EXHIBIT 4.12
LOAN AGREEMENT
LOAN AGREEMENT (this "Agreement"), dated as of March 1, 2005, by and among
Peak Entertainment Holdings, Inc., a Nevada corporation (the "Company"), and the
person set forth on the signature page hereto ("Lender").
WHEREAS:
A. The Company and Lender are executing and delivering this Agreement in
reliance upon an exemption from securities registration afforded by the rules
and regulations as promulgated by the United States Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the "1933
Act");
B. Lender desires to lend and the Company desires to borrow, upon the
terms and conditions set forth in this Agreement, an aggregate amount of
$500,000.
NOW THEREFORE, the Company and Lender hereby agree as follows:
1. LOAN.
a. Loan. Lender has deposited $500,000 (the "Loan Amount") by wire
transfer of immediately available funds to:
Law Offices of Xxx Xxxxxxx
Escrow Account
Account No.: 00000000
Citibank, N.A.
00 Xxxx Xxxxxx
Xxx Xxxx, XX 100
ABA No.: 000000000
b. Warrants. In consideration of the Loan Amount, upon receipt of an
executed Agreement, the Company will issue Lender warrants to purchase 500,000
shares of the Company's common stock, exercisable in cash or on a cashless basis
for five years at $0.50 per share, in the form annexed hereto as Exhibit A. The
Lender shall be entitled to, with respect to the warrants, the same piggyback
registration rights as all the warrants, shares or other securities to be sold
by the Company pursuant to the Orchard Transaction (as defined below) with all
the same penalty clauses and subject to all the same terms.
c. Closing Date. The date and time of the closing of this Agreement
(the "Closing Date") shall be the date of receipt and clearance of the Loan
Amount and the executed Agreement.
d. Orchard Transaction. (1) The Loan Amount will be paid over to the
Company's Signature Bank account for the sole purpose of funding a $500,000
letter of credit pursuant to a Global Investment and Intellectual Property
Licensing Agreement between the Company and Entertainment Brand Licensing
Limited and the transactions contemplated thereby (the "Orchard Transaction").
The Lender has been provided by the Company with the contracts, materially in
final form, in furtherance of the Orchard Transaction. The language of the
definitive letter of credit shall be subject to the reasonable approval of the
Lender, which shall not be unreasonably withheld.
(2) The Loan Amount will not be used at all by the Company for
operating expenses
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or repayment of any outstanding debt. Except as provided for herein, the Loan
Amount will not leave the special purpose Signature Bank account and it will
only be used as a trigger for the Company to receive other funds pursuant to the
Orchard Transaction, and in the event the Orchard Transaction is not
consummated, the Loan Amount will be promptly returned to the Lender.
(3) The Lender will be provided with a copy of a letter of
irrevocable authorization and instructions of the Company to Law Offices of Xxx
Xxxxxxx in connection with the letter of credit pursuant to the Orchard
Transaction. A copy of such letter shall be provided to Lender and shall be an
annex to this Agreement.
(4) In the event that the Loan Amount is released to Signature
Bank out of the escrow account, and the principal amount of $500,000 (the
"Repayment Amount") is not repaid to Lender in full by March 30, 2005, the
Lender will be paid interest at 6% on the Repayment Amount from date of release
to Signature Bank. If the Repayment Amount is not paid by March 30, 2005, as
penalty, for each subsequent day that the Repayment Amount is not paid, the
Lender shall be issued shares of the Company's restricted common stock at the
rate of 200,000 shares per day, and in the aggregate, up to 5,000,000 shares.
The Repayment Amount shall be paid no later than the date of accrual of such
5,000,000 shares as penalty and such date shall be the latest date in the letter
of credit described in Section 1(d)(1) for effectiveness of the letter of
credit. The Lender remains entitled to the Repayment Amount with interest and
appropriate legal fees as provided for herein if the Repayment Amount is not
paid.
(5) As a condition to Closing, the Company will place in
escrow with Law Offices twenty five common stock certificates bearing standard
restrictive legend representing in the aggregate 5,000,000 shares issuable as
penalty pursuant to Section 1(d)(4). Such stock certificates will bear the
Lender's name as holder and each of the twenty five stock certificates shall
represent 200,000 shares. The applicable penalty shares are to be paid to Lender
if the Repayment Amount is not paid pursuant to the timeline set forth in
Section 1(d)(4). These penalty shares shall have the same piggyback registration
rights as the Warrants issuable pursuant to Section 1(b). In the event of
expiration of the letter of credit pursuant to its terms, the Company shall
instruct the prompt return to the escrow account of the $500,000 from Signature
Bank, and the Repayment Amount of $500,000 shall be paid to Lender within two
business days of such receipt. Such instructions shall be included in the
irrevocable authorizations described in Section 1(d)(3).
(6) The Company is obligated under the terms of this Agreement
to guarantee that, no matter what happens, the Repayment Amount will be paid to
Lender unencumbered in any way, free and clear. Failure to do so results in
penalty shares as described above and the Company shall remain liable for the
total amount plus any interest or penalties while these funds are not returned.
The Company agrees that the collateral for these funds while not returned will
be all the intellectual property owned in full or in part by the Company and any
and all licensing agreements in place either all or in part, to the extent not
already encumbered.
e. Option. The Lender shall have an option exercisable commencing
with the date of return of the $500,000 and expiring two weeks thereafter, to
acquire, at the purchase price of $100,000, (i) shares of the Company's common
stock at $0.30 per share (333,333 shares) and (ii) warrants to purchase 200,000
shares of common stock, exercisable for five years at $0.50 per share, on
substantially the terms as set forth in Exhibit A.
2. LENDER'S REPRESENTATIONS AND WARRANTIES. Lender represents and warrants
to the Company solely as to it that:
a. Investment Purpose. As of the date hereof, Lender is entering
this Agreement and acquiring the Securities (defined as the warrants and penalty
shares issuable pursuant to this Agreement) for its own account and not with a
present view towards the public sale or distribution thereof, except pursuant to
sales registered or exempted from registration under the 1933 Act; provided,
however, that by making the representations herein, Lender does not agree to
hold any of the Securities for any minimum or other specific term and reserves
the right to dispose of the Securities at any time in accordance with or
pursuant to a registration statement or an exemption under the 1933 Act.
b. Accredited Investor Status. Lender is a sophisticated investor
(as described in Rule 506(b)(2)(ii) of Regulation D) and an accredited investor
(as defined in Rule 501 of Regulation D), and Lender has such experience in
business and financial matters that it has the capacity to protect its own
interests in connection with this transaction and is capable of evaluating the
merits and risks of an investment in the Securities pursuant to this Agreement.
Lender has been represented by counsel and advisors of its choice. Lender
acknowledges that an investment in the Securities pursuant to this Agreement is
speculative and involves a high degree of risk.
