REDEEMABLE WARRANT To Purchase 150,000 Shares of the Common Stock of SMARTVIDEO TECHNOLOGIES, INC.
EXHIBIT
A
NEITHER
THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR ANY OTHER APPLICABLE SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION
FROM
THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES
LAWS. NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF MAY
BE
SOLD, PLEDGED, TRANSFERRED, ENCUMBERED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR IN A TRANSACTION WHICH IS EXEMPT FROM
REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT.
REDEEMABLE
WARRANT
To
Purchase 150,000 Shares of the Common Stock
of
SMARTVIDEO
TECHNOLOGIES, INC.
THIS
CERTIFIES that, for value received, ▇▇▇▇ ▇▇▇▇▇ (the "Holder"), is entitled,
upon
the terms and subject to the conditions hereinafter set forth, at any time
on or
after the date hereof (the "Exercise Date") and on or prior
to
the close of business on the date which is five years after the date hereof
(the
"Termination Date"), to subscribe for and purchase from SmartVideo Technologies,
Inc. (the "Company"), up to One Hundred Fifty
Thousand (150,000) shares (the "Warrant Shares") of common stock, par value
$.001 per share (the "Common
Stock") of the Company. The purchase price of one share of Common Stock (the
"Exercise Price") under this Warrant shall be $2.50. The Exercise Price and
the
number of shares for which the Warrant
is exercisable shall be subject to adjustment as provided herein.
| 1. |
Title
to Warrant.
Prior
to the Termination Date and subject to compliance with applicable
laws and
the
terms of this Warrant, this Warrant and all rights hereunder are
transferable, in whole or in part, at the
office or agency of the Company by the holder hereof in person or
by duly
authorized attorney, upon surrender
of this Warrant together with the Assignment Form annexed hereto
properly
endorsed.
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| 2. |
Authorization
of Shares.
The
Company covenants that all shares of Common Stock which may be
issued
upon the exercise of rights represented by this Warrant will, upon
exercise of the rights represented
by this Warrant, be duly authorized, validly issued, fully paid and
nonassessable and free from
all taxes, liens and charges in respect of the issue thereof (other
than
taxes in respect of any transfer
occurring contemporaneously with such
issue).
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| 3. |
Exercise
of Warrant.
Except
as provided in Section 4 herein, exercise of the purchase rights
represented
by this Warrant may be made at any time or times on or after the
Exercise
Date and before the close of business on the Termination Date by
the
surrender of this Warrant and the Notice of Exercise
Form annexed hereto duly executed, at the office of the Company (or
such
other office or agency
of the Company as it may designate by notice in writing to the registered
holder hereof at the address
of such holder appearing on the books of the Company) and upon payment
of
the Exercise Price of
the shares thereby purchased by wire transfer or cashier's check
drawn on
a United States bank, the holder
shall be entitled to receive a certificate for the number of shares
of
Common Stock so purchased. Certificates
for shares purchased hereunder shall be delivered to the holder hereof
within twenty (20) business
days after the date on which this Warrant shall have been exercised
as
aforesaid. This Warrant shall be deemed to have been exercised and
such
certificate or certificates shall be deemed to have been issued,
and the Holder or any other person so designated to be named therein
shall
be deemed to have become
a holder of record of such shares for all purposes, as of the date
the
Holder faxes a Notice of Exercise to the Company, provided that such
fax
notice is followed by delivery of the original notice and
payment to the Company of the Exercise Price and all taxes required
to be
paid by the Holder, if any,
pursuant to Section 6 prior to the issuance of such shares, have
been paid
within three (3) business days
of such fax notice. If this Warrant shall have been exercised in
part, the
Company shall, at the time
of delivery of the certificate or certificates representing Warrant
Shares, deliver to the Holder a new Warrant evidencing the rights
of
Holder to purchase the unpurchased shares of Common Stock called
for by this Warrant, which new Warrant shall in all other respects
be
identical with this Warrant.
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| 4. |
Redemption
of Warrants.
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| 5. |
No
Fractional Shares or Scrip.
No fractional shares or scrip representing fractional shares shall
be
issued
upon the exercise of this Warrant. As to any fraction of a share
which
Holder would otherwise be
entitled to purchase upon such exercise, the Company shall pay a
cash
adjustment in respect of such final
fraction in an amount equal to the Exercise
Price.
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| 6. |
Charges,
Taxes and Expenses.
