CONSULTING AGREEMENT
This Agreement is made as of this 21st day of July, 2000, by and
among ▇▇▇▇▇▇▇▇.▇▇▇ Inc., a corporation duly organized and existing under the
laws of the State of Nevada with offices at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ (the "Company") and The May ▇▇▇▇▇ Group, Inc., a
corporation organized and existing under the laws of the State of Maryland with
offices at ▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Consultant").
WHEREAS, the Company owns and operates Internet financial web sites
and is publicly traded on the Nasdaq OTC Bulletin Board under the symbol "JNOT";
and
WHEREAS, the Consultant is a broker/dealer, duly licensed by the
NASD, and is experienced in providing investment banking advice to publicly
traded companies; and
WHEREAS, the Company wishes to retain the services of the Consultant
on the following terms and conditions.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. The Company hereby retains the services of the Consultant for a
period of six months from the date hereof. The Consultant shall receive, as a
fee for the Consulting Services (as that term is defined herein) rendered
hereunder, five-year stock purchase warrants (the "Warrants"), in the form
attached hereto as Exhibit A, to acquire an aggregate of 1,250,000 shares of
common stock, par value $0.00001 per share of the Company (the "Warrant
Shares"). The Warrants shall be issued to the Consultant and/or one or more
designees of the Consultant, and shall be exercisable at a price of $2.00 per
share. The Consultants shall have the right to demand
that the Company register the Warrant Shares on a Registration Statement on Form
SB-2 to be filed with the U.S. Securities and Exchange Commission within 45
calendar days of the date hereof.
2. The Consultant shall provide, or has provided, the following
services to the Company: (i) introduction to the Company of potential private
investors, (ii) introduction to the Company of U.S. or foreign broker-dealers or
investment funds willing to do equity credit line, convertible securities or
other investment transactions, (iii) utilization of their best efforts to
increase the number of market makers in the Company's stock, (iv) introduction
to the Company of other business ventures (publicly and/or privately held) for
the purpose of potential strategic merger, acquisition and/or investment
transactions and (v) general investment banking advice. The services referred to
in this paragraph shall be known as the "Consulting Services." The Company
hereby acknowledges that adequate services have been rendered by the Consultant
to the Company for the Warrants being issued hereunder.
3. The Consultants shall be independent contractors and shall have
no right or authority to assume or create any obligations or responsibility,
express or implied, on behalf of or in the name of the Company, unless
specifically authorized in writing by the Company. No provision of this
Agreement shall be construed to preclude the Consultant, or any officer,
director, agent, assistant, affiliate or employee of the Consultant, from
engaging in any activity whatsoever, including, without limitation, receiving
compensation for managing investments, or acting as an advisor, broker, or
dealer, to or participant in any corporation, partnership, trust or other
business entity or from receiving compensation or profit therefore.
4. This Agreement shall be binding upon the Company and the
Consultant and each of their successors and assigns.
5. If any provision or provisions of this Agreement shall be held to
be invalid, illegal or unenforceable for any reason whatsoever; (i) the
validity, legality and enforceability of the remaining provisions of this
Agreement (including, without limitation, each portion of any
2
Section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable) shall not in any way be affected or impaired thereby;
and (ii) to the fullest extent possible, the provisions of this Agreement
(including, without limitation, each portion of any Section of this Agreement
containing any such provision held to be invalid, illegal or unenforceable)
shall be construed so as to give effect to the intent manifested by the
provision held, invalid illegal or unenforceable.
6. No supplement, modification or amendment of this Agreement shall
be binding unless executed in writing by both parties hereto. No waiver of any
other provisions hereof (whether or not similar) shall be binding unless
executed in writing by both parties hereto nor shall such waiver constitute a
continuing waiver.
7. This Agreement may be executed in one or more counterparts, each
of which shall for all purposes be deemed to be an original but all of which
shall constitute one and the same Agreement.
8. This Agreement and its enforcement shall be governed by the laws
of the State of New York applicable to contracts to be performed therein,
without giving effect to the conflict of law principles thereof.
9. This Agreement contains the entire agreement between the parties
with respect to the services to be provided to the Company by the Consultant
and supersedes any and all prior understandings, agreement or correspondence
between the parties.
10. The Consultant hereby assigns the Warrants to purchase 1,150,000
shares of common stock of the Company, such that the Warrants shall be held by
the persons and in the amounts set forth in Schedule A hereto.
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IN WITNESS WHEREOF, the Company and the Consultant have caused this
Agreement to be signed by their duly authorized representatives as of the day
and year first above written.
▇▇▇▇▇▇▇▇.▇▇▇ Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Operating Officer
The May ▇▇▇▇▇ Group, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
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SCHEDULE A
Name of Consultant Warrant Shares Exercise Price Expiration Date
------------------ -------------- -------------- ---------------
The May ▇▇▇▇▇ Group, Inc. 100,000 $2.00 July 21, 2005
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 230,000 $2.00 July 21, 2005
▇▇▇▇ ▇. ▇▇▇▇▇▇ 230,000 $2.00 July 21, 2005
C. ▇▇▇ ▇▇▇▇▇▇▇▇ 230,000 $2.00 July 21, 2005
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 230,000 $2.00 July 21, 2005
Hunter ▇. ▇▇▇▇▇▇ 230,000 $2.00 July 21, 2005
5
EXHIBIT A
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW
TOWARD RESALE OR DISTRIBUTION. THIS WARRANT MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE
REASONABLY ACCEPTABLE TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT.
