THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION
OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
COMMON STOCK WARRANT
March 21, 2000
THIS CERTIFIES that, for value received, I-Bankers Securities, Inc., 122 W.
Carpenter Fwy, Suite 465, Irving, TX 75039 (the "Warrantholder"), is entitled,
upon the terms and subject to the conditions set forth herein, to purchase from
NewsReal, Inc., a Delaware corporation (the "Company"), the number of shares of
the common stock, par value $.001 per share (the "Common Stock"), of the Company
(the "Shares") which are set forth on Exhibit A hereto at the purchase price per
share of $5.88 (the "Exercise Price"). The number of shares underlying this
Warrant is calculated as follows: (a) for the first $5,000,000 in gross proceeds
raised by the Warrantholder as placement agent on behalf of the Company in a
private placement offering of the Company's securities conducted during February
and March 2000, 6% of the shares sold in the offering; (b) for funds raised in
excess of $5,000,000, and up to $10,000,000, 4% of the shares sold in the
offering; and (c) for funds raised in excess of $10,000,000 raised in the
offering, no additional warrants. The number of shares and Exercise Price are
subject to adjustment as provided below.
This Warrant is being issued to the Warrantholder in lieu of cash
compensation for services previously rendered by the Warrantholder to the
Company, an is subject to the following terms and conditions:
1. Exercise of Warrant. Upon satisfactory completion of the services to
be rendered under the Contractor Agreement, this Warrant may be exercised in
whole or in part, at any time, or from time to time, after the date hereof and
on or before the fifth anniversary of the date hereof by the surrender of this
Warrant and the Notice of Exercise annexed hereto (duly completed and executed
on behalf of the Warrantholder) to the Company and by the payment of the
Exercise Price for the Shares to be purchased by the Warrantholder to the
Company by cash or check acceptable to the Company, except as provided in
Section 13 hereof. The Company will prepare a certificate for the Shares
purchased and, if this Warrant is exercised in part, a new Warrant for the
unexercised portion of this Warrant. The Company agrees that, upon exercise of
this Warrant in accordance with the terms hereof, the Shares so purchased will
be deemed to be issued to the Warrantholder as the record owner of such Shares
as of the close of business on the date on which this Warrant was exercised.
The Warrantholder, by acceptance hereof, acknowledges that this Warrant
and Shares to be issued upon exercise hereof, are being acquired solely for
the Warrantholder's own account. The Warrantholder will not offer, sell or
otherwise dispose of this Warrant or the Shares to be issued upon exercise
hereof except under circumstances that will not result in a violation of
Securities Act of 1933, as amended (the "Act") or other applicable federal or
state securities laws. Upon exercise or transfer of this Warrant, the
Warrantholder shall provide the Company with such information as may be
necessary or reasonably requested by the Company to establish an exemption from
the registration requirements under the Act, including without limitation,
representation regarding the status of the Warrantholder as a non-U.S. Person
or accredited investor and such other matters as may be appropriate to
establish the availability of the Regulation S or Regulation D exemption from
the registration requirements of the Act. If the Company reasonably determines
that registration under the Act is required or that the Warrantholder has failed
to provide the Company with such information as may be necessary to establish
an exemption from the registration requirements under the Act, the Company may
defer the exercise or transfer of this Warrant until either a registration
statement under the Act has been declared effective or the Warrantholder has
provided information satisfactory to the Company that establishes the
availability of an exemption from the registration requirements under the Act.
Certificates for Shares purchased under this Warrant and, on partial
exercise of this Warrant, a new Warrant for the unexercised portion of this
Warrant will be delivered to the Warrantholder or to such person or persons as
the Warrantholder may direct as promptly as practicable after the date on which
this Warrant was exercised. The Company covenants that all Shares that may be
issued upon the exercise of rights represented by this Warrant will, upon
exercise of the rights represented by this Warrant, payment of the Exercise
Price and issuance by the Company, be duly authorized, validly issued, fully
paid and nonassessable.
