Exhibit 10.4
 
 
THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933
SECURITIES ACT”) OR ANY STATE SECURITIES LAWS. THIS WARRANT MAY NOT BE EXERCISED
IN THE UNITED STATES (AS DEFINED IN REGULATION S UNDER THE 1933 SECURITIES ACT),
NOR MAY THIS WARRANT OR THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT
BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED, UNLESS THE WARRANT AND
THE COMMON SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE
1933 SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND THE CORPORATION RECEIVES AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO IT TO SUCH EFFECT.
 
THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT ARE SUBJECT TO A VOTING
PROXY GRANTED TO WILLIAM O’DOWD, AND TO A RIGHT OF FIRST REFUSAL GRANTED TO
COMPANY, AS FURTHER SET FORTH HEREIN.
 
Right to Purchase 7,000,000 Common Shares of Dolphin Digital Media, Inc.
(subject to adjustment as provided herein)

FORM OF COMMON STOCK PURCHASE WARRANT
 

No. F Issue Date:  September 13, 2012

 
DOLPHIN DIGITAL MEDIA, INC., a corporation organized under the laws of the State
of Nevada (the “Company”), hereby certifies that, for value received, T Squared
Investments LLC, or its permitted assigns (the “Holder”), is entitled, subject
to the terms set forth below, to purchase from the Company at any time
commencing on the issue date of this Warrant (the “Issue Date”) until 5:00 p.m.,
Florida time on September 13, 2015 (the “Expiration Date”), Seven Million
(7,000,000) fully paid and non-assessable Common Shares of the Company, at a per
share purchase price of US$0.25.  The purchase price per share, as adjusted from
time to time as herein provided, is referred to herein as the “Purchase
Price.”  The number and character of such Common Shares and the Purchase Price
are subject to adjustment as provided herein.  The Company may reduce the
Purchase Price or extend the Expiration Date without the consent of the Holder.
 
As used herein the following terms, unless the context otherwise requires, have
the following respective meanings:
 
(a)           The term “Company” shall include Dolphin Digital Media, Inc. and
any corporation which shall succeed or assume the obligations of Dolphin Digital
Media, Inc. hereunder.
 
 
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(b)           The term “Common Shares” includes (a) the Company’s Common Shares,
no par value per share and (b) any other securities into which or for which any
of the securities described in (a) may be converted or exchanged pursuant to a
plan of recapitalization, reorganization, merger, sale of assets or otherwise.
 
(c)           The term “Other Securities” refers to any stock (other than Common
Shares) and other securities of the Company or any other person (corporate or
otherwise) which the holder of the Warrant at any time shall be entitled to
receive, or shall have received, on the exercise of the Warrant, in lieu of or
in addition to Common Shares, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Shares or Other
Securities pursuant to Section 5 herein or otherwise.
 
(d)           The term “Warrant Shares” shall mean the Common Shares issuable
upon exercise of this Warrant.
 
1. Exercise of Warrant.
 
1.1 Number of Shares Issuable upon Exercise.  From and after the Issue Date
through and including the Expiration Date, the Holder hereof shall be entitled
to receive, upon exercise of this Warrant in whole in accordance with the terms
of subsection 1.2 or upon exercise of this Warrant in part in accordance with
subsection 1.3, Common Shares of the Company, subject to adjustment pursuant to
Section 4.
 
1.2 Full Exercise.  This Warrant may be exercised in full by the Holder hereof
by delivery of an original or facsimile copy of the form of subscription
attached as Exhibit A hereto (the “Subscription Form”) duly executed by such
Holder and surrender of the original Warrant within four (4) days of exercise,
to the Company at its principal office or at the office of its Warrant Agent (as
provided hereinafter), accompanied by payment, in cash, wire transfer or by
certified or official bank check payable to the order of the Company, in the
amount obtained by multiplying the number of Common Shares for which this
Warrant is then exercisable by the Purchase Price then in effect (the “Aggregate
Purchase Price”).
 
1.3 Partial Exercise.  This Warrant may be exercised in part (but not for a
fractional share) by surrender of this Warrant in the manner and at the place
provided in subsection 1.2 except that the amount payable by the Holder on such
partial exercise shall be the amount obtained by multiplying (a) the number of
whole shares designated by the Holder in the Subscription Form by (b) the
Purchase Price then in effect.  On any such partial exercise, the Company, at
its expense, will forthwith issue and deliver to or upon the order of the Holder
hereof a new Warrant of like tenor, in the name of the Holder hereof or as such
Holder (upon payment by such Holder of any applicable transfer taxes) may
request, the whole number of Common Shares for which such Warrant may still be
exercised.
 
