Document:

CC Filed by Filing Services Canada Inc. 403-717-3898

“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY (AND THE COMMON SHARES ISSUABLE ON THE DUE EXERCISE THEREOF) BEFORE OCTOBER 9, 2007”

“THE SECURITIES REPRESENTED HEREBY (INCLUDING THE COMMON SHARES ISSUABLE ON THE DUE EXERCISE THEREOF) HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, (THE “U.S. SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY STATES, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON (AS DEFINED IN REGULATION S UNDER THE U.S. SECURITIES ACT) BEFORE JULY 19, 2007”

THE WARRANTS AND THE SECURITIES ISSUABLE UPON EXERCISE OF THE WARRANTS HAVE NOT BEEN REPRESENTED UNDER THE UNITED STATES SECURITIES ACT OF 1933 AS AMENDED (THE “U.S. SECURITIES ACT’) OR ANY STATE SECURITIES LAWS, AND THESE WARRANTS MAY NOT BE EXERCISED IN THE UNITED STATES OR BY OR ON BEHALF OF A “U.S. PERSON” (AS DEFINED IN REGULATION S UNDER THE U.S. SECURITIES ACT) UNLESS REGISTERED AS AN EXEMPTION FROM REGISTRATION IS AVAILABLE, AND THE CORPORATION HAS RECEIVED AN OPINION OF COUNSEL TO SUCH EFFECT, IN FORM AND SUBSTANCE SATISFACTORY TO IT, ACTING REASONABLY.

THIS WARRANT CERTIFICATE, AND THE WARRANTS EVIDENCED HEREBY, WILL BE VOID AND OF NO VALUE UNLESS EXERCISED ON OR BEFORE 5:00 P.M. (EASTERN STANDARD TIME) ON JUNE 8, 2011.

PEACE ARCH ENTERTAINMENT GROUP INC.

a corporation continued under the laws of Ontario

and having its registered office at

124 Merton Street Suite 407, Toronto, Ontario M4S 2Z2

		
	NO. 2007 - 1

	400,000 WARRANTS

	 
	Each entitling the holder to acquire one (1) common share Peace Arch Entertainment Group Inc., at a price per share equal to $2.50 subject to adjustment as set  forth herein, in accordance with the terms and conditions set forth herein.

BROKER WARRANTS

THIS IS TO CERTIFY THAT for value received Westwind Partners Inc. 70 York Street, 10th Floor Toronto, Ontario M5J 1S9 (the “Holder”) is the registered holder of the number of Warrants stated above and is entitled for each whole Warrant represented hereby to purchase one (1) fully paid and non-assessable common share (each a “Share” and collectively the “Shares”) in the capital of Peace Arch Entertainment Group Inc. (the “Corporation”) at any time and from time to time from the date of issue hereof up to and including 5:00 p.m. (Eastern Standard Time) on June 8, 2011 (the “Expiry Time”), at a price per Share equal to $2.50 subject to adjustment as hereinafter provided (the “Exercise Price”), upon and subject to the following terms and conditions.

For purposes of this Warrant Certificate:

(i)

“Broker Shares” means the Shares which are issuable upon the exercise from time to time of these Warrants; and

(ii)

“$” means Canadian dollars.

TERMS AND CONDITIONS

1.

The Warrants represented by this Warrant Certificate may not be exercised in the United States or by or on behalf of a U.S. Person nor will the Broker Shares be registered or delivered to an address in the United States, unless registered under, or an exemption from registration is available under, the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), and the applicable securities laws of any U.S. state is available.  The Warrants represented by this Warrant Certificate may not be transferred to, or for the benefit of, a transferee in the United States or a U.S. Person. As used herein, the terms “United States” and “U.S. Person” have the meanings ascribed to them in Regulation S under the U.S. Securities Act.

The Warrants represented by this Warrant Certificate and the Broker Shares issuable upon exercise of these Warrants are subject to certain resale restrictions under applicable securities legislation. The Holder is advised to seek professional advice as to applicable resale restrictions.

The Broker Shares, if any, issued prior to the date that is 4 months and a day  from June 8, 2007 shall bear, in addition to any other legends required by applicable laws, the following legend:

“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS 

SECURITY MUST NOT TRADE THE SECURITY BEFORE OCTOBER 9, 2007.”

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK EXCHANGE (“TSX”); HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE FACILITIES OF TSX BEFORE OCTOBER 9, 2007, SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON TSX.”

2.

At any time and from time to time at or prior to the Expiry Time (the “Exercise Period”) the Holder may exercise all or any number of whole Warrants represented hereby, upon delivering to the Corporation at its principal office noted above on this Warrant Certificate, together with a duly completed and executed subscription notice in the form attached hereto (the “Subscription Notice”) evidencing the election of the Holder to exercise the number of Warrants set forth in the Subscription Notice (which shall not be greater 

than the number of Warrants represented by this Warrant Certificate as adjusted from time to time pursuant to Sections 5 and 6 of this Warrant Certificate) and a certified cheque, money order or bank draft payable to the Corporation for the aggregate Exercise Price of all Warrants being exercised. If the Holder is not exercising all Warrants represented by this Warrant Certificate, the Holder shall be entitled to receive, without charge, a new Warrant Certificate representing the number of Warrants which is the difference between the number of Warrants represented by the then original Warrant Certificate and the number of Warrants being so exercised.

3.

