Exhibit 10.47

 

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT (i) EFFECTIVE REGISTRATION STATEMENTS RELATED THERETO, (ii) AN OPINION
OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF NO-ACTION LETTERS, FROM THE
APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH THE
PROVISIONS OF SECTION 8 OF THIS WARRANT.

 

eUniverse, Inc.

 

WARRANT TO PURCHASE SHARES

OF SERIES B PREFERRED STOCK

 

THIS CERTIFIES THAT, for value received, VP Alpha Holdings IV, L.L.C.., a
Delaware corporation, and its assignees are entitled to subscribe for and
purchase 200,000 shares of the fully paid and nonassessable Series B Preferred
Stock (as adjusted pursuant to Section 5 hereof, the “Shares”) of eUniverse,
Inc., a Delaware corporation (the “Company”), at the Warrant Price as set forth
in Section 2 below, subject to the provisions and upon the terms and conditions
hereinafter set forth. As used herein, (a) the term “Series Preferred” shall
mean the Company’s authorized Series B Preferred Stock, and any Stock into or
for which such Series B Preferred Stock may thereafter be converted or
exchanged, and (b) the term “Date of Grant” shall mean the Date of Grant listed
on the signature page hereof.

 

1. Term. The purchase right represented by this Warrant is exercisable, in whole
or in part, at any time and from time to time from the Date of Grant through 5
p.m., Pacific standard time, three (3) years from the Date of Grant.

 

2. Warrant Price. The price at which this Warrant may be exercised shall be
$2.50 per share of Series B Preferred Stock. Such price and such other price as
shall result from time to time, from the adjustments specified in Section 5
hereof is herein referred to as the “Warrant Price”.

 

3. Method of Exercise Payment; Issuance of New Warrant. Subject to Section 1
hereof, the purchase right represented by this Warrant may be exercised by the
holder hereof, in whole or in part and from time to time, at the election of the
holder hereof, by (a) the surrender of this Warrant (with the notice of exercise
substantially in the form attached hereto as Exhibit A duly completed and
executed) at the principal office of the Company and by the payment to the
Company, by certified or bank check by wire transfer to an account designated by
the Company (a “Wire Transfer”), or by the cancellation by the holder hereof of
indebtedness or other obligations of the Company to such holder of an amount
equal to the then applicable Warrant Price multiplied by the number of Shares
then being purchased, or (b) exercise of the right provided for in Section 11.3
hereof. The person or persons in whose name(s) any certificate(s) representing
shares of Series Preferred shall be issuable upon exercise of this Warrant shall
be deemed to have become the holder(s) of record of, and shall be treated for
all purposes as the record holder(s) of, the shares represented thereby (and
such shares shall be deemed to have been issued) immediately prior to the close
of business on the date or dates upon which this Warrant is exercised. In the
event of any exercise of the rights represented by this Warrant, certificates
for the shares of stock so purchased shall be delivered to the holder hereof by
the Company at the Company’s expense as soon as possible and in any event within
thirty (30) days after such exercise and, unless this Warrant has been fully
exercised or expired, a new Warrant representing the portion of the Shares, if
any, with respect to which this Warrant shall not then have been exercised shall
also be issued to the holder hereof as soon as possible and in any event within
such thirty-day period.

 

4. Stock Fully Paid; Reservation of Shares. All Shares that may be issued upon
the exercise of the rights represented by this Warrant will, upon issuance
pursuant to the terms and conditions herein, be duly authorized, validly issued,
fully paid and nonassessable, and free from all taxes, liens, encumbrances,
preemptive rights and charges. During the period within which the rights
represented by this Warrant may be exercised, the Company will at all times have
authorized, and reserved for the purpose of the issue upon exercise of the
purchase rights evidenced by this Warrant, a sufficient number of shares of its
Series Preferred to provide for the exercise of the rights represented by this
Warrant and a sufficient number of shares of its Common Stock to provide for the
conversion of the Series Preferred into Common Stock, and from time to time,
will take all steps necessary to amend its Certificate of Incorporation to
provide sufficient reserves of shares of Series Preferred issuable upon exercise
of the Warrant (and shares of its Common Stock for issuance on conversion of
such Series Preferred).