▇▇▇▇▇▇▇▇.▇▇▇ INC.
-----------------
WARRANT TO PURCHASE COMMON STOCK
Warrant No.: ________ Number of Shares Issuable: __________
Date of Issuance: July 21, 2000
▇▇▇▇▇▇▇▇.▇▇▇ Inc., a Nevada corporation (the "Company"), hereby certifies
that, for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, The May ▇▇▇▇▇ Group, Inc., the registered holder hereof
or its permitted assigns, is entitled, subject to the terms set forth below, to
purchase from the Company upon surrender of this Warrant, at any time or times
on or after the date hereof, but not after 5:00 P.M. Eastern Standard Time on
the Expiration Date (as defined herein) _______________ (__________) fully paid
nonassessable shares of Common Stock (as defined herein) of the Company (the
"Warrant Shares") at the Warrant Exercise Price per share provided in Section
l(b) below;
Section 1.
(a) Letter Agreement. This Warrant is one of the warrants (the "Warrants")
issued pursuant to the terms of a Consulting Agreement, by and among the
Company and The May ▇▇▇▇▇ Group, Inc. dated July 21, 2000.
(b) Definitions. The following words and terms as used in this Warrant
shall have the following meanings:
(i) "Common Stock" means (i) the Company's common stock, no par value
$0.0001 per share, and (ii) any capital stock into which such Common Stock shall
have been changed or any capital stock resulting from a reclassification of such
Common Stock.
1
(ii) "Convertible Securities" means any stock or securities (other than
Options) directly or indirectly convertible into or exchangeable for Common
Stock.
(iii) "Expiration Date" means the date five (5) years from the date of the
issuance of the Warrant or, if such date falls on a Saturday, Sunday or other
day on which banks are required or authorized to be closed in the City of New
York or the State of New York (a "Holiday"), the next preceding date that is not
a Holiday.
(iv) "Options" means any rights, warrants or options to subscribe for or
purchase Common Stock or Convertible Securities.
(v) "Other Securities" means other Warrants.
(vi) "Person" means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.
(vii) "Principal Market" means the Nasdaq Bulletin Board System, Nasdaq
Small-Cap Market, or American Stock Exchange.
(viii) "Securities Act" means the Securities Act of 1933, as amended.
(ix) "Warrant" shall mean this warrant and all warrants issued in
exchange, transfer or replacement of any thereof.
(x) "Warrant Exercise Price" shall be equal to $ 2.00, subject to
adjustment as hereinafter provided.
(b) Other Definitional Provisions.
(i) Except as otherwise specified herein, all references herein (A)
to the Company shall be deemed to include the Company's successors and (B)
to any applicable law defined or referred to herein, shall be deemed
references to such applicable law as the same may have been or may be
amended or supplemented from time to time.
(ii) When used in this Warrant, the words "herein," "hereof," and
"hereunder," and words of similar import, shall refer to this Warrant as a
whole and not to any provision of this Warrant, and the words "Section,"
"Schedule," and "Exhibit" shall refer to Sections of, and Schedules and
Exhibits to, this Warrant unless otherwise specified.
2
(iii) Whenever the context so requires, the neuter gender includes
the masculine or feminine, and the singular number includes the plural,
and vice versa.
Section 2. Exercise of Warrant.