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c. Reliance on Exemptions. Lender understands that this Agreement is
being entered into and the Securities are being offered and sold to it in
reliance upon specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is relying upon
the truth and accuracy of, and Lender's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of Lender set forth
herein in order to determine the availability of such exemptions and the
eligibility of Lender to acquire the Securities.
d. Information. Lender has conducted its own independent
investigation of the Company, and Lender has received all documents, records,
books and other information pertaining to Lender's investment in the Company
that has been requested by Lender. Lender represents that Lender has carefully
reviewed the SEC Documents (as defined below) and other documents provided to
the Lender.
e. Governmental Review. Lender understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of this Agreement or the
Securities. There is no representation that any registration statement will be
declared effective.
f. Transfer or Resale. Lender understands that: (i) except as
provided for herein, the sale or re-sale of the Securities has not been and is
not being registered under the 1933 Act or any applicable state securities laws,
and the Securities may not be transferred unless (a) the Securities are sold
pursuant to an effective registration statement under the 1933 Act, (b) Lender
shall have delivered to the Company an opinion of counsel that shall be in form,
substance and scope customary for opinions of counsel in comparable transactions
to the effect that the Securities to be sold or transferred may be sold or
transferred pursuant to an exemption from such registration to the reasonable
satisfaction of the Company, (c) the Securities are sold or transferred to an
"affiliate" (as defined in Rule 144 promulgated under the 1933 Act (or a
successor rule) ("Rule 144")) of Lender who agrees to sell or otherwise transfer
the Securities only in accordance with this Section 2(f) and who is an
accredited investor, or (d) the Securities are sold pursuant to Rule 144, and
Lender shall have delivered to the Company an opinion of counsel that shall be
in form, substance and scope customary for opinions of counsel in corporate
transactions to the reasonable satisfaction of the Company; (ii) any sale of
such Securities made in reliance on Rule 144 may be made only in accordance with
the terms of said Rule and further, if said Rule is not applicable, any re-sale
of such Securities under circumstances in which the seller (or the person
through whom the sale is made) may be deemed to be an underwriter (as that term
is defined in the 0000 Xxx) may require compliance with some other exemption
under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii)
neither the Company nor any other person is under any obligation to file to
register such Securities under the 1933 Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder (in each case,
other than pursuant to the provisions herein). Notwithstanding the foregoing or
anything else contained herein to the contrary, the Securities may be pledged as
collateral in connection with a bona fide margin account or other lending
arrangement.
g. Legends. Lender understands that until such time as the
Securities have been registered under the 1933 Act or otherwise may be sold
pursuant to Rule 144 without any restriction as to the number of securities as
of a particular date that can then be immediately sold, the Securities may bear
a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of the certificates for such Securities):
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The
securities may not be sold, transferred or assigned in the
absence of an effective registration statement for the
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 said Act or unless sold pursuant to Rule 144 under said
Act."
h. Authorization; Enforcement. This Agreement has been duly
authorized and validly executed and delivered by Lender and is a valid and
binding agreement of Lender enforceable against it in accordance with its terms
(i) subject to applicable bankruptcy, insolvency, or similar laws relating to,
or affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application, (ii) subject to a court's
discretionary authority with respect to the granting of specific performance,
injunctive relief or other equitable remedies and (iii) except to the extent the
indemnification and contribution provisions, if any, contained in any this
Agreement may be limited by applicable federal or state securities laws or
unenforceable as against public policy..
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i. Residency. Lender is a resident of the jurisdiction set forth
immediately below Lender's name on the signature page hereto.
j. Not an Affiliate. Lender is not an officer, director or
"affiliate" (as that term is defined in Rule 405 under the 0000 Xxx) of the
Company.
k. Manner of Sale. At no time was Lender presented with or solicited
by or through any leaflet, public promotional meeting, television advertisement
or any other form of general solicitation or advertising.
l. Broker/Finder. Lender represents that no broker or finder is
entitled to any commission or fee.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to Lender that:
a. Organization and Qualification. The Company and each of its
subsidiaries, if any, is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated,
organized or formed, with full power and authority (corporate and other) to own,
lease, use and operate its properties and to carry on its business as and where
now owned, leased, used, operated and conducted. The Company and each of its
subsidiaries is duly qualified or intends to apply for qualification as a
foreign corporation to do business and is in good standing in every jurisdiction
in which its ownership or use of property or the nature of the business
conducted by it makes such qualification necessary, except where the failure to
be so qualified or in good standing would not have a Material Adverse Effect.
"Material Adverse Effect" means any material adverse effect on the business,
operations, assets, financial condition or prospects of the Company or its
subsidiaries, if any, taken as a whole, or on the transactions contemplated
hereby or by the agreements or instruments to be entered into in connection
herewith. "Subsidiaries" means any corporation or other organization, whether
incorporated or unincorporated, in which the Company owns, directly or
indirectly, any equity or other ownership interest.
b. Authorization; Enforcement. The Company has all requisite
corporate power and authority to enter into and perform this Agreement and the
Warrant Agreement (collectively the "Transaction Agreements") and to consummate
the transactions contemplated hereby and thereby and to issue the Securities, in
accordance with the terms hereof and thereof. The execution and delivery of this
Agreement and the Warrant Agreement by the Company and the consummation by it of
the transactions contemplated hereby and thereby (including without limitation,
the issuance of the Warrants and the issuance and reservation for issuance of
the shares underlying the Warrants issuable upon exercise thereof), have been
duly authorized by the Company's Board of Directors. This Agreement has been
duly executed and delivered by the Company by its authorized representative, and
such authorized representative is the true and official representative with
authority to sign this Agreement and the other documents executed in connection
herewith and bind the Company accordingly. This Agreement constitutes, and upon
execution and delivery by the Company of the Warrant Agreement, each of such
instruments will constitute, a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms.
c. Capitalization. As of January 28, 2005, the authorized capital
stock of the Company consists of 900,000,000 shares of Common Stock, of which
approximately 29,220,995 shares are issued and outstanding. As of January 28,
2005, no shares of Common Stock are currently reserved for issuance, except
forapproximately 525,000 shares to employees and consultants, 3,195,000 shares
underlying the Company's 8% convertible debentures in the principal amount of
approximately $958,500 (exerciseable at a price of $0.30 per share of Common
Stock), shares underlying the unpaid interest on the Company's 8% convertible
debentures (exerciseable at a price of $0.30 per share of Common Stock), and
shares underlying approximately 13,325,000 warrants/options/rights outstanding
and/or to be issued pursuant to a company stock option plan or other agreement
(such warrants or options exerciseable at prices of $0.35 to $1.20 per share of
Common Stock; most exercisable at either $0.50 or $0.75). The foregoing does not
give effect to the proposed Orchard Transaction, the terms of which have been
disclosed to Lender. All of such outstanding reserved shares of capital stock
are, or upon issuance will be, duly authorized, validly issued, fully paid and
nonassessable. No shares of capital stock of the Company are subject to
preemptive rights or any other similar rights of the shareholders of the Company
or any liens or encumbrances imposed through the actions or failure to act of
the Company. The Company also will be implementing a stock option plan, which
may be subdivided as appropriate, for employees, management and other persons
entitled to participate, in an amount of up to 4,200,000 shares of the Company's
Common Stock. Except as set forth in this paragraph, there are no outstanding
options, warrants, rights (including, without limitation, rights of first
refusal, anti-dilution, conversion, preemptive or similar rights) or agreements
for the purchase or acquisition from the Company of any shares of its capital
stock or any securities convertible into or ultimately exchangeable or
exercisable for any shares of its capital stock other than the Securities.
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d. Issuance of Shares. The Warrants to be issued and the shares of
Common Stock issuable hereunder, when issued, sold and delivered in accordance
with the terms of this Agreement and the Warrant Agreement will be (i) duly and
validly issued, fully paid and nonassessable, with no personal liability
attaching to the ownership thereof, (ii) free of restrictions on transfer other
than restrictions on transfer under this Agreement, the Warrant Agreement and
applicable securities laws, (c) free of any liens, mortgages, claims, charges,
security interests, restrictions or encumbrances of any kind ("Liens") other
than as may be created by Lender, and (d) not subject to any rights of first
refusal, preemptive or similar rights existing prior to the issuance thereof.
The shares underlying the Warrants have been duly and validly reserved in
sufficient amount for issuance and, upon issuance, will be (a) duly and validly
issued, fully paid and nonassessable, (b) free of restrictions on transfer other
than restrictions on transfer under this Agreement, the Warrant Agreement and
applicable securities laws, (c) free of Liens other than as may be created by
the Investors, and (d) not subject to any rights of first refusal, preemptive or
similar rights.
e. Acknowledgment of Dilution. The Company understands and
acknowledges the potentially dilutive effect to the Common Stock upon the
issuance of the shares underlying the Warrants upon exercise of the Warrants.
