EXHIBIT 10.38
MUTUAL RELEASE AND SETTLEMENT AGREEMENT
THIS MUTUAL RELEASE AND SETTLEMENT AGREEMENT ("Agreement") is made this
9th day of October, 2001, by and between Westminster Properties, Inc., a Nevada
Corporation ("Westminster" or "Landlord") on the one hand and The End, Inc. a
California Corporation ("The End" or "Tenant"), iNTELEFILM, Corp., a Minnesota
Corporation ("iNTELEFILM") and Harmony Holdings, Inc. a Delaware Corporation
("Harmony" or "Guarantor") on the other, in consideration of the promises made
herein, agree follows:
WHEREAS, on or about April 10, 1998, The End and Westminster entered
into that certain Standard Industrial/Commercial Single-Tenant Lease-Gross
("Lease") for the Premises located at 433 S. Beverly Drive, Beverly Hills,
California 90210 ("Premises");
WHEREAS, Concurrently with the execution of the Lease, Harmony executed
that certain Guaranty of Lease dated April 10, 1998 ("Guaranty");
WHEREAS, pursuant to the terms of the Guarantee, Harmony unconditionally
guaranteed the prompt payment by The End of all rents and all other sums payable
by The End under the Lease;
WHEREAS, iNTELEFILM is interested in obtaining a full release from any
and all liability associated with its negotiations on behalf of The End and
Harmony the Landlord in efforts negotiate the termination of the Lease
WHEREAS, the Lease was for a term of ten (10) years;
WHEREAS, The End has failed to pay Rent or any other charges as of March
1, 2001 and has been in default thereafter;
NOW, THEREFORE, in view of the foregoing recitals, the parties' mutual
agreements and covenants, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
1. Concurrently with the execution of this Agreement, The End, Harmony, and
iNTELEFILM shall jointly execute the Promissory Note ("Note") along with the
Warrant Agreement ("Warrant").
2. In consideration for the execution of the Note and Warrant and the covenants
set forth therein, and other good and valuable consideration hereby
acknowledged, the parties hereto and their respective agents, employees, owners,
shareholders, partners, affiliates and assigns, past, present, or future, hereby
release each other and their respective agents, employees, owners, partners,
shareholders, affiliates, attorneys and assigns from any and all claims, causes
of action, damages or injuries, known or unknown in connection with the Lease
and or the Premises or any matter arising therefrom, including, without
limitation, any and all obligations of each other arising out of the Lease and
the Guaranty and this release represents a current waiver of any and all payment
defaults
3. In consideration for the execution of the Note and Warrant and the covenants
set forth therein, and other good and valuable consideration herby acknowledged,
The End, iNTELEFILM, Harmony and their respective agents, employees, owners,
shareholders, partners, affiliates and assigns, past, present, or future, and
Westminster and their respective agents, employees, owners, partners,
shareholders, affiliates, attorneys and assigns each release the other from any
and all claims, causes of action, damages or injuries, known or unknown in
connection with the Lease and or the Premises or any matter arising therefrom,
including, without limitation, any and all obligations of Westminster arising
out of that certain Bill of Sale executed July 16, 2001.
4. In entering into this Agreement, the parties hereto recognize that they are
waiving unknown claims and hereby acknowledge and specifically waive the
provisions of Section 1542 of the California Civil Code which states as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
5. This Agreement constitutes the full and complete agreement of the parties
regarding the subject matter and/or any release of claims, except as set forth
in this Agreement, the Note and or the Warrant. All prior agreements, written,
oral or implied, are superseded by this Agreement and the parties hereby agree
that no extrinsic evidence of any nature whatsoever shall be allowed to be
introduced in any proceeding on this Agreement.
6. This Agreement may only be modified in writing and signed by an authorized
representative of each party.
7. Arbitration. Any controversy or claim arising out of or relating to this
Agreement of the performance or breach thereof by either party shall be settled
by arbitration in California before a single arbitrator selected by both
parties. If the parties cannot agree upon a single arbitrator within thirty (30)
days after service of notice of intention to arbitrate, then the American
Arbitration Association shall appoint a single arbitrator. The rules then in
effect of the American Arbitration Association shall govern any arbitration
hereunder. The arbitrator's decision may be entered in any court having
competent jurisdiction.