With the consent of the Company, which consent will not be unreasonably
withheld, and subject to applicable laws and regulations, the Warrantholder may
direct that the certificates for Shares purchased under this Warrant be issued
in name or names other than the name of the Warrantholder. In this case, this
Warrant when surrendered for exercise must be accompanied by the Assignment
Form attached hereto duly executed by the Warrantholder and the Notice of
Exercise duly completed and executed and stating in whose name or names
certificates are to be issued.
2. Reservation of Shares; No Impairment or Amendment. The Company will
at all times reserve and keep available, solely for issuance, sale and delivery
upon the exercise of this Warrant, a number of shares of Common Stock equal to
the number of shares of Common Stock issuable upon the exercise of this Warrant.
The Company will not by any amendment of its Articles of Incorporation or
through any other means, avoid or seek to avoid the observance or performance of
any of the terms of this Warrant. The Company will take all such reasonable
action as may be necessary to assure that such shares of Common Stock may be
provided herein without violation of any applicable law or regulation, or of
any requirements of any domestic securities exchange or automated quotation
system upon which the shares of Common Stock may be listed.
3. Expiration. This Warrant, if not exercised by Warrantholder prior
thereto, will expire on the fifth anniversary of the date hereof.
4. Adjustments of Exercise Price and Number of Shares Purchasable. The
Exercise Price and the number of shares purchasable under this Warrant is
subject to adjustment from time to time in accordance with the following
(a) Reorganization, Reclassification, Consolidation or Merger. If
any capital reorganization or reclassification of the capital stock of the
Company, or an Exchange Transaction (as defined below), or the sale of all or
substantially all of its assets to another corporation shall be effected in
such a way that holders of Common Stock shall be entitled to receive stock,
securities, cash or other property with respect to or in exchange for Common
Stock, then, as a condition of such reorganization, reclassification, Exchange
Transaction or sale, lawful and adequate provision shall be made whereby the
holder of this Warrant shall have the right to acquire and receive upon
exercise of this Warrant such shares of stock, securities, cash or other
property issuable or payable (as part of the reorganization, reclassification,
Exchange Transaction or sale) with respect to or in exchange for such number of
outstanding shares of the Company's Common Stock as would have been received
upon exercise of this Warrant at the Exercise Price then in effect and which
represent Warrant Shares that are vested and exercisable as of the date
immediately preceding such reorganization, reclassification, Exchange
Transaction or sale. The Company will not effect any such Exchange Transaction
or sale, unless prior to the consummation thereof the successor corporation (if
other than the Company) resulting from such Exchange Transaction or the
corporation purchasing such assets shall assume by written instrument mailed or
delivered to the holder of this Warrant at the last address of such holder
appearing on the books of the Company, the obligation to deliver to such holder
such shares of stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to purchase. If a purchase, tender or
exchange offer is made to and accepted by the holders of more than 50% of the
outstanding shares of Common Stock of the Company, the Company shall not effect
any Exchange Transaction or sale with the person having made such offer or with
any Affiliate of such person, unless prior to the consummation of such Exchange
Transaction or sale the holder of this Warrant shall have been given a
reasonable opportunity to then elect to receive upon the exercise of this
Warrant either the stock, securities or assets then issuable with respect to
the Common Stock of the Company or the stock, securities or assets, or the
equivalent, issued to previous holders of the Common Stock in accordance with
such offer, in each case with respect to Warrant Shares that are vested and
exercisable as of the date immediately preceding such reorganization,
reclassification, Exchange Transaction or sale or which, immediately after
giving effect to such a transaction, would be vested pursuant to Section 1.2
above. For purposes hereof, the term "Affiliate" with respect to any given
person shall mean
any person controlling, controlled by or under common control with the given
person. This Warrant shall terminate with respect to any Shares that are not
vested or deemed vested pursuant to this Section 4 as of the date of any
reorganization, reclassification, Exchange Transaction or sale referred to
above effective simultaneously with such a transaction.
For purposes hereof, the term "Exchange Transaction" means a merger (other
than a merger of the Company in which the holders of Common Stock immediately
prior to the merger have the same proportionate ownership of Common Stock in the
surviving corporation immediately after the merger), consolidation, acquisition
of property or stock, separation, reorganization (other than a mere
reincorporation or the creation of a holding company), liquidation of the
Company or any other similar transaction or event so designated by the Board, in
its sole discretion, as a result of which the stockholders of the Company
receive cash, stock or other property in exchange for or in connection with
their shares of Common Stock.
