warrant Price described above.
1.3 Maximum
Number of Shares.
The
maximum number of Shares of Common Stock exercisable pursuant to this Warrant
is
265,000 Shares. However, notwithstanding anything herein to the contrary,
in no
event shall the Holder be permitted to exercise this Warrant for a number
of
Shares greater than the number that would cause the aggregate beneficial
ownership of the Company’s Common Stock (calculated pursuant to Rule 13d-3 of
the Securities Exchange Act of 1934, as amended) of (a) the Holder and its
affiliates or
(b)
, and its affiliates to equal 9.99% of
the
Company’s Common Stock then outstanding.
1.4 Procedure
for Exercise of Warrant.
Holder
may exercise this Warrant by delivering the following to the principal office
of
the Company in accordance with Section 5.1 hereof: (i) a duly
executed
Notice of Exercise in substantially the form attached as Schedule A,
(ii) payment of the Warrant Price then in effect for each of the Shares
being purchased, as designated in the Notice of Exercise, and (iii) this
Warrant. Payment of the Warrant Price may be in cash, certified or official
bank
check payable to the order of the Company, or wire transfer of funds to the
Company’s account (or any combination of any of the foregoing) in the amount of
the Warrant Price for each share being purchased.
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1.5 Delivery
of Certificate and New Warrant.
In the
event of any exercise of the rights represented by this Warrant, a certificate
or certificates for the shares of Common Stock so purchased, registered in
the
name of the Holder or such other name or names as may be designated by the
Holder, together with any other securities or other property which the Holder
is
entitled to receive upon exercise of this Warrant, shall be delivered to
the
Holder hereof, at the Company’s expense, within a reasonable time, not exceeding
fifteen (15) calendar days, after the rights represented by this Warrant
shall
have been so exercised; and, unless this Warrant has expired, a new Warrant
representing the number of Shares (except a remaining fractional share),
if any,
with respect to which this Warrant shall not then have been exercised shall
also
be issued to the Holder hereof within such time. The person in whose name
any
certificate for shares of Common Stock is issued upon exercise of this Warrant
shall for all purposes be deemed to have become the holder of record of such
shares on the date on which the Warrant was surrendered and payment of the
Warrant Price was received by the Company, irrespective of the date of delivery
of such certificate, except that, if the date of such surrender and payment
is
on a date when the stock transfer books of the Company are closed, such person
shall be deemed to have become the holder of such Shares at the close of
business on the next succeeding date on which the stock transfer books are
open.
1.6 Restrictive
Legend.
Each
certificate for Shares shall bear a restrictive legend in substantially the
form
as follows, together with any additional legend required by (i) any
applicable state securities laws and (ii) any securities exchange
upon
which such Shares may, at the time of such exercise, be listed:
The
shares of stock evidenced by this certificate have not been registered under
the
U.S. Securities Act of 1933, as amended, and may not be offered, sold, pledged
or otherwise transferred ("transferred") in the absence of such registration
or
an applicable exemption therefrom. In the absence of such registration, such
shares may not be transferred unless, if the Company requests, the Company
has
received a written opinion from counsel in form and substance satisfactory
to
the Company stating that such transfer is being made in compliance with all
applicable federal and state securities laws.
Any
certificate issued at any time in exchange or substitution for any certificate
bearing such legend shall also bear such legend unless, in the opinion of
counsel for the Holder thereof (which counsel shall be reasonably satisfactory
to the Company), the securities represented thereby are not, at such time,
required by law to bear such legend.
1.7 Fractional
Shares.
No
fractional Shares shall be issuable upon exercise or conversion of the Warrant.
In the event of a fractional interest, the number of Shares to be issued
shall
be rounded down to the nearest whole Share.
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2. Representations,
Warranties and Covenants.
2.1 Representations
and Warranties.
(a) The
Company is a corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation and has all necessary power
and
authority to perform its obligations under this Warrant;
(b) The
execution, delivery and performance of this Warrant has been duly authorized
by
all necessary actions on the part of the Company and constitutes the legal,
valid and binding obligation of the Company, enforceable against the Company
in
accordance with its terms; and
(c) This
Warrant does not violate and is not in conflict with any of the provisions
of
the Company’s Articles of Incorporation or Certificate of Designation, Bylaws
and any resolutions of the Company’s Board of Directors or stockholders, or any
agreement of the Company, and no event has occurred and no condition or
circumstance exists that might (with or without notice or lapse of time)
constitute or result directly or indirectly in such a violation or
conflict.
