EXHIBIT 4.1
NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED
BY SUCH SECURITIES.
TNX TELEVISION HOLDINGS, INC.
WARRANT
Warrant No. [ ] Original Issue Date: April 28, 2004
TNX TELEVISION HOLDINGS, INC., a Delaware corporation (the "COMPANY"),
hereby certifies that, for value received, [ ] or its registered assigns (the
"HOLDER"), is entitled to purchase from the Company up to a total of [ ] shares
of common stock, par value $0.001 per share (the "COMMON STOCK"), of the Company
(each such share, a "WARRANT SHARE" and all such shares, the "WARRANT SHARES")
at an exercise price equal to $1.75 per share (as adjusted from time to time as
provided in Section 9, the "EXERCISE PRICE"), at any time and from time to time
from and after the Original Issue Date hereof and through and including April [
], 2009 (the "EXPIRATION DATE"), and subject to the following terms and
conditions:
1. Definitions. In addition to the terms defined elsewhere in this
Warrant, capitalized terms that are not otherwise defined herein shall have the
meanings given to such terms in the Securities Purchase Agreement, dated as of
April [ ], 2004, to which the Company and the original Holder are parties (the
"PURCHASE AGREEMENT").
2. Registration of Warrant. The Company shall register this Warrant upon
records to be maintained by the Company for that purpose (the "WARRANT
REGISTER"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the contrary.
3. Registration of Transfers. The Company shall register the transfer of
any portion of this Warrant in the Warrant Register, upon surrender of this
Warrant, with the Form of Assignment attached hereto duly completed and signed,
to the Company at its address specified herein. Upon any such registration or
transfer, a new Warrant to purchase Common Stock, in substantially the form of
this Warrant (any such new Warrant, a "NEW Warrant"), evidencing the portion of
this Warrant so transferred shall be issued to the transferee and a New Warrant
evidencing the remaining portion of this Warrant not so transferred, if any,
shall be issued to the transferring Holder. The acceptance of the New Warrant by
the transferee thereof shall be deemed the acceptance by such transferee of all
of the rights and obligations of a holder of a Warrant.
4. Exercise and Duration of Warrants.
(a) This Warrant shall be exercisable by the registered Holder at
any time and from time to time on or after the Original Issue Date through and
including the Expiration Date. At 6:30 p.m., New York City time on the
Expiration Date, the portion of this Warrant not exercised prior thereto shall
be and become void and of no value. Except as specifically provided in Section
4(b), the Company may not call or redeem any portion of this Warrant without the
prior written consent of the Holder.
(b) Subject to the provisions of this Section 4(b), if at any time
following the one year anniversary of the Original Issue Date: (i) the VWAP (as
defined below) of the Common Stock for each of 30 consecutive Trading Days
following the one year anniversary of the Original Issue Date is greater than
$4.50 (subject to adjustment pursuant to Section 9), (ii) the Warrant Shares are
either registered for resale pursuant to an effective registration statement
naming the Holder as a selling stockholder thereunder (and the prospectus
thereunder is available for use by the Holder as to all Warrant Shares) or
freely transferable without volume restrictions pursuant to Rule 144(k)
promulgated under the Securities Act, as determined by counsel to the Company
pursuant to a written opinion letter addressed and in form and substance
reasonably acceptable to the Holder and the transfer agent for the Common Stock,
during the entire 30 Trading Day period referenced in (i) above through the
expiration of the Call Date as set forth in the Company's notice pursuant to
this Section (the "CALL CONDITION PERIOD"), and (iii) the Company shall have
complied in all material respects with its obligations under this Warrant and
the Transaction Documents and the Common Stock shall at all times be listed or
quoted on a Trading Market, then, subject to the conditions set forth in this
Section, the Company may, in its sole discretion, elect to require the exercise
of all (but not less than all) of the then unexercised portion of this Warrant,
on the date that is the 30th day after written notice thereof (a "CALL NOTICE")
is received by the Holder (the "CALL DATE") at the address last shown on the
records of the Company for the Holder or given by the Holder to the Company for
the purpose of notice; provided, that the conditions to giving such notice
contained in (ii) and (iii) of this Section 4(b) must be in effect at all times
during the Call Condition Period or any such Call Notice shall be null and void.
