THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. SUCH SECURITIES AND ANY SECURITIES OR SHARES ISSUED HEREUNDER MAY
NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE
SECURITIES AND RESTRICTING THEIR TRANSFER OR SALE MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD HEREOF TO THE SECRETARY OF THE
COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES.
March 15, 2000 (as amended and restated Warrant to Purchase Shares
on November 18, 2000) of Common Stock
WARRANT TO PURCHASE COMMON STOCK
OF
XXXXXXXXXXX.XXX, INC.
In consideration of the sum of ten dollars ($10.00) previously paid to
XxxxxxxxXxx.xxx, Inc., a Nevada corporation (the "Company"), the receipt and
sufficiency of which are hereby acknowledged, this certifies that, for value
received, America Online, Inc. ("AOL") or its registered assigns ("Holder") is
entitled, subject to the terms and conditions set forth below, including, but
not limited to the vesting and exercise provisions of Section 1, to purchase
from the Company, in whole or in part that number of fully paid and
nonassessable shares of the common stock, par value $0.01 per share (the "Common
Stock"), of the Company (the "Warrant Shares") as set forth in Section 2 below
and at a purchase price per share (the "Exercise Price") as set forth in Section
2 below.
This Warrant is issued in connection with that certain Interactive
Marketing Agreement dated as of March 15, 2000 between the Company and the
initial Holder (the "Interactive Marketing Agreement"), and amends and restates
in its entirety that certain Warrant issued by the Company to AOL on March 15,
2000 (the "Initial Warrant"). Accordingly, the Initial Warrant is void, and of
no further force and effect, and simultaneous with the issuance of this Warrant,
AOL shall surrender and deliver the Initial Warrant to the Company. All terms
with initial capital letters used in this Warrant that are not defined in this
Warrant but are defined in the Interactive Marketing Agreement shall have the
same meaning when used in this Warrant, unless the context otherwise clearly
requires. The term "Warrant" as used herein shall mean this Warrant, and any
warrants delivered in substitution or exchange therefor as provided herein.
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1. WARRANT TERM, VESTING AND EXERCISE.
(a) Subject to the terms and conditions set forth in this Warrant
(including the vesting requirements set forth in subsection 1(b)), this Warrant
shall be exercisable during the period commencing on March 15, 2000 and ending
at 5:00 p.m., Pacific standard time, on March 15, 2003 (the "Exercise Period"),
in accordance with the provisions of this Section 1, and upon the expiration of
the Exercise Period this Warrant thereafter shall be void.
(b) This Warrant shall become vested during the Exercise Period in
accordance with the provisions of this Section 1(b). The Company shall determine
all amounts under this Section 1(b) reasonably and in good faith.
(i) This Warrant shall vest immediately on March 15, 2000 as to one
million (1,000,000) Warrant Shares (which number gives effect to the
Company's 2-1 stock split on October 12, 2000).
(ii) This Warrant shall vest as to three million (3,000,000) Warrant
Shares (which number gives effect to the Company's 2-1 stock split on
October 12, 2000) as follows:
(A) For each one dollar ($1.00) of Recognizable Revenue (as defined
below) received by the Company during any calendar quarter , a number of
Warrant Shares shall vest which have a value of three dollars ($3.00), as
determined in accordance with the formula set forth below in this
subsection 1(b)(ii)(A); provided, however, that no more than $30,000,000
worth of Warrant Shares shall vest under this subsection 1(b)(ii)(A) in
the quarter ended December 31, 2000, no more than $45,000,000 worth of
Warrant Shares shall vest under this subsection 1(b)(ii)(A) in the quarter
ended March 31, 2001, and no more than $60,000,000 worth of Warrant Shares
shall vest under this subsection 1(b)(ii)(A) in the quarter ended June 30,
2001 (for purposes of the foregoing proviso, the "worth" of a Warrant
Share shall be equal to the average closing price of the Company's Common
Stock on The Nasdaq National Market (or other nationally recognized market
on which the Company's Common Stock trades) on all of the trading days
during the first 15 calendar days of the calendar quarter immediately
subsequent to the calendar quarter for which the calculation is being made
(or, if the Company's Common Stock is not traded on a nationally
recognized market, the fair market value of the Common Stock as determined
by an independent third party appraiser acceptable to both the Company and
AOL), less $0.01). For purposes of this Section 1(b)(ii)(A), the term
"Recognizable Revenue" shall mean (i) any revenue received by the Company
from third parties referred to the Company by AOL from sales of
marketplace licenses or related services by the Company to such third
parties, which referrals shall be (A) as evidenced by lead forms submitted
by AOL to the Company or (B) otherwise deemed a referral under Section
2.1.2 of the Interactive Marketing Agreement , and (ii) revenue received
by the Company from third parties purchasing advertising sponsorship or
other similar types of inventory under that certain Advertising Services
Agreement, dated December 12, 2000; provided that such revenue received by
the Company under the foregoing items (i) and (ii) shall be revenue which
the
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Company determines will be recognized as revenue in accordance with
generally accepted accounting principles during a particular quarter, and
shall be determined by the Company in good faith on the last business day
of each such calendar quarter. The calculation of the Warrant Shares that
vest on satisfaction of such performance criteria shall be made on a
calendar quarter basis, and shall be made on the first trading day
following the fifteenth (15th) calendar day of the calendar quarter
immediately subsequent to the calendar quarter for which the calculation
is being made .
