EXHIBIT 4(ac)
WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of September 18, 1998, between DIGITAL LAVA
INC., a Delaware corporation (the "Company"), and United Resources Partners (the
"Holder").
W I T N E S S E T H:
1. Issue. The Company shall issue to each Holder a certificate (the
"Warrant Certificate") dated as of the date hereof providing each such Holder
with the right to purchase, at any time, from September 18, 1998, until 5:30
p.m., New York time, on September 17, 2008, 200,000 Common Shares (the "Warrant
Shares") (subject to adjustment as provided in Section 9 hereof), at an exercise
price (subject to adjustment as provided in Section 9 hereof) of $0.45 per
Common Share.
2. Warrant Certificate. The Warrant Certificate to be delivered pursuant to
this Agreement shall be in the form set forth in Exhibit X, attached hereto and
made a part hereof, with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this Agreement.
3. Exercisability of Warrants. The Warrants shall be exercisable at any
time from September 18, 1998, until 5:30 p.m., New York time, on September 17,
2008.
4. Procedure for Exercise of Warrants.
4.1 Cash Exercise. The Warrants are exercisable at an aggregate initial
exercise price per Warrant Share set forth in Section 7 hereof payable by
certified check or official bank check in New York Clearing House funds. Upon
surrender of a Warrant Certificate with the annexed Form of Election to Purchase
duly executed, together with payment of the Exercise Price (as hereinafter
defined) for the Warrant Shares purchased, at the Company's principal offices in
Los Angeles, California (presently located at 00000 Xxxxxxxx Xxxxxxxxx, Xxxxx
0000, Xxx Xxxxxxx, XX 90024) the registered holder of a Warrant Certificate
(individually a "Holder" and sometimes collectively the "Holders") shall be
entitled to receive a certificate for the Warrant Shares so purchased. The
purchase rights represented by the Warrant Certificate are exercisable at the
option of the Holder thereof, in whole or in part (but not as to fractional
Common Shares underlying the Warrants). In the case of the purchase of less than
all the Warrant Shares purchasable under the 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 Warrant Shares purchasable thereunder.
4.2 Cashless Exercise. In addition to the exercise of all or a portion of
the Warrants
7
by the payment of the Exercise Price in cash or check as set forth in Section
4.1 above, and in lieu of any such payment, the Holder has the right to exercise
the Warrants, in full or in part, by surrendering the Warrant Certificate with
the annexed Form of Election to Purchase duly executed, in exchange for the
number of Warrant Shares equal to the product of (x) the number of Warrant
Shares as to which the Warrants are being exercised multiplied by (y) a
fraction, the numerator of which is the Current Market Price of the Common
Shares (as defined below) less the Exercise Price then in effect and the
denominator of which is the Current Market Price.
4.3 Current Market Price. The term "Current Market Price" shall be deemed
to be the last reported sale price, or, in case no reported sale takes place on
such day, the average of the last reported sales price for the last three (3)
trading days, in either case as officially reported by the principal securities
exchange on which the Common Shares are listed or admitted to trading, or if the
Common Shares are not listed or admitted to trading on any national securities
exchange or quotation by NASDAQ-NMS, the average closing bid price as reported
through NASDAQ (or any similar organization if NASDAQ is no longer reporting
such bid) or, if the Common Shares are not so listed, admitted or quoted, as
determined in good faith by the Board of Directors of the Company based on the
best information available to it.
5. Issuance of Certificate. Upon the exercise of the Warrants, the issuance
of a certificate for Warrant Shares (or Other Securities) shall be made
forthwith (and in any event within five (5) business days thereafter) without
charge to the Holder thereof including, without limitation, any tax which may be
payable in respect of the issuance thereof, and such certificate shall (subject
to the provisions of Sections 6 and 8 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 certificate in
a name other than that of the Holder and the Company shall not be required to
issue or deliver such certificate 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.
The Warrant Certificate and the certificate representing the Warrant Shares
(or Other Securities) shall be executed on behalf of the Company by the manual
or facsimile signature of the then present Chairman or Vice Chairman of the
Board of Directors or President or any Vice President of the Company under its
corporate seal reproduced thereon, attested to by the manual or facsimile
signature of the then present Secretary or any Assistant Secretary of the
Company. The Warrant Certificate shall be dated the date of execution by the
Company upon initial issuance, division, exchange, substitution or transfer.
