Document:

Exhibit 4.4

 

THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT
WITH A VIEW TOWARD RESALE OR DISTRIBUTION. THIS WARRANT MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN FORM,
SUBSTANCE AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT.

 

WATCHIT MEDIA, INC.

 

WARRANT
TO PURCHASE COMMON STOCK

 

	
  Warrant No.: 1

  	
  Number of Shares: 3,333,334

  
	
  Date of
  Issuance: March 16, 2006

  

 

WATCHIT MEDIA, INC., a Delaware
corporation (the “Company”), hereby certifies that, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Stiassni Capital Partners, LP, the registered holder hereof or
its permitted assigns, is entitled, subject to the terms set forth below, to
purchase from the Company upon surrender of this Warrant, at any time or times
on or after the date hereof, but not after 5:00 P.M. Eastern Standard Time
on the Expiration Date (as defined herein) three million three hundred
thirty-three thousand three hundred thirty-four (3,333,334) fully paid
nonassessable shares of Common Stock (as defined herein) of the Company (the “Warrant
Shares”) at the Warrant Exercise Price per share provided in Section l
(a) below;

 

Section 1.

 

(a)                                  Definitions. The
following words and terms as used in this Warrant shall have the following
meanings:

 

(i)                                     “Common Stock”
means (i) Common Stock, par value $0.01 per share, and (ii) any
capital stock into which such Common Stock shall have been changed or any
capital stock resulting from a reclassification of such Common Stock.

 

(ii)                                  “Expiration Date”
means March 16, 2009, or, if such date falls on a Saturday, Sunday or
other day on which banks are required or authorized to be closed in the City of
New York, the State of New York, the City of San Francisco or the State of
California (a “Holiday”), the next preceding date that is not a Holiday.

 

(iii)                               “Person” means an
individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.

 

 

(iv)                              “Securities Act”
means the Securities Act of 1933, as amended.

 

(v)                                 “Warrant” shall
mean this Warrant No. 1, dated March 16, 2006, and all warrants
issued in exchange, transfer or replacement of any thereof.

 

(vi)                              “Warrant Exercise
Price” shall be equal to $0.25 per share of Common Stock, subject to
adjustment as hereinafter provided.

 

(b)                                 Other Definitional
Provisions.

 

(i)                                     Except
as otherwise specified herein, all references herein (A) to the Company
shall be deemed to include the Company’s successors and (B) to any
applicable law defined or referred to herein, shall be deemed references to
such applicable law as the same may have been or may be amended or
supplemented from time to time.

 

(ii)                                  When
used in this Warrant, the words “herein,” “hereof,” and “hereunder,” and words
of similar import, shall refer to this Warrant as a whole and not to any
provision of this Warrant, and the words “Section,” “Schedule,” and “Exhibit”
shall refer to Sections of, and Schedules and Exhibits to, this Warrant unless
otherwise specified.

 

(iii)                               Whenever
the context so requires, the neuter gender includes the masculine or feminine,
and the singular number includes the plural, and vice versa.

 

Section 2.                                            Exercise
of Warrant.

 

(a)                        Subject to
the terms and conditions hereof, this Warrant may be exercised by the
holder hereof then registered on the books of the Company, in whole or in part,
at any time on any business day or after the opening of business on the date
hereof and prior to 11:59 P.M. Eastern Standard Time on the Expiration
Date by (i) delivery of a written notice, in the form of the
subscription notice attached as Exhibit A hereto, of such holder’s
election to exercise this Warrant, which notice shall specify the number of
Warrant Shares to be purchased,  (ii) payment
to the Company of an amount equal to the Warrant Exercise Price multiplied by
the number of Warrant Shares as to which the Warrant is being exercised (plus
any applicable issue or transfer taxes) (the “Aggregate Exercise Price”)
in cash or by check or wire transfer, and (iii) the surrender of this
Warrant, to a common carrier for delivery to the Company as soon as practicable
following such date, this Warrant (or an indemnification undertaking with
respect to this Warrant in the case of its loss, theft, or destruction);
provided that if such Warrant Shares are to be issued in any name other than
that of the registered holder of this Warrant, such issuance shall be deemed a
transfer and the provisions of Section 7 shall be applicable. In the event
of any exercise of the rights represented by this Warrant in compliance with
this Section 2, a certificate or certificates for the Warrant Shares so
purchased, in such denominations as may be requested by the holder hereof
and registered in the name of, or as directed by, the holder, shall be
delivered at the Company’s expense to, or as directed by, such holder as soon as
practicable after such rights shall have been so exercised, and in any event no
later than five (5) business days after the Company’s receipt of the
Exercise Notice, the Aggregate Exercise Price and this

 

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Warrant (or indemnification undertaking with respect to this Warrant in
the case of its loss, theft or destruction) 
Upon delivery of the Exercise Notice and Aggregate Exercise Price
referred to in clause (ii) (A) above, the holder of this Warrant shall
be deemed for all corporate purposes to have become the holder of record of the
Warrant Shares with respect to which this Warrant has been exercised,
irrespective of the date of delivery of this Warrant as required by clause (iii) above
or the certificates evidencing such Warrant Shares.

 

(b)                       Unless the
rights represented by this Warrant shall have expired or shall have been fully
exercised, the Company shall, as soon as practicable and in any event no later
than five (5) business days after any exercise and at its own expense,
issue a new Warrant identical in all respects to the Warrant exercised except (i) it
shall represent rights to purchase the number of Warrant Shares purchasable
immediately prior to such exercise under the Warrant exercised, less the number
of Warrant Shares with respect to which such Warrant is exercised, and (ii) the
holder thereof shall be deemed for all corporate purposes to have become the
holder of record of such Warrant Shares immediately prior to the close of
business on the date on which the Warrant is surrendered and payment of the
amount due in respect of such exercise and any applicable taxes is made,
irrespective of the date of delivery of certificates evidencing such Warrant
Shares, except that, if the date of such surrender and payment is a date when
the stock transfer books of the Company are properly closed, such person shall
be deemed to have become the holder of such Warrant Shares at the opening of
business on the next succeeding date on which the stock transfer books are open.
Upon presentation of a duly executed Subscription Form in the Form of
Exhibit A to this Warrant, the holder shall be entitled to exercise this
Warrant in whole or in part, if the holder shall have previously exercised and
surrendered this Warrant and the Company shall not have issued a new Warrant
representing the number of shares issuable following such prior exercise.

 

(c)                        Upon the
issuance of the Warrant Shares hereunder, and consistent with, pursuant to and
subject to the Company’s existing Rights Agreement, dated as of September 24,
1997, as amended by Amendment No. 1 to Rights Agreement, dated as of June 13,
2002 (as the same may be amended from time to time, the “Rights
Agreement”), between the Company and Computershare Trust Company NA (formerly
EquiServe Trust Company, N.A., as successor to BankBoston N.A.), as rights
agent, one right issuable pursuant to the Rights Agreement or any other right
issued in substitution thereof (a “Company Right”) shall be issued
together with and shall attach to each Warrant Share issued pursuant to the
terms and conditions of this Warrant, unless the Company Rights shall have
expired or been redeemed prior to the date on which this Warrant is exercised.

