WARRANT AGREEMENT
This Warrant Agreement ("Agreement") is entered into as of ___________, 2006, by and between Xxxxxxx Xxxxx Mortgage Capital, Inc. ("Xxxxxxx") and First Look Studios, Inc. ("First Look").
1. Grant of Warrant. First Look does hereby xxxxx Xxxxxxx a Warrant in the form of Exhibit “A” attached hereto.
2. Stockholders Agreement. Xxxxxxx hereby agrees to be bound by the terms of First Look’s Stockholders’ Agreement dated as of __________. Xxxxxxx shall be treated as an “applicable shareholder” thereunder.
3. Investor Rights Agreement. Xxxxxxx and First Look hereby agree to be bound by the terms of the Investor Rights Agreement dated as of ___________, initially entered into by and between First Look and _______________. Xxxxxxx shall be treated as a ____________ under such agreement.
4. Consideration. The consideration for this Agreement is for Xxxxxxx’x affiliate to enter into the ___________ Agreement with First Look dated as of June 14, 2006.
5. Governing Law. This Agreement shall be governed by the laws of California (without regard to its conflict of law principles).
6. Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes any and all prior discussions, term sheets or negotiations relating thereto. This Agreement may only be amended by a writing signed by both parties hereto.
7. Counterparts. This Agreement may be executed in counterparts and transmitted by facsimile or PDF copy, the combined set of which shall constitute an original.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the day and year first set forth above.
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FIRST LOOK STUDIOS, INC. By: ______________________________ Print Name: _________________________ Title: ______________________________ XXXXXXX XXXXX MORTGAGE CAPITAL, INC. By: ______________________________ Print Name: _________________________ Title: ______________________________ |
Void after 5:00 p.m., New York Time on June 20, 2011
Warrant to Purchase 765,000 Shares of Common Stock
WARRANT TO PURCHASE COMMON STOCK
OF
FIRST LOOK STUDIOS, INC.
THIS WARRANT, AND THE SECURITIES INTO WHICH IT IS EXERCISABLE (COLLECTIVELY, THE "SECURITIES"). HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE OFFERED OR SOLD UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT OR PURSUANT TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND THE COMPANY WILL BE PROVIDED WITH OPINION OF COUNSEL OR OTHER SUCH INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH EXEMPTIONS ARE AVAILABLE.
FOR VALUE RECEIVED, First Look Studios, Inc., a corporation organized under the laws of the State of Delaware (the "Company"), grants the following rights to Xxxxxxx Xxxxx Mortgage Capital Inc. and/or its assigns (the "Holder"):
ARTICLE 1. DEFINITIONS
As used in this Agreement, the following terms shall have the following meanings:
"Common Stock" means common stock of the Company.
"Corporate Office" shall mean the office of the Company (or its successor) at which at any particular time its principal business shall be administered.
"Effective Date" shall mean June 20, 2006.
"Excluded Securities" shall mean arty securities issued by Company pursuant to any option, warrant or conversion right issued prior to the Effective Date.
"Exercise Date" shall mean any date on which the Holder gives the Company a Notice of Exercise in the form attached hereto as Appendix I.
"Exercise Price" shall mean the Fixed Price per share of Common Stock, subject to adjustment as provided herein.
"Expiration Date" shall mean 5:00 p.m. (New York time) on June 20, 2011.
"Fair Market Value" shall have the meaning set forth in Section 2.2(b).
"Fixed Price" shall mean US$1.11.
"Investors’ Rights Agreement" shall mean the Investors’ Rights Agreement dated as of July 29, 2005, entered into by and between Company and the "Investors" (as defined therein).
"SEC" shall mean the United States Securities and Exchange Commission.
"Stockholders’ Agreement" shall mean the Stockholders’ Agreement entered into by and between Company and the "Applicable Stockholders" (as defined therein) dated as of July 29, 2005.
"Subscription Date" shall mean the date specified by the Company for investors to subscribe and pay for the Common Stock.
"Warrant Shares" shall mean the shares of the Common Stock issuable upon exercise of this Warrant.
ARTICLE 2. EXERCISE AND AGREEMENTS
2.1 Exercise of Warrant; Sale of Warrant and Warrant Shares. This Warrant shall entitle the Holder to purchase, at the Exercise Price, 765,000 shares of Common Stock. This Warrant shall be exercisable at any time and from time to time from the Effective Date and prior to the Expiration Date (the ‘‘Exercise Period"). This Warrant and the right to purchase Warrant Shares hereunder shall expire and become void on the Expiration Date.