(a) Subject to the terms and conditions hereof, this Warrant may be
exercised by the holder hereof then registered on the books of the Company, in
whole or in part, at any time on any business day or after the opening of
business on the date hereof and prior to 11:59 P.M. Eastern Standard Time on the
Expiration Date by (i) delivery of a written notice, in the form of the
subscription notice attached as Exhibit A hereto, of such holder's election to
exercise this Warrant, which notice shall specify the number of Warrant Shares
to be purchased, (ii) (A) payment to the Company of an amount equal to the
Warrant Exercise Price multiplied by the number of Warrant Shares as to which
the Warrant is being exercised (plus any applicable issue or transfer taxes)
(the "Aggregate Exercise Price") in cash or by check or wire transfer, or (B) by
notifying the Company that it should subtract from the number of Warrant Shares
issuable to the holder upon such exercise an amount of Warrant Shares having a
last reported sale price (as reported by Bloomberg) or fair market value on the
date immediately preceding the date of the subscription notice equal to the
Aggregate Exercise Price of the Warrant Shares for which this warrant is being
exercised (a "Cashless Exercise"), and (iii) the surrender of this Warrant, to a
common carrier for delivery to the Company as soon as practicable following such
date, this Warrant (or an indemnification undertaking with respect to this
Warrant in the case of its loss, theft, or destruction); provided that if such
Warrant Shares are to be issued in any name other than that of the registered
holder of this Warrant, such issuance shall be deemed a transfer and the
provisions of Section 7 shall be applicable. In the event of any exercise of the
rights represented by this Warrant in compliance with this Section 2, a
certificate or certificates for the Warrant Shares so purchased, in such
denominations as may be requested by the holder hereof and registered in the
name of, or as directed by, the holder, shall be delivered at the Company's
expense to, or as directed by, such holder as soon as practicable after such
rights shall have been so exercised, and in any event no later than five (5)
business days after the Company's receipt of the Exercise Notice, the Aggregate
Exercise Price and this Warrant (or indemnification undertaking with respect to
this Warrant in the case of its loss, theft or destruction) Upon delivery of the
Exercise Notice and Aggregate Exercise Price referred to in clause (ii) (A)
above or notification to the Company of a Cashless Exercise referred to in
clause (ii) (B) above, the holder of this Warrant shall be deemed for all
corporate purposes to have become the holder of record of the Warrant Shares
with respect to which this Warrant has been exercised, irrespective of the date
of delivery of this Warrant as required by clause (iii) above or the
certificates evidencing such Warrant Shares. In the case of a dispute as to the
determination of the Warrant Exercise Price or the Average Market Price of a
security or the arithmetic calculation of the Warrant Shares, the Company shall
promptly issue to the holder the number of shares of Common Stock that is not
disputed and shall submit the disputed determinations or arithmetic calculations
to the holder via facsimile within five (5) business days of receipt of the
holder's subscription notice. If the holder and the Company are unable to agree
upon the determination of the Warrant Exercise Price or Average Market Price or
arithmetic calculation of the Warrant Shares within five (5) business days of
such disputed determination or arithmetic calculation being submitted to the
holder, then the Company shall immediately submit via facsimile (i) the disputed
determination of the Warrant Exercise Price or the Average Market Price to an
independent, reputable investment banking firm or (ii) the disputed arithmetic
calculation of the Warrant Shares to its independent, outside accountant. The
Company shall cause the investment banking firm or the accountant, as the case
may be, to perform the determinations or calculations and notify the
3
Company and the holder of the results no later than forty-eight (48) hours from
the time it receives the disputed determinations or calculations. Such
investment bank's or accountant's determination or calculation, as the case may
be, shall be deemed conclusive absent manifest error and the Company shall be
liable for the costs and expenses related to such determination or calculation.
(b) Unless the rights represented by this Warrant shall have expired or
shall have been fully exercised, the Company shall, as soon as practicable and
in any event no later than five (5) business days after any exercise and at its
own expense, issue a new Warrant identical in all respects to the Warrant
exercised except (i) it shall represent rights to purchase the number of Warrant
Shares purchasable immediately prior to such exercise under the Warrant
exercised, less the number of Warrant Shares with respect to which such Warrant
is exercised, and (ii) the holder thereof shall be deemed for all corporate
purposes to have become the holder of record of such Warrant Shares immediately
prior to the close of business on the date on which the Warrant is surrendered
and payment of the amount due in respect of such exercise and any applicable
taxes is made, irrespective of the date of delivery of certificates evidencing
such Warrant Shares, except that, if the date of such surrender and payment is a
date when the stock transfer books of the Company are properly closed, such
person shall be deemed to have become the holder of such Warrant Shares at the
opening of business on the next succeeding date on which the stock transfer
books are open. Upon presentation of a duly executed Subscription Form in the
Form of Exhibit A to this Warrant, the holder shall be entitled to exercise this
Warrant in whole or in part, if the holder shall have previously exercised and
surrendered this Warrant and the Company shall not have issued a new Warrant
representing the number of shares issuable following such prior exercise.
(c) No fractional shares of Common Stock are to be issued upon the
exercise of this Warrant, but rather the number of shares of Common Stock issued
upon exercise of this Warrant shall be rounded up or down to the nearest whole
number.
(d) If the Company shall fail for any reason or for no reason to issue to
holder on a timely basis as described under this Section 2, a certificate for
the number of shares of Common Stock to which the holder is entitled upon the
holder's exercise of this, the Company shall, in addition to any other remedies
under this Agreement or otherwise available to such holder pay as additional
damages in cash to such holder for each day such issuance is not timely effected
an amount equal to .25% of the product of (A) the sum of the number of shares of
Common Stock not issued to the holder on a timely basis and to which the holder
is entitled, and (B) the sum derived by subtracting (1) the Warrant exercise
price then in effect, from (2) the closing bid price of the
Common Stock on the last possible date which the Company could have issued
Common Stock, as the case may be, to the holder without violating this Section
2.
