FORM OF WARRANT]
[FORM
OF
WARRANT]
THIS
WARRANT AND THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR WITH ANY
STATE SECURITIES COMMISSION, AND MAY NOT BE TRANSFERRED OR DISPOSED OF BY THE
HOLDER IN THE ABSENCE OF A REGISTRATION STATEMENT THAT IS EFFECTIVE UNDER THE
SECURITIES ACT AND APPLICABLE STATE LAWS AND RULES, OR, UNLESS, IMMEDIATELY
PRIOR TO THE TIME SET FOR TRANSFER, SUCH TRANSFER MAY BE EFFECTED WITHOUT
VIOLATION OF THE SECURITIES ACT AND OTHER APPLICABLE STATE LAWS AND
RULES.
ROO
GROUP, INC.
WARRANT
| Warrant No. ___ |
Dated:
May __,
2007
|
ROO
Group, Inc., a Delaware corporation (the “Company”),
hereby certifies that, for value received, [Insert
Purchaser Name]
or its
registered assigns (including permitted transferees, the “Holder”),
is
entitled to purchase from the Company up to a total of [·]
shares
(as adjusted from time to time as provided in Section
9)
of
Common Stock (as defined below) (each such share, a “Warrant
Share”
and
all
such shares, the “Warrant
Shares”)
at an
exercise price equal to $4.50 per share (as adjusted from time to time as
provided in Section 9,
the
“Exercise
Price”),
at
any time and from time to time from and after the date of this Warrant (the
“Initial
Exercise Date”)
through and including May __, 2012 (the “Expiration
Date”),
and
subject to the following terms and conditions. This Warrant is one of a series
of similar warrants (the “Warrants”)
issued
pursuant to that certain Securities Purchase Agreement, dated as of May __,
2007, by and among the Company, the Holder and certain other investors (the
“Purchase
Agreement”),
providing for the issuance and sale of Common Stock and Warrants by the Company
to the Holder and such other investors.
1.
Definitions.
The
capitalized terms used herein and not otherwise defined shall have the meanings
set forth below:
“1934
Act”
means
the Securities Exchange Act of 1934, as amended.
“Affiliate”
of
any
specified Person means any other person or entity directly or indirectly
controlling, controlled by or under direct or indirect common control with
such
specified Person. For purposes of this definition, “control”
means
the power to direct the management and policies of such Person or firm, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise.
“Approved
Stock Plan”
means
the Company’s 2004 Stock Option Plan, as amended, and as may be amended or
restated in accordance with its terms.
“Common
Stock”
means
the common stock of the Company, $0.0001 par value per share, as constituted
on
the Original Issue Date.
“Company
Offer”
means
any tender offer (including exchange offer), as amended from time to time,
made
by the Company or any of its subsidiaries for the purchase (including the
acquisition pursuant to an exchange offer) of all or any portion of the
outstanding shares of Common Stock, except as permitted pursuant to Rule 10b-18
promulgated under the 1934 Act.
“Convertible
Securities”
means any stock or securities (other than Options) directly or indirectly
convertible into or exercisable or exchangeable for shares of Common
Stock.
“Eligible
Market”
means
any of the New York Stock Exchange, the American Stock Exchange, Nasdaq Stock
Market or the Over-the-Counter Bulletin Board (the "OTCBB").
“Market
Price”
shall
mean (i) if the principal trading market for such securities is an exchange,
the
average of the last reported sale prices per share for the last five previous
Trading Days on the OTCBB or other Eligible Market, (ii) if clause (i) is not
applicable, the average of the closing bid price per share for the last five
previous Trading Days as set forth by Nasdaq or (iii) if clauses (i) and (ii)
are not applicable, the average of the closing bid price per share for the
last
five previous Trading Days as set forth in the Pink Sheets(R). Notwithstanding
the foregoing, if there is no reported sales price or closing bid price, as
the
case may be, on any of the ten (10) Trading Days preceding the event requiring
a
determination of Market Price hereunder, then the Market Price shall be
determined in good faith by resolution of the Board of Directors of the Company,
based on the best information available to it.
“Options”
shall
mean any rights, warrants or options to subscribe, directly or indirectly for
or
purchase of Common Stock or Convertible Securities.
“Original
Issue Date”
means
May__, 2007.
“Other
Securities”
refers
to any capital stock (other than Common Stock) and other securities of the
Company or any other Person that the Holder of this Warrant at any time shall
be
entitled to receive, or shall have received, upon the exercise of this Warrant,
in lieu of or in addition to Common Stock, or that at any time shall be issuable
or shall have been issued in exchange for or in replacement of Common Stock
or
Other Securities pursuant to Section
9
hereof
or otherwise.
“Person”
means
any court or other federal, state, local or other governmental authority or
other individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.
“Registration
Statement”
shall
have the meaning set forth in the Purchase Agreement.
"Required
Holders"
shall
mean the holders of the then unexercised Warrants issued pursuant to the
Purchase Agreement, which represent a majority of the Warrant Shares underlying
such unexercised warrants.
-2-
“Trading
Day”
means
any day on which the Common Stock is listed or quoted on any Eligible
Market.
“Transfer
Agent”
shall
mean Continental Stock Transfer and Trust Company or such other Person as the
Company may appoint from time to time.
“Warrant
Shares”
shall
initially mean shares of Common Stock and in addition may include Other
Securities and Distributed Property (as defined in Section
9(e))
issued
or issuable from time to time upon exercise of this Warrant.
