WARRANT TO PURCHASE SHARES OF CLASS A COMMON STOCK OF THE AMACORE GROUP, INC. Expires March 13, 2013
Exhibit 10.4
THIS
WARRANT AND THE SHARES OF CLASS A COMMON STOCK ISSUABLE UPON EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH
SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED.
WARRANT
TO PURCHASE
SHARES OF
CLASS A COMMON STOCK
OF
Expires
March 13, 2013
No.:
W-08-01 Number of Shares: 45,000,000
Date of
Issuance: March 13, 2008
FOR VALUE
RECEIVED, the undersigned, The Amacore Group, Inc., a Delaware corporation
(together with its successors and assigns, the “Issuer”), hereby
certifies that Vicis Capital Master Fund or its registered assigns is entitled
to subscribe for and purchase, during the Term (as hereinafter defined), up to
Forty-Five Million (45,000,000)
shares (subject to adjustment as hereinafter provided) of the duly
authorized, validly issued, fully paid and non-assessable Class A Common Stock
of the Issuer, par value $.001 per share (the “Class A Common
Stock”), at an exercise price per share equal to the Warrant Price then
in effect, subject, however, to the provisions and upon the terms and conditions
hereinafter set forth. This Warrant has been executed and delivered
pursuant to the Securities Purchase Agreement dated as of March 13, 2008 (the
“Purchase
Agreement”) by and among the Issuer and the purchaser(s)
listed therein. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth for such terms in the Purchase
Agreement. Capitalized terms used in this Warrant and not otherwise defined
herein shall have the respective meanings specified in Section 8
hereof.
1. Term. The
term of this Warrant shall commence on March 13, 2008 and shall expire at 6:00
p.m., eastern time, on March 13, 2013 (such period being the “Term”).
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2.
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Method of Exercise;
Payment; Issuance of New Warrant; Transfer and
Exchange.
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(a) Time of
Exercise. The purchase rights represented by this Warrant may
be exercised in whole or in part during the Term beginning on the date of
issuance hereof.
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(b) Method of
Exercise. The Holder hereof may exercise this Warrant, in
whole or in part, by the surrender of this Warrant (with the exercise form
attached hereto duly executed) at the principal office of the Issuer, and by the
payment to the Issuer of an amount of consideration therefor equal to the
Warrant Price in effect on the date of such exercise multiplied by the number of
shares of Warrant Stock with respect to which this Warrant is then being
exercised, payable at such Holder’s election (i) by certified or official bank
check or by wire transfer to an
account designated by the Issuer, (ii) by “cashless exercise” in
accordance with the provisions of subsection (c) of this Section 2, but only
when a registration statement under the Securities Act providing for the resale
of the Warrant Stock is not then in effect, or (iii) when permitted by clause
(ii), by a combination of the foregoing methods of payment selected by the
Holder of this Warrant.
(c) Cashless
Exercise. Notwithstanding any provisions herein to the
contrary and commencing six-months following the Original Issue Date if (i) the
Per Share Market Value of one share of Class A Common Stock is greater than the
Warrant Price (at the date of calculation as set forth below) and (ii) a
registration statement under the Securities Act providing for the resale of the
Warrant Stock is not in effect in accordance with the terms of the Registration
Rights Agreement at the time of exercise, in lieu of exercising this Warrant by
payment of cash, the Holder may exercise this Warrant by a cashless exercise and
shall receive the number of shares of Class A Common Stock equal to an amount
(as determined below) by surrender of this Warrant at the principal office of
the Issuer together with the properly endorsed Notice of Exercise in which event
the Issuer shall issue to the Holder a number of shares of Class A Common Stock
computed using the following formula:
Where X
= the number of
shares of Class A Common Stock to be issued to the Holder.
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Y
=
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the
number of shares of Class A Common Stock purchasable upon exercise of all
of the Warrant or, if only a portion of the Warrant is being exercised,
the portion of the Warrant being
exercised.
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A
=
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the
Warrant Price.
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B
= the Per Share
Market Value of one share of Class A Common Stock.
(d) Issuance of Stock
Certificates. In the event of any exercise of this Warrant in
accordance with and subject to the terms and conditions hereof, certificates for
the shares of Warrant Stock so purchased shall be dated the date of such
exercise and delivered to the Holder hereof within a reasonable time, not
exceeding three (3) Trading Days after such exercise (the “Delivery Date”) or,
at the request of the Holder (provided that a registration statement under the
Securities Act providing for the resale of the Warrant Stock is then in effect),
issued and delivered to the Depository Trust Company (“DTC”) account on the
Holder’s behalf via the Deposit Withdrawal Agent Commission System (“DWAC”) within a
reasonable time, not exceeding three (3) Trading Days after such exercise, and
the Holder hereof shall be deemed for all purposes to be the holder of the
shares of Warrant Stock so purchased as of the date of such
exercise. Notwithstanding the foregoing to the contrary, the Issuer
or its transfer agent shall only be obligated to issue and deliver the shares to
the DTC on a holder’s behalf via DWAC if such exercise is in connection with a
sale and the Issuer and its
transfer agent are participating in DTC through the DWAC
system. The
Holder shall deliver this original Warrant, or an indemnification undertaking
with respect to such Warrant in the case of its loss, theft or destruction, at
such time that this Warrant is fully exercised. With respect to
partial exercises of this Warrant, the Issuer shall keep written records for the
Holder of the number of shares of Warrant Stock exercised as of each date of
exercise.
