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EXHIBIT 4.8
THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO SUCH SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
INTERNET PICTURES CORPORATION
TRANCHE B WARRANT TO PURCHASE
SERIES B CONVERTIBLE PREFERRED STOCK
NO. PW-____ May 14, 2001
VOID AFTER AUGUST 14, 2002
THIS CERTIFIES THAT, for value received, IMAGE INVESTOR PORTFOLIO, a
separate series of MEMPHIS ANGELS, LLC, a Delaware limited liability company or
assigns (the "HOLDER" or "PURCHASER"), is entitled to subscribe for and purchase
at the Exercise Price (defined below) from INTERNET PICTURES CORPORATION, a
Delaware corporation, with its principal office at 0000 Xxxxxxxx Xxxx Xx., Xxx
Xxxxx, XX 00000 (the "COMPANY"), up to 1,000,000 shares of Series B Convertible
Preferred Stock of the Company (the "SERIES B PREFERRED STOCK"), as provided
herein.
This Warrant is being issued in connection with the Securities
Purchase Agreement, dated as of May 14, 2001, by and between the Company and
Image Investor Portfolio, a separate series of Memphis Angels, LLC (the
"PURCHASE AGREEMENT"). Capitalized terms used herein but not otherwise defined
herein shall have the meaning ascribed to such terms in the Purchase Agreement.
1. DEFINITIONS. As used herein, the following terms shall have the
following respective meanings:
"EXERCISE PERIOD" shall mean the time period, subject to Mandatory
Exercise (as defined in Section 2.2 below), commencing with the date of this
Warrant and ending fifteen months later; PROVIDED, HOWEVER, if the Company fails
to receive any necessary regulatory or stockholder approval in connection with
the transactions contemplated by the Purchase Agreement, then the Exercise
Period shall be extended beyond such fifteen-month period to coextend with the
period of time that is necessary for all such regulatory or consent conditions
to be met.
"EXERCISE PRICE" shall mean $20.00 per share, subject to adjustment
pursuant to Section 4.2 below.
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"EXERCISE SHARES" shall mean the shares of the Company's Series B
Preferred Stock issuable upon exercise of this Warrant, subject to adjustment
pursuant to the terms herein, including but not limited to adjustment pursuant
to Section 4.2 below.
"MAJORITY WARRANT HOLDERS" shall mean the holders (the "HOLDERS") of
warrants issued in connection with the Purchase Agreement (the "WARRANTS")
representing the right to acquire more than fifty percent (50%) of the Series B
Preferred Stock underlying all of the then-outstanding Warrants.
2. EXERCISE OF WARRANT.
2.1. OPTIONAL EXERCISE. Provided that all filings of the Holder, if
any, to be made under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, as required with respect to such Purchaser by Section 6.3 of the
Purchase Agreement have been made and related waiting periods applicable to the
Holder have expired or have been terminated early and subject to Section 2.2
below, the rights represented by this Warrant may be exercised in whole or in
part at any time during the Exercise Period (an "OPTIONAL EXERCISE").
2.2. MANDATORY EXERCISE. The rights represented by this Warrant must be
exercised in whole upon completion of the Third Closing in accordance with
Section 2 of the Purchase Agreement (a "MANDATORY EXERCISE").
2.3. EXERCISE PROCEDURE. The Holder shall exercise this Warrant
pursuant to Sections 2.1 or 2.2 above by delivery to the Company in the case of
an Optional Exercise at its address set forth above (or at such other address as
it may designate by notice in writing to the Holder) and in the case of the
Mandatory Exercise, at the offices of Xxxxxx Godward LLP, One Freedom Square,
Reston Town Center, 00000 Xxxxxxx Xxxxx, Xxxxxx, Xxxxxxxx (or at such other
place as the parties to the Purchase Agreement shall agree in writing) the
following:
(a) An executed Notice of Exercise in the form attached
hereto;
(b) Payment of the Exercise Price either (i) in cash, by check
or by wire transfer in accordance with the Purchase Agreement, or (ii) by
cancellation of indebtedness; and
(c) This Warrant.
