Exhibit 99.3
AMENDMENT TO WARRANT AGREEMENT
AMENDMENT, dated as of December 20, 2000, to Warrant Agreement dated
January 22, 1997 (the "Warrant Agreement") between PARADISE MUSIC &
ENTERTAINMENT, INC., a Delaware corporation (the "Company"), and CONTINENTAL
STOCK TRANSFER AND TRUST COMPANY, as Warrant Agent (the "Warrant Agent").
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned to such terms in the Warrant Agreement.
W I T N E S S E T H:
WHEREAS, by their terms and the terms of the Warrant Agreement, each two
Warrants presently entitle the holder thereof to purchase one share of Common
Stock at a price of $7.20 per share; and
WHEREAS, by their terms and the terms of the Warrant Agreement, the
Warrants expire at 5:00 P.M. on January 21, 2001; and
WHEREAS, Section 1(m) of the Warrant Agreement permits the Company to
extend the Warrant Expiration Date upon five business days' prior written notice
to the Registered Holders; and
WHEREAS, Section 11 of the Warrant Agreement permits the Warrant Agent and
the Company, by supplemental agreement, to, inter alia, make any changes to the
Warrant Agreement that they may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Warrant Certificates; and
WHEREAS, the Company desires to extend the exercise period of the Warrants
until December 31, 2002, and modify the terms of the Warrants so that (i) each
five warrants will entitle the holder thereof to purchase one share of Common
Stock at a price of $2.50 per share, and (ii) the Warrants may not be redeemed
unless the market price of the Common Stock shall have equaled or exceeded $4.00
per share during the period and subject to the other conditions set forth in
Section 9 of the Warrant Agreement as amended hereby, in each case effective at
5:00 P.M. on January 21, 2001; and
WHEREAS, the Company desires the Warrant Agent to continue to act on
behalf of the Company, and the Warrant Agent is willing to so act, in connection
with the issuance, registration, transfer and exchange of certificates
representing the Warrants and the exercise of the Warrants.
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NOW THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. All of the amendments to the Warrant Agreement set forth herein shall
be effective at 5:00 P.M. on January 21, 2001.
2. Section 1(f) of the Warrant Agreement is hereby deleted in its entirety
and replaced with the following:
"(f) 'Purchase Price' shall mean, subject to modification and
adjustment as provided in Section 8, $2.50."
3. Section 1(m) of the Warrant Agreement is hereby deleted in its entirety
and replaced with the following:
"(m) 'Warrant Expiration Date' shall mean, unless the Warrants are
redeemed as provided in Section 9 hereof prior to such date, 5:00 p.m.
(New York time) on December 31, 2002 or, if such date shall in the State
of New York be a holiday or a day on which banks are authorized to close,
then 5:00 p.m. (New York time) on the next following day that in the State
of New York is not a holiday or a day on which banks are authorized to
close, subject to the Company's right, prior to the Warrant Expiration
Date, in its sole discretion, to extend such Warrant Expiration Date on
five business days' prior written notice to the Registered Holders."
4. Section 2(a) of the Warrant Agreement is hereby deleted in its entirety
and replaced with the following:
"(a) Five Warrants shall initially entitle the Registered Holder of
the Warrant Certificate representing such Warrants to purchase at the
Purchase Price therefor until the Warrant Expiration Date one share of
Common Stock upon the exercise thereof, subject to modification and
adjustment as provided in Section 8."
5. Section 2(d) of the Warrant Agreement is hereby deleted in its entirety
and replaced with the following:
"(d) Upon exercise of the Representative's Warrants as provided
therein, Warrant Certificates representing up to 100,000 Warrants to
purchase up to an aggregate of 20,000 shares of Common Stock (subject to
modification and adjustment as provided in Section 8 hereof and in the
Representative's Warrant Agreement), shall be countersigned, issued and
delivered by the Warrant Agent upon written order of the Company signed by
its President, Chairman of the Board, Vice Chairman or an Executive Vice
President and by its Treasurer or an Assistant Treasurer or its Secretary
or an Assistant Secretary."