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(e) Compensation for Buy-In on
Failure to Timely Deliver Certificates Upon Exercise.
(i) The
Issuer understands that a delay in the delivery of the shares of Class A Common
Stock upon exercise of this Warrant beyond the Delivery Date could result in
economic loss to the Holder. If the Issuer fails to deliver to the
Holder such shares via DWAC or a certificate or certificates pursuant to this
Section hereunder by the Delivery Date, the Issuer shall pay to the Holder, in
cash, for each $500 of Warrant
Shares (based on the Closing Price of the Class A Common Stock on the date such
Securities are submitted to the Issuer’s transfer agent), $5 per Trading Day
(increasing to $10 per Trading Day five (5) Trading Days after such damages have
begun to accrue and increasing to $15 per Trading Day ten (10) Trading Days
after such damages have begun to accrue) for each Trading Day after the Delivery
Date until such certificate is delivered (which amount shall be paid as
liquidated damages and not as a penalty). Nothing herein shall limit a Holder’s
right to pursue actual damages for the Issuer’s failure to deliver certificates
representing any Securities as required by the Transaction Documents, and the
Holder shall have the right to pursue all remedies available to it at law or in
equity including, without limitation, a decree of specific performance and/or
injunctive relief. Notwithstanding anything to the contrary contained
herein, the Holder shall be entitled to withdraw an Exercise Notice, and upon
such withdrawal the Issuer shall only be obligated to pay the liquidated damages
accrued in accordance with this Section 2(e)(i) through the date the Exercise
Notice is withdrawn.
(ii) In
addition to any other rights available to the Holder, if the Issuer fails to
cause its transfer agent to transmit to the Holder a certificate or certificates
representing the Warrant Stock pursuant to an exercise on or before the Delivery
Date, and if after such date the Holder is required by its broker to purchase
(in an open market transaction or otherwise) shares of Class A Common Stock to
deliver in satisfaction of a sale by the Holder of the Warrant Stock which the
Holder anticipated receiving upon such exercise (a “Buy-In”), then the
Issuer shall (1) pay in cash to the Holder the amount by which (x) the Holder’s
total purchase price (including brokerage commissions, if any) for the shares of
Class A Common Stock so purchased exceeds (y) the amount obtained by multiplying
(A) the number of shares of Warrant Stock that the Issuer was required to
deliver to the Holder in connection with the exercise at issue times (B) the
price at which the sell order giving rise to such purchase obligation was
executed, and (2) at the option of the Holder, either reinstate the portion of
the Warrant and equivalent number of shares of Warrant Stock for which such
exercise was not honored or deliver to the Holder the number of shares of Class
A Common Stock that would have been issued had the Issuer timely complied with
its exercise and delivery obligations hereunder. For example, if the
Holder purchases Class A Common Stock having a total purchase price of $11,000
to cover a Buy-In with respect to an attempted exercise of shares of Class A
Common Stock with an aggregate sale price giving rise to such purchase
obligation of $10,000, under clause (1) of the immediately preceding sentence
the Issuer shall be required to pay the Holder $1,000. The Holder shall provide
the Issuer written notice indicating the amounts payable to the Holder in
respect of the Buy-In, together with applicable confirmations and other evidence
reasonably requested by the Issuer. Nothing herein shall limit a
Holder’s right to pursue any other remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Issuer’s failure to timely deliver
certificates representing shares of Class A Common Stock upon exercise of this
Warrant as required pursuant to the terms hereof.
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(f) Transferability of
Warrant. Subject to Section 2(h) hereof, this Warrant may be
transferred by a Holder, in whole or in part, subject only to the restrictions
specified in the Purchase Agreement. If transferred pursuant to this
paragraph, this Warrant may be transferred on the books of the Issuer by the
Holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant at the principal office of the Issuer, properly endorsed (by the Holder
executing an assignment in the form attached hereto) and upon payment of any
necessary transfer tax or other governmental charge imposed upon such
transfer. This Warrant is exchangeable at the principal office of the
Issuer for Warrants to purchase the same aggregate number of shares of Warrant
Stock, each new Warrant to represent the right to purchase such number of shares
of Warrant Stock as the Holder hereof shall designate at the time of such
exchange. All Warrants issued on transfers or exchanges shall be
dated the Original Issue Date and shall be identical with this Warrant except as
to the number of shares of Warrant Stock issuable pursuant thereto.
(g) Continuing Rights of
Holder. The Issuer will, at the time of or at any time after
each exercise of this Warrant, upon the request of the Holder hereof,
acknowledge in writing the extent, if any, of its continuing obligation to
afford to such Holder all rights to which such Holder shall continue to be
entitled after such exercise in accordance with the terms of this Warrant, provided that if any
such Holder shall fail to make any such request, the failure shall not affect
the continuing obligation of the Issuer to afford such rights to such
Holder.
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(h) Compliance with Securities
Laws.
(i) The
Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant and
the shares of Warrant Stock to be issued upon exercise hereof are being acquired
solely for the Holder’s own account and not as a nominee for any other party,
and for investment, and that the Holder will not offer, sell or otherwise
dispose of this Warrant or any shares of Warrant Stock to be issued upon
exercise hereof except pursuant to an effective registration statement, or an
exemption from registration, under the Securities Act and any applicable state
securities laws.
(ii) Except
as provided in paragraph (iii) below, this Warrant and all certificates
representing shares of Warrant Stock issued upon exercise hereof shall be
stamped or imprinted with a legend in substantially the following
form:
THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH SECURITIES UNDER
THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS
IS NOT REQUIRED.
