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THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT") OR ANY STATE SECURITIES LAWS ("STATE LAWS"), AND MAY NOT BE SOLD, OFFERED
FOR SALE, ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF, UNLESS REGISTERED
PURSUANT TO THE PROVISIONS OF THE SECURITIES ACT AND APPLICABLE STATE LAWS OR AN
OPINION OF COUNSEL IS OBTAINED STATING THAT SUCH DISPOSITION IS IN COMPLIANCE
WITH AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION.
____________, 199__
AFFILIATED NETWORKS, INC.
FORM OF
REDEEMABLE WARRANT FOR THE PURCHASE
OF SHARES OF COMMON STOCK
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NO. W - __
FOR VALUE RECEIVED, AFFILIATED NETWORKS, INC., a Florida corporation
(the "Company"), hereby certifies that ________________________, or its assigns
(the "Holder"), is entitled, subject to the provisions of this Warrant, to
purchase from the Company, up to _____ fully paid and non-assessable shares of
Common Stock at a price of $______ per share (the "Exercise Price").
The term "Common Stock" means the Common Stock, par value $___ per
share, of the Company as constituted on ____________, 199__ (the "Issue Date").
The number of shares of Common Stock to be received upon the exercise of this
Warrant may be adjusted from time to time as hereinafter set forth. The shares
of Common Stock deliverable upon such exercise, and as adjusted from time to
time, are hereinafter referred to as "Warrant Stock." The term "Other
Securities" means any other equity or debt securities that may be issued by the
Company in addition thereto or in substitution for the Warrant Stock.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of this Warrant, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender, if mutilated, and cancellation of this Warrant, the Company
shall execute and deliver a new Warrant of like tenor and date. Any such new
Warrant executed and delivered shall constitute an additional contractual
obligation on the part of the Company, whether or not this Warrant so lost,
stolen, destroyed or mutilated shall be at any time enforceable by anyone.
The Holder agrees with the Company that this Warrant is issued, and all
the rights hereunder shall be held, subject to all of the conditions,
limitations and provisions set forth herein.
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1. EXERCISE OF WARRANT. (A) This Warrant may be exercised in whole or
in part at any time, or from time to time, during the period commencing on the
date hereof and expiring 5:00 p.m. Eastern Time on the fifth anniversary of the
Issue Date (the "Expiration Date") or, if such day is a day on which banking
institutions in New York are authorized or required by law to close, then on the
next succeeding day that shall not be such a day, by presentation and surrender
of this Warrant to the Company at its principal office, or at the office of its
stock transfer agent, if any, with the Warrant Exercise Form attached hereto
duly executed and accompanied by payment (either in cash or by certified or
official bank check, payable to the order of the Company) of the Exercise Price
for the number of shares specified in such form and instruments of transfer, if
appropriate, duly executed by the Holder or his or her duly authorized attorney.
If this Warrant should be exercised in part only, the Company shall, upon
surrender of this Warrant for cancellation, execute and deliver a new Warrant
evidencing the rights of the Holder thereof to purchase the balance of the
shares purchasable hereunder. Upon receipt by the Company or the stock transfer
agent of the Company of this Warrant, together with the Exercise Price, at its
office, in proper form for exercise, the Holder shall be deemed to be the holder
of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such shares of Common Stock shall not
then be actually delivered to the Holder. The Company shall pay any and all
documentary stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of shares of Common Stock upon exercise of this Warrant.
(B) The Holder hereby acknowledges that neither this Warrant nor any of
the securities that may be acquired upon exercise of this Warrant have been
registered under the Securities Act or under the securities laws of any state.
The Holder acknowledges that, upon exercise of this Warrant, the securities to
be issued upon such exercise may be subject to applicable federal and state
securities (or other) laws requiring registration, qualification or approval of
governmental authorities before such securities may be validly issued or
delivered upon notice of such exercise. The Company's sole obligation to any
Holder upon exercise hereof shall be to use its best efforts to obtain
exemptions from registration or qualification for the issuance of such
securities under applicable state and federal securities laws, and the Holder
further agrees that the issuance of such securities shall be deferred until such
exemption shall have been obtained; and it is further agreed that the Company
shall have no other obligation to the Holder for the non-issuance of such
securities except to return the Warrant so rendered and to refund to the Holder
any consideration tendered in respect of the exercise price. With respect to any
such securities, this Warrant may not be exercised by, and securities shall not
be issued, to any Holder in any state in which such exercise would be unlawful.
Any restrictions imposed by this section upon the exercise of this Warrant shall
cease and terminate as to any particular shares of Common Stock (a) when such
securities shall have been registered under the Securities Act and all
applicable state securities laws, or (b) when, in the opinion of Counsel to the
Company, such restrictions are no longer required in order to ensure compliance
with the Securities Act or any applicable state securities laws.
