WARRANT AGREEMENT
EXHIBIT
10.28
WARRANT
AGREEMENT (this “Agreement”) dated as of June __, 2005, between National
Lampoon, Inc., a Delaware corporation (the “Company”), and Xxxxxxxx Curhan Ford
& Co. (the “Underwriter”).
W
I T
N E S S E T H:
WHEREAS,
the Company proposes to issue to the Underwriter warrants (“Warrants”) to
purchase up to an aggregate of _________ shares (the “Shares”) of common stock
of the Company, par value $.0001 per share (the “Common Stock”);
and
WHEREAS,
the Underwriter has agreed pursuant to the underwriting agreement (the
“Underwriting Agreement”) dated June __, 2005 between the Underwriter and the
Company, to act as the underwriter in connection with the Company’s proposed
public offering (the “Public Offering”) of _______ shares of Common Stock at an
initial public offering price of $____
per
share, with an option to purchase up to an additional _______ shares of Common
Stock for the purpose of covering over-allotments; and
WHEREAS,
the Warrants issued pursuant to this Agreement are being issued by the Company
to the Underwriter or its officers, directors or partners and members of
the
selling group (the “Selling Group”) and/or their officers, directors or
partners, in consideration for, and as part of the Underwriter’s compensation in
connection with, the Underwriter acting as the underwriter pursuant to the
Underwriting Agreement;
NOW,
THEREFORE, in consideration of the foregoing premises, the payment by the
Underwriter to the Company of an aggregate of One Hundred Dollars and No
Cents
($100.00), the agreements herein set forth and other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged,
the
parties hereto agree as follows:
1. Grant.
The
Underwriter, and/or its designees who are officers or partners of the
Underwriter or members of the Selling Group in connection with the Public
Offering, are hereby granted the right to purchase, at any time from December
__, 2005 until 5:00 P.M., New York City time, on June __, 2009 (the “Warrant
Exercise Term”), up to an aggregate of _______ Shares at an initial exercise
price (subject to adjustment as provided in Article
8
hereof)
of $____
per
Share (120% of the public offering price of the Shares). Notwithstanding
the
foregoing, the Warrants shall become immediately exercisable upon a change
in
control (as determined in good faith by the Company’s Board of Directors) of the
Company. Except as set forth herein, the Shares issuable upon exercise of
the
Warrants are in all respects identical to the shares of Common Stock being
purchased by the Underwriter for resale to the public pursuant to the terms
and
provisions of the Underwriting Agreement.
2. Warrant
Certificates.
The
warrant certificates (the “Warrant Certificates”) delivered and to be delivered
pursuant to this Agreement shall be in the form set forth as Exhibit
A
attached
hereto and made a part hereof, with such appropriate insertions, omissions,
substitutions and other variations as required or permitted by this
Agreement.
3. Exercise
of Warrants.
3.1 Cash
Exercise.
The
Warrants initially are exercisable at a price of $____ per Share, payable
in
cash or by check to the order of the Company, or any combination of cash
or
check, subject to adjustment as provided in Article
8
hereof.
Upon surrender of the Warrant Certificate with the duly executed Form of
Election to Purchase in the form set forth on Exhibit
B
attached
hereto and made a part hereof, together with payment of the Exercise Price
(as
hereinafter defined) for the Shares purchased at the Company’s principal
offices, currently located at 00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, the registered holder of a Warrant Certificate (“Holder” or
“Holders”) shall be entitled to receive a certificate or certificates for the
Shares so purchased. The purchase rights represented by each Warrant Certificate
are exercisable at the option of the Holder thereof, in whole or in part
(but
not as to fractional shares of the Common Stock underlying the Warrants).
In the
case of the purchase of less than all the Shares purchasable under any Warrant
Certificate, the Company shall cancel said Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Warrant Certificate
of
like tenor for the balance of the Shares purchasable thereunder.
3.2 [Intentionally
Omitted]
4. Issuance
of Certificates.
4.1 Issuance.
Upon
the exercise of the Warrants, the issuance of certificates for the Shares
shall
be made forthwith (and in any event within five (5) business days thereafter)
without any charge to the Holder thereof including, without limitation, any
tax
(other than income taxes) which may be payable in respect of the issuance
thereof, and such certificates shall (subject to the provisions of Article
5
hereof)
be issued in the name of, or in such names as may be directed by, the Holder
thereof; provided however, that the Company shall not be required to pay
any tax
which may be payable in respect of any transfer involved in the issuance
and
delivery of any such certificates in a name other than that of the Holder
and
the Company shall not be required to issue or deliver such certificates unless
or until the person or persons requesting the issuance thereof shall have
paid
to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
4.2 Form
of Certificates.
The
Warrant Certificates and certificates representing the Shares shall be executed
on behalf of the Company by such officer or officers as are permitted or
required to execute such certificates on behalf of the Company by the Company’s
by-laws and applicable law. Warrant Certificates shall be dated the date
of
execution by the Company upon initial issuance, division, exchange, substitution
or transfer.
(a) The
Warrant Certificates shall bear a legend substantially similar to the
following:
NEITHER
THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE COMMON STOCK ISSUABLE
UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR
ANY APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH
ACT
OR AN EXEMPTION THEREFROM. ANY SUCH TRANSFER MAY ALSO BE SUBJECT TO APPLICABLE
STATE SECURITIES LAWS.
