WARRANT TO PURCHASE SHARES OF COMMON STOCK OF WEBDIGS, INC. EXERCISABLE ON OR BEFORE, AND VOID AFTER
NEITHER
THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, OR ANY APPLICABLE STATE SECURITIES
LAWS. AS A RESULT, THIS WARRANT AND SUCH SECURITIES MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR EVIDENCE SATISFACTORY TO THE COMPANY OF AN APPLICABLE
EXEMPTION FROM REGISTRATION UNDER THE ACT OR COMPLIANCE WITH RULE 144 UNDER SUCH
ACT. THE TRANSFER OF THIS WARRANT IS FURTHER RESTRICTED AS PROVIDED
HEREIN.
WARRANT
TO PURCHASE SHARES
OF
COMMON STOCK
OF
WEBDIGS, INC.
EXERCISABLE
ON OR BEFORE, AND VOID AFTER
5:00 P.M.
MINNEAPOLIS TIME ON DECEMBER 12, 2011
This Certifies That Lantern Advisers,
LLC (the “Holder”), or
registered assigns, is entitled to subscribe for and purchase from Webdigs,
Inc., a Delaware corporation (the “Company”), at any
time after December 12, 2008, through December 12, 2011, 200,000 shares of the
Company’s common stock at an exercise price of $0.30 per share, subject to
adjustment as provided herein (as adjusted, the “Exercise Price”).
The shares that may be acquired upon
exercise of this Warrant are referred to herein as the “Warrant
Shares.” As used herein, the term “Holder” means the
Holder identified in the paragraph above and any party who acquires all or a
part of this Warrant as a registered transferee of such Holder. The
term “Convertible
Securities” means any stock or other securities convertible into, or
exchangeable for, Company common stock. This Warrant is subject
to the following terms and conditions:
1. Exercise. The
rights represented by this Warrant may be exercised by the Holder, in whole or
in part (but not as to a fractional share of common stock), by written Notice of
Exercise (in the form attached hereto) delivered to the Company at the principal
office of the Company prior to the expiration of this Warrant and accompanied or
preceded by the surrender of this Warrant along with a check in payment of the
Exercise Price multiplied by the number
of Warrant Shares being purchased hereunder, unless this Warrant is being
exercised pursuant to Section 9 below.
2. Exchange and
Replacement. Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction, or mutilation of
this Warrant, the Company will make and deliver a new Warrant of like tenor, in lieu of
this Warrant. This Warrant shall be promptly canceled by the Company
upon the surrender hereof in connection with any exchange or
replacement.
3. Issuance of the Warrant
Shares.
(a) Subject
to the provisions of paragraph (b) below, certificates for the Warrant Shares
purchased hereunder shall be delivered to the Holder within a reasonable time,
not exceeding ten days, after the rights represented by this Warrant shall have
been so exercised, and, unless this Warrant has expired, a new Warrant
representing the right to purchase the number of Warrant Shares, if any, with
respect to which this Warrant shall not then have been exercised shall also be
delivered to the Holder within such time.
(b) Notwithstanding
the foregoing, the Company shall not be required to
recognize any exercise, or deliver any certificate for Warrant Shares upon
attempted exercise, of this Warrant except in accordance with exemptions from
the applicable securities registration requirements under applicable securities
laws. The Company shall not be obligated to effect a registration of
the issuance or resale of the Warrant Shares under federal or state securities
laws unless specifically so provided herein. The Holder agrees to
execute such documents and make such representations, warranties, and agreements
as may be required solely to comply with the exemptions relied upon by the
Company, or the registrations made, for the issuance of the Warrant
Shares.
4. Covenants of the
Company. The Company 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 for the purpose of issue or transfer
upon exercise of the subscription rights evidenced by this Warrant a sufficient
number of shares of common stock to provide for the exercise of the rights
represented by this Warrant.
5. Exercise Price
Adjustments. The provisions of this
Warrant are subject to adjustment as provided in this Section 5.
