EXHIBIT 2
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, IN RELIANCE UPON SECTION 4(2) THEREOF, OR UNDER ANY APPLICABLE
STATE SECURITIES ACTS. THESE SECURITIES WERE ACQUIRED FOR INVESTMENT, ARE
RESTRICTED AS TO TRANSFERABILITY, AND MAY NOT BE SOLD OR TRANSFERRED FOR
VALUE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION OF THEM UNDER APPLICABLE
STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH ACTS.
COMMON STOCK PURCHASE WARRANT
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Dated September 29, 1997
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Void After September 29, 1999
Creative Gaming, Inc. (the "Company"), a New Jersey corporation,
hereby certifies that, for value received, Xxxxxx X. Xxxxxx, Xx., or registered
assigns (hereinafter referred to as the "Warrantholders"), is entitled, subject
to the terms and conditions set forth in this Warrant (said Warrant and any
warrants issued in exchange or transfer or replacements hereof being hereinafter
collectively referred to as the "Warrants"), to purchase from the Company, for
cash, Eight Hundred Seventy-Five Thousand (875,000) fully paid and nonassessable
shares of Common Stock of the Company, no par value (the "Common Stock," which
term is further defined in Paragraph IV C. hereof), at any time or from time to
time until 5 p.m. California local time on September 29, 1999, at an exercise
price of Ten Cents ($0.10) per share (the "Exercise Price"), the number of such
shares of Common Stock and the Exercise Price being subject to adjustment as
provided herein.
1. Exercise of Warrant. The rights represented by this Warrant may be
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exercised by the Warrantholders, in whole or in part (but not as to a
fractional share of Common Stock), by the presentation and surrender of
this Warrant with written notice of Warrantholders' election to purchase,
at the principal executive office of the Company, or at such other address
as the Company may designate by notice in writing to the Warrantholders at
the address of such Warrantholders appearing on the books of the Company,
and upon payment to the Company of the Exercise Price for such shares of
Common Stock. Such payment shall be made by certified or cashier's check
payable to the order of the Company. The Company agrees that the shares so
purchased (the "Warrant Shares") shall be deemed to have been issued to the
Warrantholders as the record owner of such Warrant Shares as of the close
of business on the date on which this Warrant shall have been surrendered
together with the aforementioned written notice of election to purchase,
and payment for such Warrant Shares shall have been made as aforesaid.
Certificates for the Warrant Shares so purchased shall be delivered to the
Warrantholders within a reasonable time, not exceeding five (5) days, after
the rights represented by this Warrant shall have been so exercised, and,
unless this Warrant has expired, a new Warrant representing the number of
shares, if any, with respect to which this Warrant shall not then have been
exercised shall also be issued to the Warrantholders within such time.
Exhibit 2 - Page 1
2. Exercise Price. Warrant Shares shall be purchased at the Exercise
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Price set forth above, subject to adjustment as provided herein.
3. Warrantholders Not Deemed Stockholders. Subject to the provisions of
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the Company's Certificate of Incorporation and By-Laws, copies of which
will be delivered to the Warrantholders upon request, the Warrantholders
shall not be entitled to vote or receive dividends or be deemed the holders
of Common Stock, nor shall anything contained herein be construed to confer
upon the Warrantholders, as holders of Warrants, any of the rights of a
stockholder of the Company or any right to vote upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold consent to
any corporate action (whether upon any recapitalization, issue of stock,
reclassification of stock, change of par value or change of stock to no par
value, consolidation, merger, conveyance, or otherwise) or to receive
notice of meetings, or to receive dividends, except as otherwise provided
herein, until this Warrant shall have been duly exercised and the Warrant
Shares receivable upon the exercise hereof shall have become deliverable as
provided in Paragraph I above.
4. Adjustment of Number of Shares, Exercise Price and Nature of
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Securities Issuable Upon Exercise of Warrants.
