Contract
Exhibit
99.5
THIS WARRANT HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION EXCEPT AS SPECIFICALLY PROVIDED HEREIN AND UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.
Right to
Purchase Shares
(Subject
to Adjustment)
Warrant for
Stock
Lightning
Gaming, Inc., a Nevada corporation (hereinafter referred to as the “Company”),
hereby certifies that, for value received,
The
Co-Investment Fund II, L.P.
or
registered assigns (the “Holder”), is entitled to purchase from the Company at
any time or from time to time during the Exercise Period (as hereinafter
defined) $1,000,000 worth of the shares of common stock of the Company, subject
to adjustment as provided below (the “Stock”), on the payment therefore of the
exercise price which shall be $2.00 per share of the Stock, multiplied by the
number of shares to be issued (the “Exercise Price”), upon the surrender of this
Warrant duly signed by the registered Holder hereof at the time of exercise,
accompanied by payment of the Exercise Price, upon the terms and subject to the
conditions hereinafter set forth.
The
Warrant represented hereby is delivered pursuant to and is subject to that
certain Loan Agreement by and among Lightning Poker, Inc. and the Lenders named
therein dated as of February 22, 2010, (the “Agreement”). Capitalized
terms used herein without definition shall have the meanings set forth in the
Agreement.
EXERCISE OF
WARRANT. This Warrant shall be exercisable commencing on the
date hereof and shall expire at 5:00 p.m. on February 22, 2015 (the “Exercise
Period”). In the event of a proposed Change of Control, the Company
shall give the Holder ten (10) days prior notice of the proposed closing date of
the Change of Control and, to the extent the Warrant has not been exercised by
such proposed closing date, then this Warrant shall terminate on such proposed
closing date. “Change of Control” shall mean (x) the acquisition of
the Company by another entity by means of any transaction or series of related
transactions (including, without limitation, any merger, consolidation or other
form of reorganization in which outstanding shares of the Company are exchanged
for securities or other consideration issued, or caused to be issued, by the
acquiring entity or its subsidiary, but excluding any transaction effected
primarily for the purpose of changing the Company’s jurisdiction of
incorporation), unless the Company’s stockholders of record as constituted
immediately prior to such transaction or series of related transactions will,
immediately after such transaction or series of related transactions hold at
least a majority of the voting power of the surviving or acquiring entity or (y)
a sale of all or substantially all of the assets of the Company in one or a
series of transactions.
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Subject
to the foregoing restrictions, during the Exercise Period this Warrant may be
exercised, in whole or in part, as follows:
A. Exercise for
Cash. The Holder may, at its option, elect to exercise this
Warrant, in whole or in part and at any time or from time to time during the
Exercise Period, by surrendering this Warrant, with the Exercise of Warrant and
Declaration appended hereto duly executed by or on behalf of the Holder, at the
principal office of the Company, or at such other office or agency as the
Company may designate, accompanied by payment in full, in lawful money of the
United States, of the Exercise Price payable in respect of the number of shares
of Stock purchased upon such exercise.
B. Cashless
Exercise.
(i) The
Holder may, at its option, elect to exercise this Warrant, in whole or in part
and at any time or from time to time during the Exercise Period, on a cashless
basis, by surrendering this Warrant, with the Exercise of Warrant and
Declaration appended hereto duly executed by or on behalf of the Holder, at the
principal office of the Company, or at such other office or agency as the
Company may designate, by canceling a portion of this Warrant in payment of the
Exercise Price payable in respect of the number of shares of Stock purchased
upon such exercise. In the event of an exercise pursuant to this
subsection B, the number of shares of Stock issued to the Holder shall be
determined according to the following formula:
X= Y(A-B)
A
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Where
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X=
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the
number of shares of Stock that shall be issued to the
Holder;
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Y=
|
the
number of shares of Stock for which this Warrant is being exercised (which
shall include both the number of shares of Stock issued to the Holder and
the number of shares of Stock subject to the portion of the Warrant being
cancelled in payment of the Exercise
Price);
|
|
|
A=
|
the
Fair Market Value (as defined below) of one share of capital stock;
and
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|
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B=
|
the
Exercise Price then in effect.
