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EXHIBIT 4.4
WARRANT AGREEMENT
Between
INTEGRATED COMMUNICATION NETWORKS, INC.
And
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Dated as of February 23, 1999
THE WARRANTS AND WARRANT SECURITIES TO BE RECEIVED UPON EXERCISE OF THE WARRANTS
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE WARRANTS
AND WARRANT SECURITIES, AS THE CASE MAY BE, MAY NOT BE OFFERED, SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED, WHETHER OR NOT FOR CONSIDERATION, IN THE
ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT AND QUALIFICATION IN EFFECT
WITH RESPECT TO THE WARRANTS AND WARRANT SECURITIES, AS THE CASE MAY BE, UNDER
THE SECURITIES ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAWS OR (2) AN
EXEMPTION FROM SUCH REGISTRATION AND QUALIFICATION.
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WARRANT AGREEMENT
THIS WARRANT AGREEMENT (this "Agreement") is dated as of the 23rd day of
February, 1999, and executed by between Integrated Communication Networks, Inc.,
a Nevada corporation (the "Company") and _______________ (the "Consultant").
WHEREAS, the Company has agreed to grant to Consultant or its assigns
common stock purchase warrants in substantially the form attached hereto as
Exhibit A hereto (the "Warrants") to acquire up to an aggregate of __________
shares of the Company's Common Stock (the "Exercise Quantity"). This Agreement
sets forth certain rights and obligations of the Company and Consultant with
respect to the Warrants.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, representations, warranties and agreements contained in this
Agreement, the parties hereto agree as follows:
I. DEFINITIONS
Section I.1 Defined Terms. As used in this agreement, the following
capitalized terms shall have the meanings respectively assigned to them below,
which meanings shall be applicable equally to the singular and plural forms of
the terms so defined.
"Common Stock" shall mean the common stock, par value $0.01, of the
Company.
"Common Stock Equivalents" shall mean all options, warrants (including,
without limitation, the Warrants), securities of any kind (including, without
limitation, securities convertible into or exchangeable or exercisable for
Common Stock) and other rights (in each case whether now existing or hereafter
issued or arising) to acquire from the Company shares of Common Stock (without
regard to whether such options, warrants, securities and other rights are then
exchangeable, exercisable or convertible in full, in part or at all).
"Company" shall have the meaning set forth in the preamble.
"Dividend" means, as to any Person, any declaration or payment of any
dividend or distribution (other than a dividend of Common Stock) on, or the
making of any pro rata distribution, loan, advance, or investment to, any shares
of capital stock of such Person.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, and any successor
provisions thereto.
"Exercise Price" shall have the meaning given in each Warrant. The
Exercise Price and the number of shares of Common Stock purchasable pursuant to
the Warrants shall be subject to adjustment from time to time as hereinafter set
forth in Article V hereof.
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"Expiration Period" means February 22, 2004.
"Exercise Quantity" shall mean the number of shares of Common Stock,
determined from time to time, taking into account all shares of Common Stock
theretofore issued upon exercise of the Warrants, required to be issued by the
Company to the holders of the Warrants. Exercise Quantity shall initially have
the meaning given in each Warrant, and may be adjusted from time to time,
pursuant to the provisions of the Warrants and this Agreement.
"Fair Value" as of a particular date shall mean the closing asked price
of the Common Stock as reported on a national securities exchange or on the
NASDAQ SmallCap, National Market System or OTC Bulletin Board Service
(collectively, and as applicable, "NASDAQ") or, if a last asked quotation is not
available for the Common Stock, the last sale price of the Common Stock as
reported by NASDAQ, or if not so reported, as listed in the National Quotation
Bureau, Inc.'s "Pink Sheets." If such quotations are unavailable, or with
respect to other appropriate security, property, assets, business or entity,
"Fair Value" shall mean the fair value of such item as determined by mutual
agreement reached by the Holder and the Company or, in the event the parties are
unable to agree, an opinion of an independent investment banking firm or firms
in accordance with the following procedure. In the case of any event which gives
rise to a requirement to determine "Fair Value" pursuant to this Agreement, the
Company shall notify the Holders of such event as promptly as practicable, but
in any event within ten (10) calendar days following such event and if the
procedures contemplated herein in connection with determining Fair Value have
not been complied with fully, then any such determination of Fair Value for any
purpose of this Agreement shall be deemed to be preliminary and subject to
adjustment pending full compliance with such procedures.
Upon the occurrence of an event requiring the determination of Fair
Value, the Company shall give the Holder(s) of the Warrants notice of such
event, and the Company and the Holders shall engage in direct good faith
discussions to arrive at a mutually agreeable determination of Fair Value. In
the event the Company and the Holder(s) are unable to arrive at a mutually
agreeable determination within ten (10) days of the notice, the Company and the
Holder(s) of the Warrants (who, if more than one, shall agree among themselves
by a majority) shall retain Imperial Capital LLC or, if Imperial Capital LLC is
unavailable or unable to accept such engagement, ▇▇▇▇▇ & Co. Such firm shall
determine the Fair Value of the security, property, assets, business or entity,
as the case may be, in question and deliver its opinion in writing to the
Company and to such Holder within thirty (30) days of its retention. Each of the
Company and the Holders (as a group) shall submit to such investment banking
firm their proposed determination of Fair Value, and any other supporting
documentation reasonably requested by the investment banking firm. In no event
shall the marketability, or lack thereof, or lack of registration of a security
be a factor in determining the "Fair Value" of such security. The determination
so made shall be conclusive and binding on the Company and such Holder(s),
absent clear and manifest error. The fees and expenses of such investment
banking firm retained pursuant to this provision shall be borne by the Company
in advance. In the event the Company fails to pay such fees, or the retainer or
deposit requested by such investment banking firm,
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within 10 days of the acceptance by such investment banking firm (conditional or
unconditional) of such engagement, then the Holders' proposed determination of
Fair Value shall be conclusive and binding upon the Company.
"Holder" or "Holders" shall mean the Person(s) then registered as the
owners of the Warrants or Warrant Securities, as the case may be, on the books
and records of the Company.
"Person" shall mean any individual, corporation, partnership, limited
liability company, association, joint-stock company, trust, estate,
unincorporated organization, joint venture, court or governmental or political
subdivision or agency thereof.
"Registrable Securities" shall have the meaning assigned to it in
Section 6.01 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder, and any successor provisions
thereto.
"Subsidiary" of any Person means (i) a corporation, association or other
business entity of which more than 50% of the total voting power of all classes
of the outstanding voting stock or other indicia of ownership is owned, directly
or indirectly, by such Person or by one or more other Subsidiaries of such
Person or by such Person and one or more Subsidiaries thereof, (ii) any
partnership (a) the sole general partner or the managing general partner of
which is such Person or a Subsidiary of such Person or (b) the only general
partners of which are such Person or one or more Subsidiaries of such Person (or
any combination thereof) and (iii) any other Person not described in clauses (i)
and (ii) above in which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, owns 50% ownership and the power, whether by such ownership
interest, pursuant to a written contract or agreement or otherwise, to direct
the policies and management or the financial and other affairs thereof.
