EXHIBIT 99.3
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THE
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT ")
OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS (1) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT, (2) THE COMPANY HAS RECEIVED AN OPINION OF
COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY, WHICH COUNSEL
MAY BE AN EMPLOYEE OF THE HOLDER, THAT REGISTRATION UNDER THE ACT IS NOT
REQUIRED OR THE HOLDER OR THE COMPANY HAS OBTAINED A NO-ACTION LETTER FROM THE
APPROPRIATE GOVERNMENTAL AUTHORITY TO THE SAME EFFECT OR (3) PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT UNDER RULE 144 (OR ANY
SUCCESSOR PROVISION) OF THE ACT.
NCSN, INC.
Common Stock Purchase Warrant
Expiring ____________, ____
New York, N.Y.
, ----
No. W-
NCSN, Inc. (the "Company"), a Delaware corporation, for value
received, hereby certifies that Student Advantage, Inc., or its registered
assigns, is entitled to purchase from the Company duly authorized, validly
issued, fully paid and nonassessable shares of Common Stock, par value $0.01 per
share, of the Company (the "Common Stock") in the amount and at the purchase
price per share specified herein, at any time or from time to time prior to 5
P.M., New York City time, on the Expiration Date, all subject to the terms,
conditions and adjustments set forth below in this Warrant.
This Warrant is one of the Common Stock Purchase Warrants (the
"Warrants", such term to include all Warrants issued in substitution therefor)
originally issued in connection with the issue by the Company of $4,250,000
aggregate principal amount of its Notes (together with all notes issued in
substitution therefor, the "Notes") pursuant to the Note Agreement (the "Note
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Agreement"), dated as of the date hereof, between the Company, certain
subsidiary guarantors and Student Advantage, Inc. Certain capitalized terms used
in this Warrant have the meanings set forth in the Note Agreement when used
herein. This Warrant is related to the Note listed next to it in Schedule V of
the Note Agreement (the "Related Note").
SECTION 1. Exercise Right and Exercise Price.
A Warrant holder may exercise this Warrant for Common Stock at any
time through the date (the "Expiration Date") that is the earlier to occur of
(a) the effective date of the first Change of Control or Initial Public
Offering, but in no event earlier than five Business Days after the Company
shall have given written notice to the holder hereof of the actual date of the
Change of Control or Initial Public Offering and (b) the second anniversary of
the date hereof or, if such date is not a Business Day, the immediately
succeeding Business Day. As of any date of determination, the number of shares
issuable upon exercise of this Warrant is determined as follows: Divide (i) the
principal and accrued but unpaid interest on the Related Note (assuming that the
Related Note is outstanding even if it has been prepaid, and calculating
interest as if the prepaid Related Note had remained outstanding after such
prepayment bearing interest at half the rate at which it bore interest at the
time when prepaid until the date of exercise) by (ii) the exercise price in
effect on the exercise date. Round the result to the nearest 1/100th of a share.
Notwithstanding the foregoing, accrued but unpaid interest on the Related Note
(including such assumed interest) shall at the option of the Company as
specified on the date of exercise instead be paid by the Company in cash to the
extent not previously paid and, if so paid, shall reduce the amount set forth in
clause (i) above.
Subject to any adjustments resulting from events between the Initial
Date and the date hereof, the exercise price for this Warrant is $7.32.
Thereafter, such exercise price is subject to adjustment in accordance with the
provisions of this Warrant.
"Common Stock" means the Common Stock of the Company as such Common
Stock exists on the date of this Warrant.
SECTION 2. Exercise Procedure.
To exercise this Warrant, a Warrant holder must (1) surrender this
Warrant to the Company, (2) furnish appropriate endorsements and transfer
documents if required by the Company, (3) pay the exercise price and any
transfer or similar tax if required, and (4) agree, in a writing similar to the
Joinder Agreement furnished by the Company prior to the Initial Date, to be
bound by the terms of the Common Shareholders' Agreements on a basis that such
holder will receive tag-along rights parallel to those held by the holders of
the Company's Series B Preferred Stock. For purposes hereof, "Common
Shareholders' Agreements" means each and every shareholders' agreement
(including, without limitation, the Amended and Restated Investor Rights
Agreement, dated July 16, 2003 and the Amended and Restated Registration Rights
Agreement dated February 7, 2003) and other similar agreements (in each such
case as entered
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into, amended, supplemented or otherwise modified in accordance with the terms
hereof from time to time) that, as of the exercise date, are in effect and
binding upon all holders of all the Company's capital stock as such. If the
Related Note remains outstanding, the exercise price shall be paid by surrender
thereof, together with appropriate endorsements and transfer documents to the
Company; otherwise, the exercise price shall be paid in cash at the time of
exercise. The date on which the Warrant holder satisfies all such requirements
is the exercise date. As soon as practicable, the Company shall deliver, upon
the order of the Warrant holder, a certificate for the number of full shares of
Common Stock issuable upon the exercise and a check for any fractional share.
