THE SECURITIES REPRESENTED BY THIS DOCUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED UNLESS SUCH SALE, TRANSFER OR ASSIGNMENT IS COVERED BY
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR SATISFIES THE
REQUIREMENTS OF RULE 144 OR REGULATION S OF THE SECURITIES AND EXCHANGE
COMMISSION, OR IS EFFECTED PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO THE
ISSUER THAT SUCH SALE, TRANSFER OR ASSIGNMENT IS EXEMPT FROM SUCH REGISTRATION.
No. WA-06
WARRANT TO PURCHASE COMMON STOCK
OF
IJNT.NET, INC.,
a Delaware corporation
This certifies that, for value received, Newport Federal Financial, a
California Corporation or its registered assigns ("Holder") is entitled, subject
to the terms and conditions set forth herein, to purchase from IJNT.net, Inc., a
Delaware corporation (the "Company"), in whole or in part, 200,000 fully-paid
and nonassessable shares (the "Warrant Shares") of Common Stock of the Company,
at a purchase price per share (the "Exercise Price") determined in accordance
with Section 2 hereof. The number, character and Exercise Price of such shares
of Common Stock are subject to adjustment as provided herein, and all references
to "Warrant Shares" and "Exercise Price" herein shall be deemed to include all
such adjustments. The term "Warrant" as used herein shall mean this Warrant and
any warrant delivered in substitution or exchange therefore as provided herein.
This Warrant is issued concurrently with the execution of that certain
Promissory Note by the Company in favor of the Holder in the principal amount of
$1,000,000.00.
1. TERM OF WARRANT. Subject to the terms and conditions set forth herein, this
Warrant shall be exercisable, in whole or in part, from time to time during
the term hereof, commencing on the date hereof and ending at 5:00 p.m.
Pacific Standard Time on the Third (3rd) annual anniversary of the date of
this Warrant (the "Exercise Period"), after which time this Warrant shall
be void.
2. EXERCISE PRICE; COMMON STOCK; NUMBER OF SHARES.
(a) EXERCISE PRICE. The term "Exercise Price" shall be $2.875, the closing
price of the Company's common stock on May 31, 2000.
3. EXERCISE OF WARRANT. This Warrant may be exercised by Holder by (i) the
surrender of this Warrant to the Company, with the Notice of Exercise
attached hereto duly completed and executed on behalf of Holder, at the
office of the Company (or such other office or agency of the Company as the
Company may designate by notice in writing to Holder at the address of
<PAGE>
Holder appearing on the books of the Company) during the Exercise Period
and (ii) the delivery of payment to the Company, for the account of the
Company, by cash, wire transfer of immediately available funds to a bank
account specified by the Company, or by certified or bank cashier's check,
of the Exercise Price for the number of Warrant Shares specified in the
Notice of Exercise in lawful money of the United States of America. The
Company agrees that such Warrant Shares shall be deemed to be issued to
Holder as the record holder of such Warrant Shares as of the close of
business on the date on which this Warrant is surrendered and payment made
for the Warrant Shares in accordance with the provisions hereof. A stock
certificate or certificates for the Warrant Shares specified in the Notice
of Exercise shall be delivered to Holder as promptly as practicable, and in
any event within Ten (10) days, thereafter. If this Warrant is exercised
only in part, then the Company shall, at the time of delivery of the stock
certificate or certificates, deliver to Holder a new Warrant evidencing the
rights to purchase the remaining Warrant Shares, which new Warrant in all
other respects shall be identical to this Warrant. No adjustments shall be
made on Warrant Shares issuable upon the exercise of this Warrant for any
cash dividend paid or payable to holders of record of the Company's Common
Stock before the date as of which Holder is deemed to be the record holder
of such Warrant Shares.
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 any fractional share to which Holder otherwise would be entitled,
the Company shall make a cash payment equal to the Exercise Price
multiplied by such fraction.
5. REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of loss, theft or destruction, upon delivery of an
indemnity agreement reasonably satisfactory in form and substance to the
Company or, in the case of mutilation, upon surrender and cancellation of
this Warrant, the Company at its expense shall execute and deliver, in lieu
of this Warrant, a new warrant of like tenor and amount.
6. RIGHTS OF STOCKHOLDERS. Subject to Sections 9 and 11 of this Warrant,
Holder shall not be entitled to vote or receive dividends or be deemed
holder of Common Stock or any other securities of the Company that at any
time may be issuable upon the exercise hereof for any purpose, nor shall
anything contained herein be construed to confer upon Holder, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or on any matter submitted to stockholders of the
Company 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 has been exercised as provided herein.
<PAGE>
7. TRANSFER OF WARRANT.
(a) WARRANT REGISTER. The Company shall maintain a register (the "Warrant
Register") containing the names and addresses of Holder or Holders.
