Exhibit 10.4
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR (B)
AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY, THAT REGISTRATION
IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY THE SECURITIES.
HOLLYWOOD MEDIA CORP.
WARRANT TO PURCHASE COMMON STOCK
Warrant No.: [ ] Number of Shares: [ ]
(subject to adjustment)
Date of Issuance: May 22, 2002
HOLLYWOOD MEDIA CORP., a Florida corporation (the "Company"),
hereby certifies that, for Ten United States Dollars ($10.00) and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, ____________, the registered holder hereof or its permitted
assigns, is entitled, subject to the terms and conditions set forth below, to
purchase from the Company upon surrender of this Warrant, at any time or times
on or after the date hereof, but not after 11:59 P.M., New York City Time, on
the Expiration Date (as defined herein), ______________ fully paid nonassessable
shares of Common Stock (as defined herein) of the Company at the Warrant
Exercise Price per share provided in Section 1(b) below; provided, however, that
the Company shall not effect the exercise of this Warrant and no holder of this
Warrant shall have the right to exercise this Warrant to the extent that after
giving effect to such exercise, such Person (together with such Person's
affiliates), would have acquired, through exercise of this Warrant or otherwise,
beneficial ownership of a number of shares of Common Stock that, when added to
the number of shares of Common Stock beneficially owned by such Person (together
with such Person's affiliates), exceeds 9.99% of the number of shares of Common
Stock outstanding immediately after giving effect to such exercise. For purposes
of the foregoing sentence, the aggregate number of shares of Common Stock
beneficially owned by such Person and its affiliates shall include the number of
shares of Common Stock issuable upon exercise of this Warrant with respect to
which the determination of such sentence is being made, but shall exclude shares
of Common Stock which would be issuable upon (i) exercise of the remaining,
unexercised portion of this Warrant beneficially owned by such Person and its
affiliates and (ii) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company beneficially owned by such Person
and its affiliates (including, without limitation, any convertible notes,
debentures or preferred stock) subject to a limitation on conversion or exercise
analogous to the limitation contained herein. Except as set forth in the
preceding sentence, for purposes of this paragraph, beneficial ownership shall
be calculated in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended. Upon the written request of any holder, the Company shall
promptly, but in no event later than two (2) Business Days following the receipt
of such notice, confirm in writing to any such holder the number of shares of
Common Stock then outstanding. In any case, the number of outstanding shares of
Common Stock shall be determined after giving effect to the exercise of Warrants
(as defined below) by such holder and its affiliates since the date as of which
such number of outstanding shares of Common Stock was last reported.
Section 1.
a. SECURITIES PURCHASE AGREEMENT. This Warrant (as defined
herein) is one of a series of Warrants issued pursuant to Section 1 of that
certain Securities Purchase Agreement dated as of May 22, 2002, among the
Company and the Persons referred to therein, as such agreement may be amended
from time to time as provided in such agreement (the "Securities Purchase
Agreement").
b. DEFINITIONS. The location of definitions used in this
Warrant is set forth on the Index of Terms attached hereto and the following
words and terms as used in this Warrant shall have the following meanings:
(i) "Approved Stock Plan" means any employee benefit
plan, stock incentive plan or other similar plan or arrangement which has been
approved by the Board of Directors of the Company or a duly authorized committee
thereof, pursuant to which the Company's securities may be issued to any
employee, consultant, officer or director for services provided to the Company.
(ii) "Bloomberg" means Bloomberg Financial Markets or
any other similar financial reporting service as may be selected from time to
time by the Company and the holders of the Warrants representing not less than
60% of the shares of Common Stock issuable upon exercise of all Warrants issued
on the Original Issuance Date then outstanding.
(iii) "Business Day" means any day other than Saturday,
Sunday or other day on which commercial banks in The City of New York are
authorized or required by law to remain closed.
(iv) "Closing Sale Price" means, for any security as of
any date, the last closing trade price for such security on the Principal Market
as reported by Bloomberg, or if the Principal Market begins to operate on an
extended hours basis, and does not designate the closing trade price, then the
last trade price at 4:00 p.m., New York City Time, as reported by Bloomberg, or
if the foregoing do not apply, the last closing trade price of such security in
the over-the-counter market on the electronic bulletin board for such security
as reported by Bloomberg, or, if no last closing trade price is reported for
such security by Bloomberg, the last closing ask price of such security as
reported by Bloomberg, or, if no last closing ask price is reported for such
security by Bloomberg, the average of the highest bid price and the lowest ask
price of any market makers for such security as reported in the "pink sheets" by
the National Quotation Bureau, Inc. If the Closing Sale Price cannot be
calculated for such security on such date on any of the foregoing bases, the
Closing Sale Price of such security on such date shall be the fair market value
as mutually determined by the Company and the holders of the Warrants
representing at least 60% of the shares of Common Stock obtainable upon exercise
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of all Warrants issued on the Original Issuance Date then outstanding. If the
Company and the holders of the Warrants are unable to agree upon the fair market
value of the Common Stock, then such dispute shall be resolved pursuant to
Section 2(a) below with the term "Closing Sale Price" being substituted for the
term "Closing Sale Price". All such determinations shall be appropriately
adjusted for any stock dividend, stock split or other similar transaction during
such period. All fees and expenses of such determinations shall be borne solely
by the Company.
(v) "Common Stock" means (i) the Company's common stock,
par value $0.01 per share, and (ii) any capital stock into which such Common
Stock shall have been changed or any capital stock resulting from a
reclassification of such Common Stock.
(vi) "Common Stock Deemed Outstanding" means, at any
given time, the number of shares of Common Stock actually outstanding at such
time, plus the number of shares of Common Stock deemed to be outstanding
pursuant to Sections 8(c)(i) and 8(c)(ii) hereof regardless of whether the
Options or Convertible Securities are actually exercisable at such time, but
excluding any shares of Common Stock owned or held by or for the account of the
Company or issuable upon conversion of the Convertible Debentures or exercise of
the Warrants.
(vii) "Convertible Debentures" means the Company's 6%
Senior Convertible Debentures Due May 22, 2005 issued pursuant to the Securities
Purchase Agreement.
(viii) "Convertible Securities" means any stock or
securities (other than Options) directly or indirectly convertible into or
exchangeable or exercisable for Common Stock.
(ix) "Expiration Date" means May 22, 2007 or, if such
date does not fall on a Business Day or on a day on which trading takes place on
the Principal Market, then the next Business Day.
(x) "Option" means any rights, warrants or options to
subscribe for or purchase or otherwise acquire Common Stock or Convertible
Securities.
