EXHIBIT 10.23C
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF A REGISTRATION STATEMENT COVERING THIS WARRANT UNDER SAID ACT OR AN
EXEMPTION FROM REGISTRATION UNDER SAID ACT.
VOID AFTER 5:00 P.M. EASTERN TIME ON MARCH 30, 2002 ("EXPIRATION DATE").
IMAGINON, INC.
WARRANT TO PURCHASE _______ SHARES OF
COMMON STOCK, PAR VALUE $0.01 PER SHARE
This is to certify that, for VALUE RECEIVED, ("Warrantholder"), is entitled
to purchase, subject to the provisions of this Warrant, from ImaginOn, Inc., a
corporation organized under the laws of Delaware, USA ("Company"), at any time
not later than 5:00 P.M., Eastern time, on the Expiration Date, at an exercise
price per share equal to $3.34 (the exercise price in effect from time to time
hereafter being herein called the "Warrant Price") ________ shares ("Warrant
Shares") of Common Stock, par value $0.01per share ("Common Stock"). The number
of Warrant Shares purchasable upon exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time as described herein.
This Warrant has been issued pursuant to the terms of the Purchase
Agreement dated on or about the date hereof between the Company and the
Warrantholder. Capitalized terms used herein and not defined shall have the
meaning specified in the Purchase Agreement.
Section 1. Registration. The Company shall maintain books for the
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transfer and registration of the Warrant. Upon the initial issuance of the
Warrant, the Company shall issue and register the Warrant in the name of the
Warrantholder.
Section 2. Transfers. As provided herein, the Warrant may be
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transferred only pursuant to a registration statement filed under the Securities
Act of 1933, as amended ("1933 Act") or an exemption from registration
thereunder. Subject to such restrictions, the Company shall transfer from time
to time, the Warrant, upon the books to be maintained by the Company for that
purpose, upon surrender thereof for transfer properly endorsed or accompanied
by appropriate instructions for transfer upon any such transfer, and a new
Warrant shall be issued to the transferee and the surrendered Warrant shall be
canceled by the Company.
Section 3. Exercise of Warrant. Subject to the provisions hereof,
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the
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Warrantholder may exercise the Warrant in whole or in part at any time upon
surrender of the Warrant, together with delivery of the duly executed Warrant
exercise form attached hereto (the "Exercise Agreement"), to the Company during
normal business hours on any business day at the Company's principal executive
offices (or such other office or agency of the Company as it may designate by
notice to the holder hereof), and upon (i) payment to the Company in cash, by
certified or official bank check or by wire transfer for the account of the
Company of the Warrant Price for the Warrant Shares specified in the Exercise
Agreement or (ii) delivery to the Company of a written notice of an election to
effect a "Cashless Exercise" (as defined below) for the Warrant Shares specified
in the Exercise Agreement. The Warrant Shares so purchased shall be deemed to
be issued to the holder hereof or such holder's designee, as the record owner of
such shares, as of the close of business on the date on which this Warrant shall
have been surrendered (or evidence of loss, theft or destruction thereof), the
completed Exercise Agreement shall have been delivered, and payment shall have
been made for such shares as set forth above. Certificates for the Warrant
Shares so purchased, representing the aggregate number of shares specified in
the Exercise Agreement, shall be delivered to the holder hereof within a
reasonable time, not exceeding two (2) business days, after this Warrant shall
have been so exercised. The certificates so delivered shall be in such
denominations as may be requested by the holder hereof and shall be registered
in the name of such holder or such other name as shall be designated by such
holder. If this Warrant shall have been exercised only in part, then, unless
this Warrant has expired, the Company shall, at its expense, at the time of
delivery of such certificates, deliver to the holder a new Warrant representing
the number of shares with respect to which this Warrant shall not then have been
exercised.
To effect a Cashless Exercise, the holder shall submit to the Company
with the Exercise Agreement, written notice of the holder's intention to do so,
including a calculation of the number of shares of Common Stock to be issued
upon such exercise in accordance with the terms hereof. In the event of a
Cashless Exercise, in lieu of paying the Warrant Price in cash, the holder shall
surrender this Warrant for that number of shares of Common Stock determined by
multiplying the number of Warrant Shares to which it would otherwise be entitled
by a fraction, the numerator of which shall be the difference between the then
current Market Price per share of the Common Stock and the Warrant Price, and
the denominator of which shall be the then current Market Price per share of the
Common Stock. For this purpose, the "Market Price" of the Common Stock shall be
the average of the closing bid prices of the Common Stock as reported by the
Nasdaq Small Cap Market for the thirty (30) trading days immediately preceding
the exercise date.