"Warrant Securities" shall mean the shares of Common Stock purchasable
or purchased from time to time under the Warrants or acquirable or acquired upon
any transfer of any such securities, together with all additional securities
receivable or received in payment of Dividends or distributions on or splits of
those securities or receivable or received as a result of adjustments provided
for in Article V hereof.
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II. WARRANTS
Section II.1 Grant of Warrants. The Company hereby grants to Consultant,
for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Warrants to purchase a number of shares of Common Stock
equal to the Exercise Quantity, as may be adjusted from time to time as set
forth herein, which Warrants shall be evidenced in substantially the form
attached as Exhibit A. Consultant and any subsequent Holder of the Warrants and
of Warrant Securities shall have the rights and obligations provided for in the
Warrants and in this Agreement.
Section II.2 Exercise of Warrants. Subject to the terms of this
Agreement, the Warrant holder shall have the right, at any time and from time to
time after December 31, 2000 until 5:00 p.m., Pacific Time, on February 22,
2004, to purchase from the Company up to the number of fully paid and
nonassessable shares of Warrant Securities to which the Warrant holder may at
the time be entitled to purchase pursuant to this Agreement and the Warrant,
upon presentation and surrender of the Warrant (or a copy thereof) to the
Company, together with the Exercise Form duly completed and executed and payment
in the aggregate amount equal to the Exercise Price multiplied by the number of
shares of Common Stock being purchased. At the option of Holder, payment of the
Exercise Price may be made either by (i) personal or business check payable to
the order of the Company, (ii) surrender of certificates then held representing,
or deduction from the number of shares issuable upon exercise of the Warrant, of
that number of shares which has an aggregate Fair Value determined in accordance
with this Agreement on the date of exercise equal to the aggregate Exercise
Price for all shares to be purchased pursuant to the Warrant, (iii) by a
promissory note bearing interest at six percent (6%) per annum and payable in
five equal annual installments commencing on the first anniversary of the
exercise of the Warrant, or (iv) by any combination of the foregoing methods.
Within five business days of the Company's receipt of the Warrant (or a copy
thereof), the completed and signed Exercise Form and the requisite payment (if
any), the Company shall issue and deliver (or cause to be delivered) to the
exercising Holder stock certificates aggregating the number of shares of Warrant
Securities purchased. In the event the Company fails to deliver or cause to be
delivered to the Holder such certificates (without legend or restriction if such
Warrant Securities are then, or are required to be, registered pursuant to the
Warrant Agreement) within such five business day period, the Company shall pay
to the Holder an amount equal to the greater of (i) $500 per calendar day, (ii)
the product of (x) the last sale price on the date the certificates are properly
issued and delivered to the Holder, less the last sale price on the date of the
Exercise Form, multiplied by (y) the number of shares of Warrant Securities
purchased as set forth in the Exercise Form, or (iii) the quotient of (x) the
last reported sale price on the day prior to the date of the Exercise Form,
multiplied by the number of shares of Warrant Securities issuable to such Holder
upon such exercise, divided by (y) 200 (the "Delay Damages"), for each day after
the fifth business day following the delivery of the Warrant and such Exercise
Form to the Company through and including the day such certificates (without
legend or restriction if such Warrant Securities are then, or are required bo
be, registered pursuant to the terms of the Warrant Agreement) are delivered to
the Holder at the address set forth in such Exercise Form. In the event the
Company restricts or delays the transfer or clearance of such certificates by
the Holder (whether by stop
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transfer order, unreasonable delay or otherwise), the Company shall pay to the
Holder the Delay Damages for each calendar day of such restriction or delay.
Section II.3 Partial Exercise. In the event of a partial exercise of the
Warrant, the Company shall issue and deliver to the Holder a new Warrant at the
same time such stock certificates are delivered, which new Warrant shall entitle
the Holder to purchase the balance of the Exercise Quantity not purchased in
that partial exercise and shall otherwise be upon the same terms and provisions
as the Warrant.
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company, hereby represents and warrants as follows:
(1) The Company is a corporation duly organized, validly existing, and
in good standing under the laws of Nevada, with full corporate power and
authority to conduct its business as it is now being conducted, to own or use
the properties and assets that it purports to own or use, and to perform all its
obligations under the contracts to which it is a party. The Company is duly
qualified to do business as a foreign corporation and is in good standing under
the laws of each state or other jurisdiction in which either the ownership or
use of the properties owned or used by it, or the nature of the activities
conducted by it, requires such qualification, including, without limitation,
California.
(2) The execution and delivery of this Agreement and the Warrants have
been duly and properly authorized by all requisite corporate action of the
Company and its board of directors, and no consent of any other Person is
required as a prerequisite to the validity, enforceability and performance of
this Agreement and the Warrants that has not been obtained. The Company has the
full legal right, power and authority to execute and deliver this Agreement and
the Warrants and to perform its obligations hereunder and thereunder. When
issued and delivered pursuant to this Agreement, the Warrants will have been
duly and validly executed, issued and delivered and will constitute valid and
legally binding obligations of the Company and the Holder thereof will be
entitled to the benefits provided herein and therein.
(3) The Warrant Securities, when issued, sold and delivered in
accordance with the terms hereof, for the consideration expressed herein, shall
be duly and validly issued and outstanding, fully paid and nonassessable, and
will be issued in compliance with all applicable federal and state securities or
blue sky laws.
(4) The Company is not a party to or otherwise subject to any contract
or agreement which restricts or otherwise affects its right or ability to
execute and deliver this Agreement or the Warrants or to perform any obligation
hereunder or thereunder (including, without limitation, issuance of the Warrant
Securities). Neither the execution or delivery of this Agreement or the
Warrants, nor compliance therewith (including, without limitation, issuance of
the Warrant Securities), will conflict with or result in a breach of the terms,
conditions or provisions of, or
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constitute a default under, or result in any violation of, or result in the
creation of any material lien upon any assets or properties of the Company
under, or require any consent, approval, or other action by, notice to or filing
with any court or governmental agency or division pursuant to the Certificate of
Incorporation or Bylaws of the Company, as currently in effect, any award of any
arbitrator, or any agreement, instrument or law to which the Company is subject
or by which it or its assets or properties is bound.
(5) The Warrants are, and the Warrant Securities will be, issued by the
Company to Consultant in a transaction exempt from registration and
qualification under the applicable federal and state securities and blue sky
laws.
IV. COVENANTS
Section IV.1 Covenants of the Company. The Company hereby covenants and
agrees that, during the term of this Agreement, unless Holders of outstanding
Warrants evidencing a majority of the Warrants agree otherwise in writing,
(1) Each of the Warrant Securities issued and delivered upon the
exercise of the Warrants and payment of the Exercise Price will be duly and
validly authorized and issued, will be fully paid and nonassessable, and will
not be subject to any unpaid tax of the Company or any lien imposed on or
created by the Company, whether respecting their issuance to and purchase by the
Holder of the Warrants or otherwise. The Company will take all such actions as
may be necessary to assure that all such Warrant Securities may be so issued
without violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange or quotation system upon which
such Warrant Securities may be listed.
(2) The Company shall reserve and at all times keep available for
issuance an authorized number of shares of Common Stock or Warrant Securities
sufficient to permit the full and immediate exercise of the Warrants and the
full and immediate exercise, exchange and conversion of all other securities,
options, warrants and other rights issued or granted by the Company.