(xi) "Original Issuance Date" means the first date on
which any Warrants have been issued pursuant to the Securities Purchase
Agreement.
(xii) "Person" means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.
(xiii) "Principal Market" means The Nasdaq National
Market ("NASDAQ") or if the Common Stock is not traded on NASDAQ then the
principal securities exchange or trading market for the Common Stock.
(xiv) "Registration Rights Agreement" means that
registration rights agreement dated May 22, 2002 by and among the Company and
the Persons referred to therein, as such agreement may be amended from time to
time as provided in such agreement.
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(xv) "Reset Date" means the one-year anniversary of the
Warrant Date.
(xvi) "Securities Act" means the Securities Act of 1933,
as amended.
(xvii) "Standard Exercise Price" means the lesser of (i)
the Warrant Exercise Price then in effect and (2) $3.29, as adjusted for any
stock dividend, stock split or other similar transaction.
(xviii) "Strategic Financing" shall mean the issuance of
Common Stock or Options in connection with any acquisition by the Company, by
whatever means, of any business, assets or technologies, or to any strategic
investor, vendor, customer, lease or similar arrangement, the primary purpose of
which is not to raise equity capital, provided that the aggregate number of
shares of Common Stock which the Company may issue pursuant to this definition
shall not exceed (i) 25% of the total outstanding equity on the Closing Date in
connection with any one or more related issuances to strategic investors,
vendors, customers, lessors or similar parties or (ii) 40% of the total
outstanding equity on the Closing Date in connection with all issuances to
strategic investors, vendors, customers, lessors or similar parties (in each
case, subject to adjustment for stock splits, stock dividends, stock combination
and similar transactions).
(xix) "Warrant" means the warrants to purchase shares of
Common Stock issued pursuant to the Securities Purchase Agreement and all
warrants issued in exchange, transfer or replacement thereof.
(xx) "Warrant Exercise Price" shall be equal to $3.78,
subject to further adjustment as provided in Section 8, Adjustment of Warrant
Exercise Price and Number of Shares.
(xxi) "Warrant Shares" means all shares of Common Stock
issuable upon exercise of the Warrants.
(xxii) "Weighted Average Price" shall mean, for any
security as of any date, the dollar volume-weighted average price per share for
such security on the Principal Market during the period beginning at 9:30 a.m.,
New York City Time, and ending at 4:00 p.m., New York City Time, as reported by
Bloomberg through its "Volume at Price" function or, if the foregoing does not
apply, the dollar volume-weighted average price per share of such security in
the over-the-counter market on the electronic bulletin board for such security
during the period beginning at 9:30 a.m., New York City Time, and ending at 4:00
p.m., New York City Time, as reported by Bloomberg, or, if no dollar
volume-weighted average price is reported for such security by Bloomberg for
such hours, the average of the highest closing bid price and the lowest closing
ask price of any of the market makers for such security as reported in the "pink
sheets" by the National Quotation Bureau, Inc. If the Weighted Average Price
cannot be calculated for such security on such date on any of the foregoing
bases, the Weighted Average Price of such security on such date shall be the
fair market value as mutually determined by the Company and the holders of the
Warrants representing at least 60% of the shares of Common Stock obtainable upon
exercise of the Warrants issued on the Original Issuance Date then outstanding.
If the Company and the holders of the Warrants are unable to agree upon the fair
market value of the Common Stock, then such dispute shall be resolved pursuant
4
to Section 2(a) below with the term "Weighted Average Price" being substituted
for the term "Closing Sale Price." All such determinations shall be
appropriately adjusted for any stock dividend, stock split or other similar
transaction during such period. All fees and expenses of such determinations
shall be borne solely by the Company.
Section 2. EXERCISE OF WARRANT.
a. Subject to the terms and conditions hereof, this Warrant
may be exercised by the holder hereof then registered on the books of the
Company, in whole or in part, at any time on any Business Day on or after the
opening of business on the date hereof and prior to 5:00 P.M., New York City
Time, on the Expiration Date by (i) delivery of a written notice, in the form of
the subscription notice attached as EXHIBIT A hereto or a reasonable facsimile
thereof (the "Exercise Notice"), to the Company and the Company's designated
transfer agent (the "Transfer Agent"), of such holder's election to exercise
this Warrant, which notice shall specify the number of Warrant Shares to be
purchased, (ii)(A) payment to the Company of an amount equal to the Warrant
Exercise Price multiplied by the number of Warrant Shares as to which this
Warrant is being exercised (the "Aggregate Exercise Price") in cash or delivery
of a certified check or bank draft payable to the order of the Company or wire
transfer of immediately available funds or (B) by notifying the Company that
this Warrant is being exercised pursuant to a Cashless Exercise (as defined in
Section 2(e)), and (iii) the surrender of this Warrant or a copy of this Warrant
(or an indemnification undertaking with respect to this Warrant in the case of
its loss, theft or destruction) to a common carrier for overnight delivery to
the Company or by delivery of a facsimile copy of this Warrant to the Company as
soon as practicable following such date; provided, that if such Warrant Shares
are to be issued in any name other than that of the registered holder of this
Warrant, such issuance shall be deemed a transfer and the provisions of Section
7 shall be applicable. In the event of any exercise of the rights represented by
this Warrant in compliance with this Section 2(a), the Company shall on the
second (2nd) Business Day (the "Warrant Share Delivery Date") following the date
of its receipt of the Exercise Notice, the Aggregate Exercise Price (or notice
of Cashless Exercise) and the original or a copy of this Warrant (or an
indemnification undertaking or other form of security reasonably satisfactory to
the Company with respect to this Warrant in the case of its loss, theft or
destruction) (collectively, the "Exercise Delivery Documents"), (A) in the case
of a public resale of such Warrant Shares in accordance with the provisions of
the Irrevocable Transfer Agent Instructions, provided the Transfer Agent is
participating in The Depository Trust Company ("DTC") Fast Automated Securities
Transfer Program and, if required by DTC, the holder provides a customary
representation letter to DTC, at the holder's request, credit such aggregate
number of shares of Common Stock to which the holder shall be entitled to the
holder's or its designee's balance account with DTC through its Deposit
Withdrawal Agent Commission system or (B) issue and deliver to the address as
specified in the Exercise Notice, a certificate or certificates in such
denominations as may be requested by the holder in the Exercise Notice,
registered in the name of the holder or its designee, for the number of shares
of Common Stock to which the holder shall be entitled upon such exercise. Upon
delivery of the Exercise Delivery Documents, the holder of this Warrant shall be
deemed for all corporate purposes to have become the holder of record of the
Warrant Shares with respect to which this Warrant has been exercised,
irrespective of the date of delivery of this Warrant as required by clause (iii)
above or the certificates evidencing such Warrant Shares. In the case of a
dispute as to the determination of the Warrant Exercise Price, the Closing Sale
5
Price of a security or the arithmetic calculation of the number of Warrant
Shares, the Company shall promptly issue to the holder the number of shares of
Common Stock that is not disputed and shall submit the disputed determinations
or arithmetic calculations to the holder via facsimile within two (2) Business
Days of receipt of the holder's Exercise Notice. If the holder and the Company
are unable to agree upon the determination of the Warrant Exercise Price, the
Closing Sale Price or arithmetic calculation of the number of Warrant Shares
within one (1) Business Day of such disputed determination or arithmetic
calculation being submitted to the holder, then the Company shall immediately
submit via facsimile (i) the disputed determination of the Warrant Exercise
Price or the Closing Sale Price to an independent, reputable investment banking
firm selected jointly by the Company and the holder or (ii) the disputed
arithmetic calculation of the number of Warrant Shares to its independent,
outside accountant. The Company shall cause the investment banking firm or the
accountant, as the case may be, to perform the determinations or calculations
and notify the Company and the holder of the results no later than ten (10)
Business Days from the time it receives the disputed determinations or
calculations. Such investment banking firm's or accountant's determination or
calculation, as the case may be, shall be deemed conclusive absent manifest
error.
