FORM OF WARRANT
Exhibit 10.5
FORM OF
WARRANT
NEITHER
THIS SECURITY NOR ANY SECURITIES WHICH MAY BE ISSUED UPON EXERCISE OF THIS
SECURITY HAVE BEEN REGISTERED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY U.S. STATE OR OTHER JURISDICTION OR ANY
EXCHANGE OR SELF-REGULATORY ORGANIZATION, IN RELIANCE UPON EXEMPTIONS FROM
REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, AND SUCH OTHER
LAWS AND REQUIREMENTS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD, EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR LISTING OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, SUCH REGISTRATION
AND/OR LISTING REQUIREMENTS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE
TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH WILL BE REASONABLY ACCEPTABLE
TO THE COMPANY.
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MAC
FILMWORKS, INC.
COMMON
STOCK WARRANT
No.
__________ ______,
2008
Mac Filmworks, Inc., a
Delaware corporation whose shares of Common Stock (defined below) are included
for quotation on the NASD Over-the-Counter Bulletin Board (the “Company”), hereby
certifies that ______________________________________, its permissible
transferees, designees, successors and assigns (collectively, the “Holder”), for value
received, is entitled to purchase from the Company at any time commencing on the
effective date (the “Effective Date”),
which shall be the date of the Closing (as defined in that certain Confidential
Private Placement Memorandum of the Company, dated as of August 11, 2008), and
terminating on the 5th
anniversary of such date (the “Termination Date”) up
to _____________ shares (each, a “Share” and
collectively the “Shares”) of the
Company’s common stock, par value $0.0001 per Share (the “Common Stock”), at an
exercise price per Share equal to $2.50 (the “Exercise
Price”). The number of Shares purchasable hereunder and the
Exercise Price are subject to adjustment as provided in Section 4
hereof.
1. Method of Exercise;
Payment.
(a) Cash
Exercise. The purchase rights represented by this Warrant may
be exercised, for cash only, by the Holder, in whole or in part, at any time, or
from time to time, by the surrender of this Warrant (with the notice of exercise
form (the "Notice of
Exercise") attached hereto as Exhibit A duly
executed) at the principal office of the Company, and by payment to the Company
of an amount equal to the Exercise Price multiplied by the number of the
Shares being purchased, which amount may be paid, at the election of the Holder,
by wire transfer or certified check payable to the order of the
Company. The person or persons in whose name(s) any certificate(s)
representing Shares 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.
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(b) Stock
Certificates. In the event of any exercise of the rights
represented by this Warrant, as promptly as practicable after this Warrant is
surrendered and delivered to the Company along with all other appropriate
documentation on or after the date of exercise and in any event within ten (10)
days thereafter, the Company at its expense shall issue and deliver to the
person or persons entitled to receive the same a certificate or certificates for
the number of Shares issuable upon such exercise. In the event this
Warrant is exercised in part, the Company at its expense will execute and
deliver a new Warrant of like tenor exercisable for the number of Shares for
which this Warrant may then be exercised.
(c) Taxes. The
issuance of the Shares upon the exercise of this Warrant, and the delivery of
certificates or other instruments representing such Shares, shall be made
without charge to the Holder for any tax or other charge in respect of such
issuance.
2. Warrant.
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(a)
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Exchange, Transfer and
Replacement. At any time prior to the exercise hereof,
this Warrant may be exchanged upon presentation and surrender to the
Company, alone or with other warrants of like tenor of different
denominations registered in the name of the same Holder, for another
warrant or warrants of like tenor in the name of such Holder exercisable
for the aggregate number of Shares as the warrant or warrants
surrendered.
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(b)
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Replacement of
Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation
of this Warrant and, in the case of any such loss, theft, or destruction,
upon delivery of an indemnity agreement reasonably satisfactory in form
and amount to the Company, or, in the case of any such mutilation, upon
surrender and cancellation of this Warrant, the Company, at its expense,
will execute and deliver in lieu thereof, a new Warrant of like
tenor.