 

(d)                       If at any time the Company defaults on its obligations
under the Stock and Warrant Purchase Agreement, dated March 16, 2006,
among the Company and the other parties thereto to register the resale of the
Warrants and Warrant Shares with the Securities and Exchange Commission, then
this Warrant may also be exercised at such time by means of a “cashless
exercise” in which the holder of this Warrant shall be entitled to receive a
certificate for the number of Warrant Shares equal to the quotient obtained by
dividing [(A-B) (X)] by (A), where:

 

(A) = the
volume weighted average price (“VWAP”) of the Common Stock on the last
trading day immediately preceding the date of such election;

 

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(B) = the
Exercise Price of the Warrants, as adjusted; and

 

(X) = the number
of Warrant Shares issuable upon exercise of this Warrant in accordance with the
terms of this Warrant.

 

(e)                                  No fractional shares
of Common Stock are to be issued upon the exercise of this Warrant, but rather
the number of shares of Common Stock issued upon exercise of this Warrant shall
be rounded up or down to the nearest whole number.

 

(f)                                    Notwithstanding
anything herein to the contrary, in no event shall the holder of this Warrant
be permitted to exercise this Warrant for a number of Warrant Shares greater
than the number that would cause the aggregate beneficial ownership of the
Company’s Common Stock (calculated pursuant to Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of (a) the holder of this
Warrant and its affiliates or (b) Stiassni Capital Partners, LP, and its
affiliates, to equal or exceed 10% of the Company’s Common Stock then
outstanding.

 

Section 3.                                            Covenants
as to Common Stock. The Company hereby covenants and agrees as follows:

 

(a)                                  This
Warrant is, duly authorized and validly issued.

 

(b)                                 All
Warrant Shares which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued, fully paid
and nonassessable and free from all taxes, liens and charges with respect to
the issue thereof.

 

(c)                                  During
the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized and reserved at least
the number of shares of Common Stock needed to provide for the exercise of the
rights then represented by this Warrant and the par value of said shares will
at all times be less than or equal to the applicable Warrant Exercise Price.

 

(d)                                 The
Company will not, by amendment of its Certificate of Incorporation or through
any reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities, or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed by it hereunder, but will at all times in good faith assist in the
carrying out of all the provisions of this Warrant and in the taking of all
such action as may reasonably be requested by the holder of this Warrant
in order to protect the exercise privilege of the holder of this Warrant
against dilution or other impairment, consistent with the tenor and purpose of
this Warrant. Without limiting the generality of the foregoing, the Company (i) will
not increase the par value of any shares of Common Stock receivable upon the
exercise of this Warrant above the Exercise Price then in effect, and (ii) will
take all such actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares
of Common Stock upon the exercise of this Warrant.

 

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(e)                                  This
Warrant will be binding upon any entity succeeding to the Company by merger,
consolidation or acquisition of all or substantially all of the Company’s
assets.

 

Section 4.                                            Taxes.
The Company shall not be required to pay any tax or taxes attributable to the
initial issuance of the Warrant Shares or any permitted transfer involved in
the issue or delivery of any certificates for Warrant Shares in a name other
than that of the registered holder hereof or upon any permitted transfer of
this Warrant.

 

Section 5.                                            Warrant
Holder Not Deemed a Stockholder. Except as otherwise specifically provided
herein, no holder, as such, of this Warrant shall be entitled to vote or
receive dividends or be deemed the holder of shares of the Company for any
purpose, nor shall anything contained in this Warrant be construed to confer
upon the holder hereof, as such, any of the rights of a stockholder of the
Company or any right to vote, give or withhold consent to any corporate action
(whether any reorganization, issue of stock, reclassification of stock,
consolidation, merger, conveyance or otherwise), receive notice of meetings,
receive dividends or subscription rights, or otherwise, prior to the issuance
to the holder of this Warrant of the Warrant Shares which he or she is then
entitled to receive upon the due exercise of this Warrant.

 

In addition, nothing contained in this
Warrant shall be construed as imposing any liabilities on such holder to
purchase any securities or as a stockholder of the Company, whether such
liabilities are asserted by the Company or by creditors of the Company.

 

Section 6.                                            Representations
of Holder. The holder of this Warrant, by the acceptance hereof, represents
(and any assignor shall represent) that it is acquiring this Warrant and the
Warrant Shares for its own account for investment purposes and not with a view
to, or for sale in connection with, any distribution hereof, and not with any
present intention of distributing any of the same. The holder of this Warrant
further represents (and any assignor shall represent), by acceptance hereof,
that, as of this date, such holder is an “accredited investor” as such term is
defined in Rule 501(a)(1) of Regulation D promulgated by the
Securities and Exchange Commission under the Securities Act (an “Accredited
Investor”). Upon exercise of this Warrant, the holder shall, if requested
by the Company, confirm in writing, in a form satisfactory to the Company,
that the Warrant Shares so purchased are being acquired solely for the holder’s
own account and not as a nominee for any other party, for investment, and not
with a view toward distribution or resale and that such holder is an Accredited
Investor. If such holder cannot make such representations because they would be
factually incorrect, it shall be a condition to such holder’s exercise of the
Warrant that the Company receive such other representations as the Company
considers reasonably necessary to assure the Company that the issuance of its
securities upon exercise of the Warrant shall not violate any United States
Federal or state securities laws.

 

Section 7.                                            Ownership
and Transfer.

 

(a)                                  The
Company shall maintain at its principal executive offices (or such other office
or agency of the Company as it may designate by notice to the holder
hereof), a register for this Warrant, in which the Company shall record the
name and address of the person in whose name this Warrant has been issued, as
well as the name and address of each permissible transferee. The

 

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Company may treat the
person in whose name any Warrant is registered on the register as the owner and
holder thereof for all purposes, notwithstanding any notice to the contrary,
but in all events recognizing any transfers made in accordance with the terms
of this Warrant.

 

(b)                                 This
Warrant and the rights granted to the holder hereof are transferable, in whole
or in part, upon surrender of this Warrant, together with a properly executed
warrant power in the form of Exhibit B attached hereto; provided,
however, that any transfer or assignment issuance of the Warrant Shares upon
shall subject to the conditions set forth in Section 6 above and Section 7(c) below.