2.2 Manner of Exercise.
(a) The Holder may exercise this Warrant at any time and from time to time during the Exercise Period, in whole or in part (but not in denominations of fewer than 10.000 Warrant Shares, except upon an exercise of this Warrant with respect to the remaining balance of Warrant Shares purchasable hereunder at the time of exercise), by delivering to Company (i) a duly executed Notice of Exercise in substantially the form attached as Appendix I hereto and (ii) a wire transfer in immediately available funds (to such account as shall be designated by Company) for the aggregate Exercise Price of the Warrant Shares being purchased.
(b) The Holder may, at its option, in lieu of paying cash for the Warrant Shares, exercise this Warrant by an exchange, in whole or in part (a "Warrant Exchange"), by delivery to the Company of (i) a duly executed Notice of Exercise electing a Warrant Exchange and (ii) the certificate representing this Warrant. In connection with any Warrant Exchange, the Holder shall be deemed to have paid for the Warrant Shares an amount equal to the Fair Market Value of each Warrant delivered, and the Warrants shall be deemed exercised for the amount so paid. For this purpose, the Fair Market Value of each Warrant is the difference between the Fair Market Value of a share of Common Stock and the Exercise Price on the Exercise Date. "Fair Market Value" shall mean the average closing bid price of a share of Common Stock during the ten (10) trading days ending on the Exercise Date.
(c) Notwithstanding the provisions of this Section 2.2, the Holder shall not have the right to exercise this Warrant to the extent that such right to exercise this Warrant would result in the Holder or any of its affiliates beneficially owning more than 5% of the outstanding shares of Common Stock, unless the Holder gives written notice not less than 65 days in advance to the Company of the Holder’s intention to exceed such limitation. For purposes of this paragraph (c), beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13D-G thereunder. The restriction contained in this paragraph (c) may not be altered, amended, deleted or changed in any manner whatsoever unless the holders of not less than a majority of the outstanding shares of Common Stock shall approve, in writing, such alteration, amendment, deletion or change.
2.3 Termination. All rights of the Holder in this Warrant, to the extent they have not been exercised, shall terminate on the Expiration Date.
2.4 No Rights Prior to Exercise. This Warrant shall not entitle the Holder to any voting or other rights as a stockholder of the Company with respect to the unexercised portion of this Warrant.
2.5 Fractional Shares. No fractional shares shall be issuable upon exercise of this Warrant, and the number of Warrant Shares to be issued shalt be rounded up to the nearest whole number. If, upon exercise of this Warrant, the Holder hereof would be entitled to receive any fractional share, the Company shall issue to the Holder one additional share of Common Stock in lieu of such fractional share.
2.6 Stockholders’ Agreement and Investors’ Rights Agreement. Holder hereby agrees to be bound by the terms of, and shall be entitled to the benefits of: (i) The Stockholders’ Agreement and Holder shall be treated as an Applicable Stockholder thereunder; and (ii) the Investors’ Rights Agreement, and Holder shall be treated as an Investor thereunder.
2.7 Adjustments to Exercise Price and Number of Securities.
(a) Computation of Adjusted Exercise Price. If and whenever on or after the Subscription Date (i) the Company issues or sells, or in accordance with this Section 2 is deemed to have issued or sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding shares of Common Stock deemed to have been issued by the Company in connection with any Excluded Securities) for a consideration per share (the "New Issuance Price") less than a price (the "Applicable Price") equal to the Exercise Price in effect immediately prior to such issue or sale or deemed issuance or sale (the foregoing a "Dilutive issuance"), then immediately after such Dilutive Issuance the Exercise Price then in effect shall be reduced to an amount equal to the New Issuance Price. Upon each such adjustment of the Exercise Price hereunder, the number of Warrant Shares shall be adjusted to the number of shares of Common Stock equal to (x) the product of (i) the Common Stock deemed outstanding immediately following such adjustment and Dilutive Issuance and (ii) the number of Warrant Shares acquirable upon exercise of this Warrant immediately prior to such adjustment and Dilutive Issuance, divided by (y) the Common Stock deemed outstanding immediately prior to such adjustment and Dilutive Issuance.
