Exhibit 3
THIS WARRANT WAS ORIGINALLY ISSUED ON DECEMBER 21, 1999 AND HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED IN VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR
THE PROVISIONS OF THIS WARRANT. THIS WARRANT IS ALSO SUBJECT TO THE SECURITIES
PURCHASE AGREEMENT DATED AS OF DECEMBER 21, 1999 BETWEEN INTERNET SPORTS
NETWORK, INC. (THE "COMPANY") AND XXXXXXXXXX.XXX, INC. (THE "PURCHASE
AGREEMENT"). A COPY OF THE PURCHASE AGREEMENT WILL BE FURNISHED WITHOUT CHARGE
BY THE COMPANY TO THE HOLDER HEREOF UPON REQUEST.
STOCK PURCHASE WARRANT
Date of Issuance: December 21, 1999 Certificate No. W-2
This Warrant is being issued pursuant to the Securities Purchase
Agreement dated as of December 21, 1999 (the "Purchase Agreement"), between
Internet Sports Network, Inc. a Florida corporation (the "Company"), and
XxxxxxXxxx.xxx, Inc., a Delaware corporation ("SportsLine"), as amended from
time to time in accordance with its terms. For value received, the Company
hereby grants to SportsLine or its registered assigns (the "Registered Holder")
the right to purchase from the Company 1,033,296 shares of the Company's Common
Stock at a price per share equal to $2.90 (the "Initial Exercise Price") (such
price as adjusted and readjusted from time to time in accordance with Section 2
hereof). Certain capitalized terms used herein are defined in Section 8 hereof.
The amount and kind of securities obtainable pursuant to the rights granted
hereunder and the purchase price for such securities are subject to adjustment
pursuant to the provisions contained in this Warrant. This Warrant is subject to
the following provisions:
SECTION 1. Exercise of Warrant.
1A. Exercise Period. The purchase rights represented by this Warrant
may be exercised, in whole or in part, at any time and from time to time from
the date hereof to and including the second anniversary of such date (the
"Exercise Period").
1B. Exercise Procedure. (i) This Warrant shall be deemed to have been
exercised when all of the following items have been delivered to the Company
(the "Exercise Time"):
(a) a completed Exercise Agreement, as described in Section 1C below,
executed by the Person exercising all or part of the purchase rights represented
by this Warrant (the "Purchaser");
(b) this Warrant;
(c) if the Purchaser is not the Registered Holder, an Assignment or
Assignments in the form set forth in Exhibit II hereto evidencing the assignment
of this Warrant to the Purchaser; and
(d) either (1) a check payable to the Company in an amount equal to the
product of the Exercise Price multiplied by the number of Warrant Shares being
purchased upon such exercise (the "Aggregate Exercise Price"), (2) the surrender
to the Company of shares of Common Stock, shares of Preferred Stock or debt
securities of the Company having a Fair Market Value equal to the Aggregate
Exercise Price of the Warrant Shares being purchased upon such exercise
(provided that for purposes of this subparagraph, the Fair Market Value of any
note or other debt security or any preferred stock shall be deemed to be equal
to the aggregate outstanding principal amount or liquidation value thereof plus
all accrued and unpaid interest thereon or accrued or declared and unpaid
dividends thereon), or (3) a written notice to the Company that the Purchaser is
exercising the Warrant (or a portion thereof) by authorizing the Company to
withhold from issuance a number of Warrant Shares issuable upon such exercise of
the Warrant which when multiplied by the Fair Market Value of one Warrant Share
is equal to the Aggregate Exercise Price (and such withheld shares shall no
longer be issuable under this Warrant).
(ii) Certificates for Warrant Shares purchased upon exercise of this
Warrant shall be delivered by the Company to the Purchaser within three days
after the date of the Exercise Time together with any cash payable in lieu of a
fraction of a share pursuant to Section 13 hereof. Unless this Warrant has
expired or all of the purchase rights represented hereby have been exercised,
the Company shall prepare a new warrant, substantially identical hereto,
representing the rights formerly represented by this Warrant which have not
expired or been exercised and shall, within such three-day period, deliver such
new warrant to the Person designated for delivery in the Exercise Agreement.
