Exhibit 3.23
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SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT ("Subscription Agreement") is made as of
October 22, 1997, between Xxxxxxx X. Xxxxx (the "Subscriber") and Interactive
Entertainment Limited, a Bermuda exempted company (the "Company").
R E C I T A L S:
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A. The Subscriber desires to subscribe for and purchase shares of common
stock, par value $.01 per share ("Common Stock"), of the Company, and a warrant
to purchase shares of Common Stock, and the Company desires to issue and sell
such Common Stock and warrant to the Subscriber, on the terms and subject to the
conditions herein contained.
B. In connection with the issuance of such shares of Common Stock and
warrant to the Subscriber, the parties have agreed that Subscriber's shares of
Common Stock shall be subject to the restrictions provided herein.
A G R E E M E N T S:
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NOW, THEREFORE, the parties agree as follows:
1. Subscription for Shares. The Subscriber hereby subscribes for and
agrees to purchase from the Company and the Company hereby agrees to sell to the
Subscriber 61,716 shares of Common Stock and, subject to the provisions of this
paragraph, a warrant to purchase 12,343 shares of Common Stock (the "Warrant"),
which Warrant will be in the form attached hereto as Exhibit A, for an aggregate
purchase price of US$200,000 (which it is agreed represents the product of (x)
the number of shares of Common Stock subscribed for hereunder and (y) 85% of the
average of the closing prices for shares of Common Stock on the Nasdaq SmallCap
Market during the five trading days immediately preceding the date hereof) (the
"Subscription Price"). The Subscription Price shall be payable by the
Subscriber by wire transfer to the Company's account identified on Exhibit B
attached hereto. Upon delivery to the Company of the Subscription Price, the
proper officers of the Company shall execute and deliver to the Subscriber
certificates representing said shares of Common Stock. If (and only if) on
April 22, 1998, the Subscriber still holds all of the Shares of Common Stock
purchased hereunder, the proper officers of the Company on that date shall
execute and deliver to the Subscriber the Warrant. The subscriber acknowledges
that, by signing this Agreement, he is making an irrevocable offer to purchase
shares of Common Stock and the Warrant. The Subscriber understands and agrees
that this subscription is subject to acceptance by the Company, and that the
Company reserves the right to accept or reject this subscription. If this
subscription is rejected, the Company will return the Subscriber's payment for
the Subscription Price.
2. Subscriber's Representations and Warranties. In connection with the
subscription for and purchase of shares of Common Stock and the Warrant pursuant
to this Subscription Agreement, the Subscriber represents and warrants to the
Company and agrees and acknowledges, that:
(a) all shares of Common Stock and the Warrant acquired by or for the
Subscriber pursuant to this Subscription Agreement are being or have been
acquired solely for investment and not with a view to the distribution
thereof or with any intention of distributing or reselling any such Common
Stock or the Warrant, and that, irrespective of any other provisions of
this Subscription Agreement, any Transfer (as herein defined) of such
Common Stock or the Warrant by the Subscriber will be made only in
compliance with all
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applicable federal, state and foreign securities laws, including, without
limitation, the Securities Act of 1933, as amended (the "Act");
(b) neither the shares of Common Stock nor the Warrant acquired by or
for the Subscriber will be registered under the Act or under any other
applicable securities laws and must be held by the Subscriber until such
shares of Common Stock are registered under the Act and under applicable
securities laws or an exemption from such registration is available; the
Company will have no obligation to take any actions that may be necessary