(iii) The
Issuer agrees to reissue this Warrant or certificates representing any of the
Warrant Stock, without the legend set forth above if at such time, prior to
making any transfer of any such securities, the Holder shall give written notice
to the Issuer describing the manner and terms of such transfer. Such
proposed transfer will not be effected until: (a) either (i) the Issuer has
received an opinion of counsel reasonably satisfactory to the Issuer, to the
effect that the registration of such securities under the Securities Act is not
required in connection with such proposed transfer, (ii) a registration
statement under the Securities Act covering such proposed disposition has been
filed by the Issuer with the Securities and Exchange Commission and has become
effective under the Securities Act, (iii) the Issuer has received other evidence
reasonably satisfactory to the Issuer that such registration and qualification
under the Securities Act and state securities laws are not required, or (iv) the
Holder provides the Issuer with reasonable assurances that such security can be
sold pursuant to Rule 144 under the Securities Act; and (b) either (i) the
Issuer has received an opinion of counsel reasonably satisfactory to the Issuer,
to the effect that registration or qualification under the securities or “blue
sky” laws of any state is not required in connection with such proposed
disposition, or (ii) compliance with applicable state securities or “blue sky”
laws has been effected or a valid exemption exists with respect
thereto. The Issuer will respond to any such notice from a holder
within three (3) Trading Days. In the case of any proposed transfer
under this Section 2(h), the Issuer will use reasonable efforts to comply with
any such applicable state securities or “blue sky” laws, but shall in no event
be required, (x) to qualify to do business in any state where it is not then
qualified, (y) to take any action that would subject it to tax or to the general
service of process in any state where it is not then subject, or (z) to comply
with state securities or “blue sky” laws of any state for which registration by
coordination is unavailable to the Issuer. The restrictions on
transfer contained in this Section 2(h) shall be in addition to, and not by way
of limitation of, any other restrictions on transfer contained in any other
section of this Warrant. Whenever a certificate representing the
Warrant Stock is required to be issued to a the Holder without a legend, in lieu
of delivering physical certificates representing the Warrant Stock, the Issuer
shall cause its transfer agent to electronically transmit the Warrant Stock to
the Holder by crediting the account of the Holder’s Prime Broker with
DTC through its DWAC system (to the extent
not inconsistent with any provisions of this Warrant or the Purchase
Agreement).
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(i) Accredited Investor
Status. In no event may the Holder exercise this Warrant in
whole or in part unless the Holder is an “accredited investor” as defined in
Regulation D under the Securities Act.
(j) No Mandatory
Redemption. This Warrant may not be called or redeemed by the
Issuer without the written consent of the Holder.
3. Stock Fully Paid;
Reservation and Listing of Shares; Covenants.
(a) Stock Fully
Paid. The Issuer
represents, warrants, covenants and agrees that all shares of Warrant Stock
which may be issued upon the exercise of this Warrant or otherwise hereunder
will, when issued in accordance with the terms of this Warrant, be duly
authorized, validly issued, fully paid and non-assessable and free from all
taxes, liens and charges created by or through the Issuer. The Issuer
further covenants and agrees that during the period within which this Warrant
may be exercised, the Issuer will at all times have authorized and reserved for
the purpose of the issuance upon exercise of this Warrant a number of authorized
but unissued shares of Class A Common Stock equal to at least one hundred
percent (100%) of the number of shares of Class A Common Stock issuable upon
exercise of this Warrant without regard to any limitations on
exercise.
(b) Reservation. If
any shares of Class A Common Stock required to be reserved for issuance upon
exercise of this Warrant or as otherwise provided hereunder require registration
or qualification with any Governmental Authority under any federal or state law
before such shares may be so issued, the Issuer will in good faith use its best
efforts as expeditiously as possible at its expense to cause such shares to be
duly registered or qualified. If the Issuer shall list any shares of
Class A Common Stock on any securities exchange or market it will, at its
expense, list thereon, and maintain and increase when necessary such listing,
of, all shares of Warrant Stock from time to time issued upon exercise of this
Warrant or as otherwise provided hereunder (provided that such Warrant Stock has
been registered pursuant to a registration statement under the Securities Act
then in effect), and, to the extent permissible under the applicable securities
exchange rules, all unissued shares of Warrant Stock which are at any time
issuable hereunder, so long as any shares of Class A Common Stock shall be so
listed. The Issuer will also so list on each securities exchange or
market, and will maintain such listing of, any other securities which the Holder
of this Warrant shall be entitled to receive upon the exercise of this Warrant
if at the time any securities of the same class shall be listed on such
securities exchange or market by the Issuer.
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(c) Loss, Theft, Destruction of
Warrants. Upon receipt of evidence satisfactory to the Issuer
of the ownership of and the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction, upon receipt of
indemnity or security satisfactory to the Issuer or, in the case of any such
mutilation, upon surrender and cancellation of such Warrant, the Issuer will
make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant,
a new Warrant of like tenor and representing the right to purchase the same
number of shares of Class A Common Stock.
(d) Payment of
Taxes. The
Issuer will pay any documentary stamp taxes attributable to the initial issuance
of the Warrant Stock issuable upon exercise of this Warrant; provided, however, that the Issuer shall not be required
to pay any tax or taxes which may be payable in respect of any transfer involved
in the issuance or delivery of any certificates representing Warrant Stock in a
name other than that of the Holder in respect to which such shares are
issued.
