NET2WIRELESS CORPORATION
Warrant for the Purchase of Shares of Common Stock
No. 2 5,000,341 Shares
FOR VALUE RECEIVED, and further to the assignment of rights under warrant
No. 1 dated December 9, 1999, Net2Wireless Corporation, a Delaware corporation
(the "Company"), hereby certifies that ML Partners, LLC is entitled to purchase
from the Company, at any time or from time to time commencing on June 26, 2000
and prior to 5:00 P.M., New York City time, on December 8, 2004, Five Million
Three Hundred and Forty One (5,000,341) fully paid and non-assessable shares of
the common stock, $.01 par value per share, of the Company for an aggregate
purchase price of $11,638,793 (computed on the basis of $2.3276 per share).
(Hereinafter, (i) said common stock, together with any other equity securities
which may be issued by the Company with respect thereto or in substitution
therefor, is referred to as the "Common Stock," (ii) the shares of the Common
Stock purchasable hereunder or under any other Warrant (as hereinafter defined)
are referred to individually as a "Warrant Share" and collectively as the
"Warrant Shares," (iii) the aggregate purchase price payable for the Warrant
Shares hereunder is referred to as the "Aggregate Warrant Price," (iv) the price
payable for each of the Warrant Shares hereunder is referred to as the "Per
Share Warrant Price," (v) this Warrant, all similar Warrants issued on the date
hereof and all Warrants hereafter issued in exchange or substitution for this
Warrant or such similar Warrants are referred to as the "Warrants" and (vi) the
holder of this Warrant is referred to as the "Holder" and the holder of this
Warrant and all other Warrants or Warrant Shares issued upon the exercise of any
Warrant are referred to as the "Holders.")
1. Exercise of Warrant. This Warrant may be exercised in whole at any
time or in part from time to time, commencing on the execution of this Warrant,
and prior to 5:00 P.M., New York City time, on December 8, 2004, by the Holder
by the surrender of this Warrant (with the subscription form at the end hereof,
or a reasonable facsimile thereof, duly executed) at the address set forth in
Subsection 9(a) hereof, together with proper payment of the Aggregate Warrant
Price, or the proportionate part hereof if this Warrant is exercised in part.
Payment for Warrant Shares shall be made by certified or official bank check
payable to the order of the Company. If this Warrant is exercised in part, this
Warrant must be exercised for a number of whole shares of the Common Stock, and
the Holder is entitled to receive a new Warrant covering the Warrant Shares
which have not been exercised and setting forth the proportionate part of the
Aggregate Warrant Price applicable to such Warrant Shares. Upon such surrender
of this Warrant, the Company will (a) issue a certificate or certificates in the
name of the Holder for the largest number of whole shares of the Common Stock to
which the Holder shall be entitled and, if this Warrant is exercised in whole,
in lieu of any fractional share of the Common Stock to which the Holder shall be
entitled, pay to the Holder cash in an amount equal to the fair value of such
fractional share (determined in such reasonable manner as the Board of Directors
of the Company shall determine), and (b) deliver the other securities and
properties receivable upon the exercise of this Warrant, or the proportionate
part thereof if this Warrant is exercised in part, pursuant to the provisions of
this Warrant.
<PAGE>
2. Reservation of Warrant Shares; Listing. The Company agrees that, prior
to the expiration of this Warrant, the Company will at all times (a) have
authorized and in reserve, and will keep available, solely for issuance or
delivery upon the exercise of this Warrant, the shares of the Common Stock and
other securities and properties as from time to time shall be receivable upon
the exercise of this Warrant, free and clear of all restrictions on sale or
transfer and free and clear of all preemptive rights and rights of first refusal
and (b) if the Company hereafter lists its Common Stock on any national
securities exchange, keep the shares of the Common Stock receivable upon the
exercise of this Warrant authorized for listing on such exchange upon notice of
issuance.
