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EXHIBIT 4.5
NO. _____
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
WARRANT TO PURCHASE SHARES
OF CAPITAL STOCK OF
BAM! ENTERTAINMENT, INC.
This certifies that Morgan Keegan & Company, Inc., or its successors or
assigns (the "Holder"), for value received, is entitled to purchase from BAM!
Entertainment, Inc., a Delaware corporation (the "Company"), having a place of
business at 333 W. Santa Clara Blvd., San Jose, CA 95113, up to 3,500 shares
("Warrant Shares") of the Company's Common Stock (the "Common Stock"), at a
purchase price of $22.553 per share (the "Per Share Price"). The Warrant Shares
may be purchased at any time after May 24, 2001 (the "Exercise Date") until 5
p.m. Pacific Standard Time on the fifth anniversary of the Exercise Date (the
"Expiration Date") upon surrender to the Company at its principal office (or at
such other location as the Company may advise the Holder in writing) of this
Warrant properly endorsed with the Form of Subscription attached hereto duly
filled in and signed and, if applicable, upon payment in cash or by check of the
aggregate Per Share Price for the number of the Warrant Shares for which this
Warrant is being exercised determined in accordance with the provisions hereof.
The Per Share Price and the number of Warrant Shares purchasable hereunder are
subject to adjustment as provided in Section 3 of this Warrant. This Warrant is
subject to the following terms and conditions:
1. EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
1.1 EXERCISE DATE. This Warrant is exercisable at the option of the
holder of record hereof, at any time or from time to time, from the Exercise
Date of the Qualified Financing up to the Expiration Date for all or any part of
the shares of Warrant Shares (but not for a fraction of a share) which may be
purchased hereunder by the surrender of this Warrant, together with the
Subscription Form attached hereto as Exhibit A, duly completed and executed at
the principal office of the Company specifying the portion of the Warrant to be
exercised and accompanied by payment in full in cash or by check with respect to
the Shares of the Warrant Stock being purchased. The Company agrees that the
shares of Warrant Shares purchased under this Warrant shall be and are deemed to
be issued to the Holder hereof as the record owner of such shares as of the
close of business on the date on which this Warrant shall have been surrendered,
properly endorsed, together with the completed, executed Form of Subscription
delivered and payment made for such shares. Certificates for the shares of
Warrant Shares so purchased, together with any other securities or property to
which the Holder hereof is entitled upon such exercise, shall be delivered to
the Holder hereof by the Company at the Company's expense within a reasonable
time after the rights represented by this Warrant have been so exercised. In
case of a purchase of less than all the shares which may be purchased under this
Warrant, the Company shall cancel this Warrant and execute and deliver a new
Warrant or Warrants of like tenor for the balance of the shares purchasable
under the Warrant surrendered upon such purchase to the Holder hereof within a
reasonable time. Each stock certificate so delivered shall be in such
denominations of Warrant Shares as may be requested by the Holder hereof and
shall be registered in the name of such Holder.
1.2 NET ISSUE EXERCISE. Notwithstanding any provisions herein to the
contrary, if the Company makes an initial public offering of the Common Stock
and the initial public offering price of one share of Common Stock is greater
than the Per Share Price for one share of the Warrant Shares, in lieu of
exercising this Warrant for cash, the Holder may elect to receive shares of
Common Stock equal to the value (as determined below) of this Warrant (or the
portion thereof being canceled) by surrender of this Warrant at the principal
office of the Company, properly endorsed with the Form of Subscription attached
hereto duly filled in and signed, in which event
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the Company shall issue to the Holder that number of shares of Common Stock
computed using the following formula:
WS = WCS (FMV-PSP)
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FMV
WHERE:
WS equals the number of Warrant Shares to be issued to the Holder
WCS equals the number of shares of Common Stock purchasable under
this Warrant or, if only a portion of the Warrant is being
exercised, the portion of the Warrant being canceled (at the date
of such calculation)
FMV equals the fair market value of one share of Common Stock at the
initial public offering price at the date of an initial public
offering of the Common Stock
PSP equals the Per Share Price (as adjusted to the date of such
calculation) of this Warrant
1.3 ORGANIC CHANGE DEFINED. "Organic Change" is any recapitalization,
reclassification or reorganization of the capital stock of the Company, or any
consolidation or merger of the Company with another corporation, or the sale of
all or substantially all of its assets or other transaction shall be effected in
such a way that holders of Warrant Shares shall be entitled to receive stock,
securities, or other assets or property (an "Organic Change").