(iii) The Warrant Shares issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Purchaser at the Exercise Time, and
the Purchaser shall be deemed for all purposes to have become the Registered
Holder of such Warrant Shares at the Exercise Time.
(iv) The issuance of certificates for Warrant Shares upon exercise of
this Warrant shall be made without charge to the Registered Holder or the
Purchaser for any issuance tax in respect thereof or other cost incurred by the
Company in connection with such exercise and the related issuance of Warrant
Shares (other than transfer or any other applicable taxes payable because the
holder of the Warrant Shares is other than the Registered Holder).
(v) The Company shall not close its books against the transfer of this
Warrant or of any Warrant Shares issued or issuable upon the exercise of this
Warrant in any manner which interferes with the timely exercise of this Warrant.
The Company shall from time to time take all such action as may be necessary to
assure that the par value per share of the unissued Warrant Shares acquirable
upon exercise of this Warrant is at all times equal to or less than the Exercise
Price then in effect. In the event that the Company fails to comply with its
obligations set forth in
the foregoing sentence, the Purchaser may (but shall not be obligated to)
purchase Warrant Shares hereunder at par value, and the Company shall be
obligated to reimburse the Purchaser for the aggregate amount of consideration
paid in connection with such exercise in excess of the Exercise Price then in
effect.
(vi) The Company shall assist and cooperate with the Registered Holder
or any Purchaser required to make any governmental filings or obtain any
governmental approvals prior to or in connection with any exercise of this
Warrant (including, without limitation, making any filings required to be made
by the Company).
(vii) Notwithstanding any other provision hereof, if an exercise of any
portion of this Warrant is to be made in connection with a Change of Control or
other transaction affecting the Company, such exercise may at the election of
the Registered Holder be conditioned upon the consummation of such transaction,
in which case such exercise shall not be deemed to be effective until
immediately prior to the consummation of such transaction.
(viii) The Company shall at all times reserve and keep available out of
its authorized but unissued Common Stock solely for the purpose of issuance upon
the exercise of this Warrant, the maximum number of Warrant Shares issuable upon
the exercise of this Warrant. All Warrant Shares which are so issuable shall,
when issued and upon the payment of the applicable Exercise Price, be duly and
validly issued, fully paid and non-assessable and free from all taxes, liens and
charges. The Company shall take all such actions as may be necessary to ensure
that all such Warrant Shares may be so issued without violation by the Company
of any applicable law or governmental regulation or any requirements of any
domestic securities exchange or trading market upon which shares of Common Stock
or other securities constituting Warrant Shares may be listed (except for
official notice of issuance which shall be immediately delivered by the Company
upon each such issuance). The Company shall not take any action which would
cause the number of authorized but unissued Warrant Shares to be less than the
number of such shares required to be reserved hereunder for issuance upon
exercise of the Warrant.
(ix) If the Warrant Shares issuable by reason of exercise of this
Warrant are at the time of exercise of this Warrant convertible into or
exchangeable for any other stock or securities of the Company, the Company
shall, at the Purchaser's option and upon surrender of this Warrant by such
Purchaser as provided above together with any notice, statement or payment
required to effect such conversion or exchange of Warrant Shares, deliver to
such Purchaser (or as otherwise specified by such Purchaser) a certificate or
certificates representing the stock or securities into which the Warrant Shares
issuable by reason of such conversion are convertible or exchangeable,
registered in such name or names and in such denomination or denominations as
such Purchaser has specified.
(x) The Company shall not, and shall not permit its Subsidiaries to,
directly or indirectly, by any action avoid or seek to avoid the observance or
performance of any of terms of this Warrant or impair or diminish its value
(except for any action which ratably affects all Warrant
Shares and shares of Common Stock), but shall at all times in good faith assist
in the carrying out of all such terms of this Warrant. Without limiting the
generality of the foregoing, the Company shall (a) obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations under this Warrant and (b) not undertake any reverse stock split,
combination, reorganization or other reclassification of its capital stock which
would have the effect of causing a material portion of the purchase rights
represented hereby to become exercisable for less than one share of Common
Stock.
