EXHIBIT 10.2

 

NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE LAW AND SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED UNLESS (A) THERE IS
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE LAW
COVERING SUCH SECURITIES, OR (B) SUCH TRANSACTION IS EXEMPT FROM, AND NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS AND THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM
REGISTRATION, OR (C) THE COMPANY OTHERWISE SATISFIES ITSELF THAT SUCH SALE OR
TRANSFER IS EXEMPT FROM REGISTRATION.

 

No. W-L-     

 

Warrant to purchase

Issued:  February 8, 2002

 

                  shares of Common Stock

 

 

(subject to adjustment)

 

CENTERSPAN COMMUNICATIONS CORPORATION

 

COMMON STOCK

PURCHASE WARRANT

 

THIS CERTIFIES THAT, for value received,                      (the “Holder”) is
entitled to exercise this Warrant to purchase from the
Company                              (                      ) fully paid and
nonassessable shares of the Company’s Common Stock, $0.01 par value per share
(the “Common Stock”), on the terms and subject to the conditions set forth
herein.  The shares of Common Stock issuable upon the exercise of this Warrant
are referred to herein as the “Warrant Shares.”  The number of Warrant Shares
issuable upon exercise of this Warrant and the Exercise Price (as defined below)
are subject to adjustment as provided herein.  The term “Warrant” as used herein
shall include this Warrant and any warrants delivered in substitution hereof as
provided herein.

 

This Warrant is being issued in connection with the transactions contemplated by
the Unit Purchase Agreement dated as of February 8, 2002 between the Company
and                                   (the “Purchase Agreement”).

 

1.1          Term of Warrant

 

This Warrant may be exercised by the Holder at any time prior to the third
anniversary of the Closing Date (as defined in the Purchase Agreement).

 

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1.2          Exercise Price

 

The Exercise Price at which this Warrant may be exercised shall be $10.67 per
share of Common Stock, as adjusted from time to time pursuant to Section 4
hereof.

 

1.3          Method of Exercise

 

1.3.1       Cash Exercise

 

This Warrant may be exercised by the Holder, in whole or in part (but not for
less than 10,000 shares at a time, or such lesser amount then issuable upon the
full exercise of this Warrant), by delivering to the Company (a) this Warrant,
(b) cash, a wire transfer of funds or a check payable to the Company in the
amount of the Exercise Price multiplied by the number of shares for which this
Warrant is being exercised (the “Purchase Price”), and (c) the form of Election
to Purchase attached hereto as Annex A, duly completed and executed by the
Holder.  This Warrant shall be deemed to have been exercised immediately prior
to the close of business on the date of its surrender for exercise as provided
above.

 

1.3.2       “Easy Sale” Exercise

 

In lieu of the payment method set forth above in this Section 1.3, when
permitted by law and applicable regulations (including Nasdaq and NASD rules),
the Holder may pay the Purchase Price through a “same day sale” commitment from
the Holder, whereby the Holder irrevocably elects to exercise this Warrant and
to sell a portion of the Warrant Shares so purchased to pay for the Purchase
Price and the Holder commits upon sale of such Shares to forward the Purchase
Price directly to the Company.

 

2.             Delivery of Stock Certificates

 

Within five business days after the payment of the Purchase Price following the
exercise of this Warrant, the Company, at its expense, shall issue in the name
of the Holder (a) a certificate for the number of fully paid and nonassessable
Warrant Shares to which the Holder shall be entitled upon such exercise and
payment and (b) a new Warrant of like tenor to purchase up to that number of
Warrant Shares, if any, not previously purchased by the Holder if this Warrant
has not expired.

 

3.             Covenants as to Warrant Shares

 

3.1          Reservation of Warrant Shares

 

The Company shall at all times have authorized and reserve and keep available,
free from preemptive rights, for the purpose of enabling it to satisfy any
obligation to issue Warrant Shares upon the exercise of this Warrant, the number
of Warrant Shares deliverable upon full exercise of this Warrant.

 

3.2          Issuance of Warrant Shares

 

The Company covenants that all Warrant Shares shall, upon issuance thereof in
accordance with the terms of this Warrant, be (a) duly authorized, validly
issued, fully paid and nonassessable and (b) free from all liens, pledges,
charges and security interests created by the Company.