The Company and the Holder agree that, if and to the extent Section 11(a) or (b)
of this Warrant would restrict the ability of the Holder to exercise this
Warrant in the event of a delivery of a Call Notice, then notwithstanding
anything to the contrary set forth in the Call Notice, the Call Notice shall be
deemed automatically amended to apply only to such portion of this Warrant as
may be exercised by the Holder by the Call Date in accordance with such Sections
as are then in effect. The Holder will promptly (and, in any event, prior to the
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Call Date) notify the Company in writing following receipt of a Call Notice if
Section 11(a) or (b) would restrict its exercise of the Warrant, specifying
therein the number of Warrant Shares so restricted. The Company covenants and
agrees that it will honor all Exercise Notices tendered through 5:00 p.m. (New
York City time) on the Call Date. "VWAP" means on any particular Trading Day or
for any particular period, the volume weighted average trading price per share
of Common Stock on such date or for such period as reported by the Bloomberg
L.P., by any successor performing similar functions.
5. Delivery of Warrant Shares.
(a) To effect exercises hereunder, the Holder shall not be required
to physically surrender this Warrant unless the aggregate Warrant Shares
represented by this Warrant is being exercised. Upon delivery of the Exercise
Notice (in the form attached hereto) to the Company (with the attached Warrant
Shares Exercise Log) at its address for notice set forth herein and upon payment
of the Exercise Price multiplied by the number of Warrant Shares that the Holder
intends to purchase hereunder, the Company shall promptly (but in no event later
than three Trading Days after the Date of Exercise (as defined herein)) issue
and deliver to the Holder, a certificate for the Warrant Shares issuable upon
such exercise, which, unless otherwise required by the Purchase Agreement, shall
be free of restrictive legends. The Company shall, upon request of the Holder
and subsequent to the date on which a registration statement covering the resale
of the Warrant Shares has been declared effective by the Securities and Exchange
Commission, use its reasonable best efforts to deliver Warrant Shares hereunder
electronically through the Depository Trust Corporation or another established
clearing corporation performing similar functions, if available, provided, that,
the Company may, but will not be required to change its transfer agent if its
current transfer agent cannot deliver Warrant Shares electronically through the
Depository Trust Corporation and the Staff of the Commission does not publicly
state removing the restrictive legend under circumstances is against the law. A
"DATE OF EXERCISE" means the date on which the Holder shall have delivered to
the Company: (i) the Exercise Notice (with the Warrant Exercise Log attached to
it), appropriately completed and duly signed and (ii) if such Holder is not
utilizing the cashless exercise provisions set forth in this Warrant, payment of
the Exercise Price for the number of Warrant Shares so indicated by the Holder
to be purchased.
(b) If by the third Trading Day after a Date of Exercise the Company
fails to deliver the required number of Warrant Shares in the manner required
pursuant to Section 5(a), then the Holder will have the right to rescind such
exercise.
(c) If by the third Trading Day after a Date of Exercise the Company
fails to deliver the required number of Warrant Shares in the manner required
pursuant to Section 5(a), and if after such third Trading Day and prior to the
receipt of such Warrant Shares, the Holder purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by the Holder of the Warrant Shares which the Holder anticipated receiving
upon such exercise (a "BUY-IN"), then the Company shall (1) pay in cash to the
Holder the amount by which (x) the Holder's total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so purchased
exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares
that the Company was required to deliver to the Holder in connection with the
exercise at issue by (B) the closing bid price of the Common Stock at the time
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of the obligation giving rise to such purchase obligation and (2) at the option
of the Holder, either reinstate the portion of the Warrant and equivalent number
of Warrant Shares for which such exercise was not honored or deliver to the
Holder the number of shares of Common Stock that would have been issued had the
Company timely complied with its exercise and delivery obligations hereunder.
