STOCK PURCHASE WARRANT
THIS
WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN
REGIS-TERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. EXCEPT AS OTHERWISE
SET FORTH HEREIN, NEITHER THIS WARRANT NOR ANY OF SUCH SHARES MAY BE SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRA-TION STATEMENT
FOR SUCH SECURITIES UNDER SAID ACT OR, AN OPINION OF COUNSEL, IN FORM, SUBSTANCE
AND SCOPE, CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE
144
OR REGULATION S UNDER SUCH ACT.
Right
to
Purchase 200,000 Shares of Common Stock, par value $0.0001 per
share
Issue
Date: September 25, 2007
STOCK
PURCHASE WARRANT
THIS
CERTIFIES THAT,
for
value received, each of the parties set forth on attached Schedule
A,
or its
registered assigns, is entitled to purchase from SportsQuest,
Inc.,
a
Delaware corporation (the “Company”), at any time or from time to time during
the period specified in Paragraph 2 hereof, 200,000 fully paid and
nonassessable shares of the Company’s Common Stock, par value $0.0001 per share
(the “Common Stock”), at an exercise price specified in Paragraph 2 (the
“Exercise Price”). The term “Warrant Shares,” as used herein, refers to the
shares of Common Stock purchasable hereunder. The Warrant Shares and the
Exercise Price are subject to adjustment as provided in Paragraph 3 hereof.
This
Warrant is issued pursuant to that certain Agreement for Exchange of Common
Stock, dated August 20, 2007, by and among the Company and Xxxxxx-Xxxxxx
Entertainment, LLC, ZCE, Inc. and Q-C Entertainment, LLC (the “Exchange
Agreement”), as amended by that Bring Down Agreement and Amendment dated as of
the date hereof by and among the Company, Xxxxxx/Xxxxxx Entertainment, Inc.,
ZCE, Inc., Xxxxx Xxxxx and Xxxx Xxxxxxxx Xxxxx.
This
Warrant is subject to the following terms, provisions, and conditions:
1. Manner
of Exercise; Issuance of Certificates; Payment for Shares.
Subject
to the provisions hereof, this Warrant may be exercised by the holder hereof,
in
whole or in part, by the surrender of this Warrant, together with a completed
exercise agreement in the form attached hereto (the “Exercise Agreement”), to
the Company during normal business hours on any business day at the Company’s
principal executive offices (or such other office or agency of the Company
as it
may designate by notice to the holder hereof), and upon payment to the Company
in cash, by certified or offi-cial bank check or by wire transfer for the
account of the Company, of the Exercise Price for the Warrant Shares specified
in the Exercise Agreement. The Warrant Shares so purchased shall be deemed
to be
issued to the holder hereof or such holder’s designee, as the record owner of
such shares, as of the close of business on the date on which this Warrant
shall
have been surrendered, the completed Exercise Agreement shall have been
deliv-ered, and payment shall have been made for such shares as set forth above.
Certifi-xxxxx for the Warrant Shares so purchased, representing the aggregate
number of shares specified in the Exercise Agreement, shall be delivered to
the
holder hereof within a reasonable time, not exceeding 10 business days after
this Warrant shall have been so exercised. The certificates so delivered shall
be in such denominations as may be requested by the holder hereof and shall
be
registered in the name of such holder or such other name as shall be designated
by such holder. If this Warrant shall have been exercised only in part, then,
unless this Warrant has expired, the Company shall, at its expense, at the
time
of delivery of such certificates, deliver to the holder a new Warrant
representing the number of shares with respect to which this Warrant shall
not
then have been exercised.
2. Period
of Exercise.
This
Warrant is exercisable during the period, for the number of shares of Common
Stock and at the Exercise Price as follows:
(a) 50,000
shares of Common Stock at $0.50 per share on or before December 31,
2007;
(b) 50,000
shares of Common Stock at $1.00 per share on or before December 31, 2008;
and
(c) 100,000
shares of Common Stock at $1.50 per share on or before December 31,
2009.
3. Subdivision
or Combination of Common Stock.
If the
Company at any time subdivides (by any stock split, stock dividend,
recapitalization, reorganization, reclassification or otherwise) the shares
of
Common Stock acquirable hereunder into a greater number of shares, then, after
the date of record for effecting such subdivision, the Exercise Price in effect
immediately prior to such subdivision will be proportionately reduced. If the
Company at any time combines (by reverse stock split, recapitalization,
reorganization, reclassification or otherwise) the shares of Common Stock
acquirable hereunder into a smaller number of shares, then, after the date
of
record for effecting such combination, the Exercise Price in effect immediately
prior to such combination will be proportionately increased. Upon each
adjustment of the Exercise Price pursuant to the provisions of this Section,
the
number of shares of Common Stock issuable upon exercise of this Warrant shall
be
adjusted by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of shares of Common Stock
issuable upon exercise of this Warrant immediately prior to such adjustment
and
dividing the product so obtained by the adjusted Exercise Price
4. No
Fractional Shares.