 

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4.             Adjustments

 

4.1          Adjustments of Exercise Price and Number of Warrant Shares

 

The Exercise Price and the number of Warrant Shares issuable upon the exercise
of this Warrant shall be subject to adjustment from time to time as hereinafter
provided in this Section 4.

 

4.2          Adjustment of Exercise Price Upon Extraordinary Common Stock Event

 

Upon the happening of an Extraordinary Common Stock Event (as defined below)
after the issuance date of this Warrant, the Exercise Price shall,
simultaneously with the happening of such Extraordinary Common Stock Event, be
adjusted by multiplying the then effective Exercise Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such Extraordinary Common Stock Event and the denominator
of which shall be the number of shares of Common Stock outstanding immediately
after such Extraordinary Common Stock Event, and the product so obtained shall
thereafter be the Exercise Price.  The Exercise Price, as so adjusted, shall be
readjusted in the same manner upon the happening of any successive Extraordinary
Common Stock Event or Events.

 

Upon each adjustment of such Exercise Price pursuant to this Section 4.2, this
Warrant shall thereafter entitle the Holder to purchase, at the Exercise Price
resulting from such adjustment, the number of Warrant Shares obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares issuable upon exercise of this Warrant immediately
prior to such adjustment, and dividing the product thereof by the Exercise Price
resulting from such adjustment.

 

“Extraordinary Common Stock Event” shall mean (x) the issuance of additional
shares of Common Stock (or other securities or rights convertible into or
entitling the holder thereof to receive additional shares of Common Stock) as a
dividend or other distribution on outstanding Common Stock of the Company, (y) a
split or subdivision of outstanding shares of Common Stock into a greater number
of shares of Common Stock, or (z) a combination of outstanding shares of Common
Stock into a smaller number of shares of Common Stock.

 

4.3          Capital Reorganization or Reclassification

 

If the Common Stock issuable upon the exercise of this Warrant shall be changed
into the same or a different number of shares of any class or classes of stock
of the Company, whether by capital reorganization, reclassification or otherwise
(other than an Extraordinary Common Stock Event), then and in each such event
the Holder shall have the right thereafter to exercise this Warrant for the kind
and amount of shares of stock and other securities and property receivable upon
such reorganization, reclassification or other change by holders of the number
of shares of Common Stock into which this Warrant might have been converted
immediately prior to such reorganization, reclassification or change, all
subject to adjustment as provided herein.  In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section 4
with respect to the rights of the Holder after the reorganization,
recapitalization or change to the end that the provisions of this Section 4
(including adjustment of the Exercise Price then in effect and the number of
shares issuable upon exercise of this Warrant) shall be applicable after that
event as nearly equivalent as may be practicable.

 

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4.4          Notice of Adjustment

 

Whenever the number of shares of Common Stock or other stock or property
issuable upon the exercise of this Warrant or the Exercise Price is adjusted,
then and in each such case the Company shall promptly deliver a notice to the
Holder, which notice shall state the Exercise Price resulting from such
adjustment and/or the increase or decrease, if any, in the number of shares of
Common Stock or other stock or property issuable upon the exercise of this
Warrant, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.

 

4.5          Other Notices

 

In the event that the Company shall propose at any time:

 

(a)           to declare any dividend or distribution upon its Common Stock,
whether in cash, property, stock or other securities, whether or not a regular
cash dividend and whether or not out of earnings or earned surplus;

 

(b)           to offer for subscription to the holders of its Common Stock any
additional shares of stock of any class or series or other rights;

 

(c)           to effect any reclassification or recapitalization of the shares
of its Common Stock outstanding involving a change in the Common Stock; or

 

(d)           to merge or consolidate with or into any other corporation, to
sell, lease or convey all or substantially all of its property or business, to
undertake any other Corporate Transaction, or to liquidate, dissolve or wind up;

 

then, in connection with each such event, the Company shall send to the Holder:

 

(i)            at least 20 days’ prior written notice of the date on which a
record shall be taken for such dividend, distribution or subscription rights
(and specifying the date on which the holders of Common Stock shall be entitled
thereto) or for determining rights to vote in respect of the matters referred to
in (c) and (d) above; and

 

(ii)           in the case of the matters referred to in (c) and (d) above, at
least 20 days’ prior written notice of the date when the same shall take place
(and, if applicable, specifying the date on which the holders of the Common
Stock shall be entitled to exchange their shares of Common Stock for securities
or other property deliverable upon the occurrence of such events).