The Holder shall provide the Company written notice indicating the amounts
payable to the Holder in respect of the Buy-In.
(d) The Company's obligations to issue and deliver Warrant Shares in
accordance with the terms hereof are absolute and unconditional, irrespective of
any action or inaction by the Holder to enforce the same, any waiver or consent
with respect to any provision hereof, the recovery of any judgment against any
Person or any action to enforce the same, or any setoff, counterclaim,
recoupment, limitation or termination, or any breach or alleged breach by the
Holder or any other Person of any obligation to the Company or any violation or
alleged violation of law by the Holder or any other Person, and irrespective of
any other circumstance which might otherwise limit such obligation of the
Company to the Holder in connection with the issuance of Warrant Shares. Nothing
herein shall limit a Holder's right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief with respect to the Company's
failure to timely deliver certificates representing shares of Common Stock upon
exercise of the Warrant as required pursuant to the terms hereof.
6. Charges, Taxes and Expenses. Issuance and delivery of certificates for
shares of Common Stock upon exercise of this Warrant shall be made without
charge to the Holder for any issue or transfer tax, withholding tax, transfer
agent fee or other incidental tax or expense in respect of the issuance of such
certificates, all of which taxes and expenses shall be paid by the Company;
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 registration of any
certificates for Warrant Shares or Warrants in a name other than that of the
Holder. The Holder shall be responsible for all other tax liability that may
arise as a result of holding or transferring this Warrant or receiving Warrant
Shares upon exercise hereof.
7. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary and
reasonable indemnity (which shall not include a surety bond), if requested.
Applicants for a New Warrant under such circumstances shall also comply with
such other reasonable regulations and procedures and pay such other reasonable
third-party costs as the Company may prescribe. If a New Warrant is requested as
a result of a mutilation of this Warrant, then the Holder shall deliver such
mutilated Warrant to the Company as a condition precedent to the Company's
obligation to issue the New Warrant.
8. Reservation of Warrant Shares. The Company covenants that it will at
all times reserve and keep available out of the aggregate of its authorized but
unissued and otherwise unreserved Common Stock, solely for the purpose of
enabling it to issue Warrant Shares upon exercise of this Warrant as herein
provided, the number of Warrant Shares which are then issuable and deliverable
upon the exercise of this entire Warrant, free from preemptive rights or any
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other contingent purchase rights of Persons other than the Holder (taking into
account the adjustments and restrictions of Section 9). The Company covenants
that all Warrant Shares so issuable and deliverable shall, upon issuance and the
payment of the applicable Exercise Price in accordance with the terms hereof, be
duly and validly authorized, issued and fully paid and nonassessable.
9. Certain Adjustments. The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section 9.
(a) Stock Dividends and Splits. If the Company, at any time while
this Warrant is outstanding, (i) pays a stock dividend on its Common Stock or
otherwise makes a distribution on any class of capital stock that is payable in
shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into
a larger number of shares, or (iii) combines outstanding shares of Common Stock
into a smaller number of shares, then in each such case the Exercise Price shall
be multiplied by a fraction of which the numerator shall be the number of shares
of Common Stock outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant to clause (i) of this
paragraph shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution,
and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall
become effective immediately after the effective date of such subdivision or
combination.