8. In the event legal action is commenced to enforce or interpret, or for breach
of, any provisions of this Agreement, the prevailing party shall be entitled to
recover from the losing party costs and expenses incurred, including, but not
limited to, taxable costs, and reasonable attorney's fees incurred by the
prevailing party, in addition to all other relief and remedies to which the
prevailing party may be entitled.
9. The parties hereto acknowledge that: (i) they have been represented by
independent counsel in connection with this Agreement; (ii) they have executed
this Agreement with the advise of such counsel; (iii) this Agreement is the
result of negotiations between the parties hereto and the advice and assistance
of their respective legal counsel. The fact that this Agreement was prepared by
either parties' counsel shall be deemed as a matter of convenience and shall
have no importance or significance. Any uncertainty or ambiguity in this
Agreement shall not be construed against the drafter simply because it prepared
this Agreement in its final form.
10. Each party agrees to perform any further acts and to execute and deliver
such further documents which may be reasonably necessary to carry out the terms
of this Agreement.
11. This Agreement shall be governed by and interpreted in accordance with the
laws of the State of California. All actions commenced in connection with this
Agreement or the Dispute shall be instituted in the County of Los Angeles, State
of California.
12. Each party hereby represents that he/she has the full power and authority to
execute, deliver and perform its obligations under this Agreement and to bind
any corporate or partnership entity which it represents.
Westminster Properties, Inc.,
A Nevada Corporation
/s/ Said Tabibi
- ---------------
By: Said Tabibi
Its: President
The End, Inc.,
A California Corporation
By: /s/ Richard A. Wiethorn
- ---------------------------
Its: C.F.O
iNTELEFILM, Corporation.,
A Minnesota Corporation
By: /s/ Richard A. Wiethorn
- ---------------------------
Its: C.F.O
Harmony Holdings, Inc.,
A Delaware Corporation
By: /s/ Richard A. Wiethorn
- ---------------------------
Its: C.F.O
PROMISSORY NOTE
$300,000.00
Los Angeles, California
October 9, 2001
FOR VALUE RECEIVED the undersigneds, Harmony Holdings, Inc., a Delaware
Corporation, and The End, Inc., a California Corporation and iNTELEFILM Corp.
jointly and severally (hereinafter collectively the "Company"), do hereby
promise to pay to Westminster Properties, Inc., a Nevada Corporation ("Holder"),
or order, the principal sum of Three Hundred Thousand Dollars ($300,000.00),
together with interest on the unpaid principal balance at the rate of Nine and
33/100 percent (9.33%) per annum commencing as of August 1, 2001 through August
1, 2004 (the "Term"). The Company shall have the right to prepay this Note, in
whole or in part, without the prior written consent of Holder. Principal and
interest shall be payable in lawful money of the United States.
During the first year of the Term interest only shall be payable quarterly on
the unpaid principal balance of this Promissory Note ("Note") and shall be
calculated based on a 360 day year and shall be payable on each three month
anniversary of the date hereof. During the second year of the Term, the Company
shall pay Holder $10,000 per month. If not sooner converted and further subject
to the due on sale clause as provided below, the entire unpaid principal amount
and all accrued and unpaid interest shall be due and payable on October 9, 2004
(the "Maturity Date") or upon the sale of Curious Pictures, whichever first
occurs. "Sale" as used in this paragraph shall be defined to mean any sale,
transfer or hypothecation of all or a substantial portion of Curious Pictures,
Inc., including without limitation, any stock transfers or options for the
assets or stock of Curious Pictures, Inc. Payment of principal and interest
hereunder shall be made by cashiers check delivered to Holder at the address
furnished to the Company for that purpose.