The Holder shall be deemed to have become the holder of record of Broker Shares on the date (the “Exercise Date”) on which the Corporation has received a duly completed Subscription Notice, delivery of the Warrant Certificate and payment of the full aggregate Exercise Price in respect of the Warrants being exercised pursuant to such Subscription Notice; provided, however, that if such date is not a business day in the City of Toronto, Ontario (a “Business Day”) then the Broker Shares shall be deemed to have been issued and the Holder shall be deemed to have become the holder of record of the Broker Shares on the next following Business Day. Within seven (7) Business Days of the Exercise Date, the Corporation shall issue and deliver (or cause to be delivered) to the Holder, by registered mail or pre-paid courier to his, her or its address specified in the register of the Corporation, one or more certificates for the appropriate number of issued and outstanding Broker Shares.  All costs, expenses, transfer taxes and other charges payable in connection with the issue and delivery of the Broker Shares shall be at the sole expense of the Corporation (other than withholding tax, if any).

4.

The Corporation covenants and agrees that, until the Expiry Time, while any of the Warrants represented by this Warrant Certificate shall be outstanding, it shall reserve and there shall remain unissued out of its authorized capital a sufficient number of Broker Shares to satisfy the right of purchase herein provided, as such right of purchase may be adjusted pursuant to Sections 5 and 6 of this Warrant Certificate. The Corporation represents and warrants that all Broker Shares which shall be issued upon the exercise of the right to purchase herein provided for, upon payment of the aggregate Exercise Price at which such Broker Shares may at that time be purchased pursuant to the provisions hereof, shall be issued as fully paid and non-assessable shares and the holders thereof shall not be liable to the Corporation or its creditors in respect thereof.  The Corporation further represents and warrants that this Warrant Certificate is a legal, valid and binding obligation of the Corporation, enforceable against the Corporation in accordance with its terms.  The Corporation covenants that it will make all requisite filings under applicable laws in connection with the exercise of the Warrants and issue of Broker Shares.

5.

The Exercise Price (and the number of Broker Shares purchasable upon exercise) shall be subject to adjustment from time to time in the events and in the manner provided as follows:

(a)

Share Reorganization. If during the Exercise Period the Corporation shall:

(i)

issue Shares or securities exchangeable for or convertible into Shares to holders of all or substantially all of its then outstanding Shares by way of stock dividend or other distribution, or

(ii)

subdivide, redivide or change its outstanding Shares into a greater number of Shares, or

(iii)

consolidate, reduce or combine its outstanding Shares into a lesser number of Shares,

(any of such events in these paragraphs (i), (ii) and (iii) being a “Share Reorganization”), then the Exercise Price shall be adjusted as of the effective date or record date, as the case may be, at which the holders of Shares are determined for the purpose of the Share Reorganization by multiplying the Exercise Price in effect immediately prior to such effective date or record date by a fraction, the numerator of which shall be the number of Shares outstanding on such effective date or record date before giving effect to such Share Reorganization and the denominator of which shall be the number of Shares outstanding as of the effective date or record date after giving effect to such Share Reorganization (including, in the case where securities exchangeable for or convertible into Shares are distributed, the number of Shares that would have been outstanding 

had such securities been fully exchanged for or converted into Shares on such record date or effective date). From and after any adjustment of the Exercise Price pursuant to this Section 5(a), the number of Broker Shares purchasable pursuant to this Warrant Certificate shall be adjusted contemporaneously with the adjustment of the Exercise Price by multiplying the number of Shares then otherwise purchasable on the exercise thereof by a fraction, the numerator of which shall be the Exercise Price in effect immediately prior to the adjustment and the denominator of which shall be the Exercise Price resulting from such adjustment.

(b)

Rights Offering. If and whenever during the Exercise Period the Corporation shall fix a record date for the issue or distribution of rights, options or warrants to all or substantially all of the holders of Shares under which such holders are entitled, during a period expiring not more than 45 days after the record date for such issue to subscribe for or purchase Shares or securities exchangeable for or convertible into Shares at a price per share to the holder (or having a conversion price or exchange price per Share) of less than 95% of the Current Market Price (as defined in Section 6 hereof) for the Shares on such record date (any of such events being called a “Rights Offering”), then the Exercise Price shall be adjusted effective immediately after the record date for the Rights Offering to a price determined by multiplying the Exercise Price in effect on such record date by a fraction:

(i)

the numerator of which shall be the aggregate of:

(A)

the number of Shares outstanding as of the record date for the Rights Offering, and

(B)

a number determined by dividing either

I.

the product of the number of Shares offered under the Rights Offering and the price at which such Shares are offered,

or, as the case may be,

II.

the product of the exchange or conversion price per share of such securities offered and the maximum number of Shares for or into which the securities so offered pursuant to the Rights Offering may be exchanged or converted,

by the Current Market Price of the Shares as of the record date for the Rights Offering; and

(ii)

the denominator of which shall be the aggregate of the number of Shares outstanding on such record date after giving effect to the Rights Offering and including the number of Shares offered pursuant to the Rights Offering (including shares issuable upon exercise of the rights, warrants or options under the Rights Offering or upon the exercise of the exchange or conversion rights contained in such exchangeable or convertible securities under the Rights Offering).

Any Shares owned by or held for the account of the Corporation shall be deemed not to be outstanding for the purpose of any such calculation.  To the extent that such Rights Offering is not so made or any such rights, options or warrants are not exercised prior to the expiration thereof, the Exercise Price shall, then be readjusted to the Exercise Price which would then be in effect if such record date had not been fixed or if such expired rights, options or warrants had not been issued.  From and after any adjustment of the Exercise Price pursuant to this Section 5(b), the number of Broker Shares purchasable pursuant to this Warrant Certificate shall be adjusted contemporaneously with the adjustment of the Exercise Price by multiplying the number of Shares then otherwise purchasable on the exercise thereof by a fraction, the numerator of which shall be 

the Exercise Price in effect immediately prior to the adjustment and the denominator of which shall be the Exercise Price resulting from such adjustment.