 

5. Adjustment of Warrant Price and Number of Shares. The number and kind of
securities purchasable upon the exercise of this Warrant and the Warrant Price
shall be subject to adjustment from time to time upon the occurrence of certain
events, as follows:

 

(a) Conversion of Series Preferred. Should all of the Company’s Series Preferred
be, or if outstanding would be, at any time prior to the expiration of this
Warrant or any portion thereof, converted into shares of the Company’s Common
Stock in accordance with the Company’s Certificate of Incorporation, then the
Company shall duly execute and deliver to the holder of this Warrant a new
Warrant (in form and substance satisfactory to the holder of this Warrant), so
that the holder of this Warrant shall have the right to receive that number of
shares of the Company’s Common Stock equal to the number shares of the Common
Stock that would have been received if this Warrant had been exercised in full
and the Series Preferred received thereupon had been simultaneously converted
immediately prior to such event, and the Warrant Price shall immediately be
adjusted to equal the quotient obtained by dividing (i) the aggregate Warrant
Price of the maximum number of shares of Series Preferred for which this Warrant
was exercisable immediately prior to such conversion, by (ii) the number of
shares of Common Stock for which this Warrant is exercisable immediately after
such conversion. Such new Warrant shall be immediately exercisable and shall
provide for adjustments that shall be as nearly equivalent as may be practicable
to the adjustments provided for in this Section 5 and shall provide for
anti-dilution protection that shall be as nearly equivalent as may be
practicable to the anti-dilution provision applicable to the Series Preferred on
the Date of Grant. For purposes of the

 

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foregoing, the “Certificate of Incorporation” shall mean the Certificate of
Incorporation of the Company as amended and/or restated and effective
immediately prior to the conversion of all of the Company’s Series Preferred. At
the time of any such conversion of all of the Company’s Series Preferred,
references herein to Series Preferred shall be deemed to refer to the Company’s
Common Stock to the extent necessary to give appropriate meaning to the
provisions hereof.

 

(b) Reclassification or Merger. In case of any reclassification or change of
securities of the class issuable upon exercise of this Warrant (other than a
change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination), or in case of any
merger of the Company with or into another corporation (other than a merger with
another corporation in which the Company is the acquiring and the surviving
corporation and which does not result in any reclassification or change of
outstanding securities issuable upon exercise of this Warrant), or in case of
any sale of all or substantially all of the assets of the Company, the Company,
or such successor or purchasing corporation, as the case may be, shall duly
execute and deliver to the holder of this Warrant a new Warrant (in form and
substance satisfactory to the holder of this Warrant), so that the holder of
this Warrant shall have the right to receive, at a total purchase price not to
exceed that payable upon the exercise of the unexercised portion of this
Warrant, and in lieu of the shares of Series Preferred theretofore issuable upon
exercise of this Warrant, the kind and amount of shares of stock, other
securities, money and property receivable upon such reclassification, change or
merger that a holder of the shares deliverable upon exercise of this Warrant
would have been entitled to receive in such reclassification, change or merger
if this Warrant had been exercised immediately before such reclassification,
change or ,merger, all subject to further adjustment as provided in this Section
5. Such new Warrant shall provide for adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
5 and, in the case of a new Warrant issuable after the amendment of the terms of
the anti-dilution protection of the Series Preferred, shall provide for
anti-dilution protection that shall be as nearly equivalent as may be
practicable to the anti-dilution provisions applicable to the Series Preferred
on the Date of Grant. The provisions of this subparagraph (a) shall similarly
apply to successive reclassifications, changes, mergers and transfers.

 

(c) Subdivision or Combination of Shares. If the Company at any time while this
Warrant, or any portion thereof, remains outstanding and unexpired shall split,
subdivide or combine the securities as to which purchase rights under this
Warrant exist, into a different number of securities of the same class, the
Warrant Price shall be proportionately decreased in the case of a split or
subdivision or increased in the case of a combination, effective at the close of
business on the date the subdivision or combination becomes effective.

 

(d) Stock Dividends and Other Distributions. If the Company at any time while
this Warrant is outstanding and unexpired shall (i) pay a dividend with respect
to Series Preferred payable in Series Preferred, or (ii) make any other
distribution with respect to Series Preferred (except any distribution
specifically provided for in Sections 5(b) and 5(c)), of Series Preferred, then
the Warrant Price shall be adjusted, from and after the date of determination of
shareholders entitled to receive such dividend or distribution, to that price
determined by multiplying the Warrant Price in effect immediately prior to such
date of determination by a fraction (i) the numerator of which shall be the
total number of shares of Series Preferred outstanding immediately prior to such
dividend or distribution, and (ii) the denominator of which shall be the total
number of shares of Series Preferred outstanding immediately after such dividend
or distribution.