2.2 Issuance
of Shares.
The
Company covenants and agrees that all shares of Common Stock that may be
issued
upon the exercise of the rights represented by this Warrant will, upon issuance,
be validly issued, fully paid and nonassessable, and free from all taxes,
liens
and charges with respect to the issue thereof. The Company further covenants
and
agrees that it will pay when due and payable any and all federal and state
taxes
which may be payable in respect of the issue of this Warrant or any Common
Stock
or certificates therefor issuable upon the exercise of this Warrant. The
Company
further covenants and agrees that the Company will at all times have authorized
and reserved, free from preemptive rights, a sufficient number of shares
of
Common Stock to provide for the exercise in full of the rights represented
by
this Warrant. If at any time the number of authorized but unissued shares
of
Common Stock of the Company shall not be sufficient to effect the exercise
of
the Warrant in full, subject to the limitations set forth in Section 1.3
hereto,
then the Company will take all such corporate action as may, in the opinion
of
counsel to the Company, be necessary or advisable to increase the number
of its
authorized shares of Common Stock as shall be sufficient to permit the exercise
of the Warrant in full, subject to the limitations set forth in Section 1.3
hereto, including without limitation, using its best efforts to obtain any
necessary stockholder approval of such increase. The Company further covenants
and agrees that if any shares of capital stock to be reserved for the purpose
of
the issuance of shares upon the exercise of this Warrant require registration
with or approval of any governmental authority under any federal or state
law
before such shares may be validly issued or delivered upon exercise, then
the
Company will in good faith and as expeditiously as possible endeavor to secure
such registration or approval, as the case may be. If and so long as the
Common
Stock issuable upon the exercise of this Warrant is listed on any national
securities exchange or the Nasdaq Stock Market, the Company will, if permitted
by the rules of such exchange or market, list and keep listed on such exchange
or market, upon official notice of issuance, all shares of such Common Stock
issuable upon exercise of this Warrant.
3. Other
Adjustments.
3.1 Subdivision
or Combination of Shares.
In case
the Company shall at any time subdivide its outstanding Common Stock into
a
greater number of shares, the Warrant Price in effect immediately prior to
such
subdivision shall be proportionately reduced, and the number of Shares subject
to this Warrant shall be proportionately increased, and conversely, in case
the
outstanding Common Stock of the Company shall be combined into a smaller
number
of shares, the Warrant Price in effect immediately prior to such combination
shall be proportionately increased, and the number of Shares subject to this
Warrant shall be proportionately decreased.
-3-
3.2 Dividends
in Common Stock, Other Stock or Property.
If at
any time or from time to time 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:
(a) Common
Stock, Options or any shares 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;
(b) any
cash paid or payable otherwise than as a regular cash dividend; or
(c) Common
Stock or additional shares or other securities or property (including cash)
by
way of spin-off, split-up, reclassification, combination of shares or similar
corporate rearrangement (other than Common Stock issued as a stock split
or
adjustments in respect of which shall be covered by the terms of Section
3.1
above) and additional shares, other securities or property issued in connection
with a Change (as defined below) (which shall be covered by the terms of
Section
3.4 below), then and in each such case, the Holder hereof shall, upon the
exercise of this Warrant, be entitled to receive, in addition to the number
of
shares of Common Stock receivable thereupon, and without payment of any
additional consideration therefor, the amount of stock and other securities
and
property (including cash in the cases referred to in clause (b) above and
this
clause (c)) which such Holder would hold on the date of such exercise had
such
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 and property.
3.3 Reorganization,
Reclassification, Consolidation, Merger or Sale.