5.1 Ownership of Common Shares. Upon the Holder exercising the Warrant, it
shall be deemed to be the owner of the Warrant Shares upon delivery to the
Company, regardless of when the certificates representing the Warrant Shares are
issued.
8
6. Transfer of Warrants. The Holder of the Warrant Certificate, by its
acceptance thereof, covenants and agrees that the Warrants are being acquired as
an investment and not with a view to the distribution thereof. The Warrants may
be sold, transferred, assigned, hypothecated or otherwise disposed of, in whole
or in part, without restriction, subject to compliance with applicable
securities laws.
7. Exercise Price.
7.1 Initial and Adjusted Exercise Price. Except as otherwise provided in
Section 9 hereof, the initial exercise price of each Warrant shall be the price
set forth in Section 1 hereof per Warrant Shares issued thereunder. 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 Section 9 hereof.
7.2 Exercise Price. The term "Exercise Price" herein shall mean the initial
exercise price or the adjusted exercise price, depending upon the context.
8. Registration Under the Securities Act of 1933. Subject to the
Registration Rights Agreement between the Company and the Holders dated as of
the date hereof, the Warrants, the Warrant Shares and any of the Other
Securities issuable upon exercise of the Warrants have not been registered under
the Securities Act of 1933, as amended (the "Act"). Upon exercise, in whole or
in part, of the Warrants, a certificate representing the Warrant Shares
underlying the Warrants, and any of the Other Securities issuable upon exercise
of the Warrants (collectively, the "Warrant Securities") shall bear the
following legend unless such Warrant Shares previously have been registered
under the Act in accordance with the terms hereof:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), AND MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER
THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION
OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL
BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION
FROM REGISTRATION UNDER THE ACT IS AVAILABLE.
9. Adjustments to Exercise Price and Number of Securities. The Exercise
Price and, in some cases, the number of Warrant Shares purchasable upon the
exercise of the Warrants, shall be subject to adjustment from time to time upon
the occurrence of certain events described in this Section 9.
9
9.1 Subdivision or Combination of Common Shares and Common Share Dividend.
In case the Company shall at any time subdivide its outstanding Common Shares
into a greater number of Common Shares or declare a dividend upon its Common
Shares payable solely in Common Shares, the Exercise Price in effect immediately
prior to such subdivision or declaration shall be proportionately reduced, and
the number of Warrant Shares issuable upon exercise of the Warrants shall be
proportionately increased. Conversely, in case the outstanding Common Shares of
the Company shall be combined into a smaller number of Common Shares, the
Exercise Price in effect immediately prior to such combination shall be
proportionately increased, and the number of Warrant Shares issuable upon
exercise of the Warrants shall be proportionately reduced.
9.2 Dilutive Issuances. In the event that the Company shall sell or issue
at any time after the date of this Warrant and prior to its termination, Shares
(other than Excluded Shares, as defined in Section 9.2.5), or any other equity
securities or rights (including Company treasury stock) which are exercisable,
exchangeable or convertible into Shares, at a consideration per Share less than
the Exercise Price, then the Exercise Price shall be adjusted to a new Exercise
Price (calculated to the nearest cent) determined by dividing
(a) an amount equal to (i) the total number of Shares Outstanding (as
defined below and subject to adjustment in the manner set forth in Section
9.1) on the date of issuance of this Warrant multiplied by the Exercise
Price in effect on the date of issuance of this Warrant (subject, however,
to adjustment in the manner set forth in Section 9.1), plus (ii) the
aggregate of the amount of all consideration, if any, received by the
Company for the issuance or sale of Shares since the date of issuance of
this Warrant, by
(b) the total number of Shares Outstanding immediately after such
issuance or sale.
In no event shall any such adjustment be made pursuant to this Section 9.2 if it
would increase the Exercise Price in effect immediately prior to such
adjustment, except as provided in Sections 9.2.3 and 9.2.4. Upon each adjustment
of the Exercise Price pursuant to this Section 9.2, the holder of this Warrant
shall thereafter be entitled to purchase, at the Exercise Price resulting from
such adjustment, the number of Warrant Shares obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares purchasable pursuant hereto immediately prior to such adjustment,
and dividing the product thereof by the Exercise Price resulting from such
adjustment.
