EXHIBIT 10.10
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VICTORY ENTERTAINMENT CORP.
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WARRANT AGREEMENT FOR SHARES
DATED AS OF MARCH 28, 2000
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WARRANT AGREEMENT dated as of March 28, 2000 between Victory Entertainment
Corp., a Florida corporation with its principal address at 0000 Xxxxxxxxx
Xxxxxxx Xxxxx, Xxxxxxxx 00X, Xxxxxxx, Xxxxxxx 00000 (the "Company"), and
Xxxxxxxxx Securities Corp., a New York corporation (hereinafter referred to
variously as the "Holder" or the "Placement Agent").
W I T N E S S E T H:
WHEREAS, the Placement Agent agreed pursuant to the Placement Agency
Agreement (the "Agency Agreement") dated March 20, 2000 between the Placement
Agent and the Company, to act as placement agent in a private placement offering
(the "Offering") by the Company, under Section 4(2) and/or Regulation D, Rule
506 of the Securities Act of 1933, (the "Act"), of up to $7,500,000 of Units
(150 Units priced at $50,000 per Unit), each Unit consisting of a $50,000
principal amount 12.0% Senior Secured Promissory Note (the "Notes") and a Common
Stock Purchase Warrant (each an "Investor Warrant" and collectively, the
"Investor Warrants") to purchase 8,000 shares of Common Stock (as defined in
Section 8.5) of the Company, par value $.001 per share (the "Investor Warrant
Conversion Shares"); and
WHEREAS, in connection with the Offering the Company has agreed to issue
to the Placement Agent warrants ("Placement Agent's Warrants") to purchase up to
an aggregate of 10% of the total number of Investor Warrant Conversion Shares
sold at each Closing (as defined in the Agency Agreement) at an exercise price
equal to 125% of the offering price of the securities offered in the initial
public offering of the Company (the "IPO").
NOW, THEREFORE, in consideration of the premises, the agreements herein
set forth and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. GRANT. The Holder is hereby granted the right to purchase, at any
time commencing on the date of the closing of the IPO and expiring five (5)
years therefrom (the "Warrant Exercise Term"), up to an aggregate of ten (10%)
percent of the total number of Investor Warrant Conversion Shares sold at each
Closing (the "Warrant Shares") at an initial exercise price (subject to
adjustment as provided in Section 8 hereof) equal to (i) seven dollars ($7.00)
or if the company shall cause to become effective a registration statement to
register the Company's securities for public offer and sale (ii) one hundred
twenty five (125%) percent of the per share offering price of the Company's
securities offered in the IPO (the "Exercise Price"), subject to the terms and
conditions of this Agreement.
2. PLACEMENT AGENT'S WARRANT CERTIFICATES. The warrant certificates
(the "Warrant Certificates") delivered and to be delivered pursuant to this
Agreement shall be in the form set
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forth in Exhibit A, attached hereto and made a part hereof, with such
appropriate insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
3. EXERCISE OF PLACEMENT AGENT'S WARRANTS.
Section 3.1 EXERCISE. The Warrants initially are exercisable at an
aggregate initial exercise price (subject to adjustment as provided in Section 8
hereof) per share, as set forth in Section 6 hereof payable by certified or
official bank check in New York Clearing House funds, subject to adjustment as
provided in Section 8 hereof. Upon surrender at the Company's principal offices
(currently located at 1000 Universal Xxxxxxx Xxxxx, Xxxxxxxx 00X, Xxxxxxx,
Xxxxxxx 00000), of a Warrant Certificate with the annexed Form of Election to
Purchase duly executed, together with payment of the Purchase Price (as
hereinafter defined) for the Warrant Shares purchased, the registered holder of
a Warrant Certificate shall be entitled to receive a certificate or certificates
for the Warrant Shares so purchased. The purchase rights represented by each
Warrant Certificate are exercisable at the option of the Holder thereof, in
whole or in part (but not as to fractional shares of Common Stock underlying any
Placement Agent Warrant). In the case of the purchase of less than all the
Warrant Shares purchasable under any Warrant Certificate, the Company shall
cancel the Warrant Certificate upon the surrender thereof and shall execute and
deliver a new Warrant Certificate of like tenor for the balance of the Warrant
Shares purchasable thereunder.
Section 3.2 CASHLESS EXERCISE. At any time during the Warrant
Exercise Term, the Holder may, at its option, exchange the Warrants represented
by such Holder's Warrant certificate, in whole or in part (a "Warrant
Exchange"), into the number of fully paid and non-assessable Warrant Shares
determined in accordance with this Section 3.2, by surrendering such Warrant
Certificate at the principal office of the Company or at the office of its
transfer agent, accompanied by a notice stating such Holder's intent to effect
such exchange, the number of Warrant Shares to be exchanged (the "Notice of
Exchange") and the date on which the Holder requests that such Warrant Exchange
occur (the "Exchange Date"). Certificates for the Warrant Shares issuable upon
such Warrant Exchange and, if applicable, a new Warrant of like tenor evidencing
the balance of the Warrant Shares remaining subject to the Holder's Warrant
certificate, shall be issued as of the Exchange Date and delivered to the Holder
within five (5) business days following the Exchange Date. In connection with
any Warrant Exchange, the Holder's Warrant certificate shall represent the right
to subscribe for and acquire (i) the number of Warrant Shares (rounded to the
next highest integer) equal to the product of (A) the number of Warrant Shares
as to which the warrants are being exercised as specified by the Holder in its
Notice of Exchange (the "Total Share Number") multiplied by (y), a fraction, the
numerator of which is the Market Price (as defined in Section 3.3) of the
Warrant Shares less the Exercise Price of the Shares and the denominator of
which is the Market Price per Warrant Share. Solely for the purposes of this
Section 3.2, Market Price shall be calculated either (i) on the date on which
the form of election attached hereto is
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deemed to have been sent to the Company pursuant to Section 13 hereof ("Notice
Date") or (ii) as the average of the Market Price for each of the five trading
days immediately preceding the Notice Date, whichever of (i) or (ii) results in
a greater Market Price.
