<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D)OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
--------- ---------
COMMISSION FILE NUMBER 0-25244
TRANS WORLD GAMING CORP.
(Exact name of registrant as specified in its charter)
NEVADA 13-3738518
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE PENN PLAZA, NEW YORK, NEW YORK 10119
(Address of principal executive offices) (Zip code)
(212) 563-3355
(Issuer's telephone number including area code)
Check whether the Registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the Registrant was required to file such
reports) and (2) has been subject to such filing requirements for the past 90
days. YES X NO .
--- ---
Shares of the Registrant's Common Stock , par value $.001, outstanding as of
November 10, 1995: 2,544,286
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TRANS WORLD GAMING CORP.
FORM 10-QSB
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS PAGE
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) AS OF
MARCH 31, 1996. 3
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED) 4
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) 5
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 6
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION OR PLAN OF OPERATIONS 7 TO 9
ITEM 3 EXHIBITS
C.P. BAKER & CO. BRIDGE LOAN DOCUMENTS
PART II - OTHER INFORMATION
SIGNATURE 10
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PART 1 - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED STATEMENTS
TRANS WORLD GAMING CORP.
CONDENSED CONSOLIDATED BALANCE SHEET
( in thousands )
<TABLE>
<CAPTION>
ASSETS
March 31,
1996
--------
CURRENT ASSETS (unaudited)
<S> <C>
Cash $272
Accounts/Notes Receivable 242
Inventories 89
Other current assets 156
--------
Total current assets 759
--------
PROPERTY AND EQUIPMENT, net 1,369
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OTHER ASSETS
Investment at equity 75
Deferred facility cost - net 10,271
Goodwill - net 684
Other deferred costs - net 37
Deferred income tax 309
--------
Total other assets 11,376
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TOTAL ASSETS $13,504
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LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)
CURRENT LIABILITIES
Current portion of long-term debt $3,753
Accounts payable and accrued expenses 620
--------
Total current liabilities 4,373
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LONG-TERM DEBT, net of current portion 1,178
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STOCKHOLDERS' EQUITY
Capital stock 3
Additional paid-in-capital 8,600
Accumulated deficit (650)
--------
Total stockholders' equity 7,953
--------
TOTAL LIABILITIES/STOCKHOLDERS' EQUITY $13,504
--------
</TABLE>
See accompanying notes to the financial statements
3
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TRANS WORLD GAMING CORP.
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(In thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
1996 1995
------ -------
<S> <C> <C>
REVENUES $1,667 $1,508
COSTS AND EXPENSES
Cost of revenue 834 651
Administrative 629 265
Depreciation and amortization 194 148
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TOTAL COSTS AND EXPENSES 1,657 1,064
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EARNINGS FROM OPERATIONS 10 444
Interest Expense 157 137
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EARNINGS/(LOSS) BEFORE TAXES (147) 307
Provision for taxes 22 112
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NET EARNINGS/(LOSS) $(169) $195
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Earnings/(Loss) per share ($0.07) $0.08
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Common shares used in computing
earnings per share 2,544 2,544
</TABLE>
See accompanying notes to the financial statements
4
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TRANS WORLD GAMING CORP.
Condensed Consolidated Statement of Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities $218 $102
Cash flows used by investing activities (4) (330)
Cash flows used by financing activities
Repayment of Debt (383) (225)
Proceeds from Short Term Note 225 - 0 -
------ -----
Net Cash used by financing activities (158) (225)
Net increase/(decrease) in cash 56 (453)
Cash - beginning of period 216 812
------ -----
Cash - end of period $272 $359
------ -----
</TABLE>
See accompanying notes to the financial statements
5
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TRANS WORLD GAMING CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. UNAUDITED STATEMENTS.
The accompanying consolidated financial statements for the three months
ended March 31, 1996 and March 31, 1995 are unaudited and reflect all
adjustments of a normal and recurring nature which are, in the opinion
of management, necessary to a fair and not misleading statement of the
results for the interim periods presented. The statements have been
prepared in accordance with generally accepted accounting principles,
pursuant to the rules and regulations of the Securities and Exchange
Commission. Pursuant to such rules and regulations, certain financial
information and footnote disclosures normally included in such
financial statements have been condensed or omitted.
The consolidated financial statements should be read in conjunction
with the financial statements and notes thereto, together with
management's discussion and analysis of financial condition and results
of operations, contained in the Company's Annual Report on Form 10KSB/A
for the year ended December 31, 1995. The results of operations for
the three months ended March 31, 1996 are not necessarily indicative of
the results for the entire year ending December 31, 1996.
2. Earnings/(loss) per share were calculated based on 2,544,286 shares of
common stock outstanding for the three months ended March 31, 1996 and
1995 respectively.