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(ii) The
Fair Market Value per share of capital stock shall be determined as
follows:
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(1) If
the capital stock is listed on a national securities exchange, the Nasdaq
National Market or another nationally recognized trading system as of the
Exercise Date, the Fair Market Value per share of capital stock shall be deemed
to be the average of the high and low reported sale prices per share of capital
stock thereon during the three trading days immediately preceding the Exercise
Date (provided
that if no such price is reported on any such day, the Fair Market Value per
share of capital stock shall be determined pursuant to clause (2)).
(2) If
the capital stock is not listed on a national securities exchange, the Nasdaq
National Market or another nationally recognized trading system as of the
Exercise Date, the Fair Market Value per share of capital stock shall be
determined in good faith by the Board of Directors of the Company, subject to
the approval of the Holders of 51% of the capital stock issuable upon exercise
of the Warrants issued pursuant to the Agreement. If the parties
hereto cannot reach agreement, then the cashless exercise option shall not be
available to the Holder.
DELIVERY OF STOCK
CERTIFICATE UPON EXERCISE. As soon as practicable after the
exercise of this Warrant and payment of the Exercise Price (which payment shall
be deemed to have occurred when funds are immediately available to the Company
without provisions), the Company will cause to be issued in the name of and
delivered to the registered Holder hereof or its assigns, or such Holder’s
nominee or nominees, a certificate or certificates for the number of full shares
of Stock of the Company to which such Holder shall be entitled upon such
exercise (and in the case of a partial exercise, a Warrant of like tenor for the
unexercised portion remaining subject to exercise prior to the expiration of the
Exercise Period set forth herein). For all corporate purposes, such
certificate or certificates shall be deemed to have been issued and such Holder
or such Holder’s designee to be named therein shall be deemed to have become a
holder of record of such shares of Stock as of the date the duly executed
exercise form pursuant to this Warrant, together with full payment of the
Exercise Price, is received by the Company as aforesaid. No fraction
of a share or scrip certificate for such fraction shall be issued upon the
exercise of this Warrant; in lieu thereof, the Company will pay or cause to be
paid to such Holder cash equal to a like fraction at the prevailing fair market
price for such share as determined in good faith by the Company.
ANTI-DILUTION
PROVISIONS. A. Dividends. In
the event that a dividend shall be declared upon the Stock of the Company
payable in shares of said stock, the number of shares of Stock covered by this
Warrant shall be adjusted by adding thereto the number of shares which would
have been distributable thereon if such shares had been outstanding on the date
fixed for determining the stockholders entitled to receive such stock
dividend.
B. Reorganizations,
Consolidations, Mergers. Except as otherwise set forth herein,
in the event that the outstanding shares of Stock of the Company shall be
changed into or exchanged for a different number or kind of shares of stock or
other securities of the Company or of another corporation, whether through
reorganization, recapitalization, stock split-up, combination of shares, merger
or consolidation, then upon exercise of this Warrant there shall be substituted
for the shares of Stock covered by this Warrant, the number and kind of shares
of stock or other securities which would have been substituted therefor if such
shares had been outstanding on the date fixed for determining the stockholders
entitled to receive such changed or substituted stock or other
securities.
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C. Other
Changes. In the event there shall be any change, other than
specified above, in the number or kind of outstanding shares of Stock of the
Company or of any stock or other securities into which such Stock shall be
changed or for which it shall have been exchanged, then if the Board of
Directors shall determine, in good faith, that such change equitably requires an
adjustment in the number or kind of shares covered by this Warrant, such
adjustment shall be made by the Board of Directors and shall be effective and
binding for all purposes on this Warrant.
D. Adjustment to Exercise
Price. In the event that the Company issues or sells any
equity securities (including warrants and securities convertible into equity
securities) (“Additional Stock”), without consideration or for a consideration
per share less than the Exercise Price, then the Exercise price shall forthwith
be adjusted to the price at which the Company has issued or sold such Additional
Stock.
REGISTRATION
RIGHTS.
A. Certain
Definitions. As used in this Section, the following terms
shall have the following respective meanings:
(i) Securities Act means
the Securities Act or any similar federal statute, and the rules and regulations
of the Commission issued under such Act, as they each may, from time to time, be
in effect.
(ii) Commission means the
Securities and Exchange Commission, or any other federal agency at the time
administering the Act.
(iii) Exchange Act means
the Exchange Act or any similar federal statute, and the rules and regulations
of the Commission issued under such Act, as they each may, from time to time, be
in effect.
