THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY OTHER APPLICABLE SECURITIES LAW, AND MAY NOT BE
TRANSFERRED IN THE ABSENCE OF REGISTRATION THEREUNDER OR AN EXEMPTION
THEREFROM.
RESTATED WARRANT
To Purchase Common Stock of
AXTIVE CORPORATION
a Delaware corporation formerly known as
Edge Technology Group, Inc.
1. Issuance. This Restated Warrant, dated as of May 23, 2003, is
issued to SANDERA PARTNERS, L.P. ("Sandera") by Axtive Corporation, a
Delaware corporation formerly known as Edge Technology Group, Inc.
(hereinafter with its successors called the "Company"), in
substitution of and exchange for that certain warrant originally
issued on April 1, 2002 (the "Issuance Date") to Sandera (the
"Original Warrant"). This Restated Warrant amends and restates the
Original Warrant in its entirety, and the holder of such Original
Warrant, by its acceptance hereof, acknowledges and agrees that such
Original Warrant shall be of no further force or effect whatsoever.
The term "Warrant" as used herein shall include this Restated Warrant
and any warrants delivered in substitution or exchange herefor or
therefor as provided herein.
2. Exercise of Warrant.
(a) Exercise Price; Number of Shares. This Warrant represents the
right to purchase from the Company FOUR MILLION (4,000,000) shares
(the "Warrant Shares") of the Company's common stock, $0.01 par value
("Common Stock") at an initial exercise price of Twenty Cents ($0.20)
per share (the "Exercise Price"). Until such time as this Warrant is
exercised in full or expires, the Exercise Price and the Warrant
Shares are subject to adjustments pursuant to the procedures described
in Section 8 below.
(b) Exercise Procedure. Subject to the terms and conditions of this
Warrant, the registered holder of this Warrant (the "Holder"), is
entitled to exercise this Warrant during the Exercise Period, in whole
or in part, upon surrender of this Warrant together with payment of
the Exercise Price and delivery of the subscription form (as annexed
hereto as Addendum A, the "Subscription Form") duly executed, to be
presented at the office of the Company, 0000 Xxxx Xxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxx 00000, or such other office in the United States as the
Company shall notify the Holder of in writing.
(c) Exercise Period. This Warrant may be exercised at any time after
the second anniversary of the Issuance Date until the earlier of (i)
the fourth anniversary of the Issuance Date or (ii) the date of a
Deemed Liquidation, as defined below (the "Exercise Period");
provided, however, that the Company shall not effect a Deemed
Liquidation without compliance with the provisions of Section 2(d)
below.
-1-
(d) Deemed Liquidation. For purposes of this Warrant, a "Deemed
Liquidation" shall mean (i) any liquidation, dissolution or winding up
of the Company, (ii) any sale, conveyance or disposition of all or
substantially all of its property or business, (iii) any merger or
consolidation with any other corporation (other than a wholly owned
subsidiary corporation) or (iv) any other transaction or series of
related transactions in which more than fifty percent (50%) of the
voting power of the Company will not immediately after such
acquisition or transaction be held by the company's stockholders of
record as constituted immediately prior to such acquisition or
transaction, provided that a merger effected exclusively for the
purpose of changing the domicile of the Company shall not constitute a
Deemed Liquidation.
(i) Notice of Transaction. The Company shall give each Holder
written notice of a Deemed Liquidation (a "Notice of Liquidation
Event") not later than 10 days prior to the stockholders' meeting
called to approve such transaction, or 10 days prior to the closing of
such transaction, whichever is earlier, and shall also notify the
Holders in writing of the final approval of such transaction. The
first of such notices shall describe the material terms and conditions
of the impending transaction and the provisions of this Section 2(d),
and the Company shall thereafter give such Holders prompt notice of
any material changes. The transaction shall in no event take place
sooner than 10 days after the Company has given the first notice
provided for herein or sooner than 5 days after the Company has given
notice of any material changes provided for herein; provided, however,
that such periods may be shortened upon the written consent of all of
the Holders.
(ii) Effect of Noncompliance. In the event the requirements of
this Section 2(d) are not complied with, the Company shall forthwith
either cause the closing of the transaction to be postponed until
such requirements have been complied with, or cancel such transaction.
(iii) Election to Exercise. Upon receipt of a Notice of
Liquidation Event, the Holder shall have the right to elect to
exercise this Warrant, in whole or in part, as provided for in this
Section 2, notwithstanding the prohibition on exercise prior to the
second anniversary of the Issuance Date set forth in Section 2(c)
above.
3. Payment of Exercise Price. The Holder may make payment of the
Exercise Price in cash or by certified or official bank check payable
to the order of the Company or by wire transfer of immediately
available funds to the account of the Company.
