THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). THIS WARRANT SHALL NOT CONSTITUTE AN OFFER
TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES IN ANY JURISDICTION
IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE SECURITIES ARE
"RESTRICTED" AND MAY NOT BE RESOLD OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE
ACT PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
COMMON STOCK PURCHASE WARRANT
To Purchase Shares of $0.01 Par Value Common Stock ("Common Stock") of
NETGURU, INC.
THIS CERTIFIES that, for value received, Shoreline Pacific
Institutional Finance (the "INVESTOR") is entitled, upon the terms and subject
to the conditions hereinafter set forth, at any time on or after the date hereof
and on or prior to 8:00 p.m. New York City Time on June 23, 2003 (the
"TERMINATION DATE"), but not thereafter, to subscribe for and purchase from
NETGURU, INC., a Delaware corporation (the "COMPANY"), 3,300 shares of Common
Stock (the "WARRANT SHARES") at an Exercise Price equal to 125% of the Closing
Price (as defined in Section 12(a) below), (as adjusted from time to time
pursuant to the terms hereof, the "EXERCISE PRICE"). The Exercise Price and the
number of shares for which the Warrant is exercisable shall be subject to
adjustment as provided herein. This Warrant is being issued in connection with
the Securities Purchase Agreement dated June 22, 2000 (the "PURCHASE AGREEMENT")
entered into between the Company and Elliott Associates, L.P. and Westgate
International L.P. and that certain Engagement Letter dated February 10, 2000
between Investor and the Company. Capitalized terms used herein and not
otherwise defined shall have the meaning ascribed thereto in the Purchase
Agreement.
1. TITLE OF WARRANT. Prior to the expiration hereof and subject to
compliance with applicable laws, this Warrant and all rights hereunder
are transferable, in whole or in part, at the office or agency of the
Company by the Holder hereof in person or by duly authorized attorney,
upon surrender of this Warrant together with (a) the Assignment Form
annexed hereto properly endorsed, and (b) any other documentation
reasonably necessary to satisfy the Company that such transfer is in
compliance with all applicable securities laws. The term "HOLDER" shall
refer to the Investor or any subsequent transferee of this Warrant.
2. AUTHORIZATION OF SHARES. The Company covenants that all shares of
Common Stock which may be issued upon the exercise of rights
represented by this Warrant will, upon exercise of the rights
represented by this Warrant and payment of the Exercise Price as set
forth herein will be duly authorized, validly issued, fully paid and
nonassessable and free from all taxes, liens and charges in respect of
the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue or otherwise specified
herein).
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3. EXERCISE OF WARRANT.
(a) The Holder may exercise this Warrant, in whole or in part, at any time
and from time to time, by delivering to the offices of the Company or
any transfer agent for the Common Stock this Warrant, together with a
Notice of Exercise in the form annexed hereto specifying the number of
Warrant Shares with respect to which this Warrant is being exercised,
together with payment to the Company of the Exercise Price therefor.
In the event that the Warrant is not exercised in full, the number of
Warrant Shares shall be reduced by the number of such Warrant Shares
for which this Warrant is exercised and/or surrendered, and the
Company, at its expense, shall within three (3) Trading Days (as
defined below) issue and deliver to the Holder a new Warrant of like
tenor in the name of the Holder or as the Holder (upon payment by
Holder of any applicable transfer taxes) may request, reflecting such
adjusted Warrant Shares.
Certificates for shares of Common Stock purchased hereunder shall be
delivered to the Holder hereof within two (2) Trading Days after the
date on which this Warrant shall have been exercised as aforesaid. The
Holder may withdraw its Notice of Exercise at any time if the Company
fails to timely deliver the relevant certificates to the Holder as
provided in this Agreement.