 

(e) Adjustment of Number of Shares. Upon each adjustment in the Warrant Price,
the number of Shares of Series Preferred purchasable hereunder shall be
adjusted, to the nearest whole share, to the product obtained by multiplying the
number of Shares purchasable immediately prior to such adjustment in the Warrant
Price by a fraction, the numerator of which shall be the Warrant Price
immediately priori to such adjustment and the denominator of which shall be the
Warrant Price immediately thereafter.

 

(f) Anti-dilution Rights. The other antidilution rights applicable to the Shares
of Series Preferred purchasable hereunder are set forth in the Company’s
Certificate of Incorporation, as amended through the Date of Grant, a true and
complete copy of which has been supplied to the holder of this Warrant (the
“Charter”). The Company shall promptly provide the holder hereof with any
restatement, amendment, modification or waiver of the Charter promptly after the
same has been made.

 

6. Notice of Adjustments. Whenever the Warrant Price or the number of Shares
purchasable hereunder shall be adjusted pursuant to Section 5 hereof, the
Company shall make 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
Warrant Price and the number of Shares purchasable hereunder after giving effect
to such adjustment, and shall cause copies of such certificate to be mailed
(without regard to Section 14 hereof, by first class mail, postage prepaid) to
the holder of this Warrant. In addition, whenever the conversion price or
conversion ratio of the Series Preferred shall be adjusted, the Company shall
make 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
conversion price or ratio of the Series Preferred after giving effect to such
adjustment, and shall cause copies of such certificate to be mailed (without
regard to Section 14 hereof, by first class mail, postage prepaid) to the holder
of this Warrant.

 

7. Fraction Shares. No fractional shares of Series Preferred will be issued in
connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor based on the fair market value of
the Series Preferred on the date of exercise as reasonably determined in good
faith by the Company’s Board of Directors.

 

8. Compliance with; Act: Disposition of Warrant or Shares of Series Preferred.

 

(a) Compliance with Act. The holder of this Warrant, by acceptance hereof,
agrees that this Warrant, and the shares of Series Preferred to be issued upon
exercise hereof and any Common Stock issued upon conversion thereof are being
acquired for investment and that such holder will not offer, sell or otherwise
dispose of this Warrant, or any shares of Series Preferred to be issued upon
exercise hereof or any Common Stock issued upon conversion thereof except under
circumstances which will not result in a violation of the Act or any applicable
state securities laws. Upon exercise of this Warrant,

 

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unless the Shares being acquired are registered under the Act and any applicable
state securities laws or an exemption from such registration is available, the
holder hereof shall confirm in writing that the shares of Series Preferred so
purchased (and any shares of Common Stock issued upon conversion thereof) are
being acquired for investment and not with a view toward distribution or resale
in violation of the Act and shall confirm such other matters related thereto as
may be reasonably requested by the Company. This Warrant and all shares of
Series Preferred issued upon exercise of this Warrant and all shares of Common
Stock issued upon conversion thereof (unless registered under the Act and any
applicable state securities laws) shall be stamped or imprinted with a legend in
substantially the following form:

 

“THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION
MAY BE EFFECTED WITHOUT (i) EFFECTIVE REGISTRATION STATEMENTS RELATED THERETO,
(ii) AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE
COMPANY, THAT SUCH REGISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF NO-ACTION
LETTERS FROM THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE
COMPLYING WITH THE PROVISIONS OF SECTION 8 OF THE WARRANT UNDER WHICH THESE
SECURITIES WERE ISSUED, DIRECTLY OR INDIRECTLY.”

 

Said legend shall be removed by the Company, upon the request of a holder, at
such time as the restrictions on the transfer of the applicable security shall
have terminated. In addition, in connection with the issuance of this Warrant,
the holder specifically represents to the Company by acceptance of this Warrant
as follows:

 

(1) The holder is acquiring this Warrant for its own account for investment
purposes only and not with a view to, or for the resale in connection with, any
“distribution” thereof in violation of the Act. The holder is an “accredited
investor” as defined in Rule 501(a) of Regulation D promulgated under the Act.