4. Adjustment of Warrant Price
and Number of Shares Issuable Upon Exercise. The Warrant Price
and the number of shares of Warrant Stock that may be purchased upon exercise of
this Warrant shall be subject to adjustment from time to time as set forth in
this Section 4. Upon each
adjustment of the Warrant Price, the Holder of this Warrant shall
thereafter be entitled to purchase, at the Warrant Price resulting from such adjustment,
the number of shares of
Class A Common Stock
obtained by multiplying the Warrant Price in effect immediately prior to
such adjustment by the number of shares purchasable pursuant hereto immediately
prior to such adjustment, and dividing the product thereof by the Warrant Price resulting from such
adjustment.
(a) Adjustment Due to Dividends,
Stock Splits, Etc. If, at any time on or after the Original Issuance
Date, the number of outstanding shares of Class A Common Stock is increased by
a (i) dividend payable in any kind
of shares of capital stock of the Corporation, (ii) stock split, (iii)
combination, (iv) reclassification or (v) other similar event, the Conversion
Price shall be proportionately reduced by multiplying the Warrant Price by a
fraction of which the numerator shall be the number of outstanding shares of
Class A Common Stock immediately before such event and of which the denominator
shall be the number of outstanding shares of Class A Common Stock immediately
after such event, or if the number of outstanding shares of Class A Common Stock
is decreased by a reverse stock split, combination or reclassification of
shares, or other similar event, the Conversion Price shall be proportionately
increased by multiplying the Warrant Price by a fraction of which the numerator
shall be the number of outstanding shares of Class A Common Stock immediately
before such event and of which the denominator shall be the number of
outstanding shares of Class A Common Stock immediately after such event. In such
event, the Issuer shall notify the Corporation's Transfer Agent of such change
on or before the effective date thereof.
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(b) Adjustment Due to Merger,
Consolidation, Etc. If, at any time after the Original Issuance Date,
there shall be (i) any reclassification or change of the outstanding shares of
Class A Common Stock, (ii) any consolidation or merger of the Corporation with
any other entity (other than a merger in which the Corporation is the surviving
or continuing entity and its capital stock is unchanged), (iii) any sale or
transfer of all or substantially all of the assets of the Corporation, (iv) any
share exchange or tender offer pursuant to which all of the outstanding shares
of Common Stock are effectively converted into other securities or
property; or (v) any distribution
of the Corporation’s assets to holders of the Class A Common Stock as a liquidation or partial
liquidation dividend or by way of return of capital (each of (i) - (v)
above being a “Corporate Change”),
and, if such Corporate Change is not a Liquidation Event pursuant to the terms
of Paragraph 5, then the Holder shall have the right thereafter to receive, upon
exercise of this Warrant, the same amount and kind of securities, cash or
property as it would have been entitled to receive upon the occurrence of such
Corporate Change if it had been, immediately prior to such Corporate Change, the
holder of the number of shares of Warrant Stock then issuable upon exercise in
full of this Warrant, and in any such case, appropriate provisions (in form and
substance reasonably satisfactory to the Holder) shall be made with respect to
the rights and interests of the Holder to the end that the economic value of the
Warrant Stock is in no way diminished by such Corporate Change and that the
provisions hereof including, without limitation, in the case of any such
consolidation, merger or sale in which the successor entity or purchasing entity
is not the Issuer, an immediate adjustment of the Warrant Price so that the
Warrant Price immediately after the Corporate Change reflects the same relative
value as compared to the value of the surviving entity’s common stock that
existed immediately prior to such Corporate Change and the value of the Class A
Common Stock immediately prior to such Corporate Change. If holders
of Class A Common Stock are given any choice as to the securities, cash or
property to be received in a Corporate Change, then the Holder shall be given
the same choice as to the consideration it receives upon any exercise of this
Warrant following such Corporate Change.
(c) Adjustment Due to Dilutive
Issuances. Except for any Qualified Issuance (as hereinafter
defined), if at any time the Issuer shall offer, issue or agree to issue any
Class A Common Stock or securities convertible into or exercisable for shares of
Class A Common Stock (or modify any of the foregoing which may be outstanding at
any time prior to the Issuance Date) to any person or entity at a price per
share or conversion or exercise price per share which shall be less than the
Warrant Price then in effect, then, for each such occasion, the Warrant Price
shall be adjusted to equal such other lower price per share, and, as to shares
of Class A Common Stock, if any, that were previously issued upon exercise of
this Warrant, the Issuer shall issue additional shares of Class A Common Stock
to the Holder so that the average per share purchase price of the shares of
Class A Common Stock issued to the Holder upon the exercise of the Warrant is
equal to such other lower price per share. For purposes of this
Section “Qualified Issuance” shall mean (i) the grant,
issuance or exercise of any convertible securities pursuant to a qualified or
non-qualified stock option plan of the Issuer or any other bona fide employee
benefit plan or incentive arrangement, adopted or approved by the Board and
approved by the Issuer’s shareholders, as may be amended from time to time, (ii)
the grant, issuance or exercise of any convertible securities in connection with
the hire or retention of any officer, director or key employee of the Issuer,
provided such grant is approved by the Board, or (iii) the issuance of any
shares of Class A Common Stock pursuant to the grant or exercise of convertible
securities outstanding as of the date hereof (exclusive of any subsequent
amendments thereto).
