Exhibit 10(48)
FORM OF B WARRANT
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE EXERCISED BY OR ON
BEHALF OF ANY U.S. PERSON, OR SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS IN ACCORDANCE WITH REGULATION S OF
THE ACT, REGISTERED UNDER THAT ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR
VIRTUAL COMMUNITIES, INC. (THE "COMPANY") SHALL HAVE RECEIVED AN OPINION, IN
FORM, SCOPE AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY, OF COUNSEL WHO
IS REASONABLY ACCEPTABLE TO THE COMPANY THAT REGISTRATION OF SUCH SECURITIES
UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE FEDERAL AND
STATE SECURITIES LAWS IS NOT REQUIRED.
WARRANT B TO PURCHASE
SHARES OF COMMON STOCK
OF
VIRTUAL COMMUNITIES, INC.
No.: W-__ Number of Shares: _____
Date of Issuance: April __, 2000
FOR VALUE RECEIVED, subject to the provisions hereinafter set forth, the
undersigned, Virtual Communities, Inc., a Delaware corporation (together with
its successors and assigns, the "Issuer"), hereby certifies that
___________________ or its registered assigns is entitled to subscribe for and
purchase, during the period specified in this Warrant, up to _____ shares
(subject to adjustment as hereinafter provided) of the duly authorized, validly
issued, fully paid and non-assessable Common Stock of the Issuer, at an exercise
price per share equal to the Warrant Price then in effect, subject, however, to
the provisions and upon the terms and conditions hereinafter set forth.
Capitalized terms used in this Warrant and not otherwise defined herein shall
have the respective meanings specified in Section 9 hereof.
Term. The right to subscribe for and purchase shares of Warrant Stock
represented hereby shall commence on the Original Issue Date and shall
expire at 5:00 p.m., eastern time, on the four (4) month anniversary date
of the Effectiveness Date (such period being the "Term").
Method of Exercise Payment; Issuance of New Warrant; Transfer and Exchange.
IIIIII. Time of Exercise. The purchase rights represented by this
Warrant may be exercised in whole or in part at any time and
from time to time during the Term.
JJJJJJ. Method of Exercise. The Holder hereof may exercise this Warrant,
in whole or in part, by the surrender of this Warrant (with the
exercise form attached hereto duly executed) at the principal
office of the Issuer, and by the payment to the Issuer of an
amount of consideration therefor equal to the Warrant Price in
effect on the date of such exercise multiplied by the number of
shares of Warrant Stock with respect to which this Warrant is
then being exercised, payable at such Xxxxxx's election by
certified or official bank check
KKKKKK. Issuance of Stock Certificates. In the event of any exercise of
the rights represented by this Warrant in accordance with and
subject to the terms and conditions hereof, 1. certificates for
the shares of Warrant Stock so purchased shall be dated the date
of such exercise and delivered to the Holder hereof within a
reasonable time, not exceeding three (3) Trading Days after such
exercise, and the Holder hereof shall be deemed for all purposes
to be the Holder of the shares of Warrant Stock so purchased as
of the date of such exercise, and 2. unless this Warrant has
expired, a new Warrant representing the number of shares of
Warrant Stock, if any, with respect to which this Warrant shall
not then have been exercised (less any amount thereof which
shall have been canceled in payment or partial payment of the
Warrant Price as hereinabove provided) shall also be issued to
the Holder hereof at the Issuer's expense within such time.
LLLLLL. Transferability of Warrant. Subject to Section 2(e), this
Warrant may be transferred by a Holder without the consent of
the Issuer. If transferred pursuant to this subsection and
subject to the provisions of subsection (e) of this Section 2,
this Warrant may be transferred on the books of the Issuer by
the Holder hereof in person or by duly authorized attorney, upon
surrender of this Warrant at the principal office of the Issuer,
properly endorsed (by the Holder executing an assignment in the
form attached hereto) and upon payment of any necessary transfer
tax imposed upon such transfer. This Warrant is exchangeable at
the principal office of the Issuer for Warrants for the purchase
of the same aggregate number of shares of Warrant Stock, each
new Warrant to represent the right to purchase such number of
shares of Warrant Stock as the Holder hereof shall designate at
the time of such exchange. All Warrants issued on transfers or
exchanges shall be dated the Original Issue Date and shall be
identical with this Warrant except as to the number of shares of
Warrant Stock issuable pursuant hereto.
MMMMMM. Compliance with Securities Laws.
1. The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant or the shares of Warrant
Stock to be issued upon exercise hereof are being
acquired solely for the Holder's own account and not as
a nominee for any other party, and for investment, and
that the Holder will not offer, sell or otherwise
dispose of this Warrant or any shares of
Warrant Stock to be issued upon exercise hereof except
pursuant to an effective registration statement, or an
exemption from registration, under the Securities Act
and any applicable state securities laws.
