AGREEMENT TO AMEND WARRANTS
This Agreement to Amend Warrants is entered into as of March 25, 1998 by
and between Trans World Gaming Corp., a Nevada Corporation (the "Company") and
the undersigned (the "Holder"). Exhibits attached hereto are by this reference
incorporated herein.
BACKGROUND
1. The undersigned are the holders of those Warrants to purchase
Common Stock of the Company as set forth under Column 2 on Exhibit "A" (the
"Outstanding Exchange Warrants").
2. The Company has entered into that certain Subscription Agreement
(the "$17 Million Agreement") dated as of March 16, 1998 pursuant to which it
proposes to issue $15 to $17 million of Notes, together with warrants to
purchase common stock of the Company. The parties to the $17 Million Agreement
have made it a condition of that $17 Million Agreement that the Outstanding
Exchange Warrants be modified as set forth herein.
3. Attached hereto as Exhibit "B" is that certain form of amended
warrant to purchase Common Stock of the Company which shall be issued, in the
event this Agreement closes, in exchange for the Outstanding Exchange Warrants,
(the "Amended Warrants") which Outstanding Exchange Warrant shall be cancelled.
TERMS
Intending to be legally bound, in consideration of the mutual covenants
and agreements set forth herein, the parties hereto agree as follows:
1. Amendment
Subject to the terms and conditions set forth herein, each of the
Outstanding Exchange Warrants shall be canceled and each shall be replaced in
its entirety by a newly issued warrant in the form of the Amended Warrant. The
number of shares of common stock of the Company which may be obtained by the
Amended Warrants shall be set at 2,051,912, in the aggregate, and each Holder
shall receive an Amended Warrant for the number of shares next to its name under
column 3 on Exhibit A, at the strike price of one cent ($.01) per share with
such Amended Warrants to expire June 30, 2002. Such number of shares of common
stock issuable pursuant to the Amended Warrants shall not be subject to
adjustment by virtue of the warrants issued pursuant to the $17 Million
Subscription Agreement or any other warrant, right or agreement in existence as
of the date hereof, as of the date of the Closing, or as a result the Closing
hereof (including those issued as a part of that certain Consent to Amend
Indenture, Bonds and Warrants ("Consent Agreement") dated as of March 25, 1998,
pursuant to which certain terms of the 12% Secured Convertible Senior Bonds, and
related Indenture, and certain Warrants issued in
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association therewith under the terms of a Subscription Agreement dated as of
July 1, 1996 (the "1996 Agreement") are amended and pursuant to which additional
warrants are issued.
2. The cancellation of the Outstanding Exchange Warrants and the
issuance of the Amended Warrants as set forth herein shall occur only in the
event of the following:
a. In the event the $17 Million Subscription Agreement closes;
and
b. In the event all of the Holders on Exhibit "A" hereto are a
party to this Agreement.
3. Representations and Warranties of Holder.
As of March 31, 1998 (the "Closing Date"), the Holder represents and
warrants as follows:
a. The Holder is the owner, subject to paragraph C below, of
and has not assigned, transferred, sold, pledged, optioned, endorsed or
otherwise conveyed or transferred any interest in the Outstanding Exchange
Warrants as set forth opposite such Holder's name under Column 2 on Exhibit "A"
hereto. Other than certain warrants acquired pursuant to the 1996 Agreement and
other than as set forth on Exhibit "A", neither the Holder nor any related party
is the holder of, directly or indirectly, any other warrant or right of any kind
or nature to acquire common stock or any other class of stock of the Company.
For purposes of this Agreement, related party is to be broadly defined, and
shall include any direct or indirect subsidiary, affiliate, officer, director,
employee, partner, shareholders, legal or equitable beneficiary, or any person
related to any such individual by blood or marriage or otherwise.
b. The Holder has all requisite legal power and authority to
enter into this Agreement. This Agreement has been duly authorized by all
necessary action on the part of the Holder, has been duly executed and delivered
by an authorized officer or representative of the Holder, and is a legal, valid
and binding obligation of the undersigned enforceable in accordance with its
terms, regardless of whether such enforceability is considered in a proceeding
in law or in equity.
c. The Holder has reviewed the Investment Representation
Letter attached hereto as Exhibit "C". All information provided therein and in
this Agreement is true and correct as of the date hereof and as of the date of
the Closing hereof. All information provided therein and in this Agreement is
true and correct as of the date hereof and as of the date of the Closing hereof,
except as modified as follows: New Generation Limited Partnership ("New
Generation"), has entered into a "Put Option Agreement" with Xxxxxxxxxxx Xxxxx
pursuant to which, under certain conditions, New Generation can require Xx.