Number of Warrant Shares vested = (A x 3)/B, where
A = Recognizable Revenue received by the Company for the calendar quarter.
B = the average closing price of the Company's Common Stock on The Nasdaq
National Market (or other nationally recognized market on which the
Company's Common Stock trades) on all of the trading days during the first
15 calendar days of the calendar quarter immediately subsequent to the
calendar quarter for which the calculation is being made (or, if the
Company's Common Stock is not traded on a nationally recognized market,
the fair market value of the Common Stock as determined by an independent
third party appraiser acceptable to both the Company and AOL), less $0.01.
(B) In addition to the vesting described in subsection 1(b)(ii)
above (and after the calculations described in subsection 1(b)(ii)(A)
above have been performed for each calendar quarter), one Warrant Share
shall vest for each eighty dollars ($80.00) of revenue received by the
Company in connection with the Interactive Marketing Agreement, including
without limitation the Transaction Revenue Run Rate, Advertising Revenue
Run Rate, Third Party Transaction Revenue Run Rate and Vertical Entity
Transaction Revenue Run Rate (collectively, such revenues are referred to
herein as "Total Revenue Run Rate") allocable to the Company under the
Interactive Marketing Agreement; provided, however, (A) no Warrant Shares
shall vest under this subsection 1(b)(ii) until a minimum of twenty-five
million dollars ($25,000,000) in Total Revenue Run Rate is allocable to
the Company under the Interactive Marketing Agreement in the subject
calendar quarter; provided, that once twenty-five million dollars
($25,000,000) in Total Revenue Run Rate is allocable to the Company in the
subject calendar quarter, Warrant Shares shall vest with respect to all of
the Total Revenue Run Rate without regard to the twenty-five million
dollars ($25,000,000) threshold, (B) no Transaction Revenue Run Rate
resulting from corporate procurement by AOL or its affiliates shall be
counted in calculating Transaction Revenue Run Rate, (C) an attrition rate
of one percent (1%) per month or twelve percent (12%) annually shall be
assumed in calculating Transaction Revenue Run Rate, and (D) the maximum
amount of Advertising Revenue Run Rate that will count in calculating the
Advertising Revenue Run Rate that is allocable to the Company is an amount
equal to twenty-five per cent (25%) of the aggregate amount of Transaction
Revenue Run Rate and Advertising Revenue Run Rate allocable to the
Company. The calculation of the Warrant Shares that vest on satisfaction
of such performance criteria shall be made on a calendar quarterly
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basis, and shall be made on the first trading day following the fifteenth
(15th) calendar day of the calendar quarter immediately subsequent to the
calendar quarter for which the calculation is being made.
(c) This Warrant shall first become exercisable with respect to the vested
Warrant Shares after the execution by the Company and AOL of the Interactive
Marketing Agreement (which the parties acknowledge occurred on March 15, 2000).
2. NUMBER OF SHARES AND EXERCISE PRICE.
(a) This Warrant shall be exercisable for up to four million (4,000,000)
shares of common stock of the Company (which number gives effect to the
Company's 2-1 stock split on October 12, 2000).
(b) The exercise price (the "Exercise Price") for the Warrant Shares shall
be as follows:
(i) The Warrant Shares described in Section 1(b)(i) above shall be
exercisable at a price per share of $63.255 (which price gives effect to
the Company's 2-1 stock split on October 12, 2000).
(ii) THE WARRANT SHARES DESCRIBED IN SECTION 1(B)(II) ABOVE SHALL BE
EXERCISABLE AT A PRICE PER SHARE OF $0.01 (WHICH PRICE GIVES EFFECT TO THE
COMPANY'S 2-1 STOCK SPLIT ON OCTOBER 12, 2000).
(c) The Exercise Price shall be subject to adjustment from time to time as
follows:
(i) If, at any time during the Exercise Period, the number of shares
of Common Stock outstanding is increased by a stock dividend payable in
shares of Common Stock or by a subdivision or split-up of shares of Common
Stock, then, following the record date fixed for the determination of
holders of Common Stock entitled to receive such stock dividend,
subdivision or split-up, the Exercise Price shall be appropriately
decreased and the number of shares of Common Stock issuable upon exercise
of this Warrant shall be appropriately increased, in each case in
proportion to such increase in outstanding shares.