Any and all payments not received by Holder on their due date, shall accrue a
late fee equal to Six (6%) percent of such amount due. This Note shall be
superior to any loans or advances made by iNTELEFILM to the other borrowers
under this Note. Repayment of this Note shall be secured by a pledge of a
security interest in any and all of the Company's assets and each such Company
shall execute and deliver to Holder or Holder's counsel, proper UCC-1 forms in
record-able form in the County Recorder's Office of any and all counties in
which the Company and each of them conducts business. The UCC-1 forms shall be
accompanied by a list of such counties. The Company shall execute and deliver a
security agreement evidencing such security interest and any financing statement
reasonably requested by Holder upon execution hereof. The secured pledge and
UCC-1 shall be filed upon execution of this document though subordinated as
provided for herein. Furthermore, Holder may at its option accelerate maturity
of the loan indebtedness in the event the assets of the Company or each of them,
including without limitation, Curious Pictures, are (i) sold or transferred by
the Company, or (ii) made subject to any other lien or security interest without
the prior written consent of Holder. Notwithstanding the above, Company hereby
represents and warrants that other than the first lien in the approximate amount
of One Million Five Hundred Thousand ($1,500,000.00) Dollars ("Existing Lien"),
no other liens, encumbrances are superior to this Note. Company shall be
authorized to refinance the Existing Lien for an amount equal to Two Million
Five Hundred Thousand ($2,500,000.00) Dollars ("Replacement Lien") and Holder
hereby agrees to contemporaneously execute documentation evidencing Holder's
agreement to subordinate to the Replacement Lien. Holder agrees that a failure
to execute such subordination documentation or to agree to subordinate to the
Replacement Lien shall render the security interest null and void.
This Note shall be subject to a liquidation preference such that in the event of
liquidation or dissolution of the Company prior to the earlier of (i) payment in
full of the principal of and interest accrued on the Note or (ii) The date on
which the Note is converted, Holder shall be entitled to a priority in payment
over all other debts and obligations of the Company.
The parties hereto recognize that the securities which are the subject of this
Note may not be issued without qualification under federal and/or state
securities laws unless an exemption is available therefrom.
Accordingly, the issuance of the securities as provided herein is conditional
upon such qualification or exemption. The Company and Holder agree to cooperate
with each other in applying for any qualification and executing any documents to
obtain same.
Holder represents and acknowledges that either its principals have a
pre-existing business or personal relationship with the Company and/or any of
its officers, directors or controlling persons, or by reason of its financial or
business experience or the business or financial experience of its professional
advisor, Holder has the capacity to protect its own interest in connection with
the purchase and sale of the securities herein. Holder further represents and
warrants that it is acquiring the securities hereunder for investment for its
own account and not with a view to or for sale in connection with any
distribution of the securities.
Each Borrower hereby represents and warrants that all board approval and
corporate resolutions have been obtained for the execution of this Note, the
attached Warrants and Mutual Release.
The Company agrees to pay Holder's costs of collection and enforcing this Note,
including reasonable attorneys' fees.
This Note shall be construed in accordance with the laws of the State of
California as applied to contracts entered into by California residents within
the State of California, which contracts are to be performed entirely within the
State of California.
The Company submits for itself and its property in any legal action or
proceeding relating to this Note and any other documents executed and delivered
in connection herewith to which the Company is a party; or for recognition and
enforcement of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the courts of the State of California and the Courts of the
United States of America for the Central District of California and appellate
courts thereof; consents that any such action or proceeding may be brought in
such courts and waives any objection to the venue of any action or proceeding in
any such court or that such action or proceeding was brought in an inconvenient
court and agrees that service of process in any such action or proceeding may be
effected by registered or certified mail, postage prepaid to the Company at the
address set forth below or such other address as the Company shall have
furnished to the Holder:
IN WITNESS WHEREOF, the undersigned has executed this Convertible Promissory
Note as of the date set forth herein.
The End, Inc., iNTELEFILM Corporation
A California Corporation A Minnesota Corporation
By: /s/ Richard A. Wiethorn By: /s/ Richard A. Wiethorn
-------------------------------- -------------------------------
Name: Richard A. Wiethorn Name: Richard A. Wiethorn
Title: Chief Financial Officer Title: Chief Financial Officer
Harmony Holdings, Inc.,
A Delaware Corporation
By: /s/ Richard A. Wiethorn
-------------------------------
Name: Richard A. Wiethorn
Title: Chief Financial Officer
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
WARRANT TO PURCHASE COMMON STOCK
of
iNTELEFILM, INC.
Void after October 9, 2006
This Warrant is issued to Westminster Properties, Inc., a Nevada Corporation
("Holder") by iNTELEFILM, Inc., a Minnesota corporation (the "Company"), on
October 9, 2001 (the "Warrant Issue Date"). This Warrant is issued pursuant to
the terms of that certain Settlement Agreement dated as of the date hereof (the
Settlement Agreement") between the Company and Holder.
