This Warrant has not been registered under the Securities Act of 1933,
as amended (the "Act"), or any applicable state securities laws, and
may not be sold or transferred unless such sale or transfer is in
accordance with the registration requirements of the Act and applicable
laws or the Company has received an opinion of counsel reasonably
satisfactory to it that an exemption from the registration requirements
of the Act and applicable laws is available with respect thereto.
STARGUIDE DIGITAL NETWORKS, INC.
COMMON STOCK PURCHASE WARRANT
Warrant No. __ 2,250,000 Shares of Class B Common Stock
1. Issuance. This Warrant is issued to Xxxxx X. Xxxxxxxx by StarGuide
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Digital Networks, Inc., a Nevada corporation (hereinafter with its successors
called the "Company"), on this ___ day of __________, 2000.
2. Purchase Price, Number of Shares. At any time after the date hereof
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but before the expiration hereof, the registered holder of this Warrant (the
"Holder"), shall be entitled upon surrender of this Warrant with the
subscription form annexed hereto duly executed, at the office of the Company, to
purchase up to 2,250,000 shares of Class B Common Stock of the Company, $.001
par value per share (the "Common Stock"), at an exercise price (the "Purchase
Price") equal to $2.50 per share.
3. Payment of Purchase Price. The Purchase Price may be paid (i) in cash
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or by cashier's check; (ii) by the surrender by the Holder to the Company of any
promissory notes or other obligations issued by the Company, with all such notes
and obligations so surrendered being credited against the Purchase Price in an
amount equal to the principal amount thereof plus accrued interest to the date
of surrender; (iii) through delivery by the Holder to the Company of other
securities issued by the Company, with such securities being credited against
the Purchase Price in an amount equal to the fair market value thereof, as
determined in good faith by the Board of Directors of the Company; or (iv) by
any combination of the foregoing.
4. Partial Exercise. This Warrant may be exercised in part, and the
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Holder shall be entitled to receive a new warrant, which shall be dated as of
the date of this Warrant, covering the number of shares in respect of which this
Warrant shall not have been exercised.
5. Net Issue Exercise. Notwithstanding any provisions herein to the
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contrary, if the fair market value of one share of Common Stock is greater than
the Purchase Price for one share of Common Stock (at the date of calculation, as
set forth below), in lieu of exercising this Warrant for cash, the Holder may
elect to receive shares of Common Stock equal to the value (as determined below)
of this Warrant (or the portion thereof being canceled) by surrender of this
Warrant at the principal office of the Company, together with the properly
endorsed Warrant Certificate, substantially in the form as attached hereto, in
which event the Company shall issue to the Holder that number of shares of
Common Stock computed using the following formula:
WS = WCS (FMV-PP)
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FMV
WHERE:
WS equals the number of Warrant Shares to be issued to the
Holder;
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WCS equals the number of shares of Common Stock purchasable
under the Warrant or, if only a portion of the Warrant is
being exercised, the portion of the Warrant being canceled
(at the date of such calculation);
FMV equals the Fair Market Value (as defined below) of one share
of Common Stock (at the date of such calculation); and
PP equals the per share Purchase Price (as adjusted to the date
of such calculation) of the Warrant.
As used in this Section, the term "Fair Market Value" of each Share as of any
date shall be determined as follows: (A) if the parties hereto can agree on the
Fair Market Value, such agreed upon value shall constitute the Fair Market
Value; (B) if the parties cannot reach an agreement as to the Fair Market Value
within five business days from the start of negotiations, then such parties
shall jointly appoint an appraiser to determine the Fair Market Value.
6. Issuance Date. The person(s) in whose name(s) any certificate
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representing shares of Common Stock is issued hereunder shall be deemed to have
become the holder of record of the shares represented thereby as at the close of
business on the date this Warrant is exercised with respect to such shares,
whether or not the transfer books of the Company shall be closed.
7. Expiration Date; Lock-Up. This Warrant shall expire and be void at the
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earlier of (i) the close of business on March 1, 2005; (ii) the closing of an
offering of shares of the Company's capital stock to the public pursuant to a
registration statement filed with and declared effective by the Securities and
Exchange Commission pursuant to Section 5 of the Securities Act of 1933, as
amended. If any portion of this Warrant is timely exercised, the shares of
Common Stock obtained pursuant to such exercise shall, at the request of the
underwriters of such an offering, be subject to a prescribed lock-up period
during which the shares of Common Stock will not be offered, sold, pledged, or
otherwise directly or indirectly disposed of without the prior written consent
of the underwriters.
8. Reserved Shares; Valid Issuance. The Company covenants that it will at
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all times from and after the date hereof reserve and keep available such number
of its authorized shares of Common Stock, free from all preemptive or similar
rights therein, as will be sufficient to permit the exercise of this Warrant in
full. The Company further covenants that, assuming the receipt by the Company of
the consideration therefor, such shares as may be issued pursuant to the
exercise of this Warrant will, upon issuance, be duly and validly issued, fully
paid and nonassessable and free from all taxes, liens, and charges with respect
to the issuance thereof.