 

(c)                                  The
holder of this Warrant understands that this Warrant has not been and is not
expected to be, registered under the Securities Act or any state securities
laws, and may not be offered for sale, sold, assigned or transferred
unless (a) subsequently registered thereunder, or (b) such holder
shall have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, scope and substance to the Company, to the effect that
the securities to be sold, assigned or transferred may be sold, assigned
or transferred pursuant to an exemption from such registration. Any sale of
such securities made in reliance on Rule 144 promulgated under the
Securities Act may be made only in accordance with the terms of said Rule and
further, if said Rule is not applicable, any resale of such securities
under circumstances in which the seller (or the person through whom the sale is
made) may be deemed to be an underwriter (as that term is defined in the
Securities Act) may require compliance with some other exemption under the
Securities Act or the rules and regulations of the Securities and Exchange
Commission thereunder; and neither the Company nor any other person is under
any obligation to register the Warrant Shares under the Securities Act or any
state securities laws or to comply with the terms and conditions of any
exemption thereunder except as set forth in Section 7(d) below.

 

(d)                                 The
Company shall use its commercially reasonable efforts to register the issuance
of the Warrant Shares upon exercise of the Warrants and the resale of the
Warrant Shares under the Securities Act pursuant to, and in accordance with,
the provisions of the Stock and Warrant Purchase Agreement, of even date
herewith, by and among the Company and the purchasers identified therein. Until
the Warrant Shares have been registered under the Securities Act, any Warrant
Shares issued upon exercise of this Warrant shall bear the following legend:

 

THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAW, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT
TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.

 

(e)                                  The
certificates representing the Warrant Shares shall also bear a legend
substantially as set forth below:

 

6

 

THIS
CERTIFICATE ALSO EVIDENCES A BENEFICIAL INTEREST IN AND ENTITLES THE HOLDER
HEREOF TO CERTAIN RIGHTS AS SET FORTH IN THE RIGHTS AGREEMENT BETWEEN WATCHIT
MEDIA, INC. (THE “COMPANY”) AND COMPUTERSHARE TRUST COMPANY NA (FORMERLY
EQUISERVE TRUST COMPANY, N.A., AS SUCCESSOR TO BANKBOSTON, N.A.) (THE “RIGHTS
AGENT”), DATED AS OF SEPTEMBER 24, 1997, AS AMENDED BY AMENDMENT NO. 1
TO RIGHTS AGREEMENT, DATED AS OF JUNE 13, 2002 (THE “RIGHTS AGREEMENT”),
AND AS THE SAME MAY BE AMENDED FROM TIME TO TIME, THE TERMS OF WHICH ARE
HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL OFFICES OF THE COMPANY. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN
THE RIGHTS AGREEMENT, SUCH RIGHTS WILL BE EVIDENCED BY SEPARATE CERTIFICATES
AND BENEFICIAL INTERESTS THEREIN WILL NO LONGER BE EVIDENCED BY THIS
CERTIFICATE. THE COMPANY WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF
THE RIGHTS AGREEMENT, AS IN EFFECT ON THE DATE OF MAILING, WITHOUT CHARGE,
PROMPTLY AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES
SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO
IS, WAS OR BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF
(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY
OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL
AND VOID.

 

Section 8.                                            Adjustment
of Warrant Exercise Price. In order to prevent dilution of the rights
granted under this Warrant, the Warrant Exercise Price shall be adjusted from
time to time as follows:

 

(a)                        Adjustment
of Warrant Exercise Price upon Subdivision or Combination of Common Stock.
If the Company at any time after the date of issuance of this Warrant,
subdivides (by any stock split, stock dividend, re-capitalization or otherwise)
one or more classes of its outstanding shares of Common Stock into a greater
number of shares, the Warrant Exercise Price in effect immediately prior to
such subdivision will be proportionately reduced and the number of shares of
Common Stock obtainable upon exercise of this Warrant will be proportionately
increased. If the Company at any time after the date of issuance of this
Warrant combines (by combination, reverse stock split or otherwise) one or more
classes of its outstanding shares of Common Stock into a smaller number of
shares, the Warrant Exercise Price in effect immediately prior to such
combination will be proportionately increased and the number of shares of
Common Stock obtainable upon exercise of this Warrant will be proportionately
decreased.

 

(b)                       Reorganization,
Reclassification, Consolidation, Merger or Sale. Any re-capitalization,
reorganization reclassification, consolidation, merger, sale of all or
substantially

 

7

 

all of the Company’s assets to another Person or other similar
transaction which is effected in such a way that holders of Common Stock are
entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock is
referred to herein as an “Organic Change.” Prior to the consummation of
any Organic Change, the Company will make appropriate provision to insure that,
upon the consummation of such Organic Change, the holder hereof will thereafter
have the right to acquire and receive in lieu of the Common Stock, such shares
of stock, securities or assets as may be issued or payable with respect to
or in exchange for the number of shares of Common Stock immediately theretofore
acquirable and receivable upon exercise of this Warrant had such Organic Change
not taken place. In any such case, the Company will make appropriate provision
with respect to such holders’ rights and interests to insure that the
provisions of this Section 8(b) will thereafter be applicable to this
Warrant.

 

(c)                        Anti-Dilution Provisions. The Warrant Exercise Price shall be subject to
adjustment from time to time as provided in this Section 8(c). In the
event that any adjustment of the Warrant Exercise Price as required herein
results in a fraction of a cent, such Warrant Exercise Price shall be rounded
up or down to the nearest cent.

 

(i) Adjustment
of Warrant Exercise Price. If and whenever the Company issues or sells, or
in accordance with Section 8(c)(ii) hereof is deemed to have issued
or sold, any shares of Common Stock for a consideration per share of less than
the average of the VWAPs of the Common Stock for the five business days
immediately prior to the execution of definitive documentation as to such
transaction or the closing of such transaction, whichever is greater (the “Market
Price”), or for no consideration (such issuances collectively, a “Dilutive
Issuance”), then, the Warrant Exercise Price shall be multiplied by the
fraction calculated as follows: (i) the sum of (a) the total number
of shares of Common Stock outstanding immediately prior to such issuance or
sale (excluding treasury shares, if any), plus (b) the number of shares of
Common Stock which the consideration, if any, received by the Company upon such
issuance or sale would purchase at the Market Price, divided by (ii) the
total number of shares of Common Stock outstanding immediately after such
issuance or sale (excluding treasury shares, if any), provided, however, that
it is acknowledged and agreed that this provision shall only have the effect of
reducing the Warrant Exercise Price of the Warrant. Such adjustment shall be
made whenever such shares of Common Stock are issued as a Dilutive Issuance,
without duplication.