Issuance of certificates for shares of Common Stock upon the exercise
of
this Warrant shall be made without charge to the holder hereof for
any
issue or Federal or State transfer
tax or other incidental expense in respect of the issuance of such
certificate, all of which taxes and
expenses shall be paid by the Company, and such certificates shall
be
issued in the name of the holder
of this Warrant or in such name or names as may be directed by the
holder
of this Warrant; provided,
however, that in the event certificates for shares of Common Stock
are to
be issued in a name other
than the name of the holder of this Warrant, this Warrant when surrendered
for exercise shall be accompanied
by the Assignment Form attached hereto duly executed by the holder
hereof;
and the Company
may require, as a condition thereto, the payment of a sum sufficient
to
reimburse it for any transfer
tax incidental thereto.
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| 7. |
Closing
of Books.
The Company will not close its stockholder books or records in any
manner
which prevents
the timely exercise of this
Warrant.
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-3-
| 8. |
Transfer,
Division and Combination.
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| (a) |
the
Holder (and its transferees and assigns), by acceptance of this Warrant,
covenants and agrees that
it is acquiring the Warrants evidenced hereby, and, upon exercise
hereof,
the Warrant Shares,
for its own account as an investment and not with a view to the resale
or
distribution thereof.
The Warrant Shares have not been registered under the Securities
Act or
any state securities
laws and no transfer of any Warrant Shares shall be permitted unless
the
Company has received
notice of such transfer, at the address of its principal office set
forth
in the Exchange Agreement,
in the form of assignment attached hereto, accompanied by an opinion
of
counsel reasonably
satisfactory to the Company that an exemption from registration of
such
Warrants or Warrant
Shares under the Securities Act is available for such transfer, except
that no such opinion
shall be required after the registration for resale by the Holder
of the
Warrant Shares, as contemplated
by the Registration Rights Agreement. Upon any exercise of the Warrants,
certificates
representing the Warrant Shares shall bear a restrictive legend
substantially identical to
that set forth on the face of this Warrant certificate. Any purported
transfer of any Warrant or Warrant
Shares not in compliance with the provisions of this section shall
be null
and void.
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| (b) |
This
Warrant may be divided or combined with other Warrants upon presentation
hereof at the aforesaid
office of the Company, together with a written notice specifying
the names
and denominations
in which new Warrants are to be issued, signed by Holder or its agent
or
attorney.
Subject to compliance with Section 8(a), as to any transfer which
may be
involved in such
division or combination, the Company shall execute and deliver a
new
Warrant or Warrants
in exchange for the Warrant or Warrants to be divided or combined
in
accordance with such
notice.
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| (c) |
The
Company shall prepare, issue and deliver at its own expense (other
than
transfer taxes) the new
Warrant or Warrants under this Section
8.
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| (d) |
The
Company agrees to maintain, at its aforesaid office or the office
of its
transfer or registration
agent, books for the registration and the registration of transfer
of the
Warrants.
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| 9. |
No
Rights as Stockholder until Exercise.
This
Warrant does not entitle the holder hereof to any voting
rights or other rights as a shareholder of the Company prior to the
exercise hereof. Upon the surrender
of this Warrant and the payment of the aggregate Exercise Price,
the
Warrant Shares so purchased
shall be and be deemed to be issued to such holder as the record
owner of
such shares as of the
close of business on the later of the date of such surrender or
payment.
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| 10. |
Loss,
Theft,
Destruction or Mutilation of Warrant.
The
Company covenants that upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this
Warrant certificate or any stock certificate relating to the Warrant
Shares, and in case of loss, theft
or destruction, of indemnity or security reasonably satisfactory
to it
(which shall not exceed that customarily
charged by the Company's transfer agent), and upon surrender and
cancellation of such Warrant
or stock certificate, if mutilated, the Company will make and deliver
a
new Warrant or stock certificate
of like tenor and dated as of such cancellation, in lieu of such
Warrant
or stock certificate.
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| 11. |
Saturdays,
Sundays, Holidays, etc.
If
the last or appointed day for the taking of any action or the expiration
of any right required or granted herein shall be a Saturday, Sunday
or a
legal holiday, then such action may be taken or such right may be
exercised on the next succeeding day not a Saturday, Sunday
or legal holiday.
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| 12. |
Adjustments
of Exercise Price and Number of Warrant Shares.