3. Reorganization.
(a) In case of any capital reorganization (including, but not limited
to, a stock split, stock dividend or similar transaction) or reclassification,
or any consolidation or merger to which the Company is a party (other than a
merger or consolidation in which the Company is the continuing corporation
unless there is a change in or distribution with respect to the common stock),
or in case of any sale or conveyance to another entity of all or substantially
all the assets of the Company, or in the case of any statutory exchange of
securities with another corporation (including any exchange effected in
connection with a merger of a third corporation into the Company), the Holder of
this Warrant shall have the right thereafter to receive on the exercise of this
Warrant the kind and amount of securities, cash or other property which the
Holder would have owned or have been entitled to receive immediately after such
reorganization, reclassification, consolidation, merger, statutory exchange,
sale or conveyance had this Warrant been exercised immediately prior to the
effective date of such reorganization, reclassification, consolidation, merger,
statutory exchange, sale or conveyance. The issuer of any shares of stock or
other securities or property thereafter deliverable on the exercise of this
Warrant (i) shall be responsible for all of the agreements and obligations of
the Company hereunder and (ii) if a Registration Statement on Form S-4 is
required to be filed by such issuer in connection with a transaction covered by
this paragraph (a), shall include the Warrant Shares in such registration
statement. Notice of any such reorganization, reclassification, consolidation,
merger, statutory exchange, sale or conveyance and of said provisions so
proposed to be made, shall be mailed to the Holders of the Warrants not less
than 30 days prior to such event.
(b) If the Board of Directors of the Company shall (i) declare any dividend
or other distribution with respect to the Common Stock, (ii) offer to the
holders of shares of Common Stock any additional shares of Common Stock, any
securities convertible into or exercisable for shares of Common Stock or any
rights to subscribe thereto, or (iii) propose a dissolution, liquidation or
winding up of the Company, the Company shall mail notice thereof to the Holders
of the Warrants not less than 15 days prior to the record date fixed for
determining stockholders entitled to participate in such dividend, distribution,
offer or subscription right or to vote on such dissolution, liquidation or
winding up.
<PAGE>
4. Registration Rights.
4.1 Piggyback Right. The Company agrees that if, at any time and from
time to time during the period commencing on the execution of this Warrant and
ending on December 8, 2004, the Board of Directors of the Company shall
authorize the filing of a registration statement or a post-effective amendment
to a registration statement (any such registration statement being hereinafter
called a "Registration Statement") under the Securities Act of 1933, as amended
(other than a registration statement on Form S-8 or other form which does not
include substantially the same information as would be required in a form for
the general registration of securities) in connection with the proposed offer of
any of its securities by it or any of its stockholders, the Company will (i)
promptly notify Holder that such Registration Statement will be filed and that
the Warrant Shares then held, and/or which may be acquired upon exercise of this
Warrant will, at Holder's request, be included in such Registration Statement,
(ii) include in the securities covered by such Registration Statement all
Warrant Shares which it has been so requested to include (the "Registered
Shares"), (iii) use its best efforts to cause such Registration Statement to
become effective as soon as practicable and (iv) take all other action necessary
under any Federal or state law or regulation of any governmental authority to
permit all Registered Shares to be sold or otherwise disposed of.
4.2 Underwritten Offering. In the event the Registration Statement relates
to an underwritten offering by the Company, and the underwriters (the
"Underwriters") advise that marketing factors require a limitation on the number
of shares of common stock of the Company to be underwritten on behalf of
stockholders of the Company, Holder agrees that (i) the number of shares of
common stock of the Company that are entitled to be included in such
underwritten offering on behalf of selling stockholders of the Company shall be
allocated to Holder and other stockholders of the Company having "piggyback"
rights to join in such Registration Statement pro rata in accordance with the
number of shares of common stock of the Company held by all such persons
requesting inclusion of shares of common stock in such Registration Statement
and (ii) with respect to all securities of the Company, Holder will be obligated
to refrain from selling such securities for up to 180 days if the Underwriters
shall so request and the officers and directors of the Company sign equivalent
agreements. Holder may not participate in any underwritten offering unless
Holder (i) agrees to sell the common stock included in the underwritten offering
on the basis provided in any underwriting arrangements, (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements, (iii) agrees to pay Holder's pro rata portion of all underwriting
discounts and commissions and (iv) agrees to cooperate with the Company and the
Underwriters in connection with the preparation and filing of the Registration
Statement and in connection with any other requirement of the Company and the
Underwriters customary in any such public underwritten offering.
4.3 Expenses. The Company shall pay all expenses, other than underwriting
discounts and applicable transfer taxes relating to the Registered Shares,
incurred in connection with any registration or other action pursuant to the
provisions of this Section 4, including all registration, listing, filing and
qualification fees, printers and accounting fees, the fees and disbursements of
counsel for the Company and the reasonable fees and disbursements of one firm of
counsel to Holder and all other persons exercising "piggyback" rights to be
included in any such registration.