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(d) Other
Adjustments. If the Issuer takes any action affecting the
Class A Common Stock after the date hereof that would be covered by this Section
4, but for the manner in which such action is taken or structured, and such
action would in any way diminish the value of the Warrant or Warrant Stock, then
the Warrant Price shall be adjusted in such manner as the Board shall in good
faith determine to be equitable under the circumstances.
(e) Purchase
Rights. In addition to any adjustments pursuant to subsections
(a)-(d) above, if at any time the Issuer are 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
shares of common stock (the “Purchase Rights”),
then the Holder will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which the Holder could have
acquired if the Holder had held the proportionate number of shares of Class A
Common Stock acquirable upon complete exercise of this Warrant (without regard
to any limitations on the 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 shares of Class A Common Stock are to be determined for the grant, issue or
sale of such Purchase Rights.
(f) Redemption
Right. No sooner than fifteen (15) days nor later than ten
(10) days prior to the consummation of a Corporate Change that constitutes a
change of control, but not prior to the public announcement of such change of
control, the Issuer shall deliver written notice thereof via facsimile and
overnight courier to the Holder (a “Change in Control
Notice”). At any time during the period beginning after the
Holder’s receipt of a Change of Control Notice and ending ten (10) Trading Days
after the consummation of such change of control, the Holder may require the
Issuer to redeem all or any portion of this Warrant by delivering written notice
thereof (“Change in
Control Redemption Notice”) to the Issuer, which Change of Control
Redemption Notice shall indicate the amount the Holder is electing to be
redeemed. Any such redemption shall be in cash in the amount equal to
the value of the remaining unexercised portion of this Warrant on the date of
such consummation, which value shall be determined by use of the Black Scholes
Option Pricing Model reflecting (A) a risk-free interest rate corresponding to
the U.S. Treasury rate for a period equal to the remaining term of
this Warrant as of such date of request and (B) an expected volatility equal to
the 100-day volatility obtained from the HVT function on Bloomberg for the
100-day period ending on the date of the Change of Control Redemption
Notice.
5. Notice of
Adjustments. Whenever the Warrant Price or Warrant Share
Number shall be adjusted pursuant to Section 4 hereof (for purposes of this
Section 5, each an “adjustment”), the
Issuer shall cause its Chief Financial Officer to prepare and execute a
certificate setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated (including a description of the basis on which the Board made any
determination hereunder), and the Warrant Price and Warrant Share Number after
giving effect to such adjustment, and shall cause copies of such certificate to
be delivered to the Holder of this Warrant promptly after each
adjustment. Any dispute between the Issuer and the Holder of this
Warrant with respect to the matters set forth in such certificate may at the
option of the Holder of this Warrant be submitted to a national or regional
accounting firm reasonably acceptable to the Issuer and the Holder, provided that the
Issuer shall have ten (10) days after receipt of notice from such Holder of its
selection of such firm to object thereto, in which case such Holder shall select
another such firm and the Issuer shall have no such right of
objection. The firm selected by the Holder of this Warrant as
provided in the preceding sentence shall be instructed to deliver a written
opinion as to such matters to the Issuer and such Holder within thirty (30) days
after submission to it of such dispute. Such opinion shall be final
and binding on the parties hereto. The costs and expenses of the
initial accounting firm shall be paid equally by the Issuer and the Holder and,
in the case of an objection by the Issuer, the costs and expenses of the
subsequent accounting firm shall be paid in full by the Issuer.
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6. Fractional
Shares. No fractional shares of Warrant Stock will be issued
in connection with any exercise hereof, but in lieu of such fractional shares,
the Issuer shall round the number of shares to be issued upon exercise up to the
nearest whole number of shares.
7. Ownership
Caps and Certain Exercise Restrictions.
(a) Notwithstanding anything
to the contrary set forth in this Warrant, at no time may a Holder of this
Warrant exercise any portion of this Warrant if the number of shares of Class A
Common Stock to be issued pursuant to such exercise would exceed, when
aggregated with all other shares of Class A Common Stock beneficially owned by
such Holder at such time, the number of shares of Class A Common Stock which
would result in such Holder beneficially owning (as determined in accordance
with Section 13(d) of the Exchange Act and the rules thereunder) in
excess of 4.99% of the then issued and outstanding shares of Class A Common
Stock; provided, however, that upon a
holder of this Warrant providing the Issuer with sixty-one (61) days notice
(pursuant to Section 12 hereof) (the “Waiver Notice”) that
such Holder would like to waive this Section 7(a) with regard to any or all
shares of Class A Common Stock issuable upon exercise of this Warrant, this
Section 7(a) will be of no force or effect with regard to all or a portion of
the Warrant referenced in the Waiver Notice; provided, further, that this
provision shall be of no further force or effect during the sixty-one (61) days
immediately preceding the expiration of the term of this Warrant. In
all circumstances, exercise of this Warrant shall be deemed to be the Holder’s
representation that such exercise conforms to the provisions of this Section
7(a) and the Issuer shall be under no obligation to verify or ascertain
compliance by the Holder with this provision.
(b) The
Holder may not exercise the Warrant hereunder to the extent such exercise would
result in the Holder beneficially owning (as determined in accordance with
Section 13(d) of the Exchange Act and the rules thereunder) in excess of 9.99%
of the then issued and outstanding shares of Class A Common Stock, including
shares issuable upon exercise of the Warrant held by the Holder after
application of this Section; provided, however, that upon a
holder of this Warrant providing the Issuer with a Waiver Notice that such
holder would like to waive this Section 7(b) with regard to any or all shares of
Class A Common Stock issuable upon exercise of this Warrant, this Section 7(b)
shall be of no force or effect with regard to those shares of Warrant Stock
referenced in the Waiver Notice; provided, further, that this
provision shall be of no further force or effect during the sixty-one (61) days
immediately preceding the expiration of the term of this Warrant. In
all circumstances, exercise of this Warrant shall be deemed to be the Holder’s
representation that such exercise conforms to the provisions of this Section
7(b) and the Issuer shall be under no obligation to verify or ascertain
compliance by the Holder with this provision.