9.2.1 Definitions. For purposes of this Section 9.2, the following
definitions shall apply:
(a) "Convertible Securities" shall mean any indebtedness or securities
convertible into or exchangeable for Shares.
10
(b) "Options" shall mean any rights, warrants or options to subscribe
for or purchase Shares or Convertible Securities other than rights,
warrants or options to purchase Excluded Securities (as defined in Section
9.2.5).
(c) "Shares Outstanding" shall mean the aggregate of all Shares
outstanding and all Shares issuable upon exercise of all outstanding
Options and conversion of all outstanding Convertible Securities.
9.2.2 For the purposes of this Section 9.2, the following provisions shall
also be applicable:
9.2.2.1 Cash Consideration. In case of the issuance or sale of additional
Shares for cash, the consideration received by the Company therefor shall be
deemed to be the amount of cash received by the Company for such Shares (or, if
such Shares are offered by the Company for subscription, the subscription price,
or, if such Shares are sold to underwriters or dealers for public offering
without a subscription offering, the public offering price), without deducting
therefrom any compensation or discount paid or allowed to underwriters or
dealers or others performing similar services or for any expenses incurred in
connection therewith.
9.2.2.2 Non-Cash Consideration. In case of the issuance (otherwise
than upon conversion or exchange of Convertible Securities) or sale of
additional Shares, Options or Convertible Securities for a consideration
other than cash or a consideration a part of which shall be other than
cash, the fair value of such consideration as determined by the Board of
Directors (if any, otherwise by the Managers) of the Company in the good
faith exercise of its business judgment (in a duly authorized resolution
certified by the secretary of the Company), irrespective of the accounting
treatment thereof, shall be deemed to be the value, for purposes of this
Section 9, of the consideration other than cash received by the Company for
such securities. If the Holder does not agree with the valuation, he may
seek the opinion of a mutually acceptable appraiser. This cost shall be
borne by the Company, unless the value determined by the appraiser is
within 5% of the value determined by the Board.
9.2.2.3 Options and Convertible Securities. In case the Company shall
in any manner issue or grant any Options or any Convertible Securities, the
total maximum number of Shares of issuable upon the exercise of such
Options or upon conversion or exchange of the total maximum amount of such
Convertible Securities at the time such Convertible Securities first become
convertible or exchangeable shall (as of the date of issue or grant of such
Options or, in the case of the issue or sale of Convertible Securities
other than where the same are issuable upon the exercise of Options, as of
the date of such issue or sale) be deemed to be issued and to be
outstanding for the purpose of this Section 9.2 and to have been issued for
the sum of the amount (if any) paid for such
11
Options or Convertible Securities and the amount (if any) payable upon the
exercise of such Options or upon conversion or exchange of such Convertible
Securities at the time such Convertible Securities first become convertible
or exchangeable; provided that, subject to the provisions of Section 9.2.3,
no further adjustment of the Exercise Price shall be made upon the actual
issuance of any such Shares or Convertible Securities or upon the
conversion or exchange of any such Convertible Securities.
9.2.3 Change in Option Price or Conversion Rate. In the event that the
purchase price provided for in any Option referred to in subsection 9.2.2.3, or
the rate at which any Convertible Securities referred to in subsection 9.2.2.3
are convertible into or exchangeable for Shares shall change at any time (other
than under or by reason of provisions designed to protect against dilution),
then, for purposes of any adjustment required by Section 9.2, the Exercise Price
in effect at the time of such event shall forthwith be readjusted to the
Exercise Price that would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed purchase
price, additional consideration or conversion rate, as the case may be, at the
time initially granted, issued or sold, provided that if such readjustment is an
increase in the Exercise Price, such readjustment shall not exceed the amount
(as adjusted by Sections 9.1 and 9.2) by which the Exercise Price was decreased
pursuant to Section 9.2 upon the issuance of the Option or Convertible Security.