1C. Exercise Agreement. Upon any exercise of this Warrant, the
Purchaser shall deliver to the Company an Exercise Agreement in substantially
the form set forth in Exhibit I hereto, except that if the Warrant Shares are
not to be issued in the name of the Registered Holder, the Exercise Agreement
shall also state the name of the Person to whom the certificates for the Warrant
Shares are to be issued, and if the number of Warrant Shares to be issued does
not include all of the Warrant Shares purchasable hereunder, it shall also state
the name of the Person to whom a new Warrant for the unexercised portion of the
rights hereunder is to be issued.
SECTION 2. Adjustment of Exercise Price and Number of Shares.
In order to prevent dilution of the rights granted under this Warrant,
the Initial Exercise Price shall be subject to adjustment from time to time (as
so adjusted, the "Exercise Price"), and the number of Warrant Shares obtainable
upon exercise of this Warrant shall be subject to adjustment from time to time,
each as provided in this Section 2.
2A. Adjustment Formula. If and whenever on or after the Date of
Issuance and prior to the expiration of the Exercise Period the Company issues
or sells, or in accordance with Section 2C is deemed to have issued or sold, any
shares of Common Stock for a consideration per share less than the Exercise
Price in effect immediately prior to the time of such issue or sale, then
immediately upon such issue or sale or deemed issue or sale the Exercise Price
shall be reduced to either (x) the consideration per share of such issuance or
sale or deemed issuance or sale if such issuance or sale or deemed issuance or
sale occurs on or prior to December 21, 2000, or (y) the amount determined by
dividing (i) the sum of (1) the product derived by multiplying the Exercise
Price in effect immediately prior to such issue or sale by the number of shares
of Common Stock Deemed Outstanding immediately prior to such issue or sale, plus
(2) the consideration, if any, received by the Company upon such issue or sale,
by (ii) the number of shares of Common Stock Deemed Outstanding immediately
after such issue or sale, if such issuance or sale or deemed issuance or sale
occurs after December 21, 2000, but prior to the expiration of the Exercise
Period.
2B. Exceptions. Notwithstanding the foregoing, there shall be no
adjustment in the Exercise Price as a result of any issue or sale (or deemed
issue or sale) of:
(i) shares of Common Stock issuable pursuant to options, warrants,
convertible securities or other rights outstanding on the Date of Issuance, and
(ii) shares of Common Stock as consideration for the acquisition of any
interest in any business or company from a Person other than an Affiliate (A)
which acquisition is not prohibited pursuant to the Purchase Agreement, and (B)
so long as the Fair Market Value of one Warrant Share as of the closing of such
acquisition exceeds $2.90 per share (as such price is proportionately adjusted
for subsequent stock splits, combinations of shares and stock dividends
affecting the Warrant Shares).
2C. Effect on Exercise Price of Certain Events. For purposes of
determining the adjusted Exercise Price under Section 2A, the following shall be
applicable during the Exercise Period:
(1) Issuance of Rights or Options. If the Company in any manner grants
or sells any Options and the price per share for which Common Stock is issuable
upon the exercise of such Options, or upon conversion or exchange of any
Convertible Securities issuable upon exercise of such Options, is less than the
Exercise Price in effect immediately prior to the time of the granting or sale
of such Options, then the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon conversion or exchange of the
total maximum amount of such Convertible Securities issuable upon the exercise
of such Options shall be deemed to be outstanding and to have been issued and
sold by the Company at the time of the granting or sale of such Options for such
price per share. For purposes of this paragraph, the "price per share for which
Common Stock is issuable" shall be determined by dividing (i) the total amount,
if any, received or receivable by the Company as consideration for the granting
or sale of such Options, plus the minimum aggregate amount of additional
consideration payable to the Company upon exercise of all such Options, plus in
the case of such Options which relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable to the Company
upon the issuance or sale of such Convertible Securities and the conversion or
exchange thereof, by (ii) the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon the conversion or exchange of
all such Convertible Securities issuable upon the exercise of such Options. No
further adjustment of the Exercise Price shall be made when Convertible
Securities are actually issued upon the exercise of such Options or when Common
Stock is actually issued upon the exercise of such Options or the conversion or
exchange of such Convertible Securities.
