Exhibit 10.1
SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Release (this "Settlement Agreement") is
made and entered into to be effective the __ day of February 2005, by and
between:
"HomeNet Corp" - HomeNet Corporation, a Delaware corporation formerly
known as Faraday Financial, Inc.
"HomeNet" - HomeNet Communications, Inc., a Washington
corporation formerly known as Video Internet
Broadcasting Corporation.
"Investors" - Those investors, individually and collectively, who
are identified in Exhibit A, which investors hold
convertible promissory notes of HomeNet in the
aggregate original principal amount of $273,000 (the
"Notes") that were acquired in private securities
offerings (individually and collectively, the
"Private Offering").
"Stonebridge" - Stonebridge Securities, LLC, a Washington limited
liability company. Stonebridge acted as Placement
Agent in connection with the Private Offering.
"Xxxxxx" - Xxxxxxx Xxxxxx, a resident of Washington.
RECITALS
A. HomeNet has not had the funds to repay the amounts owing on the
Notes.
B. Certain of the parties have been in a dispute regarding certain
amounts that are owing in connection with some of the Notes and the amount of
the fees payable to Stonebridge in connection with its activities as placement
agent in the Private Offering.
C. On or about September 8, 2004, HomeNet became a wholly owned
subsidiary of HomeNet Corp as a result of a merger between HomeNet and a
subsidiary of HomeNet Corp (the "Merger").
D. The parties desire to enter into this Settlement Agreement in order
to provide full and final settlement of all obligations that have or might be
made, by reason of any and all dealings by or between the parties, upon the
terms and conditions set forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Release and Discharge
1.1 Subject to the terms and provisions of this Settlement
Agreement, Investors, Stonebridge and Xxxxxx hereby completely release and
forever discharge HomeNet and HomeNet Corp from any and all past or present
claims, demands, obligations, actions, causes of action, rights, damages, costs,
losses of services, expenses and compensation of any nature whatsoever, whether
based on a tort, contract or other theory of recovery, which Investors,
Stonebridge and/or Xxxxxx now have, on account of, or relate to the Private
Offering and/or any and all other dealings between (i) Video Internet
Broadcasting, HomeNet and/or HomeNet Corp and (ii) Investors, Stonebridge and/or
Xxxxxx as of and through the date of the most recently dated Note.
1.2 Subject to the terms and provisions of this Settlement
Agreement, HomeNet and HomeNet Corp hereby completely release and forever
discharge Investors, Stonebridge and Xxxxxx from any and all past or present
claims, demands, obligations, actions, causes of action, rights, damages, costs,
losses of services, expenses and compensation of any nature whatsoever, whether
based on a tort, contract or other theory of recovery, which HomeNet and/or
HomeNet Corp now have on account of, or relate to the Private Offering and/or
any and all other dealings between (i) Video Internet Broadcasting, HomeNet
and/or HomeNet Corp and (ii) Investors, Stonebridge and/or Xxxxxx as of and
through the date of the most recently dated Note.
1.3 This release and discharge shall also apply to
Stonebridge's, HomeNet's and HomeNet Corp's past, present and future officers,
directors, stockholders, attorneys, accountants, agents, servants,
representatives, employees, subsidiaries, affiliates, partners, predecessors,
successors in interest and assigns and all other persons, firms or corporations
with whom any of the former have been, are now, or may hereafter be affiliated.
1.4 This release, on the part of the parties hereto, shall be
a fully binding and complete settlement as provided herein among the parties and
their heirs, assigns and successors.
1.5 Notwithstanding any other provision of this Settlement
Agreement, the releases contained herein shall in no way release any party from
any duties or obligations undertaken in this Settlement Agreement.
2. Consideration
2.1 In full satisfaction of the amounts owing on the Notes,
each Investor shall elect by delivery of an election in the form attached hereto
as Exhibit B to receive either (i) the Cash Payback or (ii) the Conversion
Payback, both as defined in Exhibit A hereto. Investors must make an election to
receive either the Cash Payback or the Conversion Payback within 10 days of the
earlier of (i) June 1, 2005 or (ii) 10 days following written notice by HomeNet
Corp to the Investor of the closing of the Next Equity Financing or upon
expiration of the Maturity Date, as defined in Exhibit A (the first of such
events to occur is hereinafter be referred to as the "Election Date"). If an
Investor makes no election within the 10-day period following the Election Date,
the Investor will be deemed to have elected to receive the Cash Payback.
