WARRANT TO PURCHASE _________ SHARES OF THE COMMON STOCK OF Handheld Entertainment, Inc.
Exhibit
4.5
THE
SECURITIES REPRESENTED BY THIS WARRANT AND THE SHARES ISSUABLE ON EXERCISE
OF
THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE
SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE SECURITIES ACT AND
ANY
APPLICABLE STATE SECURITIES LAWS.
WARRANT
TO PURCHASE _________ SHARES
OF
THE COMMON STOCK OF
This
certifies that _______________ or its assigns (each individually, the
“Holder”)
for
value received, shall be entitled to purchase from Handheld
Entertainment,
Inc.,
a
Delaware corporation (the “Company”),
having its principal place of business at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, a maximum of ___________ (_________) fully paid and
nonassessable shares of the Company’s Common Stock (“Common
Stock”)
for
cash at a price equal to $_______ per share (the “Exercise
Price”)
at any
time, or from time to time, up to and including 5:00 p.m. (local time) on
_______________, 20___ (the “Expiration
Date”),
upon
the surrender to the Company at its principal place of business (or at such
other location as the Company may advise the Holder in writing) of this Warrant
properly endorsed, a Form of Subscription in substantially the form attached
hereto duly filled in and signed and, if applicable, upon payment in cash
or by
check of the aggregate Exercise Price for the number of shares for which
this
Warrant is being exercised determined in accordance with the provisions hereof.
The Exercise Price and the number of shares of Common Stock purchasable
hereunder are subject to adjustment as provided in Section 3
herein.
This
Warrant is subject to the following terms and conditions:
1. Exercise;
Issuance of Certificates; Payment for Shares.
1.1. General.
The
Company agrees that the shares of Common Stock purchased under this Warrant
shall be and are deemed to be issued to the Holder hereof as the record owner
of
such shares as of the close of business on the date on which this Warrant
shall
have been surrendered, properly endorsed, the completed, executed Subscription
Form delivered and payment made for such shares. Certificates for the shares
of
Common Stock so purchased, together with any other securities or property
to
which the Holder is entitled upon such exercise, shall be delivered to the
Holder by the Company at the Company’s expense within a reasonable time after
the rights represented by this Warrant have been so exercised, and in any
event,
within fifteen (15) days of such exercise. In case of a purchase of less
than
all the shares which may be purchased under this Warrant, the Company shall
cancel this Warrant and execute and deliver a new Warrant or Warrants of
like
tenor for the balance of the shares purchasable under the Warrant surrendered
upon such purchase to the Holder hereof within a reasonable time. Each stock
certificate so delivered shall be in such denominations of Common Stock as
may
be requested by the Holder hereof and shall be registered in the name designated
by such Holder.
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1.2. Vesting.
Notwithstanding any provisions herein to the contrary, the vesting for the
underlying shares will be as follows
(a). Upon
Issuance:
__________ (______) shares will be exercisable at the option of the holder
of
record hereof at any time or from time to time, up to the Expiration Date
for
all or any part of the shares of Common Stock (but not for a fraction of
a
share) which may be purchased hereunder.
(b)
Scheduled Vesting:
The
remaining underlying shares (________) will vest, as noted below,
__________________________
1.3. Net
Issue Exercise.
Notwithstanding any provisions herein to the contrary, if the fair market
value
of one share of the Company’s Common Stock is greater than the Exercise Price
(at the date of calculation as set forth below), in lieu of exercising
this
Warrant for cash, the Holder may elect to receive shares 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 Form of Subscription and notice of such election
in which
event the Company shall issue to the Holder a number of shares of Common
Stock
computed using the following formula:
X
= Y (A-B)
A
Where X = the number of shares of Common Stock to be issued to the Holder
Y
= the number of shares of Common Stock purchasable under the Warrant&
#160;or,
if only a portion of the Warrant is being exercised, the portion of the Warrant
being canceled (at the date of such calculation)
A
= the fair market value of one share of the Company’s Common
60;Stock (at
the date of such calculation)
B
= Exercise Price (as adjusted to the date of such calculation).
For
purposes of the above calculation, the fair market value of one share of
Common
Stock shall be determined by the Company’s Board of Directors in good faith;
provided, however, that where there is a public market for the Company’s Common
Stock, the fair market value per share shall be the average of the closing
prices of the Company’s Common Stock quoted on the Nasdaq National Market (or
similar system) or on any exchange on which the Common Stock is listed,
whichever is applicable, over the five (5) day period ending one (1) day
before
the day the current fair market value is being determined.
