EXHIBIT 10.40
FORM OF
ENTERTAINMENT BOULEVARD, INC.
SUBSCRIPTION AGREEMENT
(this "Subscription Agreement")
The undersigned (the "Purchaser") hereby applies to purchase the number of
Units set forth below, each Unit consisting of a $100,000.00 secured promissory
note (the "Note") and a five-year warrant (the "Warrant") to purchase up to
40,000 shares of common stock, $0.001 par value per share of ENTERTAINMENT
BOULEVARD, INC. (the "Company") bearing an exercise price of $1.00 per share for
a subscription price $100,000 per Unit from the Company (this "Subscription").
This Subscription is made with reference to the provisions, terms and conditions
set out in the ENTERTAINMENT BOULEVARD, INC. CONFIDENTIAL PRIVATE PLACEMENT
MEMORANDUM, dated December 28, 1999, including all of the Exhibits thereto (the
"Memorandum"). Purchaser acknowledges that this Subscription may be accepted or
rejected by the Company in its sole discretion, at any time pursuant hereto. If
rejected, the check or funds tendered by Purchaser will be returned.
1. REPRESENTATIONS. The Purchaser makes the following representations,
which may be relied upon by the Company in accepting the Purchaser's application
to purchase the Securities:
i. Purchaser has received the Memorandum and the Company's
Registration Statement on Form SB-2 (SEC File No. 333-91825) attached as
Exhibit A thereto and is familiar with the terms and conditions and other
information set forth therein and herein.
ii. Purchaser has had the opportunity to ask of the Company, or a
person or persons acting on its behalf, any and all relevant questions in
connection with any aspect of the Company and has received answers which
Purchaser considers to be responsive to such questions.
iii. Purchaser is able to bear the economic risk of the investment
represented by the Securities.
iv. Purchaser is acquiring the Securities for Purchaser's own account
for the purpose of investment and not for or with a view to the resale,
distribution, subdivision or fractionalization thereof.
v. Purchaser understands that his right to transfer the Securities
will be subject to certain restrictions as described in the Memorandum,
including restrictions under applicable state and federal securities laws.
vi. In considering this investment, Purchaser is not relying on any
representation, warranty or statement made by the Company or any of its
agents, employees, officers or
representatives not specifically referenced herein or in any document
attached hereto. Without limiting the foregoing, Purchaser specifically
disclaims any reliance on the information, representations and warranties
contained in the Memorandum.
2. INVESTOR ELIGIBILITY. Offers and sales of Securities will be made to
purchasers whom the Company believes (i) are "Accredited Investors" pursuant to
Section 4(2) of the Securities Act of 1933 and Regulation D thereunder and
similar provisions of applicable state law, or are otherwise deemed appropriate
investors under applicable securities laws and, in addition (ii) meet the other
suitability standards, if any, as set forth in the Memorandum. Purchaser
represents and warrants that (check all applicable boxes):
/ / a. Purchaser has such knowledge and experience in business and
financial matters as to be able to evaluate the merits and
risks of the investment in the Securities; and
/ / b. Purchaser is an "Accredited Investor" as that term is defined
in the Memorandum.
Purchaser understands that the Company reserves the right, in individual cases,
to waive certain of the foregoing criteria and accept this Subscription.
3. MISCELLANEOUS.
i. This Subscription Agreement is subject to all of the terms and
provisions of the Memorandum.
ii. Purchaser may not assign any of his rights under this Subscription
Agreement without the written consent of the Company.
iii. Purchaser may not cancel, terminate or revoke this Subscription
Agreement or any agreement of the Purchaser made herein.
iv. This Subscription Agreement shall be construed in accordance with
and governed by the laws of the State of California.
v. This Subscription Agreement shall be binding upon the heirs,
executors, administrators, successors and assigns of the Purchaser.
vi. If the Purchaser is more than one person, the obligations of the
Purchaser shall be joint and several and the representations herein
contained shall be deemed to be made by and binding upon each such person
and their heirs, executors, administrators, successors and assigns.
vii. Throughout this Subscription Agreement, as the context may
require, the masculine gender includes the feminine and neuter genders.
