Contract
Exhibit
4.51
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 OR IN A SECURITIES PURCHASE AGREEMENT DATED AS OF DECEMBER
17,
2004, 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
266,000
Shares
of
Common
Stock,
$.001
par
value per
share
STOCK
PURCHASE WARRANT
THIS
CERTIFIES THAT,
for
value received, AJW QUALIFIED PARTNERS, LLC or its registered assigns, is
entitled to purchase from Pacificap Entertainment Holdings, Inc., a Nevada
corporation (the “Company”), at any time or from time to time during the period
specified in Paragraph 2 hereof, Two Hundred Sixty-Six Thousand (266,000)
fully paid and nonassessable shares of the Company’s Common Stock, $.001 par
value per share (the “Common Stock”), at an exercise price per share equal to
$.02 (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 4 hereof.
The
term “Warrants” means this Warrant and the other warrants issued pursuant to
that certain Securities Purchase Agreement, dated December 17, 2004, by and
among the Company and the Buyers listed on the execution page thereof (the
“Securities Purchase Agreement”), including any additional warrants issuable
pursuant to Section 4(l) thereof.
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 (i) 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 or (ii) if the resale of the Warrant Shares
by the holder is not then registered pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the “Securities Act”),
delivery to the Company of a written notice of an election to effect a “Cashless
Exercise” (as defined in Section 11(c) below) 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 three (3) 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. In addition to all other available remedies
at law or in equity, if the Company fails to deliver certificates for the
Warrant Shares within three (3) business days after this Warrant is exercised,
then the Company shall pay to the holder in cash a penalty (the “Penalty”) equal
to 2% of the number of Warrant Shares that the holder is entitled to multiplied
by the Market Price (as hereinafter defined) for each day that the Company
fails
to deliver certificates for the Warrant Shares. For example, if the holder
is
entitled to 100,000 Warrant Shares and the Market Price is $2.00, then the
Company shall pay to the holder $4,000 for each day that the Company fails
to
deliver certificates for the Warrant Shares. The Penalty shall be paid to the
holder by the fifth day of the month following the month in which it has
accrued.
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Notwithstanding
anything in this Warrant to the contrary, in no event shall the holder of this
Warrant be entitled to exercise a number of Warrants (or portions thereof)
in
excess of the number of Warrants (or portions thereof) upon exercise of which
the sum of (i) the number of shares of Common Stock beneficially owned by the
holder and its affiliates (other than shares of Common Stock which may be deemed
beneficially owned through the ownership of the unexercised Warrants and the
unexercised or unconverted portion of any other securities of the Company
(including the Notes (as defined in the Securities Purchase Agreement)) subject
to a limitation on conversion or exercise analogous to the limitation contained
herein) and (ii) the number of shares of Common Stock issuable upon exercise
of
the Warrants (or portions thereof) with respect to which the determination
described herein is being made, would result in beneficial ownership by the
holder and its affiliates of more than 4.9% of the outstanding shares of Common
Stock. For purposes of the immediately preceding sentence, beneficial ownership
shall be determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934, as amended, and Regulation 13D-G thereunder, except as otherwise
provided in clause (i) of the preceding sentence. Notwithstanding anything
to
the contrary contained herein, the limitation on exercise of this Warrant set
forth herein may not be amended without (i) the written consent of the holder
hereof and the Company and (ii) the approval of a majority of shareholders
of
the Company.
2. Period
of Exercise.
This
Warrant is exercisable at any time or from time to time on or after the date
on
which this Warrant is issued and delivered pursuant to the terms of the
Securities Purchase Agreement and before 6:00 p.m., New York, New York time
on
the fifth (5th)
anniversary of the date of issuance (the “Exercise Period”).
3. Certain
Agreements of the Company. The
Company hereby covenants and agrees as follows:
(a) Shares
to be Fully Paid.
All
Warrant Shares will, upon issuance in accordance with the terms of this Warrant,
be validly issued, fully paid, and nonassessable and free from all taxes, liens,
and charges with respect to the issue thereof.
(b) Reservation
of Shares.