“Weighted
Average Price”
means,
for any security as of any date, the dollar volume-weighted average price for
such security on the OTC Bulletin Board during the period beginning at 9:30:01
a.m., New York City time, and ending at 4:00:00 p.m., New York City time, as
reported by Bloomberg through its “Volume at Price” function or, if the
foregoing does not apply, the dollar volume-weighted average price of such
security in the over-the-counter market on the electronic bulletin board for
such security during the period beginning at 9:30:01 a.m., New York City time,
and ending at 4:00:00 p.m., New York City time, as reported by Bloomberg, or,
if
no dollar volume-weighted average price is reported for such security by
Bloomberg for such hours, the average of the highest closing bid price and
the
lowest closing ask price of any of the market makers for such security as
reported in the “pink sheets” by Pink Sheets LLC (formerly the National
Quotation Bureau, Inc.). If the Weighted Average Price cannot be calculated
for
such security on such date on any of the foregoing bases, the Weighted Average
Price of such security on such date shall be the fair market value as mutually
determined by the Company and the Holder. If the Company and the Holder are
unable to agree upon the fair market value of such security, then such dispute
shall be resolved pursuant to Section 16 with the term “Weighted Average Price”
being substituted for the term “Exercise Price.” All such determinations shall
be appropriately adjusted for any share dividend, share split or other similar
transaction during such period.
2. Registration
of Warrant.
The
Company shall register this Warrant, upon records to be maintained by the
Company for that purpose (the “Warrant
Register”),
in
the name of the record Holder hereof from time to time. The Company may deem
and
treat the registered Holder of this Warrant as the absolute owner hereof for
the
purpose of any exercise hereof or any distribution to the Holder, and for all
other purposes, absent actual notice to the contrary.
3. Registration
of Transfers.
The
Company shall register the transfer of any portion of this Warrant in the
Warrant Register, upon surrender of this Warrant, with the Form of Assignment
attached hereto as Appendix
A
duly
completed and signed, to the Company at its address specified herein. Upon
any
such registration and transfer, a new warrant in substantially the form of
a
Warrant (any such new warrant, a “New
Warrant”),
evidencing the portion of this Warrant so transferred shall be issued to the
transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance by such transferee of all of the rights and obligations of a holder
of a Warrant.
-3-
4. Exercise
and Duration of Warrant.
(a) This
Warrant shall become exercisable upon not less than 61 days’ prior written
notice (an “Exercisability
Notice”)
by the
Holder. Such exercisability may be revoked by the Holder at any time by
providing written notice to the Company; in that event, at least 61 days’ prior
written notice must be given by the Holder again to make this Warrant
exercisable. This Section 4(a) shall not apply to Section 4(c)
(b) Once
exercisable pursuant to Section 4(a), this Warrant shall be exercisable by
the
registered Holder at any time and from time to time on and after such date
to
and including the Expiration Date. At 5:00 P.M. New York City time on the
Expiration Date, the portion of this Warrant not exercised prior thereto shall
be and become void and of no value.
(c) A
Holder
may exercise this Warrant by delivering to the Company (i) an exercise notice,
in the form attached hereto as Appendix
B
(the
“Exercise
Notice”),
appropriately completed and duly signed, and (ii) payment of the Exercise Price
for the number of Warrant Shares as to which this Warrant is being exercised
(as
set forth in Section
4(e) below),
and the date such items are received by the Company is an “Exercise
Date.”
Execution and delivery of the Exercise Notice shall have the same effect as
cancellation of the original Warrant (other than the right to receive the
Warrant Shares specified in the Exercise Notice on the Exercise Date) and
issuance of a New Warrant evidencing the right to purchase the remaining number
of Warrant Shares.
(d) At
any
time at which the Market Price of the Company's Common Stock exceeds $6.00
for
ten (10) Trading Days during any twenty (20) consecutive Trading Days, as
adjusted for stock splits, combinations, recapitalizations and the like, the
Company may elect to call this Warrant; provided however, the Company may not
call this Warrant unless the Registration Statement is effective and the Common
Stock is listed an Eligible Market; provided further, however, that in no event
shall the number of shares of Common Stock that may be acquired by the Holder
upon exercise pursuant to the terms of this Section 4(d) at any time shall
exceed a number that, when added to the total number of shares of Common Stock
deemed beneficially owned by the Holder (other than by virtue of the ownership
of securities or rights to acquire securities that have limitations on the
Holder’s right to convert, exercise or purchase similar to the limitation set
forth herein (the “Excluded
Shares”),
together with all shares of Common Stock deemed beneficially owned at such
time
(other than by virtue of the ownership of the Excluded Shares) by persons whose
beneficial ownership of Common Stock would be aggregated with the beneficial
ownership by the Holder for purposes of determining whether a group exists
or
for purposes of determining the Holder’s beneficial ownership, in either such
case for purposes of Section 13(d) of the 1934 Act and Regulation 13D-G
thereunder (including, without limitation, as the same is made applicable to
Section 16 of the 1934 Act and the rules promulgated thereunder), would result
in beneficial ownership by the Holder or such group of more than 4.9% of the
shares of Common Stock for purposes of Section 13(d) or Section 16 of the 1934
Act and the rules promulgated thereunder. The Warrant shall remain outstanding
with respect to Warrant Shares that may not be issued to the Holder pursuant
to
the foregoing. In order for the Company to exercise its call right hereunder,
(i) it must exercise the right by providing written notice (the “Call
Notice”)
to the
Holder within 3 Trading Days after the 10th
Trading
Day in which the Market Price of the Company’s Common Stock exceeded $6.00, (ii)
such notice must indicate the date (the “Call
Date”)
on
which the Warrant shall be exercised, which date may not be sooner than 3
Trading Days, nor later than 5 Trading Days, after delivery of the Call Notice,
and (iii) the closing price of the Common Stock on an Eligible Market on the
Trading Day immediately preceding the Call Date must exceed $6.00.