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| (a) |
Stock
Splits, etc. The
number and kind of securities purchasable upon the exercise of this
Warrant and the Exercise Price shall be subject to adjustment from
time to
time upon the happening
of any of the following. In case the Company shall (i) pay a dividend
in
shares of Common Stock or make a distribution in shares of Common
Stock to
holders of its outstanding Common
Stock, (ii) subdivide its outstanding shares of Common Stock into
a
greater number of shares
of Common Stock, (iii) combine its outstanding shares of Common Stock
into
a smaller number
of shares of Common Stock or (iv) issue any shares of its capital
stock in
a reclassification
of the Common Stock, then the number of Warrant Shares purchasable
upon
exercise of this Warrant immediately prior thereto shall be adjusted
so
that the holder of this Warrant
shall be entitled to receive the kind and number of Warrant Shares
or
other securities of the Company which he would have been entitled
to
receive had such Warrant been exercised in advance thereof. Upon
each such
adjustment of the kind and number of Warrant Shares or other securities
of the Company which are purchasable hereunder, the holder of this
Warrant
shall thereafter
be entitled to purchase the number of Warrant Shares or other securities
resulting from
such adjustment at an Exercise Price per Warrant Share or other security
obtained by multiplying the Exercise Price in effect immediately
prior to
such adjustment by the number of Warrant Shares purchasable pursuant
hereto immediately prior to such adjustment and dividing by
the number of Warrant Shares or other securities of the Company resulting
from such adjustment.
An adjustment made pursuant to this paragraph shall become effective
immediately after the effective date of such event retroactive to
the
record date, if any, for such
event.
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| (b) |
Reorganization,
Reclassification, Merger, Consolidation or Disposition of
Assets.
In
case the
Company shall reorganize its capital, reclassify its capital stock
(other
than a change in nominal
value to no nominal value, or from no nominal value to nominal value,
or
as a result of a
subdivision, combination or other event described in paragraph (a)
of this
Section), consolidate
or merge with or into another corporation (where the Company is not
the
surviving corporation
or where there is a change in or distribution with respect to the
Common
Stock of the
Company), or sell, transfer or otherwise dispose of all or substantially
all its property, assets or
business to another corporation and, pursuant to the terms of such
reorganization, reclassification,
merger, consolidation or disposition of assets, shares of common
stock of
the successor
or acquiring corporation, or any cash, shares of stock or other securities
or property of any
nature whatsoever (including warrants or other subscription or purchase
rights) in addition to or in lieu of common stock of the successor
or
acquiring corporation ("Other Property"), are to be received by or
distributed to the holders of Common Stock of the Company, then Holder
shall
have the right thereafter to receive, upon exercise of this Warrant,
the
number of shares of common
stock of the successor or acquiring corporation or of the Company,
if it
is the surviving corporation,
and Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets
by a
holder of the number of shares
of Common Stock for which this Warrant is exercisable immediately
prior to
such event. In
case of any such reorganization, reclassification, merger, consolidation
or disposition of assets,
the successor or acquiring corporation (if other than the Company)
shall
expressly assume
the due and punctual observance and performance of each and every
covenant
and condition
of this Warrant to be performed and observed by the Company and all
the
obligations and liabilities hereunder, subject to such modifications
as
may be deemed appropriate (as determined
in good faith by resolution of the Board of Directors of the Company)
in
order to provide
for adjustments of shares of Common Stock for which this Warrant
is
exercisable which shall
be as nearly equivalent as practicable to the adjustments provided
for in
this Section 12. For
purposes of this Section 12, "common stock of the successor or acquiring
corporation" shall include
stock of such corporation of any class which is not preferred as
to
dividends or assets over
any other class of stock of such corporation and which is not subject
to
redemption and shall
also include any evidences of indebtedness, shares of stock or other
securities which are convertible
into or exchangeable for any such stock, either immediately or upon
the
arrival of a specified
date or the happening of a specified event and any warrants or other
rights to subscribe for
or purchase any such stock. The foregoing provisions of this Section
12
shall similarly apply to successive reorganizations, reclassifications,
mergers, consolidations or disposition of
assets.
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| 13. |
Voluntary
Adjustment by the Company.
The Company may at any time during the term of this Warrant,
reduce the then current Exercise Price to any amount and for any
period of
time deemed appropriate
by the Board of Directors of the
Company.
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| 14. |
Notice
of Adjustment.
Whenever the number of Warrant Shares or number or kind of securities
or
other
property purchasable upon the exercise of this Warrant or the Exercise
Price is adjusted, as herein
provided, the Company shall promptly mail by registered or certified
mail,
return receipt requested,
to the holder of this Warrant notice of such adjustment or adjustments
setting forth the number
of Warrant Shares (and other securities or property) purchasable
upon the
exercise of this Warrant
and the Exercise Price of such Warrant Shares (and other securities
or
property) after such adjustment,
setting forth a brief statement of the facts requiring such adjustment
and
setting forth the computation
by which such adjustment was made. Such notice, in the absence of
manifest
error, shall
be conclusive evidence of the correctness of such
adjustment.
