Document:

asv-ex101_6.htm

EXECUTION VERSION

EXHIBIT 10.1

 

SECOND AMENDMENT TO REVOLVING CREDIT, TERM LOAN AND 
SECURITY AGREEMENT AND CONSENT

This SECOND AMENDMENT TO REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT AND CONSENT (this “Second Amendment”) is entered into as of October 5, 2017, by and among ASV HOLDINGS, INC., a Delaware corporation (“ASV”, together with each Person joined to the Credit Agreement (as defined below) as a borrower from time to time, collectively, the “Borrowers” and each a “Borrower”; the Borrowers together with the Guarantors, collectively the “Loan Parties” and each a “Loan Party”), the financial institutions which are now or which hereafter become a party hereto (collectively, the “Lenders” and each individually a “Lender”) and PNC BANK, NATIONAL ASSOCIATION (“PNC”), as Administrative Agent for Lenders (PNC, in such capacity, the “Administrative Agent”) with respect to the following:

PRELIMINARY STATEMENTS

A.Borrowers, Lenders and Administrative Agent, previously entered into that certain Revolving Credit, Term Loan and Security Agreement dated as of December 23, 2016 (as has been and may hereafter be amended, restated or otherwise modified from time to time, the “Credit Agreement”);

B.Borrowers have requested that Administrative Agent and Lenders agree to amend certain provisions in the Credit Agreement and Administrative Agent and Lenders have agreed to such amendment, subject to the terms and conditions contained herein; and

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, agree as follows:

1.Definitions. Capitalized terms used in this Second Amendment are as defined in the Credit Agreement, as amended hereby, unless otherwise stated.

2.Amendments to Credit Agreement. Subject to and in accordance with the terms and conditions set forth herein, the parties hereto agree that as of the Second Amendment Date:

A.New Definitions. The following defined terms shall be added to Section 1.2 of the Credit Agreement in the proper alphabetical order:

“DEED Loan” shall mean that certain loan made by The State of Minnesota Department of Employment and Economic Development to Borrower pursuant to that certain Loan Agreement Minnesota Investment Fund dated on or around the Second Amendment Date in the original principal amount of $150,000 and on terms and conditions satisfactory to Administrative Agent (in its Permitted Discretion) and Term Loan B Agent.

“IRRRB Loan” shall mean that certain unsecured loan made by the State of Minnesota Iron Range Resources & Rehabilitation Board to Borrower pursuant to that 

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certain Loan Agreement dated on or around the Second Amendment Date in the original principal amount of $300,000 and on terms and conditions satisfactory to Administrative Agent (in its Permitted Discretion) and Term Loan B Agent.

“Second Amendment Date” shall mean October 5, 2017.

B.Existing Definitions. The definition of Maximum True Up Amount in Section 1.2 of the Credit Agreement shall be amended and restated in its entirety as follows:

““Maximum True Up Amount” shall mean, with respect to any payment to be made on a True Up Date pursuant to Section 2.3(a) and (b), an amount not to exceed Borrowers’ Average Undrawn Availability as of the last day of the month ending prior to the True Up Date less $2,500,000; provided that, solely for the fiscal quarter ending June 30, 2017 during which a Qualified IPO was consummated, the “Maximum True Up Amount” shall be an amount not to exceed Borrowers’ Average Undrawn Availability as of the last day of the month ending prior to the True Up Date less $2,500,000, less the Net Cash Proceeds received by Borrowers in connection with such Qualified IPO (excluding any proceeds applied to the Term Loans pursuant to Section 2.20(d) hereof and any proceeds used to consummate a Permitted Acquisition or some other specified purpose set forth in writing to Agents and approved by Agents in writing).”

C.Existing Definitions. The “and” at the end of clause (h) of the definition of Permitted Indebtedness in Section 1.2 of the Credit Agreement shall be deleted, clause (i) of such definition shall be amended and restated as follows, and the following clauses (j) and (k) shall be added after clause (i):

“(i)other unsecured Indebtedness in an aggregate principal amount not exceeding $500,000 at any time outstanding, (j) the IRRRB Loan, so long as such Indebtedness remains unsecured and the principal amount thereof does not exceed $300,000 in the aggregate, and (k) the DEED Loan which may be secured solely by Liens permitted pursuant to clause (g) of the definition of Permitted Encumbrances, so long as the principal amount thereof does not exceed $150,000 in the aggregate .”