3. The Company's financial statements have been prepared on the basis that
is a going concern, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business. The
Company has a substantial amount of its debt due June 30, 1996. (See
MD&A -- Liquidity and Capital Resources)
4. In October 1995, the Financial Accounting Standards Board issued SFAS
No. 123, "Accounting for Stock-Based Compensation", which encourages
companies to recognize compensation expense in the income statement
based on the fair value of the underlying common stock at the date the
awards are granted. However, it will permit continued accounting under
APB Option 25, "Accounting for Stock Issued to Employees", accompanied
by disclosure of the pro forma effects on net income and earnings per
share had the new accounting rules been applied. The statement is
effective for calendar year 1996. The Company has not yet determined
which method it will follow for measuring compensation cost attributed
to stock options or the impact of the new standard on its consolidated
financial statements.
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ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
REVENUES. Trans World Gaming Corp.'s ("TWG" or the "Company") revenues
for the three months ended March 31, 1996 increased 11% over the
revenues for the three months ended March 31, 1995 to $1,667,000.
Video poker revenues for the first quarter totaled $990,000
representing a 6% increase over first quarter revenues in the prior
fiscal year. The revenue increase was due primarily to the Toledo
Palace video poker parlor located in DeRidder, LA which opened on
October 19, 1995. Video poker revenues from The Company's other video
poker parlor, the Gold Nugget located in Lafayette, LA, remained
virtually unchanged from $926,000 in 1995 to $924,000 in 1996.
Revenues from fuel, food and beverage and convenience store operations
at the Woodlands Truck Plaza located in DeRidder, LA in the first
quarter of 1996 increased 16% to $677,000 over the revenues for the
first quarter 1995.
The Company believes that the revenues at the Gold Nugget will continue
to be significantly higher than the average video poker parlor at truck
stops in Louisiana. Revenues at the Toledo Palace have increased
steadily from an average daily revenue per device of $50 in the fourth
quarter 1995 to an average of $70 in the first quarter 1996. The
Company continues to monitor the results at the Toledo Palace to
determine how many additional devices, if any at all, will be added to
the video parlor. The Toledo Palace currently has fifteen devices
installed and is licensed for up to fifty.
COST OF REVENUE. Cost of revenue as a percentage of revenues increased
to 50% in the first quarter 1996 from 43% in the first quarter 1995
with 3% or approximately one-half of the increase due to costs
associated with the operation of the Toledo Palace.
ADMINISTRATIVE. Administrative expenses in the first quarter 1996 were
$629,000 which is an increase of $364,000 over the first quarter 1995.
This increase is comprised of the following expense items: Severance
costs of $38,000 in connection with the resignation of the Company's
Chief Executive Officer in March, 1996; financing, legal and accounting
costs of approximately $175,000 in connection with a canceled bridge
loan and secondary offering of securities in March 1996; consulting
fees covering potential acquisitions in the Caribbean and on Native
American lands; and fees of approximately $23,000 and expenses of
approximately $38,000 in connection with the successful completion of a
$225,000 bridge accounted for the increase. Notwithstanding the
expenses expected to be incurred in connection with the efforts to
refinance the existing indebtedness, the Company believes, although
there can be no assurances, that administrative costs will be lower in
the second quarter 1996 than they were in the first quarter 1996.
INTEREST EXPENSE. Interest expense increased by $20,000 in the first
quarter 1996 to $157,000 over the first quarter 1995. The increase is
due primarily to a contractual increase in the interest rate from 12%
to 15% per annum in July 1995 due on a $2.2 million note payable to
Chrysolith, LLC in connection with the 1994 acquisition of the Gold
Nugget.
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QUARTERLY RESULTS. The Company's earnings before interest, taxes,
depreciation and amortization ("EBITDA") was $.08 per common share
outstanding after absorbing significant financing and severance costs
as compared to $.23 per common share in 1995.
Following the general election in Louisiana in November, 1995, many
politicians were elected, including Governor Foster, on anti-gambling
platforms. The Governor of Louisiana called a special legislative
session on March 25, 1996 to determine, among other things, the future
of gaming in the state. Proposals included a state-wide referendum to
abolish all gaming or a local option which would decide the future of
gaming parish by parish. The uncertainties surrounding the legislative
session made it difficult to raise additional capital and was reflected
in the Company's stock price ($1 1/16 on 4/23/96).
At the close of the session on April 19, 1996, the state-wide
referendum was defeated and a local option bill was passed and sent to
the Governor for signature. At the November 1996 general election,
residents of each of the parishes must decide whether to continue video
poker and if applicable, riverboats and land based casinos. In the
event that video poker is eliminated, both operations will have until
June 1999 to close down. The Company further believes that
restructuring its current debt, although there can be no assurance, is
now possible since there is apparently no immediate risk of the
Company's video poker operations closing before June 1999.
LIQUIDITY AND CAPITAL RESOURCES
The level of cash increased by $56,000 for the quarter ended March 31,
1996 due primarily to the proceeds of bridge financing of $225,000
completed on March 25, 1996.