Section 4. Compliance with the Securities Act of 1933. Neither this
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Warrant nor the Common Stock issued upon exercise hereof nor any other security
issued or issuable upon exercise of this Warrant may be offered or sold except
as provided in this agreement and in conformity with the 1933 Act and then only
against receipt of an agreement of such person to whom such offer of sale is
made to comply with the provisions of this Section 4 with respect to any resale
or other disposition of such security. The Company may cause the legend set
forth on the first page of this Warrant to be set forth on each Warrant or
similar legend on any security issued or issuable upon exercise of this Warrant
until the Warrant Shares have been registered for resale under the Registration
Rights Agreement or until Rule 144(k) is available, unless counsel
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for the Company is of the opinion as to any such security that such legend is
unnecessary.
Section 5. Payment of Taxes. The Company will pay any documentary
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stamp taxes attributable to the initial issuance of Warrant Shares issuable upon
the exercise of the Warrant; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issue or delivery of any certificates for Warrant Shares in a
name other than that of the registered holder of the Warrant in respect of which
such shares are issued, and in such case, the Company shall not be required to
issue or deliver any certificate for Warrant Shares or any Warrant until the
person requesting the same has paid to the Company the amount of such tax or has
established to the Company's satisfaction that such tax has been paid. The
holder shall be responsible for income taxes due under federal or state law, if
any such tax is due.
Section 6. Mutilated or Missing Warrants. In case the Warrant shall
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be mutilated, lost, stolen, or destroyed, the Company shall issue in exchange
and substitution of and upon cancellation of the mutilated Warrant, or in lieu
of and substitution for the Warrant lost, stolen or destroyed, a new Warrant of
like tenor and for the purchase of a like number of Warrant Shares, but only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction of the Warrant, and with respect to a lost, stolen or
destroyed Warrant, reasonable indemnity or bond, if requested by the Company.
Section 7. Reservation of Common Stock. The Company hereby
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represents and warrants that there have been reserved, and the Company shall at
all applicable times keep reserved, out of the authorized and unissued Common
Stock, a number of shares sufficient to provide for the exercise of the rights
of purchase represented by the Warrant, and the transfer agent for the Common
Stock ("Transfer Agent"), and every subsequent transfer agent for the Common
Stock or other shares of the Company's capital stock issuable upon the exercise
of any of the right of purchase aforesaid, shall be irrevocably authorized and
directed at all times to reserve such number of authorized and unissued shares
of Common Stock as shall be requisite for such purpose. The Company agrees that
all Warrant Shares issued upon exercise of the Warrant shall be, at the time of
delivery of the certificates for such Warrant Shares, duly authorized, validly
issued, fully paid and non-assessable shares of Common Stock of the Company.
The Company will keep a conformed copy of this Warrant on file with the Transfer
Agent and with every subsequent transfer agent for the Common Stock or other
shares of the Company's capital stock issuable upon the exercise of the rights
of purchase represented by the Warrant. The Company will supply from time to
time the Transfer Agent with duly executed stock certificates required to honor
the outstanding Warrant.
Section 8. Warrant Price. The Warrant Price, subject to adjustment
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as provided in Section 9 hereof, shall, if payment is made in cash or by
certified check, be payable in lawful money of the United States of America.
Section 9. Adjustments. Subject and pursuant to the provisions of
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this Section 9, the Warrant Price and number of Warrant Shares subject to this
Warrant shall be subject to adjustment from time to time as set forth
hereinafter.
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(a) If the Company shall at any time or from time to time while the
Warrant is outstanding, pay a dividend or make a distribution on its Common
Stock in shares of Common Stock, subdivide its outstanding shares of Common
Stock into a greater number of shares or combine its outstanding shares into a
smaller number of shares or issue by reclassification of its outstanding shares
of Common Stock any shares of its capital stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), then the number of Warrant Shares
purchasable upon exercise of the Warrant and the Warrant Price in effect
immediately prior to the date upon which such change shall become effective,
shall be adjusted by the Company so that the Warrantholder thereafter exercising
the Warrant shall be entitled to receive the number of shares of Common Stock or
other capital stock which the Warrantholder would have received if the Warrant
had been exercised immediately prior to such event. Such adjustment shall be
made successively whenever any event listed above shall occur.