Subject
to the Stockholder Approval (as defined in the Securities Purchase Agreement),
during the Exercise Period, the Company shall at all times have authorized,
and
reserved for the purpose of issuance upon exercise of this Warrant, a
suf-ficient number of shares of Common Stock to provide for the exercise of
this
Warrant.
(c) Listing.
The
Company shall promptly secure the listing of the shares of Common Stock issuable
upon exercise of the Warrant upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance upon exercise of this Warrant) and
shall
maintain, so long as any other shares of Common Stock shall be so listed, such
listing of all shares of Common Stock from time to time issuable upon the
exercise of this Warrant; and the Company shall so list on each national
securities exchange or automated quotation system, as the case may be, and
shall
maintain such listing of, any other shares of capital stock of the Company
issuable upon the exercise of this Warrant if and so long as any shares of
the
same class shall be listed on such national securities exchange or automated
quotation system.
-3-
(d) Certain
Actions Prohibited.
The
Company will not, by amendment of its charter or through any re-organi-zation,
transfer of assets, consolidation, mer-ger, 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 to be observed or performed by it hereunder,
but will at all times in good faith assist in the carrying out of all the
provisions of this Warrant and in the taking of all such action as may
reasonably be requested by the holder of this Warrant in order to protect the
exercise privilege of the holder of this Warrant against dilu-tion or other
impairment, consistent with the tenor and purpose of this Warrant. Without
limiting the general-ity of the foregoing, the Company (i) will not increase
the
par value of any shares of Common Stock receivable upon the exercise of this
Warrant above the Exercise Price then in effect, and (ii) will take all such
actions as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common Stock upon
the
exercise of this Warrant.
(e) Successors
and Assigns.
This
Warrant will be binding upon any entity succeeding to the Company by merger,
consolidation, or acquisition of all or sub-stantially all the Company’s
assets.
4. Antidilution
Provisions.
During
the Exercise Period, the Exercise Price and the number of Warrant Shares shall
be subject to adjustment from time to time as provided in this Paragraph
4.
In
the
event that any adjustment of the Exercise Price as required herein results
in a
fraction of a cent, such Exercise Price shall be rounded up to the nearest
cent.
(a) Adjustment
of Exercise Price and Number of Shares upon Issuance of Common
Stock.
Except
as otherwise provided in Paragraphs 4(c) and 4(e) hereof, if and whenever on
or
after the date of issuance of this Warrant, the Company issues or sells, or
in
accordance with Paragraph 4(b) hereof is deemed to have issued or sold, any
shares of Common Stock for no consideration or for a consideration per share
(before deduction of reasonable expenses or commissions or underwriting
discounts or allowances in connection therewith) less than the Market Price
on
the date of issuance (a “Dilutive Issuance”), then immediately upon the Dilutive
Issuance, the Exercise Price will be reduced to a price determined by
multiplying the Exercise Price in effect immediately prior to the Dilutive
Issuance by a fraction, (i) the numerator of which is an amount equal to the
sum
of (x) the number of shares of Common Stock actually outstanding immediately
prior to the Dilutive Issuance, plus (y) the quotient of the aggregate
consideration, calculated as set forth in Paragraph 4(b) hereof, received by
the
Company upon such Dilutive Issuance divided by the Market Price in effect
immediately prior to the Dilutive Issuance, and (ii) the denominator of which
is
the total number of shares of Common Stock Deemed Outstanding (as defined below)
immediately after the Dilutive Issuance.
(b) Effect
on Exercise Price of Certain Events.
For
purposes of determining the adjusted Exercise Price under Paragraph 4(a) hereof,
the following will be applicable:
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(i) Issuance
of Rights or Options.