(c)

Special Distribution. If and whenever during the Exercise Period the Corporation shall issue or distribute to all or to substantially all the holders of the Shares:

(i)

securities of the Corporation including shares, rights, options or warrants to acquire shares of any class or securities exchangeable for or convertible into or exchangeable into any such shares or cash, property or assets or evidences of its indebtedness, or

(ii)

any cash, property or other assets,

and if such issuance or distribution does not constitute dividends paid in the ordinary course, a Share Reorganization or a Rights Offering (any of such non-excluded events being herein called a “Special Distribution”), the Exercise Price shall be adjusted immediately after the record date for the Special Distribution so that it shall equal the price determined by multiplying the Exercise Price in effect on such record date by a fraction:

(i)

the numerator of which shall be the difference between:

(A)

the amount obtained by multiplying the number of Shares outstanding on such record date by the Current Market Price of the Shares on such record date, and

(B)

the aggregate fair market value (as determined by the directors of the Corporation) to the holders of such Shares of such Special Distribution; and

(ii)

the denominator of which shall be the total number of shares outstanding on such record date multiplied by such Current Market Price of the Shares on such record date.

Any Common Shares owned by or held for the account of the Corporation shall be deemed not to be outstanding for the purpose of any such computation.  To the extent that such Special Distribution is not so made or any such rights, options or warrants are not exercised prior to the expiration thereof, the Exercise Price shall then be readjusted to the Exercise Price which would then be in effect if such record date had not been fixed or if such expired rights, options or warrants had not been issued.  From and after any adjustment of the Exercise Price pursuant to this Section 5(c), the number of Broker Shares purchasable pursuant to this Warrant Certificate shall be adjusted contemporaneously with the adjustment of the Exercise Price by multiplying the number of Shares then otherwise purchasable on the exercise thereof by a fraction, the numerator of which shall be the Exercise Price in effect immediately prior to the adjustment and the denominator of which shall be the Exercise Price resulting from such adjustment.

(d)

Capital Reorganization. If and whenever during the Exercise Period there shall be a reclassification or redesignation of Shares at any time outstanding or a change of the Shares into other shares or into other securities or any other capital reorganization (other than a Share Reorganization), or a consolidation, amalgamation, arrangement or merger of the Corporation with or into any other corporation or other entity (other than a consolidation, amalgamation, arrangement or merger which does not result in any reclassification or redesignation of the outstanding Shares or a change of the Shares into other securities), or a transfer of the undertaking or assets of the Corporation as an entirety or substantially as an entirety to another corporation or other entity (any of such events being herein called a “Capital Reorganization”), the Holder, where he has not exercised the right of subscription and purchase under this Warrant Certificate prior to the effective date or record date, as the case may be, of such Capital Reorganization, shall be entitled to receive, and shall accept upon the exercise of such right for the same aggregate consideration, in lieu of the number of Broker Shares to which such Holder was theretofore entitled upon such exercise, the kind and aggregate number of shares, other securities or other 

property which such holder would have been entitled to receive as a result of such Capital Reorganization if, on the effective date thereof, he had been the registered holder of the number of Shares to which such holder was theretofore entitled to subscribe for and purchase; provided however, that no such Capital Reorganization shall be carried into effect unless all necessary steps shall have been taken to so entitle the Holder. If determined appropriate by the board of directors of the Corporation, acting reasonably and in good faith, and subject to the prior written approval of the principal Canadian stock exchange or over-the-counter market on which the Shares are then listed or quoted for trading, appropriate adjustments shall be made as a result of any such Capital Reorganization in the application of the provisions set forth in this Section 5 with respect to the rights and interests thereafter of the Holder to the end that the provisions set forth in this Section 5 shall thereafter correspondingly be made applicable as nearly as may reasonably be possible in relation to any shares, other securities or other property thereafter deliverable upon the exercise of any Warrant. Any such adjustments shall be made by and set forth in terms and conditions supplemental hereto approved by the board of directors of the Corporation, acting reasonably and in good faith.

(e)

If and whenever at any time after the date hereof and prior to the Expiry Time, the Corporation takes any action affecting its Shares to which the foregoing provisions of this Section 5, in the opinion of the board of directors of the Corporation, acting reasonably and in good faith, are not strictly applicable, or if strictly applicable would not fairly adjust the rights of the Holder against dilution in accordance with the intent and purposes thereof, or would otherwise materially affect the rights of the Holder hereunder, then the Corporation shall execute and deliver to the Holder an amendment hereto providing for an adjustment in the application of such provisions so as to adjust such rights as aforesaid in such a manner as the board of directors of the Corporation may determine to be equitable in the circumstances, acting reasonably and in good faith. The failure of the taking of action by the board of directors of the Corporation to so provide for any adjustment on or prior to the effective date of any action or occurrence giving rise to such state of facts will be conclusive evidence, absent manifest error, that the board of directors has determined that it is equitable to make no adjustment in the circumstances.

6.

The following rules and procedures shall be applicable to the adjustments made pursuant to Section 5:

(a)

The adjustments provided for in Section 5 are cumulative and shall be made successively whenever an event referred to therein shall occur, and shall, in the case of adjustments to the Exercise Price be computed to the nearest one-tenth of one cent subject to the following paragraphs of this Section 6.

(b)

No adjustment in the Exercise Price shall be required unless such adjustment would result in a change of at least 1% in the prevailing Exercise Price and no adjustment shall be made in the number of Shares purchasable upon exercise of this Warrant unless it would result in a change of at least one one-hundredth of a Share; provided, however, that any adjustments which, except for the provisions of this Section 6(b) would otherwise have been required to be made, shall be carried forward and taken into account in any subsequent adjustment. Notwithstanding Section 5 or 6 hereof, no adjustment shall be made which would result in an increase in the Exercise Price or a decrease in the number of Shares issuable upon the exercise of this Broker Warrant (except in respect of a consolidation of the outstanding Shares).