(iv) Holder for the
purpose of this Section means any person who holds Registrable Shares including
any person to whom the rights granted are transferred pursuant to Section B
hereof, and Holders means all of them.
(v) Registration
Statement means a registration statement filed by the Company with the
Commission for a public offering and sale of securities of the Company (other
than a registration statement on Form S-8 or Form S-4, or their successors, or
any other form for a limited purpose, or any registration statement covering
only securities proposed to be issued in exchange for securities or assets of
another corporation).
(vi) Registrable Shares
means the shares of Common Stock owned by a Holder and any other shares of
Common Stock of the Company issued in respect of such shares (because of stock
splits, stock dividends, reclassifications, recapitalizations, or similar
events); provided, however, that shares of Common Stock which are Registrable
Shares shall cease to be Registrable Shares upon (A) any sale pursuant to a
Registration Statement, or (B) any sale in any manner to a person or entity
which, by virtue of Section B of this Agreement, is not entitled to the rights
provided, or (C) as to any Holder, to the extent that such Holder’s Registrable
Shares can be sold without volume limitations pursuant to Rule 144 promulgated
under the Securities Act.
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B. Assignment of Registration
Rights. The rights to cause the Company to register
Registrable Shares pursuant hereto may be assigned (but only with all related
obligations) by a Holder in a Qualified Assignment (as hereinafter defined);
provided that the Company is, upon or within a reasonable time after such
transfer, furnished with written notice of the name and address of such
transferee and the securities with respect to which such registration rights are
being assigned; provided that such transferee or assignee agrees in writing to
be bound by and subject to the terms and conditions of this Agreement, provided
that such assignment shall be effective only if immediately following such
transfer the further disposition of such securities by transferee or assignee is
restricted under the Securities Act; and provided, further, that such assignment
shall be effective only if immediately following such transfer such Registrable
Shares continue to be Registrable Shares. For purposes of this
Section B, “Qualified Assignment” shall mean any of the following: (a) an
assignment to a transferee acquiring at least 10% of the Registrable Shares
(subject to adjustment for stock splits, stock dividends, recapitalizations and
similar events); or (b) an assignment to a Holder or a partner (if such Holder
is a partnership) or affiliate of a Holder.
C. Incidental
Registration.
(i) Whenever
the Company proposes to file a Registration Statement (other than a
registration relating solely to the sale of securities to participants in a
Company stock or equity compensation plan, a registration relating to a
corporate reorganization or other transaction under Rule 145 of the Securities
Act, a registration on any form that does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Shares, or a registration in which the only
Common Stock being registered is Common Stock issuable upon conversion of debt
securities that are also being registered, at any time and from time to time, it
will, prior to such filing, give written notice to all Holders of its intention
to do so and, upon the written request of a Holder or Holders given within
twenty (20) days after the Company provides such notice, the Company shall use
its reasonable efforts to cause all Registrable Shares which the Company has
been requested by such Holder or Holders to register to be registered under the
Securities Act; provided that the Company shall have the right to postpone or
withdraw any registration effected pursuant to this Section C without obligation
to any Holder other than pursuant to Section E.
(ii) In
connection with any offering under this Section C involving an underwriting, the
Company shall not be required to include any Registrable Shares in such
underwriting unless the Holders thereof accept the terms of the underwriting as
agreed upon between the Company and the underwriters selected by it, and then
only in such quantity, subject to the restrictions set forth below, as will not,
in the written opinion of the underwriters, jeopardize the success of the
offering by the Company. If in the written opinion of the managing
underwriter the registration of all, or part of, the Registrable Shares that the
Holders have requested to be included would adversely affect such public
offering, then the Company shall be
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required to include in the underwriting only that number of Registrable Shares that the managing underwriter believes may be sold without causing such adverse effect. If the number of Registrable Shares to be included in the underwriting in accordance with the foregoing is less than the total number of shares which the Holders of Registrable Shares have requested to be included, then the Company may include all securities proposed to be registered by the Company to be sold for its own account; provided, however, that the number of Registrable Shares shall not be reduced unless all other securities of the Company are first excluded from the underwriting (including securities held by employees, officers and directors) and the Holders of Registrable Shares who have requested registration shall participate in the underwriting pro rata based upon their total ownership of shares of Common Stock of the Company. If any Holder would thus be entitled to include more shares than such Holder requested to be registered, the excess shall be allocated among other requesting Holders pro rata based upon their total ownership of Registrable Shares.
