EXHIBIT D
THE SECURITIES REPRESENTED HEREBY
MAY NOT BE TRANSFERRED UNLESS (I) SUCH SECURITIES HAVE BEEN
REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF 1933, AS
AMENDED, (II) SUCH SECURITIES MAY BE SOLD WITHOUT RESTRICTIONS OR
VOLUME LIMITATIONS PURSUANT TO RULE 144, OR (III) THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT
SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OF 1933 OR QUALIFICATION UNDER APPLICABLE STATE
SECURITIES LAWS.
THIS WARRANT SHALL BE VOID AFTER
5:00 P.M. EASTERN TIME ON DECEMBER 31, 2014.
FUND.COM INC.
WARRANT TO PURCHASE 2,338,333
SHARES OF
CLASS A COMMON STOCK, PAR VALUE
$0.001 PER SHARE
FOR VALUE RECEIVED, IP GLOBAL
INC. (the “ Lender ”) and/or its Affiliates
(collectively, the “ Warrant Holder ”), is
entitled to purchase, subject to the terms and condition of this
Warrant, from FUND.COM INC. , a Delaware corporation (the
“ Corporation ”), at any time or from time to
time from the “ Initial Exercise Date ” (as
hereinafter defined) and not later than 5:00 P.M., Eastern time, on
the “ Warrant Expiration Date ” (as hereinafter
defined), an aggregate of 2,338,333 shares (the “
Warrant Shares ”) of the Corporation’s Class A
Common Stock (as hereinafter defined), at an exercise price per
Warrant Share equal to sixty cents ($0.60) (the “ Exercise
Price ”). The number of Warrant Shares
issuable upon exercise of this Warrant and the Exercise Price shall
be subject to adjustment from time to time as described
herein.
This Warrant is the “
Warrant ” constituting Exhibit D , referred to
in that certain revolving credit loan agreement dated as of April
30, 2009, by and between the Corporation and the Lender (the
“ Loan Agreement ”).
The Corporation shall maintain books
for the transfer and registration of the Warrant. Upon
the initial issuance of this Warrant, the Corporation shall issue
and register the Warrant in the name of the Warrant
Holder.
Definitions.
Unless
otherwise separately defined in this Warrant, all capitalized terms
when used herein shall have the same meaning as they are defined in
the Loan Agreement. As used in this Warrant, the
following terms shall have the meanings set forth below.
A “
Affiliate ” of any particular Person means any other
Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by or under common
control with such Person. For purposes of this definition,
“ control ” (including the terms “
controlling ,” “ controlled by ”
and “ under common control with ”) means the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or
otherwise.
B. “
Bloomberg ” shall mean Bloomberg, L.P. (or any
successor to its function of reporting stock prices).
C. "
Business Day " means any day, other than a Saturday or
Sunday, or a day on which banking institutions in the State of New
York are authorized or obligated by law, regulation or executive
order to close.
D. “
Class A Common Stock ” means the Class A common stock
of the Corporation, par value $0.001 per share, together with any
securities into which the common stock may be reclassified and any
additional class of stock of the Corporation having no preference
as to dividends or distributions on liquidation, provided that the
shares purchasable pursuant to this Warrant shall include only
shares of Class A Common Stock, $0.001 par value per share, in
respect of which this Warrant is exercisable, or shares resulting
from any subdivision or combination of such Class A Common Stock,
or in the case of any reorganization, reclassification,
consolidation, merger, or sale of the character referred to in
Section 4(e) hereof, the stock or other securities or property
provided for in such Section.
E. “
Class A Common Stock Deemed Outstanding ” shall mean
the number of shares of Class A Common Stock actually outstanding
(not including shares of Class A Common Stock held in the treasury
of the Corporation), plus (x) pursuant to Section 4(f)(i) hereof,
the maximum total number of shares of Class A Common Stock issuable
upon the exercise of options (the “ Options ”),
as of the date of such issuance or grant of such Options, if any,
and (y) pursuant to Section 4(f)(ii) hereof, the maximum total
number of shares of Class A Common Stock issuable upon conversion
or exchange of convertible securities (the “Convertible
Securities”), as of the date of issuance of such Convertible
Securities, if any.
F. "
Exercise Date " means, for any one or more exercises of this
Warrant, the date specified in the notice of exercise in the form
attached hereto (the " Notice of Exercise "), so long as a
copy of the Notice of Exercise is faxed, emailed or delivered by
other means resulting in receipt by the Corporation before 11:59
p.m, New York City time, on the Warrant Expiration Date.
