Document:

Exhibit 10.4

CAPSTEAD MORTGAGE CORPORATION

PERFORMANCE UNIT AGREEMENT

FOR EXECUTIVE EMPLOYEES

THIS PERFORMANCE UNIT AGREEMENT (this “Agreement”) made and entered into as of the [___] day of [___________], 20[__], effective as of the date hereof (hereinafter called the “Award Date”), by and between Capstead Mortgage Corporation, a Maryland corporation (“Capstead” or the “Company”), and « Name» (the “Grantee”).

WHEREAS, the compensation committee of Capstead’s board of directors (the “Committee”) believes employees of the Company should have an ongoing stake in the long-term success of the Company, and

WHEREAS, the Committee believes that providing a long-term equity-based award appropriately linked to the Company’s performance over a multiple year period will better align the employees’ long-term interests with those of our stockholders.

THEREFORE, the Committee has awarded to the Grantee a performance unit award conditioned upon the execution by the Company and the Grantee of this Performance Unit Agreement that contains certain performance criteria set forth herein. In consideration of the mutual promise(s) and covenant(s) contained herein, the parties hereby agree as follows:

SECTION 1.       GRANT.

1.1          Grant and Acceptance.  Pursuant to the [__________], 20[__] authorization to grant performance units to current executive officers, the Company does hereby grant and transfer to the Grantee, for no cash consideration from the Grantee, and the Grantee does hereby accept from the Company, an aggregate of «Target» performance units (the “Performance Units”), which are convertible into shares of Common Stock, $0.01 par value per share, of the Company (the “Common Stock”) according to the terms and conditions and subject to the restrictions, forfeiture risks and other terms and conditions hereinafter set forth.

1.2          Effect of Plan.  The Performance Units shall constitute a Performance Award, as defined in the Company’s Amended and Restated 2014 Flexible Incentive Plan (the “Plan”).  This Agreement is expressly subject to the terms and provisions of the Plan and in the event there is a conflict between the terms of the Plan and this Agreement, the terms of the Plan shall control.  All undefined capitalized terms used herein shall have the meanings assigned in the Plan.  The Award is subject to all laws, approvals, requirements and regulations of any governmental authority which may be applicable thereto.

 

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SECTION 2.       CONVERSION RIGHTS; DIVIDENDS.  Provided the Performance Criteria are satisfied, each Performance Unit is automatically convertible into Common Stock following the end of the Performance Period, but no later than March 15, 20[  ], with the conversion factor determined formulaically based on the stated performance criteria, as set forth in the 2014 Flexible Incentive Plan Long-Term Award Criteria attached hereto as Exhibit A (the “Long-Term Award Criteria”).  The Grantee, for the duration of this Agreement shall not be entitled to vote or receive dividends or any other distributions declared on the Common Stock into which the Performance Units are ultimately convertible.  During the Performance Period, the Company shall accrue dividends and any other distributions declared with respect to its Common Stock, initially as if each Performance Unit were entitled to the same dividend as a single share of Common Stock.  The Company shall have discretion to accrue additional or lesser amounts if management has a reasonable basis to believe that the conversion ratio will result in automatic conversion into Common Stock on something other than a one-to-one basis (based on the actual performance criteria during the Performance Period).  To the extent the Performance Units are ultimately convertible into Common Stock, the Grantee shall be entitled to receive all dividends and any other distributions declared during the Performance Period with respect to the shares of Common Stock into which the Performance Units are ultimately converted, as if such Common Stock had been issued on the first day of the Performance Period (provided, however, that nothing contained herein shall cause the Company to declare any such dividends or to make any such distributions).  If Performance Units are forfeited pursuant to Section 3.3, 3.4 or 3.5, Grantee is not entitled to receive any such amounts representing accrued dividends or distributions.

SECTION 3.       PERFORMANCE CRITERIA, PERFORMANCE PERIOD AND VESTING.