The Company further acknowledges that its obligation to issue the shares
underlying the Warrants upon exercise of the Warrants in accordance with this
Agreement is absolute and unconditional regardless of the dilutive effect that
such issuance may have on the ownership interests of other shareholders of the
Company.
f. No Conflicts. The execution, delivery and performance of this
Agreement, and the Warrant Agreement annexed hereto, by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
(including, without limitation, the issuance and reservation for issuance of the
shares underlying the Warrants), will not (i) conflict with or result in a
violation of any provision of the Company's Articles of Incorporation or
By-laws, (ii) violate or conflict with, or result in a breach of any provision
of, or constitute a default (or an event which with notice or lapse of time or
both could become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture, patent,
patent license or instrument to which the Company or any of its Subsidiaries is
a party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations
and regulations of any self-regulatory organizations to which the Company or its
securities are subject) applicable to the Company or any of its Subsidiaries or
by which any property or asset of the Company or any of its Subsidiaries is
bound or affected (except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect). Neither the
Company nor any of its Subsidiaries is in violation of its Articles of
Incorporation, By-laws or other organizational documents and neither the Company
nor any of its Subsidiaries is in default (and no event has occurred which with
notice or lapse of time or both could put the Company or any of its Subsidiaries
in default) under, and neither the Company nor any of its Subsidiaries has taken
any action or failed to take any action that would give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a
party or by which any property or assets of the Company or any of its
Subsidiaries is bound or affected, except for possible defaults as would not,
individually or in the aggregate, have a Material Adverse Effect. The businesses
of the Company and its Subsidiaries, if any, are not being conducted, and shall
not be conducted so long as Lender owns any of the Securities, in violation of
any law, ordinance or regulation of any governmental entity. Except as
specifically contemplated by this Agreement and as required under the 1933 Act
and any applicable state securities laws, the Company is not required to obtain
any consent, authorization or order of, or make any filing or registration with,
any court, governmental agency, regulatory agency, self regulatory organization
or stock market in order for it to execute, deliver or perform any of its
obligations under this Agreement, or the Warrant Agreement, in accordance with
the terms hereof or thereof or to issue and sell the Warrants in accordance with
the terms hereof and to issue the shares underlying the Warrants upon exercise
of the Warrants; all of such consents, authorizations, orders, filings or
registrations have been made or obtained or will be made or obtained within the
required statutory or regulatory time periods, if any.
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g. Reports and Financial Statements; Absence of Certain Changes. The
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by the Company with the SEC as of the date of this
Agreement (collectively, the "SEC Documents") pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "1934
Act"), except its Form 10-QSB due November 15, 2004, for which a notification of
late filing has been filed, and has previously furnished or made available to
Lender true and complete copies of such SEC Documents and shall promptly deliver
to Lender any SEC Documents filed between the date hereof and the Closing Date.
Such SEC Documents complied with the reporting requirements with respect
thereto, and none of such SEC Documents, as of their respective dates (and as
amended through the date hereof), contained or, with respect to SEC Documents
filed after the date hereof, will contain any untrue statement of material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. To the Company's knowledge, all reports, schedules, forms,
statements and other documents required to be filed by any person or entity with
respect to the Company pursuant to Section 16 of the 1934 Act as of the date
hereof have been filed, and do not contain any untrue statement of material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The agreement with Xxxxxxxx Entertainment Group has been
terminated and the Company has negotiated a mutual release from the agreements
between Xxxxxxxx Entertainment Group and the Company whereby the parties agreed
that the Company's Monster Quest production and products are disassociated from
Xxxxxxxx Entertainment Group's Monster In My Pocket. Since September 30, 2004,
other than in the ordinary course of business, there has been no material
adverse change and no material adverse development in the assets, liabilities,
business, properties, operations, financial condition, results of operations or
prospects of the Company or any of its Subsidiaries, except as disclosed herein
and in the SEC Documents.
h. Absence of Litigation. Other than in the ordinary course of
business, there is no action, suit, claim, proceeding, inquiry or investigation
before or by any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the Company or any of its
Subsidiaries, threatened against or affecting the Company or any of its
Subsidiaries, or their officers or directors in their capacity as such, that
could have a Material Adverse Effect, except as disclosed herein and/or in the
SEC Documents.
i. Intellectual Property. The Company has the rights stated herein
and in the SEC Documents (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures) and
other similar rights and proprietary knowledge (collectively, "Intangibles")
necessary for the conduct of its business as now being conducted. To the
Company's knowledge, except as disclosed herein and/or in the SEC Documents,
neither the Company nor any of its subsidiaries is infringing upon or in
conflict with any right of any other person with respect to any Intangibles.
Except as disclosed herein and/or in the SEC Documents, no adverse claims have
been asserted by any person to the ownership or use of any Intangibles and the
Company has no knowledge of any basis for such claim.
j. No Materially Adverse Contracts, Etc. Neither the Company nor any
of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Company has or is expected in the future to have a Material
Adverse Effect, except as disclosed in the SEC Documents or in this Agreement.
Neither the Company nor any of its Subsidiaries is a party to any contract or
agreement which in the judgment of the Company's officers has or is expected to
have a Material Adverse Effect, except as disclosed in this Agreement or in the
SEC Documents. Except as referenced in this Agreement and in the SEC Documents,
the Company has not granted or agreed to grant any registration rights,
including piggyback rights, to any person or entity.
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k. Absence of Certain Company Control Person Actions or Events. None
of the following has occurred during the past five (5) years with respect to an
officer or director of the Company ("Company Control Person"):
(1) A petition under the federal bankruptcy laws or any state
insolvency law was filed by or against, or a receiver, fiscal agent or similar
officer was appointed by a court for the business or property of such Company
Control Person, or any partnership in which he was a general partner at or
within two years before the time of such filing, or any corporation or business
association of which he was an executive officer at or within two years before
the time of such filing;
(2) Such Company Control Person was convicted in a criminal
proceeding or is a named subject of a pending criminal proceeding (excluding
traffic violations and other minor offenses);
(3) Such Company Control Person was the subject of any order,
judgment or decree, not subsequently reversed, suspended or vacated, of any
court of competent jurisdiction, permanently or temporarily enjoining him from,
or otherwise limiting, the following activities:
(i) acting, as an investment advisor, underwriter,
broker or dealer in securities, or as an affiliated person, director or employee
of any investment company, bank, savings and loan association or insurance
company, as a futures commission merchant, introducing broker, commodity trading
advisor, commodity pool operator, floor broker, any other Person regulated by
the Commodity Futures Trading Commission ("CFTC") or engaging in or continuing
any conduct or practice in connection with such activity;
(ii) engaging in any type of business practice; or
(iii) engaging in any activity in connection with the
purchase or sale of any security or commodity or in connection with any
violation of federal or state securities laws or federal commodities laws;
(4) Such Company Control Person was the subject of any order,
judgment or decree, not subsequently reversed, suspended or vacated, of any
federal or state authority barring, suspending or otherwise limiting for more
than 60 days the right of such Company Control Person to engage in any activity
described in paragraph (3) of this item, or to be associated with Persons
engaged in any such activity; or
(5) Such Company Control Person was found by a court of
competent jurisdiction in a civil action or by the CFTC or SEC to have violated
any federal or state securities law, and the judgment in such civil action or
finding by the CFTC or SEC has not been subsequently reversed, suspended, or
vacated.
l. Regulation D. The Company has not, to the best of its knowledge,
at any time during the past year made any offer or sales of any security or
solicited any offers to buy any security under circumstances that would
eliminate the availability of the exemption from registration under Regulation D
in connection with the offer and sale of the Securities as contemplated hereby.
m. Dilution. The number of shares of Common Stock, including upon
exercise of the Warrants, may have a dilutive effect on the ownership interests
of the other shareholders (and Persons having the right to become shareholders)
of the Company. The Company's executive officers and directors have studied and
fully understand the nature of the Securities being sold hereby and recognize
that they have such a potential dilutive effect. The board of directors of the
Company has concluded, in its good faith business judgment, that such issuance
is in the best interests of the Company. The Company specifically acknowledges
that its obligation to issue the shares upon exercise of the Warrants is binding
upon the Company and enforceable regardless of the dilution such issuance may
have on the ownership interests of other shareholders of the Company, and the
Company will honor every Notice of Exercise (as contemplated by the Warrants),
unless the Company is subject to an injunction (which injunction was not sought
by the Company) prohibiting the Company from doing so.