2. Except as provided in paragraph (iii) below, this
Warrant and all certificates representing shares of
Warrant Stock issued upon exercise hereof shall be
stamped or imprinted with a legend in substantially the
following form:
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR STATE
SECURITIES LAWS AND MAY NOT BE EXERCISED BY OR ON BEHALF OF ANY
U.S. PERSON, OR SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS IN ACCORDANCE WITH
REGULATION S OF THE ACT, REGISTERED UNDER THAT ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR VIRTUAL COMMUNITIES, INC.
(THE "COMPANY") SHALL HAVE RECEIVED AN OPINION, IN FORM, SCOPE
AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY, OF COUNSEL
WHO IS REASONABLY ACCEPTABLE TO THE COMPANY THAT REGISTRATION OF
SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS IS
NOT REQUIRED.
3. The restrictions imposed by this subsection (e) upon the
transfer of this Warrant or the shares of Warrant Stock
to be purchased upon exercise hereof shall terminate (A)
when such securities shall have been resold pursuant to
being effectively registered under the Securities Act,
(B) upon the Issuer's receipt of an opinion of counsel,
in form and substance reasonably satisfactory to the
Issuer, addressed to the Issuer to the effect that such
restrictions are no longer required to ensure compliance
with the Securities Act and state securities laws or (C)
upon the Issuer's receipt of other evidence reasonably
satisfactory to the Issuer that such registration and
qualification under state securities laws is not
required. Whenever such restrictions shall cease and
terminate as to any such securities, the Holder thereof
shall be entitled to receive from the Issuer (or its
transfer agent and registrar), without expense (other
than applicable transfer taxes, if any), new Warrants
(or, in the case of shares of Warrant Stock, new stock
certificates) of like tenor not bearing the applicable
legend required by paragraph (ii) above relating to the
Securities Act and applicable state securities laws.
NNNNNN. Continuing Rights of Holder. The Issuer will, at the time of or
at any time after each exercise of this Warrant, upon the
request of the Holder hereof, acknowledge in writing the extent,
if any, of its continuing obligation to afford to such Holder
all rights
to which such Holder shall continue to be entitled after such
exercise in accordance with the terms of this Warrant; provided
that if any such Holder shall fail to make any such request, the
failure shall not affect the continuing obligation of the Issuer
to afford such rights to such Holder.
Stock Fully Paid: Reservation and Listing of Shares: Covenants.
OOOOOO. Stock Fully Paid. The Issuer represents, warrants, covenants and
agrees that all shares of Warrant Stock which may be issued upon
the exercise of this Warrant or otherwise hereunder will, upon
issuance, be duly authorized, validly issued, fully paid and
non-assessable and free from all taxes and liens, security
interest, charges and encumbrances of any nature whatsoever
created by or through the Issuer. The Issuer further represents,
warrants, covenants and agrees that during the period within
which this Warrant may be exercised, the Issuer will at all
times have authorized and reserved for the purpose of the issue
upon exercise of this Warrant a sufficient number of shares of
Common Stock to provide for the exercise of this Warrant.
(v) Reservation. If any shares of Common Stock required to be reserved for
issuance upon exercise of this Warrant or as otherwise provided hereunder
require registration or qualification with any governmental authority under any
federal or state law before such shares may be so issued, the Issuer will in
good faith use its best efforts as expeditiously as possible at its expense to
cause such shares to be duly registered or qualified. If the Issuer shall list
any shares of Common Stock on any securities exchange or market it will, at its
expense, list thereon, maintain and increase when necessary such listing, of,
all shares of Warrant Stock from time to time issued upon exercise of this
Warrant or as otherwise provided hereunder, and, to the extent permissible under
the applicable securities exchange rules, all unissued shares of Warrant Stock
which are at any time issuable hereunder, so long as any shares of Common Stock
shall be so listed. The Issuer will also so list on each securities exchange or
market, and will maintain such listing of, any other securities which the Holder
of this Warrant shall be entitled to receive upon the exercise of this Warrant
if at the time any securities of the same class shall be listed on such
securities exchange or market by the Issuer.
(w) Covenants. The Issuer shall not by any action including, without
limitation, amending the Certificate of Incorporation or the by-laws of the
Issuer, or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other action, avoid or
seek to avoid the observance or performance of any of the terms or provisions of
this Warrant, but will at all times in good faith carry out all such terms or
provisions and take all such actions as may be necessary or appropriate to
protect the rights of the Holder hereof against dilution (to the extent
specifically provided herein) or impairment. Without limiting the generality of
the foregoing, the Issuer will (i) not permit the par value, if any, of its
Common Stock to exceed the then effective Warrant Price, (ii) not amend or
modify any provision of the Certificate of Incorporation or by-laws of the
Issuer in any manner that would adversely affect in any way the powers,
preferences or relative participating, optional or other special rights of the
Common Stock or which would adversely affect the rights of the Holders of the
Warrants, (iii) take all such action as may be reasonably necessary in order
that the Issuer may validly and legally issue fully paid and nonassessable
shares of Common Stock, free and clear of any liens, security interests,
charges, claims, encumbrances and restrictions (other than as provided herein)
upon the exercise of this Warrant, and (iv) obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction
thereof as may be necessary to enable the Issuer to perform its obligations
under this Warrant.