(ii) If, at any time during the Exercise Period, the number of
shares of Common Stock outstanding is decreased by a combination of the
outstanding shares of Common Stock, then, following the record date for
such combination, the Exercise Price shall be appropriately increased and
the number of shares of Common Stock issuable upon exercise of this
Warrant shall be appropriately decreased, in each case, in proportion to
such decrease in outstanding shares.
(iii) In the event of any capital reorganization of the Company ,
any reclassification of the stock of the Company (other than a change in
par value or from par value to no par value or from no par value to par
value or as a result of a stock dividend or subdivision, split-up or
combination of shares), or any consolidation or merger of the Company
(other than a consolidation or merger in which the Company is the
continuing corporation and which does not result in any change in the
Common Stock), each Warrant Share shall after such reorganization,
reclassification, consolidation or merger be exercisable or exchangeable
into the kind and number of shares of stock or other securities or
property of the Company or of the corporation resulting from such
consolidation or surviving such merger to which the holder of the number
of shares of Common Stock deliverable (immediately prior to the time of
such reorganization, reclassification, consolidation or merger) upon
exercise or exchange of such Warrant Share would have been entitled upon
such reorganization, reclassification, consolidation or merger. The
provisions of this clause shall similarly apply to successive
reorganizations, reclassifications, consolidations or mergers.
(iv) All calculations under this Section 2 shall be made to the
nearest one tenth (1/10) of a cent or to the nearest one tenth (1/10) of a
share, as the case may be.
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(d) Whenever the Exercise Price shall be adjusted as provided in this
Section 2 the Company shall forthwith file, at the office of the Company or any
transfer agent designated by the Company for the Common Stock, a statement,
signed by its chief financial officer, showing in detail the facts requiring
such adjustment and the adjusted Exercise Price. The Company shall also cause a
copy of such statement to be sent by first-class certified mail, return receipt
requested, postage prepaid, to each holder of a Warrant at his or its address
appearing on the Company's records. Where appropriate, such copy may be given in
advance and may be included as part of a notice required to be mailed under the
provisions set forth immediately below.
(e) In the event the Company shall propose to take any action of the types
described in Sections 2(c)(i), 2(c)(ii) and 2(c)(iii) or Section 12, the Company
shall give notice to each holder of a Warrant in the manner set forth herein,
which notice shall specify the record date, if any, with respect to any such
action and the date on which such action is to take place. Such notice shall
also set forth such facts with respect thereto as shall be reasonably necessary
to indicate the effect of such action (to the extent such effect may be known at
the date of such notice) on the Exercise Price then in effect and the number,
kind or class of shares or other securities or property which shall be delivered
or purchasable upon the occurrence of such action or deliverable upon exercise
of this Warrant. In the case of any action which would require the fixing of a
record date, such notice shall be given at least 20 days prior to the date so
fixed, and in case of all other action, such notice shall be given at least 30
days prior to the taking of such proposed action. Failure to give such notice,
or any defect therein, shall not affect the legality or validity of any such
action.
(f) Upon each adjustment of the Exercise Price as provided in Section 2,
the holder hereof shall thereafter be entitled to subscribe for and purchase, at
the Exercise Price resulting from such adjustment, the number of Warrant Shares
equal to the product of (i) the number of Warrant Shares existing prior to such
adjustment and (ii) the quotient obtained by dividing (A) the Exercise Price
existing prior to such adjustment by (B) the new Exercise Price resulting from
such adjustment. No fractional shares of Common Stock shall be issued as a
result of any such adjustment, and any fractional shares resulting from the
computations pursuant to this paragraph shall be eliminated without
consideration.
3. WARRANT EXERCISE PROCEDURE; NET EXERCISE.
(a) This Warrant may be exercised by the Holder by the surrender of this
Warrant to the Company, with the Notice of Exercise annexed hereto duly
completed and executed on behalf of the Holder, at the office of the Company (or
such other office or agency of the Company as it may designate by notice in
writing to the Holder at the address of the Holder appearing on the books of the
Company) during the Exercise Period and: (x) the delivery of payment to the
Company, for the account of the Company, by cash, wire transfer of immediately
available funds to a bank account specified by the Company, or by certified or
bank cashier's check, of the Exercise Price for the number of Warrant Shares
specified in the Exercise Form in lawful money of the United States of America
or (y) pursuant to a net issuance election in accordance with Section 3(b)
hereof. The Company agrees that such Warrant Shares shall be deemed to be issued
to the Holder as the record holder of such Warrant Shares as of the close of
business on the date on which this Warrant shall have been surrendered and
payment made for the Warrant Shares as aforesaid. A stock certificate or
certificates for the Warrant Shares specified in the Exercise
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Form shall be delivered to the Holder as promptly as practicable, and in any
event within ten (10) days, thereafter. If this Warrant shall have been
exercised only in part, the Company shall, at the time of delivery of the stock
certificate or certificates, deliver to the Holder a new Warrant evidencing the
rights to purchase the remaining Warrant Shares, which new Warrant shall in all
other respects be identical with this Warrant. No adjustments shall be made on
Warrant Shares issuable on the exercise of this Warrant for any cash dividends
paid or payable to holders of record of common stock prior to the date as of
which the Holder shall be deemed to be the record holder of such Warrant Shares.