For the purposes of any computation to he made in accordance with this Section 2.7(a), the following provisions shall be applicable:
| (i) In case of the issuance or sale of shares of Common Stock for a consideration part or all of which shall be cash, the amount of cash consideration therefor shall be deemed to be the amount of cash received by the Company for such shares (or, if shares of Common Stock are offered by the Company for subscription, the subscription price, or if either of such securities shall be sold to underwriters or dealers for public offering without a subscription offering. the initial public offering price) before deducting therefrom any compensation paid or discount allowed in the sale, underwriting or purchase thereof by underwriters or dealers or others performing similar services, or any expenses incurred in connection therewith. |
| (ii) In case of the issuance or sale (otherwise than as a dividend or other distribution on any stock of the Company) of shares of Common Stock for a consideration part or all of which shall be other than cash, the amount of the consideration therefor other than cash shall be deemed to be the value of such consideration as determined in good faith by the Board of Directors of the Company. |
| (iii) Shares of Common Stock issuable by way of dividend or other distribution on any stock of the Company shall be deemed to have been issued immediately after the opening of business on the day following the record date for the determination of stockholders entitled to receive such dividend or other distribution and shall be deemed to have been issued without consideration. |
| (iv) The reclassification of securities of the Company other than shares of the Common Stock into securities including shares of Common Stock shall be deemed to involve the issuance of such shares of Common Stock for a consideration other than cash immediately prior to the close of business on the date fixed for the determination of security holders entitled to receive such shares. and the value of the consideration allocable to such shares of Common Stock shall be determined as provided in subsection (ii) of this Section 2.7(a). |
| (v) The number of shares of Common Stock at any one time outstanding shall include the aggregate number of shares issued or issuable (subject to readjustment upon the actual issuance thereof) upon the exercise of options, rights, warrants and upon the conversion or exchange of convertible or exchangeable securities; provided, however, that shares issuable upon the exercise of the Warrants shall not be included in such calculation. |
(b) Options. Rights. Warrants and Convertible and Exchangeable Securities. In case the Company shall, at any time after the Effective Date and until this Warrant is fully exercised, issues options, rights or warrants to subscribe for shares of Common Stock, or issue any securities convertible into or exchangeable for shares of Common Stock, for a consideration per share less than the Exercise Price immediately prior to the issuance of such options, rights or warrants (excluding shares of Common Stock issuable upon exercise of options, warrants or conversion rights granted as of the Effective Date and shares of Common Stock issuable upon exercise of stock options at or above the closing market price per share of Common Stock under any stock option plan of the Company), or such convertible or exchangeable securities, or without consideration, the Exercise Price in effect immediately prior to the issuance of such options, rights or warrants, or such convertible or exchangeable securities, as the case may be, shall be reduced to a price determined by making a computation in accordance with the provision of Section 2.7(a) hereof, provided that:
| (i) The aggregate maximum number of shares of Common Stock, as the case may be, issuable under such options, rights or warrants shall be deemed to be issued and outstanding at the time such options, rights or warranties were issued, and for a consideration equal to the minimum purchase price per share provided for in such options. rights or warrants at the time of issuance, plus the consideration (determined in the same manner as consideration received on the issue or sale of shares in accordance with the terms of the Warrants), if any, received by the Company for such options, rights or warrants. |
| (ii) The aggregate maximum number of shares of Common Stock issuable upon conversion or exchange of any convertible or exchangeable securities shall he deemed to be issued and outstanding at the time of issuance of such securities, and for a consideration equal to the consideration (determined in the same manner as consideration received on the issue or sale of shares of Common Stock in accordance with the terms of the Warrants) received by the Company for such securities, plus the minimum consideration, if any, receivable by the Company upon the conversion or exchange thereof. |
| (iii) If any change shall occur in the price per share provided for in any of the options, rights, warrants, or conversion or exchange rights, such options, rights or warrants or conversion or exchange rights, as the case may be, shall be deemed to have expired or terminated on the date when such price change became effective in respect of shares not theretofore issued pursuant to the exercise or conversion or exchange thereof, and the Company shall be deemed to have issued upon such date new options, rights or warrants or convertible or exchangeable securities at the new price in respect of the number of shares issuable upon the exercise of such options, rights or warrants or the conversion or exchange of such convertible or exchangeable securities. |
| (iv) If any options, rights, warrants, or conversion or exchange rights, expire or terminate without exercise or conversion, as the case may be, then the Exercise Price or the remaining outstanding Warrant shall be readjusted as if such options, rights or warrants or convertible or exchangeable securities, as the case may he, had never been issued. |
(c) Subdivision and Combination. In case the Company shall at any time subdivide or combine the outstanding shares of Common Stock, the Exercise Price shall forthwith be proportionately decreased in the case of subdivision or increased in the case of combination.
(d) Adjustment in Number of Securities. Upon each adjustment of the Exercise Price pursuant to the provisions of this Section 2.7, the number of Warrant Shares issuable upon the exercise of each Warrant shall be adjusted to the nearest whole number by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares issuable upon exercise of the Warrants immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price.
