SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): January 27, 1998
ACTV, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-10377 94-2907258
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of organization) Identification No.)
1270 Avenue of the Americas
New York, New York 10020
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: (212) 262-2570
Not Applicable
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(Former name or former address; if changed since last report)
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ITEM 5. OTHER EVENTS
On January 27, 1998, ACTV, Inc. ("ACTV") entered into an agreement with
certain holders of 5% Cumulative Convertible Preferred Stock ("Preferred
Shares") of ACTV Holdings, Inc., a wholly owned subsidiary of ACTV. The
agreement provides that ACTV, at its sole discretion, may purchase from certain
holders of the Preferred Shares up to an aggregate of 150,000 Preferred Shares
based on a predetermined schedule through June 30, 1998. If ACTV chooses to
purchase the Preferred Shares, ACTV may, at its sole discretion, pay in cash or
a combination of cash, ACTV common stock, and warrants to purchase ACTV common
stock.
ITEM 7. EXHIBITS
99.1 Conversion Restriction Agreement and Exhibits
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunder duly authorized.
ACTV, Inc.
By: /s/ William C. Samuels
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William C. Samuels
Chief Executive Officer
Date: February 5, 1998
2
Exhibit 99.1
CONVERSION RESTRICTION AGREEMENT
CONVERSION RESTRICTION AGREEMENT ("Agreement") dated as of January 27, 1998
by and between ACTV, Inc., a Delaware corporation ("ACTV") and each of Elliott
Associates, L.P. ("Elliott") and Westgate International, L.P. ("Westgate")(each
individually an "Investor" and collectively the "Investors").
W I T N E S S E T H:
WHEREAS, ACTV, Inc. desires the right to repurchase from the Investors
shares of 5% Cumulative Convertible Preferred Stock (the "Preferred Shares") of
ACTV Holdings, Inc. ("Holdings"), a wholly-owned subsidiary of ACTV, issued
pursuant to a Preferred Stock Investment Agreement between Holdings and
Investors, dated August 9, 1996 (the "Investment Agreement"); and
WHEREAS, the Investors desire to grant ACTV such rights;
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
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"Average Common Price" shall equal the greater of: (x) the average of the
daily means between the low trading price of the common stock, par value $0.10,
of ACTV (the "Common Stock") and the closing price of the Common Stock during
the three trading days prior to the relevant Purchase Date or (y) the
weighted-average (based upon the number of shares sold) of the actual selling
prices at which the Investor shall have sold Common Stock on the relevant
Purchase Date. In the event that during any period of consecutive trading days
provided for above, ACTV shall declare or pay any dividend on the Common Stock
payable in Common Stock or in rights to acquire Common Stock, or shall effect a
stock split or reverse stock split, then the Average Common Price shall be
proportionately increased (in case of a combination) or decreased (in all other
cases) to give effect to such event.
"Closing Price" of the Common Stock on any day shall be (A) the reported
Closing Price (last sale price) of the Common Stock on the New York Stock
Exchange or the American Stock Exchange, or (B) if the Common Stock is not
listed on the New York Stock Exchange or the American Stock Exchange, the
reported Closing Price of the Common Stock on the principal automated securities
price quotation system on which sale prices of the Common Stock are reported, or
(C) if the Common Stock is not listed on such stock exchanges and sale prices of
the Common Stock are not reported on an automated quotation system, the mean of
the final bid and asked prices for the Common Stock as reported by National
Quotation Bureau Incorporated if at least two securities dealers have inserted
both bid and asked quotations for the Common Stock on at least five of the ten
preceding trading days. If none of the foregoing provisions are applicable, the
Closing Price of the Common Stock on a day will be the fair
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market value of the Common Stock on that day as determined by a member firm of
the New York Stock Exchange, Inc., selected in good faith by the Board of
Directors of ACTV and reasonably acceptable to the Investors. The term "trading
day" means (x) if the Common Stock is listed on the New York Stock Exchange or
the American Stock Exchange, a day on which there is trading on the such stock
exchange, (y) if the Common Stock is not listed on either of such stock
exchanges but sale prices of the Common Stock are reported on an automated
quotation system, a day on which trading is reported on the principal automated
quotation system on which sales of the Common Stock are reported, or (z) if the
foregoing provisions are inapplicable, a day on which quotations are reported by
National Quotation Bureau Incorporated.
The "high trading price" of the Common Stock on any day shall be (A) the
highest reported sale price of the Common Stock on the New York Stock Exchange
or the American Stock Exchange, or (B) if the Common Stock is not listed on the
New York Stock Exchange or the American Stock Exchange, the highest reported
sale price of the Common Stock on the principal automated securities price
quotation system on which sale prices of the Common Stock are reported, or (C)
if the Common Stock is not listed on such stock exchanges and sale prices of the
Common Stock are not reported on an automated quotation system, the highest bid
price and the mean of the final bid and asked prices for the Common Stock as
reported by National Quotation Bureau Incorporated if at least two securities
dealers have inserted both bid and asked quotations for the Common Stock on at
least five of the ten preceding trading days. If none of the foregoing
provisions are applicable, the "mean of the high trading price and the Closing
Price" of the Common Stock on a day will be the fair market value of the Common
Stock on that day as determined by a member firm of the New York Stock Exchange,
Inc., selected in good
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faith by the Board of Directors of ACTV and reasonably acceptable to the
Investors.
"Liquidated Damages" shall mean liquidated damages pursuant to Section 2(b)
of the August 9, 1996 Registration Rights and Exchange Agreement (the "Exchange
Agreement") together with liquidated damages pursuant to Section 2(g) of this
Agreement.
"Liquidation Preference" per Preferred Share shall be the sum of $25.00
plus accrued and unpaid dividends thereon (with dividends deemed accrued on a
per diem basis through the Purchase Date (as defined below) even if the Purchase
Date is not at the end of a calendar quarter) plus any Liquidated Damages owed
to such Investor on the Purchase Date.
The "low trading price" of the Common Stock on any day shall be (A) the
lowest reported sale price of the Common Stock on the New York Stock Exchange or
the American Stock Exchange, or (B) if the Common Stock is not listed on the New
York Stock Exchange or the American Stock Exchange, the lowest reported sale
price of the Common Stock on the principal automated securities price quotation
system on which sale prices of the Common Stock are reported, or (C) if the
Common Stock is not listed on such stock exchanges and sale prices of the Common
Stock are not reported on an automated quotation system, the lowest bid price
and the mean of the final bid and asked prices for the Common Stock as reported
by National Quotation Bureau Incorporated if at least two securities dealers
have inserted both bid and asked quotations for the Common Stock on at least
five of the ten preceding trading days. If none of the foregoing provisions are
applicable, the "mean of the low trading price and the Closing Price" of the
Common Stock on a day will be the fair market value of the Common Stock on that
day as determined by a member firm of the New York Stock Exchange, Inc.,
selected in good faith by
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the Board of Directors of ACTV and reasonably acceptable to the Investors.