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a. Stock Dividend, Recapitalization, Merger, etc. If and whenever
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after the date hereof (i) any change occurs in the outstanding shares
of any class or series of Common Stock by reason of any stock
dividend, stock split, recapitalization, consolidation or merger; or
(ii) the Company pays any distribution or dividend in cash or property
of the Company, the holder of this Warrant shall thereafter, upon
exercise of this Warrant, be entitled to receive the number of shares
of stock or other securities or the cash or property of the Company
(or of the successor corporation resulting from any consolidation or
merger) to which the shares of Common Stock (and any other securities)
deliverable upon the exercise of this Warrant would have been entitled
if this Warrant had been exercised immediately prior to the earlier of
(i) such event, and (ii) the record date, if any, set for determining
the holders entitled to participate in such event and the Exercise
Price shall be adjusted appropriately so that the aggregate amount
payable by the holder hereof upon the full exercise of this Warrant
remains the same. The Company shall not effect any recapitalization,
consolidation or merger unless, upon the consummation thereof, the
successor corporation shall assume by written instrument the
obligation to deliver to the holder hereof such shares of stock,
securities, cash or property as such holder shall be entitled to
purchase in accordance with the foregoing provisions.
Notwithstanding the foregoing, no adjustment to the number of
shares of Common Stock or the Exercise Price shall occur as a result of the
reverse stock split contemplated by the Company to occur during 1997.
If pursuant to the provisions of this Paragraph IV A. the holder
of this Warrant would be entitled to receive shares of stock or other securities
upon the exercise of this Warrant in addition to the shares of Common Stock
issuable upon exercise of this Warrant, the Company shall at all times reserve
and keep available sufficient shares or other securities to permit the Company
to issue such additional shares or other securities upon the exercise of this
Warrant. If pursuant to the provisions of this Paragraph I A. the holder of this
Warrant would be entitled to receive cash or
Exhibit 2 - Page 2
property upon the exercise of this Warrant, the Company shall set aside and hold
in trust as the property of the holder of this Warrant a sufficient amount of
such cash or property to permit payment in full of all such cash or property
that would be payable upon the exercise of this Warrant.
b. Accountants' Certificate. In each case of an adjustment in the
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number of shares of Common Stock or other stock, securities or
property receivable on the exercise of the Warrants, the Company at
its expense shall cause independent public accountants of recognized
standing selected by the Company and acceptable to the Warrantholders
to compute such adjustment in accordance with the terms of this
Warrant and prepare a certificate setting forth such adjustment and
showing in detail the facts upon which such adjustment is based,
including a statement of (a) the consideration received or to be
received by the Company for any additional shares of Common Stock,
rights, options or convertible securities issued or sold or deemed to
have been issued or sold, (b) the number of shares of Common Stock of
each class and/or series outstanding or deemed to be outstanding, (c)
the adjusted Exercise Price and (d) the number of shares issuable upon
exercise of this Warrant. The Company will forthwith mail a copy of
each such certificate to each Warrantholder.
c. Definition of Common Stock. As used herein, the term "Common
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Stock" shall mean and include the Company's authorized common stock of
any class, classes or series, and shall also include any capital stock
of any class or series of the Company hereafter authorized which shall
not be limited to a fixed sum or percentage of par value in respect of
the rights of the holders thereof to participate in dividends and in
the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the Company, and shall
include any common stock of any class, classes or series resulting
from any reclassification or reclassifications thereof.
5. Special Agreements of the Company.
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a. Reservation of Shares. The Company covenants and agrees that all
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Warrant Shares will, upon issuance, be validly issued, fully paid and
nonassessable and free from all preemptive rights of any stockholder,
and from all taxes, liens and charges with respect to the issue
thereof (other than taxes in respect to any transfer occurring
contemporaneously with such issue). The Company further covenants and
agrees that during the period within which the rights represented by
this Warrant may be exercised, the Company will at all times have
authorized, and reserved, a sufficient number of shares of Common
Stock to provide for the exercise of the rights represented by this
Warrant.
b. Avoidance of Certain Actions. The Company will not, by
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amendment of its Certificate of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, issue or
sale of securities or otherwise, avoid or take any action which would
have the effect of avoiding the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but
will at all times in good faith assist in carrying out all of the
provisions of this Warrant and in taking all of such action as may be
necessary or appropriate in order to protect the rights of the
Warrantholders against dilution as provided herein or other impairment
of their rights hereunder.