(b) If any capital reorganization, reclassification of the capital
stock of the Company, consolidation or merger of the Company with another
corporation, or sale, transfer or other disposition of all or substantially all
of the Company's properties to another corporation shall be effected, then, as a
condition of such reorganization, reclassification, consolidation, merger, sale,
transfer or other disposition, lawful and adequate provision shall be made
whereby each Warrantholder shall thereafter have the right to purchase and
receive upon the basis and upon the terms and conditions herein specified and in
lieu of the Warrant Shares immediately theretofore issuable upon exercise of the
Warrant, such shares of stock, securities or properties as may be issuable or
payable with respect to or in exchange for a number of outstanding Warrant
Shares equal to the number of Warrant Shares immediately theretofore issuable
upon exercise of the Warrant, had such reorganization, reclassification,
consolidation, merger, sale, transfer or other disposition not taken place, and
in any such case appropriate provision shall be made with respect to the rights
and interests of each Warrantholder to the end that the provisions hereof
(including, without limitations, provision for adjustment of the Warrant Price)
shall thereafter be applicable, as nearly equivalent as may be practicable in
relation to any shares of stock, securities or properties thereafter deliverable
upon the exercise thereof. The Company shall not effect any such consolidation,
merger, sale, transfer or other disposition unless prior to or simultaneously
with the consummation thereof the successor corporation (if other than the
Company) resulting from such consolidation or merger, or the corporation
purchasing or otherwise acquiring such assets or other appropriate corporation
or entity shall assume, by written instrument executed and delivered to the
Company, the obligation to deliver to the holder of the Warrant such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such holder may be entitled to purchase and the other obligations under this
Warrant. The provisions of this paragraph (b) shall similarly apply to
successive reorganizations, reclassifications, consolidations, mergers, sales,
transfers or other dispositions.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness or assets (other than cash
dividends or cash distributions payable out of consolidated earnings or earned
surplus or dividends or distributions referred to in Section 9(a)),
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or subscription rights or warrants, the Warrant Price to be in effect after such
record date shall be determined by multiplying the Warrant Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the total number of shares of Common Stock outstanding multiplied by
the Market Price per share of Common Stock (as determined pursuant to Section
3), less the fair market value (as determined by the Company's Board of
Directors in good faith) of said assets or evidences of indebtedness so
distributed, or of such subscription rights or warrants, and the denominator of
which shall be the total number of shares of Common Stock outstanding multiplied
by such current Market Price per share of Common Stock. Such adjustment shall
be made successively whenever such a record date is fixed.
(d) If the Company shall at any time or from time to time after the
date of issuance hereof issue or sell in a financing transaction (which shall
not include any sales or issuances of Common Stock after the date hereof
pursuant to contractual obligations in effect on the date hereof), (A) any
shares of Common Stock for a consideration per share less than the Warrant Price
(as defined above) on the date of such issuance or (B) any securities
convertible into shares of Common Stock ("Convertible Securities") for which the
conversion or exercise price (which, for the purposes of this Section 9(d),
shall be the total obtained by dividing (x) the total amount received by the
Company as consideration for the issuance of such Convertible Securities plus
any amount payable to the Company on conversion or exercise thereof, by (y) the
number of shares of Common Stock issuable upon the conversion or exercise
thereof) is less than the Warrant Price (as defined above) on the date of such
issuance, then the Warrant Price shall be reduced to a price equal to 125% of
such per share consideration, or conversion or exercise price. Such adjustments
shall be made successively whenever such sales are made.
(e) An adjustment shall become effective immediately after the record
date in the case of each dividend or distribution and immediately after the
effective date of each other event which requires an adjustment.
(f) If, as a result of an adjustment made pursuant to Section 9, the
holder of the Warrant shall become entitled to receive any shares of capital
stock of the Company other than shares of Common Stock, the number of such other
shares so receivable upon exercise of the Warrant shall be subject thereafter to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Warrant Shares contained in
this Warrant.
Section 10. Fractional Interest. The Company shall not be required
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to issue fractions of Warrant Shares upon the exercise of the Warrant. If any
fraction of a Warrant Share would, except for the provisions of this Section, be
issuable upon the exercise of the Warrant (or specified portions thereof), the
Company shall round such calculation to the nearest whole number and disregard
the fraction.
Section 11. Benefits. Nothing in this Warrant shall be construed to
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give any person, firm or corporation (other than the Company and the
Warrantholder) any legal or equitable right, remedy or claim, it being agreed
that this Warrant shall be for the sole and exclusive benefit of the Company and
the Warrantholder.