to make available any exemption from registration under the Act or under
applicable state securities laws; and the Company shall place "stop
transfer" restrictions on the party responsible for recording Transfers of
shares of Common Stock in violation of the foregoing provisions of this
clause (b);
(c) the Subscriber is familiar with Rule 144 promulgated by the
Securities and Exchange Commission under the Act, which establishes
guidelines governing, among other things, the resale of "restricted
securities" (securities such as the Common Stock, which are acquired from
the issuer of such securities in a transaction not involving any public
offering); the Subscriber is aware that reliance on Rule 144 to Transfer
securities is subject to other restrictions and limitations, as set forth
in such Rule;
(d) in connection with a Transfer of the Common Stock pursuant to an
exemption from registration under the Act, or if available, under Rule 144
or pursuant to some other exemption, such Subscriber may be required by the
Company to deliver to the Company an opinion from counsel for such
Subscriber, and/or receive an opinion from counsel for the Company, to the
effect that all applicable federal and state securities law requirements
have been met;
(e) The Subscriber is an "accredited investor" as that term is
defined in Rule 501(a) of Regulation D under the Securities Act because:
(i) the Subscriber is a natural person whose individual net
worth or joint net worth with the Subscriber's spouse, as of the
date hereof, exceeds $1,000,000;
(ii) the Subscriber is a natural person who had individual
income in excess of $200,000 (or joint income with the
Subscriber's spouse in excess of $300,000) in each of the past
two calendar years and reasonably expects to reach the same
income level in the current calendar year;
(iii) the Subscriber is (1) a bank as defined in Section 3(a)(2)
of the Securities Act, or a savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the Securities
Act, whether acting in its individual or fiduciary capacity; (2)
a broker dealer registered pursuant to Section 15 of the Exchange
Act; (3) an insurance company as defined in Section 2(13) of the
Securities Act; (4) an investment company registered under the
Investment Company Act or a business development company defined
in Section 2(a)(48) of the Investment Company Act; (5) a Small
Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or 301(d) of the Small
Business Investment Act of 1958 ("SBIA"); (6) a plan established
and maintained by a state, its political subdivisions, or any
agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, which has total
assets in excess of $5 million; or (7) an employee benefit plan
within the meaning of Title I of ERISA, if the investment
decision is made by a plan
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fiduciary, as defined in Section 3(21) of ERISA, which is either
a bank, savings and loan association, insurance company, or
registered investment advisor, or if the employee benefit plan
has total assets in excess of $5 million or, if a self-directed
plan, with investment decisions made solely by persons that are
accredited investors;
(iv) the Subscriber is a private business development company
as defined in Section 202(a)(22) of the Investment Advisers Act
of 1940, as amended;
(v) the Subscriber is an organization described in Section
501(c)(3) of the Code, a corporation, a business trust, or a
partnership, in each case not formed for the specific purpose of
acquiring Common Stock, with total assets in excess of $5
million;
(vi) the Subscriber is a trust, with total assets in excess of
$5 million, not formed for the specific purpose of acquiring
shares of Common Stock, whose purchase is directed by a
sophisticated person with such knowledge and experience in
financial and business matters that such person is capable of
evaluating the merits and risks of the prospective investment; or
(vii) the Subscriber is an entity in which all of the equity
owners are "accredited investors" of the types described in one
or more of the foregoing clauses (i) through (vi).