However, the number of Warrant Shares shall be adjusted to reflect any stock
dividend, stock split or other conversion of the number of shares of the Company
into a different number of shares, however denominated.
(b) In lieu of exercising this Warrant pursuant to Section 3(a), the
Holder may elect to receive, without the payment by the Holder of any additional
consideration, shares equal to the value of this Warrant or any portion hereof
by the surrender of this Warrant or such portion to the Company, with the Net
Issue Election Notice annexed hereto duly executed, at the office of the
Company. Thereupon, the Company shall issue to the Holder such number of fully
paid and nonassessable shares of Common Stock as is computed using the following
formula:
X = Y (A-B)
-------
A
where
X = the number of shares to be issued to the Holder pursuant to this
Section 3(b).
Y = the number of shares of Common Stock otherwise issuable under this
Warrant (as adjusted to the date of such calculation).
A = the closing stock price of one share of the Company's common stock
as reported by the Nasdaq National Market the business day
immediately prior to the Exercise Date (as defined below).
B = the Exercise Price in effect under this Warrant at the time the
net issue election is made pursuant to this Section 3(b).
This Warrant shall automatically be deemed to be exercised in full pursuant to
the provisions of this Section 3(b), without any further action on behalf of the
Holder, immediately prior to the time this Warrant would otherwise expire
pursuant to the terms of this Warrant.
(c) This Warrant shall be deemed to have been exercised immediately prior
to the close of business on the date of its surrender for exercise as provided
above (the "Exercise Date"), and the person entitled to receive the shares of
common stock issuable upon such exercise shall be treated for all purposes as
the holder of record of such shares as of the close of business on such date. As
promptly as practicable on or after such date and in any event within three (3)
business days thereafter, the Company at its expense shall issue and deliver to
the person or persons entitled to receive the same a certificate or certificates
for the number of shares issuable upon such exercise. In the event that this
Warrant is exercised in part, the Company at its expense will
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execute and deliver a new Warrant of like tenor exercisable for the number of
shares for which this Warrant may then be exercised.
4. NO FRACTIONAL SHARES OR SCRIP.
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of this warrant. In lieu of any fractional share to
which the holder would otherwise be entitled, the company shall make a cash
payment equal to the exercise price multiplied by such fraction.
5. REPLACEMENT OF WARRANT.
On receipt of evidence reasonably satisfactory to the company of the
loss, theft, destruction or mutilation of this warrant and, in the case of
loss, theft or destruction, on delivery of an indemnity agreement reasonably
satisfactory in form and substance to the company or, in the case of
mutilation, on surrender and cancellation of this warrant, the company at its
expense shall execute and deliver, in lieu of this warrant, a new warrant of
like tenor and amount. Any such new warrant shall constitute an original
contracted obligation of the company, whether or not the allegedly lost,
stolen, mutilated or destroyed warrant shall be at any time enforceable by
anyone.
6. RIGHTS OF STOCKHOLDERS.
The holder of this warrant shall not be entitled to vote or receive
dividends or be deemed the holder of common stock nor shall anything
contained herein be construed to confer upon the holder, as such, any of the
rights of a stockholder of the company or any right to vote for the election
of directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action (whether upon
any recapitalization, issuance of stock, reclassification of stock, change of
par value, or change of stock to no par value, consolidation, merger,
conveyance, or otherwise) or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise until the warrant shall have
been exercised as provided herein.
7. TRANSFER OF WARRANT.
(a) WARRANT REGISTER. The Company will maintain a register (the "Warrant
Register") containing the names and addresses of the Holder or Holders. Any
Holder of this Warrant or any portion thereof may change his 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 delivered or given by mail to such Holder as shown on the Warrant
Register and at the address shown on the Warrant Register. Until this Warrant is
transferred on the Warrant Register of the Company, the Company may treat the
Holder as shown on the Warrant Register as the absolute owner of this Warrant
for all purposes, notwithstanding any notice to the contrary.