-4-
(e) The
Holder shall pay the Exercise Price (i) in cash, by certified bank check payable
to the order of the Company or by wire transfer of immediately available funds
in accordance with the Company’s instructions or (ii) if on or after the one (1)
year anniversary of the Original Issue Date (x) there is no effective
Registration Statement registering the resale of the Warrant Shares by the
Holder and (y) the Market Price exceeds the Exercise Price, by means of a
“cashless exercise”, by presenting and surrendering to the Company this Warrant,
in which event the Company shall issue to the Holder the number of Warrant
Shares determined as follows:
X
=
Y
[(A-B)/A]
where:
|
X
=
|
the
number of Warrant Shares to be issued to the Holder upon such cashless
exercise;
|
|
Y
=
|
the
number of Warrant Shares with respect to which this Warrant is being
exercised;
|
|
A
=
|
the
Market Price on the Exercise Date;
and
|
|
B
=
|
the
Exercise Price.
|
(f) If
an
exercise of this Warrant is to be made in connection with a registered public
offering or sale of the Company, such exercise may, at the election of the
Holder, be conditioned on the consummation of the public offering or sale of
the
Company, in which case such exercise shall not be deemed effective until the
consummation of such transaction.
5. Delivery
of Warrant Shares.
(a) Upon
exercise of this Warrant, the Company shall promptly (but in no event later
than
three Trading Days after the Exercise Date) issue or cause to be issued and
deliver or cause to be delivered to the Holder, in such name or names as the
Holder may designate, a certificate for the Warrant Shares issuable upon such
exercise, free of restrictive legends unless a registration statement covering
the resale of the Warrant Shares and naming the Holder as a selling stockholder
thereunder is not then effective. In the event that there shall be an effective
registration statement covering the resale of the Warrant Shares, the Company
shall cause a certificate for the Warrant Shares issuable upon exercise to
be
free of restrictive legends upon the Holder’s acknowledgement hereby that it
will comply with the prospectus delivery requirements, to the extent required
by
Rule 172 of the Securities Act. The Holder, or any Person so designated by
the
Holder to receive the Warrant Shares, shall be deemed to have become holder
of
record of such Warrant Shares as of the Exercise Date. The Company shall, upon
request of the Holder, use its best efforts to deliver Warrant Shares hereunder
electronically through the Depository Trust Corporation or another established
clearing corporation performing similar functions.
-5-
(b) This
Warrant is exercisable, either in its entirety or, from time to time, for a
portion of the number of Warrant Shares. Upon surrender of this Warrant
following one or more partial exercises, the Company shall issue or cause to
be
issued, at its expense, a New Warrant evidencing the right to purchase the
remaining number of Warrant Shares.
(c) In
addition to any other rights available to a Holder, if the Company fails to
deliver to the Holder a certificate representing Warrant Shares by the third
Trading Day after the Exercise Date, and if after such third Trading Day the
Holder purchases (in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares
that the Holder anticipated receiving from the Company (a “Buy-In”),
then
the Company shall, within three Trading Days after the Holder’s request and in
the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to
the Holder’s total purchase price (including brokerage commissions, if any) for
the shares of Common Stock so purchased (the “Buy-In
Price”),
at
which point the Company’s obligation to deliver such certificate (and to issue
such Common Stock) shall terminate, or (ii) promptly honor its obligation to
deliver to the Holder a certificate or certificates representing such Common
Stock and pay cash to the Holder in an amount equal to the excess (if any)
of
the Buy-In Price over the product of (A) such number of shares of Common Stock,
times (B) the closing price of the Common Stock on the OTCBB, other Eligible
Market or Pink Sheets, as applicable, on the date of the event giving rise
to
the Company’s obligation to deliver such certificate.
(d) The
Company’s obligations to issue and deliver Warrant Shares in accordance with the
terms hereof are absolute and unconditional, irrespective of any action or
inaction by the Holder to enforce the same, any waiver or consent with respect
to any provision hereof, the recovery of any judgment against any Person or
any
action to enforce the same, or any setoff, counterclaim, recoupment, limitation
or termination, or any breach or alleged breach by the Holder or any other
Person of any obligation to the Company or any violation or alleged violation
of
law by the Holder or any other Person, and irrespective of any other
circumstance which might otherwise limit such obligation of the Company to
the
Holder in connection with the issuance of Warrant Shares. Nothing herein shall
limit a Holder’s right to pursue any other remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company’s failure to
timely deliver certificates representing shares of Common Stock upon exercise
of
the Warrant as required pursuant to the terms hereof.
6. Charges,
Taxes and Expenses.
Issuance and delivery of certificates for shares of Common Stock upon exercise
of this Warrant shall be made without charge to the Holder for any issue or
transfer tax, withholding tax, transfer agent fee or other incidental tax or
expense in respect of the issuance of such certificates, all of which taxes
and
expenses shall be paid by the Company; provided, however, that the Company
shall
not be required to pay any tax that may be payable in respect of any transfer
involved in the registration of any certificates for Warrant Shares or Warrant
in a name other than that of the Holder. The Holder shall be responsible for
all
other tax liability that may arise as a result of holding or transferring this
Warrant or receiving Warrant Shares upon exercise hereof.
-6-
7. Replacement
of Warrant.
If this
Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
hereof, or in lieu of and in substitution for this Warrant, a New Warrant,
but
only upon receipt of evidence reasonably satisfactory to the Company of such
loss, theft or destruction and customary and reasonable indemnity, if
requested.
8. Reservation
of Warrant Shares.