(f) the execution, delivery and performance of this Agreement by the
Subscriber have been duly authorized and this Agreement constitutes the
valid, legal and binding obligation of the Subscriber enforceable against
the Subscriber in accordance with its terms. If the Subscriber is an
entity, the Subscriber's governing instruments permit it to purchase, and
it is duly qualified to purchase, the shares of Common Stock and the
Warrant subscribed for hereunder;
(g) if the Subscriber is an individual, the Subscriber is at least 21
years of age, a citizen or permanent resident of the United States and the
state set forth under Subscriber's signature on the signature page hereto;
is of sufficient legal capacity to execute this Subscription Agreement, to
the extent applicable;
(h) the Subscriber has the power and authority to execute and perform
the terms of this Subscription Agreement and this Subscription Agreement
constitutes a valid and binding obligation of the Subscriber, enforceable
against the Subscriber in accordance with its terms, except that (i) such
enforcement may be limited by or subject to any bankruptcy, insolvency,
fraudulent transfer or other laws, now or hereafter in effect relating to
or limiting creditors' rights generally, and (ii) the remedy of specific
performance and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding
therefor may be brought;
(i) neither the execution and delivery of this Subscription Agreement
or the other agreements, documents and instruments contemplated hereby, nor
the consummation by the Subscriber of the transactions contemplated hereby,
(i) will or do violate or conflict with any statute, ordinance, rule,
regulation, order or decree of any court or of any public governmental or
regulatory body, agency or authority applicable to the Subscriber, (ii)
will require any filing with, or permit, consent or approval of, or the
giving of any notice to any public, governmental or regulatory body, agency
or authority by the Subscriber (except for permits, consents or approvals
which have been obtained or filings or notices which have been timely
given), or (iii)
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will result in a violation or breach of or constitute (with or without
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms,
conditions or provisions of any contract, note, bond, mortgage, license,
franchise, permit, lease or other agreement to which the Subscriber is a
party or by which the Subscriber may be bound;
(j) in order to adequately evaluate the merits and risks of an
investment in the Company, the Subscriber has had an opportunity to (i) ask
questions and receive answers from the Company and its representatives
concerning the Company and the Subscriber's investment therein, and (ii)
obtain any additional information which the Subscriber has requested with
respect to the Company and the Subscriber's investment therein;
(k) the Subscriber understands that no federal, state or foreign
governmental agency has recommended or endorsed the purchase of shares of
Common Stock or the Warrant or made any determination or finding as to the
fairness of the provisions of this Subscription Agreement;
(l) all information which the Subscriber has heretofore furnished, or
in connection herewith is furnishing, to the Company is correct and
complete as of the date hereof, and, if there should be any material change
in such information prior to the Subscriber's acquisition of the shares of
Common Stock and the Warrant, the Subscriber will promptly furnish such
revised or corrected information to the Company; and
(m) (i) the Subscriber's financial situation is such that the
Subscriber can afford to bear the economic risk of holding the shares of
Common Stock for an indefinite period; (ii) the Subscriber can afford to
suffer the complete loss of the investment in the shares of Common Stock
and the Warrant; (iii) the Subscriber understands and is cognizant of all
the risk factors related to the purchase of the shares of Common Stock and
the Warrant; and (iv) the Subscriber's knowledge and experience in
financial and business matters is such that the Subscriber is capable of
evaluating the risks of an investment in the shares of Common Stock and the
Warrant.
As used herein, "Transfer" means any transfer, sale, assignment, pledge,
encumbrance or other disposition of shares or the Warrant, irrespective of
whether any of the foregoing are effected voluntarily or involuntarily, by
operation of law or otherwise, or whether inter vivos or upon death.
3. Company Representations and Warranties. In connection with the
subscription for and purchase of Shares pursuant to this Subscription Agreement,
the Company represents and warrants to Subscriber that:
(a) the Company is duly organized, validly existing and in good
standing under the laws of Bermuda; the Company has full power and
authority to enter into and perform its obligations under this Subscription
Agreement; the execution and delivery by the Company of this Subscription
Agreement and the performance by the Company of its obligations hereunder
have been duly authorized and approved by all requisite action; and this
Subscription Agreement has been duly executed and delivered by a duly
authorized officer of the Company;
(b) the execution, delivery and performance of this Subscription
Agreement by the Company do not and shall not conflict with, violate or
cause a breach of any of the terms or provisions of the Memorandum of
Continuance of the Company or the Bye-Laws of the Company, or any
agreement, contract or instrument to which the Company is a party, or any
judgment, order or decree to which the Company is subject;