(x) Loss, Theft, Destruction of Warrants. Upon receipt of evidence
satisfactory to the Issuer of the ownership of and the loss, theft, destruction
or mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security satisfactory to the Issuer
or, in the case of any such mutilation, upon surrender and cancellation of such
Warrant, the Issuer will make and deliver, in lieu of such lost, stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same number of shares of Common Stock.
(y) Rights and Obligations under the Registration Rights Agreement. The
shares of Warrant Stock are entitled to the benefits and subject to the terms of
the Registration Rights Agreement dated as of even date herewith between the
Issuer and the Holders listed on the signature pages thereof (as amended from
time to time, the "Registration Rights Agreement"). The Issuer shall keep or
cause to be kept a copy of the Registration Rights Agreement, and any amendments
thereto, at its chief executive office and shall furnish, without charge, copies
thereof to the Holder upon request.
Adjustment of Warrant Price and Warrant Share Number. The number and kind of
Securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the happening
of certain events as follows:
(z) Recapitalization, Reorganization, Reclassification, Consolidation,
Merger or Sale.
1. In case the Issuer after the Original Issue Date shall do any of
the following (each, a "Triggering Event"): (a) consolidate with
or merge into any other Person and the Issuer shall not be the
continuing or surviving Person of such consolidation or merger,
or (b) permit any other Person to consolidate with or merge into
the Issuer and the Issuer shall be the continuing or surviving
Person but, in connection with such consolidation or merger, any
Capital Stock of the Issuer shall be changed into or exchanged
for Securities of any other Person or cash or any other property,
or (c) transfer all or substantially all of its properties or
assets to any other Person, or (d) effect a capital
reorganization or reclassification of its Capital Stock, then,
and in the case of each such Triggering Event, proper provision
shall be made so that, upon the basis and the terms and in the
manner provided in this Warrant, the Holder of this Warrant shall
be entitled, at the option of such Holder, (x) upon the exercise
hereof at any time after the consummation of such Triggering
Event, to the extent this Warrant is not exercised prior to such
Triggering Event, to receive at the Warrant Price in effect at
the time immediately prior to the consummation of such Triggering
Event in lieu of the Common Stock issuable upon such exercise of
this Warrant prior to such Triggering Event, the Securities, cash
and property to which such Holder would have been entitled upon
the consummation of such Triggering Event if such Holder had
exercised the rights represented by this Warrant immediately
prior thereto, subject to adjustments (subsequent to such
corporate action) as nearly equivalent as possible to the
adjustments provided for in Section 4 hereof or (y) to sell this
Warrant (or, at such Holder's election, a portion hereof)
concurrently with the Triggering Event to the Person continuing
after or surviving such Triggering Event, or to the Issuer (if
Issuer is the continuing or surviving Person) at a sales price
equal to the amount of cash, property and/or Securities to which
a holder of the number of shares of Common Stock
which would otherwise have been delivered upon the exercise of
this Warrant would have been entitled upon the effective date or
closing of any such Triggering Event (the "Event Consideration"),
less the amount or portion of such Event Consideration having a
fair value equal to the aggregate Warrant Price applicable to
this Warrant or the portion hereof so sold.
2. Notwithstanding anything contained in this Warrant to the
contrary, the Issuer will not effect any Triggering Event unless,
prior to the consummation thereof, each Person (other than the
Issuer) which may be required to deliver any Securities, cash or
property upon the exercise of this Warrant as provided herein
shall assume, by written instrument delivered to, and reasonably
satisfactory to, the Holder of this Warrant, (A) the obligations
of the Issuer under this Warrant (and if the Issuer shall survive
the consummation of such Triggering Event, such assumption shall
be in addition to, and shall not release the Issuer from, any
continuing obligations of the Issuer under this Warrant) and (B)
the obligation to deliver to such Holder such shares of
Securities, cash or property as, in accordance with the foregoing
provisions of this subsection (a), such Holder shall be entitled
to receive, and such Person shall have similarly delivered to
such Holder an opinion of counsel for such Person, which counsel
shall be reasonably satisfactory to such Holder, stating that
this Warrant shall thereafter continue in full force and effect
and the terms hereof (including, without limitation, all of the
provisions of this subsection (a)) shall be applicable to the
Securities, cash or property which such Person may be required to
deliver upon any exercise of this Warrant or the exercise of any
rights pursuant hereto.