The
Company covenants that it will at all times reserve and keep available out
of
the aggregate of its authorized but unissued and otherwise unreserved Common
Stock, solely for the purpose of enabling it to issue Warrant Shares upon
exercise of this Warrant as herein provided, the number of Warrant Shares that
are then issuable and deliverable upon the exercise of this entire Warrant,
free
from all taxes, liens, claims, encumbrances with respect to the issuance of
such
Warrant Shares and will not be subject to any pre-emptive rights or similar
rights (taking into account the adjustments and restrictions of Section
9 hereof).
The Company covenants that all Warrant Shares so issuable and deliverable shall,
upon issuance and the payment of the applicable Exercise Price in accordance
with the terms hereof, be duly and validly authorized, issued, fully paid and
nonassessable. The Company will take all such action as may be necessary to
assure that such shares of Common Stock may be issued as provided herein without
violation of any applicable law or regulation, or of any requirements of any
securities exchange or automated quotation system upon which the Common Stock
may be listed or quoted, as the case may be.
9. Certain
Adjustments.
The
Exercise Price and number of Warrant Shares issuable upon exercise of this
Warrant are subject to adjustment from time to time as set forth in this
Section
9.
(a) Stock
Dividends.
If the
Company, at any time while this Warrant is outstanding, pays a dividend on
its
Common Stock payable in additional shares of Common Stock or otherwise makes
a
distribution on any class of capital stock that is payable in shares of Common
Stock, then in each such case the Exercise Price shall be multiplied by a
fraction, (i) the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to the opening of business on the day after
the record date for the determination of stockholders entitle to receive such
dividend or distribution and (ii) the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event. Any
adjustment made pursuant to this Section
9(a)
shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution.
(b) Stock
Splits.
If the
Company, at any time while this Warrant is outstanding, (i) subdivides
outstanding shares of Common Stock into a larger number of shares, or (ii)
combines outstanding shares of Common Stock into a smaller number of shares,
then in each such case the Exercise Price shall be multiplied by a fraction,
(A)
the numerator of which shall be the number of shares of Common Stock outstanding
immediately before such event and (B) the denominator of which shall be the
number of shares of Common Stock outstanding immediately after such event.
Any
adjustment pursuant to this Section
9(b) shall
become effective immediately after the effective date of such subdivision or
combination.
-7-
(c) Reclassifications.
A
reclassification of the Common Stock (other than any such reclassification
in
connection with a merger or consolidation to which Section
9(f) applies)
into shares of any other class of stock shall be deemed:
(i) a
distribution by the Company to the holders of its Common Stock of such shares
of
such other class of stock for the purposes and within the meaning of this
Section
9;
and
(ii) if
the
outstanding shares of Common Stock shall be changed into a larger or smaller
number of shares of Common Stock as part of such reclassification, such change
shall be deemed a subdivision or combination, as the case may be, of the
outstanding shares of Common Stock for the purposes and within the meaning
of
Section
9(b).
(d) Self-Tender
Offers.
In the
event, at any time or from time to time after the Original Issue Date while
the
Warrants remain outstanding and unexpired, in whole or in part, a Company Offer
shall be made and expire, then and in each such event the Exercise Price in
effect immediately prior to close of business on the date of the last time
(the
“Expiration
Time”)
tenders could have been made pursuant to such Company Offer shall be decreased
by multiplying such Exercise Price by a fraction (not to be greater than
1):
(i) the
numerator of which shall be equal to (A) the product of (1) the Market Price
per
share of the Common Stock on the date of the Expiration Time and (2) the number
of shares of Common Stock outstanding (including any tendered shares) at the
Expiration Time less (B) the fair market value (as determined in good faith
by
the Board of Directors of the Company) of the aggregate consideration payable
to
stockholders based on the acceptance (up to any maximum specified in the terms
of the Company Offer) of all shares validly tendered and not withdrawn as of
the
Expiration Time (the shares deemed so accepted, up to any maximum amount
provided for in connection with such Company Offer, being referred to as the
“Purchased
Shares”);
and
(ii) the
denominator of which shall be equal to the product of (A) the Market Price
per
share of the Common Stock on the date of the Expiration Time and (B) the number
of shares of Common Stock outstanding (including any tendered shares) on the
Expiration Time less the number of Purchased Shares.
Any
adjustment under this
Section 9(d)
shall
become effective immediately prior to the opening of business on the day after
the Expiration Time.
(e) Other
Distributions.
If the
Company, at any time while this Warrant is outstanding, distributes to holders
of Common Stock (i) evidences of its indebtedness, (ii) any security (other
than
a distribution of Common Stock covered by Section
9(a)),
(iii)
rights or warrants to subscribe for or purchase any security or (iv) any other
asset (in each case, “Distributed
Property”),
then
in each such case the Exercise Price in effect immediately prior to the record
date fixed for determination of stockholders entitled to receive such
distribution (and the Exercise Price thereafter applicable) shall be adjusted
(effective on and after such record date) to equal the product of such Exercise
Price multiplied by a fraction, (A) the numerator of which shall be Market
Price
on such record date less the then fair market value per share of the Distributed
Property distributed in respect of one outstanding share of Common Stock, which,
if the Distributed Property is other than cash or marketable securities, shall
be as determined in good faith by the Board of Directors of the Company, and
(B)
the denominator of which shall be the Market Price on such record
date.
-8-
(f) Fundamental
Transactions.