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Section 12. Notices to Warrantholder. Upon the happening of any
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event requiring an adjustment of the Warrant Price, the Company shall forthwith
give written notice thereof to the Warrantholder at the address appearing in the
records of the Company and in the manner provided by Section 14 hereof, stating
the adjusted Warrant Price and the adjusted number of Warrant Shares resulting
from such event and setting forth in reasonable detail the method of calculation
and the facts upon which such calculation is based. The certificate of the
Company's independent certified public accountants shall be conclusive evidence
of the correctness of any computation made, absent manifest error. Failure to
give such notice to the Warrantholder or any defect therein shall not affect the
legality or validity of the subject adjustment.
Section 13. Identity of Transfer Agent. The Transfer Agent for the
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Common Stock is Corporate Stock Transfer. Forthwith upon the appointment of any
subsequent transfer agent for the Common Stock or other shares of the Company's
capital stock issuable upon the exercise of the rights of purchase represented
by the Warrant, the Company will fax to the Warrantholder a statement setting
forth the name and address of such transfer agent.
Section 14. Notices. Any notice pursuant hereto to be given or made
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by the Warrantholder to or on the Company shall be sufficiently given or made
personally or if sent by an internationally recognized courier by next day or
two day delivery service, addressed as follows:
ImaginOn, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx Xx. 0
Xxx Xxxxxx, XX 00000
XXX
Telephone: (000) 000 0000
Telefax: (000) 000 0000
Attention: Chief Executive Officer
or such other address as the Company may specify in writing by notice to the
Warrantholder complying as to delivery with the terms of this Section 14.
Any notice pursuant hereto to be given or made by the Company to the
Warrantholder shall be sufficiently given or made if personally delivered or if
sent by an internationally recognized courier service by next day or two-day
service, to the address set forth on the books of the Company or, as to each of
the Company and the Warrantholder, at such other address as shall be designated
by such party by written notice to the other party complying as to delivery with
the terms of this Section 14.
All such notices, requests, demands, directions and other
communications shall, when sent by courier, be effective two (2) days after
delivery to such courier as provided and addressed as aforesaid.
Section 15. Registration Rights. The initial holder of this Warrant
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is entitled to
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the benefit of certain registration rights in respect of the Warrant Shares as
provided in the Registration Rights Agreement.
Section 16. Successors. All the covenants and provisions hereof by
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or for the benefit of the Investor shall bind and inure to the benefit of its
respective successors and assigns hereunder.
Section 17. Governing Law. This Warrant shall be deemed to be a
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contract made under the laws of the State of New York, and for all purposes
shall be construed in accordance with the laws of said State.
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IN WITNESS WHEREOF, the parties hereto have caused this Warrant to be duly
executed, as of the day and year first above written.
IMAGINON, INC.
By:________________________________
Name: Xxxxx X. Xxxxxxxx
Title Chief Executive Officer
Attest:
______________________________
Xxxxx X. Xxxxxxx
Chief Financial Officer
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IMAGINON, INC.
WARRANT EXERCISE FORM
ImaginOn, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx Xx. 0
Xxx Xxxxxx, XX 00000
XXX
Attention: Chief Executive Officer
This undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant ("Warrant") for, and to purchase
thereunder by (CHECK AS APPLICABLE) [_] payment by cash, wire or certified
check; [_] conversion of the within Warrant by surrender of the Warrant,
_______________ shares of Common Stock* ("Warrant Shares") provided for therein,
and requests that certificates for the Warrant Shares be issued as follows:
________________________________
Name
________________________________
Address
________________________________
________________________________
and, if the number of Warrant Shares shall not be all the Warrant Shares
purchasable upon exercise of the Warrant, that a new Warrant for the balance of
the Warrant Shares be issued.
* NOTE: If conversion of the Warrant is made by surrender of the Warrant and
the number of shares indicated exceeds the maximum number of shares to
which a holder is entitled, the Company will issue such maximum number
of shares purchasable upon exercise of the Warrant be registered in
the name of the undersigned Warrantholder or the undersigned's
Assignee as below indicated and delivered to the address stated below.
Dated:___________________, ____
Signature:__________________________________
__________________________________
Name (please print)
__________________________________
Address
__________________________________
SCHEDULE 4.1--SUBSIDIARIES
ImaginOn Inc., a Delaware corporation, operates through three subsidiaries:
1. ImaginOn.com- a California corporations in good standing
2. iNow, a California corporation in good standing, acquired in February, 1999
3. ImaginOn Digital Productions (IDP), a Colorado corporation in good standing,
also acquired in 1999.