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THIS
CERTIFICATE IS ISSUED SUBJECT TO THE PROVISIONS OF A WARRANT AGREEMENT DATED
AS
OF _____ __, 2005, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, AND ANY
TRANSFEREE OF THIS CERTIFICATE OR OF THE SHARES ISSUABLE UPON EXERCISE OF
IT
SHALL BE BOUND BY THE PROVISIONS OF SAID AGREEMENT, A COPY OF WHICH IS ON
FILE
WITH, AND AVAILABLE FROM, THE SECRETARY OF THE COMPANY. AMONG OTHER THINGS,
SUCH
WARRANT AGREEMENT ABSOLUTELY PROHIBITS THE SALE, TRANSFER, ASSIGNMENT, PLEDGE
OR
HYPOTHECATION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE
UPON
EXERCISE THEREOF PRIOR TO ______ __, 2005, EXCEPT TO A “PERMITTED TRANSFEREE”
(AS DEFINED IN SUCH WARRANT AGREEMENT).
(b) Upon
exercise of the Warrants, in part or in whole, certificates representing
the
Shares issued upon such exercise shall bear a legend substantially similar
to
the following:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE
SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES LAWS. THEY MAY
NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED OR OTHERWISE TRANSFERRED
IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER SUCH ACT OR AN EXEMPTION THEREFROM. ANY SUCH TRANSFER MAY ALSO BE SUBJECT
TO APPLICABLE STATE SECURITIES LAWS.
THIS
CERTIFICATE IS ISSUED SUBJECT TO THE PROVISIONS OF A WARRANT AGREEMENT DATED
AS
OF _____ __, 2005, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, AND ANY
TRANSFEREE OF THIS CERTIFICATE SHALL BE BOUND BY THE PROVISIONS OF SAID
AGREEMENT, A COPY OF WHICH IS ON FILE WITH, AND AVAILABLE FROM, THE SECRETARY
OF
THE COMPANY. AMONG OTHER THINGS, SUCH WARRANT AGREEMENT ABSOLUTELY PROHIBITS
THE
SALE, TRANSFER, ASSIGNMENT, PLEDGE OR HYPOTHECATION OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE THEREOF PRIOR TO
______ __, 2005, EXCEPT TO A “PERMITTED TRANSFEREE” (AS DEFINED IN SUCH WARRANT
AGREEMENT).
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5. Restriction
on Transfer of Warrants.
The
Holder of a Warrant Certificate, by its acceptance thereof, covenants and
agrees
that the Warrants are being acquired, and any Shares will be acquired, as
an
investment and not with a view to the distribution thereof, and that the
Warrants and Shares may not be sold, transferred, assigned, hypothecated
or
otherwise disposed of, in whole or in part, except pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the
“Act”)
or an applicable exemption from the registration requirements thereof. In
addition to, and without limiting the foregoing, pursuant to Corporate Financing
Rule 2710, the Warrants and Shares may not be sold, transferred, assigned,
hypothecated or otherwise disposed of, in whole or in part for a period of
180
days from the effective date of the Registration Statement filed for the
Public
Offering, except to officers or partners (but not directors) of the Underwriter,
to any member of the Selling Group participating in the distribution to the
public of the Common Stock and/or to their respective officers or partners
which, in each case, agree in writing not to further transfer any Warrants
or
Shares during such 180-day period, (each of which is hereinafter referred
to as
a “Permitted Transferee”), in which case such Permitted Transferee shall be
entitled to receive a replacement Warrant Certificate in accordance with
Section
9
hereof
upon presentment of a properly executed Form of Assignment in the form set
forth
on Exhibit
C
attached
hereto and made a part hereof.
In
connection with the transfer or exercise of Warrants, the transferee and
Holder
must agree to execute any documents which may be reasonably required by counsel
to the Company to comply with the provisions of the Act (as defined below)
and
applicable state securities laws.
6. Price.
6.1 Initial
and Adjusted Exercise Price.
The
initial exercise price of each Warrant shall be $____ per Share. The adjusted
exercise price shall be the price which shall result from time to time from
any
and all adjustments of the initial exercise price in accordance with the
provisions of Article
8
hereof.
6.2 Exercise
Price.
The
term “Exercise Price” herein shall mean the initial exercise price or the
adjusted exercise price, depending upon the context.
7. Registration
Rights.
7.1 Registrable
Securities.
As used
herein the term “Registrable Security” means each of the Shares issuable upon
exercise of the Warrants and any shares of Common Stock issued upon any stock
split or stock dividend in respect of such Shares; provided, however, that
with
respect to any particular Registrable Security, such security shall cease
to be
a Registrable Security when, as of the date of determination, (i) it has
been
effectively registered under the Act and disposed of pursuant thereto, (ii)
it
may be resold to the public pursuant to Rule 144 under the Act or other
applicable exemption from the registration requirements of the Act, (iii)
registration under the Act is no longer required for the immediate public
distribution of all or any portion of such security or (iv) it has ceased
to be
outstanding. The term “Registrable Securities” means any and/or all of the
securities falling within the foregoing definition of a “Registrable Security.”
In the event of any merger, reorganization, consolidation, recapitalization
or
other change in corporate structure affecting the Common Stock, such adjustment
shall be made in the definition of “Registrable Security” as is appropriate in
order to prevent any dilution or enlargement of the rights granted pursuant
to
this Article
7.