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(c) Cancellation; Payment of
Expenses. Upon the surrender of this Warrant in connection
with any transfer, exchange or replacement as provided in this Section 2, this
Warrant shall be promptly canceled by the Company. The Holder shall
pay all taxes and all other expenses (including legal expenses, if any, incurred
by the Holder or transferees) and charges payable in connection with the
preparation, execution and delivery of Warrants pursuant to this Section
2.
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(d) Warrant
Register. The Company shall maintain, at its principal
executive offices (or at the offices of the transfer agent for the Warrant or
such other office or agency of the Company as it may designate by notice to the
holder hereof), a register for this Warrant (the “Warrant Register”),
in which the Company shall record the name and address of the person in whose
name this Warrant has been issued, as well as the name and address of each
transferee and each prior owner of this Warrant.
3. Rights and Obligations of
Holders of this Warrant. The Holder of this Warrant shall not,
by virtue hereof, be entitled to any rights of a stockholder in the Company,
either at law or in equity; provided, however, that in the
event any certificate representing shares of Common Stock or other securities is
issued to the holder hereof upon exercise of this Warrant, such holder shall,
for all purposes, be deemed to have become the holder of record of such Common
Stock on the date on which this Warrant, together with a duly executed Election
to Purchase, was surrendered and payment of the aggregate Exercise Price was
made, irrespective of the date of delivery of such Common Stock
certificate.
4. Adjustments.
(a) Stock Dividends,
Reclassifications, Recapitalizations, Etc. While this Warrant
is outstanding, in the event the Company: (i) pays a dividend in
Common Stock or makes a distribution in Common Stock, (ii) subdivides its
outstanding Common Stock into a greater number of shares, (iii) combines
its outstanding Common Stock into a smaller number of shares or
(iv) increases or decreases the number of shares of Common Stock
outstanding by reclassification of its Common Stock (including a
recapitalization in connection with a consolidation or merger in which the
Company is the continuing corporation), then (1) the Exercise Price on the
record date of such division or distribution or the effective date of such
action shall be adjusted by multiplying such Exercise Price by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately before such event and the denominator of which is the number of
shares of Common Stock outstanding immediately after such event, and
(2) the number of shares of Common Stock for which this Warrant may be
exercised immediately before such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the Exercise Price immediately
before such event and the denominator of which is the Exercise Price immediately
after such event.
(b) Combination:
Liquidation. While this Warrant is outstanding, (i) In
the event of a Combination (as defined below), each Holder shall have the right
to receive upon exercise of the Warrant the kind and amount of shares of capital
stock or other securities or property which such Holder would have been entitled
to receive upon or as a result of such Combination had such Warrant been
exercised immediately prior to such event (subject to further adjustment in
accordance with the terms hereof). Unless paragraph (ii) is
applicable to a Combination, the Company shall provide that the surviving or
acquiring Person (the “Successor Company”)
in such Combination will assume by written instrument the obligations under this
Section 4
and the obligations to deliver to the Holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, the Holder may be
entitled to acquire. “Combination” means an
event in which the Company consolidates with, mergers with or into, or sells all
or substantially all of its assets to another Person, where “Person” means any
individual, corporation, partnership, joint venture, limited liability company,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity;
(ii) In the event of (x) a Combination where consideration to the
holders of Common Stock in exchange for their shares is payable solely in cash
or (y) the dissolution, liquidation or winding-up of the Company, the Holders
shall be entitled to receive, upon surrender of their Warrant, distributions on
an equal basis with the holders of Common Stock or other securities issuable
upon exercise of the Warrant, as if the Warrant had been exercised immediately
prior to such event, less the Exercise Price. In case of any
Combination described in this Section 4, the
surviving or acquiring Person and, in the event of any dissolution, liquidation
or winding-up of the Company, the Company, shall deposit promptly with an agent
or trustee for the benefit of the Holders of the funds, if any, necessary to pay
to the Holders the amounts to which they are entitled as described
above. After such funds and the surrendered Warrant are received, the
Company is required to deliver a check in such amount as is appropriate (or, in
the case or consideration other than cash, such other consideration as is
appropriate) to such Person or Persons as it may be directed in writing by the
Holders surrendering such Warrant.