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2. Shares
to be Fully Paid; Reservation of Shares.
The
Company covenants and agrees that all shares of Common Stock which may be
issued
upon the exercise of the rights represented by this Warrant will, upon issuance,
be duly authorized, validly issued, fully paid and nonassessable and free
from
all preemptive rights of any shareholder and free of all taxes, liens and
charges with respect to the issue thereof. The Company further covenants
and
agrees that, during the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized and
reserved, for the purpose of issue or transfer upon exercise of the subscription
rights evidenced by this Warrant, a sufficient number of shares of authorized
but unissued Common Stock, or other securities and property, when and as
required to provide for the exercise of the rights represented by this Warrant.
The Company will take all such action as may be necessary to assure that
such
shares of Common Stock may be issued as provided herein without violation
of any
applicable law or regulation, or of any requirements of any domestic securities
exchange upon which the Common Stock may be listed; provided, however, that
the
Company shall not be required to effect a registration under Federal or State
securities laws with respect to such exercise. The Company will not take
any
action which would result in any adjustment of the Exercise Price (as set
forth
in Section 3 hereof) if the total number of shares of Common Stock issuable
after such action upon exercise of all outstanding warrants, together with
all
shares of Common Stock then outstanding and all shares of Common Stock then
issuable upon exercise of all options and upon the conversion of all convertible
securities then outstanding, would exceed the total number of shares of Common
Stock then authorized by the Company’s Articles/Certificate of Incorporation
(the “Company
Charter”).
3. Adjustment
of Exercise Price and Number of Shares.
3.1. The
Exercise Price and the number of shares purchasable upon the exercise of
this
Warrant shall be subject to adjustment from time to time upon the occurrence
of
certain events described in this Section 3. Upon each adjustment of the Exercise
Price, the Holder of this Warrant shall thereafter be entitled to purchase,
at
the Exercise Price resulting from such adjustment, the number of shares obtained
by multiplying the Exercise Price in effect immediately prior to such adjustment
by the number of shares purchasable pursuant hereto immediately prior to
such
adjustment, and dividing the product thereof by the Exercise Price resulting
from such adjustment.
3.2. Subdivision
or Combination of Stock.
In case
the Company shall at any time subdivide its outstanding shares of Common
Stock
into a greater number of shares, the Exercise Price in effect immediately
prior
to such subdivision shall be proportionately reduced, and conversely, in
case
the outstanding shares of Common Stock of the Company shall be combined into
a
smaller number of shares, the Exercise Price in effect immediately prior
to such
combination shall be proportionately increased.
3.3. Dividends
in Common Stock, Other Stock, Property, Reclassification.
If at
any time or from time to time the Holders of Common Stock (or any shares
of
stock or other securities at the time receivable upon the exercise of this
Warrant) shall have received or become entitled to receive, without payment
therefor,
(a) Common
Stock or any shares of stock or other securities which are at any time directly
or indirectly convertible into or exchangeable for Common Stock, or any rights
or options to subscribe for, purchase or otherwise acquire any of the foregoing
by way of dividend or other distribution,
(b) any
cash
paid or payable otherwise than as a cash dividend, or
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(c) Common
Stock or additional stock or other securities or property (including cash)
by
way of spinoff, split-up, reclassification, combination of shares or similar
corporate rearrangement, (other than shares of Common Stock issued as a stock
split or adjustments in respect of which shall be covered by the terms of
Section 3.1 above), then and in each such case, the Holder hereof shall,
upon
the exercise of this Warrant, be entitled to receive, in addition to the
number
of shares of Common Stock receivable thereupon, and without payment of any
additional consideration therefor, the amount of stock and other securities
and
property (including cash in the cases referred to in clause (b) above and
this
clause (c)) which such Holder would hold on the date of such exercise had
he
been the holder of record of such Common Stock as of the date on which holders
of Common Stock received or became entitled to receive such shares or all
other
additional stock and other securities and property.
3.4. Reorganization,
Reclassification, Consolidation, Merger or Sale.