(3) The Company shall not permit the par value of its Common Stock to
exceed, at any time, the Exercise Price and shall take all such actions as may
be necessary or appropriate to ensure that it does not do so.
(4) As soon as available, and in no event later than the dates filed
with the Securities and Exchange Commission (the "Commission") or any other
governmental agency or division or other regulatory authority, if such documents
are so filed, the Company shall, upon request, deliver to any Holder(s) of the
Warrants and the Warrant Securities copies of (i) all annual, quarterly and
monthly financial statements made available by the Company to its shareholders,
(ii) all reports, notices and proxy or information statements sent or made
available generally by the Company to its shareholders, and (iii) all regular
and periodic reports and all registration statements, prospectuses and other
information filed by the Company with the Commission,
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relevant state authorities or any securities exchange, securities quotation
system or other self-regulatory organization.
(5) The Company agrees that to the extent reasonably necessary to permit
the Holders to sell shares of the Common Stock in accordance with and in
reliance on Rule 144, and for so long as such shares are owned by the Holders
and such shares are not registered for resale under the Securities Act, the
Company will make and keep public information available within the meaning of
Rule 144 at all times from and after the Closing Date, and file with the SEC in
a timely manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act.
(6) The Company shall cooperate with the Holder(s) of the Warrants and
the Warrant Securities in supplying such information as may be reasonably
necessary for the Holder(s) to complete and file any information or other
reporting forms from time to time required by the Commission, relevant state
authorities or any securities exchange, securities quotation system or other
self-regulatory organization, including, without limitation, information
pertaining to or required for the availability of any exemption from the
securities laws for the sale, transfer or other disposition of the Warrants or
any of the Warrant Securities.
Section IV.2 Indemnification.
(1) The Company agrees to defend, indemnify and hold harmless, to the
full extent permitted by law, Consultant and each other Holder of the Warrants,
this Agreement, or any Warrant Security purchased hereunder, any underwriter(s),
and their respective directors, officers, employees, attorneys and agents, as
well as each other Person (if any) controlling any of the foregoing Persons
within the meaning of Section 15 of the Securities Act, or Section 20 of the
Exchange Act, from and against any and all claims, liabilities, losses and
expenses (including, without limitation, the reasonable disbursements, expenses
and fees of their respective attorneys, accountants and experts) that may be
imposed upon, incurred by, or asserted against any of them, any of their
respective directors, officers, employees, attorneys and agents, or any such
control Person, under the Securities Act, the Exchange Act or any other statute
or at common law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof), arise out of or are related directly or indirectly
to (i) the breach of any of the representations, warranties and/or covenants of
the Company contained herein, or (ii) any alleged untrue statement of any
material fact contained, on the effective date thereof, in any registration
statement under which such securities are or were registered under the
Securities Act or the Exchange Act, or in any preliminary prospectus or final
prospectus related thereto, or any amendment or supplement thereto, or any
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and shall reimburse
such Persons for any legal or any other expenses reasonably incurred by such
Persons in connection with investigating or defending any such loss, claim,
damage, liability or action. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of any such
indemnified Person, and shall survive the transfer of such securities by such
Person. Promptly after receipt of notice of the commencement of any action in
respect of which indemnity may be sought against the Company, the Company shall
assume the defense of
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such action (including the employment of counsel, who shall be counsel of
national reputation and presence, and who shall be reasonably satisfactory to
the party seeking indemnity hereunder) and the payment of expenses insofar as
such action shall relate to any alleged liability in respect of which indemnity
may be sought against the Company. If the Company assumes the defense of such
action, (i) it will be conclusively established for purposes of this Agreement
that the claims made in that action are within the scope of and subject to
indemnification; (ii) no compromise or settlement of such claims may be effected
by the Company without the indemnified party's consent unless (1) there is no
finding or admission of any violation of law, regulation, rule or order or any
violation of the rights of any other person or entity and no effect on any other
claims that may be made against the indemnified party, and (2) the sole relief
provided is monetary damages that are paid in full by Company; and (iii) the
indemnified party will have no liability with respect to any compromise or
settlement of such claims effected without its consent. If notice is given to
the Company of the commencement of any action and the Company does not, within
ten days after the indemnified party's notice is given to the Company, give
notice to the indemnified party of its election to assume the defense of such
action, the Company will be bound by any determination made in such action or
any compromise or settlement effected by the indemnified party.
(2) Notwithstanding the foregoing, if an indemnified party determines in
good faith that there is a reasonable probability that a claim or action may
adversely affect it or its affiliates other than as a result of monetary damages
for which it would be entitled to indemnification under this Agreement, or if an
indemnified party determines that there are defenses available to it that are
either not available to the Company or not being raised by the Company, or if
the indemnified party determines that there is a conflict of interest between
the Company and the indemnified party in the claim or action, the indemnified
party may, by notice to the Company, assume the exclusive right to defend,
compromise, or settle such claim or action, and the Company will be bound by any
determination of a claim or action so defended or any compromise or settlement
effected.
Section IV.3 Repurchases and Redemptions. The Company shall not
repurchase or redeem any of its equity securities or any Common Stock
Equivalents unless it concurrently makes a cash payment to the Holder(s) of the
Warrants equal to the product of: (1) the quotient obtained by dividing (x) the
aggregate amount of cash and the aggregate Fair Value of any property paid out
or to be paid out by the Company in connection with any such repurchase or
redemption by (y) the number of shares of Common Stock outstanding immediately
after such repurchase or redemption and (2) the number of shares of Common Stock
issuable upon the exercise of the Warrants.
Section IV.4 Listing on the Securities Exchange. The Company shall, at
its expense, list on NASDAQ or any securities exchange where it lists its Common
Stock, and maintain and increase when necessary such listing of all outstanding
Warrant Securities so long as any shares of Common Stock shall be so listed. The
Company shall also so list on each such securities exchange or NASDAQ, and will
maintain such listing of, any other securities which the
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Holder(s) shall be entitled to receive upon the exercise thereof if at the time
any securities of the same class shall be listed on such securities exchange or
NASDAQ by the Company.
V. ANTIDILUTION
Section V.1 No Dilution or Impairment: Adjustments.
(1) Prohibited Actions. So long as any Warrants are outstanding, the
Company will not avoid or seek to avoid the observance or performance of any of
the terms of this Agreement or the Warrants or impair the ability of the
Holder(s) to realize the full intended economic value thereof, but will at all
times in good faith assist in the carrying out of all such terms, and of the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Holder(s) of the Warrants against dilution or other
impairment.