Further, HomeNet Corp shall deliver a copy of any private placement memorandum
that is prepared by HomeNet Corp or prepared on behalf of HomeNet Corp prior to
the Election Date to Investor within 10 business days following first
availability of such private placement memorandum. HomeNet Corp shall, fifteen
days following the Election Date, deliver to each Investor the cash, Conversion
Securities and/or Warrants to which each Investor is entitled. Upon delivery to
an Investor of the cash, Conversion Securities and/or warrants, as the case may
be, such Investor shall deliver to HomeNet the original Note held by such
Investor for cancellation. HomeNet Corp's obligation to deliver cash or deliver
securities to an Investor shall be contingent upon the Investor tendering for
delivery the original Note held by such Investor to HomeNet for cancellation or
if such Note has become lost, an affidavit of lost note with customary and
reasonable indemnification provisions.
.
2.2 In full satisfaction of any amounts owing to Stonebridge,
HomeNet Corp shall issue to Stonebridge 109,030 shares of Conversion Securities
and issue to Xxxxxx warrants for 10,903 of Conversion Securities with an
exercise price of one dollar and a term of 5 years, as defined in Exhibit A
hereto. The Conversion Securities shall be dated of even date herewith. The
Conversion Securities and Warrants shall be delivered to Stonebridge and Xxxxxx
on or before June 1, 2005 to be coincident with the Next Equity Financing. In
the event the Next Equity Financing has not occurred on or before June 1, 2005,
HomeNet shall then issue to Stonebridge 109,030 shares of HomeNet's common stock
and then issue to Xxxxxx warrants for 10,903 shares of HomeNet common stock with
an exercise price, term and other conditions as provided for Conversion
Securities. In the event HomeNet is recapitalized or issues additional common
stock prior to June 1, 2005, the shares of common stock issued to Stonebridge
and the shares subject to warrants to be issued to Xxxxxx shall be adjusted to
equal the same percentage of HomeNet's common stock as prior to any such event.
2.3 The parties shall execute and deliver to the others any
and all instruments and/or documents required to perform such party's
obligations hereunder, and each party shall provide continuing assurance, upon
reasonable request, of compliance with all of the provisions hereof. The parties
agree to cooperate reasonably with each other, in person or through counsel, to
carry out all provisions of this Settlement Agreement.
2.4 The parties agree upon delivery of the consideration
described in this Section 2 and satisfaction of all of the other terms and
provisions of this Settlement Agreement, the terms and provisions of the Notes,
the placement agent agreement between the Stonebridge and HomeNet, the personal
guarantees of Messrs. W. Xxxxx Xxxx and Xxxxxxx Xxxxxx, dated August 20,
2004,will be deemed null, void and of no further force or effect.
3. Attorney's Fees
Each party hereto shall bear all attorney's fees and costs arising from
the actions of its own counsel in connection with this Settlement Agreement, the
matters and documents referred to herein, and all related matters, except that
HomeNet shall, at the time this Agreement is signed, pay the sum of $25,669 to
Stonebridge which amount the parties agree represents reasonable out-of-pocket
expenses that were incurred by Stonebridge in connection with this Settlement
Agreement.
4. Representation of Comprehension of Document
In entering into this Settlement Agreement the parties represent that
they have relied upon the advise of their attorneys or had an opportunity to
consult with an attorney of their choice.
5. Warranty of Capacity to Execute Agreement
The parties represent and warrant that no other person or entity has,
or has had, any interest in the claims, demands, obligations, or cause of action
referred to in this Settlement Agreement, except as otherwise set forth herein;
that each party has the sole right and exclusive authority to execute this
Settlement Agreement; and that the parties have not sold, assigned, transferred,
conveyed or otherwise disposed of any of the claims, demands, obligations or
causes of action referred to in this Settlement Agreement.
6. Investor Representations
Each Investor hereby individually, and not collectively, represents to
HomeNet and HomeNet Corp as follows:
6.1 Investor is able to bear the economic risk of an
investment in the securities it may receive from HomeNet Corp in connection with
this Settlement Agreement (individually and collectively, the "Securities") can
afford the loss of the entire investment in the Securities, and will, after
making an investment in the Securities, have sufficient means of providing for
Investor's current needs and possible future contingencies.