Xxxxx to purchase an agreed upon percentage of New Generation's Amended Bond
plus accrued, unpaid interest, plus the Amended Warrants on such portion of the
bond. Also, Fundamental Investors, L.P. ("Fundamental") has entered into a "Put
Option Agreement" with Xx. Xxxxx pursuant to which, immediately subsequent to
the Closing hereof, Fundamental has the right to sell Xx. Xxxxx an
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agreed upon percentage of Fundamental's Amended Bond and the accrued unpaid
interest thereon. Fundamental has also agreed to sell all Amended Warrants
received by it on such bond to Xx. Xxxxx. Execution of this Agreement shall be
deemed execution of the Investment Representation Letter.
4. Representations and Warranties of the Company.
As of the Closing Date, the Company represents, warrants and covenants to
the Subscriber that:
(a) ORGANIZATION, STANDING, ETC. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada and has all requisite corporate power and authority to own its assets and
carry on its business as presently conducted. The Company has all requisite
corporate power and authority to (i) execute, deliver, and perform its
obligations under this Agreement and the Amended Warrants and all other
agreements and instruments executed and delivered pursuant to or in connection
with this Agreement and Amended Warrant (collectively the "Operative
Agreements"), and (ii) issue the Amended Warrant in exchange for the Outstanding
Exchange Warrants.
(b) AUTHORIZATION AND EXECUTION; AMENDED WARRANTS VALIDLY ISSUED. The
execution, delivery and performance by the Company of this Agreement and the
other Operative Agreements, and the issuance of the Amended Warrant hereunder
have been duly and validly authorized by the Company. This Agreement and the
other Operative Agreements have been duly executed and delivered by the Company
and constitute valid and binding agreements of the Company enforceable against
the Company in accordance with their respective terms. Upon the Closing, the
shares of common stock issuable pursuant to the Amended Warrant will upon
issuance be duly and validly issued and outstanding, fully paid and
nonassessable (other than the exercise price of the Amended Warrant).
(c) CONTRAVENTION. The execution, delivery and performance of this
Agreement and the other Operative Agreements and the consummation of the
transactions contemplated thereby do not contravene or constitute a default
under or violate (i) any provision of applicable law or regulation the violation
of which would have a material adverse effect on the Company or the Amended
Warrant, (ii) the Articles of Incorporation and Bylaws of the Company, or (iii)
any agreements, judgment, injunction, order, decree or other instrument binding
upon the Company or any of its assets or properties, the violation of which
would have a material adverse effect on the Company or on the Amended Warrant.
For purposes of this Agreement, a "material adverse effect" means a
material adverse effect on (a) the business, operations, property or condition
(financial or otherwise) of the Company, (b) the ability of the Company to
perform its obligations under this Agreement, or any other Operative Agreements
to which it is a party, or (c) the validity, enforceability, perfection or
priority of this Agreement or the rights or remedies of the Holder.
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(d) GOVERNMENTAL REGULATIONS. Except as required pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and State securities laws,
the Company is not subject to any foreign, Federal or State law or regulation
limiting its ability to enter into this Agreement or any other Operative
Agreement, to issue the Amended Warrant or to perform its obligations required
thereby.
(e) BISHKEK CASINO. The Company will fully fund the "Bishkek Casino"
project with a minimum of US $250,000 prior to April 15, 1998 (which US $250,000
shall include the contribution to cage cash).
(f) TERM OF WARRANTS. The terms of the Warrants issued to the persons
and entities listed on Exhibit "A" shall be identical to the terms of the
warrants issued pursuant to the $ 17 Million Agreement, except for the
expiration date of such Warrants. This shall not include the number of warrants
or percentage ownership of the Company, but rather the governing terms. Nothing
herein shall effect the terms of the Warrants as contained in Exhibit "B".
(g) NON-ACCOUNTABLE EXPENSES. The Company will pay X.X. Xxxxx &
Company a one-time non-accountable expense fee of US $15,000 within ten days
following the Closing of this Agreement.
(h) TAX REPORTING. To the extent lawful, the Company agrees that for
tax purposes, it will take the position that the Amended Warrant has no value.
This shall not be deemed an indemnity of the Holder by the Company, unless the
company refuses to take such a position when such position is lawful. Subject
to the limitations in this subparagraph, tax filings by the Company will be
prepared in a manner consistent with this treatment.
5. Surrender of Securities.
Immediately following and in the event of the Closing, the Holder shall
surrender to the Company the Outstanding Exchange Warrants, which shall be
canceled and exchanged for the Amended Warrant in the form attached hereto.