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(c) the Subscription Agreement constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance
with its terms, except that (i) such enforcement may be limited by or
subject to any bankruptcy, insolvency, fraudulent transfer or other laws,
now or hereafter in effect relating to or limiting creditors' rights
generally, and (ii) the remedy of specific performance and other forms of
equitable relief may be subject to equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought;
(d) neither the execution and delivery of the Subscription Agreement
or the other agreements, documents and instruments contemplated hereby, nor
the consummation by the Company of the transactions contemplated hereby (i)
will or do violate or conflict with any statute, ordinance, rule,
regulation, order or decree of any court or of any public governmental or
regulatory body, agency or authority applicable to the Company, (ii) will
require any filing with, or permit, consent or approval of, or the giving
of any notice to any public, governmental or regulatory body, agency or
authority by the Company (except for permits, consents or approvals which
have been obtained or filings or notices which have been timely given), or
(iii) will result in a violation or breach of or constitute (with or
without notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under any of the terms,
conditions or provisions of any contract, note, bond, mortgage, license,
franchise, permit, lease or other agreement to which the Company is a party
or by which the Company may be bound;
(e) upon full payment by the Subscriber to the Company for the shares
of Common Stock and the Warrant subscribed by the Subscriber pursuant to
this Subscription Agreement and receipt of payment in full by the Company
for such shares of Common Stock and the Warrant, such shares shall be duly
authorized, validly issued, fully paid and non-assessable, and upon full
payment by the holder of the Warrant of the exercise price stated therein
and receipt in full by the Company of such exercise price, the shares of
Common Stock issuable upon exercise of the Warrant shall be duly
authorized, validly issued, fully paid and non-assessable.
4. Legend. All certificates representing shares of Common Stock sold
hereunder shall bear the following legend:
"The securities represented hereby have not been registered under the
Securities Act of 1933, as amended, or the securities laws of any
jurisdiction and may not be sold or otherwise disposed of except
pursuant to an effective registration statement under such Act and
applicable securities laws or there is presented to the Company an
opinion of counsel satisfactory to the Company to the effect that such
registration is not necessary."
5. Notice. All notices and other communications which are required or
permitted to be given under this Subscription Agreement shall be in writing and
shall be delivered personally or by certified mail (return receipt requested),
or telecopied and addressed: (a) if to the Company, to:
Interactive Entertainment Limited
000 Xxxxxxxxx Xxxx
Xxxxx X-000
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxx
Fax: (000) 000-0000
with a copy to:
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Altheimer & Xxxx
00 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxx X. XxXxxx, Esq.
Fax: (000) 000-0000
and (b) if to Subscriber to the address set forth below the signature of the
Subscriber on this Subscription Agreement. Each notice or other communication
which shall be delivered, personally mailed or telecopied in the manner
described above shall be deemed sufficiently given, sent, received or delivered
for all purposes as of such time as it is delivered to the addressee (with
return receipt, delivery receipt, the affidavit of messenger or (with return
receipt to a telecopy) the confirmation report being deemed conclusive, but not
exclusive evidence of such delivery) or at such time as delivery is refused by
the addressee upon presentation.
6. Confidentiality. Subscriber agrees and acknowledges that the Company
has provided to Subscriber certain information regarding the Company, and that
such information may be deemed to constitute material non-public information
under the Act. Subscriber agrees that for the longest period permitted by law,
Subscriber shall hold in strictest confidence, and not, without the prior
written approval of the Company, use for its own benefit or for the benefit of
any party other than the Company or disclose to any person, firm or corporation
other than the Company, any of such information (other than as required by law
and other than information which has been publicly disseminated by the Company).
7. Severability. The invalidity of any provision of this Subscription
Agreement or portion of a provision shall not affect the validity of any other
provision of this Subscription Agreement or the remaining portion of the
applicable provision.
8. Counterparts. This Subscription Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, and all of such
counterparts shall constitute but one instrument.
9. Amendment and Waiver. Neither this Subscription Agreement nor any
provisions hereof shall be modified, discharged or terminated except in writing
signed by the party against whom any waiver, change, discharge or termination is
sought. All representations and warranties contained in this Subscription
Agreement or made in writing by any party in connection herewith shall survive
the execution and delivery of this Agreement for a period of one year from the
date of the closing of the purchase made pursuant to this Agreement.