(b) WARRANT AGENT. The Company may, by written notice to the Holder,
appoint an agent for the purpose of maintaining the Warrant Register referred to
in Section 7(a) above, issuing the common stock, exchanging this Warrant,
replacing this Warrant, or any or all of the foregoing. Thereafter, any such
registration, issuance, exchange, or replacement, as the case may be, shall be
made at the office of such agent.
(c) TRANSFERABILITY AND NONNEGOTIABILITY OF WARRANT. This Warrant may not
be transferred or assigned in whole or in part without compliance with all
applicable federal and state securities laws by the transferor and the
transferee (including the delivery of investment representation letters and
legal opinions reasonably satisfactory to the Company, if such are requested by
the Company). Notwithstanding the foregoing, no investment representation letter
or opinion of counsel shall be required for any transfer of this Warrant (or any
portion thereof) or any shares of common stock issued upon exercise hereof (i)
in compliance with Rule 144 or Rule 144A of the Act, or (ii) by gift, will or
intestate succession by the Holder to his or her spouse or lineal descendants or
ancestors or any trust for any of the foregoing; provided that in each of the
foregoing cases the transferee agrees in writing to be subject to the terms of
this Section 7(c). In addition, if the holder of the Warrant (or any portion
thereof) or any common stock issued upon exercise hereof delivers to the Company
an unqualified opinion of counsel that no subsequent
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transfer of such Warrant or common stock shall require registration under the
Act, the Company shall, upon such contemplated transfer, promptly deliver new
documents/certificates for such Warrant or common stock that do not bear the
legend set forth in Section 7(e)(ii) below. Subject to the provisions of this
Warrant with respect to compliance with the Securities Act of 1933, as amended
(the "Act"), title to this Warrant may be transferred by endorsement (by the
Holder executing the Assignment Form annexed hereto) and delivery in the same
manner as a negotiable instrument transferable by endorsement and delivery.
(d) EXCHANGE OF WARRANT UPON A TRANSFER. On surrender of this Warrant for
exchange, properly endorsed on the Assignment Form and subject to the provisions
of this Warrant with respect to compliance with the Act and with the limitations
on assignments and transfers and contained in this Section 7, the Company at its
expense shall issue to or on the order of the Holder a new warrant or warrants
of like tenor, in the name of the Holder or as the Holder (on payment by the
Holder of any applicable transfer taxes) may direct, for the number of shares
issuable upon exercise hereof.
(e) COMPLIANCE WITH SECURITIES LAWS.
(i) The initial Holder of this Warrant represents and warrants to
the Company that it is an accredited investor under the Act. The initial
Holder represents and warrants to the Company that it has all of the
information necessary for it to evaluate an investment in the Company's
securities.
(ii) The Holder of this Warrant, by acceptance hereof, acknowledges
that this Warrant and the shares of common stock to be issued upon
exercise hereof are being acquired solely for the Holder's own account and
not as a nominee for any other party, and for investment, and that the
Holder will not offer, sell or otherwise dispose of this Warrant or any
shares of common stock to be issued upon exercise hereof except under
circumstances that will not result in a violation of the Act or any
applicable state securities laws. Upon the exercise of this Warrant, the
Holder shall, if requested by the Company, confirm in writing, in a form
satisfactory to the Company, that the shares of common stock so purchased
are being acquired solely for the Holder's own account and not as a
nominee for any other party, for investment, and not with a view toward
distribution or resale.
(iii) This Warrant and all shares of common stock issued upon
exercise hereof shall be stamped or imprinted with a legend in
substantially the following form (in addition to any legend required by
state securities laws):
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. SUCH SECURITIES AND ANY SECURITIES OR SHARES
ISSUED HEREUNDER MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF THE
AGREEMENT COVERING THE PURCHASE OF THESE SECURITIES AND RESTRICTING THEIR
TRANSFER OR SALE MAY BE OBTAINED AT NO
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COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD HEREOF TO THE SECRETARY OF
THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES."
(iv) The Company agrees to remove promptly, upon the request of the
holder of this Warrant and Securities issuable upon exercise of the
Warrant, the legend set forth in Section 7(e)(ii) above from the
documents/certificates for such securities upon full compliance with this
Agreement and Rules 144 and 145.
8. RESERVATION OF STOCK.
The company covenants to submit to its stockholders at a meeting to be
scheduled for this purpose to be held during the fiscal quarter ending june
30, 2000 an amendment to its restated articles of incorporation to increase
the amount of its authorized common stock sufficient in all respects to
permit the exercise in full of this warrant at all times during the exercise
period and to use its best efforts to cause the adoption of such amendment
and shall take all actions necessary to effect the increase of such
authorized common stock. Following the amendment of its restated articles of
incorporation to increase the amount of its authorized common stock, the
company covenants that during the term this warrant is exercisable, the
company will reserve from its authorized and unissued common stock a
sufficient number of shares to provide for the issuance of common stock upon
the exercise of this warrant (including any adjustment in the number of
warrant shares pursuant to section 3(a) above). The company further covenants
that all shares that may be issued upon the exercise of rights represented by
this warrant and payment of the exercise price, all as set forth herein, will
be free from all taxes, liens and charges in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously or
otherwise specified herein). The company agrees that its issuance of this
warrant shall constitute full authority to its officers who are charged with
the duty of executing stock certificates to execute and issue the necessary
certificates for shares of common stock upon the exercise of this warrant.
