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EXHIBIT 4.2
FUNDEX GAMES, LTD.
AND
NATIONAL SECURITIES CORPORATION
REPRESENTATIVE'S
WARRANT AGREEMENT
DATED AS OF OCTOBER ___, 1996
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REPRESENTATIVE'S WARRANT AGREEMENT dated as of October __,
1996, between FUNDEX GAMES, LTD., a Nevada corporation (the "Company"), and
NATIONAL SECURITIES CORPORATION and its assignees or designees (each
hereinafter referred to variously as a "Holder" or "Representative").
W I T N E S S E T H :
WHEREAS, the Representative has agreed pursuant to the
underwriting agreement (the "Underwriting Agreement") dated as of the date
hereof and entered into between the Company and the Representative, to act as
the representative of the several underwriters listed therein (the
"Underwriters") in connection with the Company's proposed public offering of
1,000,000 shares of Common Stock (as hereinafter defined) at a public offering
price of $________ per share and 1,000,000 redeemable warrants (the "Redeemable
Warrants") to purchase one (1) share of Common Stock at an exercise price of
$____, per share [150% of the initial public offering price per share of Common
Stock] (the "Public Offering").
WHEREAS, pursuant to the Underwriting Agreement, the Company
proposes to issue warrants (the "Representative's Warrants") to the
Representative to purchase up to an aggregate of 100,000 shares of Common Stock
of the Company and/or 100,000 Redeemable Warrants.
WHEREAS, the Representative's Warrants to be issued pursuant
to this Agreement will be issued on the Closing Date (as such term is defined
in the Underwriting Agreement) by the Company to the Representative in
consideration for, and as part of the Underwriters' compensation in connection
with, the Representative acting as the representative pursuant to the
Underwriting Agreement.
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NOW, THEREFORE, in consideration of the premises, the payment
by the Representative to the Company of an aggregate of one hundred dollar
($100), the agreements herein set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Grant. The Representative is hereby
collectively granted the right to purchase, at any time from September _ , 1997
(one year from the Closing Date until 5:30 p.m., New York time, on September
__, 2001 (5 years from the Closing Date), at which time the Representative's
Warrants expire, up to an aggregate of 100,000 shares of Common Stock, $0.01
par value per share (the "Common Stock"), and/or 100,000 Redeemable Warrants at
the Exercise Price (as defined in Section 8 hereof). One Redeemable Warrant is
exercisable to purchase one additional share of Common Stock at an initial
exercise of $____ [150% of the initial public offering price per share] from
September __, 1997 [one year from the Effective Date of the Registration
Statement] until 5:30 p.m. New York time on September __, 2001 [5 years from
the Effective Date of the Registration Statement], at which time the Redeemable
Warrants shall expire. Except as set forth herein, the shares of Common Stock
and the Redeemable Warrants issuable upon exercise of the Representative's
Warrants are in all respects identical to the shares of Common Stock and the
Redeemable Warrants being purchased by the Underwriters for resale to the
public pursuant to the terms and provisions of the Underwriting Agreement. The
shares of Common Stock and the Redeemable Warrants issuable upon exercise of
the Representative's Warrants are sometimes hereinafter referred to
collectively as the "Securities."
2. Representative's Warrant Certificates. The
Representative's warrant certificates (the "Warrant Certificates") delivered
and to be delivered pursuant to this Agreement shall be in the form set forth
in Exhibit A, attached hereto and made a part hereof,
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with such appropriate insertions, omissions, substitutions, and other
variations as required or permitted by this Agreement.
3. Registration of Warrant. The Representative's Warrants
shall be numbered and shall be registered on the books of the Company when
issued.
4. Exercise of Representative's Warrant.
The Representative's Warrants initially are exercisable
at an aggregate Exercise Price (subject to adjustment as provided in Section 11
hereof) per share of Common Stock and Redeemable Warrant as set forth in
Section 8 hereof payable by certified or official bank check in New York
Clearing House funds. Upon surrender of a Representative's Warrant Certificate
with the annexed Form of Election to Purchase duly executed, together with
payment of the Exercise Price for the Securities purchased at the Company's
principal offices in Indianapolis, Indiana, the registered holder of a
Representative's Warrant Certificate ("Holder" or "Holders") shall be entitled
to receive a certificate or certificates for the shares of Common Stock and/or
Redeemable Warrants so purchased. The purchase rights represented by each
Representative's Warrant Certificate are exercisable at the option of the
Holder thereof, in whole or in part (but not as to fractional shares of Common
Stock and/or Redeemable Warrants underlying the Representative's Warrants).