(c)

No adjustment in the Exercise Price or in the number of Shares purchasable upon exercise of Warrants shall be made in respect of any event described in Section 5, other than the events referred to in Sections 5(a)(ii) and (iii), if the Holder is entitled to participate in such event on the same terms, mutatis mutandis, as if it had exercised its Warrants prior to or on the effective date or record date, as the case may be, of such event. The terms of the participation of the Holder in such event shall be subject to the prior written approval, if applicable, of the principal Canadian stock exchange or over-the-counter market on which the Shares are then listed or quoted for trading.

(d)

No adjustment in the Exercise Price shall be made pursuant to Section 5 in respect of the issue from time to time:

(i)

of Broker Shares purchasable on exercise of the Warrants represented by this Warrant Certificate;

(ii)

of dividends paid in the ordinary course of Shares to holders of Shares who exercise an option or election to receive substantially equivalent dividends in Shares in lieu of receiving a cash dividend pursuant to a dividend reinvestment plan or similar plan adopted by the Corporation in accordance with the requirements of the principal Canadian stock exchange or over-the-counter market on which the Shares are then listed or quoted for trading and applicable securities laws; or

(iii)

of Shares pursuant to any stock option, stock option plan, stock purchase plan or benefit plan in force at the date hereof for directors, officers, employees, advisers or consultants of the Corporation, as such option or plan is amended or superseded from time to time in accordance with the requirements of the principal Canadian stock exchange or over-the-counter market on which the Shares are then listed or quoted for trading and applicable securities laws, and such other stock option, stock option plan, stock purchase plan or benefit plan as may be adopted by the Corporation in accordance with the requirements of the principal Canadian stock exchange or over-the-counter market on which the Shares are then listed or quoted for trading and applicable securities laws;

and any such issue shall be deemed not to be a Share Reorganization or Capital Reorganization.

(e)

If the Corporation shall set a record date to determine the holders of Shares for the purpose of entitling them to receive any dividend or distribution or any subscription or purchase rights and shall, thereafter and before the distribution to such shareholders of any such dividend, distribution or subscription or purchase rights, legally abandon its plan to pay or deliver such dividend, distribution or subscription or purchase rights, then no adjustment in the Exercise Price or the number of Shares purchasable upon exercise of any Warrant shall be required by reason of the setting of such record date.

(f)

As a condition precedent to the taking of any action which would require any adjustment in any of the subscription rights pursuant to this Warrant Certificate, including the Exercise Price and the number or class of shares or other securities which are to be received upon the exercise thereof, the Corporation shall take any corporate action which may, in the opinion of counsel, be necessary in order that the Corporation have unissued and reserved shares in its authorized capital and may validly and legally issue as fully paid and non-assessable all the shares or other securities which the holder of such Warrant Certificate is entitled to receive on the full exercise thereof in accordance with the provisions hereof.

(g)

For the purposes of this Warrant Certificate, “Current Market Price” of a Share at any date shall be calculated as the price per Share equal to the weighted average price at which the Shares have traded in the principal Canadian or American stock exchange or, if the Shares are not listed, the over-the-counter market, on which the Shares are then listed or posted for trading during the 20 consecutive trading days (on each of which at least 500 Shares are traded in board lots) ending not more than five trading days immediately prior to such date as reported by such market or exchange in which the Shares are then trading or quoted. If the Shares are not then traded in the over-the-counter market or on a recognized Canadian or American stock exchange, the Current Market Price of the Shares shall be the fair market value of the Shares as determined in good faith by the board of directors of the Corporation after consultation with a nationally or internationally recognized and independent investment dealer, investment banker or firm of chartered accountants.

(h)

In the absence of a resolution of the board of directors of the Corporation fixing a record date for any dividend or distribution referred to in Section 5(a)(i) or any Rights Offering or Special Distribution, the Corporation shall be deemed to have fixed as the record date therefor the date on which such dividend or distribution, Rights Offering or Special Distribution is effected.

(i)

Any question that at any time or from time to time arises with respect to the amount of any adjustment to the Exercise Price or other adjustments pursuant to Section 5 shall be conclusively determined by a firm of independent chartered accountants (who may be the Corporation’s auditors) and shall be binding upon the Corporation and the Holder, absent manifest error. Notwithstanding the foregoing, such determination shall be subject to the prior written approval of the principal Canadian stock exchange or over-the-counter market on which the Shares are then listed or quoted for trading. In the event that any such determination is made, the Corporation shall notify the Holder in the manner contemplated in Section 17 describing such determination.

7.

On the happening of each and every such event set out in Section 5, the applicable provisions of this Warrant Certificate, including the Exercise Price, shall, ipso facto, be deemed to be amended accordingly and the Corporation shall take all necessary action so as to comply with such provisions as so amended.

8.

In any case in which Section 5 shall require that an adjustment shall be effective immediately after a record date for an event referred to herein, the Corporation may defer, until the occurrence of such an event:

(a)

issuing to the holder of any Warrant exercised after such record date and before the occurrence of such event, the additional Shares issuable upon such exercise by reason of the adjustment required by such event, and

(b)

delivering to such holder any distributions declared with respect to such additional Shares after such Exercise Date and before such event;

provided, however, that the Corporation shall deliver or cause to be delivered to such holder, an appropriate instrument evidencing such holder’s right, upon the occurrence of the event requiring the adjustment, to an adjustment in the Exercise Price and/or the number of Shares purchasable on the exercise of any Warrant and to such distributions declared with respect to any additional Shares issuable on the exercise of any Warrant.

9.

