Contract
Exhibit
10.4
THIS
WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR
THE SECURITIES LAWS OF ANY STATE (COLLECTIVELY, THE “ACTS”). NEITHER THIS
WARRANT NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED
OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
WITH
RESPECT HERETO UNDER ALL OF THE APPLICABLE ACTS, OR AN OPINION OF COUNSEL
SATISFACTORY TO EQUITY MEDIA HOLDINGS CORPORATION TO THE EFFECT THAT SUCH
REGISTRATIONS ARE NOT REQUIRED.
WARRANT
to
Purchase Common Stock of
EQUITY
MEDIA HOLDINGS CORPORATION
Expiring
on September 7, 2009
THIS
IS
TO CERTIFY THAT, for value received, Xxxxx Communications, LLC, or permitted
assigns, is entitled to purchase from EQUITY MEDIA HOLDINGS CORPORATION, a
Delaware corporation (the “Company”), at the Warrant Office designated pursuant
to Section 2.1, at a purchase price per share of $1.10 (as adjusted pursuant
to
the terms of this Warrant, the “Exercise Price”), 8,050,000 shares of duly
authorized, validly issued, fully paid and nonassessable shares of Common Stock,
$.0001 par value, of the Company (the “Common Stock”), and is entitled also to
exercise the other appurtenant rights, powers and privileges hereinafter set
forth. The number of shares of the Common Stock purchasable hereunder and the
Exercise Price are subject to adjustment in accordance with Article III hereof.
This Warrant shall expire at 5:00 p.m., C.S.T., on September 7,
2009.
Certain
Terms used in this Warrant are defined in Article IV.
ARTICLE
I
Exercise
of Warrant
1.1 Method
of Exercise.
This
Warrant may be exercised as a whole or in part beginning on the date of issuance
until September 7, 2009, at which time this Warrant shall expire and be of
no
further force or effect; provided. To exercise this Warrant, the holder hereof
or permitted assignees of all rights of the registered owner hereof shall
deliver to the Company, at the Warrant Office designated in Section 2.1, (a)
a
written notice in the form of the Subscription Notice attached as an exhibit
hereto, stating therein the election of such holder or such permitted assignees
of the holder to exercise this Warrant, (b) payment in full of the Exercise
Price (in the manner described below) for all Warrant Shares purchased hereunder
and (c) this Warrant. Subject to compliance with Section 3.1(a)(vi), this
Warrant shall be deemed to be exercised on the date of receipt by the Company
of
the Subscription Notice, accompanied by payment for the Warrant Shares to be
purchased and surrender of this Warrant, as aforesaid, and such date is referred
to herein as the “Exercise Date.” Upon such exercise (subject as aforesaid), the
Company shall issue and deliver to such holder a certificate for the full number
of the Warrant Shares purchasable by such holder hereunder. The Person in whose
name the certificate(s) for Common Stock is to be issued shall be deemed to
have
become a holder of record of such Common Stock on the Exercise Date; provided,
however, that this Warrant may not be exercised and the shares of common stock
underlying this Warrant (the “Warrant Shares”) shall not be issued to the holder
unless:
(a) it
is
lawful for the holder to own the Warrant Shares that the holder would own upon
such exercise of this Warrant, and the exercise of this Warrant and such
holder’s acquisition of the Warrant Shares do not result in a violation of the
Communications Act of 1934, as amended, or any ownership rule or regulation
of
the Federal Communications Commission (“FCC”); and
(b) if
the
issuance of the Warrant Shares would result in any transfer of control of any
licensee of the FCC, any required prior approval from the FCC for such transfer
of control shall have been received.
1.2 Fractional
Shares.
In lieu
of any fractional shares of Common Stock which would otherwise be issuable
upon
exercise of this Warrant, the Company shall issue a certificate for the next
higher number of whole shares of Common Stock for any fraction of a share.
ARTICLE
II
Warrant
Office; Transfer
2.1 Warrant
Office.
The
Company shall maintain an office for certain purposes specified herein (the
“Warrant Office”), which office shall initially be the Company’s office at #0
Xxxxxxxxxxx Xxxxx, Xxxxx 000 Xxxxxx Xxxx, Xxxxxxxx 00000, and may subsequently
be such other office of the Company or of any transfer agent of the Common
Stock
in the continental United States of which written notice has previously been
given to the holder of this Warrant. The Company shall maintain, at the Warrant
Office, a register for the Warrant in which the Company shall record the name
and address of the person in whose name this Warrant has been issued, as well
as
the name and address of each permitted assignee of the rights of the registered
owner hereof.