On January 19 and amended on January 30, 1996, the Company and
Chrysolith reached agreement to extend the maturity date of the
Chrysolith Note and other financial obligations owed to Chrysolith to
June 30, 1996 in exchange for the Company's agreement to pay Chrysolith
$15,600 per week in principal payments during the extension period. If
the Company fails to repay the Chrysolith Note by June 30, 1996, or the
Prime Note quarterly payment of $292,000 due on June 21, 1996, the
Company could lose its interest in the profits at the Gold Nugget and
lose its leasehold interest under the Prime Sublease, either of which
would materially and adversely affect the financial condition and
business of the Company and would cause the Company to immediately and
substantially limit or cease its business operations, and likely would
require the Company to seek protection under the federal bankruptcy
laws.
As of March 31, 1996, following the completion of a bridge financing in
the form of secured loans in the aggregate principal amount of
$225,000, the Company's other outstanding indebtedness includes
approximately a principal amount of $2,208,000 under the Chrysolith
Note which is due in its entirety on June 30, 1996, and a note payable
to Prime Properties in the outstanding principal amount of
approximately $1,856,000 (which was incurred in connection with the
Gold Nugget transaction), with principal and interest at 10% per annum
payable quarterly through December 21, 1997. The obligation due Prime
Properties is evidenced by a three year promissory note in the original
principal amount of $3,000,000, which is secured by the Company's
sublease with Prime Properties
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for the Gold Nugget premises (the "Prime Note"). With respect to the
Woodlands Plaza transaction, the principal amount of the Company's
remaining indebtedness is $435,000 payable on December 30, 1996 with
interest payable monthly at 10% (the "Note"). The Company must also
pay monthly interest payments under the Monarch Note which has an
outstanding principal balance of $75,000. The Company will be
dependent on cash on hand and cash flow from operations (assuming
continued operation of both the Gold Nugget and the Toledo Palace) and
will need a successful new financing that would raise approximately
$3,500,000 in order to pay the scheduled debt service on the Prime
Note, the Chrysolith Note, the Monarch Note and the Note, as well as to
meet anticipated and unanticipated cash requirements. If cash on hand
and cash flow from operations are insufficient, or if the Company is
not able to raise additional equity financing or restructure its
existing indebtedness to meet the debt service on these obligations as
they come due in June 1996, and to meet other cash requirements, the
Company would likely need to seek protection under the federal
bankruptcy laws. There can be no assurance that the Company will be
successful in obtaining additional financing or that such financing, If
obtained, will be on terms favorable to the Company. Furthermore, if
such financing involves the sale of Company's equity securities, there
would be further significant dilution to existing shareholders. If the
Company defaults in its obligations under the Prime Note, the
Chrysolith Note, or the Monarch Note, it would lose all of its
interests in the Gold Nugget which would materially and adversely
effect the financial condition and business of the Company.
On March 25, 1996, the Company completed bridge financing (the
"Bridge") in the form of secured loans in the aggregate principal
amount of $225,000, which was increased to $250,000 on April 29, 1996,
bearing interest at the rate of 10% per annum payable at maturity
scheduled for August 19, 1996. The Company agreed to repay the
principal amount in twenty weekly installments of $10,000 each starting
April 1, 1996 with the balance due at maturity. The net proceeds of
the Bridge, approximately $225,000, were used to pay the scheduled
principal and interest payment to Prime Properties of $292,000 due on
March 21, 1996. In connection with the Bridge, the Company issued to
the lenders warrants to purchase 299,925 shares of the Company's common
stock at an exercise price of $.01 per share. As compensation to the
placement agent, the Company has agreed to pay a $25,000 cash
commission and issue warrants to purchase 30,000 shares of the
Company's common stock at an exercise price of $.01 per share. All
these warrants carry demand registration rights commencing in July
1996.
Since the Company's cash flow may be insufficent to cover its monthly
debt service, excluding the quarterly Prime Properties payment, of
approximately $130,500, the Company is currently seeking a minimum of
$200,000 in additional short term financing in order to meet its cash
requirements for the next two months. The Company is attempting to
place a first mortgage on its Woodlands Property, secure a working
capital line of credit or raise additional capital on terms similar
to the Bridge recently completed. There can be no assurances that the
additional funding will be available at terms favorable to the Company
or at all.
9
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SIGNATURE:
TRANS WORLD GAMING CORP.
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 thereunto duly authorized.
TRANS WORLD GAMING CORP.
/s/ Dominick J. Valenzano
May 10, 1995 ------------------------------
Dominick J. Valenzano
Chief Financial Officer & Treasurer
10
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SECURED INSTALLMENT NOTE
$225,000.00 NEW YORK, NEW YORK
MARCH 26, 1996
FOR VALUE RECEIVED, the undersigned makers, endorsers and guarantors, in
solido, jointly and severally promise to pay to the order of C.P. BAKER &
CO., LTD. (as agent for the parties (or their transferees) set forth on
Exhibit A to the Subscription Agreement of even date herewith and attached
hereto as Annex I) with offices at 108 Charles Street, Boston, Massachusetts,
02114, the principal sum of TWO HUNDRED TWENTY-FIVE THOUSAND AND NO/100
($225,000.00) DOLLARS together with interest on the unpaid principal balance
thereof, until paid in full, at the rate per annum of 10%, compounded
monthly, calculated on the basis of a 360-day year and actual days elapsed.