(2) Issuance of Convertible Securities. If the Company in any manner
issues or sells any Convertible Securities and the price per share for which
Common Stock is issuable upon conversion or exchange thereof is less than the
Exercise Price in effect immediately prior to the time of such issue or sale,
then the maximum number of shares of Common Stock issuable upon conversion or
exchange of such Convertible Securities shall be deemed to be outstanding and to
have been issued and sold by the Company at the time of the issuance or sale of
such Convertible Securities for such price per share. For the purposes of this
paragraph, the "price per share for
which Common Stock is issuable" shall be determined by dividing (i) the total
amount received or receivable by the Company as consideration for the issue or
sale of such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the conversion or
exchange thereof, by (ii) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities. No
further adjustment of the Exercise Price shall be made when Common Stock is
actually issued upon the conversion or exchange of such Convertible Securities,
and if any such issue or sale of such Convertible Securities is made upon
exercise of any Options for which adjustments of the Exercise Price had been or
are to be made pursuant to other provisions of this Section 2, no further
adjustment of the Exercise Price shall be made by reason of such issue or sale.
(3) Change in Option Price or Conversion Rate. If the purchase price
provided for in any Options, the additional consideration, if any, payable upon
the conversion or exchange of any Convertible Securities or the rate at which
any Convertible Securities are convertible into or exchangeable for Common Stock
changes at any time, the Exercise Price in effect at the time of such change
shall be immediately adjusted to the Exercise Price which would have been in
effect at such time had such Options or Convertible Securities still outstanding
provided for such changed purchase price, additional consideration or conversion
rate, as the case may be, at the time initially granted, issued or sold. For
purposes of this Section 2C, if the terms of any Option or Convertible Security
which was outstanding as of the Date of Issuance of this Warrant are changed in
the manner described in the immediately preceding sentence, then such Option or
Convertible Security and the Common Stock deemed issuable upon exercise,
conversion or exchange thereof shall be deemed to have been issued as of the
date of such change; provided that no such change shall at any time cause the
Exercise Price hereunder to be increased.
(4) Treatment of Expired Options and Unexercised Convertible
Securities. Upon the expiration of any Option or the termination of any right to
convert or exchange any Convertible Security without the exercise of any such
Option or right, the Exercise Price then in effect hereunder shall be adjusted
immediately to the Exercise Price which would have been in effect at the time of
such expiration or termination had such Option or Convertible Security, to the
extent outstanding immediately prior to such expiration or termination, never
been issued. For purposes of this Section 2C, the expiration or termination of
any Option or Convertible Security which was outstanding as of the Date of
Issuance shall not cause the Exercise Price hereunder to be adjusted unless, and
only to the extent that, a change in the terms of such Option or Convertible
Security caused it to be deemed to have been issued after the Date of Issuance.
(5) Calculation of Consideration Received. If any Common Stock, Option
or Convertible Security is issued or sold or deemed to have been issued or sold
for cash, the consideration received therefor shall be deemed to be the amount
received by the Company therefor (net of discounts, commissions and related
expenses). If any Common Stock, Option or Convertible Security is issued or sold
for a consideration other than cash, the amount of the consideration other than
cash received by the Company shall be the fair value of such consideration,
except where such consideration consists of securities, in which case the amount
of consideration received by the Company shall be the Fair Market Value thereof
as of the date of receipt. If any Common Stock, Option or Convertible Security
is issued to the owners of the non-surviving entity in connection with any
merger in which the Company is the surviving Company, the amount of
consideration therefor shall be deemed to be the fair value of such portion of
the net assets and business of the non-surviving entity as is attributable to
such Common Stock, Option or Convertible Security, as the case may be. The fair
value of any consideration other than cash and securities shall be determined in
good faith by the Board of Directors of the Company and such determination shall
be delivered in writing to the Registered Holder. In the event that the
Registered Holder disputes such determination of fair value, the Registered
Holder shall so inform the Company in writing within 10 days after receipt of
the Company's determination and the Company and such Registered Holder shall
negotiate in good faith to determine a mutually acceptable fair value. If such
parties are unable to reach agreement within 30 days after the Registered Holder
has given the Company written notice of its dispute, the fair value of such
consideration shall be determined by an independent appraiser experienced in
valuing such type of consideration jointly selected by the Company and the
Registered Holder. The determination of such appraiser shall be final and
binding upon the parties, and the fees and expenses of such appraiser shall be
borne by the Company.