Any Holder of this Warrant or any portion thereof may change his
address as shown on the Warrant Register by written notice to the
Company requesting such change. Any notice or written communication
required or permitted to be given to Holder may be delivered or given
by mail to such Holder as shown on the Warrant Register and at the
address shown on the Warrant Register. Until this Warrant is
transferred on the Warrant Register, the Company may treat Holder as
shown on the Warrant Register as the absolute owner of this Warrant
for all purposes, notwithstanding any notice to the contrary.
(b) WARRANT AGENT. The Company may, by written notice to Holder, appoint
an agent for the purpose of maintaining the Warrant Register referred
to in Section 7(a) hereof, issuing the Warrant Shares or other
securities then issuable upon the exercise of this Warrant, exchanging
this Warrant, replacing this Warrant or any or all of the foregoing.
Thereafter, any such registration, issuance, exchange or replacement,
as the case may be, shall be made at the office of such agent.
(c) TRANSFERABILITY AND NONNEGOTIABILITY OF WARRANT. This Warrant may not
be transferred or assigned in whole or in part without compliance with
all applicable federal and state securities laws by the transferor and
the transferee (including the delivery of investment representation
letters and legal opinions reasonably satisfactory to the Company, if
such are requested by the Company). Notwithstanding the foregoing, no
investment representation letter or opinion of counsel shall be
required for any transfer of this Warrant (or any portion thereof) or
of any shares of Common Stock issued upon exercise hereof or
conversion thereof (i) in compliance with Rule 144 or Rule 144A of the
Securities Act, or (ii) by gift, will or intestate succession by
Holder to his or her spouse or lineal descendants or ancestors or any
trust for any of the foregoing; provided that in each of the foregoing
cases the transferee agrees in writing to be subject to the terms of
this Section 7(c) and Section 7(e). Subject to the provisions of this
Warrant with respect to compliance with the Securities Act, title to
this Warrant may be transferred by endorsement (by Holder executing
the Assignment Form attached hereto) and delivery in the same manner
as a negotiable instrument transferable by endorsement and delivery.
(d) EXCHANGE OF WARRANT UPON A TRANSFER. Upon surrender of this Warrant
for exchange, properly endorsed on the Assignment Form and subject to
the provisions of this Warrant with respect to compliance with the
Securities Act and with the limitations on assignments and transfers
contained in this Section 7, the Company at its expense shall issue to
or upon the order of Holder a new warrant or warrants of like tenor,
in the name of Holder or as Holder (upon payment by Holder of all
applicable transfer taxes, if any) may direct, for the number of
shares issuable upon exercise hereof.
<PAGE>
(e) COMPLIANCE WITH SECURITIES LAWS.
(i) Holder, by acceptance hereof, acknowledges that this Warrant and
the shares of Common Stock to be issued upon exercise hereof or
conversion thereof are being acquired solely for Holder's own
account and not as a nominee for any other party, and for
investment, and that Holder will not offer, sell or otherwise
dispose of this Warrant or any shares of Common Stock to be
issued upon exercise hereof or conversion thereof except under
circumstances that will not result in a violation of the
Securities Act or applicable state securities laws. Upon exercise
of this Warrant, Holder shall, if requested by the Company,
confirm in writing, in a form satisfactory to the Company, that
the shares of Common Stock so purchased are being acquired solely
for Holder's own account and not as a nominee for any other
party, for investment, and not with a view toward distribution or
resale.
(ii) This Warrant and all shares of Common Stock issued upon exercise
hereof or conversion thereof shall be stamped or imprinted with a
legend in substantially the following form (in addition to any
legend required by applicable state securities laws):
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE SOLD, TRANSFERRED
OR ASSIGNED UNLESS SUCH SALE, TRANSFER OR ASSIGNMENT IS COVERED BY AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR SATISFIES THE REQUIREMENTS
OF RULE 144 OR REGULATION S OF THE SECURITIES AND EXCHANGE COMMISSION, OR IS
EFFECTED PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH
SALE, TRANSFER OR ASSIGNMENT IS EXEMPT FROM SUCH REGISTRATION."
(iii)The Company agrees to remove promptly, upon the request of the
holder of this Warrant and Securities issuable upon exercise of
the Warrant, the legend set forth in Section 7(e)(ii) hereof from
the documents and/or certificates representing such securities
upon full compliance with the terms and provisions hereof and
Rules 144 and 145.
8. RESERVATION OF STOCK. The Company covenants that, at all times while this
Warrant is exercisable, the Company shall reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the
issuance of Common Stock upon the exercise of this Warrant and, from time
to time, shall take all steps necessary to amend the Company's Certificate
of Incorporation (the "Certificate of Incorporation") to provide sufficient
reserves of shares of Common Stock issuable upon exercise of this Warrant.