Upon the exercise of the rights represented by this Warrant, a
certificate or certificates for the Exercise Shares so purchased, registered in
the name of the Holder or persons designated by the Holder, if requested by the
Holder, shall be issued and delivered to the Holder in the case of an Optional
Exercise, within five (5) business day after the rights represented by this
Warrant shall have been so exercised and in the case of a Mandatory Exercise, at
the Third Closing.
The person in whose name any certificate or certificates for
Exercise Shares are to be issued upon exercise of this Warrant shall be deemed
to have become the holder of record of such shares on the date on which this
Warrant was surrendered and payment of the Exercise Price was made, irrespective
of the date of delivery of such certificate or certificates, except that, if the
date of such surrender and payment is a date when the stock transfer books of
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the Company are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.
2.4. LIMITATION ON EXERCISE OF WARRANTS.
(a) Notwithstanding anything to the contrary contained herein
and except as set forth in clause (c) below, the Holder agrees that, to enable
the Company to comply with Nasdaq Rule 4350(i), or any successor or similar
rule, the Company shall be prohibited from issuing a number of shares of
Preferred Stock upon conversion of the Promissory Note and exercise of the
Warrants in excess of the prescribed amount under such rule (the "NASDAQ CAP"),
and the Company shall be required and allowed to limit the number of Exercise
Shares issued by the Company to the Holder to the Holder's Pro Rata Amount (as
defined below).
(b) Prior to the Stockholder Approval, the Holder shall be
entitled to convert that amount of its Notes and to exercise that amount of its
Warrants equal to the Holder's pro rata share of the Nasdaq Cap (the
"PURCHASER'S PRO RATA AMOUNT").
(c) This Section 2.4 shall terminate and be of no force and
effect in the event (i) Stockholder Approval is obtained or (ii) Nasdaq shall
have granted an exception to its requirement of the receipt of stockholder
approval under its Rule 4350(i).
3. COVENANTS OF THE COMPANY.
3.1. COVENANTS AS TO EXERCISE SHARES. The Company covenants and agrees
that all Exercise Shares that may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued and
outstanding, fully paid and nonassessable, and free from all taxes, liens and
charges with respect to the issuance thereof. The Company further covenants and
agrees that the Company will at all times during the Exercise Period, have
authorized and reserved, free from preemptive rights, a sufficient number of
shares of its Series B Preferred Stock to provide for the exercise of the rights
represented by this Warrant. If at any time during the Exercise Period the
number of authorized but unissued shares of Series B Preferred Stock shall not
be sufficient to permit exercise of this Warrant, the Company will take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Series B Preferred Stock to such number of
shares as shall be sufficient for such purposes.
3.2. NO IMPAIRMENT. Except and to the extent as waived or consented to
by the Majority Warrant Holders, the Company will not, by amendment of its
Certificate of Incorporation or any certificates of designation thereto or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Company, but will at all times in good faith
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assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may be necessary or appropriate in order to protect
the exercise rights of the Holder against impairment.
3.3. NOTICES OF RECORD DATE. In the event of any taking by the Company
of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend which is the same as cash dividends paid in previous
quarters) or other distribution, the Company shall mail to the Holder, at least
thirty (30) days prior to the date specified herein, a notice specifying the
date on which any such record is to be taken for the purpose of such dividend or
distribution.
3.4. NOTICE OF EXPIRATION. If this Warrant has not been fully exercised
on or before the date thirty (30) days prior to the end of the Exercise Period,
the Company shall thereafter provide Holder with at least thirty (30) days
advance written notice of the date on which this Warrant is to expire. If the
Company fails to provide such notice, the Exercise Period shall be extended
until the date thirty (30) days after the date said notice is provided to
Holder.