If
any
recapitalization, reclassification or reorganization of the share capital
of the
Company, or any consolidation or merger of the Company with another corporation,
or the sale of all or substantially all of its shares and/or assets or other
transaction (including, without limitation, a sale of substantially all of
its
assets followed by a liquidation) shall be effected in such a way that holders
of Common Stock shall be entitled to receive shares, securities or other
assets
or property (a “Change”),
then,
as a condition of such Change, lawful and adequate provisions shall be made
by
the Company whereby the Holder hereof shall thereafter have the right to
purchase and receive (in lieu of the Common Stock of the Company immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby) such shares, securities or other assets or property as
may
be issued or payable with respect to or in exchange for the number of
outstanding Common Stock which such Holder would have been entitled to receive
had such Holder exercised this Warrant immediately prior to the consummation
of
such Change. The Company or its successor shall promptly issue to Holder
a new
Warrant for such new securities or other property. The new Warrant shall
provide
for adjustments which shall be as nearly equivalent as may be practicable
to
give effect to the adjustments provided for in this Section 3 including,
without
limitation, adjustments to the Warrant Price and to the number of securities
or
property issuable upon exercise of the new Warrant. The provisions of this
Section 3.3 shall similarly apply to successive Changes.
4. Ownership
and Transfer.
4.1 Ownership
of This Warrant.
The
Company may deem and treat the person in whose name this Warrant is registered
as the holder and owner hereof (notwithstanding any notations of ownership
or
writing hereon made by anyone other than the Company) for all purposes and
shall
not be affected by any notice to the contrary until presentation of this
Warrant
for registration of transfer as provided in this Section 4.
-4-
4.2 Transfer
and Replacement.
Subject
to the terms and conditions of this Warrant and compliance with all applicable
securities laws, and upon prior written consent of the Company, which consent
shall not be unreasonably withheld, this Warrant and all rights hereunder
are
transferable in whole or in part upon the books of the Company by the Holder
hereof in person or by duly authorized attorney, and a new Warrant or Warrants,
of the same tenor as this Warrant but registered in the name of the transferee
or transferees (and in the name of the Holder, if a partial transfer is
effected) shall be made and delivered by the Company upon surrender of this
Warrant duly endorsed, at the office of the Company in accordance with Section
6.1 hereof. Upon receipt by the Company of evidence reasonably satisfactory
to
it of the loss, theft or destruction, and, in such case, of indemnity or
security reasonably satisfactory to it, and upon surrender of this Warrant
if
mutilated, the Company will make and deliver a new Warrant of like tenor,
in
lieu of this Warrant; provided that if the Holder hereof is an instrumentality
of a state or local government or an institutional holder or a nominee for
such
an instrumentality or institutional holder an irrevocable agreement of indemnity
by such Holder shall be sufficient for all purposes of this Warrant, and
no
evidence of loss or theft or destruction shall be necessary. This Warrant
shall
be promptly cancelled by the Company upon the surrender hereof in connection
with any transfer or replacement. Except as otherwise provided above, in
the
case of the loss, theft or destruction of a Warrant, the Company shall pay
all
expenses, taxes and other charges payable in connection with any transfer
or
replacement of this Warrant, other than income taxes and stock transfer taxes
(if any) payable in connection with a transfer of this Warrant, which shall
be
payable by the Holder. Holder will not transfer this Warrant and the rights
hereunder except in compliance with federal and state securities laws and
except
after providing evidence of such compliance reasonably satisfactory to the
Company.
5. Compliance
with Securities Laws.
By
acceptance of this Warrant, the Holder hereby represents, warrants and covenants
that any shares of stock purchased upon exercise of this Warrant or acquired
upon conversion thereof shall be acquired for investment only and not with
a
view to, or for sale in connection with, any distribution thereof; that the
Holder has had such opportunity as Holder has deemed adequate to obtain from
representatives of the Company such information as is necessary to permit
the
Holder to evaluate the merits and risks of its investment in the Company;
that
the Holder is able to bear the economic risk of holding such shares as may
be
acquired pursuant to the exercise of this Warrant for an indefinite period;
that
the Holder understands that the shares of stock acquired pursuant to the
exercise of this Warrant or acquired upon conversion thereof will not be
registered under the Act (unless otherwise required pursuant to exercise
by the
Holder of the registration rights, if any, previously granted to the registered
Holder) and will be "restricted securities" within the meaning of Rule 144
under
the Securities Act of 1933 and that the exemption from registration under
Rule
144 will not be available for at least one year from the date of exercise
of
this Warrant, and even then will not be available unless a public market
then
exists for the stock, adequate information concerning the Company is then
available to the public, and other terms and conditions of Rule 144 are complied
with; and that all stock certificates representing shares of stock issued
to the
Holder upon exercise of this Warrant or upon conversion of such shares may
have
affixed thereto a legend substantially in the form set forth in Section 1.6
above.