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The undersigned hereby represents that the undersigned has read this entire
Subscription Agreement and the Memorandum, understands them, and wishes to
subscribe for the Securities indicated below.
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Please Complete the Following:
Purchaser: Name:
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Age (if individual):
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Date of Formation: (if an entity)
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Residence/Principal
Place of Business:
--------------------------------
Telephone Number: (Business Hrs.)
----------------
(Evenings):
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Subscription: Units totaling $ .
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Type of Ownership:
(select one)
___ Corporation (Signature of authorized officer required --
include certified corporate resolution authorizing
signature)
___ Partnership Limited/General (signature of all general
partners required -- include a copy of the Partnership
Agreement authorizing signature)
___ Trust (Signature of trustee required -- include a copy of
the trust agreement)
___ Individual Ownership (One signature required)
___ Community Property (One signature required if interest is
to be held in both names)
___ Tenants in common (Signature of both or all parties
required) Joint Tenants with Right of Survivorship
(Signatures of both or all parties required)
___ Joint Tenants with Right of Survivorship (Signatures of
both or all parties required)
DOCUMENTS TO BE RETURNED:
1. One copy of this Subscription Agreement completed, dated and
signed with the Purchaser's(s') signature(s).
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2. One copy of the Investor's Questionnaire completed and
signed with the Purchaser(s) signature(s).
3. A wire transfer of the purchase price to
___________________, ________, account number _______, ABA
number _________ .
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Purchaser #1 Purchaser #2 (If the Units
are to be held as tenants in
common, as joint tenants, or
as community property in both
names)
Dated: Dated:
------------------------- -------------------------
By By
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(Signature) (Signature)
Name: Name:
-------------------------- --------------------------
(Print or Type) (Print or Type)
------------------------------- -------------------------------
Social Security or Tax I.D. No. Social Security or Tax I.D. No.
(If none, so state) (If none, so state)
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LOAN AND SECURITY AGREEMENT
Loan and Security Agreement made this 14th day of January, 2000, by and
between Entertainment Boulevard Inc., a Nevada corporation (the "Company"),
Forest Equities, Ltd., a foreign corporation and H.A.A. Inc., a foreign
corporation (each an "Investor" and collectively, the "Investors").
W I T N E S S E T H :
WHEREAS, the Company desires to borrow certain amounts from the Investors
and the Investors desire to make a loan (the "Loan") to the Company;
NOW, THEREFORE, in consideration of the mutual promises, representations
and warranties contained herein, the parties hereby agree as follows:
1. LOAN. The Investors hereby lend to the Company the aggregate principal
amount of $200,000. The Loan shall be evidenced by a two notes, one to Forest
Equities, Ltd. and the other to H.A.A. Inc. (the "Notes") in the form annexed
hereto as Exhibit A, shall bear interest at the rate of 10% per annum and shall
be due and payable on or before February 15, 2000 or earlier as provided in the
Notes. Each Note may be converted at any time by the its respective Investor
prior to repayment thereof into shares of Common Stock of the Company at $1.00
per share and will be entitled to resale registration rights (subject to the
registration rights previously granted to security holders of the Company).
2. CONDITIONS TO LOAN. The obligation of the Investors to make the Loan is
subject to the conditions that the following shall have occurred prior to or
concurrently with the Loan:
(a) The Company shall have granted to the Investors a valid pari
passu security interest in all its assets pursuant to this agreement dated the
date hereof.
(b) The Company agrees that various UCC statements will have to
be filed after the date hereof to perfect the Investors' pari passu security
interest in the Company's assets as set forth in subsection (a). As such, the
Company grants Stroock & Stroock & Xxxxx LLP ("SSL") power of attorney to sign
as debtor on its behalf on the requisite UCC filings. The Company also agrees it
will prepare such filings as needed (such decision to be at the sole discretion
of SSL).