6.2 The Securities will not be sold by Investor without
registration under applicable securities acts or a proper exemption from such
registration.
6.3 The Securities are being acquired for Investor's own
account and risk, for investment purposes, and not on behalf of any other person
or with a view to, or for resale in connection with, any distribution thereof
within the meaning of the Securities Act of 1933. Investor is aware that there
are substantial restrictions on the transferability of the Securities.
6.4 Investor has had access to any and all information
concerning the HomeNet Corp and HomeNet that Investor and its financial, tax and
legal advisors required or considered necessary to make a proper evaluation of
this investment. Specifically, Investor has had the opportunity to review
HomeNet Corp's annual report on Form 10-KSB for the fiscal year ended March 31,
2004, HomeNet Corp's quarterly report on Form 10-QSB for the quarterly periods
ended June 30, 2004 and September 30, 2004, HomeNet Corp's current reports on
Form 8-K that were filed during 2004 and the Proxy Statement and related
materials sent to HomeNet voting stockholders in connection with the Merger (the
"SEC Materials"). In making the decision to acquire the Securities, Investors
and their advisers have relied solely upon the SEC Filings and their own
independent investigations, and fully understand that there are no guarantees,
assurances or promises in connection with any investment hereunder and
understand that the particular tax consequences arising from this investment in
HomeNet Corp will depend upon its individual circumstances. Investor further
understands that no opinion is being given as to any securities or tax matters
involving the transactions described in this Settlement Agreement.
6.5 Investor also understands and agrees that stop transfer
instructions relating to the Securities will be placed in HomeNet Corp's
transfer ledger, and that the Securities will bear a legend in substantially the
following form:
THIS SECURITIES REPREENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT
TO THESE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A OF
SUCH ACT.
6.6 Investor knows that the Securities are offered and sold
pursuant to exemptions from registration under the Securities Act of 1933, and
state securities law based, in part, on these warranties and representations,
which are the very essence of this Settlement Agreement, and constitute a
material part of the bargained-for consideration without which this Settlement
Agreement would not have been executed.
6.7 Investor has the capacity to protect Investor's own
interest in connection with this transaction or has a pre-existing personal or
business relationship with HomeNet Corp or one or more of its officers,
directors or controlling persons consisting of personal or business contacts of
a nature and duration such as would enable a reasonably prudent purchaser to be
aware of the character, business acumen and general business and financial
circumstances of such person with whom such relationship exists.
6.8 Investor, if Investor is an entity, was not formed or
organized for the specific purpose of acquiring the Securities. In the event
Investor is an entity, the purchase of the Securities by Investor is a
permissible investment in accordance with Investor's Articles of Incorporation
or other similar charter document, and has been duly approved by all requisite
action by the entity's owners, directors, officers or other authorized managers.
The person signing this document and all documents necessary to consummate the
purchase of the Securities has all requisite authority to sign such documents on
behalf of Investor.
6.9 Investor represents that Investor is a sophisticated and
an "accredited investor" as defined under Rule 501 of Regulation D for the
reasons set forth in the subscriptions documents and questionnaire that Investor
completed in connection with Investor's initial acquisition of the Notes.
7. Miscellaneous
7.1 This Settlement Agreement shall be construed and
interpreted in accordance with the laws of the State of Washington.
7.2 All parties agree to cooperate fully and execute any and
all supplementary documents and to take all additional actions, which may be
necessary or appropriate to give full force and effect to the basic terms and
intent of this Settlement Agreement.
7.3 This Settlement Agreement contains the entire agreement
between the parties with regard to the matters set forth in it and shall be
binding upon and inure to the benefit of the executors, administrators, personal
representatives, heirs, successors and assigns of each. This Settlement
Agreement may not be modified by an instrument in writing signed by the parties
hereto.
7.4 This Settlement Agreement shall become effective
immediately following execution by each of the parties and payment by HomeNet of
the amounts described in Section 3.
7.5 This Settlement Agreement may be executed in two or more
counterparts and each when executed shall be deemed an original. The signature
in counterpart on a facsimile transmission copy of this Settlement Agreement
shall be valid and binding.