The Person in whose name the certificate is registered shall be treated as a
stockholder of record on and after the exercise date.
SECTION 3. Fractional Shares.
The Company shall not issue a fractional share of Common Stock upon
exercise of a Warrant. Instead, the Company shall deliver a check for an amount
equal to the current value of the fractional share. The current value of a
fraction of a share shall be determined as follows: Multiply the fair market
value of a full share by the fraction. Round the result to the nearest cent.
SECTION 4. Taxes on Exercise.
If a Warrant holder exercises this Warrant, the Company shall pay
any documentary, stamp or similar issue or transfer tax due on the issue of
shares of Common Stock upon the exercise. However, the Warrant holder shall pay
any withholding tax or any tax that is due because the shares are issued in a
name other than the Warrant holder's name.
SECTION 5. Company to Reserve Common Stock, Etc.
The Company shall at all times reserve out of its authorized but
unissued Common Stock or its Common Stock held in treasury enough shares of
Common Stock to permit the exercise of the Warrants. All shares of Common Stock
issued upon exercise of this Warrant shall be fully paid and non-assessable, and
the Company shall insure that such issuance does not violate any preemptive or
other similar rights. The Company shall comply with all laws regulating the
offer and delivery of shares of Common Stock upon exercise of Warrants.
The Company shall not enter into any Common Shareholders' Agreement,
nor shall it modify any Common Shareholders' Agreement in a manner, that
discriminates against the Warrant holder (including as a holder of Common Stock
following exercise).
SECTION 6. Adjustment for Changes in Capital Stock.
If on or after the Initial Date and prior to the Expiration Date the
Company:
(1) pays a dividend or makes a distribution on its Common
Stock in shares of its Common Stock;
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(2) subdivides its outstanding shares of Common Stock into a
greater number of shares;
(3) combines its outstanding shares of Common Stock into a
smaller number of shares;
(4) makes a distribution on its Common Stock in shares of its
capital stock other than Common Stock; or
(5) issues by reclassification of its Common Stock any shares
of its capital stock,
then the exercise privilege and the exercise price in effect immediately prior
to such action shall be proportionately adjusted so that the holder of this
Warrant thereafter exercised may receive the aggregate number and kind of shares
of capital stock of the Company that the Warrant holder would have owned
immediately following such action if this Warrant had been exercised immediately
prior to such action. Each adjustment contemplated by this Section 6 shall
become effective immediately after the record date in the case of a dividend or
distribution and immediately after the effective date in the case of a
subdivision, combination or reclassification.
If after an adjustment a Warrant holder upon exercise of a Warrant
may receive shares of two or more classes of capital stock of the Company, the
Company's Board of Directors, acting reasonably, shall determine the allocation
of the adjusted exercise price among the classes of capital stock. After such
allocation, the exercise privilege and the exercise price of each class of
capital stock shall thereafter be subject to adjustment on terms comparable to
those applicable to Common Stock in this Warrant. The term "Common Stock" shall
thereafter apply to each class of capital stock.
The adjustment contemplated by this Section 6 shall be made
successively whenever any of the events listed above shall occur.
SECTION 7. Adjustment for Equity Issuances.
If the weighted average exercise or issue price of convertible
preferred stock or other equity issued by the Company after the Initial Date and
through the earlier of (i) the date when the proceeds of the issuance of such
stock or other equity equal or exceed $5,000,000 and (ii) the Business Day
before the Maturity Date is less than the current exercise price hereunder at
such time, the exercise price hereunder shall immediately be adjusted to equal
such weighted average price.
This Section 7 shall not apply to securities issued to the Company's
employees subject to the conditions specified in paragraph (4) of Section 9.
SECTION 8. Adjustment for Other Distributions.
If after the Initial Date the Company distributes to all holders of
its Common Stock any of its assets (including, but not limited to, cash), debt
securities or other securities or
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any rights, options or warrants to purchase assets, debt securities or other
securities of the Company (other than any such distribution governed by Section
6) the exercise price shall be adjusted in accordance with the following
formula:
C'= C x M-F
---
M
where:
C'= the adjusted exercise price.
C = the current exercise price.
M = the fair market value (as determined reasonably by the
Company's Board of Directors on such basis as it reasonably
considers appropriate) of one share of Common Stock on the
record date mentioned below.