Representative's Warrants may be exercised to purchase all or part of the
shares of Common Stock together with an equal or unequal number of the
Redeemable Warrants represented thereby. If the Company redeems all of the
Redeemable Warrants sold in the Public Offering, then thereafter the
Representative's Warrants may not be exercised to purchase any Redeemable
Warrants unless such exercise is accompanied by the simultaneous exercise of
all such Redeemable Warrants being purchased. In the case of the purchase of
less than all of the shares of Common Stock and/or Redeemable Warrants
purchasable under any Representative's
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Warrant Certificate, the Company shall cancel said Representative's
Warrant Certificate upon the surrender thereof and shall execute and deliver a
new Representative's Warrant Certificate of like tenor for the balance of the
shares of Common Stock and/or Redeemable Warrants purchasable thereunder.
5. Issuance of Certificates. Upon the exercise of the
Representative's Warrant, the issuance of certificates for shares of
Common Stock and/or Redeemable Warrants or other securities, properties or
rights underlying such Representative's Warrant shall be made forthwith (and in
any event within five (5) business days thereafter) without charge to the
Holder thereof including, without limitation, any tax which may be payable in
respect of the issuance thereof, and such certificates shall (subject to the
provisions of Sections 7 and 9 hereof) be issued in the name of, or in such
names as may be directed by, the Holder thereof; provided, however, that the
Company shall cannot be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any such certificates
in a name other than that of the Holder and the Company shall not be required
to issue or deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.
The Representative's Warrant Certificates and the certificates
representing the shares of Common Stock and/or Redeemable Warrants or other
securities, property or rights issued upon exercise of the Representative's
Warrant shall be executed on behalf of the Company by the manual or facsimile
signature of the then present President or any Vice President of the Company
under its corporate seal reproduced thereon, attested to by the manual or
facsimile signature of the then present Secretary or any Assistant Secretary of
the
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Company. Representative's Warrant Certificates shall be dated the date
of execution by the Company upon initial issuance, division, exchange,
substitution or transfer.
6. Transfer of Representative's Warrant. The Representative's
Warrant shall be transferable only on the books of the Company maintained at
its principal office, where its principal office may then be located, upon
delivery thereof accompanied by a Form of Assignment (the form of which is
included in Exhibit A hereto) duly endorsed by the Holder or by its duly
authorized attorney or representative accompanied by proper evidence of
succession, assignment or authority to transfer. Upon any registration of
transfer, the Company shall execute and deliver the new Representative's
Warrant to the person entitled thereto.
7. Restriction On Transfer of Representative's Warrant.
The Holder of a Representative's Warrant Certificate, by its acceptance
thereof, covenants and agrees that the Representative's Warrant is being
acquired as an investment and not with a view to the distribution thereof, and
that the Representative's Warrant may not be sold, transferred, assigned,
hypothecated or otherwise disposed of, in whole or in part, for one year from
the date hereof, except to officers or partners of the Underwriters, or by
operation of law.
8. Exercise Price.
8.1 Initial and Adjusted Exercise Price. Except as
otherwise provided in Section 11 hereof, the initial exercise price of each
Representative's Warrant shall be $____ per share of Common Stock [120% of the
initial public offering price per share of Common Stock] and $.12 per
Redeemable Warrant. The adjusted exercise price shall be the price which shall
result from time to time from any and all adjustments of the initial exercise
price in accordance with the provisions of Section 11 hereof. Any transfer of
a Representative's Warrant shall constitute an automatic transfer and
assignment of the registration rights set
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forth in Section 9 hereof with respect to the Securities or other
securities, properties or rights underlying the Representative's Warrants.
8.2 Exercise Price. The term "Exercise Price" herein
shall mean the initial exercise price or the adjusted exercise price, depending
upon the context or unless otherwise specified.
9. Registration Rights.
9.1 Registration Under the Securities Act of 1933.
Each Representative's Warrant Certificate and each certificate representing
shares of Common Stock and/or Redeemable Warrants and any of the other
securities issuable upon exercise of the Representative's Warrant
(collectively, the "Warrant Shares") shall bear the following legend unless (i)
such Representative's Warrant or Warrant Shares are distributed to the public
or sold to the underwriters for distribution to the public pursuant to Section
9 hereof or otherwise pursuant to a registration statement filed under the
Securities Act of 1933, as amended (the "Act"), or (ii) the Company has
received an opinion of counsel, in form and substance reasonably satisfactory
to counsel for the Company, that such legend is unnecessary for any such
certificate:
THE REPRESENTATIVE'S WARRANT REPRESENTED BY THIS CERTIFICATE
AND THE OTHER SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY
NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii)
TO THE EXTENT APPLICABLE, RULE 144
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UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN
OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY
SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE REPRESENTATIVE'S
WARRANT REPRESENTED BY THE CERTIFICATE IS RESTRICTED IN
ACCORDANCE WITH THE REPRESENTATIVE'S WARRANT AGREEMENT
REFERRED TO HEREIN.