7.6 In the event any action, suit or proceeding is commenced
by any party against another party under this Settlement Agreement, the
prevailing party in any such action, suit or proceeding shall be entitled to
recover reasonable attorneys' fees, costs related to the discovery process,
expert costs and court costs, in such amounts as the court may adjudge
reasonable, including, but not limited to, those fees and costs incident to any
appeal and to any action or participation in (or in connection with) a case or a
proceeding involving a party under the applicable chapter of the Federal
Bankruptcy Code (11 U.S.C. xx.xx. 101, et seq.), or any successor statute
thereto. Venue of any such action, suit or proceeding shall be in King County,
Washington.
7.7 This Settlement Agreement shall not be effective until and
unless (i) it is executed by HomeNet Corp, HomeNet, Stonebridge, Xxxxxx and each
of the Investors, (ii) fully executed copies of this Settlement Agreement have
been delivered to HomeNet no later than February __, 2005 and (iii) payment by
HomeNet of the amount described in Section 3.
7.8 Except as otherwise required in this Subscription
Agreement, any notice required or permitted under this Settlement Agreement
shall be given in writing and shall be deemed effectively given upon personal
delivery or upon deposit with the United States Post Office, by registered or
certified mail, postage prepaid, addressed as follows:
To HomeNet Corp or Homenet: 0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxx, XX 00000
To Stonebridge: ____________________________________
To Xxxxxx: ____________________________________
To an Investor: At the address set forth beneath the
Investor's signature
IN WITNESS WHEREOF, the parties have executed this Settlement Agreement
to be effective as of the date first written above.
HOMENET CORPORATION HOMENET COMMUNICATIONS, INC.
By /s/Xxxx Xxxxxx By /s/Xxxx Xxxxxx
Its: Its:
STONEBRIDGE SECURITIES, LLC
By /s/ Xxxxxxx Xxxxxxxxxxx /s/ Xxxxxxx Xxxxxx
Its: Xxxxxxx Xxxxxx, individually
Counterpart Signature Page to the Settlement Agreement
The undersigned hereby agrees to become a party as an Investor to the
Settlement Agreement, effective as of the ___ day of December 2004, by and among
the parties identified therein, and hereby authorizes the other parties to
attach this Counterpart Signature Page to the Settlement Agreement.
Date: 1/21/2005 /s/ Xxxxxxx Handvickson
-------------------------------
(signature)
Date: 1/21/2005 /s/ Xxxxxx X. Xxxx
-------------------------------
(signature)
Date: 1/21/2005 /s/ Xxxxxx X. Xxxxxxx
-------------------------------
(signature)
Date: 1/25/2005 /s/ Xxxxxx X. Xxxx
-------------------------------
(signature)
Date: 1/20/2005 /s/ Xxxxx X. Xxxxxxxxx
-------------------------------
(signature)
Date: 1/24/2005 /s/ Xxxxx X. Xxxx
-------------------------------
(signature)
EXHIBIT "A"
Conversion Payback
Cash Payback ----------------------------------------------
Principal Amount Principal and Conversion Conversion
Investor of Note Date of Note Interest Securities (1) Warrants (2) Securities (1) Warrants (2)
-------- ------- ----------- -------- -------------- ------------- -------------- ------------
Xxxxx Xxxx $ 25,000.00 1/29/2004 $ 32,264 28,399 14,181 56,725 14181
Xxx Xxxx $ 50,000.00 12/4/2003 $ 65,141 57,395 28,697 114,789 28697
Eastside $ 25,000.00 1/23/2004 $ 32,297 28,399 14,199 56,797 00000
Xxxxxx Xxxxxxx $ 50,000.00 9/8/2003 $ 66,095 0 29,217 116,868 29217
Xxxxxx Xxxxxxx $ 25,000.00 10/25/2004 $ 32,790 28,936 14,468 57,873 00000
Xxxxxx Xxxx $ 35,000.00 9/8/2003 $ 46,266 0 20,452 81,808 00000
Xxxxxx Xxxx $ 25,000.00 10/25/2003 $ 32,790 28,936 14,468 57,873 14468
Xxxxx Xxxxxxxxx $ 25,000.00 1/23/2004 $ 32,297 28,399 14,199 56,797 14199
Stonebridge $ 1,250.00 1/29/2004 $ 1,613 0 709 2,836 709
Stonebridge $ 1,250.00 1/23/2004 $ 1,615 0 710 2,840 710
Stonebridge $ 1,250.00 1/23/2004 $ 1,615 1,420 710 2,840 710
Stonebridge $ 2,500.00 12/4/2003 $ 3,257 2,870 1,435 5,739 0000
Xxxxxxxxxxx $ 2,500.00 10/25/2003 $ 3,279 2,894 1,447 5,787 0000
Xxxxxxxxxxx $ 4,250.00 9/8/2003 $ 5,618 0 2,483 9,934 2483
--------------------
