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EXHIBIT 10.4
FTM MEDIA, INC.
WARRANT
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THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAW, AND MAY
NOT BE TRANSFERRED UNTIL (1) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH
REGARD THERETO, OR (2) IN THE OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY,
REGISTRATION UNDER THE SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS
IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER.
CLASS A WARRANT
CLASS B WARRANT
This Warrant Agreement is entered into as of the date set forth on the
signature page attached hereto by FTM Media, Inc., a Delaware corporation (the
"COMPANY"), and the person(s) set forth on the signature page attached hereto,
(the "HOLDER").
AGREEMENT
1. Issuance of Warrants. For good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company is
hereby issuing to the Holder, subject to all the terms and conditions
set forth below, the Class A Warrant set forth in Section
1.1 below and the Class B Warrant set forth in Section 1.2 below
(each a "WARRANT", and collectively, the "WARRANTS"). The effective date
of these Warrants ("EFFECTIVE DATE") is __________, 2000.
1.1 The Class A Warrant
(a) Number of Shares Subject to Class A Warrant. The Holder
shall have the right to purchase the number of shares of common stock of
the Company, $0.0001 par value per share ("COMMON STOCK") set forth on
the signature page attached hereto (the warrant right set forth in this
Section 1.1 is referred to as the "CLASS A WARRANT").
(b) Exercise Price. The exercise price for the Class A Warrant
shall be $10.00 per share of Common Stock; provided, however, if the
Company sends notice of its intent to exercise its redemption right set
forth in Section 1.1(c) below, the exercise price shall be reset as set
forth in such Section 1.1(c).
(c) Redemption Right. Commencing on the first anniversary of the
Effective Date, the Company shall have the right, at its election, to
redeem this Class A Warrant for an aggregate redemption price equal to
$0.01 in accordance with the procedure set forth herein. The Company
shall exercise its redemption right by sending notice (the "REDEMPTION
NOTICE") to the Holder of its intent to redeem the Class A Warrant (the
date of such notice shall be referred to as the "REDEMPTION NOTICE
DATE"). On the Redemption Notice Date, the exercise price of the Class A
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Warrant shall be reset to an amount equal the product of (x) 0.80
multiplied by (y) the average of the last sales prices per share of the
Common Stock for the thirty (30) consecutive trading days immediately
preceding the Redemption Notice Date; provided, that the exercise price
shall not exceed $10.00 per share of Common Stock (subject to any
adjustment pursuant to Section 6 hereof). If the Class A Warrant (or any
portion thereof) has not been exercised prior to the expiration of the
thirty (30) day period ("REDEMPTION NOTICE PERIOD") following the
Redemption Notice Date, the Class A Warrant (or the remaining portion
thereof) shall be redeemed by the Company. The redemption price shall be
paid by the Company within twenty (20) days following the expiration of
the Redemption Notice Period.
(d) Term. The Class A Warrant shall be exercisable at any time
and from time to time and in whole or in part commencing on the
Effective Date until the third anniversary of the Effective Date, and
shall be void thereafter; provided, however, if the Company has sent a
Redemption Notice to the Holder, in no event shall the Class A Warrant
be exercisable after the expiration of the Redemption Notice Period.
1.2 The Class B Warrant
(a) Number of Shares Subject to Class B Warrant. The Holder
shall have the right to purchase the number of shares of Common Stock
set forth on the signature page attached hereto (the warrant right set
forth in this Section 1.2 is referred to as the "CLASS B WARRANT").
(b) Exercise Price. The exercise price for the Class B Warrant
shall be $15.00 per share of Common Stock; provided, however, if the
Company sends a Redemption Notice to the Holder, the exercise price
shall be reset, as of the Redemption Notice Date, to an amount equal to
(i) 1.25 times (ii) the amount of the reset Class A Warrant exercise
price as determined pursuant to Section 1.1(c).
(c) Redemption Right. If the Company sends a Redemption Notice,
then the Company shall redeem the Class B Warrant for an aggregate
redemption price equal to $0.01 to the extent that it remains
unexercised at the end of the Redemption Notice Period; provided,
however, in no event shall the portion of the Class B Warrant that is to
be redeemed exceed the portion of the Class A Warrant that remains
unexercised at the end of the Redemption Notice Period. The redemption
price with respect to the Class B Warrants to be redeemed shall be paid
by the Company within twenty (20) days following the expiration of the
Redemption Notice Period
(d) Term. The Class B Warrant shall be exercisable at any time
and from time to time and in whole or in part commencing on the
Effective Date until the earlier of (i) the third anniversary of the
Effective Date, and (ii) the 180th day following the Redemption Notice
Date, and shall be void thereafter; provided, however, if the Company
has sent a Redemption Notice to the Holder, in no event shall any
portion of the Class B Warrant which is to be redeemed by the Company
pursuant to Section 1.2(c) be exercisable after the expiration of the
Redemption Notice Period.