At least ten Business Days prior to the effective date or record date, as the case may be, of any event which requires or might require adjustment in any of the subscription rights pursuant to this Warrant Certificate, including the Exercise Price and the number of Shares which are purchasable upon the exercise thereof, or such longer period of notice as the Corporation shall be required to provide holders of Shares in respect of any such event, the Corporation shall notify the Holder of the particulars of such event and, if determinable, the required adjustment and the computation of such adjustment. In case any adjustment for which such notice has been given is not then determinable, the Corporation shall promptly after such adjustment is determinable notify the Holder of the adjustment and the computation of such adjustment.

10.

The Corporation shall maintain a register of holders in which shall be entered the names and addresses of the holders of the Warrants and of the number of Warrants held by them.  Such register shall be open at all reasonable times for inspection by the Holder.  The Corporation shall notify the Holder forthwith of any change of address of the principal office of the Corporation.

11.

The Corporation shall not be required to issue fractional Broker Shares in satisfaction of its obligations hereunder. If any fractional interest in a Broker Share would, except for the provisions of this Section 11, be deliverable upon the exercise of a Warrant, the Corporation shall in lieu of delivering the fractional Broker Shares therefor satisfy the right to receive such fractional interest by payment to the holder of such Warrant of an amount in cash equal (computed in the case of a fraction of a cent to the next lower cent) to the value of the right to acquire such fractional interest on the basis of the Current Market Price at the Exercise Date.

12.

Subject as herein provided, all or any of the rights conferred upon the Holder by the terms hereof may be enforced by the Holder by appropriate legal proceedings.

13.

The registered Holder of this Warrant Certificate may at any time up to and including the Expiry Time, upon the surrender hereof to the Corporation at its principal office, exchange this Warrant Certificate for one or more Warrant Certificates entitling the Holder to subscribe in the aggregate for the same number of Shares as is expressed in this Warrant Certificate. Any Warrant Certificate tendered for exchange shall be surrendered to the Corporation and cancelled.

14.

If this Warrant Certificate becomes stolen, lost, mutilated or destroyed, the Corporation shall, on such terms as it may in its discretion acting reasonably impose, issue and deliver to the Holder a new Warrant Certificate of like denomination, tenor and date as the Warrant Certificate so stolen, lost, mutilated or destroyed.

15.

Nothing contained herein shall confer any right upon the Holder hereof or any other person to subscribe for or purchase any Shares of the Corporation at any time subsequent to the Expiry Time. After the Expiry Time this Warrant Certificate and all rights hereunder shall be void and of no value.

16.

Except as expressly set out herein, the holding of this Warrant Certificate or the Warrants represented hereby shall not constitute a Holder hereof a holder of Shares nor entitle it to any right of interest in respect thereof.

17.

Unless herein otherwise expressly provided, any notice to be given hereunder to the Holder shall be deemed to be validly given if such notice is given by personal delivery or registered mail to the attention of the Holder at its registered address recorded in the registers maintained by the Corporation. Any notice so given shall be deemed to be validly given, if delivered personally, on the day of delivery and if sent by post or other means, on the fifth Business Day next following the sending thereof. In determining under any provision hereof the date when notice of any event must be given, the date of giving notice shall be included and the date of the event shall be excluded. 

18.

 The Corporation intends to remain a “foreign issuer” as defined in Regulation S under the U.S. Securities Act for at least two years after June 8, 2007. In the event the Corporation does not remain a foreign issuer or proposes to take an action that would cause the Corporation to fail to meet the definition of a “foreign private issuer” under clause (2) of Rule 405 of the U.S. Securities Act then the Corporation shall file a registration statement pursuant to the U.S. Securities Act registering the Broker Shares that are “restricted securities” as defined in Rule 144 under the U.S. Securities Act and use commercially reasonable efforts to cause such registration statement to become effective and such registration statement to remain effective and available for use until June 8, 2009

19.

Time is of the essence hereof.

20.

This Warrant Certificate is binding upon the Corporation and its successors and assigns, provided that it shall not be assigned by the Corporation without the prior consent of the Holder.

21.

This Warrant Certificate and the Warrants represented hereby shall be governed by the laws of the Province of Ontario and the federal laws of Canada applicable therein.

IN WITNESS WHEREOF this Warrant Certificate has been executed on behalf of Peach Arch Entertainment Group Inc. as of the 8th day of June, 2007.

		
	PEACH ARCH ENTERTAINMENT GROUP INC.

		
	By:

	/s/ Gary Howsam

	 
	Authorized Signing Officer

SUBSCRIPTION NOTICE

TO:

PEACH ARCH ENTERTAINMENT GROUP INC.

124 Merton Street, Suite 407

Toronto, Ontario

M4S 2Z2

Attention: Chief Financial Officer

Terms used herein but not otherwise defined have the meanings ascribed thereto in the attached Warrant Certificate.

The undersigned registered Holder of the attached Warrant Certificate, hereby:

(a)

subscribes for ___________________________ Broker Shares at a price per of $2.50 per Share (or such adjusted price which may be in effect under the provisions of the Warrant Certificate) and in payment of the exercise price encloses a certified cheque, bank draft or money order in lawful money of Canada payable to the order of Peach Arch Entertainment Group Inc. or its successor corporation; and

(b)

delivers herewith the above-mentioned Warrant Certificate entitling the undersigned to
subscribe for the above-mentioned number of Broker Shares; 

in each case in accordance with the terms and conditions set out in the attached Warrant Certificate.

The undersigned hereby directs that the said Shares be registered as follows:

					
	

Name(s) in full

	 
	Address(es)

(including Postal Code)*

	 
	Number of

Broker Shares

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	Total:________

(Please print full name in which share certificates and warrant certificates are to be issued.  If any of the Broker Shares are to be issued to a person or persons other than the Holder, the Holder must pay to the Corporation all requisite taxes or other governmental charges.)