3.1          Performance Criteria.  The “Performance Criteria” with respect to the Performance Units shall be comprised of the performance metrics, and each performance metric shall be weighted, as described in the Long-Term Award Criteria.  Based on the “Payout Factors” and weighting described in the Long-Term Award Criteria, the Performance Units could expire without converting into any shares of Common Stock or could be convertible into as many as 200% of the number of Performance Units granted to each Grantee.

3.2          Performance Period.  Performance shall be measured for a single three-year period beginning January 1, 20[__] and ending December 31, 20[__].

3.3          Conversions.

(a)          Pursuant to the Plan, after the end of the Performance Period, the Committee shall determine whether, and to what degree, the Performance Criteria were satisfied. If any of the Performance Criteria were satisfied at or above the “Threshold” level (as described in the Long-Term Award Criteria) with respect to the Performance Period, the Committee shall establish a “Conversion Date” with respect to such Performance Period.  The determination by the Committee as to the satisfaction of the Performance Criteria with respect to the Performance Period shall be deemed to be final.

(b)          Provided the Grantee remains continuously employed by the Company throughout the Performance Period and some or all of the Performance Criteria for the Performance Period have been satisfied and acknowledged by the Committee at or above the “Threshold” level, then on the Conversion Date, the Performance Units shall automatically convert into the number of shares of Common Stock calculated consistent with the Payout Factors shown on the Long-Term Award Criteria.

(c)           Except as otherwise provided in Sections 3.4, 3.5 and 3.6 below, no Performance Units shall become convertible after:

 

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(i)        termination of Grantee’s employment with the Company or any Affiliate for any reason other than death (including termination by reason of voluntary or involuntary discharge, Disability or Retirement) in which case the Grantee shall, at the time of termination, forfeit all right, title and interest in and to any Performance Units and the Common Stock into which such Performance Units may have been convertible following the Performance Period; or

(ii)        a Grantee working full-time at the Award Date reduces his/her scheduled hours worked per week below a standard 40-hour work week, in which case the Grantee shall, at the time of such reduction and subject to the Committee’s discretion, forfeit all right, title and interest in and to any Performance Units and the Common Stock into which such Performance Units may have been convertible following the Performance Period; or

(iii)       a Grantee working part-time at the Award Date reduces his/her scheduled hours worked per week below a standard 20-hour work week, in which case the Grantee shall, at the time of such reduction and subject to the Committee’s discretion, forfeit all right, title and interest in and to any Performance Units and the Common Stock into which such Performance Units may have been convertible following the Performance Period.

3.4          Effect of Grantee’s Death.  If the Grantee ceases to be an employee of the Company or any Affiliate by reason of death prior to the end of a Performance Period, the personal representatives, heirs, legatees or distributees of the Grantee, as appropriate, shall be entitled to the Performance Units, which shall be convertible into the same number of shares of Common Stock that would have otherwise been applicable for the Performance Period multiplied by a fraction, the numerator of which is the number of years during the related Performance Period in which the Grantee was alive and employed by the Company for any portion of such year and the denominator of which is three.  Such beneficiary shall have no further rights under this Agreement.

3.5          Effect of Dissolution or Liquidation.  In the event of the dissolution or liquidation of the Company, all performance goals with respect to the Performance Units shall be deemed to have been met at the Targeted Amount set forth in the Long-Term Award Criteria for the entire Performance Period under the terms of the Long-Term Award Criteria and the Performance Period shall immediately end.

3.6          Effect of Change of Control.  If there is a Change in Control (as defined in the Plan) during the Performance Period, the Grantee’s employment is terminated at any time within 24 months of the Change of Control (but before the end of the Performance Period) and such termination is by the Company without Cause or by the Grantee with Good Reason, all performance goals with respect to the Performance Units shall be deemed to have been met at the Targeted Amount set forth in the Long-Term Award Criteria for the entire Performance Period under the terms of the Long-Term Award Criteria and the Performance Period shall immediately end.  In such an event, the Conversion Date shall be the date of the occurrence of the Change in Control.  For purposes of this Agreement, “Good Reason” shall include (i) a reduction in Grantee’s base salary; (ii) a material diminution in Grantee’s duties and job responsibilities; or (iii) a relocation of Grantee’s primary place of work as of the date of this Agreement to a location that requires Grantee to travel from his or her primary residence to such new location an additional 50 or more miles each way.