 

5.             Fractional Shares

 

No fractional shares shall be issued upon the exercise of this Warrant.  If any
fraction of a Warrant Share would, except for the provisions of this Section, be
issuable on the exercise of this Warrant (or any portion hereof), the Company
shall pay to the Holder an amount of cash equal to the then fair market value of
a Warrant Share multiplied by such fraction, computed to the nearest whole
cent.  For purposes of the above calculation, the fair market value of a Warrant
Share shall be deemed to be the average of the closing bid and asked prices of
the Company’s Common Stock as quoted on the Nasdaq National Market System or on
any exchange on which such Common Stock is

 

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then listed, whichever is applicable, for the five trading days prior to the
date of exercise of this Warrant.

 

6.             Transfers

 

6.1          Restrictions on Transfer

 

No Warrant Shares or any interest therein may be transferred unless (a) such
transfer is registered under the Securities Act of 1933, as amended (the
“Securities Act”), (b) the Company has received an opinion of legal counsel for
the Holder reasonably satisfactory to the Company stating that the transfer is
exempt from the registration requirements of the Securities Act, or (c) the
Company otherwise satisfies itself that such transfer is exempt from
registration.

 

6.2          Transfers

 

The Company shall register on the books of the Company maintained at its
principal office the permitted transfer of this Warrant upon surrender to the
Company of this Warrant, with the form of Assignment attached hereto as Annex B
duly completed and executed by the Holder.  Upon any such registration of
transfer, a new Warrant, in substantially the form of this Warrant, evidencing
this Warrant so transferred shall be issued, at the Company’s expense, to the
transferee, and a new Warrant, in substantially the form of this Warrant,
evidencing the portion of this Warrant, if any, not so transferred shall be
issued, at the Company’s expense, to the Holder.

 

7.             Legend

 

Legends setting forth or referring to the applicable restrictions set forth in
Section 6.1 may be placed on this Warrant, any replacement hereof or any
certificate representing the Warrant Shares, and a stop transfer restriction or
order shall be placed on the books of the Company and with any transfer agent
until such securities may be sold or otherwise transferred in accordance with
Section 6.1.

 

8.             Holder as Owner

 

The Company may deem and treat the holder of record of this Warrant as the
absolute owner hereof for all purposes regardless of any notice to the contrary.

 

9.             No Shareholder Rights

 

This Warrant shall not entitle the Holder to any voting rights or any other
rights as a shareholder of the Company or to any other rights whatsoever except
the rights stated herein; and no dividend or interest shall be payable or shall
accrue in respect of this Warrant or the Warrant Shares, until and to the extent
that this Warrant shall be exercised.

 

10.          Registration Rights

 

(a)           Subject to Section 10(b) below, the Company shall file, with
respect to the shares of Common Stock issuable under this Warrant, a
registration statement on Form S-3 (or any successor form) on or before the date
60 days after the Closing Date (as defined in the Purchase Agreement) to
register the shares issuable upon the exercise of this Warrant under the
Securities Act.  Any such registration statement may also include other shares
of Common Stock issued to other investors by

 

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the Company.  The Company shall use its best efforts to have the registration
statement declared effective within 120 days after the Closing Date and to
maintain the effectiveness of such registration statement (and maintain the
current status of the prospectus or prospectuses contained therein) until the
earliest of (i) the fifth anniversary of the Closing Date, (ii) the date all
such shares have been disposed of pursuant to such effective registration
statement and (iii) the date such shares are sold or otherwise transferred by
the Holder in a transaction in which the rights under this Section 10 are not
assigned in accordance with Section 15 hereof.  The Company shall respond to the
SEC within 15 days after the Company’s receipt of any SEC comments with respect
to the registration statement or any amendments thereto, subject to timely
receipt from the Holder and other holders of shares of Common Stock to be
included in such registration statement of information required to so respond to
such comments.

 

(b)           The Company shall not be obligated to effect any such registration
pursuant to Section 10(a):

 

(1)           if the offering is deemed by the SEC to involve a primary offering
by the Company and Form S-3 is not available for such offering; or

 

(2)           in any particular jurisdiction in which the Company would be
required to qualify to do business or to execute a general consent to service of
process in effecting such registration.