If, at
any time while this Warrant is outstanding, (i) the Company effects any merger
or consolidation of the Company with or into another Person, (ii) the Company
effects any sale of all or substantially all of its assets in one or a series
of
related transactions or (iii) there shall occur any merger of another Person
into the Company whereby the Common Stock is cancelled, converted or
reclassified into or exchanged for other securities, cash or property (in any
such case, a “Fundamental
Transaction”),
then,
as a condition to the consummation of such Fundamental Transaction, the Company
shall (or, in the case of any Fundamental Transaction in which the Company
is
not the surviving entity, the Company shall take all reasonable steps to cause
such other Person to) execute and deliver to each Holder of Warrants a written
instrument providing that:
(x) so
long
as any Warrant remains outstanding on such terms and subject to such conditions
as shall be nearly equivalent as may be practicable to the provisions set forth
in this Warrant, each Warrant, upon the exercise thereof at any time on or
after
the consummation of such Fundamental Transaction, shall be exercisable into,
in
lieu of Common Stock issuable upon such exercise prior to such consummation,
the
securities or other property (the “Substituted
Property”)
that
would have been received in connection with such Fundamental Transaction by
a
holder of the number of shares of Common Stock into which such Warrant was
exercisable immediately prior to such Fundamental Transaction, assuming such
holder of Common Stock:
(A)
is not a
Person with which the Company consolidated or into which the Company merged
or
which merged into the Company or to which such sale or transfer was made, as
the
case may be (a “Constituent
Person”),
or an
Affiliate of a Constituent Person; and
(B)
failed
to exercise such Holder’s rights of election, if any, as to the kind or amount
of securities, cash and other property receivable in connection with such
Fundamental Transaction (provided,
however,
that if
the kind or amount of securities, cash or other property receivable in
connection with such Fundamental Transaction is not the same for each share
of
Common Stock held immediately prior to such Fundamental Transaction by a Person
other than a Constituent Person or an Affiliate thereof and in respect of which
such rights of election shall not have been exercised (a “Non-Electing
Share”),
then,
for the purposes of this Section
9(f),
the
kind and amount of securities, cash and other property receivable in connection
with such Fundamental Transaction by each Non-Electing Share shall be deemed
to
be the kind and amount so receivable per share by a plurality of the
Non-Electing Shares); and
(y) the
rights and obligations of the Company (or, in the event of a transaction in
which the Company is not the surviving Person, such other Person) and the
Holders in respect of Substituted Property shall be as nearly equivalent as
may
be practicable to the rights and obligations of the Company and Holders in
respect of Common Stock hereunder.
-9-
Such
written instrument shall provide for adjustments that, for events subsequent
to
the effective date of such written instrument, shall be as nearly equivalent
as
may be practicable to the adjustments provided for in Section
9.
The
above provisions of this Section 9(f)
shall
similarly apply to successive Fundamental Transactions. Notwithstanding the
foregoing, in the event of a Dilutive Fundamental Transaction, at the request
of
the Holder delivered before the 90th day after the effective date of such
Dilutive Fundamental Transaction, the Company (or successor entity) shall
purchase this Warrant from the Holder by paying to the Holder, within five
business days after such request, cash in an amount equal to the value of the
remaining unexercised portion of this Warrant on the effective date of such
Dilutive Fundamental Transaction, which value shall be determined by use of
the
Black-Scholes option pricing model, where the volatility input shall not be
greater than 50%. For purposes of this section, a "Dilutive Fundamental
Transaction" is a Fundamental Transaction in which the aggregate proceeds to
the
Holder, had the Holder exercised the then-unexercised portion of this Warrant
in
full immediately prior to the effective date of such Fundamental Transaction,
is
less than the aggregate Exercise Price of the Warrant with respect to the
then-unexercised portion of this Warrant immediately prior to the effectiveness
of such Fundamental Transaction.
(g) Issuance
of Shares of Common Stock.
The
Exercise Price and the number of Warrant Shares shall be adjusted from time
to
time as follows:
(i) If
and
whenever on or after the Original Issue Date, for a period of ninety (90) days
after the date hereof, the Company issues or sells, or in accordance with this
Section 9 is deemed to have issued or sold, any shares of Common Stock
(including the issuance or sale of shares of Common Stock owned or held by
or
for the account of the Company), but excluding shares of Common Stock deemed
to
have been issued by the Company in connection with any Excluded Securities
or an
Excluded Issuance) for a consideration per share (the “New
Issuance Price”)
less
than a price (the “Applicable
Price”)
equal
to the Exercise Price in effect immediately prior to such issue or sale or
deemed issuance or sale (the foregoing a “Dilutive
Issuance”),
then
immediately after such Dilutive Issuance, the Exercise Price then in effect
shall be reduced to an amount equal to the
formula below:
Adjusted
Exercise Price = (A
x
B) + D
A+C
where
A
= the
number of shares of Common Stock outstanding immediately preceding such Dilutive
Issuance
B
= the
Exercise Price in effect immediately preceding such Dilutive
Issuance
-10-
C
= the
number of Additional Shares of Common Stock (as adjusted for stock splits,
stock
combinations, recapitalizations, and dividends and the like) outstanding or
deemed outstanding hereunder as a result of such Dilutive Issuance
D
= the
aggregate consideration, if any, received or deemed to be received by the
Company upon such Dilutive Issuance
For
purposes of this subsection (i), “Additional
Shares of Common Stock”
shall
mean all shares of Common Stock issued by the Company or deemed to be issued
pursuant to this Section
9(g)(i),
other
than Excluded Issuances (as defined in Section
9(g)(ii)
hereof).
For
purposes of determining the adjusted Exercise Price under this Section 9(g),
the
following shall be applicable:
(1) Issuance
of Options.