G. "
Exercise Price " means initially Sixty Cents ($0.60) per
Warrant Share, or such other amount into which such Exercise Price
may be adjusted pursuant to Section 4 of this Warrant.
H. “
Initial Exercise Date ” shall mean the date of this
Warrant.
I. “
Market Price ” means, as of any Trading Day, (i) the
average of the last reported sale prices for the shares of Class A
Common Stock on a national securities exchange which is the
principal trading market for the Class A Common Stock for the
twenty (20) Trading Days immediately preceding such date as
reported by Bloomberg or (ii) if no national securities exchange is
the principal trading market for the shares of Class A Common
Stock, the average of the last reported sale prices on the
principal trading market for the Class A Common Stock during the
same period as reported by Bloomberg, or (iii) if market value
cannot be calculated as of such date on any of the foregoing bases,
the Market Price shall be the fair market value as reasonably
determined in good faith by the Corporation’s Board of
Directors in the exercise of its good faith
judgment. The manner of determining the Market Price of
the Class A Common Stock set forth in the foregoing definition
shall apply with respect to any other security in respect of which
a determination as to market value must be made
hereunder.
J. “
Trading Day ” shall mean any day on which the Class A
Common Stock is traded for any period on the principal securities
exchange or other securities market on which the Class A Common
Stock is then being traded.
L.
“ Warrant Expiration Date ” shall mean 5:00 p.m.
(Eastern time) on December 31, 2014.
M.
Warrant Holder ” shall mean the collective reference
to the Investor, its Affiliates or any one or more holder(s) of
this Warrant.
N.
“ Warrant Shares ” shall mean the shares of
Class A Common Stock issuable upon the full or partial exercise of
this Warrant, as such shares may be adjusted pursuant to the terms
of this Warrant.
This Warrant is subject to the
following terms, provisions, and conditions:
Section 1. Manner of
Exercise .
a.
Procedure . Subject to the provisions
hereof, this Warrant may be exercised by the Holder, in whole or in
part, by the surrender of this Warrant, together with a completed
exercise agreement in the form attached hereto (the “Exercise
Agreement”), to the Corporation during normal business hours
on any day that banks are generally open for business in New York
City (a “Business Day”) at the Corporation’s
principal executive offices (or such other office or agency of the
Corporation as it may designate by notice to the Holder), and upon
(i) payment to the Corporation in cash, by certified or official
bank check or by wire transfer for the account of the Corporation
of the Exercise Price for the Warrant Shares specified in the
Exercise Agreement or (ii) by delivery to the Corporation of a
written notice of an election to effect a Cashless Exercise (as
defined in Section 1(c) below) for the Warrant Shares
specified in the Exercise Agreement. The Warrant Shares
so purchased shall be deemed to be issued to the Holder or such
Holder’s designee, as the record owner of such shares, as of
the close of business on the date on which the completed Exercise
Agreement shall have been delivered, and payment shall have been
made for such shares as set forth above. Certificates
for the Warrant Shares so purchased, representing the aggregate
number of shares specified in the Exercise Agreement, shall be
delivered to the Holder (without restrictive legend thereon when
such exercise occurs while a registration statement registering
under the Securities Act of 1933, as amended (the “Securities
Act”) the resale of the Warrant Shares so purchased is
effective or such Warrant Shares so purchased may be resold by the
Holder pursuant to Rule 144(i) or any similar successor rule)
within a reasonable time, not exceeding five (5) Business Days,
after this Warrant shall have been so exercised. The
certificates so delivered shall be in such denominations as may be
requested by the Holder and shall be registered in the name of the
Holder or such other name as shall be designated by the
Holder. If this Warrant shall have been exercised only
in part, then, at the option of the Holder (i) the Holder may
surrender this Warrant to the Corporation and, unless this Warrant
has expired, the Corporation shall, at its expense, within a
reasonable time, not exceeding twenty (20) Business Days, after
this Warrant shall have been so exercised, deliver to the Holder a
new Warrant representing the number of shares with respect to which
this Warrant shall not then have been exercised, or (ii) the Holder
may retain this Warrant and the Warrant Shares purchasable under
this Warrant shall be reduced by such number of Warrant Shares so
exercised by the Holder and properly delivered by the Corporation
hereunder.
b.