 

(ii) Effect
on Warrant Exercise Price of Certain Events. For purposes of determining
the adjusted Warrant Exercise Price under Section 11(b) hereof, the
following will be applicable:

 

(A) Issuance
of Rights or Options. If the Company in any manner issues or grants any
warrants, rights or options, whether or not immediately exercisable, to
subscribe for or to purchase Common Stock (such warrants, rights and options to
purchase Common Stock are hereinafter referred to as “Options”) and the
effective price per share for which Common Stock is issuable upon the exercise
of such Options is less than the Market Price (“Below Base Price Options”),
then the maximum total number of shares of Common Stock issuable upon the
exercise of all such Below Base Price Options will, as of the date of the
issuance or grant of such Below Base Price Options, be deemed to be outstanding
and to have been issued and sold by the

 

8

 

Company for such price per share and the
maximum consideration payable to the Company upon such exercise will be deemed
to have been received by the Company. For purposes of the preceding sentence,
the “effective price per share for which Common Stock is issuable upon the
exercise of such Below Base Price Options” is determined by dividing (i) the
total amount, if any, received or receivable by the Company as consideration
for the issuance or granting of all such Below Base Price Options, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the exercise of all such Below Base Price Options, by (ii) the
maximum total number of shares of Common Stock issuable upon the exercise of
all such Below Base Price Options. No further adjustment to the Warrant Exercise
Price will be made upon the actual issuance of such Common Stock upon the
exercise of such Below Base Price Options. In case any subscription price may be
paid in a consideration part or all of which shall be in a form other
than cash, the value of such consideration shall be as determined in good faith
by the Board of Directors of the Company, whose determination shall be
conclusive absent manifest error.

 

(B) Exceptions
to Adjustment of Exercise Price. Notwithstanding the foregoing, no
adjustment will be made under this Section 8(c) in respect of (1) the
granting or issuance of shares of Common Stock or options (or exercise thereof)
to or by employees, officers, directors or consultants of the Company or any subsidiary
pursuant to any stock option plan or employee incentive plan or agreement duly
adopted or approved by a majority of the non-employee members of the Board of
Directors of the Company or a majority of the members of a committee of
non-employee directors established for such purpose, or (2) the exercise
of or conversion of any Options, rights or warrants issued and outstanding on
the date of issuance of this Warrant, or (3) issuances of shares of Common
Stock or options in connection with acquisitions, mergers, joint ventures,
strategic investments, or strategic partnering arrangements the primary purpose
of which is not to raise capital.

 

(iii) Minimum
Adjustment of Warrant Exercise Price. No adjustment of the Warrant Exercise
Price shall be made under this Section 8(c) in an amount of less than
1% of the Warrant Exercise Price in effect at the time such adjustment is
otherwise required to be made, but any such lesser adjustment shall be carried
forward and shall be made at the time and together with the next subsequent
adjustment which, together with any adjustments so carried forward, shall
amount to not less than 1% of such Warrant Exercise Price.

 

(d)                                 Notices.

 

(i)                       Immediately
upon any adjustment of the Warrant Exercise Price pursuant to this Section 8,
the Company will give written notice thereof to the holder of this Warrant,
setting forth in reasonable detail and certifying the calculation of such
adjustment.

 

(ii)                    The
Company will give written notice to the holder of this Warrant at least twenty
(20) days prior to the date on which the Company closes its books or takes a
record (A) with respect to any dividend or distribution upon the Common
Stock, (B) with respect to any pro rata subscription offer to holders of
Common Stock or (C) for determining rights to vote with respect to any
Organic Change, dissolution or liquidation, except that in no event shall such
notice be provided to such holder prior to such information being made known to
the public.

 

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(iii)                 The
Company will also give written notice to the holder of this Warrant at least
twenty (20) days prior to the date on which any Organic Change, dissolution or
liquidation will take place.

 

Section 9.                                            Company’s
Right of Optional Redemption.

 

(a)                                  At any time from and
after the date hereof, the Company may redeem all or any portion of this
Warrant by delivering written notice thereof (an “Optional Redemption Notice”
and the date the holder of the Warrant receives such notice is referred to as
the “Optional Redemption Notice Date”) to the holder of the Warrant,
which Optional Redemption Notice shall indicate the redemption of this Warrant
in accordance with this Section 9 (the “Optional Redemption”).

 

(b)                                 The Optional
Redemption Notice shall be delivered by the Company to the holder of the
Warrant on the date which is at least 30 calendar days prior to the date that
the Optional Redemption will be effected (the “Optional Redemption Date”).
The Optional Redemption Notice shall be delivered by facsimile and overnight
courier to the holder of this Warrant. The Optional Redemption Notice shall be
irrevocable. The Optional Redemption Notice shall state the portion of this
Warrant being redeemed, the Optional Redemption Date and the aggregate
Redemption Price for the portion of this Warrant being redeemed.

 

(c)                                  This Warrant shall be
redeemed by the Company in cash at a price equal to $0.40 per Warrant Share
(the “Redemption Price”).

 

(d)                                 Notwithstanding
anything to the contrary in this Section 9, but subject to Section 7(c),
until the Redemption Price is paid in full, all or any portion of this Warrant may be
exercised, in whole or in part, by the holder for shares of Common Stock
pursuant to Section 2, and any such exercise shall reduce the number of
Warrant Shares issuable upon exercise of this Warrant.

 

Section 10.                                      Lost,
Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost, stolen,
mutilated or destroyed, the Company shall, on receipt of an indemnification
undertaking, issue a new Warrant of like denomination and tenor as the Warrant
so lost, stolen, mutilated or destroyed.

 

Section 11.                                      Notice.
Any notices, consents, waivers, or other communications required or permitted
to be given under the terms of this Warrant must be in writing and will be
deemed to have been delivered (i) upon receipt, when delivered personally;
(ii) upon receipt, when sent by facsimile, provided a copy is mailed by
U.S. certified mail, return receipt requested; (iii) three (3) days
after being sent by U.S. certified mail, return receipt requested; or (iv) one
(1) day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:

 

10

 

	
  If to the Company:

  	
  Watchit Media, Inc.

  	
   

  
	
   

  	
  655 Montgomery Street, Suite 1000

  	
   

  
	
   

  	
  San Francisco, CA 94111

  	
   

  
	
   

  	
  Attention:

  	
  James R.
  Lavelle

  
	
   

  	
  Telephone:

  	
  (415)
  477-9900

  
	
   

  	
  Facsimile:

  	
  (415)
  399-0756

  
	
   

  	
   

  	
   

  
	
   

  	
  With a copy to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Morgan, Lewis & Bockius LLP

  	
   

  
	
   

  	
  101 Park Avenue

  	
   

  
	
   

  	
  New York, NY 10178

  	
   

  
	
   

  	
  Attention:

  	
  David W.
  Pollak, Esq.

  
	
   

  	
  Telephone:

  	
  (212)
  309-6000

  
	
   

  	
  Facsimile:

  	
  (212)
  309-6001

  
					

 

If to a holder
of this Warrant, to him, her or it at the address set forth below such holder’s
signature on the signature page hereof. Each party shall provide five (5) days’
prior written notice to the other party of any change in address or facsimile
number.