If the
Company in any manner issues or grants any warrants, rights or options, whether
or not immediately exercisable, to subscribe for or to purchase Common Stock
or
other securities convertible into or exchangeable for Common Stock (“Convertible
Securities”) (such warrants, rights and options to purchase Common Stock or
Convertible Securities are hereinafter referred to as “Options”) and the price
per share for which Common Stock is issuable upon the exercise of such Options
is less than the Market Price on the date of issuance or grant of such Options,
then the maximum total number of shares of Common Stock issuable upon the
exercise of all such Options will, as of the date of the issuance or grant
of
such Options, be deemed to be outstanding and to have been issued and sold
by
the Company for such price per share. For purposes of the preceding sentence,
the “price per share for which Common Stock is issuable upon the exercise of
such Options” is determined by dividing (i) the total amount, if any, received
or receivable by the Company as consideration for the issuance or granting
of
all such Options, plus the minimum aggregate amount of additional consideration,
if any, payable to the Company upon the exercise of all such Options, plus,
in
the case of Convertible Securities issuable upon the exercise of such Options,
the minimum aggregate amount of additional consideration payable upon the
conversion or exchange thereof at the time such Convertible Securities first
become convertible or exchangeable, by (ii) the maximum total number of shares
of Common Stock issuable upon the exercise of all such Options (assuming full
conversion of Convertible Securities, if applicable). No further adjustment
to
the Exercise Price will be made upon the actual issuance of such Common Stock
upon the exercise of such Options or upon the conversion or exchange of
Convertible Securities issuable upon exercise of such Options.
(ii) Issuance
of Convertible Securities.
If the
Company in any manner issues or sells any Convertible Securities, whether or
not
immediately convertible (other than where the same are issuable upon the
exercise of Options) and the price per share for which Common Stock is issuable
upon such conversion or exchange is less than the Market Price on the date
of
issuance, then the maximum total number of shares of Common Stock issuable
upon
the conversion or exchange of all such Convertible Securities will, as of the
date of the issuance of such Convertible Securities, be deemed to be outstanding
and to have been issued and sold by the Company for such price per share. For
the purposes of the preceding sentence, the “price per share for which Common
Stock is issuable upon such conversion or exchange” is determined by dividing
(i) the total amount, if any, received or receivable by the Company as
consideration for the issuance or sale of all such Convertible Securities,
plus
the minimum aggregate amount of additional consideration, if any, payable to
the
Company upon the conversion or exchange thereof at the time such Convertible
Securities first become convertible or exchangeable, by (ii) the maximum total
number of shares of Common Stock issuable upon the conversion or exchange of
all
such Convertible Securities. No further adjustment to the Exercise Price will
be
made upon the actual issuance of such Common Stock upon conversion or exchange
of such Convertible Securities.
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(iii) Change
in Option Price or Conversion Rate.
If there
is a change at any time in (i) the amount of additional consideration payable
to
the Company upon the exercise of any Options; (ii) the amount of additional
consideration, if any, payable to the Company upon the conversion or exchange
of
any Convertible Securities; or (iii) the rate at which any Convertible
Securities are convertible into or exchangeable for Common Stock (other than
under or by reason of provisions designed to protect against dilution), the
Exercise Price in effect at the time of such change will be readjusted to the
Exercise Price which would have been in effect at such time had such Options
or
Convertible Securities still outstanding provided for such changed additional
consideration or changed conversion rate, as the case may be, at the time
initially granted, issued or sold.
(iv) Treatment
of Expired Options and Unexercised Convertible
Securities.
If, in
any case, the total number of shares of Common Stock issuable upon exercise
of
any Option or upon conversion or exchange of any Convertible Securities is
not,
in fact, issued and the rights to exercise such Option or to convert or exchange
such Convertible Securities shall have expired or terminated, the Exercise
Price
then in effect will be readjusted to the Exercise Price which would have been
in
effect at the time of such expiration or termination had such Option or
Convertible Securities, to the extent outstanding immediately prior to such
expiration or termination (other than in respect of the actual number of shares
of Common Stock issued upon exercise or conversion thereof), never been
issued.
(v) Calculation
of Consideration Received.
If any
Common Stock, Options or Convertible Securities are issued, granted or sold
for
cash, the consideration received therefor for purposes of this Warrant will
be
the amount received by the Company therefor, before deduction of reasonable
commissions, underwriting discounts or allowances or other reasonable expenses
paid or incurred by the Company in connection with such issuance, grant or
sale.