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2. RESERVATION OF SHARES. The Company shall at all times reserve for
issuance and delivery upon exercise of this Warrant all shares of Common Stock
or other shares of capital stock of the Company (and Other Securities) from time
to time receivable upon exercise of this Warrant. All such shares (and Other
Securities) shall be duly authorized and, when issued upon such exercise, shall
be validly issued, fully paid and non-assessable and free of all preemptive
rights.
3. FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant, but the
Company shall pay the Holder an amount equal to the fair market value of such
fractional share of Common Stock in lieu of each fraction of a share otherwise
called for upon any exercise of this Warrant. For purposes of this Warrant, the
fair market value of a share of Common Stock shall be determined as follows:
(a) If the Common Stock is listed on a national securities exchange
or admitted to unlisted trading privileges on such exchange or listed for
trading on the NASDAQ system, the current market value shall be the last
reported sale price of the Common Stock on such exchange or system on the last
business day prior to the date of exercise of this Warrant or if no such sale is
made on such day, the average of the closing bid and asked prices for such day
on such exchange or system; or
(b) If the Common Stock is not so listed or admitted to unlisted
trading privileges, the current market value shall be the mean of the last
reported bid and asked prices reported by the National Quotation Bureau, Inc. on
the last business day prior to the date of the exercise of this Warrant; or
(c) If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and asked prices are not so reported, the current
market value shall be an amount, not less than book value thereof as at the end
of the most recent fiscal year of the Company ending prior to the date of the
exercise of the Warrant, determined in such reasonable manner as may be
prescribed by the Board of Directors of the Company.
4. EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other Warrants of different denominations, entitling the
Holder or Holders thereof to purchase in the aggregate the same number of shares
of Common Stock purchasable hereunder. Upon surrender of this Warrant to the
Company or at the office of its stock transfer agent, if any, with the
Assignment Form annexed hereto duly executed and funds sufficient to pay any
transfer tax, the Company shall, without charge, execute and deliver a new
Warrant in the name of the assignee named in such instrument of assignment and
this Warrant shall promptly be canceled. This Warrant may be divided or combined
with other Warrants that carry the same rights upon presentation hereof at the
office of the Company or at the office of its stock transfer agent, if any,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued and signed by the Holder hereof.
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5. RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or in
equity, and the rights of the Holder are limited to those expressed in this
Warrant.
6. ANTI-DILUTION PROVISIONS.
6.1 ADJUSTMENT FOR RECAPITALIZATION. If the Company shall at
any time subdivide its outstanding shares of Common Stock (or Other Securities
at the time receivable upon the exercise of the Warrant) by recapitalization,
reclassification or split-up thereof, or if the Company shall declare a stock
dividend or distribute shares of Common Stock to its stockholders, the number of
shares of Common Stock subject to this Warrant immediately prior to such
subdivision shall be proportionately increased, and if the Company shall at any
time combine the outstanding shares of Common Stock by recapitalization,
reclassification or combination thereof, the number of shares of Common Stock
subject to this Warrant immediately prior to such combination shall be
proportionately decreased. Any such adjustment and adjustment to the Exercise
Price pursuant to this Section 6.1 shall be effective at the close of business
on the effective date of such subdivision or combination or if any adjustment is
the result of a stock dividend or distribution then the effective date for such
adjustment based thereon shall be the record date therefor.
Whenever the number of shares of Common Stock purchasable upon
the exercise of this Warrant is adjusted, as provided in this Section 6.1, the
Exercise Price shall be adjusted to the nearest cent by multiplying such
Exercise Price immediately prior to such adjustment by a fraction (x) the
numerator of which shall be the number of shares of Common Stock purchasable
upon the exercise immediately prior to such adjustment, and (y) the denominator
of which shall be the number of shares of Common Stock so purchasable
immediately thereafter.
6.2 CERTIFICATE AS TO ADJUSTMENTS. In each case of an
adjustment in the number of shares of Common Stock receivable on the exercise of
the Warrant, the Company at its expense shall promptly compute such adjustment
in accordance with the terms of the Warrant and prepare a certificate executed
by two executive officers of the Company setting forth such adjustment and
showing in detail the facts upon which such adjustment is based. The Company
shall forthwith mail a copy of each such certificate to each Holder.
