THE REGISTERED HOLDER OF THIS WARRANT, BY ITS ACCEPTANCE HEREOF, AGREES
THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS WARRANT EXCEPT AS HEREIN PROVIDED.
VOID AFTER 5:00 P.M. EASTERN TIME, JUNE 25, 2007
WARRANT
For the Purchase of
881,137 Shares of Common Stock
of
FIRST LOOK MEDIA, INC.
1.
Warrant.
THIS
CERTIFIES THAT, for good and valuable consideration, duly given by or on behalf of Seven
Hills Pictures, LLC, a Connecticut limited liability company (“Holder”), as
registered owner of this Warrant, to First Look Media, Inc., a Delaware corporation
(“Company”), Holder is entitled, at any time or from time to time at or after
the date hereof (“Commencement Date”), and at or before 5:00 p.m., Eastern Time,
June 25, 2007 (“Expiration Date”), but not thereafter, to purchase and receive,
in whole or in part, up to Eight Hundred Eighty-One Thousand One Hundred Thirty-Seven
(881,137) shares of Common Stock of the Company, $.001 par value (“Common
Stock”). If the Expiration Date is a day on which banking institutions are authorized
by law to close, then this Warrant may be exercised on the next succeeding day which is
not such a day in accordance with the terms herein. During the period ending on the
Expiration Date, the Company agrees not to take any action that would terminate this
Warrant. This Warrant is initially exercisable at $3.40 per share of Common Stock
purchased; provided, however, that upon the occurrence of any of the events specified in
Section 6 hereof, the rights granted by this Warrant, including the exercise price and the
number of shares of Common Stock to be received upon such exercise, shall be adjusted as
therein specified. The term “Exercise Price” shall mean the initial exercise
price or the adjusted exercise price, depending on the context, of a share of Common Stock
issuable upon exercise of this Warrant. The term “Securities” shall mean the
shares of Common Stock issuable upon exercise of this Warrant.
2.
Exercise.
2.1
Exercise Form. In order to exercise this Warrant, the exercise form attached hereto must
be duly executed and completed and delivered to the Company, together with this Warrant
and payment of the Exercise Price for the Securities being purchased.
2.2
Legend. Each certificate for Securities purchased under this Warrant shall bear a legend
as follows, unless such Securities have been registered under the Securities Act of 1933,
as amended (“Securities Act”):
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“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”) OR
APPLICABLE STATE LAW. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT AND APPLICABLE STATE LAW.” |
2.3
Conversion Right.
2.3.1 Determination of Amount. In lieu
of the payment of the Exercise Price in cash, the Holder shall have the right
(but not the obligation) to convert this Warrant, in whole or in part, into
Common Stock (“Conversion Right”), as follows: upon exercise of the
Conversion Right, the Company shall deliver to the Holder (without payment by
the Holder of any of the Exercise Price) that number of shares of Common Stock
equal to the quotient obtained by dividing (x) the “Value” (as defined
below) of the portion of the Warrant being converted at the time the Conversion
Right is exercised by (y) the Market Price. The “Value” of the portion
of the Warrant being converted shall equal the remainder derived from
subtracting (a) the Exercise Price multiplied by the number of shares of Common
Stock being converted from (b) the Market Price of the Common Stock multiplied
by the number of shares of Common Stock being converted. As used herein, the
term “Market Price” at any date shall be deemed to be the last
reported sale price of the Common Stock on such date, or, in case no such
reported sale takes place on such day, the average of the last reported sale
prices for the immediately preceding three trading days, in either case as
officially reported by the principal securities exchange on which the Common
Stock is listed or admitted to trading, or, if the Common Stock is not listed or
admitted to trading on any national securities exchange or if any such exchange
on which the Common Stock is listed is not its principal trading market, the
last reported sale price as furnished by the National Association of Securities
Dealers, Inc. (“NASD”) through the Nasdaq National Market or SmallCap
Market, or, if applicable, the OTC Bulletin Board or BBX, or if the Common Stock
is not listed or admitted to trading on any of the foregoing markets, or similar
organization, as determined in good faith by resolution of the Board of
Directors of the Company, based on the best information available to it.