b. Unless the rights represented by this Warrant shall have
expired or shall have been fully exercised, the Company shall, as soon as
practicable using reasonable best efforts and in no event later than five (5)
Business Days after its receipt of the Exercise Delivery Documents (the "Warrant
Delivery Date") and at its own expense, issue a new Warrant identical in all
respects to this Warrant exercised except it shall represent rights to purchase
the number of Warrant Shares purchasable immediately prior to such exercise
under this Warrant, less the number of Warrant Shares with respect to which such
Warrant is exercised.
c. No fractional shares of Common Stock are to be issued upon
the exercise of this Warrant, but rather the number of shares of Common Stock
issued upon exercise of this Warrant shall be rounded up or down to the nearest
whole number.
d. If the Company shall fail for any reason or for no reason
to issue to the holder within five (5) Business Days of receipt of the Exercise
Delivery Documents, a certificate for the number of shares of Common Stock to
which the holder is entitled or to credit the holder's designee's balance
account with DTC, in accordance with Section 2 hereof, for such number of shares
of Common Stock to which the holder is entitled upon the holder's exercise of
this Warrant, the Company shall, in addition to any other remedies under this
Warrant or the Securities Purchase Agreement or otherwise available to such
holder, including any indemnification under Section 8 of the Securities Purchase
Agreement, pay as additional damages in cash to such holder on each day after
the Warrant Share Delivery Date such exercise is not timely effected in an
amount equal to 0.05% multiplied by the product of (I) the sum of the number of
shares of Common Stock not issued to the holder on or prior to the Warrant Share
Delivery Date and to which such holder is entitled and (II) the excess of the
Closing Sale Price of the Common Stock on the Warrant Share Delivery Date over
the Warrant Exercise Price then in effect. The foregoing notwithstanding, the
damages set forth in this Section 2(d) shall be stayed with respect to the
number of shares of Common Stock for which there is a good faith dispute being
resolved pursuant to, and within the time periods provided for in, Section 2(a),
pending the resolution of such dispute.
6
e. Notwithstanding anything contained herein to the contrary,
if at any time during the two (2) Business Day period immediately preceding the
holder's delivery of an Exercise Notice, a Registration Statement (as defined in
the Registration Rights Agreement) covering the Warrant Shares that are the
subject of the Exercise Notice (the "Unavailable Warrant Shares") is not
available for the resale of such Unavailable Warrant Shares, the holder of this
Warrant may, at its election exercised in its sole discretion, exercise this
Warrant as to any or all of such Unavailable Warrant Shares and, in lieu of
making the cash payment otherwise contemplated to be made to the Company upon
such exercise in payment of the Aggregate Exercise Price, elect instead to
receive upon such exercise the "Net Number" of shares of Common Stock determined
according to the following formula (a "Cashless Exercise"):
Net Number = (A x B) - (A x C)
-----------------
B
For purposes of the foregoing formula:
A= the total number of shares with respect to which
this Warrant is then being exercised.
B= the Closing Sale Price of the Common Stock on the
trading day immediately preceding the date of the
Exercise Notice.
C= the Warrant Exercise Price then in effect for the
applicable Warrant Shares at the time of such
exercise.
Section 3. COVENANTS AS TO COMMON STOCK. The Company hereby
covenants and agrees as follows:
a. This Warrant is, and any Warrants issued in substitution
for or replacement of this Warrant will upon issuance be, duly authorized and
validly issued.
b. All Warrant Shares which may be issued upon the exercise of
the rights represented by this Warrant will, upon issuance and payment hereof in
accordance with the terms hereof, be validly issued, fully paid and
nonassessable and free from all taxes, liens and charges created by or through
the Company with respect to the issue thereof.
c. During the period within which the rights represented by
this Warrant may be exercised, the Company will at all times have authorized and
reserved at least 120% of the number of shares of Common Stock needed to provide
for the exercise of the rights then represented by this Warrant and the par
value of said shares will at all times be less than or equal to the applicable
Warrant Exercise Price.
d. The Company shall promptly secure the listing of the shares
of Common Stock issuable upon exercise of this Warrant upon each national
securities exchange or automated quotation system, if any, upon which shares of
Common Stock are then listed (subject to official notice of issuance upon
exercise of this Warrant) and shall maintain, so long as any other shares of
7
Common Stock shall be so listed, such listing of all shares of Common Stock from
time to time issuable upon the exercise of this Warrant; and the Company shall
so list on each national securities exchange or automated quotation system, as
the case may be, and shall maintain such listing of, any other shares of capital
stock of the Company issuable upon the exercise of this Warrant if and so long
as any shares of the same class shall be listed on such national securities
exchange or automated quotation system.
e. The Company will not, by amendment of its Articles 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 to be
observed or performed by it hereunder. Without limiting the generality of the
foregoing, the Company (i) will not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the Warrant
Exercise Price then in effect, (ii) will take all such actions as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of Common Stock upon the exercise of this
Warrant and (iii) will not take any action which results in any adjustment of
the Warrant Exercise Price if the total number of shares of Common Stock
issuable after the action upon the exercise of all of the Warrants would exceed
the total number of shares of Common Stock then authorized by the Company's
Articles of Incorporation and available for the purpose of issue upon such
exercise.
f. This Warrant will be binding upon any entity succeeding to
the Company by merger, consolidation or acquisition of all or substantially all
of the Company's assets.