9.2 Piggyback Registration. If, at any time
commencing after the effective date of the Registration Statement relating to
the Public Offering and expiring five (5) years thereafter, the Company
proposes to register any of its securities under the Act (other than in
connection with a merger, or the offering of debt, or pursuant to Form S-4 or
Form S-8 it will give written notice by registered mail, at least twenty (20)
days prior to the filing of each such registration statement, to the Holders of
the Representative's Warrants and/or the Warrant Shares of its intention to do
so. If any of the Holders of the Representative's Warrants and/or Warrant
Shares notify the Company within ten (10) days after mailing of
any such notice of its or their desire to include any such securities in such
proposed registration statement, the Company shall afford such Holders of the
Representative's Warrants and/or
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Warrant Shares the opportunity to have any such Representative's
Warrants and/or Warrant Shares registered under such registration statement.
In the event that the managing underwriter for said offering advises the
Company in writing that in its opinion the number of securities requested to be
included in such registration exceeds the number which can be sold in such
offering without causing a diminution in the offering price or otherwise
adversely affecting the offering, the Company include in such registration (a)
first, the securities the Company proposes to sell, (b) second, the securities
held by the entities, if any, that made the demand for registration, (c) third,
the Representative's Warrants and/or Warrant Shares requested to be included in
such registration which in the opinion of such underwriter can be sold, pro
rata among all proposed selling shareholders.
Notwithstanding the provisions of this Section 9.2, the Company shall
have the right at any time after it shall have given written notice pursuant to
this Section 9.2 (irrespective of whether a written request for inclusion of
any such securities shall have been made) to elect not to file any such
proposed registration statement or to withdraw the same after the filing but
prior to the effective date thereof.
9.3 Demand Registration.
(a) At any time commencing one (1) year after
the effective date of the Registration Statement relating to the Public
Offering (the "Registration Statement") and expiring five (5) years from the
effective date of the Registration Statement, the Holders of the
Representative's Warrants and/or Warrant Shares representing a "Majority" (as
hereinafter defined) of the Representative's Warrants and/or Warrant Shares
shall have the right (which right is in addition to the registration rights
under Section 9.2 hereof), exercisable by written notice to the Company, to
have the Company prepare and file with the Securities and Exchange Commission
(the "Commission"), on one occasion, a registration statement and
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such other documents, including a prospectus, as may be necessary in
the opinion of both counsel for the Company and counsel for the Holders, in
order to comply with the provisions of the Act, so as to permit a public
offering and sale by such Holders and any other Holders of the Representative's
Warrant and/or Warrant Shares who notify the Company within fifteen (15) days
after the Company mails notice of such request pursuant to Section 9.3(b)
hereof (collectively, the "Requesting Holders") of their respective Warrant
Shares for the earlier of (i) nine (9) consecutive months, or (ii) until the
sale of all of the Warrant Shares requested to be registered by the Requesting
Holders.
(b) The Company covenants and agrees to give
written notice of any registration request under this Section 9.3 by any Holder
or Holders representing a Majority of the Representative's Warrants and/or
Warrant Shares to all other registered Holders of the Representative's Warrants
and the Warrant Shares within ten (10) days from the date of the receipt of any
such registration request.
(c) Intentionally omitted.
(d) Notwithstanding anything to the contrary
contained herein, if the Company shall not have filed a registration statement
for the Warrant Shares within the time period specified in Section 9.4(a)
hereof pursuant to the written notice specified in Section 9.3(a) of the
Holders of a Majority of the Representative's Warrants and/or Warrant Shares,
the Company, at its option, may repurchase (i) any and all Warrant Shares at
the higher of the Market Price (as defined in Section 9.3(e)) per share of
Common Stock or per Redeemable Warrant, as the case may be, on (x) the date of
the notice sent pursuant to Section 9.3(a) or (y) the expiration of the period
specified in Section 9.4(a) and (ii) any and all Representative's Warrants
at the Market Price of the Common Stock and Redeemable Warrants purchasable
upon exercise thereof less the aggregate exercise price payable upon such
exercise. Such
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repurchase shall be in immediately available funds and shall close
within two (2) days after the expiration of the period specified in Section
9.4(a).
(e) Definition of Market Price. As used herein,
the phrase "Market Price" at any date shall be deemed to be the last
reported sale price, or, in case no such reported sale takes place on such day,
the average of the last reported sale prices for the last three (3) trading
days, in either case as officially reported by the principal securities
exchange on which the shares of Common Stock and/or Redeemable Warrants is
listed or admitted to trading, or, if the shares of Common Stock and/or
Redeemable Warrants is not listed or admitted to trading on any national
securities exchange, the average closing sale price as furnished by the NASD
through The Nasdaq Stock Market, Inc. ("Nasdaq") or similar organization if
Nasdaq is no longer reporting such information, or if the shares of Common
Stock and/or Redeemable Warrants or Common Stock is not quoted on Nasdaq, as
determined in good faith by resolution of the Board of Directors of the
Company, based on the best information available to it.