"Parity" per Preferred Share shall mean the greater of: (i) the Liquidation
Preference divided by 0.69625 or (ii) the product of (a) Liquidation Preference
divided by 1.0967 and (b) the Average Common Price.
"Parity 2" per Preferred Share shall mean the greater of: (i) the
Liquidation Preference divided by 0.69625 or (ii) the product of (a) Liquidation
Preference divided by 1.0967 and (b) the value that the Average Common Price
would be if the "high trading price" were substituted for the "low trading
price" in the calculation thereof.
"Registration Expenses" shall mean all expenses to be incurred by ACTV in
connection with each Investor's registration rights under this Agreement,
including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel for ACTV, blue sky fees and
expenses, reasonable fees and disbursements of counsel to Investors (using a
single counsel) for a review of the Registration Statement and related
documents, and the expense of any special audits incident to or required by any
such registration (but excluding the compensation of regular employees of ACTV,
which shall be paid in any event by ACTV).
Terms used but not defined herein shall have the meanings ascribed to them
in the Investment Agreement, the Exchange Agreement and the related transaction
documents.
2. Minimum Repurchase Requirement.
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a. ACTV, at its option, may purchase in the aggregate from Elliott and
Westgate, in the ratio provided by Elliott and Westgate following their receipt
of each Purchase Notice pursuant to Section 2c below, on or before the following
dates (except that the first Purchase Date may only be on, and not before,
January 29, 1998) (each of the following dates referred to as a "Final Purchase
Date" and the actual date of each such purchase referred to as a "Purchase
Date") the following cumulative numbers of Preferred Shares:
Final Purchase Date Minimum Repurchase Requirement
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on January 29, 1998 10,000 Preferred Shares
on or before February 27, 1998 20,000 Preferred Shares
on or before March 31, 1998 40,000 Preferred Shares
on or before April 16, 1998 55,000 Preferred Shares
on or before April 30, 1998 70,000 Preferred Shares
on or before May 15, 1998 90,000 Preferred Shares
on or before May 29, 1998 110,000 Preferred Shares
on or before June 15, 1998 130,000 Preferred Shares
on or before June 30, 1998 150,000 Preferred Shares
As to each Final Purchase Date, the cumulative number of Preferred Shares
which may be purchased is hereinafter referred to as the "Minimum Repurchase
Requirement".
Notwithstanding anything in this Agreement to the contrary, at no time may
ACTV elect to purchase more Preferred Shares from Elliott or Westgate than
either actually owns.
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b. ACTV may elect to pay for the purchase of the Preferred Shares by:
(i) paying to each Investor in cash on the Purchase Date the product of
Parity and the number of Preferred Shares being repurchased; or
(ii) for each Preferred Share repurchased from an Investor, on the
Purchase Date (a) paying to each Investor in cash the Liquidation Preference
plus the product of {the positive difference, if any, of Parity 2 minus Parity}
and the number of Preferred Shares being repurchased; (b) issuing and delivering
to or upon the order of such Investor, a certificate or certificates for a
number of registered, listed and freely tradable shares of Common Stock ("Common
Shares") equal to (x) Parity minus Liquidation Preference, divided by (y) the
Average Common Price; and (c) issuing and delivering to or upon the order of
such Investor a number of 3-year warrants (the "Warrants") to purchase Common
Stock, in the form attached as Exhibit A hereto, equal to {Parity 2 minus
Liquidation Preference} divided by the Average Common Price, with an exercise
price equal to the Average Common Price as of the relevant Purchase Date. In
connection with clause (ii) (b) of this subsection b, provided the Investors
were furnished with an adequate number of current prospectuses, they shall
deliver prospectuses (if required to satisfy the prospectus delivery requirement
of the Securities Act) in connection with the sale of Common Shares.
c. ACTV shall give the Investor written notice ("Purchase Notice") at least
5 (except for the Final Purchase Date on January 29, 1998, which notice shall be
at least 2 trading days) and not more than 8 trading days prior to a Purchase
Date stating (i) the Purchase Date; (ii)
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the number of Preferred Shares to be purchased from such Investor; (iii) the
form of consideration to be paid; and (iv) that such notice is irrevocable and
constitutes a legal and binding contract. Such notice will be effective upon
receipt. At each such closing, the Investors will deliver the certificates
representing the Preferred Shares being sold against delivery of the
consideration set forth under Section 2(b).
d. ACTV may elect to repurchase Preferred Shares pursuant to (b)(ii) above
only if (i) all registration obligations pursuant to the Investment Agreement
and the Registration Rights and Exchange Agreement, dated August 9, 1996, have
been satisfied; (ii) there is Effective Registration as defined in the
Investment Agreement; and (iii) all Common Shares to be delivered are subject to
an effective registration statement and are listed and freely tradeable.
Notwithstanding the fulfillment of the preceding conditions, ACTV may not elect
to repurchase Preferred Shares pursuant to (b)(ii) above and must elect (b)(i),
if after issuing Common Shares pursuant to (b)(ii) the Investors would be deemed
in the aggregate to beneficially own in excess of 4.9% of the total issued and
outstanding Common Stock of ACTV. The term "deemed beneficially owned" shall
exclude shares that might otherwise be deemed beneficially owned by reason of
the convertibility of the Preferred Shares. Without prejudice to the immediately
preceding two sentences, the Investors will provide notice to ACTV if the
Investors are deemed in the aggregate to beneficially own in excess of 720,000
shares of Common Stock of ACTV (as such number may be equitably adjusted for
reorganizations, recapitalizations, stock splits and dividends, reverse stock
splits, etc.).
e. In lieu of delivering physical certificates representing the Common
Stock
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issuable pursuant to (b)(ii) above, provided ACTV's transfer agent is
participating in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer ("FAST") program, upon request of an Investor (or then holder), the
Company shall use its best efforts to cause its transfer agent to electronically
transmit the Common Stock issuable upon conversion or exercise to such Investor
(or then holder), by crediting the account of such Investor's (or then holder's)
prime broker with DTC through its Deposit Withdrawal Agent Commission ("DWAC")
system. The time periods for delivery described in the paragraph (b)(ii) shall
apply to the electronic transmittals described herein.
f. As a condition to purchasing Preferred Shares pursuant to (b)(ii) above,
ACTV agrees to:
i) Prepare and file as soon as possible, but in no event by later than
July 10, 1998, a registration statement with the Commission pursuant to Rule 415
under the Securities Act on Form S-3 under the Securities Act (or in the event
that ACTV is ineligible to use such form, such other form as ACTV is eligible to
use under the Securities Act) covering the shares of Common Stock underlying the
Warrants ("Warrant Shares") ("Registration Statement"). Thereafter ACTV shall
use its best efforts to have such Registration Statement and other filings
declared effective as soon as possible, but by no later than September 10, 1998.