(b) Adjustment to Exercise Price. The Exercise Price will be
proportionately adjusted based on any adjustment to the number of Shares
purchasable hereunder following the date of this Warrant.
5. Notice of Adjustment; Notices. Whenever the Exercise Price or number
of shares purchasable hereunder will be adjusted, the Company at its expense
will promptly issue a certificate signed by an executive officer of the Company
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated and
the Exercise Price and number of shares purchasable hereunder after giving
effect to such adjustment, and will cause a copy of such certificate to be sent
to the Warrantholder.
6. No Fractionalized Shares. No fractionalized shares of Common Stock or
other security will be issued upon exercise of this Warrant. The shares of
Common Stock or other security issued to the Warrantholder as a result of any
exercise of this Warrant in accordance with the terms hereof will be rounded
down to the nearest whole share.
7. Transfer of Warrant. Subject to section 1 hereof, this Warrant and all
rights hereunder are transferable, in whole or in part, but only with the prior
written consent of the Company, which consent will not be unreasonably withheld.
In order to transfer this Warrant, the Warrantholder must deliver to the Company
this Warrant together with the Assignment Form annexed hereto properly endorsed.
Upon receipt thereof, the Company will affect such transfer as promptly as
8. No Voting Rights, Etc. Prior to the proper exercise of this Warrant,
the Warrantholder, as such, is not entitled to vote or receive dividends or be
deemed to be a shareholder of the Company for any purposes, nor may anything
contained in this Warrant be construed to confer such rights upon Warrantholder.
9. Registry of Warrant. The Company will maintain a registry showing the
name and address of the Warrantholder and the Company will be entitled to rely
in all respects, prior to written notice to the contrary, upon such registry.
The Warrantholder is responsible for notifying the Company of any change of its
10. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to the Company,
and upon reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this Warrant, if mutilated, the
Company will replace this Warrant with a new Warrant of like tenor, dated as of
such cancellation, and deliver it to the Warrantholder.
11. Office for Exercise or Exchange. This Warrant may be surrendered for
exchange, transfer or exercise, in accordance with its terms, at the principal
office of the Company, or at such other office or such other office or agency
of the Company as it may designate in writing to the Warrantholder at its
address appearing on the Company's registry or other books.
12. Chargers, Taxes and Expenses. Issuance of certificates to the
Warrantholder for Shares upon the exercise of this Warrant will be made without
charge to the Warrantholder for any issue or transfer tax or other incidental
expense in respect of the issuance of such certificates, all of which taxes and
expenses will be paid by the Company. However, if the certificates are to be
issued in a name or names other than the name of the Warrantholder, the Company
may require, as a condition to such issuance, the payment of a sum sufficient
to reimburse it for any transfer tax incidental thereto.
13. Cashless Exercise. In lieu of payment of the aggregate Exercise Price,
the Warrantholder may exercise this Warrant with respect to the Shares that are
then vested and exercisable, in whole or in part, by presentation and surrender
of this Warrant to the Company, together with a Cashless Exercise Form attached
hereto (or a reasonable facsimile thereof) duly executed (a "Cashless
Exercise"). Acceptance by the Company of such presentation and surrender shall
be deemed a waiver of the Warrantholder's obligation to pay all or any portion
of the aggregate Exercise Price. In the event of a Cashless Exercise, the
Warrantholder shall exchange this Warrant for that number of shares of Common
Stock determined by multiplying the number of Shares being exercised by a
fraction, the numerator of which shall be the difference between the then
current market price per share of the Common Stock and the Exercise Price, and
the denominator of which shall be the then current market price per share of
Common Stock. For purposes of any computation under this Section 13, the then
current market price per share of Common Stock at any date shall be deemed to
be the average for the five consecutive business days immediately prior to the
Cashless Exercise of the daily closing prices of the Common Stock on the
principal national securities exchange on which the Common Stock
is admitted to trading or listed, or if not listed or admitted to trading on any
such exchange, the closing prices as reported by the Nasdaq National Market, or
if not then listed on the Nasdaq National Market, the average of the highest
reported bid and lowest reported asked prices as reported by the National
Association of Securities Dealers, Inc. Automated Quotations System ("NASDAQ")
or if not then publicly traded, the fair market price of the Common Stock as
determined by the Board.