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n. Trading in Securities. The Company specifically acknowledges
that, except to the extent specifically provided herein or in any of the other
Transaction Agreements (but limited in each instance to the extent so
specified), Lender retains the right (but is not otherwise obligated) to buy,
sell, engage in hedging transactions or otherwise trade in the securities of the
Company, including, but not necessarily limited to, the Securities, at any time
before, contemporaneous with or after the execution of this Agreement or from
time to time, but only, in each case, in any manner whatsoever permitted by
applicable federal and state securities laws.
4. COVENANTS.
a. SEC Reporting. So long as Lender beneficially owns any of the
Securities, the Company shall use best efforts to timely file all reports
required to be filed with the SEC pursuant to the 1934 Act, and the Company
shall use best efforts to maintain its status as an issuer filing reports under
the 1934 Act even if the 1934 Act or the rules and regulations thereunder would
permit such termination.
b. Use of Proceeds. The Company shall use the Loan Amount only as
set forth in Section 1(d).
c. Listing. The Company will use best efforts, so long as Lender
owns at least one-third of the Securities, to maintain the quoting/listing and
trading of its Common Stock on the OTCBB or any equivalent or replacement
quotation service or exchange, including, but not limited to, the Nasdaq
National Market ("Nasdaq"), the Nasdaq SmallCap Market ("Nasdaq SmallCap"), the
New York Stock Exchange ("NYSE"), or the American Stock Exchange ("AMEX") and
will comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the National Association of Securities
Dealers ("NASD") and such exchanges, as applicable. The Company will promptly
notify Lender regarding the continued eligibility of the Common Stock for
listing or quotation should there be a material change.
d. Corporate Existence. So long as Lender beneficially owns any
Warrants, the Company shall maintain its corporate existence and shall not sell
all or substantially all of the Company's assets, except in the event of a
merger or consolidation or sale of all or substantially all of the Company's
assets, where the surviving or successor entity in such transaction (i) assumes
the Company's obligations hereunder and under the agreements and instruments
entered into in connection herewith or (ii) is a publicly traded corporation
whose Common Stock is listed for trading on the OTCBB, Nasdaq, Nasdaq SmallCap,
NYSE or AMEX, or any other equivalent or replacement quotation service or
exchange.
e. Reimbursement. If (i) Lender, other than by reason of its gross
negligence or willful misconduct, becomes involved in any capacity in any
action, proceeding or investigation brought by any shareholder of the Company,
in connection with or as a result of the consummation of the transactions
contemplated by the Transaction Agreements, or if Lender is impleaded in any
such action, proceeding or investigation by any Person, or (ii) Lender, other
than by reason of its gross negligence or willful misconduct or by reason of its
trading of the Common Stock in a manner that is illegal under the federal
securities laws, becomes involved in any capacity in any action, proceeding or
investigation brought by the SEC against or involving the Company or in
connection with or as a result of the consummation of the transactions
contemplated by the Transaction Agreements, or if Lender is impleaded in any
such action, proceeding or investigation by any Person, then in any such case,
the Company will reimburse Lender for its reasonable legal and other expenses
(including the cost of any investigation and preparation) incurred in connection
therewith, as such expenses are incurred. In addition, other than with respect
to any matter in which Lender is a named party, the Company will pay to Lender
the charges, as reasonably determined by Lender, for the time of any officers or
employees of Lender devoted to appearing and preparing to appear as witnesses,
assisting in preparation for hearings, trials or pretrial matters, or otherwise
with respect to inquiries, hearing, trials, and other proceedings relating to
the subject matter of this Agreement. The reimbursement obligations of the
Company under this section shall be in addition to any liability which the
Company may otherwise have, shall extend upon the same terms and conditions to
any affiliates of Lender who or which are actually named in such action,
proceeding or investigation, and partners, directors, agents, employees and
controlling persons (if any), as the case may be, of Lender and any such
affiliate, and such terms and conditions shall be binding upon and inure to the
benefit of any successors, assigns, heirs and personal representatives of the
Company, Lender and any such affiliate and any such person. The Company also
agrees that neither Lender nor any such affiliate, partner, director, agent,
employee or controlling person shall have any liability to the Company or any
person or entity asserting claims on behalf of or in right of the Company in
connection with or as a result of the consummation of any of the Transaction
Agreements, except as may be expressly and specifically provided in or
contemplated by this Agreement.
8
f. Available Shares. The Company shall have at all times authorized
and reserved for issuance, free from preemptive rights, a number of shares (the
"Minimum Available Shares") at least equal to one hundred percent (100%) of the
number of shares of Common Stock issuable upon exercise of all outstanding
Warrants held by Lender.
g. Registration Rights. If the Company proposes to register any of
its securities under the Securities Act for sale to the public, whether for its
own account or for the account of other security holders or both (except with
respect to registration statements on Forms X-0, X-0 and any successor forms
thereto), each such time it will give written notice to such effect to each
holder of the Securities from time to time (a "Holder") at least ten days prior
to such filing. Upon the written request of any Holder, received by the Company
within ten days after the giving of any such notice by the Company, to register
any of its shares of common stock eligible to be registered, the Company will
cause such shares to be covered by the registration statement proposed to be
filed by the Company. Notwithstanding the foregoing, in the event that any
registration pursuant to this provision shall be, in whole or in part, an
underwritten public offering of common stock, the number of shares to be
included in such an underwriting may be reduced (pro rata among the requesting
holders and the Company's placement agent and its assigns (based upon the number
of Shares requested to be registered by them)) if and to the extent that the
managing underwriter shall be of the good faith opinion that such inclusion
would reduce the number of shares to be offered by the Company, the placement
agent and its assigns or requesting holders of Shares. Notwithstanding the
foregoing provisions, the Company may withdraw any registration statement
referred to in this provision without thereby incurring any liability to any
Holder. In the event that the SEC restricts or prohibits the inclusion of any
part of the common stock included in the registration statement on the basis of
integration or that such securities are not deemed owned or paid for or any
similar reason, the Company shall not register such shares. Holder shall
cooperate with the Company in furnishing such information regarding itself as
reasonably needed to prepare, file and effect the registration statement, and
the failure to cooperate shall suspend the Company's obligations discussed in
this paragraph.
Notwithstanding anything to the contrary, Lender shall be
entitled to demand the filing of a registration statement covering the resale of
the shares of common stock underlying the Securities purchased pursuant to this
Agreement. Such demand shall be consistent with the Company's year-end federal
securities reporting obligations.
All expenses other than underwriting discounts and commissions
incurred in connection with registrations, filings or qualifications pursuant to
this paragraph, including, without limitation, all registration, filing and
qualification fees (including "blue sky" fees), printers' and accounting fees,
fees and disbursements of counsel for the Company (including fees and
disbursements of counsel for the Company) shall be borne by the Company.