ACTV shall provide Investors reasonable opportunity to review any such
Registration Statement or amendment or supplement thereto prior to filing.
ii) Prepare and file with the SEC such amendments and supplements
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to such Registration Statement and the prospectus used in connection with such
Registration Statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
Registration Statement and notify the holders of the filing and effectiveness of
such Registration Statement and any amendments or supplements.
iii) Furnish to each Investor such numbers of copies of a current
prospectus conforming with the requirements of the Act, copies of the
Registration Statement, any amendment or supplement thereto and any documents
incorporated by reference therein and such other documents as such Investor may
reasonably require in order to facilitate the disposition of Warrant Shares
owned by such Investor.
iv) Use its best efforts to register and qualify the securities covered
by such Registration Statement under such other securities or "Blue Sky" laws of
such jurisdictions as shall be reasonably requested by each Investor provided
that ACTV shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions.
v) Notify each Investor immediately of the happening of any event as a
result of which the prospectus (including any supplements thereto or thereof)
included in such Registration Statement, as then in effect, includes an untrue
statement of material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing, and use its best efforts to promptly
update and/or correct such prospectus.
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vi) Use its best efforts to list the Warrant Shares covered by such
Registration Statement with any securities exchange(s) and/or markets on which
the Common Stock is then listed and prepare and file any required filings with
the National Association of Securities Dealers, Inc. or any exchange or market
where the Common Stock is traded.
vii) Comply in all respects with its reporting and filing obligations
under the Securities Exchange Act of 1934, as amended (the "Exchange Act") and
will cause the Common Stock to continue to be registered.
All Registration Expenses incurred in connection with any registration,
qualification or compliance with registration pursuant to this Agreement shall
be borne by ACTV.
In the case of the registration effected by ACTV pursuant to this
Agreement, ACTV will use its best efforts to keep such registration effective
until all the Investors have completed the sales or distribution described in
the Registration Statement relating thereto or, if earlier, until such Warrant
Shares may be sold under Rule 144(k).
g. In the event the Warrant Shares are not subject to Effective
Registration by September 10, 1998, then ACTV shall pay to each Investor
liquidated damages in an amount in cash equal to 3% of the aggregate exercise
price of the Warrants held by such Investor for each 30-day period during which
there is no Effective Registration. Such liquidated payment shall be due and
payable on each such 30-day anniversary.
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3. Assignment; Transfer.
a. ACTV may assign its rights to purchase the Preferred Shares under this
Agreement on 10 trading days' prior written notice to the Investors, provided
that (i) the assignee must purchase Preferred Shares in accordance with 2b(i)
above; (ii) such assignee must agree, in an agreement in form and substance
satisfactory to the Investors, not to convert any Preferred Shares until the
earlier of (x) the date on which neither Investor owns any Preferred Shares, or
(y) the date which is 90 days after the last purchase of Preferred Shares
pursuant to this Agreement (such 90 days to be extended one and one-half (1.5)
days for every one (1) day that there is not Effective Registration of the
Warrant Shares or of the Common Stock and for every one (1) day that ACTV's
assignee fails to comply with this Agreement, including without limitation the
failure to purchase Preferred Shares in accordance with the schedule set forth
in Section 2a); (iii) such assignee must upon purchasing any Preferred Shares
from the Investors issue to the Investors an irrevocable proxy, in form and
substance satisfactory to the Investors, for so long as either of the Investors
own any Preferred Shares to vote such shares in proportion to the voting of all
holders of Preferred Shares held by shareholders of ACTV who are neither
officers, directors, holders of 5% of ACTV or direct or indirect subsidiaries of
ACTV; and (iv) such assignee must agree, in an agreement in form and substance
to the Investors, not to take any actions to alter the terms of the Preferred
Shares or to take any actions which are in derogation of this Agreement. Each
assignee that meets the requirements set forth in the preceding sentence is a
"Permitted Assignee". For purposes of clause 3(a)(ii)(y) immediately preceding,
the maximum number of days that the 90-day period can be extended as a result of
ACTV's assignee failure to purchase Preferred Shares in accordance with the
schedule set forth in Section 2a (as
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distinguished from any other failure to comply with this Agreement) shall be 180
days.
b. So long as ACTV is in compliance with this Agreement, any transferee or
purchaser of Preferred Shares from the Investors (other than ACTV or an assignee
of ACTV) shall agree to be bound by the Investors' obligations under this
Agreement.
4. Restrictions on Conversion; Obligations to Sell to ACTV.
a. Restrictions on Conversion. The Investors agree that for so long as ACTV
or its Permitted Assignee has repurchased the Minimum Repurchase Requirement set
forth in Section 2a by each Final Purchase Date, each Investor will not convert
any remaining Preferred Shares into Common Shares during the period commencing
on such Final Purchase Date and ending on the succeeding Final Purchase Date.
This restriction on conversion will end as to both Investors on the earlier of
July 1, 1998 and (i) any Final Purchase Date by or on which ACTV or its
Permitted Assignee does not comply with its Minimum Repurchase Requirement; (ii)
the date on which either the Ravich Family Trust or Libra Investments, Inc.
ceases to comply with its respective restrictions on conversion set forth in the
letter agreement between the Ravich Revocable Trust of 1989, Libra Investments,
Inc. and ACTV, dated January 27, 1998; (iii) the date of any filing of
bankruptcy or insolvency proceedings by or against ACTV or any of its
subsidiaries; (iv) the date of the announcement of any merger (except if ACTV's
merger partner or such merger partner's shareholders will own less than 16% of
the merged company), acquisition, "Change in Control" transaction (hereinafter
defined as the type of transaction described in Section 11(k) of the Exchange
Agreement) or any other significant extraordinary
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corporate event; or (v) the date of any event which in the reasonable judgment
of the Investors has a Material Adverse Effect on ACTV or its subsidiaries. For
purposes of this section 4, a "significant extraordinary corporate event" shall
include, without limitation, a sale of aggregate assets whose value is more than
20% of the fair market value of ACTV and its subsidiaries or the acquisition of
a company or companies representing 16% of the aggregate value of ACTV and its
subsidiaries after the closing. For the purposes of this section 4, the term
"extraordinary corporate event" shall not include an arms-length financing for
fair consideration if such financing involves the issuance of Common Stock equal
to no greater than fifty percent (50%) of the then outstanding shares of Common
Stock and is not in connection with a merger, acquisition or Change in Control
transaction.