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7.2 Demand
Registration.
At any
time commencing after December __, 2005 through
and including December __, 2009, the Majority Holders (as defined below)
shall
have the right (which right is in addition to the registration rights under
Section
7.3
hereof),
exercisable by written notice to the Company, to have the Company prepare
and
file with the Commission, on one occasion, a Registration Statement (“Demand
Registration”) and such other documents, including a prospectus, as may be
necessary in order to comply with the provisions of the Act, so as to permit
a
public offering and sale of the Registrable Securities during a period equal
to
the longer of (i) nine (9) months and (ii) the unexpired term of the Warrants
by
the Majority Holders demanding such registration and any other Holders of
Warrants who shall notify the Company within ten (10) days after receiving
notice from the Company of such Demand Registration.
7.3 Piggyback
Registration.
(a) If,
at
any time during the seven years following the effective date of the Public
Offering, the Company proposes to prepare and file any new registration
statement under the Securities Act or post-effective amendments thereto covering
equity or debt securities of the Company, or any such securities of the Company
held by its shareholders (other than on Form S-4 or Form S-8 promulgated
under
the Securities Act or any successor forms thereto), it shall, with respect
to
each such registration statement and amendment, give written notice by
registered mail to the Holders of its intention to so register such securities
(“Notice”) at least thirty (30) days before the initial filing of such
registration statement. Upon the written request, delivered to the Company
within 20 days after delivery of any such Notice by the Company, of any Holder
(a “Requesting Holder”) to include in such registration the Requesting Holder’s
Registrable Securities (which request shall specify the number of such Holder’s
Registrable Securities proposed to be included in such registration and shall
state that such Requesting Holder desires to sell such Registrable Securities
in
the public securities markets), the Company shall use its best efforts to
cause
all such Registrable Securities to be included in such registration (“Piggyback
Registration”), at the company’s sole cost and expense and at no cost or expense
to the Requesting Holders (other than underwriting discounts and commissions
applicable to the sale of such Registrable Securities and the fees and
disbursements, if any, of counsel or any advisor to the Requesting Holders);
provided,
however,
that if
the Piggyback Registration relates to an underwritten public offering and
the
managing underwriter advises the Company and the Requesting Holders that
the
inclusion of all Registrable Securities requested to be included in such
registration would
materially adversely affect the marketability of the offering (including
pricing) of the securities proposed to be registered by the Company, then
such
Requesting Holders shall be entitled to participate pro rata (based on the
number of shares owned by the respective Requesting Holders) with the other
Requesting Holders having similar piggyback registration rights with respect
to
such registration to the extent the managing underwriter determines that
such
securities may be included without such material adverse effect.
(b) Notwithstanding
the provisions of this Section
7.3,
the
Company shall have the right at any time after it shall have given written
notice pursuant to this Section
7.3
(irrespective of whether any written request for inclusion of Registrable
Securities shall have already been made) to elect not to file any such proposed
Registration Statement, or to withdraw the same after the filing but prior
to
the effective date thereof.
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7.4 Covenants
of the Company With Respect to Registration.
The
Company covenants and agrees as follows:
(a) The
Company shall pay all costs, fees and expenses in connection with all
Registration Statements filed pursuant to Sections
7.2
and
7.3
hereof
(excluding any underwriting discounts and commissions which may be incurred
in
connection with the sale of any Registrable Securities and fees of counsel
or
any advisor to the Holders of Registrable Securities) including, without
limitation, the Company’s legal and accounting fees, printing expenses and blue
sky fees and expenses and the reasonable fees and expenses (not to exceed
$10,000) of one counsel to the Holders of Registrable Securities.
(b) The
Company shall take all reasonably necessary action which may be required
in
qualifying or registering the Registrable Securities included in a Registration
Statement for offering and sale under the securities or blue sky laws of
such
states as are reasonably requested by the holders of such securities, provided
that the Company shall not be obligated to execute or file any general consent
to service of process or to qualify as a foreign corporation to do business
under the laws of any such jurisdiction or to provide any material undertaking
or make any changes in its by-laws or amended and restated certificate of
incorporation which the Board of Directors determines to be contrary to the
best
interests of the Corporation or to modify any of its contractual relationships
then existing.
(c) Nothing
contained in this Agreement shall be construed as requiring any Holder to
exercise his Warrants prior to the initial filing of any Registration Statement
or the effectiveness thereof.
(d) The
Company shall deliver promptly to each holder of Registrable Securities
participating in the offering copies of all correspondence between the
Commission or its staff, on the one hand, and the Company, its counsel or
auditors, on the other hand, with respect to the Registration Statement and
permit each holder of Registrable Securities and underwriter to do such
investigation, upon reasonable advance notice, with respect to information
contained in or omitted from the Registration Statement as it deems reasonably
necessary to comply with applicable securities laws or rules of the National
Association of Securities Dealers, Inc. (“NASD”); provided
that
each such holder of Registrable Securities agrees not to disclose or use
such
information without the prior written consent of the Company. Such investigation
shall include access to books, records and properties and opportunities to
discuss the business of the Company with its officers and independent auditors,
all to such reasonable extent and at such reasonable times and as often as
any
such holder of Registrable Securities or underwriter shall reasonably
request.