2.2 Ownership
of Warrant.
The
Company may deem and treat the person in whose name this Warrant is registered
as the holder and owner hereof (notwithstanding any notations of ownership
or
writing hereon made by anyone other than the Company) for all purposes and
shall
not be affected by any notice to the contrary, until presentation of this
Warrant for registration of transfer as provided in this Article
II.
2
2.3 Transfer
of Warrants.
The
Company agrees to maintain at the Warrant Office books for the registration
and
transfer of this Warrant. This Warrant may be transferred in whole or in part
only in compliance with the applicable law and the terms of this Section 2.3.
The holder may not transfer this Warrant or any interest herein (including
through the grant of participation interests), in whole or in part, if such
transfer would result in a violation of the Communications Act of 1934, as
amended, or any ownership rule or regulation of the FCC (it being understood
that a party not qualified to exercise the Warrant may be qualified as a
transferee if no violation would result from the transfer of this Warrant
without exercise). The Company, from time to time, shall register the transfer
of this Warrant in such books upon surrender of this Warrant at the Warrant
Office, properly endorsed or accompanied by appropriate instruments of transfer
and written instructions for transfer satisfactory to the Company. Upon any
such
transfer, a new Warrant shall be issued to the transferee, and the surrendered
Warrant shall be canceled by the Company. The registered holder of this Warrant
shall pay all taxes and all other expenses and charges payable in connection
with the transfer of Warrants pursuant to this Section 2.3.
2.4 Registration
Rights.
The
Company agrees to register the Warrant Shares on any registration statement
filed by the Company pursuant to the terms of the Warrant Purchase Agreement
of
even date herewith, of which the Company and the initial holder of this Warrant
are parties.
2.5 Acknowledgment
of Rights.
The
Company will, at the time of the exercise of this Warrant in accordance with
the
terms hereof, upon the request of the registered holder hereof, acknowledge
in
writing its continuing obligation to afford to such holder any rights (including
without limitation, any right to registration of the Warrant Shares) to which
such holder shall continue to be entitled after such exercise in accordance
with
the provisions of this Warrant, provided that if the holder of this Warrant
shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to such holder any such
rights.
2.6 Expenses
of Delivery of Warrants.
Except
as provided in Section 2.3 above, the Company shall pay all reasonable expenses,
taxes (other than transfer taxes) and other charges payable in connection with
the preparation, issuance and delivery of Warrants and related Warrant Shares
hereunder.
2.7 Compliance
with Securities Laws.
The
holder hereof understands and agrees that the following restrictions and
limitations shall be applicable to all Warrant Shares and resales or other
transfers thereof pursuant to the Securities Act:
(a) The
holder hereof agrees that the Warrant Shares shall not be sold or otherwise
transferred unless the Warrant Shares are registered under the Securities Act
and state securities laws or are exempt therefrom.
(b) A
legend
in substantially the following form has been or will be placed on the
certificate(s) evidencing the Warrant Shares:
“The
shares represented by this certificate have not been registered under the
Securities Act of 1933, as amended, or the securities laws of any state
(collectively, the “Acts”). Neither the shares nor any interest therein may be
offered, sold, transferred, pledged, or otherwise disposed of in the absence
of
an effective registration statement with respect to the shares under all of
the
applicable Acts, or an opinion of counsel satisfactory to Equity Media Holdings
Corporation to the effect that such registrations are not required.
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(c) Stop
transfer instructions have been or will be imposed with respect to the Warrant
Shares so as to restrict resale or other transfer thereof, subject to this
Section 2.7.
ARTICLE
III
Anti-Dilution
Provisions
3.1 Stock
Dividends - Split Ups.
If
after the date hereof, and subject to the provisions of Section 4.6 below,
the
number of outstanding shares of Common Stock is increased by a stock dividend
payable in shares of Common Stock, or by a split up of shares of Common Stock,
or other similar event, then, on the effective date of such stock dividend,
split up or similar event, the number of shares of Common Stock issuable on
exercise of each Warrant shall be increased in proportion to such increase
in
outstanding shares of Common Stock.
3.2 Aggregation
of Shares.