6.3 NOTICES OF RECORD DATE, ETC. In case:
(a) the Company shall take a record of the holders of
its Common Stock (or Other Securities at the time receivable upon the exercise
of the Warrant) for the purpose of entitling them to receive any dividend (other
than a cash dividend at the same rate as the rate of the last cash dividend
theretofore paid) or other distribution, or any right to subscribe for, purchase
or otherwise acquire any shares of stock of any class or any other securities,
or to receive any other right; or
(b) of any capital reorganization of the Company any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into
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another corporation, or any conveyance of all or substantially all of the assets
of the Company to another corporation; or
(c) of any voluntary or involuntary dissolution,
liquidation or winding up of the Company, then, and in each such case, the
Company shall mail or cause to be mailed to each Holder of the Warrant at the
time outstanding a notice specifying, as the case may be, (i) the date on which
a record is to be taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend, distribution or right, or
(ii) the date on which such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding up is to take place, and
the time, if any, is to be fixed, as to which the holders of record of Common
Stock (or such other securities at the time receivable upon the exercise of the
Warrant) shall be entitled to exchange their shares of Common Stock (or such
other securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding up. Such notice shall be mailed at least 20
days prior to the date therein specified and the Warrant may be exercised prior
to said date during the term of the Warrant.
7. REDEMPTION. The Company shall have the right, upon the giving of at
least 30 days prior written notice to the Holders of all the Warrants, to redeem
all of the Warrants at a price of $.05 per Warrant at any time after 90 days
following the date that the Company completes a public offering of its Common
Stock at an offering price of not less than $5 per share; provided, however,
that the Holder shall have the right to exercise the unexercised portion of the
Warrant up to the business day before the date set for redemption by giving the
Company a Notice of Exercise and delivering an amount equal to the aggregate
Exercise Price for the number of shares of Common Stock as to which this Warrant
is then being exercised.
Such notice of redemption shall (a) designate the date of
redemption which date shall be not less than 30 or more than 60 days from the
date of such notice, (b) state the redemption price and that payment therefor
will be made upon surrender of the Warrant of the offices of the Company and (c)
indicate that the right to exercise the Warrant will terminate at the close of
business on the business day prior to the redemption date. If the giving of
notice of redemption shall be given as aforesaid, the right to exercise the
Warrant shall terminate at the close of business on the business day preceding
the date fixed for redemption and the Holder of this Warrant shall thereafter be
entitled upon surrender of this Warrant to receive the redemption price without
interest.
8. TRANSFER TO COMPLY WITH THE SECURITIES ACT. The Company shall be
under no obligation to transfer this Warrant, or any of the Common Stock issued
upon exercise of this Warrant, unless and until the Company shall have received
an opinion of counsel, reasonably acceptable to the Company, that such transfer
does not require registration of any such securities under the Securities Act or
any applicable state securities laws. This Warrant and any Warrant Stock or
Other Securities may not be sold, transferred, pledged, hypothecated or
otherwise disposed of except as follows: (a) to a person who, in the opinion of
counsel to the Company, is a
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person to whom this Warrant or the Warrant Stock or Other Securities may legally
be transferred without registration and without the delivery of a current
prospectus under the Securities Act with respect thereto and then only against
receipt of an agreement of such person to comply with the provisions of this
Section 8 with respect to any resale or other disposition of such securities; or
(b) to any person upon delivery of a prospectus then meeting the requirements of
the Securities Act relating to such securities and the offering thereof for such
sale or disposition, and thereafter to all successive assignees.
9. LEGEND. Unless the shares of Warrant Stock or Other Securities have
been registered under the Securities Act, upon exercise of any of the Warrants
and the issuance of any of the shares of Warrant Stock, all certificates
representing shares shall bear on the face thereof substantially the following
legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
ANY STATE SECURITIES LAWS ("STATE LAWS"), AND MAY NOT BE SOLD, OFFERED
FOR SALE, ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF, UNLESS
REGISTERED PURSUANT TO THE PROVISIONS OF THE SECURITIES ACT AND
APPLICABLE STATE LAWS OR AN OPINION OF COUNSEL IS OBTAINED STATING THAT
SUCH DISPOSITION IS IN COMPLIANCE WITH AN AVAILABLE EXEMPTION FROM SUCH
REGISTRATION.
10. NOTICES. All notices required hereunder shall be in writing and
shall be deemed given when telegraphed, delivered personally or within two days
after mailing when mailed by certified or registered mail, return receipt
requested, to the Company or the Holder, as the case may be, for whom such
notice is intended, at the address of such party as set forth on the first page,
or at such other address of which the Company or the Holder has been advised by
notice hereunder.
11. APPLICABLE LAW. The Warrant is issued under and shall for all
purposes be governed by and construed in accordance with the laws of the State
of Florida.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed on
its behalf, in its corporate name, by its duly authorized officer, all as of the
day and year first above written.
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By:
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Name:
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Title:
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