In lieu of delivering physical certificates representing the Warrant
Shares issuable upon conversion of this Warrant, provided the Company's
transfer agent is participating in the Depository Trust Company ("DTC")
Fast Automated Securities Transfer ("FAST") program, upon request of
the Holder, the Company shall use its best efforts to cause its
transfer agent to electronically transmit the Warrant Shares issuable
upon exercise to the Holder, by crediting the account of the Holder's
prime broker with DTC through its Deposit Withdrawal Agent Commission
("DWAC") system. The time periods for delivery described above shall
apply to the electronic transmittals through the DWAC system. The
Company agrees to coordinate with DTC to accomplish this objective.
(b) CASHLESS EXERCISE. Notwithstanding the foregoing provision
regarding payment of the Exercise Price in cash, the Holder may elect
to receive a reduced number of Warrant Shares in lieu of tendering the
Exercise Price in cash. In such case, the number of Warrant Shares to
be issued to the Holder shall be computed using the following formula:
X = Y X (A-B)
---------
A
where: X = the number of Warrant Shares to be issued to the Holder; Y
= the number of Warrant Shares to be exercised under this
Warrant Certificate; A = the Market Value (defined below) of
one share of Common Stock; and B = the Exercise Price.
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As used herein, "MARKET VALUE" refers to the closing bid price of the
Common Stock (as reported by Bloomberg, L.P.) on the day before the
Notice of Exercise and this Warrant are duly surrendered to the Company
for a full or partial exercise hereof. Notwithstanding the foregoing
definition, if the Common Stock is not listed on a national securities
exchange or quoted in the Nasdaq System at the time said Notice of
Exercise is submitted to the Company in the foregoing manner, the
Market Value of the Common Stock shall be as reasonably determined in
good faith by the Board of Directors of the Company and such Holder,
unless the Company shall become subject to a merger, acquisition, or
other consolidation pursuant to which the Company is not the surviving
entity, in which case the Market Value of the Common Stock shall be
deemed to be the value received by the Company's common shareholders
pursuant to the Company's acquisition (subject to Section 12 below).
(c) The term "TRADING DAY" means (x) if the Common Stock is not listed on
the New York or American Stock Exchange but sale prices of the Common
Stock are reported on Nasdaq National Market or another automated
quotation system, a day on which trading is reported on the principal
automated quotation system on which sales of the Common Stock are
reported, (y) if the Common Stock is listed on the New York Stock
Exchange or the American Stock Exchange, a day on which there is
trading on such stock exchange, or (z) if the foregoing provisions are
inapplicable, a day on which quotations are reported by National
Quotation Bureau Incorporated.
4. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of
this Warrant. In lieu of issuance of a fractional share upon any
exercise hereunder, the Company will either round up to nearest whole
number of shares or pay the cash value of that fractional share
calculated on the basis of the Fair Market Value (as defined below).
5. CHARGES, TAXES AND EXPENSES. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without
charge to the Holder hereof for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificate, all
of which taxes and expenses shall be paid by the Company, and such
certificates shall be issued in the name of the Holder of this Warrant
or in such name or names as may be directed by the Holder of this
Warrant; PROVIDED, HOWEVER, that in the event certificates for shares
of Common Stock are to be issued in a name other than the name of the
Holder of this Warrant, this Warrant when surrendered for exercise
shall be accompanied by the Assignment Form attached hereto duly
executed by the Holder hereof; and PROVIDED FURTHER, that the Company
shall not be required to pay any tax or taxes which may be payable in
respect of any transfer involved in the issuance of any Warrant
certificates or any certificates for the Warrant Shares other than the
issuance of a Warrant Certificate to the Holder in connection with the
Holder's surrender of a Warrant Certificate upon the exercise of all or
less than all of the Warrants evidenced thereby.
6. CLOSING OF BOOKS. The Company will at no time close its shareholder
books or records in any manner which interferes with the timely
exercise of this Warrant.
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<PAGE>
7. NO RIGHTS AS SHAREHOLDER UNTIL EXERCISE. Subject to Section 12 of this
Warrant and the provisions of any other written agreement between the
Company and the Investor, the Investor shall not be entitled to vote or
receive dividends or be deemed the holder of Warrant Shares or any
other securities of the Company that may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the Investor, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action
(whether upon any recapitalization, issuance of stock, reclassification
of stock, change of par value, or change of stock to no par value,
consolidation, merger, conveyance or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise
until the Warrant shall have been exercised as provided herein.