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(c)
Notice of
Adjustment. Whenever the Exercise Price or the number of
shares of Common Stock and other property, if any, issuable upon exercise of the
Warrant is adjusted, as herein provided, the Company shall deliver to the
holders of the Warrant in accordance with Section 10 a
certificate of the Company’s Chief Financial Officer setting forth, in
reasonable detail, the event requiring the adjustment and the method by which
such adjustment was calculated (including a description of the basis on which
(i) the Board of Directors determined the fair value of any evidences of
indebtedness, other securities or property or warrants, options or other
subscription or purchase rights and (ii) the Current Market Value of the Common
Stock was determined, if either of such determinations were required), and
specifying the Exercise Price and number of shares of Common Stock issuable upon
exercise of Warrant after giving effect to such
adjustment.
(d) Notice of Certain
Transactions. While this Warrant is outstanding, in the event
that the Company shall propose (a) to pay any dividend payable in
securities of any class to the holders of its Common Stock or to make any other
non-cash dividend or distribution to the holders of its Common Stock,
(b) to offer the holders of its Common Stock rights to subscribe for or to
purchase any securities convertible into shares of Common Stock or shares of
stock of any class or any other securities, rights or options, (c) to
effect any capital reorganization, reclassification, consolidation or merger
affecting the class of Common Stock, as a whole, or (d) to effect the
voluntary or involuntary dissolution, liquidation or winding-up of the Company,
the Company shall, within the time limits specified below, send to each Holder a
notice of such proposed action or offer. Such notice shall be mailed
to the Holders at their addresses as they appear in the Warrant Register (as
defined in Section 2(d)),
which shall specify the record date for the purposes of such dividend,
distribution or rights, or the date such issuance or event is to take place and
the date of participation therein by the holders of Common Stock, if any such
date is to be fixed, and shall briefly indicate the effect of such action on the
Common Stock and on the number and kind of any other shares of stock and on
other property, if any, and the number of shares of Common Stock and other
property, if any, issuable upon exercise of each Warrant and the Exercise Price
after giving effect to any adjustment pursuant to Section 4 which
will be required as a result of such action. Such notice shall be
given as promptly as possible and (x) in the case of any action covered by
clause (a) or (b) above, at least ten (10) days prior to the record date for
determining holders of the Common Stock for purposes of such action or (y) in
the case of any other such action, at least twenty (20) days prior to the date
of the taking of such proposed action or the date of participation therein by
the holders of Common Stock, whichever shall be the earlier.
(e) Current Market
Value. “Current Market Value”
per share of Common Stock or any other security at any date means (i) if the
security is not registered under the Securities Exchange Act of 1934 and/or
traded on a national securities exchange, quotation system or bulletin board, as
amended (the “Exchange
Act”), (a) the value of the security, determined in good faith by the
Board of Directors of the Company and certified in a board resolution, based on
the most recently completed arm’s-length transaction between the Company and a
Person other than an affiliate of the Company or between any two such Persons
and the closing of which occurs on such date or shall have occurred within the
six-month period preceding such date, or (b) if no such transaction shall have
occurred within the six-month period, the value of the security as determined by
an independent financial expert or an agreed upon financial valuation model or
(ii) if the security is registered under the Exchange Act and/or traded on a
national securities exchange, quotation system or bulletin board, the average of
the daily closing bid prices (or the equivalent in an
over-the-counter market) for each day on which the Common Stock is traded for
any period on the principal securities exchange or other securities market on
which the common Stock is being traded (each, a “Trading Day”) during
the period commencing thirty (30) days before such date and ending on the date
one day prior to such date.
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5. Registration
Rights. The Holder is entitled to the benefit of such
registration rights in respect of the Shares as are set forth in the
Subscription Agreement dated as of ____, 2008 by and between the Company and the
Holder.