6. Closing.
The closing this Agreement shall be deemed to occur simultaneously with
and only in the event of the closing of the $17 Million Agreement (the
"Closing"). The Holder acknowledges that the Amended Warrants shall be
delivered subsequent to the Closing and that the Outstanding Exchange Warrants
shall be returned to the Company. The parties hereto agree to act in good faith
and to use their best efforts to the extent additional documents, actions or
information are necessary post-closing and convenant to cooperate with each
other in taking all necessary actions related thereto.
7. Survival of Representations and Warranties; Beneficiaries
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All representations and warranties contained in this Agreement shall
survive the execution and delivery of this Agreement. The parties hereto
acknowledge that the Subscribers to the $17 Million Agreement and the parties to
the Consent Agreement are entitled to rely upon and are beneficiaries of this
Agreement and the representations, warranties, convenants and agreements made
herein.
8. Waiver of Jury Trial.
Each of the parties hereto irrevocably and unconditionally waives the
right to trial by jury in any legal or equitable action, suit or proceeding
arising out of or relating to this agreement, the units or any other operative
agreement or any transaction contemplated hereby or thereby or the subject
matter of any of the foregoing.
9. Notices to the Company.
All notices and other communications provided for herein shall be in
writing and shall be deemed to have been duly given if delivered personally or
sent by registered or certified mail, return receipt requested, postage prepaid,
telex, telecopier or overnight air courier guaranteeing next day delivery:
(a) if to the Company, to it at the following address:
Trans World Gaming Corp.
Xxx Xxxx Xxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx Xxxxxxxxx, Chief Financial Officer
(c) if to the Holder, to the address set forth on the signature page
hereto, or at such other address as either party shall have
specified by notice in writing to the other.
All notices and communications shall be deemed to have been duly given:
at the time delivered by hand, if personally delivered; five business days after
being deposited in the mail, certified mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is orally acknowledged, if telecopied;
and the next business day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next day delivery.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
10. Notification of Changes.
The Holder and the Company agree and covenant to notify the other
promptly upon the occurrence of any event prior to the Closing which would cause
any representation, warranty, covenant or other statement contained in this
Agreement by such person so notifying to be false
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or incorrect or of any material change in any statement made herein occurring
prior to the Closing Date.
11. Assignability.
This Agreement is not assignable by the Holder or the Company, and may
not be modified, waived or terminated except by an instrument in writing signed
by the party against whom enforcement of such modifications, waiver or
termination is sought.
12. Binding Effect.
Except as otherwise provided herein, this Agreement shall be binding upon
and inure to the benefit of the parties and their heirs, executors,
administrators, successors, and legal representatives, and assigns, including
any transferee of the Outstanding Exchange Warrants and the Amended Warrant, and
the agreements, representations, warranties and acknowledgments contained herein
shall be deemed to be made by and be binding upon such heirs, executors,
administrators, successors, and legal representatives and assigns. If the
Holder is more than one person, the obligation of the Holder shall be joint and
several and the agreements, representations, warranties and acknowledgments
contained herein shall be deemed to be made by and be binding upon each such
person and his heirs, executors, administrators and successors.
13. Obligations Irrevocable.
The obligations of the Holder shall be irrevocable, except with the
consent of the Company, until the Closing or earlier termination of the $17
Million Subscription Agreement.
14. Entire Agreement.
This Agreement constitutes the entire agreement of the Holder and the
Company relating to the matters contained herein, superseding all prior
contracts, commitments, or agreements, whether oral or written.
15. Governing Law.
This Agreement shall be governed and controlled as to the validity,
enforcement, interpretations, construction and effect and in all other aspects
by the substantive laws of the State of NEW YORK, without reference to conflicts
of laws principles.
16. Severability.
If any provision of this Agreement or the application thereof to any
Holder or circumstance shall be held invalid or unenforceable to any extent, the
remainder of this Agreement and the application of such provision to other
Holders or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by law.
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17. Headings.
The headings in this Agreement are inserted for convenience and
identification only and are not intended to describe, interpret, define, or
limit the scope, extent or intent of this Agreement or any provision hereof.
18. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which together shall be deemed to be one and the same agreement.
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IN WITNESS WHEREOF, the undersigned Holder and Company have executed this
Agreement to Amend Warrants this 25 day of March, 1998.