Cashless Exercise . Notwithstanding any
provisions herein to the contrary, if during the Exercise Period
the fair market value of one share of the Common Stock is greater
than the Exercise Price (at the date of calculation as set forth
below), in lieu of exercising this Warrant by payment of cash or by
check, the Holder may exercise this Warrant in whole or in part by
presentation and surrender of this Warrant to the Corporation at
its principal executive offices, with a written notice of the
Holders intention to effect a cashless exercise, including a
calculation of the number of share of Class A Common Stock to be
issued upon such exercise in accordance with the terms hereof (a
“Cashless Exercise”). In the event of a
Cashless Exercise, in lieu of paying the Exercise Price in cash,
the Holder shall surrender this Warrant for that number of shares
of Class A Common Stock determined by multiplying the number of
Warrant Shares to which such Holder would otherwise be entitled by
a fraction (i) the numerator of which shall be the difference
between (A) the average Market Price per share of the Class A
Common Stock for the twenty (20) Trading Days immediately prior to
the date the completed Exercise Agreement shall have been delivered
to the Corporation (the “ Cashless Exercise Market
Price ”) and (B) the Exercise Price (as adjusted to the
date of such calculation), multiplied by the number of shares of
Common Stock purchasable under this Warrant or, if only a portion
of this Warrant is being exercised, the portion of this Warrant
being canceled (at the date of such calculation) and (ii) the
denominator of which shall be the Cashless Exercise Market
Price.
Section 2. Period of
Exercise .
This Warrant is exercisable at any time or from
time to time on or after the date hereof and before 5:00 p.m., New
York, New York time on March 31, 2014 (the “ Exercise
Period ”).
Section 3. Certain
Agreements of the Corporation .
The Corporation hereby covenants and agrees as
follows:
a.
Shares to be Fully Paid . All Warrant Shares
will, upon issuance in accordance with the terms of this Warrant,
be validly issued, fully paid, and nonassessable and free from all
taxes, liens, and charges with respect to the issue
thereof.
b.
Reservation of Shares . During the Exercise
Period, the Corporation shall at all times have authorized, and
reserved for the purpose of issuance upon exercise of this Warrant,
a sufficient number of shares of Class A Common Stock to provide
for the exercise of this Warrant.
c.
Listing . If the Corporation’s Class A
Common Stock is listed as of the date of this Warrant, or if so
listed in the future, the Corporation shall maintain its listing of
its Class A Common Stock on each national securities exchange or
automated quotation system, as the case may be, and shall maintain
such listing of any other shares of capital stock of the
Corporation issuable upon the exercise of this Warrant if and so
long as any shares of the same class shall be listed on such
national securities exchange or automated quotation
system.
d.
Certain Actions Prohibited . The Corporation will
not, by amendment of its charter 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 to be
observed or performed by it hereunder, but will at all times in
good faith assist in the carrying out of all the provisions of this
Warrant and in the taking of all such action as may reasonably be
requested by the Holder of this Warrant in order to protect the
exercise privilege of the Holder of this Warrant against dilution
or other impairment, consistent with the tenor and purpose of this
Warrant. Without limiting the generality of the
foregoing, the Corporation (i) will not increase the par value of
any shares of Class A Common Stock receivable upon the exercise of
this Warrant above the Exercise Price then in effect, and (ii) will
take all such actions as may be necessary or appropriate in order
that the Corporation may validly and legally issue fully paid and
nonassessable shares of Class A Common Stock upon the exercise of
this Warrant.
e.
Successors and Assigns . This Warrant will be
binding upon any entity succeeding to the Corporation by merger,
consolidation, or acquisition of all or substantially all the
Corporation’s assets.
f.
Delivery of Class A Common Stock by Electronic Transfer
. In lieu of delivering physical certificates
representing the Class A Common Stock issuable upon exercise,
provided the Corporation’s transfer agent is participating in
the Depository Trust Corporation (“DTC”) Fast Automated
Securities Transfer program and the Corporation has activated such
programs, upon request of the Holder and its compliance with the
provisions contained in Section 1, the Corporation shall use its
best efforts to cause its transfer agent to electronically transmit
the Class A Common Stock issuable upon exercise to the Holder by
crediting the account of Holder’s Prime Broker with DTC
through its Deposit Withdrawal Agent Commission system.