9. REGISTRATION RIGHTS; COMPANY REGISTRATION.
(a) If the Company shall determine to register any of its securities
either (A) for its own account, other than a registration relating solely to (x)
employee benefit plans, or (y) a registration relating solely to a Rule 145
transaction, or (B) securities held by a person or entity other than the Company
pursuant to the exercise of demand registration rights, if any, then the Company
will:
(i) promptly give to Holder written notice thereof; and
(ii) use reasonable efforts to include in such registration (and any
related qualification under blue sky laws or other compliance), except as
set forth in Section 9(b) below, and in any underwriting involved therein,
all or any part of the Warrant Shares specified in a written request or
requests, made by Holder and received by the Company within twenty (20)
days after the written notice from the Company described in clause (i)
above is delivered by the Company. Such written request may specify all or
a part of Holder's Warrant Shares.
(b) UNDERWRITING. If the registration of which the Company gives notice is
for a registered public offering involving an underwriting, the Company shall so
advise Holder as a part of the written notice given pursuant to Section 9(a)(i).
In such event, the right of Holder to registration pursuant to this Section 9
shall be conditioned upon Xxxxxx's participation in such underwriting and the
inclusion of Xxxxxx's Warrant Shares in the underwriting to the extent provided
herein. A Holder proposing to distribute its securities through such
underwriting shall (together with the Company and the other holders of
securities of the Company with registration rights to participate therein
distributing their securities through such underwriting) enter into an
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underwriting agreement in customary form with the representative of the
underwriter or underwriters selected by the Company.
Notwithstanding any other provision of this Section 9, if the
representative of the underwriters advises the Company, in good faith, in
writing that marketing factors require a limitation on the number of shares to
be underwritten, the representative may exclude all Warrant Shares from, or
limit the number of Warrant Shares to be included in, the registration and
underwriting; provided, however, that the Company may limit, to the extent so
advised by the underwriters, the amount of securities (including Warrant Shares)
to be included in the registration by the Company's stockholders (including the
Holder), and such securities shall be apportioned pro rata among the selling
stockholders according to the total amount of securities entitled to be included
therein owned by each selling stockholder, subject to Warrant Shares being
cut-back first upon the exercise of demand registration rights, if any,
exercised by company shareholders. If any person does not agree to the terms of
any such underwriting, he shall be excluded therefrom by written notice from the
Company or the underwriter. Any Warrant Shares or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
If shares are so withdrawn from the registration or if the number of
shares of Warrant Shares to be included in such registration was previously
reduced as a result of marketing factors, the Company shall then offer to all
persons who have retained the right to include securities in the registration
the right to include additional securities in the registration in an aggregate
amount equal to the number of shares so withdrawn.
10. REGISTRATION ON FORM S-3.
(a) The Company shall use its best efforts to qualify for registration on
Form S-3 or any comparable or successor form or forms. After the Company has
qualified for the use of Form S-3, in addition to the rights contained in the
foregoing provisions of Section 9, Holder shall have the right to request one or
more registrations on Form S-3 (such requests shall be in writing and shall
state the number of shares of Warrant Shares to be disposed of and the intended
methods of disposition of such shares by Holder), provided, however, that the
Company shall not be obligated to effect any such registration if (i) Holder
proposes to sell Warrant Shares on Form S-3 at an aggregate price to the public
of less than $500,000, or (ii) in the event the Company shall furnish the
certification described in paragraph 10(d)(ii) (but subject to the limitations
set forth therein), or (iii) the Company has, within the six (6) month period
preceding the date of such request already effected one registration on Form S-3
for the Holders pursuant to this Section 10.
(b) If a request complying with the requirements of Section 10(a) hereof
is delivered to the Company, the provisions of Sections 9(a)(i) and (ii) and
Section 10(c) hereof shall apply to such registration. If the registration is
for an underwritten offering, the provisions of Sections 9(b) hereof shall apply
to such registration.