(a) Governing Law. This Warrant constitutes a contract under
and will be construed in accordance with and governed by the internal laws of
the State of Delaware.
(b) Successors and Assigns. This Warrant is binding upon any
successors or assigns of the Company and the Warrantholder and of the Shares
issued or issuable upon the exercise hereof.
(c) Definition of Warrantholder. The term Warrantholder means
the Warrantholder named in the first paragraph of this Warrant and any successor
or permitted assign of such Warrantholder known to the Company and reflected on
the Company's registry as the holder of this Warrant.
(d) Restrictions. THESE SECURITIES 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 ANY EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS
(e) Amendments. This warrant may be amended and the observance
of any term of this Warrant may be waived only with the written consent of the
Company and the Warrantholder.
(f) Notice. Any notice required or permitted under this Warrant
will be deemed effectively given upon personal delivery, delivery by recognized
international express courier or upon deposit with the United States Post
Office, by certified mail, postage prepaid and addressed to the party to be
notified at the address indicated below for such party, or at such other address
as such other party may designate by ten-day advance written notice.
(g) Acceptance. Receipt of this Warrant by the Warrantholder
constitutes acceptance of and agreement to the foregoing terms and conditions.
[The remainder of this page is left intentionally blank.]
This Warrant Agreement has been duly executed on the date first written
NEWSREAL, INC., a Delaware corporation
David C. Hoppmann
President & CEO
Agreed to and accepted by:
NOTICE OF EXERCISE
To: NEWSREAL, INC.
1. The undersigned hereby elects to purchase ____________ shares of
Common Stock ("Stock") of NEWSREAL, INC. (the "Company") pursuant to the terms
of the attached Warrant, and tenders herewith payment of the purchase price,
together with an Investment Representation Statement (see attached form) in
form and substance satisfactory to legal counsel to the Company.
2. The shares of Stock to be received by the undersigned upon exercise of
the Warrant are being acquired for its own account, not as a nominee or agent,
and not with a view to resale or distribution of any part thereof, and the
undersigned has no present intention of selling, granting any participation in,
or otherwise distributing the same. The undersigned further represents that it
does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such person or to any third
person, with respect to the Stock. The undersigned believes it has received all
the information it considers necessary or appropriate for deciding whether to
purchase the Stock.
3. The undersigned understands that the shares of Stock and the shares of
the Company's Common Stock into which the Stock is convertible are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in transactions not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act of
1933, as amended (the "Act"), only in certain limited circumstances. In this
connection, the undersigned represents that it is familiar with Rule 144
promulgated under the Act, as presently in effect, and understandings the
resale limitations imposed thereby and by the Act.
4. The undersigned is an "accredited investor" as defined in Rule 502 of
Regulation D under the Act or is not a "U.S. Person" as defined in Rule 902
regulations under the Act.
5. The undersigned understands the instruments evidencing the Stock may
bear one or all of the following legends:
(a) "THESE SECURITIES 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 AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED."
(b) Any legend required by applicable state law.
6. Please issue a certificate or certificates representing said shares
of Stock in the name set forth below.
[Please type or print name]
7. Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name set forth below.
[Please type or print name]
CASHLESS EXERCISE FORM
(To be executed upon exercise of Warrant pursuant to Section 13)
The undersigned hereby irrevocably elects to surrender __________________
shares purchasable under this Warrant for such shares of Common Stock issuable
in exchange therefor pursuant to the Cashless Exercise provisions of the within
Warrant, as provided for in Section 13 of such Warrant.
Please issue a certificate or certificates for such Common Stock in the
name of, and pay cash for fractional shares in the name of:
(Please print name, address, and social security number/tax identification
and, if said number of shares of Common Stock shall not be all the shares of
Common Stock purchasable thereunder, that a new Warrant for the balance
remaining of the shares of Common Stock purchasable under the within Warrant be
registered in the name of the undersigned Warrantholder or his or her Assignee
as below indicated and delivered to the address stated below.