Section 4. Antidilution
Provisions . During the Exercise Period, the
Exercise Price and the number of Warrant Shares shall be subject to
adjustment from time to time as provided in this Section
4. In the event that any adjustment of the Exercise
Price as required herein results in a fraction of a cent, such
Exercise Price shall be rounded up to the nearest cent.
a.
Subdivision or Combination of Class A Common Stock
. If the Corporation at any time subdivides (by any
stock split, stock dividend, recapitalization, reorganization,
reclassification or otherwise) the shares of Class A Common Stock
acquirable hereunder into a greater number of shares, then, after
the date of record for effecting such subdivision, the Exercise
Price in effect immediately prior to such subdivision will be
proportionately reduced. If the Corporation at any time
combines (by any reverse stock split, recapitalization,
reorganization, reclassification or otherwise) the shares of Class
A Common Stock acquirable hereunder into a smaller number of
shares, then, after the date of record for effecting such
combination, the Exercise Price in effect immediately prior to such
combination will be proportionately increased.
b.
Adjustment in Number of Shares . Upon each
adjustment of the Exercise Price pursuant to the provisions of this
Section 4, the number of shares of Class A Common Stock issuable
upon exercise of this Warrant shall be adjusted by multiplying a
number equal to the Exercise Price in effect immediately prior to
such adjustment by the number of shares of Class A Common Stock
issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product so obtained by the adjusted
Exercise Price.
c.
Recapitalization, Reorganization, Reclassification,
Consolidation, Merger or Sale .
(i) Subject
at all times to the provisions of Section 4(c)(iii) below, in case
the Corporation after the Original Issue Date shall do any of the
following (each, a “Triggering Event”): (a) consolidate
or merge with or into any other Person and the Corporation shall
not be the continuing or surviving corporation of such
consolidation or merger, or (b) permit any other Person to
consolidate with or merge into the Corporation and the Corporation
shall be the continuing or surviving Person but, in connection with
such consolidation or merger, any Capital Stock of the Corporation
shall be changed into or exchanged for Securities of any other
Person or cash or any other property, or (c) transfer all or
substantially all of its properties or assets to any other Person,
or (d) effect a capital reorganization or reclassification of its
Class A Common Stock and/or Preferred Stock (collectively,
“Capital Stock”), then, and in the case of each such
Triggering Event, proper provision shall be made to the Exercise
Price and the number of shares of Warrant Stock that may be
purchased upon exercise of this Warrant so that, upon the basis and
the terms and in the manner provided in this Warrant, the Holder of
this Warrant shall be entitled upon the exercise hereof at any time
after the consummation of such Triggering Event, to the extent this
Warrant is not exercised prior to such Triggering Event, to receive
at the Exercise Price in effect at the time immediately prior to
the consummation of such Triggering Event, in lieu of the Class A
Common Stock issuable upon such exercise of this Warrant prior to
such Triggering Event, the Capital Stock, cash and property to
which such Holder would have been entitled upon the consummation of
such Triggering Event if such Holder had exercised the rights
represented by this Warrant immediately prior thereto (including
the right of a shareholder to elect the type of consideration it
will receive upon a Triggering Event), subject to adjustments
(subsequent to such corporate action) as nearly equivalent as
possible to the adjustments provided for elsewhere in this Section
4; provided , however , the Holder at its option may
elect to receive an amount in unregistered shares of the common
stock of the surviving entity equal to the value of this Warrant
calculated in accordance with the Black-Scholes formula;
provided , further , such shares of Class A Common
Stock shall be valued at a twenty percent (20%) discount to the
VWAP of the Class A Common Stock for the twenty (20) Trading Days
immediately prior to the Triggering Event. Immediately upon
the occurrence of a Triggering Event, the Corporation shall notify
the Holder in writing of such Triggering Event and provide the
calculations in determining the number of shares of Warrant Stock
issuable upon exercise of the new warrant and the adjusted Exercise
Price. Upon the Holder’s request, the continuing or
surviving corporation as a result of such Triggering Event shall
issue to the Holder a new warrant of like tenor evidencing the
right to purchase the adjusted number of Warrant Shares and the
adjusted Exercise Price pursuant to the terms and provisions of
this Section 4(c)(i). Notwithstanding the foregoing to the
contrary, this Section 4(c)(i) shall only apply if the surviving
entity pursuant to any such Triggering Event is a company that has
a class of equity securities registered pursuant to the Securities
Exchange Act of 1934, as amended (the “ Exchange Act
”), and its common stock is listed or quoted on a national
securities exchange, national automated quotatio