However, at the time of the exercise of this Warrant pursuant to
Section 3 hereof, the Warrant Shares so purchased hereunder shall be
deemed to be issued to such Holder as the record owner of such shares
as of the close of business on the date on which this Warrant shall
have been exercised.
8. ASSIGNMENT AND TRANSFER OF WARRANT. This Warrant may be assigned by the
surrender of this Warrant and the Assignment Form annexed hereto duly
executed at the office of the Company (or such other office or agency
of the Company or its transfer agent as the Company may designate by
notice in writing to the registered Holder hereof at the address of
such Holder appearing on the books of the Company); PROVIDED, HOWEVER,
that this Warrant may not be resold or otherwise transferred except (i)
in a transaction registered under the Securities Act of 1933, as
amended (the "ACT"), or (ii) in a transaction pursuant to an exemption,
if available, from registration under the Act and whereby, if
reasonably requested by the Company, an opinion of counsel reasonably
satisfactory to the Company is obtained by the Holder of this Warrant
to the effect that the transaction is so exempt. If this Warrant is
duly assigned in accordance with the terms hereof, then the Company
agrees, upon the request of the assignee, to amend or supplement
promptly any effective registration statement covering the Warrant
Shares so that the direct assignee of the original holder is added as a
selling stockholder thereunder.
9. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT; EXCHANGE. The
Company represents warrants and covenants that (a) upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of any Warrant or stock certificate
representing the Warrant Shares, and in case of loss, theft or
destruction, of indemnity reasonably satisfactory to it, and (b) upon
surrender and cancellation of such Warrant or stock certificate, if
mutilated, the Company will make and deliver a new Warrant or stock
certificate of like tenor and dated as of such cancellation, in lieu of
this Warrant or stock certificate, without any charge therefor. This
Warrant is exchangeable at any time for an equal aggregate number of
Warrants of different denominations, as requested by the holder
surrendering the same, or in such denominations as may be requested by
the Holder following determination of the Exercise Price. No service
charge will be made for such registration or transfer, exchange or
reissuance.
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<PAGE>
10. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed day for the
taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action
may be taken or such right may be exercised on the next succeeding day
not a legal holiday.
11. EFFECT OF CERTAIN EVENTS. If at any time while this Warrant or any
portion thereof is outstanding and unexpired there shall be a
transaction (by merger or otherwise) in which more than 50% of the
voting power of the Company is disposed of (collectively, a "SALE OR
MERGER TRANSACTION"), the Holder of this Warrant shall have the right
thereafter to purchase, by exercise of this Warrant and payment of the
aggregate Exercise Price in effect immediately prior to such action,
the kind and amount of shares and other securities and property which
it would have owned or have been entitled to receive after the
happening of such transaction had this Warrant been exercised
immediately prior thereto, subject to further adjustment as provided in
Section 12.
12. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.
The number of and kind of securities purchasable upon exercise of this
Warrant and the Exercise Price shall be subject to adjustment from time
to time as set forth in this Section 12.
(a) SUBDIVISIONS, COMBINATIONS, STOCK DIVIDENDS AND OTHER ISSUANCES. If the
Company shall, at any time while this Warrant is outstanding, (A) pay a
stock dividend or otherwise make a distribution or distributions on any
equity securities (including instruments or securities convertible into
or exchangeable for such equity securities) in shares of Common Stock,
(B) subdivide outstanding shares of Common Stock into a larger number
of shares, or (C) combine outstanding Common Stock into a smaller
number of shares, then each Affected Exercise Price (as defined below)
shall be multiplied by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding before such event and the
denominator of which shall be the number of shares of Common Stock
outstanding after such event. Any adjustment made pursuant to this
Section 12(a) shall become effective immediately after the record date
for the determination of stockholders entitled to receive such dividend
or distribution and shall become effective immediately after the
effective date in the case of a subdivision or combination. As used
herein, the Affected Exercise Prices (each an "AFFECTED EXERCISE
PRICE") shall refer to: (i) the Exercise Price and (ii) each reported
price for the Common Stock on the Principal Market (as defined in the
Purchase Agreement) occurring on any Trading Day included in the period
used for determining the Closing Price, which Trading Day occurred
before the record date in the case of events referred to in clause (A)
of this subparagraph 12(a) and the effective date in the case of the
events referred to in clauses (B) and (C) of this subparagraph 12(a).