(iii) All
Holders of Registrable Shares proposing to distribute their securities in an
offering under this Section C involving an underwriting shall (together with the
Company and other shareholders, if any, of securities distributing their shares
through such underwriting) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for the
underwriting.
D. Registration
Procedures. If and whenever the Company is required by the
provisions of this Agreement to use its reasonable efforts to effect the
registration of any of the Registrable Shares under the Securities Act, the
Company shall use its reasonable best efforts to:
(i) file
with the Commission a Registration Statement with respect to such Registrable
Shares and use its reasonable efforts to cause that Registration Statement to
become and remain effective for at least one hundred twenty (120) days or until
the distribution described in the Registration Statement has been
completed;
(ii) as
soon as reasonably practicable prepare and file with the Commission any
amendments and supplements to the Registration Statement and the prospectus
included in the Registration Statement as may be necessary to keep the
Registration Statement effective until the earliest of (i) the period of time
required by the Commission, (ii) if requested by the Holders of 66.66% of the
Registrable Securities covered thereby, one hundred twenty (120) days from the
effective date, or until such earlier time at which the Holders have informed
the Company that the distribution of their securities has been completed, or
(iii) the sale of all Registrable Shares covered thereby; provided, that the
Company may discontinue any registration of its securities that are not
Registrable Shares (and, under the circumstances specified in Section C, its
securities that are Registrable Shares) at any time prior to the effective date
of such Registration Statement;
(iii) as
soon as reasonably practicable furnish to each selling Holder such reasonable
numbers of copies of the prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents
as the selling Holder may reasonably request in order to facilitate the public
sale or other disposition of the Registrable Shares owned by the selling
Holder;
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(iv) as
soon as reasonably practicable use its reasonable best efforts to register or
qualify the Registrable Shares covered by the Registration Statement under the
securities or Blue Sky laws of such states as the selling Holders shall
reasonably request, and do any and all other acts and things that may be
necessary or desirable to enable the selling Holders to consummate the public
sale or other disposition in such states of the Registrable Shares owned by the
selling Holder; provided, however, that the Company shall not be required in
connection with this Section D to qualify as a foreign corporation, subject
itself to taxation or execute a general consent to service of process in any
such states or other jurisdiction;
(v) notify
each Holder of Registrable Shares covered by the registration statement at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act of the happening of any event 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) If
the Company has delivered a preliminary or final prospectus to the selling
Holders and after having done so the prospectus is amended to comply with the
requirements of the Securities Act, the Company shall promptly notify the
selling Holders and, if requested, the selling Holders shall immediately cease
making offers of Registrable Shares and return all prospectuses to the
Company. The Company shall promptly provide the selling Holders with
revised prospectuses and, following receipt of the revised prospectuses, the
selling Holders shall be free to resume making offers of the Registrable
Shares.
E. Allocation of
Expenses. The Company will pay all Registration Expenses (as
hereinafter defined) of all registrations under this Agreement. For
purposes hereof, the term “Registration Expenses” shall mean all expenses
incurred by the Company in complying with this Section, including without
limitation, all registration and filing fees, exchange listing fees, printing
expenses, the fees and disbursements of counsel for the Company and the
reasonable fees and disbursements of one counsel selected by Holders owning a
majority of the Registrable Securities requested to be included in such
registration, the fees and disbursements of the Company’s accountants, state
Blue Sky fees and expenses, and the expense of any special audits incident to or
required by any such registration, but excluding underwriting discounts,
transfer taxes, selling commissions and the fees and expenses of the selling
Holders’ own counsel (other than the one counsel selected by holders owning a
majority of the Registrable Shares requested to be included in such
registration).