(e) The Company shall not effect any exercise of any Warrant and no holder
of any Warrant shall have the right to exercise any Warrant pursuant to Section
2 to the extent that after giving to such exercise such person (together with
such Persons affiliates) (A) would beneficially owned in excess of 4.9% of the
outstanding shares of Common Stock following such conversion and (B) would have
acquired, through exercise of any Warrant or otherwise, in excess of 4.9% of the
outstanding shares of the Common Stock following such exercise during the 60-day
period ending on and including such exercise date; provided, that the holder of
any Warrant shall have the right to exercise such Warrant regardless of the
percent of outstanding shares of Common Stock such holder would own following
the exercise thereof if the holder exercises the Warrant within 60 days prior to
the Expiration Date. For purposes of the foregoing sentence, the number of
shares of Common Stock beneficially owned by a person and its affiliates or
acquired by a person and its affiliates, as the case may be, shall include the
number of shares of Common Stock issuable upon the exercise of the Warrants
4
with respect to which the determination of such sentence is being made, but
shall exclude the number of shares of Common Stock which would be issuable upon
(i) exercise of the remaining, non exercisable Warrants beneficially owned by
such person and its affiliates and (ii) exercise or conversion of the
unexercised or unconverted portion of any other securities of the Company
subject to limitation on conversion or exercise analogous to the limit contained
herein beneficially owned by such Person and its affiliates. Except as set forth
in the preceding sentence, for purposes of this section 2(e), beneficial
ownership shall be calculated in accordance with Section 13 (d) of the
Securities Exchange Act of 1934, as amended. Notwithstanding anything to the
contrary contained herein, each Exercise Notice shall constitute a
representation by the holder submitting such Exercise Notice that, after giving
effect to such Exercise Notice (A) the holder will not beneficially own (as
determined in accordance with this Section 2(e)) and (B) during the 60-day
period ending on and including such exercise date, the holder will not have
acquired, through exercise of any Warrant or otherwise, a number of shares of
Common Stock in excess of 4.9% of the outstanding shares of Common Stock as
reflected in the Company's most recent Form 10-QSB or Form 10-KSB, as the case
may be, or more recent public release or other public notice by the Company
setting forth the number of Shares of Common Stock outstanding, but after giving
effect to exercise of any Warrant by such holder since the date as of which such
numbers of outstanding shares of the Common Stock was reported.
Section 3. Covenants as to Common Stock. The Company hereby covenants and
agrees as follows:
(a) This Warrant is, duly authorized and validly issued.
(b) All Warrant Shares which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued, fully paid
and nonassessable and free from all taxes, liens and charges with respect to the
issue thereof.
(c) During the period within which the rights represented by this Warrant
may be exercised, the Company will at all times have authorized and reserved at
least the number of shares of Common Stock needed to provide for the exercise of
the rights then represented by this Warrant and the par value of said shares
will at all times be less than or equal to the applicable Warrant Exercise
Price.
(d) The Company shall promptly secure the listing of the shares of Common
Stock issuable upon exercise of this Warrant upon each national securities
exchange or automated quotation system, if any, or over-the-counter-bulletin
board upon which shares of Common Stock are then listed or quoted (subject to
official notice of the over-the-counter bulletin board of issuance upon exercise
of this Warrant) and shall maintain, so long as any other shares of Common Stock
shall be so listed or quoted, such listing or quotation of all shares of Common
Stock from time to time issuable upon the exercise of this Warrant; and the
Company shall so list or obtain quotation on each such national securities
exchange, automated quotation system or over-the-counter bulletin board, as the
case may be, and shall maintain such listing in quotation of, any other shares
of capital stock of the Company issuable upon the exercise of this Warrant if
and so long as any shares of the same class shall be listed on such national
securities exchange, automated quotation system or over-the-counter bulletin
board.
(e) The Company will not, by amendment of its Certificate of Incorporation
or through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any
5
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed by it hereunder, but will at all
times in good faith assist in the carrying out of all the provisions of this
Warrant and in the taking of all such action as may reasonably be requested by
the holder of this Warrant in order to protect the exercise privilege of the
holder of this Warrant against dilution or other impairment, consistent with the
tenor and purpose of this Warrant. Without limiting the generality of the
foregoing, the Company (i) will not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the Exercise
Price then in effect, and (ii) will take all such actions as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock upon the exercise of this Warrant.
(f) This Warrant will be binding upon any entity succeeding to the Company
by merger, consolidation or acquisition of all or substantially all of the
Company's assets.
(g) If at any time the Company proposes to file with the Securities and
Exchange Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its
securities (other than on Form S-4 or Form S-8 (or their equivalents at such
time relating to securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans) the Company shall
promptly send to the Holder's written notice of the Company's intention to file
a registration statement and of the holder's rights under this section and, if
within five (5) days after receipt of such notice, the holder hereof shall so
request in writing, the Company shall include in such registration statement all
or any part of the Common Stock underlying this Warrant the holder requests to
be registered. If a registration pursuant this section is to be an underwritten
public offering and the managing underwriters advise the Company in writing,
that in their reasonable good faith opinion, marketing or other factors dictate
that a limitation on the number of shares of Company common stock which may be
included in the registration statement is necessary to facilitate and not
adversely affect the proposed offering, then the Company shall include in such
registration : (1) first, all securities the Company proposes to sell for its
own account, (2) second, up to the full number of securities proposed to be
registered for the account of the holders of securities entitled to inclusion of
their securities requested to be registered by the holder hereof and other
holders of securities entitled to participate in the registration, as of the
date hereof, drawn from them pro rata based on the number each has requested to
be included in such registration.