9.4 Covenants of the Company With Respect to
Registration. In connection with any registration under Sections 9.2
or 9.3 hereof, the Company covenants and agrees as follows:
(a) In connection with any registration under
Section 9.3 hereof, the Company shall use its best efforts to file a
registration statement within one hundred and twenty (120) days of receipt
of any demand therefor, and to have any registration statements declared
effective at the earliest possible time, and shall furnish each Holder desiring
to sell Warrant Shares such number of prospectuses as shall reasonably be
requested.
(b) The Company shall pay all costs (excluding
fees and expenses of a single counsel for all Holders up to a $25,000
maximum and any underwriting or selling
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commissions), fees and expenses in connection with all registration
statements filed pursuant to Sections 9.2 and 9.3(a) hereof including, without
limitation, the Company's legal and accounting fees, printing expenses and blue
sky fees and expenses.
(c) The Company will use its commercially
reasonable efforts to take all necessary action which may be required in
qualifying or registering the Warrant Shares included in a registration
statement for offering and sale under the securities or blue sky laws of such
states as reasonably are requested by the Holder(s), provided that the Company
shall not be obligated to execute or file any general consent to service of
process or to qualify as a foreign corporation to do business under the laws of
any such jurisdiction.
(d) The Company shall indemnify the Holder(s) of
the Warrant Shares to be sold pursuant to any registration statement and each
person, if any, who controls such Holders within the meaning of Section 15 of
the Act or Section 20(a) of the Securities Exchange Act of 1934, as amended
("Exchange Act"), against all loss, claim, damage, expense or liability
(including all expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which any of them may become subject
under the Act, the Exchange Act or otherwise, arising from such registration
statement but only to the same extent and with the same effect and subject to
the same procedures as are provided by the provisions pursuant to which the
Company has agreed to indemnify each of the Underwriters contained in Section 7
of the Underwriting Agreement.
(e) The Holder(s) of the Warrant Shares to be
sold pursuant to a registration statement, and their successors and assigns,
shall severally, and not jointly, indemnify the Company, its officers and
directors and each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act, against all
loss, claim, damage or expense or liability (including all expenses reasonably
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incurred in investigating, preparing or defending against any claim whatsoever)
to which they may become subject under the Act, the Exchange Act or otherwise,
arising from information furnished by or on behalf of such Holders, or their
successors or assigns, for specific inclusion in such registration statement to
the same extent and with the same effect as the provisions contained in Section
7 of the Underwriting Agreement pursuant to which the Underwriters have agreed
to indemnify the Company.
(f) Nothing contained in this Agreement shall be
construed as requiring the Holder(s) to exercise their Representative's Warrant
prior to the initial filing of any registration statement or the effectiveness
thereof.
(g) The Company shall not permit the inclusion
of any securities other than the Warrant Shares to be included in any
registration statement filed pursuant to Section 9.3 hereof, without the prior
written consent of National Securities Corporation or as otherwise required by
the terms of any existing registration rights granted prior to the date of this
Agreement by the Company to the holders of any of the Company's securities.
(h) The Company shall furnish to each Holder
participating in the offering and to each underwriter, if any, a signed
counterpart, addressed to such Holder or underwriter, of (i) an opinion of
counsel to the Company, dated the effective date of such registration statement
(and, if such registration includes an underwritten public offering, an
opinion dated the date of the closing under the underwriting agreement), and
(ii) a "cold comfort" letter dated the effective date of such registration
statement (and, if such registration includes an underwritten public offering,
a letter dated the date of the closing under the underwriting agreement) signed
by the independent public accountants who have issued a report on the Company's
financial statements included in such registration statement, in each case
covering substantially the same matters with respect to such registration
statement (and
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the prospectus included therein) and, in the case of such accountants' letter,
with respect to events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities.
(i) The Company shall as soon as practicable
after the effective date of the registration statement, and in any event within
15 months thereafter, make "generally available to its security holders"
(within the meaning of Rule 158 under the Act) an earnings statement (which
need not be audited) complying with Section 11(a) of the Act and covering a
period of at least 12 consecutive months beginning after the effective date of
the registration statement.
(j) In connection with any registration under
Section 9.3 hereof, the Company shall enter into an underwriting agreement with
the managing underwriters selected for such underwriting by Holders holding a
Majority of the Warrant Shares requested to be included in such underwriting,
which may be the Representative. Such agreement shall be satisfactory in form
and substance to the Company, each Holder and such managing underwriters, and
shall contain such representations, warranties and covenants by the Company and
such other terms as are customarily contained in agreements of that type used
by the managing underwriter. The Holders shall be parties to any underwriting
agreement relating to an underwritten sale of their Warrant Shares and may, at
their option, require that any or all the representations, warranties and
covenants of the Company to or for the benefit of such underwriters shall also
be made to and for the benefit of such Holders. Such Holders shall not be
required to make any representations or warranties to or agreements with the
Company or the underwriters except as they may relate to such Holders and their
intended methods of distribution.