b. Obligation to Sell to ACTV. The Investors' obligations pursuant to this
Agreement to sell Preferred Stock to ACTV shall cease: (i) as of any Final
Purchase Date by or on which ACTV or its Permitted Assignee has not complied
with the Minimum Repurchase Requirement; (ii) the date on which either the
Ravich Family Trust or Libra Investments, Inc. ceases to comply with its
respective restrictions on conversion set forth in the letter agreement between
the Ravich Revocable Trust of 1989, Libra Investments, Inc. and ACTV, dated
January 27, 1998, (iii) the date of any filing of bankruptcy or insolvency
proceedings by or against ACTV or any of its subsidiaries; (iv) the date of the
announcement of any merger (except if ACTV's merger partner or such merger
partner's shareholders will own less than 16% of the merged company),
acquisition, "Change in Control" transaction or any other significant
extraordinary corporate event; or (v) the date of any event which in the
reasonable judgment of the Investors has a Material Adverse Effect on ACTV or
its subsidiaries.
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5. Distributions. In the event ACTV shall at any time or from time to time
make or issue, or fix a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
securities of ACTV or any of its direct or indirect subsidiaries other than
additional shares of Common Stock, then in each such event, in addition to the
number of shares of Common Stock receivable upon exchange, provision shall be
made so that the holders of Preferred Shares shall receive, upon the exchange
thereof, the securities of ACTV or such subsidiary which they would have
received had they been the owners on the date of such event of the number of
shares of Common Stock issuable to them upon exchange.
6. Merger. In case of any reorganization or any reclassification of the
capital stock of ACTV or any consolidation or merger of ACTV with or into any
other corporation or corporations or a sale of all or substantially all of the
assets of ACTV to any other person, then, thereafter if ACTV elects to
repurchase the Preferred Shares, it must do so pursuant to Section 2b(i),
unless, the Investors and ACTV (or the surviving company) can agree on a formula
for the repurchase of the Preferred Shares pursuant to Section 2b(ii) which is
the economic equivalent of the provisions set forth in this Agreement.
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7. Indemnification.
(a) ACTV Indemnity. ACTV will indemnify each Investor, each of its
officers, directors and partners, and each person controlling each Investor,
within the meaning of Section 15 of the Securities Act and the rules and
regulations thereunder with respect to which registration, qualification or
compliance has been effected pursuant to this Exchange Agreement, and each
underwriter, if any, and each person who controls, within the meaning of Section
15 of the Securities Act and the rules and regulations thereunder, any
underwriter, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, offering
circular or other document (including any related registration statement,
notification or the like) incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by ACTV of the Securities Act or any
state securities law or in either case, any rule or regulation thereunder
applicable to ACTV and relating to action or inaction required of ACTV in
connection with any such registration, qualification or compliance, and will
reimburse each Investor, each of its officers, directors and partners, and each
person controlling such Investor, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating and defending any such claim, loss,
damage, liability or action, provided that ACTV will not be liable in any such
case to a Investor to the extent that any such claim, loss, damage, liability or
expense ed to ACTV by such Investor or the underwriter (if any) therefor and
stated to be specifically for use therein. The indemnity agreement contained
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in this Section 7(a) 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 ACTV (which consent will not be unreasonably withheld).
(b) Investor Indemnity. Each Investor will, severally and not jointly,
if Warrant Shares held by it are included in the securities as to which such
registration, qualification or compliance is being effected, indemnify ACTV,
each of its directors, officers, partners, and each underwriter, if any, of
ACTV's securities covered by such a registration statement, each person who
controls ACTV or such underwriter within the meaning of Section 15 of the
Securities Act and the rules and regulations thereunder, each other Investor (if
any), and each of their officers, directors and partners, and each person
controlling such other Investor(s) against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statement therein not
misleading, and will reimburse ACTV and such other Investor(s) and their
directors, officers and partners, underwriters or control persons for any legal
or any other expenses reasonably incurred in connection with investigating and
defending any such claim, loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to ACTV by such Investor and
stated to be specifically for use therein, and provided that the maximum amount
for which such Investor shall
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be liable under this indemnity shall not exceed the net proceeds received by
such Investor from the sale of the Warrant Shares. The indemnity agreement
contained in this Section 7(b) shall not apply to amounts paid in settlement of
any such claims, losses, damages or liabilities if such settlement is effected
without the consent of such Investor (which consent shall not be unreasonably
withheld).
(c) Procedure. Each party entitled to indemnification under this Section
7 (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 in any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
be unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Article except to the extent
that the Indemnifying Party is materially and adversely affected by such failure
to provide notice. 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 to such claim or
litigation. Each Indemnified Party shall furnish such information regarding
itself or the claim in question as an Indemnifying Party may reasonably request
in writing and as shall be reasonably required in
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connection with the defense of such claim and litigation resulting therefrom.
8. Contribution. If the indemnification provided for in Section 7 herein is
unavailable to the Indemnified Parties in respect of any losses, claims, damages
or liabilities referred to herein (other than by reason of the exceptions
provided therein), then each such Indemnifying Party, in lieu of indemnifying
such Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities as
between ACTV on the one hand and any Investor on the other, in such proportion
as is appropriate to reflect the relative fault of ACTV and of such Investor in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of ACTV on the one hand and of any Investor
on the other shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by ACTV or by
such Investor.
In no event shall the obligation of any Indemnifying Party to contribute
under this Section 8 exceed the amount that such Indemnifying Party would have
been obligated to pay by way of indemnification if the indemnification provided
for under Section 7(a) or 7(b) hereof had been available under the
circumstances.