Section 4. Taxes. The Company shall not be required to pay any tax or
taxes attributable to the initial issuance of the Warrant Shares or any
permitted transfer involved in the issue or delivery of any certificates for
Warrant Shares in a name other than that of the registered holder hereof or upon
any permitted transfer of this Warrant.
Section 5. Warrant Holder Not Deemed a Stockholder. Except as otherwise
specifically provided herein, no holder, as such, of this Warrant shall be
entitled to vote or receive dividends or be deemed the holder of shares of the
Company for any purpose, nor shall anything contained in this Warrant be
construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization, issue of stock, reclassification
of stock, consolidation, merger, conveyance or otherwise), receive notice of
meetings, receive dividends or subscription rights, or otherwise, prior to the
issuance to
6
the holder of this Warrant of the Warrant Shares which he or she is then
entitled to receive upon the due exercise of this Warrant.
In addition, nothing contained in this Warrant shall be construed as
imposing any liabilities on such holder to purchase any securities or as a
stockholder of the Company, whether such liabilities are asserted by the Company
or by creditors of the Company. Notwithstanding this Section 5, the Company will
provide the holder of this Warrant with copies of the same notices and other
information given to the stockholders of the Company generally,
contemporaneously with the giving thereof to the stockholders.
Section 6. Representations of Holder. The holder of this Warrant, by the
acceptance hereof, represents (and any assignor shall represent) that it is
acquiring this Warrant and the Warrant Shares for its own account for investment
purposes and not with a view to, or for sale in connection with, any
distribution hereof, and not with any present intention of distributing any of
the same. The holder of this Warrant further represents (and any assignor shall
represent), by acceptance hereof, that, as of this date, such holder is an
"accredited investor" as such term is defined in Rule 501(a)(1) of Regulation D
promulgated by the Securities and Exchange Commission under the Securities Act
(an "Accredited Investor"). Upon exercise of this Warrant, the holder shall, if
requested by the Company, confirm in writing, in a form satisfactory to the
Company, that the Warrant Shares 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 and that such holder is an
Accredited Investor. If such holder cannot make such representations because
they would be factually incorrect, it shall be a condition to such holder's
exercise of the Warrant that the Company receive such other representations as
the Company considers reasonably necessary to assure the Company that the
issuance of its securities upon exercise of the Warrant shall not violate any
United States Federal or state securities laws.
Section 7. Ownership and Transfer.
(a) The Company shall maintain at its principal executive offices (or such
other office or agency of the Company as it may designate by notice to the
holder hereof), a register for this Warrant, in which the Company shall record
the name and address of the person in whose name this Warrant has been issued,
as well as the name and address of each permissible transferee. The Company may
treat the person in whose name any Warrant is registered on the register as the
owner and holder thereof for all purposes, notwithstanding any notice to the
contrary, but in all events recognizing any transfers made in accordance with
the terms of this Warrant.
(b) This Warrant and the rights granted to the holder hereof are
transferable, in whole or in part, upon surrender of this Warrant, together with
a properly executed warrant power in the form of Exhibit B attached hereto;
provided, however, that any transfer or assignment shall subject to the
conditions set forth in Section 6 above and Section 7(c) below.
(c) The holder of this Warrant understands that this Warrant has not been
and is not expected to be, registered under the Securities Act or any state
securities laws, and may not be offered for sale, sold, assigned or transferred
unless (a) subsequently registered thereunder, or (b) such holder shall have
delivered to the Company an opinion of counsel, reasonably satisfactory in form,
scope and substance to the Company, to the effect that the securities to be
sold, assigned or transferred may be sold, assigned or
7
transferred pursuant to an exemption from such registration. Any sale of such
securities made in reliance on Rule 144 promulgated under the Securities Act may
be made only in accordance with the terms of said Rule and further, if said Rule
is not applicable, any resale of such securities under circumstances in which
the seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the Securities and Exchange Commission thereunder; and neither
the Company nor any other person is under any obligation to register the Warrant
Shares under the Securities Act or any state securities laws or to comply with
the terms and conditions of any exemption thereunder except as set forth in
Section 7(d) below.
(d) The Company is obligated to register the Warrant Shares for resale
under the Securities Act pursuant to the Consulting Agreement, dated as of July
21, 2000, by and between the Company and The May ▇▇▇▇▇ Group, Inc. (the
"Consulting Agreement") and the initial holder of this Warrant (and certain
assignees thereof) is entitled to the registration rights in respect of the
Warrant Shares as set forth in the Consulting Agreement.
Section 8. Indemnification.