3. If with respect to any Triggering Event, the Holder of this
Warrant has exercised its right as provided in clause (y) of
subparagraph (i) of this subsection (a) to sell this Warrant or a
portion thereof, the Issuer agrees that as a condition to the
consummation of any such Triggering Event the Issuer shall secure
such right of Holder to sell this Warrant to the Person
continuing after or surviving such Triggering Event and the
Issuer shall not effect any such Triggering Event unless upon or
prior to the consummation thereof the amounts of cash, property
and/or Securities required under such clause (y) are delivered to
the Holder of this Warrant. The obligation of the Issuer to
secure such right of the Holder to sell this Warrant shall be
subject to such Holder's cooperation with the Issuer, including,
without limitation, the giving of reasonable and customary
representations and warranties to the purchaser in connection
with any such sale. Prior notice of any Triggering Event shall be
given to the Holder of this Warrant in accordance with Section 13
hereof.
(aa) Subdivision or Combination of Shares. If the Issuer, at any time while
this Warrant is outstanding, shall subdivide or combine any shares of Common
Stock, (i) in case of subdivision of shares, the Warrant Price shall be
proportionately reduced (as at the effective date of such subdivision or, if the
Issuer shall take a record of holders of its Common Stock for the purpose of so
subdividing, as at the applicable record date, whichever is earlier) to reflect
the increase in the total number of
shares of Common Stock outstanding as a result of such subdivision, or (ii) in
the case of a combination of shares, the Warrant Price shall be proportionately
increased (as at the effective date of such combination or, if the Issuer shall
take a record of holders of its Common Stock for the purpose of so combining, as
at the applicable record date, whichever is earlier) to reflect the reduction in
the total number of shares of Common Stock outstanding as a result of such
combination.
(bb) Certain Dividends and Distributions. If the Issuer, at any time while
this Warrant is outstanding, shall:
4. Stock Dividends. Pay a dividend in, or make any other
distribution to its stockholders (without consideration therefor)
of, shares of Common Stock, the Warrant Price shall be adjusted,
as at the date the Issuer shall take a record of the holders of
the Issuer's Capital Stock for the purpose of receiving such
dividend or other distribution (or if no such record is taken, as
at the date of such payment or other distribution), to that price
determined by multiplying the Warrant Price in effect immediately
prior to such record date (or if no such record is taken, then
immediately prior to such payment or other distribution), by a
fraction (1) the numerator of which shall be the total number of
shares of Common Stock outstanding immediately prior to such
dividend or distribution, and (2) the denominator of which shall
be the total number of shares of Common Stock outstanding
immediately after such dividend or distribution (plus in the
event that the Issuer paid cash for fractional shares, the number
of additional shares which would have been outstanding had the
Issuer issued fractional shares in connection with said
dividends); or
5. Other Dividends. Pay a dividend on, or make any distribution of
its assets upon or with respect to (including, but not limited
to, a distribution of its property as a dividend in liquidation
or partial liquidation or by way of return of capital), the
Common Stock (other than as described in clause (i) of this
subsection (c)), or in the event that the Company shall offer
options or rights to subscribe for shares of Common Stock, or
issue any Common Stock Equivalents, to all of its holders of
Common Stock, then on the record date for such payment,
distribution or offer or, in the absence of a record date, on the
date of such payment, distribution or offer, the Holder shall
receive what the Holder would have received had it exercised this
Warrant in full immediately prior to the record date of such
payment, distribution or offer or, in the absence of a record
date, immediately prior to the date of such payment, distribution
or offer.
PPPPPP. Intentionally Omitted.
QQQQQQ. Intentionally Omitted.
RRRRRR. Intentionally Omitted.
SSSSSS. Intentionally Omitted.
(cc) Other Action Affecting Common Stock. In case after the Original Issue
Date the Issuer shall take any action affecting its Common Stock, other than an
action described in any of the foregoing subsections (a) through (c) of this
Section 4, inclusive, and the failure to make any adjustment would not fairly
protect the purchase rights represented by this Warrant in accordance with the
essential intent and principle of this Section 4, then the Warrant Price shall
be adjusted in such manner and at such time as the Board may in good faith
determine to be equitable in the circumstances.
(dd) Other Adjustments of Warrant Price. If on the three (3) month
anniversary date of the Effectiveness Date, the Per Share Market Value of the
Common Stock is less than the Purchase Price of the Common Stock, then,
notwithstanding any redemption of this Warrant pursuant to Section 8 hereof, the
Warrant Price shall be adjusted to $.01 per share with respect to the number of
shares of Warrant Stock determined by multiplying the number of Purchased Shares
by a fraction:
a) the numerator of which shall be equal to the difference of
(x) the Purchase Price minus (y) the Per Share Market Value
then in effect, and
b) the denominator of which shall be equal to the Per Share
Market Value then in effect.