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IMAGINON, INC. - Schedule 4.3
(a) Authorized capital stock of the Company:
Common stock 50,000,000 shares
Preferred stock 5,000,000 shares
(b) Number of shares of capital stock issued and
outstanding
Common stock: 41,205,887 shares
Preferred stock, Series F 4000 shares
Note: Information provided above excerpted from the September 30, 1999,
Form 10-QSB.
(c) 2.5 million shares to be issued under employee equity incentive plan
over 10 years.
(d) IMAGINON
Common stock issuable upon conversion of
series F Preferred Stock 2,836,905
Common stock issuable upon exercise of
group F warrant 122,553
Shares issuable under options outstanding
under 1994 stock option plan 0
Shares issuable under options outstanding
under 1997 stock option plan 847,302
Shares issuable under warrants to
purchase common stock 519,845
Shares issuable under options
issued in 1998 1,100,000
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5,426,605
Note: Information above excerpted from S-1/A filing and other SEC filings
SCHEDULE 4.8-NO MATERIAL ADVERSE CHANGE
NONE.
SCHEDULE 4.11- NO MATERIAL BREACH,VIOLATION, OR DEFAULT
NONE.
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4.16 Intellectual Property
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Trademarks
The Company has one registered trademark and eighteen pending trademark
applications and will aggressively file new applications as appropriate. The
following table sets out the Company's trademarks.
Mark Registration/Application No.
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IMAGINON U.S. Reg. No. 2,255,045
WEBZINGER (Stylized) App. Ser. No. 75/746,739
STOP SEARCHING, START ZINGING App. Ser. No. 75/742,124
YOUR PERSONAL RESEARCH ENGINE App. Ser. No. 75/742,195
WEBZINGER MASCOT DESIGN App. Ser. No. 75/746,740
WORLD CITIES 2000 and Design App. Ser. No. 75/746,737
WEBZINGER (Stylized) App. Ser. No. 75/750,694
THE WORLD'S FIRST RESEARCH ENGINE App. Ser. No. 75/750,693
IMAGINON Filed: November 10, 1999.
Awaiting serial number.
IMAGINON and Design Filed: November 10, 1999.
Awaiting serial number.
XXXX.XXX' Filed: November 23, 1999.
Awaiting serial number.
XXXX.XXX and Design Filed: November 23, 1999.
Awaiting serial number.
LIVE AT A HIGHER BANDWIDTH Filed: December 15, 1999.
Awaiting serial number.
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/1/ On October 4, 1999, the Company received a letter from ImOn, Inc., the owner
of the XXXX.XXX domain name, demanding that the Company cease its use of the
IMON and XXXX.XXX names and marks. The Company responded to this demand,
asserted the basis for the Company's rights in the IMON and XXXX.XXX names and
marks, and believes that this matter has been resolved.
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WORLDCITIES 2000 Filed: November 10, 1999.
Awaiting serial number.
IMAGINAUTHOR Filed: December 15, 1999.
Awaiting serial number.
IMAGINAUTHOR and Design Filed: December 15, 1999.
Awaiting serial number.
XXXX.XXX TV Filed: December 15, 1999.
Awaiting serial number.
XXXX.XXX Filed: December 15, 1999.
Awaiting serial number.
XXXX.XXX and Design Filed: December 15, 1999.
Awaiting serial number.
Patents
The Company's technology is covered by two U.S. patents. U.S. Patent No.
5,905,988, owned by the Company, covers the Company's proprietary method and
apparatus for database transformation and adaptive playback. The Company's
technology is also covered by a patent licensed from Atari. U.S. Patent No.
5,607,356, licensed by the Company from Atari, covers an interactive game film.
The Company also owns U.S. Patent No. 5,969,559, which covers a method and
apparatus that uses the power grid for clock distribution in semiconductor
integrated circuits.
There can be no assurance that these patents will provide a competitive
advantage or will afford protection against competitors with similar technology,
or that such patents will not be challenged successfully or circumvented by
competitors.
Copyrights
The Company will pursue an aggressive proprietary strategy. To that end,
the Company is in the process of filing multiple copyright applications covering
its source code and other copyrightable proprietary information.
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SCHEDULE 4.19-FINANCIAL STATEMENTS
NONE.