The Company further covenants that all shares that may be issued upon the
exercise of rights represented by this Warrant and payment of the Exercise
Price, all as set forth herein, shall be free from all taxes, liens and
charges in respect of the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously or otherwise specified herein).
9. NOTICES.
(a) Whenever the Exercise Price or number of shares purchasable hereunder
is adjusted pursuant to Section 11 hereof, the Company shall issue a
certificate signed by its Chief Financial Officer setting forth, in
reasonable detail, the event requiring the adjustment, the amount of
the adjustment, the method by which such adjustment was calculated and
the Exercise Price and number of shares purchasable hereunder after
giving effect to such adjustment, and the Company shall cause a copy
of such certificate to be mailed (by first-class mail, postage
prepaid) to Holder of this Warrant.
<PAGE>
(b) In case:
(i) the Company takes a record of holders of the Company's Common
Stock for the purpose of entitling them to receive any dividend
or other distribution, or any right to subscribe for or purchase
shares of stock of any class or other securities, or to receive
any other right;
(ii) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another
corporation or any conveyance of all or substantially all of the
assets of the Company to another corporation or other entity; or
(iii)of any voluntary dissolution, liquidation or winding-up of the
Company; then, and in each such case, the Company shall mail or
cause to be mailed to Holder a notice stating, as the case may
be, (A) the date on which a record is to be taken for the purpose
of such dividend, distribution or right, and stating the amount
and character of such dividend, distribution or right, (B) the
date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed,
as of which Holders of record of Common Stock shall be entitled
to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or
winding-up. (c) All such notices, advices and communications
shall be deemed to have been received (i) in the case of personal
delivery or by a reputable national courier service, on the date
of such delivery, and (ii) in the case of mailing, on the third
business day following the date of such mailing if sent to a
United States address and on the Tenth (10th) business day
following the date of such mailing if sent to an address outside
the United States.
10. AMENDMENTS. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or
termination is sought.
11. ADJUSTMENTS. The Exercise Price and the number of shares purchasable
hereunder are subject to adjustment from time to time as follows:
(a) RECLASSIFICATION, ETC. If the Company, at any time while this Warrant
or any portion thereof remains outstanding and unexpired by
reclassification of securities or otherwise, changes any 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, this Warrant thereafter shall represent the right to acquire
such number and kind of securities as would have been issuable as the
result of such change with respect to the securities that were subject
to the purchase rights under this Warrant immediately before such
reclassification or other change and the Exercise Price therefore
shall be appropriately adjusted, all subject to further adjustment as
provided in this Section 11.
<PAGE>
(b) SPLIT, SUBDIVISION OR COMBINATION OF SHARES. If the Company, at any
time while this Warrant or any portion thereof remains outstanding and
unexpired, splits, subdivides or combines the securities as to which
purchase rights under this Warrant exist into a different number of
securities of the same class, then (i) in the case of a split or
subdivision, the Exercise Price for such securities shall be
proportionately decreased and the securities issuable upon exercise of
this Warrant shall be proportionately increased, and (ii), in the case
of a combination, the Exercise Price for such securities shall be
proportionately increased and the securities issuable upon exercise of
this Warrant shall be proportionately decreased.
(c) ADJUSTMENTS FOR DIVIDENDS IN STOCK OR OTHER SECURITIES OR PROPERTY.
If, while this Warrant or any portion hereof remains outstanding and
unexpired, the holders of the securities as to which purchase rights
under this Warrant exist at the time have received, or, on or after
the record date fixed for the determination of eligible stockholders
of the Company, have become entitled to receive, without payment
therefore, other or additional stock or other securities or property
(other than cash) of the Company by way of dividend, then and in each
case, this Warrant shall represent the right to acquire, in addition
to the number of shares of the securities receivable upon exercise of
this Warrant, and without payment of any additional consideration
therefore, the amount of such other or additional stock or other
securities or property (other than cash) of the Company that such
holder would hold on the date of such exercise had such holder been
Holder of record of the securities receivable upon exercise of this
Warrant on the date hereof and had thereafter, during the period from
the date hereof to and including the date of such exercise, retained
such shares and/or all other additional stock available by it as
provided herein during such period, giving effect to all adjustments
called for during such period by the provisions of this Section 11.