 

Section 12.                                      Date.
The date of this Warrant is March 16, 2006. This Warrant, in all events,
shall be wholly void and of no effect after the close of business on the
Expiration Date, except that notwithstanding any other provisions hereof, the
provisions of Section 7 shall continue in full force and effect after such
date as to any Warrant Shares or other securities issued upon the exercise of
this Warrant.

 

Section 13.                                      Amendment
and Waiver. Except as otherwise provided herein, the provisions of this
Warrant may be amended and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the holder of this
Warrant.

 

Section 14.                                      Descriptive
Headings; Governing Law. The descriptive headings of the several sections
of this Warrant are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof. This Warrant shall be governed by and
interpreted under the laws of the State of California, without giving effect to
any choice of law or conflict of law provision.

 

11

 

This Warrant has been duly executed by the Company as of the date first
set forth above.

 

 

	
   

  	
  WATCHIT MEDIA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John
  Dong

  	
   

  
	
   

  	
   

  	
  Name: John Dong

  
	
   

  	
   

  	
  Title: Executive Vice President and Chief

  Financial Officer

  

 

 

ACCEPTED BY:

 

STIASSNI CAPITAL PARTNERS, LP

3400 Palos Verdes Drive, West

Rancho Palos Verdes, CA 90275

 

By: Stiassni Capital, LLC

its general partner

 

 

	
  /s/ Nicholas
  C. Stiassni

  	
   

  
	
  Name: Nicholas C. Stiassni

  
	
  Title: Manager

  

 

12

 

EXHIBIT A

 

FORM OF SUBSCRIPTION

 

(Complete and sign only for exercise
of the Warrant in whole or in part.)

 

	
  TO:

  	
   

  	
   

  

 

The
undersigned, the holder of the attached Warrant to which this Form of
Subscription applies, hereby irrevocably elects to exercise the purchase rights
represented by such warrant for and to purchase thereunder             
shares of Common Stock, par value $0.01 per share (the “Shares”), from Watchit
Media, Inc., (or such other securities issuable pursuant to the terms of
the Warrant) and herewith makes payment of $            
therefor in cash or by certified or official bank check. The undersigned hereby
requests that the certificate(s) representing such securities be issued in the
name(s) and delivered the address(es) as follows:

 

	
  Name:

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  
	
  Social Security Number:

  	
   

  	
   

  	
   

  
	
  Deliver to:

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  

 

If the
foregoing subscription evidences an exercise of the Warrant to purchase fewer
than all of the Shares (or other securities issuable pursuant to the terms of
the Warrant) to which the undersigned is entitled under such warrant, please
issue a new warrant, of like tenor, relating to the remaining portion of the
securities issuable upon exercise of such warrant (or other securities issuable
pursuant to the terms of such warrant) in the name(s), and deliver the same to
the address(es), as follows:

 

	
  Name:

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (Name of Holder)

  	
   

  	
  (Social Security or Taxpayer Identification

  
	
   

  	
   

  	
  Number of Holder, if applicable)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (Signature of Holder or Authorized

  	
   

  	
   

  
	
  Signatory)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature Guaranteed:

  	
   

  	
   

  
							

 

13

 

EXHIBIT B

 

FORM OF WARRANT POWER

 

FOR VALUE RECEIVED, the undersigned does
hereby assign and transfer to                                                                          
[Federal Identification No.      ][Social
Security No.      ], a warrant to purchase shares
of the capital stock of Watchit Media, Inc., a Delaware corporation,
represented by warrant certificate No.             ,
standing in the name of the undersigned on the books of said corporation. The
undersigned does hereby irrevocably constitute and appoint                                           ,
attorney to transfer the warrants of said corporation, with full power of
substitution in the premises.

 

	
  Dated:

  	
   

  	
   

  
	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
						

 

14Exhibit 4.8

 

THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT
WITH A VIEW TOWARD RESALE OR DISTRIBUTION. THIS WARRANT MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE
AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT.

 

WATCHIT MEDIA,
INC.

 

WARRANT TO PURCHASE COMMON
STOCK

 

	
  Warrant No.: 2

  	
   

  	
   

  	
   

  	
  Number of Shares 1,666,667

  
	
  Date of Issuance: April 28, 2006

  	
   

  	
   

  	
   

  	
   

  

 

WATCHIT MEDIA, INC., a Delaware corporation (the “Company”),
hereby certifies that, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Colton Melby, the registered
holder hereof or its permitted assigns, is entitled, subject to the terms set
forth below, to purchase from the Company upon surrender of this Warrant, at
any time or times on or after the date hereof, but not after 5:00 P.M. Eastern
Standard Time on the Expiration Date (as defined herein) one million six
hundred sixty-six thousand six hundred sixty-seven (1,666,667) fully paid
nonassessable shares of Common Stock (as defined herein) of the Company (the “Warrant
Shares”) at the Warrant Exercise Price per share provided in Section l (a)
below;

 

Section 1.

 

(a)           Definitions. The
following words and terms as used in this Warrant shall have the following
meanings:

 

(i)            “Common Stock”
means (i) Common Stock, par value $0.01 per share, and (ii) any capital stock
into which such Common Stock shall have been changed or any capital stock
resulting from a reclassification of such Common Stock.

 

(ii)           “Expiration Date”
means April 28, 2011, or, if such date falls on a Saturday, Sunday or other day
on which banks are required or authorized to be closed in the City of New York,
the State of New York, the City of San Francisco or the State of California (a
“Holiday”), the next preceding date that is not a Holiday.

 

(iii)          “Person” means an
individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.

 

 

(iv)          “Securities Act”
means the Securities Act of 1933, as amended.

 

(v)           “Warrant” shall
mean this Warrant No. 2, dated April 28, 2006, and all warrants issued in
exchange, transfer or replacement of any thereof.

 

(vi)          “Warrant Exercise
Price” shall be equal to $0.27 per share of Common Stock, subject to
adjustment as hereinafter provided.

 

(b)           Other Definitional
Provisions.

 

(i)            Except
as otherwise specified herein, all references herein (A) to the Company shall
be deemed to include the Company’s successors and (B) to any applicable law
defined or referred to herein, shall be deemed references to such applicable
law as the same may have been or may be amended or supplemented from time to
time.

                             

(ii)           When
used in this Warrant, the words “herein,” “hereof,” and “hereunder,” and words
of similar import, shall refer to this Warrant as a whole and not to any
provision of this Warrant, and the words “Section,” “Schedule,” and “Exhibit”
shall refer to Sections of, and Schedules and Exhibits to, this Warrant unless
otherwise specified.

 

(iii)          Whenever
the context so requires, the neuter gender includes the masculine or feminine,
and the singular number includes the plural, and vice versa.

 

Section 2.               Exercise
of Warrant.