1.4 Cashless Exercise.  Subject to the conditions contained in this Section 1.4
and Section 1.12, the Holder may, in its sole discretion, exercise this Warrant
in whole or in part and, in lieu of making the cash payment otherwise
contemplated to be made to the Company upon such exercise in payment of the
Aggregate Purchase Price, elect instead to receive upon such exercise the “Net
Number” of Common Shares determined according to the following formula (a
“Cashless Exercise”):
 

 Net Number =    (B-C) x A       B  

 
 
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For purposes of the foregoing formula:

 
A =
the total number of shares with respect to which this Warrant is then being
exercised.

 
B =
the Fair Market Value of a Common Share as of the date of exercise.

 
C =
the Purchase Price then in effect for the applicable Warrant Shares at the time
of such exercise.

 
The holder of this Warrant agrees not to elect a Cashless Exercise for a period
so long as the Purchase Price of this warrant is above $0.001 per share.
 
1.5 Fair Market Value. Fair Market Value of a Common Share as of a particular
date (the “Determination Date”) shall mean:
 
(a) If the Company’s Common Shares are traded on a national stock exchange, then
the average of the closing or last sale price reported for each of the last 5
business days immediately preceding the Determination Date;
 
(b) If the Company’s Common Shares are not traded on a national stock exchange,
but are traded in the over-the-counter market, then the average of the closing
bid and ask prices reported for each of the last 5 business days immediately
preceding the Determination Date;
 
(c) Except as provided in clause (d) below, if the Company’s Common Shares are
not publicly traded, then as the Holder and the Company agree, or in the absence
of such an agreement, by arbitration in accordance with the rules then standing
of the American Arbitration Association, before a single arbitrator to be chosen
from a panel of persons qualified by education and training to pass on the
matter to be decided; or
 
(d) If the Determination Date is the date of a liquidation, dissolution or
winding up, or any event deemed to be a liquidation, dissolution or winding up
pursuant to the Company’s charter, then all amounts to be payable per share to
holders of the Common Shares pursuant to the charter in the event of such
liquidation, dissolution or winding up, plus all other amounts to be payable per
share in respect of the Common Shares in liquidation under the charter, assuming
for the purposes of this clause (d) that all of the shares of Common Shares then
issuable upon exercise of all of the Warrants are outstanding at the
Determination Date.
 
1.6 Company Acknowledgment. The Company will, at the time of the exercise of the
Warrant, upon the request of the Holder hereof acknowledge in writing its
continuing obligation to afford to such Holder any rights to which such Holder
shall continue to be entitled after such exercise in accordance with the
provisions of this Warrant. If the Holder shall fail to make any such request,
such failure shall not affect the continuing obligation of the Company to afford
to such Holder any such rights.
 
 
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1.7 Delivery of Stock Certificates, etc. on Exercise.  The Company agrees that
the Common Shares purchased upon exercise of this Warrant shall be 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 and
payment made for such shares as aforesaid. As soon as practicable after the
exercise of this Warrant in full or in part, and in any event within five (5)
business days thereafter, the Company at its expense (including the payment by
it of any applicable issue taxes) will cause to be issued in the name of and
delivered to the Holder hereof, or as such Holder (upon payment by such Holder
of any applicable transfer taxes) may direct in compliance with applicable
securities laws, a certificate or certificates for the number of duly and
validly issued, fully paid and non-assessable Common Shares (or Other
Securities) to which such Holder shall be entitled on such exercise, plus, in
lieu of any fractional share to which such Holder would otherwise be entitled,
cash equal to such fraction multiplied by the then Fair Market Value of one full
Common Share, together with any other stock or other securities and property
(including cash, where applicable) to which such Holder is entitled upon such
exercise pursuant to Section 1 or otherwise.
 