"CLOSING PRICE" shall mean (i) for the period after the 20th Trading
Day following the Closing Date (as defined in the Purchase Agreement),
the average of the lowest 5 closing bid prices of the Common Stock
recorded on the Principal Market (as reported by the Bloomberg
Financial Network or any successor reporting source) for the 20 Trading
Days immediately following the Closing Date (as defined in the Purchase
Agreement), and (ii) for the period on or before the 20th Trading Day
following the Closing Date, the average of the 5 closing bid prices of
the Common Stock recorded on the Principal Market (as reported by the
Bloomberg financial network or any successor reporting service) on the
5 Trading Days immediately preceding the Closing Date. The number of
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<PAGE>
shares which may be purchased hereunder shall be increased
proportionately to any reduction in Exercise Price pursuant to this
paragraph 12(a), so that after such adjustments the aggregate Exercise
Price payable hereunder for the increased number of shares shall be the
same as the aggregate Exercise Price in effect just prior to such
adjustments.
(b) OTHER DISTRIBUTIONS. If at any time after the date hereof the Company
distributes to holders of its Common Stock, other than as part of its
dissolution, liquidation or the winding up of its affairs, any shares
of its capital stock, any evidence of indebtedness or any of its assets
(other than Common Stock), then the number of Warrant Shares for which
this Warrant is exercisable shall be increased to equal: (i) the number
of Warrant Shares for which this Warrant is exercisable immediately
prior to such event, (ii) multiplied by a fraction, (A) the numerator
of which shall be the Fair Market Value (as defined below) per share of
Common Stock on the record date for the dividend or distribution, and
(B) the denominator of which shall be the Fair Market Value price per
share of Common Stock on the record date for the dividend or
distribution minus the amount allocable to one share of Common Stock of
the value (as jointly determined in good faith by the Board of
Directors of the Company and the Holder) of any and all such evidences
of indebtedness, shares of capital stock, other securities or property,
so distributed. For purposes of this Warrant, "FAIR MARKET VALUE" shall
equal the 5 Trading Day average closing trading price of the Common
Stock on the Principal Market (as defined in the Purchase Agreement)
for the 5 Trading Days preceding the date of determination or, if the
Common Stock is not listed or admitted to trading on any Principal
Market, and the average price cannot be determined as contemplated
above, the Fair Market Value of the Common Stock shall be as reasonably
determined in good faith by the Company's Board of Directors and the
Holder. The Exercise Price shall be reduced to equal: (i) the Exercise
Price in effect immediately before the occurrence of any event (ii)
multiplied by a fraction, (A) the numerator of which is the number of
Warrant Shares for which this Warrant is exercisable immediately before
the adjustment, and (B) the denominator of which is the number of
Warrant Shares for which this Warrant is exercisable immediately after
the adjustment.
(c) MERGER, ETC. If at any time after the date hereof there shall be a
merger or consolidation of the Company with or into or a transfer of
all or substantially all of the assets of the Company to another
entity, then the Holder shall be entitled to receive upon or after such
transfer, merger or consolidation becoming effective, and upon payment
of the Exercise Price then in effect, the number of shares or other
securities or property of the Company or of the successor corporation
resulting from such merger or consolidation, which would have been
received by the Holder for the shares of stock subject to this Warrant
had this Warrant been exercised just prior to such transfer, merger or
consolidation becoming effective or to the applicable record date
thereof, as the case may be. The Company will not merge or consolidate
with or into any other corporation, or sell or otherwise transfer its
property, assets and business substantially as an entirety to another
corporation, unless the corporation resulting from such merger or
consolidation (if not the Company), or such transferee corporation, as
the case may be, shall expressly assume in writing the due and punctual
performance and observance of each and every covenant and condition of
this Warrant to be performed and observed by the Company.