 

(c)           The Company shall notify the Holder in writing at least thirty
(30) days prior to filing any registration statement under the Securities Act
for purposes of effecting a public offering of securities of the Company
(including, but not limited to, registration statements relating to secondary
offerings of securities of the Company, but excluding registration statements
relating to any registration under Section 10(a) of this Warrant or to any
employee benefit plan or a corporate reorganization) and will afford the Holder
an opportunity to include in such registration statement all or any part of the
shares issuable upon the exercise of this Warrant, subject to the provisions of
Section 10(d) below.  If the Holder wants to include in any such registration
statement all or any part of the shares issuable upon the exercise of this
Warrant, the Holder shall within twenty (20) days after receipt of the
above-described notice from the Company, so notify the Company in writing, and
in such notice shall inform the Company of the number of shares of Common Stock
the Holder wishes to include in such registration statement.

 

(d)           If a registration statement under which the Company gives notice
under Section 10(c) is for an underwritten offering, then the Company shall so
advise the Holder.  In such event, the right of the Holder to include any of the
shares issuable upon the exercise of this Warrant in a registration pursuant to
Section 10(c) shall be conditioned upon the Holder’s participation in such
underwriting and the inclusion of the Holder’s shares of Common Stock in the
underwriting on the same terms and conditions as the other participants in such
offering, including, without limitation, entering into an underwriting agreement
in customary form with the managing underwriter or underwriters selected for
such underwriting (including a market stand-off agreement of up to 180 days if
required by such underwriters).  Notwithstanding any other provision of this
Warrant, if the managing underwriter(s) determine(s) that marketing factors
require a limitation of the number of shares to be underwritten, then the
managing underwriter(s) may exclude shares from the registration and the
underwriting, and the number of shares that may be included in the registration
and the underwriting shall be allocated, first, to the Company, second, to each
holder of registration rights granted by the Company before the issuance date of
this Warrant that contractually require the

 

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Company to include such holder’s shares on a priority basis, and, third, to the
Holder and any other holder of registration rights granted by the Company
(excluding those covered above), on a pro rata basis based on the total number
of shares of Common Stock then sought to be included by each in such offering. 
If the Holder disapproves of the terms of any such underwriting, the Holder may
elect to withdraw therefrom by written notice to the Company and the
underwriter(s), delivered at least ten (10) business days prior to the effective
date of the registration statement.  Any shares of Common Stock excluded or
withdrawn from such underwriting shall be excluded and withdrawn from the
registration.

 

(e)           The Holder shall have no right to obtain or seek, nor shall the
Holder obtain or seek, an injunction restraining or otherwise delaying any
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Agreement.

 

(f)            In the event any Registrable Shares are included in a
registration statement under this Agreement or the terms of the Warrant:

 

(i)            To the extent permitted by law, the Company will indemnify and
hold harmless the Holder and each person, if any, who controls the Holder within
the meaning of the Securities Act or the Securities Exchange Act of 1934, as
amended (the “1934 Act”), against any losses, claims, damages, or liabilities to
which they may become subject under the Securities Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively a “Violation”): (A)
any untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (B) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or (C) any violation
or alleged violation by the Company of the Securities Act, the 1934 Act, any
state securities law or any rule or regulation promulgated under the Securities
Act, the 1934 Act or any state securities law in connection with such
registration and sale of securities; and the Company will pay to the Holder or
such controlling person, as incurred, any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this subsection 10(f)(i) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation that occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by the Holder or such controlling person or their
respective agents.

 

(ii)           To the extent permitted by law, the Holder will indemnify and
hold harmless the Company, each of its directors, each of its officers who has
signed the registration statement, each person, if any, who controls the Company
within the meaning of the Securities Act, each agent and any underwriter, any
other person or entity selling securities in such registration statement and any
controlling person of any such underwriter or other person or entity, against
any losses, claims, damages, or liabilities (joint or several) to which any of
the foregoing persons may become subject, under the Securities Act, the 1934 Act
or other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in

 

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conformity with written information furnished by the Holder or its agents
expressly for use in connection with such registration; and the Holder will pay,
as incurred, any legal or other expenses reasonably incurred by any person
intended to be indemnified pursuant to this subsection 10(f)(ii), in connection
with investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
subsection 10(f)(ii) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Holder (which consent shall not be unreasonably withheld);
and, provided further, that in no event shall any indemnity under this
subsection 10(f)(ii) exceed the net proceeds from the offering received by the
Holder.