If the
Company in any manner grants any Options and the lowest price per share for
which one share of Common Stock is issuable upon the exercise of any such Option
or upon conversion, exercise or exchange of any Convertible Securities issuable
upon exercise of any such Option is less than the Applicable Price, then such
share of Common Stock shall be deemed to be outstanding and to have been issued
and sold by the Company at the time of the granting or sale of such Option
for
such price per share. For purposes of this Section 9(g)(i)(1), the “lowest price
per share for which one share of Common Stock is issuable upon exercise of
such
Options or upon conversion, exercise or exchange of such Convertible Securities”
shall be equal to the sum of the lowest amounts of consideration (if any)
received or receivable by the Company with respect to any one share of Common
Stock upon the granting or sale of the Option, upon exercise of the Option
and
upon conversion, exercise or exchange of any Convertible Security issuable
upon
exercise of such Option. No further adjustment of the Exercise Price or number
of Warrant Shares shall be made upon the actual issuance of such shares of
Common Stock or of such Convertible Securities upon the exercise of such Options
or upon the actual issuance of such shares of Common Stock upon conversion,
exercise or exchange of such Convertible Securities.
(2) Issuance
of Convertible Securities.
If the
Company in any manner issues or sells any Convertible Securities and the lowest
price per share for which one share of Common Stock is issuable upon the
conversion, exercise or exchange thereof is less than the Applicable Price,
then
such share of Common Stock shall be deemed to be outstanding and to have been
issued and sold by the Company at the time of the issuance or sale of such
Convertible Securities for such price per share. For the purposes of this
Section 9(g)(i)(2), the “lowest price per share for which one share of Common
Stock is issuable upon the conversion, exercise or exchange” shall be equal to
the sum of the lowest amounts of consideration (if any) received or receivable
by the Company with respect to one share of Common Stock upon the issuance
or
sale of the Convertible Security and upon conversion, exercise or exchange
of
such Convertible Security. No further adjustment of the Exercise Price or number
of Warrant Shares shall be made upon the actual issuance of such shares of
Common Stock upon conversion, exercise or exchange of such Convertible
Securities, and if any such issue or sale of such Convertible Securities is
made
upon exercise of any Options for which adjustment of this Warrant has been
or is
to be made pursuant to other provisions of this Section 9(g), no further
adjustment of the Exercise Price or number of Warrant Shares shall be made
by
reason of such issue or sale.
-11-
(3) Change
in Option Price or Rate of Conversion.
If the
purchase price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion, exercise or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are convertible
into
or exercisable or exchangeable for shares of Common Stock increases or decreases
at any time, the Exercise Price and the number of Warrant Shares in effect
at
the time of such increase or decrease shall be adjusted to the Exercise Price
and the number of Warrant Shares which would have been in effect at such time
had such Options or Convertible Securities provided for such increased or
decreased purchase price, additional consideration or increased or decreased
conversion rate, as the case may be, at the time initially granted, issued
or
sold. For purposes of this Section 9(g)(i)(3), if the terms of any Option or
Convertible Security that was outstanding as of the date of issuance of this
Warrant are increased or decreased in the manner described in the immediately
preceding sentence, then such Option or Convertible Security and the shares
of
Common Stock deemed issuable upon exercise, conversion or exchange thereof
shall
be deemed to have been issued as of the date of such increase or decrease.
No
adjustment pursuant to this Section 9(g) shall be made if such adjustment would
result in an increase of the Exercise Price then in effect or a decrease in
the
number of Warrant Shares.
(4) Calculation
of Consideration Received.
In case
any Option is issued in connection with the issue or sale of other securities
of
the Company, together comprising one integrated transaction in which no specific
consideration is allocated to such Options by the parties thereto, the Options
will be deemed to have been issued for a consideration of $0.01. If any shares
of Common Stock, Options or Convertible Securities are issued or sold or deemed
to have been issued or sold for cash, the consideration received therefor will
be deemed to be the net amount received by the Company therefor. If any shares
of Common Stock, Options or Convertible Securities are issued or sold for a
consideration other than cash, the amount of such consideration received by
the
Company will be the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of consideration
received by the Company will be the Weighted Average Price of such security
on
the date of receipt. If any shares of Common Stock, Options or Convertible
Securities are issued to the owners of the non-surviving entity in connection
with any merger in which the Company is the surviving entity, the amount of
consideration therefor will be deemed to be the fair value of such portion
of
the net assets and business of the non-surviving entity as is attributable
to
such shares of Common Stock, Options or Convertible Securities, as the case
may
be. The fair value of any consideration other than cash or securities will
be
determined jointly by the Company and the Required Holders. If such parties
are
unable to reach agreement within ten (10) days after the occurrence of an event
requiring valuation (the “Valuation
Event”),
the
fair value of such consideration will be determined within five (5) Business
Days after the tenth (10th)
day
following the Valuation Event by an independent, reputable appraiser jointly
selected by the Company and the Required Holders. The determination of such
appraiser shall be final and binding upon all parties absent manifest error
and
the fees and expenses of such appraiser shall be borne by the
Company.
-12-
(5) Record
Date.
If the
Company takes a record of the holders of shares of Common Stock for the purpose
of entitling them (A) to receive a dividend or other distribution payable
in shares of Common Stock, Options or in Convertible Securities or (B) to
subscribe for or purchase shares of Common Stock, Options or Convertible
Securities, then such record date will be deemed to be the date of the issue
or
sale of the shares of Common Stock deemed to have been issued or sold upon
the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case
may
be.
(ii) For
purposes of the Section 9(g)(i): “Excluded
Issuance”
means
any Dilutive Issuance during the ninety day period after the Original Issue
Date
in which the New Issuance Price is greater than $3.00 (subject to adjustment
for
stock splits, stock dividends, recapitalizations, reorganizations,
reclassification, combinations, reverse stock splits or other similar events
after the Original Issue Date) per share of Common Stock. “Excluded
Securities”
means
any Common Stock issued or issuable: (i) in connection with any Approved Stock
Plan; (ii) upon the exercise of this Warrant; (iii) upon conversion, exercise
or
exchange of any Options or Convertible Securities which are outstanding on
the
day immediately preceding the Original Issue Date, provided that the terms
of
such Options or Convertible Securities are not amended, modified or changed
on
or after the Original Issue Date; or (iv) in connection with any acquisition
by
the Company, whether through an acquisition of stock or a merger of any
business, assets or technologies or an investment made in the Company by an
operating company in a business synergistic with the business of the Company
and
in which the Company receives benefits in addition to the investment of funds,
in each case, the primary purpose of which is not to raise equity capital in
an
amount.