(a) In
case the Company shall hereafter: (i) subdivide its then-outstanding
shares of common stock into a greater number of shares; or (ii) combine
outstanding shares of common stock, by reclassification or otherwise; then, in
any such event, the Exercise Price in effect immediately prior to such event
shall (until adjusted again pursuant hereto) be adjusted immediately after such
event to a price (calculated to the nearest full cent) determined by dividing
(A) the number of shares of common stock outstanding immediately prior to such
event, multiplied by the then-existing Exercise Price, by (B) the total number
of shares of common stock outstanding immediately after such event (including in
each case the maximum number of shares of common stock issuable in respect of
any Convertible Securities), and the resulting quotient shall be the adjusted
Exercise Price. An adjustment made pursuant to this paragraph shall
become effective immediately after the record date in the case of a dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision, combination or reclassification. If, as a
result of an adjustment made pursuant to this paragraph, the Holder of any
Warrant thereafter surrendered for exercise shall become entitled to receive
shares of two or more classes of capital stock or share of common stock and
other capital stock of the Company, the Company’s board of directors (whose
determination shall be conclusive) shall reasonably and in good faith determine
the allocation of the adjusted Exercise Price between or among shares of such
classes of capital stock or shares of common stock and other-capital
stock. All calculations under this paragraph shall be made to the
nearest cent or to the nearest 1/100 of a share, as the case may
be. In the event that at any time as a result of an adjustment made
pursuant to this paragraph, the holder of any Warrant thereafter surrendered for
exercise shall become entitled to receive any shares of the Company other than
shares of common stock, thereafter the Exercise Price of such other shares so
receivable upon exercise of any Warrant shall be subject to adjustment from
time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to common stock contained in this Section.
(b) In
case of any consolidation or merger to which the Company is a party other than a
merger or consolidation in which the Company is the surviving corporation, or in
case of any sale or conveyance to another corporation of the property of the
Company as an entirety or substantially as an entirety, or in the case of any
statutory exchange of securities with another corporation (including any
exchange effected in connection with a merger of a third corporation into the
Company), there shall be no adjustment under paragraph (a) above, but the Holder
of this Warrant then outstanding shall have the right thereafter to convert this
Warrant into the kind and amount of shares of stock and other securities, and any other property,
which he, she or it would have owned or have been entitled to receive
immediately after such consolidation, merger, statutory exchange sale or
conveyance had such Warrant been converted immediately prior to the effective
date of such consolidation, merger, statutory exchange, sale or
conveyance. The provisions of this paragraph shall similarly apply to
successive consolidations, mergers, statutory exchanges, sales or
conveyances.
6. No Voting
Rights. This Warrant by itself shall not entitle the Holder to
any voting rights or other rights as a shareholder of the
Company.
2
7. Notice of Transfer of
Warrant or Resale of the Warrant Shares.
(a) The
Holder, by acceptance hereof, agrees to give written notice to the Company
before transferring this Warrant or transferring any Warrant Shares of such
Holder’s intention to do so, describing briefly the manner of any proposed
transfer. If in the opinion of the Company counsel the proposed
transfer may be effected without registration or qualification (under any
federal or state securities laws), the Company, as promptly as practicable,
shall notify the Holder of such opinion, whereupon the Holder shall be entitled
to transfer this Warrant or to dispose of Warrant Shares received upon the
previous exercise of this Warrant, all in accordance with the terms of the notice
delivered by the Holder to the Company; provided, however, that an
appropriate legend may be endorsed on this Warrant or the certificates for such
Warrant Shares respecting restrictions upon transfer thereof necessary or
advisable in the opinion of counsel and satisfactory to the Company to prevent
further transfers which would be in violation of Section 5 of the Securities Act
of 1933 (the “Securities Act”) and
applicable state securities laws; and provided further that the prospective
transferee or purchaser shall execute such documents and make such
representations, warranties, and agreements as may be required solely to comply
with the exemptions relied upon by the Company for the transfer of disposition
of the Warrant or Warrant Shares.