1. Purchase of Shares. Subject to the terms and conditions hereinafter set
forth, the Holder is entitled, upon surrender of this Warrant at the
principal office of the Company (or at such other place as the Company
shall notify the Holder hereof in writing), to purchase from the
Company One Hundred and Fifty Thousand (150,000) shares of fully paid
and nonassessable shares of Common Stock of the Company. The shares of
Common Stock issuable pursuant to this Section 1 (the "Shares") shall
be subject to adjustment pursuant to Section 7 hereof.
2. Exercise Price. The purchase price for the Shares shall be $2.00 per
Share, subject to adjustment pursuant to Section 7 hereof (such price,
as adjusted from time to time, is herein referred to as the "Exercise
Price").
Exercise Period. This Warrant shall become exercisable, in whole or in part,
commencing immediately upon execution and delivery of this Warrant to Holder and
it shall remain so exercisable until 100 days following the Note Payable due
from Harmony and The End in the amount of $300,000 is repaid in full.
3. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may
exercise, in whole or in part, the purchase rights evidenced hereby.
Such exercise shall be effected by:
(a) the surrender of the Warrant, together with a duly executed copy of
the form of Notice of Exercise attached hereto, to the Secretary of the
Company at its principal offices; and
(b) the payment to the Company of an amount equal to the aggregate
Exercise Price for the number of Shares being purchased. The exercise
price may be paid by the Holder by surrendering the Note Payable due
from Harmony Holdings , The End and iNTELEFILM in the amount of
$300,000 to the Company.
4. Certificates for Shares. Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of
Shares so purchased shall be issued as soon as practicable thereafter
(with appropriate restrictive legends, if applicable), and in any event
within thirty (30) days of the delivery of the Notice of Exercise.
5. Issuance of Shares. The Company covenants that the Shares, when issued
pursuant to the exercise of this Warrant, will be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens,
and charges with respect to the issuance thereof.
6. Adjustment of Exercise Price and Number of Shares. The number of and
kind of securities purchasable upon exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time as
follows:
(a) Subdivisions, Combinations and Other Issuances. If the Company
shall at any time prior to the expiration of this Warrant subdivide its
Common Stock, by split-up or otherwise, or combine its Common Stock, or
issue additional shares of its Common Stock as a dividend with respect
to any shares of its Common Stock, the number of Shares issuable on the
exercise of this Warrant shall forthwith be proportionately increased
in the case of a subdivision or stock dividend, or proportionately
decreased in the case of a combination. Appropriate adjustments shall
also be made to the Exercise Price payable per share, but the aggregate
Exercise Price payable for the total number of Shares purchasable under
this Warrant (as adjusted) shall remain the same. Any adjustment under
this Section 7(a) shall become effective at the close of business on
the date the subdivision or combination becomes effective, or as of the
record date of such dividend, or in the event that no record date is
fixed, upon the making of such dividend.
(b) Reclassification, Reorganization and Consolidation. In case of any
reclassification, capital reorganization, or change in the Common Stock
of the Company (other than as a result of a subdivision, combination,
or stock dividend provided for in Section 7(a) above), then, as a
condition of such reclassification, reorganization, or change, lawful
provision shall be made, and duly executed documents evidencing the
same from the Company or its successor shall be delivered to the
Holder, so that the Holder shall have the right at any time prior to
the expiration of this Warrant to purchase, at a total price equal to
that payable upon the exercise of this Warrant, the kind and amount of
shares of stock and other securities and property receivable in
connection with such reclassification, reorganization, or change by a
holder of the same number of shares of Common Stock as were purchasable
by the Holder immediately prior to such reclassification,
reorganization, or change. In any such case appropriate provisions
shall be made with respect to the rights and interest of the Holder so
that the provisions hereof shall thereafter be applicable with respect
to any shares of stock or other securities and property deliverable
upon exercise hereof, and appropriate adjustments shall be made to the
purchase price per share payable hereunder, provided the aggregate
purchase price shall remain the same.