(h) Calculations.
All
calculations under this Section
9
shall be
made to the nearest cent or the nearest 1/100th of a share, as applicable.
The
number of shares of Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Company, and the disposition
of any such shares shall be considered an issue or sale of Common Stock.
(i) Adjustments.
Notwithstanding any provision of this
Section 9,
no
adjustment of the Exercise Price shall be required if such adjustment is less
than $0.01; provided,
however,
that
any adjustments that by reason of this
Section 9(i)
are not
required to be made shall be carried forward and taken into account for purposes
of any subsequent adjustment.
-13-
(j) Adjustment
of Number of Shares.
Upon
each adjustment in the Exercise Price pursuant to this Section
9,
the
number of Warrant Shares purchasable hereunder shall be adjusted, to the nearest
whole share, to the product obtained by multiplying the number of Warrant Shares
purchasable immediately prior to such adjustment by a fraction, (i) the
numerator of which shall be the Exercise Price immediately prior to such
adjustment, and (ii) the denominator of which shall be the Exercise Price
immediately thereafter.
(k) Notice
of Adjustments.
Upon the
occurrence of each adjustment pursuant to this Section
9,
the
Company will promptly deliver to the Holder a certificate executed by the
Company’s Chief Financial Officer setting forth, in reasonable detail, the event
requiring such adjustment and the method by which such adjustment was
calculated, the adjusted Exercise Price and the adjusted number or type of
Warrant Shares or other securities issuable upon exercise of this Warrant (as
applicable). The Company will retain at its office copies of all such
certificates and cause the same to be available for inspection at said office
during normal business hours by the Holder or any prospective purchaser of
the
Warrant designated by the Holder.
(l) Notice
of Corporate Events. If
the
Company (i) declares a dividend or any other distribution of cash, securities
or
other property in respect of its Common Stock, including, without limitation,
any granting of rights or warrants to subscribe for or purchase any capital
stock of the Company or any subsidiary of the Company, (ii) authorizes,
approves, enters into any agreement contemplating, or solicits stockholder
approval for, any Fundamental Transaction or (iii) authorizes the voluntary
dissolution, liquidation or winding up of the affairs of the Company, then
the
Company shall deliver to the Holder a notice describing the material terms
and
conditions of such transaction at least 15 calendar days prior to the applicable
record or effective date on which a Person would need to hold Common Stock
in
order to participate in or vote with respect to such transaction, and the
Company will take all steps reasonably necessary in order to ensure that the
Holder is given the practical opportunity to exercise this Warrant prior to
such
time so as to participate in or vote with respect to such transaction; provided,
however, that the failure to deliver such notice or any defect therein shall
not
affect the validity of the corporate action required to be described in such
notice.
10. Fractional
Shares.
The
Company shall not be required to issue or cause to be issued fractional Warrant
Shares on the exercise of this Warrant. If any fraction of a Warrant Share
would, except for the provisions of this Section, be issuable upon exercise
of
this Warrant, the Company shall make a cash payment to the Holder equal to
(a)
such fraction multiplied by (b) the Market Price on the Exercise Date of one
full Warrant Share.
11. Restricted
Securities.
The
Holder represents and warrants that it (i) understands that the Warrant and
the
Warrant Shares have not been registered under the Securities Act and (ii)
understands the restrictions set forth on the legend printed on the face of
this
Warrant.
12. Listing
on Securities Exchanges.
In
furtherance and not in limitation of any other provision of this Warrant, if
the
Company at any time shall list any Common Stock on any Eligible Market, the
Company will, at its expense, simultaneously list the Warrant Shares (and
maintain such listing) on such Eligible Market, upon official notice of issuance
following the exercise of this Warrant; and the Company will so list, register
and maintain such listing on any Eligible Market any Other Securities, if and
at
the time that any securities of like class or similar type shall be listed
on
such Eligible Market by the Company.
-14-
13. Remedies.
The
Company stipulates that the remedies at law of the Holder of this Warrant in
the
event of any default or threatened default by the Company in the performance
of
or compliance with any of the terms of this Warrant are not and will not be
adequate, and that such terms may be specifically enforced by a decree for
the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
14. Notices.
Any and
all notices or other communications or deliveries hereunder (including without
limitation any Exercise Notice) shall be in writing and shall be mailed by
certified mail, return receipt requested, or by a nationally recognized courier
service or delivered (in person or by facsimile), against receipt to the party
to whom such notice or other communication is to be given. The address for
such
notices or communications shall be as set forth in the Purchase Agreement
entered into by the Holder and the Company. Any notice or other communication
given by means permitted by this Section
14 shall
be
deemed given at the time of receipt thereof.
15. Warrant
Agent.
The
Company shall serve as warrant agent under this Warrant. Upon 30 days’ notice to
the Holder, the Company may appoint a new warrant agent. Any Person into which
any new warrant agent may be merged, any Person resulting from any consolidation
to which any new warrant agent shall be a party or any Person to which any
new
warrant agent transfers substantially all of its corporate trust or shareholders
services business shall be a successor warrant agent under this Warrant without
any further act. Any such successor warrant agent shall promptly cause notice
of
its succession as warrant agent to be mailed (by first class mail, postage
prepaid) to the Holder at the Holder’s last address as shown on the Warrant
Register.