No
fractional shares of Common Stock are to be issued upon the exercise of this
Warrant, but the Company shall pay a cash adjustment in respect of any
fractional share which would otherwise be issuable in an amount equal to the
same fraction of the Market Price of a share of Common Stock on the date of
such
exercise. “Market Price,” as of any date, (i) means the average of the last
reported sale prices for the shares of Common Stock on the OTCBB for the five
trading days immediately preceding such date as reported by Bloomberg, or (ii)
if the OTCBB is not the principal trading market for the shares of Common Stock,
the average of the last reported sale prices on the principal trading market
for
the Common Stock during the same period as reported by Bloomberg, or (iii)
if
market value cannot be calculated as of such date on any of the foregoing bases,
the Market Price shall be the fair market value as reasonably determined in
good
faith by the board of directors of the Company.
5. No
Rights or Liabilities as a Shareholder.
This
Warrant shall not entitle the holder hereof to any voting rights or other rights
as a shareholder of the Company. No provision of this Warrant, and no mere
enumeration herein of the rights or privileges of the holder hereof, shall
give
rise to any liability of such holder for the Exercise Price or as a shareholder
of the Company, whether such liability is asserted by the Company or by
creditors of the Company.
2
6. Transfer,
Exchange, and Replacement of Warrant.
(a) Restriction
on Transfer.
This
Warrant and the rights granted to the holder hereof are transferable, in whole
or in part, upon surrender of this Warrant, together with a properly executed
assignment in the form attached hereto, at the office or agency of the Company
referred to in Section 6(d) below, pro-vided, however, that any transfer or
assignment shall be subject to the conditions set forth in Section 6(e) hereof.
Until due presentment for registration of transfer on the books of the Company,
the Company may treat the registered holder hereof as the owner and holder
hereof for all purposes, and the Company shall not be affected by any notice
to
the con-trary.
(b) Replacement
of Warrant.
Upon
receipt of evi-dence 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 destruc-tion, upon delivery of an indemnity agreement reason-ably
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
the
holder’s expense, will execute and deliver, in lieu thereof, a new Warrant of
like tenor.
(c) Cancellation;
Payment of Expenses.
Upon the
surrender of this Warrant in connection with any trans-fer, exchange or
replacement as provided in this Section 6, this Warrant shall be promptly
canceled by the Company.
(d) Register.
The
Company shall maintain, at its principal executive offices (or such other office
or agency of the Company as it may designate by notice to the holder hereof),
a
register for this Warrant, 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.
(e) Exercise
or Transfer Without Registration.
If, at
the time of the surrender of this Warrant in connection with any exercise,
transfer or exchange of this Warrant, this Warrant (or, in the case of any
exercise, the Warrant Shares issuable hereunder), shall not be registered under
the Securities Act of 1933, as amended (the “Securities Act”) and under
applicable state securities or blue sky laws, the Company may require, as a
condition of allowing such exercise, transfer or exchange, (i) that the holder
or transferee of this Warrant, as the case may be, furnish to the Company a
written opinion of counsel, which opinion and counsel are acceptable to the
Company, to the effect that such exercise, transfer or exchange may be made
without registration under the Securities Act and under applicable state
securities or blue sky laws, (ii) that the holder or transferee execute and
deliver to the Company an investment letter in form and substance acceptable
to
the Company and (iii) that the transferee be an “accredited investor” as defined
in Rule 501(a) promulgated under the Securities Act; provided that no such
opinion, letter or status as an “accredited investor” shall be required in
connection with a transfer pursuant to Rule 144 under the Securities Act. The
first holder of this Warrant, by taking and holding the same, represents to
the
Company that such holder is acquiring this Warrant for investment and not with
a
view to the distribution thereof.
3
7. Miscellaneous.
(a) Legends.
This
Warrant and the Warrant Shares shall be imprinted with a legend in substantially
the following form:
THIS
WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY
STATE, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE STATE
SECURITIES LAW OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER,
PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION.
(b) Notices.