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(k) For purposes of this Agreement, the term
"Majority" in reference to the Representative's Warrants or Warrant Shares,
shall mean in excess of fifty percent (50%) of the then outstanding Warrant
Shares (calculated as provided in the following sentence) that (i) are not
held by the Company, an affiliate, officer, creditor, employee or agent thereof
or any of their respective affiliates, members of their family, persons acting
as nominees or in conjunction therewith and (ii) have not been resold to the
public pursuant to a registration statement filed with the Commission under the
Act. For purposes of the preceding sentence, the Holder of a Representative's
Warrant shall be deemed the holder of the aggregate number of Warrant Shares
that acquirable upon exercise thereof.
10. Obligations of Holders. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to
Section 9 hereof that each of the selling Holders shall:
(a) Furnish to the Company such information
regarding themselves, the Warrant Shares held by them, the intended method of
sale or other disposition of such securities, the identity of and compensation
to be paid to any underwriters proposed to be employed in connection with such
sale or other disposition, and such other information as may reasonably be
required to effect the registration of their Warrant Shares.
(b) Notify the Company, at any time when a
prospectus relating to the Warrant Shares covered by a registration statement
is required to be delivered under the Act, of the happening of any event with
respect to such selling Holder 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.
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11. Adjustments to Exercise Price and Number of Securities.
The Exercise Price in effect at any time and the number and kind of securities
purchased upon the exercise of the Representative's Warrant shall be subject to
adjustment from time to time only upon the happening of the following events:
11.1 Stock Dividend, Subdivision and Combination. In
case the Company shall (i) declare a dividend or make a distribution on its
outstanding shares of Common Stock in shares of Common Stock, (ii) subdivide or
reclassify its outstanding shares of Common Stock into a greater number of
shares, or (iii) combine or reclassify its outstanding shares of Common Stock
into a smaller number of shares, the Exercise Price in effect at the time of
the record date for such dividend or distribution or of the effective date of
such subdivision, combination or reclassification shall be adjusted so that it
shall equal the price determined by multiplying the Exercise Price by a
fraction, the denominator of which shall be the number of shares of Common
Stock outstanding after giving effect to such action, and the numerator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such action. Such adjustment shall be made successively whenever any
event listed above shall occur.
11.2 Adjustment in Number of Securities. Upon each
adjustment of the Exercise Price pursuant to the provisions of this Section 11,
the number of Warrant Shares issuable upon the exercise at the adjusted
Exercise Price of each Representative's Warrant shall be adjusted to the
nearest number of whole shares of Common Stock by multiplying a number equal to
the Exercise Price in effect immediately prior to such adjustment by the number
of Warrant Shares issuable upon exercise of the Representative's Warrant
immediately prior to such adjustment and dividing the product so obtained by
the adjusted Exercise Price.
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11.3 Definition of Common Stock. For the purpose of
this Agreement, the term "Common Stock" shall mean (i) the class of stock
designated as Common Stock in the Articles of Incorporation of the Company as
amended as of the date hereof, or (ii) any other class of stock resulting from
successive changes or reclassifications of such Common Stock consisting solely
of changes in par value, or from par value to no par value, or from no par
value to par value.
11.4 Merger or Consolidation. In case of any
consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger which does not result in any
reclassification or change of the outstanding Common Stock), the corporation
formed by such consolidation or merger shall execute and deliver to the Holder
a supplemental warrant agreement providing that the Holder of each
Representative's Warrant then outstanding or to be outstanding shall have the
right thereafter (until the expiration of such Representative's Warrant) to
receive, upon exercise of such Representative's Warrant, the kind and amount of
shares of stock and other securities and property receivable upon such
consolidation or merger by a holder of the number of shares of Common Stock for
which such Representative's Warrant might have been exercised immediately
prior to such consolidation, merger, sale or transfer. Such supplemental
warrant agreement shall provide for adjustments which shall be identical to the
adjustments provided in Section 11. The above provision of this subsection
shall similarly apply to successive consolidations or mergers.
11.5 No Adjustment of Exercise Price in Certain
Cases. No adjustment of the Exercise Price shall be made:
(a) Upon the issuance or sale of the
Representative's Warrant or the Warrant Shares;
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(b) Upon the issuance or sale of Common Stock (or
any other security convertible, exercisable, or exchangeable into
shares of Common Stock) upon the direct or indirect conversion, exercise, or
exchange of any options, rights, warrants, or other securities or indebtedness
of the Company outstanding as of the date of this Agreement or granted pursuant
to any stock option plan of the Company in existence as of the date of this
Agreement, pursuant to the terms thereof; or
(c) If the amount of said adjustment shall be
less than two cents ($.02) per share, provided, however, that in such case any
adjustment that would otherwise be required then to be made shall be carried
forward and shall be made at the time of and together with the next subsequent
adjustment which, together with any adjustment so carried forward, shall amount
to at least two cents ($.02) per Representative's Warrant.