 

(2) The holder understands that this Warrant has not been registered under the
Act in reliance upon a specific exemption therefrom, which exemption depends
upon, among other things, the bona fide nature of the holder’s investment intent
as expressed herein.

 

(3) The holder further understands that this Warrant must be held indefinitely
unless subsequently registered under the Act and qualified under any applicable
state securities laws, or unless exemptions from registration and qualification
are otherwise available. The holder is aware of the provisions of Rule 144,
promulgated under the Act.

 

(b) Disposition of Warrant or Shares. With respect to any offer, sale or other
disposition of this Warrant or any shares of Series Preferred acquired pursuant
to the exercise of this Warrant prior to registration of such Warrant or shares,
the holder hereof agrees to give written notice to the Company prior thereto,
describing briefly the manner thereof, together with a written opinion of such
holder’s counsel, or other evidence, if reasonably requested by the Company, to
the effect that such offer sale or other disposition may be effected without
registration or qualification (under the Act as then in effect or any federal or
state securities law then in effects) of this Warrant or such shares of Series
Preferred or Common Stock and indicating whether or not under the Act
certificates for this Warrant or such shares of Series Preferred to be sold or
otherwise disposed of require any restrictive legend as to applicable
restrictions on transferability in order to ensure compliance with such law.
Promptly upon receiving such written notice and reasonably satisfactory opinion
or other evidence, if so requested, the Company, as promptly as practicable but
no later than fifteen (15) days after receipt of the written notice, shall
notify such holder that such holder may sell or otherwise dispose of this
Warrant or such shares of Series Preferred or Common Stock, all in accordance
with the terms of the notice delivered to the Company. If a determination has
been made pursuant to this Section 8(b) that the opinion of counsel for the
holder, or other evidence is not reasonably satisfactory to the Company, the
Company shall so notify the holder promptly with details thereof after such
determination has been made. Notwithstanding the foregoing, this Warrant or such
shares of Series Preferred or Common Stock may, as to such federal laws, be
offered, sold or otherwise disposed of in accordance with Rule 144 or 144A under
the Act, provided that the Company shall have been furnished with such
information as the Company may reasonably request to provide a reasonable
assurance that the provisions of Rule 144 or 144A have been satisfied. Each
certificate representing this Warrant or the shares of Series Preferred thus
transferred (except a transfer pursuant to Rule 144 or 144A) shall bear a legend
as to the applicable restrictions on transferability in order to ensure
compliance with such laws, unless in the aforesaid opinion of counsel for the
holder, such legend is not required in order to ensure compliance with such
laws. The Company may issue stop transfer instructions to its transfer agent in
connection with such restrictions.

 

(c) Applicability of Restrictions. Neither any restrictions of any legend
described in this Warrant nor the requirements of Section 8(b) above shall apply
to any transfer or grant of a security interest in, this Warrant (or the Series
Preferred or Common Stock obtainable upon exercise thereof) or any part hereof
(i) to a partner of the holder if the holder is partnership, (ii) to a
partnership of which the holder is a partner, or (iii) to any affiliate of the
holder if the holder is a corporation; provided, however, in any such transfer,
if applicable, the transferee shall on the Company’s request agree in writing to
be bound by the terms of this Warrant as if an original signatory hereto.

 

9. Rights as Shareholder’s Information. No holder of this Warrant, as such,
shall be entitled to vote or receive dividends or be deemed the holder of Series
Preferred or any other securities of the Company which may at any time be
issuable on the exercise hereof for any purpose, nor shall anything contained
herein be construed to confer upon the holder of this Warrant, as such, any of
the rights of a shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until this Warrant shall have been exercised
and the Shares purchasable upon the exercise hereof shall have become
deliverable, as provided herein. Notwithstanding the foregoing, the Company will
transmit to the holder of this Warrant such information, documents and reports
as are generally distributed to the holders of any class or series of the
securities of the Company concurrently with the distribution thereof to the
shareholders.

 

10. Registration Rights. The Company grants registration rights to the holders
of this Warrant for any Common Stock of the Company obtained upon conversion of
the Series Preferred,

 

 

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comparable to the registration rights granted to the investors in that certain
                 Agreement dated as of             ,          (the “Registration
Rights Agreement”).

 

11. Additional Rights.

 

11.1 Secondary Sales. The Company agrees that it will not interfere with the
holder of this Warrant in obtaining liquidity if opportunities to make secondary
sales of the Company’s securities become available.