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2. Exercise. Subject to the terms and conditions of this Warrant
Agreement, each Warrant may be exercised by the Holder hereof pursuant
to the Notice of Exercise attached hereto as Exhibit A as to all or any
part hereof, upon delivery of written notice of intent to exercise to
the Company at the address set forth in Section 8 hereof or such other
address as the Company shall designate in a written notice to the Holder
hereof, together with this Warrant and payment to the Company of the
aggregate Exercise Price of the Common Stock so purchased in lawful
currency of the United States. Upon exercise of this Warrant as
aforesaid, the Company, in a reasonable amount of time, and in any event
within thirty (30) days thereafter, will execute and deliver to the
Holder of this Warrant a certificate or certificates for the total
number of whole shares of Common Stock for which this Warrant is being
exercised in such names and denominations as are requested by such
Holder. If this Warrant shall be exercised with respect to less than all
of the shares of Common Stock, the Holder shall be entitled to receive a
new Warrant covering the number of shares of Common Stock in respect of
which this Warrant shall not have been exercised, which new Warrant
shall in all other respects be identical to this Warrant.
3. Covenants and Conditions. The above provisions are subject to
the following:
(a) Neither this Warrant nor the Shares have been
registered under the Securities Act of 1933 as amended
("SECURITIES ACT") or any state securities laws ("BLUE SKY
LAWS"). This Warrant has been acquired for investment purposes
and not with a view to distribution or resale and may not be
sold or otherwise transferred without (i) an effective
registration statement for such Warrant under the Securities Act
and such applicable Blue Sky Laws, or (ii) an opinion of
counsel, which opinion and counsel shall be reasonably
satisfactory to the Company and its counsel, that registration
is not required under the Securities Act or under any applicable
Blue Sky Laws. Transfer of the shares issued upon the exercise
of this Warrant shall be restricted in the same manner and to
the same extent as the Warrant and the certificates representing
such Shares shall bear substantially the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY APPLICABLE
STATE SECURITIES LAW AND MAY NOT BE
TRANSFERRED UNTIL (1) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND SUCH
APPLICABLE STATE SECURITIES LAWS SHALL HAVE
BECOME EFFECTIVE WITH REGARD THERETO, OR (2)
IN THE OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY, REGISTRATION UNDER THE SECURITIES
ACT AND SUCH APPLICABLE STATE SECURITIES LAWS
IS NOT REQUIRED IN CONNECTION WITH SUCH
PROPOSED TRANSFER.
The Holder hereof and the Company agree to execute such
other documents and instruments as counsel for the Company
reasonably deems
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necessary to effect the compliance of the issuance of this Warrant and
any Shares issued upon exercise hereof with applicable federal and
state securities laws.
(b) The Company covenants and agrees that all Shares
which may be issued upon exercise of this Warrant will, upon
issuance and payment therefor, be legally and validly issued and
outstanding, fully paid and nonassessable, free from all liens,
charges and preemptive rights, if any, with respect thereto or
to the issuance thereof. The Company shall at all times reserve
and keep available for issuance upon the exercise of this
Warrant such number of authorized but unissued shares of Common
Stock as will be sufficient to permit the exercise in full of
this Warrant.
4. Transfer of Warrant. Subject to the provisions of Section 3
hereof, this Warrant may be transferred, in whole or in part, to any
person or business entity, by presentation of the Warrant to the
Company with written instructions for such transfer, pursuant to the
Notice of Exercise, attached hereto as Exhibit A; provided however
that as long as the Class A Warrant and Class B Warrant are both
outstanding they may not be transferred separately. Upon such
presentation for transfer, the Company shall promptly execute and
deliver a new Warrant or Warrants in the form hereof in the name of
the assignee or assignees and in the denominations specified in such
instructions. The Company shall pay all expenses incurred by it in
connection with the preparation, issuance and delivery of Warrants
under this Section.
5. Warrant Holder Not Stockholder. Except as otherwise
provided herein, this Warrant does not confer upon the Holder, as
such, any right whatsoever as a shareholder of the Company.
6. Adjustment Upon Changes in Stock.
(a) If all or any portion of this Warrant shall be
exercised subsequent to any stock split, stock dividend,
recapitalization, combination of shares of the Company, or other
similar event, occurring after the date hereof, then the Holder
exercising this Warrant shall receive, for the aggregate price
paid upon such exercise, the aggregate number and class of
shares which such Holder would have received if this Warrant had
been exercised immediately prior to such stock split, stock
dividend, recapitalization, combination of shares, or other
similar event. If any adjustment under this Section 6(a), would
create a fractional share of Common Stock or a right to acquire
a fractional share of Common Stock, such fractional share shall
be disregarded and the number of shares subject to this Warrant
shall be the next lower number of shares, rounding all fractions
downward.