All
notices, requests, and other communications required or permitted to be given
or
delivered hereunder to the holder of this Warrant shall be in writing, and
shall
be personally delivered, or shall be sent by certified or registered mail or
by
recognized overnight mail courier, postage prepaid and addressed, to such holder
at the address shown for such holder on the books of the Company, or at such
other address as shall have been furnished to the Company by notice from such
holder. All notices, requests and other communications required or permitted
to
be given or delivered hereunder to the Company shall be in writing, and shall
be
personally delivered, or shall be sent by certified or registered mail or by
recognized overnight mail courier, postage prepaid and addressed, to the office
of the Company at 000 Xxxxxxxxxxxxx Xxxxxxx, 0xx
xxxxx,
Xxxx Xxxx, Xxxxxxx 00000, Attention: Chief Executive Officer, or at such other
address as shall have been furnished to the holder of this Warrant by notice
from the Company. Any such notice, request or other communication may be sent
by
facsimile, but shall in such case be subsequently confirmed by a writing
personally delivered or sent by certified or registered mail or by recognized
overnight mail courier as provided above. All notices, requests and other
communications shall be deemed to have been given either at the time of the
receipt thereof by the person entitled to re-ceive such notice at the address
of
such person for purposes of this Section, or, if mailed by registered or
certified mail or with a recognized overnight mail courier, upon deposit with
the United States Post Office or such overnight mail courier, if postage is
prepaid and the mailing is properly addressed, as the case may be.
(c) Governing
Law.
THIS
WARRANT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS
OF THE COMMONWEALTH OF VIRGINIA APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICT OF LAWS. THE PARTIES HERETO HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION
OF THE STATE COURTS OR THE UNITED STATES FEDERAL COURTS LOCATED IN NORFOLK,
VIRGINIA WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS WARRANT, THE AGREEMENTS
ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR
THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM
TO
THE MAINTENANCE OF SUCH SUIT OR PROCEEDING. BOTH PARTIES FURTHER AGREE THAT
SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED
IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT
OR
PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER PARTY’S RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW. BOTH PARTIES AGREE THAT A FINAL
NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE
AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER
LAWFUL MANNER. THE PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE ARISING UNDER
THIS WARRANT SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING
ATTORNEYS’ FEES, INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH SUCH
DISPUTE.
4
(d)
Amendments.
This
Warrant and any provision hereof may only be amended by an instrument in writing
signed by the Company and the holder hereof.
(e) Descriptive
Headings.
The
descriptive headings of the several sections of this Warrant are in-serted
for
purposes of reference only and shall not affect the meaning or construction
of
any of the provisions hereof.
(f) Waiver.
This
Warrant and any term hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party against which enforcement
of such change, waiver, discharge or termination is sought.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
5
IN
WITNESS WHEREOF,
the
Company has caused this Warrant to be signed by its duly authorized
officer.
|
|
|
By: | /s/ | |
R.
Xxxxxx Xxxx
|
||
Chief
Executive Officer
|
6
FORM
OF EXERCISE AGREEMENT
Dated:
________ __, 200_
To:
______________________
The
undersigned, pursuant to the provisions set forth in the within Warrant, hereby
agrees to purchase ________ shares of Common Stock covered by such Warrant,
and
makes pay-ment herewith in full at the price per share provided by such Warrant
in cash, by certified or official bank check or by wire transfer in the amount
of $_________. Please issue a certificate or certifi-xxxxx for such shares
of
Common Stock in the name of and pay any cash for any fractional share
to:
Name:
|
|
Signature:
|
|
Address:
|
|
|
|
Note:
|
The
above signature should correspond exactly with the name on the
face of the
within Warrant, if
applicable.
|
and,
if
said number of shares of Common Stock shall not be all the shares purchasable
under the within Warrant, a new Warrant is to be issued in the name of said
undersigned covering the balance of the shares purchasable thereunder less
any
frac-tion of a share paid in cash.
7
FORM
OF ASSIGNMENT
FOR
VALUE RECEIVED,
the
undersigned hereby sells, assigns, and transfers all the rights of the
undersigned under the within Warrant, with respect to the number of shares
of
Common Stock covered thereby set forth below, to:
Name
of Assignee
|
Address
|
No.
of Shares
|
and
hereby irrevocably constitutes and appoints ___________________________________
as agent and attorney-in-fact to trans-fer said Warrant on the books of the
within-named corporation, with full power of substitution in the
premises.
Dated: ________
__, 200_
In
the presence of:
|
|
|
Name:
|
|
|
Signature:
|
|
|
Title
of Signing Officer or Agent (if any):
|
||
|
||
Address:
|
|
|
|
Note:
|
The
above signature should correspond exactly with the name on the
face of the
within Warrant, if
applicable.
|
8
Schedule
A
Holder
|
ZCE,
Inc.
|
Xxxx
Xxxxxxxx Xxxxx and Xxxxx Xxxxx
|
9