10. Successors and Assigns. This Subscription Agreement shall be binding
on the parties hereto and their respective heirs, representatives, successors
and assigns, including, without limitation. The rights and obligations of the
Subscriber hereunder may not be assigned or transferred by the Subscriber and
any attempted assignment of transfer shall be void. If the Subscriber is more
than one person, the obligations of the Subscriber shall be joint and several,
and the agreements, representations, warranties and acknowledgments herein
contained shall be deemed to be made by and be binding upon each such person and
their respective heirs, executors, administrators, and successors.
11. Governing Law. This Subscription Agreement and the risks of the
parties hereunder shall be construed and interpreted in accordance with the laws
of Bermuda, without application of the rules regarding conflicts of laws.
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IN WITNESS WHEREOF, the parties have executed this Subscription Agreement
as of the date first above written.
SUBSCRIBER:
/s/ Xxxxxxx X. Xxxxx
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Print Name: Xxxxxxx X. Xxxxx
Address: Xxxxx Xxxxxx, Inc. Rollover Custodian
0000 Xxxxxxx Xxxxxx
Xxxxxxx, Xx 00000
Telephone: 000 000-0000
Telecopy: 000 000-0000
Accepted:
INTERACTIVE ENTERTAINMENT LIMITED
By: /s/ Xxxxxx Xxxxxxxxx
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Its: President and CEO
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EXHIBIT A
FORM OF WARRANT
WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK
No. __________ Shares ___________
THIS WARRANT AND THE SHARES OF COMMON STOCK UNDERLYING THIS WARRANT
(COLLECTIVELY, THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE OR FOREIGN SECURITIES
LAWS AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SUCH ACT AND ALL SUCH APPLICABLE
LAWS, OR IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER OF THE SECURITIES, SUCH OFFER, SALE, OR TRANSFER, PLEDGE OR HYPOTHECATION
IS IN COMPLIANCE THEREWITH.
FOR VALUE RECEIVED, Interactive Entertainment Limited (the "Company"), a
Bermuda exempted company, hereby certifies that ____________________________,
or its permitted assigns, are entitled to purchase from the Company, at any time
or from time to time commencing immediately, and prior to 5:00 p.m., New York
City time then current, on {date 18 months from issue date}, __________ fully
paid and non-assessable shares of the common stock, $.01 par value, of the
Company at the purchase price of $________ per share (which it is agreed
represents the average of the closing prices for shares of Common Stock on the
Nasdaq SmallCap Market during the five trading days immediately preceding
{effective date of the Subscription Agreement}). Hereinafter, (i) said common
stock, together with any other equity securities which may be issued by the
Company with respect thereto or in substitution therefor, is referred to as the
"Common Stock", (ii) the shares of the Common Stock purchasable hereunder are
referred to as the "Warrant Shares", (iii) the aggregate purchase price payable
hereunder for the Warrant Shares is referred to as the "Aggregate Warrant
Price", (iv) the price payable hereunder for each of the shares of the Warrant
Shares is referred to as the "Per Share Warrant Price", and (v) this warrant and
all warrants hereafter issued in exchange or substitution for this warrant are
referred to as the "Warrants".
1. Exercise of Warrant.
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(a) This Warrant may be exercised, in whole at any time or in part from
time to time, commencing {issue date of warrant} (the "Commencement Date"),
and prior to 5:00 p.m., New York City time then current, on {date 18 months
from Commencement Date} (the "Expiration Date"), by the holder of this
Warrant (the "Holder") by the surrender of this Warrant (with the
subscription form at the end hereof duly executed) at the address set forth
in Subsection 8(a) hereof, together with proper payment of the Aggregate
Warrant Price, or the proportionate part thereof if this Warrant is
exercised in part. Payment for the Warrant Shares shall be made by
certified or official bank check, payable to the order of the Company or by
wire transfer to a bank account designated by an officer of the Company.