4. DISPOSITION OF WARRANT AND EXERCISE SHARES, ADJUSTMENT OF
EXERCISE PRICE AND EFFECT OF ORGANIC CHANGES.
4.1. DISPOSITION OF WARRANT AND EXERCISE SHARES.
(a) The Holder agrees not to make any disposition of all or
any part of the Warrant or Exercise Shares in any event unless and until:
(i) There is then in effect a registration statement
under the Act covering such proposed disposition and such disposition is made in
accordance with said registration statement; or
(ii) (A) such Holder shall have notified the Company
of the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (B) if
reasonably requested by the Company, such Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such shares under the
Securities Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144.
(b) Notwithstanding the provisions of paragraphs (a)(i) and
(a)(ii) above, no such registration statement or opinion of counsel shall be
necessary for a transfer by a Holder that is (A) a partnership transferring to
its partners or former partners in accordance with partnership interests, (B) a
corporation transferring to a wholly owned subsidiary or a parent corporation
that owns all of the capital stock of the Holder, (C) a limited liability
company transferring to its members or former members in accordance with their
interest in the limited liability company, or (D) an individual transferring to
the Holder's family member or trust for the benefit of an individual Holder.
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4.2. ADJUSTMENT OF EXERCISE PRICE. In the event of changes in the
outstanding Series B Preferred Stock of the Company by reason of stock
dividends, splits, recapitalizations, reclassifications, combinations or
exchanges of shares, separations, reorganizations, liquidations, or the like,
the number and class of shares available under the Warrant in the aggregate and
the Exercise Price shall be correspondingly adjusted to give the Holder of the
Warrant, on exercise for the same aggregate Exercise Price, the total number,
class, and kind of shares as the Holder would have owned had the Warrant been
exercised prior to the event and had the Holder continued to hold such shares
until after the event requiring adjustment. The form of this Warrant need not be
changed because of any adjustment in the number of Exercise Shares subject to
this Warrant.
4.3. REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
If any recapitalization, reclassification or reorganization of the capital stock
of the Company, or any consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets or other
transaction shall be effected in such a way that holders of the Company's Series
B Preferred Stock shall be entitled to receive stock, securities, or other
assets or property (an "ORGANIC CHANGE"), then, as a condition of such Organic
Change, lawful and adequate provisions shall be made by the Company whereby the
Holder hereof shall thereafter have the right to purchase and receive (in lieu
of the shares of the Series B Preferred Stock of the Company immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby) such shares of stock, securities or other assets or property
as may be issued or payable with respect to or in exchange for a number of
outstanding shares of such Series B Preferred Stock equal to the number of
shares of such stock immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby. In the event of any Organic Change,
appropriate provision shall be made by the Company with respect to the rights
and interests of the Holder of this Warrant to the end that the provisions
hereof (including, without limitation, provisions for adjustments of the
Exercise Price and of the number of shares purchasable and receivable upon the
exercise of this Warrant) shall thereafter be applicable, in relation to any
shares of stock, securities or assets thereafter deliverable upon the exercise
hereof. The Company will not effect any such consolidation, merger or sale
unless, prior to the consummation thereof, the successor corporation (if other
than the Company) resulting from such consolidation or the corporation
purchasing such assets shall assume by written instrument reasonably
satisfactory in form and substance to the Majority Warrant Holders to expressly
assume the due and punctual performance and observation of each and every
covenant and condition of this Warrant, executed and mailed or delivered to the
registered Holder hereof at the last address of such Holder appearing on the
books of the Company, the obligation to deliver to such Holder such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such Holder may be entitled to purchase.