(1) The term "Conversion Securities " shall mean (i) if HomeNet Corp has issued
any of its convertible notes, or capital stock (the "Capital Stock") in a Next
Equity Financing subject to a binding commitment signed on or before the
Maturity Date, then the notes or shares of such series of Capital Stock or (ii)
shares of HomeNet Corp's common stock if there is not a Next Equity Financing
prior to the Maturity Date. The "Next Equity Financing" means any convertible
note or stock equity financing or other financings which closes after the date
of the effective date of the Settlement Agreement pursuant to a binding
commitment signed on or prior to the Maturity Date in which the gross proceeds
received by HomeNet Corp meet or exceed $1,000,000, or in the case of a series
of financings, aggregates $1,000,000 or more. The term "Next Equity Financing"
does not include the issuance of HomeNet Corp common stock or other HomeNet Corp
securities where the issuance was primarily for compensatory purposes (e.g.,
under HomeNet Corp Stock Option Plans) or where the issuance of such securities
is primarily for payment of services (e.g., payment of HomeNet Corp lease
obligations) provided such aggregate issuance for services does not exceed
$100,000. The "Maturity Date" means June 1, 2005. Any Conversion Securities
issued under clause (i) above shall be on the same terms and conditions and
subject to all ancillary agreements and understandings as are applicable to the
other investors in the Next Equity Financing, except that (a) the number of
Conversion Securities to be received shall be equal to the number of Conversion
Securities that the Investor would have received had the Investor invested the
principal and interest which shall continue to accrue until the Maturity Date at
the rate set forth in the Note , (as shown in the above table for the period
from date of issue to the date the table was prepared) directly in the Next
Equity Financing and (b) the investor shall be entitled to receive and HomeNet
Corp shall issue the Warrants identified in the above table in addition to the
Conversion Securities. In the event there is no Next Equity Financing prior to
the Maturity Date, then the Investor shall be entitled to and HomeNet Corp shall
issue the number of shares of HomeNet Corp common stock as are identified in the
Conversion Securities column of the above table and Warrants exercisable for the
identified number of shares of HomeNet Corp common stock.
(2) The "Warrants" identified in the table shall be exercisable at a $1 strike
price and shall be exercisable for the number of shares of Conversion Securities
identified in the above table. The form of the warrant shall be substantially
similar to that attached hereto as Annex A.
Note: these are for Conversion Securities, not Common Stock
ANNEX A
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD, ASSIGNED OR
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES
UNDER THE ACT, UNLESS THE COMPANY HAS RECEIVED THE WRITTEN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH SALE, ASSIGNMENT OR TRANSFER
DOES NOT INVOLVE A TRANSACTION REQUIRING REGISTRATION OF THE ACT.
STOCK PURCHASE WARRANTS
HOMENET CORPORATION
Incorporated Under the Laws of the State of Delaware
No. - ___ ___________ Stock
Purchase Warrants
CERTIFICATE FOR _______ STOCK
PURCHASE WARRANTS
HOMENET CORPORATION, a Delaware corporation (the "Company"), for value
received, hereby certifies that ________, or registered assigns (the "Holder"),
is the registered owner of the above indicated number of Warrants. One (1)
Warrant entitles the Holder to purchase one (1) share of the Company's _____
stock (the "______ Stock"). The _______ Stock issuable upon an exercise of this
Warrant is sometimes herein referred to as the "Warrant Stock."
1. Purchase Price. The purchase price (the "Exercise Price") per share
for the Warrant Stock shall be $1.00 per share tendered to the Company in good
United States funds.
2. Rights to Exercise. The Holder shall have the right (but not the
obligation) to exercise the Warrant to receive the Warrant Stock (subject to
adjustment as hereinafter provided) at any time on or before the five year
anniversary date of this Note (?).