D.Capital Expenditures. Section 7.6 of the Credit Agreement is hereby amended and restated as follows:

7.6Capital Expenditures. Contract for, purchase or make any expenditure or commitments for Capital Expenditures in (a) the fiscal year ended December 31, 2017 in an aggregate amount for all Loan Parties in excess of $2,000,000, and (b) any fiscal year thereafter in an aggregate amount for all Loan Parties in excess of $1,600,000.

E.Leases. Section 7.11 of the Credit Agreement is hereby amended and restated as follows:

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7.11 Leases. Enter as lessee into any lease arrangement for real or personal property (unless capitalized and permitted under Section 7.6 hereof) if after giving effect thereto, aggregate annual rental payments for all leased property would exceed $400,000 in any one fiscal year in the aggregate for all Loan Parties and their Subsidiaries.

3.Conditions to Effectiveness. The effectiveness of this Second Amendment is

subject to the satisfaction of the following conditions precedent, unless specifically waived in writing by Agents:

(a)Administrative Agent shall have received the following documents or items, each in form and substance satisfactory to Agents and their legal counsel in their sole discretion:

(i)this Second Amendment duly executed by Borrowers, the other Loan Parties, Lenders and Administrative Agent;

(ii)all documents, instruments and agreements evidencing the DEED Loan and the IRRRB Loan; and

(b)no Default or Event of Default shall have occurred and be continuing.

4.Ratifications. Except as expressly modified and superseded by this Second

Amendment, the terms and provisions of the Credit Agreement and the Other Documents are ratified and confirmed and shall continue in full force and effect. Loan Parties hereby agree that all liens and security interests securing payment of the Obligations under the Credit Agreement (as amended hereby) are hereby collectively renewed, ratified and brought forward as security for the payment and performance of the Obligations. Borrowers, the other Loan Parties, Lenders and Administrative Agent agree that the Credit Agreement and the Other Documents, as amended hereby, shall continue to be legal, valid, binding and enforceable in accordance with their respective terms.

5.Representations and Warranties with respect to Other Documents. Each of the

Loan Parties hereby represents and warrants to Administrative Agent and Lenders as follows: (a) it is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization; (b) the execution, delivery and performance by it of this Second Amendment and all Other Documents executed and/or delivered in connection herewith are within its company powers, have been duly authorized, and do not contravene (i) its Organizational Documents, or (ii) any applicable law; (c) no Consent of any Governmental Body or other Person is required in connection with the execution, delivery, performance, validity or enforceability of this Second Amendment, except as has been obtained; (d) this Second Amendment and all Other Documents executed and/or delivered in connection herewith have been duly executed and delivered by it; (e) this Second Amendment and all Other Documents executed and/or delivered in connection herewith constitute its legal, valid and binding obligation of such Person enforceable against it in accordance with their terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally or by general principles of equity; (f) no Default or Event of Default has 

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occurred and is continuing or would immediately thereafter result by the execution, delivery or performance of this Second Amendment; (g) the representations and warranties contained in the Credit Agreement and the Other Documents are true and correct in all material respects (except to the extent already qualified by materiality in which case such representation and warranties shall be true and correct in all respects) on and as of the date hereof and on and as of the date of execution hereof as though made on and as of each such date (except to the extent any such representation or warranty expressly relates only to any earlier and/or specified date); and (h) ASV has not amended its Organizational Documents in a manner that would constitute a Default or Event of Default.

6.Survival of Representations and Warranties. All representations and warranties made in the Credit Agreement or the Other Documents, including, without limitation, any document furnished in connection with this Second Amendment, shall survive the execution and delivery of this Second Amendment and the Other Documents.

7.Reference to Credit Agreement. Each of the Credit Agreement and the Other Documents, and any and all other agreements, documents or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Credit Agreement, as amended hereby, are hereby amended so that any reference in the Credit Agreement and such Other Documents to the Credit Agreement shall mean a reference to the Credit Agreement as amended hereby.

8.Expenses of Administrative Agent and Term Loan B Agent. Borrowers agree to pay on demand all reasonable out-of-pocket costs and expenses actually incurred by Administrative Agent and Term Loan B Agent in connection with the preparation, negotiation, execution and closing of the Second Amendment, any and all amendments, modifications and supplements thereto and any Other Documents in connection therewith, including, without limitation, the costs and fees of Administrative Agent’s and Term Loan B Agent’s legal counsel and financial advisors.