 

(a)           Subject to the terms
and conditions hereof, this Warrant may be exercised by the holder hereof then
registered on the books of the Company, in whole or in part, at any time on any
business day or after the opening of business on the date hereof and prior to
11:59 P.M. Eastern Standard Time on the Expiration Date by (i) delivery of a
written notice, in the form of the subscription notice attached as Exhibit A
hereto, of such holder’s election to exercise this Warrant, which notice shall
specify the number of Warrant Shares to be purchased, (ii) payment to the
Company of an amount equal to the Warrant Exercise Price multiplied by the
number of Warrant Shares as to which the Warrant is being exercised (plus any
applicable issue or transfer taxes) (the “Aggregate Exercise Price”) in
cash or by check or wire transfer, and (iii) the surrender of this Warrant, to
a common carrier for delivery to the Company as soon as practicable following
such date, this Warrant (or an indemnification undertaking with respect to this
Warrant in the case of its loss, theft, or destruction); provided that if such
Warrant Shares are to be issued in any name other than that of the registered
holder of this Warrant, such issuance shall be deemed a transfer and the
provisions of Section 7 shall be applicable. In the event of any exercise of
the rights represented by this Warrant in compliance with this Section 2, a
certificate or certificates for the Warrant Shares so purchased, in such
denominations as may be requested by the holder hereof and registered in the
name of, or as directed by, the holder, shall be delivered at the Company’s
expense to, or as directed by, such holder as soon as practicable after such
rights shall have been so exercised, and in any event no later than five (5)
business days after the Company’s receipt of the Exercise Notice, the Aggregate
Exercise Price and this

 

2

 

Warrant (or indemnification undertaking with respect to this Warrant in
the case of its loss, theft or destruction) 
Upon delivery of the Exercise Notice and Aggregate Exercise Price
referred to in clause (ii) (A) above, the holder of this Warrant shall be
deemed for all corporate purposes to have become the holder of record of the
Warrant Shares with respect to which this Warrant has been exercised,
irrespective of the date of delivery of this Warrant as required by clause
(iii) above or the certificates evidencing such Warrant Shares.

 

(b)           Unless the rights
represented by this Warrant shall have expired or shall have been fully
exercised, the Company shall, as soon as practicable and in any event no later
than five (5) business days after any exercise and at its own expense, issue a
new Warrant identical in all respects to the Warrant exercised except (i) it
shall represent rights to purchase the number of Warrant Shares purchasable
immediately prior to such exercise under the Warrant exercised, less the number
of Warrant Shares with respect to which such Warrant is exercised, and (ii) the
holder thereof shall be deemed for all corporate purposes to have become the
holder of record of such Warrant Shares immediately prior to the close of
business on the date on which the Warrant is surrendered and payment of the
amount due in respect of such exercise and any applicable taxes is made,
irrespective of the date of delivery of certificates evidencing such Warrant
Shares, except that, if the date of such surrender and payment is a date when
the stock transfer books of the Company are properly closed, such person shall
be deemed to have become the holder of such Warrant Shares at the opening of
business on the next succeeding date on which the stock transfer books are
open. Upon presentation of a duly executed Subscription Form in the Form of
Exhibit A to this Warrant, the holder shall be entitled to exercise this
Warrant in whole or in part, if the holder shall have previously exercised and
surrendered this Warrant and the Company shall not have issued a new Warrant
representing the number of shares issuable following such prior exercise.

 

(c)           Upon the issuance of
the Warrant Shares hereunder, and consistent with, pursuant to and subject to
the Company’s existing Rights Agreement, dated as of September 24, 1997, as
amended by Amendment No. 1 to Rights Agreement, dated as of June 13, 2002 (as
the same may be amended from time to time, the “Rights Agreement”), between the
Company and Computershare Trust Company, N.A. (formerly EquiServe Trust
Company, N.A., as successor to BankBoston N.A.), as rights agent, one right
issuable pursuant to the Rights Agreement or any other right issued in
substitution thereof (a “Company Right”) shall be issued together with and
shall attach to each Warrant Share issued pursuant to the terms and conditions
of this Warrant, unless the Company Rights shall have expired or been redeemed
prior to the date on which this Warrant is exercised.

 

(d)           No fractional shares of
Common Stock are to be issued upon the exercise of this Warrant, but rather the
number of shares of Common Stock issued upon exercise of this Warrant shall be
rounded up or down to the nearest whole number.

 

Section 3.               Covenants
as to Common Stock. The Company hereby covenants and agrees as follows:

 

(a)           This
Warrant is, duly authorized and validly issued.

 

3

 

(b)           All
Warrant Shares which may be issued upon the exercise of the rights represented
by this Warrant will, upon issuance, be validly issued, fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof.

 

(c)           During
the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized and reserved at least
the number of shares of Common Stock needed to provide for the exercise of the
rights then represented by this Warrant and the par value of said shares will
at all times be less than or equal to the applicable Warrant Exercise Price.

 

(d)           The
Company will not, by amendment of its Certificate of Incorporation or through
any reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities, or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed by it hereunder, but will at all times in good faith assist in the
carrying out of all the provisions of this Warrant and in the taking of all
such action as may reasonably be requested by the holder of this Warrant in
order to protect the exercise privilege of the holder of this Warrant against
dilution or other impairment, consistent with the tenor and purpose of this
Warrant. Without limiting the generality of the foregoing, the Company (i) will
not increase the par value of any shares of Common Stock receivable upon the
exercise of this Warrant above the Exercise Price then in effect, and (ii) will
take all such actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant.

 

(e)           This
Warrant will be binding upon any entity succeeding to the Company by merger,
consolidation or acquisition of all or substantially all of the Company’s
assets.

 

Section 4.               Taxes.
The Company shall not be required to pay any tax or taxes attributable to the
initial issuance of the Warrant Shares or any permitted transfer involved in
the issue or delivery of any certificates for Warrant Shares in a name other
than that of the registered holder hereof or upon any permitted transfer of
this Warrant.

 

Section 5.               Warrant
Holder Not Deemed a Stockholder. Except as otherwise specifically provided
herein, no holder, as such, of this Warrant shall be entitled to vote or
receive dividends or be deemed the holder of shares of the Company for any
purpose, nor shall anything contained in this Warrant be construed to confer
upon the holder hereof, as such, any of the rights of a stockholder of the
Company or any right to vote, give or withhold consent to any corporate action
(whether any reorganization, issue of stock, reclassification of stock,
consolidation, merger, conveyance or otherwise), receive notice of meetings,
receive dividends or subscription rights, or otherwise, prior to the issuance
to the holder of this Warrant of the Warrant Shares which he or she is then
entitled to receive upon the due exercise of this Warrant.

 

In addition, nothing contained in this Warrant shall be construed as
imposing any liabilities on such holder to purchase any securities or as a
stockholder of the Company, whether such liabilities are asserted by the
Company or by creditors of the Company.