ACTV and the Investors agree that it would not be just and equitable if
contribution pursuant to this Section 8 were determined by pro rata allocation
(even if the Investors or the underwriters were treated as one entity for such
purpose) or by any other method
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<PAGE>
of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraphs. The amount paid or payable
by an Indemnified Party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraphs shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this section, no Investor or underwriter shall be required to
contribute any amount in excess of the amount by which (i) in the case of any
Investor, the net proceeds received by such Investor from the sale of Warrant
Shares or (ii) in the case of an underwriter, the total price at which the
Warrant Shares purchased by it and distributed to the public were offered to the
public exceeds, in any such case, the amount of any damages that such Investor
or underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
9. Survival. The indemnity and contribution agreements contained in
Sections 7 and 8 shall remain operative and in full force and effect regardless
of (i) any termination of this Agreement or any underwriting agreement, (ii) any
investigation made by or on behalf of any Indemnified Party or by or on behalf
of ACTV, and (iii) the consummation of the sale or successive resales of the
Warrant Shares.
10. Obligations of Investors Several and not Joint. All obligations of the
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Investors under this Agreement are several and not joint.
11. Issue Taxes. ACTV shall pay any and all issue and other taxes,
excluding any income, franchise or similar taxes, that may be payable in respect
of any issue or delivery of shares of Common Stock on exchange of Preferred
Shares pursuant hereto.
12. Fractional Shares. No fractional shares shall be issued upon the
purchase of any Preferred Shares. All Common Shares (including fractions
thereof) issuable upon exchange of more than one Preferred Share by a holder
thereof shall be aggregated for purposes of determining whether the exchange
would result in the issuance of any fractional share. If, after the
aforementioned aggregation, the exchange would result in the issuance of a
fraction of a share of Common Stock, ACTV shall, in lieu of issuing any
fractional share, pay the holder otherwise entitled to such fraction a sum in
cash equal to the fair market value of such fraction on the date of exchange (as
determined in good faith by the Board of Directors of ACTV).
13. Replacement Certificates. The certificate(s) representing the Common
Shares held by any Investor (or then holder) may be exchanged by such Investor
(or such holder) at any time and from time to time for certificates with
different denominations representing an equal aggregate number of Common Shares,
as requested by such Investor (or such holder) upon surrendering the same. No
service charge will be made for such registration or transfer or exchange.
14. Notices. Any notice or other communication required or permitted to be
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<PAGE>
given to the Investors hereunder shall be in writing and shall be effective upon
actual receipt of such mailing, fax or personal delivery. The addresses for such
communications shall be:
to Elliott: Elliott Associates, L.P.
712 Fifth Avenue
New York, New York 10019
Tel. No.: (212) 974-6000
Fax No.: (212) 974-2092
Attn: Richard Mansouri/Stephane Carnot
to Westgate: Westgate International, L.P.
c/o Stonington Management Corporation
712 Fifth Avenue
New York, New York 10019
Tel. No.: (212) 506-2099
Fax No.: (212) 974-2093
Attn: Richard Mansouri/Stephane Carnot
15. Survival. To the extent not inconsistent with this Agreement, the
representations, warranties, covenants and obligations in the Investment
Agreement, and Exchange Agreement and related documentation shall remain in full
force and effect.
16. Publicity. ACTV agrees that it will not disclose, and will not include
in any public announcement, the name of, or refer to, either Investor without
such Investor's consent, unless such disclosure is required by law or applicable
regulation, and then only to the extent of such requirement.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
ACTV, INC.
By: /s/ William C. Samuels
-----------------------------
Name:
Title:
ELLIOTT ASSOCIATES, L.P.
By: /s/ Paul E. Singer
-----------------------------
Paul E. Singer
General Partner
WESTGATE INTERNATIONAL, L.P.
By: MARTLEY INTERNATIONAL, INC.
as Attorney-in-Fact
By: /s/ Paul E. Singer
-----------------------------
Paul E. Singer
President
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<PAGE>
EXHIBIT A
FORM OF COMMON STOCK PURCHASE WARRANT
<PAGE>
EXHIBIT A
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. IT MAY NOT BE SOLD OR OFFERED FOR SALE
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAW OR AN APPLICABLE EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS.
-------------------
- ----------- --, ----
[Purchase Date]
ACTV, INC.
-------------------
Common Stock Purchase Warrant
ACTV, Inc., a Delaware corporation (the "Company"), hereby certifies that
for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, __________________, having an address at
___________________________, ________________________ ("Investor") or any other
Warrant Holder is entitled, on the terms and conditions set forth below, to
purchase from the Company at any time beginning on the date hereof and ending
thirty-six (36) months after the date hereof, ______ [ a number of shares equal
to [(Parity 2 minus Liquidation Preference) divided by the Average Common Price
as of the Purchase Date] fully paid and nonassessable shares of Common Stock,
$0.10 par value, of the Company (the "Common Stock"), at a purchase price per
share [equal to the Average Common Price as of the Purchase Date] [of $_____]
(the "Purchase Price"), as the same may be adjusted pursuant to Section 5
herein.
1. Definitions.
All terms used herein and not defined shall have the meanings ascribed to
them in the Conversion Restriction Agreement, dated January 27, 1998, between
the Company, Elliott Associates, L.P. and Westgate International, L.P. (the
"Conversion Restriction Agreement".
(a) the term "Warrant Holder" shall mean the Investor or any assignee of
all or any portion of this Warrant.
(b) the term "Warrant Shares" shall mean the Shares of Common Stock or
other securities issuable upon exercise of this Warrant.
(c) the term "Exchange Agreement" shall mean the Registration Rights and
<PAGE>
Exchange Agreement, dated August 9, 1996, between the Company and various
investors.
(d) the term "Agreement" shall mean the Preferred Stock Investment
Agreement, dated August 9, 1996, between ACTV Holdings, Inc. and
various investors.
2. Exercise of Warrant.
This Warrant may be exercised by the Warrant Holder, in whole or in
part, at any time and from time to time by either of the following methods:
(a) The Warrant Holder may send a form of subscription at the end hereof
duly executed by Warrant Holder ("Subscription Notice") by facsimile
to the offices of the Company or any transfer agent for the Common
Stock, followed by prompt surrender of this Warrant to the same
entity, or surrender this Warrant together with the Subscription
Notice to the offices of the Company or any transfer agent for the
Common Stock; or
(b) The Warrant Holder may also exercise this Warrant, in whole or in
part, in a "cashless" or "net-issue" exercise by delivering to the
offices of the Company or any transfer agent for the Common Stock
this Warrant, together with a Subscription Notice specifying the
number of Warrant Shares to be delivered to such Warrant Holder
("Deliverable Shares") and the number of Warrant Shares with respect
to which this Warrant is being surrendered in payment of the
aggregate Purchase Price for the Deliverable Shares ("Surrendered
Shares"); provided that the Purchase Price multiplied by the number
of Deliverable Shares shall not exceed the value of the Surrendered
Shares; and provided further that the sum of the number of
Deliverable Shares and the number of Surrendered Shares so specified
shall not exceed the aggregate Warrant Shares represented by this
Warrant. For the purposes of this provision, each Warrant Share as
to which this Warrant is surrendered will be attributed a value
equal to the fair market value (as defined below) of the Warrant
Share minus the Purchase Price of the Warrant Share.