4. Cashless Exercise of Warrants.
(a) Notwithstanding the provisions of Section 3 above, if the Fair
Market Value is greater than the Exercise Price (at the date of
calculation, as set forth below), in lieu of exercising the Warrant as
permitted in Section 2.1(b), the Holder may elect to receive shares of
Common Stock equal to the value (as determined below) of the Warrant
(or the portion thereof being canceled) by surrender of the Warrant,
together with the Subscription Form duly executed, to the Company at
its office referred to in Section 2(b) hereof, in which event the
Company shall issue to the Holder that number of shares of Common
Stock computed using the following formula:
-2-
CS = WCS x (FMV - EP)
FMV
Where:
CS equals the number of shares of Common Stock to be issued
to the holder of the Warrant;
WCS equals the number of shares of Common Stock purchasable
under the Warrant being exercised (at the date of such
calculation);
FMV equals the Fair Market Value of one share of the Common
Stock (at the date of such calculation); and
EP equals the Exercise Price (as adjusted to the date of
such calculation).
(b) For purposes of Rule 144 under the Securities Act, 17 C.F.R. ss.
230.144, as amended, the parties hereto agree that the exercise of
this Warrant in accordance with this Section 2.2 shall be deemed to be
a conversion of such Warrant, pursuant to the terms of this Warrant,
into Common Stock.
(c) For purposes of this Section 4, "Fair Market Value" shall mean
with respect to every share of Common Stock on any date in question
(i) the average of the closing bid prices per share of the Common
Stock for the previous 15 consecutive trading days (A) on the
principal securities exchange or trading market where the Common Stock
is listed or traded or, if the foregoing does not apply, (B) in the
over-the-counter market on the electronic bulletin board for the
Common Stock or (ii), if, and only if, no trading price is reported
for the Common Stock, then its Fair Market Value shall be as
determined, in good faith by the board of directors of the Company. If
the Holder shall object in writing within 5 days of notification of
the determination of the Company's board of directors, then the Fair
Market Value shall be determined by an investment banking firm or
appraisal firm (which firm shall own no securities of, and shall not
be an affiliate, subsidiary or a related person of, the Company or any
Holder) of recognized national standing retained by the Company and
acceptable to the Holder.
5. Partial Exercise. This Warrant may be exercised in part, and the
Holder shall be entitled to receive a new warrant, which shall be
dated as of the date of this Warrant, covering the number of Warrant
Shares in respect of which this Warrant shall not have been exercised.
6. Issuance Date. The person or persons in whose name or names any
certificate representing Warrant Shares is issued hereunder shall be
deemed to have become the holders of record of such shares represented
thereby as at the close of business on the date this Warrant is
exercised with respect to such shares, whether or not the transfer
books of the Company shall be closed. As soon as practicable after the
exercise of this Warrant, the Company at its expense (including the
payment of any applicable taxes) will use its best lawful efforts to
cause the Company's transfer agent to issue and deliver to Holder a
certificate for the number of fully paid nonassessable shares of
Common Stock to which such Holder is entitled.
-3-
7. Reserved Shares; Valid Issuance. The Company covenants that it
will reserve and keep available at all times from and after the date
hereof such number of its authorized shares of Common Stock, free from
all preemptive or similar rights therein, as will be sufficient to
permit the exercise of this Warrant in full. The Company further
covenants that such shares as may be issued pursuant to the exercise
of this Warrant will, upon issuance, be duly and validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with
respect to the issuance thereof.
8. Adjustment Provision.
(a) Subdivisions, Split-ups, Combinations and Stock Dividends. If
after the Issuance Date the Company shall subdivide the Common Stock,
by split up or otherwise, or combine such shares, or issue additional
shares in payment of a stock dividend on such shares, the number of
shares issuable on the exercise of this Warrant shall forthwith be
proportionately increased in the case of a subdivision or stock
dividend, or proportionately decreased in the case of a combination,
and the Exercise Price shall forthwith be proportionately decreased in
the case of a subdivision or stock dividend, or proportionately
increased in the case of a combination.
(b) Reclassifications. If after the Issuance Date there shall be
any reclassification, capital reorganization or change of the Common Stock
(other than as a result of a subdivision, combination or stock
dividend provided for in Section 8 (a) hereof), then, as a condition
of such reclassification, reorganization or change, lawful provisions
shall be made, and duly executed documents evidencing the same from
the Company shall be delivered to the Holder, so that the Holder shall
thereafter have the right to purchase, at a total price not to exceed
that payable upon the exercise of this Warrant in full, the kind and
amount of shares of stock and other securities and property receivable
upon such reclassification, reorganization or change, by holders of
the number of shares of Common Stock which might have been purchased
by the Holder immediately prior to such reclassification,
reorganization or change, and in such case appropriate provisions
shall be made with respect to the rights and interest of the Holder to
the end that the provisions hereof (including, without limitation,
provisions for the adjustment of the Exercise Price and the number of
shares issuable hereunder) shall thereafter be applicable in relation
to any shares of stock or other securities and property thereafter
deliverable upon exercise hereof.
9. Fractional Shares. In no event shall any fractional share of
Common Stock be issued upon any exercise of this Warrant and the
number of shares of Common Stock to be issued shall be rounded to the
nearest whole share.