2. SHARES TO BE FULLY PAID; RESERVATION OF SHARES. The Company covenants
and agrees that all shares of Warrant Shares which may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable and free from all
preemptive rights of any shareholder and free of all taxes, liens and charges
with respect to the issue thereof. The Company further covenants and agrees
that, during the period within which the rights represented by this Warrant may
be exercised, the Company will at all times have authorized and reserved, for
the purpose of issue or transfer upon exercise of the subscription rights
evidenced by this Warrant, a sufficient number of shares of authorized but
unissued Warrant Shares, or other securities and property, when and as required
to provide for the exercise of the rights represented by this Warrant.
3. ADJUSTMENT OF PER SHARE PRICE AND NUMBER OF SHARES. The Per Share Price
and the number of shares purchasable upon the exercise of this Warrant shall be
subject to adjustment from time to time upon the occurrence of certain events
described in this Section 3.
3.1 SUBDIVISION OR COMBINATION OF STOCK. In case the Company shall at
any time subdivide its outstanding shares of Warrant Shares into a greater
number of shares, the Per Share Price in effect immediately prior to such
subdivision shall be proportionately reduced, and conversely, in case the
outstanding shares of Warrant Shares of the Company shall be combined into a
smaller number of shares, the Per Share Price in effect immediately prior to
such combination shall be proportionately increased.
3.2 DIVIDENDS IN WARRANT SHARES, OTHER STOCK, PROPERTY,
RECLASSIFICATION. If at any time or from time to time the Holders of Warrant
Shares (or any shares of stock or other securities at the time receivable upon
the exercise of this Warrant) shall have received or become entitled to receive,
without payment therefor,
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(a) Warrant Shares or any shares of stock or other securities
which are at any time directly or indirectly convertible into or exchangeable
for Warrant Shares, or any rights or options to subscribe for, purchase or
otherwise acquire any of the foregoing by way of dividend or other distribution,
(b) Any cash paid or payable otherwise than as a cash dividend,
or
(c) Warrant Shares or additional stock or other securities or
property (including cash) by way of spinoff, split-up, reclassification,
combination of shares or similar corporate rearrangement, (other than shares of
Warrant Shares issued as a stock split or adjustments in respect of which shall
be covered by the terms of Section 3.1 above),
then and in each such case, the Holder hereof shall, upon the exercise of this
Warrant, be entitled to receive, in addition to the number of shares of Warrant
Shares receivable thereupon, and without payment of any additional consideration
therefor, the amount of stock and other securities and property (including cash
in the cases referred to in clause (b) above and this clause (c)) which such
Holder would hold on the date of such exercise had he been the holder of record
of such Warrant Shares as of the date on which holders of Warrant Shares
received or became entitled to receive such shares or all other additional stock
and other securities and property.
3.3 NO IMPAIRMENT. Except and to the extent as waived or consented to
by the Holder, 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 hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of this Warrant and in
the taking of all such action as may be necessary or appropriate in order to
protect the exercise rights of the Holder against impairment.
3.4 NOTICES OF CHANGE.
(a) Immediately upon any adjustment in the number or class of
shares subject to this Warrant and of the Per Share Price, the Company shall
give written notice thereof to the Holder, setting forth in reasonable detail
and certifying the calculation of such adjustment.
(b) The Company shall give written notice to the Holder at least
ten (10) business days prior to the date on which the Company closes its books
or takes a record for determining rights to receive any dividends or
distributions.