(b) Fundamental Transactions. If, at any time while this Warrant is
outstanding, (1) the Company effects any merger or consolidation of the Company
with or into another Person, (2) the Company effects any sale of all or
substantially all of its assets in one or a series of related transactions, (3)
any tender offer or exchange offer (whether by the Company or another Person) is
completed pursuant to which holders of Common Stock are permitted to tender or
exchange their shares for other securities, cash or property, or (4) the Company
effects any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property (in any such case, a
"FUNDAMENTAL TRANSACTION"), then the Holder shall have the right thereafter to
receive, upon exercise of this Warrant, the same amount and kind of securities,
cash or property as it would have been entitled to receive upon the occurrence
of such Fundamental Transaction if it had been, immediately prior to such
Fundamental Transaction, the holder of the number of Warrant Shares then
issuable upon exercise in full of this Warrant (the "ALTERNATE CONSIDERATION").
For purposes of any such exercise, the determination of the Exercise Price shall
be appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it
receives upon any exercise of this Warrant following such Fundamental
Transaction. At the Holder's option and request, any successor to the Company or
surviving entity in such Fundamental Transaction shall, either (1) issue to the
Holder a new warrant substantially in the form of this Warrant and consistent
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with the foregoing provisions and evidencing the Holder's right to purchase the
Alternate Consideration for the aggregate Exercise Price upon exercise thereof,
or (2) purchase the Warrant from the Holder for a purchase price, payable in
cash within five Trading Days after such request (or, if later, on the effective
date of the Fundamental Transaction), equal to the Black Scholes value of the
remaining unexercised portion of this Warrant on the date of such request. The
terms of any agreement pursuant to which a Fundamental Transaction is effected
shall include terms requiring any such successor or surviving entity to comply
with the provisions of this paragraph (b) and insuring that the Warrant (or any
such replacement security) will be similarly adjusted upon any subsequent
transaction analogous to a Fundamental Transaction.
(c) Subsequent Equity Sales.
(i) If the Company or any subsidiary thereof, as applicable
with respect to Common Stock Equivalents (as defined below), at any time while
this Warrant is outstanding, shall issue any securities of the Company or any
Subsidiary which entitle the holder thereof to acquire Common Stock at any time,
including without limitation, any debt, preferred stock, rights, options,
warrants or any other instrument that is at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock or other securities that entitle the holder to receive, directly or
indirectly, Common Stock ("COMMON STOCK EQUIVALENTS") entitling any Person to
acquire shares of Common Stock, at a price per share less than the Exercise
Price (if the holder of the Common Stock or Common Stock Equivalent so issued
shall at any time, whether by operation of purchase price adjustments, reset
provisions, floating conversion, exercise or exchange prices or otherwise, or
due to warrants, options or rights issued in connection with such issuance, be
entitled to receive shares of Common Stock at a price less than the Exercise
Price, such issuance shall be deemed to have occurred for less than the Exercise
Price), then, the Exercise Price shall be multiplied by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to the issuance of such shares of Common Stock or such Common
Stock Equivalents plus the number of shares of Common Stock which the offering
price for such shares of Common Stock or Common Stock Equivalents would purchase
at the Exercise Price, and the denominator of which shall be the sum of the
number of shares of Common Stock outstanding immediately prior to such issuance
plus the number of shares of Common Stock so issued or issuable. Such adjustment
shall be made whenever such Common Stock or Common Stock Equivalents are issued.
The Company shall notify the Holder in writing, no later than the Trading Day
following the issuance of any Common Stock or Common Stock Equivalent subject to
this section, indicating therein the applicable issuance price, or of applicable
reset price, exchange price, conversion price and other pricing terms.