 

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For purposes of this Agreement, “Cause” means:

(i)            gross negligence in the performance of Grantee’s duties and responsibilities, which negligence results in material harm to the business, interests or reputation of the Company;

(ii)           a violation of any material Company policy, including, without limitation, the theft, embezzlement or misappropriation or material misuse of any Company funds or property;

(iii)          any criminal or civil conviction for a crime involving moral turpitude;

(iv)          willful and continued failure by Grantee to perform his or her duties and responsibilities; or

(v)          any misconduct that, in the Company’s good faith determination, is materially harmful to the business, interests or reputation of the Company.

3.7          Effect of Forfeiture.  Any Performance Units forfeited pursuant to Section 3.3 shall revert to the Company.

SECTION 4.       FORM OF PERFORMANCE UNITS.  The Performance Units shall not be certificated.  On the Conversion Date, the Company shall cause its Transfer Agent to record Grantee’s ownership of the Common Stock of the Company (into which the Performance Units are converted) in unrestricted book entry form or, at the request of the Grantee, issued in stock certificate form.  Any such certificates shall be unencumbered by any of the restrictions enumerated herein other than such restrictions as may be imposed by applicable federal or state securities laws and regulations.

SECTION 5.       TRANSFER OF PERFORMANCE UNITS.

5.1           Except as otherwise provided in the Plan, the Performance Units shall not be offered, sold, transferred, assigned, exchanged, pledged, encumbered or otherwise disposed of (each, a “Transfer”) for any purpose whatsoever, other than to the Company, and shall not be subject, in whole or in part, to execution, attachment, or similar process in all such cases until the Conversion Date.  Any attempted Transfer of the Performance Units, other than in accordance with the terms set forth herein, shall be void and of no effect.

5.2          Grantee acknowledges that any sale, assignment, transfer or other disposition of Performance Units may be subject to restrictions contained in applicable federal or state securities laws and regulations and that any such sale, assignment, transfer or other disposition of Performance Units by him or her will be in compliance with such laws and regulations.

 

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SECTION 6.        WITHHOLDINGS.  The Company and each Affiliate shall have the right to retain and withhold from any payment of Performance Units, Common Stock into which Performance Units are convertible (and any dividends on such Common Stock) any amounts required to be withheld or otherwise deducted and paid with respect to such payment.  At its discretion, the Company and each Affiliate may require the Grantee receiving Performance Units or Common Stock into which Performance Units are convertible to reimburse the Company or any Affiliate for any such taxes required to be withheld by the Company or the Affiliate and withhold any distribution in whole or in part until the Company and each Affiliate is so reimbursed.  In lieu thereof, the Company and each Affiliate shall have the right to withhold from any other cash amounts due or to become due from the Company or the Affiliate to the Grantee an amount equal to such taxes required to be withheld by the Company or the Affiliate as reimbursement for any such taxes or retain and withhold a number of shares having a market value not less than the amount of such taxes in order to reimburse the Company or the Affiliate for any such taxes.

SECTION 7.       ADJUSTMENTS TO PERFORMANCE UNITS.

7.1          Stock Dividends and Splits and Similar Transactions.  Subject to any required action by the Company’s Board of Directors and stockholders, the number of Performance Units shall be proportionately adjusted for any increase or decrease in the number of issued Shares of the Company resulting from the payment of a Share dividend, a Share split, a Share reverse-split or any similar transaction.

7.2          Change in Par Value.  In the event of a change in the Company’s Shares, which is limited to a change of all of its authorized shares with par value into the same number of shares with a different par value or without par value, the shares resulting from any such change shall be deemed to be shares within the meaning of the Plan.