(c) The Company has also entered into a Registration Rights
Agreement (containing substantially the same terms as the registration rights
previously granted to security holders of the Company but being subject to such
previously granted rights) regarding the Warrants (as defined below) and the
shares underlying the Notes (upon conversion), which is reasonably acceptable to
the Investors.
3. WARRANTS. In consideration for the Investors making the Loan, the
Company has issued and delivered warrants to each Investor (the "Warrants") in
the forms annexed hereto as Exhibit B, each of which authorize the purchase of
25,000 shares of the Company's common stock pursuant to the terms set forth in
the Warrants. The Warrants shall be covered by the Registration Rights
Agreement.
4. GRANT OF SECURITY INTEREST. The Company hereby grants to the Investors
all of the right, title, and interest in and to the Company's assets, whether
now existing or hereafter from time to time acquired, including: (i) each and
every Receivable; (ii) all Contracts, together with all Contract Rights arising
thereunder; (iii) all Inventory; (iv) all Equipment; (v) all Marks, together
with the registrations and right to all renewals thereof, and the goodwill of
the business of the Company symbolized by the Marks;
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(vi) all Patents and Copyrights; (vii) all computer programs of the Company and
all intellectual property rights therein and all other proprietary information
of the Company, including, but not limited to, trade secrets; (viii) all Stock;
(ix) the Cash Collateral Account and all monies, securities, and instruments
deposited or required to be deposited in the Cash Collateral Account; (x) all
other Goods, General Intangibles, Chattel Paper, Documents, and Instruments; and
(xi) all Proceeds and products of any and all of the foregoing. Until such time
as there is an Event of Default, the Investors will not collect any revenues
from the collateral described in this Section 4.
5. REPRESENTATIONS OF THE COMPANY. The Company represents and warrants to
the Investors as follows:
5.1. The issuance of the Notes and the Warrants pursuant to the
provisions of this Agreement has been duly and validly authorized. No approval
or authorization of the shareholders or the directors of the Company or of any
governmental authority or agency which has not been obtained will be required by
the Company for the issuance and sale of the Notes or the Warrants, as
contemplated by this Agreement. When issued and sold to the Investors, the
Warrants will be duly and validly issued, fully paid and non-assessable, and
will be free and clear of any liens or encumbrances created by the Company.
5.2 The Company has the full corporate power and authority to enter
into this Agreement and to perform all of its obligations hereunder. The
execution, delivery and performance of this Agreement and the Notes by the
Company have been duly authorized by all necessary corporate action. This
Agreement and the Notes constitute legal, valid and binding obligations of the
Company enforceable in accordance with their respective terms.
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5.3 Neither the sale of the Notes, the Warrants, the execution and
delivery of this Agreement, nor the fulfillment of the terms set forth in this
Agreement and the consummation of the transactions contemplated by this
Agreement, will (i) conflict with or constitute a breach of, or constitute a
default under or an event which, with or without notice of lapse of time or
each, would be a breach of or default under or violation of the Certificate of
Incorporation or By-Laws of the Company or would be a breach of or default under
or violation of any agreement, document, lease or other instrument or
undertaking by which the Company is bound or to which any of its properties are
subject, would be a violation of any law, administrative regulation, judgment,
order or decree applicable to the Company, or (ii) subject to the listing
approval requirements of the OTC Stock Market, require the consent which has not
been obtained of any other person or entity under any agreement, lease, document
or other instrument or undertaking by which the Company is bound or to which any
of its properties are subject.
5.4 Subject to the filing of UCC-1 Financing Statements in appropriate
jurisdictions, the security interest in all of the assets of the Company (the
"Assets") granted pursuant to Section 4 hereto constitutes a valid security
interest in the Assets.
6. COVENANTS OF THE COMPANY. The Company covenants with the Investors as
follows:
(a) The proceeds of the Loan will be used for working capital and
general corporate purposes.
(b) At all times while the Notes are outstanding, the Company will
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the conversion of the Notes, the full
number of shares of Common Stock deliverable upon conversion of the Notes.