In the event that the purchase price provided for in any such Option referred to
in subsection 9.2.2.3, or the additional consideration (if any) payable upon the
conversion or exchange of any Convertible Securities referred to in subsection
9.2.2.3, or the rate at which any Convertible Securities referred to in
subsection 9.2.2.3 are convertible into or exchangeable for Shares, shall be
reduced at any time under or by reason of provisions with respect thereto
designed to protect against dilution, then in case of the delivery of Shares
upon the exercise of any such Option or upon conversion or exchange of any such
Convertible Security; the Exercise Price then in effect hereunder shall, upon
issuance of such Shares, be adjusted to such amount as would have obtained had
such Option or Convertible Security never been issued and had adjustments been
made only upon the issuance of the Shares delivered as aforesaid and for the
consideration actually received for such Option or Convertible Security and the
Shares, provided that if such readjustment is an increase in the Exercise Price,
such readjustment shall not exceed the amount (as adjusted by Sections 9.1 and
9.2) by which the Exercise Price was decreased pursuant to Section 9.2 upon the
issuance of the Option or Convertible Security.
9.2.4 Termination Of Option or Conversion Rights. In the event of the
termination or expiration of any right to purchase Shares under any Option
granted after the date of this Warrant or of any right to convert or exchange
Convertible Securities issued after the date of this Warrant, the Exercise Price
shall, upon such termination, be readjusted to the Exercise Price that would
have been in effect at the time of such expiration or termination had such
Option or Convertible Security, to the extent outstanding immediately prior to
such expiration or termination, never been issued, and the Shares issuable
thereunder shall no longer be deemed to be Shares Outstanding, provided that if
such readjustment is an increase in the Exercise Price,
12
such readjustment shall not exceed the amount (as adjusted by Sections 9.1 and
9.2) by which the Exercise Price was decreased pursuant to Section 9.2 upon the
issuance of the Option or Convertible Security. The termination or expiration of
any right to purchase Shares under any Option granted prior to the date of this
Warrant or of any right to convert or exchange Convertible Securities issued
prior to the date of this Warrant shall not trigger any adjustment to the
Exercise Price, but the Shares issuable under such Options or Convertible
Securities shall no longer be counted in determining the number of Shares
Outstanding on the date of issuance of this Warrant for purposes of subsequent
calculations under this Section 9.2.
9.2.5 Excluded Shares. Notwithstanding anything herein to the contrary, the
Exercise Price shall not be adjusted pursuant to this Section 9.2 by virtue of
the issuance and/or sale of Excluded Shares, which shall mean the following: (a)
Shares issuable upon the exercise of the Warrants; (b) Shares, Options or
Convertible Securities to be issued and/or sold to employees, advisors
(including, without limitation, financial, technical and legal advisers),
directors, or officers of, or consultants to, the Company or any of its
subsidiaries pursuant to a share grant, share option plan, share purchase plan,
pension or profit sharing plan or other share agreement or arrangement existing
as of the date hereof or approved by the Company's Board of Directors (if any,
otherwise by the Managers); (c) the issuance of Shares, Options and/or
Convertible Securities pursuant to Options and Convertible Securities
outstanding as of the date of this Warrant; (d) the issuance of Shares, Options
or Convertible Securities as a share dividend or upon any subdivision or
combination of Shares or Convertible Securities; (e) the issuance of Shares,
Options or Convertible Securities in connection with strategic partnerships or
other business and/or product consolidations or joint ventures and (f) the
issuance of Shares, Options or Convertible Securities by the Company in
connection with a contemplated equity financing currently in progress as of the
date hereof. For all purposes of this Section 9.2, all Shares of Excluded Shares
shall be deemed to have been issued for an amount of consideration per Share
equal to the initial Exercise Price (subject to adjustment in the manner set
forth in Section 9.1). In addition, if the amount of any adjustment pursuant to
this Section 9 shall be less than two cents (2(cent)) per Warrant Share no
adjustment to the Exercise Price or to the number of Warrant Shares issuable
upon the exercise of the Warrants shall be made; provided, however, that in such
case any adjustment that would otherwise be required then to be made shall be
carried forward and shall be made at the time of and together with the next
subsequent adjustment which, together with any adjustment so carried forward,
shall amount to at least two cents (2(cent)) per Warrant Share.
9.3 Notice of Adjustment. Promptly after adjustment of the Exercise Price
or any increase or decrease in the number of Warrant Shares purchasable upon the
exercise of this Warrant, the Company shall give written notice thereof, by
first class mail, postage prepaid, addressed to the registered holder of this
Warrant at the address of such holder as shown on the books of the Company. The
notice shall be signed by the Company's chief financial officer and shall state
(i) the effective date of the adjustment and the Exercise Price resulting from
such adjustment and (ii) the increase or decrease, if any, in the number of
Common Shares purchasable at such price upon the exercise of this Warrant,
setting forth in reasonable detail the method of calculation and the
13
facts upon which such calculation is based.