(2) Adjustment of Exercise Price in the Event of Certain Issuances of
Common Stock or Common Stock Equivalents. In case the Company shall at any time
issue or sell Common Stock or Common Stock Equivalents (by merger otherwise) for
less than Fair Value as of the date of such issuance or at a price per share
less than the then current Exercise Price of the Warrants (other than (i)
delivery of shares of Common Stock upon exercise of the Warrants, and (ii) any
Common Stock Equivalents issued and outstanding on the date hereof), or issue
Common Stock or Common Stock Equivalents by way of a Dividend or other
distribution on any stock of the Company or effect a forward stock split of the
outstanding shares of Common Stock, the Exercise Price then in effect shall be
proportionately decreased (on the date of such issuance, sale or split), so that
the new Exercise Price shall be equal to the product of (x) the former Exercise
Price and (y) the lesser of (i) one or (ii) the following fraction:
The number of shares of Common Stock and Common Stock
Equivalents outstanding immediately prior to such issuance
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The number of shares of Common Stock and Common Stock
Equivalents outstanding immediately after such issuance
and the Exercise Quantity purchasable upon exercise of the Warrants immediately
prior thereto shall be adjusted so that the new Exercise Quantity shall be equal
to the product of (x) the former Exercise Quantity and (y) the following
fraction:
The Exercise Price in effect immediately prior to such adjustment
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The Exercise Price in effect immediately after such adjustment
(3) Company to Prevent Dilution. In any case at any time or from time to
time conditions arise by reason of action taken by the Company which are not
adequately covered by the provisions of this Article V, and which might
adversely affect the rights of the Holders under any provision of this
Agreement, unless the adjustment necessary shall be agreed upon by the Company
and the Holders, the Board of Directors of the Company shall appoint a firm of
independent certified public accountants of recognized national standing,
acceptable to the
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Holders, who at the Company's expense shall give their opinion upon the
adjustment, if any, on a basis consistent with the standards established in the
other provisions of this Article V, necessary with respect to the Exercise Price
and the Exercise Quantity, so as to preserve, without dilution, the rights of
the Holders. Upon the receipt of such opinion, the Company's Board of Directors
shall forthwith make the adjustments described therein; provide, however, that
no such adjustment shall be made to increase the Exercise Price or decrease the
Exercise Quantity.
(4) Reorganization; Asset Sales; Etc. In case of (i) any capital
reorganization or any reclassification of the capital stock of the Company, (ii)
any consolidation or merger of the Company or any Subsidiary with or into
another Person, (iii) the disposition or transfer of assets of the Company other
than in the ordinary course of the Company's business, (iv) any Dividend or
other distribution to the holders of capital stock of the Company in the form of
any asset, including without limitation securities of the Company, or (v) the
dissolution, liquidation or winding up of the Company, the Holders shall
thereafter be entitled to purchase (and it shall be a condition to the
consummation of any such transaction or event that appropriate provision shall
be made so that such Holders shall thereafter be entitled to purchase) the kind
and amount of shares of stock and other securities and property receivable in
such transaction by a holder of the number of shares of Common Stock of the
Company into which this Agreement entitled the Holders to purchase immediately
prior to such capital reorganization, reclassification of capital stock,
non-surviving combination or disposition; and in any such case appropriate
adjustments shall be made in the application of the provisions of this Article V
with respect to rights and interests thereafter purchasable upon the exercise of
a Warrant.
(5) Adjustment Statement. Whenever the Exercise Price or Exercise
Quantity is adjusted as herein provided, the Company shall, within ten days
following the consummation of the event triggering such adjustment, deliver to
the Holders a statement signed by the President of the Company and by its
Treasurer or Secretary stating the adjusted Exercise Price and Exercise Quantity
for which the Warrants are exercisable, determined as specified herein. The
statement shall show in detail the facts requiring such adjustment, including a
statement of the consideration received by the Company for any additional stock
issued. In the event the Company shall fail to timely deliver such adjustment
statement, the Company shall be in default hereof, and the Holder's reasonable
determination of any adjustment shall be deemed conclusive and binding, absent
manifest error. Irrespective of any adjustments in the Exercise Price or the
Exercise Quantity or the kind of shares purchasable upon the exercise of the
Warrants, the Warrants theretofore or thereafter issued may continue to express
the same price and number and kind of shares as are stated in the Warrants
initially issuable pursuant to this Agreement.
(6) Prior Notice to the Holders. If at any time:
(1) The Company shall pay any Dividend payable in Common
Stock or Common Stock Equivalents upon its capital stock or make any
distribution to the holders of its capital stock; or
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(2) The Company shall offer for subscription pro rata to
the holders of its capital stock any additional shares of stock of any class or
any other rights; or
(3) The Company shall effect any capital reorganization or
any reclassification of or change in the outstanding capital stock of the
Company (other than a change in par value, or a change from par value to no par
value, or a change from no par value to par value, or a change resulting solely
from a subdivision of outstanding shares), or any consolidation or merger, or
any sale, transfer or other disposition of all or substantially all of its
property, assets, business and goodwill as an entirety, or the liquidation,
dissolution or winding up of the Company; or
(4) The Company shall declare a Dividend upon its capital
stock;
then, in any such event, the Company shall cause at least thirty (30) days'
prior written notice to be mailed to the Holders at the address of each such
Holder shown on the books of the Company. The notice shall also specify the date
on which the books of the Company shall close or a record be taken for such
stock dividend, distribution or subscription rights, or the date on which such
reclassification, reorganization, consolidation, merger, sale, transfer,
disposition, liquidation, dissolution, winding up, or Dividend, as the case may
be, shall take place, and the date of participation therein by the holders of
shares of capital stock if any such date is to be fixed, and shall also set
forth such facts with respect thereto as shall be reasonably necessary to
indicate the effect of such action on the rights of the Holder.
(7) Disputes. If there is any dispute as to the computation of the
Exercise Price or the Exercise Quantity, the Company will retain, at its
expense, BDO ▇▇▇▇▇▇▇, LLP (or its successor), or, if unavailable or if then
providing services to the Company, PricewaterhouseCoopers, LLP (or its
successor), to conduct an audit of the computations pursuant to the terms hereof
involved in such dispute, including the financial statements or other
information upon which such computations were based. The determination of such
accounting firm shall, in the absence of manifest error, be conclusive and
binding.
VI. REGISTRATION RIGHTS
Section VI.1 "Piggyback" Registration Rights. If at any time the Company
shall determine to register under the Securities Act (including pursuant to a
demand of any security holder of the Company exercising registration rights) any
of its Common Stock, it shall send to Consultant and to each of the Holder(s)
written notice of such determination at least thirty (30) days prior to each
such filing and, if within twenty (20) days after receipt of such notice, any
Holder shall so request in writing, the Company shall include in such
registration statement (to the extent permitted by applicable regulation) all or
any part of the Warrant Securities (collectively referred to in this Agreement
as "Registrable Securities") that such Holder requests to be registered. Any
Registrable Securities which are included in any underwritten offering under
this Section 6.01 shall be sold upon such terms as the managing underwriters
shall
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reasonably request but in any event shall be upon terms not less favorable
than those upon which any other selling security holder or the Company shall
sell any of its securities. If any Holder disapproves of the terms of such
underwriting, such Holder may elect to withdraw therefrom by written notice to
the Company and the underwriter. Notwithstanding the provisions of this Section
6.01, the Company shall have the right, at any time after it shall have given
written notice pursuant to this Section 6.01 (irrespective of whether a written
request for inclusion of Registrable Securities shall have been made), to elect
not to file any such proposed registration statement or to withdraw the same
after the filing and prior to the effective date thereof.