(6) Integrated Transactions. In case any Option is issued in connection
with the issue or sale of other securities of the Company, together comprising
one integrated transaction in which no specific consideration is allocated to
such Option by the parties thereto, the Option shall be deemed to have been
issued for a consideration of $.001.
(7) Treasury Shares. The number of shares of Common Stock outstanding
at any given time shall not include shares owned or held by or for the account
of the Company or any Subsidiary, and the disposition of any shares so owned or
held shall be considered an issue or sale of Common Stock.
(8) Record Date. If the Company takes a record of the holders of Common
Stock for the purpose of entitling them (i) to receive a dividend or other
distribution payable in Common Stock, Options or in Convertible Securities or
(ii) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or upon the making of such other distribution or
the date of the granting of such right of subscription or purchase, as the case
may be.
2D. Subdivision or Combination of Common Stock. If the Company at any
time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of 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 the number of Warrant Shares
shall be proportionately increased, and if the Company at any time combines (by
reverse stock split or otherwise) one or more classes of its outstanding shares
of Common Stock into a smaller number of shares, the Exercise Price in effect
immediately prior to such
combination shall be proportionately increased and the number of Warrant Shares
shall be proportionately reduced.
2E. Reorganization, Reclassification, Consolidation, Merger or Sale.
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company's assets or other transaction in
each case which is effected in such a way that holders of Common Stock are
entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock is referred
to herein as an "Organic Change". Prior to the consummation of any Organic
Change, the Company shall make appropriate provision (in form and substance
satisfactory to the Registered Holders of a majority of the Warrants) to ensure
that each Registered Holder of Warrant(s) shall thereafter have the right to
acquire and receive upon exercise thereof, in lieu of or addition to (as the
case may be) the Warrant Shares immediately theretofore acquirable and
receivable upon exercise of such Registered Holder's Warrant(s), such shares of
stock, securities or assets as such holder would have received in connection
with such Organic Change if such Holder had exercised its Warrants immediately
prior to such Organic Change. In each such case, the Company shall also make
appropriate provision (in form and substance satisfactory to the Registered
Holders of a majority of the Warrants then outstanding) to insure that the
provisions of this Section 2 and Section 4 hereof shall thereafter be applicable
to the Warrants (including, in the case of any such Organic Change in which the
successor entity or purchasing entity is other than the Company, an immediate
adjustment of the Exercise Price to the value for the Common Stock reflected by
the terms of such Organic Change and a corresponding immediate adjustment in the
number of Warrant Shares acquirable and receivable upon exercise of the
Warrants, if the value so reflected is less than the Exercise Price in effect
immediately prior to such Organic Change). The Company shall not effect any such
Organic Change unless, prior to the consummation thereof, the successor entity
(if other than the Company) resulting from such Organic Change assumes by
written instrument (in form and substance reasonably satisfactory to the
Registered Holders of a majority of the Warrants then outstanding) the
obligation to deliver to each Registered Holder of Warrant(s) such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such Registered Holder may be entitled to acquire.
2F. Certain Events. If any event occurs of the type contemplated by the
provisions of this Section 2 but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features, other than as
contemplated by Section 2B hereof), then the Company's Board of Directors shall
make an appropriate adjustment in the Exercise Price and the number of Warrant
Shares obtainable upon exercise of this Warrant so as to protect the rights of
the Registered Holder of this Warrant; provided that no such adjustment shall
increase the Exercise Price as otherwise determined pursuant to this Section 2
or decrease the number of Warrant Shares issuable upon conversion of any
Warrant.
