SERIES A-3 WARRANT NO. 1
22,500 SHARES
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED OR SOLD UNLESS (I) REGISTERED
UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (II) AN
EXEMPTION FROM REGISTRATION IS AVAILABLE AT THE TIME OF SUCH TRANSFER OR SALE.
WARRANT, dated as of May 1, 1999, issued by NETWORD, INC., a Delaware
corporation (the "Company") with principal offices at 000 Xxxxxxx Xxxxxx, Xxxxx
Xxxxx, Xxxxxxxxxxxx, Xxxxxxxx 00000-0000, Attn: President, to Pryor, Cashman,
Xxxxxxx & Xxxxx LLP (the "Holder").
The Company hereby agrees as follows:
1. Grant. The Company hereby grants to the Holder, the right, privilege and
option to purchase from the Company, Twenty-Two Thousand Five Hundred (22,500)
shares (the "Warrant Shares") of common stock, par value $.01 per share ("Common
Stock"), subject to adjustment as provided in Section 6, at the exercise price
of $.1666 per share (the "Exercise Price"), all subject to the terms and upon
the conditions set forth herein.
2. Exercise of Warrant. This Warrant is exercisable commencing on the date
hereof and will expire at 5:00 p.m., New York City time, on April 30, 2004 (the
"Expiration Date"), subject to the right of the Company to redeem this Warrant
as described in Section 3.
3. Method of Exercise and Redemption of Warrant. Unless this Warrant has
been redeemed by the Company as provided in this Section 3, the Holder may
exercise this Warrant at or prior to its expiration on the Expiration Date. This
Warrant may be exercised by the Holder or redeemed by the Company as follows:
(a) Subject to compliance with the provisions of Section 5 hereof,
this Warrant may be exercised in whole at any time, or in part from time to
time, by delivery of this Warrant to the Company at its principal place of
business, accompanied by a check payable to the Company in payment of the
Exercise Price for the number of Warrant Shares as to which this Warrant is
exercised.
(b) Upon clearance of the check delivered pursuant to Section 3(a),
the Company shall make immediate delivery of the shares of Common Stock as to
which this Warrant is exercised, provided that if any law or regulation requires
the Company to take any action with respect to such shares of Common Stock
before the issuance thereof, then the date of delivery of such shares shall be
extended for the period necessary to take such action. In case of
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the exercise of this Warrant as to less than all of the Warrant Shares, the
Company shall cancel this Warrant upon surrender hereof and shall execute and
deliver to the Holder a new Warrant of like tenor and date for the balance of
the Warrant Shares.
(c) In the event that a registration statement shall become effective
under the Securities Act of 1933, as amended (the "Securities Act") covering the
purchase and/or resale of the Warrant Shares, then the Company may, at its
option, redeem this Warrant as to all or any of the Warrant Shares, at a price
of $0.05 per Warrant Share (the "Redemption Price"), at any time after the first
date on which the average of the closing bid prices for the shares of the
Company's Common Stock in any inter-dealer quotation system on which the Common
Stock has been the subject of both bid and ask quotations shall have exceeded
$2.50 per share on any 10 consecutive trading days that commenced on or after
the effective date of such registration statement. From and after the date fixed
for redemption by notice given pursuant to Section 3(d) (the "Redemption Date"),
the right to purchase Warrant Shares with respect to the redeemed portion of
this Warrant shall cease, and the Holder shall be entitled to payment of the
Redemption Price with respect to the portion of this Warrant so redeemed (and to
receive a new Warrant of like tenor and date with respect to the unredeemed
portion of this Warrant) upon surrender of this Warrant to the Company.
(d) Notice of redemption of this Warrant shall be given at least 30
days prior to the Redemption Date by mailing, by registered or certified mail,
return receipt requested, a copy of such notice to the Holder at its address
appearing on the books or transfer records of the Company or such other address
as may be designated by the Holder by notice to the Company. Notwithstanding the
giving of such notice, the Holder shall be entitled to exercise this Warrant at
any time prior to the Redemption Date.
4. Payment of Taxes. (a) The Company shall pay all documentary stamp taxes
attributable to the issuance of shares of Common Stock upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax that may be payable in respect of any transfer involved in the issuance and
delivery of any Warrants, warrant certificates or certificates for Warrant
Shares purchased pursuant hereto in a name other than that of the Holder, and
the Company shall not be required to issue or deliver such Warrants, warrant
certificates or other certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.