2.3.2 Exercise of Conversion Right.
The Conversion Right may be exercised by the Holder on any business day on or
after the Commencement Date and not later than the Expiration Date by delivering
the Warrant with a duly executed exercise form attached hereto with the
conversion section completed to the Company, exercising the Conversion Right and
specifying the total number of shares of Common Stock the Holder will purchase
pursuant to such conversion.
2
3.
Transfer.
3.1
General Restrictions. The registered Holder of this Warrant, by its acceptance
hereof, agrees that it will not sell, transfer, assign or hypothecate this
Warrant to anyone except upon compliance with, or pursuant to exemptions from,
applicable securities laws. This Warrant shall not be transferred to any person
or entity operating in the film distribution or home DVD or video entertainment
industry without the prior written consent of the Company. In order to make any
permitted assignment, the Holder must deliver to the Company the assignment form
attached hereto duly executed and completed, together with this Warrant and
payment of all transfer taxes, if any, payable in connection therewith. The
Company shall immediately transfer this Warrant on the books of the Company and
shall execute and deliver a new Warrant or Warrants of like tenor to the
appropriate assignee(s) expressly evidencing the right to purchase the aggregate
number of shares of Common Stock purchasable hereunder or such portion of such
number as shall be contemplated by any such assignment. Notwithstanding the
foregoing, Holder may distribute the Warrant to its members owning limited
liability company interests of Holder, subject to such transferee executing
documents reasonably acceptable to the Company to insure compliance with all
applicable federal and state securities laws.
3.2
Restrictions Imposed by the Securities Act. This Warrant and the Securities
underlying this Warrant shall not be transferred unless and until (i) the
Company has received the opinion of counsel for the Holder that such securities
may be sold pursuant to an exemption from registration under the Securities Act,
and applicable state law, the availability of which is established to the
reasonable satisfaction of the Company, or (ii) a registration statement
relating to such Securities has been filed by the Company and declared effective
by the Securities and Exchange Commission and compliance with applicable state
law.
4.
New Warrants to be Issued.
4.1
Partial Exercise or Transfer. Subject to the restrictions in Section 3 hereof, this
Warrant may be exercised or assigned in whole or in part. In the event of the exercise or
assignment hereof in part only, upon surrender of this Warrant for cancellation, together
with the duly executed exercise or assignment form and funds sufficient to pay any
Exercise Price and/or transfer tax, the Company shall cause to be delivered to the Holder
without charge a new Warrant of like tenor to this Warrant in the name of the Holder
evidencing the right of the Holder to purchase the aggregate number of shares of Common
Stock and Warrants purchasable hereunder as to which this Warrant has not been exercised
or assigned.
4.2
Lost Certificate. Upon receipt by the Company of evidence satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant and of reasonably satisfactory
indemnification, the Company shall execute and deliver a new Warrant of like tenor and
date. Any such new Warrant executed and delivered as a result of such loss, theft,
mutilation or destruction shall constitute a substitute contractual obligation on the part
of the Company.
5.
[Reserved]
6.
Adjustments.
6.1
Structural Adjustments to Exercise Price and Number of Securities. The Exercise Price and
the number of shares of Common Stock underlying this Warrant shall be subject to
adjustment from time to time as hereinafter set forth:
6.1.1 Stock Dividends —
Recapitalization, Reclassification, Split-Ups. If, after the date hereof, the
number of outstanding shares of Common Stock is increased by a stock dividend on
the Common Stock payable in shares of Common Stock or by a split-up,
recapitalization or reclassification of shares of Common Stock or other similar
event, then, on the effective date thereof, the number of shares of Common Stock
issuable on exercise of this Warrant shall be increased in proportion to such
increase in outstanding shares.