Exhibit 2 - Page 3
c. Communication to Shareholders. Any notice, document or other
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communication given or made by the Company to holders of Common Stock
as such shall at the same time be provided to the Warrantholders.
d. Compliance with Law. The Company shall comply with all
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applicable laws, rules and regulations of the United States and of all
states, municipalities and agencies and of any other jurisdiction
applicable to the Company and shall do all things necessary to
preserve, renew and keep in full force and effect and in good standing
its corporate existence and authority necessary to continue its
business.
6. Fractional Shares. No fractional shares or scrip representing
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fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon exercise hereof, the
Company shall pay to the Warrantholder an amount in cash equal to such
fraction multiplied by the current fair value of one share of Common Stock.
7. Notices of Stock Dividends, Subscriptions, Reclassifications,
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Consolidations, Mergers, etc. If at any time: (i) the Company shall
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declare a cash dividend (or an increase in the then existing dividend
rate), or declare a dividend on Common Stock payable otherwise than in cash
out of its net earnings after taxes for the prior fiscal year; or (ii) the
Company shall authorize the granting to the holders of Common Stock of
rights to subscribe for or purchase any shares of capital stock of any
class or of any other rights; or (iii) there shall be any capital
reorganization, or reclassification, or redemption of the capital stock of
the Company, or consolidation or merger of the Company with, or sale of all
or substantially all of its assets to, another corporation or firm; or (iv)
there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Company, then the Company shall give to the
Warrantholders at the addresses of such Warrantholders as shown on the
books of the Company, at least twenty (20) days prior to the applicable
record date hereinafter specified, a written notice summarizing such action
or event and stating the record date for any such dividend or rights (or,
if a record date is not to be selected, the date as of which the holders of
Common Stock of record entitled to such dividend or rights are to be
determined), the date on which any such reorganization, reclassification,
consolidation, merger, sale of assets, dissolution, liquidation or winding
up is expected to become effective, and the date as of which it is expected
the holders of Common Stock of record shall be entitled to effect any
exchange of their shares of Common Stock for cash (or cash equivalent)
securities or other property deliverable upon any such reorganization,
reclassification, consolidation, merger, sale of assets, dissolution,
liquidation or winding up.
8. Registered Holder; Transfer of Warrants or Warrant Shares.
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a. Maintenance of Registration Books; Ownership of this Warrant.
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The Company shall keep at its principal office a register in which,
subject to such reasonable regulations as it may prescribe, the
Company shall provide for the registration, transfer and exchange of
this Warrant. The Company shall not at any time, except upon the
dissolution, liquidation or winding-up of the Company, close such
register so as to result in preventing or delaying the exercise or
transfer of this Warrant.
Exhibit 2 - Page 4
The Company may deem and treat the person in whose name
this Warrant is registered as the holder and owner hereof (notwithstanding any
notations of ownership or writing hereon made by anyone other than the Company)
for all purposes and shall not be affected by any notice to the contrary, until
presentation of this Warrant for registration or transfer as provided in this
Paragraph VIII.