 

11.2 Mergers. The Company shall provide the holder of this Warrant with at least
thirty (30) days’ notice of the terms and conditions of any of the following
potential transactions: (i) the sale, lease, exchange, conveyance or other
disposition of all or substantially all of the Company’s property or business,
or (ii) its merger into or consolidation with any other corporation (other than
a wholly-owned subsidiary of the Company), or any transaction (including a
merger or other reorganization) or series of related transactions, in which more
than 50% of the voting power of the Company is disposed of. The Company will
cooperate with the holder in arranging the sale of this Warrant in connection
with any such transaction.

 

11.3 Rights to Convert Warrant into Stock; Net Issuance.

 

(a) Right to Convert. In addition to and without limiting the rights of the
holder under the terms of this Warrant, the holder shall have the right to
convert this Warrant or any portion thereof (the “Conversion Right”) into shares
of Series Preferred (or Common Stock if the Series Preferred has been
automatically converted into Common Stock) as provided in this Section 11.3 at
any time or from time to time during the term of this Warrant. Upon exercise of
the Conversion Right with respect to a particular number of shares subject to
this Warrant (the “Converted Warrant Shares”), the Company shall deliver to the
holder (without payment by the holder of any exercise price or any cash or other
consideration) (X) that number of shares of fully paid and nonassessable Series
Preferred (or Common Stock if the Series Preferred has been automatically
converted into Common Stock) equal to the quotient obtained by dividing the
value of this Warrant (or the specified portion hereof) on the Conversion Date
(as defined in subsection (b) hereof), which value shall be determined by
subtracting (A) the aggregate Warrant Price of the Converted Warrant Shares
immediately prior to the exercise of the Conversion Right from (B) the aggregate
fair market value of the Converted Warrant Shares issuable upon exercise of this
Warrant (or the specified portion hereof) on the Conversion Date (as herein
defined) by (Y) the fair market value of one share of Series Preferred (or
Common Stock if the Series Preferred has been automatically converted into
Common Stock) on the Conversion Date (as herein defined).

 

Expressed as a formula, such conversion (assuming the Series Preferred has been
automatically converted into Common Stock) shall be computed as follows:

 

X    =

   B –A             Y     

Where: X

   =    the number of shares of Common Stock that may be issued to holder

              Y

   =    the fair market value (FMV) of one share of Common Stock

              A

   =    the aggregate Warrant Price (i.e., Converted Warrant Shares x Warrant
Price)

              B

   =    the aggregate FMV (i.e., FMV x Converted Warrant Shares)

 

No fractional shares shall be issuable upon exercise of the Conversion Right,
and, if the number of shares to be issued determined in accordance with the
foregoing formula is other than a whole number, the Company shall pay to the
holder an amount in cash equal to the fair market value of the resulting
fractional share on the Conversion Date (as hereinafter defined). For purposes
of Section 10 of this Warrant, shares issued pursuant to the Conversion Right
shall be treated as if they were issued upon the exercise of this Warrant.

 

(b) Method of Exercise. The Conversion Right may be exercised by the holder by
the surrender of this Warrant at the principal office of the Company together
with a written statement specifying that the holder thereby intends to exercise
the Conversion Right and indicating the number of shares subject to this Warrant
which are being surrendered (referred to in Section 11.3(a) hereof as the
Converted Warrant Shares) in exercise of the Conversion Right. Such conversion
shall be effective upon receipt by the Company of this Warrant together with the
aforesaid written statement, or on such later date as is specified therein (the
“Conversion Date”), and, at the election of the holder hereof, may be made
contingent upon the closing of the sale of the Company’s Common Stock to the
public in a public offering pursuant to a Registration Statement under the Act
(a “Public Offering”). Certificates for the shares issuable upon exercise of the
Conversion Right and, if applicable, a new warrant evidencing the balance of the
shares remaining subject to this Warrant, shall be issued as of the Conversion
Date and shall be delivered to the holder within thirty (30) days following the
Conversion Date. Any conversion from Series Preferred to Common Stock shall be
in the ratio of one (1) share of Common Stock for each share of Series Preferred
(as adjusted herein and in the Charter). On the Date of Grant, each share of the
Series Preferred represented by this Warrant is convertible into one (1) share
of Common Stock.