F = the fair market value on the record date of the assets,
securities, rights, options or warrants applicable to one
share of Common Stock. Such fair market value shall be
determined reasonably by the Company's Board of Directors,
provided that the Company shall obtain an appraisal or other
valuation opinion in support of the determination from an
investment bank or accounting firm of recognized national
standing if such fair market value exceeds $5 million.
The adjustment contemplated by this Section 8 shall be made
successively whenever any such distribution is made and shall become effective
immediately after the record date for the determination of securityholders
entitled to receive the distribution.
SECTION 9. Adjustment for Common Stock Issue.
If at any time after the Initial Date the Company issues shares of
Common Stock for a consideration per share less than the higher of the exercise
price then in effect and the current fair market value per share (as reasonably
determined by the Company's Board of Directors on such basis as it reasonably
considers appropriate) on the date the Company fixes the offering price of such
shares, the exercise price shall be adjusted in accordance with the following
formula:
P
-
C' = C x O + M
-----
A
where:
C' = the adjusted exercise price.
C = the current exercise price.
O = the number of shares of Common Stock outstanding on the
record date.
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P = the aggregate consideration received (including contract
rights and general intangibles) for the issuance of such
additional shares.
M = the higher of the current exercise price and the current fair
market value per share of Common Stock on the issue date.
A = the number of shares of Common Stock outstanding immediately
after the issuance of such additional shares.
The adjustment contemplated by this Section 9 shall be made
successively whenever any such issuance is made and shall become effective
immediately upon such issuance.
This Section 9 shall not apply to:
(1) any of the transactions that has resulted in an
adjustment under Sections 6, 7, 8 or 10;
(2) the exercise of the Warrants or the exercise or exchange of
other securities, exercisable into or exchangeable for Common Stock
(and/or other securities as a result of a transaction that has
resulted in an adjustment under paragraph (5) of Section 6);
(3) the issuance of Common Stock upon the exercise of
rights, options or warrants issued to the holders of Common
Stock, or
(4) the issuance of Common Stock to the Company's employees
under bona fide employee benefit plans adopted by the Company's
Board of Directors, and approved by the holders of Common Stock when
required by law, but only to the extent that the aggregate number of
shares excluded by this clause (4) together with shares issuable on
conversion or exchange of Convertible Securities excluded under the
last sentence of Section 10 and issued after the Initial Date shall
not exceed 10% of the Common Stock outstanding as of any date.
SECTION 10. Adjustment for Convertible Security Issue.
If the Company after the Initial Date issues any securities, rights,
options or warrants (other than the Warrants or securities issued in
transactions that have resulted in an adjustment pursuant to Sections 6, 7, 8 or
9) convertible into or exchangeable for Common Stock ("Convertible Securities")
for a consideration per share of Common Stock initially deliverable upon
conversion or exchange of such securities less than the higher of the current
exercise price and current fair market value per share on the date of issuance
of such Convertible Securities, the exercise price shall be adjusted in
accordance with the following formula:
P
-
C' = C x O + M
-----
O + D
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where:
C' = the adjusted exercise price.
C = the current exercise price.
O = the number of shares of Common Stock outstanding on the
record date.
P = the aggregate consideration (including contract rights and
general intangibles) received for the issuance of such
securities.
M = the higher of the current exercise price and the current fair
market value per share of Common Stock on the record date.
D = the maximum number of shares of Common Stock deliverable upon
conversion or exchange of such securities at the initial
exercise or exchange rate.
The adjustment contemplated by this Section 10 shall be made successively
whenever any such issuance is made and shall become effective immediately upon
such issuance. If at the end of the period during which such Convertible
Securities are convertible into or exchangeable for Common Stock, not all such
Convertible Securities shall have been so converted or exchanged, the conversion
price shall immediately be readjusted to what it would have been if "D" in the
above formula had been the number of shares actually issued upon conversion or
exchange. No further adjustment of the exercise price shall be made upon the
subsequent issuance of securities upon the conversion or exchange of such
Convertible Securities.
If such Convertible Securities by their terms provide, with the
passage of time or otherwise, for any increase or decrease in the consideration
payable to the Company, or increase or decrease in the number of shares of
Common Stock issuable, upon the exercise, conversion or exchange thereof (by
change of rate or otherwise), the exercise price computed upon the original
issue, sale, grant or assumption thereof (or upon the occurrence of the record
date with respect thereto), and any subsequent adjustments based thereon, shall,
upon any such increase or decrease becoming effective, be recomputed as to such
Convertible Securities outstanding at the time of such increase or decrease as
if such increase or de crease had been in effect at the time such Convertible
Securities were initially issued, sold, granted or assumed (or upon the
occurrence of the record date with respect thereto).