16. Miscellaneous.
This
Warrant may be assigned by the Holder. This Warrant may not be assigned by
the
Company, except to a successor in the event of a Fundamental Transaction. This
Warrant shall be binding on and inure to the benefit of the parties hereto
and
their respective successors and assigns. Subject to the preceding sentence,
nothing in this Warrant shall be construed to give to any Person other than
the
Company and the Holder any legal or equitable right, remedy or cause of action
under this Warrant. This Warrant may be amended only in writing signed by the
Company and the Holder and their successors and assigns.
(b) The
Company will not, by amendment of its governing documents or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this 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 against impairment. Without limiting the generality
of
the foregoing, the Company (i) will not increase the par value of any Warrant
Shares above the amount payable therefor upon exercise thereof, (ii) will take
all such action as may be reasonably necessary or appropriate in order that
the
Company may validly and legally issue fully paid and nonassessable Warrant
Shares on the exercise of this Warrant, free from all taxes, liens, claims
and
encumbrances and (iii) will not close its shareholder books or records in any
manner that interferes with the timely exercise of this Warrant.
-15-
(c) This
Warrant shall be governed by and construed and enforced in accordance with
the
laws of the State of New York without regard to conflicts of laws principles
thereof. Each party hereby irrevocably submits to the exclusive jurisdiction
of
the state and Federal courts sitting in the City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of the Securities Purchase
Agreement), and hereby irrevocably waives, and agrees not to assert any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process
and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Warrant and agrees that such service shall constitute good
and
sufficient service of process and notice thereof. Nothing contained herein
shall
be deemed to limit in any way any right to serve process in any manner permitted
by law. THE PARTIES HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.
(d) Neither
party shall be deemed in default of any provision of this Warrant, to the extent
that performance of its obligations or attempts to cure a breach hereof are
delayed or prevented by any event reasonably beyond the control of such party,
including, without limitation, war, hostilities, acts of terrorism, revolution,
riot, civil commotion, national emergency, strike, lockout, unavailability
of
supplies, epidemic, fire, flood, earthquake, force of nature, explosion,
embargo, or any other Act of God, or any law, proclamation, regulation,
ordinance, or other act or order of any court, government or governmental
agency, provided that such party gives the other party written notice thereof
promptly upon discovery thereof and uses reasonable best efforts to cure or
mitigate the delay or failure to perform.
(e) The
headings herein are for convenience only, do not constitute a part of this
Warrant and shall not be deemed to limit or affect any of the provisions hereof.
(f) In
case
any one or more of the provisions of this Warrant shall be deemed invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision that shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE
PAGE FOLLOWS]
-16-
The
Company has caused this Warrant to be duly executed by its authorized officer
as
of the date first indicated above.
| Roo Group, Inc. | ||
| |
|
|
| By: | ||
|
Name: Xxxxxx Xxxxx |
||
| Title: Chief Executive Officer | ||
APPENDIX
A
Form
of Assignment
(to
be
completed and signed only upon transfer of Warrant)
For
Value Received,
the
undersigned hereby sells, assigns and transfers unto __________________________
the right represented by the within Warrant to purchase _____________ shares
of
Common Stock of ROO Group, Inc. to which the within warrant relates and appoints
__________________________ attorney to transfer said right on the books of
ROO
Group, Inc. with full power of substitution in the premises.
| Dated: | ||||
| (Signature must conform in all respects to name of Holder as specified on face of the Warrant) | ||||
| Address of Transferee: | ||||
APPENDIX
B
Form
of Exercise Notice
(To
be
executed by the Holder to exercise the right to purchase shares of Common Stock
under the foregoing Warrant)
| To: |
Roo
Group, Inc.
|
The
undersigned is the Holder of Warrant No. _________ (the “Warrant”) issued by
Roo
Group, Inc.,
a
Delaware corporation (the “Company”). Capitalized terms used herein and not
otherwise defined have the respective meanings set forth in the Warrant.
|
1.
|
The
Warrant is currently exercisable to purchase a total of _________
Warrant
Shares.
|
|
2.
|
The
undersigned Holder hereby exercises its right to purchase __________
Warrant Shares pursuant to the
Warrant
|
|
3.
|
The
Holder intends that payment of the Exercise Price shall be made as
(check
one):
|
Cash
Exercise _______
Cashless
Exercise _______
|
4.
|
If
the Holder has elected a Cash Exercise, the Holder shall pay the
sum of
$________ to the Company in accordance with the terms of the Warrant.
|
|
5.
|
If
the Holder has elected a Cashless Exercise, a certificate shall be
issued
to the Holder for the number of shares equal to the whole number
portion
of the product of the calculation set forth below, which is ________.
The
Company shall pay a cash adjustment in respect of the fractional
portion
of the product of the calculation set forth below in an amount equal
to
the product of the fractional portion of such product and the Market
Price
on the Exercise Day, which product is
__________.
|
X
=
Y[(A-B)/A]
X
= the
number of Warrant Shares to be issued to the Holder.
Number
of
Warrant Shares being exercised:__________ (“Y”).
Market
Price on the Exercise Day:__________ (“A”).
Exercise
Price:__________ (“B”)
|
6.
|
Pursuant
to this exercise, the Company shall deliver to the Holder Warrant
Shares
in accordance with the terms of the
Warrant.
|
1
|
7.
|
Following
this exercise, the Warrant shall be exercisable to purchase a total
of
__________ Warrant Shares.
|
| Dated: | Name of Holder: | ||||
| (Print) | |||||
| By: | |||||
| Name: | |||||
| Title: | |||||
| (Signature must conform in all respects to name of holder as specified on the face of the Warrant) | |||||
2