(c) Notice of Adjustment. When any adjustment is required to be made in
the number or kind of shares purchasable upon exercise of the Warrant,
or in the Warrant Price, the Company shall promptly notify the Holder
of such event and of the number of shares of Common Stock or other
securities or property thereafter purchasable upon exercise of this
Warrant.
7. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of
this Warrant, but in lieu of such fractional shares the Company shall
make a cash payment therefor on the basis of the Exercise Price then in
effect.
8. No Stockholder Rights. Prior to exercise of this Warrant, the Holder
shall not be entitled to any rights of a stockholder with respect to
the Shares (including without limitation the right to vote such Shares,
receive dividends or other distributions thereon, exercise preemptive
rights or be notified of stockholder meetings), and such Holder shall
not be entitled to any notice or other communication concerning the
business or affairs of the Company.
9. Transfers of Warrant. Subject to compliance with applicable federal and
state securities laws, this Warrant and all rights hereunder are
transferable in whole or in part by the Holder to any person or entity
upon written notice to the Company. The transfer shall be recorded on
the books of the Company upon the surrender of this Warrant, properly
endorsed, to the Company at its principal offices, and the payment to
the Company of all transfer taxes and other governmental charges
imposed on such transfer. In the event of a partial transfer, the
Company shall issue to the Holders one or more appropriate new
warrants.
10. Successors and Assigns. The terms and provisions of this Warrant shall
inure to the benefit of, and be binding upon, the Company and the
Holders hereof and their respective successors and assigns.
11. Amendments and Waivers. Any term of this Warrant may be amended and the
observance of any term of this Warrant may be waived with the written
consent of the Company and Holder.
12. Notices. All notices required under this Warrant shall be deemed to
have been given or made for all purposes (i) upon personal delivery,
(ii) upon confirmation that the communication was successfully sent to
the applicable number if sent by facsimile; (iii) one day after being
sent, when sent by professional overnight courier service, or
(iv) five days after posting when sent by registered or certified mail.
Notices to the Company shall be sent to the principal office of the
Company (or at such other place as the Company shall notify the Holder
hereof in writing). Notices to the Holder shall be sent to the address
of the Holder on the books of the Company (or at such other place as
the Holder shall notify the Company hereof in writing).
13. Attorneys' Fees. If any action of law or equity is necessary to enforce
or interpret the terms of this Warrant, the prevailing party shall be
entitled to its reasonable attorneys' fees, costs and disbursements in
addition to any other relief to which it may be entitled.
14. Captions. The section and subsection headings of this Warrant are
inserted for convenience only and shall not constitute a part of this
Warrant in construing or interpreting any provision hereof.
15. Governing Law. This Warrant shall be governed by the laws of the State
of Minnesota as applied to agreements among Minnesota residents made
and to be performed entirely within the State of Minnesota.
IN WITNESS WHEREOF, iNTELEFILM, Inc. caused this Warrant to be executed by an
officer thereunto duly authorized.
iNTELEFILM, INC.,
A Minnesota corporation
By: /s/ Richard A. Wiethorn
Name: Richard A. Wiethorn
Title: Chief Financial Officer
NOTICE OF EXERCISE
To: Intelefilm, Inc.
The undersigned hereby elects to purchase _________________ shares of Common
Stock of Intelefilm, Inc., a Minnesota corporation, pursuant to the terms of the
attached Warrant, and payment of the Exercise Price per share required under
such Warrant accompanies this notice. The undersigned hereby represents and
warrants that the undersigned is acquiring such shares for its own account for
investment purposes only, and not for resale or with a view to distribution of
such shares or any part thereof.
WARRANT HOLDER:
- -----------------------------------------
By:
[NAME]
Address:
Date:
Name in which shares should be registered:
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
WARRANT TO PURCHASE COMMON STOCK
of
iNTELEFILM, INC.
Void after October 9, 2006
This Warrant is issued to Westminster Properties, Inc., a Nevada Corporation
("Holder") by iNTELEFILM, Inc., a Minnesota corporation (the "Company"), on
October 9, 2001 (the "Warrant Issue Date"). This Warrant is issued pursuant to
the terms of that certain Settlement Agreement dated as of the date hereof (the
Settlement Agreement") between the Company and Holder.