The Subscriber hereby certifies that the undersigned is not a U.S. Person or a person in the United States, and is not acquiring any of the Shares hereby subscribed for the account or benefit of a U.S. Person or a person in the United States, and none of the persons listed in paragraph (b) above is a U.S. Person or a person in the United States.  For purposes hereof the terms “United States” and “U.S. Person” shall have the meanings ascribed to them in Regulation S under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”).

*

Share certificates will not be registered or delivered to an address in the United States without an opinion of counsel to the effect that the Shares have been registered under the U.S. Securities Act or an exemption from registration is available.

DATED this                      day of                              , 200      .

	
	 

	(Signature of Subscriber)

	 

	 

	(Print Name of Subscriber)

	 

	 

	(Address of Subscriber in full)

	 

	 

	 

	 

The certificates will be mailed by registered mail to the address appearing in this Subscription Notice.ex10_17.htm

    
      

    

    
      	
               

            	
              Exhibit
      10.17

              Execution
      Copy

            

    

    

    FOURTEENTH AMENDMENT TO
AMENDED AND RESTATED

    LOAN AND SECURITY
AGREEMENT

    

    FOURTEENTH
AMENDMENT, dated as of January 31, 2008 to the Amended and Restated Loan and
Security Agreement, dated as of May 22, 2000, among HWC Wire & Cable Company
(formerly known as Houston Wire & Cable Company) (“Borrower”), the lenders
or lender named therein (“Lenders”) and Bank of America, N.A. (“Bank of
America”) as successor-in-interest to Fleet Capital Corporation, as agent for
said Lenders (Bank of America, in such capacity, “Agent”).  Said
Amended and Restated Loan and Security Agreement, as amended by a certain First
Amendment to Amended and Restated Loan and Security Agreement by and among
Borrower, Lenders and Agent dated as of July 13, 2000, by a certain Second
Amendment to Amended and Restated Loan and Security Agreement by and among
Borrower, Lenders and Agent dated May 30, 2001, by a certain Third
Amendment to Amended and Restated Loan and Security Agreement by and among
Borrower, Lenders and Agent dated October 22, 2001, by a certain Fourth
Amendment to Amended and Restated Loan and Security Agreement by and among
Borrower, Lenders and Agent dated December 31, 2002, by a certain Fifth
Amendment to Amended and Restated Loan and Security Agreement by and among
Borrower, Lenders and Agent dated November 19, 2003, by a certain Sixth Amended
to Amended and Restated Loan and Security Agreement dated as of May 26, 2005 by
and among Borrower, Lenders and Agent, by a certain Seventh Amendment to Amended
and Restated Loan and Security Agreement dated December 14, 2005 by and among
Borrower, Agent and Lenders, by a certain Eighth Amendment to Amended and
Restated Loan and Security Agreement dated December 30, 2005 by and among
Borrower, Agent and Lenders, by a certain Ninth Amendment to Amended and
Restated Loan and Security Agreement dated May 23, 2006 by and among Borrower,
Agent and Lenders, by a certain Tenth Amendment to Amended and Restated Loan and
Security Agreement dated as of November 3, 2006 by and among Borrower, Agent and
Lenders, by a certain Eleventh Amendment to Amendment of Restated Loan and
Security Agreement dated as of July 31, 2007 by and among Borrower, Agent and
Lenders, by a certain Twelfth Amendment to Amended and Restated Loan and
Security Agreement dated August 3, 2007 by and among Borrower, Agent and Lenders
and by a certain Thirteenth Amendment to Amended and Restated Loan and Security
Agreement dated as of September 28, 2007 by and among Borrower, Agent and
Lenders and as it may be further amended, is hereinafter referred to as the
“Loan Agreement.”  The terms used herein and not otherwise defined
shall have the meanings attributed to them in the Loan
Agreement.  References to Agent and/or any Lender shall include
Agent’s or such Lender’s predecessor(s)-in-interest.

    

    WHEREAS,
Lenders, Agent and Borrower desire to make certain amendments and modifications
to the Loan Agreement.

    

    NOW
THEREFORE, in consideration of the premises and the mutual covenants hereinafter
contained and contained in the Loan Agreement, the parties hereto hereby agree
as follows:

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.           Amended and Additional
Definitions.  The following definitions of “Fourteenth
Amendment” and “Fourteenth Amendment Effective Date” are hereby inserted into
Appendix A to
the Loan Agreement.  The definition of “Borrowing Base” contained in
Appendix A to
the Loan Agreement is hereby deleted and the following is inserted in its
stead:

    

    *      *      *

    

    “Borrowing Base – as
at any date of determination thereof, an amount equal to the lesser
of:

    

    (i)           the
Maximum Revolving Loan at such date; or

    

    (ii)           an
amount equal to:

    

    (a)           up
to eighty-five percent (85%) of the net amount of Eligible Accounts outstanding
at such date;

    

    PLUS

    

    (b)           the
Effective Inventory Advance Rate multiplied by the value of Eligible Inventory
at such date calculated on the basis of the lower of cost or market with the
cost of raw materials and finished goods calculated on a first-in, first-out
basis;

    

    MINUS
(subtract from the lesser of (i) or (ii) above)

    

    (iii)           an
amount equal to the sum of (a) any amount which Agent reasonably expects it may
be obligated to pay in the future for the account of Borrower, plus (b) the
amount of any reserve established by Agent pursuant to Section 1.1.1, plus (c)
the LC Amount.