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| 15. |
Notice
of Corporate Action.
If at any time:
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| (a) |
the
Company shall take a record of the holders of its Common Stock for
the
purpose of entitling them to receive a dividend or other distribution,
or
any right to subscribe for or purchase any evidences
of its indebtedness, any shares of stock of any class or any other
securities or property,
or to receive any other right, or
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| (b) |
there
shall be any capital reorganization of the Company, any reclassification
or recapitalization of
the capital stock of the Company or any consolidation with or merger
of
the Company into, or any
sale, transfer or other disposition of all or substantially all the
property, assets or business of the
Company to, another corporation or,
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| (c) |
there
shall be a voluntary or involuntary dissolution, liquidation or winding
up
of the Company;
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then,
in
any one or more of such cases, the Company shall give to Holder (i) at least
10
days' prior written notice of any record date for such dividend, distribution
or
right or for determining rights to vote in respect of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
liquidation or winding up, and (ii) in the case of any such reorganization,
reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, at least 10 days'
prior written notice of the date when the same shall take place. Such notice
in
accordance with the
foregoing clause also shall specify (i) the date on which any such record is
to
be taken for the purpose
of such dividend, distribution or right, the date on which the holders of Common
Stock shall be entitled to any such dividend, distribution or right, and the
amount and character thereof, and (ii) the date on which any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up is to take place and the
time, if any such time is to be
fixed,
as of which the holders of Common Stock shall be entitled to exchange their
shares of Common Stock for securities or other property deliverable upon such
disposition, dissolution, liquidation
or winding up. Each such written notice shall be sufficiently given if addressed
to Holder at
the
last address of Holder appearing on the books of the Company and delivered
in
accordance with
Section 17(d).
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| 16. |
Authorized
Shares.
The
Company covenants that during the period the Warrant is outstanding,
it
will reserve
from its authorized and unissued Common Stock a sufficient number
of
shares to provide for the issuance
of the Warrant Shares upon the exercise of any purchase rights
under this
Warrant. The Company
further covenants that its issuance of this Warrant shall constitute
full
authority to its officers who
are charged with the duty of executing stock certificates to
execute and
issue the necessary certificates
for the Warrant Shares upon the exercise of the purchase rights
under this
Warrant. The Company
will take all such reasonable action as may be necessary to assure
that
such Warrant Shares may
be issued as provided herein without violation of any applicable
law or
regulation, or of any requirements
of the Principal Market upon which the Common Stock may be
listed.
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The
Company shall not by any action, including, without limitation, amending its
certificate of incorporation
or through any reorganization, transfer of assets, consolidation, merger,
dissolution, 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 actions as may be necessary
or appropriate to
protect the rights of Holder against impairment. Without limiting the generality
of the foregoing, the
Company will (a) not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the amount payable therefor
upon such exercise immediately prior to such
increase in par value, (b) take all such action as may be necessary or
appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon
the
exercise of this Warrant, and (c) use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary
to enable the Company to perform its obligations under this
Warrant.
Before
taking any action which would result in an adjustment in the number of shares
of
Common Stock
for
which this Warrant is exercisable or in the Exercise Price, the Company shall
obtain all such
authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory
body or bodies having jurisdiction thereof.
| 17. |
Miscellaneous.
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| (a) |
Jurisdiction.This
Warrant shall be binding upon any successors or assigns of the Company.
This
Warrant shall constitute a contract under the laws of Delaware without
regard to its conflict of
law, principles or rules, and be subject to arbitration pursuant
to the
terms set forth in the Exchange
Agreement.
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| (b) |
Restrictions.
The
holder hereof acknowledges that the Warrant Shares acquired upon
the
exercise of
this Warrant, if not registered, will have restrictions upon resale
imposed by state and federal securities
laws.
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| (c) |
Nonwaiver
and Expenses.
No
course of dealing or any delay or failure to exercise any right
hereunder
on the part of the Holder shall operate as a waiver of such right
or
otherwise prejudice Holder's
rights, powers or remedies, except that all rights hereunder terminate
on
the Termination Date.
If the Company fails to comply with any provision of this Warrant,
the
Company shall pay to
the Holder such amounts as shall be sufficient to cover any costs
and
expenses including, but not limited
to, reasonable attorneys' fees, including those of appellate proceedings,
incurred by the Holder
in collecting any amounts due pursuant hereto or in otherwise enforcing
any of its rights, powers
or remedies hereunder.