Section 3.3 MARKET PRICE. For the purpose of this Agreement, the
phrase "Market Price" at any date shall be deemed to be the (i) last reported
sale price on the last trading day or, in case no such reported sale takes place
on such day, the average last reported sale price for the last three (3) trading
days, in either case as officially reported by the principal securities exchange
on which the Common Stock is listed or admitted to trading, or, (ii) if the
Common Stock is not listed or admitted to trading on any national securities
exchange but is listed or quoted upon the Nasdaq National Market or SmallCap
Market (referred to hereinafter as "NASDAQ"), the closing bid price on the last
trading day, or, in case no such reported bid takes place on such day, the
average closing bid price for the last three (3) trading days, as furnished by
NASDAQ or similar organization if NASDAQ is no longer reporting such
information, or (iii) if the Common Stock is not listed upon a principal
exchange or quoted on NASDAQ, but quotes for the Common Stock are available in
the OTC Bulletin Board or "pink sheets" the closing bid price on the last
trading day, or, in case no such bid takes place on such day, the average
closing bid price for the last three (3) trading days as furnished on the OTC
Bulletin Board or any other reliable reporting service or (iv) in the event the
Common Stock is not traded upon a principal exchange and not listed on NASDAQ
and quotes are not available on the OTC Bulletin Board or any other reliable
reporting service, the price as determined in good faith by resolution of the
Board of Directors of the Company, based on the best information available to
it.
4. ISSUANCE OF CERTIFICATES. Upon the exercise of this Warrant, the
issuance of certificates for the Warrant Shares or other securities, properties
or rights underlying this Warrant, shall be made forthwith (and in any event
within five (5) business days thereafter) without charge to the Holder thereof
including, without limitation, any tax which may be payable in respect of the
issuance thereof, and such certificates shall (subject to the provisions of
SECTIONS 5 and 7 hereof) be issued in the name of, or in such names as may be
directed by, the Holder thereof; provided, however, that the Company shall not
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificates in a name other
than that of the Placement Agent and the Company shall not be required to issue
or deliver such certificates unless or until the person or persons requesting
the issuance thereof shall have paid to the Company the amount of such tax or
shall have established to the satisfaction of the Company that such tax has been
paid.
The Warrant Certificates and the certificates representing the Warrant
Shares issuable upon exercise of any Placement Agent Warrant shall be executed
on behalf of the Company by the manual or facsimile signature of the then
Chairman or Vice Chairman of the Board of Directors or President or Vice
President of the Company under its corporate seal reproduced
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thereon, attested to by the manual or facsimile signature of the then present
Secretary or Assistant Secretary of the Company. The Warrant Certificates shall
be dated the date of the execution by the Company upon initial issuance,
division, exchange, substitution or transfer. The certificates representing the
Warrant Shares issuable upon exercise of this Warrant shall be identical in form
to those held by the public at large and listed for trading on any national
securities exchange or NASDAQ, as the case may be.
5. RESTRICTION ON TRANSFER OF PLACEMENT AGENT'S WARRANTS. Upon
exercise, in part or in whole, of the Placement Agent Warrants, certificates
representing the Warrant Shares and any of the other securities issuable upon
exercise of the Placement Agent Warrants, if any, (collectively, the "Warrant
Securities"), shall bear a legend substantially similar to the legend set forth
in Section 7.1.
The Holder of a Warrant Certificate, by its acceptance thereof, and
agrees that the Placement Agent Warrants are being acquired as an investment and
view to the distribution thereof.
6. EXERCISE PRICE.
Section 6.1 INITIAL AND ADJUSTED EXERCISE PRICE. Except as otherwise
provided in Section 8 hereof, the initial exercise price of any Placement Agent
Warrant shall be (i) $7.00 or if the Company shall cause to become effective a
registration statement to register the Company's securities for public offer and
sale (ii) 125% of the per share offering price of the securities offered in the
IPO. The exercise price shall be adjusted from time to time in accordance with
the provisions of Section 8 hereof.
Section 6.2 EXERCISE PRICE. The term "Exercise Price" herein shall
mean the initial exercise prices or the adjusted exercise price, depending upon
the context of the Placement Agent Warrant.
7. REGISTRATION RIGHTS.
Section 7.1 REGISTRATION UNDER THE SECURITIES ACT OF 1933. The
Placement Agent Warrants and the Warrant Securities have not been registered
under the Act. The Warrant Securities and/or the Warrant Shares shall be
registered in the IPO for public resale. Upon exercise, in part or in whole, of
the Placement Agent Warrants, certificates representing the Warrant Securities
shall bear the following legend if not previously registered:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended ("Act"), and may not be
offered or sold except pursuant to (i) an effective registration statement
under the Act, (ii) to the extent applicable, Rule 144 under the Act (or
any similar rule under such Act
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relating to the disposition of securities), or (iii) an opinion of
counsel, if such opinion shall be reasonably satisfactory to counsel to
the issuer, that an exemption from registration under such Act is
available.
Section 7.2 PIGGYBACK REGISTRATION. If, at any time commencing on
the date hereof through and including March 28, 2005, the Company proposes to
register any of its securities under the Act (other than in connection with a
merger or pursuant to Form X-0, X-0 or similar form) it will give written notice
by registered or certified mail, at least thirty (30) days prior to the tiling
of each such registration statement, to the Placement Agent and to all other
Holders of the Placement Agent Warrants and Warrant Shares underlying the
Placement Agent Warrants, of its intention to do so. If any of the Holders of
the Placement Agent's Warrants and/or the Warrant Shares, notify the Company
within twenty (20) days after receipt of any such notice of its or their desire
to include any such securities in such proposed registration statement, the
Company shall afford each of the Placement Agent and such Holders of the
Placement Agent's Warrants and/or Warrant Shares, the opportunity to have any of
such securities registered under such registration statement.
Notwithstanding the provisions of this Section 7.2, the Company shall have
the right, except with respect to the IPO, at any time after it shall have given
written notice pursuant to this Section 7.2 (irrespective of whether a written
request for inclusion of any such securities shall have been made) to elect not
to file any such proposed registration statement, or to withdraw the same after
the filing but prior to the effective date thereof.
Section 7.3 DEMAND REGISTRATION.