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7. SURVIVAL. All representations, warranties, covenants and agreements
contained in this Agreement or in any document, exhibit, schedule or certificate
delivered in connection herewith shall survive the execution and delivery of
this Agreement and the closing of the Loan and any investigation at any time
made by the Investors or on their behalf.
8. MISCELLANEOUS PROVISIONS.
8.1. This Agreement shall be governed by, and construed and enforced
in accordance with, the internal laws of the State of New York without giving
any effect to principles of conflicts of laws.
8.2. All notices hereunder shall be in writing and shall be deemed to
have been given at the time when mailed by certified mail, addressed to the
address below stated of the party to which notice is given, or to such changed
address as such party may have fixed by notice:
To the Company:
Entertainment Boulevard, Inc.
0000 Xxx Xxx Xxxxxx
Xxxxx 000
Xxxxxx Xxx Xxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxx
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To the Investors:
Forest Equities, Ltd.
c/x Xxxx, Xxxxxx & Company
Attention: Xx. Xxx Xxxxx
0 Xx. Xxxxx Xxxx
Xx. Xxxxx 0000 Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxx
and to
H.A.A. Inc.
0000-00xx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
provided, however, that any notice of change of address shall be effective only
upon receipt.
8.3. This Agreement shall be binding upon and inure to the benefit of
the Company, the Investors and the successors and assigns of the Investors. The
Company may not assign this Agreement without the prior written consent of the
Investors. The Investors may assign all or any part of his rights and
obligations hereunder to any affiliate of the Investors without the consent of
the Company.
8.4. This Agreement and all exhibits and schedules hereto set forth
the entire understanding of the parties with respect to the transactions
contemplated hereby. This Agreement may be amended and the Company or either
Investor may take any action herein prohibited or omit to take action herein
required to be performed by it or him, and any breach of or compliance with any
covenant, agreement, warranty or representation may be waived, only if the
Company or the Investors has obtained the written consent of the other party
parties to this Agreement.
8.5. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
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8.6. The headings in this Agreement are for reference purposes only
and shall not constitute a part hereof.
8.7 Investors' reasonable attorneys fees and expenses, incurred by the
Investors in connection with the preparation, execution and delivery of this
Agreement, the Notes and the Registration Rights Agreement, shall be deducted
from the proceeds of the Notes.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first above written.
ENTERTAINMENT BOULEVARD, INC.
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By: Xxxxxxx Xxxxx
Title: Chairman of the Board
FOREST EQUITIES, LTD.
-----------------------------------
By:
Title:
H.A.A. INC.
-----------------------------------
By:
Title:
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EXHIBIT A
SECURED NOTE
$100,000 January __, 2000
FOR VALUE RECEIVED, Entertainment Boulevard, Inc. (the "Maker"), hereby
promises to pay to the order of (the "Payee"), at or at such other place as the
Payee may designate in writing, in lawful money of the United States of America,
the principal sum of one hundred thousand dollars ($100,000) together with
interest from the date hereof at the rate of 10% per annum, computed on the
basis of a 360-day year of twelve 30-day months. The principal of this Note
shall be payable in full on or before February 15, 2000. Interest shall accrue
from the date hereof and shall be paid when the principal amount of this Note
has been paid in full.
The occurrence of any one or more of the following events shall constitute
an Event of Default under this Note: (i) the failure to pay principal of or
interest on this Note as and when due; (ii) any representation or warranty of
the Maker contained in the Loan and Security Agreement dated as of the date
hereof between the Maker and the Payee shall not be true and correct in all
material respects and the same shall not be cured within 30 days after written
notice thereof by the Payee to the Maker or the Maker shall have breached any
covenant contained in the Loan and Security Agreement and such breach shall not
be cured within 30 days; (iii) a proceeding being filed or commenced against the
Maker for bankruptcy, dissolution or liquidation which shall not be dismissed
within 60 days, or the Maker voluntarily or involuntarily terminating or
dissolving or being terminated or dissolved; (iv) the Maker filing a petition
under bankruptcy, insolvency or debtor's relief law or making an assignment for
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the benefit of creditors; or (v) the appointment of a custodian, trustee,
liquidator or receiver for any of the property of the Maker, which shall not be
dismissed, released or vacated within 60 days.