7.3          Other Capital Adjustments.  Except as hereinbefore expressly provided in Section 7.1 and except for rights that all holders of Common Stock shall have, Grantee shall have no rights by reason of any subdivision or consolidation of Shares of any class or payment of any share dividend or any other increase or decrease in the number of shares of any class or by reason of any dissolution, liquidation, merger or consolidation or spin-off of assets or stock of another corporation; any issuance by the Company of Shares of any class, or securities convertible into Shares of any class, shall not affect the Award, and no adjustment by reason thereof shall be made with respect to the number or price of the Performance Units subject to the Award.  An Award of Performance Units shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge or to consolidate or to dissolve, liquidate or sell or transfer all or any part of its business or assets.

SECTION 8.       GRANTEE’S REPRESENTATIONS AND WARRANTIES.  Grantee represents and warrants that:

(a)           such Grantee has not and will not, directly or indirectly, Transfer any Performance Units except in accordance with the terms of this Agreement;

(b)          such Grantee has, or such Grantee together with such Grantee’s advisors, if any, have such knowledge and experience in financial, business and tax matters that such Grantee is, or such Grantee together with such Grantee’s advisors, if any, are capable of evaluating the merits and risks relating to such Grantee’s investment in the Performance Units and making an investment decision with respect to the Company;

 

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(c)           such Grantee has been given the opportunity to obtain information and documents relating to the Company and to ask questions of and receive answers from representatives of the Company concerning the Company and such Grantee’s investment in the Performance Units; and

(d)          such Grantee realizes that there are substantial risks incident to an investment in the Performance Units.

SECTION 9.       IMPACT ON OTHER BENEFITS.  The value of the Performance Units (either on the Award Date or at the Conversion Date) shall not be includable as compensation or earnings for purposes of any other benefit plan offered by the Company.

SECTION 10.     ADMINISTRATION.  The Committee shall have full authority and discretion (subject only to the express provisions of the Plan) to decide all matters relating to the administration and interpretation of the Plan and this Agreement.  All such Committee determinations shall be final, conclusive, and binding upon the Company, the Grantee, and any and all interested parties.

SECTION 11.     NO AGREEMENT TO CONTINUE IN EMPLOYMENT.  Nothing in the Plan or this Agreement shall confer on the Grantee any right to continue in the employ of the Company or any Affiliate or interfere in any way with the right of the Company and any Affiliate to terminate the Grantee’s employment at any time.

SECTION 12.     AMENDMENT(S).  This Agreement shall be subject to the terms of the Plan, as amended from time to time, except that the Award that is the subject of this Agreement may not in any way be restricted or limited by any amendment or termination approved after the Award Date without the Grantee’s written consent.

SECTION 13.     FORCE AND EFFECT.  The various provisions of this Agreement are severable in their entirety.  Any determination of invalidity or unenforceability of any one provision shall have no effect on the continuing force and effect of the remaining provisions.

SECTION 14.     GOVERNING LAWS.  This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Maryland.

SECTION 15.     MISCELLANEOUS.

15.1        Any notice necessary under this Agreement shall be in writing, signed by the party giving or making the same, and addressed (a) to the Company in the care of its President or Secretary at the principal executive office of the Company in Dallas, Texas, (b) to the Grantee at the address appearing in the personnel records of the Company for such Grantee or (c) to either party at such other address as either party hereto may hereafter designate in writing to the other.  Except as otherwise provided herein, any such notice shall be deemed effective upon receipt thereof by the addressee.

15.2         This Agreement may be executed in counterparts, each of which shall be deemed an original for all purposes and both of which taken together shall constitute but one and the same instrument.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date hereof.  By execution of this Agreement, the Grantee acknowledges receipt of a copy of the Plan, the Company’s Annual Report on Form 10-K for the year ended December 31, 20[__] and the informational supplement required by Rule 428(b)(1) under the Securities Act of 1933.

	 	
CAPSTEAD MORTGAGE CORPORATION

	 
	 	 	 	 
	 	
By:

	 	 
	 	 	
Phillip A. Reinsch

	 
	 	 	
President & Chief Officer

	 
	 	 	 	 
	 	GRANTEE	 
	 	 	 	 
	 	 	 	 
	 	 	
«Name»

	 

 

 

7Blueprint

Exhibit 4.6

 

THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933
ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SHARES
NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR
OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH
RESPECT THERETO IS EFFECTIVE UNDER THE 1933 ACT AND ANY APPLICABLE
STATE SECURITIES LAWS, OR (2) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE 1933 ACT.