12. Exchange and Replacement of Representative's Warrant
Certificates. Each Representative's Warrant Certificate is exchangeable,
without expense, upon the surrender thereof by the registered Holder at the
principal executive office of the Company for a new Representative's Warrant
Certificate of like tenor and date representing in the aggregate the right to
purchase the same number of Warrant Shares in such denominations as shall be
designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any
Representative's Warrant Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it and
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of the Representative's Warrant, if mutilated,
the Company will make and deliver a new Warrant Certificate of like tenor, in
lieu thereof.
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13. Elimination of Fractional Interests. The Company shall
not be required to issue certificates representing fractions of shares of
Common Stock upon the exercise of the Representative's Warrant, nor shall it be
required to issue scrip or pay cash in lieu of fractional interests, it being
the intent of the parties that all fractional interests shall be eliminated by
rounding any fraction up to the nearest whole number of shares of Common Stock
or other securities, properties or rights.
14. Reservation and Listing of Securities. The Company
shall at all times reserve and keep available out of its authorized shares of
Common Stock, solely for the purpose of issuance upon the exercise of the
Representative's Warrant and the Redeemable Warrants issuable upon exercise
thereof, such number of shares of Common Stock or other securities, properties
or rights as shall be issuable upon the exercise thereof. Every transfer
agent ("Transfer Agent") for the Common Stock and other securities of the
Company issuable upon the exercise of the Representative's Warrant will be
irrevocably authorized and directed at all times to reserve such number of
authorized shares of Common Stock and other securities as shall be requisite
for such purpose. The Company will keep a copy of this Agreement on file with
every Transfer Agent for the Common Stock and other securities of the Company
issuable upon the exercise of the Representative's Warrant. The Company will
supply every such Transfer Agent with duly executed stock and other
certificates, as appropriate, for such purpose. The Company covenants and
agrees that, upon exercise of the Representative's Warrant and payment of the
Exercise Price therefor, all shares of Common Stock and other securities
issuable upon such exercise shall be duly and validly issued, fully paid,
non-assessable and not subject to the preemptive rights of any stockholder. As
long as the Representative's Warrant shall be outstanding, the Company shall
use its best efforts to cause all shares of Common Stock issuable upon the
exercise of the Representative's Warrant
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to be listed (subject to official notice of issuance) on all securities
exchanges on which the Common Stock issued to the public in connection herewith
may then be listed and/or quoted on Nasdaq SmallCap Market.
15. Notices to Representative's Warrant Holders. Nothing
contained in this Agreement shall be construed as conferring upon the
Holders the right to vote or to consent or to receive notice as a stockholder
in respect to any meeting of stockholders for the election of directors or any
other matter, or as having any rights whatsoever as a stockholder of the
Company. If, however, at any time prior to the expiration of the
representative's Warrants and their exercise, any of the following events shall
occur:
(a) the Company shall take a record of the holders
of its shares of Common Stock for the purpose of entitling them to receive a
dividend or distributin paybable otherwise than in cash, or a cash
dividend or distribution payable otherwise than out of current retained
earnings, as indicated by the accounting treatment of such dividend or
distribution on the books of the Company; or
(b) the Company shall offer to all the holders of
its Common Stock any additional shares of capital stock of the Company
or securities convertible into or exchangeable for shares of capital stock of
the Company, or any option, right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or merger) or a sale of
all or substantially all of its property, assets and business as an entirety
shall be proposed; then in any one or more of said events, the Company shall
give written notice of such event at least fifteen (15) days prior to the date
fixed as a record date or the date of closing the transfer books for the
determination of the stockholders entitled to such dividend, distribution,
convertible or
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exchangable securities or subscription rights, or entitled to vote on
such proposed dissolution, liquidation, winding up or sale. Such notice shall
specify such record date or the date of closing the transfer books, as the case
may be. Failure to give such notice or any defect therein shall not affect the
validity of any action taken in connection with the declaration or payment of
any such dividend, or the issuance of any convertible or exchangeable
securities, or subscription rights, options or warrants, or any proposed
dissolution, liquidation, winding up or sale.