Section 4. TAXES. (a) The Company shall pay any and all
documentary, stamp, transfer and other similar taxes which may be payable with
respect to the issuance and delivery of Warrant Shares upon exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax that may be payable in respect of any transfer involved in the issue or
delivery of Common Stock or other securities or property in a name other than
that of the registered holder of this Warrant to be exercised and such holder
shall pay such amount, if any, to cover any applicable transfer or similar tax.
(b) The Company and the Company's transfer agent
shall be permitted to withhold from any amounts payable to a registered holder
of this Warrant or any holder of Warrant Shares any taxes required by law to be
withheld from such amounts.
(c) Notwithstanding any other provision of this
Agreement or any other Transaction Document, any assignee or transferee shall
agree that the Company and the Company's transfer agent shall be permitted to
withhold from any amounts payable to such assignee or transferee any taxes
required by law to be withheld from such amounts. Unless exempt from the
obligation to do so, each assignee or transferee shall execute and deliver to
the Company or the Company's transfer agent, as applicable, two properly
completed and duly executed copies of either (i) U.S. Internal Revenue Service
Form W-8BEN, or any successor form, (ii) U.S. Internal Revenue Service Form
W-8ECI, or any successor form, (iii) U.S. Internal Revenue Service Form W-9, or
any successor form, or (iv) other applicable form, certificate or document
prescribed by the U.S. Internal Revenue Service, as applicable, in each case,
indicating that such assignee or transferee is not subject to "back-up
withholding" for U.S. Federal income tax purposes. Each assignee or transferee
8
that does not deliver such forms pursuant to the preceding sentence shall have
the burden of proving to the Company's reasonable satisfaction that it is exempt
from such requirement or the Company and the Company's transfer agent shall be
entitled to withhold as provided in the first sentence hereof. In addition, each
assignee or transferee that is organized under the laws of a jurisdiction other
than the United States, any State thereof or the District of Columbia (each, a
"Non-U.S. Assignee or Transferee") shall deliver to the Company and the
Company's transfer agent, to the extent legally able to do so, with respect to
payments of dividends by the Company for U.S. Federal income tax purposes, if
applicable, two properly completed and duly executed copies of either (i) U.S.
Internal Revenue Service Form W-8BEN (claiming a reduction of U.S. Federal
withholding tax under an applicable income tax treaty, if any), or any successor
form, (ii) U.S. Internal Revenue Service Form W-8ECI (claiming complete
exemption from U.S. Federal withholding tax because the income is effectively
connected with a U.S. trade or business), or any successor form, or (iii) other
applicable form, certificate or document prescribed by the U.S. Internal Revenue
Service certifying as to such assignee's or transferee's entitlement to an
exemption from, or a reduction of, U.S. Federal withholding tax on payments of
dividends by the Company for U.S. Federal income tax purposes. Each Non-U.S.
Assignee or Transferee that does not deliver a form or other document claiming a
complete exemption from U.S. Federal withholding tax shall have the burden of
proving to the Company's reasonable satisfaction that it is completely exempt
from such tax or the Company and the Company's transfer agent shall be entitled
to withhold as provided in the second sentence of this Section 4(c). The forms
and other documents required to be delivered pursuant to this Section 4 shall be
properly completed and duly executed and shall be delivered on or prior to the
date of such assignment or transfer, and from time to time thereafter if
requested by the Company or the Company's transfer agent. In addition, each
assignee and transferee shall deliver such forms and other documents promptly
upon the obsolescence or invalidity of any form or documents previously
delivered by such assignee or transferee. Each assignee and transferee shall
promptly notify the Company and the Company's transfer agent at any time it
determines that it is no longer in a position to provide any previously
delivered form, document or certificate to the Company and the Company's
transfer agent (or any form of certification adopted by the U.S. taxing
authorities for such purpose).
Section 5. WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as
otherwise specifically provided herein, no holder, as such, of this Warrant
shall be entitled to vote or receive dividends or be deemed the holder of shares
of the Company for any purpose, nor shall anything contained in this Warrant be
construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization, issue of stock, reclassification
of stock, consolidation, merger, conveyance or otherwise), receive notice of
meetings, receive dividends or subscription rights, or otherwise, prior to the
issuance to the holder of this Warrant of the Warrant Shares which he, she, or
it is then entitled to receive upon the due exercise of this Warrant. In
addition, nothing contained in this Warrant shall be construed as imposing any
liabilities on such holder to purchase any securities (upon exercise of this
Warrant or otherwise) or as a stockholder of the Company, whether such
liabilities are asserted by the Company or by creditors of the Company.
Section 6. REPRESENTATIONS OF HOLDER. The holder of this
Warrant, by the acceptance hereof, represents and warrants that it is acquiring
this Warrant, and the Warrant Shares for its own account for investment only and
9
not with a view towards, or for sale in connection with, the public sale or
distribution of this Warrant or the Warrant Shares, except pursuant to sales
registered or exempted under the Securities Act; provided, however, that by
making the representations herein, the holder does not agree to hold this
Warrant or any of the Warrant Shares for any minimum or other specific term and
reserves the right to dispose of this Warrant and the Warrant Shares at any time
in accordance with or pursuant to a registration statement or an exemption under
the Securities Act. The holder of this Warrant further represents, by acceptance
hereof, that, as of this date, such holder is an "accredited investor" as such
term is defined in Rule 501(a) of Regulation D promulgated by the Securities and
Exchange Commission under the Securities Act (an "Accredited Investor").