2G. Notices. (i) Promptly after any adjustment of the Exercise Price,
the Company shall give written notice thereof to the Registered Holder, setting
forth in reasonable detail and
certifying the calculation of such adjustment. (ii) The Company shall give
written notice to the Registered Holders at least 20 days prior to the date on
which the Company closes its books or takes a record (a) with respect to any
dividend or distribution upon its Common Stock, (b) with respect to any pro rata
subscription offer to holders of Common Stock or (c) for determining rights to
vote with respect to any Organic Change, dissolution or liquidation. (iii) The
Company shall also give written notice to the Registered Holder at least 20 days
prior to the date on which any Organic Change, dissolution or liquidation shall
take place.
SECTION 3. Liquidating Dividends.
If the Company declares or pays a dividend upon the Common Stock
payable otherwise than in cash out of earnings or earned surplus (determined in
accordance with generally accepted accounting principles, consistently applied)
except for a stock dividend payable in shares of Common Stock (a "Liquidating
Dividend"), then the Company shall pay to the Registered Holder of this Warrant
at the time of payment thereof the Liquidating Dividend which would have been
paid to such Registered Holder on the Warrant Shares had this Warrant been fully
exercised immediately prior to the date on which a record is taken for such
Liquidating Dividend reduced by an amount equal to the aggregate Exercise Price
of this Warrant, or, if no record is taken, the date as of which the record
holders of Common Stock entitled to such dividends are to be determined.
SECTION 4. Purchase Rights. If at any time the Company grants, issues
or sells any Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of any
class of Common Stock (the "Purchase Rights"), then the Registered Holder hereof
shall be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which such holder could have acquired if such
holder had held the number of Warrant Shares acquirable upon conversion of such
holder's Warrants immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or if no such record is taken,
the date as of which the record holders of Common Stock are to be determined for
the grant, issue or sale of such Purchase Rights.
SECTION 5. No Voting Rights; Limitations of Liability.
This Warrant shall not entitle the Registered Holder hereof to any
voting rights or other rights as a stockholder of the Company. No provision
hereof, in the absence of affirmative action by the Registered Holder to
purchase Warrant Shares, and no enumeration herein of the rights or privileges
of the Registered Holder shall give rise to any liability of such Registered
Holder for the Exercise Price of Warrant Shares acquirable by exercise hereof or
as a stockholder of the Company.
SECTION 6. Transferability.
Subject to the transfer conditions referred to in the legend endorsed
hereon and applicable securities laws, this Warrant and all rights hereunder are
transferable, in whole or in part, without charge to the Registered Holder, upon
surrender of this Warrant with a properly executed Assignment (in the form of
Exhibit II hereto) at the principal office of the Company, with the prior
written consent of the Company, such consent not to be unreasonably withheld,
provided, however, that no such consent shall be required if any such transfer
is to an Affiliate of SportsLine.
SECTION 7. Warrant Exchangeable for Different Denominations.
This Warrant is exchangeable, upon the surrender hereof by the
Registered Holder at the principal office of the Company, for new Warrants of
like tenor representing in the aggregate the purchase rights hereunder, and each
of such new Warrants shall represent such portion of such rights as is
designated by the Registered Holder at the time of such surrender. At the
request of the Registered Holder (pursuant to a transfer of Warrants or
otherwise), this Warrant may be exchanged for one or more Warrants to purchase
Common Stock. The date the Company initially issues Warrants pursuant to the
Purchase Agreement shall be deemed to be the "Date of Issuance" regardless of
the number of times new certificates representing the unexpired and unexercised
rights formerly represented by this Warrant shall be issued. All Warrants
representing portions of the rights hereunder are referred to herein as the
"Warrants."
SECTION 8. Definitions.
The following terms have the meanings set forth below:
"Affiliate" means with respect to any Person, any other Person directly
or indirectly controlling or controlled by or is under direct or indirect
control with such specified Person.