In case any Common Stock, Options or Convertible Securities are issued or sold
for a consideration part or all of which shall be other than cash, the amount
of
the consideration other than cash received by the Company will be the fair
value
of such consideration, except where such consideration consists of securities,
in which case the amount of consideration received by the Company will be the
Market Price thereof as of the date of receipt. In case any Common Stock,
Options or Convertible Securities are issued in connection with any acquisition,
merger or consolidation in which the Company is the surviving corporation,
the
amount of consideration therefor will be deemed to be the fair value of such
portion of the net assets and business of the non-surviving corporation as
is
attributable to such Common Stock, Options or Convertible Securities, as the
case may be. The fair value of any consideration other than cash or securities
will be determined in good faith by the Board of Directors of the
Company.
-6-
(vi) Exceptions
to Adjustment of Exercise Price.
No
adjustment to the Exercise Price will be made (i) upon the exercise of any
warrants, options or convertible securities granted, issued and outstanding
on
the date of issuance of this Warrant; (ii) upon the grant or exercise of any
stock or options which may hereafter be granted or exercised under any employee
benefit plan, stock option plan or restricted stock plan of the Company now
existing or to be implemented in the future, so long as the issuance of such
stock or options is approved by a majority of the independent members of the
Board of Directors of the Company or a majority of the members of a committee
of
independent directors established for such purpose; or (iii) upon the exercise
of the Warrants.
(c) 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.
(d) Adjustment
in Number of Shares.
Upon
each adjustment of the Exercise Price pursuant to the provisions of this
Paragraph 4, 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.
(e) Consolidation,
Merger or Sale.
In case
of any consolidation of the Company with, or merger of the Company into any
other corporation, or in case of any sale or conveyance of all or substantially
all of the assets of the Company other than in connection with a plan of
complete liquidation of the Company, then as a condition of such consolidation,
merger or sale or conveyance, adequate provision will be made whereby the holder
of this Warrant will have the right to acquire and receive upon exercise of
this
Warrant in lieu of the shares of Common Stock immediately theretofore acquirable
upon the exercise of this Warrant, such shares of stock, securities or assets
as
may be issued or payable with respect to or in exchange for the number of shares
of Common Stock immediately theretofore acquirable and receivable upon exercise
of this Warrant had such consolidation, merger or sale or conveyance not taken
place. In any such case, the Company will make appropriate provision to insure
that the provisions of this Paragraph 4 hereof will thereafter be applicable
as
nearly as may be in relation to any shares of stock or securities thereafter
deliverable upon the exercise of this Warrant. The Company will not effect
any
consolidation, merger or sale or conveyance unless prior to the consummation
thereof, the successor corporation (if other than the Company) assumes by
written instrument the obligations under this Paragraph 4 and the obligations
to
deliver to the holder of this Warrant such shares of stock, securities or assets
as, in accordance with the foregoing provisions, the holder may be entitled
to
acquire.
-7-
(f) Distribution
of Assets.
In case
the Company shall declare or make any distribution of its assets (including
cash) to holders of Common Stock as a partial liquidating dividend, by way
of
return of capital or otherwise, then, after the date of record for determining
shareholders entitled to such distribution, but prior to the date of
distribution, the holder of this Warrant shall be entitled upon exercise of
this
Warrant for the purchase of any or all of the shares of Common Stock subject
hereto, to receive the amount of such assets which would have been payable
to
the holder had such holder been the holder of such shares of Common Stock on
the
record date for the determination of shareholders entitled to such
distribution.
(g) Notice
of Adjustment.
Upon the
occurrence of any event which requires any adjustment of the Exercise Price,
then, and in each such case, the Company shall give notice thereof to the holder
of this Warrant, which notice shall state the Exercise Price resulting from
such
adjustment and the increase or decrease in the number of Warrant Shares
purchasable at such price upon exercise, setting forth in reasonable detail
the
method of calculation and the facts upon which such calculation is based. Such
calculation shall be certified by the Chief Financial Officer of the
Company.
(h) Minimum
Adjustment of Exercise Price.
No
adjustment of the Exercise Price shall be made in an amount of less than 1%
of
the Exercise Price in effect at the time such adjustment is otherwise required
to be made, but any such lesser adjustment shall be carried forward and shall
be
made at the time and together with the next subsequent adjustment which,
together with any adjustments so carried forward, shall amount to not less
than
1% of such Exercise Price.
(i) 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.
(j) Other
Notices.