6. Fractional
Shares. In lieu of issuance of a fractional share upon any
exercise hereunder, the Company will issue an additional whole share in lieu of
that fractional share, calculated on the basis of the Exercise
Price.
7. Legends. Prior
to issuance of the shares of Common Stock underlying this Warrant, all such
certificates representing such shares shall bear a restrictive legend to the
effect that the Shares represented by such certificate have not been registered
under the 1933 Act, and that the Shares may not be sold or transferred in the
absence of such registration or an exemption therefrom, such legend to be
substantially in the form of the bold-face language appearing at the top of Page
1 of this Warrant.
8. Disposition of Warrants or
Shares. The Holder of this Warrant, each transferee hereof and
any holder and transferee of any Shares, by his or its acceptance thereof,
agrees that no public distribution of Warrants or Shares will be made in
violation of the provisions of the 1933 Act. Furthermore, it shall be
a condition to the transfer of this Warrant that any transferee thereof deliver
to the Company his or its written agreement to accept and be bound by all of the
terms and conditions contained in this Warrant.
9. Merger or
Consolidation. The Company will not merge or consolidate with
or into any other corporation, or sell or otherwise transfer its property,
assets and business substantially as an entirety to another corporation, unless
the corporation resulting from such merger or consolidation (if not the
Company), or such transferee corporation, as the case may be, shall expressly
assume, by supplemental agreement reasonably satisfactory in form and substance
to the Holder, the due and punctual performance and observance of each and every
covenant and condition of this Warrant to be performed and observed by the
Company.
10. Notices. Except
as otherwise specified herein to the contrary, all notices, requests, demands
and other communications required or desired to be given hereunder shall only be
effective if given in writing by certified or registered U.S. mail with return
receipt requested and postage prepaid; by private overnight delivery service
(e.g. Federal Express); by facsimile transmission (if no original documents or
instruments must accompany the notice); or by personal delivery. Any
such notice shall be deemed to have been given (a) on the business day
immediately following the mailing thereof, if mailed by certified or registered
U.S. mail as specified above; (b) on the business day immediately following
deposit with a private overnight delivery service if sent by said service; (c)
upon receipt of confirmation of transmission if sent by facsimile transmission;
or (d) upon personal delivery of the notice. All such notices shall
be sent to the following addresses (or to such other address or addresses as a
party may have advised the other in the manner provided in this Section 10):
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if
to the Company:
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Mac
Filmworks, Inc.
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| 00 Xxxxxxxx Xxxxxx, 0xx Xxxxx | |
| New York, NY 10013 | |
| Attention: Xxxxxxxx Xxxxxxxx XX, CEO | |
| Facsimile: 000-000-0000 | |
| with copy to: | Xxxxxxxxx Xxxx Xxxxxxxx Xxxxxxx LLP |
| 00 Xxxxxxxx, 00xx Floor | |
| New York, NY 10006 | |
| Attention: Xxxx Xxxx, Esq | |
| Facsimile: (000) 000-0000 |
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| if to the Holder: | ____________________ |
| ____________________ | |
| ____________________ | |
| ____________________ | |
| with a copy to: | ____________________ |
| ____________________ | |
| ____________________ | |
| ____________________ | |
| Facsimile: ____________ |
Notwithstanding
the time of effectiveness of notices set forth in this Section, an Election to
Purchase shall not be deemed effectively given until it has been duly completed
and submitted to the Company together with this original Warrant and payment of
the Exercise Price in a manner set forth in this Section.