(c) The Company shall give written notice to the Holder at least
thirty (30) business days prior to the date on which an Organic Change or an
Qualified Public Offering shall take place.
4. ISSUE TAX. The issuance of certificates for shares of Warrant Shares
upon the exercise of the Warrant shall be made without charge to the Holder of
the Warrant for any issue tax (other than any applicable income taxes) in
respect thereof; provided, however, that the Company shall not be required to
pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of the then
Holder of the Warrant being exercised.
5. CLOSING OF BOOKS. The Company will at no time close its transfer books
against the transfer of any warrant or of any shares of Warrant Shares issued or
issuable upon the exercise of any warrant in any manner which interferes with
the timely exercise of this Warrant.
6. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing contained
in this Warrant shall be construed as conferring upon the Holder hereof the
right to vote or to consent or to receive notice as a shareholder of the Company
or any other matters or any rights whatsoever as a shareholder of the Company.
No dividends or interest shall be payable or accrued in respect of this Warrant
or the interest represented hereby or the shares purchasable hereunder until,
and only to the extent that, this Warrant shall have been exercised. No
provisions hereof, in the absence of affirmative action by the holder to
purchase shares of Warrant Shares, and no
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mere enumeration herein of the rights or privileges of the holder hereof, shall
give rise to any liability of such Holder for the Per Share Price or as a
shareholder of the Company, whether such liability is asserted by the Company or
by its creditors.
7. RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF WARRANT. The rights and
obligations of the Company, of the holder of this Warrant and of the holder of
shares of Warrant Shares issued upon exercise of this Warrant, shall survive the
exercise of this Warrant.
8. MODIFICATION AND WAIVER. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
9. NOTICES.
9.1 The Company shall notify the Holder of a Qualified Public Offering
or an Organic Change at least fifteen (15) days prior to the occurrence of such
an event.
9.2 Any notice, request or other document required or permitted to be
given or delivered to the holder hereof or the Company shall be delivered or
shall be sent by certified mail, postage prepaid, to each such holder at its
address as shown on the books of the Company or to the Company at the address
indicated therefor in the first paragraph of this Warrant or such other address
as either may from time to time provide to the other.
10. BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets. All of the obligations of the
Company relating to the Warrant Shares issuable upon the exercise of this
Warrant shall survive the exercise and termination of this Warrant. This Warrant
may not be assigned without the prior written consent of the Company.
11. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description headings of
the several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of California.
12. LOST WARRANTS. The Company represents and warrants to the Holder
hereof that upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction, or mutilation of this Warrant and, in the case of
any such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of such Warrant, the Company, at its expense, will
make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant.
13. FRACTIONAL SHARES. No fractional shares shall be issued upon exercise
of this Warrant. The Company shall, in lieu of issuing any fractional share, pay
the holder entitled to such fraction a sum in cash equal to such fraction
multiplied by the then effective Per Share Price.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
by its officers, thereunto duly authorized this 24th day of May, 2001.
BAM! ENTERTAINMENT, INC., a Delaware
corporation
By: /s/ RAYMOND C. MUSCI
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Raymond C. Musci, President
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EXHIBIT A
SUBSCRIPTION FORM
Date: _________________, 200_
BAM! Entertainment, Inc.
333 W. Santa Clara Blvd.
San Jose, CA 95113
Attn: President
Ladies and Gentlemen:
The undersigned hereby elects to exercise the warrant issued to it by BAM!
Entertainment, Inc. (the "Company") and dated _____________, 2001 Warrant No.
___ (the "Warrant") and to purchase thereunder
__________________________________ shares of the Warrant Shares of the Company
(the "Shares") at a purchase price of
___________________________________________ Dollars ($__________) per Share or
an aggregate purchase price of __________________________________ Dollars
($__________) (the "Purchase Price").
Pursuant to the terms of the Warrant the undersigned has delivered the
Purchase Price herewith in full in cash or by certified check or wire transfer.
Very truly yours,
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By:
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Title:
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