In case
at any time:
(i) the
Company shall declare any dividend upon the Common Stock payable in shares
of
stock of any class or make any other distribution (including dividends or
distributions payable in cash out of retained earnings) to the holders of the
Common Stock;
(ii) the
Company shall offer for subscription pro rata to the holders of the Common
Stock
any additional shares of stock of any class or other rights;
(iii) there
shall be any capital reorganiza-tion of the Company, or reclassification of
the
Common Stock, or consolidation or merger of the Company with or into, or sale
of
all or substan-tially all its assets to, another corporation or entity;
or
(iv) there
shall be a voluntary or involun-tary dissolution, liquidation or winding up
of
the Company;
-8-
then,
in
each such case, the Company shall give to the holder of this Warrant (a) notice
of the date on which the books of the Company shall close or a record shall
be
taken for determining the holders of Common Stock entitled to receive any such
divi-dend, distribution, or subscription rights or for determining the holders
of Common Stock entitled to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, notice
of
the date (or, if not then known, a reasonable approximation thereof by the
Company) when the same shall take place. Such notice shall also specify the
date
on which the holders of Common Stock shall be entitled to receive such dividend,
distribution, or subscription rights or to exchange their Common Stock for
stock
or other securities or property deliverable upon such reorganization,
re-classification, consolidation, merger, sale, dissolution, liquidation, or
winding-up, as the case may be. Such notice shall be given at least thirty
(30)
days prior to the record date or the date on which the Company’s books are
closed in respect thereto. Failure to give any such notice or any defect therein
shall not affect the validity of the proceedings referred to in clauses (i),
(ii), (iii) and (iv) above.
(k) Certain
Events.
If any
event occurs of the type contemplated by the adjustment provisions of this
Paragraph 4 but not expressly provided for by such provisions, the Company
will
give notice of such event as provided in Paragraph 4(g) hereof, and the
Company’s Board of Directors will make an appropriate adjustment in the Exercise
Price and the number of shares of Common Stock acquirable upon exercise of
this
Warrant so that the rights of the holder shall be neither enhanced nor
diminished by such event.
(l) Certain
Definitions.
(i) “Common
Stock Deemed Outstanding”
shall
mean the number of shares of Common Stock actually outstanding (not including
shares of Common Stock held in the treasury of the Company), plus (x) pursuant
to Paragraph 4(b)(i) hereof, the maximum total number of shares of Common Stock
issuable upon the exercise of Options, as of the date of such issuance or grant
of such Options, if any, and (y) pursuant to Paragraph 4(b)(ii) hereof, the
maximum total number of shares of Common Stock issuable upon conversion or
exchange of Convertible Securities, as of the date of issuance of such
Convertible Securities, if any.
(ii) “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 (5) 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 (a) the Board of
Directors of the Company or, at the option of a majority-in-interest of the
holders of the outstanding Warrants by (b) an independent investment bank of
nationally recognized standing in the valuation of businesses similar to the
business of the corporation. The manner of determining the Market Price of
the
Common Stock set forth in the foregoing definition shall apply with respect
to
any other security in respect of which a determination as to market value must
be made hereunder.
-9-
(iii) “Common
Stock,”
for
purposes of this Paragraph 4, includes the Common Stock, par value $.001 per
share, and any additional class of stock of the Company having no preference
as
to dividends or distributions on liquidation, provided that the shares
purchasable pursuant to this Warrant shall include only shares of Common Stock,
par value $.001 per share, in respect of which this Warrant is exercisable,
or
shares resulting from any subdivision or combination of such Common Stock,
or in
the case of any reorganization, reclassification, consolidation, merger, or
sale
of the character referred to in Paragraph 4(e) hereof, the stock or other
securities or property provided for in such Paragraph.
5. Issue
Tax.
The
issuance of certificates for Warrant Shares upon the exercise of this Warrant
shall be made without charge to the holder of this Warrant or such shares for
any issuance tax or other costs in respect thereof, provided 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 certificate in a name
other than the holder of this Warrant.
6. 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, in the absence
of
affirmative action by the holder hereof to purchase Warrant Shares, 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.
7. 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 Paragraph 7(e) below, pro-vided, however, that any transfer
or assignment shall be subject to the conditions set forth in Paragraph 7(f)
hereof and to the applicable provisions of the Securities Purchase Agreement.