Name of Holder
NOTE: The above signature must correspond exactly with the name on the first
page of this Warrant or with the name of the assignee appearing in the
assignment form below.
(To assign the foregoing Warrant, execute this form and
supply required information. Do not use this form to
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to
[Please type or print name.]
whose address is ----------------------------------------------
[Please type or print address.]
NOTE: The signature to this Agreement Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be guaranteed by a bank or trust company. Officers of
a corporation and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
INVESTMENT REPRESENTATION STATEMENT
COMPANY: NEWSREAL, INC.
SECURITIES: Warrant to purchase the number of shares of Common Stock set
forth in Exhibit A hereto.
In connection with the purchase of the above-listed Securities, the
undersigned, the Purchaser, represents to the Company the following:
(a) The undersigned is sufficiently aware of the Company's business
affairs and financial condition to reach an informed and knowledgeable decision
to acquire the Securities. The undersigned is purchasing these Securities for
its own account for investment purposes only and not with a view to, or for the
resale in connection with, any "distribution" thereof for purposes of the
Securities Act of 1933, as amended (the "Securities Act").
(b) The undersigned understands that the Securities have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of its investment intent as expressed herein. In this connection, the
undersigned understands that, in the view of the Securities and Exchange
Commission (the "SEC"), the statutory basis for such exemption may be
unavailable if its representation was predicated solely upon a present
intention to hold these Securities for the minimum capital gains period
specified under tax statutes for a deferred sale, for or until an increase or
decrease in the market price of the Securities, or for a period of one year or
any other fixed period in the future.
(c) The undersigned further understands that the Securities must be
held indefinitely unless subsequently registered under the Securities Act or
unless an exemption from registration is otherwise available (such as Rule 144
under the Securities Act). In addition, the undersigned understands that the
certificate evidencing the Securities may be imprinted with a legend which
prohibits the transfer of the Securities unless they are registered or such
registration is not required in the opinion of counsel for the Company.
(d) The undersigned is familiar with the provisions of Rule 144,
promulgated under the Securities Act, which, in substance, permits limited
public resale of "restricted securities" acquired, directly or indirectly, from
the issuer thereof (or from an affiliate of such issuer), in a non-public
offering subject to the satisfaction of certain conditions, including, among
other things: (1) The availability of certain public information
about the Company; (2) the resale occurring not less than two years after the
party has purchased, and made full payment for, within the meaning of Rule 144,
the securities to be sold; and, in the case of an affiliate, or of a
non-affiliate who has held the securities less than three years; and (3) the
sale being made through a broker in an unsolicited "broker's transaction" or in
transactions directly with a market maker, as said term is defined under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
amount of securities being sold during any three month period not exceeding the
specified limitation stated therein, if applicable. There can be no assurances
that the requirements of Rule 144 will be met, or that the Securities will ever
(e) The undersigned further understands that at the time the
undersigned wishes to sell the Securities there may be no public market upon
which to make such a sale, and that, even if such a public market then exists,
the Company may not be satisfying the current public information requirements
of Rule 144, and that, in such event, the undersigned would be precluded from
selling the Securities under Rule 144 even if the two-year minimum holding
period has been satisfied.
(f) The undersigned further understands that in the event all of the
applicable requirements of Rule 144 are not satisfied registration under the
Securities Act, compliance with some other registration exemption or the
notification to the Company of the proposed disposition by it and the
furnishing to the Company of (i) detailed information regarding the
disposition, and (ii) opinion of its counsel to the effect that such
disposition will not require registration (the undersigned understands such
counsel's opinion must concur with the opinion by counsel for the Company and
the undersigned must have been informed of such compliance) will be required
and that, notwithstanding the fact that Rule 144 is not exclusive, the Staff of
the SEC has expressed its opinion that person proposing to sell private
placement securities other than in a registered offering and otherwise than
pursuant to Rule 144 will have a substantial burden of proof in establishing
that an exemption from registration is available for such offers or sales, and
that such persons and their respective brokers who participate in such
transactions do so at their own risk.
Signature of Purchaser:
Amount of Shares under Common Stock Warrant of NewsReal, Inc.
134,409 SHARES OF COMMON STOCK