Section 7. OWNERSHIP AND TRANSFER.
a. The Company shall maintain at its principal executive
offices (or such other office or agency of the Company as it may designate by
notice to the holder hereof), a register for this Warrant, in which the Company
shall record the name and address of the person in whose name this Warrant has
been issued, as well as the name and address of each transferee. The Company may
treat the person in whose name any Warrant is registered on the register as the
owner and holder thereof for all purposes, notwithstanding any notice to the
contrary, but in all events recognizing any transfers made in accordance with
the terms of this Warrant.
b. This Warrant and all rights hereunder shall be assignable
and transferable by the holder hereof without the consent of the Company upon
surrender of this Warrant with a properly executed assignment (in the form of
Exhibit B hereto) at the principal executive offices of the Company (or such
other office or agency of the Company as it may designate in writing to the
holder hereof); provided, that (x) either (i) the Warrant shall have been
registered under the Securities Act or (ii) the Company first shall have been
furnished with an opinion of counsel, in a form reasonably satisfactory to the
Company, to the effect that such sale or transfer is exempt from the
registration requirements of the Securities Act and (y) such transfer or
assignment of this Warrant does not result in more than ten (10) holders of all
outstanding Warrants and any such part or portion of this Warrant constitutes at
least 10% of the number of Warrant Shares issuable upon exercise of all
outstanding Warrants (subject to appropriate adjustment for stock splits, stock
dividends, combinations, recapitalizations and other similar transactions) or
such lesser number if such transfer involves all of the Warrant Shares
represented by the Warrants then held by such transferor.
c. The Company is obligated to register the Warrant Shares for
resale under the Securities Act pursuant to the Registration Rights Agreement.
The shares of Common Stock issuable upon exercise of this Warrant shall
constitute Registrable Securities (as such term is defined in the Registration
Rights Agreement). Each holder of this Warrant shall be entitled to all of the
benefits afforded to a holder of any such Registrable Securities under the
Registration Rights Agreement and such holder, by its acceptance of this
Warrant, agrees and shall agree to be bound by and to comply with the terms and
conditions of the Registration Rights Agreement applicable to such holder as a
holder of such Registrable Securities.
10
Section 8. ADJUSTMENT OF WARRANT EXERCISE PRICE AND NUMBER OF
SHARES. The Warrant Exercise Price and the number of shares of Common Stock
issuable upon exercise of this Warrant shall be adjusted from time to time as
follows:
a. ADJUSTMENT OF WARRANT EXERCISE PRICE AT THE RESET DATE. If,
on the Reset Date, the holder of this Warrant holds no less than 75% of the
shares of Common Stock issued, issuable or deemed issued upon conversion of the
Convertible Debentures held by such holder (net of the aggregate of any short
position in the Common Stock held by such holder or any of its affiliates), then
the Warrant Exercise Price shall be reduced to a price equal to $3.57 if, and
only if, such reduced price is less than the Warrant Exercise Price in effect on
the Reset Date.
b. ADJUSTMENT OF WARRANT EXERCISE PRICE. If and whenever on or
after the Warrant Date and prior to the twelve (12) month anniversary of the
Warrant Date, the Company issues or sells, or 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 (i) issued or deemed to have been issued by the Company in
connection with an Approved Stock Plan, (ii) issued or deemed to have been
issued upon exercise of the Warrants or issued upon the issuance or conversion
of the Convertible Debentures; (iii) issued upon exercise of Options or
Convertible Securities which are outstanding on the date immediately preceding
the Warrant Date, provided that such issuance of shares of Common Stock upon
exercise of such Options or Convertible Securities is made pursuant to the terms
of such Options or Convertible Securities in effect on the date immediately
preceding the Warrant Date and such Options or Convertible Securities are not
amended after the date immediately preceding the Warrant Date other than with
respect to Options originally issued pursuant to an Approved Stock Plan, (iv)
issued pursuant to a Strategic Financing; or (v) issued to the public pursuant
to an underwritten offering registered pursuant to the Securities Act (but in
all events excluding offerings pursuant to "equity lines" or similar products)
((i) through (v) collectively, "Excluded Issuances")) for a consideration per
share (the "New Issuance Price") less than the Standard Exercise Price in effect
immediately prior to such issuance or sale (each such sale or issuance, a
"Dilutive Issuance"), then concurrent with such issue or sale, the Warrant
Exercise Price then in effect shall be reduced to a price (subject to Section
8(g)) equal to the New Issuance Price. If and whenever on or after the twelve
(12) month anniversary of the Warrant Date and prior to the Expiration Date, the
Company issues or sells, or 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
issued or deemed to be issued pursuant to any Excluded Issuance) in a Dilutive
Issuance, then concurrent with such issue or sale, the Warrant Exercise Price
then in effect shall be reduced to a price (rounded to the nearest cent) equal
to the product of (x) the Warrant Exercise Price in effect immediately prior to
such issuance or sale and (y) the quotient determined by dividing (1) the sum of
(I) the product derived by multiplying the Standard Exercise Price in effect
immediately prior to such Dilutive Issuance by the number of shares of Common
Stock Deemed Outstanding immediately prior to such issue or sale, plus (II) the
consideration, if any, received by the Company upon such Dilutive Issuance, by
(2) the product derived by multiplying the (I) the Standard Exercise Price in
effect immediately prior to such Dilutive Issuance by (II) the number of shares
of Common Stock Deemed Outstanding immediately after such Dilutive Issuance.
11
c. EFFECT ON WARRANT EXERCISE PRICE OF CERTAIN EVENTS. For
purposes of determining the adjusted Warrant Exercise Price under Section 8(b)
above, the following shall be applicable:
(i) ISSUANCE OF OPTIONS. If the Company in any manner
grants any Options and the lowest price per share for which one share of Common
Stock is issuable upon the exercise of any such Option or upon conversion,
exchange or exercise of any Convertible Securities issuable upon exercise of any
such Option is less than the Standard Exercise Price in effect immediately prior
to such Dilutive Issuance, then such share of Common Stock shall be deemed to be
outstanding and to have been issued and sold by the Company at the time of the
granting or sale of such Option for such price per share. For purposes of this
Section 8(c)(i), the "lowest price per share for which one share of Common Stock
is issuable upon exercise of any such Option or upon conversion, exchange or
exercise of any Convertible Securities issuable upon exercise of any such
Option" shall be equal to the sum of the lowest amounts of consideration (if
any) received or receivable by the Company with respect to any one share of
Common Stock upon the granting or sale of the Option, upon exercise of the
Option and upon conversion, exchange or exercise of any Convertible Security
issuable upon exercise of such Option. No further adjustment of the Warrant
Exercise Price shall be made upon the actual issuance of such Common Stock or of
such Convertible Securities upon the exercise of such Options or upon the actual
issuance of such Common Stock upon conversion, exchange or exercise of such
Convertible Securities.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the Company
in any manner issues or sells any Convertible Securities and the lowest price
per share for which one share of Common Stock is issuable upon such conversion,
exchange or exercise thereof is less than the Standard Exercise Price in effect
immediately prior to such Dilutive Issuance, then such share of Common Stock
shall be deemed to be outstanding and to have been issued and sold by the
Company at the time of the issuance or sale of such Convertible Securities for
such price per share. For the purposes of this Section 8(c)(ii), the "lowest
price per share for which one share of Common Stock is issuable upon such
conversion, exchange or exercise" shall be equal to the sum of the lowest
amounts of consideration (if any) received or receivable by the Company with
respect to one share of Common Stock upon the issuance or sale of the
Convertible Security and upon conversion, exchange or exercise of such
Convertible Security. No further adjustment of the Warrant Exercise Price shall
be made upon the actual issuance of such Common Stock upon conversion, exchange
or exercise of such Convertible Securities, and if any such issue or sale of
such Convertible Securities is made upon exercise of any Options for which
adjustment of the Warrant Exercise Price had been or are to be made pursuant to
other provisions of this Section 8(c), no further adjustment of the Warrant
Exercise Price shall be made by reason of such issue or sale.