 

---------------------------------------

 

Dolphin Digital Media, Inc.

 

COMMON STOCK PURCHASE WARRANT "[*]"

 

 

	

Number
of Shares:

	
[*]	

Holder:
[*]

	

Original
Issue Date:

	
[*]	

Attn:
[*]

	
 

	
 

	

Title:

	

Expiration
Date:

	
[*]	
 

	
 

	

unless
otherwise extended

pursuant
to terms herein

	
 

	

 Exercise
Price per Share:

	

$[*]

	

Tel:
[*]

	
 

	
 

	

Fax:
[*]

 

Dolphin
Digital Media, Inc., a company organized and existing under the
laws of the State of Florida (the “Company”),
hereby certifies that, for value received, [*], or its registered
assigns (the “Warrant
Holder”), is entitled, subject to the terms set forth
below, to purchase from the Company up to [*]
shares (as adjusted from time to time as provided in Section 7, the
“Warrant
Shares”) of common stock, $0.015 par value (the
“Common
Stock”), of the Company at an initial price of
$[*] per
Warrant Share (as adjusted from time to time as provided in Section
7, the “Exercise
Price”), at any time and from time to time from and
after the date thereof and through and including 5:00 p.m. New York
City time on [*], or
unless extended pursuant to the terms provided herein (the
“Expiration
Date”), and subject to the following terms and
conditions:

1.           Registration
of Warrant. The
Company shall register this Warrant upon records to be maintained
by the Company for that purpose (the “Warrant
Register”), in the name of the record Warrant Holder
hereof from time to time. The Company may deem and treat the
registered Warrant Holder of this Warrant as the absolute owner
hereof for the purpose of any exercise hereof or any distribution
to the Warrant Holder, and for all other purposes, and the Company
shall not be affected by notice to the contrary.

2.           Investment
Representation. The
Warrant Holder by
accepting this Warrant represents that the Warrant Holder is
acquiring this Warrant for its own account or the account of an
affiliate for investment purposes and not with the view to any
offering or distribution and that the Warrant Holder will not sell
or otherwise dispose of this Warrant or the underlying Warrant
Shares in violation of applicable securities laws. The Warrant
Holder acknowledges that the certificates representing any Warrant
Shares will bear a legend indicating that they have not been
registered under the United States Securities Act of 1933, as
amended (the “1933
Act”) and may not be sold by the Warrant Holder except
pursuant to an effective registration statement or pursuant to an
exemption from registration requirements of the 1933 Act and in
accordance with federal and state securities laws.
“Person”
means an individual, partnership, firm, Limited Liability Company,
trust, joint venture, association, corporation, or any other legal
entity.

WARRANT
AGREEMENT BETWEEN DOLPHIN DIGITAL MEDIA, INC.  

AND [*]

PAGE 1 OF
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3.           Validity
of Warrant and Issue of Shares. The Company
represents and warrants that this Warrant has been duly authorized
and validly issued and warrants and agrees that all of Common Stock
that may be issued upon the exercise of the rights represented by
this Warrant will, when issued upon such exercise, be duly
authorized, validly issued, fully paid and non-assessable and free
from all taxes, liens and charges with respect to the issue
thereof. The Company further warrants and agrees that during the
period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized and
reserved a sufficient number of Common Stock to provide for the
exercise of the rights represented by this
Warrant.

4.           Registration
of Transfers and Exchange of Warrants.

a.           Subject
to compliance with the legend set forth on the face of this
Warrant, the Company shall register the transfer of any portion of
this Warrant in the Warrant Register, upon surrender of this
Warrant with the Form of Assignment attached hereto duly completed
and signed, to the Company at the office specified in or pursuant
to Section 12. Upon any such registration or transfer, a new
warrant to purchase Common Stock, in substantially the form of this
Warrant (any such new warrant, a “New
Warrant”), evidencing the portion of this Warrant so
transferred shall be issued to the transferee and a New Warrant
evidencing the remaining portion of this Warrant not so
transferred, if any, shall be issued to the transferring Warrant
Holder. The acceptance of the New Warrant by the transferee thereof
shall be deemed the acceptance of such transferee of all of the
rights and obligations of a Warrant Holder of a
Warrant.

b.           This
Warrant is exchangeable, upon the surrender hereof by the Warrant
Holder to the office of the Company specified in or pursuant to
Section 9 for one or more New Warrants, evidencing in the aggregate
the right to purchase the number of Warrant Shares which may then
be purchased hereunder. Any such New Warrant will be dated the date
of such exchange.