Section VI.2 Demand Registration Rights. If Consultant or the Holders of
a 25% or more of the Warrants shall so request in writing (a "Demand Request"),
at any time and from time to time after the date hereof but prior to the later
of (a) expiration of the term hereof, or (b) one year after the exercise of the
Warrants, the Company shall file with the Commission within 30 days of the date
of such Demand Request and cause to become effective no later than 90 days
following the date of such Demand Request, a registration statement under the
Securities Act for the offering and sale of the Registrable Securities.
Section VI.3 Effectiveness. If necessary to permit unrestricted and
unlimited distribution of the Registrable Securities, the Company shall maintain
the effectiveness of the registration statement pursuant to which any of the
Registrable Securities are being offered, and from time to time will amend or
supplement such registration statement and the prospectus related thereto as and
to the extent necessary to comply with the Securities Act and any applicable
state securities statute or regulation. If the registration by the Company of
the resale of Registrable Securities is eligible for Form S-3 or any successor
to such form, the Company shall maintain the effectiveness of the registration
statement until all registered Registrable Securities are sold, or until two
years after the date all of the Warrants have been exercised.
Section VI.4 Further Obligations of the Company. Whenever, under the
preceding Sections of this Article VI, the Company is required hereunder to
register Registrable Securities, it agrees that it shall also do the following:
(1) Furnish to each selling Holder such copies of each preliminary and
final prospectus and any other documents as such Holder may reasonably request
to facilitate the public offering of its Registrable Securities;
(2) Register or qualify the Registrable Securities to be registered
pursuant to this Article VI under the applicable securities or blue sky laws of
such jurisdictions as any selling Holder may reasonably request;
(3) Furnish to each selling Holder: (i) a signed counterpart of an
opinion of counsel for the Company, dated the effective date of the registration
statement; and (ii) a copy of any "comfort" letters signed by the Company's
independent public accountants who have examined and reported on the Company's
financial statements included in the registration statement, covering the same
matters as are customarily covered in opinions of issuer's counsel and in
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accountants' "comfort" letters delivered to the underwriters in underwritten
public offerings of securities;
(4) Permit each selling Holder or such Holder's counsel or other
representatives to inspect and copy such corporate documents and records as may
reasonably be requested by them in connection with such registration; and
(5) Furnish to each selling Holder, upon request, a copy of all
documents filed and all correspondence from or to the Commission in connection
with any such offering.
Section VI.5 Expenses. Except for underwriters' discounts and brokerage
commissions allocable to the Registrable Securities, the Company shall bear all
costs and expenses of each registration contemplated in Sections 6.01, 6.02 and
6.03 including, but not limited to, printing, legal and accounting fees and
expenses, Commission and NASD filing fees and blue sky fees and expenses in any
jurisdiction in which the securities to be offered are to be registered or
qualified.
Section VI.6 Transfer of Registration Rights. The registration rights of
the Holders of Registrable Securities under this Article VI shall inure to the
benefit of and shall be exercisable by any transferee of Registrable Securities.
Section VI.7 Participation Rights.
The Company will not grant to any Person (other than Consultant, the
Holders, any Affiliate thereof or any transferee of Registrable Securities under
this Article VI) at any time on or after the date of this Agreement the right (a
"Participation Right") to request the Company to register any securities of the
Company under the Securities Act by reason of the exercise by any Holder of its
rights under this Article VI unless such Participation Right provides that such
securities shall not be registered and sold at the same time if the managing
underwriter for the offering, including the Registrable Securities, believes
that sale of such securities would adversely affect the amount of, or price at
which, the respective Registrable Securities being registered under this Article
VI can be sold.
Notwithstanding anything in this Article VI to the contrary, in no event
shall this Article VI be construed as prohibiting, restricting or impairing the
Company's ability to comply with the registration rights agreements or the
registration rights in any Common Stock Equivalents it has entered into prior to
the date hereof.
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VII. TRANSFER OF WARRANTS AND WARRANT SECURITIES
Section VII.1 Transfer. Except as set forth in Section 7.02 below, the
Warrants and all rights thereunder are transferable, in whole or in part, on the
books of the Company to be maintained for such purpose, upon surrender of such
Warrant at the office of the Company maintained for such purpose, together with
a written assignment of such Warrant duly executed by the Holder hereof or its
agent or attorney. Upon such surrender and payment, the Company shall execute
and deliver a new Warrant or Warrants in the name of the assignee or assignees
and in the denominations specified in such instrument of assignment, and the
surrendered Warrant shall promptly be canceled. The transferred Warrant, if
properly assigned in compliance herewith, may be exercised by an assignee for
the purchase of shares of Common Stock without having a new Warrant issued. The
Company will not close its stock transfer books against a transfer of the
Warrants or the Warrant Securities or any exercise of the Warrants. Any such
transfer or exercise tendered while such stock transfer books shall be closed
shall be deemed effective immediately prior to such closure.
Subject to Section 7.02 below, the Warrants may be divided or combined
with other Warrants upon presentation at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by the Holder thereof or its agent or
attorney. Subject to compliance with this, as to any transfer which may be
involved in such division or combination, the Company shall execute and deliver
a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice.
The Company shall pay all expenses, taxes (other than income taxes, if
any, of the transferee) and other charges incurred by the Company in the
performance of its obligations in connection with the preparation, issue and
delivery of Warrants under this Section. The Company agrees to maintain at its
aforesaid office books for the registration and transfer of the Warrants.
Notwithstanding any provision to the contrary contained herein, the Warrants and
the Warrant Securities shall be transferable only in compliance with the
provisions of the Securities Act and applicable state securities laws in respect
of the transfer of any Warrant or any Warrant Securities.
Section VII.2 Transfer Restrictions. Neither this Warrant Agreement, the
Warrants nor the Warrant Securities, when issued, have been registered under the
Securities Act or under the securities laws of any state. Neither this
Agreement, the Warrants nor the Warrant Securities, when issued, may be
transferred: (a) if such transfer would constitute a violation of any federal or
state securities laws or a breach of the conditions to any exemption from
registration thereunder and (b) unless and until one of the following has
occurred: (i) registration of the Warrants or the Warrant Securities, as the
case may be, under the Securities Act, and such registration or qualification as
may be necessary under the securities laws of any state, have become effective,
(ii) the Holder has delivered an opinion of counsel, or other evidence
reasonably satisfactory to the Company, that such registration or qualification
is not required, or (iii) such transfer would be permitted under Rule 144 under
the Securities Act.
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Each certificate for Warrant Securities issued upon exercise of a
Warrant and each certificate issued to a subsequent transferee, unless at the
time of exercise such Warrant Securities are registered under the Securities
Act, shall bear a legend substantially in the following form (and any additional
legends required by applicable law) on the face thereof:
THE WARRANT SECURITIES TO BE RECEIVED UPON EXERCISE OF THE WARRANTS HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE WARRANT SECURITIES MAY
NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED,
WHETHER OR NOT FOR CONSIDERATION, IN THE ABSENCE OF (1) AN EFFECTIVE
REGISTRATION STATEMENT AND QUALIFICATION IN EFFECT WITH RESPECT TO THE
WARRANT SECURITIES UNDER THE SECURITIES ACT AND UNDER ANY APPLICABLE
STATE SECURITIES LAWS OR (2) AN EXEMPTION FROM SUCH REGISTRATION AND
QUALIFICATION.