Notwithstanding the foregoing, no adjustment will be made under this subsection
as a result of: (i) the issuance of securities upon the exercise or conversion
of any Common Stock or Common Stock Equivalents issued by the Company prior to
the date hereof (but will apply to any amendments, modifications and reissuances
thereof), (ii) the grant of options, warrants or other Common Stock Equivalents
under any duly authorized Company stock option, restricted stock plan or stock
purchase plan whether now existing or hereafter approved by the Company and its
stockholders in the future (but not as to any amendments or other modifications
to the number of Common Stock issuable thereunder, the terms set forth therein,
or the exercise price set forth therein, unless such amendments or other
modifications are approved by the Company's stockholders) and the issuance of
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Common Stock in respect thereof, (iii) securities granted or issued in
connection with a Strategic Transaction or as the purchase price for the
acquisition of a third party company or all or a portion of the assets of a
third party company, or (iv) the issuance of Common Stock in connection with a
firm commitment underwritten public offering of Common Stock resulting in net
proceeds to the Company of not less than $15,000,000 (which shall not include
equity lines of credit or takedowns off of shelf registration statements or
similar transactions). "STRATEGIC TRANSACTION" means a transaction or
relationship in which the Company issues shares of Common Stock or other
securities of the Company to a Person which is, itself or through its
Subsidiaries, an operating company in a business synergistic with the business
of the Company and in which the Company receives benefits in addition to the
investment of funds, but shall not include a transaction in which the Company is
issuing securities primarily for the purpose of raising capital or to an entity
whose primary business is investing in securities.
(ii) If, at any time while this Warrant is outstanding, the
Company or any Subsidiary issues Common Stock Equivalents at a price per share
that floats or resets or otherwise varies or is subject to adjustment based on
market prices of the Common Stock (a "FLOATING PRICE SECURITY"), then for
purposes of applying the preceding paragraph in connection with any subsequent
exercise, the Exercise Price will be determined separately on each Exercise Date
and will be deemed to equal the lowest price per share at which any holder of
such Floating Price Security is entitled to acquire shares of Common Stock on
such Exercise Date (regardless of whether any such holder actually acquires any
shares on such date).
(iii) For the purposes of any adjustment of a Conversion Price
pursuant to Section 9(c)(i), the following provisions shall be applicable:
(1) In the case of the issuance of Common Stock for
cash, the consideration shall be deemed to be the amount of cash paid therefor.
(2) In the case of the issuance of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair market value thereof as determined in good
faith by the Board of Directors. Notwithstanding the foregoing, in the event a
Holder disagrees with the fair market value determined by the Board of
Directors, the Board of Directors shall hire a neutral third party appraiser,
acceptable to the Holders, to determine the fair market value at the Board of
Directors' sole cost and expense.
(3) In the case of the issuance of options or warrants
to purchase or rights to subscribe for Common Stock, securities by their terms
convertible into or exchangeable for Common Stock, or options or warrants to
purchase or rights to subscribe for such convertible or exchangeable securities,
except for options or warrants to acquire securities set forth in subsection
(ii) of Section 9(c)(i) and subsection (iii) of Section 9(c)(i):
(A) the aggregate maximum number of shares of
Common Stock deliverable upon exercise of such options or warrants to purchase
or rights to subscribe for Common Stock shall be deemed to have been issued at
the time such options, warrants or rights were issued and for a consideration
equal to the consideration (determined in the manner provided in subparagraphs
(1) and (2) above), if any, received by the Company upon the issuance of such
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options, warrants or rights plus the minimum purchase price provided in such
options, warrants or rights for the Common Stock covered thereby;
(B) the aggregate maximum number of shares of
Common Stock deliverable upon conversion of or in exchange of any such
convertible or exchangeable securities or upon the exercise of options or
warrants to purchase or rights to subscribe for such convertible or exchangeable
securities and subsequent conversion or exchange thereof shall be deemed to have
been issued at the time such securities, options, warrants or rights were issued
and for a consideration equal to the consideration received by the Company for
any such securities and related options, warrants or rights (excluding any cash
received on account of accrued interest or accumulated dividends), plus the
minimum additional consideration, if any, to be received by the Company upon the
conversion or exchange of such securities or the exercise of any related
options, warrants or rights (the consideration in each case to be determined in
the manner provided in subparagraphs (1) and (2) above); and
(C) upon the expiration of any such options or
warrants or the termination of any rights, convertible securities or
exchangeable securities, the applicable Conversion Price shall forthwith be
readjusted to such Conversion Price as would have been in effect at the time of
such expiration or termination had such options, warrants, rights, convertible
securities or exchangeable securities, to the extent outstanding immediately
prior to such expiration or termination, never been issued.