9. Dividends. If after the date hereof the Company shall subdivide the
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Common Stock, by split-up or otherwise, or combine the Common Stock, or issue
additional shares of Common Stock in payment of a stock dividend on the Common
Stock, the number of shares issuable on the exercise of this Warrant shall
forthwith be proportionately increased in the case of a subdivision or stock
dividend, or proportionately decreased in the case of a combination, and the
Purchase Price shall forthwith be proportionately decreased in the case of a
subdivision or stock dividend, or proportionately increased in the case of a
combination.
10. Mergers and Reclassifications. If at any time after the date hereof
-----------------------------
there shall be any reclassification, capital reorganization, or change of the
Common Stock (other than as a result of a subdivision, combination, or stock
dividend provided for in Section 8 hereof), or any consolidation of the Company
with, or merger of the Company into, another corporation or other business
2
organization (other than a consolidation or merger in which the Company is the
continuing corporation and which does not result in any reclassification or
change of the outstanding Common Stock), or any sale or conveyance to another
corporation or other business organization of all or substantially all of the
assets of the Company, then, as a condition of such reclassification,
reorganization, change, consolidation, merger, sale, or conveyance, lawful
provisions shall be made, and duly executed documents evidencing the same from
the Company or its successor shall be delivered to the Holder, so that the
Holder shall thereafter have the right to purchase, at a total price not to
exceed that payable upon the exercise of this Warrant in full, the kind and
amount of shares of stock and other securities and property receivable upon such
reclassification, reorganization, change, consolidation, merger, sale, or
conveyance by a holder of the number of shares of Common Stock which might have
been purchased by the Holder immediately prior to such reclassification,
reorganization, change, consolidation, merger, sale, or conveyance, and in any
such case appropriate provisions shall be made with respect to the rights and
interest of the Holder to the end that the provisions hereof (including, without
limitation, provisions for the adjustment of the Purchase Price and the number
of shares issuable hereunder) shall thereafter be applicable in relation to any
shares of stock or other securities and property thereafter deliverable upon
exercise hereof.
11. Fractional Shares; Certificate of Adjustment. In no event shall any
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fractional share of Common Stock be issued upon any exercise of this Warrant.
Whenever the Purchase Price is adjusted, as herein provided, the Company shall
promptly deliver to the Holder a certificate of its Chief Financial Officer
setting forth the Purchase Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment.
12. Notices of Certain Record Dates. In the event of (i) any taking by the
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Company of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend 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 property, or
to receive any other right; (ii) any reclassification of the capital stock of
the Company, capital reorganization of the Company, consolidation or merger
involving the Company, or sale or conveyance of all or substantially all of its
assets; or (iii) any voluntary or involuntary dissolution, liquidation, or
winding-up of the Company; then and in each such event the Company will mail or
cause to be mailed to the Holder a notice specifying (a) the date on which any
such 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 (b) the date on which any such reclassification, reorganization,
consolidation, merger, sale, conveyance, dissolution, liquidation or winding-up
is to take place, and the time, if any is to be fixed, as of which the holders
of record in respect of such event are to be determined. Such notice shall be
mailed at least 20 days prior to the date specified in such notice on which any
such action is to be taken.
13. Piggyback Registration. The provisions of this Section 13 shall apply
----------------------
with respect to both this Warrant and shares issued upon exercise to this
Warrant (the "Registrable Securities").
(a) Notice of Piggyback Registration. Subject to the exceptions and
--------------------------------
limitations contained herein, if, at any time or from time-to-time, the Company
shall Register any of its securities, either for its own account or for the
account of a security holder or holders (other than a Registration relating
solely to a transaction described in Rule 145 under the Securities Act, a
Registration on Form S-8, or an initial public offering) the Company will: (i)
promptly give the Holder written notice thereof (which notice shall include a
list of jurisdictions in which the Company intends to attempt to qualify such
securities under applicable Blue Sky or other state securities laws), and (ii)
include in such Registration (and any related registration and/or qualification
under the applicable Blue Sky or other state securities laws), and in any
Underwritten
3
Offering pursuant to such Registration, all Registrable Securities specified in
a written request or requests delivered to the Company by the Holder within
twenty (20) days after receipt of such written notice from the Company by the
Holder.
(b) Piggyback Registration in Underwritten Offerings.
------------------------------------------------
(i) Notice of Underwritten Offering. If the Registration of which
the Company gives notice is for an Underwritten Offering commenced at the
election of the Company, the Company shall so advise the Holder as part of the
written notice given pursuant to Section 13(a). In such event, the right of the
Holder to Registration shall be conditioned upon there being an Underwritten
Offering, and the inclusion of the Holder's Registrable Securities in such
Registration and Underwritten Offering to the extent provided in and in
compliance with this Section 13. If Holder proposes to distribute its securities
through such Underwritten Offering, Holder shall (together with the Company and
any other holders distributing securities through such underwriting) enter into
an underwriting agreement containing the terms and conditions agreed to by the
Company. Possession of this Warrant alone shall give the Holder no right to
participate in the selection of underwriters for an offering pursuant to this
Section 13(b).