Whenever required under this paragraph to effect the
registration of any shares of Common Stock underlying Securities of a Holder,
the Company shall, as expeditiously as reasonably possible:
(i) prepare and file with the SEC a registration
statement with respect to such shares of Common Stock underlying Securities and
use commercially reasonable efforts to cause such registration statement to
become effective, and keep such registration statement effective for a period of
up to 120 days or, if earlier, until the distribution contemplated in such
registration statement has been completed; provided, however, that such 120 day
period shall be extended for a period of time equal to the period a Holder
refrains from selling any securities included in such registration at the
request of an underwriter of Common Stock (or other securities) of the Company;
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement;
9
(iii) furnish to each Holder (A) a draft copy of the
registration statement and (B) a prospectus, including a preliminary prospectus,
in conformity with the requirements of the 1933 Act, and such other documents as
it may reasonably request in order to facilitate the disposition of Securities
owned by it;
(iv) in the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting, if any, shall also enter into and perform
its obligations under such an agreement. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required to include any of the Holders' securities in such
underwriting unless they accept the terms of the underwriting as agreed upon
between the Company and the underwriters selected by the Company and enter into
an underwriting agreement in customary form with an underwriter or underwriters
selected by the Company. If the total amount of securities, including shares of
Common Stock underlying Securities of a Holder, to be included in such offering
exceeds the amount of securities that the underwriters determine in their sole
discretion is compatible with the success of the offering, then the Company
shall be required to include in the offering only that number of securities that
the underwriters determine in their sole discretion will not jeopardize the
success of the offering;
(v) notify each Holder of Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the 1933 Act, of (i) the issuance of any stop
order by the SEC in respect of such registration statement, or (ii) the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing; and
(vi) use commercially reasonable efforts to register and
qualify the securities covered by such registration statement under such other
securities or "blue sky" laws of such jurisdictions as shall be reasonably
requested by a Holder, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business, where
not otherwise required, or to file a general consent to service of process in
any such states or jurisdictions, unless the Company is already subject to
service in such jurisdiction and except as may be required by the 1933 Act.
6. CONDITIONS TO THE COMPANY'S OBLIGATION. The obligation of the Company
hereunder is subject to the satisfaction, at or before the Closing Date of each
of the following conditions thereto, provided that these conditions are for the
Company's sole benefit and may be waived by the Company at any time in its sole
discretion:
a. Lender shall have executed this Agreement, and delivered the same
to the Company.
b. Lender shall have delivered and the Company shall have received
the Loan Amount in accordance with Section 1.
c. The representations and warranties of Lender shall be true and
correct in all material respects as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties that
speak as of a specific date), and Lender shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by Lender
at or prior to the Closing Date.
d. No undisclosed litigation, statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by or in any court or governmental authority of
competent jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which prohibits the consummation of any of the
transactions contemplated by this Agreement.
7. CONDITIONS TO LENDER'S OBLIGATION. The obligation of Lender is subject
to the satisfaction, at or before the Closing Date of each of the following
conditions, provided that these conditions are for Lender's sole benefit and may
be waived by Lender at any time in its sole discretion:
10
a. The Company shall have executed this Agreement and the Warrant
Agreement. The Company shall have submitted irrevocable instructions to its
transfer agent for the issuance of the Common Stock.
b. The representations and warranties of the Company shall be true
and correct in all material respects as of the date when made and as of the
Closing Date as though made at such time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Closing Date.
c. No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent jurisdiction
or any self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the transactions
contemplated by this Agreement.
8. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law. THIS AGREEMENT 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 AND THE NEW YORK
STATE COURTS LOCATED IN NEW YORK COUNTY IN THE STATE OF NEW YORK WITH RESPECT TO
ANY DISPUTE ARISING UNDER THIS AGREEMENT, 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 Company and Lender hereby waive a trial by jury in any
action, proceeding or counterclaim brought by either of the Parties hereto
against the other in respect of any matter arising out or in connection with the
Transaction Agreements.
b. Counterparts; Signatures by Facsimile. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original
but all of which shall constitute one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party. This Agreement, once executed by a party, may be delivered to the
other party hereto by facsimile transmission of a copy of this Agreement bearing
the signature of the party so delivering this Agreement.
c. Headings. The headings of this Agreement are for convenience of
reference only and shall not form part of, or affect the interpretation of, this
Agreement.
d. Severability. In the event that any provision of this Agreement
is invalid or unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any provision hereof which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision hereof.
e. Entire Agreement; Amendments. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor Lender makes any representation,
warranty, covenant or undertaking with respect to such matters. Except as
provided herein, no provision of this Agreement may be waived or amended other
than by an instrument in writing signed by the party to be charged with
enforcement.
11
f. Notices. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile and shall be effective five days
after being placed in the mail, if mailed by regular United States mail, or upon
receipt, if delivered personally or by courier (including a recognized overnight
delivery service) or by facsimile, in each case addressed to a party. The
addresses for such communications shall be:
If to the Company:
Attn.: Xxxxxxx Xxxxxxxxx, President
Peak Entertainment Holdings, Inc.
Xxxxxxx Xxxx, Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxx, XX XX00 0XX
Tel: x00(0)0000 000000
Fax: x00(0)0000 000000
With a copy (which shall not constitute notice) to:
Attn.: Xxx Xxxxxxx, Esq.
Law Offices of Xxx Xxxxxxx
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
If to Lender:
At the address and facsimile number listed on the
signature page hereof.
Each party shall provide notice to the other party of any change in address.
g. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Neither
the Company nor any Lender shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other.
Notwithstanding the foregoing, subject to Section 2(f), any Lender may assign
its rights hereunder to any person that purchases Securities in a private
transaction from Lender or to any of its affiliates.
h. Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
i. Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
j. No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
k. Remedies. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to Lender 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 Agreement will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Agreement, that
Lender shall be entitled, in addition to all other available remedies at law or
in equity.
12
l. Survival. The representations, warranties and covenants made by
each of the Company and Lender in this Agreement, the annexes, schedules and
exhibits hereto and in each instrument, agreement and certificate entered into
and delivered by them pursuant to this Agreement, shall survive the Closing and
the consummation of the transactions contemplated hereby. In the event of a
breach or violation of any of such representations, warranties or covenants, the
party to whom such representations, warranties or covenants have been made shall
have all rights and remedies for such breach or violation available to it under
the provisions of this Agreement, irrespective of any investigation made by or
on behalf of such party on or prior to the Closing Date.
m. Indemnification.
(a) The Company hereby agrees to indemnify and hold harmless
Lender and its officers, directors, partners and members (collectively, the
"Lender Indemnitees"), from and against any and all damages, and agrees to
reimburse Lender Indemnitees for all reasonable out-of-pocket expenses
(including the reasonable fees and expenses of legal counsel), in each case
promptly as incurred by Lender Indemnitees and to the extent arising out of or
in connection with:
(i) any material misrepresentation, omission of fact or
breach of any of the Company's representations or warranties contained in this
Agreement, the annexes, schedules or exhibits hereto or any instrument,
agreement or certificate entered into or delivered by the Company pursuant to
this Agreement; or
(ii) any material failure by the Company to perform in
any material respect any of its covenants, agreements, undertakings or
obligations set forth in this Agreement, the annexes, schedules or exhibits
hereto or any instrument, agreement or certificate entered into or delivered by
the Company pursuant to this Agreement; or
(iii) any action instituted against any Lender, or any
of its affiliates, by any stockholder of the Company who is not an affiliate of
Lender, with respect to any of the transactions contemplated by this Agreement.