<PAGE>
4.4 Indemnification. The Company will indemnify the Holders included in
each Registration Statement substantially to the same extent as the Company
would customarily indemnify underwriters of a public offering of its common
stock and Holder will indemnify the Company with respect to information
furnished by them in writing to the Company for inclusion therein substantially
to the same extent as in any such underwritten public offering.
5. Fully Paid Stock. The Company agrees that the shares of the Common
Stock represented by each and every certificate for Warrant Shares delivered on
the exercise of this Warrant shall, at the time of such delivery, be validly
issued and outstanding, fully paid and nonassessable, and not subject to
preemptive rights or rights of first refusal, and the Company will take all such
actions as may be necessary to assure that the par value or stated value, if
any, per share of the Common Stock is at all times equal to or less than the
then Per Share Warrant Price.
6. Limited Transferability. This Warrant may not be sold, transferred,
assigned or hypothecated by the Holder without the prior written approval of the
Company. The Company may treat the registered Holder of this Warrant as he or
it appears on the Company's books at any time as the Holder for all purposes.
The Company shall permit any Holder of a Warrant or his duly authorized
attorney, upon written request during ordinary business hours, to inspect and
copy or make extracts from its books showing the registered holders of Warrants.
All Warrants issued upon the transfer or assignment of this Warrant will be
dated the same date as this Warrant, and all rights of the Holder thereof shall
be identical to those of the Holder.
7. Loss, etc., of Warrant. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant, and of
indemnity reasonably satisfactory to the Company, if lost, stolen or destroyed,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
shall execute and deliver to the Holder a new Warrant of like date, tenor and
denomination.
8. Warrant Holder Not Shareholder. Except as otherwise provided herein,
this Warrant does not confer upon the Holder any right to vote or to consent to
or receive notice as a stockholder of the Company, as such, in respect of any
matters whatsoever, or any other rights or liabilities as a stockholder, prior
to the exercise hereof.
9. Notices. All notices and other communications required or permitted to
be given under this Warrant shall be in writing and shall be deemed to have been
duly given if delivered personally or by facsimile transmission, or sent by
recognized overnight courier or by certified mail, return receipt requested,
postage paid, to the parties hereto as follows:
(a) if to the Company at 11 Haamal Street, Park Afek, Rosh Haayin
48092, Israel, Att.: Hemi Davidson, facsimile no. 972-3-9028601, or such other
address as the Company has designated in writing to the Holder, or
(b) if to the Holder at ML Partners LLC, facsimile no. _______________, or
such other address or facsimile number as the Holder has designated in writing
to the Company.
10. Headings. The headings of this Warrant have been inserted as a
matter of convenience and shall not affect the construction hereof.
<PAGE>
11. Applicable Law. This Warrant shall be governed by and construed in
accordance with the law of the State of Delaware without giving effect to the
principles of conflicts of law thereof.
12. Assignment of Rights under Former Warrant. This warrant replaces and
supersedes warrant No. 1 to purchase 2,500,000 shares of Common Stock granted
to the Holder by the Corporation on December 9, 1999 (the "Former Warrant"). The
number of shares underlying this Warrant reflects the number of shares
underlying the Former Warrant after giving effect to assignment by the Holder
of certain rights under the Former Warrant. The Company does not have any
obligation under the Former Warrant.
<PAGE>
IN WITNESS WHEREOF, Net2Wireless Corporation has caused this Warrant to be
signed by its President and its corporate seal to be hereunto affixed and
attested by its Secretary this 26th day of June, 2000.
Net2Wireless Corporation
By: /s/ Hemi Davidson
President
ATTEST:
/s/ Yaron Sobol
Secretary
[Corporate Seal]
<PAGE>
SUBSCRIPTION FORM
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant for, and to purchase thereunder,
______________ shares of Common Stock, as provided for in the first paragraph of
the within Warrant, and tenders herewith payment of the purchase price in full
in the form of cash or a certified or official bank check in the amount of
$___________.
Please issue a certificate or certificates for such Common Stock in the name
of, and pay any cash for any fractional share to:
Name
(Please Print Name, Address and Social Security No.)
Address
Social Security Number
Signature
NOTE: The above signature should correspond exactly with the name on the
first page of this Warrant or with the name of the assignee
appearing in the assignment form below.
Date
And if said number of shares shall not be all the shares purchasable under
the within Warrant, a new Warrant is to be issued in the name of said
undersigned for the balance remaining of the shares purchasable thereunder.
<PAGE>