3. Manner of Exercise. In order to exercise this Warrant, the Holder
shall surrender this Warrant certificate at the office of the Company, as set
forth below, or at such other address within the State of Utah as the Company
shall designate in writing, together with a duly executed exercise form in the
form attached hereto and simultaneous payment in full (in cash or by certified
or official bank or bank cashier's check payable to the order of the Company or
by offset of obligations then owed by the Company to the Holder) of the purchase
price for the Warrant Stock.
In lieu of payment of the Exercise Price in cash, the Holder shall have
the right at any time and from time to time to exercise the Warrants by
surrendering the Warrant in the manner specified herein in exchange for the
number of shares of ______ Stock computed using the following formula:
X = Y (A-B)
-----
A
Where
X = the number of shares of _______ Stock to be issued to the Holder.
Y = the number of Warrant Shares subject to this Warrant or,
if only a portion of this Warrant is being exercised, the
portion of the Warrant being exercised.
A = the Market Price (as defined below) of one Warrant Share
(as of the date of such calculation).
B = the Exercise Price per Warrant Share (as adjusted to the
date of such calculation).
As used herein, the term "Market Price" of one Warrant Share shall be
deemed to be the average of the last reported sale prices per Warrant Share as
officially reported by the principal securities exchange on which the Company's
Common Stock is listed or admitted to trading during said period, or, if the
Company's Common Stock is not listed or admitted to trading on any national
securities exchange during said period, the average closing bid and asked price
of the Common Stock on the Nasdaq Stock Market System or reported on the NASD's
OTC Bulletin Board, in any such case as published in the Eastern Edition of the
Wall Street Journal for the last ten (10) trading days immediately prior to the
date of calculation. If the Company's Common Stock is not quoted on Nasdaq or
the OTC Bulletin Board, the Market Price per Warrant Share shall be agreed upon
by the parties hereto. If the parties cannot agree within five (5) business days
of delivery of the notice of exercise, the Market Price per Warrant Share shall
be as determined in good faith by resolution of the Board of Directors of the
Company, based on the best information available to it. For purposes hereof, the
"date of calculation" shall be the day on which the Holder either mails the
notice of exercise to the Company by first class certified mail or delivers the
notice of exercise to a nationally-recognized courier for next business day
delivery to the Company.
Upon surrender of this Warrant in conformity with the foregoing
provisions, the Company shall promptly deliver to or upon the written order of
the Holder a stock certificate or certificates representing the number of
Warrant Shares so purchased. Certificates for shares purchased shall be
delivered within ten (10) business days after the date on which this Warrant
shall have been exercised. This Warrant shall be deemed to have been exercised
and such certificate or certificates shall be deemed to have been issued, and
Holder or any other person so designated to be named therein shall be deemed to
have become a holder of record of such shares for all purposes, as of the date
the Warrant has been exercised by payment to the Company of the Exercise Price
and all taxes required to be paid by the Holder, if any, pursuant to Section 7.6
prior to the issuance of such shares, have been paid. The Company will not close
its stockholder books or records in any manner which prevents the timely
exercise of this Warrant, pursuant to the terms hereof.
If this Warrant shall have been exercised in part, the Company shall,
at the time of delivery of the certificate or certificates representing Warrant
Stock, deliver to Holder a new Warrant evidencing the rights of Holder to
purchase the unpurchased Warrant Shares called for by this Warrant, which new
Warrant shall in all other respects be identical with this Warrant.
4. Adjustments upon Certain Events.
4.1 Stock Splits, Stock Combinations and Certain Stock
Dividends. If the Company shall at any time subdivide or combine its outstanding
Common Stock, or declare a dividend in Common Stock or other securities of the
Company convertible into or exchangeable for Common Stock, a Warrant shall,
after such subdivision or combination or after the record date for such
dividend, be exercisable for that number of shares of Common Stock and other
securities of the Company that the Holder would have owned immediately after
such event with respect to the Common Stock and other securities for which a
Warrant may have been exercised immediately before such event had the Warrant
been exercised immediately before such event. Any adjustment under this Section
4.1 shall become effective at the close of business on the date the subdivision,
combination or dividend becomes effective.