In the event that the Warrant is not exercised in full, the number of
Warrant Shares shall be reduced by the number of such Warrant Shares for which
this Warrant is exercised, and the Company, at its expense, shall forthwith
issue and deliver or upon the order of Warrant Holder a new Warrant of like
tenor in the name of Warrant Holder or as Warrant Holder (upon payment by
Warrant Holder of any applicable transfer taxes) may request, reflecting such
adjusted Warrant Shares.
3. Delivery of Stock Certificates.
(a) Subject to the terms and conditions of this Warrant, as soon as
practicable after the exercise of this Warrant in full or in part,
and in any event within three (3) "trading
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<PAGE>
days" (as defined below) thereafter, the Company shall transmit the certificates
(together with any other stock or other securities or property to which Warrant
Holder is entitled upon exercise) by messenger or overnight delivery service to
reach the address designated by such holder within three (3) trading days after
the receipt of the Subscription Notice ("T+3").
In lieu of delivering physical certificates representing the Common Stock
issuable upon exercise, provided the Company's transfer agent is participating
in the Depository Trust Company ("DTC") Fast Automated Securities Transfer
("FAST") program, upon request of the Warrant Holder, the Company shall use its
best efforts to cause its transfer agent to electronically transmit the Common
Stock issuable upon exercise to the Warrant Holder by crediting the account of
Warrant Holder's prime broker with DTC through its Deposit Withdrawal Agent
Commission ("DWAC") system. The time periods for delivery described in the
immediately preceding paragraph shall apply to the electronic transmittals
described herein.
The term "trading day" means a day on which there is trading on the NASDAQ
Small Capitalization or National Market or such other principal market or
exchange on which the Common Stock is then traded.
(b) This Warrant may not be exercised as to fractional shares of Common
Stock. In the event that the exercise of this Warrant, in full or in
part, would result in the issuance of any fractional share of Common
Stock, then in such event the Warrant Holder shall be entitled to
cash equal to the fair market value of such fractional share. For
purposes of this Warrant, "fair market value" shall equal the
closing trading price of the Common Stock, on the NASDAQ Small
Capitalization or National Market, the American Stock Exchange or
the New York Stock Exchange, whichever is the principal trading
exchange or market for the Common Stock (the "Principal Market") on
the date of determination or, if the Common Stock is not listed or
admitted to trading on any national securities exchange or quoted on
the NASDAQ Small Capitalization or National Market, the average of
the closing bid and asked prices on the over-the-counter market as
furnished by any New York Stock Exchange member firm reasonably
selected from time to time by the Company for that purpose and
reasonably acceptable to the Warrant Holder, or, if the Common Stock
is not listed or admitted to trading on any national securities
exchange or quoted on the NASDAQ Small Capitalization or National
Market or traded over-the-counter and the average price cannot be
determined a contemplated above, the fair market value of the Common
Stock shall be as reasonably determined in good faith by the
Company's Board of Directors with the concurrence of the Warrant
Holder.
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<PAGE>
4. (A) Representations and Covenants of the Company.
(a) The Company shall comply with its obligations under the Exchange
Agreement with respect to the Warrant Shares, including, without
limitation, the Company's obligation to have filed and declared
effective a registration statement registering the Warrant Shares
under the Securities Act of 1933, as amended (the "Act").
(b) The Company shall take all necessary action and proceedings as may
be required and permitted by applicable law, rule and regulation,
including, without limitation, the notification of the Principal
Market, for the legal and valid issuance of this Warrant and the
Warrant Shares to the Warrant Holder under this Warrant.
(c) From the date hereof through the last date on which this Warrant is
exercisable, the Company shall take all steps reasonably necessary
and within its control to insure that the Common Stock remains
listed on the Principal Market and shall not amend its Certificate
of Incorporation or Bylaws so as to adversely affect any rights of
the Warrant Holder under this Warrant.
(d) The Warrant Shares, when issued in accordance with the terms hereof,
will be duly authorized and, when paid for or issued in accordance
with the terms hereof, shall be validly issued, fully paid and
non-assessable. The Company has authorized and reserved for issuance
to Warrant Holder the requisite number of shares of Common Stock to
be issued pursuant to this Warrant.
(e) The Company shall at all times reserve and keep available, solely
for issuance and delivery as Warrant Shares hereunder, such number
of shares of Common Stock as shall from time to time be issuable
thereunder.
(f) With a view to making available to Warrant Holder the benefits of
Rule 144 promulgated under the Act and any other rule or regulation
of the Securities and Exchange Commission ("SEC") that may at any
time permit Warrant Holder to sell securities of the Company to the
public without registration, the Company agrees to use its
reasonable best efforts to:
i) make and keep public information available, as those terms are
understood and defined in Rule 144, at all times;
ii) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); and
iii) furnish to any Warrant Holder forthwith upon request a written
statement by the Company that it has complied with the reporting
requirements of Rule 144 and of the Act and the Exchange Act, a copy
of the most recent annual or quarterly report of the
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<PAGE>
Company, and such other reports and documents so filed by the Company as may be
reasonably requested to permit any such Warrant Holder to take advantage of any
rule or regulation of the SEC permitting the selling of any such securities
without registration.
(B) Representations and Covenants of the Investor.
The Purchaser shall not resell Warrant Shares, unless such resale is
pursuant to an effective registration statement under the Act or pursuant to an
applicable exemption from such registration requirements.
5. Adjustment of Purchase Price and Number of Shares. The number of and
kind of securities purchasable upon exercise of this Warrant and the Purchase
Price shall be subject to adjustment from time to time as follows:
(a) Subdivisions, Combinations and other Issuances. If the Company shall
at any time after the date hereof but prior to the expiration of
this Warrant subdivide its outstanding securities as to which
purchase rights under this Warrant exist, by split-up, spin-off, or
otherwise, or combine its outstanding securities as to which
purchase rights under this Warrant exist, the number of Warrant
Shares as to which this Warrant is exercisable as of the date of
such subdivision, split-up, spin-off or combination shall forthwith
be proportionately increased in the case of a subdivision, or
proportionately decreased in the case of a combination. Appropriate
proportional adjustments (decrease in the case of subdivision,
increase in the case of combination) shall also be made to the
Purchase Price payable per share, so that the aggregate Purchase
Price payable for the total number of Warrant Shares purchasable
under this Warrant as of such date shall remain the same.