4.4. CERTAIN EVENTS. If any change in the outstanding Series B
Preferred Stock of the Company or any other event occurs as to which the other
provisions of this Section 4 are not strictly applicable or if strictly
applicable would not fairly protect the purchase rights of the Holder of the
Warrant in accordance with such provisions, then the Board of Directors of the
Company shall make an adjustment in the number and class of shares available
under the Warrant, the Exercise Price or the application of such provisions, so
as to protect such purchase rights as aforesaid. The adjustment shall be such as
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to give the Holder of the Warrant upon exercise for the same aggregate Exercise
Price the total number, class and kind of shares as he would have owned had the
Warrant been exercised prior to the event and had he continued to hold such
shares until after the event requiring adjustment.
5. FRACTIONAL SHARES. Fractional shares may be issued upon the exercise
of this Warrant. Any reference contained herein to Exercise Shares or shares of
Common Stock shall be deemed to include fractional shares to the extent thereof.
The size of all fractional shares shall be rounded to four decimal places.
6. NO STOCKHOLDER RIGHTS. This Warrant in and of itself shall not
entitle the Holder to any voting rights or other rights as a stockholder of the
Company.
7. TRANSFER OF WARRANT. Subject to applicable laws, this Warrant and
all rights hereunder are transferable, by the Holder in person or by duly
authorized attorney, upon delivery of this Warrant and the form of assignment
attached hereto to any Permitted Transferee (as defined in the Purchase
Agreement).
8. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant is
lost, stolen, mutilated or destroyed, the Company may, on such terms as to
indemnity or otherwise as it may reasonably impose (which shall, in the case of
a mutilated Warrant, include the surrender thereof), issue a new Warrant of like
denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed.
Any such new Warrant shall constitute an original contractual obligation of the
Company, whether or not the allegedly lost, stolen, mutilated or destroyed
Warrant shall be at any time enforceable by anyone.
9. NOTICES, ETC. All notices required or permitted hereunder shall be
in writing and shall be deemed effectively given: (a) upon personal delivery to
the party to be notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day, (c) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one (1) day after deposit with
a nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the Company
at the address listed on the signature page and to Holder at the address listed
on the signature page or at such other address as the Company or Holder may
designate by ten (10) days advance written notice to the other parties hereto a
change of address that notices may be sent.
10. AMENDMENT AND WAIVER. Any term in this Warrant may be amended or
waived with the written consent of the Company and the Majority Warrant Holders.
Holder acknowledges that because this Warrant may be amended with the consent of
the Majority Warrant Holders, the Holder's rights hereunder may be amended or
waived without the Holder's consent.
11. ACCEPTANCE. Receipt of this Warrant by the Holder shall constitute
acceptance of and agreement to all of the terms and conditions contained herein.
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12. GOVERNING LAW. THIS WARRANT AND ALL RIGHTS, OBLIGATIONS AND
LIABILITIES HEREUNDER SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
duly authorized officer as of May 14, 2001.
INTERNET PICTURES CORPORATION
By: _______________________________________________
Name:
Title:
Address: 0000 Xxxx Xxxxxx Xxxx
Xxx Xxxxx, XX 00000
FOR NOTICE ONLY:
HOLDER:
IMAGE INVESTOR PORTFOLIO, care of:
Paradigm Capital Equity Partners, LLC
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Warner X. Xxxxx, Esq., General Counsel
Facsimile: (000) 000-0000
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NOTICE OF EXERCISE
TO: INTERNET PICTURES CORPORATION
(1) The undersigned hereby elects to purchase ________ shares of the
Series B Preferred Stock of INTERNET PICTURES CORPORATION pursuant to the terms
of the attached Warrant, and tenders herewith payment of the exercise price in
full, together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing said shares
of Series B Preferred Stock in the name of the undersigned or in such other name
as is specified below:
------------------------
(Name)
------------------------
------------------------
(Address)
----------------------- ----------------------------
(Date) (Signature)
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(Print name)
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ASSIGNMENT FORM
(To assign the foregoing
Warrant, execute this form and
supply required information. Do
not use this form to purchase
shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
Name:
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(Please Print)
Address:
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(Please Print)
Dated: _________________
Holder's
Signature:
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Holder's
Address:
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NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.