4.2 Adjustment for Reorganization, Consolidation, Merger. In
case of any reorganization of the Company (or any other corporation the stock or
other securities of which are at the time receivable upon exercise of a Warrant)
or in case the Company (or any such other corporation) shall merge into or with
or consolidate with another corporation or convey all or substantially all of
its assets to another corporation or enter into a business combination of any
form as a result of which the Common Stock or other securities receivable upon
exercise of a Warrant are converted into other stock or securities of the same
or another corporation, then and in each such case, the Holder of a Warrant,
upon exercise of the purchase right at any time after the consummation of such
reorganization, consolidation, merger, conveyance or combination, shall be
entitled to receive, in lieu of the shares of Common Stock or other securities
to which such Holder would have been entitled had he exercised the purchase
right immediately prior thereto, such stock and securities which such Holder
would have owned immediately after such event with respect to the shares Common
Stock and other securities for which a Warrant may have been exercised
immediately before such event had the Warrant been exercised immediately prior
to such event.
4.3 Notice. In each case of an adjustment in the Common Stock
or other securities receivable upon the exercise of a Warrant, the Company shall
promptly notify the Holder of such adjustment. Such notice shall set forth the
facts upon which such adjustment is based.
5. Loss, Theft, Destruction, or Mutilation. Upon receipt by the Company
of evidence reasonably satisfactory to it of the ownership of and the loss,
theft, destruction or mutilation of this Warrant and (in the case of loss,
theft, or destruction) of indemnity satisfactory to it (in the exercise of its
reasonable discretion), and (in the case of mutilation) upon surrender and
cancellation thereof, the Company will execute and deliver, in lieu thereof, a
new Warrant in the same form and tenor.
6. Reservation of Shares Issuable on Exercise of Warrant. The Company
will at all times reserve and keep available out of its authorized shares,
solely for issuance upon the exercise of the Warrant, such shares of its Common
Stock and other securities as from time to time shall be issuable upon the
exercise of the Warrant.
7. Miscellaneous.
7.1 Governing Law. This Warrant shall be construed in
accordance with, and governed by the substantive laws of, the State of Delaware.
7.2 Assignment. The benefit of this Warrant and of the Warrant
Stock represented hereby may be assigned and transferred by the Holder and its
assigns in accordance with any applicable securities laws and regulations;
however, the obligations of the Company and its successors may not be delegated
without the prior written consent of the Holder hereof. Subject to the
foregoing, this Warrant shall be binding upon and inure to the benefit of the
parties and their respective legal representatives, successors, agents, heirs
and assigns.
7.3 Enforcement. In the event of a dispute between the parties
arising under this Warrant, the party prevailing in such dispute shall be
entitled to collect such party's costs and expenses from the other party,
including without limitation court costs and reasonable attorneys' fees.
7.4 Notices. Any notice or demand which is required or
provided to be given under this Agreement shall be deemed to have been
sufficiently given and received for all purposes when delivered by hand or by
telecopy, e-mail or other method of electronic transmission (provided such
transmission generates evidence of delivery), or five days after being sent by
certified or registered mail, postage and charges prepaid, return receipt
requested, or two days after being sent by overnight delivery providing receipt
of delivery, to the following addresses:
if to the Company :
HomeNet Corporation
0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxx, XX 00000
if to the Holder :
-------------------------
-------------------------
Fax: ___________________
E-mail: _________________
7.5 Restrictive Legend. Each Warrant Certificate and each
certificate representing Common Stock issued upon exercise of a Warrant, unless
such Common Stock is then registered under the Securities Act of 1933, as
amended (the "Act"), shall bear a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933 OR
THE SECURITIES OR BLUE SKY LAWS OF ANY STATE AND MAY BE
OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO
RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES OR BLUE
SKY LAWS OR IF AN EXEMPTION FROM SUCH REGISTRATION OR
QUALIFICATION IS APPLICABLE.
7.6 Payment of Taxes. The Holder shall pay all documentary,
stamp or similar taxes and other government charges that may be imposed with
respect to the issuance, transfer or delivery of any Warrant Stock on exercise
of the Warrants. In the event the Warrant Stock are to be delivered in a name
other than the name of the Holder of the Warrant Certificate, no such delivery
shall be made unless the person requesting the same has paid the amount of any
such taxes or charges incident thereto.
7.7 Reduction in Exercise Price at Company's Option. The
Company's Board of Directors may, at its sole discretion, reduce the Exercise
Price of the Warrants in effect at any time either for the life of the Warrants
or any shorter period of time determined by the Company's Board of Directors.