(iii) CHANGE IN OPTION PRICE OR RATE OF CONVERSION. If
the purchase or exercise price provided for in any Options, the additional
consideration, if any, payable upon the issue, conversion, exchange or exercise
of any Convertible Securities, or the rate at which any Convertible Securities
are convertible into or exchangeable or exercisable for Common Stock changes at
any time, the Warrant Exercise Price in effect at the time of such change shall
be adjusted to the Warrant Exercise Price which would have been in effect at
such time had such Options or Convertible Securities provided for such changed
purchase price, additional consideration or changed conversion rate, as the case
12
may be, at the time initially granted, issued or sold and the number of shares
of Common Stock acquirable hereunder shall be correspondingly readjusted. For
purposes of this Section 8(c)(iii), if the terms of any Option or Convertible
Security that was outstanding as of the date of issuance of this Warrant are
changed in the manner described in the immediately preceding sentence, then such
Option or Convertible Security and the Common Stock deemed issuable upon
conversion, exchange or exercise thereof shall be deemed to have been issued as
of the date of such change. No adjustment shall be made if such adjustment would
result in an increase of the Warrant Exercise Price then in effect.
d. HOLDER'S RIGHT OF ALTERNATIVE WARRANT EXERCISE PRICE
FOLLOWING ISSUANCE OF CONVERTIBLE SECURITIES. If the Company issues or sells any
Options or Convertible Securities after the Closing Date that are convertible
into or exchangeable or exercisable for Common Stock at a price which varies or
may vary with the market price of the Common Stock, including by way of one or
more reset(s) to a fixed price (each of the formulations for such variable price
being herein referred to as, the "Variable Price"), the Company shall provide
written notice thereof via facsimile and overnight courier to the holder of this
Warrant (the "Variable Notice") on the date of issuance of such Convertible
Securities or Options. From and after the date the Company issues any such
Convertible Securities or Options with a Variable Price, but only for so long as
such Convertible Securities or Options are outstanding, the holder shall have
the right, but not the obligation, in its sole discretion to substitute the
Variable Price for the Warrant Exercise Price upon exercise of this Warrant by
designating in the Exercise Notice delivered upon exercise of this Warrant that
solely for purposes of such exercise the holder is relying on the Variable Price
rather than the Warrant Exercise Price then in effect. The holder's election to
rely on a Variable Price for a particular exercise of this Warrant shall not
obligate the holder to rely on a Variable Price for any future exercises of this
Warrant.
e. EFFECT ON WARRANT EXERCISE PRICE OF CERTAIN EVENTS. For
purposes of determining the adjusted Warrant Exercise Price under Sections 8(b)
and 8(c), the following shall be applicable:
(i) CALCULATION OF CONSIDERATION RECEIVED. In case any
Option is issued in connection with the issue or sale of other securities of the
Company, together comprising one integrated transaction in which no specific
consideration is allocated to such Options by the parties thereto, then, solely
for the purposes of this Section 8, the Options will be deemed to have been
issued for a consideration of $0.01. If any Common Stock, Options or Convertible
Securities are issued or sold or deemed to have been issued or sold for cash,
the consideration received therefor will be deemed to be the gross amount
received by the Company therefor. If any Common Stock, Options or Convertible
Securities are issued or sold for a consideration other than cash, the amount of
such consideration received by the Company will be the fair value of such
consideration, except where such consideration consists of marketable
securities, in which case the amount of consideration received by the Company
will be the Closing Sale Price of such securities on the date of receipt of such
securities. If any Common Stock, Options or Convertible Securities are issued to
13
the owners of the non-surviving entity in connection with any merger in which
the Company is the surviving entity, the amount of consideration therefor will
be deemed to be the fair value of such portion of the net assets and business of
the non-surviving entity as is attributable to such Common Stock, Options or
Convertible Securities, as the case may be. The fair value of any consideration
other than cash or securities will be determined by the Company and the holders
of Warrants representing at least 60% of the shares of Common Stock obtainable
upon exercise of all Warrants issued on the Original Issuance Date then
outstanding. If such parties are unable to reach agreement within ten (10) days
after the occurrence of an event requiring valuation (the "Valuation Event"),
the fair value of such consideration will be determined within five (5) Business
Days after the tenth (10th) day following the Valuation Event by an independent,
reputable appraiser jointly selected by the Company and the holders of the
Warrants representing at least 60% of the shares of Common Stock obtainable upon
exercise of all Warrants issued on the Original Issuance Date then outstanding.
The determination of such appraiser shall be final and binding upon all parties
absent manifest error and the fees and expenses of such appraiser shall be borne
by the Company.
(ii) RECORD DATE. If the Company takes a record of the
holders of Common Stock for the purpose of entitling them (1) to receive a
dividend or other distribution payable in Common Stock, Options or in
Convertible Securities or (2) to subscribe for or purchase Common Stock, Options
or Convertible Securities, then such record date will be deemed to be the date
of the issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be. If after the occurrence of such record date the
transaction or event for which such record date was set is abandoned or
terminated, then any adjustments resulting from this Section 8(d)(ii) as it
relates to such terminated or abandoned transaction or event shall be reversed
as if such record date had never occurred.
f. ADJUSTMENT OF WARRANT EXERCISE PRICE AND NUMBER OF SHARES
UPON SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company at any time
after the date of issuance of this Warrant subdivides (by any stock split, stock
dividend, recapitalization or otherwise) one or more classes of its outstanding
shares of Common Stock into a greater number of shares, the Warrant Exercise
Price in effect immediately prior to such subdivision will be proportionately
reduced and the number of shares of Common Stock obtainable upon exercise of
this Warrant will be proportionately increased. If the Company at any time after
the date of issuance of this Warrant combines (by combination, reverse stock
split or otherwise) one or more classes of its outstanding shares of Common
Stock into a smaller number of shares, the Warrant Exercise Price in effect
immediately prior to such combination will be proportionately increased and the
number of shares of Common Stock obtainable upon exercise of this Warrant will
be proportionately decreased. Any adjustment under this Section 8(f) shall
become effective at the close of business on the date the subdivision or
combination becomes effective.