CORPORATE HOLDER:
By: ________________________________
Its: ________________________________
INDIVIDUAL HOLDER:
By: ________________________________
PARTNERSHIP HOLDER:
By: ________________________________
Its: ________________________________
TRANS WORLD GAMING CORP:
By: _________________________________
Its: ________________________________
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Exhibit "A"
1 2 3
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NUMBER OF SHARES NUMBER OF SHARES OF
NAME OF HOLDER OUTSTANDING AMENDED WARRANTS
1 X.X. Xxxxx Venture Fund I., L.P. 53,320 218,862
2 Xxxxxxxxxxx X. Xxxxx,
individually 266,600 1,094,309
3 Xxxxxxxx Xxxxx 13,333 54,728
4 Xxxxx Xxxxxxxx 66,667 273,647
5 X.X. Xxxxx & Co., Ltd. 99,975 410,366
---------------- -------------------
Total 499,895 2,051,912
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Exhibit "B"
FORM OF AMENDED WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series D No. __
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that _____________ (together with its successors or
permitted assigns, the "Holder") is entitled to purchase from Trans World Gaming
Corp., a Nevada corporation ("Company") up to ________ shares of the Company's
common stock, par value $.001 per share (the "Common Stock"), at a purchase
price of $.01 per share of Common Stock (the "Warrant Price"), subject to
adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Agreement to Amend
Warrants dated as of March 25, 1998 (the "Agreement"), between the Company and
the Holder.
1. EXERCISE OF THE WARRANT.
The rights represented by this Warrant may be exercised at any time on or
before 5:00 p.m., New York time, on June 30, 2002, in whole or in part, by (i)
the surrender of this Warrant (with the purchase form at the end hereof properly
executed) at the principal executive office of the Company (or such other office
or agency of the Company as it may designate by notice in writing to the Holder
at the address of the Holder appearing on the books of the Company); (ii)
payment to the Company of the Warrant Price then in effect for the number of
shares of Common Stock specified in the above-mentioned purchase form together
with applicable stock transfer taxes, if any; and (iii) delivery to the Company
of a duly executed agreement signed by the
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person(s) designated in the purchase form to the effect that such person(s)
agree(s) to be bound by the provisions of Paragraph 5 and subparagraph (b), (c)
and (d) of Paragraph 6 hereof. This Warrant shall be deemed to have been
exercised, in whole or in part to the extent specified, immediately prior to the
close of business on the date this Warrant is surrendered and payment is made in
accordance with the foregoing provisions of this Paragraph 1, and the person or
persons in whose name or names the certificates for the Common Stock shall be
issuable upon such exercise shall become the Holder or Holders of record of such
Common Stock at that time and date. The Common Stock so purchased shall be
delivered to the Holder within a reasonable time, not exceeding ten (10)
business days, after the rights represented by this Warrant shall have been so
exercised. If at any time this Warrant is exercised as to less than the total
number of shares for which it may be exercised, and this Warrant shall not have
expired, the Company shall promptly issue to the Holder a new Warrant identical
in form as to this Warrant as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, this
Warrant may be assigned in whole or in part by the Holder by (i) completing and
executing the form of assignment at the end hereof and (ii) surrendering this
Warrant with such duly completed and executed assignment form for cancellation,
accompanied by funds sufficient to pay any transfer tax, at the office or agency
of the Company referred to in Paragraph 9(b), hereof; whereupon the Company
shall issue, in the name or names specified by the Holder (including the Holder)
a new Warrant or Warrants of like tenor and representing in the aggregate rights
to purchase the same number of shares of Common Stock as are then purchasable
hereunder.
3. COVENANTS OF THE COMPANY.
(a) The Company covenants and agrees that all Common Stock and
Common Stock issuable upon exercise of this Warrant will, upon issuance, be duly
and validly issued, fully paid and nonassessable and no personal liability will,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants and agrees that during the period
within which this Warrant may be exercised, the Company will at all times have
authorized and reserved a sufficient number of shares of Common Stock to provide
for the exercise of this Warrant.
4. NO RIGHTS OF STOCKHOLDER.
This Warrant shall not entitle the Holder to any voting rights or other
rights as a stockholder of the Company, either at law or in equity, and the
rights of the Holder are limited to those expressed in this Warrant and are not
enforceable against the Company except to the extent set forth herein.
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5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (the "Registerable
Securities"). The Company shall supply prospectuses in order to facilitate the
public sale or other disposition of the Registerable Securities, use its best
efforts to register and qualify any of the Registerable Securities for sale in
such states as such Holder reasonably designates and do any and all other acts
and things which may be necessary to enable such Holder to consummate the public
sale of the Registerable Securities, and furnish indemnification in the manner
provided in Paragraph 6 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective amendments or
registration statements, including its intentions with respect thereto, and
shall furnish indemnification as set forth in Paragraph 6.