 

(c) Determination of Fair Market Value. For purposes of this Section 11.3, “fair
market value” of a share of Series Preferred (or Common Stock if the Series
Preferred has been automatically converted into Common Stock) as of a particular
date (the “Determination Date”) shall mean:

 

(i) If the Conversion Right is exercised in connection with and contingent upon
the closing of the sale and issuance of shares of Common Stock of the Company in
a firmly underwritten public offering, pursuant to an effective registration
statement under the Securities Act of 1933, as amended, (“Public Offering”), and
if the Company’s Registration Statement relating to such Public Offering
(“Registration Statement”) has been declared effective by the SEC, then the
initial “Price to Public” specified in the final prospectus with respect to such
offering.

 

(ii) If the Conversion Right is not exercised in connection with and contingent
upon a Public offering, then as follows:

 

(A) If traded on a securities exchange, the fair market value of the Common
Stock shall be deemed to be the average of the closing prices of the

 

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Common Stock on such exchange over the 30-day period ending five business days
prior to the Determination Date, and the fair market value of the Series
Preferred shall be deemed to be such fair market value of the Common Stock
multiplied by the number of shares of Common Stock into which each share of
Series Preferred is then convertible;

 

(B) If traded over-the-counter, the fair market value of the Common Stock shall
be deemed to be the average of the closing bid prices of the Common Stock over
the 30-day period ending five business days prior to the Determination Date, and
the fair market value of the Series Preferred shall be deemed to be such fair
market value of the Common Stock multiplied by the number of shares of Common
Stock into which each share of Series Preferred is then convertible; and

 

(C) If there is no public market for the Common Stock, then fair market value
shall be determined by mutual agreement of the holder of this Warrant and the
Company.

 

12. Representations and Warranties. The Company represents and warrants to the
holder of this Warrant that:

 

(a) Loan Agreement. The representations and warranties of the Company contained
in that certain Secured Note Purchase Agreement (the “Note Purchase Agreement”)
between the Company and the initial holder hereof, dated as of
                    , 2003, are true, complete and correct.

 

(b) Corporate Power. The Company has all requisite legal and corporate power to
execute and deliver this Warrant and any other agreement contemplated hereby, to
sell and issue the Warrant, to sell and issue the Shares upon exercise of the
Warrant upon the terms of the Warrant, to sell and issue the shares of Common
Stock issuable upon conversion of the Shares (the “Conversion Shares”) and to
carry out and perform its obligations under the terms of this Agreement and any
other agreement contemplated hereby or thereby. (The Shares and the Conversion
Shares are collectively referred to hereinafter as the “Underlying Stock.”)

 

(c) Authorization. All corporate action on the part of the Company, its
directors and stockholders necessary for the authorization, sale and issuance of
the Warrant, the Warrant Shares and the Conversion Shares, and the performance
of the company’s obligations hereunder, contemplated hereby and the reservation
of the Underlying Stock has been taken. This Agreement and the Warrant and the
other transactions contemplated hereby are valid and binding obligations of the
Company, enforceable in accordance with their respective terms, subject to laws
of general application relating to bankruptcy, insolvency and the relief of
debtors.

 

(d) Rights. The rights, preferences, privileges and restrictions granted to or
imposed upon the Shares and the holders thereof are as set forth in the
Company’s Certificate of Incorporation, a true and complete copy of which has
been provided to the holder of this Warrant.

 

(e) No Inconsistency. The execution and delivery of this warrant is not, and the
issuance of the Shares upon exercise of the Warrant in accordance with the terms
hereof, and the issuance of the Conversion Shares upon conversion of the Shares,
will not be, inconsistent with the Certificate of Incorporation or the Company’s
Bylaws, do not and will not contravene any law, governmental rule or regulation,
judgment or order applicable to the Company, and do not and will not conflict
with or contravene any provision of, or constitute a default under, any
indenture, mortgage, contract or other instrument of which the Company is a
party or by which it is bound or require the consent or approval of, the giving
of notice to, the registration or filing with or the taking of any action in
respect of or by, any Federal, state or local government authority or agency or
other person, except for the filing of notices pursuant to federal and state
securities laws, which filings will be effected by the time required thereby
and, except for defaults, conflicts, or contraventions, or where the failure to
obtain any such consent or approval, or to register, file, or take any action,
would not have a Material Adverse Effect (as defined in the Note Purchase
Agreement).