14
g. CERTAIN EVENTS. If any event occurs of the type
contemplated by the provisions of this Section 8 in a private transaction (the
primary purpose of which is to raise equity capital) but not expressly provided
for by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features
other than pursuant to an Excluded Issuance), then the Company's Board of
Directors will make an appropriate adjustment in the Warrant Exercise Price and
the number of shares of Common Stock obtainable upon exercise of this Warrant so
as to protect the rights of the holders of the Warrants; provided that no such
adjustment will increase the Warrant Exercise Price or decrease the number of
shares of Common Stock obtainable as otherwise determined pursuant to this
Section 8.
h. NOTICES.
(i) Promptly following any adjustment of the Warrant
Exercise Price, the Company will give written notice thereof to the holder of
this Warrant, setting forth in reasonable detail, and certifying, the
calculation of such adjustment. The Company (at the Company's expense), if there
shall be a disagreement among the Company and holders of Warrants representing
at least 60% of the shares of Common Stock obtainable upon exercise of all
Warrants issued on the Original Issuance Date then outstanding, shall retain
independent public accountants of recognized national standing selected by the
Board of Directors of the Company to make any computation required in connection
with adjustments under this Warrant, and a certificate signed by such firm
absent manifest error shall be conclusive evidence of the correctness of such
adjustment, which shall be binding on the holder and the Company.
(ii) The Company will give written notice to the holder
of this Warrant at least ten (10) Business Days prior to the date on which the
Company closes its books or takes a record (A) with respect to any dividend or
distribution upon the Common Stock, (B) with respect to any pro rata
subscription offer to holders of Common Stock or (C) for determining rights to
vote with respect to any Organic Change (as defined below), dissolution or
liquidation, provided that the Company need not in any case provide such notice
prior to the time such information is made known to the public.
(iii) The Company will also give written notice to the
holder of this Warrant at least ten (10) Business Days prior to the date on
which any Organic Change, dissolution or liquidation will take place, provided
that the Company need not in any case provide such notice prior to the time such
information is made known to the public.
i. ADJUSTMENT. No adjustment in the Warrant Exercise Price
shall be required unless such adjustment would require an increase or decrease
of at least $.01 in such price; provided, however, that any adjustments which by
reason of this sentence are not required to be made shall be carried forward and
taken into account in any subsequent adjustment required to be made hereunder.
j. TRADING RESTRICTIONS. On each trading day during the 30
days prior to the Reset Date, the holder of this Warrant shall not sell
(including short sales) shares of Common Stock representing more than ten
percent (10%) of the trading volume of the Common Stock on the Principal Market
on such trading day.
15
Section 9. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If
this Warrant is lost, stolen, mutilated or destroyed, the Company shall
promptly, on receipt of an indemnification undertaking or other form of security
reasonably acceptable to the Company (or in the case of a mutilated Warrant, the
Warrant), issue a new Warrant of like denomination and tenor as this Warrant so
lost, stolen, mutilated or destroyed. Notwithstanding the foregoing, if this
Warrant is lost by, stolen from or destroyed by the original holder hereof, the
affidavit of such original holder setting forth the circumstances of such loss,
theft or destruction shall be accepted as satisfactory evidence thereof, and no
indemnification bond or other security shall be required by the Company as a
condition to the execution and delivery by the Company of a new Warrant to such
original holder other than such original holder's unsecured written agreement to
indemnify the Company solely for losses actually incurred by the Company as a
direct consequence of the loss, theft or destruction of the Warrant.
Section 10. NOTICE. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this Warrant
must be in writing and will be deemed to have been delivered: (i) upon receipt,
when delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) Business Day after deposit
with a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. If notice is to be sent to the
Company, the holder shall use its reasonable best efforts to provide additional
copies to the individuals listed below; provided, however, that the failure of
such holder to send such additional copies shall in no way limit the
effectiveness of any notice sent to the Company to the attention of Chief
Executive Officer as provided for below. The addresses and facsimile numbers for
such communications shall be:
If to the Company:
Hollywood Media Corp.
2255 Glades Road
Suite 237W
Boca Raton, FL 33431
Telephone: (561) 998-8000
Facsimile: (561) 998-2974
Attention: Chief Executive Officer
With a copy to:
Hollywood Media Corp.
2255 Glades Road
Suite 237W
Boca Raton, FL 33431
Telephone: (561) 998-8000
Facsimile: (561) 998-2974
Attention: General Counsel
16
and
Weil, Gotshal & Manges LLP
700 Louisiana, Suite 1600
Houston, TX 77002
Telephone: (713) 546-5275
Facsimile: (713) 224-9511
Attention: W. Robert Shearer, Esq.
If to the Transfer Agent:
American Stock Transfer & Trust Company
59 Maiden Lane, Plaza Level
New York, NY 10038
Facsimile: (718) 921-8323
If to a holder of this Warrant, to it at the address and
facsimile number set forth on the Schedule of Buyers to the Securities Purchase
Agreement, with copies to such holder's representatives as set forth on such
Schedule of Buyers, or at such other address and facsimile as shall be delivered
to the Company upon the issuance or transfer of this Warrant. Each party shall
provide five days' prior written notice to the other party of any change in
address or facsimile number. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a nationally recognized overnight
delivery service shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.
Section 11. AMENDMENTS. This Warrant and any term hereof may
be amended, changed, waived, discharged, or terminated only by an instrument in
writing signed by the party or holder hereof against which enforcement of such
amendment, change, waiver, discharge or termination is sought and shall be
binding on such party's or holder's assignees and transferees; provided,
however, that any such amendment, change, waiver, discharge or termination that
adversely impacts the holders of any of the Warrants other than this Warrant may
be made only if the Company has obtained the written consent of the holders of
Warrants representing at least 60% of the shares of Common Stock issuable upon
exercise of all of the Warrants issued on the Original Issuance Date then
outstanding; provided, further, that no such action may increase the Warrant
Exercise Price or decrease the number of shares or class of stock issuable upon
exercise of any Warrants without the written consent of the holder of such
Warrant. No waivers of any term, condition or provision of this 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.