(b) The Company will maintain such registration statement or
post-effective amendment current and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(c) The Company shall bear the entire cost and expense of any
registration of securities under Paragraph 5 hereof. Notwithstanding the
foregoing, any Holder whose Registerable Securities are included in any such
registration statement pursuant to this Paragraph 5 shall, however, bear the
fees of any counsel retained by him and any transfer taxes or underwriting
discounts or commissions applicable to the Registerable Securities sold by him
pursuant thereto.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such other documents, as the Holder may
reasonably request in order to facilitate the public sale or other disposition
of the securities owned by the Holder;
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(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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6. INDEMNIFICATION.
(a) Whenever pursuant to Paragraph 5 a registration statement
relating to any Registerable Securities is filed under the Act, amended or
supplemented, the Company will indemnify and hold harmless each Holder of the
Registerable Securities covered by such registration statement, amendment or
supplement (such holder hereinafter referred to as the "Distributing Holder"),
each person, if any, who controls (within the meaning of the Act) the
Distributing Holder, and each officer, director, employee, partner or agent of
the Distributing Holder, and each underwriter (within the meaning of the Act) of
such securities and each person, if any, who controls (within the meaning of the
Act) any such underwriter and each officer, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above may become subject under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any such registration statement or any
preliminary prospectus or final prospectus constituting a part thereof or any
amendment or supplement thereto, or arise out of or are based upon the omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading; and will reimburse the Distributing
Holder and each such underwriter or such other person for any legal or other
expenses reasonably incurred by the Distributing Holder, or underwriter or such
other person, in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will not
be liable in any such case (i) to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in said registration
statement, said preliminary prospectus, said final prospectus or said amendment
or supplement in reliance upon and in conformity with written information
furnished by such Distributing Holder, any other Distributing Holder or any such
underwriter or any other such person for use in the preparation thereof, and
(ii) such losse, claims, damages or liabilities arise out of or are based upon
any actual or alleged untrue statement or omission made in or from any
preliminary prospectus, but corrected in the final prospectus, as amended or
supplemented.
(b) Whenever pursuant to Paragraph 5 a registration statement
relating to the Registerable Securities is filed, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents thereto, and each person, if
any, who controls the Company (within the meaning of the Act) against any
losses, claims, damages or liabilities to which the Company or any such
director, officer, employees, partners and agents or controlling person may
become subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue or alleged untrue statement of any material fact contained in
any such registration statement or any preliminary prospectus or final
prospectus constituting a part thereof, or any amendment or supplement thereto,
or arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent that such untrue statement or alleged untrue statement or omission was
made in said registration
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statement, said preliminary prospectus, said final prospectus or said amendment
or supplement in reliance upon and in conformity with written information
furnished by such Distributing Holder for use in the preparation thereof; and
will reimburse the Company or any such director, officer, employees, partners
and agents or controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action.
(c) Promptly after receipt by an indemnified party under this
Paragraph 6 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying
party, give the indemnifying party notice of the commencement thereof; but the
omission to so notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Paragraph 6.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnifying party, and after notice from the indemnified party to such
indemnifying party of its election to so assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Paragraph 6 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
7. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SECURITIES.
(a) The Warrant Price shall be subject to adjustment from time
to time as follows:
(i) In case the Company shall at any time after the date
hereof pay a dividend in shares of Common Stock or
make a distribution in shares of Common Stock, then
upon such dividend or distribution the Warrant Price
in effect immediately prior to such dividend or
distribution shall forthwith be reduced to a price
determined by dividing:
(A) an amount equal to the total number of shares
of Common Stock outstanding immediately prior
to such dividend or distribution multiplied
by the Warrant Price in effect immediately
prior to such dividend or distribution, by
(B) the total number of shares of Common Stock
outstanding immediately after such issuance
or sale.
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For the purposes of any computation to be made in accordance with
the provision of this clause (i), the following provisions shall be applicable:
Common Stock issuable by way of dividend or other distribution on any stock of
the Company shall be deemed to have been issued immediately after the opening of
business on the date following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution.
(ii) In case the Company shall at any time subdivide or
combine the outstanding Common Stock, the Warrant
Price shall forthwith be proportionately decreased
in the case of subdivision or increased in the case
of combination. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable
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upon conversion, exchange or exercise of such
security) would purchase at the Market Price per
share of Common Stock on such date. Such adjustment
shall be made whenever such shares, securities,
options, warrants or other rights are issued, and
shall become effective retroactively immediately
after the close of business on the record date for
the determination of stockholders entitled to
receive such shares, securities, options, warrants
or other rights; PROVIDED, that the determination as
to whether an adjustment is required to be made
pursuant to this Section 7(a) shall only be made
upon the issuance of such shares or such convertible
or exchangeable securities, options, warrants or
other rights, and not upon the issuance of the
security into which such convertible or exchangeable
security converts or exchanges, or the security
underlying such option, warrant or other right.