This note shall be payable in 20 weekly installments of principal in the
amount of $1,0000.00 each and the final installment, which shall be for the
remaining balance of unpaid principal and accrued interest. The first
installment shall be due and payable on Monday the 1st day of April, 1996,
and the remaining installments shall be due and payable on the same day of
each succeeding week thereafter. The final installment (including all
interest) shall be due and payable on August 19, 1996, the maturity date of
the borrowings evidenced hereby. All payments hereunder shall be made in
legal tender of the United States of America at the address set forth above.
This note shall be secured by the collateral described in that certain
Consumer Security Agreement of even date herewith and attached hereto as
Annex II. This note may be prepaid in whole or in part at any time without
penalty or fee. Any partial pre-payment shall not postpone the due date of
any subsequent installments or change the amount of such installments or the
maturity date of this note.
Failure to pay any installment or the final installment of this note
or interest thereon when due shall, at the option of the holder of this note,
mature and accelerate this note in its entirety, and all the remaining
installments shall immediately become due and payable together with interest
thereon. In addition, the following shall, at the option of the holder of this
note, mature and accelerate this note in its entirety, and all the remaining
installments shall immediately become due and payable together with interest
thereon:
i) Loss by Trans World Gaming Corp. or any subsidiary of any
gambling license or the legal right to operate any gaming
establishment including, without limitation,
<PAGE>
those of the Gold Nugget or DeRidder locations;
ii) Consolidated operating results for Trans World Gaming Corp.
fall below the projections delivered to the Subscribers in
the Debt Securities (as such terms are defined in the
Subscription Agreement) at the time of purchase for two or
more fiscal quarters of Trans World Gaming Corp.;
iii) Indictment of any officer or key employee of Trans World
Gaming Corp. or any of its subsidiaries by any governmental
authority;
iv) Fraud by an officer or key employee of the Trans World
Gaming Corp. or any of its subsidiaries;
v) The commencement by Trans World Gaming Corp. or any
subsidiary of a case under any Chapter of the Bankruptcy
Code (Title 11 of the United States Code), as now or
hereafter in effect, or the entering by any of such persons
of any equivalent or similar action by the filing of a
petition or otherwise under any federal or state law in
effect at the time relating to bankruptcy or insolvency;
vi) The filing of a petition against Trans World Gaming Corp. or
any subsidiary under any Chapter of the Bankruptcy Code
(Title 11 of the United States Code), as now or hereafter in
effect, or the filing of a petition seeking any equivalent
or similar relief, against any of such persons under any
other federal or state law in effect at the time relating to
bankruptcy or insolvency;
vii) The breach by Trans World Gaming Corp. or any subsidiary of
any term, representation, warranty or covenant contained
herein, in the Subscription Agreement, or in any document
securing the indebtedness evidenced hereby including,
without limitation, the Consumer Security Agreement; or
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viii) Any event which may, in the judgment of C.P. Baker & Co.,
Ltd. have a material adverse effect on the condition,
operations, prospects or properties (financial or otherwise)
of Trans World Gaming Corp. or any of its subsidiaries.
The undersigned hereby severally waive presentment of payment, demand,
protest, dishonor, notice of protest and of dishonor, and all pleas of division
and discussion, and consent that time of payment may be extended without notice
or previous consent of any of them. If suit for collection is instituted, or
this note is placed in the hands of an attorney for collection, the undersigned
agree pay the fees of the attorney who may be employed for the purpose, which
fees are hereby fixed at twenty-five (25%) percent of the amount due, sought to
be collected, preserved or enforced.
At the maturity of this note, or when otherwise due as above provided,
any money, deposit or otherwise, to the credit of any maker, endorser, or other
person liable therefor, on the books of the holder of this note, or that may be
due at any time before full and final payment hereof, or any other property that
may now or at any time hereafter be given or left in possession of the holder,
are hereby pledged as collateral security of the payment of this indebtedness
and may be applied at any time by the holder in whole or in part, to the payment
of this indebtedness. At the maturity of this note or when otherwise due as
above provided, any money on deposit or otherwise to the credit of the maker,
any endorser or any person liable therefor on the books of the holder or in its
possession shall at once stand applied to the payment of this note, unless it be
otherwise paid.
Upon the occurrence of any event of default hereunder, C.P. Baker &
Co., Ltd. may exercise any right, power, or remedy permitted by a law or
contract or as stated herein, and C.P. Baker & Co., Ltd. shall have, in
particular, without limiting the generality of the foregoing, the right,
exercisable by notice mailed or delivered to the undersigned, to declare the
entire unpaid principal amount of this note and all accrued but unpaid interest
hereon to be, and such unpaid principal amount and interest shall thereupon
become, forthwith due and payable, without any presentment for payment, demand,
protest, dishonor, notice of protest, notice of dishonor or other notice of any
kind, all of which are hereby expressly waived. Upon the occurrence and during
the continuance of any event of default hereunder, interest shall accrue on this
note at a rate of 8% per
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annum in excess of the rate stated in the first paragraph of this note.