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<PAGE>
(d) RECLASSIFICATION, ETC. If at any time after the date hereof there shall
be a reorganization or reclassification of the securities as to which
purchase rights under this Warrant exist into the same or a different
number of securities of any other class or classes, then the Holder
shall thereafter be entitled to receive upon exercise of this Warrant,
during the period specified herein and upon payment of the Exercise
Price then in effect, the number of shares or other securities or
property resulting from such reorganization or reclassification, which
would have been received by the Holder for the shares of stock subject
to this Warrant had this Warrant at such time been exercised.
(e) EXERCISE PRICE ADJUSTMENT. In the event that the Company issues or
sells any Common Stock or securities which are convertible into or
exchangeable for its Common Stock or any convertible securities, or any
warrants or other rights to subscribe for or to purchase or any options
for the purchase of its Common Stock or any such convertible securities
(other than shares or options issued or which may be issued pursuant to
(i) the Company's current employee option plans or shares issued upon
exercise of options, warrants or rights outstanding on the date of the
Agreement and listed in the Company's most recent periodic report filed
under the Exchange Act, (ii) arrangements with the Investor, (iii) an
underwriting agreement, to one or more underwriters in connection with
a bona fide public offering (as defined in the Certificate), or (iv)
strategic acquisitions of other entities by the Company which engage in
businesses related or complementary to the Company's business) at an
effective price per share which is less than the greater of the
Exercise Price then in effect or the Fair Market Value (as described in
Section 12(b) above) of the Common Stock on the trading day next
preceding such issue or sale, then in each such case, the Exercise
Price in effect immediately prior to such issue or sale shall be
reduced effective concurrently with such issue or sale to an amount
determined by multiplying the Exercise Price then in effect by a
fraction, (x) the numerator of which shall be the sum of (1) the number
of shares of Common Stock outstanding immediately prior to such issue
or sale, plus (2) the number of shares of Common Stock which the
aggregate consideration received by the Company for such additional
shares would purchase at such Fair Market Value or Exercise Price,
whichever is greater, then in effect; and (y) the denominator of which
shall be the number of shares of Common Stock of the Company
outstanding immediately after such issue or sale.
For the purposes of the foregoing adjustment, in the case of the
issuance of any convertible securities, warrants, options or other
rights to subscribe for or to purchase or exchange for, shares of
Common Stock ("CONVERTIBLE SECURITIES"), the maximum number of shares
of Common Stock issuable upon exercise, exchange or conversion of such
Convertible Securities shall be deemed to be outstanding, provided that
no further adjustment shall be made upon the actual issuance of Common
Stock upon exercise, exchange or conversion of such Convertible
Securities.
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The number of shares which may be purchased hereunder shall be
increased proportionately to any reduction in Exercise Price pursuant
to this paragraph 12(e), so that after such adjustments the aggregate
Exercise Price payable hereunder for the increased number of shares
shall be the same as the aggregate Exercise Price in effect just prior
to such adjustments.
In the event of any such issuance for a consideration which is less
than such Fair Market Value and also less than the Exercise Price then
in effect, than there shall be only one such adjustment by reason of
such issuance, such adjustment to be that which results in the greatest
reduction of the Exercise Price computed as aforesaid.
(f) (i) The terms of any reorganization, consolidation, merger, sale,
transfer or share exchange shall include such terms so as to continue
to give to the holder hereof the right to receive the securities or
property set forth in this Section 12 upon any exercise following any
such reclassification, consolidation, merger, sale, transfer or share
exchange.
(ii) In the event of any adjustment in the number of Warrant Shares
issuable hereunder upon exercise, the Exercise Price shall be inversely
proportionately increased or decreased as the case may be, such that
aggregate purchase price for Warrant Shares upon full exercise of this
Warrant shall remain the same. Similarly, in the event of any
adjustment in the Exercise Price, the number of Warrant Shares issuable
hereunder upon exercise shall be inversely proportionately increased or
decreased as the case may be, such that aggregate purchase price for
Warrant Shares upon full exercise of this Warrant shall remain the
same.
13. VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may at its option, at
any time during the term of this Warrant, reduce but not increase the
then current Exercise Price to any amount and for any period of time
deemed appropriate by the Board of Directors of the Company.
14. NOTICE OF ADJUSTMENT; NOTICE OF EVENTS. (i) Whenever the number of
Warrant Shares or number or kind of securities or other property
purchasable upon the exercise of this Warrant or the Exercise Price is
adjusted, the Company shall promptly mail to the Holder of this Warrant
a notice setting forth the number of Warrant Shares (and other
securities or property) purchasable upon the exercise of this Warrant
and the Exercise Price of such Warrant Shares after such adjustment and
setting forth the computation of such adjustment and a brief statement
of the facts requiring such adjustment. (ii) If: (A) the Company shall
declare a dividend (or any other distribution) on its Common Stock; or
(B) the Company shall declare a special nonrecurring cash dividend on
or a redemption of its Common Stock; or (C) the Company shall authorize
the granting to all holders of the Common Stock rights or warrants to
subscribe for or purchase any shares of capital stock of any class or
of any rights; or (D) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common
Stock of the Company, any consolidation or merger to which the Company
is a party, any sale or transfer of all or substantially all of the
assets of the Company, or any compulsory share exchange whereby the
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Common Stock is converted into other securities, cash or property; or
(E) the Company shall authorize the voluntary dissolution, liquidation
or winding up of the affairs of the Company, then the Company shall
cause to be mailed to each Warrant holder at their last addresses as
they shall appear upon the Warrant register of the Company, at least 30
calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record
is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the
date as of which the holders of Common Stock of record to be entitled
to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to
become effective or close, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their
shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or winding up.
15. AUTHORIZED SHARES. The Company covenants that during the period the
Warrant is outstanding and exercisable, it will reserve from its
authorized and unissued Common Stock a sufficient number of shares to
provide for the issuance of the Warrant Shares upon the exercise of any
and all purchase rights under this Warrant. The Company further
covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing
stock certificates to execute and issue the necessary certificates for
the Warrant Shares upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as may be
necessary to assure that such Warrant Shares may be issued as provided
herein without violation of any applicable law, regulation, or rule of
any applicable market or exchange.
16. 9.99% LIMITATION.
(i) Notwithstanding anything to the contrary contained herein,
the number of shares of Common Stock that may be acquired by the holder
upon exercise pursuant to the terms hereof shall not exceed a number
that, when added to the total number of shares of Common Stock deemed
beneficially owned by such holder (other than by virtue of the
ownership of securities or rights to acquire securities that have
limitations on the holder's right to convert, exercise or purchase
similar to the limitation set forth herein), together with all shares
of Common Stock deemed beneficially owned by the holder's "affiliates"
(as defined in Rule 144 of the Act) ("Aggregation Parties") that would
be aggregated for purposes of determining whether a group under Section
13(d) of the Securities Exchange Act of 1934 as amended, exists, would
exceed 9.99% of the total issued and outstanding shares of the Common
Stock (the "Restricted Ownership Percentage"); PROVIDED that (w) each
holder shall have the right at any time and from time to time to reduce
its Restricted Ownership Percentage immediately upon notice to the
Company and (x) each holder shall have the right (subject to waiver) at
any time and from time to time, to increase its Restricted Ownership
Percentage immediately in the event of the announcement as pending or
planned, of a transaction or event referred to in Section 5(m) of the
Certificate.