b. Exchange and Replacement. This Warrant is exchangeable upon
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surrender hereof by the registered holder to the Company at its
principal office for new Warrants of like tenor and date representing
in the aggregate the right to purchase the number of shares
purchasable hereunder, each of such new Warrants to represent the
right to purchase such number of shares as shall be designated by said
registered holder at the time of surrender. Subject to compliance with
the provisions of Paragraphs VIII and IX, this Warrant and all rights
hereunder are transferable in whole or in part upon the books of the
Company by the registered holder hereof in person or by duly
authorized attorney, and a new Warrant shall be made and delivered by
the Company, of the same tenor and date as this Warrant but registered
in the name of the transferee, upon surrender of this Warrant, duly
endorsed, to said office of the Company. Upon receipt by the Company
of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and upon surrender and
cancellation of this Warrant, if mutilated, the Company will make and
deliver a new Warrant of like tenor, in lieu of this Warrant, upon the
delivery of an appropriate bond if required by the Company. This
Warrant shall be promptly canceled by the Company upon the surrender
hereof in connection with any exchange, transfer or replacement. The
Company shall pay all expenses, taxes and other charges payable in
connection with the preparation, execution and delivery of Warrants
pursuant to this Paragraph VIII.
c. Warrants and Warrant Shares Not Registered. The holder of this
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Warrant, by accepting this Warrant, represents and acknowledges that
this Warrant and the Warrant Shares have not been registered under the
Securities Act on the grounds that the issuance of this Warrant and
the offering and sale of such Warrant Shares were exempt from
registration under Section 4(2) of the Securities Act.
D. Registration Rights. (a) The Company shall prepare
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and file with the Securities and Exchange Commission ("SEC"), on one occasion,
at the sole expense of the Company (except as provided in Section 3(c) hereof),
in respect of all holders of the warrants, so as to permit a non-underwritten
public offering and sale of the Warrants or the underlying Common Stock of the
Company (the "Conversion Shares") under the Act.
(b) The Company will maintain any Registration Statement or
post-effective amendment filed under this Section 3 hereof current under the
Securities Act until the earlier of (i) the date that all of the Conversion
Shares have been sold pursuant to the Registration Statement, (ii) the date the
holders thereof receive an opinion of counsel that the Conversion Shares may be
sold under the provisions of Rule 144 or (iii) the second anniversary of the
effective date of the Registration Statement.
(c) All fees, disbursements and out-of-pocket expenses and
costs incurred by the Company in connection with the preparation and filing of
any Registration Statement under
Exhibit 2 - Page 5
subparagraph 3(a) and in complying with applicable securities and Blue Sky laws
(including, without limitation, all attorneys' fees) shall be borne by the
Company. The Warrantholders shall bear the cost of underwriting discounts and
commissions, if any, applicable to the Conversion Shares being registered and
the fees and expenses of its counsel. The Company shall use its best efforts to
qualify any of the securities for sale in such states as such Warrantholders
reasonably designate. However, the Company shall not be required to qualify in
any state which will require an escrow or other restriction relating to the
Company and/or the sellers. The Company at its expense will supply the
Warrantholders with copies of such Registration Statement and the prospectus or
offering circular included therein and other related documents in such
quantities as may be reasonably requested by the Warrantholders.
(d) The Company shall not be required by this Section 3 to
include a Warrantholder's Conversion Shares in any Registration Statement which
is to be filed if, in the opinion of counsel for both the Warrantholders and the
Company (or, should they not agree, in the opinion of another counsel
experienced in securities law matters acceptable to counsel for the
Warrantholders and the Company) the proposed offering or other transfer as to
which such registration is requested is exempt from applicable federal and state
securities laws and would result in all purchasers or transferees obtaining
securities which are not "restricted securities", as defined in Rule 144 under
the Securities Act.