    

    For purposes hereof, the net amount of
Eligible Accounts at any time shall be the face amount of such Eligible Accounts
less, to the extent not already deducted in the calculation of Eligible
Accounts, any and all returns, rebates, discounts (which may, at Agent’s option,
be calculated on shortest terms), credits, allowances or excise taxes of any
nature at any time issued, owing, claimed by Account Debtors, granted,
outstanding or payable in connection with such Accounts at such
time.  Further, the value of Eligible Inventory shall be adjusted as
of each date of calculation to reflect decreases in the Comex market price of
copper as reported on the London Metals Exchange, but only to the extent that
such decrease would result in a value less than current book value.

    

    *      *      *

    

    Fourteenth Amendment
– that certain Fourteenth Amendment to Amended and Restated Loan and Security
Agreement dated as of January 31, 2008 by and among Borrower, Agent and
Lenders.

    

    *      *      *

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    Fourteenth Amendment
Effective Date – the date on which the conditions precedent to the
effectiveness of the Fourteenth Amendment are satisfied.”

    

    2.           Distribution.  Subsection
8.2.7 of the Loan Agreement is hereby deleted and the following is inserted in
its stead:

    

    “8.2.7      Distributions.  Declare
or make, or permit any Subsidiary of Borrower to declare or make, any
Distributions, except that:

    

    (a)           Subsidiaries
of Borrower may make Distributions to Borrower with respect to their common
Stock;

    

    (b)           Borrower
may pay dividends to Guarantor in an amount sufficient to maintain the corporate
existence of Guarantor, to pay income taxes and to pay the reasonable
out-of-pocket expenses of Guarantor and audit fees and expenses, not to exceed
$100,000 per annum in the aggregate;

    

    (c)           Borrower
may pay dividends to Guarantor for further distribution to its stockholders in
an amount not to exceed the lesser of (x) income taxes on phantom income
incurred on the issuance of payment-in-kind notes with respect to the Guarantor
Subordinated Debt or (y) $125,000 per year;

    

    (d)           Borrower
may pay dividends to Guarantor of up to $100,000 in each Fiscal Year to
repurchase the capital stock of employees who die or terminate their employment
with Borrower; and

    

    (e)           Borrower
may make Distributions to Guarantor to permit Guarantor to pay dividends on
Guarantor’s common Stock so long as after giving effect to any such
Distribution, (i) no Event of Default shall have occurred and is continuing,
(ii) the aggregate amount of all such Distributions made within the most
recently ended twelve month period plus the amount of the proposed Distribution
does not exceed, within any twelve month period, $10,000,000, and (iii)
Availability was or will not be less than $15,000,000 at any time within the 90
days immediately prior to the date of such Distribution or after giving effect
to such Distribution and any pending Distribution for declared but unpaid
dividends or common Stock repurchases.

    

    (f)           On
or prior to December 31, 2009, Borrower may make Distributions to Guarantor to
permit Guarantor to make repurchases of, Guarantor’s common Stock so long as
after giving Guarantors  effect to any such Distribution, (i) no Event
of Default shall have occurred and is continuing, (ii) the aggregate amount of
all such Distributions does not exceed $75,000,000, and (iii) Availability was
or will not be less than $15,000,000 at any time within the 90 days immediately
prior to the date of such Distribution or after giving effect to such
Distribution and any pending Distributions for declared but unpaid dividends or
common Stock repurchases.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    3.           Financial
Covenant.  Exhibit Q to the Loan
Agreement is hereby deleted and Exhibit Q attached to
this Fourteenth Amendment is hereby inserted in its stead.  The
financial covenant contained in Exhibit Q to the Loan
Agreement is hereby deleted and the following is inserted in its
stead:

    

    “EXHIBIT Q

    

    FINANCIAL
COVENANTS

    

    *     *      *

    

    COVENANT

    

    Fixed Charge Coverage
Ratio- If Availability at any time within the most recently ended 90 day
period is less than Fifteen Million Dollars ($15,000,000), (x) Borrower
shall not permit the Fixed Charge Coverage Ratio for the most recently ended
twelve month period ending on a March 31, June 30, September 30 or December 31
to be less than 1.10 to 1 and (y) Borrower shall not permit the Fixed Charge
Coverage Ratio for the most recently ended fiscal quarter ending on March 31,
June 30, September 30 or December 31 to be less than 2.00 to 1.”

    

    4.           Fee.  In
order to induce Bank of America, as a Lender, to enter into this Fourteenth
Amendment, Borrower agrees to pay to Agent, for the benefit of Bank of America,
as sole Lender, a fee in the amount of $20,000.  Said fee shall be due
and payable and fully earned and non-refundable on the date hereof.

    

    5.           Conditions
Precedent.  This Fourteenth Amendment shall become effective
upon satisfaction of each of the following conditions precedent:

    

    (a)           Agent
shall have received each of the following documents, each in form and substance
acceptable to Agent:

    

    (i)           Copy
of this Fourteenth Amendment, duly executed by Borrower, Guarantor, Agent and
each Lender; and

    

    (ii)           Amended
and Restated Revolving Credit Note in the form attached hereto and incorporated
herein as Exhibit A-1 attached to this Fourteenth Amendment executed by
Borrower.

    

    (b)           Bank
of America, as Agent and Lender, and The CIT Group/Business Credit, Inc. shall
have executed and delivered to each other an Assignment and Acceptance Agreement
pursuant to which The CIT Group/Business Credit, Inc. shall have assigned to
Bank of America all of its rights, title and interest in its Loans and Revolving
Loan Commitment.

    

    The date
on which all of the conditions precedent listed above are satisfied or waived is
hereinafter referred to as the “Fourteenth Amendment Effective
Date.”  After the Fourteenth Amendment Effective Date, Lenders shall
deliver to Borrower the Revolving Credit Notes and Term Notes previously
executed and delivered by Borrower to Lenders, which Notes shall be marked
“Amended and Superceded.”