The Maker agrees that in an Event of Default under this Note, then all or
any part of the unpaid principal balance of and interest on this Note shall
immediately become due and payable without notice or demand. If an Event of
Default occurs, the Maker agrees to pay to the holder all reasonable expenses
incurred by the holder, including reasonable attorneys' fees, in enforcing and
collecting this Note.
Failure of the Payee hereof to assert any right contained herein will not
be deemed to be a waiver thereof.
In the event any one or more of the provisions of this Note shall for any
reason be held to be invalid, illegal or unenforceable, in whole or in part or
in any respect, or in the event that any one or more of the provisions of this
Note operate to invalidate this Note, then and in either of those events, such
provision or provisions only shall be deemed null and void and shall not affect
any other provision of this Note and the remaining provisions of this Note shall
remain operative and in full force and effect and shall in no way be affected,
prejudiced or disturbed thereby.
The Maker hereby forever waives presentment, presentment for payment,
demand, protest, notice of protest, notice of dishonor of this Note and all
other demands and notices in connection with the delivery, acceptance,
performance and enforcement of this Note.
This Note may be prepaid in whole or in part at any time and from time to
time without premium. This Note shall be paid without deduction by reason of any
set-off, defense or counterclaim of the Maker.
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The principal and accrued interest on this Note may be converted into
shares of Common Shares (the "Common Shares") of the Maker at the option of the
Payee at $1.00 per share and the Maker agrees to cause such Common Shares to be
registered for resale (subject to the registration rights previously granted to
security holders of the Maker) under the Securities Act of 1933, as amended.
This Note is secured pursuant to the terms of the Loan and Security
Agreement.
This Note shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York without giving any effect to
principles of conflicts of laws. This Note shall be binding upon the successors
and assigns of the Maker and shall inure to the benefit of the
successors and assigns of Payee.
ENTERTAINMENT BOULEVARD, INC.
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By: Xxxxxxx Xxxxx
Title: Chairman of the Board
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EXHIBIT B
THIS COMMON STOCK PURCHASE WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING
THIS COMMON STOCK PURCHASE WARRANT, AGREES FOR THE BENEFIT OF THE COMPANY THAT
SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE
COMPANY, (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT, OR (C) IF REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS. IN ADDITION, A SECURITIES PURCHASE AGREEMENT, DATED THE DATE
HEREOF, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS PRINCIPAL
EXECUTIVE OFFICE, CONTAINS CERTAIN ADDITIONAL AGREEMENTS AMONG THE PARTIES,
INCLUDING, WITHOUT LIMITATION, PROVISIONS WHICH LIMIT THE EXERCISE RIGHTS OF THE
HOLDER.
ENTERTAINMENT BOULEVARD INC.
COMMON STOCK PURCHASE WARRANT
No. Warrant to Purchase 25,000 Shares
ENTERTAINMENT BOULEVARD INC. a foreign corporation (the "COMPANY"), hereby
certifies that, for value received, or assigns, is entitled, subject to the
terms set forth below, to purchase from the Company at any time or from time to
time during the period commencing January , 2000 and ending January , 2005 (the
"EXERCISE PERIOD"), at the Purchase Price (as hereinafter defined), twenty-five
thousand (25,000) shares of the fully paid and nonassessable shares of Common
Stock of the Company. The number and character of such shares of Common Stock
and the Purchase Price are subject to adjustment as provided herein.
This Warrant (this "Warrant"; such term to include any warrants issued in
substitution therefor) is issued in connection with that certain Loan and
Securities Agreement (the "Agreement") dated of even date herewith among the
initial Holder hereof, the Company and certain other parties thereto.
Capitalized terms used herein not otherwise defined shall have the meanings
ascribed thereto in the Agreement. As used herein the following terms, unless
the context otherwise requires, have the following respective meanings:
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(a) The term "AGREEMENT" refers to that certain Loan and Securities
Agreement dated the date herewith among the initial Holder hereof and the
Company.