If
after the date hereof, and subject to the provisions of Section 4.6, the number
of outstanding shares of Common Stock is decreased by a consolidation,
combination, reverse stock split or reclassification of shares of Common Stock
or other similar event, then, on the effective date of such consolidation,
combination, reverse stock split, reclassification or similar event, the number
of shares of Common Stock issuable on exercise of each Warrant shall be
decreased in proportion to such decrease in outstanding shares of Common
Stock.
3.3 Adjustments
in Exercise Price.
Whenever the number of shares of Common Stock purchasable upon the exercise
of
the Warrants is adjusted, as provided in Section 4.1 and 4.2 above, the Warrant
Price shall be adjusted (to the nearest cent) by multiplying such Warrant Price
immediately prior to such adjustment by a fraction (x) the numerator of which
shall be the number of shares of Common Stock purchasable upon the exercise
of
the Warrants immediately prior to such adjustment, and (y) the denominator
of
which shall be the number of shares of Common Stock so purchasable immediately
thereafter.
3.4 Replacement
of Securities upon Reorganization, etc.
In case
of any reclassification or reorganization of the outstanding shares of Common
Stock (other than a change covered by Section 4.1 or 4.2 hereof or that solely
affects the par value of such shares of Common Stock), or in the case of any
merger or consolidation of the Company with or into another corporation (other
than a consolidation or merger in which the Company is the continuing
corporation and that does not result in any reclassification or reorganization
of the outstanding shares of Common Stock), or in the case of any sale or
conveyance to another corporation or entity of the assets or other property
of
the Company as an entirety or substantially as an entirety in connection with
which the Company is dissolved, the Warrant holders shall thereafter have the
right to purchase and receive, upon the basis and upon the terms and conditions
specified in the Warrants and in lieu of the shares of Common Stock of the
Company immediately theretofore purchasable and receivable upon the exercise
of
the rights represented thereby, the kind and amount of shares of stock or other
securities or property (including cash) receivable upon such reclassification,
reorganization, merger or consolidation, or upon a dissolution following any
such sale or transfer, that the Warrant holder would have received if such
Warrant holder had exercised his, her or its Warrant(s) immediately prior to
such event; and if any reclassification also results in a change in shares
of
Common Stock covered by Section 4.1 or 4.2, then such adjustment shall be made
pursuant to Sections 4.1, 4.2, 4.3 and this Section 4.4. The provisions of
this
Section 4.4 shall similarly apply to successive reclassifications,
reorganizations, mergers or consolidations, sales or other
transfers.
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3.5 Notices
of Changes in Warrant.
Upon
every adjustment of the Warrant Price or the number of shares issuable upon
exercise of a Warrant, the Company shall give written notice thereof to the
Warrant Agent, which notice shall state the Warrant Price resulting from such
adjustment and the increase or decrease, if any, in the number of shares
purchasable at such price upon the exercise of a Warrant, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. Upon the occurrence of any event specified in Sections
4.1, 4.2, 4.3 or 4.4, then, in any such event, the Company shall give written
notice to each Warrant holder, at the last address set forth for such holder
in
the warrant register, of the record date or the effective date of the event.
Failure to give such notice, or any defect therein, shall not affect the
legality or validity of such event.
3.6 No
Fractional Shares.
Notwithstanding any provision contained in this Warrant Agreement to the
contrary, the Company shall not issue fractional shares upon exercise of
Warrants. If, by reason of any adjustment made pursuant to this Section 4,
the
holder of any Warrant would be entitled, upon the exercise of such Warrant,
to
receive a fractional interest in a share, the Company shall, upon such exercise,
round up or down to the nearest whole number the number of the shares of Common
Stock to be issued to the Warrant holder.
3.7 Form
of Warrant.
The
form of Warrant need not be changed because of any adjustment pursuant to this
Section 4, and Warrants issued after such adjustment may state the same Warrant
Price and the same number of shares as is stated in the Warrants initially
issued pursuant to this Agreement. However, the Company may at any time in
its
sole discretion make any change in the form of Warrant that the Company may
deem
appropriate and that does not affect the substance thereof, and any Warrant
thereafter issued or countersigned, whether in exchange or substitution for
an
outstanding Warrant or otherwise, may be in the form as so changed.
ARTICLE
IV
Miscellaneous
4.1 Entire
Agreement.