This Section 10 shall not apply to Convertible Securities issued to
the Company's employees subject to the conditions specified in paragraph (4) of
Section 9.
SECTION 11. No Dilution or Impairment. If after the Initial Date any
event shall occur as to which the provisions of this are not Warrant strictly
applicable but the failure to make any adjustment would adversely affect rights
under this Warrant, then, in each such case, the Company shall adjust the
exercise price as reasonably determined by the Company's Board of Directors on
such basis as it reasonably considers appropriate in order to preserve, without
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dilution, such exercise rights in accordance with the essential intent and
principles of this Warrant.
The Company after the Initial Date shall not, by amendment of its
certificate of incorporation or through any consolidation, merger,
reorganization, transfer of assets, 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 (including Sections 7 and 17), but will at
all times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holders of the Warrants against dilution or other impairment.
Without limiting the generality of the foregoing, the Company will not take any
action that would result in an adjustment of the exercise price if the total
number of shares of Common Stock issuable after the exercise of all of the
Securities would exceed the total number of shares of Common Stock then
authorized by the Company's certificate of incorporation and available for the
purpose of issue upon such exercise.
SECTION 12. Reserved.
SECTION 13. When De Minimis Adjustment May Be Deferred.
No adjustment in the exercise price need be made unless the
adjustment would require an increase or decrease of at least 1% in the exercise
price. All calculations under this Warrant shall be made to the nearest cent or
to the nearest 1/100th of a share, as the case may be. Any adjustments that are
not made shall be carried forward and taken into account in any subsequent
adjustment.
SECTION 14. When No Adjustment Required.
No adjustment need be made for a transaction referred to in Sections
6 or 8 if Warrant holders are permitted to participate in the transaction on a
basis and with notice that is fair and appropriate in light of the basis and
notice on which holders of Common Stock are permitted to participate in the
transaction.
SECTION 15. Notice of Adjustment.
Whenever the exercise price is adjusted, the Company shall promptly
mail to Warrant holders a notice of the adjustment, accompanied by a certificate
from the Company's chief executive officer briefly stating the facts requiring
the adjustment and the manner of computing it.
SECTION 16. Notice of Certain Transactions.
If:
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(1) the Company takes any action that would require an
adjustment in the exercise price pursuant to Sections 6, 7,
8, 9 or 10 (unless in the case of Sections 6 or 8 the
Company permits Warrant holders to participate pursuant to
Section 14);
(2) the Company takes any action pursuant to Section 17; or
(3) there is a Change of Control, Initial Public Offering,
liquidation or dissolution of the Company,
the Company shall mail to Warrant holders a notice stating the proposed record
date for a dividend or distribution or the proposed effective date of a
subdivision, combination, reclassification, consolidation, merger, transfer,
lease, Change of Control, initial public offering, liquidation or dissolution.
The Company shall mail the notice at least 20 days before such date. Failure to
mail the notice or any defect in it shall not affect the validity of the
transaction.
SECTION 17. Merger, Sale, Reclassification.
In the case at any time after the Initial Date of any (i)
consolidation or merger of the Company with or into another entity (other than a
merger or reorganization (A) in which the Company is the continuing corporation
and which does not result in any reclassification or change of the then
outstanding shares of Common Stock or issuance of any dividend or other
distribution of cash, securities or property to Holders of the then outstanding
shares of Common Stock, or (B) resulting solely in a change in par value, or
from par value to no par value, or from no par value to par value, or in a stock
split, subdivision or combination that is the subject of another paragraph in
this Warrant), (ii) sale or other disposition of all or substantially all of the
Company's assets or distribution of property to stockholders (other than
distributions payable out of earnings or retained earnings) or (iii)
reclassification, change or conversion of securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of any stock
split, subdivision or combination that is the subject of another paragraph in
this Warrant), then the Company shall take all necessary actions (including but
not limited to executing and delivering to the Holder an additional Warrant or
other instrument, in form and substance mutually agreeable to the Company and
the Holder) to ensure that the Holder shall thereafter have the right to
receive, at a total purchase price not to exceed that payable upon the exercise
of the unexercised portion of this Warrant, and in lieu of the shares of Common
Stock previously issuable upon exercise of this Warrant, the kind and amount of
shares of stock, other securities, money and property receivable upon the
effectiveness of such consolidation, merger, sale or other disposition,
reclassification, change or conversion by a Holder of the number of shares of
Common Stock then purchasable under this Warrant (which, in the case of such a
transaction in which holders of Common Stock were entitled to elect between
different forms of consideration, shall be deemed to be the form of
consideration received by a plurality of the electing holders of Common Stock).