No course of dealing on the part of C.P. Baker & Co., Ltd., nor any
delay or failure on the part of C.P. Baker & Co., Ltd. to exercise any right,
shall operate as a waiver of such right or otherwise prejudice C.P. Baker & Co.,
Ltd.'s rights, powers and remedies. The rights, powers and remedies of C.P.
Baker & Co., Ltd., permitted by law or contract or as stated herein, shall be
cumulative and concurrent and may be exercised or otherwise pursued by C.P.
Baker & Co., Ltd. singly, successively or together against the undersigned at
the sole discretion of C.P. Baker & Co., Ltd. The failure to exercise any such
right, power or remedy shall in no event be construed as a waiver or release of
the same. C.P. Baker & Co., Ltd. shall not by any act or omission be deemed to
waive any of C.P. Baker & Co., Ltd.'s rights, powers or remedies hereunder
unless such waiver is in writing and signed by C.P. Baker & Co., Ltd., and then
only to the extent specifically set forth therein. A waiver of one event shall
not be construed as continuing or as a bar to or waiver of such right, power or
remedy on any subsequent event.
This note and all of the provisions hereof shall be binding upon the
undersigned and their respective successors and permitted assigns and shall
inure to the benefit of C.P. Baker & Co., Ltd. and its successors and assigns.
C.P. Baker & Co., Ltd. may assign, transfer or dispose of all or any portion of
its rights with respect to this note to any other person without the consent of
undersigned. The undersigned shall not, however, assign, transfer or dispose of
all or any portion of its rights or obligations herein or hereunder without the
prior written consent of C.P. Baker & Co., Ltd.
This note shall be governed by and construed in accordance with the
laws of Louisiana, without giving effect to the conflict of laws provisions
thereof.
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The undersigned specifically declare, represent and warrant that the
loan evidenced by this note has been made for business and commercial purposes
and that the proceeds of this loan will be used only for such purposes.
ADDRESS: TRANS WORLD GAMING CORP.
_________________________ By:______________________________
_________________________ Name:____________________________
Title:___________________________
TRANS WORLD GAMING OF LOUISIANA,
INC.
By:______________________________
Name:____________________________
Title:___________________________
5
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Annex I
See attached.
6
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NO PUBLIC OFFERING OF THIS WARRANT OR THE SECURITIES
UNDERLYING THIS WARRANT MAY BE MADE UNTIL
THE EFFECTIVENESS OF A REGISTRATION STATEMENT
OR OF A POST-EFFECTIVE AMENDMENT THERETO
UNDER THE SECURITIES ACT OF 1933 (THE "ACT"),
COVERING THIS WARRANT OR THE SECURITIES UNDERLYING
THIS WARRANT, OR UNTIL THE COMPANY IS IN RECEIPT OF AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
STATING THAT SUCH PUBLIC OFFERING IS EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT. TRANSFER OF
THIS WARRANT IS RESTRICTED UNDER PARAGRAPH 2 BELOW.
WARRANT TO PURCHASE
COMMON STOCK
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 26, 1996
THIS CERTIFIES that Adrienne M. Baker (together with her assigns, the
"Holder") is entitled to purchase from Trans World Gaming Corp., a Nevada
corporation ("Company") up to 13,330 shares of the Company's common stock, par
value $.001 per share
<PAGE>
(the "Common Stock"), at a purchase price of $.01 per share of Common Stock,
subject to adjustment as hereafter provided.
This Warrant is issued pursuant to a Subscription Agreement dated
March 25, 1996 (the Subscription Agreement"), among the Company, Trans World
Gaming of Louisiana, Inc., the Holder and certain other subscribers.
1. EXERCISE OF THE WARRANT.
The rights represented by this Warrant may be exercised at any time on
or before 5:00 p.m., New York time, on March 26, 2002, in whole or in part, by
(i) the surrender of this Warrant (with the purchase form at the end of hereof
properly executed) at the principal executive office of the Company (or such
other office or agency of the Company as it may designate by notice in writing
to the Holder at the address of the Holder appearing on the books of the
Company); (ii) payment to the Company of the Exercise Price then in effect for
the number of shares of Common Stock specified in the above-mentioned purchase
form together with applicable stock transfer taxes, if any; and (iii) delivery
to the Company of a duly executed agreement signed by the person(s) designated
in the purchase form to the effect that such person(s) agree(s) to be bound by
the provisions of Paragraph 5 and subparagraphs (b), (c) and (d) of Paragraph 6
hereof. This Warrant shall be deemed to have been exercised, in whole or in
part to the extent specified, immediately prior to the close of business on the
date this Warrant is surrendered and payment is made in accordance with the
foregoing provisions of this Paragraph 1, and the person or persons in whose
name or names the certificates for the Securities shall be issuable upon such
exercise shall become the Holder or Holders of record of such Common Stock at
that time and date. The Common Stock so purchased shall be delivered
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to the Holder within a reasonable time, not exceeding ten (10) business days,
after the rights represented by this Warrant shall have been so exercised.