(ee) Adjustment of Warrant Share Number. Upon each adjustment in the
Warrant Price pursuant to any of the foregoing provisions of this Section 4
(other than pursuant to subsection (i) of this Section 4), the Warrant Share
Number shall be adjusted, to the nearest one hundredth of a whole share, to the
product obtained by multiplying the Warrant Share Number immediately prior to
such adjustment in the Warrant Price by a fraction, the numerator of which shall
be the Warrant Price immediately before giving effect to such adjustment and the
denominator of which shall be the Warrant Price immediately after giving effect
to such adjustment. If the Issuer shall be in default under any provision
contained in Section 3 of this Warrant so that shares issued at the Warrant
Price adjusted in accordance with this Section 4 would not be validly issued,
the adjustment of the Warrant Share Number provided for in the foregoing
sentence shall nonetheless be made and the Holder of this Warrant shall be
entitled to purchase such greater number of shares at the lowest price at which
such shares may then be validly issued under applicable law. Such exercise shall
not constitute a waiver of any claim arising against the Issuer by reason of its
default under Section 3 of this Warrant.
(ff) Form of Warrant after Adjustments. The form of this Warrant need not
be changed because of any adjustments in the Warrant Price or the number and
kind of Securities purchasable upon the exercise of this Warrant.
Notice of Adjustments. Whenever the Warrant Price or Warrant Share Number shall
be adjusted pursuant to Section 4 hereof (for purposes of this Section 5,
each an "adjustment"), the Issuer shall cause its Chief Financial Officer
to prepare and execute a certificate setting forth, in reasonable detail,
the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated (including a description of
the basis on which the Board made any determination hereunder), and the
Warrant Price and Warrant Share Number after giving effect to such
adjustment, and shall cause copies of such certificate to be delivered to
the Holder of this Warrant promptly after each adjustment. Any dispute
between the Issuer and the Holder of this Warrant with respect to the
matters set forth in such certificate may at the option of the Holder of
this Warrant be submitted to one of the national accounting firms currently
known as the "big five" selected by the Holder, provided that the Issuer
shall have ten (10) days after receipt of notice from such Holder of its
selection of such firm to object thereto, in which case such Holder shall
select another such firm and the Issuer shall have no such right of
objection. The firm selected by the Holder of this Warrant as provided in
the preceding sentence shall be instructed to deliver a written opinion as
to such matters to the Issuer and such Holder within thirty (30) days after
submission to it of such dispute. Such opinion shall be final and binding
on the parties hereto. The fees and expenses of such accounting firm shall
be paid by the Issuer.
Fractional Shares. No fractional shares of Warrant Stock will be issued in
connection with and exercise hereof, but in lieu of such fractional shares,
the Issuer shall make a cash payment therefor equal in amount to the
product of the applicable fraction multiplied by the Per Share Market Value
then in effect.
Intentionally Omitted.
Redemption. On or after the Original Issue Date, the Issuer may redeem all or a
portion of this Warrant which is outstanding upon five (5) days prior
written notice (the "Redemption Notice") at a price per share of Warrant
Stock equal to $0.75 (the "Redemption Price"); provided; however, that
beginning on the three (3) month anniversary date of the Effectiveness
Date, the Redemption Price shall be reduced by $0.25 for the first month
and by $.05 for each month thereafter. Notwithstanding anything to the
contrary contained herein, the minimum Redemption Price shall be equal to
$0.25 per share. The Redemption Notice shall state the date of redemption
which date shall be the sixth (6th) day after the Issuer has delivered the
Redemption Notice (the "Redemption Date"), the Redemption Price and the
number of shares of Warrant Stock to be redeemed by the Company. The Issuer
shall not send a Redemption Notice unless it has good and clear funds for a
minimum of the amount it intends to redeem in a bank account controlled by
the Issuer. The Issuer shall deliver the Redemption Price to each Holder
within three (3) business days after the Issuer has delivered the
Redemption Notice against receipt. If the Issuer fails to pay the
Redemption Price by the sixth (6th) business day after the Issuer has
delivered the Redemption Notice, the redemption will be declared null and
void and the Issuer shall lose its right to serve a Redemption Notice in
the future.
Definitions. For the purposes of this Warrant, the following terms have the
following meanings:
"A Warrants" means the non-callable A Warrants issued in connection with the
sale and issuance of Common Stock pursuant to the Purchase Agreement.
"Additional Shares of Common Stock" means all shares of Common Stock issued by
the Issuer after the Original Issue Date, and all shares of Other Common, if
any, issued by the Issuer after the Original Issue Date, except the Warrant
Stock and the shares of Common Stock issued upon exercise of the A Warrants and
the Callable Warrants.
"Board" shall mean the Board of Directors of the Issuer.
"Callable Warrants" means the callable warrant issued in connection with the
sale and issuance of Common Stock pursuant to the Purchase Agreement.
"Capital Stock" means and includes (i) any and all shares, interests,
participations or other equivalents of or interests in (however designated)
corporate stock, including, without limitation, shares of preferred or
preference stock, (ii) all partnership interests (whether general or limited) in
any Person which is a partnership, (iii) all membership interests or limited
liability company interests in any limited liability company, and (iv) all
equity or ownership interests in any Person of any other type.