(iv) In the case of the issuance of units of securities, the
consideration deemed to be paid for each share of Common Stock shall be
determined by allocating the price paid for the unit entirely to the lesser of
(i) the Common Stock or convertible securities included in the unit and (ii) any
option, warrant or other right exercisable for Common Stock included in the
unit.
(d) Number of Warrant Shares. Simultaneously with any adjustment to
the Exercise Price pursuant to this Section 9, the number of Warrant Shares that
may be purchased upon exercise of this Warrant shall be increased or decreased
proportionately, so that after such adjustment the aggregate Exercise Price
payable hereunder for the adjusted number of Warrant Shares shall be the same as
the aggregate Exercise Price in effect immediately prior to such adjustment.
(e) Calculations. All calculations under this Section 9 shall be
made to the nearest cent or the nearest 1/100th of a share, as applicable. The
number of shares of Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Company, and the disposition
of any such shares shall be considered an issue or sale of Common Stock.
(f) Notice of Adjustments. Upon the occurrence of each adjustment
pursuant to this Section 9, the Company at its expense will promptly compute
such adjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment, including a statement of the adjusted
Exercise Price and adjusted number or type of Warrant Shares or other securities
issuable upon exercise of this Warrant (as applicable), describing the
transactions giving rise to such adjustments and showing in detail the facts
upon which such adjustment is based. Upon written request, the Company will
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promptly deliver a copy of each such certificate to the Holder and to the
Company's Transfer Agent.
(g) Notice of Corporate Events. If the Company (i) declares a
dividend or any other distribution of cash, securities or other property in
respect of its Common Stock, including without limitation any granting of rights
or warrants to subscribe for or purchase any capital stock of the Company or any
Subsidiary, (ii) authorizes or approves, enters into any agreement contemplating
or solicits stockholder approval for any Fundamental Transaction or (iii)
authorizes the voluntary dissolution, liquidation or winding up of the affairs
of the Company, then the Company shall deliver to the Holder a notice describing
the material terms and conditions of such transaction, at least 10 calendar days
prior to the applicable record or effective date on which a Person would need to
hold Common Stock in order to participate in or vote with respect to such
transaction, and the Company will take all steps reasonably necessary in order
to insure that the Holder is given the practical opportunity to exercise this
Warrant prior to such time so as to participate in or vote with respect to such
transaction; provided, however, that the failure to deliver such notice or any
defect therein shall not affect the validity of the corporate action required to
be described in such notice.
10. Payment of Exercise Price. The Holder may pay the Exercise Price in
one of the following manners:
(a) Cash Exercise. The Holder may deliver immediately available
funds; or
(b) Cashless Exercise. The Holder may notify the Company in an
Exercise Notice of its election to utilize cashless exercise, in which event the
Company shall issue to the Holder the number of Warrant Shares determined as
follows:
X = Y [(A-B)/A]
where:
X = the number of Warrant Shares to be issued to the Holder.
Y = the number of Warrant Shares with
respect to which this Warrant is being
exercised.
A = the average of the closing prices for
the five Trading Days immediately prior to
(but not including) the Exercise Date.
B = the Exercise Price.
For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have commenced, on
the date this Warrant was originally issued.
11. Limitations on Exercise.
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(a) Notwithstanding anything to the contrary contained herein, the
number of shares of Common Stock that may be acquired by the Holder upon any
exercise of this Warrant (or otherwise in respect hereof) shall be limited to
the extent necessary to insure that, following such exercise (or other
issuance), the total number of shares of Common Stock then beneficially owned by
such Holder and its Affiliates and any other Persons whose beneficial ownership
of Common Stock would be aggregated with the Holder's for purposes of Section
13(d) of the Exchange Act, does not exceed 4.999% of the total number of issued
and outstanding shares of Common Stock (including for such purpose the shares of
Common Stock issuable upon such exercise). For such purposes, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder. This provision shall
not restrict the number of shares of Common Stock which a Holder may receive or
beneficially own in order to determine the amount of securities or other
consideration that such Holder may receive in the event of a Fundamental
Transaction as contemplated in Section 9 of this Warrant. By written notice to
the Company, the Holder may waive the provisions of this Section but any such
waiver will not be effective until the 61st day after delivery thereof.