2. TRANSFER.
This Warrant may be assigned in whole or in part by the Holder by
(i) completing and executing the form of assignment at the end hereof and
(ii) surrendering this Warrant with such duly completed and executed assignment
form for cancellation, accompanied by funds sufficient to pay any transfer tax,
at the office or agency of the Company referred to in Paragraph 1 hereof;
whereupon the Company shall issue, in the name or names specified by the Holder
(including the Holder) a new Warrant or Warrants of like tenor and representing
in the aggregate rights to purchase the same number of shares of Common Stock as
are then purchasable hereunder.
3. COVENANTS OF THE COMPANY.
(a) The Company covenants and agrees that all Common Stock and
Common Stock issuable upon exercise of this Warrant will, upon issuance, be duly
and validly issued, fully paid and nonassessable and no personal liability will
attach to the holder thereof by reason of being such a holder, other than as set
forth herein.
(b) The Company covenant and agrees that during the period
within which this Warrant may be exercised, the Company will at all times have
authorized and reserved a sufficient number of shares of Common Stock to provide
for the exercise of this Warrant.
(c) The Company covenants and agrees that for so long as the
Common Stock shall be outstanding, the Company shall use its best efforts to
cause all shares of Common
3
<PAGE>
Stock issuable upon the exercise of the Warrant to be listed on or quoted by
The NASDAQ National Market System or on the NASDAQ Stock Market and the
Boston Stock Exchange.
4. NO RIGHTS OF STOCKHOLDER.
This Warrant shall not entitle the Holder to any voting rights or
other rights as a stockholder of the Company, either at law or in equity, and
the rights of the Holder are limited to those expressed in this Warrant and are
not enforceable against the Company except to the extent set forth herein.
5. REGISTRATION.
(a) From July 1, 1996 until February 15, 1997, upon the written
request of the Holder, and on a one-time basis, the Company shall file and use
its best reasonable efforts to cause to be declared effective by the Securities
and Exchange Commission a registration statement or post-effective amendment
thereto under the Act including such information as may be required to permit a
public offering of this Warrant and all the Warrants issued pursuant to the
Subscription Agreement, and any of the Common Stock issuable under those
Warrants (the "Registerable Securities"). The Company shall supply prospectuses
in order to facilitate the public sale or other disposition of the Registerable
Securities, use its best efforts to register and qualify any of the Registerable
Securities for sale in such states as such Holder reasonably designates and do
any and all other acts and things which may be necessary to enable such Holder
to consummate the public sale of the Registerable Securities, and furnish
indemnification in the manner provided in Paragraph 6 hereof. The Holder shall
furnish information reasonably requested by the Company in accordance with such
post-effective
4
<PAGE>
amendments or registration statements, including its intentions with respect
thereto, and shall furnish indemnification as set forth in Paragraph 6.
(b) The Company will maintain such registration statement or
post-effective amendment current under the Act for a period of at least twelve
(12) months from the effective date thereof.
(c) The Company shall bear the entire cost and expense of any
registration of securities under Paragraph 5 hereof. Notwithstanding the
foregoing, any Holder whose Registerable Securities are included in any such
registration statement pursuant to this Paragraph 5 shall, however, bear the
fees of any counsel retained by him and any transfer taxes or underwriting
discounts or commissions applicable to the Registerable Securities sold by him
pursuant thereto.
6. INDEMNIFICATION.
(a) Whenever pursuant to Paragraph 5 a registration statement
relating to any Registerable Securities is filed under the Act, amended or
supplemented, the Company will indemnify and hold harmless each Holder of the
Registerable Securities covered by such registration statement, amendment or
supplement (such holder hereinafter referred to as the "Distributing Holder"),
each person, if any, who controls (within the meaning of the Act) the
Distributing Holder, and each officer, employee, partner or agent of the
Distributing Holder, if the Distributing Holder is a broker or dealer, and each
underwriter (within the meaning of the Act) of such securities and each person,
if any, who controls (within the meaning of the Act) any such underwriter and
each officer, employee, agent or partner of such underwriter against any losses,
claims, damages or liabilities, joint or several, to which the Distributing
Holder, any
5
<PAGE>
such underwriter or any other person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement or alleged untrue statement of any material fact
contained in any such registration statement or any preliminary prospectus or
final prospectus constituting a part thereof or any amendment or supplement
thereto, or arise out of or are based upon the omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and will reimburse the Distributing Holder
and each such underwriter or such other person for any legal or other
expenses reasonably incurred by the Distributing Holder, or underwriter or
such other person, in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the Company
will not be liable in any such case (i) to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in said
registration statement, said preliminary prospectus, said final prospectus or
said amendment or supplement in reliance upon and in conformity with written
information furnished by such Distributing Holder, any other Distributing
Holder or any such underwriter for use in the preparation thereof, and (ii)
such losses, claims, damages or liabilities arise out of or are based upon
any actual or alleged untrue statement or omission made in or from any
preliminary prospectus, but corrected in the final prospectus, as amended or
supplemented.