(a) At any time commencing the day after the closing of the IPO
through and including the fifth anniversary thereof, the Holders of the
Placement Agent's Warrants and Warrant Shares, representing a "Majority" as
hereinafter defined of the Warrant Shares of Common Stock issuable upon the
exercise of the Placement Agent's Warrants (assuming the exercise of all of the
Placement Agent's Warrants) shall have the right (which right is in addition to
the registration rights under Section 7.2 hereof), exercisable by written notice
to the Company (the "Registration Notice"), to have the Company prepare and file
with the Securities and Exchange Commission ("SEC"), on one occasion, a
registration statement and such other documents, including a prospectus, as may
be necessary in the opinion of both counsel for the Company and counsel for the
Placement Agent and Holders, in order to comply with the provisions of the Act,
so as to permit a public offering and sale of their respective Placement Agent's
Warrants and Warrant Shares for at least eighteen (18) consecutive months by
such Holders and any other Holders of the Placement Agent's Warrants and the
Warrant Shares who shall notify the Company within ten (10) days after receiving
notice from the Company of such request. Such registration and all costs
incident thereof shall be at the expense of the Company, as provided in Section
7.4(b).
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(b) The Company covenants and agrees to give written notice of any
registration request under this Section 7.3 by any Holder or Holders to all
other registered Holders of the Placement Agent's Warrants and Warrant Shares
within ten (10) days from the date of the receipt of any such registration
request.
(c) In addition to the registration rights under Section 7.2 and
subsection (a) of this Section 7.3, at any time within the time period specified
in Section 7.4(a) hereof, any Holder of the Placement Agent's Warrants and/or
Warrant Shares, representing a "Majority" (as hereinafter defined) of the shares
of Common Stock issuable upon the exercise of the Placement Agent's Warrants
(assuming the exercise of all of the Placement Agent's Warrants) shall have the
right, exercisable by written request to the Company, to have the Company
prepare and file, on one occasion, with the Commission a registration statement
so as to permit a public offering and sale for eighteen (18) consecutive months
by any such Holder of its shares, provided, however, that the provisions of
Section 7.4(b) hereof shall not apply to any such registration request and
registration and all costs incident thereto shall be at the expense of the
Holder or Holders making such request.
(d) The Company and the Holders agree that the Holders of Placement
Agents Warrants and Warrant Shares will suffer damages if the Company fails to
fulfill its obligations under this Section 7.3 and that ascertaining the extent
of such damages with precision would not be feasible. If due to the failure of
the Company to file a registration statement with the SEC covering the resale of
the Warrant Shares within 60 days from receipt of the Registration Notice or
such registration statement is not declared effective within 120 days (the
"Effective Target Date") following the receipt of the Registration Notice, each
Holder shall receive a cash payment equal to the greater of (i) 10% of the
Holder's aggregate per share Exercise Price or (ii) 10% of the fair market value
of the Common Stock multiplied by such Holder's Warrant Shares (either actually
held Warrant Shares or Warrant Shares which may be purchased), for each 30-day
delay, or part thereof, payable promptly after the expiration of each 30-day
period, in the filing of the registration statement or effective date of the
registration statement, whichever may be applicable. For purposes of this
Section, "fair market value" shall mean the average of the closing bid and
closing asked prices of the Common Stock on the five (5) consecutive trading
days immediately prior to receipt of the Registration Notice.
Section 7.4 COVENANTS OF THE COMPANY WITH RESPECT TO REGISTRATION.
In connection with any registration under Section 7.2 or 7.3 hereof, the Company
covenants and agrees as follows:
(a) The Company shall file a registration statement within 60 days
of receipt of a Registration Notice in accordance with Section 7.3(a), shall
have any registration statement declared effective by the Effectiveness Target
Date, and shall furnish each Holder
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desiring to sell the Warrant Shares underlying the Placement Agent's Warrants
such number of prospectuses as shall reasonably be requested. Notwithstanding
the foregoing sentence, the Company shall be entitled to postpone the filing of
any registration statement otherwise required to be prepared and filed by it
pursuant to this Section 7.4(a) if the Company (i) is publicly committed to a
self-tender or exchange offer and the filing of a registration statement would
cause a violation of Regulation M under the Securities Exchange Act of 1 934 as
amended (the "Exchange Act") or (ii) or if the Company is involved in
negotiating or consummating an acquisition or merger which would make such
registration impracticable in which case the filing of the registration
statement may be delayed for a period of up to 30 days. In the event of such
postponement, the Company shall be required to file the registration statement
pursuant to this Section 7.4(a) upon the earlier of (i) the consummation or
termination, as applicable, of the event requiring such postponement or (ii) 90
days after the receipt of the Registration Notice. Additionally, notwithstanding
anything to the contrary contained herein, during any period that a registration
statement filed pursuant to Section 7.3 hereof is effective, the Company shall
have the right to prohibit the sale of any shares thereunder upon notice to the
Holder(s) (A) if in the opinion of counsel for the Company, the Company would
thereby be required to disclose information not otherwise then required by law
to be publicly disclosed where it is significant to the operations or well being
of the Company that such information remain undisclosed, provided that the
Company shall use its best efforts to minimize the period of time in which it
shall prohibit the sale of any of such shares pursuant to this clause (A), (B)
for periods of up to 30 days if the Company reasonably believes that such sale
might reasonably be expected to have an adverse effect on any significant
proposal or plan of the Company to engage in an acquisition of assets or any
merger, consolidation, tender offer, financing, corporate reorganization or
similar transaction; (C) during the period starting with the date 10 days prior
to the Company's estimate of the date of filing of, and ending on a date 60 days
after the effective date of, a Company initiated registration in which the
Holders are entitled to and may in fact participate in accordance with Section
7.2 hereof, but in no event longer than 90 days; or (D) upon the happening of
any event, as a result of which the prospectus under the registration statement
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing in which case, the
Company shall within a reasonable period provide the Holder with revised or
supplemental prospectuses and the Holders shall promptly take action to cease
making any offers of such shares until receipt and distribution of such revised
or supplemental prospectuses.
(b) The Company shall pay all costs (excluding fees and expenses of
Holder(s) counsel and any underwriting or selling commissions), fees and
expenses in connection with all registration statements filed pursuant to
Sections 7.2 and 7.3(a) hereof including, without limitation, the Company's
legal and accounting fees, printing expenses, and
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blue sky fees and expenses. The Holder(s) will pay all costs, fees and expenses
in connection with any registration statement filed pursuant to Section 7.3(c).
(c) The Company will take all necessary action which may be required
in qualifying or registering the Warrant Shares included in a registration
statement for offering and sale under the securities or blue sky laws of such
states as reasonably are requested by the Holder(s), provided that the Company
shall not be obligated to execute or file any general consent to service of
process or to qualify as a foreign corporation to do business under the laws of
any such jurisdiction.