 

WARRANT AGREEMENT BETWEEN DOLPHIN DIGITAL MEDIA, INC. 

AND [*]

PAGE 2 OF
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5. 

Exercise of
Warrants.

a.           Upon
surrender of this Warrant with the Form of Election to Purchase
attached hereto duly completed and signed to the Company, at its
address set forth in Section 12, and upon payment and delivery of
the Exercise Price per Warrant Share multiplied by the number of
Warrant Shares that the Warrant Holder intends to purchase
hereunder, in lawful money of the United States of America, in cash
or by certified or official bank check or checks, to the Company,
all as specified by the Warrant Holder in the Form of Election to
Purchase, the Company shall promptly (but in no event later than 7
business days after the Date of Exercise (as defined herein)) issue
or cause to be issued and cause to be delivered to or upon the
written order of the Warrant Holder and in such name or names as
the Warrant Holder may designate (subject to the restrictions on
transfer described in the legend set forth on the face of this
Warrant), a certificate for the Warrant Shares issuable upon such
exercise, with such restrictive legend as required by the 1933 Act.
Any person so designated by the Warrant Holder to receive Warrant
Shares shall be deemed to have become holder of record of such
Warrant Shares as of the Date of Exercise of this
Warrant.

b.           A
“Date of Exercise” means the date on which the Company
shall have received (i) this Warrant (or any New Warrant, as
applicable), with the Form of Election to Purchase attached hereto
(or attached to such New Warrant) appropriately completed and duly
signed, and (ii) payment of the Exercise Price for the number of
Warrant Shares so indicated by the Warrant Holder to be
purchased.

c.           This
Warrant shall be exercisable at any time and from time to time for
such number of Warrant Shares as is indicated in the attached Form
of Election To Purchase. If less than all of the Warrant Shares
which may be purchased under this Warrant are exercised at any
time, the Company shall issue or cause to be issued, at its
expense, a New Warrant evidencing the right to purchase the
remaining number of Warrant Shares for which no exercise has been
evidenced by this Warrant.

d. (i)
Notwithstanding anything contained herein to the contrary but
subject to Section 6, the holder of this Warrant may, at its
election exercised 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 Exercise Price, elect instead to receive
upon such exercise the “Net Number” of shares of Common
Stock determined according to the following formula (a
“Cashless
Exercise”):

Net
Number = (A x (B - C))/B

(ii)
For purposes of the foregoing formula:

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

WARRANT AGREEMENT BETWEEN DOLPHIN DIGITAL MEDIA, INC. 

AND [*]

PAGE 3 OF
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B= the
last reported sale price (as reported by Bloomberg) of the Common
Stock on the trading day immediately preceding the date of the
Exercise Notice.

C= the
Warrant Exercise Price then in effect at the time of such
exercise.

e. The
holder of this Warrant agrees not to elect a Cashless Exercise for
a period so long as the exercise price of this warrant is above
$0.01 per share.

6.           Maximum
Exercise. Until the
date that is fifteen days before the Expiration Date, the Warrant
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 Warrant 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 Warrant
Holder and its affiliates of more than 9.99% of the outstanding
shares of Common Stock on such date. This Section 6 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.