16. Purchase of Shares. Subject to the terms and conditions hereinafter set
forth, the Holder is entitled, upon surrender of this Warrant at the
principal office of the Company (or at such other place as the Company
shall notify the Holder hereof in writing), to purchase from the
Company One Hundred Thousand (100,000) shares of fully paid and
nonassessable shares of Common Stock of the Company. The shares of
Common Stock issuable pursuant to this Section 1 (the "Shares") shall
be subject to adjustment pursuant to Section 7 hereof.
17. Exercise Price. The purchase price for the Shares shall be $0.50 per
Share less than the average bid price of iNTELEFILM's common stock for
the 10 days prior to the effective date but under no circumstances
shall be less than $0.25 per share. , subject to adjustment pursuant to
Section 7 hereof (such price, as adjusted from time to time, is herein
referred to as the "Exercise Price").
18. Exercise Period. This Warrant shall become exercisable, in whole or in
part, commencing immediately upon execution and delivery of this
Warrant to Holder and it shall remain so exercisable until 5:00 p.m. on
October 9, 2006; provided, however, that in the event of (a) the
closing of the issuance and sale of shares of Common Stock of the
Company in the Company's first underwritten public offering pursuant to
an effective registration statement under the Securities Act of 1933,
as amended (the "IPO"), (b) the closing of the Company's sale or
transfer of all or substantially all of its assets, or (c) the closing
of the acquisition of the Company by another entity by means of merger,
consolidation or other transaction or series of related transactions,
resulting in the exchange of the outstanding shares of the Company's
capital stock such that the stockholders of the Company prior to such
transaction own, directly or
indirectly, less than 50% of the voting power of the surviving entity
(unless, in the case of this subpart (c) only, this Warrant is assumed
by the surviving company), this Warrant shall, on the date of such
event, no longer be exercisable and become null and void. In the event
of a proposed transaction of the kind described above, the Company
shall notify the Holder of the Warrant at least thirty (30) days prior
to the consummation of such event or transaction to permit the Holder
to exercise the Warrant as provided herein.
19. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may
exercise, in whole or in part, the purchase rights evidenced hereby.
Such exercise shall be effected by:
(c) the surrender of the Warrant, together with a duly executed copy of
the form of Notice of Exercise attached hereto, to the Secretary of the
Company at its principal offices; and
(d) the payment to the Company of an amount equal to the aggregate
Exercise Price for the number of Shares being purchased.
20. Certificates for Shares. Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of
Shares so purchased shall be issued as soon as practicable thereafter
(with appropriate restrictive legends, if applicable), and in any event
within thirty (30) days of the delivery of the Notice of Exercise.
21. Issuance of Shares. The Company covenants that the Shares, when issued
pursuant to the exercise of this Warrant, will be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens,
and charges with respect to the issuance thereof.
22. Adjustment of Exercise Price and Number of Shares. The number of and
kind of securities purchasable upon exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time as
follows:
(d) Subdivisions, Combinations and Other Issuances. If the Company
shall at any time prior to the expiration of this Warrant subdivide its
Common Stock, by split-up or otherwise, or combine its Common Stock, or
issue additional shares of its Common Stock as a dividend with respect
to any shares of its Common Stock, the number of Shares issuable on the
exercise of this Warrant shall forthwith be proportionately increased
in the case of a subdivision or stock dividend, or proportionately
decreased in the case of a combination. Appropriate adjustments shall
also be made to the Exercise Price payable per share, but the aggregate
Exercise Price payable for the total number of Shares purchasable under
this Warrant (as adjusted) shall remain the same. Any adjustment under
this Section 7(a) shall become effective at the close of business on
the date the subdivision or combination becomes effective, or as of the
record date of such dividend, or in the event that no record date is
fixed, upon the making of such dividend.
(e) Reclassification, Reorganization and Consolidation. In case of any
reclassification, capital reorganization, or change in the Common Stock
of the Company (other than as a result of a subdivision, combination,
or stock dividend provided for in Section 7(a) above), then, as a
condition of such reclassification, reorganization, or change, lawful
provision shall be made, and duly executed documents evidencing the
same from the Company or its successor shall be delivered to the
Holder, so that the Holder shall have the right at any time prior to
the expiration of this Warrant to purchase, at a total price equal to
that payable upon the exercise of this Warrant, the kind and amount of
shares of stock and other securities and property receivable in
connection with such reclassification, reorganization, or change by a
holder of the same number of shares of Common Stock as were purchasable
by the Holder immediately prior to such reclassification,
reorganization, or change. In any such case appropriate provisions
shall be made with respect to the rights and interest of the Holder so
that the provisions hereof shall thereafter be applicable with respect
to any shares of stock or other securities and property deliverable
upon exercise hereof, and appropriate adjustments shall be made to the
purchase price per share payable hereunder, provided the aggregate
purchase price shall remain the same.