(b) Stock Dividend. If at any time after the date hereof the Company
declares a dividend or other distribution on Common Stock payable in
Common Stock or other securities or rights convertible into Common
Stock ("Common Stock Equivalents") without payment of any
consideration by holders of Common Stock for the additional shares
of Common Stock or the Common Stock Equivalents (including the
additional shares of Common Stock issuable upon exercise or
conversion thereof), then the number of shares of Common Stock for
which this Warrant may be exercised shall be increased as of the
record date (or the date of such dividend distribution if no record
date is set) for determining which holders of Common Stock shall be
entitled to receive such dividends, in proportion to the increase in
the number of outstanding shares (and shares of Common Stock
issuable upon conversion of all such securities convertible into
Common Stock) of Common Stock as a result of such dividend, and the
Purchase Price shall be proportionately reduced so that the
aggregate Purchase Price for all the Warrant Shares issuable
hereunder immediately after the record date (or on the date of such
distribution, if applicable), for such dividend shall equal the
aggregate Purchase Price so payable immediately before such record
date (or on the date of such distribution, if applicable).
(c) Other Distributions. If at any time after the date hereof the
Company distributes to holders of its Common Stock, other than as
part of its dissolution, liquidation or the winding up of its
affairs, any shares of its capital stock, any evidence of
indebtedness or any of
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<PAGE>
its assets (other than cash, Common Stock or securities convertible
into Common Stock), then the number of Warrant Shares for which this
Warrant is exercisable shall be increased to equal: (i) the number
of Warrant Shares for which this Warrant is exercisable immediately
prior to such event, (ii) multiplied by a fraction, (A) the
numerator of which shall be the fair market value per share of
Common Stock on the record date for the dividend or distribution,
and (B) the denominator of which shall be the fair market value
price per share of Common Stock on the record date for the dividend
or distribution minus the amount allocable to one share of Common
Stock of the value (as jointly determined in good faith by the Board
of Directors of the Company and the Warrant Holder) of any and all
such evidences of indebtedness, shares of capital stock, other
securities or property, so distributed. The Purchase Price shall be
reduced to equal: (i) the Purchase Price in effect immediately
before the occurrence of any event (ii) multiplied by a fraction,
(A) the numerator of which is the number of Warrant Shares for which
this Warrant is exercisable immediately before the adjustment, and
(B) the denominator of which is the number of Warrant Shares for
which this Warrant is exercisable immediately after the adjustment.
(d) Merger, etc. If at any time after the date hereof there shall be a
merger or consolidation of the Company with or into or a transfer of
all or substantially all of the assets of the Company to another
entity, then the Warrant Holder shall be entitled-to receive upon or
after such transfer, merger or consolidation becoming effective, and
upon payment of the Purchase Price then in effect, the number of
shares or other securities or property of the Company or of the
successor corporation resulting from such merger or consolidation,
which would have been received by Warrant Holder for the shares of
stock subject to this Warrant had this Warrant been exercised just
prior to such transfer, merger or consolidation becoming effective
or to the applicable record date thereof, as the case may be. The
Company will not merge or consolidate with or into any other
corporation, or sell or otherwise transfer its property, assets and
business substantially as an entirety to another corporation, unless
the corporation resulting from such merger or consolidation (if not
the Company), or such transferee corporation, as the case may be,
shall expressly assume, by supplemental agreement reasonably
satisfactory in form and substance to the Warrant Holder, the due
and punctual performance and observance of each and every covenant
and condition of this Warrant to be performed and observed by the
Company.
(e) Reclassification, etc. If at any time after the date hereof there
shall be a reorganization or reclassification of the securities as
to which purchase rights under this Warrant exist into the same or a
different number of securities of any other class or classes, then
the Warrant Holder shall thereafter be entitled to receive upon
exercise of this Warrant, during the period specified herein and
upon payment of the Purchase Price then in effect, the number of
shares or other securities or property resulting from such
reorganization or reclassification, which would have been received
by the Warrant Holder for the shares of stock subject to this
Warrant had this Warrant at such time been exercised.
6. No Impairment. The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Warrant Holder against
impairment. Without limiting the generality of the foregoing, the Company (a)
will not increase the par value of any Warrant Shares above the amount payable
therefor on such exercise, and (b) will take all such action as may be
-6-
<PAGE>
reasonably necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares on the exercise of
this Warrant.
7. Notice of Adjustments- Notices. Whenever the Purchase Price or number of
Shares purchasable hereunder shall be adjusted pursuant to Section 5 hereof, the
Company shall execute and deliver to the Warrant Holder a certificate setting
forth, in reasonable detail, the event requiring the adjustment, the amount of
the adjustment, the method by which such adjustment was calculated and the
Purchase Price and number of shares purchasable hereunder after giving effect to
such adjustment, and shall cause a copy of such certificate to be mailed (by
first class mail, postage prepaid) to the Warrant Holder.
8. Rights As Stockholder. Prior to exercise of this Warrant, the Warrant
Holder shall not be entitled to any rights as a stockholder of the Company with
respect to the Warrant Shares, including (without limitation) the right to vote
such shares, receive dividends or other distributions thereon or be notified of
stockholder meetings. However, in the event of any taking by the Company of a
record of the holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend (other than a cash
dividend) or other distribution, any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right, the Company shall mail to each Warrant
Holder, at least 10 days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and the amount and character of such
dividend, distribution or right.
9. Limitation on Exercise. Notwithstanding anything to the contrary
contained herein, this Warrant may not be exercised by the Warrant Holder to the
extent that, after giving effect to Warrant Shares to be issued pursuant to a
Subscription Notice, the total number of shares of Common Stock deemed
beneficially owned by such holder (other than by virtue of ownership of this
Warrant, or ownership of other securities that have limitations on the holder's
rights to convert or exercise similar to the limitations set forth herein),
together with all shares of Common Stock deemed beneficially owned by the
holder's "affiliates" (as defined in Rule 144 of the Act) that would be
aggregated for purposes of determining whether a group under Section 13(d) of
the Securities Exchange Act of 1934 exists, would exceed 4.9% of the total
issued and outstanding shares of the Common Stock. The delivery of a
Subscription Notice by the Warrant Holder shall be deemed a representation by
such holder that it is in compliance with this paragraph.