6. Miscellaneous
Provisions.
6.1 Notices.
Any
notice or other document required or permitted to be given or delivered to
the
Holder shall be delivered or forwarded to the Holder at
c/o
_____, 000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000,
Attention: Xxxx Xxxxxxx (Facsimile No. 213/553-8285), or to such other address
or number as shall have been furnished to the Company in writing by the Holder,
with a copy to Xxxxxxxx Xxxxxx Xxxxxxx & Xxxxxxx LLP, 000 Xxxxx Xxxx Xxxxxx,
00xx
Xxxxx,
Xxx Xxxxxxx, Xxxxxxxxxx 00000-1448 Attention Xxxxx X. Xxxxx (Facsimile No.
213/620-1398). Any notice or other document required or permitted to be given
or
delivered to the Company shall be delivered or forwarded to the Company
at
00000
Xxxxx Xxxx, Xxxxx 000, Xxxxxx Xxxxxx, XX 00000, Attention: Xxxxxx Xxxxxxxx
(Facsimile No. 888/886-1305), or to such other address or number as shall
have
been furnished to Holder in writing by the Company.
-5-
6.2 All
notices, requests and approvals required by this Warrant shall be in writing
and
shall be conclusively deemed to be given (i) when hand-delivered to the other
party, (ii) when received if sent by facsimile at the address and number
set
forth above; provided that notices given by facsimile shall not be effective,
unless either (a) a duplicate copy of such facsimile notice is promptly given
by
depositing the same in the mail, postage prepaid and addressed to the party
as
set forth below or (b) the receiving party delivers a written confirmation
of
receipt for such notice by any other method permitted under this paragraph;
and
further provided that any notice given by facsimile received after 5:00 p.m.
(recipient’s time) or on a non-business day shall be deemed received on the next
business day; (iii) five (5) business days after deposit in the United States
mail, certified, return receipt requested, postage prepaid, and addressed
to the
party as set forth below; or (iv) the next business day after deposit with
an
international overnight delivery service, postage prepaid, addressed to the
party as set forth below with next business day delivery guaranteed; provided
that the sending party receives confirmation of delivery from the delivery
service provider.
6.3 No
Rights as Shareholder; Limitation of Liability.
This
Warrant shall not entitle the Holder to any of the rights of a shareholder
of
the Company except upon exercise in accordance with the terms hereof. No
provision 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, shall give rise to any liability of the Holder
for the
Warrant Price hereunder or as a shareholder of the Company, whether such
liability is asserted by the Company or by creditors of the
Company.
6.4 Governing
Law.
This
Warrant shall be governed by and construed in accordance with the laws of
the
State of California as applied to agreements among California residents made
and
to be performed entirely within the State of California, without giving effect
to the conflict of law principles thereof.
6.5 Binding
Effect on Successors.
This
Warrant shall be binding upon any corporation succeeding the Company by merger,
consolidation or acquisition of all or substantially all of the Company’s assets
and/or securities. All of the obligations of the Company relating to the
Shares
issuable upon the exercise of this Warrant shall survive the exercise and
termination of this Warrant. All of the covenants and agreements of the Company
shall inure to the benefit of the successors and assigns of the
Holder.
6.6 Waiver,
Amendments and Headings.
This
Warrant and any provision hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by both parties (either
generally or in a particular instance and either retroactively or
prospectively). The headings in this Warrant are for purposes of reference
only
and shall not affect the meaning or construction of any of the provisions
hereof.
6.7 Jurisdiction.
Each of
the parties irrevocably agrees that any and all suits or proceedings based
on or
arising under this Agreement may be brought only in and shall be resolved
in the
federal or state courts located in the City of Los Angeles, California and
consents to the jurisdiction of such courts for such purpose. Each of the
parties irrevocably waives the defense of an inconvenient forum to the
maintenance of such suit or proceeding in any such court. Each of the parties
further agrees that service of process upon such party mailed by first class
mail to the address set forth in Section 6.1 shall be deemed in every respect
effective service of process upon such party in any such suit or proceeding.
Nothing herein shall affect the right of a Holder to serve process in any
other
manner permitted by law. Each of the parties agrees that a final non-appealable
judgment in any such suit or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on such judgment or in any other lawful
manner.