9.4 Other Notices. If at any time:
(a) the Company shall declare any cash dividend upon its Common
Shares;
(b) the Company shall declare any dividend upon its Common Shares
payable in securities (other than a dividend payable solely in Common
Shares) or make any special dividend or other distribution to the holders
of its Common Shares;
(c) there shall be any consolidation or merger of the Company with
another corporation, or a sale of all or substantially all of the Company's
assets to another corporation; or
(d) there shall be a voluntary or involuntary dissolution, liquidation
or winding- up of the Company;
then, in any one or more of said cases, the Company shall give, by certified or
registered mail, postage prepaid, addressed to the registered holder of this
Warrant at the address of such holder as shown on the books of the Company, (i)
at least 15 days' prior written notice of the date on which the books of the
Company shall close or a record shall be taken for such dividend, distribution
or subscription rights or for determining rights to vote in respect of any such
dissolution, liquidation or winding-up; (ii) at least 10 days' prior written
notice of the date on which the books of the Company shall close or a record
shall be taken for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger or sale, and (iii) in
the case of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up, at least 15 days' written notice
of the date when the same shall take place. Any notice given in accordance with
clause (i) above shall also specify, in the case of any such dividend,
distribution or option rights, the date on which the holders of Common Shares
shall be entitled thereto. Any notice given in accordance with clause (iii)
above shall also specify the date on which the holders of Common Shares shall be
entitled to exchange their Common Shares for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up, as the case may be. If the Holder
of the Warrant does not exercise this Warrant prior to the occurrence of an
event described above, except as provided in Sections 9.1 and 9.5, the Holder
shall not be entitled to receive the benefits accruing to existing holders of
the Common Shares in such event.
9.5 Changes in Common Shares. In case at any time the Company shall be a
party to any transaction (including, without limitation, a merger,
consolidation, sale of all or substantially all of the Company's assets or
recapitalization of the Common Shares) in which the previously outstanding
Common Shares shall be changed into or exchanged for different securities of the
Company or common stock or other securities of another corporation or interests
in a non-corporate entity or other property (including cash) or any combination
of any of the foregoing (each such transaction being herein called the
"Transaction" and the date of consummation of the Transaction being herein
called the "Consummation Date"), then, as a condition of the
14
consummation of the Transaction, lawful and adequate provisions shall be made so
that each Holder, upon the exercise hereof at any time on or after the
Consummation Date, shall be entitled to receive, and this Warrant shall
thereafter represent the right to receive, in lieu of the Common Shares issuable
upon such exercise prior to the Consummation Date, the highest amount of
securities or other property to which such Holder would actually have been
entitled as a holder of an Common Shares upon the consummation of the
Transaction if such Holder had exercised such Warrant immediately prior thereto.
The provisions of this Section 9.5 shall similarly apply to successive
Transactions.
10. Exchange and Replacement of Warrant Certificate. The Warrant
Certificate is exchangeable without expense, upon the surrender thereof 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 Warrant Shares in such denominations as
shall be designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of the 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.
11. Elimination of Fractional Interests. The Company shall not be required
to issue certificates representing fractions of Common Shares upon the exercise
of the Warrants, nor shall it 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 Common Shares or Other Securities.
12. Reservation of Securities. The Company shall at all times reserve and
keep available out of its authorized Common Shares, solely for the purpose of
issuance upon the exercise of the Warrants, such number of Common Shares or
Other Securities 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 therefor, all Common Shares or Other Securities issuable upon
such exercise shall be duly and validly issued, fully paid, non-assessable and
not subject to the preemptive rights of any holder of Common Shares.
13. Notices to Warrant Holder. Except as otherwise provided in Section 9.4,
nothing contained in this Agreement shall be construed as conferring upon the
Holder by virtue of his holding the Warrant the right to vote or to consent or
to receive notice as a holder of Common Shares in respect of any meetings of
such holders for the election of directors or any other matter, or as having any
rights whatsoever as such a holder of the Company.
15
14. Notices.
All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed to have been duly made and sent when delivered,
or mailed by registered or certified mail, return receipt requested:
(a) If to the 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 4 hereof or
to such other address as the Company may designate by notice to the Holder.