(b) The Company's obligation to deliver Warrant Shares upon the
exercise of this Warrant or any portion thereof shall be subject to the payment
by the Holder of any applicable federal, state and local withholding tax. The
Company shall, to the extent permitted by law, have the right to deduct from any
payment of any kind otherwise due to the Holder any federal, state or local
taxes required to be withheld with respect to such payment.
5. Restriction on Transfer and Exercise of Warrant. The Holder hereof, by
the Holder's acceptance hereof, hereby represents and warrants to, and agrees
with, the Company that the Holder has been informed that neither this Warrant
nor the Warrant Shares have been
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registered for sale under any federal or state securities laws and that this
Warrant is being offered and sold to the Holder and, upon the exercise of this
Warrant, the Warrant Shares will be sold to the Holder, pursuant to an exemption
from registration under the Securities Act; Holder is acquiring this Warrant and
will acquire the Warrant Shares for Holder's own account for investment only and
not with a view to the resale or distribution thereof; this Warrant is not
assignable or transferable otherwise than by will or the laws of descent and
distribution, and this Warrant may be exercised during the Holder's lifetime
only by the Holder; any attempt to assign or transfer this Warrant in
contravention of this Section 5 shall be void ab initio; the Warrant Shares may
not be sold, transferred, assigned, hypothecated or otherwise disposed of, in
whole or in part, unless registered under the Securities Act and applicable
state securities laws or unless an exemption from such registrations is
available; and that prior to the exercise of this Warrant, Holder shall provide
to the Company in writing such information as the Company may reasonably request
to establish that the exercise of this Warrant by Holder is exempt from
registration under such securities laws.
6. Anti-Dilution Provisions. (a) In the event the Company shall (i) declare
or pay a dividend on its outstanding shares of Common Stock in shares of Common
Stock or make a distribution to all holders of its outstanding shares of Common
Stock in shares of 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 by reclassification of its outstanding shares of Common
Stock other securities of the Company (including any such reclassification in
connection with a consolidation, merger or other business combination in which
the Company is the surviving corporation), the number and kind of Warrant Shares
issuable upon exercise of this Warrant and/or the Exercise Price shall be
adjusted as the Company's Board of Directors determines to be equitable so that
the Holder upon exercise hereof shall be entitled to receive the number and kind
of Warrant Shares or other securities of the Company that the Holder would have
been entitled to receive after the occurrence of any of such events had this
Warrant been exercised immediately prior to the occurrence of such event or any
record date with respect thereto. An adjustment made pursuant to this Section
6(a) shall become effective on the date of the dividend payment, distribution,
subdivision, combination or reclassification, retroactive to any record date
with respect thereto. The provisions of this Section 6(a) shall similarly apply
to successive events on a cumulative basis.
(b) In case of any consolidation of the Company with, or merger of the
Company into, another person (whether or not the Company is the surviving
corporation), or in the case of any sale, transfer or lease to another person of
all or substantially all of the assets of the Company, the Company or such
successor, as the case may be, shall deliver to the Holder an undertaking that
the Holder shall have the right thereafter upon payment of the Exercise Price in
effect immediately prior to such transaction to purchase upon exercise of this
Warrant the kind and amount of securities, cash and property which the Holder
would have been entitled to receive after the consummation of such
consolidation, merger, sale, transfer or lease had this Warrant been exercised
immediately prior to such transaction, and if the successor or purchaser is not
a corporation, such person shall provide appropriate tax indemnification with
respect to such shares and other securities and property so that, upon exercise
of this Warrant, the Holder will
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have the same benefits the Holder otherwise would have had if such successor or
purchaser were a corporation. The provisions of this Section 6(b) shall
similarly apply to successive consolidations, mergers, sales, transfers or
leases.
7. Elimination of Fractional Interests. The Company shall not be required
to issue certificates representing fractions of Common Stock upon the exercise
of this Warrant, nor shall it be required to issue scrip or pay cash in lieu of
fractional interests, it being the intent of the parties that all fractional
interests shall be eliminated by the Company by rounding down to the nearest
whole number of shares of Common Stock.