(a) (i) Indemnification by the Company. The Company agrees to indemnify
and hold harmless the registered holder hereof, its partners, affiliates,
officers, directors, employees, counsel and duly authorized agents, and each
Person or entity, if any, who controls the holder within the meaning of Section
15 of the Securities Act, or Section 20 of the Securities Exchange Act of 1934,
as amended, together with the partners, affiliates, officers, directors,
employees, counsel and duly authorized agents of such controlling Person or
entity (collectively, the "Controlling Persons"), from and against any loss,
claim, damage, liability, costs and expenses (including, without limitation,
reasonable attorneys' fees and disbursements and costs and expenses of
investigating and defending any such claim) (collectively, "Damages"), joint or
several, and any action or proceeding in respect thereof to which the registered
holder, its partners, affiliates, officers, directors, employees and duly
authorized agents, and any Controlling Person, may become subject under the
Securities Act or otherwise, as incurred, insofar as such Damages (or actions or
proceedings in respect thereof) arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement, preliminary prospectus or prospectus relating to the
Warrant Shares or arises out of, or are based upon, any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made, except insofar as any such untrue
statement, alleged untrue statement, omission or alleged omission is made in
reliance upon and in conformity with written information furnished to the
Company by the registered holder which is specifically intended by the
registered holder for use in the preparation of any such registration statement,
preliminary prospectus or prospectus, and shall reimburse the registered holder,
its partners, affiliates, officers, directors, employees, counsel and duly
authorized agents, and each such Controlling Person, for any legal and other
expenses reasonably incurred by the Registered holder, its partners, affiliates,
officers, directors, employees, counsel and duly authorized agents, or any such
Controlling Person, as incurred, in investigating or defending or preparing to
defend against any such Damages or actions or proceedings; provided, however,
that the Company shall not be liable to the registered holder to the extent that
any such Damages arise out of or are based upon an untrue statement or omission
made in any preliminary prospectus if (i) the registered holder failed to send
or deliver a copy of the final prospectus delivered by the Company to the
registered holder with or prior to the delivery of written confirmation of the
sale by the registered holder to the Person asserting the claim from which such
Damages arise, and (ii) the final prospectus would have corrected such untrue
statement or alleged untrue statement or such omission or alleged omission.
(ii) Indemnification by the Holder. The registered holder
hereof agrees to indemnify and hold harmless the Company, its affiliates,
officers, directors, employees, counsel and duly authorized agents, and each
Controlling Persons of the Company, from and against any and all Damages, joint
or several, and any action or proceeding in respect thereof to which the
registered holder, its partners, affiliates, officers, directors, employees,
counsel and duly authorized agents, and any such Controlling Person, may become
subject under the Securities Act or otherwise, as incurred; insofar as such
Damages (or actions or proceedings in respect thereof) arise out of, or are
based upon, any untrue statement or alleged untrue statement of a material fact
contained in any registration statement, preliminary prospectus or prospectus
relating to the Warrant Shares or arises out of, or are based upon, any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances under which they were made, but only to the extent that any
such untrue statement, alleged untrue statement, omission or alleged omission is
made in reliance upon and in conformity with written information furnished to
the Company by the registered holder of this Warrant which is specifically
intended by the registered holder for use in the preparation of any such
registration statement, preliminary prospectus or prospectus, and shall
reimburse the Company, its partners, affiliates, officers, directors, employees,
counsel and duly authorized agents, and each such Controlling Person, for any
legal and other expenses reasonably incurred by the registered holder hereof,
its partners, affiliates, officers, directors, employees, counsel and duly
authorized agents, or any such Controlling Person, as incurred, in investigating
or defending or preparing to defend against any such Damages or actions or
proceedings.
(b) Conduct of Indemnification Proceedings. Promptly after receipt by
any person or entity in respect of which indemnity may be sought pursuant to
Section 8(a) (an "Indemnified Party") of notice of any claim or the commencement
of any action, the Indemnified Party shall, if a claim in respect thereof is to
be made against the person or entity against whom such indemnity may be sought
(the "Indemnifying Party"), notify the Indemnifying Party in writing of the
claim or the commencement of such action. In the event an Indemnified Party
shall fail to give such notice as provided in this Section 8(b) and the
Indemnifying Party to whom notice was not given was unaware of the proceeding to
which such notice would have related and was prejudiced by the failure to give
such notice, the indemnification provided for in Section 8(a) shall be reduced
to the extent of any actual prejudice resulting from such failure to so notify
the Indemnifying Party; provided, however, that the failure to notify the
Indemnifying Party shall not relieve the Indemnifying Party from any liability
that it may have to an Indemnified Party otherwise than under Section 8(a). If
any such claim or action shall be brought against an Indemnified Party, and it
shall notify the Indemnifying Party thereof, the Indemnifying Party shall be
entitled to participate therein, and, to the extent that it wishes, jointly with
any other similarly notified Indemnifying Party, to assume the defense thereof
with counsel reasonably satisfactory to the Indemnified Party. After notice from
the Indemnifying Party to the Indemnified Party of its election to assume the
defense of such claim or action, the Indemnifying Party shall not be liable to
the Indemnified Party for any legal or other expenses subsequently incurred by
the Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that the Indemnified Party
shall have the right to employ separate counsel to represent the Indemnified
Party and its Controlling Persons who may be subject to liability arising out of
any claim in respect of which indemnity may be sought by the Indemnified Party
against the Indemnifying Party, but the fees and expenses of such counsel shall
be for the account of such Indemnified Party, unless (i) the Indemnifying Party
and the Indemnified Party shall have mutually agreed to the retention of such
counsel or (ii) in the reasonable judgment of the Indemnifying Party and the
Indemnified Party, representation of both parties by the same counsel would be
inappropriate due to actual or potential conflicts of interest between them, it
being understood, however, that the Indemnifying Party shall not, in connection
with any one such claim or action or separate but substantially similar or
related claims or actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (together with appropriate local
counsel) at any time for all Indemnified Parties, or for fees and expenses that
are not reasonable. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any claim or pending
or threatened proceeding in respect of which the Indemnified Party is or could
have been a party and indemnity is sought hereunder by such Indemnified Party,
unless such settlement includes an unconditional release of such Indemnified
Party from all liability arising out of such claim or proceeding. Whether or not
the defense of any claim or action is assumed by the Indemnifying Party, such
Indemnifying Party will not be subject to any liability for any settlement made
without its consent, which consent will not be unreasonably withheld.