15. Supplements and Amendments. The Company and Holder may from time to
time supplement or amend this Agreement 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 Holder
may deem necessary or desirable.
16. Successors. All the covenants and provisions of this Agreement shall be
binding upon and inure to the benefit of the Company, the Holder and their
respective successors and assigns hereunder.
17. Termination. This Agreement shall terminate at the close of business on
the tenth anniversary of the issuance of the Warrants.
18. Governing Law. This Agreement and the Warrant Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
New York and for all purposes shall be construed in accordance with the laws of
the State of New York without giving effect to the rules of the State of New
York governing the conflicts of laws. Any action or proceeding relating to this
Agreement and the Warrant Certificate may be brought in the courts of New York
sitting in New York County, or in the United States courts located in New York
County, New York, and each of the parties irrevocably consents to the
jurisdiction of such courts in any such action or proceeding.
19. Entire Agreement; Modification. This Agreement contains the entire
understanding between the parties hereto with respect to the subject matter
hereof and may not be modified or amended except by a writing duly signed by the
party against whom enforcement of the modification or amendment is sought.
20. Severability. If any provision of this Agreement shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Agreement.
21. Captions. The caption headings of the Sections of this Agreement are
for convenience of reference only and are not intended, nor should they be
construed as, a part of this
16
Agreement and shall be given no substantive effect.
22. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and Holder
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 Holder.
23. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement
to be duly executed, as of the day and year first above written.
Very truly yours,
DIGITAL LAVA INC.
By: /s/ Xxxxx Xxxxx
---------------------------
Authorized Officer
ACCEPTED AND AGREED TO:
United Resources Partners
By: /s/ Xxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxx X. Xxxxx
Title: President
Address: 00 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Social Security/Tax I.D. No.:
17
EXHIBIT X
TO
WARRANT AGREEMENT
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT") (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY
SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii)
AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO
COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS
AVAILABLE.
EXERCISABLE FROM SEPTEMBER 18, 1998
UNTIL
5:30 P.M., NEW YORK TIME, SEPTEMBER 17, 2008
No. W-LAVA-98-[_____] [__________] Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that ________________________ or his/her
registered assigns ("Holder"), is the registered holder of [________________]
Warrants to purchase initially at any time from September 18, 1998, until 5:30
p.m. New York time on September 17, 2008 ("Expiration Date"), up to
[______________] fully-paid and non-assessable shares of common stock, par value
$.0001 per share ("Common Shares") of DIGITAL LAVA INC., a Delaware corporation
(the "Company"), at an initial exercise price, subject to adjustment in certain
events (the "Exercise Price"), equal to $0.8073 per Common Share, upon surrender
of this Warrant Certificate and payment of the initial exercise price at an
office or agency of the Company, but subject to the conditions set forth herein
and in the Warrant Agreement dated as of the date hereof between the Company and
Holder (the "Warrant Agreement"). Payment of the Exercise Price shall be made by
certified check or official bank check in New York Clearing House funds payable
to the order of the Company, unless exercise is made pursuant to Section 4.2 of
the Warrant Agreement.
No Warrant may be exercised after 5:30 p.m., New York 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
18
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Company and the Holder (the word
"Holder" meaning the registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price and the type 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 Certificate
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 with such transfer.
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.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed.
Dated as of September 18, 1998
DIGITAL LAVA INC.
By: ____________________________
Authorized Officer
19
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase _________________- Common
Shares and herewith tenders in payment for such securities a certified check or
official bank check payable in New York Clearing House Funds to the order of
DIGITAL LAVA INC. in the amount of $_______________, all in accordance with the
terms of Section 4 of the Warrant Agreement dated as of September 18, 1998,
between DIGITAL LAVA INC. and the undersigned (or its assignor). The undersigned
requests that a certificate for such securities be registered in the name of
_________________ whose address is __________________________ and that such
Certificate be delivered to ______________________ whose address is
______________________.
Dated:
Signature ________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant Certificate.)
___________________________________
(Insert Social Security or Other
Identifying Number of Holder)
20
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED ___________________ hereby
sells, assigns and transfers unto
________________________________________________________________________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint Attorney, to transfer the
within Warrant Certificate on the books of the within-named Company, with full
power of substitution.
Dated: _______________________ Signature ________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant Certificate.)
___________________________________
(Insert Social Security or Other
Identifying Number of Holder)
21