F. Indemnification.
(i) In
the event of any registration of any of the Registrable Shares under the
Securities Act pursuant to this Agreement, to the extent permitted by law, the
Company will indemnify and hold harmless the seller of such Registrable Shares,
each of its directors, officers or partners, each underwriter (if any) within
the meaning of the Exchange Act (an “Underwriter”) and each other person, if
any, who controls such seller or Underwriter within the meaning of the
Securities Act or the Exchange Act (a “controlling person”) against any losses,
claims, damages or liabilities, joint or several, to which such seller or
Underwriter or controlling person may become subject under the Securities Act,
the Exchange Act, Blue Sky
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laws or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement under which such Registrable Shares were registered under the Securities Act, any preliminary prospectus or final prospectus contained in the Registration Statement, or any amendment or supplement to such Registration Statement, or (ii) the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any federal securities or state Blue Sky law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any federal securities or Blue Sky law in connection with the offering covered by such registration statement; and the Company will reimburse such seller or Underwriter and each such controlling person for any legal or any other expenses reasonably incurred by such seller or Underwriter or controlling 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 (1) to the extent that any such loss, claim, damage or liability arises out of or is based upon any untrue statement or omission made in such Registration Statement, preliminary prospectus or prospectus, or any such amendment or supplement, in reliance upon and in conformity with information furnished to the Company, in writing, by or on behalf of such seller or controlling person specifically for use in the preparation thereof, or (2) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), provided further, however, that the foregoing indemnity agreement with respect to any preliminary prospectus shall not inure to the benefit of any seller or Underwriter, or any person controlling such seller or Underwriter, from whom the person asserting any such losses, claims, damages or liabilities purchased shares in the offering, if a copy of the prospectus (as then amended or supplemented if the Company shall have furnished any amendment or supplements thereto) was not sent or given by or on behalf of such seller or Underwriter to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the shares to such person, and if the prospectus (as so amended or supplement) would have cured the defect giving rise to such loss, claim, damage or liability.
(ii) In
the event of any registration of any of the Registrable Shares under the
Securities Act pursuant to this Agreement, to the extent permitted by law, each
seller of Registrable Shares, severally and not jointly, will indemnify and hold
harmless the Company, each of its directors and officers, each Underwriter (if
any) and each controlling person, if any, of the Company or Underwriter against
any losses, claims, damages or liabilities, (or actions in respect thereof),
joint or several, to which the Company, such directors and officers, any
Underwriter or controlling persons or other such Holder or partner, director,
officer or controlling person of such other Holder may become subject under the
Securities Act, Exchange Act, Blue Sky laws or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement under which such
Registrable Shares were registered under the Securities Act, any preliminary
prospectus or final prospectus contained in the Registration Statement, any
amendment or supplement to the Registration Statement or any offering circular
or other document, or (ii) any omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements
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therein, in light of the circumstances in which they were made, not misleading, if the statement, omission or violation was made or occurred in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of such seller, specifically for use in connection with the preparation of such Registration Statement, prospectus, amendment or supplement or if such misstatement or omission was corrected in any amendment or supplement provided to a selling Holder pursuant to Section D and the selling Holder failed to deliver such amendment or supplement, or (iii) any violation or alleged violation by the Holder of the Securities Act, the Exchange Act, any federal securities or state Blue Sky law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any federal securities or Blue Sky law in connection with the offering covered by such registration statement; and each such selling Holder will reimburse any person intended to be indemnified pursuant to this Section F, for any legal or other expenses reasonably incurred by such person in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this Section F shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, and provided, however, that the obligations of each Holder hereunder shall be limited to an amount equal to the net proceeds to such Holder of Registrable Shares sold as contemplated herein.
(iii) Each
party entitled to indemnification under this Section F (the “Indemnified Party”)
shall give notice to the party required to provide indemnification (the
“Indemnifying Party”) promptly after such Indemnified Party has actual knowledge
of any claim as to which indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of any such claim or any litigation
resulting therefrom with counsel mutually satisfactory to the parties; and,
provided, that the failure of any Indemnified Party to deliver notice to the
Indemnifying Party as provided herein, if materially prejudicial to the ability
of the Indemnifying Party to defend such action, shall relieve such Indemnifying
Party of any liability to the Indemnified Party under this Section F to the
extent of such prejudice, but the omission so to deliver notice to the
Indemnifying Party will not relieve it of any liability that it may have to any
Indemnified Xxxxx otherwise than under this Section F. The
Indemnified Party may participate in such defense at such party’s expense;
provided, however, that the Indemnifying Party shall pay such expense if
representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential differing
interests between the Indemnified Party and any other party represented by such
counsel in such proceeding. No Indemnifying Party, in the defense of
any such claim or litigation shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
of such claim or litigation, and no further obligation to indemnify an
Indemnified Party shall exist in connection with either of the following without
the prior written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld: (i) judgment entered with the consent of the
Indemnified Person; or (ii) settlement of such claim or litigation.