(c) Other Indemnification. Indemnification similar to that specified
in the preceding paragraphs of this Section 8 (with appropriate modifications)
shall be given by the Company with respect to any required registration or other
qualification of securities under any federal or state law or regulation of any
governmental authority other than the Securities Act. The provisions of this
Section 8 shall be in addition to any other rights to indemnification,
contribution or other remedies which an Indemnified Party may have pursuant to
law, equity, contract or otherwise.
(d) Contribution. If the indemnification and reimbursement obligations
provided for in any section of this Section 8 is unavailable or insufficient to
hold harmless the Indemnified Parties in respect of any Damages referred to
herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified Party
as a result of such Damages as between the Company on the one hand and the
registered holder hereof on the other, in such proportion as is appropriate to
reflect the relative fault of the Company and of the registered holder in
connection with such statements or omissions, as well as other equitable
considerations. The relative fault of the Company on the one hand and of the
registered holder hereof on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by such party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and the registered holder agree that it would not be just
and equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of the
Damages referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 8, the registered holder hereof shall in no event be required to
contribute any amount in excess of the amount by which the total price at which
the Warrant Shares of the registered holder were sold to the public (less
underwriting discounts and commissions) exceeds the amount of any damages which
the registered holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
Section 9. Adjustment of Warrant Exercise Price. In order to prevent
dilution of the rights granted under this Warrant, the Warrant Exercise Price
shall be adjusted from time to time as follows:
(a) Adjustment of Warrant Exercise Price upon Subdivision or Combination
of Common Stock. If the Company at any time after the date of issuance of this
Warrant, subdivides (by any stock split, stock dividend, re-capitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Warrant Exercise Price in effect immediately prior
to such subdivision will be proportionately reduced and the number of shares of
Common Stock obtainable upon exercise of this Warrant will be proportionately
increased. If the Company at any time after the date of issuance of this Warrant
combines (by combination, reverse stock split or otherwise) one or more classes
of its outstanding shares of Common Stock into a smaller number of shares, the
Warrant Exercise Price in effect immediately prior to such combination will be
proportionately increased and the number of shares of Common Stock obtainable
upon exercise of this Warrant will be proportionately decreased.
(b) Reorganization, Reclassification, Consolidation, Merger or Sale. Any
re-capitalization, reorganization reclassification, consolidation, merger, sale
of all or substantially all of the Company's assets to another Person or other
similar transaction which is effected in such a way that holders of Common Stock
are entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock is referred
to herein as in "Organic Change." Prior to the consummation of any Organic
Change, the Company will make appropriate provision to insure that, upon the
consummation of such Organic Change, each of the holders of the Warrants will
thereafter have the right to acquire and receive in lieu of the Common Stock,
such shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for the number of shares of Common Stock immediately
theretofore acquirable and receivable upon exercise of the Warrants had such
Organic Change not taken place. In any such case, the Company will make
appropriate provision with respect to such holders' rights and interests to
insure that the provisions of this Section 9(b) will thereafter be applicable to
the Warrants.
8
(c) Notices.
(i) Immediately upon any adjustment of the Warrant Exercise Price
pursuant to this Section 9, the Company will give written notice thereof to the
holder of this Warrant, setting forth in reasonable detail and certifying the
calculation of such adjustment.
(ii) The Company will give written notice to the holder of this
Warrant at least twenty (20) days prior to the date on which the Company closes
its books or takes a record (A) with respect to any dividend or distribution
upon the Common Stock, (B) with respect to any pro rata subscription offer to
holders of Common Stock or (C) for determining rights to vote with respect to
any Organic Change, dissolution or liquidation, except that in no event shall
such notice be provided to such holder prior to such information being made
known to the public.
(iii) The Company will also give written notice to the holder of this
Warrant at least twenty (20) days prior to the date on which any Organic Change,
dissolution or liquidation will take place.
Section 10. (a) Purchase Rights. If at any time the Company grants, issues
or sells any Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of any
class of Common Stock (the "Purchase Rights"), then the holder of this Warrant
will be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which such holder could have acquired if such
holder had held the number of shares of Common Stock acquirable upon complete
exercise of this Warrant immediately before the date on which a record is taken
for the grant, issuance or sale of such Purchase Rights, or, if no such record
is taken, the date as of which the record holders of Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights.