(d) The Company shall indemnify the Holder(s) of the Placement
Agent's Warrants and Warrant Shares to be sold pursuant to any registration
statement and each person, if any, who controls such Holders within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act, against all loss,
claim, damage, expense or liability (including all expenses reasonably incurred
in investigating, preparing or defending against any claim whatsoever) to which
any of them may become subject under the Act, the Exchange Act or otherwise,
arising from such registration statement but only to the same extent and with
the same effect as the provisions pursuant to which the Company has agreed to
indemnify the Placement Agent contained in the Indemnity Agreement dated January
10, 2000 between the Placement Agent and the Company.
(e) The Holder(s) of the Warrants and Warrant Shares to be sold
pursuant to a registration statement, and their successors and assigns, shall
severally, and not jointly, indemnify the Company, its officers and directors
and each person, if any, who controls the Company within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, against all loss, claim,
damage or expense or liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which
they may become subject under the Act, the Exchange Act or otherwise, arising
from information furnished by or on behalf of such Holders, or their successors
or assigns, for specific inclusion in such registration statement to the same
extent and with the same effect as the provisions contained in Section 13(b) of
the Agency Agreement pursuant to which the Placement Agent has agreed to
indemnify the Company.
(f) Nothing contained in this Agreement shall be construed as
requiring the Holder(s) to exercise their Placement Agent's Warrants prior to
the initial filing of any registration statement or the effectiveness thereof.
(g) The Company shall not permit the inclusion of any securities
other than the Warrant Shares to be included in any registration statement filed
pursuant to Section 7.3 hereof, or permit any other registration statement
(other than in connection with a merger or on Form S-8) to become effective
within 180 days of a registration statement filed pursuant to Section 7.3
hereof, without the prior written consent of the Holders of the Placement
Agent's
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Warrants or Warrant Shares representing a Majority of the shares of Common Stock
issuable upon the exercise of such Placement Agent's Warrants.
(h) If the Warrant Shares are to be sold in an underwritten public
offering, the Company shall use its best efforts to furnish to each Holder
participating in the offering and to each such Placement Agent, a signed
counterpart, addressed to such Placement Agent, of (i) an opinion of counsel to
the Company dated the date of the closing under the underwriting agreement, and
(ii) a "cold comfort" letter dated the date of the closing under the
underwriting agreement signed by the independent public accountants who have
issued a report on the Company's financial statements included in such
registration statement, in each case covering substantially the same matters
with respect to such registration statement (and the prospectus included
therein) and, in the case of such accountants' letter, with respect to events
subsequent to the date of such financial statements, as are customarily covered
in opinions of issuer's counsel and in accountants' letters delivered to
Placement Agent in underwritten public offerings of securities.
(i) The Company shall as soon as practicable after the effective
date of the registration statement, and in any event within 15 months
thereafter, have made generally available to its "security holders" (within the
meaning of Rule 158 under the Act) an earnings statement (which need not be
audited) complying with Section 11(a) of the Act and covering a period of at
least 12 consecutive months beginning after the effective date of the
registration statement.
(j) The Company shall deliver promptly to each Holder participating
in the offering requesting the correspondence and memoranda described below, and
the managing underwriters, copies of all correspondence between the Commission
and the Company, its counsel or auditors and all memoranda relating to
discussions with the Commission or its staff with respect to the registration
statement and permit each Holder and Placement Agent to do such investigation,
upon reasonable advance notice, with respect to information contained in or
omitted from the registration statement as it deems reasonably necessary to
comply with applicable securities laws or rules of the National Association of
Securities Dealers, Inc. ("NASD"). Such investigation shall include access to
books, records and properties and opportunities to discuss the business of the
Company with its officers and independent auditors, all to such reasonable
extent and at such reasonable times and as often as any such Holder shall
reasonably request.
(k) The Company shall enter into an underwriting agreement with the
managing underwriter selected for such underwriting, if any, by Holders holding
a Majority of the Placement Agent's Warrants and Warrant Shares requested to be
included in such underwriting. Such underwriting agreement shall be satisfactory
in form and substance to the Company, each Holder and the managing underwriter,
and shall contain such representations, war-
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ranties and covenants by the Company and such other terms as are customarily
contained in agreements of that type used by the managing underwriter.
The Holders shall be parties to any underwriting agreement relating
to an underwritten sale of their Placement Agent's Warrants and the Warrant
Shares and may, at their option, require that any or all the representations,
warranties and covenants of the Company to or for the benefit of such Placement
Agent(s) shall also be made to and for the benefit of such Holders. Such Holders
shall not be required to make any representations or warranties to or agreements
with the Company or the underwriter except as they may relate to such Holders,
their intended methods of distribution, and except for matters related to
disclosures with respect to such Holders, contained or required to be contained,
in such registration statement under the Act and the rules and regulations
thereunder.
(l) For purposes of this Agreement, the term "Majority" in reference
to the Holders of Placement Agent's Warrants and Warrant Shares, shall mean in
excess of fifty percent (50%) of the then outstanding Warrant Shares, assuming
the full exercise of all Placement Agent's Warrants that (i) are not held by the
Company, an affiliate, officer, creditor, employee or agent thereof or any of
their respective affiliates, members of their families, persons acting as
nominees or in conjunction therewith or (ii) have not been resold to the public
pursuant to Rule 144 under the Act or a registration statement filed with the
Commission under the Act.