"Certificate of Incorporation" means the Certificate of Incorporation, as
amended, of the Issuer as in effect on the Original Issue Date, and as hereafter
from time to time amended, modified, supplemented or restated in accordance with
the terms hereof and thereof and pursuant to applicable law.
"Common Stock" means the Common Stock, $.01 par value, of the Issuer and any
other Capital Stock into which such stock may hereafter be changed.
"Common Stock Equivalent" means any Convertible Security or warrant, option or
other right to subscribe for or purchase any Additional Shares of Common Stock
or any Convertible Security.
"Convertible Securities" means evidences of Indebtedness, shares of Capital
Stock or other Securities which are or may be at any time convertible into or
exchangeable for Additional Shares of Common Stock. The term "Convertible
Security" means one of the Convertible Securities.
"Effectiveness Date" means the date of effectiveness of the Registration
Statement (as defined in the Registration Rights Agreement) filed pursuant to
the Registration Rights Agreement.
"Governmental Authority" means any governmental, regulatory or self-regulatory
entity, department, body, official, authority, commission, board, agency or
instrumentality, whether federal, state or local, and whether domestic or
foreign.
"Holders" mean the Persons who shall from time to time own any Warrant. The term
"Holder" means one of the Holders.
"Independent Appraiser" means a nationally recognized or major regional
investment banking firm or firm of independent certified public accountants of
recognized standing (which may be the firm that regularly examines the financial
statements of the Issuer) that is regularly engaged in the business of
appraising the Capital Stock or assets of corporations or other entities as
going concerns, and which is not affiliated with either the Issuer or the Holder
of any Warrant.
"Issuer" means Virtual Communities, Inc., a Delaware corporation, and its
successors.
"Majority Holders" means at any time the Holders of Warrants exercisable for a
majority of the shares of Warrant Stock issuable under the Warrants at the time
outstanding.
"Original Issue Date" means April __, 2000.
"Other Common" means any other Capital Stock of the Issuer of any class which
shall be authorized at any time after the date of this Warrant (other than
Common Stock) and which shall have the right to participate in the distribution
of earnings and assets of the Issuer without limitation as to amount.
"OTC Bulletin Board" means the over-the-counter electronic bulletin board.
"Person" means an individual, corporation, limited liability company,
partnership, joint stock company, trust, unincorporated organization, joint
venture, Governmental Authority or other entity of whatever nature.
"Per Share Market Value" means on any particular date (a) the closing bid price
per share of the Common Stock on such date the Nasdaq SmallCap Market, Nasdaq
National Market or other registered national stock exchange on which the Common
Stock is then listed or if there is no such price on such date, then the closing
bid price on such exchange or quotation system on the date nearest preceding
such date, or (b) if the Common Stock is not listed then on the Nasdaq SmallCap
Market, Nasdaq National Market or any registered national stock exchange, the
closing bid price for a share of Common Stock in the over-the-counter market, as
reported by NASDAQ or in the National Quotation Bureau Incorporated or similar
organization or agency succeeding to its functions of reporting prices) at the
close of business on such date, or (c) if the Common Stock is not then reported
by NASDAQ the National Quotation Bureau Incorporated (or similar organization or
agency succeeding to its functions of
reporting prices), then the average of the "Pink Sheet" quotes for the relevant
conversion period, as determined in good faith by the holder, or (d) if the
Common Stock is not then publicly traded the fair market value of a share of
Common Stock as determined by an Independent Appraiser selected in good faith by
the Majority Holders; provided, however, that the Issuer, after receipt of the
determination by such Independent Appraiser, shall have the right to select an
additional Independent Appraiser, in which case, the fair market value shall be
equal to the average of the determinations by each such Independent Appraiser;
and provided, further that all determinations of the Per Share Market Value
shall be appropriately adjusted for any stock dividends, stock splits or other
similar transactions during such period. The determination of fair market value
by an Independent Appraiser shall be based upon the fair market value of the
Issuer determined on a going concern basis as between a willing buyer and a
willing seller and taking into account all relevant factors determinative of
value, and shall be final and binding on all parties. In determining the fair
market value of any shares of Common Stock, no consideration shall be given to
any restrictions on transfer of the Common Stock imposed by agreement or by
federal or state securities laws, or to the existence or absence of, or any
limitations on, voting rights.
"Purchase Agreement" means the Common Stock and Warrants Purchase Agreement
dated as of March 31, 2000 among the Issuer and the investors a party thereto.
"Purchase Price" means $5.79375 per share.
"Purchased Shares" means the total number of shares of Common Stock purchased by
the initial Holder of this Warrant pursuant to the Purchase Agreement.
"Registration Rights Agreement" has the meaning specified in Section 3(e)
hereof.
"Redemption Date" has the meaning specified in Section 8 hereof.