(b) Notwithstanding anything to the contrary contained herein, the
number of shares of Common Stock that may be acquired by the Holder upon any
exercise of this Warrant (or otherwise in respect hereof) shall be limited to
the extent necessary to insure that, following such exercise (or other
issuance), the total number of shares of Common Stock then beneficially owned by
such Holder and its Affiliates and any other Persons whose beneficial ownership
of Common Stock would be aggregated with the Holder's for purposes of Section
13(d) of the Exchange Act, does not exceed 9.999% of the total number of issued
and outstanding shares of Common Stock (including for such purpose the shares of
Common Stock issuable upon such exercise). For such purposes, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder. This provision shall
not restrict the number of shares of Common Stock which a Holder may receive or
beneficially own in order to determine the amount of securities or other
consideration that such Holder may receive in the event of a Fundamental
Transaction as contemplated in Section 9 of this Warrant. This restriction may
not be waived.
12. No Fractional Shares. No fractional shares of Warrant Shares will be
issued in connection with any exercise of this Warrant. In lieu of any
fractional shares which would, otherwise be issuable, the Company shall pay cash
equal to the product of such fraction multiplied by the closing price of one
Warrant Share as reported by the applicable Trading Market on the date of
exercise.
13. Notices. Any and all notices or other communications or deliveries
hereunder (including, without limitation, any Exercise Notice) shall be in
writing and shall be deemed given and effective on the earliest of (i) the date
of transmission, if such notice or communication is delivered via facsimile at
the facsimile number specified in this Section prior to 6:30 p.m. (New York City
time) on a Trading Day, (ii) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section on a day that is not a Trading Day or
later than 6:30 p.m. (New York City time) on any Trading Day, (iii) the Trading
Day following the date of mailing, if sent by nationally recognized overnight
courier service, or (iv) upon actual receipt by the party to whom such notice is
required to be given. The addresses for such communications shall be: (i) if to
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the Company, to TNX Television Holdings, Inc., Attn: President, or to Facsimile
No.: (000) 000-0000 (or such other address as the Company shall indicate in
writing in accordance with this Section), or (ii) if to the Holder, to the
address or facsimile number appearing on the Warrant Register or such other
address or facsimile number as the Holder may provide to the Company in
accordance with this Section.
14. Warrant Agent. The Company shall serve as warrant agent under this
Warrant. Upon 10 days' notice to the Holder, the Company may appoint a new
warrant agent. Any corporation into which the Company or any new warrant agent
may be merged or any corporation resulting from any consolidation to which the
Company or any new warrant agent shall be a party or any corporation to which
the Company or any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor warrant
agent under this Warrant without any further act. Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder's last
address as shown on the Warrant Register.
15. Miscellaneous.
(a) This Warrant shall be binding on and inure to the benefit of the
parties hereto and their respective successors and assigns. Subject to the
preceding sentence, nothing in this Warrant shall be construed to give to any
Person other than the Company and the Holder any legal or equitable right,
remedy or cause of action under this Warrant. This Warrant may be amended only
in writing signed by the Company and the Holder and their successors and
assigns.
(b) All questions concerning the construction, validity, enforcement
and interpretation of this Warrant shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York (except
with respect to matters governed by corporate law in the State of Delaware),
without regard to the principles of conflicts of law thereof. Each party agrees
that all legal proceedings concerning the interpretations, enforcement and
defense of this Warrant and the transactions herein contemplated ("PROCEEDINGS")
(whether brought against a party hereto or its respective Affiliates, employees
or agents) shall be commenced exclusively in the state and federal courts
sitting in the City of New York, Borough of Manhattan (the "NEW YORK COURTS").