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    6.           Signature
Block.  The signature block to the Loan Agreement is hereby
amended to read as the signature block to this Fourteenth
Amendment.

    

    7.           Continuing
Effect.  Except as otherwise specifically set out herein, the
provisions of the Loan Agreement shall remain in full force and
effect.

    

    8.           Governing
Law.  This Fourteenth Amendment and the obligations arising
hereunder shall be governed by, and construed and enforced in accordance with,
the laws of the State of Illinois applicable to contracts made and performed in
such state, without regard to the principles thereof regarding conflict of
laws.

    

    9.           Counterparts.  This
Fourteenth Amendment may be executed in any number of separate counterparts,
each of which shall, collectively and separately, constitute one
agreement.

    

    10.           No
Novation.  The amended and restated Revolving Credit Note to be
delivered pursuant to this Fourteenth Amendment replaces and supercedes those
certain promissory notes in the principal amount of $55,000,000 and $20,000,000,
respectively, each dated September 27, 2007 (the “Original Notes”) and the
execution and delivery of such amended and restated Revolving Credit Note shall
not constitute (a) an extinguishment of the indebtedness of Borrower to the
applicable Lender evidenced by the Original Notes or (b) a novation of any such
indebtedness or any of the Original Notes.

    

    (Signature
Page Follows)

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    (Signature
Page to Fourteenth Amendment to Amended and Restated

    Loan
and Security Agreement)

    

    IN
WITNESS WHEREOF, this Fourteenth Amendment has been duly executed as of the
first day written above.

    

    

    
      	
              HWC
      WIRE & CABLE COMPANY, as Borrower

            	 
      	
              HOUSTON
      WIRE & CABLE COMPANY, as Guarantor

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
              By:

            	
              /s/ Nicol G. Graham

            	 
      	
              By:

            	
              /s/ Charles A.
Sorrentino

            
	
              Name: 
      

            	
              Nicol
      G. Graham

            	 
      	
              Name: 
      

            	
              Charles
      A. Sorrentino

            
	
              Title:

            	
              Vice
      President and Chief Financial Officer

            	 
      	
              Title:

            	
              President
      and Chief Executive Officer

            
	 	 	 	 	 
	 
      	 
      	 
      	 
      	 
      
	
              BANK
      OF AMERICA, N.A., as Agent and a Lender

            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
              By:

            	
              /s/ Sandra J. Evans

            	 
      	 
      	 
      
	
              Name: 
      

            	
              Sandra
      J. Evans

            	 
      	 
      	 
      
	
              Title:

            	
              Sr.
      Vice President

            	 
      	 
      	 
      

    

    

    Revolving
Loan Commitment:  $75,000,000

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
A-1

    

    AMENDED
AND RESTATED REVOLVING CREDIT NOTE

    

    

    
      	
              $75,000,000

            	
              Amended
      and Restated

            
	 
      	
              As
      of January 31, 2008

            
	 
      	
              Chicago,
      Illinois

            

    

    

    FOR VALUE
RECEIVED, the undersigned, (hereinafter “Borrower”), hereby PROMISES TO PAY to
the order of Bank of America, N.A., a national banking association (“Lender”),
or its registered assigns, at the principal office of Bank of America, N.A., as
agent for such Lender, or at such other place in the United States of America as
the holder of this Note may designate from time to time in writing, in lawful
money of the United States of America and in immediately available funds, the
principal amount of Seventy-Five Million Dollars ($75,000,000), or such lesser
principal amount as may be outstanding pursuant to the Loan Agreement (as
hereinafter defined) with respect to the Revolving Credit Loan, together with
interest on the unpaid principal amount of this Note outstanding from time to
time.

    

    This Note
is one of the or, if applicable, the, Revolving Credit Notes referred to in, and
issued pursuant to, that certain Amended and Restated Loan and Security
Agreement dated as of May 22, 2000 by and among Borrower, the lender
signatories thereto (including Lender) and Fleet Capital Corporation, the
predecessor-in-interest to Bank of America, N.A. (“Bank of America”), as agent
for such Lenders (Bank of America in such capacity “Agent”) (hereinafter amended
from time to time, the “Loan Agreement”), and is entitled to the benefit and
security of the Loan Agreement.  All of the terms, covenants and
conditions of the Loan Agreement and the Security Documents are hereby made a
part of this Note and are deemed incorporated herein in full.  All
capitalized terms herein, unless otherwise defined, unless otherwise
specifically defined in this Note, shall have the meanings ascribed to them in
the Loan Agreement.

    

    The
principal amount of the indebtedness evidenced hereby shall be payable in the
amounts and on the dates specified in the Loan Agreement and, if not sooner paid
in full, on the Commitment Termination Date, unless the term hereof is extended
in accordance with the Loan Agreement.  Interest thereon shall be paid
until such principal amount is paid in full at such interest rates and at such
times as are specified in the Loan Agreement.

    

    Upon and
after the occurrence, and during the continuation, of an Event of Default, this
Note shall or may, as provided in the Loan Agreement, become or be declared
immediately due and payable.

    

    The right
to receive principal of, and stated interest on, this Note may only be
transferred in accordance with the provisions of the Loan
Agreement.

    

    Demand,
presentment, protest and notice of nonpayment and protest are hereby waived by
Borrower.

     

    This Note
shall be interpreted, governed by, and construed in accordance with, the
internal laws of the State of Illinois.

     

    
      	 
      	
              HWC
      WIRE & CABLE COMPANY

            
	 
      	 
      	 
      
	 
      	
              By:

            	 
      
	 
      	
              Name:  
      

            	 
      
	 
      	
              Title:

            	 
      

    

    

     

    A-1-1

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