-10-
8. Definitions. For
the purposes of this Warrant, the following terms have the following
meanings:
“Additional Shares of Common
Stock” means all shares of Class A Common Stock issued by the Issuer
after the Original Issue Date, and all shares of Other Common, if any, issued by
the Issuer after the Original Issue Date, except for those issued in a Permitted
Financing.
“Board” shall mean the
Board of Directors of the Issuer.
“Capital Stock” means
and includes (i) any and all shares, interests, participations or other
equivalents of or interests in (however designated) corporate stock, including,
without limitation, shares of preferred or preference stock, (ii) all
partnership interests (whether general or limited) in any Person which is a
partnership, (iii) all membership interests or limited liability company
interests in any limited liability company, and (iv) all equity or ownership
interests in any Person of any other type.
“Certificate of
Incorporation” means the Certificate of Incorporation of the Issuer as in
effect on the Original Issue Date, and as hereafter from time to time amended,
modified, supplemented or restated in accordance with the terms hereof and
thereof and pursuant to applicable law.
“Class A Common Stock”
means the Class A Common Stock, $0.001 par value per share, of the Issuer and
any other Capital Stock into which such stock may hereafter be
changed.
“Governmental
Authority” means any governmental, regulatory or self-regulatory entity,
department, body, official, authority, commission, board, agency or
instrumentality, whether federal, state or local, and whether domestic or
foreign.
“Holders” mean the
Persons who shall from time to time own any Warrant. The term
“Holder” means one of the Holders.
“Independent
Appraiser” means a nationally recognized or major regional investment
banking firm or firm of independent certified public accountants of recognized
standing (which may be the firm that regularly examines the financial statements
of the Issuer) that is regularly engaged in the business of appraising the
Capital Stock or assets of corporations or other entities as going concerns, and
which is not affiliated with either the Issuer or the Holder of any
Warrant.
-11-
“Issuer” means The
Amacore Group, Inc., a Delaware corporation, and its successors.
“Original Issue Date”
means March 13, 2008.
“OTC Bulletin Board”
means the over-the-counter electronic bulletin board.
“Other Common” means
any other Capital Stock of the Issuer of any class which shall be authorized at
any time after the date of this Warrant (other than Class A Common Stock) and
which shall have the right to participate in the distribution of earnings and
assets of the Issuer without limitation as to amount.
“Outstanding Common
Stock” means, at any given time, the aggregate amount of outstanding
shares of Class A Common Stock, assuming full exercise, conversion or exchange
(as applicable) of all options, warrants and other Securities which are
convertible into or exercisable or exchangeable for, and any right to subscribe
for, shares of Class A Common Stock that are outstanding at such
time.
“Person” means an
individual, corporation, limited liability company, partnership, joint stock
company, trust, unincorporated organization, joint venture, Governmental
Authority or other entity of whatever nature.
“Per Share Market
Value” means on any particular date (a) the last closing bid price per
share of the Class A Common Stock on such date on the OTC Bulletin Board or another
registered national stock exchange on which the Class A Common Stock is then
listed, or if there is no such price on such date, then the closing bid price on
such exchange or quotation system on the date nearest preceding such date, or
(b) if the Class A Common Stock is not listed then on the OTC Bulletin Board or
any registered national stock exchange, the last closing bid price for a share
of Class A Common Stock in the over-the-counter market, as reported by the OTC
Bulletin Board or in the National Quotation Bureau Incorporated or similar
organization or agency succeeding to its functions of reporting prices) at the
close of business on such date, or (c) if the Class A Common Stock is not then
reported by the OTC Bulletin Board or the National Quotation Bureau Incorporated
(or similar organization or agency succeeding to its functions of reporting
prices), then the “Pink Sheet” quotes for the applicable Trading Days preceding
such date of determination, or (d) if the Class A Common Stock is not then
publicly traded the fair market value of a share of Class A Common Stock as
determined by an Independent Appraiser selected in good faith by the Holder;
provided, however, that the
Issuer, after receipt of the determination by such Independent Appraiser, shall
have the right to select an additional Independent Appraiser, in which case, the
fair market value shall be equal to the average of the determinations by each
such Independent Appraiser; and provided, further that all
determinations of the Per Share Market Value shall be appropriately adjusted for
any stock dividends, stock splits or other similar transactions during such
period. The determination of fair market value by an Independent
Appraiser shall be based upon the fair market value of the Issuer determined on
a going concern basis as between a willing buyer and a willing seller and taking
into account all relevant factors determinative of value, and the determination
of the additional Independent Appraiser, if any, or of the Independent
Appraisers otherwise shall be final and binding on all parties. In
determining the fair market value of any shares of Class A Common Stock, no
consideration shall be given to any restrictions on transfer of the Class A
Common Stock imposed by agreement or by federal or state securities laws, or to
the existence or absence of, or any limitations on, voting rights.
-12-
“Purchase Agreement”
means the Securities Purchase Agreement dated as of March 13, 2008, among the
Issuer and the Holder.