16. Redeemable Warrants.
The form of the certificate representing the Redeemable
Warrants (and the form of election to purchase shares of Common Stock upon the
exercise of the Redeemable Warrants and the form of assignment printed on the
reverse thereof) shall be substantially as set forth in Exhibit "A" to the
Warrant Agreement dated as of the date hereof by and among the Company, the
Representative and American Stock Transfer & Trust Company, as warrant agent
(the "Redeemable Warrant Agreement"). Each Redeemable Warrant issuable upon
exercise of the Representative's Warrants shall evidence the right to initially
purchase a fully paid and non-assessable share of Common Stock at an initial
purchase price of $____ [150% of the initial public offering price per share of
Common Stock] from _________, 1997 [one year from the Effective Date of the
Registration Statement] until 5:30 p.m. New York time on September 2001 [5
years from the Effective Date of the Registration Statement] at which time the
Redeemable Warrants, unless the exercise period has been extended, shall
expire. The exercise price of the Redeemable Warrants and the number of
shares of Common Stock issuable upon the exercise of the Redeemable Warrants
are subject to adjustment, whether or not the Representative's Warrants have
been exercised and the Redeemable Warrants have been issued, in the manner and
upon the occurrence of the events set forth in Section 8 of the
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Redeemable Warrant Agreement, which is hereby incorporated by reference
and made a part hereof as if set forth in its entirety herein. The Company
covenants to, and agrees with, the Holder(s) that without the prior written
consent of the Holder(s), which will not be unreasonably withheld, the
Redeemable Warrant Agreement will not be modified, amended, canceled, altered
or superseded, and that the Company will send to each Holder, irrespective of
whether or not the Representative's Warrants have been exercised, any and all
notices required by the Redeemable Warrant Agreement to be sent to holders of
the Redeemable Warrants.
17. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
duly made and sent when delivered, or mailed by registered or certified mail,
return receipt requested:
(a) if to the registered Holder of the
Representative's Warrant, to the address of such Holder as shown on the books
of the Company; or
(b) if to the Company, to the address set forth
in Section 4 hereof or to such other address as the Company may designate by
notice to the Holders.
18. Supplements; Amendments; Entire Agreement. This
Agreement (including the Underwriting Agreement to the extent portions thereof
are referred to herein) contains the entire understanding between the parties
hereto with respect to the subject matter hereof and may not be modified or
amended except by a writing duly signed by the party against whom enforcement
of the modification or amendment is sought. The Company and the Representative
may from time to time supplement or amend this Agreement without the approval
of any holders of Representative's Warrant Certificates (other than the
Representative) in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any
provisions herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company
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and the Representative may deem necessary or desirable and which the Company
and the Representative deem shall not adversely affect the interests of
the Holders of Representative's Warrant Certificates.
19. Successors. All of the covenants and provisions of this
Agreement shall be binding upon and inure to the benefit of the Company, the
Holders and their respective successors and assigns hereunder.
20. Survival of Representations and Warranties.
Notwithstanding any investigations made by or on behalf of the parties to this
Agreement, all representations, warranties and agreements made by the parties
to this Agreement herein shall survive.
21. Governing Law. This Agreement and each Representative's
Warrant Certificate issued hereunder shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be construed
in accordance with the laws of said State without giving effect to the rules of
said State governing the conflicts of laws.
22. Severability. If any provision of this Agreement shall
be held to be invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provision of this Agreement.
23. Captions. The caption headings of the Sections of this
Agreement are for convenience of reference only and are not intended, nor
should they be construed as, a part of this Agreement and shall be given no
substantive effect.
24. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company
and the Representative and any other registered Holder(s) of the
Representative's Warrant Certificates or Warrant Shares any legal or equitable
right, remedy or claim under this Agreement; and this Agreement shall be for
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the sole and exclusive benefit of the Company and the Representative and any
other Holder(s) of the Representative's Warrant Certificates or Warrant Shares.
25. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and such counterparts shall together constitute but
one and the same instrument.
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IN WITNESS OF, the parties hereto have caused this Agreement
to be duly executed, as of the day and year first above written.
ATTEST: FUNDEX GAMES, LTD.
_____________________________________
Secretary
By: ____________________________
Name: Xxxx X. Xxxxx, XX
___________________________
Title: President
___________________________
NATIONAL SECURITIES CORPORATION
By:_______________________________
Name: Xxxxxx X. Xxxxxxxxx
____________________________
Title: Chairman
____________________________
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EXHIBIT A
[FORM OF REPRESENTATIVE'S WARRANT CERTIFICATE]
THE REPRESENTATIVE'S WARRANT REPRESENTED BY THIS CERTIFICATE AND THE OTHER
SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR
RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN
OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL
FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE REPRESENTATIVE'S WARRANT REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO
HEREIN.
EXERCISABLE ON OR BEFORE
5:30 P.M., NEW YORK TIME, OCTOBER ___, 2001
Representative's Warrant No. _____
____ Shares of Common Stock and/or ____ Redeemable Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that ________, or
registered assigns, is the registered holder of Warrants to purchase
initially, at any time from September ___, 1997 until 5:30 p.m., New York time
on September ___, 2001 ("Expiration Date"), up to ____ shares of Common Stock
and/or ____ Redeemable Warrants at the initial exercise price, subject to
adjustment in certain events, of $____ [120% of initial offering price per
share] per share of Common Stock and $___ per Redeemable Warrant (the "Exercise
Price") upon surrender of this Representative's Warrant Certificate and payment
of the Exercise Price at an office or agency of the Company, but subject to the
conditions set forth herein and in the Representative's Warrant Agreement dated
as of September ___, 1996 between the Company and National Securities
Corporation (the "Warrant Agreement"). Payment of the Exercise Price shall be
made by certified or official bank check in New York Clearing House funds
payable to the order of the Company.