(b) The term "COMPANY" shall include Entertainment Boulevard Inc. and any
corporation that shall succeed or assume the obligations of such corporation
hereunder.
(c) The term "COMMON STOCK" includes (a) the Company's common stock, $ par
value per share, (b) any other capital stock of any class or classes (however
designated) of the Company, authorized on or after such date, the Holders of
which shall have the right, without limitation as to amount, either to all or to
a share of the balance of current dividends and liquidating dividends after the
payment of dividends and distributions on any shares entitled to preference, and
the Holders of which shall ordinarily, in the absence of contingencies, be
entitled to vote for the election of a majority of directors of the Company
(even though the right so to vote has been suspended by the happening of such a
contingency) and (c) any other securities into which or for which any of the
securities described in (a) or (b) may be converted or exchanged pursuant to a
plan of recapitalization, reorganization, merger, sale of assets or otherwise.
(d) The term "OTHER SECURITIES" refers to any stock (other than Common
Stock) and other securities of the Company or any other person (corporate or
otherwise) that the Holder of this Warrant at any time shall be entitled to
receive, or shall have received, on the exercise of this Warrant, in lieu of or
in addition to Common Stock, or that at any time shall be issuable or shall have
been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 3 or otherwise.
(e) The term "PURCHASE PRICE" means $1.00 per share of Common Stock.
(f) The term "REGISTRATION RIGHTS AGREEMENT" refers to that certain
Registration Rights Agreement dated herewith among the initial Holder hereof,
the Company and certain other parties hereto.
1. EXERCISE OF WARRANT.
1.1. METHOD OF EXERCISE.
(a) This Warrant may be exercised in whole or in part (but not as to a
fractional share of Common Stock), at any time and from time to time during
the Exercise Period by the Holder hereof by delivery of a notice of
exercise (a "NOTICE OF EXERCISE") in the form attached hereto as Exhibit A
via facsimile to the Company. Promptly thereafter the Holder shall
surrender this Warrant to the Company at its principal office, accompanied
by payment of the Purchase Price multiplied by the number of shares of
Common Stock for which this Warrant is being exercised (the "EXERCISE
PRICE"). Payment of the Exercise Price shall be made by wire transfer to
the account of the Company. Upon exercise, the Holder shall be entitled to
receive,
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one or more certificates, issued in the Holder's name or in such name or
names as the Holder may direct, subject to the limitations on transfer
contained herein, for the number of shares of Common Stock so purchased.
The shares of Common Stock so purchased shall be deemed to be issued as of
the close of business on the date on which the Company shall have received
from the Holder payment of the Exercise Price (the "EXERCISE DATE").
(b) Notwithstanding anything to the contrary set forth herein, upon
exercise of all or a portion of this Warrant in accordance with the terms
hereof, the Holder shall not be required to physically surrender this
Warrant to the Company. Rather, records showing the amount so exercised and
the date of exercise shall be maintained on a ledger (the "Ledger") (a copy
of which shall be delivered to the Company or transfer agent with each
Notice of Exercise). It is specifically contemplated that the Company
hereof shall act as the calculation agent for all exercises of this
Warrant. In the event of any dispute or discrepancies, such records
maintained by the Company shall be controlling and determinative in the
absence of manifest error. The Holder and any assignee, by acceptance of
this Warrant, acknowledge and agree that, by reason of the provisions of
this paragraph, following an exercise of a portion of this Warrant, the
number of shares of Common Stock represented by this Warrant will be the
amount indicated on the Ledger attached hereto (which may be less than the
amount stated on the face hereof).
1.2. REGULATION D RESTRICTIONS. The Holder hereof represents and warrants
to the Company that it has acquired this Warrant and anticipates acquiring the
shares of Common Stock issuable upon exercise of the Warrant solely for its own
account for investment purposes and not with a view to or for resale of such
securities unless such resale has been registered with the Commission or an
applicable exemption is available therefor. At the time this Warrant is
exercised, the Company may require the Holder to state in the Notice of Exercise
such representations concerning the Holder as are necessary or appropriate to
assure compliance by the Holder with the Securities Act.