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| (d) |
Notices.
Any
notice, request or other document required or permitted to be given
or
delivered to the
holder hereof by the Company shall be delivered in accordance with
the
notice provisions of the
Exchange Agreement.
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| (e) |
Limitation
of Liability.
No
provision hereof, in the absence of affirmative action by Holder
to
purchase
shares of Common Stock, and no enumeration herein of the rights or
privileges of Holder hereof,
shall give rise to any liability of the Holder for the purchase price
of
any Common Stock or as
a stockholder of the Company, whether such liability is asserted
by the
Company or by creditors of
the Company.
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| (f) |
Remedies.
The
Holder, in addition to being entitled to exercise all rights granted
by
law, including
recovery of damages, will be entitled to specific performance of
its
rights under this Warrant.
The Company agrees that monetary damages would not be adequate
compensation for any
loss incurred by reason of a breach by it of the provisions of this
Warrant and hereby agrees to waive
the defense in any action for specific performance that a remedy
at law
would be adequate.
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| (g) |
Successors
and Assigns.
Subject
to applicable securities laws, this Warrant and the rights and
obligations
evidenced hereby shall inure to the benefit of and be binding upon
the
successors of the Company
and the successors and permitted assigns of the Holder. The provisions
of
this Warrant are
intended to be for the benefit of all Holders from time to time of
this
Warrant and shall be enforceable
by any such Holder or holder of Warrant
Shares.
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| (h) |
Amendment.
This
Warrant may be modified or amended or the provisions hereof waived
only
with
the written consent of the Company and the
Holder.
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| (i) |
Severability.
Wherever
possible, each provision of this Warrant shall be interpreted in
such
manner
as to be effective and valid under applicable law, but if any provision
of
this Warrant shall be
prohibited by or invalid under applicable law, such provision shall
be
ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of
such
provisions or the remaining
provisions of this Warrant.
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| (j) |
Headings.
The
headings used in this Warrant are for the convenience of reference
only
and shall not,
for any purpose, be deemed a part of this
Warrant.
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IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized.
| Dated: November 12, 2003 | ||
| SMARTVIDEO TECHNOLOGIES, INC. | ||
| |
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| By: |  |
|
|
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
President
& CEO
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NOTICE
OF EXERCISE
| To: |
SmartVideo
Technologies, Inc.
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| 1. |
The
undersigned hereby elects to purchase _________ shares
of Common Stock (the "Common Stock"),
of SmartVideo Technologies, Inc. pursuant to the terms of the attached
Warrant, and tenders herewith
payment of the exercise price in full, together with all applicable
transfer taxes, if any.
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| 2. |
Please
issue a certificate or certificates representing said shares
of Common
Stock in the name of the undersigned or in such other name as
is specified
below:
|
|
▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
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Dated:
______________, ___
|
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|
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Holder's
Signature:
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|
Holder's
Name: ▇▇▇▇ ▇▇▇▇▇
Holder's
Address: ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Social
Security, Employer or Other Tax Identification
Number
of Holder: ▇▇▇-▇▇-▇▇▇▇
|
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NOTE:
The
signature to this Assignment Form must correspond with the name as it appears
on
the face of the
Warrant, without alteration or enlargement or any change whatsoever, and must
be
guaranteed by a bank
or
trust company. Officers of corporations and those acting in an fiduciary or
other representative capacity
should file proper evidence of authority to assign the foregoing
Warrant.
1
ASSIGNMENT
FORM
(To
assign the foregoing warrant, execute
this
form
and supply required information.
Do
not
use this form to exercise the warrant.)
FOR
VALUE
RECEIVED, the foregoing Warrant and all rights evidenced thereby are
hereby
assigned to ______________________________________________________________________________
whose address is _________________________________________________________________________
___________________________________________________________________________.
assigned to ______________________________________________________________________________
whose address is _________________________________________________________________________
___________________________________________________________________________.
|
Dated:
______________, ___
|
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|
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Holder's
Signature:
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|
Holder's
Signature:
Holder's
Name: ▇▇▇▇ ▇▇▇▇▇
Holder's
Address: ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
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|
Social Security, Employer or
Other Tax Identification Number of Holder:
###-##-####
|
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Signature
Guaranteed:
|
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||
NOTE:
The
signature to this Assignment Form must correspond with the name as it appears
on
the face of
the
Warrant, without alteration or enlargement or any change whatsoever, and must
be
guaranteed by a bank
or
trust company. Officers of corporations and those acting in an fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.
2