 

(f) No Suits. There are no actions, suits, audits, investigations or proceedings
pending or, to the knowledge of the Company, threatened against the Company in
any court or before any governmental commission, board or authority which, if
adversely determined, would reasonably be expected to have a Material Adverse
Effect (as defined in the Note Purchase Agreement) or a material adverse effect
on the ability of the Company to perform its obligations under this Warrant.

 

13. Modification and Waiver. This Warrant and any provision 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.

 

14. Notices. Any notice, request, communication or other document required or
permitted to be given or delivered to the holder hereof or the Company shall be
delivered, or shall be sent by certified or registered mail, postage prepaid, to
each such holder at its address as shown on the books of the Company or to the
Company at the address indicated therefor on the signature page of this Warrant.

 

15. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company’s assets, and all of the obligations of
the Company relating to the Series Preferred issuable upon the exercise or
conversion of this Warrant shall survive the exercise, conversion and
termination of this Warrant.

 

16. Lost Warrants or Stock Certificates. The Company covenants to the holder
hereof that, upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of this Warrant or any stock
certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver a new Warrant or stock
certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant or stock certificate.

 

17. Descriptive Headings. The descriptive headings of the several paragraphs of
this Warrant are inserted for convenience only and do not constitute a part of
this Warrant.

 

18. Governing Law. This Warrant shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the laws of the State
of California without regard to the conflicts of law principle.

 

 

5

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19. Survival of Representations, Warranties and Agreements. All representations
and warranties of the Company and the holder hereof contained herein shall
survive the Date of Grant and the exercise or conversion of this Warrant (or any
part hereof). All agreements of the Company and the holder hereof contained
herein shall survive indefinitely until, by their respective terms, they are no
longer operative.

 

20. Remedies. In case any one or more of the covenants and agreements contained
in this Warrant shall have been breached, the holders hereof (in the case of a
breach by the Company), or the Company (in the case of a breach by a holder),
may proceed to protect and enforce their or its rights either by suit in equity
and/or by action at law, including, but not limited to, an action for damages as
a result of any such breach and/or an action for specific performance of any
such covenant or agreement contained in this Warrant.

 

21. No Impairment of Rights. The Company will not, by amendment of its Charter
or through any other means, 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 of
this Warrant against impairment.

 

22. Severability. The invalidity or unenforceability of any provision of this
Warrant in any jurisdiction shall not affect the validity or enforceability of
such provision in any other jurisdiction, or affect any other provision of this
Warrant, which shall remain in full force and effect.

 

23. Dispute Resolution. In the event of any dispute arising out of or relating
to this Warrant, then such dispute shall be              resolved solely and
exclusively by confidential binding arbitration with the San Francisco branch of
JAMS (“JAMS”) to be governed by JAMS’ Commercial Rules of Arbitration (the “JAMS
Rules”) and heard before one arbitrator. The parties shall attempt to mutually
select the arbitrator. in the event they are unable to mutually agree, the
arbitrator shall be selected by the procedures prescribed by the JAMS Rules.
Each party shall bear its own attorneys’ fees, expert witness fees, and costs
incurred in connection with any arbitration.

 

23. Construction. This Agreement has been negotiated and drafted by both parties
with counsel and its language shall be construed as to its fair meaning and not
strictly for or against any party.

 

24. Entire Agreement; Modification. This Warrant constitutes the entire
agreement between the parties pertaining to the subject matter contained in it
and supersedes all prior and contemporaneous agreements, representations, and
undertakings of the parties, whether oral or written, with respect to such
subject matter.

 

 

 

 

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EXHIBIT A

NOTICE OF EXERCISE

 

To eUniverse, Inc

 

1. The undersigned hereby:

 

¨   elects to purchase              shares of Series B Preferred Stock of
eUniverse, Inc. pursuant to the terms of the attached Warrant, and tenders
herewith payment of the purchase price of such shares in full, or

¨   elects to exercise its net issuance rights pursuant to Section 11.3 of the
attached Warrant with respect to              Shares of Series B Preferred
Stock.

 

2. Please issue a certificate or certificates representing said shares in the
name of the undersigned or in such other name or names as are specified below:

 

   

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(Name)

       

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(Address)

   

 

3. The undersigned represents that the aforesaid shares are being acquired for
the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares, all except as in
compliance with applicable securities laws

 

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(Signature)

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(Date)