"Board of Directors" means the board of directors of the Company.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Corporation and its Subsidiaries taken as
a whole to any "person" (as such term is used in Section 13(d)(3) of the
Exchange Act) other than SportsLine or a Related Party of SportsLine, (ii) the
adoption of a plan relating to the liquidation or dissolution of the Company,
(iii) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "person" (as defined above), other than SportsLine
and its Related Parties, becomes the "beneficial owner" (as such term is defined
in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating
the beneficial ownership of any particular "person," such "person" shall be
deemed to have beneficial ownership of all securities that such person has the
right to acquire, whether such right is currently exercisable or is exercisable
only upon the occurrence of a subsequent condition), directly or indirectly, of
more than 50% of the Voting Stock of the Company (measured by voting power
rather than number of shares), (iv) the first day on which a majority of the
members of the Board of Directors of the Company are not Continuing Directors,
(v) the Company consolidates with, or merges with or into, any Person, or any
Person consolidates with, or merges with or into, the Company, in any such event
pursuant to a transaction in which any of the outstanding Voting Stock of the
Company is converted into or exchanged for cash, securities or other property,
other than any such transaction where the Voting Stock of the Company
outstanding immediately prior to such transaction is converted into or exchanged
for Voting Stock of the surviving or transferee Person constituting a majority
of the outstanding shares of such Voting Stock of such surviving or transferee
Person (immediately after giving effect to such issuance), or (vi) a Change of
Control of any Person holding a majority of the outstanding shares of Voting
Stock of the Company. For purposes of this definition, any transfer of an equity
interest of an entity that was formed for the purpose of acquiring Voting Stock
of the Company will be deemed to be a transfer of such portion of such Voting
Stock as corresponds to the portion of the equity of such entity that has been
so transferred.
"Common Stock" means the Company's Common Stock, $.001 par value per
share, or any securities into which such Common Stock is hereafter converted or
exchanged.
"Common Stock Deemed Outstanding" means, at any given time, the number
of shares of Common Stock actually outstanding at such time, plus the number of
shares of Common Stock deemed to be outstanding pursuant to Sections 2C(1) and
2C(2) hereof.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the Date of Issuance or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Convertible Securities" means any stock or securities directly or
indirectly convertible into or exchangeable for Common Stock, other than any
such securities referred to in Section 2B above.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any similar federal statute then in effect.
"Fair Market Value" of any security means the average of the closing
prices of such security's sales on all securities exchanges on which such
security may at the time be listed or as reported on the NASDAQ National Market,
or, if there has been no sales on any such exchange or reported on the NASDAQ
National Market on any day, the average of the highest bid and lowest asked
prices on all such exchanges or reported at the end of such day, or, if on any
day such security is not so listed or included in the NASDAQ National Market,
the average of the representative bid and asked prices quoted in the NASDAQ
Stock Market as of 4:00 P.M., New York time, or, if on any day such security is
not quoted in the NASDAQ Stock Market, the average of the highest bid and lowest
asked prices on such day in the domestic over-the-counter market as reported by
the National Quotation Bureau, Incorporated, or any similar successor
organization, in each such case averaged over a period of 21 days consisting of
the day as of which "Fair Market Value" is being determined and the 20
consecutive business days prior to such day. If at any time such security is not
listed on any securities exchange or quoted in the NASDAQ National Market, the
NASDAQ Stock Market or the over-the-counter market, the "Fair Market Value"
shall be determined in good faith by the Board of Directors of the Company and
such determination shall be delivered in writing to the Registered Holder. In
the event that the Registered Holder disputes such determination of Fair Market
Value, the Registered Holder shall so inform the Company in writing within 10
days after receipt of the Company's determination and the Company and such
Registered Holder shall negotiate in good faith to determine a mutually
acceptable Fair Market Value. If such parties are unable to reach agreement
within 30 days after the Registered Holder has given the Company written notice
of its dispute, the Fair Market Value of such security shall be determined by an
independent appraiser experienced in valuing securities jointly selected by the
Company and the Registered Holder. The determination of such appraiser shall be
final and binding upon the parties, and the fees and expenses of such appraiser
shall be borne by the Company.
"Options" means any rights, warrants or options to subscribe for or
purchase Common Stock or Convertible Securities other than rights, warrants or
options referred to in Section 2B above.
"Person" means an individual, a partnership (including a limited
partnership), a corporation, a limited liability company, an association, a
joint stock company, a trust, a joint venture, an unincorporated organization
and a governmental entity or any department, agency or political subdivision
thereof.