6.1.2 Aggregation of Shares. If, after
the date hereof, the number of outstanding shares of Common Stock is decreased
by a reverse split, consolidation, combination or reclassification of shares of
Common Stock or other similar event, then, upon the effective date thereof, the
number of shares of Common Stock issuable on exercise of this Warrant shall be
decreased in proportion to such decrease in outstanding shares.
6.1.3 Adjustments in Exercise Price.
Whenever the number of shares of Common Stock purchasable upon the exercise of
this Warrant is adjusted, as provided in this Section 6.1, the Exercise Price
shall be adjusted (to the nearest cent) by multiplying such Exercise 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
this Warrant immediately prior to such adjustment, and (y) the denominator of
which shall be the number of shares of Common Stock so purchasable immediately
thereafter.
6.1.4 Replacement of Securities upon
Reorganization, etc. In case of any split up, recapitalization or
reclassification of the outstanding shares of Common Stock other than a change
covered by Section 6.1.1 or 6.1.2 hereof or which 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 which does not
result in any split up, recapitalization or reclassification of the outstanding
shares of Common Stock), or in the case of any sale or conveyance to another
corporation or entity of the property of the Company as an entirety or
substantially as an entirety in connection with which the Company is dissolved,
the Holder of this Warrant shall have the right thereafter (until the expiration
of the right of exercise of this Warrant) to receive upon the exercise hereof,
for the same aggregate Exercise Price payable hereunder immediately prior to
such event, the kind and amount of shares of stock or other securities or
property (including cash) receivable upon such split-up, reclassification,
reorganization, merger or consolidation, or upon a dissolution following any
such sale or other transfer, by a Holder of the number of shares of Common Stock
of the Company obtainable upon exercise of this Warrant immediately prior to
such event; and if any reclassification also results in a change in shares of
Common Stock covered by Section 6.1.1 or 6.1.2, then such adjustment shall be
made pursuant to Sections 6.1.1, 6.1.2, 6.1.3 and this Section 6.1.4. The
provisions of this Section 6.1.4 shall similarly apply to successive split-ups,
reclassifications, reorganizations, mergers or consolidations, sales or other
transfers.
6.2
Adjustment upon Issuances of Securities for Cash.
(i)
Until December 25, 2004, if the Company shall issue (“Subject
Issuance”) any Additional Stock (as defined below) for cash at an Effective
Price (as defined in subsection (ix) below) of less than $2.30:
| |
(
a) the Exercise Price in effect immediately prior to the Subject Issuance
(“Original Exercise Price”) shall be adjusted to a price (“New
Exercise Price”) determined by multiplying the Original Exercise Price by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to the Subject Issuance plus the number of shares
of Common Stock that the aggregate cash consideration received by the Company in
the Subject Issuance would purchase at the Original Exercise Price, and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately prior to the Subject Issuance plus the number of shares of
Additional Stock issued in the Subject Issuance; and |
| |
(b)
the number of shares of Common Stock purchasable under this Warrant shall be
adjusted to a number determined by multiplying the aggregate number of shares of
Common Stock purchasable hereunder immediately prior to the Subject Issuance by
a fraction, the numerator of which is the Original Exercise Price and the
denominator of which is the New Exercise Price. |
(ii)
For the purpose of the calculation in subsection (i), the number of shares of
Common Stock outstanding immediately prior to the Subject Issuance shall be the
sum of (1) the number of shares of Common Stock actually outstanding, (2) the
number of shares of Common Stock then issuable upon the exercise of this Warrant
(and the related Warrant, of even date herewith, in favor of the Holder) and (3)
the number of shares of Common Stock, if any, deemed issued pursuant to Section
6.2(v) below.
(iii) For the purpose of the calculation in subsection (i), the cash
consideration received by the Company for any issue or sale of Additional Stock
shall be computed at the net amount of cash received by the Company after
deduction of any underwriting or similar commissions, compensation or
concessions paid or allowed by the Company in connection with such issue or sale
but without deduction of any expenses payable by the Company.