Section 11. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant
is lost, stolen, mutilated or destroyed, the Company shall, on receipt of an
indemnification undertaking, issue a new Warrant of like denomination and tenor
as the Warrant so lost, stolen, mutilated or destroyed.
Section 12. Notice. Any notices, consents, waivers, or other
communications required or permitted to be given under the terms of this Warrant
must be in writing and will be deemed to have been delivered (i) upon receipt,
when delivered personally; (ii) upon receipt, when sent by facsimile, provided a
copy is mailed by U.S. certified mail, return receipt requested; (iii) three (3)
days after being sent by U.S. certified mail, return receipt requested; or (iv)
one (1) day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
If to the Company: ▇▇▇▇▇▇▇▇.▇▇▇ Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Chief Operating
Officer
9
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇, ▇▇▇▇▇ and ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to a holder of this Warrant, to it at the address set forth below such
holder's signature on the signature page hereof. Each party shall provide five
(5) days' prior written notice to the other party of any change in address or
facsimile number.
Section 13. Amendments. This Warrant and any term hereof may be changed,
waived, discharged, or terminated only by an instrument in writing signed by the
Company or holder.
Section 14. Date. The date of this Warrant is July 21, 2000. This
Warrant, in all events, shall be wholly void and of no effect after the close of
business on the Expiration Date, except that notwithstanding any other
provisions hereof, the provisions of Section 7 shall continue in full force and
effect after such date as to any Warrant Shares or other securities issued upon
the exercise of this Warrant.
Section 15. Amendment and Waiver. Except as otherwise provided herein, the
provisions of the Warrants may be amended and the Company may take any action
herein prohibited, or omitted to perform any act herein required to be performed
by it, only if the Company has obtained the written consent of the holders of
Warrants representing a majority of the shares of Common Stock obtainable upon
exercise of the Warrants then outstanding, provided that no such action may
increase the Warrant Exercise Price of the Warrants or decrease the number of
shares or class of stock obtainable upon exercise of any warrants with out the
written consent of the holder of such warrant.
Section 16. Descriptive Headings; Governing Law. The descriptive headings
of the several sections of this Warrant are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof. This Warrant shall
be governed by and interpreted under the laws of the State of New York, without
giving effect to any choice of law or conflict of law provision .
This Warrant has been duly executed by the Company as of the date first
set forth above.
▇▇▇▇▇▇▇▇.▇▇▇ INC.
By:
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Operating Officer
10
[HOLDER]
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
Address:
-------------------------------
---------------------------------------
---------------------------------------
11
EXHIBIT A
FORM OF SUBSCRIPTION
(Complete and sign only exercise of the Warrant in whole or in part.)
TO: ▇▇▇▇▇▇▇▇.▇▇▇ Inc.
The undersigned, the holder of the attached Warrant to which this Form of
Subscription applies, hereby irrevocably elects to exercise the purchase rights
represented by such warrant for and to purchase thereunder _______ shares of
Common Stock, par value $0.00001 per share (the "Shares"), from ▇▇▇▇▇▇▇▇.▇▇▇
Inc., (or such other securities issuable pursuant to the terms of the Warrant)
and either: (i) herewith makes payment of $_______ therefor in cash or by
certified or official bank check or (ii) elects to make payment upon a cashless
basis pursuant to Section 2 (a)(ii)(B) of the Warrant and hereby exercises
______ Warrants and the Average Market Price Per Share for purposes hereof is
$_______. The undersigned hereby requests that the certificate(s) representing
such securities be issued in the name(s) and delivered the address(es) as
follows:
Name:
----------------------------------------------
Address:
----------------------------------------------
Social Security Number:
----------------------------------------------
Deliver to:
----------------------------------------------
Address:
----------------------------------------------
This the foregoing subscription evidences an exercise of the Warrant to
purchase fewer than all of the Shares (or other securities issuable pursuant to
the terms of the Warrant) to which the undersigned is entitled under such
warrant, please issue a new warrant, of like tenor, relating to the remaining
portion of the securities issuable upon exercise of such warrant (or other
securities issuable pursuant to the terms of such warrant) in the name(s), and
deliver the same to the address(es), as follow:
Name:
----------------------------------------------
Address:
----------------------------------------------
----------------------------------------------
Dated:
----------------------------------------------
----------------------------- ---------------------------------
(Name of Holder) (Social Security or Taxpayer Identification
Number of Holder, if applicable)
-----------------------------
(Signature of Holder or Authorized
Signatory)
Signature Guaranteed:
--------------------------------------
12
EXHIBIT B
FORM OF WARRANT POWER
FOR VALUE RECEIVED, the undersigned does hereby assign and transfer to
____________________________________________ Federal Identification No.______, a
warrant to purchase shares of the capital stock of ▇▇▇▇▇▇▇▇.▇▇▇ Inc., a Nevada
corporation, represented by warrant certificate No._________, standing in the
name of the undersigned on the books of said corporation. The undersigned does
hereby irrevocably constitute and appoint ____________________________, attorney
to transfer the warrants of said corporation, with full power of substitution in
the premises.
Dated: _______________________
By:
-----------------------------
Its:
-----------------------------
13