Section VII.3 Replacement of Instruments. Within five business days
following receipt by the Company of evidence reasonably satisfactory to it of
the ownership of and the loss, theft, destruction or mutilation of any
certificate or instrument evidencing any Warrants or Warrant Securities, and (a)
in the case of loss, theft or destruction, upon receipt by the Company of
indemnity reasonably satisfactory to it (provided that, the Holder's own
agreement of indemnification shall be deemed to be satisfactory), or (b) in the
case of mutilation, upon surrender and cancellation thereof, the Company, at its
expense, will execute, register and deliver, in lieu thereof, a new certificate
or instrument for (or covering the purchase of) an equal number of Warrants or
Warrant Securities.
VIII. MISCELLANEOUS
Section VIII.1 Term. Except as otherwise expressly provided in this
Agreement or the Warrants, this Agreement shall expire on February 22, 2004,
provided that the Company's obligations to honor an exercise of the Warrants
given prior to such expiration or to perform any obligation continue and survive
notwithstanding the expiration of this Agreement.
Section VIII.2 No Waiver Under Other Agreements. The terms and
provisions contained in this Agreement are not intended and shall not be
construed to waive, modify, repeal, stay, diminish or otherwise impair or affect
in any manner whatsoever any right or remedy of Consultant or the Holder(s)
under the Company's Certificate of Incorporation, Bylaws or similar agreements,
or any other agreements between the Company and/or its affiliates and
Consultant.
Section VIII.3 Reliance. Each party to this Agreement shall be entitled
to rely upon any notice, consent, certificate, affidavit, statement, paper,
document, writing or other
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communication reasonably believed by that party to be genuine and to have been
signed, sent or made by the proper Person or Persons.
Section VIII.4 Notice. All notices and other communications provided for
or permitted hereunder shall be made in writing and be by hand-delivery or
certified mail, return receipt requested, or by telecopy, (a) if to Consultant,
to the address set forth on the signature page hereof or such other address
given by Consultant to the Company in writing, (b), if to a subsequent Holder of
Warrants or Warrant Securities issued pursuant to the exercise of the Warrants,
at the most current address given by such Holder to the Company in writing; or
(c)if to the Company, as follows:
Integrated Communication Networks, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
ATTN: President
All such notices and communications shall be deemed to have been duly
given when delivered by hand, if personally delivered; four business days after
being deposited in the mail, postage prepaid, if mailed, when receipt is
acknowledged, if telecopied, or the next business day, if timely delivered to an
air courier guaranteeing overnight delivery.
Section VIII.5 Enforcement. The Company acknowledges that the Holders
may proceed to exercise or enforce any right, power, privilege, remedy or
interest that they may have under this Agreement or applicable law without
notice, except as otherwise expressly provided herein, without pursuing,
exhausting or otherwise exercising or enforcing any other right, power,
privilege, remedy or interest that they may have against or in respect of any
other party, or any other Person or thing, and without regard to any act or
omission of such party or any other Person. The Company's obligations hereunder,
including, without limitation the obligation to issue the Warrant Securities
upon exercise of the Warrant, are absolute and unconditional and are not subject
to any abatement, reduction, setoff, defense, counterclaim or recoupment due or
alleged to be due to, or by reason of, any past, present or future claims which
the Company may have against the Consultant, any Holder, or any assignee,
thereof, for any reason whatsoever. All rights and remedies of the party hereto
are cumulative of each other and of every other right or remedy such party may
otherwise have at law or in equity, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise of
other rights or remedies.
Section VIII.6 Equitable Relief. Each party acknowledges and agrees that
it would be impossible to measure in money the damage in the event of a breach
of any of the terms and provisions of this Agreement by any party hereto, and
that, in the event of any such breach, there may not be an adequate remedy at
law, although the foregoing shall not constitute a waiver of any of the party's
rights, powers, privileges and remedies against or in respect of a breaching
party, any other person or thing under this Agreement or applicable law. It is
therefore agreed that, in addition to all other such rights, powers, privileges
and remedies that it may have, each
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party shall be entitled, without the obligation to post bond, to injunctive
relief, specific performance or such other equitable relief as such party may
request to exercise or otherwise enforce any of the terms and provisions of this
Agreement and to enjoin or otherwise restrain any act prohibited thereby, and no
party will urge, and each party hereby waives, any defense that there is an
adequate remedy available at law.
Section VIII.7 Merger or Consolidation of the Company. So long as the
Warrant remains outstanding, the Company will not merge or consolidate with or
into, or sell, transfer or lease all or substantially all of its property to,
any other corporation unless the successor or purchasing corporation, as the
case may be (if not the Company), shall expressly assume, by supplemental
agreement, the due and punctual performance and observance of each and every
covenant and condition of this Agreement to be performed and observed by the
Company.
Section VIII.8 Interpretation; Headings, Severability.
(1) The parties acknowledge and agree that since each party and its
counsel have had the opportunity to review and negotiate the terms and
provisions of this Agreement and have contributed to its revision, the normal
rule of construction to the effect that any ambiguities are resolved against the
drafting party shall not be employed in the interpretation of this Agreement,
and its terms and provisions shall be construed fairly as to all parties hereto
and not in favor of or against any party, regardless of which party was
generally responsible for the preparation of this Agreement.
(2) The Section and other headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
(3) In the event that any term or provision of this Agreement shall be
finally determined to be superseded, invalid, illegal or otherwise unenforceable
pursuant to applicable law by a governmental authority having jurisdiction and
venue, such determination shall not impair or otherwise affect the validity,
legality or enforceability: (i) by or before that authority of the remaining
terms and provisions of this Agreement, which shall be enforced as if the
superseded, invalid, illegal or otherwise unenforceable term or provision were
modified to the extent required to permit such provision to be not superseded,
invalid, illegal or unenforceable, or (ii) by or before any other authority of
any of the terms and provisions of this Agreement.
(4) If any period of time specified in this Agreement expires on a day
that is not a Business Day, that period shall be extended to and expire on the
next succeeding Business Day.
Section VIII.9 Survival of Covenants. Each of the covenants and other
agreements of the parties contained in this Agreement shall be absolute and,
except as otherwise expressly provided, unconditional, shall survive the
execution and delivery of this Agreement and shall continue in full force and
effect until the term of this Agreement has expired, and thereafter with respect
to events occurring prior thereto.
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Section VIII.10 No Required Exercise. No term or provision of the
Warrants or this Agreement is intended to require, nor shall any such term or
provision be construed as requiring, any Holder of the Warrants to exercise or
sell the Warrants.
Section VIII.11 Binding Effect. This Agreement shall be binding upon and
enforceable against the parties hereto and their respective successors and
assigns.
Section VIII.12 No Waiver by Action or Course of Dealing. No course of
dealing or any delay or failure to exercise any right hereunder on the part of
any party hereto shall operate as a waiver of such right or otherwise prejudice
the rights, powers or remedies of such party.
Section VIII.13 Waiver; Modification; Amendment. Each and every
modification to and amendment of this Agreement shall be in writing and signed
by the Company, Consultant (if at that time Consultant is a Holder) and by the
Holders of a majority in interest of all issued and unissued Warrant Securities.