1.8 Right of First Refusal.  Prior to any sale, assignment, transfer (including
by purchase, inter-spousal disposition pursuant to a domestic relations
proceeding or otherwise by operation of law), pledge, encumbrance or otherwise
disposition of any of the Common Shares issuable upon exercise of this Warrant,
Holder shall provide Company with 10 business days prior written notice of same
(a “Sale Notice”), which Sale Notice shall contain a description of the material
terms of the proposed sale transaction, including the names of any parties
involved, price per share, etc.  Upon receipt of a Sale Notice, the Company
shall have 5 business days to provide Holder with written notice of the
Company’s election to redeem said Common Shares (a “Redemption Notice”).  Any
such redemption shall be made at the Fair Market Value of the Common Shares or
the price per share of the proposed sale transaction, as set forth in Section
1.5 above, with the Determination Date being the date of said Redemption Notice,
and shall be payable in cash at closing, which closing shall occur as soon as
possible and in any event within 30 days of the date of said Redemption
Notice.  The certificates evidencing the Common Shares issuable upon exercise of
this Warrant shall contain a restrictive legend setting forth, or
cross-referencing, the provisions of this Section 1.8. Such clause shall only be
valid if the Holders sale transaction represents greater than 20,000 shares in
any given 24 hour period.
 
1.9 No Transfer Clause.  Holder hereby agrees that it will for no reason
transfer the control of the Warrant into the name of any other party that would
result in the current representative party (“Control Person(s)”) of the entity
or person(s) holding the Warrant, being another Control Person(s).
 
1.10 Limitation on Exercise.  Notwithstanding any provision of this Warrant to
the contrary, this Warrant is only exercisable to the extent the Company has
available for issuance that number of authorized and unissued Common Shares
necessary to cover said exercise.  To the extent the Company at any time fails
to have that number of authorized and unissued Common Shares necessary to enable
the full exercise of this Warrant, the Company shall promptly take all
reasonable steps necessary to increase the Company’s authorized and unissued
Common Shares to enable the full exercise of this Warrant, including, but not
limited to, filing a proxy statement or information statement with the
Securities and Exchange Commission, scheduling and holding a meeting of the
Company’s shareholders to the extent necessary, and filing Articles of Amendment
to the Company’s Articles of Incorporation.
 
 
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1.11 Proxy. Holder hereby irrevocably grants to, and appoints, William O’Dowd,
and any individual designated in writing by him, and each of them individually,
as its proxy and attorney-in-fact (with full power of substitution), for and in
its name, place and stead, to vote the Common Shares underlying this Warrant,
upon issuance, at any meeting of the shareholders of the Company or
otherwise.  Holder understands and acknowledges that the Company is entering
into this Warrant in reliance upon the proxy set forth in this Section
1.11.  Holder hereby (i) affirms that the irrevocable proxy is coupled with an
interest and may under no circumstances be revoked, (ii) ratifies and confirms
all that the proxies appointed hereunder may lawfully do or cause to be done by
virtue hereof, and (iii) affirms that such irrevocable proxy is executed and
intended to be irrevocable in accordance with the provisions of Section
78.355(5) of the Nevada General Corporation Law.
 
1.12 Maximum Exercise. The Holder shall not be entitled to exercise thisWarrant
on a date of exercise in connection with that number of shares of Common Stock
which would be in excess of the sum of (i) the number of shares of Common Stock
beneficially owned by the Holder and its affiliates on an exercise date, and
(ii) the number of shares of Common Stock issuable upon the exercise of this
Warrant with respect to which the determination of this limitation is being made
on an exercise date, which would result in beneficial ownership by the Holder
and its affiliates of more than 9.99% of the outstanding shares of Common Stock
on such date. If the Warrant Holder is unable to exercise this Warrant as a
result that it would put them over the 9.99% limitation, the Expiration Date of
this Warrant shall be extended until such time as the Warrant Holder is able to
exercise this warrant and stay below the 9.99% limitation. This Section 1.12 may
be waived or amended only with the consent of the Holder and the Board of
Directors of the Company. For the purposes of the immediately preceding
sentence, beneficial ownership shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13d-3
there under.
 
2. Adjustment for Reorganization, Consolidation, Merger, etc.
 
2.1 Reorganization, Consolidation, Merger, etc.  In case at any time or from
time to time, the Company shall (a) effect a reorganization, (b) consolidate
with or merge into any other person or (c) transfer all or substantially all of
its properties or assets to any other person under any plan or arrangement
contemplating the dissolution of the Company, then, in each such case, as a
condition to the consummation of such a transaction, proper and adequate
provision shall be made by the Company whereby the Holder of this Warrant, on
the exercise hereof as provided in Section 1, at any time after the consummation
of such reorganization, consolidation or merger or the effective date of such
dissolution, as the case may be, shall receive, in lieu of the Common Shares (or
Other Securities) issuable on such exercise prior to such consummation or such
effective date, the stock and other securities and property (including cash) to
which such Holder would have been entitled upon such consummation or in
connection with such dissolution, as the case may be, if such Holder had so
exercised this Warrant, immediately prior thereto, all subject to further
adjustment thereafter as provided in Section 3.
 