(e) Merger or Consolidation. In case of any consolidation of the Company with, or merger of the Company with, or merger of the Company into, another corporation (other than a consolidation or merger which does not result in any reclassification or change of the outstanding Common Stock), the corporation formed by such consolidation or merger shall execute and deliver to the Holder a supplemental warrant agreement providing that the Holder of each Warrant then outstanding or to be outstanding shall have the right thereafter (until the expiration of such Warrant) to receive, upon exercise of such Warrant, the kind and amount of shares of stock and other securities and property (except in the event the property is cash, then the Holder shall have the right to exercise the Warrant and receive cash in the same manner as other stockholders) receivable upon such consolidation or merger, by a holder of the number of shares of Common Stock of the Company for which such warrant might have been exercised immediately prior to such consolidation, merger, sale or transfer. Such supplemental warrant agreement shall provide for adjustments that shall be identical to the adjustments provided in Section 2.7. The foregoing provisions of this paragraph (e) shall similarly apply to successive consolidations or mergers.
(f) No Adjustment of Exercise Price in Certain Cases. No adjustment of the Exercise Price shall be made (i) upon the issuance of the Warrant Shares, (ii) upon the issuance of any Excluded Securities, or (iii) shares of Common Stock pursuant to any employee benefit plan which has been approved by the Board of Directors of the Company, pursuant to which the Company’s securities may be issued to any employee, officer or director for services provided to the Company.
ARTICLE 3. MISCELLANEOUS
3.1 Transfer. This Warrant may not be offered, sold, transferred, pledged, assigned, hypothecated or otherwise disposed of, in whole or in part, at any time, except in compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of an investment representation letter and a legal opinion reasonably satisfactory to the Company).
3.2 Transfer Procedure. Subject to the provisions of Section 3.1, the Holder may transfer or assign this Warrant by giving the Company notice setting forth the name, address and taxpayer identification number of the transferee or assignee, if applicable (the "Transferee"), and surrendering this Warrant to the Company for reissuance to the Transferee and, in the event of a transfer or assignment of this Warrant in part, the Holder. (Each of the persons or entities in whose name any such new Warrant shall be issued are herein referred to as a "Holder").
3.3 Loss, Theft, Destruction or Mutilation. If this Warrant shall become mutilated or defaced or be destroyed, lost or stolen, the Company shall execute and deliver a new Warrant in exchange for and upon surrender and cancellation of such mutilated or defaced Warrant or, in lieu of and in substitution for such Warrant so destroyed, lost or stolen, upon the Holder filing with the Company an affidavit that such Warrant has been so mutilated, defaced, destroyed, lost or stolen. However, the Company shall be entitled, as a condition to the execution and delivery of such new Warrant, to demand reasonably acceptable indemnity to it and payment of the expenses and charges incurred in connection with the delivery of such new Warrant. Any Warrant so surrendered to the Company shall be cancelled.
3.4 Notices. All notices and other communications from the Company to the Holder or vice-versa shall be deemed delivered and effective when given personally, by facsimile transmission with confirmation sheet at such address and/or facsimile number as may have been furnished to the Company or the Holder, as the case may be, in writing by the Company or the Holder from time to time.
3.5 Waiver. This Warrant and any term hereof may be changed, waived, or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.
3.6 Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of California, without giving effect to its principles regarding conflicts of law. Any action to enforce the terms of this Warrant shall be exclusively heard in the county, state and federal Courts of Los Angeles, California and Country of the United States of America.
3.7 Signature. In the event that any signature on this Warrant is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same, with the same force and effect as if such facsimile signature page were an original thereof.
3.8 Legal Fees. In the event any Person commences a legal action or proceeding to enforce its rights under this Warrant, the non-prevailing party to such action or proceeding shall pay all reasonable and necessary costs and expenses (including reasonable and necessary attorney’s fees) incurred in enforcing such rights.
Dated: June 20, 2006
FIRST LOOK STUDIOS, INC.
By: ________________________
Name: Xxxxx X. Xxxxxxxxxxx
Title: Chief Executive Officer
XXXXXXX XXXXX MORTGAGE CAPITAL INC.
By: _____________________
Print Name: ___________________
Title:____________________________
APPENDIX I
NOTICE OF EXERCISE
| 1. |
The undersigned hereby elects (please check the appropriate box and fill in the
blank spaces): |_| to purchase _______ shares of Common Stock, $.001 par value per share, of First Look Studios, Inc. at $1.11 per share for a total of $_____ and pursuant to the terms of the attached Warrant, and tenders herewith payment of the aggregate Exercise Price of such Warrant Shares in full; or |_| to purchase _____ shares of Common Stock, $.001 par value per share, of First Look Studios, Inc. pursuant to the cashless exercise provision under Section 2.2 (b) of the attached Warrant, and tenders herewith the number of Warrant Shares to purchase such Warrant Shares based upon the formula set forth in Section 2.2 (b). |
| 2. | Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below: |
Dated: ______________________
XXXXXXX XXXXX MORTGAGE CAPITAL INC.
By:______________________
Print Name: __________________
Title: _____________________