17
Section 12. DATE. The date of this Warrant is May 22, 2002
(the "Warrant Date"). This Warrant, in all events, shall be wholly void and of
no effect after the close of business on the Expiration Date, except that
notwithstanding any other provisions hereof, the provisions of Section 7(c)
shall continue in full force and effect after such date as to any Warrant Shares
or other securities issued upon the exercise of this Warrant.
Section 13. LIMITATION ON NUMBER OF WARRANT SHARES. The
Company shall not be obligated to issue Warrant Shares upon exercise of this
Warrant to the extent that the issuance of such shares of Common Stock would
cause the Company to exceed that number of shares of Common Stock which the
Company may issue upon exercise of this Warrant (the "Exchange Cap") without
breaching the Company's obligations under the rules or regulations of the
Principal Market, except that such limitation shall not apply in the event that
the Company obtains the approval of its stockholders as required by the
Principal Market (or any successor rule or regulation) for issuances of Common
Stock in excess of such amount. Until such approval is obtained, the holder of
this Warrant shall not be issued, upon exercise of this Warrant, Warrant Shares
in an amount, which if added to the aggregate number of Interest Shares and
Conversion Shares issued to the holder of this Warrant (and all predecessor
holders) under the Convertible Debentures held by the holder (and all
predecessor holders) as of the date of such exercise would exceed such holder's
Cap Allocation Amount (as such term is defined in the Convertible Debenture). If
at any time when the holder delivers an Exercise Notice pursuant to Section 2
hereof the Company shall be prohibited pursuant to the provisions of this
Section 13 from issuing any Warrant Shares, then the Company shall pay in
immediately available funds to the holder of this Warrant within two (2)
Business Days of the date of delivery of such Exercise Notice, an amount in cash
equal to the product of (X) the number of shares of Common Stock which could not
be issued by virtue of the limitations contained in this Section 13 multiplied
by (Y) the excess of (1) the average of the Closing Sale Prices of the Common
Stock on each of the five (5) trading days ending on the third trading day
immediately preceding the date such prohibition arises over (2) the Warrant
Exercise Price then in effect. The number of shares issuable upon exercise of
this Warrant shall be reduced for each share for which the Company makes a cash
payment pursuant to the preceding sentence.
Section 14. Judicial Proceedings. Any legal action, suit or
proceeding brought against the Company with respect to this Warrant may be
brought in any federal court of the Southern District of New York or any state
court located in New York County, State of New York, and by execution and
delivery of this Warrant, the Company hereby irrevocably and unconditionally
waives any claim (by way of motion, as a defense or otherwise) of improper
venue, that it is not subject personally to the jurisdiction of such court, that
such courts are an inconvenient forum or that this Warrant or the subject matter
may not be enforced in or by such court. The Company hereby irrevocably and
unconditionally consents to the service of process of any of the aforementioned
courts in any such action, suit or proceeding by the mailing of copies thereof
by registered or certified mail, postage prepaid, at its address set forth or
provided for in Section 10, such service to become effective 10 days after such
mailing. Nothing herein contained shall be deemed to affect the right of any
party to serve process in any manner permitted by law or commence legal
proceedings or otherwise proceed against any other party in any other
jurisdiction to enforce judgments obtained in any action, suit or proceeding
brought pursuant to this Section. The Company irrevocably submits to the
exclusive jurisdiction of the aforementioned courts in such action, suit or
proceeding
18
Section 15. DESCRIPTIVE HEADINGS; GOVERNING LAW. The
descriptive headings of the several sections and paragraphs of this Warrant are
inserted for convenience only and do not constitute a part of this Warrant. The
corporate laws of the State of New York shall govern all issues concerning the
relative rights of the Company and its stockholders. All other questions
concerning the construction, validity, enforcement and interpretation of this
Warrant shall be governed by the internal laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New York.
[* * * *]
19
IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed by as of the 21st day of May, 2002.
HOLLYWOOD MEDIA CORP.
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
20
EXHIBIT A TO WARRANT
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
HOLLYWOOD MEDIA CORP.
The undersigned holder hereby exercises the right to purchase
______________ of the shares of Common Stock ("Warrant Shares") of HOLLYWOOD
MEDIA CORP., a Florida corporation (the "Company"), evidenced by the attached
Warrant (the "Warrant"). Capitalized terms used herein and not otherwise defined
shall have the respective meanings set forth in the Warrant.
1. Form of Warrant Exercise Price. The Holder intends that
payment of the Warrant Exercise Price shall be made as:
______ "Cash Exercise" with respect to _______
Warrant Shares; and/or
______ "Cashless Exercise" with respect to
______ Warrant Shares (to the extent
permitted by the terms of the Warrant).
2. Variable Price. Is the Variable Price being relied on
pursuant to Section 8(d) of the Warrant? (check one) YES ____ No ____
3. Payment of Warrant Exercise Price. In the event that the
holder has elected a Cash Exercise with respect to some or all of the Warrant
Shares to be issued pursuant hereto, the holder shall pay the sum of
$___________________ to the Company in accordance with the terms of the Warrant.
4. Delivery of Warrant Shares. The holder of this warrant has
sold or will sell the shares of common stock issuable pursuant to this Notice
pursuant to a registration statement or an exemption from registration under the
Securities Act of 1933, as amended.
5. Private Placement Representations. The holder of this
Warrant confirms the continuing validity of, and reaffirms as of the date
hereof, its representations and warranties set forth in Section 6 of the
Warrant.
Date: _______________ __, ____
__________________________________
-------------------------------------
Name of Registered Holder Tax ID of Registered Holder
(if applicable)
By:_______________________________
Name:_____________________________
Title:______________________________
21
ACKNOWLEDGMENT
The Company hereby acknowledges this Exercise Notice and
hereby directs American Stock Transfer & Trust Co. to issue the above indicated
number of shares of Common Stock in accordance with the Irrevocable Transfer
Agent Instructions dated May 21, 2002 from the Company and acknowledged and
agreed to by American Stock Transfer & Trust Co.
HOLLYWOOD MEDIA CORP.
By:
------------------------------------------
Name:
Title:
22
EXHIBIT B TO WARRANT
FORM OF WARRANT
FOR VALUE RECEIVED, the undersigned does hereby assign and
transfer to ________________, Federal Identification No. __________, a warrant
to purchase ____________ shares of the capital stock of HOLLYWOOD MEDIA CORP., a
Delaware corporation, represented by warrant certificate no. _____, standing in
the name of the undersigned on the books of said corporation. The undersigned
does hereby irrevocably constitute and appoint ______________, attorney to
transfer the warrants of said corporation, with full power of substitution in
the premises.
Dated: _________, 200_
By:
-------------------------------------
Its:
-------------------------------------
23