 

4

 

Section 6.               Representations
of Holder. The holder of this Warrant, by the acceptance hereof, represents
(and any assignor shall represent) that it is acquiring this Warrant and the
Warrant Shares for its own account for investment purposes and not with a view
to, or for sale in connection with, any distribution hereof, and not with any
present intention of distributing any of the same. The holder of this Warrant
further represents (and any assignor shall represent), by acceptance hereof,
that, as of this date, such holder is an “accredited investor” as such term is
defined in Rule 501(a)(1) of Regulation D promulgated by the Securities and
Exchange Commission under the Securities Act (an “Accredited Investor”).
Upon exercise of this Warrant, the holder shall, if requested by the Company,
confirm in writing, in a form satisfactory to the Company, that the Warrant
Shares so purchased are being acquired solely for the holder’s own account and
not as a nominee for any other party, for investment, and not with a view
toward distribution or resale and that such holder is an Accredited Investor.
If such holder cannot make such representations because they would be factually
incorrect, it shall be a condition to such holder’s exercise of the Warrant
that the Company receive such other representations as the Company considers
reasonably necessary to assure the Company that the issuance of its securities
upon exercise of the Warrant shall not violate any United States Federal or
state securities laws.

 

Section 7.               Ownership
and Transfer.

 

(a)           The
Company shall maintain at its principal executive offices (or such other office
or agency of the Company as it may designate by notice to the holder hereof), a
register for this Warrant, in which the Company shall record the name and
address of the person in whose name this Warrant has been issued, as well as
the name and address of each permissible transferee. The Company may treat the
person in whose name any Warrant is registered on the register as the owner and
holder thereof for all purposes, notwithstanding any notice to the contrary,
but in all events recognizing any transfers made in accordance with the terms
of this Warrant.

 

(b)           This
Warrant and the rights granted to the holder hereof are transferable, in whole
or in part, upon surrender of this Warrant, together with a properly executed
warrant power in the form of Exhibit B attached hereto; provided, however, that
any transfer or assignment issuance of the Warrant Shares upon shall subject to
the conditions set forth in Section 6 above and Section 7(c) below.

 

(c)           The
holder of this Warrant understands that this Warrant has not been and is not
expected to be, registered under the Securities Act or any state securities
laws, and may not be offered for sale, sold, assigned or transferred unless (a)
subsequently registered thereunder, or (b) such holder shall have delivered to
the Company an opinion of counsel, reasonably satisfactory in form, scope and
substance to the Company, to the effect that the securities to be sold,
assigned or transferred may be sold, assigned or transferred pursuant to an
exemption from such registration. Any sale of such securities made in reliance
on Rule 144 promulgated under the Securities Act may be made only in accordance
with the terms of said Rule and further, if said Rule is not applicable, any
resale of such securities under circumstances in which the seller (or the
person through whom the sale is made) may be deemed to be an underwriter (as
that term is defined in the Securities Act) may require compliance with some
other exemption under the Securities Act or the rules and regulations of the
Securities and Exchange Commission

 

5

 

thereunder; and neither the
Company nor any other person is under any obligation to register the Warrant
Shares under the Securities Act or any state securities laws or to comply with
the terms and conditions of any exemption thereunder except as set forth in
Section 7(d) below.

 

(d)           The
Company shall use its commercially reasonable efforts to register the issuance
of the Warrant Shares upon exercise of the Warrants and the resale of the
Warrant Shares under the Securities Act pursuant to, and in accordance with,
the provisions of the Stock and Warrant Purchase Agreement, of even date
herewith, by and among the Company and the purchasers identified therein. Until
the Warrant Shares have been registered under the Securities Act, any Warrant
Shares issued upon exercise of this Warrant shall bear the following legend:

 

THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAW, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.

 

(e)           The
certificates representing the Warrant Shares shall also bear a legend
substantially as set forth below:

 

THIS
CERTIFICATE ALSO EVIDENCES A BENEFICIAL INTEREST IN AND ENTITLES THE HOLDER
HEREOF TO CERTAIN RIGHTS AS SET FORTH IN THE RIGHTS AGREEMENT BETWEEN WATCHIT
MEDIA, INC. (THE “COMPANY”) AND COMPUTERSHARE TRUST COMPANY, N.A. (FORMERLY EQUISERVE
TRUST COMPANY, N.A., AS SUCCESSOR TO BANKBOSTON, N.A.) (THE “RIGHTS AGENT”),
DATED AS OF SEPTEMBER 24, 1997, AS AMENDED BY AMENDMENT NO. 1 TO RIGHTS
AGREEMENT, DATED AS OF JUNE 13, 2002 (THE “RIGHTS AGREEMENT”), AND AS THE SAME
MAY BE AMENDED FROM TIME TO TIME, THE TERMS OF WHICH ARE HEREBY INCORPORATED
HEREIN BY REFERENCE AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICES OF
THE COMPANY. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
SUCH RIGHTS WILL BE EVIDENCED BY SEPARATE CERTIFICATES AND BENEFICIAL INTERESTS
THEREIN WILL NO LONGER BE EVIDENCED BY THIS CERTIFICATE. THE COMPANY WILL MAIL
TO THE HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT, AS IN EFFECT
ON THE DATE OF MAILING, WITHOUT CHARGE, PROMPTLY AFTER RECEIPT OF A WRITTEN
REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN
ACQUIRING PERSON OR ANY AFFILIATE OR

 

6

 

ASSOCIATE
THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY
HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME
NULL AND VOID.

 

Section 8.               Adjustment
of Warrant Exercise Price. In order to prevent dilution of the rights
granted under this Warrant, the Warrant Exercise Price shall be adjusted from
time to time as follows:

 

(a)           Adjustment of
Warrant Exercise Price upon Subdivision or Combination of Common Stock. If
the Company at any time after the date of issuance of this Warrant, subdivides
(by any stock split, stock dividend, re-capitalization or otherwise) one or
more classes of its outstanding shares of Common Stock into a greater number of
shares, the Warrant Exercise Price in effect immediately prior to such
subdivision will be proportionately reduced and the number of shares of Common
Stock obtainable upon exercise of this Warrant will be proportionately
increased. If the Company at any time after the date of issuance of this
Warrant combines (by combination, reverse stock split or otherwise) one or more
classes of its outstanding shares of Common Stock into a smaller number of
shares, the Warrant Exercise Price in effect immediately prior to such
combination will be proportionately increased and the number of shares of
Common Stock obtainable upon exercise of this Warrant will be proportionately
decreased.

 

(b)           Reorganization,
Reclassification, Consolidation, Merger or Sale. Any re-capitalization,
reorganization reclassification, consolidation, merger, sale of all or
substantially all of the Company’s assets to another Person or other similar
transaction which is effected in such a way that holders of Common Stock are
entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock is
referred to herein as an “Organic Change.” Prior to the consummation of
any Organic Change, the Company will make appropriate provision to insure that,
upon the consummation of such Organic Change, the holder hereof will thereafter
have the right to acquire and receive in lieu of the Common Stock, such shares
of stock, securities or assets as may be issued or payable with respect to or
in exchange for the number of shares of Common Stock immediately theretofore
acquirable and receivable upon exercise of this Warrant had such Organic Change
not taken place. In any such case, the Company will make appropriate provision
with respect to such holders’ rights and interests to insure that the
provisions of this Section 8(b) will thereafter be applicable to this Warrant.