(d) ADJUSTMENTS FOR CONSOLIDATION, MERGER, SALE OF ASSETS, REORGANIZATION,
ETC. In case the Company after the date hereof (i) shall consolidate
with or merge with into any other corporation, person, group or entity
("Person") and shall not be the continuing or surviving corporation of
such consolidation or merger, or (ii) shall permit any other Person to
consolidate with or merge into the Company and the Company shall be
the continuing or surviving Person but, in connection with such
consolidation or merger, the Common Stock shall be changed into or
exchanged for stock or other securities of any other Person or cash or
any other property, or (iii) shall transfer all or substantially all
of its properties or assets to any other Person or (iv) shall affect a
capital reorganization or reclassification of the Common Stock (other
than a capital reorganization or reclassification for which adjustment
is provided for above), then, and in the case of each such
transaction, proper provision shall be made so that, upon the basis
and the terms and in the manner provided in this Warrant, the Holder
of this Warrant, upon the exercise of this Warrant at any time after
the consummation of such transaction shall be entitled to receive (at
the aggregate exercise price in effect at the time of such
consummation for all Common Stock issuable upon such exercise
immediately prior to such consummation), in lieu of the Common Stock
issuable upon exercise prior to such consummation, the amount of
securities, cash or other property to which such Holder would actually
have been entitled as a stockholder upon such consummation if such
Holder had exercised this Warrant immediately prior thereto.
<PAGE>
(e) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each adjustment
or readjustment pursuant to this Section 11, the Company at its
expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and furnish to each Holder of this
Warrant a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or
readjustment is based. The Company shall, upon the written request, at
any time, of any such Holder, furnish or cause to be furnished to such
Holder a like certificate setting forth: (i) such adjustments and
readjustments; (ii) the Exercise Price at the time in effect; and
(iii) the number of shares and the amount, if any, of other property
that at the time would be received upon the exercise of this Warrant.
(f) NO IMPAIRMENT. The Company shall not, by any voluntary action, avoid
or seek to avoid the observance or performance of any of the terms to
be observed or performed hereunder by the Company, and the Company
shall at all times in good faith assist in the carrying out of all the
provisions of this Section 11 and in the taking of all such actions as
may be necessary or appropriate in order to protect the rights of
Holders of this Warrant against impairment.
12. MISCELLANEOUS.
(a) This Warrant shall be governed in all respects by the laws of the
State of California, without regard to the conflicts of laws
provisions thereof.
(b) In the event of a dispute with regard to the interpretation of this
Warrant, the prevailing party may collect the cost of reasonable
attorneys' fees, litigation expenses or such other expenses as may be
incurred in the enforcement of the prevailing party's rights
hereunder.
(c) This Warrant shall be exercisable as provided for herein, except that,
if the expiration date of this Warrant falls on a Saturday, Sunday or
United States federally-recognized Holiday, then the expiration date
for this Warrant shall be extended to 5:00 p.m. Pacific Standard Time
on the business day following such Saturday, Sunday or
federally-recognized Holiday.
<PAGE>
IN WITNESS WHEREOF, IJNT.net, INC. has caused this Warrant to be executed by its
officer thereunto duly authorized.
Dated: June 5, 2000
The "Company":
IJNT.net, INC., a Delaware corporation
By: ______________________________________
Jeffrey R. Matsen,
Executive Vice President
NOTICE OF EXERCISE
------------------
To: IJNT.net, INC.
(1) The undersigned hereby elects to purchase __________ shares of Common Stock
of IJNT.net, INC., a Delaware corporation, pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price for
such shares in full.
(2) In exercising this Warrant, 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, for investment, and that the
undersigned shall not offer, sell or otherwise dispose of any such shares
of Common Stock except under circumstances that will not result in a
violation of the Securities Act of 1933, as amended, applicable state
securities laws.
(3) Please issue a certificate or certificates representing such shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
(Name)
(Name)
(4) 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)
<PAGE>
ASSIGNMENT FORM
---------------
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under this Warrant, with respect to the number of shares of
Common Stock set forth below:
No. of
Name of Assignee Address Shares
---------------- ------- ------
and does hereby irrevocably constitute and appoint Attorney ___________________
to make such transfer on the books of IJNT.net, INC., maintained for the
purpose, with full power of substitution in the premises.
The undersigned also represents that, by assignment hereof, the
Assignee acknowledges that this Warrant and the shares of stock to be issued
upon exercise hereof or conversion thereof are being acquired for investment and
that the Assignee shall not offer, sell or otherwise dispose of this Warrant or
shares of stock to be issued upon exercise hereof or conversion thereof except
under circumstances that will not result in a violation of the Securities Act of
1933, as amended, or applicable state securities laws. Further, the Assignee has
acknowledged that, upon exercise of this Warrant, the Assignee shall, if
requested by the Company, confirm in writing, in a form satisfactory to the
Company, that the shares of stock so purchased are being acquired for investment
and not with a view toward distribution or resale. The Assignee further
acknowledges and agrees that it is bound by the provisions of Section 7(e) of
this Warrant.
(Date)
Signature of Holder
Signature of Assignee