The Company shall promptly notify the Registered Holders of any such reduction
in the Exercise Price.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed as of the ____ day of ________________, 2004.
HOMENET CORPORATION, a Delaware corporation
By: __________________________________
Its: President
HOMENET CORPORATION
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JR TEN - as joint tenants with right of survivorship and not as tenants
in common
UNIF TRANS MIN ACT - ____________ (Custodian for Minor) as custodian
for __________ (name of minor) under the Uniform Transfers to Minors
Act
Additional abbreviations may also be used though not in the above list.
FORM OF ASSIGNMENT
(To be Executed by the Registered Holder if He or She
Desires to Assign Warrants Evidenced by the
Within Warrant Certificate)
FOR VALUE RECEIVED ___________________________ hereby sells, assigns
and transfers unto _____________________________ _________________________
(_______) Warrants, evidenced by the within Warrant Certificate, and does hereby
irrevocably constitute and appoint _______________________________________
Attorney to transfer the said Warrants evidenced by the within Warrant
Certificates on the books of the Company, with full power of substitution.
Dated:____________________ _____________________________
Signature
Notice: The above signature must correspond with the name as
written upon the face of the Warrant Certificate in every
particular, without alteration or enlargement or any
change whatsoever.
Signature Guaranteed: __________________________________________
SIGNATURE MUST BE GUARANTEED BY A COMMERCIAL BANK OR MEMBER FIRM OF ONE OF THE
FOLLOWING STOCK EXCHANGES: NEW YORK STOCK EXCHANGE, PACIFIC COAST STOCK
EXCHANGE, AMERICAN STOCK EXCHANGE, OR MIDWEST STOCK EXCHANGE.
FORM OF ELECTION TO PURCHASE
(To be Executed by the Holder if Holder Desires to Exercise
Warrants Evidenced by the Warrant Certificate)
To HOMENET CORPORATION
The undersigned hereby irrevocably elects to exercise
___________________________ (______) Warrants, evidenced by the within Warrant
Certificate for, and to purchase thereunder, ____________________________
(______) full shares of ______ Stock issuable upon exercise of said Warrants and
delivery of $_________ and any applicable taxes.
The undersigned requests that certificates for such shares be issued in
the name of:
PLEASE INSERT SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER
------------------------------------------------------------------------------
(Please print name and address)
------------------------------------------------------------------------------
If said number of Warrants shall not be all the Warrants evidenced by
the within Warrant Certificate, the undersigned requests that a new Warrant
Certificate evidencing the Warrants not so exercised be issued in the name of
and delivered to:
------------------------------------------------------------------------------
(Please print name and address)
------------------------------------------------------------------------------
Dated: _____________________ Signature:__________________________
NOTICE: The above signature must correspond with the name as written
upon the face of the within Warrant Certificate in every
particular, without alteration or enlargement or any change
whatsoever, or if signed by any other person the Form of
Assignment hereon must be duly executed and if the certificate
representing the shares or any Warrant Certificate
representing Warrants not exercised is to be registered in a
name other than that in which the within Warrant Certificate
is registered, the signature of the holder hereof must be
guaranteed.
Signature Guaranteed: ___________________________________________
SIGNATURE MUST BE GUARANTEED BY A COMMERCIAL BANK OR MEMBER FIRM OF ONE OF THE
FOLLOWING STOCK EXCHANGES: NEW YORK STOCK EXCHANGE, PACIFIC COAST STOCK
EXCHANGE, AMERICAN STOCK EXCHANGE, OR MIDWEST STOCK EXCHANGE.
EXHIBIT B
ELECTION
(To be Executed by Each Investor)
To HomeNet Corporation:
The undersigned hereby irrevocably elects to receive the following
(check appropriate box):
[ ] The Cash Payback
[ ] The Conversion Payback
The undersigned is surrendering the original promissory note to the
Company herewith for cancellation in connection with this Election.
The undersigned requests that certificates for any securities to be
issued be issued in the name of the undersigned and delivered to the undersigned
at the following address:
-------------------------------------
(Please print name and address)
Dated: _____________________ Signature:__________________________
NOTICE: The above signature must correspond with the name on the Promissory Note
in every particular.