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6. Section 4(a) of the Warrant Agreement is hereby deleted in its entirety
and replaced with the following:
"(a) Warrants in denominations of five or multiples thereof may be
exercised commencing at any time on or after the Initial Warrant Exercise
Date, but not after the Warrant Expiration Date, upon the terms and
subject to the conditions set forth herein and in the applicable Warrant
Certificate. A Warrant shall be deemed to have been exercised immediately
prior to the close of business on the Exercise Date, provided that the
Warrant Certificate representing such Warrant, with the exercise form
thereon duly executed by the Registered Holder thereof or his attorney
duly authorized in writing, together with payment in cash or by check made
payable to the Warrant Agent for the account of the Company, of an amount
in lawful money of the United States of America equal to the applicable
Purchase Price has been received in good funds by the Warrant Agent. The
person entitled to receive the securities deliverable upon such exercise
shall be treated for all purposes as the holder of such securities as of
the close of business on the Exercise Date. If Warrants in denominations
other than five or multiples thereof shall be exercised at one time by the
same Registered Holder, the number of full shares of Common Stock which
shall be issuable upon exercise thereof shall be computed on the basis of
the aggregate number of full shares of Common Stock issuable upon such
exercise. As soon as practicable on or after the Exercise Date and in any
event within five business days after such date, if five or more Warrants
have been exercised, the Warrant Agent on behalf of the Company shall
cause to be issued to the person or persons entitled to receive the same a
Common Stock certificate or certificates for the shares of Common Stock
deliverable upon such exercise, and the Warrant Agent shall deliver the
same to the person or persons entitled thereto. Upon the exercise of any
five or more Warrants, the Warrant Agent shall promptly notify the Company
in writing of such fact and of the number of securities delivered upon
such exercise and, subject to subsection (b) below, shall cause all
payments of an amount in cash or by check made payable to the order of the
Company, equal to the Purchase Price, to be deposited promptly in the
Company's bank account."
7. Section 4(c) of the Warrant Agreement is hereby deleted in its entirety
and replaced with the following:
"(c) The Company shall not be required to issue fractional shares of
Common Stock on the exercise of Warrants. Warrants may only be exercised
in such multiples as are required to permit the issuance by the Company of
one or more whole shares of Common Stock. If five or more Warrants shall
be presented for exercise in full at the same time by the same Registered
Holder, the number of whole shares of Common Stock which shall be issuable
upon such exercise thereof shall be computed on the basis of the aggregate
number of shares purchasable on exercise of the Warrants so presented. If
any fraction of a share would, except for the provisions provided herein,
be issuable on the exercise of any Warrant (or specified portion thereof),
the Company shall pay an amount in cash equal to such fraction multiplied
by the current market value of a share of Common Stock, determined as
follows:"
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8. Section 9(a) of the Warrant Agreement is hereby deleted in its entirety
and replaced with the following:
"(a) Commencing on the Initial Warrant Redemption Date, the Company
may, on 30 days' prior written notice, redeem all the Warrants at five
cents ($.05) per Warrant, provided, however, that before any such call for
redemption of Warrants can take place, the (A) closing bid price for the
Common Stock as reported by NASDAQ (SCM), if the Common Stock is then
traded in the over-the-counter market or (B) if not traded in the
over-the-counter market, the closing sale price, if the Common Stock is
then traded on NASDAQ (NMS) or on a national securities exchange, shall
have, for twenty (20) consecutive trading days ending on the fifth day
prior to the date on which the notice contemplated by (b) and (c) below is
given, equaled or exceeded, $4.00 (subject to adjustment in the event of
any stock splits or other similar events as provided in Section 8 hereof).
Notwithstanding the foregoing, the Warrants underlying the
Representative's Warrants are subject to redemption, if the Warrants are
resold pursuant to Rule 144 or an effective registration statement."
9. Except as set forth above, the Warrant Agreement, as amended herein,
shall remain in full force and force without further modification.
10. This Amendment may be executed in several counterparts, which taken
together shall constitute a single document.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the first date first above written.
[SEAL]
PARADISE MUSIC & CONTINENTAL STOCK TRANSFER
ENTERTAINMENT, INC. AND TRUST COMPANY
As Warrant Agent
By:_______________________________ By:_____________________________________
Jesse Dylan Steven G. Nelson
Chief Executive Officer Chairman
By:_______________________________
Richard Flynn
Secretary
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