Such new Warrant shall provide for adjustments that shall be as nearly
equivalent as may be
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practicable to the adjustments provided for in this Section 17. The provisions
of this Section 17 shall similarly apply to successive reclassifications,
changes and conversions.
SECTION 18. Compliance with Securities Act.
The Holder, by acceptance of this Warrant, represents as follows:
(1) It is an "accredited investor" within the meaning of Rule 501 under
the Securities Act. It understands that, unless this Warrant is
registered or an exemption from registration is available, this
Warrant may be required to be held indefinitely.
(2) It has sufficient knowledge and experience investing in companies
similar to the Company in terms of the Company's stage of
development so as to be able to evaluate the risks and merits of its
investment in the Company and it is able financially to bear the
risks thereof.
(3) It has had an opportunity to discuss the Company's business,
management and financial affairs with the Company's management.
(4) It is purchasing this Warrant for its own account for the purpose of
investment and not with a view to or for sale in connection with any
distribution hereof.
(5) It understands that (i) this Warrant and the underlying Common Stock
have not been registered under the Securities Act by reason of their
issuance in a transaction exempt from the registration requirements
of the Securities Act pursuant to Section 4(2) thereof or Rule 505
or 506 promulgated under the Securities Act, (ii) this Warrant and,
upon exercise hereof, the underlying Common Stock must be held
indefinitely unless a subsequent disposition thereof is registered
under the Securities Act or is exempt from such registration, (iii)
this Warrant bears and the underlying Common Stock will bear a
legend to such effect and (iv) the Company will make a notation on
its transfer books to such effect.
Neither the Company nor anyone acting on its behalf has taken or
will take any action that would subject the issuance or sale of the Warrants or
the underlying Common Stock to the registration requirements of the Securities
Act.
SECTION 19. Ownership, Transfer and Substitution of Warrants.
Upon the surrender of any Warrant, properly endorsed, for
registration of transfer or for exchange at the principal office of the Company,
the Company at its expense will execute and deliver to or upon the order of the
holder thereof a new Warrant or Warrants of like tenor, in the name of such
holder or as such holder (upon payment by such holder of any applicable transfer
taxes) may direct, exercisable for the number of shares of Common Stock called
for on the face or faces of the Warrant or Warrants so surrendered. This Warrant
may not be transferred separately
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from the Related Note and may not be transferred to ▇▇▇▇ ▇▇▇▇▇▇▇. Any attempted
transfer not in compliance with the foregoing sentence shall be null and void.
Upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of any Warrant and, in the case of
any such loss, theft or destruction of any Warrant held by a Person other than
the Purchaser or any institutional investor, upon delivery of indemnity
reasonably satisfactory to the Company in form and amount or, in the case of any
such mutilation, upon surrender of such Warrant for cancellation at the
principal office of the Company, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
SECTION 20. Remedies.
The Company stipulates that the remedies at law of the holder of
this Warrant in the event of any default or threatened default by the Company in
the performance of or compliance with any of the terms of this Warrant are not
and will not be adequate and that, to the fullest extent permitted by law, such
terms may be specifically enforced by a decree for the specific performance of
any agreement contained herein or by an injunction against a violation of any of
the terms hereof or otherwise.
SECTION 21. No Rights or Liabilities as Stockholder.
Nothing contained in this Warrant shall be construed as conferring
upon the holder hereof any rights as a stockholder of the Company or as imposing
any liabilities on such holder to purchase any securities or as a stockholder of
the Company, whether such liabilities are asserted by the Company or by
creditors or stockholders of the Company or otherwise.
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SECTION 22. Notices.
All notices and other communications under this Warrant shall be
given in the manner provided for notices in the Note Agreement, provided that
the exercise of any Warrant shall be effected in the manner provided in Section
1.
SECTION 23. Miscellaneous.
This Warrant and any term hereof may be changed, waived, discharged
or terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought. The
agreements of the Company contained in this Warrant other than those applicable
solely to the Warrants and the holders thereof shall inure to the benefit of and
be enforceable by any holder or holders at the time of any securities issued
upon the exercise of Warrants, whether so expressed or not. This Warrant shall
be construed and enforced in accordance with and governed by the laws of the
State of New York. The section headings in this Warrant are for purposes of
convenience only and shall not constitute a part hereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the day and year first above written.
NCSN, INC.
By:______________________________
Name:
Title:
Warrant