8. ADJUSTMENTS TO EXERCISE PRICE AND NUMBER OF SECURITIES.
Section 8.1 (a) COMPUTATION OF ADJUSTED EXERCISE PRICE. Except as
hereinafter provided, in case the Company shall at any time after the date
hereof issue or sell any shares of Common Stock (other than the issuances or
sales referred to in Section 3.2 hereof), including shares held in the Company's
treasury and shares of Common Stock issued upon the exercise of any options,
rights or warrants, to subscribe for shares of Common Stock and shares of Common
Stock issued upon the direct or indirect conversion or exchange of securities
for shares of Common Stock, for a consideration per share less than the Exercise
Price in effect immediately prior to the issuance or sale of such shares or the
"Market Price" (as defined in Section 8.l(vi) hereof) per share of Common Stock
on the date immediately prior to the issuance or sale of such shares or without
consideration, then forthwith upon such issuance or sale, the Exercise Price
shall (until another such issuance or sale) be reduced to the price (calculated
to the nearest full cent) equal to the quotient derived by dividing (A) an
amount equal to the sum of (X) the product of (a) the lower of (i) the Exercise
Price in effect immediately prior to such issuance or sale or (ii) the Market
Price per share of Common Stock on the date immediately prior to the issuance or
sale of such shares, in either event, reduced, but not below .001, by the
positive difference between the (u) "Market Price" per share of Common Stock on
the date immediately prior to the issuance or sale and (v) the amount per share
re-
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ceived in connection with such issuance or sale, multiplied by (b) the total
number of shares of Common Stock outstanding immediately prior to such issuance
or sale plus, (Y) the aggregate of the amount of all consideration, if any,
received by the Company upon such issuance or sale, by (B) the total number of
shares of Common Stock outstanding immediately after such issuance or sale;
provided, however, that in no event shall the Exercise Price be adjusted
pursuant to this computation to an amount in excess of the Exercise Price in
effect immediately prior to such computation, except in the case of a
combination of outstanding shares of Common Stock, as provided by Section 8.3
hereof.
(b) For the purposes of this Section 8 the term Exercise Price shall
mean the Exercise Price per share of Common Stock set forth in Section 6 hereof,
as adjusted from time to time pursuant to the provisions of this Section 8.
For the purposes of any computation to be made in accordance with this
Section 8.1, the following provisions shall be applicable:
(i) In case of the issuance or sale of shares of Common Stock for a
consideration part or all of which shall be cash, the amount of the cash
consideration therefor shall be deemed to be the amount of cash received
by the Company for such shares (or, if shares of Common Stock are offered
by the Company for subscription, the subscription price, or, if either of
such securities shall be sold to underwriters or dealers for public
offering without a subscription offering, the initial public offering
price) before deducting therefrom any compensation paid or discount
allowed in the sale, underwriting or purchase thereof by underwriters or
dealers or others performing similar services, or any expenses incurred in
connection therewith.
(ii) In case of the issuance or sale (otherwise than as a dividend
or other distribution on any stock of the Company) of shares of Common
Stock for a consideration part or all of which shall be other than cash,
the amount of the consideration therefor other than cash shall be deemed
to be the value of such consideration as determined in good faith by the
Board of Directors of the Company.
(iii) Shares of Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have been
issued immediately after the opening of business on the day following the
record date for the determination of stockholders entitled to receive such
dividend or other distribution and shall be deemed to have been issued
without consideration.
(iv) The reclassification of securities of the Company other than
shares of Common Stock into securities including shares of Common Stock
shall be deemed to involve the issuance of such shares of Common Stock for
a consideration other than cash immediately prior to the close of business
on the date fixed for the determination
-12-
of security holders entitled to receive such shares, and the value of the
consideration allocable to such shares of Common Stock shall be determined
as provided in subsection (ii) of this Section 8.1.
(v) The number of shares of Common Stock at any one time
outstanding shall include the aggregate number of shares issued or
issuable (subject to readjustment upon the actual issuance thereof) upon
the exercise of options, rights, warrants and upon the conversion or
exchange of convertible or exchangeable securities.
Section 8.2 OPTIONS, RIGHTS, WARRANTS AND CONVERTIBLE AND
EXCHANGEABLE SECURITIES EXCEPT FOR ISSUANCES DESCRIBED IN SECTION 8.7. In case
the Company shall at any time after the date hereof issue options, rights or
warrants to subscribe for shares of Common Stock, or issue any securities
convertible into or exchangeable for shares of Common Stock: (i) for a
consideration per share less than the (a) Exercise Price in effect immediately
prior to the issuance of such options, rights or warrants, or such convertible
or exchangeable securities, or (b) the Market Price immediately prior to the
issuance of such options, rights or warrants, or such convertible or
exchangeable securities, or (ii) without consideration, the Exercise Price in
effect immediately prior to the issuance of such options, rights or warrants, or
such convertible or exchangeable securities, as the case may be, shall be
reduced to a price determined by making a computation in accordance with the
provisions of Section 8.1 hereof, provided that:
(a) The aggregate maximum number of shares of Common Stock, as the
case may be, issuable under such options, rights or warrants shall be
deemed to be issued and outstanding at the time such options, rights or
warrants were issued, and for a consideration equal to the minimum
purchase price per share provided for in such options, rights or warrants
at the time of issuance, plus the consideration (determined in the same
manner as consideration received on the issue or sale of shares in
accordance with the terms of the Warrants), if any, received by the
Company for such options, rights or warrants and if no minimum price is
provided in the options, rights or warrants, then the consideration shall
be equal to zero; provided, however, that upon the expiration or other
termination of the options, rights or warrants, if any thereof shall not
have been exercised, the number of shares of Common Stock deemed to be
issued and outstanding pursuant to this subsection (a) (and for the
purposes of subsection (v) of Section 8.1 hereof) shall be reduced by such
number of shares as to which options, warrants and/or rights shall have
expired or terminated unexercised, and such number of shares shall no
longer be deemed to be issued and outstanding, and the Exercise Price then
in effect shall forthwith be readjusted and thereafter be the price which
it would have been had adjustment been made on the basis of the issuance
only of shares actually issued or issuable upon the exercise of those
options, rights or warrants as to which the exercise rights shall not have
expired or terminated unexercised.
-13-
(b) The aggregate maximum number of shares of Common Stock issuable
upon conversion or exchange of any convertible or exchangeable securities
shall be deemed to be issued and outstanding at the time of issuance of
such securities, and for a consideration equal to the consideration
(determined in the same manner as consideration received on the issue or
sale of shares of Common Stock in accordance with the terms of the
Warrants) received by the Company for such securities, plus the minimum
consideration, if any, receivable by the Company upon the conversion or
exchange thereof; provided, however, that upon the termination of the
right to convert or exchange such convertible or exchangeable securities
(whether by reason of redemption or otherwise), the number of shares
deemed to be issued and outstanding pursuant to this subsection (b) (and
for the purpose of subsection (v) of Section 8.1 hereof) shall be reduced
by such number of shares as to which the conversion or exchange rights
shall have expired or terminated unexercised, and such number of shares
shall no longer be deemed to be issued and outstanding and the Exercise
Price then in effect shall forthwith be readjusted and thereafter be the
price which it would have been had adjustment been made on the basis of
the issuance only of the shares actually issued or issuable upon the
conversion or exchange of those convertible or exchangeable securities as
to which the conversion or exchange rights shall not have expired or
terminated unexercised.