(e) In
connection with any Registration Statement filed pursuant to Sections
7.2
and
7.3
hereof,
the Company shall furnish, or cause to be furnished, to each Holder
participating in any underwritten offering and to each underwriter, a signed
counterpart, addressed to such Holder or underwriter, of (i) an opinion of
counsel to the Company, dated the effective date of such
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Registration
Statement (and, if such registration includes an underwritten public offering,
an opinion dated the date of the closing under the underwriting agreement),
and
(ii) a “cold comfort” letter, dated the effective date of such Registration
Statement (and, if such registration includes an underwritten public offering,
a
letter dated the date of the closing under the underwriting agreement), signed
by the independent public accountants who have issued a report on the Company’s
financial statements included in such Registration Statement, in each case
covering substantially the same matters with respect to such Registration
Statement (and the prospectus included therein) and, in the case of such
accountants’ letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer’s counsel
and in accountants’ letters delivered to underwriters in underwritten public
offerings of securities.
(f) The
Company shall promptly notify each Holder of Registrable Securities covered
by
such Registration Statement, at any time when a prospectus relating thereto
is
required to be delivered under the Act, upon the Company’s discovery that, or
upon the happening of any event as a result of which, the prospectus included
in
such Registration Statement, as then in effect, includes an untrue statement
of
a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light
of the circumstances under which they were made, and upon receipt of such
notice
each Holder shall not effect any sale of Shares and shall immediately cease
utilizing or distributing such prospectus. At the request of any such Holder,
the Company shall promptly prepare and furnish to such Holder and each
underwriter, if any, a reasonable number of copies of a supplement to or
an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary to make the statements therein
not
misleading in the light of the circumstances under which they were
made.
(g) For
purposes of this Agreement, the term “Majority Holders” means the Holders of
Registrable Securities and/or Warrants exerciseable for Registrable Securities
which constitute in excess of fifty percent (50%) of the then outstanding
Registrable Securities and/or Warrants exerciseable for Registrable
Securities.
7.5 Indemnification.
(a) In
connection with any registration of any Registrable Securities under the
Act
pursuant to this Agreement, the Company shall indemnify and hold harmless
the
holders of Registrable Securities, each underwriter, broker or any other
person
acting on behalf of the holders of Registrable Securities and each other
person,
if any, who controls any of the foregoing persons within the meaning of the
Act
against any losses, claims, damages or liabilities, joint or several (or
actions
in respect thereof), to which any of the foregoing persons may become subject
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
an
untrue statement or allegedly untrue statement of a material fact contained
in
the registration statement under which such Registrable Securities were
registered under the Act, any preliminary prospectus or final prospectus
contained therein or otherwise filed with the Commission, any amendment or
supplement thereto or any document incident to registration or qualification
of
any Registrable Securities, or arise out of or are based upon the omission
or
alleged omission to state therein a material fact
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required
to be stated therein or necessary to make the statements therein not misleading
or, with respect to any prospectus, necessary to make the statements therein
in
light of the circumstances under which they were made not misleading, or
any
violation by the Company of the Act or state securities or blue sky laws
applicable to the Company and relating to action or inaction required of
the
Company in connection with such registration or qualification under such
state
securities or blue sky laws; and shall reimburse the holders of Registrable
Securities, such underwriter, such broker or such other person acting on
behalf
of the holders of Registrable Securities and each such controlling person
for
any legal or other expenses reasonably incurred by any of them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided,
however,
that
the Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or action (including any legal or other expenses
incurred) arises out of or is based upon an untrue statement or allegedly
untrue
statement or omission or alleged omission made in said registration statement,
preliminary prospectus, final prospectus, amendment, supplement or document
incident to registration or qualification of any Registrable Securities in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by the holders of Registrable
Securities specifically for use in the preparation thereof.
(b) In
connection with any registration of Registrable Securities under the Act
pursuant to this Agreement, each holder of Registrable Securities shall
severally and not jointly indemnify and hold harmless (in the same manner
and to
the same extent as set forth in the preceding paragraph of this Section
7.5)
the
Company, each director of the Company, each officer of the Company who shall
sign such registration statement, each other holder of Registrable Securities
or
Other Shares, each underwriter, broker or other person acting on behalf of
the
holders of Registrable Securities and each person who controls any of the
foregoing persons within the meaning of the Act with respect to any statement
or
omission from such registration statement, any preliminary prospectus or
final
prospectus contained therein or otherwise filed with the Commission, any
amendment or supplement thereto or any document incident to registration
or
qualification of any Registrable Securities if such statement or omission
was
made in reliance upon and in conformity with written information furnished
by
such holder to the Company or such underwriter specifically for use in
connection with the preparation of such registration statement, preliminary
prospectus, final prospectus, amendment, supplement or document.
(c) Promptly
after receipt by an indemnified party of notice of the commencement of any
action involving a claim referred to in the preceding paragraphs of this
Section
7.5,
such
indemnified party will, if a claim in respect thereof is made against an
indemnifying party, give written notice to the latter of the commencement
of
such action. The failure of any indemnified party to notify an indemnifying
party of any such action shall not relieve the indemnifying party from any
liability in respect of such action that it may have to such indemnified
party
on account of this Section
7.5
(except
to the extent that such indemnifying party is actually prejudiced thereby).