Notwithstanding the foregoing, in the event of such
issuance or sale of Common Stock at a cash price
less than the Market Price, no such adjustment under
this Section 7(a) need be made to the number of
shares underlying the Warrant unless such adjustment
would require an increase or decrease of at least 1%
of the number of shares underlying the Warrant. Any
lesser adjustment shall be carried forward and shall
be made at the time of and together with the next
subsequent adjustment which, together with any
adjustment or adjustments so carried forward, shall
amount to an increase or decrease of at least 1% of
number of shares underlying the Warrant. For the
purpose of this Agreement, the term "Market Price"
shall mean (i) if the Common Stock is traded in the
over-the-counter market or on the National
Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ"), the average per share
closing prices of the Common Stock on the 20
consecutive trading days immediately preceding the
date in question as reported by NASDAQ or an
equivalent generally accepted reporting service, or
(ii) if the Common Stock is traded on a national
securities exchange, the average for the 20
consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such
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adjustment by a fraction, the numerator of which
shall be the number of shares of Common Stock
purchasable upon the exercise of each Warrant
immediately prior to such adjustment and the
denominator of which shall be the number of shares
of Common Stock purchasable immediately after such
adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall deliver to the Holder a
certificate signed by the President or Vice
President of the Company and by the Treasurer or
Assistant Treasurer or the Secretary or an Assistant
Secretary of the Company, showing in detail the
facts requiring all such adjustments occurring
during such period and the Warrant Price after each
such adjustment.
(b) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the Warrant shall be increased in proportion to such increase in outstanding
shares. In the event that the number of shares of Common Stock outstanding is
decreased by a combination of the outstanding Common Stock, then, from and after
the record date thereof, the number of shares of Common Stock issuable upon the
exercise of the Warrant shall be decreased in proportion to such decrease in the
outstanding shares of Common Stock.
(c) In case of any reorganization or reclassification of the
outstanding Common Stock (other than a change in par value, or from par value to
no par value, or as a result of a subdivision or combination), or in case of any
consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is the
continuing corporation and which does not result in any reclassification of the
outstanding Common Stock), or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety, the holder of the Warrant then outstanding shall thereafter have the
right to purchase the kind and amount of shares of common stock and other
securities and property receivable upon such reorganization, reclassification,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock which the holder of the Warrant shall then be entitled to purchase;
such adjustments shall apply with respect to all such changes occurring between
the date of this Warrant Agreement and the date of exercise or expiration of the
Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine
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holders of Common Stock entitled to receive such distribution and the holder of
this Warrant shall have until 5:00 p.m. EST on the twentieth (20th) day
following the actual receipt of such notice to elect whether to exercise this
Warrant in accordance with the terms herein. In the event of proper election to
exercise the Warrant, the holder of this Warrant shall be deemed to be a holder
of Common Stock as of the record date for such distribution. Should the holder
of the Warrant elect to exercise his Warrant within 20 days after the record
date for the determination of those holders of Common Stock entitled to such
dividend or distribution, he shall be entitled to receive for the Warrant Price
per Warrant, in addition to each share of Common Stock, the amount of such
distribution (or, at the option of the Company, a sum equal to the value of any
such assets at the time of such distribution as determined by the Board of
Directors of the Company in good faith), which would have been payable to the
holder had he been the holder of record of the Common Stock receivable upon
exercise of his Warrant on the record date for the determination of those
entitled to such distribution.
(e) In case of the dissolution, liquidation or winding-up of
the Company, all rights under the Warrant shall terminate on a date fixed by the
Company, such date to be no earlier than ten (10) days prior to the
effectiveness of such dissolution, liquidation or winding-up and not later than
five (5) days prior to such effectiveness. Notice of such termination of
purchase rights shall be given to the last registered holder of this Warrant, as
the same shall appear on the books of the Company, by registered mail at least
thirty (30) days prior to such termination date.
(f) In case the Company shall, at any time prior to the
expiration of this Warrant and prior to the exercise thereof, offer to the
holders of its Common Stock any rights to subscribe for additional shares of any
class of the Company, then the Company shall give written notice thereof to the
last registered holder hereof not less than thirty (30) days prior to the date
on which the books of the Company are closed or a record date is fixed for the
determination of the stockholders entitled to such subscription rights. Such
notice shall specify the date as to which the books shall be closed or record
date fixed with respect to such offer of subscription and the right of the
holder hereof to participate in such offer of subscription shall terminate if
this Warrant shall not be exercised on or before the date of such closing of the
books or such record date.