7.           Adjustment
of Exercise Price and Number of Shares. The character of the shares of stock
or other securities at the time issuable upon exercise of this
Warrant and the Exercise Price therefore, are subject to adjustment
upon the occurrence of the following events, and all such
adjustments shall be cumulative:

a.           Adjustment
for Stock Splits, Stock Dividends, Recapitalizations, Etc.
The Exercise Price of this Warrant and the number of shares of
Common Stock or other securities at the time issuable upon exercise
of this Warrant shall be appropriately adjusted to reflect any
stock dividend, stock split, combination of shares,
reclassification, recapitalization or other similar event affecting
the number of outstanding shares of stock or
securities.

b.           Adjustment
for Reorganization, Consolidation, Merger, Etc. In case of
any consolidation or merger of the Company with or into any other
corporation, entity or person, or any other corporate
reorganization, in which the Company shall not be the continuing or
surviving entity of such consolidation, merger or reorganization
(any such transaction being hereinafter referred to as a
“Reorganization”),
then, in each case, the holder of this Warrant, on exercise hereof
at any time after the consummation or effective date of such
Reorganization (the “Effective
Date”), shall receive, in lieu of the shares of stock
or other securities at any time issuable upon the exercise of the
Warrant issuable on such exercise prior to the Effective Date, the
stock and other securities and property (including cash) to which
such holder would have been entitled upon the Effective Date if
such holder had exercised this Warrant immediately prior thereto
(all subject to further adjustment as provided in this
Warrant).

WARRANT AGREEMENT BETWEEN DOLPHIN DIGITAL MEDIA, INC. 

AND [*]

PAGE 4 OF
9

 

 

 

c.           Certificate
as to Adjustments. In case of any adjustment or readjustment
in the price or kind of securities issuable on the exercise of this
Warrant, the Company will promptly give written notice thereof to
the holder of this Warrant in the form of a certificate, certified
and confirmed by the Board of Directors of the Company, setting
forth such adjustment or readjustment and showing in reasonable
detail the facts upon which such adjustment or readjustment is
based.

ii. The
Company sells grants or issues any shares, options, warrants, or
any instrument convertible into shares or equity in any form below
the exercise price per share of the warrant. In the event the
Company sells, grants or issues any shares, options, warrants, or
any instrument convertible into shares or equity in any form below
the current exercise price per share of the warrant, then the
current exercise price per share for the warrant that are
outstanding shall be reduced to such lower price per share. Such
reduction shall be made at the time such transaction is
executed.

8.           Fractional
Shares. The Company
shall not be required to issue or cause to be issued fractional
Warrant Shares on the exercise of this Warrant. The number of full
Warrant Shares that shall be issuable upon the exercise of this
Warrant shall be computed on the basis of the aggregate number of
Warrants Shares purchasable on exercise of this Warrant so
presented. If any fraction of a Warrant Share would, except for the
provisions of this Section 8, be issuable on the exercise of this
Warrant, the Company shall, at its option, (i) pay an amount in
cash equal to the Exercise Price multiplied by such fraction or
(ii) round the number of Warrant Shares issuable, up to the next
whole number.

9.           Sale
or Merger of the Company. Upon a Change in Control, the
restriction contained in Section 6 shall immediately be released
and the Warrant 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.

10.           Notice
of Intent to Sell or Merge the Company. 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.

11.           Issuance
of Substitute Warrant. In the event of a merger,
consolidation, recapitalization or reorganization of the Company or
a reclassification of Company shares of stock, which results in an
adjustment to the number of shares subject to this Warrant and/or
the Exercise Price hereunder, the Company agrees to issue to the
Warrant Holder a substitute Warrant reflecting the adjusted number
of shares and/or Exercise Price upon the surrender of this Warrant
to the Company.

WARRANT AGREEMENT BETWEEN DOLPHIN DIGITAL MEDIA, INC. 

AND [*]

PAGE 5 OF
9

 

 

 

12.           Notice.
All notices and other communications hereunder shall be in writing
and shall be deemed to have been given (i) on the date they are
delivered if delivered in person; (ii) on the date initially
received if delivered by facsimile transmission followed by
registered or certified mail confirmation; (iii) on the date
delivered by an overnight courier service; or (iv) on the third
business day after it is mailed by registered or certified mail,
return receipt requested with postage and other fees prepaid as
follows:

If to the Company:

Dolphin
Digital Media, Inc.