6.8 Attorneys'
Fees and Disbursements.
If any
action at law or in equity is necessary to enforce or interpret the terms
of
this Agreement, the prevailing party or parties shall be entitled to receive
from the other party or parties reasonable attorneys’ fees and disbursements in
addition to any other relief to which the prevailing party or parties may
be
entitled.
-6-
IN
WITNESS WHEREOF,
the
Company has caused this Warrant to be signed by its duly authorized officer
this
27th day of December, 2005.
| COMPANY: | INTERACTIVE TELEVISION NETWORKS, INC. | |
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-7-
SCHEDULE
A
FORM
OF NOTICE OF EXERCISE
[To
be signed only upon exercise of the Warrant]
TO
BE EXECUTED BY THE REGISTERED HOLDER
TO
EXERCISE THE WITHIN WARRANT
The
undersigned hereby elects to purchase _______ shares of Common Stock (the
“Shares”) of Interactive Television Networks, Inc., under the Warrant to
Purchase Common Stock dated December __, 2005, which the undersigned is entitled
to purchase pursuant to the terms of such Warrant. The undersigned has delivered
$_________, the aggregate Warrant Price for _____ Shares purchased herewith,
in
full in cash or by certified or official bank check or wire transfer.
Please
issue a certificate or certificates representing such shares of Common Stock
in
the name of the undersigned or in such other name as is specified below and
in
the denominations as is set forth below:
_________________________________________________________________________________________
[Type
Name of Holder as it should appear on the stock
certificate]
_________________________________________________________________________________________
[Requested
Denominations - if no denomination is specified, a single certificate
will be
issued]
The
initial address of such Holder to be entered on the books of Company shall
be:
________________________________________________________________
________________________________________________________________
________________________________________________________________
The
undersigned hereby represents and warrants that the undersigned is acquiring
such shares for his own account for investment purposes only, and not for
resale
or with a view to distribution of such shares or any part thereof.
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By:
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________________________________________
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Print
Name:
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________________________________________
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Title:
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________________________________________
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Dated:
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________________________________________
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-1-
FORM
OF ASSIGNMENT
(ENTIRE)
[To
be signed only upon transfer of entire Warrant]
TO
BE EXECUTED BY THE REGISTERED HOLDER
TO
TRANSFER THE WITHIN WARRANT
FOR
VALUE RECEIVED
___________________________ hereby sells, assigns and transfers unto
_______________________________ all rights of the undersigned under and pursuant
to the within Warrant, and the undersigned does hereby irrevocably constitute
and appoint _____________________ Attorney to transfer the said Warrant on
the
books of ________ _________, with full power of substitution.
___________________________________________________________________________________________
[Type
Name of
Holder]
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By:
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____________________________________________________________
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Title:
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____________________________________________________________
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| Dated: |
____________________________________________________________
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NOTICE
The
signature to the foregoing Assignment must correspond exactly to the name
as
written upon the face of the within Warrant, without alteration or enlargement
or any change whatsoever.
-1-
FORM
OF ASSIGNMENT
(PARTIAL)
[To
be signed only upon partial transfer of Warrant]
TO
BE EXECUTED BY THE REGISTERED HOLDER
TO
TRANSFER THE WITHIN WARRANT
FOR
VALUE
RECEIVED ___________________________ hereby sells, assigns and transfers
unto
____________________________ (i) the rights of the undersigned to
purchase
____________________ shares of Common Stock under and pursuant to the within
Warrant, and (ii) on a non-exclusive basis, all other rights of the
undersigned under and pursuant to the within Warrant, it being understood
that
the undersigned shall retain, severally (and not jointly) with the transferee(s)
named herein, all rights assigned on such non-exclusive basis. The undersigned
does hereby irrevocably constitute and appoint __________________________
Attorney to transfer the said Warrant on the books of Interactive Television
Networks, Inc, with full power of substitution.
____________________________________________________________________________________________
[Type
Name of
Holder]
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By:
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____________________________________________________________
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Title:
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____________________________________________________________
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| Dated: |
____________________________________________________________
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NOTICE
The
signature to the foregoing Assignment must correspond exactly to the name
as
written upon the face of the within Warrant, without alteration or enlargement
or any change whatsoever.
-1-