No Warrant may be exercised after 5:30 p.m., New York time, on
the Expiration Date, at which time all Representative's Warrant evidenced
hereby, unless exercised prior thereto, shall thereafter be void.
The Representative's Warrant evidenced by this Warrant
Certificate are part of a duly authorized issue of Representative's Warrants
issued pursuant to the Warrant Agreement, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights,
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obligations, duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Representative's Warrant.
The Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price and the type and/or number of the Company's
securities issuable thereupon may, subject to certain conditions, be adjusted.
In such event, the Company will, at the request of the holder, issue a new
Warrant Certificate evidencing the adjustment in the Exercise Price and the
number and/or type of securities issuable upon the exercise of the
Representative's Warrant; provided, however, that the failure of the Company to
issue such new Warrant Certificates shall not in any way change, alter, or
otherwise impair, the rights of the holder as set forth in the Warrant
Agreement.
Upon due presentment for registration of transfer of this
Warrant Certificate at an office or agency of the Company, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Representative's Warrant shall be issued to the
transferee(s) in exchange for this Warrant Certificate, subject to the
limitations provided herein and in the Warrant Agreement, without any charge
except for any tax or other governmental charge imposed in connection with such
transfer.
Upon the exercise of less than all of the Representative's
Warrant evidenced by this Certificate, the Company shall forthwith issue to the
holder hereof a new Warrant Certificate representing such numbered unexercised
Representative's Warrant.
The Company may deem and treat the registered holder(s) hereof
as the absolute owner(s) of this Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone), for the purpose
of any exercise hereof, and of any distribution to the holder(s) hereof, and
for all other purposes, and the Company shall not be affected by any notice to
the contrary.
All terms used in this Warrant Certificate which are defined
in the Warrant Agreement shall have the meanings assigned to them in the
Warrant Agreement.
This Warrant Certificate does not entitle any holder thereof
to any of the rights of a shareholder of the Company.
Exhibit A-2
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IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed under its corporate seal.
Dated as of ___________, 1996.
ATTEST: FUNDEX GAMES, LTD.
_____________________________________
Secretary
By: _________________
Name: _________________
Title:_________________
Exhibit A-3
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FORM OF ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise the right,
represented by
this Warrant Certificate, to purchase ____ shares of Common Stock and/or ____
Redeemable Warrants and herewith tenders in payment for such securities a
certified or official bank check payable in New York Clearing House Funds to
the order of Fundex Games, Ltd. (the "Company") in the amount of $_____, all
in accordance with the terms of Section 4 of the Representative's Warrant
Agreement dated as of ________ __, 1996 between the Company and National
Securities Corporation. The undersigned requests that a certificate for such
securities be registered in the name of _____________________________ , whose
address is
_____________________________________________________________________________
and that such certificate be delivered to _________________, whose
address is _______________________________________________, and if said
number of shares shall not be all the shares purchasable hereunder, that a new
Warrant Certificate for the balance of the shares purchasable under the within
Warrant Certificate be registered in the name of the undersigned warrantholder
or his assignee as below indicated and delivered to the address stated below.
Dated:
Signature:
(Signature must conform
in all respects to name
of holder as specified on
the face of the Warrant
Certificate.)
Address:
(Insert Social Security or
Other Identifying Number of Holder)
Signature Guaranteed:
(Signature must be guaranteed by a bank savings and loan association,
stockbroker, or credit union with membership in an approved signature guaranty
Medallion Program pursuant to Securities
Exchange Act Rule 17Ad-15.) FORM OF ASSIGNMENT
Exhibit A-4
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FORM OF ASSIGNMENT
(TO BE EXECUTED BY THE REGISTERED HOLDER IF SUCH HOLDER
DESIRES TO TRANSFER THE WARRANT CERTIFICATE.)
FOR VALUE RECEIVED , __________________ hereby sells, assigns and transfers
unto [NAME OF TRANSFEREE] this Warrant Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
__________________________ Attorney, to transfer the within Warrant Certificate
on the books of the within-named Company, with full power of substitution.
Dated:
Signature:
(Signature must conform
in all respects to name of
holder as specified on the
face of the Warrant
Certificate.)
Address:
(Insert Social Security or Other
Identifying Number of Holder)
Signature Guaranteed: _______________________________________________________
(Signature must be guaranteed by a bank savings and loan association,
stockbroker, or credit union with membership in an approved signature guaranty
Medallion Program pursuant to Securities Exchange Act Rule 17Ad-15.)
Exhibit A-5