2151 Le
Jeune Road, Suite 150-Mezzanine

Coral
Gables, Florida 33134

Attn.
Bill O’Dowd

 

If to the Warrant
Holder:

 

[*]

[*]

[*]

Attention:
[*]

 

13.           Restrictions
on Transfer. 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), without first giving
written notice to the Company.

14.           Miscellaneous.

a.           This
Warrant shall be binding on and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. This
Warrant may be amended only by a writing signed by the Company and
the Warrant Holder.

b.           Nothing
in this Warrant shall be construed to give to any person or
corporation other than the Company and the Warrant Holder any legal
or equitable right, remedy or cause of action under this Warrant;
this Warrant shall be for the sole and exclusive benefit of the
Company and the Warrant Holder.

c.           This
Warrant shall be governed by, construed and enforced in accordance
with the internal laws of the State of Florida without regard to
the principles of conflicts of law thereof.

d.           The
headings herein are for convenience only, do not constitute a part
of this Warrant and shall not be deemed to limit or affect any of
the provisions hereof.

WARRANT AGREEMENT BETWEEN DOLPHIN DIGITAL MEDIA, INC. 

AND [*]

PAGE 6 OF
9

 

 

 

e.           In
case any one or more of the provisions of this Warrant shall be
invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this
Warrant shall not in any way be affected or impaired thereby and
the parties will attempt in good faith to agree upon a valid and
enforceable provision which shall be a commercially reasonably
substitute therefore, and upon so agreeing, shall incorporate such
substitute provision in this Warrant.

f.           The
Warrant Holder shall not, by virtue hereof, be entitled to any
voting or other rights of a shareholder of the Company, either at
law or equity, and the rights of the Warrant Holder are limited to
those expressed in this Warrant.

 

[SIGNATURES ON FOLLOWING PAGE]

 

 

WARRANT AGREEMENT BETWEEN DOLPHIN DIGITAL MEDIA, INC. 

AND [*]

PAGE 7 OF
9

 

 

 

 

IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by the authorized officer as of the Original Issue
Date.

 

 

Dolphin
Digital Media, Inc., a Florida corporation

 

 

 

By:         
                 
                 
          
                                                    

 

Name: 
     
William
O'Dowd               

 

Its:
Chief Executive Officer

 

WARRANT AGREEMENT BETWEEN DOLPHIN DIGITAL MEDIA, INC. 

AND [*]

PAGE 8 OF
9

 

 

 

 

FORM OF ELECTION TO PURCHASE

 

(To be
executed by the Warrant Holder to exercise the right to purchase
shares of Common Stock under the foregoing Warrant)

 

To:
Dolphin Digital Media,
Inc.:

 

In
accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase
______________ shares of Common Stock (“Common Stock”),
$.015 par value, of the Company and encloses the warrant and
$______ for each Warrant Share being purchased or an aggregate of
$________________ in cash or certified or official bank check or
checks, which sum represents the aggregate Exercise Price (as
defined in the Warrant) together with any applicable taxes payable
by the undersigned pursuant to the Warrant.

 

The
undersigned requests that certificates for the shares of Common
Stock issuable upon this exercise be issued in the name
of:

 

[*]

 

Address:                                                                            

 

Address:                                                                            

 

(Tax
Identification Number)

 

If the
number of shares of Common Stock issuable upon this exercise shall
not be all of the shares of Common Stock which the undersigned is
entitled to purchase in accordance with the enclosed Warrant, the
undersigned requests that a New Warrant (as defined in the Warrant)
evidencing the right to purchase the shares of Common Stock not
issuable pursuant to the exercise evidenced hereby be issued in the
name of and delivered to:

 

[*]

 

Address:                                                                            

 

Address:                                                                            

 

Dated:                                            

 

Name of
Warrant Holder:

 

(Print)                                                                            

 

(By:)                                                                 

 

(Name:)                                                                 

 

(Title:)                                                                            

 

 

WARRANT AGREEMENT BETWEEN DOLPHIN DIGITAL MEDIA, INC. 

AND [*]

PAGE 9 OF
9

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