(iv)
If Additional Stock or Convertible Securities (as defined in subsection (v)
below) are sold together with other stock or securities or other assets of the
Company for a consideration which covers both, the cash consideration received
by the Company shall be computed as the portion of such consideration that may
be reasonably determined in good faith by the Board of Directors of the Company
to be allocable to such Additional Stock and Convertible Securities.
(v) For the purpose of the calculation in subsection (i), if the Company issues
or sells any (a) stock or other securities convertible into, Additional Stock
(such convertible stock or securities being hereinafter referred to as
“Convertible Securities”) or (b) rights or options for the purchase of
Additional Stock or Convertible Securities, and if the exercise price for such
Additional Stock is less than the Original Exercise Price, in each case the
Company shall be deemed to have issued at the time of the issuance of such
rights or options or Convertible Securities the maximum number of shares of
Additional Stock issuable upon exercise or conversion thereof and to have
received as consideration for the issuance of such shares an amount equal to the
total amount of the consideration, if any, received by the Company for the
issuance of such rights or options or Convertible Securities, plus, in the case
of such rights or options, the minimum amounts of consideration, if any, payable
to the Company upon the exercise of such rights or options, plus, in the case of
Convertible Securities, the minimum amounts of consideration, if any, payable to
the Company (other than by cancellation of liabilities or obligations evidenced
by such Convertible Securities) upon the conversion thereof.
(vi) If, in the case of Convertible Securities, the minimum amounts of such
consideration cannot be ascertained, but are a function of anti-dilution or
similar protective clauses, the Company shall be deemed to have received the
minimum amounts of consideration without reference to such clauses; provided,
further, that if the minimum amount of consideration payable to the Company upon
the exercise or conversion of rights, options or Convertible Securities is
reduced over time or on the occurrence or non-occurrence of specified events
other than by reason of anti-dilution adjustments, the Effective Price shall be
recalculated using the figure to which such minimum amount of consideration is
reduced; and provided, further, that if the minimum amount of consideration
payable to the Company upon the exercise or conversion of such rights, options
or Convertible Securities is subsequently increased, the Effective Price shall
be again recalculated using the increased minimum amount of consideration
payable to the Company upon the exercise or conversion of such rights, options
or Convertible Securities.
(vii) No further adjustment of the Original Exercise Price, as adjusted upon the
issuance of such rights, options or Convertible Securities, shall be made as a
result of the actual issuance of Additional Stock on the exercise of any such
rights or options or the conversion of any such Convertible Securities. If any
such rights or options or the conversion privilege represented by any such
Convertible Securities shall expire without having been exercised, the Original
Exercise Price, as adjusted upon the issuance of such rights, options or
Convertible Securities shall be readjusted to the Original Exercise Price which
would have been in effect had an adjustment been made on the basis that the only
Additional Stock so issued were the Additional Stock, if any, actually issued or
sold on the exercise of such rights or options or rights of conversion of such
Convertible Securities, and such Additional Stock, if any, were issued or sold
for the consideration actually received by the Company upon such exercise, plus
the consideration, if any, actually received by the Company for the granting of
all such rights or options, whether or not exercised, plus the consideration
received for issuing or selling the Convertible Securities actually converted,
plus the consideration, if any, actually received by the Company (other than by
cancellation of liabilities or obligations evidenced by such Convertible
Securities) on the conversion of such Convertible Securities.
(viii) “Additional Stock” shall mean all shares of Common Stock issued
by the Company or deemed to be issued pursuant to this subsection after the date
of this Warrant, whether or not subsequently reacquired or retired by the
Company other than (a) shares of Common Stock (or options, warrants or other
Common Stock purchase rights issued pursuant to such options, warrants or other
rights) issued or to be issued to employees, officers or directors of, or
consultants or advisors to the Company or any subsidiary, pursuant to stock
purchase or stock option plans or other arrangements that are approved by the
Board of Directors of the Company; (b) stock issued pursuant to any rights,
options and warrants outstanding as of the date of this Warrant; (c) shares of
Common Stock issued in connection with any stock split, stock dividend or
recapitalization by the Company; (d) shares of Common Stock issued upon exercise
or conversion of this Warrant; (e) any securities issued by the Company in a
firm commitment underwriting pursuant to a registration statement filed under
the Securities Act; and (f) any options or warrants for the purchase or shares
of Common Stock issued in connection with the acquisition of business or assets
of another Person (other than an “affiliate” of the Company (as that
term is defined in Rule 405 promulgated under the Securities Act)) or other
strategic transactions, such as joint ventures or marketing or distribution
arrangements, involving the Company and another such Person.