(b) Whenever pursuant to Paragraph 5 a registration statement
relating to the Registerable Securities is filed under the Act, or is amended
or supplemented, the Distributing Holder will indemnify and hold harmless the
Company, each of its directors, each
6
<PAGE>
of its officers who have signed said registration statement and such
amendments and supplements thereto, and each person, if any, who controls the
Company (within the meaning of the Act) against any losses, claims, damages
or liabilities to which the Company or any such director, officer or
controlling person may become subject under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue or alleged untrue statement of any
material fact contained in any such registration statement or any preliminary
prospectus or final prospectus constituting a part thereof, or any amendment
or supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent that such untrue statement or
alleged untrue statement or omission was made in said registration statement,
said preliminary prospectus, said final prospectus or said amendment or
supplement in reliance upon and in conformity with written information
furnished by such Distributing Holder for use in the preparation thereof; and
will reimburse the Company or any such director, officer or controlling
person for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action.
(c) Promptly after receipt by an indemnified party under this
Paragraph 6 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against any
indemnifying party, give the indemnifying party notice of the commencement
thereof; but the omission to so notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party
otherwise than under this Paragraph 6.
7
<PAGE>
(d) In case any such action is brought against any
indemnified party, and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to
the extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnified
part to such indemnified party of its election to so assume the defense
thereof, the indemnifying party will not be liable to such indemnified party
under this Paragraph 6 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation.
7. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SECURITIES.
(a) The Warrant Price shall be subject to adjustment from time
to time as follows:
(i) In case the Company shall at any time after the date
hereof pay a dividend in shares of Common Stock or make a distribution in shares
of Common Stock, then upon such dividend or distribution the Warrant Price in
effect immediately prior to such dividend or distribution shall forthwith be
reduced to a price determined by dividing:
a. an amount equal to the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution
multiplied by the Warrant Price in effect immediately prior to such dividend or
distribution, by
b. the total number of shares of Common Stock
outstanding immediately after such issuance or sale.
8
<PAGE>
For the purposes of any computation to be made in accordance
with the provisions of this clause (i), the following provisions shall be
applicable: Common Stock issuable by way of dividend or other distribution on
any stock of the Company shall be deemed to have been issued immediately after
the opening of business on the date following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution.
(ii) In case the Company shall at any time subdivide or
combine the outstanding Common Stock, the Warrant Price shall forthwith be
proportionately decreased in the case of subdivision or increased in the case of
combination to the nearest one cent. Any such adjustment shall become effective
at the time such subdivision or combination shall become effective.
(iii) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which the Warrant Price has been
adjusted as herein provided, the Company shall:
a. Deliver to the Holder a certificate signed by the
President or Vice President of the Company and by the Treasurer or Assistant
Treasurer or the Secretary or an Assistant Secretary of the Company, showing in
detail the facts requiring all such adjustments occurring during such period and
the Warrant Price after each such adjustment.
b. Notwithstanding anything contained herein to the
contrary, no adjustment of the Warrant Price shall be made if the amount of such
adjustment shall be less than $.01, but in such case any adjustment that would
otherwise be required then to be made shall be carried forward and shall be made
at the time and together with the next
9
<PAGE>
subsequent adjustment which, together with any adjustment so carried forward,
shall amount to not less than $.01.
(b) In the event that the number of outstanding shares of Common
Stock is increased by a stock dividend payable in Common Stock or by a
subdivision of the outstanding Common Stock, then, from and after the time at
which the adjusted Warrant Price becomes effective pursuant to Subsection (b) of
this Section by reason of such dividend or subdivision, the number of shares of
Common Stock issuable upon the exercise of each Warrant shall be increased in
proportion to such increase in outstanding shares. In the event that the number
of shares of Common Stock outstanding is decreased by a combination of the
outstanding Common Stock, then, from and after the time at which the adjusted
Warrant Price becomes effective pursuant to Subsection (b) of this Section by
reason of such combination, the number of shares of Common Stock issuable upon
the exercise of each Warrant shall be decreased in proportion to such decrease
in the outstanding shares of Common Stock.
(c) In case of any reorganization or reclassification of the
outstanding Common Stock (other than a change in par value, or from par value
to no par value, or as a result of a subdivision or combination), or in case
of any consolidation of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger in which the
Company is the continuing corporation and which does not result in any
reclassification of the outstanding Common Stock), or in case of any sale or
conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety, the holder of each Warrant then
outstanding shall thereafter have the right to purchase the kind and amount
of shares of Common Stock and other securities and property receivable upon
such
10
<PAGE>
reorganization, reclassification, consolidation, merger, sale or conveyance
by a holder of the number of shares of Common Stock which the holder of such
Warrant shall then be entitled to purchase; such adjustments shall apply with
respect to all such changes occurring between the date of this Warrant
Agreement and the date of exercise of such Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrants, make any
distribution of its assets to holders of its Common Stock as a liquidating or
a partial liquidating dividend, then the holder of Warrants who exercises his
Warrants after the record date for the determination of those holders of
Common Stock entitled to such distribution of assets as a liquidating or
partial liquidating dividend shall be entitled to receive for the Warrant
Price per Warrant, in addition to each share of Common Stock, the amount of
such distribution (or, at the option of the Company, a sum equal to the value
of any such assets at the time of such distribution as determined by the
Board of Directors of the Company in good faith), which would have been
payable to such holder had he been the holder of record of the Common Stock
receivable upon exercise of his Warrant on the record date for the
determination of those entitled to such distribution.