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(ii) Each time (a "COVENANT TIME") the holder or an
Aggregation Party makes a Triggering Acquisition (as defined below) of
shares of Common Stock (the "TRIGGERING SHARES"), the holder will be
deemed to covenant that it will not, during the balance of the day on
which such Triggering Acquisition occurs, and during the 61-day period
beginning immediately after that day, acquire additional shares of
Common Stock pursuant to rights-to-acquire existing at that Covenant
Time, if the aggregate amount of such additional shares so acquired
(without reducing that amount by any dispositions) would exceed (x)
9.99% of the number of shares of Common Stock outstanding at that
Covenant Time (including the Triggering Shares) minus (y) the number of
shares of Common Stock actually owned by the holder at that Covenant
Time (regardless of how or when acquired, and including the Triggering
Shares). A "TRIGGERING ACQUISITION" means the giving of a Notice of
Exercise or any other acquisition of Common Stock by the holder or an
Aggregation Party; PROVIDED, however, that with respect to the giving
of such Notice of Exercise, if the associated issuance of shares of
Common Stock does not occur, such event shall cease to be a Triggering
Acquisition and the related covenant under this paragraph shall
terminate. At each Covenant Time, the holder shall be deemed to waive
any right it would otherwise have to acquire shares of Common Stock to
the extent that such acquisition would violate any covenant given by
the holder under this paragraph. Notwithstanding anything to the
contrary in the Transaction Documents, in the event of a conflict
between any covenant given under this paragraph and any obligation of
the holder to exercise this Warrant pursuant to the Transaction
Documents, the former shall supersede the latter, and the latter shall
be reduced accordingly. For the avoidance of doubt:
(A) The covenant to be given pursuant to this
paragraph will be given at every Covenant
Time and shall be calculated based on the
circumstances then in effect. The making of
a covenant at one Covenant Time shall not
terminate or modify any prior covenants.
(B) The holder may therefore from time to time
be subject to multiple such covenants, each
one having been made at a different Covenant
Time, and some possibly being more
restrictive than others. The holder must
comply with all such covenants then in
effect..
17. COMPLIANCE WITH SECURITIES LAWS. (a) The Holder hereof acknowledges
that the Warrant Shares acquired upon the exercise of this Warrant, if
not registered (or if no exemption from registration exists), will have
restrictions upon resale imposed by state and federal securities laws.
Each certificate representing the Warrant Shares issued to the Holder
upon exercise (if not registered, for resale or otherwise, or if no
exemption from registration exists) will bear substantially the
following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED, TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
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(b) Without limiting the Investor's right to transfer, assign or otherwise
convey the Warrant or Warrant Shares in compliance with all applicable
securities laws, the Investor of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the Warrant Shares to be issued upon
exercise hereof are being acquired solely for the Investor's own
account and not as a nominee for any other party, and that the Investor
will not offer, sell or otherwise dispose of this Warrant or any
Warrant Shares to be issued upon exercise hereof except under
circumstances that will not result in a violation of applicable federal
and state securities laws.
18. MISCELLANEOUS.
(a) ISSUE DATE; CHOICE OF LAW; VENUE; JURISDICTION. THE PROVISIONS OF THIS
WARRANT SHALL BE CONSTRUED AND SHALL BE GIVEN EFFECT IN ALL RESPECTS AS
IF IT HAD BEEN ISSUED AND DELIVERED BY THE COMPANY ON THE DATE HEREOF.
THIS WARRANT SHALL BE BINDING UPON ANY SUCCESSORS OR ASSIGNS OF THE
COMPANY. THIS WARRANT WILL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, EXCEPT FOR MATTERS
ARISING UNDER THE ACT, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF
LAW. EACH OF THE PARTIES CONSENTS TO THE EXCLUSIVE JURISDICTION OF THE
FEDERAL AND STATE COURTS SITTING IN THE COUNTY OF NEW YORK IN THE STATE
OF NEW YORK IN CONNECTION WITH ANY DISPUTE ARISING UNDER THIS WARRANT
AND HEREBY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY
OBJECTION, INCLUDING ANY OBJECTION BASED ON FORUM NON CONVENIENS OR
VENUE, TO THE BRINGING OF ANY SUCH PROCEEDING IN SUCH JURISDICTION.