11. Limitation on
Exercise. Notwithstanding anything to the contrary contained herein, the
number of shares of Common Stock that may be acquired by the Holder upon
any exercise of this Warrant (or otherwise in respect hereof)
shall be limited to the extent necessary to insure that, following such exercise
(or other issuance), the total number of shares of Common Stock then
beneficially owned by such Holder and its affiliates and any other persons whose
beneficial ownership of Common Stock would be aggregated with the Holder’s for
purposes of Section 13(d) of the Exchange Act, does not exceed 4.99%
of the total number of issued and outstanding shares of Common
Stock (including for such purpose the shares of Common Stock issuable upon such
exercise). For such purposes, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder. Each delivery of an Exercise
Notice hereunder will constitute a representation by the Holder that it has
evaluated the limitation set forth in this paragraph and determined that
issuance of the full number of Warrant Shares requested in such
Exercise Notice is permitted under this paragraph. This provision shall not
restrict the number of shares of Common Stock which a Holder may receive or
beneficially own in order to determine the amount of securities or other
consideration that such Holder may receive in the event of a merger or
other business combination or reclassification involving the Company. This restriction may not be waived without the consent of the
Holder.
12. Governing
Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed in the State of New York.
13. Successors and
Assigns. This Warrant shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and
assigns.
14. Headings. The
headings of various sections of this Warrant have been inserted for reference
only and shall not affect the meaning or construction of any of the provisions
hereof.
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15. Severability. If any
provision of this Warrant is held to be unenforceable under applicable law, such
provision shall be excluded from this Warrant, and the balance hereof shall be
interpreted as if such provision were so excluded.
16. Modification and
Waiver. This Warrant and any provision hereof may be amended,
waived, discharged or terminated only by an instrument in writing signed by the
Company and the Holder.
17. Specific
Enforcement. The Company and the Holder acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Warrant were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Warrant and to enforce specifically the terms and provisions
hereof, this being in addition to any other remedy to which either of them may
be entitled by law or equity.
18. Assignment. Subject to
prior written approval by the Company, this Warrant may be transferred or
assigned, in whole or in part, at any time and from time to time by the then
Holder by submitting this Warrant to the Company together with a duly executed
Assignment in substantially the form and substance of the Form of Assignment
which accompanies this Warrant, as Exhibit B
hereto, and, upon the Company’s receipt hereof, and in any event, within five
(5) business days thereafter, the Company shall issue a warrant to the Holder to
evidence that portion of this Warrant, if any as shall not have been so
transferred or assigned.
(signature
page immediately follows)
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IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed,
manually or by facsimile, by one of its officers thereunto duly
authorized.
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Date:
___, 2008
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Mac
Filmworks, Inc.
By:____________________________________
Name:
Title:
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EXHIBIT
A
TO
WARRANT
CERTIFICATE
ELECTION
TO PURCHASE
To Be
Executed by the Holder
in Order
to Exercise the Warrant
The
undersigned Holder hereby elects to purchase _______ Shares pursuant
to the attached Warrant, and requests that certificates for securities be issued
in the name of:
__________________________________________________________
(Please
type or print name and address)
__________________________________________________________
__________________________________________________________
__________________________________________________________
(Social
Security or Tax Identification Number)
and
delivered
to:_________________________________________________________________
___________________________________________________________________.
(Please
type or print name and address if different from above)
If such
number of Shares being purchased hereby shall not be all the Shares that may be
purchased pursuant to the attached Warrant, a new Warrant for the balance of
such Shares shall be registered in the name of, and delivered to, the Holder at
the address set forth below.
In full
payment of the purchase price with respect to the Shares purchased and transfer
taxes, if any, the undersigned hereby tenders payment of $__________ by check,
money order or wire transfer payable in United States currency to the order of
[_________]
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HOLDER:
By:_____________________________________
Name:
Title:
Address:
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Dated:
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EXHIBIT
B
TO
WARRANT
FORM OF
ASSIGNMENT
(To be
signed only on transfer of Warrant)
For value
received, the undersigned hereby sells, assigns, and transfers unto
_____________ the right represented by the within Warrant to purchase ______
shares of Common Stock of [________], a Delaware corporation, to which the
within Warrant relates, and appoints ____________________ Attorney to transfer
such right on the books of [_________], a Delaware corporation, with full power
of substitution of premises.
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Dated:
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By:_______________________________
Name:
Title:
(signature
must conform to name
of
holder as specified on the factof the Warrant)
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Address:
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Signed in
the presence of :
Dated:
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