Each party hereto hereby irrevocably submits to the exclusive jurisdiction of
the New York Courts for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any
Proceeding, any claim that it is not personally subject to the jurisdiction of
any New York Court, or that such Proceeding has been commenced in an improper or
inconvenient forum. Each party hereto hereby irrevocably waives personal service
of process and consents to process being served in any such Proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Warrant and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law. Each party hereto hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Warrant or the transactions
contemplated hereby. If either party shall commence a Proceeding to enforce any
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provisions of this Warrant, then the prevailing party in such Proceeding shall
be reimbursed by the other party for its attorney's fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
Proceeding.
(c) The headings herein are for convenience only, do not constitute
a part of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof.
(d) In case any one or more of the provisions of this Warrant shall
be invalid or unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Warrant shall not in any way be
affected or impaired thereby and the parties will attempt in good faith to agree
upon a valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
(e) Prior to exercise of this Warrant, the Holder hereof shall not,
by reason of by being a Holder, be entitled to any rights of a stockholder with
respect to the Warrant Shares
[REMAINDER OF XXXX INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.
TNX TELEVISION HOLDINGS, INC.
By:
----------------------------------------
Name:
Title:
13
FORM OF EXERCISE NOTICE
(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)
To: TNX TELEVISION HOLDINGS, INC.
The undersigned is the Holder of Warrant No. _______ (the "WARRANT") issued by
TNX Television Holdings, Inc., a Delaware corporation (the "COMPANY").
Capitalized terms used herein and not otherwise defined have the respective
meanings set forth in the Warrant.
(1) The Warrant is currently exercisable to purchase a total of
______________ Warrant Shares.
(2) The undersigned Holder hereby exercises its right to purchase
_________________ Warrant Shares pursuant to the Warrant.
(3) The Holder intends that payment of the Exercise Price shall be
made as (check one):
____ "Cash Exercise" under Section 10
____ "Cashless Exercise" under Section 10 (if permitted)
(4) If the holder has elected a Cash Exercise, the holder shall pay
the sum of $____________ to the Company in accordance with the terms
of the Warrant.
(5) Pursuant to this exercise, the Company shall deliver to the
holder _______________ Warrant Shares in accordance with the terms
of the Warrant.
(6) Following this exercise, the Warrant shall be exercisable to
purchase a total of ______________ Warrant Shares.
(For use if at the time of this Notice, a registration statement is effective
and available for use by the undersigned holder to sell Warrant Shares) The
undersigned represents its intention to sell the Warrant Shares issuable
pursuant to this Exercise Notice pursuant to the prospectus that forms a part of
the Registration Statement, and accordingly requests that such Warrant Shares be
issued free of all legends in accordance with the Purchase Agreement. |_|
14
Dated: , Name of Holder:
--------- -------
(Print)
By:
Name:
Title:
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant)
15
Warrant Shares Exercise Log
---------- ----------------------------- ------------------- -------------------
Date Number of Warrant Shares Number of Warrant Number of Warrant
Available to be Exercised Shares Exercised Shares Remaining to
be Exercised
---------- ----------------------------- ------------------- -------------------
---------- ----------------------------- ------------------- -------------------
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TNX Television Holdings, Inc.
WARRANT ORIGINALLY ISSUED [ ], 2004
WARRANT NO. [ ]
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the
above-captioned Warrant to purchase ____________ shares of Common Stock to which
such Warrant relates and appoints ________________ attorney to transfer said
right on the books of the Company with full power of substitution in the
premises.
Dated: _______________, ____
-----------------------------------------
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant)
-----------------------------------------
Address of Transferee
-----------------------------------------
-----------------------------------------
In the presence of:
--------------------------
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