(b) If,
in the opinion of counsel referred to in this Section 7, the proposed transfer
or disposition of this Warrant or such Warrant Shares described in the written
notice given pursuant to this Section 7 may not be effected without registration
or qualification of this Warrant or such Warrant Shares, the Company shall
promptly give written notice thereof to the Holder, and the Holder will limit
its activities in respect to such transfer or disposition as, in the opinion of
both such counsel, are permitted by law.
8. No Fractional
Shares. No fractional shares will be issued upon the exercise
hereof.
9. Net Issue
Exercise. In lieu of exercising this Warrant pursuant to
Section 1 hereof, the Holder may elect to receive, without the payment of any
additional consideration, a number of Warrant Shares equal to the value (as
determined below) of this Warrant (or the portion thereof being exercised) by
surrender of this Warrant to the Company together with a duly executed Notice of
Exercise (in the form attached hereto) in which the appropriate alternative is
initialed by the Holder. In such event, the Company shall issue to
the Holder the number of Warrant Shares computed by applying the following
formula:
X = Y
(A-B)
A
3
Where:
|
|
X =
|
the
number of Warrant Shares to be issued to the
Holder;
|
|
|
Y =
|
the
number of Warrant Shares subject to this Warrant (or, if only a portion of
this Warrant is being exercised, the number of Warrant Shares subject to
the portion of this Warrant being
exercised);
|
|
|
A =
|
the
Fair Market Value of one Warrant Share (at the date of such exercise);
and
|
|
|
B =
|
the
Exercise Price, as adjusted to the date of such
calculation.
|
For purposes of the above, the “Fair Market Value” of
one share shall equal the average of the closing sale prices of the common stock
quoted on the Nasdaq Stock Market or listed in the Over-The-Counter Bulletin
Board (or the Pink Sheets) or the closing price quoted on any national
securities exchange on which such securities are listed, whichever is
applicable, for the ten consecutive trading days immediately prior to the date
of determination of Fair Market Value (or, if no sales take place on any such
trading day, the average of the closing bid and asked prices on such trading
day). If, however, the common stock is not traded on the Nasdaq Stock
Market or Over-The-Counter or on a national securities exchange, the Fair Market
Value of a Warrant Share shall be reasonably determined by the agreement in
writing of the Company and Holder, acting in good faith and utilizing customary
business valuation criteria and methodologies (without discount for lack of
marketability or minority interest).
10. Piggyback Registration
Rights.
(a) Subject
to paragraph (d) of this Section, each time the Company shall determine to
proceed with the actual preparation and filing of a registration statement under
the Securities Act, to register a proposed offer and sale for money of its
common stock (other than a registration on Form ▇-▇, ▇-▇ or any successor forms
or other inappropriate forms), the Company will give written notice of its
determination to Holder. Upon the written request of Holder given
within 30 days after receipt of any such notice from the Company, the Company
will, except as herein provided, cause all Warrant Shares with respect to which
Holder has requested registration to be included in such registration statement,
all to the extent requisite to permit the sale or other disposition by Holder of
the shares to be so registered; provided, however, that
nothing herein shall prevent the Company from, at any time, abandoning or
delaying any such registration initiated by it. If any such
registration pertains to an underwritten offering in whole or in part, the
Company may require that the shares requested for inclusion by Holder pursuant
to this section be included in the underwritten offering on the same terms and
conditions as the securities otherwise being sold through the
underwriters. If, in the good faith judgment of the managing
underwriter of such underwritten offering, the inclusion of all of the Warrant
Shares originally covered by a request for registration made by Holder would
reduce the amount of securities to be offered by the Company or interfere with
the successful marketing of the securities to be offered by the Company, the
number of Warrant Shares owned by or issuable to Holder and otherwise to be
included in the underwritten offering may be reduced. Any Warrant
Shares which are thus excluded from the underwritten offering shall be withheld
from the market by Holder for a period, not to exceed 180 days, that the
managing underwriter reasonably determines is necessary in order to effect the
underwritten offering.