 

(iii)          Promptly after receipt by an indemnified party under this
Section 10(f) of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 10(f), deliver
to the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties that may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with reasonable fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding.  The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this
Section 10(f), but the omission so to deliver written notice to the indemnifying
party will not relieve it of any liability that it may have to any indemnified
party otherwise than under this Section 10(f).

 

(iv)          To the extent the indemnification provided for in this
Section 10(f) is held by a court of competent jurisdiction to be unavailable to
an indemnified party with respect to any losses, claims, damages or liabilities
referred to herein, the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall to the extent permitted by applicable law
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other, in connection with the Violation(s) that
resulted in such loss, claim, damage or liability, as well as any other relevant
equitable considerations.  The relative fault of the indemnifying party and of
the indemnified party shall be determined by a court of law by reference to,
among other things, whether the untrue or allegedly untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.

 

(v)           The obligations of the Company and the Holder under this
Section 10(f) shall survive the completion of any offering of Registrable Shares
in a registration statement under Section 10, and otherwise.

 

(g)           Notwithstanding the foregoing, without the prior written consent
of the holders (the “Required Holders”) of warrants (including this Warrant and
similar warrants being sold by the

 

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Company on or about the date hereof pursuant to the Purchase Agreement and other
Unit Purchase Agreements in substantially the same form as the Purchase
Agreement) exercisable for at least 75% of the aggregate number of shares of
Common Stock issuable upon the exercise of this Warrant and all such other
warrants (which consent shall not be unreasonably withheld), the Company shall
not file with the SEC any registration statement to register shares of its
capital stock until after the registration statement described in Section 10(a)
above has been declared effective, other than any registration statements
(a) relating to any employee benefit plan of the Company or (b) required to be
filed by the Company pursuant to registration rights granted prior to the date
of the Purchase Agreement; provided, however, that the Company shall not be
bound by the provisions of this Section 10(g) if, at any time at least 30 days
after the filing date of the registration statement described in Section 10(a),
such registration statement has not been declared effective as a result of any
comments by the SEC, or refusal of the SEC to accept or review the registration
statement for reasons, relating to or directed at the Holder or any other
purchaser of Units of the Company with shares included in such registration
statement (or any assignee or affiliate of the Holder or any such other
purchaser), in connection with the registration statement.

 

(h)           Certificates evidencing shares of Common Stock issued upon
exercise of this Warrant shall not contain any restrictive legend as long as the
resale of such Warrant Shares is covered by an effective registration statement
and the holder thereof represents in writing to the Company that such Warrant
Shares (i) have been or are being sold pursuant to such registration statement
or pursuant to Rule 144 under the Securities Act, or (ii) may be made pursuant
to Rule 144(k) under the Securities Act, or any successor rule or provision.

 

11.          Governing Law; Construction

 

The validity and interpretation of the terms and provisions of this Warrant
shall be governed by the laws of the State of Oregon.  The descriptive headings
of the several sections of this Warrant are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
thereof.

 

12.          Lost Warrant Certificate

 

Upon receipt by the Company of satisfactory evidence of the loss, theft,
destruction or mutilation of this Warrant and either (in the case of loss, theft
or destruction) indemnification reasonably satisfactory to the Company or (in
the case of mutilation) the surrender of this Warrant for cancellation, the
Company will execute and deliver to the Holder, without charge, a new Warrant of
like denomination.

 

13.          Waivers and Amendments

 

This Warrant or any provision hereof may be amended or waived only by a
statement in writing signed by the Company and the Holder; provided, however,
that the provisions of Section 10 hereof may be amended with the written consent
of the Company and the Required Holders, with any such consent being binding
upon the Company and the Holder.

 

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14.          Notices

 

Any notice required by the provisions of this Warrant to be given to the Holder
shall be deemed given two days after being deposited in the United States mail,
postage prepaid and addressed to such Holder’s address appearing on the books of
the Company.

 

Any notice required by the provisions of this Warrant to be given to the Company
shall be deemed given three business days after being deposited in the United
States mail, postage prepaid and addressed to CenterSpan Communications
Corporation, 7175 NW Evergreen Parkway, Suite 400, Hillsboro, OR 97124,
Attention: Chief Financial Officer, or at such other address as specified in a
notice delivered to the Holder as set forth above.