"Redemption Notice" has the meaning specified in Section 8 hereof.
"Redemption Price" has the meaning specified in Section 8 hereof.
"Securities" means any debt or equity securities of the Issuer, whether now or
hereafter authorized, any instrument convertible into or exchangeable for
Securities or a Security, and any option, warrant or other right to purchase or
acquire any Security. "Security" means one of the Securities.
"Securities Act" means the Securities Act of 1933, as amended, or any similar
federal statute then in effect.
"Subsidiary" means any corporation at least 50% of whose outstanding Voting
Stock shall at the time be owned directly or indirectly by the Issuer or by one
or more of its Subsidiaries, or by the Issuer and one or more of its
Subsidiaries.
"Term" has the meaning specified in Section 1 hereof.
"Trading Day" means (a) a day on which the Common Stock is traded on the Nasdaq
SmallCap Market, Nasdaq National Market or other registered national stock
exchange on which the Common Stock has been listed, or (b) if the Common Stock
is not listed on the Nasdaq SmallCap Market, Nasdaq National Market or other
registered national stock exchange on which the Common Stock has been listed, a
day on which the Common Stock is quoted in the over-the-counter market, as
reported by the OTC Bulletin Board, or (c) if the Common Stock is not quoted on
the OTC Bulletin Board, a day on which the Common Stock is quoted in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding its functions of
reporting prices); provided, however, that in the event that the Common Stock is
not listed or quoted as set forth in (a), (b) and (c) hereof, then Trading Day
shall mean any day except Saturday, Sunday and any day which shall be a legal
holiday or a day on which banking institutions in the State of New York are
authorized or required by law or other government action to close.
"Voting Stock", as applied to the Capital Stock of any corporation, means
Capital Stock of any class or classes (however designated) having ordinary
voting power for the election of a majority of the members of the Board of
Directors (or other governing body) of such corporation, other than Capital
Stock having such power only by reason of the happening of a contingency.
"VWAP" shall mean the daily volume weighted average price (based on a Trading
Day from 9:30 a.m. to 4:00 p.m., E.S.T.) of the Company on the Nasdaq SmallCap
Market (or any successor thereto) as reported by Bloomberg Financial LP using
the AQR function.
"Warrants" means the B Warrants issued in connection with the sale and issuance
of Common Stock pursuant to the Purchase Agreement, including, without
limitation, this Warrant, and any other warrants of like tenor issued in
substitution or exchange for any thereof pursuant to the provisions of Section
2(c), 2(d) or 2(e) hereof or of any of such other Warrants.
"Warrant Price" means $14.875 per share, as such price may be adjusted from time
to time as shall result from the adjustments specified in Section 4 hereof.
"Warrant Share Number" means at any time the aggregate number of shares of
Warrant Stock which may at such time be purchased upon exercise of this Warrant,
after giving effect to all prior adjustments and increases to such number made
or required to be made under the terms hereof.
"Warrant Stock" means Common Stock issuable upon exercise of any Warrant or
Warrants or otherwise issuable pursuant to any Warrant or Warrants.
Other Notices. In case at any time:
c) the Issuer shall make any distributions to the holders of
Common Stock; or
d) the Issuer shall authorize the granting to all holders of
its Common Stock of rights to subscribe for or purchase any
shares of Capital Stock of any class or of any Common Stock
Equivalents or Convertible Securities or other rights; or
e) there shall be any reclassification of the Capital Stock of
the Issuer; or
f) there shall be any capital reorganization by the Issuer; or
g) there shall be any (i) consolidation or merger involving the
Issuer or (ii) sale, transfer or other disposition of all or
substantially all of the
Issuer's property, assets or business (except a merger or
other reorganization in which the Issuer shall be the
surviving corporation and its shares of Capital Stock shall
continue to be outstanding and unchanged and except a
consolidation, merger, sale, transfer or other disposition
involving a wholly-owned Subsidiary); or
h) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Issuer or any partial
liquidation of the Issuer or distribution to holders of
Common Stock;
then, in each of such cases, the Issuer shall give written notice to the Holder
of the date on which (i) the books of the Issuer shall close or a record shall
be taken for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take place.
Such notice also shall specify the date as of which the holders of Common Stock
of record shall participate in such dividend, distribution or subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation
or winding-up, as the case may be. Such notice shall be given at least twenty
(20) days prior to the action in question and not less than twenty (20) days
prior to the record date or the date on which the Issuer's transfer books are
closed in respect thereto. The Issuer shall give to the Holder notice of all
meetings and actions by written consent of its stockholders, at the same time in
the same manner as notice of any meetings of stockholders is required to be
given to stockholders who do not waive such notice (or, if such actions require
no notice, then two (2) Trading Days written notice thereof describing the
matters upon which action is to be taken). The Holder shall have the right to
send two representatives selected by it to each meeting, who shall be permitted
to attend, but not vote at, such meeting and any adjournments thereof. This
Warrant entitles the Holder to receive copies of all financial and other
information distributed or required to be distributed to the holders of the
Common Stock.