(c) The Company shall not be obligated to effect, or to take any action to
effect, any such registration pursuant to this Section 10:
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(i) In any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in effecting
such registration, qualification, or compliance, unless the Company is
already subject to service in such jurisdiction and except as may be
required by the Act;
(ii) During the period starting with the date sixty (60) days prior
to the Company's good faith estimate of the date of filing of, and ending
on a date one hundred eighty (180) days after the effective date of, a
Company-initiated registration; provided that the Company is actively
employing in good faith all reasonable efforts to cause such registration
statement to become effective;
(d) Subject to the foregoing clauses (i) and (ii), the Company shall file
a registration statement covering the Warrant Shares so requested to be
registered as soon as practicable after receipt of the request of Holder;
provided, however, that if (i) in the good faith judgment of the Board of
Directors of the Company, such registration would be seriously detrimental to
the Company and the Board of Directors of the Company concludes, as a result,
that it is essential to defer the filing of such registration statement at such
time, and (ii) the Company shall furnish to Holder a certificate signed by the
President of the Company stating that in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the Company for
such registration statement to be filed in the near future and that it is,
therefore, essential to defer the filing of such registration statement, then
the Company shall have the right to defer such filing for the period during
which such disclosure would be seriously detrimental, provided that (except as
provided in clause (c) above) the Company may not defer the filing for a period
of more than ninety (90) days after receipt of the request of Holder, and,
provided further, that the Company shall not defer its obligation in this manner
more than once in any twelve (12) month period.
11. EXPENSES OF REGISTRATION.
(a) All "Registration Expenses" (as defined below) incurred in connection
with any registration, qualification or compliance pursuant to Sections 9 and 10
hereof and reasonable fees of one counsel for Holder shall be borne by the
Company. All "Selling Expenses" (as defined below) relating to securities so
registered shall be borne by the holders of such securities pro rata on the
basis of the number of shares of securities so registered on their behalf.
(b) "Registration Expenses" shall mean all expenses incurred in effecting
any registration pursuant to this Warrant, including, without limitation, all
registration, qualification, and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for the Company, fees and disbursements of one
special counsel for the selling stockholders, blue sky fees and expenses,
accounting fees and expenses of any regular or special audits incident to or
required by any such registration, but shall not include Selling Expenses and
fees and disbursements of additional counsel for the stockholders. Registration
Expenses do not include the compensation of regular employees of the Company,
which shall be paid in any event by the Company.
(c) "Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Warrant Shares and fees and disbursements
of counsel for any Holder (other than the fees and disbursements of counsel
included in Registration Expenses).
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12. REORGANIZATION, ETC.
In case, at any time during the exercise period, of any capital
reorganization, of any reclassification of the stock of the company (other
than a change in par value or from par value to no par value or from no par
value to par value or as a result of a stock dividend or subdivision,
split-up or combination of shares), or the consolidation or merger of the
company with or into another corporation (other than a consolidation or
merger in which the company is the continuing operation and which does not
result in any change in the common stock) or of the sale of all or
substantially all the properties and assets of the company as an entirety to
any other corporation, this warrant shall, after such reorganization,
reclassification, consolidation, merger or sale, be exercisable for the kind
and number of shares of stock or other securities or property of the company
or of the corporation resulting from such consolidation or surviving such
merger or to which such properties and assets shall have been sold to which
such holder would have been entitled if he had held the common stock issuable
upon the exercise hereof immediately prior to such reorganization,
reclassification, consolidation, merger or sale. In any such reorganization
or other action or transaction described above, appropriate provision shall
be made with respect to the rights and interests of the holder of this
warrant to the end that the provisions hereof (including, without limitation,
provisions for adjustments of the warrant price and of the number of shares
purchasable and receivable upon the exercise of this warrant) shall
thereafter be applicable, as nearly as may be, in relation to any shares of
stock, securities or assets thereafter deliverable upon the exercise hereof.
The company will not effect any such consolidation, merger or sale unless,
prior to the consummation thereof, the successor corporation or entity (if
other than the company) resulting from such transaction or the corporation or
entity purchasing such assets shall assume by written instrument, executed
and mailed or delivered to the registered holder hereof at the last address
of such holder appearing on the books of the company, the obligation to
deliver to such holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
purchase.
13. AMENDMENTS.
This warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.
14. GOVERNING LAW.
This warrant shall be governed by the laws of the state of nevada as
applied to agreements entered into in the state of nevada by and among
residents of the state of nevada.
15. MISCELLANEOUS.
(a) In the event of a dispute with regard to the interpretation of this
Warrant, the prevailing party may collect the cost of attorney's fees,
litigation expenses or such other expenses as may be incurred in the enforcement
of the prevailing party's rights hereunder.
(b) The rights to cause the Company to register securities granted to a
Holder by the Company under Section 10 may be transferred or assigned by Xxxxxx
only to a transferee or assignee of not less than one hundred thousand (100,000)
Warrant Shares, provided that the Company is given written notice at the time of
or within a reasonable time after such transfer or assignment, stating the name
and address of the transferee or assignee and identifying the securities with
respect to which such registration rights are being transferred or assigned,
and, provided further, that the transferee or assignee of such rights assumes
the obligations of such Holder under this Warrant.