This
Warrant, together with the Warrant Purchase Agreement, and that certain Stock
Purchase Agreement by and among the Company, CASH Services, Inc., Retro
Programming Services, Inc. and Xxxxx Communications, LLC, dated of even date
herewith (“RPSI Purchase Agreement”), and the documents referenced herein and
therein contains the entire agreement between the holder hereof and the Company
with respect to the Warrant Shares that it can purchase upon exercise hereof
and
the related transactions and supersedes all prior arrangements or understanding
with respect thereto.
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(a) Certain
Rights.
Upon
any Seller Trigger Event (as defined in the RPSI Purchase Agreement), the
Purchaser shall have the right to require the Company to repurchase all, but
not
less than all, of the Warrants sold to Purchaser under the Warrant Purchase
Agreement for a price of $1.5 million. In the event of any repurchase hereunder,
the party having the right to cause such repurchase shall exercise its rights
within 15 days of the event or circumstances giving rise to such right by
written notice to the other party. Such repurchase shall be consummated within
30 days of such notice. In any repurchase, all Warrants shall be delivered
to
the Company by Purchaser free and clear of all liens, mortgages and encumbrances
of any kind.
4.2 Governing
Law.
This
Warrant shall be governed by and construed in accordance with the laws of the
United States of America and the State of Delaware, both substantive and
remedial. Exclusive venue and jurisdiction for any action arising hereunder
shall lie in the court of competent jurisdiction located in New Castle County,
Delaware, and the parties specifically agree to submit to such jurisdiction
and
waive any objection to such venue.
4.3 Waiver
and Amendment.
Any
term or provision of this Warrant may be waived at any time by the party which
is entitled to the benefits thereof, and any term or provision of this Warrant
may be amended or supplemented at any time by agreement of the holder hereof
and
the Company, except that any waiver of any term or condition, or any amendment
or supplementation, of this Warrant must be in writing. A waiver of any breach
or failure to enforce any of the terms or conditions of this Warrant shall
not
in any way affect, limit or waive a party’s rights hereunder at any time to
enforce strict compliance thereafter with every term or condition of this
Warrant.
4.4 Illegality.
In the
event that any one or more of the provisions contained in this Warrant shall
be
determined to be invalid, illegal or unenforceable in any respect for any
reason, the validity, legality and enforceability of any such provision in
any
other respect and the remaining provisions of this Warrant shall not, at the
election of the party for whom the benefit of the provision exists, be in any
way impaired.
4.5 Copy
of Warrant.
A copy
of this Warrant shall be filed among the records of the Company.
4.6 Notice.
Any
notice or other document required or permitted to be given or delivered to
the
holder hereof shall be delivered at, or sent by certified or registered mail
to
such holder at, the last address shown on the books of the Company maintained
at
the Warrant Office for the registration of this Warrant or at any more recent
address of which the holder hereof shall have notified the Company in writing.
Any notice or other document required or permitted to be given or delivered
to
the Company, other than such notice or documents required to be delivered to
the
Warrant Office, shall be delivered at, or sent by certified or registered mail
to, the office of the Company at 0 Xxxxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx Xxxx,
XX
00000 or any other address within the continental United States of America
as
shall have been furnished by the Company to the holder of this
Warrant.
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4.7 Limitation
of Liability; Not Stockholders.
No
provision of this Warrant shall be construed as conferring upon the holder
hereof the right to vote, consent, receive dividends or receive notices other
than as herein expressly provided in respect of meetings of stockholders for
the
election of directors of the Company or any other matter whatsoever as a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the holder hereof to purchase shares of Common Stock, and no mere
enumeration herein of the rights or privileges of the holder hereof, shall
give
rise to any liability of such holder for the purchase price of any shares of
Common Stock or as a stockholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company.
4.8 Exchange,
Loss, Destruction, etc. of Warrant.
Upon
receipt of evidence satisfactory to the Company of the loss, theft, mutilation
or destruction of this Warrant, and in the case of any such loss, theft or
destruction upon delivery of a bond of indemnity in such form and amount as
shall be reasonably satisfactory to the Company, or in the event of such
mutilation upon surrender and cancellation of this Warrant, the Company will
make and deliver a new Warrant of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Warrant; provided,
however,
that
the original recipient of this Warrant shall not be required to provide any
such
bond of indemnity and may in lieu thereof provide his agreement of indemnity.