(b) Lender hereby agrees to indemnify and hold harmless the
Company, its affiliates and its respective officers, directors, partners and
members (collectively, the "Company Indemnitees"), from and against any and all
damages, and agrees to reimburse the Company Indemnitees for reasonable all
out-of-pocket expenses (including the reasonable fees and expenses of legal
counsel), in each case promptly as incurred by the Company Indemnitees and to
the extent arising out of or in connection with:
(i) any material misrepresentation, omission of fact, or
breach of any of any Lender's representations or warranties contained in this
Agreement, the annexes, schedules or exhibits hereto or any instrument,
agreement or certificate entered into or delivered by Lender pursuant to this
Agreement; or
(ii) any material failure by Lender to perform in any
material respect any of its covenants, agreements, undertakings or obligations
set forth in this Agreement or any instrument, certificate or agreement entered
into or delivered by Lender pursuant to this Agreement.
(c) Promptly after receipt by either party hereto seeking
indemnification pursuant to this Section 8(m) (an "Indemnified Party") of
written notice of any investigation, claim, proceeding or other action in
respect of which indemnification is being sought (each, a "Claim"), the
Indemnified Party promptly shall notify the party from whom indemnification
pursuant to this Section 8(m) is being sought (the "Indemnifying Party") of the
commencement thereof; but the omission to so notify the Indemnifying Party shall
not relieve it from any liability that it otherwise may have to the Indemnified
Party, except to the extent that the Indemnifying Party is actually prejudiced
by such omission or delay. In connection with any Claim as to which both the
Indemnifying Party and the Indemnified Party are parties, the Indemnifying Party
shall be entitled to assume the defense thereof. Notwithstanding the assumption
of the defense of any Claim by the Indemnifying Party, the Indemnified Party
shall have the right to employ separate legal counsel and to participate in the
defense of such Claim, and the Indemnifying Party shall bear the reasonable
fees, out-of-pocket costs and expenses of such separate legal counsel to the
Indemnified Party if (and only if): (x) the Indemnifying Party shall have agreed
to pay such fees, out-of-pocket costs and expenses, (y) the Indemnified Party
reasonably shall have concluded that representation of the Indemnified Party and
the Indemnifying Party by the same legal counsel would not be appropriate due to
actual or, as reasonably determined by legal counsel to the Indemnified Party,
potentially differing interests between such parties in the conduct of the
defense of such Claim, or if there may be legal defenses available to the
Indemnified Party that are in addition to or disparate from those available to
the Indemnifying Party, or (z) the Indemnifying Party shall have failed to
employ legal counsel reasonably satisfactory to the Indemnified Party within a
reasonable period of time after notice of the commencement of such Claim. If the
Indemnified Party employs separate legal counsel in circumstances other than as
described in clauses (x), (y) or (z) above, the fees, costs and expenses of such
legal counsel shall be borne exclusively by the Indemnified Party. Except as
provided above, the Indemnifying Party shall not, in connection with any Claim
in the same jurisdiction, be liable for the fees and expenses of more than one
firm of legal counsel for the Indemnified Party (together with appropriate local
counsel). The Indemnifying Party shall not, without the prior written consent of
the Indemnified Party (which consent shall not unreasonably be withheld), settle
or compromise any Claim or consent to the entry of any judgment that does not
include an unconditional release of the Indemnified Party from all liabilities
with respect to such Claim or judgment.
13
n. Certain Fees. The Company shall contribute funds towards the
reasonable legal fees incurred by Lender in connection with the enforcement of
this Agreement, in the event the Company breaches its contractual obligations to
Lender pursuant to this Agreement.
[signature page follows]
14
IN WITNESS WHEREOF, the undersigned Lender and the Company have caused
this Agreement to be duly executed as of the date first above written.
THE COMPANY: PEAK ENTERTAINMENT HOLDINGS, INC.
By: /s/ Wilf Shorrocks
Wilf Shorrocks
President and Chief Executive Officer
LENDER: Tayside Trading Ltd.
By:
----------------------------------------
Name: ____________________
Title: _____________________
STATE OF INCORPORATION/FORMATION:
----------
ADDRESS: 50 Town Range
Gibraltar
MAILING ADDRESS: c/o E. Pines
Ezrat Torah Xxxxxx
Xxxxxxxxx 0
Xxxxxxxxx 00000, Xxxxxx
Facsimile: 011-972-2-500-2641
Backup fax: 000-0-000-0000
Telephone: 000- 000-00-000-0000
15
EXHIBIT A
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. EXCEPT AS
OTHERWISE SET FORTH HEREIN, OR IN THE LOAN AGREEMENT, NEITHER THIS WARRANT NOR
ANY OF SUCH SHARES MAY BE SOLD, PLEDGED, TRANSFERRED, ASSIGNED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION 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
UNDER SUCH ACT.
Right to Purchase 500,000 Shares of Common Stock at $0.50 Per Share
Peak Entertainment Holdings, Inc.
STOCK PURCHASE WARRANT AGREEMENT
THIS CERTIFIES THAT, for value received, Tayside Trading Ltd. (the
"Holder"), is entitled, upon the terms and subject to the conditions hereinafter
set forth, at any time on or after the closing of the related Loan Agreement
dated as of March 1, 2005 (the "Initial Exercise Date") and on or prior to the
fifth year anniversary date of this warrant agreement (the "Termination Date"),
but not thereafter, to subscribe for and purchase from Peak Entertainment
Holdings, Inc., a Nevada corporation (the "Company"), up to 500,000 fully paid
and nonassessable shares of the Company's Common Stock (the "Common Stock"), at
the exercise price of $0.50 per share (the "Exercise Price"). The Exercise Price
and the number of shares for which this Warrant is exercisable shall be subject
to adjustment as provided herein. In the event of any conflict between the terms
of this Warrant and the Loan Agreement, dated as of March 1, 2005, by and among
the Company and Lender listed on the execution page thereof (the "Loan
Agreement"), the Loan Agreement shall control. Capitalized terms used and not
otherwise defined herein shall have the meanings set forth for such terms in the
Loan Agreement.
1. Title to Warrant. Prior to the Termination Date and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by the
holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto, properly endorsed.
2. Authorization of Shares. The Company covenants that all shares of
Common Stock which may be issued upon the exercise of rights represented by this
Warrant will, upon exercise of the rights represented by this Warrant, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).
3. Exercise of Warrant. Except as provided in Sections 4 and 5 herein,
exercise of the purchase rights represented by this Warrant may be made at any
time or times on or after the Initial Exercise Date, and before the close of
business on the Termination Date by the surrender of this Warrant and the Notice
of Exercise Form annexed hereto, duly executed, at the office of the Company (or
such other office or agency of the Company as it may designate by notice in
writing to the registered holder hereof at the address of such holder appearing
on the books of the Company) and upon payment of the Exercise Price of the
shares thereby purchased by wire transfer or cashier's check drawn on a United
States bank, the holder of this Warrant shall be entitled to receive a
certificate for the number of shares of Common Stock so purchased. Certificates
for shares purchased hereunder shall be delivered to the Holder hereof within
three (3) Trading Days after the date on which this Warrant shall have been
exercised as aforesaid. This Warrant shall be deemed to have been exercised and
such certificate or certificates shall be deemed to have been issued, and the
Holder or any other person so designated to be named therein shall be deemed to
have become a holder of record of such shares for all purposes, as of the date
this Warrant has been exercised by payment to, and receipt thereof by, the
Company of the Exercise Price and all taxes required to be paid by Holder, if
any, pursuant to Section 5 herein prior to the issuance of such shares. If this
Warrant shall have been exercised in part, the Company shall, at the time of
delivery of the certificate or certificates representing Warrant Shares, deliver
to Holder a new Warrant evidencing the rights of Holder to purchase the
unpurchased shares of Common Stock called for by this Warrant, which new warrant
shall in all other respects be identical with this Warrant. The warrants may
also be exercisable by means of a "cashless exercise" in which the Holder shall
be entitled to receive a certificate for the number of shares equal to the
quotient obtained by dividing [(A-B) (X)] by (A), where: (A) = the weighted
average of the closing trading prices per share of Common Stock on the three
trading days preceding the date of such election on the principal trading
market, in terms of volume; (B) = the Exercise Price of the Warrants; and (X) =
the number of shares issuable upon exercise of the warrants in accordance with
the terms of this warrant.