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. Notwithstanding anything to the contrary contained herein, the
registration rights described in Paragraph 8 are assignable only in accordance
with the provisions of that certain Registration Rights Agreement, dated
December 17, 2004, by and among the Company and the other signatories thereto
(the “Registration Rights Agreement”).
(b) Warrant
Exchangeable for Different Denomina-tions.
This
Warrant is exchange-able, upon the surrender hereof by the holder hereof at
the
office or agency of the Company referred to in Paragraph 7(e) below, for new
Warrants of like tenor representing in the aggregate the right to purchase
the
number of shares of Common Stock which may be purchased hereunder, each of
such
new Warrants to represent the right to purchase such number of shares as shall
be designated by the holder hereof at the time of such surrender.
-10-
(c) 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
its
expense, will execute and deliver, in lieu thereof, a new Warrant of like
tenor.
(d) Cancellation;
Payment of Expenses.
Upon the
surrender of this Warrant in connection with any trans-fer, exchange, or
replacement as provided in this Paragraph 7, this Warrant shall be promptly
canceled by the Company. The Company shall pay all taxes (other than securities
transfer taxes) and all other expenses (other than legal expenses, if any,
incurred by the holder or transferees) and charges payable in connection with
the preparation, execution, and delivery of Warrants pursuant to this Paragraph
7.
(e) 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.
(f) 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 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 said 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.
8. Registration
Rights.
The
initial holder of this Warrant (and certain assignees thereof) is entitled
to
the benefit of such registration rights in respect of the Warrant Shares as
are
set forth in Section 2 of the Registration Rights Agreement
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9. 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 00000 Xxx Xxxxxx, Xxx Xxx, Xxxxxxxxxx 00000, Attention:
President, 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 Paragraph 9, 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.
10. Governing
Law. THIS
WARRANT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS
OF THE STATE OF NEW YORK 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
UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK 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.
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11. Miscellaneous.
(a) Amendments.
This
Warrant and any provision hereof may only be amended by an instrument in writing
signed by the Company and the holder hereof.
(b) Descriptive
Headings.
The
descriptive headings of the several paragraphs 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.
(c) Cashless
Exercise.
Notwithstanding anything to the contrary contained in this Warrant, if the
resale of the Warrant Shares by the holder is not then registered pursuant
to an
effective registration statement under the Securities Act, this Warrant may
be
exercised by presentation and surrender of this Warrant to the Company at its
principal executive offices with a written notice of the holder’s intention to
effect a cashless exercise, including a calculation of the number of shares
of
Common Stock to be issued upon such exercise in accordance with the terms hereof
(a “Cashless Exercise”). In the event of a Cashless Exercise, in lieu of paying
the Exercise Price in cash, the holder shall surrender this Warrant for that
number of shares of Common Stock determined by multiplying the number of Warrant
Shares to which it would otherwise be entitled by a fraction, the numerator
of
which shall be the difference between the then current Market Price per share
of
the Common Stock and the Exercise Price, and the denominator of which shall
be
the then current Market Price per share of Common Stock. For example, if the
holder is exercising 100,000 Warrants with a per Warrant exercise price of
$0.75
per share through a cashless exercise when the Common Stock’s current Market
Price per share is $2.00 per share, then upon such Cashless Exercise the holder
will receive 62,500 shares of Common Stock.
(d) Remedies.
The
Company acknowledges that a breach by it of its obligations hereunder will
cause
irreparable harm to the holder, by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company acknowledges that
the
remedy at law for a breach of its obligations under this Warrant will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Warrant, that the holder shall be entitled,
in
addition to all other available remedies at law or in equity, and in addition
to
the penalties assessable herein, to an injunction or injunctions restraining,
preventing or curing any breach of this Warrant and to enforce specifically
the
terms and provisions thereof, without the necessity of showing economic loss
and
without any bond or other security being required.
[REMAINDER
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IN
WITNESS WHEREOF,
the
Company has caused this Warrant to be signed by its duly authorized
officer.
PACIFICAP
ENTERTAINMENT
HOLDINGS,
INC.
By: /s/
XXXXXX XXXXXX
Xxxxxx Xxxxxx
President
Dated
as
of June 1, 2005