In
case any such action is brought against an indemnified party, the indemnifying
party will be entitled to participate in and to assume the defense thereof,
jointly with any other indemnifying party to the extent that it may wish,
with
counsel reasonably satisfactory to such indemnified party, and after notice
from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be responsible for
any
legal or other expenses subsequently incurred by the indemnified party in
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connection
with the defense thereof; provided,
however,
that if
any indemnified party shall have reasonably concluded that there may be one
or
more legal or equitable defenses available to such indemnified party which
are
additional to or conflict with those available to the indemnifying party,
or
that such claim or litigation involves or could have an effect upon matters
beyond the scope of the indemnity agreement provided in this Section
7.5,
the
indemnifying party shall not have the right to assume the defense of such
action
on behalf of such indemnified party (but shall have the right to participate
therein with counsel of its choice) and such indemnifying party shall reimburse
such indemnified party for that portion of the fees and expenses of any counsel
retained by the indemnified party which is reasonably related to the matters
covered by the indemnity agreement provided in this Section
7.5.
If the
indemnifying party is not entitled to, or elects not to, assume the defense
of a
claim, it will not be obligated to pay the fees and expenses of more than
one
counsel with respect to such claim. No indemnifying party shall, without
the
prior written consent of the indemnified parties, which consent shall not
be
unreasonably withheld, effect any settlement or compromise of, or consent
to the
entry of judgment with respect to, any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or
any
claim whatsoever in respect of which indemnification or contribution could
have
been sought under this Section
7.5
(whether
or not the indemnified parties are actual or potential parties thereto),
unless
(x) such settlement, compromise or consent (I) includes an unconditional
release
of the indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (II) does not include a statement
as to,
or an admission of, fault, culpability or a failure to act, by or on behalf
of
the indemnified party and (y) the indemnifying party reaffirms its
indemnification obligations pursuant to this Agreement. For purposes of this
Section
7.5(c),
it
shall be deemed unreasonable for an indemnified party to withhold consent
to
settlement if the conditions in clauses (x) and (y) above are
satisfied.
(d) If
the
indemnification provided for in this Section
7.5
is
unavailable to an indemnified party under subsections (a) and (b) of this
Section
7.5
in
respect of any losses, expenses, liabilities, damages or claims referred
to
therein, then each applicable indemnifying party, in lieu of indemnifying
such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, expenses, liabilities, damages
or
claims (i) in such proportion as is appropriate to reflect the relative benefits
received by such person from the registration and offering of Registrable
Securities pursuant to Section
7.2
or
7.3
or (ii)
if (but only if) the allocation provided by clause (i) above is not permitted
by
applicable law, in such proportion as is appropriate to reflect not only
the
relative benefits referred to in clause (i) above but also the relative fault
of
such person with respect to the statements or omissions which resulted in
such
losses, expenses, liabilities, damages or claims, as well as any other relevant
equitable considerations. The relative fault of any person shall be determined
by reference to, among other things, whether the untrue statement or alleged
untrue statement of a material fact or omission or alleged omission relates
to
information supplied by such person, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a party as a result
of
the losses, claims, damages and liabilities referred to above shall be deemed
to
include any legal or other fees or expenses reasonably incurred by such party
in
connection with investigating or defending any claim or action. Notwithstanding
anything to the contrary, no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
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8. Adjustments
of Exercise Price and Number of Shares.
8.1 Computation
of Adjusted Price.
In case
the Company shall at any time after the date hereof pay a dividend to holders
of
Common Stock in shares of Common Stock or make a distribution to holders
of
Common Stock in shares of Common Stock, then upon such dividend or distribution
the Exercise Price in effect immediately prior to such dividend or distribution
shall forthwith be reduced to a price determined by dividing:
(a) an
amount
equal to the total number of shares of Common Stock outstanding immediately
prior to such dividend or distribution multiplied by the Exercise Price in
effect immediately prior to such dividend or distribution, by
(b) the
total
number of shares of Common Stock outstanding immediately after such issuance
or
sale.
For
the
purposes of any computation to be made in accordance with the provisions
of this
Section
8.1,
the
following provisions shall be applicable: Common Stock issuable by way of
dividend or other distribution on any stock of the Company shall be deemed
to
have been issued immediately after the opening of business on the date following
the date fixed for the determination of stockholders entitled to receive
such
dividend or other distribution.
8.2 Subdivision
and Combination.
In case
the Company shall at any time subdivide or combine the outstanding shares
of
Common Stock, the Exercise Price shall forthwith be proportionately decreased
in
the case of subdivision or increased in the case of combination.
8.3 Adjustment
in Number of Shares.
Upon
each adjustment of the Exercise Price pursuant to the provisions of this
Article
8,
the
number of Shares issuable upon the exercise of each Warrant shall be adjusted
to
the nearest full Share, by multiplying a number equal to the Exercise Price
in
effect immediately prior to such adjustment by the number of Shares issuable
upon exercise of the Warrants immediately prior to such adjustment and dividing
the product so obtained by the adjusted Exercise Price.
8.4 Reclassification,
Consolidation, Merger, etc.