(ix) The “Effective Price” of Additional Stock shall mean the quotient
determined by dividing the total number of shares of Additional Stock issued or
sold, or deemed to have been issued or sold by the Company under this
subsection, into the aggregate cash consideration received, or deemed to have
been received by the Company for such issue under this subsection, for such
Additional Stock.
6.3
Changes in Form of Warrant. This form of Warrant need not be changed because of any change
pursuant to this Section, and Warrants issued after such change may state the same
Exercise Price and the same number of shares of Common Stock and Warrants as are stated in
the Warrants initially issued pursuant to this Agreement. The acceptance by any Holder of
the issuance of new Warrants reflecting a required or permissive change shall not be
deemed to waive any rights to a prior adjustment or the computation thereof.
6.4
Elimination of Fractional Interests. The Company shall not be required to issue
certificates representing fractions of shares of Common Stock upon the exercise of this
Warrant, nor shall it be required to issue scrip or pay cash in lieu of any fractional
interests, it being the intent of the parties that all fractional interests shall be
eliminated by rounding any fraction up to the nearest whole number of shares of Common
Stock or other securities, properties or rights.
7.
Reservation of Shares. The Company shall at all times reserve and keep available
out of its authorized shares of Common Stock, solely for the purpose of issuance
upon exercise of this Warrant, such number of shares of Common Stock or other
securities, properties or rights as shall be issuable upon the exercise thereof.
The Company covenants and agrees that, upon exercise of the Warrants and payment
of the Exercise Price therefor, all shares of Common Stock and other securities
issuable upon such exercise shall be duly and validly issued, fully paid and
non-assessable and not subject to preemptive rights of any stockholder.
8.
Certain Notice Requirements.
8.1
Holder’s Right to Receive Notice. Nothing herein shall be construed as conferring
upon the Holders the right to vote or consent or to receive notice as a stockholder for
the election of directors or any other matter, or as having any rights whatsoever as a
stockholder of the Company. If, however, at any time prior to the expiration of the
Warrants and their exercise, any of the events described in Section 8.2 shall occur, then,
in one or more of said events, the Company shall give written notice of such event at
least ten days prior to the date fixed as a record date or the date of closing the
transfer books for the determination of the stockholders entitled to such dividend,
distribution, conversion or exchange of securities or subscription rights, or entitled to
vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall
specify such record date or the date of the closing of the transfer books, as the case may
be.
8.2
Events Requiring Notice. The Company shall be required to give the notice described in
this Section 8 upon one or more of the following events: (i) if the Company shall take a
record of the holders of its shares of Common Stock for the purpose of entitling them to
receive a dividend or distribution, or (ii) the Company shall offer to all the holders of
its Common Stock any additional shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of the Company, or any
option, right or warrant to subscribe therefor, or (iii) a merger or reorganization in
which the Company is not the surviving party, or (iv) a dissolution, liquidation or
winding up of the Company (other than in connection with a consolidation or merger) or a
sale of all or substantially all of its property, assets and business shall be proposed.
8.3
Notice of Change in Exercise Price. The Company shall, promptly after an event requiring a
change in the Exercise Price pursuant to Section 6 hereof, send notice to the Holders of
such event and change (“Price Notice”). The Price Notice shall describe the
event causing the change and the method of calculating same and shall be certified as
being true and accurate by two officers of the Company.