“Securities” means any
debt or equity securities of the Issuer, whether now or hereafter authorized,
any instrument convertible into or exchangeable for Securities or a Security,
and any option, warrant or other right to purchase or acquire any
Security. “Security” means one of the Securities.
“Securities Act” means
the Securities Act of 1933, as amended, or any similar federal statute then in
effect.
“Subsidiary” means any
corporation at least 50% of whose outstanding Voting Stock shall at the time be
owned directly or indirectly by the Issuer or by one or more of its
Subsidiaries, or by the Issuer and one or more of its Subsidiaries.
“Term” has the meaning
specified in Section 1 hereof.
“Trading Day” means
(a) a day on which the Class A Common Stock is traded on the OTC Bulletin Board,
or (b) if the Class A Common Stock is not traded on the OTC Bulletin Board, a
day on which the Class A Common Stock is quoted in the over-the-counter market
as reported by the National Quotation Bureau Incorporated (or any similar
organization or agency succeeding its functions of reporting prices); provided, however, that in the
event that the Class A Common Stock is not listed or quoted as set forth in (a)
or (b) hereof, then Trading Day shall mean any day except Saturday, Sunday and
any day which shall be a legal holiday or a day on which banking institutions in
the State of New York are authorized or required by law or other government
action to close.
“Voting Stock” means,
as applied to the Capital Stock of any corporation, Capital Stock of any class
or classes (however designated) having ordinary voting power for the election of
a majority of the members of the Board of Directors (or other governing body) of
such corporation, other than Capital Stock having such power only by reason of
the happening of a contingency.
“Warrants” means the
Warrants issued and sold pursuant to the Purchase Agreement, including, without
limitation, this Warrant, and any other warrants of like tenor issued in
substitution or exchange for any thereof pursuant to the provisions of Section
2(c), 2(d) or 2(e) hereof or of any of such other Warrants.
-13-
“Warrant Price”
initially means $0.375, as such price may be adjusted from time to time as shall
result from the adjustments specified in this Warrant, including Section 4
hereto.
“Warrant Share Number”
means at any time the aggregate number of shares of Warrant Stock which may at
such time be purchased upon exercise of this Warrant, after giving effect to all
prior adjustments and increases to such number made or required to be made under
the terms hereof.
“Warrant Stock” means
Class A Common Stock issuable upon exercise of any Warrant or Warrants or
otherwise issuable pursuant to any Warrant or Warrants.
9. Other
Notices. In case at any time:
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(a)
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the
Issuer shall make any distributions to the holders of Class A Common
Stock; or
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(b)
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the
Issuer shall authorize the granting to all holders of its Class A Common
Stock of rights to subscribe for or purchase any shares of Capital Stock
of any class or other rights; or
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(c)
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there
shall be any reclassification of the Capital Stock of the Issuer;
or
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(d)
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there
shall be any capital reorganization by the Issuer;
or
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(e)
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there
shall be any (i) consolidation or merger involving the Issuer or (ii)
sale, transfer or other disposition of all or substantially all of the
Issuer’s property, assets or business (except a merger or other
reorganization in which the Issuer shall be the surviving corporation and
its shares of Capital Stock shall continue to be outstanding and unchanged
and except a consolidation, merger, sale, transfer or other disposition
involving a wholly-owned subsidiary);
or
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(f)
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there
shall be a voluntary or involuntary dissolution, liquidation or winding-up
of the Issuer or any partial liquidation of the Issuer or distribution to
holders of Class A Common Stock;
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then, in
each of such cases, the Issuer shall give written notice to the Holder of the
date on which (i) the books of the Issuer shall close or a record shall be taken
for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take
place. Such notice also shall specify the date as of which the
holders of Class A Common Stock of record shall participate in such dividend,
distribution or subscription rights, or shall be entitled to exchange their
certificates for Class A Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
disposition, dissolution, liquidation or winding-up, as the case may
be. Such notice shall be given at least twenty (20) days prior to the
action in question and not less than ten (10) days prior to the record date or
the date on which the Issuer’s transfer books are closed in respect
thereto. This Warrant entitles the Holder to receive copies of all
financial and other information distributed or required to be distributed to the
holders of the Class A Common Stock.
-14-
10. Amendment and
Waiver. Any term, covenant, agreement or condition in this
Warrant may be amended, or compliance therewith may be waived (either generally
or in a particular instance and either retroactively or prospectively), by a
written instrument or written instruments executed by the Issuer and the Holder;
provided, however, that no such
amendment or waiver shall reduce the Warrant Share Number, increase the Warrant
Price, shorten the period during which this Warrant may be exercised or modify
any provision of this Section 10 without the consent of the Holder of this
Warrant. No consideration shall be offered or paid to any person to
amend or consent to a waiver or modification of any provision of this Warrant
unless the same consideration is also offered to all holders of the
Warrants.
11. Governing Law;
Jurisdiction. This Warrant shall be governed by and construed
in accordance with the internal laws of the State of New York, without giving
effect to any of the conflicts of law principles which would result in the
application of the substantive law of another jurisdiction. This
Warrant shall not be interpreted or construed with any presumption against the
party causing this Warrant to be drafted. The Issuer and the Holder
agree that venue for any dispute arising under this Warrant will lie exclusively
in the state or federal courts located in New York County, New York, and the
parties irrevocably waive any right to raise forum non conveniens or any
other argument that New York is not the proper venue. The Issuer and
the Holder irrevocably consent to personal jurisdiction in the state and federal
courts of the state of New York. The Issuer and the Holder consent to
process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it under this
Warrant and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing in this Section 11
shall affect or limit any right to serve process in any other manner permitted
by law. The Issuer
agrees to pay all costs and expenses of enforcement of this Warrant, including,
without limitation, reasonable attorneys’ fees and
expenses. The parties hereby waive all rights to a trial by
jury.