4
(b) If
and whenever the Company is required by the provisions of Section 10(a) hereof
to effect the registration of any Warrant Shares under the Securities Act, the
Company will:
(i) prepare
and file with the Securities and Exchange Commission (the “SEC”) a registration
statement with respect to such shares, and use reasonable commercial efforts to
cause such registration statement to become and remain effective for such period
as may be reasonably necessary to effect the sale of such shares, not to exceed
one year from the date of issuance of the covered Warrant Shares;
(ii) prepare
and file with the SEC such amendments to such registration statement and
supplements to the prospectus contained therein as may be necessary to keep such
registration statement effective for such period as may be reasonably necessary
to effect the sale of such securities, not to exceed one year from the date of
issuance of the covered Warrant Shares;
(iii) furnish
to Holder and to the underwriters of the securities being registered such
reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as Holder and underwriters
may reasonably request in order to facilitate the public offering of such
securities;
(iv) use
reasonable commercial efforts to register or qualify the securities covered by
such registration statement under such state securities or blue sky laws of such
jurisdictions as the underwriters may reasonably request within 20 days
following the original filing of such registration statement, except that the
Company shall not for any purpose be required to execute a general consent to
service of process or to qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified; and
(v) prepare
and promptly file with the SEC any amendment or supplement to such registration
statement or prospectus as may be necessary to correct any statements or
omissions if, at the time when a prospectus relating to such securities is
required to be delivered under the Securities Act, any event shall have occurred
as the result of which any such prospectus or any other prospectus as then in
effect would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading.
(c) With
respect to any registration of shares pursuant to Section 10(a) hereof, the
Company shall bear the following fees, costs and expenses: all
registration, SEC filing fees, printing expenses, fees and disbursements of
counsel and accountants for the Company, fees and disbursements of counsel for
the underwriter or underwriters of such securities (if the Company and/or
selling security holders are required to bear such fees and disbursements), all
internal Company expenses, and all legal fees and disbursements and other
expenses of complying with state securities or blue sky laws of any
jurisdictions in which the securities to be offered are to be registered or
qualified. Fees and disbursements of counsel and accountants for
Holder, underwriting discounts and commissions and transfer taxes for Holder and
any other expenses incurred by Holder not expressly included above shall be
borne by Holder.
(d) Notwithstanding
anything to the contrary herein, the Company shall not be obligated to register
the resale of any Warrant Shares purchased for cash and which have been
outstanding for more than six months.
623346
5
In
Witness Whereof, the Company has caused this Warrant to be signed by its duly
authorized officer.
| WEBDIGS, INC.: | |||
|
Date:
December 12, 2008
|
By:
|
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. | |
| By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. | |||
| Its: Chief Executive Officer | |||
6
NOTICE
OF EXERCISE
(To be
signed upon exercise of Warrant)
The Undersigned, the holder of the
within Warrant, hereby irrevocably elects to exercise the purchase right
represented by such Warrant for, and to purchase thereunder, of the shares of
common stock of Webdigs, Inc. to which such Warrant relates and herewith makes
payment of $______________________ therefor in cash or by certified check
(unless the Warrant is being exercised pursuant to Section 9, in which case the
box below indicating such fact is checked), and requests that the certificate
for such shares be issued in the name of, and be delivered to,
________________________ the address for which is set forth below the signature
of the undersigned.
|
|
The
undersigned is exercising the Warrant pursuant to the Net Issue Exercise
provisions of Section 9.
|
Dated:
_______________________, 20____
|
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|
||
| Signature | |||
| Name | |||
| Address | |||
| City, State, Zip Code | |||
| Social Security or Tax Identification No. | |||
7
ASSIGNMENT
FORM
(To be
signed only upon authorized transfer of Warrant)
For Value Received, the undersigned
hereby sells, assigns, and transfers unto __________________________ the right
to purchase the securities of Webdigs, Inc., a Delaware corporation, to which
the within Warrant relates and appoints ______________________, attorney, to
transfer said right on the books of Webdigs, Inc. with full power of
substitution in the premises.
Dated:
_______________________, 20____
|
|
|
||
| Signature | |||
| Name | |||
| Address | |||
| Social Security or Tax Identification No. | |||
8