Amendment and Waiver. Any term, covenant, agreement or condition in this Warrant
may be amended, or compliance therewith may be waived (either generally or
in a particular instance and either retroactively or prospectively), by a
written instrument or written instruments executed by the Issuer and the
Majority Holders; provided, however, that no such amendment or waiver shall
reduce the Warrant Share Number, increase the Warrant Price, shorten the
period during which this Warrant may be exercised or modify any provision
of this Section 11 without the consent of the Holder of this Warrant.
Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO PRINCIPLES
OF CONFLICTS OF LAW. THIS WARRANT SHALL NOT BE INTERPRETED OR CONSTRUED
WITH ANY PRESUMPTION AGAINST THE PARTY CAUSING THIS WARRANT TO BE DRAFTED.
Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed
given and effective on the earlier of (i) the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile
telephone number specified for notice prior to 5:00 p.m., eastern standard
time, on a Trading Day, (ii) the Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at
the facsimile telephone number specified for notice later than 5:00 p.m.,
eastern standard time, on any date and earlier than 11:59 p.m., eastern
standard time, on such date, (iii) the Trading Day following the date of
mailing, if sent by nationally recognized overnight courier service or (iv)
actual receipt by the party to whom such notice is required to be given.
The addresses for such communications shall be with respect to the Holder
of this Warrant or of Warrant Stock issued pursuant hereto, addressed to
such Holder at its last known address or facsimile number appearing on the
books of the Issuer maintained for such purposes, or with respect to the
Issuer, addressed to:
Virtual Communities, Inc.
000 Xxxxxx Xxxxxx, 0xx Floor
New York, New York 10018
Facsimile Number: (000) 000-0000
Attention: Xxx Xxxxxxxxx
or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to the Issuer shall be sent to Wuersch &
Xxxxxx LLP, 00 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx, Attention: Xxxxxx
Xxxxxx, Esq., Facsimile no.(000) 000-0000. Copies of notices to the Holder shall
be sent to (a) Xxxxxx Xxxxxx LLP, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxxxxxxxx X. Xxxxxxx, Esq., Facsimile no.: (000) 000-0000.
Warrant Agent. The Issuer may, by written notice to each Holder of this Warrant,
appoint an agent having an office in New York, New York for the purpose of
issuing shares of Warrant Stock on the exercise of this Warrant pursuant to
subsection (b) of Section 2 hereof, exchanging this Warrant pursuant to
subsection (d) of Section 2 hereof or replacing this Warrant pursuant to
subsection (d) of Section 3 hereof, or any of the foregoing, and thereafter
any such issuance, exchange or replacement, as the case may be, shall be
made at such office by such agent.
Remedies. The Issuer stipulates that the remedies at law of the Holder of this
Warrant in the event of any default or threatened default by the Issuer in
the performance of or compliance with any of the terms of this Warrant are
not and will not be adequate and that, to the fullest extent permitted by
law, such terms may be specifically enforced by a decree for the specific
performance of any agreement contained herein or by an injunction against a
violation of any of the terms hereof or otherwise.
Successors and Assigns. This Warrant and the rights evidenced hereby shall inure
to the benefit of and be binding upon the successors and assigns of the
Issuer, the Holder hereof and (to the extent provided herein) the Holders
of Warrant Stock issued pursuant hereto, and shall be enforceable by any
such party.
Modification and Severability. If, in any action before any court or agency
legally empowered to enforce any provision contained herein, any provision
hereof is found to be unenforceable, then such provision shall be deemed
modified to the extent necessary to make it enforceable by such court or
agency. If any such provision is not enforceable as set forth in the
preceding sentence, the unenforceability of such provision shall not affect
the other provisions of this Warrant, but this Warrant shall be construed
as if such unenforceable provision had never been contained herein.
Headings. The headings of the Sections of this Warrant are for convenience of
reference only and shall not, for any purpose, be deemed a part of this
Warrant.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Issuer has executed this Warrant as of the day and year
first above written.
VIRTUAL COMMUNITIES, INC.
By:
--------------------------------------
Name:
Title:
EXERCISE FORM
[NAME OF ISSUER]
The undersigned _______________, pursuant to the provisions of the within
Warrant, hereby elects to purchase _____ shares of Common Stock of
___________________ covered by the within Warrant.
Dated: _________________ Signature __________________________________
Address ____________________________
____________________________
ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.
Dated: _________________ Signature __________________________________
Address ____________________________
____________________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named corporation.
Dated: _________________ Signature __________________________________
Address ____________________________
____________________________
FOR USE BY THE ISSUER ONLY:
This Warrant No. W-A- cancelled (or transferred or exchanged) this _____ day of
___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No. W-A- issued for ____ shares of Common Stock in the
name of _______________.