If this Warrant is exercised in part, this Warrant must be exercised for a
number of whole shares of Common Stock, and the Holder is entitled to
receive a new Warrant covering the number of Warrant Shares in respect of
which this Warrant has not been exercised. Upon such exercise and
surrender of this Warrant, the Company will (i) issue a certificate or
certificates in the name of the Holder for the number of whole shares of
the Common Stock to which the Holder shall be entitled, and (ii) deliver
the other securities and properties receivable upon the exercise of this
Warrant, or the proportionate part thereof if this Warrant is exercised in
part pursuant to the provisions of this Warrant.
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(b) Notwithstanding anything to the contrary contained in this Warrant,
this Warrant may be exercised by presentation and surrender of this Warrant
to the Company at its principal executive offices with a written notice of
the Holder's intention to effect a cashless exercise, including a
calculation of the number of shares of Common Stock to be issued upon such
exercise in accordance with the terms hereof (a "Cashless Exercise"). In
the event of a Cashless Exercise, in lieu of paying the exercise price in
cash, the Holder shall surrender this Warrant for the number of shares of
Common Stock determined by multiplying the number of Warrant Shares to
which it would otherwise be entitled by a fraction, the numerator of which
shall be the difference between the then current market price per share of
the Common Stock (as determined by the closing price of Common Stock on the
Nasdaq SmallCap Market on the trading day immediately preceding the date of
the Cashless Exercise) and the exercise price, and the denominator of which
shall be such then current market price per share of Common Stock.
2. Reservation of Warrant Shares. The Company agrees that, prior to the
expiration of this Warrant, the Company will at all times have authorized and in
reserve, and will keep available, solely for issuance or delivery upon the
exercise of this Warrant, such number of shares of Common Stock and such amount
of other securities and properties as from time to time shall be deliverable to
the Holder upon the exercise of this Warrant, free and clear of all restrictions
on sale or transfer (except such as may be imposed under applicable federal and
state securities laws) and free and clear of all preemptive rights and all other
rights to purchase securities of the Company.
3. Protection Against Dilution.
(a) If, at any time or from time to time after the date of this Warrant,
the Company shall distribute with respect to the Common Stock to the
holders of its outstanding Common Stock (i) securities, other than shares
of Common Stock or (ii) property, other than cash dividends, without
payment therefor, then, and in each such case, the Holder, upon the
exercise of this Warrant, shall be entitled to receive the securities and
property which the Holder would have held on the date of such exercise if,
on the date of this Warrant, the Holder had been the holder of record of
the number of shares of Common Stock subscribed for upon such exercise and,
during the period from the date of this Warrant to and including the date
of such exercise, had retained such shares and the securities and
properties receivable by the Holder during such period. Notice of each such
distribution shall be forthwith mailed to the Holder.
(b) If, at any time or from time to time after the date of this Warrant,
the Company shall (i) pay a dividend or make a distribution on its capital
stock in shares of Common Stock, (ii) subdivide its outstanding shares of
Common Stock into a greater number of shares, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares or (iv) issue by
reclassification of its Common Stock any shares of capital stock of the
Company, the Per Share Warrant Price in effect immediately prior to such
action shall be adjusted so that the Holder of any Warrant thereafter
exercised shall be entitled to receive the number of shares of Common Stock
or other capital stock of the Company which he would have owned or been
entitled to receive immediately following the happening of any of the
events described above had such Warrant been exercised immediately prior
thereto. An adjustment made pursuant to this paragraph (b) shall become
effective immediately after the record date in the case of a dividend or
distribution and shall become effective immediately after the effective
date in the case of a subdivision, combination or reclassification. If, as
a result of an adjustment made pursuant to this paragraph (b), the holder
of any Warrant thereafter surrendered for exercise shall become entitled to
receive shares of two or more classes of capital stock or shares of Common
Stock and of other capital stock of the Company, the Board of Directors
(whose determination shall be conclusive and shall be described in a
written notice to the Holder of any Warrant promptly after such adjustment)
shall determine
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the allocation of the adjusted Per Share Warrant Price between or among
shares of such classes or capital stock or shares of Common Stock and other
capital stock.