(c) If any change shall occur in the price per share provided for in
any of the options rights or warrants referred to in subsection (a) of
this Section 8.2, or in the price per share at which the securities
referred to in subsection (b) of this Section 8.2 are convertible or
exchangeable, such options, rights or warrants or conversion or exchange
rights, as the case may be, shall be deemed to have expired or terminated
on the date when such price change became effective in respect of shares
not theretofore issued pursuant to the exercise or conversion or exchange
thereof, and the Company shall be deemed to have issued upon such date new
options, rights or warrants or convertible or exchangeable securities at
the new price in respect of the number of shares issuable upon the
exercise of such options, rights or warrants or the conversion or exchange
of such convertible or exchangeable securities.
Section 8.3 SUBDIVISION AND COMBINATION. In case the Company shall
at any time subdivide or combine the outstanding shares of Common Stock, the
Exercise Price of the Placement Agent's Warrants shall forthwith be
proportionately decreased in the case of subdivision or increased in the case of
combination.
Section 8.4 ADJUSTMENT IN NUMBER OF SECURITIES. Upon each adjustment
of the Exercise Price of the Placement Agent's Warrants, pursuant to the
provisions of this Section 8, the number of shares issuable upon the exercise of
the Placement Agent's Warrants, shall be adjusted to the nearest full amount by
multiplying a number equal to the exercise
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price in effect immediately prior to such adjustment by the number of shares of
Common Stock issuable upon exercise of the Placement Agent's Warrants
immediately prior to such adjustment and dividing the product so obtained by the
adjusted Exercise Prices.
Section 8.5 DEFINITION OF COMMON STOCK. For the purpose of this
Agreement, the term "Common Stock" shall mean (i) the class of stock designated
as Common Stock in the Articles of Incorporation of the Company as amended as of
the date hereof, or (ii) any other class of stock resulting from successive
changes or reclassifications of such Common Stock, consisting solely of changes
in par value, or from par value to no par value, or from no par value to par
value. In the event that the Company shall after the date hereof issue common
securities with greater or superior voting rights than the shares of Common
Stock outstanding as of the date hereof, the Holder, at its option, may receive
upon exercise of any Placement Agent's Warrant, either shares of Common Stock or
a like number of such securities with greater or superior voting rights.
Section 8.6 MERGER OR CONSOLIDATION. In case of any consolidation of
the Company with, or merger of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger which does not result
in any reclassification or change of the outstanding Common Stock), the
corporation formed by such consolidation or merger shall execute and deliver to
the Holder a supplemental warrant agreement providing that the Holder shall have
the right thereafter (until the expiration of such warrant) to receive, upon
exercise of such warrant, the kind and amount of shares of stock and other
securities and property receivable upon such consolidation or merger, by a
holder of the number of shares of Common Stock of the Company for which such
warrant might have been exercised immediately prior to such consolidation,
merger, sale or transfer. Such supplemental warrant agreement shall provide for
adjustments which shall be identical to the adjustments provided in Section 8.
The above provision of this subsection shall similarly apply to successive
consolidations or mergers.
Section 8.7 NO ADJUSTMENT OF EXERCISE PRICE IN CERTAIN CASES. No
adjustment of the Exercise Price of the Placement Agent's Warrants shall be
made:
(a) Upon the issuance or sale of the Placement Agent's Warrants or
Shares issuable upon the exercise of the Placement Agent's Warrants or the
exercise of options and warrants outstanding on the date hereof; or
(b) If the amount of such adjustment shall be less than one cent
($.01) per share of Common Stock, provided, however, that in such case any
adjustment that would otherwise be required then to be made shall be
carried forward and shall be made at the time of and together with the
next subsequent adjustment which, together with any adjustment so carried
forward, shall amount to at least one cent ($.01) per share of Common
Stock;
-15-
9. LOCK-UP. The Holder of the Warrant Shares and/or the Warrant
Securities, as adjusted, will not, directly or indirectly, offer, sell, contract
to sell, grant any option to purchase, pledge, assign, hypothecate, or otherwise
dispose of, encumber, or transfer all or any portion of the economic
consequences associated with the ownership of the Warrant Shares and/or Warrant
Securities beneficially owned by the Holder for a period of 180 days after the
date on which the SEC declares the registration statement in connection with the
IPO effective, without the prior written consent of the Company (the "Lock-Up").
Notwithstanding the foregoing, if the average of the closing prices for the
Company's Common Stock during the last twenty trading days of each measurement
period set forth below (each a "Measurement Period") following the closing date
of the IPO, is at least 150% of the offering price of the securities offered in
the IPO, then the designated percentage of all of the Warrant Shares and/or
Warrant Securities subject to the Lock-Up outstanding at the time shall be
irrevocably released from such restrictions:
MEASUREMENT PERIOD PERCENTAGE RELEASED
------------------ -------------------
2 months 30%
4 months 60%
6 months All Warrant Shares and/or Warrant
Securities not previously released.
In calculating the number of Warrant Shares and/or Warrant
Securities to be released upon any Measurement Period, the designated percentage
shall be multiplied by the sum of (a) all of the Warrant Shares and/or Warrant
Securities subject to the Lock-Up and (b) all Warrant Shares and/or Warrant
Securities previously released from such restrictions pursuant to the Lock-Up.
10. EXCHANGE AND REPLACEMENT OF PLACEMENT AGENT'S WARRANT CERTIFICATES.
Each Placement Agent's Warrant Certificate is exchangeable without expense, upon
the surrender thereof by the registered Holder at the principal executive office
of the Company, for a new Placement Agent's Warrant Certificate of like tenor
and date representing in the aggregate the right to purchase the same number of
Warrant Shares as provided in the original Placement Agent's Warrants in such
denominations as shall be designated by the Holder thereof at the time of such
surrender.
Upon receipt by the Company of evidence reasonably satisfactory to
it of the loss, theft, destruction or mutilation of any Placement Agent's
Warrant Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
the Placement Agent's Warrants, if mutilated, the Company will make and deliver
a new Placement Agent's Warrant Certificate of like tenor, in lieu thereof.