In case
of any reclassification or change of the outstanding shares of Common Stock
(other than a change in par value to no par value, or from no par value to
par
value, or as a result of a subdivision or combination), or in the case of
any
consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is
the
surviving corporation and which does not result in any reclassification or
change of the outstanding shares of Common Stock, except a change as a result
of
a subdivision or combination of such shares or a change in par value, as
aforesaid), or in the case of a sale or conveyance to another corporation
of the
property of the Company as an entirety, the Holders shall thereafter have
the
right to purchase the kind and number of shares of stock and other securities
and property receivable upon such reclassification, change, consolidation,
merger, sale or conveyance as if the Holders were the owners of the shares
of
Common Stock issuable upon exercise of the Warrants immediately prior to
any
such events at a price equal to the product of (x) the number of shares issuable
upon exercise of the Warrants and (y) the Exercise Price in effect immediately
prior to the record date for such reclassification, change, consolidation,
merger, sale or conveyance as if such Holders had exercised the
Warrants.
-10-
8.5 Determination
of Outstanding Shares of Common Stock.
The
number of shares of Common Stock at any one time outstanding shall include
the
aggregate number of shares issued or issuable upon the exercise of options,
rights, warrants and upon the conversion or exchange of convertible or
exchangeable securities.
8.6 [Intentionally
Omitted]
8.7 Subscription
Rights for Shares of Common Stock or Other Securities.
In the
case the Company or an affiliate of the Company shall at any time after the
date
hereof and prior to the exercise of all the Warrants issue any rights to
subscribe for shares of Common Stock or any other securities of the Company
or
of such affiliate to all the shareholders of the Company, each Holder of
unexercised Warrants shall be entitled to receive such rights at the later
of
(i) the time such Holder exercises its Warrants and (ii) the time such rights
are distributed to the other shareholders of the Company.
9. Exchange
and Replacement of Warrant Certificates.
9.1 Exchange.
Each
Warrant Certificate is exchangeable without expense, upon the surrender hereof
by the registered Holder at the principal executive office of the Company,
for a
new Warrant Certificate of like tenor and date representing in the aggregate
the
right to purchase the same number of Shares in such denominations as shall
be
designated by the Holder thereof at the time of such surrender.
9.2 Replacement.
Upon
receipt by the Company of evidence reason-ably satisfactory to it of the
loss,
theft, destruction or mutilation of any Warrant Certificate, and, in case
of
loss, theft or destruction, of indemnity or security reasonably satisfactory
to
it, and reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of the Warrants, if mutilated,
the
Company will make and deliver a new Warrant Certificate of like tenor, in
lieu
thereof.
10. Elimination
of Fractional Interests.
The
Company shall not be required to issue certificates representing fractions
of
shares of Common Stock and shall not be required to issue scrip or pay cash
in
lieu of fractional interests, it being the intent of the parties that all
fractional interests shall be eliminated by rounding any fraction up to the
nearest whole number of shares of Common Stock.
11. Reservation
and Listing of Securities.
The
Company shall at all times reserve and keep available out of its authorized
shares of Common Stock, solely for the purpose of issuance upon the exercise
of
the Warrants, such number of shares of Common Stock as shall be issuable
upon
the exercise thereof. The Company covenants and agrees that, upon exercise
of
the Warrants and payment of the Exercise Price thereof, all shares of Common
Stock issuable upon such exercise shall be duly and validly issued, fully
paid,
non-assessable and not subject to the preemptive rights of any shareholder.
As
long as the Warrants shall be outstanding, the Company shall use its best
efforts to cause all shares of Common Stock issuable upon the exercise of
the
Warrants to be listed on or quoted by the exchange upon which the Company’s
Common Stock is then listed or quoted.
-11-
12. Notices
to Warrant Holders.
Nothing
contained in this Agreement shall be construed as conferring upon the Holder
or
Holders the right to vote or to consent or to receive notice as a shareholder
in
respect of any meetings of shareholders for the election of directors or
any
other matter, or as having any rights whatsoever as a shareholder of the
Company. If, however, at any time prior to the expiration of the Warrants
and
their exercise, any of the following events shall occur:
(a) the
Company shall take a record of the holders of its shares of Common Stock
for the
purpose of entitling them to receive a dividend or distribution payable
otherwise than in cash, or a cash dividend or distribution payable otherwise
than out of current or retained earnings, as indicated by the accounting
treatment of such dividend or distribution on the books of the Company;
or
(b) the
Company shall offer to all the holders of its Common Stock any additional
shares
of capital stock of the Company or securities convertible into or exchangeable
for shares of capital stock of the Company, or any option, right or warrant
to
subscribe therefor; or
(c) a
dissolution, liquidation or winding up of the Company (other than in connection
with a consolidation or merger) or a sale of all or substantially all of
its
property, assets and business as an entirety shall be proposed; or
(d) a
change
in control of the Company occurs;
then,
in
any one or more of said events, the Company shall give written notice of
such
event at least twenty (20) days prior to the date fixed as a record date
or the
date of closing the transfer books for the determination of the shareholders
entitled to such dividend, distribution, convertible or exchangeable securities
or subscription rights, options or warrants, or entitled to vote on such
proposed dissolution, liquidation, winding up, sale or change of control.
Such
notice shall specify such record date or the date of closing of the transfer
books, as the case may be. Failure to give such notice or any defect therein
shall not affect the validity of any action taken in connection with the
declaration or payment of any such dividend or distribution, or the issuance
of
any convertible or exchangeable securities or subscription rights, options
or
warrants, or any proposed dissolution, liquidation, winding up, sale or change
of control.