(c) In case of any consolidation or merger to which the Company is a party
other than a merger or consolidation in which the Company is the continuing
corporation, or in case of any sale or conveyance to another entity of all
or substantially all of the property of the Company, or in the case of any
statutory exchange of securities with another entity (including any
exchange effectuated in connection with a merger of any other corporation
with the Company), the Holder of this Warrant shall have the right
thereafter to convert this Warrant into the kind and amount of securities,
cash or other property which he would have owned or have been entitled to
receive immediately after such consolidation, merger, statutory exchange,
sale or conveyance had this Warrant been exercised immediately prior to the
effective date of such consolidation, merger, statutory exchange, sale or
conveyance and in any such case, if necessary, appropriate adjustment shall
be made in the application of the provisions set forth in this Section 3
with respect to the rights and interests thereafter of the Holder of this
Warrant such that the provisions set forth in this Section 3 shall
thereafter correspondingly be made applicable, as nearly as reasonable, in
relation to any shares of stock or other securities or property thereafter
deliverable on the exercise of this Warrant. In the event of a triangular
merger in which the Company is the surviving corporation, the right to
purchase Warrant Shares hereunder shall terminate on the date of such
merger and thereupon this Warrant shall become null and void, but only if
the controlling corporation shall agree to substitute for this Warrant a
warrant which entitles the holder thereof to purchase upon its exercise the
kind and amount of shares and other securities and property which the
holder would have owned or been entitled to receive had this Warrant been
exercised immediately prior to such merger. The above provisions of this
paragraph 3(c) shall similarly apply to successive consolidations, mergers,
statutory exchanges, sales or conveyances. Notice of any such
consolidation, merger, statutory exchange, sale or conveyance, and of said
provisions so proposed to be made, shall be mailed to the Holder at the
same time as notice is given to the holders of Common Stock. A sale of all
or substantially all of the assets of the Company for a consideration
consisting primarily of securities shall be deemed a consolidation or
merger for the foregoing purposes.
(d) Anything in this Section 3 to the contrary notwithstanding, the Company
shall be entitled to make such reduction in the Per Share Warrant Price as
it in its discretion shall deem to be advisable in order that any stock
dividend, subdivision of shares or distribution of rights to purchase stock
or securities convertible or exchangeable for stock hereafter made by the
Company to its shareholders shall not be taxable.
4. Fully Paid Stock; Taxes. The Company agrees that the shares of Common
Stock represented by each and every certificate for Warrant Shares delivered on
the exercise of this Warrant in accordance with the terms hereof shall, at the
time of such delivery, be validly issued and outstanding, fully paid and non-
assessable and not subject to preemptive rights or other contractual rights to
purchase securities of the Company, and the Company will take all such actions
as may be necessary to assure that the par value or stated value, if any, per
share of Common Stock is at all times equal to or less than the then Per Share
Warrant Price.
5. Limited Transferability.
(a) This Warrant is not transferable or assignable by the Holder except
pursuant to the laws of descent and distribution and is so transferable
only upon the books of the Company which it shall cause to be maintained
for the purpose. The Company may treat the registered holder of this
Warrant as he or it appears on the Company's books at any time as the
Holder for all purposes. The Company shall permit any holder of a Warrant
or his duly authorized attorney, upon written request during ordinary
business hours, to inspect and copy or make
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extracts from its books showing the registered holders of Warrants. All
Warrants will be dated the same date as this Warrant.