16
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which Holder would otherwise be entitled
to purchase upon such exercise, the Company shall pay a cash adjustment in
respect of such final fraction in an amount equal to the Exercise Price.
5. Limitation on Exercise of Warrant. In no event shall the Holder be
permitted to exercise this Warrant for shares of Common Stock in excess of the
amount of this Warrant upon the exercise of which, (x) the number of shares of
Common Stock beneficially owned by such Holder (other than shares of Common
Stock issuable upon exercise of this Warrant) plus (y) the number of shares of
Common Stock issuable upon exercise of this Warrant, would be equal to or exceed
4.9% of the number of shares of Common Stock then issued and outstanding,
including shares issuable upon exercise of this Warrant held by such Holder
after application of this Section 5. As used herein, beneficial ownership shall
be determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder. To the extent that
the limitation contained in this Section 5 applies, the determination of whether
this Warrant is exercisable (in relation to other securities owned by the
Holder) and which portion of this Warrant is exercisable shall be in the sole
discretion of such Holder, and the submission of a Notice of Exercise shall be
deemed to be such Holder's determination of whether this Warrant is exercisable
(in relation to other securities owned by such Holder) and of which portion of
this Warrant is exercisable, in each case subject to such aggregate percentage
limitation, and the Company shall have no obligation to verify or confirm the
accuracy of such determination. Nothing contained herein shall be deemed to
restrict the right of a Holder to exercise this Warrant into shares of Common
Stock at such time as such exercise will not violate the provisions of this
Section 5. The provisions of this Section 5 may be waived by the Holder of this
Warrant upon not less than 75 days' prior notice to the Company, and the
provisions of this Section 5 shall continue to apply until such 75th day (or
such later date as may be specified in such notice of waiver). No exercise of
this Warrant in violation of this Section 5, but otherwise in accordance with
this Warrant, shall affect the status of the Common Stock issued upon such
exercise as validly issued, fully-paid and nonassessable.
6. Charges, Taxes and Expenses. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the Holder hereof for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the Holder of this Warrant, or in such name or names as may be directed by
the holder of this Warrant; provided, however, that in the event certificates
for shares of Common Stock are to be issued in a name other than the name of the
Holder of this Warrant, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto, duly executed by the Holder
hereof; and the Company may require, as a condition thereto, the payment of a
sum sufficient to reimburse it for any transfer tax incidental thereto.
7. Closing of Books. The Company will not close its shareholder books or
records in any manner which prevents the timely exercise of this Warrant.
8. Transfer, Division and Combination.
(a) Subject to compliance with any applicable securities laws,
transfer of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant at the principal office of the Company, together with
a written assignment of this Warrant substantially in the form attached hereto
duly executed by Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new
warrant or warrants in the name of the assignee or assignees and in the
denomination or denominations specified in such instrument of assignment, and
shall issue to the assignor a new warrant evidencing the portion of this Warrant
not so assigned, and this Warrant shall promptly be cancelled. This Warrant, if
properly assigned, may be exercised by a new holder for the purchase of shares
of Common Stock without having a new warrant issued.
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(b) This Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by Holder or its agent or attorney. Subject to compliance
with Section 8(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice.
(c) The Company shall prepare, issue and deliver at its own expense
(other than transfer taxes) the new Warrant or Warrants under this Section 8.
(d) The Company agrees to maintain, at its aforesaid office, books
for the registration and the registration of transfer of the Warrants.
9. No Rights as Shareholder until Exercise. This Warrant does not entitle
the Holder hereof to any voting rights or other rights as a shareholder of the
Company prior to the exercise hereof. Upon the surrender of this Warrant and the
payment of the aggregate Exercise Price, the Warrant Shares so purchased shall
be and be deemed to be issued to such Holder as the record owner of such shares
as of the close of business on the later of the date of such surrender or
payment.
10. Loss, Theft, Destruction or Mutilation of Warrant. The Company
covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant certificate
or any stock certificate relating to the Warrant Shares, and in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to it
(which shall not include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated, the Company
will make and deliver a new warrant or stock certificate of like tenor and dated
as of such cancellation, in lieu of such Warrant or stock certificate.
11. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a Saturday,
Sunday or legal holiday.
12. Adjustments of Exercise Price and Number of Warrant Shares.
(a) Stock Splits, etc. The number and kind of securities purchasable
upon the exercise of this Warrant and the Exercise Price shall be subject to
adjustment from time to time upon the happening of any of the following. In the
event that the Company shall (i) pay a dividend in shares of Common Stock or
make a distribution in shares of Common Stock to holders of its outstanding
Common Stock, (ii) subdivide its outstanding shares of Common Stock into a
greater number of shares of Common Stock, (iii) combine its outstanding shares
of Common Stock into a smaller number of shares of Common Stock, (iv) issue any
shares of its capital stock in a reclassification of the Common Stock, or (v)
otherwise transacts a similar adjustment to its class of Common Stock, then the
number of Warrant Shares purchasable upon exercise of this Warrant and the
Exercise Price immediately prior thereto shall be adjusted so that the holder of
this Warrant shall be entitled to receive the kind and number of Warrant Shares
or other securities of the Company which the holder would have owned or have
been entitled to receive had such Warrant been exercised in advance thereof.
Upon each such adjustment of the kind and number of Warrant Shares or other
securities of the Company which are purchasable hereunder, the holder of this
Warrant shall thereafter be entitled to purchase the number of Warrant Shares or
other securities resulting from such adjustment at an Exercise Price per Warrant
Share or other security obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares purchasable
pursuant hereto immediately prior to such adjustment and dividing by the number
of Warrant Shares or other securities of the Company resulting from such
adjustment. An adjustment made pursuant to this paragraph shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
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(b) Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of all or substantially all its property,
assets or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then the Holder shall have the right thereafter to receive, upon
exercise of this Warrant, the number of shares of common stock of the successor
or acquiring corporation or of the Company, if it is the surviving corporation,
and Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined in good faith by resolution of the Board of
Directors of the Company) in order to provide for adjustments of shares of
Common Stock for which this Warrant is exercisable which shall be as nearly
equivalent as practicable to the adjustments provided for in this Section 12.
For purposes of this Section 12, "common stock of the successor or acquiring
corporation" shall include stock of such corporation of any class which is not
preferred as to dividends or assets over any other class of stock of such
corporation and which is not subject to redemption and shall also include any
evidences of indebtedness, shares of stock or other securities which are
exercisable into or exchangeable for any such stock, either immediately or upon
the arrival of a specified date or the happening of a specified event and any
warrants or other rights to subscribe for or purchase any such stock. The
foregoing provisions of this Section 12 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or disposition of
assets.