The term "deemed beneficially owned" as used in this Warrant shall exclude
shares that might otherwise be deemed beneficially owned by reason of the
exercise of this Warrant.
10. Replacement Of Warrant. On receipt of evidence reasonably satisfactory
to the
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<PAGE>
Company of the loss, theft, destruction or mutilation of the Warrant and, in the
case of any such loss, theft or destruction of the Warrant, on delivery of an
indemnity agreement or security reasonably satisfactory in form and amount to
the Company or, in the case of any such mutilation, on surrender and
cancellation of such Warrant, the Company at its expense will execute and
deliver, in lieu thereof a new Warrant of like tenor.
11. Specific Enforcement; Consent to Jurisdiction; Choice of Law
(a) The Company and the Warrant Holder acknowledge and agree that
irreparable damage would occur in the event that any of the provisions
of this Warrant were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent or
cure breaches of the provisions of this Warrant and to enforce
specifically the terms and provisions hereof, this being in addition to
any other remedy to which either of them may be entitled by law or
equity.
(b) Each of the Company and the Warrant Holder (i) hereby irrevocably
submits to the exclusive jurisdiction of the state and federal court
located in New York County, New York for the purposes of any suit,
action or proceeding arising out of or relating to this Warrant and
(ii) hereby waives, and agrees not to assert in any such suit, action
or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is
brought in an inconvenient forum or that the venue of the suit, action
or proceeding is improper. Each of the Company and the Warrant Holder
consents to process being served in any such suit, action or proceeding
by mailing a copy thereof to such party at the address in effect for
notices to it under this Warrant and agrees that such service shall
constitute good and sufficient service of process and notice thereof.
Nothing in this paragraph shall affect or limit any right to serve
process in any other manner permitted by law.
(c) This Warrant shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York without
regard to such state's principles of conflict of laws.
12. Entire Agreement; Amendments. This Warrant, the Exhibits hereto and the
provisions contained in the Agreement or the Exchange Agreement and incorporated
into this Warrant and the Warrant Shares contain the entire understanding of the
parties with respect to the matters covered hereby and thereby and, except as
specifically set forth herein and therein, neither the Company nor the Warrant
Holder makes any representation, warranty, covenant or undertaking with respect
to such matters. No provision of this Agreement may be waived or amended other
than by a written instrument signed by the party against whom enforcement of any
such amendment or waiver is sought.
13. Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be effective (a) upon hand
delivery or delivery by telecopy or facsimile at the address or number
designated below (if delivered on a business day during normal business hours
-8-
<PAGE>
where such notice is to be received), or the first business day following such
delivery (if delivered other than on a business day during normal business hours
where such notice is to be received) or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever shall first occur.
The addresses for such communications shall be:
to the Company:
ACTV, Inc.
1270 Avenue of the Americas
New York, New York 10020
Attn: William Samuels
Fax: (212) 459-9458
with copies to:
Wesley C. Fredericks, Jr. Esq.
Gersten Savage Kaplowitz & Curtin
575 Lexington Avenue, 27th Floor
New York, New York 10022
Fax: (212) 980-5192
to the Warrant Holder:
Elliott Associates, L.P.
712 Fifth Avenue
New York, New York 10019
Attn: Richard Mansouri/Stephane Carnot
Tel. No.: (212) 974-6000
Fax No.: (212) 974-2092
and: Westgate International, L.P.
c/o Stonington Management Corporation
712 Fifth Avenue
New York, New York 10019
Attn: Richard Mansouri/Stephane Carnot
Tel. No.: (212) 506-2099
Fax No.: (212) 974-2093
with copies to:
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<PAGE>
Kleinberg, Kaplan, Wolff & Cohen, P.C.
551 Fifth Avenue
New York, New York 10176
Attn: Stephen M. Schultz, Esq.
Fax: (212) 986-8866
Either party hereto may from time to time change its address for notices under
this Section 13 by giving at least 10 days prior written notice of such changed
address to the other party hereto.
14. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant shall be construed and enforced in accordance with and
governed by laws of the State of New York. The headings in this Warrant are for
purposes of reference only, and shall not limit or otherwise affect any of the
terms hereof. The invalidity or unenforceability of any provision hereof shall
in no way affect the validity or enforceability of any other provision.
15. Assignment. This Warrant may be transferred or assigned, in whole
or in part, at any time and from time to time by the then Warrant Holder by
submitting this Warrant to the Company together with a duly executed Assignment
in substantially the form and substance of the Form of Assignment which
accompanies this Warrant and, upon the Company's receipt hereof, and in any
event, within three (3) business days thereafter, the Company shall issue a
Warrant to the Warrant Holder to evidence that portion of this Warrant, if any
as shall not have been so transferred or assigned.
[Signature Page Follows]
-10-
<PAGE>
Dated ACTV, INC.
----------------------------------------
By:
---------------------------
Name:
Title:
[CORPORATE SEAL]
Attest:
By:
--------------------
Its
[INVESTOR SIGNATURE BLOCK]
(Signature Page of [Name of Company] Common Stock Purchase Warrant)
-11-
<PAGE>
(SUBSCRIPTION NOTICE)
FORM OF WARRANT EXERCISE
(To be signed only on exercise of Warrant)
TO ___________
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise this Warrant
_____ (A) for, and to purchase thereunder, ___ shares of Common
Stock of ACTV, Inc., a Delaware corporation (the "Common
Stock"), and herewith, or by wire transfer, makes payment
of $__________ therefor; or
_____ (B) in a "cashless" or "net-issue exercise" for, and to
purchase thereunder , ______ shares of Common Stock, and
herewith makes payment therefor _________ with Surrendered
Warrant Shares.
The undersigned requests that the certificates for such shares be issued in
the name of, and
_____ (A) delivered to _________________, whose address is
_________________; or
_____ (B) electronically transmitted and credited to the account of
______________ , undersigned's prime broker
(Account No. ) with Depository Trust Company
through its Deposit Withdrawal Agent Commission system.
Dated: ___________
(Signature must conform to name of holder
as specified on the face of the Warrant)
(Address)
Tax Identification Number:
-12-
<PAGE>
------------------------------
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and transfers unto
______ the right represented by the within Warrant to purchase ___ shares of
Common Stock of ACTV, Inc., a Delaware corporation, to which the within Warrant
relates, and appoints ____ Attorney to transfer such right on the books of ACTV,
Inc., a Delaware corporation, with full power of substitution of premises.
Dated: ______________
(Signature must conform to name of holder
as specified on the face of the Warrant)
(Address)
Signed in the presence of:
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