13. Notices.
All
notices, requests, consents and other communications hereunder shall be in
writing and shall be deemed to have been duly made when delivered, telecopied
or
mailed by registered or certified mail, return receipt requested:
(a) If
to a
registered Holder of the Warrants, to the address of such Holder as shown
on the
books of the Company; or
(b) If
to the
Company, to the address set forth in Section
3
of this
Agreement or to such other address as the Company may designate by notice
to the
Holders.
-12-
14. Supplements
and Amendments.
The
Company and the Underwriter may from time to time supplement or amend this
Agreement without the approval of any Holders of Warrant Certificates in
order
to cure any ambiguity, to correct or supplement any provision contained herein
which may be defective or inconsistent with any provisions herein, or to
make
any other provisions in regard to matters or questions arising hereunder
which
the Company and the Underwriter may deem necessary or desirable and which
the
Company and the Underwriter deem not to adversely affect the interests of
the
Holders of Warrant Certificates. Furthermore, this Agreement may be amended
by a
writing signed by the Company and the Majority Holders.
15. Successors.
All the
covenants and provisions of this Agreement by or for the benefit of the Company
and the Holders inure to the benefit of their respective successors and assigns
hereunder.
16. Termination.
This
Agreement shall terminate at the close of business on June __, 2009.
Notwithstanding the foregoing, the indemnification provisions of Article
7
shall
survive such termination until the close of business on June __,
2012.
17. Governing
Law.
This
Agreement and each Warrant Certificate issued hereunder shall be deemed to
be a
contract made under the laws of the State of New York with respect to contracts
made and to be wholly performed in said State and for all purposes shall
be
construed in accordance with the laws of said State. The Company, the
Underwriter and any other registered holder or holders of the Warrant
Certificates (i) agree that any legal Suit, action or proceeding arising
out of
or relating to this Agreement shall be instituted exclusively in New York
State
Supreme Court, County of New York, or in the United States District Court
for
the Southern District of New York, (ii) waive any objection which the they
may
have now or hereafter to the venue of any such suit, action or proceeding,
and
(iii) irrevocably consent to the jurisdiction of the New York State Supreme
Court, County of New York and the United States District Court for the Southern
District of New York in any such suit, action or procedure. The Company,
the
Underwriter and any other registered holder or holders of the Warrant
Certificates, Warrants or the Shares further agree to accept and acknowledge
service of any and all process which may be served in any suit, action or
proceeding in the New York State Supreme Court, County of New York and the
United States District Court for the Southern District of New York, and agree
that service of process upon them mailed by certified mail to their respective
addresses shall be deemed in every respect effective service of process upon
them in any such suit, action or proceeding. In the event of litigation between
the parties arising hereunder, the prevailing party shall be entitled to
costs
and reasonable attorney’s fees.
18. Benefits
of This Agreement.
Nothing
in this Agreement shall be construed to give to any person or corporation,
other
than the Company and the Underwriter and any other registered holder or holders
of the Warrant Certificates, Warrants or the Shares, any legal or equitable
right, remedy or claim under this Agreement; and this Agreement shall be
for the
sole and exclusive benefit of the Company and the Underwriter and any other
holder or holders of the Warrant Certificates, Warrants or the
Shares.
19. Preservation
of Rights.
The
Company will not, by amendment of its articles of incorporation or through
any
consolidation, merger, reorganization, transfer of assets, 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 of this Agreement or the Warrants
or the rights represented hereby or thereby, but will at all times in good
faith
assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate in order to protect the rights
of the
Holders of the Warrants against dilution or other impairment.
20. Counterparts.
This
Agreement may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and such
counterparts shall together constitute but one and the same
instrument.
-13-
IN
WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement to
be
duly executed, as of the day and year first above written.
|
NATIONAL
LAMPOON, INC.
|
|
|
By:
___________________________________
Name:
Title:
|
|
|
XXXXXXXX
CURHAN FORD & CO.
By:
___________________________________
Name:
Title:
|
-14-
EXHIBIT
A
NEITHER
THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE COMMON STOCK ISSUABLE
UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR
ANY APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH
ACT
OR AN EXEMPTION THEREFROM. ANY SUCH TRANSFER MAY ALSO BE SUBJECT TO APPLICABLE
STATE SECURITIES LAWS.
THIS
CERTIFICATE IS ISSUED SUBJECT TO THE PROVISIONS OF A WARRANT AGREEMENT DATED
AS
OF _____ __, 2005, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, AND ANY
TRANSFEREE OF THIS CERTIFICATE OR OF THE SHARES ISSUABLE UPON EXERCISE OF
IT
SHALL BE BOUND BY THE PROVISIONS OF SAID AGREEMENT, A COPY OF WHICH IS ON
FILE
WITH, AND AVAILABLE FROM, THE SECRETARY OF THE COMPANY. AMONG OTHER THINGS,
SUCH
WARRANT AGREEMENT ABSOLUTELY PROHIBITS THE SALE, TRANSFER, ASSIGNMENT, PLEDGE
OR
HYPOTHECATION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE
UPON
EXERCISE THEREOF PRIOR TO ______ __, 2005, EXCEPT TO A “PERMITTED TRANSFEREE”
(AS DEFINED IN SUCH WARRANT AGREEMENT).