1.3. LIMITATION ON EXERCISE. Notwithstanding the rights of the Holder to
exercise all or a portion of this Warrant as described herein, such exercise
rights shall be limited, solely to the extent set forth in the Agreement as if
such provisions were specifically set forth herein. Specifically, the rights of
the Holder to exercise all or a portion of this Warrant are subject to the
limitation on exercise provisions specified in Section 10.1 of the Agreement.
2. DELIVERY OF STOCK CERTIFICATES ON EXERCISE. Within 5 business days after
the exercise of this Warrant, the Company at its expense (including the payment
by it of any applicable issue, stamp or transfer taxes) will cause to be issued
in the name of and delivered to the Holder thereof, or, to the extent
permissible hereunder, to such other person as such Holder may direct, a
certificate or certificates for the number of fully paid and nonassessable
shares of Common Stock (or Other Securities) to which such Holder shall be
entitled on such exercise, plus, in lieu of any fractional share to which such
Holder would otherwise be entitled, cash equal to such fraction multiplied by
the then applicable Purchase Price, together with any other stock or other
securities and property (including cash, where applicable) to which such Holder
is entitled upon such exercise pursuant to Section 1 or
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otherwise which certificate or certificates shall be without restrictive legend
of any nature provided that a registration statement has been declared effective
in accordance with the Registration Rights Agreement, and if a registration
statement has not been declared effective, then in accordance with Rule 144.
3. NO IMPAIRMENT. The Company will not, by amendment of its Articles of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder of this Warrant against
impairment. Without limiting the generality of the foregoing, the Company (a)
will not increase the par value of any shares of stock receivable on the
exercise of this Warrant above the amount payable therefor on such exercise, (b)
will take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
stock on the exercise of this Warrant, and (c) will not transfer all or
substantially all of its properties and assets to any other person (corporate or
otherwise), or consolidate with or merge into any other person or permit any
such person to consolidate with or merge into the Company (if the Company is not
the surviving person), unless such other person shall expressly assume in
writing and will be bound by all the terms of this Warrant.
4. NOTICES OF RECORD DATE. In the event of
(a) any taking by the Company of a record of the Holders of any class or
securities for the purpose of determining the Holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right,
or
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any transfer
of all or substantially all the assets of the Company to or consolidation
or merger of the Company with or into any other person, or
(c) any voluntary or involuntary dissolution, liquidation or winding-up of
the Company,
then and in each such event the Company will mail or cause to be mailed to
the Holder of this Warrant a notice specifying (i) the date on which any such
record is to be taken for the purpose of such dividend, distribution or
right, and stating the amount and character of such dividend, distribution or
right, and (ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation
or winding-up is to take place, and the time, if any, as of which the Holders
of record of Common Stock (or Other Securities) shall be entitled to exchange
their shares of Common Stock (or Other Securities) for securities or other
property deliverable on such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation
or winding-up. Such notice shall be mailed at least 20 days prior to the date
specified in such notice on which any action is to be taken.
15
5. RESERVATION OF STOCK ISSUABLE ON EXERCISE OF WARRANT. The Company will
at all times reserve and keep available, solely for issuance and delivery on the
exercise of this Warrant, all shares of Common Stock (or Other Securities) from
time to time issuable on the exercise of this Warrant.
6. EXCHANGE OF WARRANT. On surrender for exchange of this Warrant, properly
endorsed and in compliance with the restrictions on transfer set forth in the
legend on the face of this Warrant, to the Company, the Company at its expense
will issue and deliver to or on the order of the Holder thereof a new Warrant of
like tenor, in the name of such Holder or as such Holder (on payment by such
Holder of any applicable transfer taxes) may direct, calling in the aggregate on
the face or faces thereof for the number of shares of Common Stock called for on
the face of the Warrant so surrendered.