"Registered Holder" means the holder of this Warrant as reflected in
the records of the Company maintained pursuant to Section 13.
"Related Party" with respect to SportsLine means (A) any controlling
stockholder, Subsidiary, or spouse or immediate family member (in the case of an
individual) of SportsLine or (B) any trust, corporation, partnership or other
entity, the beneficiaries, stockholders, partners, owners or Persons
beneficially holding a majority interest of which consist of SportsLine and/or
such other Persons referred to in the immediately preceding clause (A).
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors or managers thereof is at
the time owned or controlled, directly or indirectly, by such Person or one or
more of the other Subsidiaries of that Person (or a combination thereof) and
(ii) any partnership (a) the sole general partner or the managing general
partner of which is such Person or a Subsidiary of such Person or (b) the only
general partners of which are such Person or of one or more Subsidiaries of such
Person (or any combination thereof).
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Warrant Shares" means shares of the Company's Common Stock issuable
upon exercise of the Warrant; provided, that if the securities issuable upon
exercise of the Warrant are issued by an entity other than the Company or there
is a change in the class of securities so issuable, then the term "Warrant
Shares" shall mean shares of the security issuable upon exercise of the Warrant
if such security is issuable in shares, or shall mean the equivalent units in
which such security is issuable if such security is not issuable in shares.
SECTION 9. Replacement.
Upon receipt of evidence reasonably satisfactory to the Company (an
affidavit of the Registered Holder shall be satisfactory) of the ownership and
the loss, theft, destruction or mutilation of any certificate evidencing this
Warrant, and in the case of any such loss, theft or destruction, upon receipt of
indemnity reasonably satisfactory to the Company (provided that if the
Registered Holder is a financial institution or other institutional investor its
own agreement shall be satisfactory), or, in the case of any such mutilation
upon surrender of such certificate, the Company shall (at its expense) execute
and deliver in lieu of such certificate a new certificate of like kind
representing the same rights represented by such lost, stolen, destroyed or
mutilated certificate and dated the date of such lost, stolen, destroyed or
mutilated certificate.
SECTION 10. Notices.
Except as otherwise expressly provided herein, all notices referred to
herein shall be in writing and shall be delivered by registered or certified
mail, return receipt requested, postage prepaid and will be deemed to have been
given when so mailed (i) to the Company, at its principal executive offices and
(ii) to a Registered Holder, at such Registered Holder's address as it appears
in the records of the Company (unless otherwise indicated by any such Registered
Holder).
SECTION 11. Amendment and Waiver.
No amendment, modification or waiver will be binding or effective with
respect to any provision of this Warrant without the prior written consent of
the Registered Holder hereof.
SECTION 12. Warrant Register.
The Company shall maintain at its principal executive offices a
register for the registration of transfer of Warrants. Upon the surrender of any
certificate representing Warrants at such place, the Company will, at the
request of the record holder of such certificate, execute and deliver (at the
Company's expense) a new certificate or certificates in exchange therefor
representing in the aggregate the number of Warrant Shares represented by the
surrendered certificate. Each such new certificate will be registered in such
name and will represent such number of Warrant Shares as is requested by the
holder of the surrendered certificate and will be substantially identical in
form to the surrendered certificate.
SECTION 13. Fractions of Shares.
If any fractional interest in a Warrant Share would, except for the
provisions of this subparagraph, be delivered upon any exercise of the Warrant,
at the request of the Registered Holder the Company, in lieu of delivering the
fractional share therefor, shall pay an amount to the Registered Holder thereof
equal to the Fair Market Value of such fractional interest as of the date of
exercise.
SECTION 14. Descriptive Headings; Governing Law.
The descriptive headings of the several Sections and paragraphs of this
Warrant are inserted for convenience only and do not constitute a part of this
Warrant. THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS WARRANT SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF FLORIDA WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officers under its corporate seal and to be
dated as of the date hereof.
INTERNET SPORTS NETWORK, INC.
By: /s/ Xxxxxx XxXxxxxxxxx
--------------------------------
Name: Xxxxxx XxXxxxxxxxx
Title: Chairman and CEO