Each and every waiver of and consent to any departure from any term or provision
hereof (except as otherwise provided herein) shall be in writing and signed by
Consultant (if at that time it is a Holder) and by the Holders of a majority in
interest of all issued and unissued Warrant Securities and by each party against
whom enforcement of the waiver or consent may be sought. Notwithstanding the
foregoing, no modification, amendment or waiver of any term or provision hereof
with respect to the Exercise Price, the Exercise Quantity, any terms of Article
V hereof, any of the terms of this Section 8.13 or which purports, or has the
effect of, shortening the term of any Warrant or limiting the right or ability
of a Holder thereof to exercise a Warrant shall be enforceable against a Holder
unless such Holder specifically approves, in writing, such modifications,
amendment or modification.
Section VIII.14 Entire Agreement. This Agreement and the Warrants
contain the entire agreement of the parties with respect to the Warrants and
supersede all other representations, warranties, agreements and understandings,
oral or otherwise, among the parties hereto with respect to the Warrants, except
as otherwise provided herein.
Section VIII.15 No Inconsistent Agreements or Rights. The Company shall
not enter into any agreement with respect to its securities that is inconsistent
with the rights granted to the Holders in this Agreement.
Section VIII.16 Time of the Essence. With regard to all dates and time
periods set forth or referred to in this Agreement, time is of the essence.
Section VIII.17 Attorneys' Fees and Costs. Should any party institute
any action, suit or other proceeding arising out of or relating to this
Agreement or the Warrants, the prevailing party shall be entitled to receive
from the losing party reasonable attorneys' fees and costs incurred in
connection therewith, along with all costs of defense, investigation,
preparation, experts and collection.
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Section VIII.18 Governing Law; Consent to Jurisdiction; Waiver of Jury
Trial. THIS AGREEMENT, THE WARRANTS AND THE WARRANT SECURITIES AND ALL
AMENDMENTS, SUPPLEMENTS, WAIVERS, AND CONSENTS RELATING HERETO OR THERETO SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF CALIFORNIA WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY
HEREBY IRREVOCABLY SUBMITS ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE
AND FEDERAL COURTS SITTING IN THE STATE OF CALIFORNIA, COUNTY OF LOS ANGELES,
AND AGREES AND CONSENTS THAT SERVICES OF PROCESS MAY BE MADE UPON IT IN ANY
LEGAL PROCEEDINGS RELATING HERETO BY ANY MEANS ALLOWED UNDER CALIFORNIA OR
FEDERAL LAW. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
THE COMPANY AND CONSULTANT EACH HEREBY AGREE TO WAIVE ITS RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, THE SECURITIES OR ANY OTHER AGREEMENTS RELATING TO THE SECURITIES OR
ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION.
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT, THE WARRANTS, THE WARRANT SECURITIES OR ANY OTHER DOCUMENTS
OR AGREEMENTS RELATING THERETO.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be executed as of the day and year first above written.
THE COMPANY:
Integrated Communication Networks, Inc.
By:
-------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chief Executive Officer
By:
-------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
Secretary
CONSULTANT
By:
-------------------------------------------
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Exhibit A
to
Warrant Agreement
Initial Warrant
23
THE WARRANT SECURITIES TO BE RECEIVED UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER
ANY STATE SECURITIES LAWS. THE WARRANT SECURITIES MAY NOT BE OFFERED, SOLD,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED, WHETHER OR NOT FOR
CONSIDERATION, IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT AND
QUALIFICATION WITH RESPECT TO THE WARRANT SECURITIES UNDER THE SECURITIES ACT
AND UNDER ANY APPLICABLE STATE SECURITIES LAWS OR (2) AN EXEMPTION FROM SUCH
QUALIFICATION AND REGISTRATION.
COMMON STOCK PURCHASE WARRANT
February 23, 1999
Capitalized terms used and not otherwise defined in this Warrant shall have the
meanings respectively assigned to them in the Warrant Agreement, dated as of the
date hereof, by and between the Company and Holder.
Integrated Communication Networks, Inc., a Nevada corporation (the "Company")
does hereby certify and agree that, for good and valuable consideration (the
existence, sufficiency and receipt of which are hereby acknowledged by the
Company), ________, its successor, and assigns ("Holder"), hereby is entitled to
purchase from the Company, during the term set forth in Section 1 hereof, up to
an aggregate amount of _______ shares (the "Exercise Quantity") of duly
authorized, validly issued, fully paid and non-assessable shares of Common Stock
of the Company (the "Common Stock"), all upon the terms and provisions and
subject to adjustment of such Exercise Quantity provided in the Warrant
Agreement and this Common Stock Purchase Warrant (the "Warrant"). The exercise
price per share of Common Stock for which this Warrant is exercisable shall be
$____, as adjusted from time to time pursuant to the terms of this Warrant and
the Warrant Agreement (the "Exercise Price").
1. Term of the Warrant. The term of this Warrant commences as of the
date hereof, and shall expire at 5:00 P.M., Pacific time, on February 22, 2004.
2. Exercise of Warrant.
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(a) This Warrant may be exercised by the Holder of this Warrant
at any time during the term hereof, but after December 31, 2000, in whole or in
part, from time to time (but not for fractional shares, unless this Warrant is
exercised in whole), by presentation and surrender of this Warrant (or a copy
hereof) to the Company, together with the annexed Exercise Form duly completed
and executed and payment in the aggregate amount equal to the Exercise Price
multiplied by the number of shares of Common Stock being purchased. At the
option of Holder, payment of the Exercise Price may be made either by (i)
personal or business check payable to the order of the Company, (ii) surrender
of certificates then held representing, or deduction from the number of shares
issuable upon exercise of this Warrant, of that number of shares which has an
aggregate Fair Value determined in accordance with this Agreement on the date of
exercise equal to the aggregate Exercise Price for all shares to be purchased
pursuant to this Warrant, (iii) by a promissory note bearing interest at six
percent (6%) per annum and payable in five equal annual installments commencing
on the first anniversary of the exercise of this Warrant, or (iv) by any
combination of the foregoing methods. Within five business days of the Company's
receipt of this Warrant (or a copy thereof), the completed and signed Exercise
Form and the requisite payment (if any), the Company shall issue and deliver (or
cause to be delivered) to the exercising Holder stock certificates aggregating
the number of shares of Warrant Securities purchased. In the event the Company
fails to deliver or cause to be delivered to the Holder such certificates
(without legend or restriction if such Warrant Securities are then, or are
required to be, registered pursuant to the Warrant Agreement) within such five
business day period, the Company shall pay to the Holder the Delay Damages, for
each day after the fifth business day following the delivery of this Warrant and
such Exercise Form to the Company through and including the day such
certificates (without legend or restriction if such Warrant Securities are then,
or are required bo be, registered pursuant to the terms of the Warrant
Agreement) are delivered to the Holder at the address set forth in such Exercise
Form. In the event the Company restricts or delays the transfer or clearance of
such certificates by the Holder (whether by stop transfer order, unreasonable
delay or otherwise), the Company shall pay to the Holder the Delay Damages for
each calendar day of such restriction or delay.