(g) Any adjustment pursuant to the aforesaid provisions shall
be made on the basis of the number of shares of Common Stock which the holder
thereof would have been entitled to acquire by the exercise of the Warrant
immediately prior to the event giving rise to such adjustment.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall retain a firm of independent public
accountants (who may be any such firm regularly employed by the Company) to make
any computation required under this Section.
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(j) If at any time, as a result of an adjustment made pursuant
to this Paragraph 7, the Holder of this Warrant shall become entitled to
purchase any securities other than shares of Common Stock, thereafter the number
of such securities so purchasable upon exercise of each Warrant and the Warrant
Price for such shares shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Common Stock.
8. FRACTIONAL SHARES.
The Company shall not be required to issue fractions of shares of Common
Stock on the exercise of this Warrant; provided, however, that if a Holder
exercises all the Warrants held of record by such Holder, the fractional
interests shall be eliminated by rounding any fraction up to the nearest whole
number of shares, if the fraction is equal to or greater than .5, and down if
the fraction is less than .5.
9. MISCELLANEOUS.
(a) This Warrant shall be governed by and in accordance with
the laws of the State of New York.
(b) All notices, requests, consents and other communications
hereunder shall be made in writing and shall be deemed to have been duly made
when delivered, or mailed by registered or certified mail, return receipt
requested: (i) if to a Holder, to the address of such Holder as shown on the
books of the Company, or (ii) if to the Company, Xxx Xxxx Xxxxx, Xxxxx 0000, Xxx
Xxxx, XX 00000.
(c) All the covenants and provisions of this Warrant by or for
the benefit of the Company and the Holders inure to the benefit of their
respective successors and assigns hereunder.
(d) Nothing in this Warrant other than Section 6 shall be
construed to give to any person or corporation other than the Company and the
registered Holder or Holders, any legal or equitable right, and this Warrant is
for the sole and exclusive benefit of the Company and the Holder or Holders.
IN WITNESS WHEREOF, Trans World Gaming Corp. has caused this warrant to
be signed by its duly authorized officer and this Warrant to be dated March 31,
1998.
TRANS WORLD GAMING CORP.
By:__________________________
Its: ________________________
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FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of
$____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of Common
Stock issuable upon exercise of all Warrants represented by such Warrant
Certificate (or if a new or replacement Warrant is otherwise to be provided
pursuant to the Warrant Certificate), that a new or replacement Warrant
Certificate of like tenor for the number of Warrants not being exercised (and
not being surrendered) hereunder be issued in the name of and delivered to the
undersigned, whose address is __________________________.
Dated: __________, _____.
________________________
(Signature of Registered Holder)
By:______________________
Title:___________________
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Exhibit "C"
INVESTMENT REPRESENTATION LETTER
(Accredited Investor)
March __, 1998
Trans World Gaming Corp
Xxx Xxxx Xxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Mr. Andrew Tottenham, President
Dear Mr. Tottenham:
This letter is submitted in conjunction with and pursuant to the terms
and conditions contained in that certain Agreement to Amend Warrants (the
"Agreement"). The undersigned Purchaser is exchanging all of the issued
outstanding warrants of Trans World Gaming Corp. (the "Company") held by it for
certain new warrants (the "Amended Warrant") issued by the Company pursuant to
the Agreement. In order to induce the Company issue the Amended Warrant (the
"Units") to the Purchaser, the Purchaser makes the representations and
warranties contained herein.
The Company has informed the Purchaser that the Units have not been
registered with the Securities and Exchange Commission nor with the securities
authorities of any state, and that the Units must be held indefinitely unless
they are subsequently registered under the Securities Act of 1933, as amended,
and the appropriate state securities laws, or an exemption from such
registration is available and counsel to the Purchaser provides an opinion
regarding such exemption which is satisfactory to the Company. The Purchaser
understands that the Company is under no obligation to register the Units or to
comply with any such exemption, except as may be set forth in any binding
agreement between the parties. The Purchaser understands that no federal or
state securities authority has made any finding or determination as to the
fairness of investment in, nor any recommendation or endorsement of, the Units.
The Purchaser hereby represents and warrants to the Company that
Purchaser is purchasing the Units for Purchaser's own account for investment and
not with a view to dividing the Units with others, or with a view to or in
connection with an offering or any distribution of the Units, and that the
Purchaser has no present intention of selling or otherwise disposing of the
Units.