12. Notices. Any
notice, demand, request, waiver or other communication required or permitted to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery by telecopy or facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The
addresses for such communications shall be as set forth in the Purchase
Agreement. Any party hereto may from time to time change its address
for notices by giving written notice of such changed address to the other party
hereto.
13. Warrant
Agent. The Issuer may, by written notice to each Holder of
this Warrant, appoint an agent having an office in New York, New York for the
purpose of issuing shares of Warrant Stock on the exercise of this Warrant
pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant pursuant
to subsection (d) of Section 2 hereof or replacing this Warrant pursuant to
subsection (d) of Section 3 hereof, or any of the foregoing, and thereafter any
such issuance, exchange or replacement, as the case may be, shall be made at
such office by such agent.
-15-
14. Remedies. The
Issuer stipulates that the remedies at law of the Holder of this Warrant in the
event of any default or threatened default by the Issuer in the performance of
or compliance with any of the terms of this Warrant are not and will not be
adequate and that, to the fullest extent permitted by law, such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
15. Successors and
Assigns. This Warrant and the rights evidenced hereby shall
inure to the benefit of and be binding upon the successors and assigns of the
Issuer, the Holder hereof and (to the extent provided herein) the Holders of
Warrant Stock issued pursuant hereto, and shall be enforceable by any such
Holder or Holder of Warrant Stock.
16. Modification and
Severability. If, in any action before any court or agency
legally empowered to enforce any provision contained herein, any provision
hereof is found to be unenforceable, then such provision shall be deemed
modified to the extent necessary to make it enforceable by such court or
agency. If any such provision is not enforceable as set forth in the
preceding sentence, the unenforceability of such provision shall not affect the
other provisions of this Warrant, but this Warrant shall be construed as if such
unenforceable provision had never been contained herein.
17. Headings. The
headings of the Sections of this Warrant are for convenience of reference only
and shall not, for any purpose, be deemed a part of this Warrant.
18. Registration
Rights. The
Holder of this Warrant is entitled to the benefit of certain registration rights
with respect to the shares of Warrant Stock issuable upon the exercise of this
Warrant pursuant to that certain Registration Rights Agreement, dated March 13,
2008, by and among the Issuer and the Holder (the “Registration
Rights Agreement”) and the
registration rights with respect to the shares of Warrant Stock issuable upon
the exercise of this Warrant by any subsequent Holder may only be assigned in
accordance with the terms and provisions of the Registrations Rights
Agreement.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
-16-
IN
WITNESS WHEREOF, the Issuer has executed this Warrant as of the day and year
first above written.
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By:
/s/ ▇▇▇▇▇ ▇.
▇▇▇▇▇▇
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Name: ▇▇▇▇▇
▇. ▇▇▇▇▇▇
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Title: Chief
Executive Officer
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-17-
WARRANT
EXERCISE FORM
The
undersigned _______________, pursuant to the provisions of the within Warrant,
hereby elects to purchase _____ shares of Class A Common Stock of The Amacore
Group, Inc. covered by the within Warrant.
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Dated:
_________________
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Signature
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___________________________
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Address
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___________________________
___________________________
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Number of shares of Class A Common Stock beneficially owned or deemed beneficially owned by the Holder on the date of Exercise: _________________________
The
undersigned is an “accredited investor” as defined in Regulation D under the
Securities Act of 1933, as amended.
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The
undersigned intends that payment of the Warrant Price shall be made as
(check one):
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Cash
Exercise_______
Cashless
Exercise_______
If the
Holder has elected a Cash Exercise, the Holder shall pay the sum of $________ by
certified or official bank check (or via wire transfer) to the Issuer in
accordance with the terms of the Warrant.
If the
Holder has elected a Cashless Exercise, a certificate shall be issued to the
Holder for the number of shares equal to the whole number portion of the product
of the calculation set forth below, which is ___________. The
Company shall pay a cash adjustment in respect of the fractional portion of the
product of the calculation set forth below in an amount equal to the product of
the fractional portion of such product and the Per Share Market Value on the
date of exercise, which product is ____________.
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Where:
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The
number of shares of Class A Common Stock to be issued to the Holder
__________________(“X”).
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-18-
The
number of shares of Class A Common Stock purchasable upon exercise of all of the
Warrant or, if only a portion of the Warrant is being exercised, the portion of
the Warrant being exercised ___________________________ (“Y”).
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The
Warrant Price ______________ (“A”).
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The Per
Share Market Value of one share of Class A Common
Stock _______________________ (“B”).
ASSIGNMENT
FOR VALUE
RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.
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Dated:
_________________
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Signature
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___________________________
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Address
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___________________________
___________________________
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PARTIAL
ASSIGNMENT
FOR VALUE
RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named
corporation.
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Dated:
_________________
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Signature
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___________________________
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Address
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___________________________
___________________________
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FOR USE
BY THE ISSUER ONLY:
This
Warrant No. W-___ canceled (or transferred or exchanged) this _____ day of
___________, _____, shares of Class A Common Stock issued therefor in the name
of _______________, Warrant No. W-_____ issued for ____ shares of Class A Common
Stock in the name of _______________.
-19-