(iv) If
the indemnification provided for in this Section F is held by a court of
competent jurisdiction to be unavailable to an Indemnified Party with respect to
any losses, claims, damages or liabilities referred to therein, the Indemnifying
Party, in lieu of indemnifying such Indemnified Party thereunder, shall to the
extent permitted by applicable law
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contribute to the amount paid or payable by such Indemnified Party as a result of such loss, claim, damage, expense, or liability in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the violations (s) that resulted in such loss, claim, damages, expense or liability, as well as any other relevant equitable considerations; provided however that in any such case, no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation. The relative fault of the Indemnifying Party and the Indemnified Party shall be determined by a court of law by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact related to information supplied by the Indemnifying Party by the Indemnified Party and the parties’ relative intent, knowledge, access to information or omission. The obligations of the Company and the seller sand Holders under this Section F shall survive completion of any offering of Registrable Shares and termination of this Agreement.
G. Information by
Holder.
(i) Each
Holder of Registrable Shares included in any registration shall furnish to the
Company such information regarding such Holder and the distribution proposed by
such Holder as the Company may reasonably request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Section.
(ii) Each
Holder of Registrable Shares shall report to the Company sales made pursuant to
any registration of such Registrable Shares.
LOST, STOLEN, DESTROYED OR
MUTILATED WARRANT. Upon receipt by the Company of evidence
satisfactory (in the exercise of reasonable discretion) to it of the ownership
of and the loss, theft or destruction or mutilation of this Warrant, and (in the
case of loss, theft or destruction) of indemnity satisfactory (in the exercise
or reasonable discretion) to it, and (in the case of mutilation) upon the
surrender and cancellation thereof, the Company will issue and deliver, in lieu
thereof, a new Warrant of like tenor.
TRANSFER AND TRANSFER
RESTRICTIONS. A. Owner of
Warrant. 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 of transfer as
provided below.
B. Transfer of
Warrant. The Company agrees to maintain, at its then principal
place of business, books for the registration of the Warrant and transfers
thereof, and, subject to the provisions of subsections C, D and E below, this
Warrant and all rights hereunder are transferable, in whole or in part, on said
books at said office, upon surrender of this Warrant at said office, together
with a written assignment of this Warrant duly executed by the Holder hereof or
his duly authorized agent or attorney and funds sufficient to pay any transfer
taxes payable upon the making of such transfer. Upon such surrender
and payment the Company shall execute and deliver a new Warrant or Warrants in
the name of the assignee or assignees and in the denominations specified in such
instrument of assignment, and this Warrant shall promptly be
canceled.
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C. Restrictions on Exercise and
Transfer. Neither this Warrant nor the shares of Stock
issuable upon exercise of this Warrant have been registered under the
Securities Act of 1933, as amended (the “Act”) or any state securities
laws. Therefore, in order, among other things, to insure compliance
with the Act, notwithstanding anything else in the Warrant to contrary, the
Holder of this Warrant, including any successive Holder, agrees by accepting
this Warrant as follows: No Holder shall sell, assign, transfer, pledge,
hypothecate, mortgage, encumber or dispose of all or any portion of this Warrant
(or any of the shares of Stock which may be issued upon the exercise
hereof). Notwithstanding the foregoing, a Holder may transfer all or
any portion of this Warrant (or any of the shares of Stock which may be issued
upon the exercise hereof) (a) as part of a registered public offering of the
Company’s securities or pursuant to Rule 144 under the Act, (b) by pledge that
creates a mere security interest in all or any portion of this Warrant (or any
of the shares of Stock which may be issued upon the exercise hereof), provided
that the pledgee thereof agrees in writing in advance to be bound by and comply
with all applicable provisions of this Warrant to the same extent as if it were
the Holder making such pledge, (c) either during his lifetime or on death by
will or the laws of descent and distribution to his siblings, ancestors,
descendants or spouse, or any custodian or trustee for the account
of Holder or Holder’s siblings, ancestors, descendants or spouse, or
(d) to an affiliate or a partner of Holder, provided, in each such
case a transferee shall receive and hold all or any portion of this Warrant (or
any of the shares of Stock which may be issued upon the exercise hereof) subject
to the provisions of this Warrant and there shall be no further transfer except
in accordance herewith. No party will avoid the provisions of this
Warrant by making one or more transfers to an affiliate of such party and then
disposing of all or any portion of such party’s interest in such affiliate;
provided, however, that in any event, this Warrant may not be sold or
transferred in the absence of registration under the Act unless the Company
receives an opinion of counsel reasonably acceptable to it stating that such
sale or transfer is exempt from the registration and prospectus delivery
requirements of said act.
D. Legend on
Shares. Each certificate for shares of Stock issued upon
exercise of this Warrant, unless at the time of exercise such shares are
registered under the Act, shall bear substantially the following legend (and any
additional legend required under the Act or otherwise):
“THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER
AND MAY NOT BE SOLD, EXCHANGED, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF EXCEPT (I) PURSUANT TO A REGISTRATION STATEMENT EFFECTIVE UNDER THE
ACT, OR (II) PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
ACT.
Any
certificate issued at any time in exchange or substitution for any certificate
bearing such legend (except a new certificate issued upon completion of a public
distribution pursuant to a registration statement under the Act of the
securities represented thereby) shall also bear such legend unless, in the
opinion of counsel for the Company, the securities represented
11
thereby need no longer be subject to the transfer restrictions contained in this Warrant. The exercise and transfer restriction provisions of this Warrant shall be binding upon all subsequent Holders of the Warrant.
COVENANTS. The
Company covenants that, so long as this Warrant is exercisable, it will reserve
from its authorized and unissued Stock a sufficient number of shares to provide
for the delivery of stock pursuant to the exercise of this
Warrant. The Company further covenants that all shares of Stock which
shall be so deliverable upon exercise of this Warrant shall be duly and validly
issued and fully paid and nonassessable.
MISCELLANEOUS. This
Warrant does not confer upon the Holder any rights of a stockholder of the
Company, including, without limitation, any right to vote or to consent to or
receive notice as a stockholder of the Company.
REPRESENTATION. The
Company represents and warrants that the authorized capital of the Company
consists of (i) 10,000,000 shares of Preferred Stock, of which 6,000,000 shares
have been designated as Series A Nonvoting Capital Stock, of which 500,000
shares are issued and outstanding; and (ii) 90,000,000 shares of Common Stock,
of which 4,660,285 are issued and 4,652,474 shares are outstanding as of the
date of this Warrant. All of the issued and outstanding shares of
Series A Nonvoting Preferred Stock and Common Stock of the Company have been
duly authorized and validly issued and are fully paid and nonassessable and were
issued in compliance with all applicable state and federal laws concerning the
issuance of securities.
HEADINGS. The
headings in this Warrant are for purposes of reference only, and shall not limit
or otherwise affect the meaning hereof.
|
Dated: February
22, 2010
|
|
|
| By: |
/s/ Xxxxxx
Xxxxxx
|
|
| Title: | Chief Financial Officer |
12
EXERCISE OF WARRANT AND
DECLARATION
The
undersigned Holder hereby exercises the right to purchase _________________
shares of common stock of Lightning Gaming, Inc., a Nevada corporation (the
“Company”) and delivers to the Company herewith the Exercise Price.
The
undersigned declares and represents to the Company that the intention of this
exercise is to acquire the aforementioned shares for investment only and not for
resale or with a view to the distribution thereof, except as the same may be
made in compliance with all applicable securities laws. The
undersigned has been advised that the shares being issued to the undersigned are
not being registered under the Securities Act of 1933 (the “Act”) on the grounds
that this transaction is exempt under the Act as not involving any public
offering. As a result of not being registered under the Act, the
undersigned has been advised that the shares may not be sold or offered for sale
in the absence of an effective registration statement as to the securities under
the Act and any applicable state securities acts or the availability of an
exemption from the registration requirements under the Act and any applicable
state securities acts.
You will
kindly forward a certificate or certificates for the shares purchased hereby
and, if such shares shall not include all of the shares provided in this
Warrant, a new Warrant of like tenor and date for the balance of the shares
issuable thereunder shall be delivered to the undersigned at the address set
forth below.
|
Date:_____________________
|
______________________________
|
Name of
Holder
By:___________________________
Address:
______________________________
______________________________
______________________________