 

15.          Binding Effect

 

This Warrant shall be binding upon the Company and its successors and assigns,
and shall inure to the benefit of and be enforceable by the Holder and its
successors and permitted assigns.  The rights to cause the Company to register
shares of Common Stock pursuant to Section 10 may be assigned by a Holder to a
transferee or assignee of such shares that acquires at least 50,000 shares
(appropriately adjusted for any stock dividend, stock split, or combination
applicable to the Common Stock), and who assumes the Holder’s obligations
hereunder; provided the Company is, within a reasonable time after such
transfer, furnished with written notice of the name and address of such
transferee or assignee and the shares with respect to which such registration
rights are being assigned; and, provided, further, that such assignment shall be
effective only if immediately following such transfer the further disposition of
such shares by the transferee or assignee is restricted under the Securities
Act.

 

16.          Investment Intent, etc.

 

By accepting this Warrant, the Holder represents that (a) the Holder is
acquiring this Warrant and the Warrant Shares issuable upon exercise hereof for
investment and not with a view to, or for sale in connection with, any
distribution thereof; (b) the Holder can bear the economic risk of an investment
in the Warrant Shares (including possible complete loss of such investment) for
an indefinite period of time; (c) the Holder understands that this Warrant and
the Warrant Shares have not been registered under the Securities Act, or under
the securities laws of any jurisdiction, by reason of reliance upon certain
exemptions, and that the reliance of the Company on such exemptions is
predicated upon the accuracy of the Holder’s representations in this Section;
(d) the Holder is familiar with Rule 144 under the Securities Act, as currently
in effect, and understands the resale limitations that are or would be imposed
thereby and by the Securities Act on this Warrant and the Warrant Shares to the
extent such securities are characterized as “restricted securities” under the
United States federal securities laws inasmuch as they are acquired from the
Company in a transaction not involving a public offering; (e) the Holder has
received and reviewed a copy of each SEC Document (as defined below) and the
Holder believes the Holder has been given access to full and complete
information regarding the Company and has utilized such access to the Holder’s
satisfaction for the purpose of obtaining information about the Company,
particularly, representatives of the Holder have had adequate opportunities to
ask questions of, and receive answers from, senior executives of the Company
concerning the Company and to obtain any additional information, to the extent
reasonably available, necessary to verify the accuracy of information provided
to the Holder about the Company; (f) the Holder is an “accredited investor” as
such term is defined in Rule 501(a) under the Securities Act and as defined
pursuant to the provisions of state securities laws applicable

 

10

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to the Holder providing for an exemption from registration or qualification of
the offer and sale of this Warrant and the Warrant Shares; (g) the Holder has
obtained, to the extent he or she deems necessary, his or her own professional
advice with respect to the risks inherent in the investment in this Warrant and
the Warrant Shares, the condition of the Company and the suitability of the
investment in this Warrant and the Warrant Shares in light of the Holder’s
financial condition and investment needs; and (h) the Holder is a resident of
the state (or if not a natural person, the Holder made its investment decision
with respect to this Warrant and the Warrant Shares from its office located in
such state) set forth on the signature page of this Warrant.

 

As used herein, the term “SEC Documents” means, collectively, the following
documents of the Company filed with the SEC:  (i) its Annual Report on Form 10-K
for the fiscal year ended December 31, 2000, (ii) all Forms 8–K filed after the
date of such Form 10–K, if any, (iii) its Quarterly Reports on Form 10-Q for the
quarters ended March 31, June 30 and September 30, 2001, and (iv) its Definitive
Proxy Statement for the annual meeting of the Company’s shareholders held in May
2001.

 

11

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IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first
written above.

 

 

CENTERSPAN COMMUNICATIONS CORPORATION

 

 

 

By

 

 

 

Name:  Mark B. Conan

 

Title:  Vice President of Finance, Administration
and Chief Financial Officer

 

 

The undersigned hereby confirms its
acknowledgements and representations
in Section 16 of this Warrant.

 

 

 

 

 

 

[Name]

 

 

 

Holder’s State of Residency:

 

 

 

12

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ANNEX A

 

FORM OF ELECTION TO PURCHASE

 

To CenterSpan Communications Corporation:

 

The undersigned hereby elects to purchase                  shares of Common
Stock of CenterSpan Communications Corporation issuable upon the exercise of the
within Warrant, and requests that a certificate for such shares shall be issued
in the name of the undersigned holder and delivered to the address indicated
below and, if said number of shares shall not be all the shares which may be
purchased pursuant to the within Warrant, that a new Warrant evidencing the
right to purchase the balance of such shares be registered in the name of, and
delivered to, the undersigned at the undersigned’s address stated below.