EXERCISABLE
ON OR BEFORE
5:00
P.M., NEW YORK TIME, _________, 2009
| No. W- |
_____
Warrants
|
WARRANT
CERTIFICATE
This
Warrant Certificate certifies that Xxxxxxxx Curhan Ford & Co. or registered
assigns is the registered holder of _________________ (______) Warrants to
purchase, at any time from ________, 2005 until 5:00 P.M. New York City time
on
_________, 2009 (“Expiration Date”) up to ________________
(______)
shares
(“Shares”) of fully-paid and nonassessable common stock, par value $.0001 per
share (“Common Stock”), of National Lampoon, Inc., a Delaware corporation (the
“Company”), at the initial exercise price, subject to adjustment in certain
events (the “Exercise Price”), of $____ per Share upon surrender of this Warrant
Certificate and payment of the Exercise Price or notice of cashless exchange
at
an office or agency of the Company, but subject to the conditions set forth
herein and in the warrant agreement dated as of ________, 2005 (“Warrant
Agreement”) between the Company and Xxxxxxxx Curhan Ford & Co. Payment of
the Exercise Price may be made in cash, by certified or official bank check
in
New York Clearing House funds payable to the order of the Company, or any
combination of cash or check, or in shares of Common Stock pursuant to a
Notice
of Exchange in accordance with Section 3 of the Warrant Agreement.
No
Warrant may be exercised after 5:00 P.M., New York City time, on the Expiration
Date, at which time all Warrants evidenced hereby, unless exercised prior
thereto, shall thereafter be void.
The
Warrants evidenced by this Warrant Certificate are part of a duly authorized
issue of Warrants issued pursuant to the Warrant Agreement, which Warrant
Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to as a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and
the
holders (the words “holders” or “holder” meaning the registered holders or
registered holder) of the Warrants.
The
Warrant Agreement provides that upon the occurrence of certain events, the
Exercise Price and/or number of the Company’s securities issuable thereupon may,
subject to certain conditions, be adjusted. In such event, the Company will,
at
the request of the holder, issue a new Warrant Certificate evidencing the
adjustment in the Exercise Price and the number and/or type of securities
issuable upon the exercise of the Warrants; provided, however, that the failure
of the Company to issue such new Warrant Certificates shall not in any way
change, alter, or otherwise impair, the rights of the holder as set forth
in the
Warrant Agreement.
Upon
due
presentment for registration of transfer of this Warrant Certificate at an
office or agency of the Company, a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number
of
Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax, or other governmental charge
imposed in connection therewith.
Upon
the
exercise of less than all of the Warrants evidenced by this Certificate,
the
Company shall forthwith issue to the holder hereof a new Warrant Certificate
representing such number of unexercised Warrants.
The
Company may deem and treat the registered holder(s) hereof as the absolute
owner(s) of this Warrant Certificate (notwithstanding any notation of ownership
or other writing hereon made by anyone), for the purpose of any exercise
hereof,
and of any distribution to the holder(s) hereof, and for all other purposes,
and
the Company shall not be affected by any notice to the contrary.
All
terms
used in this Warrant Certificate which are defined in the Warrant Agreement
shall have the meanings assigned to them in the Warrant Agreement.
[Remainder
of page intentionally left blank]
IN
WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly
executed under its corporate seal.
|
Dated:
____________,
2005
|
NATIONAL
LAMPOON, INC.
By:
___________________________________
Name:
Title:
|
EXHIBIT
B
FORM
OF
ELECTION TO PURCHASE
The
undersigned registered owner of the attached Warrant Certificate hereby
irrevocably elects to exercise the right, represented by such Warrant
Certificate, to purchase _______
Shares
and herewith tenders in payment for such Shares cash or a certified or official
bank check payable in New York Clearing House Funds to the order of National
Lampoon, Inc. in the amount of $_______ all in accordance with Section 3.1
of
the Warrant Agreement.
|
Dated:
|
______________________________________
Name
of Registered Owner
______________________________________
Signature
of Registered Owner
(Signature
must conform in all respects to name
of
holder as specified on the face of the Warrant
Certificate.)
______________________________________
Street
Address
______________________________________
City,
State, Zip
______________________________________
IRS
Identification Number/Social Security
Number
|
EXHIBIT
C
FORM
OF
ASSIGNMENT
(To
be
executed by the registered holder if such holder desires to transfer the
Warrant
Certificate.)
FOR
VALUE
RECEIVED, the undersigned registered owner of the attached Warrant Certificate
hereby sells, assigns and transfers unto the Assignee named below all of
the
rights, title and interest therein of the undersigned under the within Warrant,
with respect to the number of shares of Common stock set forth
below:
|
NAME
OF ASSIGNEE
|
ADDRESS
|
NUMBER
OF SHARES
|
and
does
hereby irrevocably constitute and appoint __________________________, Attorney,
to transfer the within Warrant on the books of National Lampoon, Inc.,
maintained for the purpose, with full power of substitution in the premises.
The
undersigned understand that compliance with the provisions of the Warrant
is
necessary to effect any assignment or transfer.
|
Dated:
|
______________________________________
Signature
of Registered Owner
(Signature
must conform in all respects to name
of
holder as specified on the face of the Warrant
Certificate.)
______________________________________
Name
of Registered Owner
______________________________________
IRS
Identification Number/Social Security Number
|