 
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2.2 Dissolution.  In the event of any dissolution of the Company following the
transfer of all or substantially all of its properties or assets, the Company,
prior to such dissolution, shall at its expense deliver or cause to be delivered
the stock and other securities and property (including cash, where applicable)
receivable in accordance with Section 2.1 by the Holder of the Warrants upon
their exercise after the effective date of such dissolution pursuant to this
Section 2.
 
2.3 Continuation of Terms.  Upon any reorganization, consolidation, merger or
transfer (and any dissolution following any transfer) referred to in this
Section 2, this Warrant shall continue in full force and effect and the terms
hereof shall be applicable to the Other Securities and property receivable on
the exercise of this Warrant after the consummation of such reorganization,
consolidation or merger or the effective date of dissolution following any such
transfer, as the case may be, and shall be binding upon the issuer of any Other
Securities, including, in the case of any such transfer, the person acquiring
all or substantially all of the properties or assets of the Company, whether or
not such person shall have expressly assumed the terms of this Warrant as
provided in Section 3.  In the event this Warrant does not continue in full
force and effect after the consummation of the transaction described in this
Section 2, then only in such event will the Company’s securities and property
(including cash, where applicable) receivable by the Holder of the Warrants be
delivered to the Trustee as contemplated by Section 2.2.
 
3. Extraordinary Events Regarding Common Stock.  In the event that the Company
shall (a) issue additional Common Shares as a dividend or other distribution on
outstanding Common Shares, (b) subdivide its outstanding Common Shares, or
(c) combine its outstanding Common Shares into a smaller number of Common
Shares, then, in each such event, the Purchase Price shall, simultaneously with
the happening of such event, be adjusted by multiplying the then Purchase Price
by a fraction, the numerator of which shall be the number of Common Shares
outstanding immediately prior to such event and the denominator of which shall
be the number of Common Shares outstanding immediately after such event, and the
product so obtained shall thereafter be the Purchase Price then in effect. The
Purchase Price, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described herein in this Section 3.
The number of Common Shares that the Holder of this Warrant shall thereafter, on
the exercise hereof as provided in Section 1, be entitled to receive shall be
adjusted to a number determined by multiplying the number of Common Shares that
would otherwise (but for the provisions of this Section 3) be issuable on such
exercise by a fraction of which (a) the numerator is the Purchase Price that
would otherwise (but for the provisions of this Section 3) be in effect, and
(b) the denominator is the Purchase Price in effect on the date of such
exercise.
 
4. Certificate as to Adjustments.  In each case of any adjustment in the Common
Shares (or Other Securities) issuable on the exercise of the Warrants, the
Company at its expense will promptly cause its Chief Financial Officer or other
appropriate designee to compute such adjustment or readjustment in accordance
with the terms of the Warrant and prepare a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment is based.  The Company will forthwith mail a copy of each such
certificate to the Holder of the Warrant.
 
 
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5. Reservation of Stock, etc. Issuable on Exercise of Warrant; Financial
Statements.  The Company will, after amendment of its articles of Inc.,  at all
times reserve and keep available, solely for issuance and delivery on the
exercise of the Warrants, all Common Shares (or Other Securities) from time to
time issuable on the exercise of the Warrant.
 
6. Assignment; Exchange of Warrant. Subject to compliance with applicable
securities laws, and the terms contained herein, this Warrant, and the rights
evidenced hereby, may be transferred by any registered holder hereof (a
“Transferor”). On the surrender for exchange of this Warrant, with the
Transferor’s endorsement in the form of Exhibit B attached hereto (the
“Transferor Endorsement Form”) and together with an opinion of counsel
reasonably satisfactory to the Company that the transfer of this Warrant will be
in compliance with applicable securities laws, the Company at its expense,
twice, only, but with payment by the Transferor of any applicable transfer
taxes, will issue and deliver to or on the order of the Transferor thereof a new
Warrant or Warrants of like tenor, in the name of the Transferor and/or the
transferee(s) specified in such Transferor Endorsement Form (each a
“Transferee”), calling in the aggregate on the face or faces thereof for the
number of Common Shares called for on the face or faces of the Warrant so
surrendered by the Transferor.  No such transfers shall result in a public
distribution of the Warrant.
 