(b) In the event the Holder of this Warrant desires that any or
all of the stock certificates to be issued upon the exercise hereof be
registered in a name or names other than that of the Holder of this Warrant, the
Holder must (i) so request in writing at the time of exercise if the transfer is
not a registered transfer, and (ii) provide to the Company evidence reasonably
satisfactory to the Company to the effect that the proposed transfer may be
effected without registration under the Securities Act.
(c) Upon the due exercise by the Holder of this Warrant, whether
in whole or in part, the Holder (or any other person to whom a stock certificate
is to be so issued) shall be deemed for all purposes to have become the Holder
of record of the shares of Common Stock for which this Warrant has been so
exercised, effective immediately prior to the close of business on the date this
Warrant, the completed and signed Exercise Form and the requisite payment were
duly delivered to the Company, irrespective of the date of actual delivery of
certificates representing such shares of Common Stock so issued.
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3. Surrender of Warrant; Expenses.
(a) Whether in connection with the exercise, exchange or
registration of transfer or replacement of this Warrant, surrender of this
Warrant (or a copy hereof) shall be made to the Company during normal business
hours on a business day (unless the Company otherwise permits) at the executive
offices of the Company or to such other office or duly authorized representative
of the Company as from time to time may be designated by the Company by written
notice given to the Holder of this Warrant.
(b) The Company shall pay all costs and expenses incurred in
connection with the exercise, registering, exchange, transfer or replacement of
this Warrant, including the costs of preparation, execution and delivery of
warrants and stock certificates, and shall pay all taxes (other than any taxes
measured by the income of any Person other than the Company) and other charges
imposed by law payable in connection with the transfer or replacement of this
Warrant.
(c) The Company shall deliver or cause to be delivered to the
Holder exercising this Warrant or any portion hereof certificates representing
the shares of Common Stock issuable upon such exercise within five business days
of the surrender and delivery by such Holder to the Company of this Warrant and
a duly completed Exercise Form. In the event the Company fails to deliver or
cause to be delivered to the Holder such certificates (without legend or
restriction if such Warrant Securities are then, or are required to be,
registered pursuant to the Warrant Agreement) within such five business day
period, the Company shall pay to the Holder the Delay Damages. In the event the
Company restricts or delays the transfer or clearance of such certificates by
the Holder (whether by stop transfer order, unreasonable delay or otherwise),
the Company shall pay to the Holder the Delay Damages for each calendar day of
such restriction or delay.
4. Warrant Register; Exchange; Transfer; Loss.
(a) The Company at all times shall maintain at its chief
executive offices an open register for all Warrants, in which the Company shall
record the name and address of each Person to whom a Warrant has been issued or
transferred, the number of shares of Common Stock or other securities
purchasable hereunder and the corresponding purchase prices.
(b) This Warrant may be exchanged for two or more warrants
entitling the identical Holder hereof to purchase the same aggregate Exercise
Quantity at the same Exercise Price per share and otherwise having the same
terms and provisions as this Warrant. The identical Holder may request such an
exchange by surrender of this Warrant to the Company, together with a written
exchange request specifying the desired number of warrants and allocation of the
Exercise Quantity purchasable under the existing Warrant.
(c) This Warrant may be transferred only in accordance with the
provisions of Article VII of the Warrant Agreement, in whole or in part, by the
Holder or any duly authorized representative of such Holder. A transfer may be
registered with the Company by submission to
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it of this Warrant, together with the annexed Assignment Form duly completed and
executed, and if the transfer is not a registered transfer, evidence reasonably
satisfactory to the Company that such transfer is in compliance with federal and
state securities laws. Within five business days after the Company's receipt of
this Warrant and the Assignment Form so completed and executed, the Company will
issue and deliver to the transferee a new Warrant representing the portion of
the Exercise Quantity transferred at the same Exercise Price per share and
otherwise having the same terms and provisions as this Warrant, which the
Company will register in the new Holder's name.
(d) Upon receipt by the Company of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant, and (a) in the case of loss, theft or destruction,
upon receipt by the Company of indemnity reasonably satisfactory to it (provided
that, the Holder's own agreement of indemnity shall be deemed to be
satisfactory), or (b) in the case of mutilation, upon surrender and cancellation
thereof, the Company, at its expense, will execute, register and deliver, in
lieu thereof, a new certificate or instrument for (or covering the purchase of)
this Warrant.
(e) The Company will not close its books against the transfer of
this Warrant or any of the Warrant Securities in any manner which interferes
with the timely exercise of this Warrant. The Company will from time to time
take all such action as may be necessary to assure that the par value per share
of the unissued Common Stock acquirable upon exercise of this Warrant is at all
times equal or less than the Exercise Price then in effect.
5. Rights and Obligations of the Company and the Holder. The Company and
the Holder of this Warrant are entitled to the rights and bound by the
obligations set forth in the Warrant Agreement, all of which rights and
obligations are hereby incorporated by reference herein. This Warrant shall not
entitle its Holder to any rights of a stockholder in the Company (other than as
provided in Section 2(c) of this Warrant and the Warrant Agreement).
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized representative and its corporate seal, if any, to be
impressed hereupon and attested to by its Secretary or Assistant Secretary.
Integrated Communication Networks, Inc.
By:
---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chief Executive Officer
By:
---------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
Secretary
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Integrated Communication Networks, Inc.
EXERCISE FORM
Integrated Communication Networks, Inc. (the "Company")
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant Certificate for, and to purchase
thereunder, shares of common stock of the Company (the "Warrant Securities"),
and requests that certificates for the Warrant Securities be issued in the
name of:
--------------------------------------------------------------
(Please print or Type Name, Address and Social Security Number)
--------------------------------------------------------------
--------------------------------------------------------------
and, if said number of shares of Warrant Securities shall not be all the Warrant
Securities purchasable hereunder, that a new Warrant Certificate for the balance
of the Warrant Securities purchasable under the within Warrant Certificate be
registered in the name of the undersigned Holder or his Assignee as below
indicated and delivered to the address stated below.
Dated:
------------------
Name of Holder
or Assignee:
---------------------------
(Please Print)
Address:
---------------------------
---------------------------
Signature: ---------------------------
Note: The above signature must correspond with the name as it appears upon the
face of this Warrant Certificate in every particular, without alteration or
enlargement or any change whatever, unless these Warrants have been assigned.
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ASSIGNMENT
(To be signed only upon assignment of Warrants)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
the right to purchase ________________shares of common stock represented by
the within Warrant Certificate unto, and requests that a certificate for such
Warrant be issued in the name of:
-------------------------------------------------------------
(Name and Address of Assignee Must be Printed or Typewritten)
-------------------------------------------------------------
-------------------------------------------------------------
The undersigned hereby irrevocably constitutes and appoints _______________
Attorney to transfer said Warrants on the books of the Company, with full power
of substitution in the premises and, if said number of shares of common stock
shall not be all of the common stock purchasable under the within Warrant
Certificate, that a new Warrant Certificate for the balance of the common stock
purchasable under the within Warrant Certificate be registered in the name of
the undersigned Holder and delivered to such Holder's address as then set forth
on the Company's books.
Dated:
--------------- ------------------------------------
Signature of Registered Holder
Note: The above signature must correspond with the name as it appears upon the
face of this Warrant Certificate in every particular, without alteration or
enlargement or any change whatever.
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