9.Severability. If any part of this Second Amendment is contrary to, prohibited by, or deemed invalid under Applicable Laws, such provision shall be inapplicable and deemed omitted to the extent so contrary, prohibited or invalid, but the remainder hereof shall not be invalidated thereby and shall be given effect so far as possible.

10.Successors and Assigns. This Second Amendment is binding upon and shall inure to the benefit of Administrative Agent, Lenders and Loan Parties and their respective successors and assigns, except that no Loan Party may assign or transfer any of its rights or obligations hereunder without the prior written consent of Administrative Agent and Term Loan B Agent and the Lenders.

11.Counterparts. This Second Amendment may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same instrument. Any signature delivered by a party by facsimile or electronic transmission (including email transmission of a PDF image) shall be deemed to be an original signature hereto.

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12.Effect of Waiver. No consent or waiver, express or implied, by Lenders or Administrative Agent to or for any breach of or deviation from any covenant or condition by Borrowers or any other Loan Party shall be deemed a consent to or waiver of any other breach of the same or any other covenant, condition or duty.

13.Headings. The headings, captions, and arrangements used in this Second Amendment are for convenience only, are not a part of this Second Amendment, and shall not affect the interpretation hereof.

14.Governing Law; Judicial Reference. Sections 12.1 through 12.3 and Section 16.1 of the Credit Agreement are incorporated herein by reference and are fully applicable to this Second Amendment.

15.Final Agreement. THE CREDIT AGREEMENT AND THE OTHER DOCUMENTS, EACH AS AMENDED HEREBY, REPRESENT THE ENTIRE EXPRESSION OF THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF ON THE DATE THIS SECOND AMENDMENT IS EXECUTED. THE CREDIT AGREEMENT AND THE OTHER DOCUMENTS, AS AMENDED HEREBY, MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. NO MODIFICATION, RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY PROVISION OF THIS SECOND AMENDMENT SHALL BE MADE, EXCEPT IN ACCORDANCE WITH SECTION 16.2 OF THE CREDIT AGREEMENT.

16.Acknowledgements and Agreements. Each of the Loan Parties hereby acknowledge and agree that: (a) none has any defenses, claims or set-offs to the enforcement by Administrative Agent, Term Loan B Agent or any Lender of the Obligations on the date hereof and on the date of execution hereof; (b) to their knowledge, Administrative Agent, Term Loan B Agent and Lenders have fully performed all undertakings and obligations owed to them as of the date hereof and on the date of execution hereof; and (c) except to the limited extent expressly set forth in this Second Amendment, Administrative Agent, Term Loan B Agent and Lenders do not waive, diminish or limit any term or condition contained in the Credit Agreement or any of the Other Documents.

17.Release. EACH LOAN PARTY HEREBY IRREVOCABLY RELEASES AND FOREVER DISCHARGES ADMINISTRATIVE AGENT, TERM LOAN B AGENT, LENDERS, AND THEIR RESPECTIVE AFFILIATES, AND EACH SUCH PERSON’S RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, MEMBERS, ATTORNEYS AND REPRESENTATIVES (EACH, A “RELEASED PERSON”) OF AND FROM ALL DAMAGES, LOSSES, CLAIMS, DEMANDS, LIABILITIES, OBLIGATIONS, ACTIONS OR CAUSES OF ACTION WHATSOEVER (EACH A “RELEASED CLAIM”), THAT EACH LOAN PARTY NOW HAS OR CLAIMS TO HAVE AGAINST ANY RELEASED PERSON ON THE DATE HEREOF AND ON THE DATE OF EXECUTION HEREOF, WHETHER KNOWN OR UNKNOWN, OF EVERY NATURE AND EXTENT WHATSOEVER, FOR OR BECAUSE OF ANY MATTER OR THING DONE, OMITTED OR SUFFERED TO BE DONE OR OMITTED BY ANY OF THE RELEASED PERSONS THAT

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BOTH (A) OCCURRED PRIOR TO OR ON THE DATE HEREOF OR ON THE DATE OF EXECUTION HEREOF AND (B) IS ON ACCOUNT OF OR IN ANY WAY CONCERNING, ARISING OUT OF OR FOUNDED UPON THE CREDIT AGREEMENT OR ANY OTHER DOCUMENT OR ANY TRANSACTIONS RELATED THERETO.