If any
recapitalization, reclassification or reorganization of the capital stock
of the
Company, or any consolidation or merger of the Company with another corporation,
or the sale of all or substantially all of its assets or other transaction
shall
be effected in such a way that holders of Common Stock shall be entitled
to
receive stock, securities, or other assets or property (an “Organic
Change”),
then,
as a condition of such Organic Change, lawful and adequate provisions shall
be
made by the Company whereby the Holder hereof shall thereafter have the right
to
purchase and receive (in lieu of the shares of the Common Stock of the
Company immediately theretofore purchasable and receivable upon the exercise
of
the rights represented by this Warrant) such shares of stock, securities
or
other assets or property as may be issued or payable with respect to or in
exchange for a number of outstanding shares of such Common Stock equal to
the
number of shares of such stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented by this Warrant. In
the
event of any Organic Change, appropriate provision shall be made by the Company
with respect to the rights and interests of the Holder of this Warrant to
the
end that the provisions hereof (including, without limitation, provisions
for
adjustments of the Exercise Price and of the number of shares purchasable
and
receivable upon the exercise of this Warrant) shall thereafter be applicable,
in
relation to any shares of stock, securities or assets thereafter deliverable
upon the exercise hereof. The Company will not effect any such consolidation,
merger or sale unless, prior to the consummation thereof, the successor
corporation (if other than the Company) resulting from such consolidation
or the
corporation purchasing such assets shall assume by written instrument
reasonably satisfactory in form and substance to the Holders executed and
mailed
or delivered to the registered Holder hereof 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.
3.5. Certain
Events.
If any
change in the outstanding Common Stock of the Company or any other event
occurs
as to which the other provisions of this Section 3 are not strictly applicable
or if strictly applicable would not fairly protect the purchase rights of
the
Holder of the Warrant in accordance with such provisions, then the Board
of
Directors of the Company shall make an adjustment in the number and class
of
shares available under the Warrant, the Exercise Price or the application
of
such provisions, so as to protect such purchase rights as aforesaid. The
adjustment shall be such as will give the Holder of the Warrant upon exercise
for the same aggregate Exercise Price the total number, class and kind of
shares
as he would have owned had the Warrant been exercised prior to the event
and had
he continued to hold such shares until after the event requiring
adjustment.
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3.6. Notices
of Change.
(a) Immediately
upon any adjustment in the number or class of shares subject to this Warrant
and
of the Exercise Price, the Company shall give written notice thereof to the
Holder, setting forth in reasonable detail and certifying the calculation
of
such adjustment.
(b) The
Company shall give written notice to the Holder at least 10 business days
prior
to the date on which the Company closes its books or takes a record for
determining rights to receive any dividends or distributions.
(c) The
Company shall also give written notice to the Holder at least 30 business
days
prior to the date on which an Organic Change shall take place.
4. Issue
Tax.
The
issuance of certificates for shares of Common Stock upon the exercise of
the
Warrant shall be made without charge to the Holder of the Warrant for any
issue
tax (other than any applicable income taxes) in respect thereof; provided,
however, that the Company shall not be required to pay any tax which may
be
payable in respect of any transfer involved in the issuance and delivery
of any
certificate in a name other than that of the then Holder of the Warrant being
exercised.
5. Closing
of Books.
The
Company will at no time close its transfer books against the transfer of
any
warrant or of any shares of Common Stock issued or issuable upon the exercise
of
any warrant in any manner which interferes with the timely exercise of this
Warrant.
6. No
Voting or Dividend Rights; Limitation of Liability.
Nothing
contained in this Warrant shall be construed as conferring upon the Holder
hereof the right to vote or to consent or to receive notice as a shareholder
of
the Company or any other matters or any rights whatsoever as a shareholder
of
the Company. No dividends or interest shall be payable or accrued in respect
of
this Warrant or the interest represented hereby or the shares purchasable
hereunder until, and only to the extent that, this Warrant shall have been
exercised. No provisions hereof, in the absence of affirmative action by
the
holder to purchase shares of Common Stock, and no mere enumeration herein
of the
rights or privileges of the holder hereof, shall give rise to any liability
of
such Holder for the Exercise Price or as a shareholder of the Company, whether
such liability is asserted by the Company or by its creditors.
7. Warrants
Transferable.
Subject
to compliance with applicable federal and state securities laws, this Warrant
and all rights hereunder are transferable, in whole or in part, without charge
to the holder hereof (except for transfer taxes), upon surrender of this
Warrant
properly endorsed. Each taker and holder of this Warrant, by taking or holding
the same, consents and agrees that this Warrant, when endorsed in blank,
shall
be deemed negotiable, and that the holder hereof, when this Warrant shall
have been so endorsed, may be treated by the Company, at the Company’s option,
and all other persons dealing with this Warrant as the absolute owner hereof
for
any purpose and as the person entitled to exercise the rights represented
by
this Warrant, or to the transfer hereof on the books of the Company any notice
to the contrary notwithstanding; but until such transfer on such books, the
Company may treat the registered owner hereof as the owner for all
purposes.