EACH PARTY HEREBY AGREES THAT IF THE OTHER PARTY TO THIS WARRANT
OBTAINS A JUDGMENT AGAINST IT IN SUCH A PROCEEDING, THE PARTY WHICH
OBTAINED SUCH JUDGMENT MAY ENFORCE SAME BY SUMMARY JUDGMENT IN THE
COURTS OF ANY COUNTRY HAVING JURISDICTION OVER THE PARTY AGAINST WHOM
SUCH JUDGMENT WAS OBTAINED, AND EACH PARTY HEREBY WAIVES ANY DEFENSES
AVAILABLE TO IT UNDER LOCAL LAW AND AGREES TO THE ENFORCEMENT OF SUCH A
JUDGMENT. EACH PARTY TO THIS WARRANT IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS IN ANY SUCH PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY
AT ITS ADDRESS IN ACCORDANCE WITH SECTION 18(C). NOTHING HEREIN SHALL
AFFECT THE RIGHT OF ANY PARTY TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW.
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(b) MODIFICATION AND WAIVER. This Warrant and any provisions hereof may be
changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is
sought. Any amendment effected in accordance with this paragraph shall
be binding upon the Investor, each future holder of this Warrant and
the Company. No waivers of, or exceptions to, any term, condition or
provision of this Warrant, in any one or more instances, shall be
deemed to be, or construed as, a further or continuing waiver of any
such term, condition or provision.
(c) NOTICES. Any notice, request or other document required or permitted to
be given or delivered to the Investor or future holders hereof or the
Company shall be personally delivered or shall be sent by certified or
registered mail, postage prepaid, to the Investor or each such holder
at its address as shown on the books of the Company or to the Company
at the address set forth in the Purchase Agreement. All notices under
this Warrant shall be deemed to have been given when received.
A party may from time to time change the address to which notices to it
are to be delivered or mailed hereunder by notice in accordance with
the provisions of this Section 18(c).
(d) SEVERABILITY. Whenever possible, each provision of this Warrant shall
be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant is held to be
invalid, illegal or unenforceable in any respect under any applicable
law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect the validity, legality or
enforceability of any other provision of this Warrant in such
jurisdiction or affect the validity, legality or enforceability of any
provision in any other jurisdiction, but this Warrant shall be
reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained
herein.
(e) NO IMPAIRMENT. The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times
in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order
to protect the rights of the Holder against impairment. Without
limiting the generality of the foregoing, the Company (a) will not
increase the par value of any Warrant Shares above the amount payable
therefor on such exercise, and (b) will take all such action as may be
reasonably necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable Warrant Shares
on the exercise of this Warrant.
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(f) SPECIFIC ENFORCEMENT. The Company and the Holder acknowledge and agree
that irreparable damage would occur in the event that any of the
provisions of this Warrant were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed
that the parties shall he entitled to an injunction or injunctions to
prevent or cure breaches of the provisions of this Warrant and to
enforce specifically the terms and provisions hereof, this being in
addition to any other remedy to which either of them may be entitled by
law or equity.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officers thereunto duly authorized.
Dated: June 23, 2000
NETGURU, INC.
By: /S/ Jyoti Chatterjee
------------------------
Name: Jyoti Chatterjee
Title: President
ATTEST:
/s/ Wayne Blair
------------------------------
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NOTICE OF EXERCISE
------------------
To: NETGURU, INC.
(1) The undersigned hereby elects to exercise the attached Warrant for and to
purchase thereunder, ______ shares of Common Stock, [and herewith makes payment
therefor of $_______] or [and elects to utilize the cashless exercise provisions
of Section 3(b) of this Warrant, resulting in ______ shares of Common Stock
issuable hereunder].
(2) 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:
-------------------------------
(Name)
-------------------------------
(Address)
-------------------------------
(3) Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned or in such other name as is specified
below:
-----------------------------------
(Name)
-------------------- -----------------------------------
(Date) (Signature)
-----------------------------------
(Address)
Dated:
------------------------------
Signature
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ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
_______________________________________________ whose address is
_______________________________________________________________.
_______________________________________________________________.
Dated: ______________,
Holder's Signature: ___________________________
Holder's Address:______________________________
______________________________
Signature Guaranteed: _________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
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