8.4
Transmittal of Notices. All notices, requests, consents and other communications under
this Warrant shall be in writing and shall be deemed to have been duly made on the date of
delivery if delivered personally or sent by overnight courier, with acknowledgment of
receipt by the party to which notice is given, or on the fifth day after mailing if mailed
to the party to whom notice is to be given, by registered or certified mail, return
receipt requested, postage prepaid and properly addressed as follows: (i) if to the
registered Holder of this Warrant, to the address of such Holder as shown on the books of
the Company, or (ii) if to the Company, to its principal executive office.
9.
Miscellaneous.
9.1
Headings. The headings contained herein are for the sole purpose of convenience of
reference, and shall not in any way limit or affect the meaning or interpretation of any
of the terms or provisions of this Warrant.
9.2
Entire Agreement. This Warrant (together with the other agreements and documents being
delivered pursuant to or in connection with this Warrant) constitutes the entire agreement
of the parties hereto with respect to the subject matter hereof, and supersedes all prior
agreements and understandings of the parties, oral and written, with respect to the
subject matter hereof.
9.3
Binding Effect. This Warrant shall inure solely to the benefit of and shall be binding
upon, the Holder and the Company and their respective successors, legal representatives
and assigns, and no other person shall have or be construed to have any legal or equitable
right, remedy or claim under or in respect of or by virtue of this Warrant or any
provisions herein contained.
9.4
Governing Law. This Warrant shall be governed by and construed and enforced in accordance
with the law of the State of Delaware, without giving effect to conflict of laws.
9.5
Waiver, Etc. The failure of the Company or the Holder to at any time enforce any of the
provisions of this Warrant shall not be deemed or construed to be a waiver of any such
provision, nor to in any way affect the validity of this Warrant or any provision hereof
or the right of the Company or any Holder to thereafter enforce each and every provision
of this Warrant. No waiver of any breach, non-compliance or non-fulfillment of any of the
provisions of this Warrant shall be effective unless set forth in a written instrument
executed by the party or parties against whom or which enforcement of such waiver is
sought; and no waiver of any such breach, non-compliance or non-fulfillment shall be
construed or deemed to be a waiver of any other or subsequent breach, non-compliance or
non-fulfillment.
IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized
officer as of the 25th day of June, 2002.
|
FIRST LOOK MEDIA, INC.
By: /s/ Xxxxxxxxxxx Xxxxxx
Xxxxxxxxxxx Xxxxxx
Chief Executive Officer |
Form to be used to exercise Warrant:
First Look Media, Inc.
_________________
_________________
Date: _____________________, 200___
The
undersigned hereby elects irrevocably to exercise the within Warrant and to purchase
________ shares of Common Stock of First Look Media, Inc. and hereby makes payment of
$____________ (at the rate of $_________ per share of Common Stock) in payment of the
Exercise Price pursuant thereto. Please issue the Common Stock as to which this Warrant is
exercised in accordance with the instructions given below.
or
The
undersigned hereby elects irrevocably to convert its right to purchase ____________ shares
of Common Stock purchasable under the within Warrant into __________ shares of Common
Stock of __________________________________________ (based on a “Market Price”
of $________ per share of Common Stock). Please issue the Common Stock in accordance with
the instructions given below.
___________________
Signature
NOTICE:
The signature to this form must correspond with the name as written upon the face of the
within Warrant in every particular without alteration or enlargement or any change
whatsoever.
INSTRUCTIONS FOR REGISTRATION OF SECURITIES
Name
(Print in Block Letters)
Address
Form to be used to assign Warrant:
ASSIGNMENT
(To
be executed by the registered Holder to effect a transfer of the within Warrant):
FOR VALUE
RECEIVED, ________________________________ does hereby sell, assign and transfer unto
_________________________________ the right to purchase _____________________ shares of
Common Stock of First Look Media, Inc. (“Company”) evidenced by the within
Warrant and does hereby authorize the Company to transfer such right on the books of the
Company.
Dated:____________________, 200___
_________________
Signature
________________________
Signature Guaranteed
NOTICE:
The signature to this form must correspond with the name as written upon the face of the
within Warrant in every particular without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a trust
company or by a firm having membership on a registered national securities exchange.