7. Replacement of Warrant.  On 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 of this Warrant, on delivery
of an indemnity agreement or security reasonably satisfactory in form and amount
to the Company or, in the case of any such mutilation, on surrender and
cancellation of this Warrant, the Company at its expense, twice only, will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
 
8. Transfer on the Company’s Books.  Until this Warrant is transferred on the
books of the Company, the Company may treat the registered holder hereof as the
absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.
 
9. Notices. All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless
otherwise specified herein, shall be (i) personally served, (ii) deposited in
the mail, registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice.  Any notice or other communication required or permitted to
be given hereunder shall be deemed effective (a) upon hand delivery or delivery
by facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur or (c) three business days
after deposited in the mail if delivered pursuant to subsection (ii) above.  The
addresses for such communications shall be: (i) if to the Company to:  2151
LeJeune Road, Suite 150, Coral Gables, Florida 33134, facsimile (305) 774-0405;
and (ii) if to the Holder, to: 1325 Sixth Ave., Floor 27, New York, NY 10019,
facsimile (212) 671-1403.  The Company and the Holder may change their
respective addresses for notices by like notice to the other party.
 
 
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10. Sale or Merger of the Company. Upon a Change in Control, the restriction
contained in Section 1.12 shall immediately be released and the Holder will have
the right to exercise this Warrant concurrently with such Change in Control
event.  For purposes of this Warrant, the term “Change in Control” shall mean a
consolidation or merger of the Company with or into another company or entity in
which the Company is not the surviving entity or the sale of all or
substantially all of the assets of the Company to another company or entity not
controlled by the then existing stockholders of the Company in a transaction or
series of transactions.
 
11. Notice of Intent to Sell or Merge the Company. To the extent legally
practicable, the Company will give Warrant Holder ten (10) business days notice
before the event of a sale of all or substantially all of the assets of the
Company or the merger or consolidation of the Company in a transaction in which
the Company is not the surviving entity. Failure to provide such notice will not
invalidate any such corporate action.
 
12. Reduction of Exercise Price. The Holder may over the term of the Warrant
make a payment to the Company for an equivalent amount of money to reduce the
Purchase Price of this Warrant until such time as the Purchase Price of this
Warrant is able to be exercised via a cashless provision per Section 1.4 of this
agreement.  Each time a payment by the Holder is made to the Company, a side
letter will be executed by both parties that states the new effective Purchase
Price of the Warrant at that time.  At such time when the Holder has paid a
total amount to effectively reduce the Purchase Price down to an Purchase Price
that is below the limitation in Section 1.4 of this agreement, then the Holder
shall have the right to exercise this Warrant via a cashless provision and hold
for a period of six months since the last payment to reduce the exercise price
was made to remove the legend under Rule 144.
 
13. Miscellaneous. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. This Warrant shall be construed and enforced in accordance with and
governed by the laws of New York without regard to the conflicts of laws
provisions thereof. The headings in this Warrant are for purposes of reference
only, and shall not limit or otherwise affect any of the terms hereof.  The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.
 
IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first
written above.
 

  DOLPHIN DIGITAL MEDIA, INC.

By: _____________________________________________
Name: ___________________________________________
Title: ____________________________________________

 
 
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Exhibit A
 
FORM OF SUBSCRIPTION
(to be signed only on exercise of Warrant)
 
TO:  DOLPHIN DIGITAL MEDIA, INC.
 
The undersigned, pursuant to the provisions set forth in the attached Warrant,
hereby irrevocably elects to purchase ___ Common Shares covered by such Warrant.
 
The undersigned herewith (check applicable box):
 
_____           makes payment of the full purchase price for such shares at the
price per share provided for in such Warrant, which is $___________, in lawful
money of the United States; or
 
_____ elects a Cashless Exercise.
 
The undersigned requests that the certificates for such shares be issued in the
name of, and delivered to __________________________ whose address is
______________________________
 

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The undersigned represents and warrants that all offers and sales by the
undersigned of the securities issuable upon exercise of the within Warrant shall
be made pursuant to registration of the Common Shares under the Securities Act
of 1933, as amended (the “Securities Act”), or pursuant to an exemption from
registration under the Securities Act.
 
 

Dated: ____________________________________________        
____________________________________________    
(Signature must conform to name of holder as
specified on the fact of the Warrant.)
          ____________________________________________    
____________________________________________     (Address)

 
 
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