5
8. Rights
and Obligations Survive Exercise of Warrant.
The
rights and obligations of the Company, of the holder of this Warrant and
of the
holder of shares of Common Stock issued upon exercise of this Warrant, shall
survive the exercise of this Warrant.
9. Further
Representations, Warranties and Covenants of the
Company.
9.1. Articles
and Bylaws.
The
Company has made available to Holder true, complete and correct copies of
the
Company Charter and Bylaws, as amended, through the date hereof.
9.2. Due
Authority.
The
execution and delivery by the Company of this Warrant and the performance
of all
obligations of the Company hereunder, including the issuance to Holder of
the
right to acquire the shares of Common Stock, have been duly authorized by
all
necessary corporate action on the part of the Company, and the Warrant is
not
inconsistent with the Company Charter or Bylaws and constitutes a legal,
valid
and binding agreement of the Company, enforceable in accordance with its
terms.
9.3. Consents
and Approvals.
No
consent or approval of, giving of notice to, registration with, or taking
of any
other action in respect of any state, federal or other governmental authority
or
agency is required with respect to the execution, delivery and performance
by
the Company of its obligations under this Warrant, except for any filing
required by applicable federal and state securities laws, which filing will
be
effective by the time required thereby.
9.4. Issued
Securities.
All
issued and outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. All
outstanding shares of capital stock were issued in full compliance with all
federal and state securities laws.
9.5. Exempt
Transaction.
Subject
to the accuracy of the Holder’s representations in Section 10 hereof, the
issuance of the Common Stock upon exercise of this Warrant will constitute
a
transaction exempt from (i) the registration requirements of Section 5 of
the
Securities Act of 1933, as amended (the “Securities Act”), in reliance upon
Section 4(2) thereof, and (ii) the qualification requirements of the applicable
state securities laws.
9.6. Compliance
with Rule 144.
At the
written request of the Holder, who proposes to sell Common Stock issuable
upon
the exercise of the Warrant in compliance with Rule 144 promulgated by the
Securities and Exchange Commission, the Company shall furnish to the Holder,
within thirty (30) days after receipt of such request, a written statement
confirming the Company’s compliance with the filing requirements of the
Securities and Exchange Commission as set forth in such Rule, as such Rule
may
be amended from time to time.
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10. Representations
and Covenants of the Holder.
This
Warrant has been entered into by the Company in reliance upon the following
representations and covenants of the Holder:
10.1. Investment
Purpose.
The
Warrant or the Common Stock issuable upon exercise of the Warrant will be
acquired for investment and not with a view to the sale or distribution of
any
part thereof, and the Holder has no present intention of selling or engaging
in
any public distribution of the same except pursuant to a registration or
exemption.
10.2. Private
Issue.
The
Holder understands (i) that the Warrant and the Common Stock issuable upon
exercise of this Warrant are not registered under the Securities Act or
qualified under applicable state securities laws on the ground that the issuance
contemplated by this Warrant will be exempt from the registration and
qualifications requirements thereof, and (ii) that the Company’s reliance on
such exemption is predicated on the representations set forth in this Section
10.
10.3. Disposition
of Holders Rights.
In no
event will the Holder make a disposition of the Warrant or the Common Stock
issuable upon exercise of the Warrant unless and until (i) it shall have
notified the Company of the proposed disposition, and (ii) if requested by
the
Company, it shall have furnished the Company with an opinion of counsel (which
counsel may either be inside or outside counsel to the Holder) satisfactory
to
the Company and its counsel to the effect that (A) appropriate action necessary
for compliance with the Securities Act has been taken, or (B) an exemption
from
the registration requirements of the Securities Act is available.
Notwithstanding the foregoing, the restrictions imposed upon the transferability
of any of its rights to acquire Common Stock or Common Stock issuable on
the
exercise of such rights do not apply to transfers from the beneficial owner
of
any of the aforementioned securities to its nominee or from such nominee
to its
beneficial owner, and shall terminate as to any particular share of Common
Stock
when (1) such security shall have been effectively registered under the
Securities Act and sold by the holder thereof in accordance with such
registration or (2) such security shall have been sold without registration
in
compliance with Rule 144 under the Securities Act, or (3) a letter shall
have
been issued to the Holder at its request by the staff of the Securities and
Exchange Commission or a ruling shall have been issued to the Holder at its
request by such Commission stating that no action shall be recommended by
such
staff or taken by such Commission, as the case may be, if such security is
transferred without registration under the Securities Act in accordance with
the
conditions set forth in such letter or ruling and such letter or ruling
specifies that no subsequent restrictions on transfer are required. Whenever
the
restrictions imposed hereunder shall terminate, as hereinabove provided,
the
Holder or holder of a share of Common Stock then outstanding as to which
such
restrictions have terminated shall be entitled to receive from the Company,
without expense to such holder, one or more new certificates for the Warrant
or
for such shares of Common Stock not bearing any restrictive legend.
7
10.4. Financial
Risk.
The
Holder has such knowledge and experience in financial and business matters
as to
be capable of evaluating the merits and risks of its investment, and has
the
ability to bear the economic risks of its investment.
10.5. Risk
of No Registration.
The
Holder understands that if the Company does not register with the Securities
and
Exchange Commission pursuant to Section 12 of the Securities Act, or file
reports pursuant to Section 15(d), of the Securities Exchange Act of 1934
(the
“Exchange Act”), or if a registration statement covering the securities under
the Securities Act is not in effect when it desires to sell (i) the Warrant,
or
(ii) the Common Stock issuable upon exercise of the Warrant, it may be required
to hold such securities for an indefinite period. The Holder also understands
that any sale of the Warrant or the Common Stock issuable upon exercise of
the
Warrant which might be made by it in reliance upon Rule 144 under the Securities
Act may be made only in accordance with the terms and conditions of that
Rule.
10.6. Accredited
Investor.
Holder
is an “accredited investor” within the meaning of Rule 501 of Regulation D under
the Securities Act, as presently in effect.
11. Modification
and Waiver.
This
Warrant and any provision hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of the same is sought.
12. Notices.
Any
notice, request or other document required or permitted to be given or delivered
to the holder hereof or the Company shall be delivered or shall be sent by
certified mail, postage prepaid, to each such holder at its address as shown
on
the books of the Company or to the Company at the address indicated therefor
in
the first paragraph of this Warrant or such other address as either may from
time to time provide to the other.
13. Binding
Effect on Successors.
This
Warrant shall be binding upon any corporation succeeding the Company by merger,
consolidation or acquisition of all or substantially all of the Company’s
assets. All of the obligations of the Company relating to the Common Stock
issuable upon the exercise of this Warrant shall survive the exercise and
termination of this Warrant. All of the covenants and agreements of the Company
shall inure to the benefit of the successors and assigns of the holder hereof.
14. Descriptive
Headings and Governing Law.
The
description headings of the several sections and paragraphs of this Warrant
are
inserted for convenience only and do not constitute a part of this Warrant.
This
Warrant shall be construed and enforced in accordance with, and the rights
of
the parties shall be governed by, the laws of the State of
California.
8
15. Lost
Warrants.
The
Company represents and warrants to the Holder hereof that upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft, destruction,
or mutilation of this Warrant and, in the case of any such loss, theft or
destruction, upon receipt of an indemnity reasonably satisfactory to the
Company, or in the case of any such mutilation upon surrender and cancellation
of such Warrant, the Company, at its expense, will make and deliver a new
Warrant, of like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant.
16. Fractional
Shares.
No
fractional shares shall be issued upon exercise of this Warrant. The Company
shall, in lieu of issuing any fractional share, pay the holder entitled to
such
fraction a sum in cash equal to such fraction multiplied by the then effective
Exercise Price.
In
Witness Whereof, the
Company has caused this Warrant to be duly executed by its officers, thereunto
duly authorized as of the _____ day of _________________20____.
By:
_____________________________
Title:
____President
& CEO__________
9
SUBSCRIPTION
FORM
Date:
_________________, 200__
[Company
Name]
[address]
Attn:
President
Ladies
and Gentlemen:
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¨
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The
undersigned hereby elects to exercise the warrant issued to it
by
International Microcomputer Software, Inc. (the “Company”)
and dated ___________ _____, ____ -___ (the “Warrant”)
and to purchase thereunder __________________________________ shares
of
the Common Stock of the Company (the “Shares”)
at a purchase price of ___________________________________________
Dollars
($__________) per Share or an aggregate purchase price of
__________________________________ Dollars ($__________) (the
“Exercise
Price”).
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¨
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The
undersigned hereby elects to convert _______________________ percent
(____%) of the value of the Warrant pursuant to the provisions
of Section
1.2 of the Warrant.
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Pursuant
to the terms of the Warrant the undersigned has delivered the Exercise Price
herewith in full in cash or by certified check or wire transfer.
Very
truly yours,
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Title:
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By:
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