(c) Adjustment for Spin Off. If, for any reason, prior to the
exercise of this Warrant in full, the Company spins off or otherwise divests
itself of a part of its business or operations or disposes all or a part of its
assets in a transaction (the "Spin Off") in which the Company does not receive
compensation for such business, operations or assets, but causes securities of
another entity (the "Spin Off Securities") to be issued to security holders of
the Company, then
(A) the Company shall cause (i) to be reserved Spin Off
Securities equal to the number thereof which would have been issued to the
Holder had all of the Holder's unexercised Warrants outstanding on the record
date (the "Record Date") for determining the amount and number of Spin Off
Securities to be issued to security holders of the Company (the "Outstanding
Warrants") been exercised as of the close of business on the trading day
immediately before the Record Date (the "Reserved Spin Off Shares"), and (ii) to
be issued to the Holder on the exercise of all or any of the Outstanding
Warrants, such amount of the Reserved Spin Off Shares equal to (x) the Reserved
Spin Off Shares multiplied by (y) a fraction, of which (I) the numerator is the
amount of the Outstanding Warrants then being exercised, and (II) the
denominator is the amount of the Outstanding Warrants; and
(B) the Exercise Price on the Outstanding Warrants shall be
adjusted immediately after consummation of the Spin Off by multiplying the
Exercise Price by a fraction (if, but only if, such fraction is less than 1.0),
the numerator of which is the average Closing Bid Price of the Common Stock for
the five (5) trading days immediately following the fifth trading day after the
Record Date, and the denominator of which is the average Closing Bid Price of
the Common Stock on the five (5) trading days immediately preceding the Record
Date; and such adjusted Exercise Price shall be deemed to be the Exercise Price
with respect to the Outstanding Warrants after the Record Date.
13. Voluntary Adjustment by the Company. The Company may at any time
during the term of this Warrant, reduce the then current Exercise Price to any
amount and for any period of time deemed appropriate by the Board of Directors
of the Company.
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14. Notice of Adjustment. Whenever the number of Warrant Shares or number
or kind of securities or other property purchasable upon the exercise of this
Warrant or the Exercise Price is adjusted, as herein provided, the Company shall
promptly send notice to the holder of this Warrant notice of such adjustment or
adjustments setting forth the number of Warrant Shares (and other securities or
property) purchasable upon the exercise of this Warrant and the Exercise Price
of such Warrant Shares (and other securities or property) after such adjustment,
setting forth a brief statement of the facts requiring such adjustment and
setting forth the computation by which such adjustment was made. Such notice, in
the absence of manifest error, shall be conclusive evidence of the correctness
of such adjustment.
15. Call Provision. Prior to the Termination Date, the Warrant shall be
callable, under the circumstances described in this Section, at the discretion
of the Company, for $0.10 per warrant (the "Call Fee"). The Company's right to
call shall be exercisable commencing upon the day following the tenth
consecutive business day during which the Company's common stock has traded at
prices of, or in excess of, $1.75 per share, subject to adjustment for stock
splits, dividends, subdivisions, reclassification and the like, with weekly
volume of such trading being in excess of the total number of shares represented
by this Warrant. In the event the Company exercises its right to call the
Warrants, the Company shall give the Holder written notice of such decision. In
the event that the Holder does not exercise all or any part of the Warrants or
that the Company does not receive the Warrant from the Holder within 30 days
from the date on the notice to the Holder of the Company's intention to redeem
the Warrant, then the Warrant shall be deemed canceled, and the Holder shall not
be entitled to further exercise thereof or to the Call Fee. This call provision
shall only be exercisable by the Company during such time that the shares
underlying the warrants are registered for resale or exercisable into shares
that are exempt from registration requirements.
16. Notice of Corporate Action. If at any time:
(a) the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property, or to receive any other right, or
(b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
consolidation or merger of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of the
Company to, another corporation or,
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to the Holder (i)
at least 30 days' prior written notice of the date on which a record date shall
be selected for such dividend, distribution or right or for determining rights
to vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, liquidation or winding up, and (ii)
in the case of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up, at least 30
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause also shall specify (i) the date
on which any such record is to be taken for the purpose of such dividend,
distribution or right, the date on which the holders of Common Stock shall be
entitled to any such dividend, distribution or right, and the amount and
character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to the
Holder at the last address of the Holder appearing on the books of the Company
and delivered in accordance with Section 18(d).
17. Authorized Shares. The Company covenants that during the period the
Warrant is outstanding, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of the Warrant
Shares upon the exercise of any purchase rights under this Warrant. The Company
further covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant
Shares upon the exercise of the purchase rights under this Warrant. The Company
will take all such reasonable action as may be necessary to assure that such
Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the OTCBB or other
market upon which the Common Stock may be listed.
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The Company shall not by any action, including, without limitation,
amending its certificate 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 actions as may be necessary or appropriate to protect the rights of the
Holder against impairment. Without limiting the generality of the foregoing, the
Company will (a) 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 Common Stock upon the exercise of this Warrant, and (b)
use its best efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary
to enable the Company to perform its obligations under this Warrant.
18. Miscellaneous.
(a) Jurisdiction. This Warrant shall be binding upon any successors
or assigns of the Company. This Warrant shall constitute a contract under the
laws of New York without regard to its conflict of law, principles or rules, and
be subject to governing law provisions set forth in Section 8 of the Loan
Agreement.
(b) Restrictions. The holder hereof acknowledges that the Warrant
Shares acquired upon the exercise of this Warrant, if not registered, will have
restrictions upon resale imposed by state and federal securities laws.
(c) Nonwaiver and Expenses. No course of dealing or any delay or
failure to exercise any right hereunder on the part of the Holder shall operate
as a waiver of such right or otherwise prejudice the Holder's rights, powers or
remedies, notwithstanding all rights hereunder terminate on the Termination
Date. If the Company fails to comply with any provision of this Warrant, the
Company shall pay to the Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys' fees,
including those of appellate proceedings, incurred by the Holder in collecting
any amounts due pursuant hereto or in otherwise enforcing any of its rights,
powers or remedies hereunder.
(d) Notices. Any notice, request or other document required or
permitted to be given or delivered to the Holder hereof by the Company shall be
delivered in accordance with the notice provisions of the Loan Agreement.
(e) Limitation of Liability. No provision hereof, in the absence of
affirmative action by the Holder to purchase shares of Common Stock, and no
enumeration herein of the rights or privileges of the Holder hereof, shall give
rise to any liability of the Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
(f) Remedies. The Holder, in addition to being entitled to exercise
all rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant.
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(g) Successors and Assigns. Subject to applicable securities laws,
this Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and permitted assigns of the Holder. The provisions of this Warrant are intended
to be for the benefit of all Holders from time to time of this Warrant and shall
be enforceable by any such Holder or holder of Warrant Shares.
(h) Indemnification. The Company agrees to indemnify and hold
harmless the Holder from and against any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees,
expenses and disbursements of any kind which may be imposed upon, incurred by or
asserted against the Holder in any manner relating to or arising out of any
failure by the Company to perform or observe in any material respect any of its
covenants, agreements, undertakings or obligations set forth in this Warrant;
provided, however, that the Company will not be liable hereunder to the extent
that any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, attorneys' fees, expenses or disbursements are
found in a final non-appealable judgment by a court to have resulted from the
holder's negligence, bad faith or willful misconduct in its capacity as a
stockholder or warrantholder of the Company.
(i) Amendment. This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the Company and the Holder.
(j) Severability. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.
(k) Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
[signature page follows]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its officer thereunto duly authorized.
Dated: March 1, 2005
Peak Entertainment Holdings, Inc.
By: /s/ Wilf Shorrocks
-------------------------------------
Wilf Shorrocks
President and Chief Executive Officer
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NOTICE OF EXERCISE
To: Peak Entertainment Holdings, Inc.
The undersigned hereby elects to purchase ________ shares of Common Stock
(the "Common Stock"), at an exercise price of $0.50 per share, of Peak
Entertainment Holdings, Inc. pursuant to the terms of the attached Warrant, and
tenders herewith payment of the exercise price in full, in the amount of
$_____________, together with all applicable transfer taxes, if any.
Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
-------------------------------
(Name)
-------------------------------
(Address)
-------------------------------
Dated:
---------------------
------------------------------
Signature
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ASSIGNMENT FORM
(To assign the foregoing warrant, execute this form and supply required
information. Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to whose address is .
Dated:
---------------------
Holder's Signature: _____________________________
Holder's Address: _____________________________
_____________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
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