-16-
11. ELIMINATION OF FRACTIONAL INTERESTS. The Company shall not be
required to issue certificates representing fractions of shares of Common Stock
upon the exercise of the Placement Agent's Warrants, nor shall it be required to
issue scrip or pay cash in lieu of fractional interests, it being the intent of
the parties that all fractional interests shall be eliminated by rounding any
fraction of .5 or greater up to the nearest whole number of shares of Common
Stock or other securities, properties or rights.
12. RESERVATION AND LISTING OF SECURITIES. The Company shall at all
times reserve and keep available out of its authorized shares of Common Stock,
solely for the purpose of issuance upon the exercise of the Placement Agent's
Warrants, such number of shares of Common Stock or other securities, properties
or rights as shall be issuable upon the exercise thereof. The Company covenants
and agrees that, upon exercise of the Placement Agent's Warrants and payment of
the Exercise Price therefor, all shares of Common Stock and other securities
issuable upon such exercise shall be duly and validly issued, fully paid,
non-assessable and not subject to the preemptive rights of any stockholder. As
long as the Placement Agent's Warrants shall be outstanding, the Company shall
use its best efforts to cause all shares of Common Stock issuable upon the
exercise of the Placement Agent's Warrants to be listed (subject to official
notice of issuance) on all securities exchanges on which the Common Stock issued
to the public in connection herewith may then be listed and/or quoted on NASDAQ.
13. NOTICES TO PLACEMENT AGENT'S WARRANT HOLDERS. Nothing contained in
this Agreement shall be construed as conferring upon the Holders the right to
vote or to consent or to receive notice as a stockholder in respect of any
meetings of stockholders for the election of directors or any other matter, or
as having any rights whatsoever as a stockholder of the Company. If, however, at
any time prior to the expiration of the Placement Agent's Warrants and their
exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of current or retained earnings,
as indicated by the accounting treatment of such dividend or distribution
on the books of the Company; or
(b) the Company shall offer to all the holders of its Common Stock
any additional shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of the
Company, or any option, right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale of all or
substantially all of its property assets and business as an entirety shall
be proposed;
-17-
then, in any one or more of such events the Company shall give written notice to
the Holders of such event at least fifteen (15) days prior to the date fixed as
a record date or the date of closing the transfer books for the determination of
the stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be.
Failure to give such notice or any defect therein shall not affect the validity
of any action taken in connection with the declaration or payment of any such
dividend, or the issuance of any convertible or exchangeable securities, or
subscription rights, options or warrants, or any proposed dissolution,
liquidation, winding up or sale.
14. NOTICES. All notices requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made when
delivered, or mailed by registered or certified mail, return receipt requested:
(a) If to the registered Holder of the Placement Agent's Warrants,
to the address of such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3 hereof
or to such other address as the Company may designate by notice to the
Holders.
In addition to the foregoing, notice may by delivered by facsimile,
overnight courier or in person. In the event notice is sent by facsimile,
delivery shall be deemed to have been made when followed by first class mail. In
the event notice is sent by overnight courier or in person, deliver shall be
deemed to have been made when received at the address of the recipient.
15. SUPPLEMENTS AND AMENDMENTS. The Company and the Placement Agent may
from time to time supplement or amend this Agreement without the approval of any
holders of Placement Agent's Warrant Certificates (other than the Placement
Agent) in order to cure any ambiguity, to correct or supplement any provision
contained herein which may be defective or inconsistent with any provisions
herein or to make any other provisions in regard to matters or questions arising
hereunder which the Company and the Placement Agent may deem necessary or
desirable and which the Company and the Placement Agent deem shall not adversely
affect the interests of the Holders of Placement Agent's Warrant Certificates.
16. SUCCESSORS. All the covenants and provisions of this Agreement shall
be binding upon and inure to the benefit of the Company, the Holders and their
respective successors and assigns hereunder.
17. TERMINATION. This Agreement shall terminate at the close of business
March __, 2005. Notwithstanding the foregoing, the indemnification provisions of
Section 7
-18-
shall survive such termination until the expiration of the statute of
limitations in connection with any underwriter under Section 7 hereof.
18. ARBITRATION. In the event of a dispute under the terms of this
Agreement, the parties agree to submit the issues for resolution to arbitration
before a panel of three (3) arbitrators in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (the "AAA"). Any
arbitration shall be held in the County of New York, State of New York, at the
office of the AAA. Notwithstanding any contrary provisions of the Commercial
Arbitration Rules, the provisions contained herein shall govern any proceeding
between the parties.
(a) Each party agrees that the arbitrators shall be bound by the
terms and conditions of this Agreement and shall have no power, in
rendering an award, to alter or depart from any express provision of this
Agreement, and the failure to observe this limitation shall constitute
grounds for vacating the award. Except as otherwise provided in this
Agreement, the arbitrators shall apply New York substantive law and New
York rules of evidence in the proceeding. The arbitrators shall have the
power to grant all remedies and award, provided by New York law, excluding
the power to award punitive damages. The parties shall exchange any and
all documentary materials relevant to the dispute not less than twenty
(20) days prior to the time when the arbitrators have scheduled a hearing
for the purposes of resolving said dispute. The parties shall require the
arbitrators to prepare in writing and provide to the parties an award
including factual findings and the reasons on which the decision is based.
Any award of the arbitrators shall be final and binding upon the parties
and judgment may be entered by a court of competent jurisdiction in the
State of New York. Should the arbitrators commit errors of law or legal
reasoning, the award may be vacated or corrected pursuant to the New York
Civil Practice Law for any such error.
(b) If any legal action or dispute arising under this Agreement,
arises by reason of any asserted breach of this Agreement, or arises
between the parties and is related in any way to the subject matter of
this Agreement, the prevailing party shall be entitled to recover all
costs and expenses including attorneys' fees, investigative costs,
accounting fees and charges for experts. The "prevailing party" shall be
the party who obtains a provisional remedy such as a preliminary
injunction or who is entitled to recover its costs of suit, whether or not
the suit proceeds to final judgment; if there is no court action, the
prevailing party shall be the party who wins any dispute. A party need not
be awarded money damages or all relief sought in order to be considered
the "prevailing party."