LOAN PARTIES INTEND THE ABOVE RELEASE TO COVER, ENCOMPASS, RELEASE, AND EXTINGUISH, INTER ALIA, ALL RELEASED CLAIMS THAT MIGHT OTHERWISE BE RESERVED BY THE CALIFORNIA CIVIL CODE SECTION 1542 (AND ANY EQUIVALENT PROVISION UNDER NEW YORK LAW OR THE LAW OF ANY OTHER JURISDICTION), WHICH PROVIDES AS FOLLOWS:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

LOAN PARTIES ACKNOWLEDGE THAT THEY MAY HEREAFTER DISCOVER FACTS DIFFERENT FROM OR IN ADDITION TO THOSE NOW KNOWN OR BELIEVED TO BE TRUE WITH RESPECT TO SUCH RELEASED CLAIMS AND AGREE THAT THIS SECOND AMENDMENT AND THE ABOVE RELEASE ARE AND WILL REMAIN EFFECTIVE IN ALL RESPECTS NOTWITHSTANDING ANY SUCH DIFFERENCES OR ADDITIONAL FACTS.

[remainder of page intentionally left blank; signature pages follow]

 

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IN WITNESS WHEREOF, the parties have executed and delivered this Second Amendment as of the day and year first written above.

	
 
	
ASV HOLDINGS, INC. 

By:       /s/ Melissa How
Name:  Melissa How
Title:    CFO

 

			
	
 
	
 
	
 

Second Amendment to Revolving Credit, Term Loan and Security Agreement

 

	
 
	
PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent, a Revolving Lender and a Term Loan A Lender

By:       /s/ Steven J. Chalmers
Name:  Steven J. Chalmers
Title:    V.P.

	
 
	
WHITE OAK GLOBAL ADVISORS, LLC, as a Term Loan B Agent and a Term Loan B Lender

By:        /s/ Barbara J. S. McKee
Name:    Barbara J.S. McKee 
Title:      Authorized Signatory

	
 
	
WHITE OAK PARTNERS, as a Lender

By:        /s/ Barbara J. S. McKee
Name:    Barbara J.S. McKee 
Title:      Authorized Signatory

	
 
	
WHITE OAK PARTNERS 2, as a Lender

By:        /s/ Barbara J. S. McKee
Name:    Barbara J.S. McKee 
Title:      Authorized Signatory

 

			
	
 
	
 
	
 

Second Amendment to Revolving Credit, Term Loan and Security AgreementBlueprint

 

 Exhibit
4.2(d)

 

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 [*], AND TO A RIGHT OF FIRST
REFUSAL GRANTED TO COMPANY, AS FURTHER SET FORTH
HEREIN.

 

Right
to Purchase [*] Common Shares of Dolphin Digital Media, Inc.
(subject to adjustment as provided herein)

 

FORM OF COMMON STOCK PURCHASE WARRANT

 

	
 No. F

	
  Issue Date:
[*]

 

 

DOLPHIN DIGITAL MEDIA, INC., a
corporation organized under the laws of the State of Nevada (the
“Company”),
hereby certifies that, for value received, [*], 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 [*], [*] time on [*] (the “Expiration Date”), [*] ([*]) fully
paid and non-assessable Common Shares of the Company, at a per
share purchase price of US$[*]. 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 the obligations
of Dolphin Digital Media, Inc. corporation which shall succeed or
assume hereunder.

 

(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.

 

 

1

 

 

(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”):

 

 

2

 

 

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
$[*] 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.

 

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.

 

 

3

 

 

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 [*] 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.

 

 

4

 

 

1.11 Proxy
.
Holder hereby irrevocably grants to, and appoints, [*], 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 this Warrant 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.

 

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.

 

 

5

 

 

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.

 

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

 

 

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 13 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: [*]. The Company and the Holder may change their respective
addresses for notices by like notice to the other
party.

 

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.

 

 

7

 

 

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:                                                                     

 

 

8

 

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 _____________________________________

 

______________________________________________________________________________

 

____________________________________________________________________________________________________________________________________________________________

 

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)

 

 

9

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