10. Certificate of Adjustment. Whenever the Exercise Price or the
number of shares issuable hereunder is adjusted, as herein provided,
the Company shall promptly deliver to the Holder a certificate of the
Company's Chief Financial Officer setting forth the number of shares
issuable hereunder and the Exercise Price after such adjustment and
setting forth a brief statement of the facts requiring such
adjustment.
11. Notices of Record Date. In the event of:
(a) any taking by the Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who
are entitled to receive any dividend or other distribution, or any
right to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other securities or property, or to receive
any other right,
-4-
(b) any reclassification of the capital stock of the Company, capital
reorganization of the Company, or
(c) any transaction which would constitute a Deemed Liquidation, then
and in each such event the Company will mail or cause to be mailed to
the Holder a notice specifying (i) the date on which any such record
is to be taken for the purpose of such dividend, distribution or
right, and stating the amount and character of such dividend,
distribution or right, or (ii) the date on which any such
reclassification, reorganization, conveyance or Deemed Liquidation is
to take place, and the time, if any is to be fixed, as of which the
holders of record in respect of such event are to be determined. Such
notice shall be mailed at least 10 days prior to the date specified in
such notice on which any such action is to be taken.
12. Amendment. The terms of this Warrant may be amended, modified or
waived only with the written consent of the Company and the Holder.
13. Warrant Register; Transfers.
(a) The Company will maintain a register containing the names and
addresses of the registered holders of the Warrants. The Holder may
change his or its address as shown on the warrant register by written
notice to the Company requesting such change. Any notice or written
communication required or permitted to be given to the Holder may be
given by certified mail or delivered to the Holder at his or its
address as shown on the warrant register.
(b) Subject to compliance with applicable federal and state
securities laws, this Warrant may be transferred by the Holder with
respect to any or all of the Warrant Shares purchasable hereunder.
Upon surrender of this Warrant to the Company, together with the
assignment hereof (in form substantially similar to Addendum B annexed
hereto) properly endorsed for transfer of this Warrant as an entirety
by the Holder, the Company shall issue a new warrant of the same
denomination to the assignee. Upon surrender of this Warrant to the
Company, together with the assignment hereof properly endorsed by the
Holder for transfer with respect to a portion of the Warrant Shares
purchasable hereunder, the Company shall issue a new warrant to the
assignee, in such denomination as shall be requested by the Holder
hereof, and shall issue to such Holder a new warrant covering the
number of shares in respect of which this Warrant shall not have been
transferred.
(c) In case this Warrant shall be mutilated, lost, stolen or
destroyed, the Company shall issue a new warrant of like tenor and
denomination and deliver the same (i) in exchange and substitution for
and upon surrender and cancellation of any mutilated Warrant, or (ii)
in lieu of any Warrant lost, stolen or destroyed, upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft or
destruction of such Warrant (including a reasonably detailed affidavit
with respect to the circumstances of any loss, theft or destruction)
and of indemnity reasonably satisfactory to the Company.
-5-
14. No Impairment. The Company will not, by amendment of its Charter
or by-laws or through any reclassification, capital reorganization,
consolidation, merger, sale or conveyance of assets, dissolution,
liquidation, 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 Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the
rights of the Holder.
15. Governing Law. The provisions and terms of this Warrant shall be
governed by and construed in accordance with the internal laws of
State of Texas, without giving effect to principles of conflicts law.
16. Successors and Assigns. This Warrant shall be binding upon the
Company's successors and assigns and shall inure to the benefit of
each of the Holder's successors, legal representatives and permitted
assigns.
[Remainder of Page Intentionally Left Blank]
-6-
IN WITNESS WHEREOF, the Company has caused this Restated Warrant
to be executed as an instrument under seal by its duly authorized
officer as of the date first above written, but to be deemed to have
an Issuance Date of April 1, 2002.
AXTIVE CORPORATION
By: /s/ XXXXXX X. XXXXXXX XX
-------------------------------------
Xxxxxx X. Xxxxxxx XX
President and Chief Executive Officer
Attest:
/s/ XXXXX X. XXXXXXX
------------------------------
Xxxxx X. Xxxxxxx, Secretary
-7-
ADDENDUM A
(Form of Subscription)
Date:___________
The undersigned hereby subscribes for:
_______ shares of Common Stock covered by that certain Warrant issued
by Axtive Corporation, dated _____________, to the undersigned.
The certificate(s) for such shares shall be issued in the name of the
undersigned or as otherwise indicated below:
Signature
_______________________
Name for Registration
Mailing Address
________________________
________________________
________________________
ADDENDUM B
(Form of Assignment)
For value received _____________________________ hereby sells,
assigns and transfers unto ________________________________________
___________________________________________________________________
(Please print or typewrite name and address of Assignee)
the within Warrant, and does hereby irrevocably constitute and appoint
__________________________ its attorney to transfer the within Warrant
on the books of the within named Company with full power of
substitution in the premises.
Dated: _______________
In the Presence of: ________________________