(ii) Marketing Limitation in Piggyback Registration. In the event
the representative of the underwriters in any Underwritten Offering advises the
Company in writing that market factors (including, without limitation, the
aggregate number of shares of Common requested to be Registered, the general
condition of the market, and the status of the persons proposing to sell
securities in the Underwritten Offering) require a limitation of the shares to
be offered and sold in the Underwritten Offering, then the number of shares to
be excluded from the Underwritten Offering shall be determined in the following
order: (i) first, securities held by persons who are not contractually entitled
to be included in the Registration; and (ii) second, securities (other than
preferred stock of the Company or securities convertible therefrom) that are
contractually entitled to be included in the Registration, including securities
Registrable pursuant to this Section 13; and (iii) third, securities represented
by preferred stock of the Company, if any, or shares convertible therefrom, that
are entitled to be included in the Registration. Any partial reduction in the
number of shares or securities included in the Underwritten Offering affecting
any of the three (3) classes set forth in the immediately preceding sentence
shall be allocated among the persons in any such class pro rata, as nearly as
practicable, based on the number of Registrable Securities held by each persons
and included in the Registration as a percentage of the aggregate Registrable
Securities held by all persons and included in the Registration.
(iii) Withdrawal in Piggyback Registration. If the Holder exercises
piggyback registration rights pursuant to this Section 13 and shall disapprove
of the proposed terms of any Underwritten Offering, he may elect to withdraw
therefrom by written notice to the Company and the underwriters delivered at
least five business days prior to the effective date of the Registration
Statement. Any Registrable Securities or other securities excluded or withdrawn
from such Underwritten Offering shall be withdrawn from such Registration.
(c) Blue Sky in Piggyback Registration. In the event of any Registration
----------------------------------
of Registrable Securities pursuant to this Section 13, the Company will use its
best efforts to register and/or qualify the securities covered by the
Registration Statement under the securities or Blue Sky laws of such
jurisdiction as shall be reasonably appropriate for the distribution of the
Registrable Securities.
(d) Right to Terminate Registration. The Company shall have the right to
-------------------------------
terminate or withdraw any Registration initiated by it that triggers piggyback
registration rights pursuant to this Section 13 prior to the effectiveness of
such Registration, whether or not the Holder has elected to include securities
in such registration.
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14. Warrant Register. The Company will maintain a register containing the
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names and addresses of the registered holders of warrants issued by the Company.
The Holder may change its address as shown on the warrant register by written
notice to the Company requesting such change. Any notice or written
communication required or permitted to be given to the Holder may be given by
certified mail or delivered to the Holder at its address as shown on the warrant
register.
15. Substitute Warrants. If this Warrant is mutilated, lost, stolen, or
-------------------
destroyed, the Company shall issue a new warrant of like tenor and denomination
and deliver the same (i) in exchange and substitution for and upon surrender and
cancellation of the mutilated Warrant; or (ii) in lieu of any Warrant lost,
stolen, or destroyed, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, or destruction of such Warrant (including a
reasonably detailed affidavit with respect to the circumstances of any loss,
theft or destruction) and of indemnity reasonably satisfactory to the Company.
16. No Impairment. The Company will not, by amendment of its Articles of
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Incorporation or through any reclassification, capital reorganization,
consolidation, merger, sale or conveyance of assets, dissolution, liquidation,
issue or sale of securities, or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder.
17. Miscellaneous. The provisions and terms of this Warrant (i) shall be
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governed by and construed in accordance with the internal laws of the State of
Nevada; (ii) shall be binding upon the Company's successors and assigns and
shall inure to the benefit of the Holder's successors, legal representatives,
and permitted assigns; (iii) subject to the terms hereof, may be amended,
modified, or waived only with the written consent of the Company and the Holder;
(iv) shall, if any terms hereof are found unenforceable by a legally empowered
court or agency, be deemed modified to the extent necessary to become
enforceable; and (v) constitute the entire agreement of the parties with respect
to the transactions contemplated herein.
IN WITNESS WHEREOF, the Company has caused this Common Stock Purchase
Warrant to be executed by its duly authorized officer, under seal, as of the
date above written.
STARGUIDE DIGITAL NETWORKS, INC.
By: ______________________________
Name:
Title:
ATTEST:
______________________________
Name:
Title:
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FORM OF SUBSCRIPTION
To: STARGUIDE DIGITAL NETWORKS, INC. Date: _______________
The undersigned hereby subscribes for _______________ shares of Common
Stock covered by this Warrant. The certificates for such shares shall be issued
in the name of the undersigned or as otherwise indicated below:
______________________________
Signature
______________________________
Name for Registration
______________________________
Mailing Address
______________________________
* * *
FORM OF ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers
unto ____________________________________________ the Warrant attached hereto
and does hereby irrevocably constitute and appoint
____________________________________________ its attorney to transfer the
Warrant on the books of Starguide Digital Networks, Inc. with full power of
substitution on the premises.
______________________________
Signature
______________________________
Date
______________________________
Witness
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