(b) By acceptance hereof, the Holder represents and warrants that this
Warrant is being acquired, and all Warrant Shares to be purchased upon the
exercise of this Warrant will be acquired, by the Holder solely for the
account of such Holder and not with a view to the fractionalization and
distribution thereof and will not be sold or transferred except in
accordance with the applicable provisions of the Act and the rules and
regulations of the Securities and Exchange Commission promulgated
thereunder, and the Holder agrees that neither this Warrant nor any of the
Warrant Shares may be sold or transferred except under cover of a
Registration Statement under the Act which is effective and current with
respect to such Warrant Shares or pursuant to an opinion, in form and
substance reasonably acceptable to the Company's counsel, that registration
under the Act is not required in connection with such sale or transfer. Any
Warrant Shares issued upon exercise of this Warrant shall bear the
following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE OR FOREIGN SECURITIES LAWS AND MANY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER SUCH ACT AND ALL SUCH APPLICABLE LAWS OR, IN THE
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF
THE SHARES REPRESENTED BY THIS CERTIFICATE, SUCH OFFER, SALE OR
TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH."
6. Loss, etc., of Warrant. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant, and
of indemnify reasonably satisfactory to the Company, if lost, stolen or
destroyed, and upon surrender and cancellation of this Warrant, if
mutilated, and upon reimbursement of the Company's reasonably incidental
expenses, the Company shall execute and deliver to the Holder a new Warrant
of like date, tenor and denomination.
7. Warrant Holder Not Shareholders. Except as otherwise provided herein, this
Warrant does not confer upon the Holder any right to vote or to consent to
or receive notice as a shareholder of the Company, as such, in respect of
any matters whatsoever, or any other rights or liabilities as a
shareholder, prior to the exercise hereof.
8. Communication. No notice or other communication under this warrant shall
be effective unless, but any notice or other communication shall be
effective and shall be deemed to have been given if, the same is in writing
and is personally delivered, mailed by first-class mail, postage prepaid,
or sent by confirmed telecopy, addressed to:
(a) the Company at: Interactive Entertainment Limited
000 Xxxxxxxxx Xxxx
Xxxxx X-000
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxx
Fax: (000) 000-0000
with a copy to: Altheimer & Xxxx
00 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Page 49
Xxxxxxx, XX 00000
Attn: Xxxxxx X. XxXxxx, Esq.
Fax: (000) 000-0000
or such other address as the Company may designate in writing to the
Holder; or
(b) the Holder at: _______________________________________
_______________________________________
_______________________________________
_______________________________________
or such other address as the Holder may designate in writing to the
Company.
9. Headings. The headings of this Warrant have been inserted as a matter of
convenience and shall not affect the construction hereof.
10. Applicable Law. This Warrant shall be governed by and construed in
accordance with the laws of Bermuda without giving effect to the principles
of conflicts of law thereof.
Page 50
IN WITNESS WHEREOF, Interactive Entertainment Limited has caused this Warrant to
be signed by its Chief Financial Officer and its corporate seal to be hereunto
affixed and attested by its Assistant Secretary this ____th day of __________,
1998.
INTERACTIVE ENTERTAINMENT LIMITED
By:
----------------------------------
Its: Chief Financial Officer
ATTEST:
By:
--------------------------
Its: Assistant Secretary
Page 51
EXERCISE
--------
The undersigned, , pursuant to the provisions of the foregoing
Warrant, hereby agrees to subscribe for and purchase shares of Common Stock
of Interactive Entertainment Limited covered by said Warrant, and makes payment
therefor in full at the price per share provided by said Warrant.
Dated:_____________________ ________________________________________
Signature: _______________________
Address:__________________________
__________________________________
__________________________________
__________________________________
Page 52
EXHIBIT B
WIRE TRANSFER INSTRUCTIONS
Beneficiary Bank: First Tennessee Bank
000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
ABA Number: 000000000
Account Name: Interactive Entertainment Limited
Account Number: 100121556
Reference: (Sender's Name)
Page 53