19. ENTIRE AGREEMENT: MODIFICATION. This Agreement (including the Agency
Agreement to the extent portions thereof are referred to herein) contains the
entire under-
-19-
standing between the parties hereto with respect to the subject matter hereof
and, except as provided in Section 14 hereof, may not be modified or amended
except by a writing duly signed by the party against whom enforcement of the
modification or amendment is sought.
20. SEVERABILITY. If any provision of this Agreement shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Agreement.
21. CAPTIONS. The caption headings of the Sections of this Agreement are
for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
22. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Placement Agent and any other registered Holder(s) of the Placement Agent's
Warrant Certificates or Warrant Shares underlying the Placement Agent's Warrants
any legal or equitable right, remedy or claim under this Agreement; and this
Agreement shall be for the sole and exclusive benefit of the Company and the
Placement Agent and any other Holder(s) of the Placement Agent's Warrant
Certificates or Warrant Shares.
23. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
-20-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
[SEAL] VICTORY ENTERTAINMENT CORP.
By:___________________________________
Name: Xxxxxxx Xxxxxx
Title: President and Chief Executive
Officer
Attest:
_________________________
Secretary
XXXXXXXXX SECURITIES CORP.
By:____________________________________
Name: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE PLACEMENT AGENT'S WARRANTS REPRESENTED BY
THIS CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE PLACEMENT AGENT'S WARRANT
AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:30 P.M., NEW YORK TIME, March 28, 2005
No. PA-1 80,000 Placement Agent's Warrants
Warrant Certificate
This Placement Agent's Warrant Certificate certifies that Xxxxxxxxx
Securities Corp. (the "Placement Agent") or registered assigns, is the
registered holder of 80,000 Placement Agent's Warrants to purchase initially, at
any time from March 28, 2000 until 5:30 p.m. New York time on March 28, 2005
("Expiration Date"), up to 80,000 fully-paid and non-assessable shares of Common
Stock, par value $.001 per share (the "Shares") of Victory Entertainment Corp.,
a Florida corporation (the "Company"), at an initial per share exercise price,
subject to adjustment in certain events (the "Exercise Price"), of (i) $7.00 or
if the Company shall cause to become effective a registration statement to
register the Company's securities for public offer and sale (ii) 125% of the per
share offering price of the Company's securities offered in the Company's
initial public offering upon surrender of this Placement Agent's Warrant
Certificate and payment of the Exercise Price at an office or agency of the
Company, but subject to the conditions set forth herein and in the warrant
agreement dated as of March 28, 2000, 2000 between the Company and the Placement
Agent (the "Placement Agent's Warrant Agreement"). Payment of the Exercise Price
shall be made by certified or official bank check in New York Clearing House
funds payable to the order of the Company or otherwise in accordance with the
terms of the Placement Agent's Warrant Agreement. In accordance with Sec-
A-1
tion 3.2 of the Placement Agent's Warrant Agreement, payment of the exercise
price may also be made by the delivery of Shares of Common Stock of the Company.
No Placement Agent's Warrant may be exercised after 5:30 p.m., New York
time, on the Expiration Date, at which time all Placement Agent's Warrants
evidenced hereby, unless exercised prior thereto, shall thereafter be void.
The Placement Agent's Warrants evidenced by this Placement Agent's Warrant
Certificate are part of a duly authorized issue of warrants pursuant to the
Placement Agent's Warrant Agreement, which Placement Agent's Warrant Agreement
is hereby incorporated by reference in and made a part of this instrument and is
hereby referred to for a description of the rights, limitation of rights,
obligations, duties and immunities thereunder of the Company and the holders
(the words "holders" or "holder" meaning the registered holders or registered
holder) of the Placement Agent's Warrants.
The Placement Agent's Warrant Agreement provides that upon the occurrence
of certain events the exercise price and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder, issue a new Placement
Agent's Warrant Certificate evidencing the adjustment in the exercise price and
the number and/or type of securities issuable upon the exercise of the Placement
Agent's Warrants; provided, however, that the failure of the Company to issue
such new Placement Agent's Warrant Certificates shall not in any way change,
alter or otherwise impair, the rights of the holder as set forth in the
Placement Agent's Warrant Agreement.
Upon due presentment for registration of transfer of this Placement
Agent's Warrant Certificate at an office or agency of the Company, a new
Placement Agent's Warrant Certificate or Placement Agent's Warrant Certificates
of like tenor and evidencing in the aggregate a like number of Placement Agent's
Warrants shall be issued to the transferee(s) in exchange for this Placement
Agent's Warrant Certificate, subject to the limitations provided herein and in
the Placement Agent's Warrant Agreement, without any charge except for any tax
or other governmental charge imposed in connection with such transfer.
Upon the exercise of less than all of the Placement Agent's Warrants
evidenced by this Certificate, the Company shall forthwith issue to the holder
hereof anew Placement Agent's Warrant Certificate representing such number of
unexercised Placement Agent's Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Placement Agent's Warrant Certificate (notwithstanding
any notation of ownership or other writing hereon made by anyone), for the
purpose of any exercise hereof, and of any distribution to the holder(s) hereof,
and for all other purposes, and the Company shall not be affected by any notice
to the contrary.
A-2
The Shares are subject to a certain Lock-Up provision contained in the
Placement Agent's Warrant Agreement.
All terms used in this Placement Agent's Warrant Certificate which are
defined in the Placement Agent's Warrant Agreement shall have the meanings
assigned to them in the Placement Agent's Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Placement Agent's Warrant
Certificate to be duly executed under its corporate seal.
Dated as of March 28, 2000
VICTORY ENTERTAINMENT CORP.
By:___________________________________
Name: Xxxxxxx Xxxxxx
Title: President and Chief Executive
Officer
Attest:
____________________________
Secretary
A-3
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Placement Agent's Warrant Certificate, to purchase
_____shares of Common Stock of Victory Entertainment Corp. and herewith tenders
in payment for such securities a certified or official bank check payable in New
York Clearing House Funds to the order of ____________________________ in the
amount of $_______, all in accordance with the terms hereof. The undersigned
requests that a certificate for such securities be registered in the name of
___________ whose address is _____________________________ and that such
Certificate be delivered to _______________whose address is
____________________________.
Dated:
Signature___________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Placement Agent's Warrant Certificate.)
____________________________________________
(Insert Social Security or Other
Identifying Number of Holder)