Any Warrant issued under the provisions of this Section 6.8 in lieu of any
Warrant alleged to be lost, destroyed or stolen, or in lieu of any mutilated
Warrant, shall constitute an original contractual obligation on the part of
the
Company. This Warrant shall be promptly canceled by the Company upon the
surrender hereof in connection with any exchange or replacement. The registered
holder of this Warrant shall pay all taxes (including securities transfer taxes)
and all other expenses and charges payable in connection with the preparation,
execution and delivery of Warrants pursuant to this Section 6.8.
4.9 FCC
Consent.
In the
event that any action to be taken under this Warrant would result in a change
of
control of any license, permit or other authorization issued by the FCC such
that the prior consent of the FCC is required for the taking or consummation
of
such action under the Communications Act of 1934, as amended, or the rules,
regulations and policies of the FCC which are then in effect, the obtaining
of
such FCC consent shall be a condition for the taking or consummation of such
action and the Company and the holder shall cooperate and use all commercially
reasonable efforts to make any required filings with the FCC so as to obtain
such consent of the FCC prior to the date for taking or consummating any such
action.
4.10 Headings.
The
Article and Section and other headings herein are for convenience only and
are
not a part of this Warrant and shall not affect the interpretation
thereof.
IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed in its
name.
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Dated:
June 24, 2008
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EQUITY
MEDIA HOLDINGS CORPORATION
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By:
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Name:
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Title:
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7
SUBSCRIPTION
NOTICE
The
undersigned, the holder of the foregoing Warrant, hereby elects to exercise
purchase rights represented by said Warrant for, and to purchase thereunder
__________ shares of the Common Stock covered by said Warrant and herewith
makes
payment in full therefor pursuant to Section 1.1 of such Warrant, and requests
(a) that certificates for such shares (and any securities or other property
issuable upon such exercise) be issued in the name of, and delivered to,
__________________, _____________________ and (b) if such shares shall not
include all of the shares issuable as provided in said Warrant, that a new
Warrant of like tenor and date for the balance of the shares issuable thereunder
be delivered to the undersigned.
Except
to
the extent the shares of Common Stock being acquired are registered for public
resale by the holder, the undersigned represents that (1) the aforesaid shares
of Common Stock are being acquired for the account of the undersigned for
investment not with view to, or for resale in connection with, the distribution
thereof and that the undersigned has no present intention of distributing or
reselling such shares; (2) the undersigned is aware of the Company’s business
affairs and financial condition and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision regarding its
investment in the Company; (3) the undersigned is experienced in making
investments of this type and has such knowledge and background in financial
and
business matters that the undersigned is capable of evaluating the merits and
risks of this investment and protecting the undersigned’s own interests; (4) the
undersigned understands that the shares of Common Stock issuable upon exercise
of this Warrant have not been registered under the Securities Act of 1933,
as
amended (the “Securities Act”), by reason of a specific exemption from the
registration provisions of the Securities Act, which exemption depends upon,
among other things, the bona fide nature of the investment intent as expressed
herein, and, because such securities have not been registered under the
Securities Act, they must be held indefinitely unless subsequently registered
under the Securities Act or an exemption from such registration is available;
(5) the undersigned is aware that the aforesaid shares of Common Stock may
not
be sold pursuant to Rule 144 adopted under the Securities Act unless certain
conditions are met and until the undersigned has held the shares for the number
of years prescribed by Rule 144, that among the conditions for use of the Rule
is the availability of current information to the public about the Company,
and
the Company has not made such information available and has no present plans
to
do so; and (6) the undersigned agrees not to make any disposition of all or
any
part of the aforesaid shares of Common Stock unless and until there is then
in
effect a registration statement under the Securities Act covering such proposed
disposition and such disposition is made in accordance with said registration
statement, or the undersigned has provided the Company with an opinion of
counsel satisfactory to the Company, stating that such registration is not
required.
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Name:
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Signature
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Dated:___________________,
_____
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8
ASSIGNMENT
For
value
received, _____________________________, hereby sells, assigns and transfers
unto _______________________________ the within Warrant, together with all
right, title and interest therein and does hereby irrevocably constitute and
appoint _______________________ attorney, to transfer said Warrant on the books
of the Company, with full power of substitution.
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Dated:
___________________, 20__
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9