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In order to assure the Company with respect to the foregoing, the
Purchaser further represents and warrants the following facts:
(a) Except as specifically noted above, it is the intention of
the Purchaser to receive and hold the Units for the private personal investment
of the Purchaser for Purchaser's own account. Any sale or exchange or offer of
the Units will be made in only if the Units are registered under the Securities
Act of 1933, as amended, or the sale can be made pursuant to an exemption from
the registration requirements of such Act and any applicable state securities
act and such exception is set forth in an opinion of Purchaser's counsel
satisfactory to the Company.
(b) The Purchaser has no contract, understanding, agreement or
arrangement with any person or entity to sell or transfer to any such persons or
entities, or to anyone, or to have any such person or entity sell for the
Purchaser the Units and the Purchaser is not engaged in, and does not plan to
engage in any discussion with any person or entity relating to the sale or
transfer of the Units.
(c) Except as specifically noted above, as of the present date,
the Purchaser is not aware of any occurrence, event or circumstance upon the
happening of which Purchaser intends to transfer or sell the Units, or any part
thereof, and the Purchaser does not have any present intention to sell the
Units, or any part thereof, after the lapse of any particular period of time.
Purchaser understands that Purchaser may be required to bear the economic risks
of Purchaser's investment in the Units for an indefinite period of time.
(d) The Purchaser has no present obligation, indebtedness or
commitment and has no knowledge of any circumstances in existence, which would
compel the Purchaser to secure funds by the sale of the Units, nor is the
Purchaser a party to any plans or undertakings requiring funds, which plans or
undertakings can be consummated only by the sale of all or part of the Units.
(e) The Undersigned is an "Accredited Investor" as that term
is defined in Regulation D promulgated by the Securities and Exchange Commission
under the Securities Act of 1933.
(f) The negotiations for the purchase of such Units have been
conducted directly between the Purchaser on the one hand and the Company on the
other. The Purchaser has been given the opportunity to ask questions of, and
receive answers from, the Company and its officers concerning the terms and
conditions of the sale of the Units and other matters pertaining to the
investment in the Company in order for the Purchaser to evaluate the merits and
risks of purchase of the Units. The Purchaser acknowledges that Purchaser has
been furnished all information that Purchaser has requested to the extent that
Purchaser considers necessary and advisable, and such information, along with
the information and advice provided by the Purchaser Representative, is
reasonable upon which to base an investment decision.
(g) The Purchaser acknowledges Purchaser's understanding that
the offering and sale of the Units is intended to be exempt from registration
under the Securities Act of 1933, as amended, by virtue of Section 4(2) of that
Act, and that the Company is relying upon the
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representations made by the Purchasers herein for the purpose of qualifying such
offering thereunder.
(h) Investment in the Units is speculative and involves a high
degree of risk of loss by the Purchaser of the Purchaser's entire investment.
The Purchaser has such knowledge and experience in financial and business
matters that Purchaser is capable of evaluating the merits and risks of the
investment in the Units, can bear the economic risk of losing Purchaser's entire
investment, has adequate means for providing for Purchaser's current needs and
personal contingencies, and has no need for liquidity in an investment in the
Units and is capable of evaluating the merits and risks of the investment in the
Units.
The Purchaser further understands that in the event Purchaser should in
fact resell the Units, or any part thereof, within the foreseeable future,
Purchaser may be deemed to be an underwriter, as that term is defined in the
Securities Act of 1933, as amended. The Purchaser further understands and
agrees that the Units cannot be offered for sale, sold or otherwise transferred
on the register of the Company until Purchaser has notified the Company in
writing of Purchaser's intention to do so and unless and until the Company, if
it deems appropriate, has been furnished with an opinion of counsel for the
Purchaser satisfactory to counsel for the Company that such sale or transfer
does not involve a violation of the Securities Act of 1933, as amended, or the
securities laws of any state having jurisdiction. The Purchaser agrees that an
appropriate restrictive legend may be placed on the certificates evidencing any
Units issued pursuant hereto. The Purchaser hereby agrees to indemnify and hold
the Company and its directors, officers, employees, agents and controlling
persons, harmless from and against any losses, claims, damages or expenses
(including attorneys fees) arising out of or resulting from the untruth of any
representation or the breach of any warranty or covenant herein.
The Purchaser agrees that transfer of the Units may be refused by the
Company or its transfer agent if, in the opinion of counsel for the Company, any
proposed sale or transfer by the Purchaser of the Units would not be in
compliance with the applicable federal and state securities laws. The Purchaser
has not received any offering materials from the Company and the investment is
not made as a result of any general solicitation advertisements.
Sincerely,
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