 

(c)           Notices.

 

(i)         Immediately upon any
adjustment of the Warrant Exercise Price pursuant to this Section 8, the
Company will give written notice thereof to the holder of this Warrant, setting
forth in reasonable detail and certifying the calculation of such adjustment.

 

(ii)        The Company will give
written notice to the holder of this Warrant at least twenty (20) days prior to
the date on which the Company closes its books or takes a record (A) with
respect to any dividend or distribution upon the Common Stock, (B) with respect
to any pro

 

7

 

rata subscription offer to
holders of Common Stock or (C) for determining rights to vote with respect to any
Organic Change, dissolution or liquidation, except that in no event shall such
notice be provided to such holder prior to such information being made known to
the public.

 

(iii)       The Company will also give
written notice to the holder of this Warrant at least twenty (20) days prior to
the date on which any Organic Change, dissolution or liquidation will take
place.

 

Section 9.               Lost,
Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost, stolen,
mutilated or destroyed, the Company shall, on receipt of an indemnification
undertaking, issue a new Warrant of like denomination and tenor as the Warrant
so lost, stolen, mutilated or destroyed.

 

Section 10.             Notice.
Any notices, consents, waivers, or other communications required or permitted
to be given under the terms of this Warrant must be in writing and will be
deemed to have been delivered (i) upon receipt, when delivered personally; (ii)
upon receipt, when sent by facsimile, provided a copy is mailed by U.S.
certified mail, return receipt requested; (iii) three (3) days after being sent
by U.S. certified mail, return receipt requested; or (iv) one (1) day after
deposit with a nationally recognized overnight delivery service, in each case
properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:

 

	
  If to the
  Company:

  	
  Watchit
  Media, Inc.

  
	
   

  	
  655
  Montgomery Street, Suite 1000

  
	
   

  	
  San
  Francisco, CA  94111

  
	
   

  	
  Attention:

  	
  James R.
  Lavelle

  
	
   

  	
  Telephone:

  	
  (415)
  477-9900

  
	
   

  	
  Facsimile:

  	
  (415)
  399-0756

  
	
   

  	
   

  	
   

  
	
   

  	
  With a copy
  to:

  
	
   

  	
   

  
	
   

  	
  Morgan,
  Lewis & Bockius LLP

  
	
   

  	
  101 Park
  Avenue

  
	
   

  	
  New York, NY  10178

  
	
   

  	
  Attention:

  	
  David W.
  Pollak, Esq.

  
	
   

  	
  Telephone:

  	
  (212)
  309-6000

  
	
   

  	
  Facsimile:

  	
  (212)
  309-6001

  

 

If to a holder
of this Warrant, to him, her or it at the address set forth below such holder’s
signature on the signature page hereof. Each party shall provide five (5) days’
prior written notice to the other party of any change in address or facsimile
number.

 

Section 11.             Date.
The date of this Warrant is April 28, 2006. This Warrant, in all events, shall
be wholly void and of no effect after the close of business on the Expiration
Date, except that notwithstanding any other provisions hereof, the provisions
of Section 7 shall

 

8

 

continue in full force and effect after such date as to any Warrant
Shares or other securities issued upon the exercise of this Warrant.

 

Section 12.             Amendment
and Waiver. Except as otherwise provided herein, the provisions of this
Warrant may be amended and the Company may take any action herein prohibited,
or omit to perform any act herein required to be performed by it, only if the
Company has obtained the written consent of the holder of this Warrant.

 

Section 13.             Descriptive
Headings; Governing Law. The descriptive headings of the several sections
of this Warrant are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof. This Warrant shall be governed by and
interpreted under the laws of the State of California, without giving effect to
any choice of law or conflict of law provision.

 

9

 

This Warrant has been duly executed by the Company as of the date first
set forth above.

 

 

	
   

  	
  WATCHIT
  MEDIA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James Lavelle

  	
   

  
	
   

  	
   

  	
  Name: James Lavelle

  
	
   

  	
   

  	
  Title: Chairman and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ACCEPTED BY:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Colton Melby

  	
   

  	
   

  	
   

  
	
  Colton Melby

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tel:

  	
   

  	
   

  
	
  Fax:

  	
   

  	
   

  

 

10

 

EXHIBIT A

 

FORM OF SUBSCRIPTION

 

(Complete and sign only exercise of the
Warrant in whole or in part.)

 

	
  TO:

  	
   

  	
   

  

 

The
undersigned, the holder of the attached Warrant to which this Form of
Subscription applies, hereby irrevocably elects to exercise the purchase rights
represented by such warrant for and to purchase thereunder
           shares of Common
Stock, par value $0.01 per share (the “Shares”), from Watchit Media, Inc., (or
such other securities issuable pursuant to the terms of the Warrant) and
herewith makes payment of
$           therefor in cash
or by certified or official bank check. The undersigned hereby requests that
the certificate(s) representing such securities be issued in the name(s) and
delivered the address(es) as follows:

 

	
  Name:

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
  Social Security Number:

  	
   

  	
   

  
	
  Deliver to:

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  

 

If the
foregoing subscription evidences an exercise of the Warrant to purchase fewer
than all of the Shares (or other securities issuable pursuant to the terms of
the Warrant) to which the undersigned is entitled under such warrant, please
issue a new warrant, of like tenor, relating to the remaining portion of the
securities issuable upon exercise of such warrant (or other securities issuable
pursuant to the terms of such warrant) in the name(s), and deliver the same to
the address(es), as follows:

 

	
  Name:

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  

 

 

 

	
   

  	
   

  	
   

  	
   

  
	
  (Name of Holder)  

  	
   

  	
  (Social Security or Taxpayer Identification

  
	
   

  	
   

  	
  Number of Holder, if applicable)

  

 

	
   

  	
   

  	
   

  	
   

  
	
  (Signature of Holder or Authorized

  	
   

  	
   

  
	
  Signatory)

  	
   

  	
   

  

 

	
  Signature Guaranteed:

  	
   

  	
   

  

 

11

 

EXHIBIT B

 

FORM OF WARRANT POWER

 

FOR VALUE RECEIVED, the undersigned does hereby assign and transfer to                                                                           
[Federal Identification No.          ][Social
Security No.      ], a warrant to purchase shares
of the capital stock of Watchit Media, Inc., a Delaware corporation,
represented by warrant certificate No.             ,
standing in the name of the undersigned on the books of said corporation. The
undersigned does hereby irrevocably constitute and appoint                                       ,
attorney to transfer the warrants of said corporation, with full power of
substitution in the premises.

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  

 

12

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