9. Miscellaneous Provisions.
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(a) Governing Law and Venue. This Warrant shall be deemed to have
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been made in the State of New Jersey and the validity of this Warrant, the
construction, interpretation, and enforcement thereof, and the rights of the
parties thereto shall be determined under, governed by, and construed in
accordance with the internal laws of the State of New Jersey, without regard to
principles of conflicts of law. The parties agree that all actions or
proceedings arising in connection with this Warrant shall be tried and litigated
only in the state or federal courts located in the County of Los Angeles, State
of California or, at the sole option of a Warrantholder, in any other court in
which a Warrantholder shall initiate legal or equitable proceedings and which
has subject matter jurisdiction over the matter in controversy. The
Warrantholders and the Company each waive the right to a trial by jury and any
right each may have to assert the doctrine of forum non conveniens or to object
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to venue to the extent any proceeding is brought in accordance with this
Paragraph IX(a). Service of process, sufficient for personal jurisdiction in any
action against the Company, may be made by registered or certified mail, return
receipt requested, to its address indicated in Paragraph IX A.
a. Notices. All notices hereunder shall be in writing and shall be
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deemed to have been given one (1) business day after being sent by
facsimile or five (5) days after being mailed by certified mail,
addressed to the address below stated of the party to which notice is
given, or to such changed address as such party may have fixed by
notice:
To the Company: Creative Gaming, Inc.
000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Exhibit 2 - Page 6
To the At the addresses of such holders as
Warrantholders they appear on the records of the
or holder of Company
Warrant Shares
provided, however, that any notice of change of address shall be effective only
upon receipt.
b. Assignment. This Warrant shall be binding upon and inure to the
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benefit of the Company, the Warrantholders and the holders of Warrant
Shares and the successors, assigns and transferees of the Company, the
Warrantholders and the holders of Warrant Shares.
c. Attorneys' Fees. If any legal action or any arbitration or other
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proceeding is brought for the enforcement of this Warrant, or because
of an alleged dispute, breach, default, or misrepresentation in
connection with any of the provisions of this Warrant, the successful
or prevailing party or parties shall be entitled to recover such
reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be
entitled, as may be ordered in connection with such proceeding.
d. Entire Agreement; Amendments and Waivers. This Warrant sets
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forth the entire understanding of the parties with respect to the
transactions contemplated hereby. The failure of any party to seek
redress for the violation or to insist upon the strict performance of
any term of this Warrant shall not constitute a waiver of such term
and such party shall be entitled to enforce such term without regard
to such forbearance. This Warrant may be amended, the Company may take
any action herein prohibited or omit to take action herein required to
be performed by it, and any breach of or compliance with any covenant,
agreement, warranty or representation may be waived, only if the
Company has obtained the written consent or written waiver of the
majority in interest of the Warrantholders, and then such consent or
waiver shall be effective only in the specific instance and for the
specific purpose for which given.
e. Severability. If any term of this Warrant as applied to any
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person or to any circumstance is prohibited, void, invalid or
unenforceable in any jurisdiction, such term shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
invalidity without in any way affecting any other term of this Warrant
or affecting the validity or enforceability of this Warrant or of such
provision in any other jurisdiction.
f. Headings. The headings in this Warrant are inserted only for
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convenience of reference and shall not be used in the construction of
any of its terms.
Exhibit 2 - Page 7
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officers on the date first written above.
Creative Gaming, Inc., a New Jersey corporation
By:
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Xxxxx X. Xxxxx, President
Attest: [SEAL]
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Secretary
Exhibit 2 - Page 8
SCHEDULE 2.1
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INVESTORS:
Number of Shares of Number of
Name Series C Preferred Stock Warrant Shares
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Xxxxxx X. Xxxxxx, Xx. 1,344,000 875,000
000 Xxxxxxx Xxxxxx Xxxx
Xxxxxx Xxxxx, XX 00000
Xxxx X. Xxxxxxxx 129,000 25,000
0000 Xxxx Xxx
Xxxxxxxx Xxxx, XX 00000
Xxxx X. Xxxx 172,000 25,000
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Xxxx Xxx Xxxxxx 258,000 25,000
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Xxxxxxx X. Xxxxxx, Xx. 64,400 25,000
00000 Xxxxx Xxxxx Xxxx
Xxxxxxxx Xxxx, XX 00000
Xxxx X. Xxxxxx Xxxxxx 32,600 25,000
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TOTAL 2,000,000 1,000,000
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Section 2.1-Page 1