8. Reservation of Securities. The Company shall at all times reserve and
keep available out of its authorized shares of Common Stock, solely for the
purpose of issuance upon the exercise of this Warrant, such number of shares of
Common Stock as shall be issuable upon the exercise hereof. The Company
covenants and agrees that, upon exercise of this Warrant for and payment of the
exercise price therefor, all shares of Common Stock issuable upon such exercise
shall be duly authorized, validly issued, fully paid, nonassessable and not
subject to preemptive rights of any stockholder.
9. Right to Notice. If the Company shall propose to engage in any
transaction with respect to which adjustment of the Exercise Price or the kind
or amount of securities, property or other assets receivable upon exercise of
this Warrant would be required pursuant to Section 6, the Company shall cause to
be mailed to the Holder, at least 10 days prior to the applicable date
hereinafter specified, a notice describing such transaction and stating (a) in
the case of any dividend, distribution or grant of rights or warrants to all
holders of shares of Common Stock, the date on which a record is to be taken for
such purpose or, if a record is not to be so taken, the date as of which the
holders of Common Stock of record to be entitled thereto are to be determined,
(b) in the case of any other transaction described in Section 6 in which all
holders of Common Stock of record are entitled to participate, the date on which
such transaction is expected to become effective and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities, property or other assets
deliverable upon such transaction, and (c) in the case of any other transaction,
the date on which it is expected to occur or become effective. Failure to give
such notice or any defect therein shall not affect the validity of any action
taken or transaction consummated by the Company.
10. No Rights as a Stockholder. Nothing contained in this Warrant shall be
construed as conferring upon the Holder the right to vote or to consent or to
receive notice as a stockholder in respect of any meetings of stockholders for
the election of directors or any other matter, or as having any rights
whatsoever as a stockholder of the Company.
11. Notices.
All notices, requests, consents and other communications hereunder shall be
effective only if given in writing and shall be deemed to have been duly made or
given when delivered, or three days after being mailed by registered or
certified mail, return receipt requested:
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(a) If to the Holder, to the address of the Holder as shown on the
books of the Company or as otherwise designated or provided for herein; or
(b) If to the Company, to the address set forth on the first page of
this Warrant or to such other address as the Company may designate by notice to
the Holder.
12. Amendment. This Warrant may not be amended or supplemented except by an
instrument in writing executed by the Company and the Holder.
13. Governing Law. This Warrant shall be deemed to be a contract made under
the laws of the State of New York and for all purposes shall be construed in
accordance with the laws of such State (without regard to the conflict of laws
principles thereof).
14. Jurisdiction. Any legal action or proceeding with respect to Warrant
may be brought exclusively in the courts of the State of New York or of the
United States of America for the Southern District of New York, and, by
acceptance of this Warrant, the Holder accepts for itself and in respect of its
property, generally and unconditionally, the exclusive jurisdiction of the
aforesaid courts. By acceptance of this Warrant, the Holder waives and agrees
not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement of this Warrant, that the Holder is not subject to
the jurisdiction of such courts or that such action, suit or proceeding may not
be brought or is not maintainable in said courts or that this Warrant may not be
enforced in or by said courts or that the Holder's property is exempt or immune
from execution, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is improper
or (provided that process shall be served in any manner referred to in the
following sentence) that service of process upon the Holder is ineffective.
Service of process in any such action, suit or proceeding may be made upon the
Company or the Holder in any manner permitted by the laws of the State of New
York or the federal laws of the United States or as follows: (i) by personal
service or (ii) by certified or registered mail to the Holder or the Company, as
applicable, at its address for notice pursuant to Section 11. Service of process
upon the Holder or the Company in any manner referred to in the preceding
sentence shall be deemed in every respect effective service of process upon the
Holder or the Company.
15. Benefits of This Warrant. Nothing in this Warrant shall be construed to
give to any person other than the Company and the Holder any legal or equitable
right, remedy or claim under this Warrant; and this Warrant shall be for the
exclusive benefit of the Company and the Holder.
16. Headings. The headings in this Warrant are intended solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Warrant.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
on its behalf.
NETWORD, INC.
By: /s/ Xxxx X. Xxxxxxxx
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Name: Xxxx X. Xxxxxxxx
Title: Secretary
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