 

The undersigned hereby certifies to the Company that the undersigned’s
representations set forth in Section 16 of the within Warrant are true and
correct on the date hereof as if made by the undersigned on the date hereof.

 

Payment enclosed in the amount of $                         

 

Dated:

 

 

 

Name of holder of Warrant:

 

 

(please print)

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

Signature:

 

 

 

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ANNEX B

 

FORM OF ASSIGNMENT

 

FOR VALUE RECEIVED,                                  hereby sells, assigns and
transfers to the assignee set forth below all of the rights of the undersigned
in and to the number of Warrant Shares (as defined in and evidenced by the
foregoing Warrant) set opposite the name of such assignee below and in and to
the foregoing Warrant with respect to said Warrant Shares:

 

Name of Assignee

 

Address

 

Number of Shares

 

 

 

If the total of said Warrant Shares shall not be all such shares which may be
purchased pursuant to the foregoing Warrant, the undersigned requests that a new
Warrant evidencing the right to purchase the balance of such shares be issued in
the name of, and delivered to, the undersigned at the undersigned’s address
stated below.

 

Dated:

 

 

 

 

Name of holder of Warrant:

 

 

(please print)

 

Address:

 

 

 

 

 

 

 

 

 

 

 

Signature:

 

 

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Schedule to Exhibit 10.2

 

All Common Stock Purchase Warrants are not required to be filed because each of
them is substantially identical to Exhibit 10.2, and the material details by
which each such Common Stock Purchase Warrant differs from Exhibit 10.2 are as
follows:

 

Investor

 

Date of
Warrant

 

Warrant to Purchase
Number of Shares of
Common Stock

 

AIG DKR SoundShore Holdings Ltd.

 

02/08/02

 

23,600

 

AIG DKR SoundShore Opportunity Holding Fund Ltd.

 

02/08/02

 

18,700

 

AIG DKR SoundShore Private Investors Holding Fund Ltd.

 

02/08/02

 

44,600

 

AIG DKR SoundShore Strategic Holding Fund Ltd.

 

02/08/02

 

13,100

 

Louise G. Brooks IRA

 

02/08/02

 

6,000

 

Gryphon Master Fund, L.P.

 

02/08/02

 

166,667

 

Frank G. Hausmann, Jr.

 

02/08/02

 

5,000

 

Langley Partners, L.P.

 

02/08/02

 

100,000

 

Quantico Partners, L.P.

 

02/08/02

 

66,666

 

Steelhead Investments Ltd.

 

02/08/02

 

166,667

 

Synapse Fund II, LLC

 

02/08/02

 

41,667

 

TCMP3 Limited Partnership

 

02/08/02

 

10,000

 

AIG DKR SoundShore Holdings Ltd. (1)

 

03/28/02

 

39,333

 

AIG DKR SoundShore Opportunity Holding Fund Ltd. (1)

 

03/28/02

 

31,167

 

AIG DKR SoundShore Private Investors Holding Fund Ltd. (1)

 

03/28/02

 

74,334

 

AIG DKR SoundShore Strategic Holding Fund Ltd. (1)

 

03/28/02

 

21,833

 

Gryphon Master Fund L.P. (1)

 

03/28/02

 

83,333

 

Quantico Partners, L.P. (1)

 

03/28/02

 

83,333

 

BG Development Corp. Pension Fund (1)

 

04/01/02

 

5,000

 

Mark B. Conan (1)

 

04/01/02

 

1,000

 

Frank G. Hausmann, Jr. (1)

 

04/01/02

 

5,000

 

Alfred Lee (1)

 

04/01/02

 

1,000

 

G. Gerald Pratt (1)

 

04/01/02

 

10,000

 

 

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(1)    Section 7(a) differs as follows:

 

A.            CenterSpan is obligated to file a registration statement on Form
S-3 within 15 days of the Closing Date, as opposed to 60 days.

 

B.            CenterSpan will use its best efforts to have such registration
statement declared effective within 75 days of the Closing Date, as opposed to
120 days.

 

C.            CenterSpan will use its best efforts to maintain the effectiveness
of such registration statement until the earliest of each of the events listed
in the Unit Purchase Agreement filed as Exhibit 10.1 and the date the Investor
is able to dispose of all Registrable Shares in one three-month period pursuant
to Rule 144 under the Securities Act of 1933, as amended, without registration
under such Act.

 

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