(c) This Warrant shall be exercisable as provided for herein, except that
in the event that the expiration date of this Warrant shall fall on a Saturday,
Sunday or United States federally recognized holiday, this expiration date for
this Warrant shall be extended to 5:00 p.m. Pacific standard time on the
business day following such Saturday, Sunday or recognized holiday.
(d) AOL agrees not to publicly sell, make any short sale of, loan, grant
any option for the purchase of, sell any uncovered calls of, or otherwise
dispose of any securities of the Company without the prior written consent of
the Company at any time before August 1, 2001; provided, however, that AOL may
at any time enter into derivative hedging transactions (including "cashless
collars") which cover the securities of the Company, other than short sales or
uncovered calls of the securities of the Company, entered into for the purpose
of protecting
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the value of the Warrant Shares from and against declines in the value of the
Company's Common Stock. AOL shall consider in good faith any objection of the
Company with respect to any transaction which could be effected by AOL in
accordance with the foregoing, and if in AOL's reasonable determination, AOL is
able to protect the value of the Warrant Shares by means of a different type of
transaction acceptable to the Company, AOL shall effect such alternative
transaction; provided, however, that AOL shall not be required to amend, revoke
or rescind any hedging transactions entered into in accordance with the
foregoing sentence
IN WITNESS WHEREOF, XXXXXXXXXXX.XXX, INC. has caused this Warrant to be
executed by its officers thereunto duly authorized.
Dated: November 18, 2000.
"Holder:"
America Online, Inc.
By
---------------------------------------
Its
---------------------------------------
"Company:"
XxxxxxxxXxx.xxx, Inc.
By
--------------------------------------
Xxxxxxx X. Xxxxxxx, Xx.
Chairman and Chief Executive Officer
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NOTICE OF EXERCISE
To: XXXXXXXXXXX.XXX, INC.
(1) The undersigned hereby elects to purchase shares of common stock of
XXXXXXXXXXX.XXX, INC., pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price for such shares in full.
(2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of common stock to be issued upon conversion
thereof are being acquired solely for the account of the undersigned and not as
a nominee for any other party, or for investment, and that the undersigned will
not offer, sell or otherwise dispose of any such shares of common stock except
under circumstances that will not result in a violation of the Securities Act of
1933, as amended, or any applicable state securities laws.
(3) Please issue a certificate or certificates representing said shares of
common stock in the name of the undersigned or in such other name as is
specified below:
---------------------------------
(Name)
---------------------------------
(Name)
(4) Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned or in such other name as is specified
below:
---------------------------------
(Name)
--------------------------------- ---------------------------------
(Date) (Name)
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NET ISSUE ELECTION NOTICE
To: XXXXXXXXXXX.XXX, INC. Date: __________
The undersigned hereby elects pursuant to the net issue provisions of
Section 3(b) to surrender the right to purchase _______ shares of Common Stock
pursuant to this Warrant.
(1) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of common stock to be issued upon conversion
thereof are being acquired solely for the account of the undersigned and not as
a nominee for any other party, or for investment, and that the undersigned will
not offer, sell or otherwise dispose of any such shares of common stock except
under circumstances that will not result in a violation of the Securities Act of
1933, as amended, or any applicable state securities laws.
(2) Please issue a certificate or certificates representing said shares of
common stock in the name of the undersigned or in such other name as is
specified below:
---------------------------------
(Name)
---------------------------------
(Name)
(3) Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned or in such other name as is specified
below:
---------------------------------
(Name)
--------------------------------- ---------------------------------
(Date) (Signature)
Address:
--------------------------------
--------------------------------
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ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under the within Warrant, with respect to the number
of shares of common stock set forth below:
Name of Assignee Address No. of Shares
---------------- ------- -------------
and does hereby irrevocably constitute and appoint Attorney to make such
transfer on the books of XXXXXXXXXXX.XXX, INC., maintained for the purpose, with
full power of substitution in the premises.
The undersigned also represents that, by assignment hereof, the Assignee
acknowledges that this Warrant and the shares of stock to be issued upon
exercise hereof or conversion thereof are being acquired for investment and that
the Assignee will not offer, sell or otherwise dispose of this Warrant or any
shares of stock to be issued upon exercise hereof or conversion thereof except
under circumstances which will not result in a violation of the Securities Act
of 1933, as amended, or any applicable state securities laws. Further, the
Assignee has acknowledged that upon exercise of this Warrant, the Assignee
shall, if requested by the Company, confirm in writing, in a form satisfactory
to the Company, that the shares of stock so purchased are being acquired for
investment and not with a view toward distribution or resale.
Dated: __________, ____
---------------------------------
Signature of Holder
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