(b) If all or any portion of this Warrant shall be
exercised subsequent to any merger, consolidation, exchange of
shares, separation, reorganization or liquidation of the
Company; or other similar event, occurring after the date hereof
as a result of which shares of Common Stock shall be changed
into the same or a different number of shares of the same or
another class or classes of securities of the Company or another
entity, or the holders of Common Stock are entitled to receive
cash or other property, then the Holder exercising this Warrant
shall receive, for the
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aggregate price paid upon such exercise, the aggregate number
and class of shares, cash or other property which such Holder would
have received if this Warrant had been exercised immediately prior to
such merger, consolidation, exchange of shares, separation,
reorganization or liquidation, or other similar event. If any
adjustment under this Section 6(b) would create a fractional share of
Common Stock or a right to acquire a fractional share of Common Stock,
such fractional share shall be disregarded and the number of shares
subject to this Warrant shall be the next lower number of shares,
rounding all fractions downward.
7. Article and Section Headings. Numbered and titled article
and section headings are for convenience only and shall not be
construed as amplifying or limiting any of the provisions of this
Warrant.
8. Notice. Any and all notices, elections or demands permitted
or required to be made under this Warrant shall be in writing, signed
by the party giving such notice, election or demand and shall be
delivered personally, telecopied, telexed, or sent by certified mail
or overnight via nationally recognized courier service (such as
Federal Express), to the other party at the address set forth below,
or at such other address as may be supplied in writing and of which
receipt has been acknowledged in writing. The date of personal
delivery or telecopy or two (2) business days after the date of
mailing (or the next business day after delivery to such courier
service), as the case may be, shall be the date of such notice,
election or demand. For the purposes of this Warrant:
The Address of the Holder is set forth on the signature page attached
hereto.
The Address of Company is: FTM Media, Inc.
6991 East Camelback Road
Suite D-103
Scottsdale, AZ 85251
Attention: Chief Executive Officer
Telecopy No.: (480) 425 - 7711
with a copy to: Irell & Manella LLP
333 South Hope Street, Suite 3300
Los Angeles, CA 90071-3042
Attention: Richard C. Wirthlin, Esq.
Telecopy No.: (310) 203 - 7199
9. Amendment. No amendment or modification hereof shall be
effective except in a writing executed by each of the parties hereto.
10. Severability. If any provision(s) of this Warrant or the
application thereof to any person or circumstances shall be invalid or
unenforceable to any extent, the remainder of this Warrant and the
application of such provisions to other persons or circumstances shall
not be affected thereby and shall be enforced to the greatest extent
permitted by law.
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11. Governing Law and Amendments. This Warrant shall be
construed and entered under the laws of the State of Delaware without
giving effect to the conflict of law principles thereto.
12. Arbitration. Any dispute concerning this Warrant (or the
investment in the Company) shall be submitted to arbitration before a
single arbitrator under the then applicable rules of the American
Arbitration Association (or any successor thereto or any replacement
arbitration tribunal as agreed to by the parties). The arbitration
hearing will be held in Los Angeles, California. The remedial
authority of any arbitrators serving under any dispute shall be the
same as, but no greater than would be the remedial power of a court
having jurisdiction over the parties and their dispute. The prevailing
party or parties in any such dispute shall be entitled to recover
reasonable attorney's fees and costs as determined by the arbitrator.
13. Counterparts. This Warrant may be executed in any number
of counterparts and be different parties to this Warrant in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the
same Warrant.
[THE REMAINDER TO THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties specified below hereby enter
into this Warrant.
COMPANY: FTM Media, Inc.
a Delaware corporation
By:
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Date:
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Its: Chief Executive Officer
HOLDER:
Name:
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Signature:
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Address:
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NUMBER OF SHARES OF COMMON STOCK
SUBJECT TO CLASS A WARRANTS:
NUMBER OF SHARES OF COMMON STOCK
SUBJECT TO CLASS B WARRANTS:
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EXHIBIT A
NOTICE OF EXERCISE
To: FTM Media, Inc.
1. The Class A Warrant. The undersigned hereby elects to purchase
shares of Common Stock of FTM Media, Inc., pursuant to the Class A
Warrant provisions of Section 1.1 of the attached Warrant, and tenders
herewith payment of the purchase price for such shares in full.
2. The Class B Warrant. The undersigned hereby elects to purchase
shares of Common Stock of FTM Media, Inc., pursuant to the Class B
Warrant provisions of Section 1.2 of the attached Warrant, and tenders
herewith payment of the purchase price for such shares in full.
3. Exercise. In exercising this/these Warrants, the undersigned hereby
confirms and acknowledges that the shares of Common Stock to be issued
upon conversion thereof are being acquired solely for the account of
the undersigned and not as a nominee for any other party, and for
investment, and the undersigned will not offer, sell or dispose of any
such shares of Common Stock except under circumstances that will not
result in a violation of the Securities Act of 1933, or any other
applicable state or federal securities laws.
4. Issuance of Common Stock. Please issue a certificate or
certificates representing said shares of Common Stock in the name of
the undersigned or in such other name as is specified below:
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(Number of Shares) (Name)
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(Number of Shares) (Name)
5. Issuance of New Warrant(s). Please issue new Warrant(s) for the
unexercised portion of the attached Warrant in the name of the
undersigned or in such other name as is specified below:
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(Name)
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(Date) (Signature)