(f) Notice of Adjustment. When any adjustment is required to be made in
the number or kind of shares purchasable upon exercise of the Warrant,
or in the Warrant Price, the Company shall promptly notify the Holder
of such event and of the number of shares of Common Stock or other
securities or property thereafter purchasable upon exercise of this
Warrant.
23. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of
this Warrant, but in lieu of such fractional shares the Company shall
make a cash payment therefor on the basis of the Exercise Price then in
effect.
24. No Stockholder Rights. Prior to exercise of this Warrant, the Holder
shall not be entitled to any rights of a stockholder with respect to
the Shares (including without limitation the right to vote such Shares,
receive dividends or other distributions thereon, exercise preemptive
rights or be notified of stockholder meetings), and such Holder shall
not be entitled to any notice or other communication concerning the
business or affairs of the Company.
25. Transfers of Warrant. Subject to compliance with applicable federal and
state securities laws, this Warrant and all rights hereunder are
transferable in whole or in part by the Holder to any person or entity
upon written notice to the Company. The transfer shall be recorded on
the books of the Company upon the surrender of this Warrant, properly
endorsed, to the Company at its principal offices, and the payment to
the Company of all transfer taxes and other governmental charges
imposed on such transfer. In the event of a partial transfer, the
Company shall issue to the Holders one or more appropriate new
warrants.
26. Successors and Assigns. The terms and provisions of this Warrant shall
inure to the benefit of, and be binding upon, the Company and the
Holders hereof and their respective successors and assigns.
27. Amendments and Waivers. Any term of this Warrant may be amended and the
observance of any term of this Warrant may be waived with the written
consent of the Company and Holder.
28. Notices. All notices required under this Warrant shall be deemed to
have been given or made for all purposes (i) upon personal delivery,
(ii) upon confirmation that the communication was successfully sent to
the applicable number if sent by facsimile; (iii) one day after being
sent, when sent by professional overnight courier service, or (iv) five
days after posting when sent by registered or certified mail. Notices
to the Company shall be sent to the principal office of the Company (or
at such other place as the Company shall notify the Holder hereof in
writing). Notices to the Holder shall be sent to the address of the
Holder on the books of the Company (or at such other place as the
Holder shall notify the Company hereof in writing).
29. Attorneys' Fees. If any action of law or equity is necessary to enforce
or interpret the terms of this Warrant, the prevailing party shall be
entitled to its reasonable attorneys' fees, costs and disbursements in
addition to any other relief to which it may be entitled.
30. Captions. The section and subsection headings of this Warrant are
inserted for convenience only and shall not constitute a part of this
Warrant in construing or interpreting any provision hereof.
31. Governing Law. This Warrant shall be governed by the laws of the State
of Minnesota as applied to agreements among Minnesota residents made
and to be performed entirely within the State of Minnesota
32.
IN WITNESS WHEREOF, iNTELEFILM, Inc. caused this Warrant to be executed by an
officer thereunto duly authorized.
INTELEFILM, INC.,
A Minnesota corporation
By: /s/ Richard A. Wiethorn
Name: Richard A. Wiethorn
Title: Chief Financial Officer
NOTICE OF EXERCISE
To: iNTELEFILM, Inc.
The undersigned hereby elects to purchase _________________ shares of Common
Stock of iNTELEFILM, Inc., a Minnesota corporation, pursuant to the terms of the
attached Warrant, and payment of the Exercise Price per share required under
such Warrant accompanies this notice. The undersigned hereby represents and
warrants that the undersigned is acquiring such shares for its own account for
investment purposes only, and not for resale or with a view to distribution of
such shares or any part thereof.
WARRANT HOLDER:
- -----------------------------------------
By:
[NAME]
Address:
Date:
Name in which shares should be registered: