EXHIBIT 10.3
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EXECUTION COPY
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT") OR OTHERWISE. THIS ADJUSTMENT WARRANT SHALL
NOT CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE
SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL. THE SECURITIES ARE "RESTRICTED" AND MAY NOT BE RESOLD OR TRANSFERRED
EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM.
COMMON STOCK ADJUSTMENT WARRANT
No. A1
To Receive Shares of $.01 Par Value Common Stock of
HOLLYWOOD.COM, INC.
THIS CERTIFIES that, for value received, ELLIOTT ASSOCIATES, L.P. (the
"INVESTOR") is entitled, upon the terms and subject to the conditions
hereinafter set forth, at any time on or after the date hereof and on or prior
to 5:00 p.m. New York City time on August 22, 2002 (the "TERMINATION DATE"), but
not thereafter, to subscribe for from time to time from HOLLYWOOD.COM, INC., a
Florida corporation (the "COMPANY"), a number of shares of Common Stock of the
Company determined in accordance with Section 3 hereof (the "ADJUSTMENT
SHARES"). The "EXERCISE PRICE" is $0. The number of shares for which the
Adjustment Warrant is exercisable shall be subject to adjustment as provided
herein. This Adjustment Warrant is being issued in connection with the Common
Stock Investment Agreement dated as of August 22, 2000 (the "AGREEMENT") entered
into between the Company and the Investor.
1. Title of Adjustment Warrant. Prior to the expiration hereof and subject
to compliance with applicable laws, this Adjustment Warrant and all
rights hereunder are transferable, in whole or in respect of the right
to receive any part of the Adjustment Shares, at the office or agency
of the Company by the holder hereof in person or by duly authorized
attorney, upon surrender of this Adjustment Warrant together with (a)
the Assignment Form annexed hereto properly endorsed, and (b) any other
documentation reasonably necessary to satisfy the Company that such
transfer is in compliance with all applicable securities laws.
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 Adjustment Warrant will, upon exercise of the
rights represented by this Adjustment 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 or
otherwise specified herein).
3. Exercise of Adjustment Warrant for Adjustment Shares.
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(a) Definitions..
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"ADJUSTMENT NUMBER" means 17,921 shares of Common Stock in each of the
Adjustment Periods.
Subject to Section 3(c), "ADJUSTMENT PERIOD" initially means the period
starting two trading days after the day on which a registration
statement covering any Registrable Securities (as defined in the
Registration Rights Agreement of even date herewith) is first declared
effective by the SEC and ending on and including the 30th calendar day
thereafter; and subsequently shall mean each of the nine (9) succeeding
30 day periods.
"EFFECTIVE REGISTRATION" shall mean that a Registration Statement (as
defined in the Registration Rights Agreement) shall have been declared
effective, such registration is not subject to any suspension or stop
order, the prospectus for the Initial Shares, the Warrant Shares
issuable upon any exercise of the Initial Warrant and for all
Adjustment Shares issued or issuable for the current or previous
Adjustment Periods is current and deliverable, and none of the Company
or any Subsidiary is subject to any bankruptcy, insolvency or similar
proceeding, and no Interfering Event (as defined in the Registration
Rights Agreement) exists.
"SET PRICE" means, for a particular Adjustment Period, the average of
the five (5) lowest VWAPs occurring during the fifteen (15) final
trading days of such Adjustment Period.
"VWAP" means the volume weighted average price of the Common Stock on
the Principal Market as quoted by Bloomberg for a particular trading
day.
(b) Adjustment Share Calculations. Subject to Sections 3(c),(d) and (e),
the number of Adjustment Shares (if any) issuable in respect of a
particular Adjustment Period shall be calculated immediately following
the close of the Principal Market on the final trading day of such
Adjustment Period, using the following formula:
# of Adjustment Shares = Adjustment Number x (115% of the Share Purchase Price) - Set Price
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Set Price
Promptly after performing such calculation for the Investor on the
final trading day of such Adjustment Period, the Company shall deliver
its written calculations to the Investor by facsimile.
(c) Exercise of Adjustment Warrant. Exercise of the rights represented by
this Adjustment Warrant may be made at any time or times, in whole or
in part, after the termination of the applicable Adjustment Period and
prior to 5:00 p.m. New York City time on the Termination Date, or such
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earlier date on which this Adjustment Warrant may terminate as provided
herein, by the surrender on any business day of this Adjustment Warrant
and a Notice of Exercise in the form annexed hereto duly completed and
executed, at the principal 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); whereupon the holder of this Adjustment
Warrant shall be entitled to receive a certificate for the number of
Adjustment Shares for which this Adjustment Warrant has been so
exercised. Certificates for Adjustment Shares shall be delivered to the
holder hereof within three (3) Trading Days after the date on which
this Adjustment Warrant shall have been exercised as aforesaid (each
such event being a "FILL-UP CLOSING"). An exercise of this Adjustment
Warrant shall be deemed for all purposes a "cashless" exercise.
Notwithstanding the immediately preceding paragraph, if during an
Adjustment Period, the Company delivers a Share Redemption Notice to
the Investor pursuant to the Agreement, the number of Adjustment Shares
due to the Investor with respect to the applicable Fill-Up Closing
shall equal the number of Adjustment Shares calculated pursuant to the
formula stated in Subsection (b) above multiplied by a fraction, the
numerator of which is equal to the number of days elapsed from the
commencement of the applicable Adjustment Period to the day on which
such Share Redemption Notice is received by the Investor (including
such day of receipt), and the denominator of which is equal to 30.
(d) Effective Registration During Adjustment Period.
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(i) If at any time during an Adjustment Period there shall be
a lack of Effective Registration or the Company has failed to deliver
Adjustment Shares for any previous Adjustment Period in accordance with
this Adjustment Warrant, the Investor may at its option either (x)
waive the lack of Effective Registration or non-delivery of Adjustment
Shares, in which case the Adjustment Period will continue uninterrupted
with respect to the Investor in accordance with the other provisions of
this Section 3, or (y) by written notice to the Company (delivered no
later than 24 hours after actually receiving written notification from
the Company of such lack of Effective Registration) elect to suspend
such Adjustment Period with respect to itself (a "SUSPENSION NOTICE").
(ii) If the Investor elects pursuant to subsection (i) above
to suspend a particular Adjustment Period and Effective Registration is
subsequently re-established or such Adjustment Shares are delivered,
either before or after the scheduled end of such Adjustment Period,
then the Investor may, at its option, elect either (x) to treat such
Adjustment Period as tolled for the duration (however long) of the lack
of Effective Registration, such that the first full day of Effective
Registration following delivery of the Suspension Notice shall be
treated as and deemed to be the next day of that tolled Adjustment
Period, or (y) to treat such Adjustment Period as having never
commenced, such that the first full day of Effective Registration
following delivery of the Suspension Notice shall be treated as and
deemed to be the first day of the Adjustment Period interrupted by the
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lack of Effective Registration. The Investor shall have two (2) trading
days after receiving written notice from the Company of the
re-establishment of Effective Registration to make such election.
(iii) Nothing in this Section 3(d) shall limit the Investor's
right to be eligible to receive Adjustment Shares or immediately
available funds in respect of ten (10) separate Adjustment Periods.
There cannot be more than one Adjustment Period at one time.
(e) Inapplicability of Adjustment Period. (i) There shall be no Adjustment
Shares payable in respect of, and consequently no Fill-Up Closing
related to, an Adjustment Period in which, for each trading day in any
single 10 consecutive trading day period in such Adjustment Period,
both (A) the VWAP is greater than 120% of the Share Purchase Price and
(B) the average daily trading volume of the Common Stock on the
Principal Market is greater than 40,000; provided that this Section
3(e) shall only be applicable if there is Effective Registration for
each day during such Adjustment Period. The existence of such
circumstances during any given Adjustment Period will in no way affect
the Company's obligation to deliver Adjustment Shares or, if required,
immediately available funds to the Investor in subsequent Adjustment
Periods.
(ii) There shall be no future Adjustment Shares payable (1) after the
consummation of any redemption at the Mandatory Redemption Price (as
defined in the Registration Rights Agreement) or (2) if at any time
after the Registration Statement is declared effective, the closing
price for the Common Stock on the Principal Market equals or exceeds
the Threshold Price (as defined in the Agreement) for fifteen (15)
consecutive trading days.
(f) Effective Registration as of Fill-up Closing. If there is Effective
Registration on the date of a Fill-Up Closing, then the Company must
pay (subject to Section 3(c)) the Investor in Adjustment Shares. If
there is not Effective Registration on the date of a Fill-Up Closing,
then the Investor shall have the option but not the obligation to
receive from the Company, in lieu of the Adjustment Shares otherwise
deliverable, an amount in immediately available funds equal to the
product of (i) the average closing price of the Common Stock on the
Principal Market from the final trading day of the applicable
Adjustment Period through and including the trading day immediately
prior to the date of the Fill-Up Closing and (ii) the number of
Adjustment Shares the Company otherwise would be obligated to deliver
to the Investor at such Fill-up Closing.
(g) Remedies. If the Company fails to deliver the specified number of
Adjustment Shares or amount of immediately available funds, as
applicable, to the Investor within 3 trading days of the time and at
the place specified in this Section 3, then the Investor may, without
reducing its other rights at law or in equity, compel the Company to
repurchase all or a part of its Securities (including the number of
Adjustment Shares which, without regard to Effective Registration,
should have been delivered by the Company) at the applicable Mandatory
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Redemption Price (as defined in, and as specified, in the Registration
Rights Agreement).
(h) Adjustments. The number of Adjustment Shares shall be appropriately
adjusted to reflect any stock split, stock dividend, recapitalization
or similar event so that the Investor receives the same economically
equivalent value of Adjustment Shares as it would in the absence of
such event.
(i) Miscellaneous. The Adjustment Shares shall upon delivery to the
Investor be fully-paid, nonassessable, shares of Common Stock, free and
clear of all liens and encumbrances and duly eligible for trading on
the Nasdaq National Market System or if the Common Stock is not quoted
thereon, on such exchange or market (which for purposes of this
Agreement shall mean the New York Stock Exchange, the American Stock
Exchange or the Nasdaq Small Cap Market) upon which the Common Stock is
principally traded or quoted (in either case, the "PRINCIPAL MARKET").
4. Non-Certificated Shares, In lieu of delivering physical certificates
representing the Adjustment Shares, provided the Company's transfer
agent is participating in the Depository Trust Company ("DTC") Fast
Automated Securities Transfer ("FAST") program, upon request of the
Adjustment Warrant holder, the Company shall use its best efforts to
cause its transfer agent to electronically transmit the Adjustment
Shares to the Adjustment Warrant holder by crediting the account of
Adjustment Warrant holder's prime broker with DTC through its Deposit
Withdrawal Agent Commission ("DWAC") system. The time periods for
delivery described in the immediately preceding paragraph shall apply
to the electronic transmittals described herein.
The term "TRADING DAY" means (x) if the Common Stock is listed on the
New York Stock Exchange or the American Stock Exchange, a day on which
there is trading on such stock exchange, or (y) if the Common Stock is
not listed on either of such stock exchanges but sale prices of the
Common Stock are reported on an automated quotation system, a day on
which trading is reported on the principal automated quotation system
on which sales of the Common Stock are reported, or (z) if the
foregoing provisions are inapplicable, a day on which quotations are
reported by National Quotation Bureau Incorporated.
5. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the issuance of the
Adjustment Shares
6. Charges, Taxes and Expenses. Issuance of certificates for shares of
Common Stock upon the exercise of this Adjustment 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 Adjustment Warrant or in such name or names as may be
directed by the holder of this Adjustment Warrant; provided, however,
that in the event certificates for shares of Common Stock are to be
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issued in a name other than the name of the holder of this Adjustment
Warrant, this Adjustment Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the
holder hereof; and provided further, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issuance of any Adjustment Warrant
certificates or any certificates for the Adjustment Shares other than
the issuance of a Adjustment Warrant Certificate to the Investor in
connection with the Investor's surrender of a Adjustment Warrant
Certificate upon the exercise of less than all of the Adjustment
Warrants evidenced thereby, and the Company shall not be required to
issue or deliver such certificates unless or until the person or
persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of
the Company that such tax has been paid.
7. Closing of Books. The Company will at no time close its shareholder
books or records in any manner which interferes with the timely
exercise of this Adjustment Warrant.
8. No Rights as Shareholder until Exercise. Subject to Section 13 of this
Adjustment Warrant and the provisions of any other written agreement
between the Company and the Investor, the Investor shall not be
entitled to vote or receive dividends or be deemed the holder of
Adjustment Shares or any other securities of the Company that may at
any time be issuable on the exercise hereof for any purpose, nor shall
anything contained herein be construed to confer upon the Investor, as
such, any of the rights of a stockholder of the Company or any right to
vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to
any corporate action (whether upon any recapitalization, issuance of
stock, reclassification of stock, change of par value, or change of
stock to no par value, consolidation, merger, conveyance or otherwise)
or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until the Adjustment Warrant shall
have been exercised as provided herein. However, at the time of the
exercise of this Adjustment Warrant pursuant to Section 3 hereof, the
Adjustment Shares so purchased hereunder shall be deemed to be issued
to such holder as the record owner of such shares as of the close of
business on the date on which this Adjustment Warrant shall have been
exercised.
9. Assignment and Transfer of Adjustment Warrant. This Adjustment Warrant
may be assigned in whole or in part by the surrender of this Adjustment
Warrant and the Assignment 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);
provided, however, that this Adjustment Warrant may not be resold or
otherwise transferred except (i) in a transaction registered under the
Securities Act of 1933, as amended (the "ACT"), or (ii) in a
transaction pursuant to an exemption, if available, from registration
under the Act and whereby, if requested by the Company, an opinion of
counsel reasonably satisfactory to the Company is obtained by the
holder of this Adjustment Warrant to the effect that the transaction is
so exempt.
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10. Loss, Theft, Destruction or Mutilation of Adjustment Warrant. Upon
receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of any Adjustment Warrant or
stock certificate representing the Adjustment Shares, and in case of
loss, theft or destruction, of indemnity reasonably satisfactory to it,
and upon reimbursement to the Company of all reasonable expenses
incidental thereto. Upon surrender and cancellation of such Adjustment
Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Adjustment Warrant or stock certificate of like tenor and
dated as of such cancellation, in lieu of this Adjustment 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 legal holiday.
12. Effect of Certain Events. If at any time while this Adjustment Warrant
or any portion thereof is outstanding and unexpired there shall be (i)
a sale or conveyance of all or substantially all of the Company's
assets or (ii) a transaction (by merger or otherwise) in which more
than 50% of the voting power of the Company is disposed of
(collectively, a "SALE OR MERGER TRANSACTION"), the holder of this
Adjustment Warrant shall have the right thereafter to purchase, by
exercise of this Adjustment Warrant, the kind and amount of cash,
shares and other securities and property which it would have owned or
have been entitled to receive after the happening of such transaction
had this Adjustment Warrant been exercised immediately prior thereto,
subject to further adjustment as provided in Section 13.
Notwithstanding the above, a Sale or Merger Transaction shall not be
deemed to occur in the event the Company is the acquiring entity in
connection with an acquisition by the Company. Nothing in this Section
12 will impair Section 9.7 of the Agreement.
13. Adjustment of Number of Adjustment Warrant Shares.
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The number of and kind of securities purchasable upon exercise of this
Adjustment Warrant shall be subject to adjustment from time to time as
follows:
(a) Subdivisions, Combinations and other Issuances. If the Company shall at
any time after the date hereof but prior to the expiration of this
Adjustment Warrant subdivide its outstanding securities as to which
purchase rights under this Adjustment Warrant exist, by split-up,
spin-off, or otherwise, or combine its outstanding securities as to
which purchase rights under this Adjustment Warrant exist, the number
of Adjustment Shares as to which this Adjustment Warrant is exercisable
as of the date of such subdivision, split-up, spin-off or combination
shall forthwith be proportionately increased in the case of a
subdivision, or proportionately decreased in the case of a combination.
(b) Stock Dividend. If at any time after the date hereof the Company
declares a dividend or other distribution on Common Stock payable in
Common Stock or other securities or rights convertible into Common
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Stock ("COMMON STOCK EQUIVALENTS") without payment of any consideration
by holders of Common Stock for the additional shares of Common Stock or
the Common Stock Equivalents (including the additional shares of Common
Stock issuable upon exercise or conversion thereof), then the number of
shares of Common Stock for which this Adjustment Warrant may be
exercised shall be increased as of the record date (or the date of such
dividend distribution if no record date is set) for determining which
holders of Common Stock shall be entitled to receive such dividends, in
proportion to the increase in the number of outstanding shares (and
shares of Common Stock issuable upon conversion of all such securities
convertible into Common Stock) of Common Stock as a result of such
dividend.
(c) Other Distributions. If at any time after the date hereof the Company
distributes to holders of its Common Stock, other than as part of its
dissolution, liquidation or the winding up of its affairs, any shares
of its capital stock, any evidence of indebtedness or any of its assets
(other than Common Stock), then the number of Adjustment Shares for
which this Adjustment Warrant is exercisable shall be increased to
equal: (i) the number of Adjustment Shares for which this Adjustment
Warrant is exercisable immediately prior to such event, (ii) multiplied
by a fraction, (A) the numerator of which shall be the Fair Market
Value (as defined below) per share of Common Stock on the record date
for the dividend or distribution, and (B) the denominator of which
shall be the Fair Market Value price per share of Common Stock on the
record date for the dividend or distribution minus the amount allocable
to one share of Common Stock of the value (as jointly determined in
good faith by the Board of Directors of the Company and the Adjustment
Warrant holder) of any and all such evidences of indebtedness, shares
of capital stock, other securities or property, so distributed. For
purposes of this Adjustment Warrant, "FAIR MARKET VALUE" shall equal
the 10 Trading Day average closing trading price of the Common Stock on
the Principal Market for the 10 Trading Days preceding the date of
determination or, if the Common Stock is not listed or admitted to
trading on any Principal Market, the average of the closing bid and
asked prices on the over-the-counter market as furnished by any New
York Stock Exchange member firm reasonably selected from time to time
by the Company for that purpose and reasonably acceptable to the
Holder, or, if the Common Stock is not listed or admitted to trading on
the Principal Market or traded over-the-counter and the average price
cannot be determined as contemplated above, the Fair Market Value of
the Common Stock shall be as reasonably determined in good faith by the
Company's Board of Directors with the concurrence of the Holder.
(d) Merger, etc. If at any time after the date hereof there shall be a
merger or consolidation of the Company with or into or a transfer of
all or substantially all of the assets of the Company to another
entity, then the Adjustment Warrant Holder shall be entitled to receive
upon or after such transfer, merger or consolidation becoming
effective, the number of shares or other securities or property of the
Company or of the successor corporation resulting from such merger or
consolidation, which would have been received by Adjustment Warrant
Holder for the shares of stock subject to this Adjustment Warrant had
this Adjustment Warrant been exercised just prior to such transfer,
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merger or consolidation becoming effective or to the applicable record
date thereof, as the case may be; the terms of the Adjustment Warrant
automatically shall be applicable to the securities or property
receivable upon the exercise of the Adjustment Warrant after
consummation of such merger or consolidation. Nothing in this Section
13(d) will impair Section 9.7 of the Agreement.
(e) Reclassification, etc. If at any time after the date hereof there shall
be a reorganization or reclassification of the securities as to which
purchase rights under this Adjustment Warrant exist into the same or a
different number of securities of any other class or classes, then the
Adjustment Warrant Holder shall thereafter be entitled to receive upon
exercise of this Adjustment Warrant, during the period specified
herein, the number of shares or other securities or property resulting
from such reorganization or reclassification, which would have been
received by the Adjustment Warrant Holder for the shares of stock
subject to this Adjustment Warrant had this Adjustment Warrant at such
time been exercised.
14. 9.99% Limitation.
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(1) Notwithstanding anything to the contrary contained herein, the
number of shares of Common Stock that may be acquired by the Investor upon
exercise pursuant to the terms hereof shall not exceed a number that, when added
to the total number of shares of Common Stock deemed beneficially owned by such
holder (other than by virtue of the ownership of securities or rights to acquire
securities (including the Warrants) that have limitations on the Investor's
right to convert, exercise or purchase similar to the limitation set forth
herein (the "EXCLUDED Shares")), together with all shares of Common Stock deemed
beneficially owned (not counting such affiliate's Excluded Shares) by the
holder's "affiliates" (as defined Rule 144 of the Act) ("AGGREGATION PARTIES")
that would be aggregated for purposes of determining whether a group under
Section 13(d) of the Securities Exchange Act of 1934, as amended, exists, would
exceed 9.99% of the total issued and outstanding shares of the Company's Common
Stock (the "RESTRICTED OWNERSHIP PERCENTAGE"). Each Holder shall have the right
(w) at any time and from time to time to reduce its Restricted Ownership
Percentage immediately upon notice to the Company and (x) at any time and from
time to time, to increase its Restricted Ownership Percentage immediately in the
event of the announcement as pending or planned of a Major Transaction (as such
term is defined in the Investment Agreement).
(2) The Investor covenants at all times on each day (each such day
being referred to as a "COVENANT DAY") as follows: During the balance of such
Covenant Day and the succeeding sixty-one (61) days (the balance of such
Covenant Day and the succeeding 61 days being referred to as the "COVENANT
PERIOD") such Investor will not acquire shares of Common Stock pursuant to any
right (including the exercise of the Adjustment Warrant) existing at the
commencement of the Covenant Period to the extent the number of shares so
acquired by such holder and its Aggregation Parties (ignoring all dispositions)
would exceed:
(x) the Restricted Ownership Percentage of the total number of
shares of Common Stock outstanding at the commencement of the
Covenant Period,
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minus
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(y) the number of shares of Common Stock owned by such holder and
its Aggregation Parties at the commencement of the Covenant
Period.
A new and independent covenant will be deemed to be
given by the holder as of each moment of each Covenant Day. No
covenant will terminate, diminish or modify any other
covenant. The holder agrees to comply with each such covenant.
This Section 17 controls in the case of any conflict with any
other provision of the Transaction Documents.
The Company's obligation to issue Adjustment Shares which would exceed
such limits referred to in this Section 17 shall be suspended to the
extent necessary until such time, if any, as Adjustment Shares may be
issued in compliance with such restrictions.
15. Compliance with Securities Laws. (a) The holder hereof acknowledges
that the Adjustment Shares acquired upon the exercise of this
Adjustment Warrant, if not registered (or if no exemption from
registration exists), will have restrictions upon resale imposed by
state and federal securities laws. Each certificate representing the
Adjustment Shares issued to the Holder upon exercise (if not registered
or if no exemption from registration exists) will bear the following
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED, TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS,
BASED ON AN OPINION LETTER OF COUNSEL SATISFACTORY TO THE COMPANY OR A
NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION.
(b) Without limiting the Investor's right to transfer, assign or otherwise
convey the Adjustment Warrant or Adjustment Shares in compliance with
all applicable securities laws, the Investor of this Adjustment
Warrant, by acceptance hereof, acknowledges that this Adjustment
Warrant and the Adjustment Shares to be issued upon exercise hereof are
being acquired solely for the Investor's own account and not as a
nominee for any other party, and that the Investor will not offer, sell
or otherwise dispose of this Adjustment Warrant or any Adjustment
Shares to be issued upon exercise hereof except under circumstances
that will not result in a violation of applicable federal and state
securities laws. Upon exercise of this Adjustment Warrant, the Investor
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or holder shall, if requested by the Company, confirm in writing, in a
form satisfactory to the Company, that the Adjustment Warrant Shares of
Common Stock so purchased are being acquired solely for the Investor's
own account and not as a nominee for any other party, for investment,
and not with a view toward distribution or resale.
(c) Neither this Adjustment Warrant nor any Share of Common Stock issued
upon exercise of this Adjustment Warrant may be offered for sale or
sold, or otherwise transferred or sold in any transaction which would
constitute a sale thereof within the meaning of the Act, unless (i)
such security has been registered for sale under the Act and registered
or qualified under applicable state securities laws relating to the
offer an sale of securities, or (ii) exemptions from the registration
requirements of the Act and the registration or qualification
requirements of all such state securities laws are available and the
Company shall have received an opinion of counsel that the proposed
sale or other disposition of such securities may be effected without
registration under the Act, such counsel and such opinion to be
satisfactory to the Company.
(d) Investor recognizes that investing in the Adjustment Warrant and the
Adjustment Shares involves a high degree of risk, and Investor is in a
financial position to hold the Adjustment Warrant and the Adjustment
Shares indefinitely and is able to bear the economic risk and withstand
a complete loss of its investment in the Adjustment Warrant and the
Adjustment Warrant Shares. The Investor is a sophisticated investor and
is capable of evaluating the merits and risks of investing in the
Company. The Investor has had an opportunity to discuss the Company's
business, management and financial affairs with the Company's
management, has been given full and complete access to information
concerning the Company, and has utilized such access to its
satisfaction for the purpose of obtaining information or verifying
information and have had the opportunity to inspect the Company's
operation. Investor has had the opportunity to ask questions of, and
receive answers from, the management of the Company (and any person
acting on its behalf) concerning the Adjustment Warrant and the
Adjustment Shares and the agreements and transactions contemplated
hereby, and to obtain any additional information as Investor may have
requested in making its investment decision. The initial Investor in
this Adjustment Warrant is an "accredited investor", as defined by
Regulation D promulgated under the Act.
16. Miscellaneous.
--------------
(a) Issue Date; Choice Of Law; Venue; Jurisdiction. The provisions of this
Adjustment Warrant shall be construed and shall be given effect in all
respects as if it had been issued and delivered by the Company on the
date hereof. This Adjustment Warrant shall be binding upon any
successors or assigns of the Company. This Adjustment Warrant will be
construed and enforced in accordance with and governed by the laws of
the State of New York, except for matters arising under the Act,
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without reference to principles of conflicts of law. Each of the
parties consents to the exclusive jurisdiction of the U.S. District
Court sitting in the State of City of New York in the State of New York
in connection with any dispute arising under this Adjustment Warrant
and hereby waives, to the maximum extent permitted by law, any
objection, including any objection based on forum non conveniens, to
the bringing of any such proceeding in such jurisdiction. Each party
hereby agrees that if the other party to this Adjustment Warrant
obtains a judgment against it in such a proceeding, the party which
obtained such judgment may enforce same by summary judgment in the
courts of any country having jurisdiction over the party against whom
such judgment was obtained, and each party hereby waives any defenses
available to it under local law and agrees to the enforcement of such a
judgment. Each party to this Adjustment Warrant irrevocably consents to
the service of process in any such proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to such party
at its address in accordance with Section 18(c). Nothing herein shall
affect the right of any party to serve process in any other manner
permitted by law. Each party waives its right to a trial by jury.
(b) Modification and Waiver. This Adjustment Warrant and any provisions
hereof may be changed, waived, discharged or terminated only by an
instrument in writing signed by the party against which enforcement of
the same is sought. Any amendment effected in accordance with this
paragraph shall be binding upon the Investor, each future holder of
this Adjustment Warrant and the Company. No waivers of, or exceptions
to, any term, condition or provision of this Adjustment Warrant, in any
one or more instances, shall be deemed to be, or construed as, a
further or continuing waiver of any such term, condition or provision.
(c) Notices. Any notice, request or other document required or permitted to
be given or delivered to the Investor or future holders hereof or the
Company shall be personally delivered or shall be sent by certified or
registered mail, postage prepaid, to the Investor or each such holder
at its address as shown on the books of the Company or to the Company
at the address set forth in the Agreement. All notices under this
Adjustment Warrant shall be deemed to have been given when received.
A party may from time to time change the address to which notices to it
are to be delivered or mailed hereunder by notice in accordance with
the provisions of this Section 18(c).
(d) Severability. Whenever possible, each provision of this Adjustment
Warrant shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Adjustment
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Warrant is held to be invalid, illegal or unenforceable in any respect
under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect the validity, legality
or enforceability of any other provision of this Adjustment Warrant in
such jurisdiction or affect the validity, legality or enforceability of
any provision in any other jurisdiction, but this Adjustment Warrant
shall be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision had never been
contained herein.
(e) No Impairment. The Company will not, by amendment of 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 Adjustment 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 action as may be necessary or appropriate
in order to protect the rights of the Adjustment Warrant Holder against
impairment. Without limiting the generality of the foregoing, the
Company (a) will not increase the par value of any Adjustment Warrant
Shares above the amount payable therefor on such exercise, and (b) will
take all such action as may be reasonably necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable Adjustment Warrant Shares on the exercise of this
Adjustment Warrant.
IN WITNESS WHEREOF, the Company has caused this Adjustment Warrant to
be executed by its officers thereunto duly authorized.
Dated: August 22, 2000
HOLLYWOOD.COM, INC.
By: /s/ Mitchell Rubenstein
---------------------------
Name: Mitchell Rubenstein
Title: Chairman and CEO
Agreed and Accepted
this 22nd day of August, 2000
ELLIOTT ASSOCIATES, L.P.
By: Elliott Capital Advisors, L.P., as General Partner
By: Braxton Associates, Inc., as General Partner
By: /s/ Paul E. Singer
-----------------------------
Name: Paul E. Singer
Title: General Partner
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NOTICE OF EXERCISE
------------------
To: HOLLYWOOD.COM, INC.
(1) The undersigned hereby elects to receive ________ shares of Common Stock of
HOLLYWOOD.COM, INC. pursuant to the terms of the attached Adjustment Warrant in
a "cashless" exercise.
(2) 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)
-------------------------------
(3) Please issue a new Adjustment Warrant for the unexercised portion of the
attached Adjustment Warrant in the name of the undersigned or in such other name
as is specified below:
Other Name: ____________________
-----------------------------------
(Name)
- -------------------- -----------------------------------
(Date) (Signature)
-----------------------------------
(Address)
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ASSIGNMENT FORM
(To assign the foregoing Adjustment Warrant, execute
this form and supply required information.
Do not use this form to exercise the Adjustment Warrant.)
FOR VALUE RECEIVED, the foregoing Adjustment Warrant of
Hollywood.com, Inc. 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 Adjustment 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 Adjustment Warrant.
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