7. REPLACEMENT OF WARRANT. On 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 of this Warrant, on
delivery of an indemnity agreement or security reasonably satisfactory in form
and amount to the Company or, in the case of any such mutilation, on surrender
and cancellation of this Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
8. REMEDIES. The Company stipulates that the remedies at law of the Holder
of this Warrant in the event of any default or threatened default by the Company
in the performance of or compliance with any of the terms of this Warrant are
not and will not be adequate, and that such terms may be specifically enforced
by a decree for the specific performance of any agreement contained herein or by
an injunction against a violation of any of the terms hereof or otherwise.
9. NEGOTIABILITY, ETC. This Warrant is issued upon the following terms, to
all of which each Holder or owner hereof by the taking hereof consents and
agrees:
(a) title to this Warrant may be transferred by endorsement and delivery in
the same manner as in the case of a negotiable instrument transferable by
endorsement and delivery.
(b) any person in possession of this Warrant properly endorsed is
authorized to represent himself as absolute owner hereof and is empowered
to transfer absolute title hereto by endorsement and delivery hereof to a
BONA FIDE purchaser hereof for value; each prior taker or owner waives and
renounces all of his equities or rights in this Warrant in favor of each
such BONA FIDE purchaser, and each such BONA FIDE purchaser shall acquire
absolute title hereto and to all rights represented hereby;
(c) until this Warrant is transferred on the books of the Company, the
Company may treat the registered Holder hereof as the absolute owner hereof
for all purposes, notwithstanding any notice to the contrary; and
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(d) notwithstanding the foregoing, this Warrant may not be sold,
transferred or assigned except pursuant to an effective registration
statement under the Securities Act or pursuant to an applicable exemption
therefrom.
10. REGISTRATION RIGHTS. The Company is obligated to register the shares of
Common Stock issuable upon exercise of this Warrant in accordance with the terms
of the Registration Rights Agreement.
11. NOTICES. All notices and other communications from the Company to the
Holder of this Warrant shall be mailed by first class registered or certified
mail, postage prepaid, at such address as may have been furnished to the Company
in writing by such Holder or, until any such Holder furnishes to the Company an
address, then to, and at the address of, the last Holder of this Warrant who has
so furnished an address to the Company.
12. MISCELLANEOUS. 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. This Warrant shall be construed and enforced in accordance with and
governed by the internal laws of the State of New York. The headings in this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision.
DATED as of January , 2000.
ENTERTAINMENT BOULEVARD, INC.
By:
Name:
Title:
[Corporate Seal]
Attest:
By:
------------------------------
Secretary
17
EXHIBIT A
FORM OF NOTICE OF EXERCISE - WARRANT
(To be executed only upon exercise
of the Warrant in whole or in part)
To: ENTERTAINMENT BOULEVARD, INC.
The undersigned registered Holder of the accompanying Warrant hereby
exercises such Warrant or portion thereof for, and purchases thereunder,
______________ (1) shares of Common Stock (as defined in such Warrant) and
herewith makes payment therefor in the amount and manner set forth below, as
of the date written below. The undersigned requests that the certificates for
such shares of Common Stock be issued in the name of, and delivered to,
______________________ whose address is ______________________________________.
The Exercise Price is paid by check or wire transfer to the account of the
Company in the amount of $________.
Upon exercise pursuant to this Notice of Exercise, the Holder will be in
compliance with the Limitation on Exercise (as defined in the Loan and
Securities Agreement pursuant to which this Warrant was issued).
Dated: ____________________ ______
------------------------------------------
(Name must conform to name of Holder as
specified on the face of the Warrant)
By:
------------------------------
Name:
-----------------------------
Title:
----------------------------
Address of Holder:
----------------
Date of exercise:
-------------------
(1) Insert the number of shares of Common Stock as to which the accompanying
Warrant is being exercised. In the case of a partial exercise, a new
Warrant or Warrants will be issued and delivered, representing the
unexercised portion of the accompanying Warrant, to the holder surrendering
the same.