(e) In case of the dissolution, liquidation or winding-up of
the Company, all rights under the Warrants shall terminate on a date fixed by
the Company, such date to be no earlier than ten (10) days prior to the
effectiveness of such dissolution, liquidation or winding-up and not later
than five (5) days prior to such effectiveness. Notice of such termination
of purchase rights shall be given to the last registered holder of this
Warrant, as the same shall appear on the books of the Company, by registered
mail at least thirty (30) days prior to such termination date.
11
<PAGE>
(f) In case the Company shall, at any time prior to the
expiration of this Warrant and prior to the exercise thereof, offer to the
holders of its Common Stock any rights to subscribe for additional shares of any
class of the Company, then the Company shall give written notice thereof to the
last registered holder thereof not less than thirty (30) days prior to the date
on which the books of the Company are closed or a record date is fixed for the
determination of the stockholders entitled to such subscription rights. Such
notice shall specify the date as to which the books shall be closed or record
date fixed with respect to such offer of subscription and the right of the
holder thereof to participate in such offer of subscription shall terminate if
this Warrant shall not be exercised on or before the date of such closing of the
books or such record date.
(g) Without limiting the foregoing, the Company agrees to make
such additional adjustments to the number of shares to be issued hereunder
(whether required by the issuance of additional Common Stock or otherwise) as
may from time to time be necessary to ensure that the Holder will upon exercise
of this Warrant receive a percentage of the Total Equity of the Company equal to
the percentage of the Total Equity of the Company held by the Holder as of the
time of the original issuance of this Warrant. "Total Equity" shall mean the
sum of (i) the number of shares of Common Stock of the Company outstanding on
the date of determination of Total Equity is made and (ii) the number of shares
of Common Stock issuable upon exercise of options or warrants (not including
this Warrant) to purchase shares of Common Stock or securities convertible into
Common Stock or securities or evidences of indebtedness convertible directly or
indirectly into or exchangeable for Common Stock outstanding on the date the
determination of Total Equity is made.
12
<PAGE>
(h) Any adjustment pursuant to the aforesaid provision shall be
made on the basis of the number of shares of Common Stock which the holder
thereof would have been entitled to acquire by the exercise of the Warrant
immediately prior to the event giving rise to such adjustment.
(i) Irrespective of any adjustments in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or thereafter issued may continue to express the same price and
number and kind of shares as are stated in this Warrant.
(j) The Company may retain a firm of independent public
accountants (who may be any such firm regularly employed by the Company) to make
any computation required under this Section.
(k) If at any time, as a result of an adjustment made pursuant
to this Paragraph 7, the Holder of this Warrant shall become entitled to
purchase any securities other than shares of Common Stock, thereafter the number
of such securities so purchasable upon exercise of each Warrant and the Warrant
Price for such shares shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Common Stock.
8. FRACTIONAL SHARES.
The Company shall not be required to issue fractions of shares of
Common Shares on the exercise of this Warrant; provided, however, that if a
Holder exercises all the Warrants held of record by such Holder, the fractional
interests shall be eliminated by rounding any fraction up to the nearest whole
number of shares.
13
<PAGE>
9. MISCELLANEOUS.
(a) This Warrant shall be governed by and in accordance with the
laws of the State of New York.
(b) All notices, requests, consents and other communications
hereunder shall be made in writing and shall be deemed to have been duly made
when delivered, or mailed by registered or certified mail, return receipt
requested: (i) if to a Holder, to the address of such Holder as shown on the
books of the Company, or (ii) if to the Company, One Penn Plaza, New York, NY
10119.
(c) All the covenants and provisions of this Warrant by or for
the benefit of the Company and the Holders inure to the benefit of their
respective successors and assigns hereunder.
(d) Nothing in this Warrant shall be construed to give to any
person or corporation other than the Company and the registered Holder or
Holders, any legal or equitable right, for the sole and exclusive benefit of the
Company and the Holder or Holders.
IN WITNESS WHEREOF, Trans World Gaming Corp. has caused this Warrant
to be signed by its duly authorized officer and this Warrant to be dated
March , 1996.
TRANS WORLD GAMING CORP.
By:___________________________
Stanley Kohlenberg
President and
Chief Executive Officer
14
<PAGE>
PURCHASE FORM
(To be signed only upon exercise of the Warrant)
The undersigned, the Holder of the foregoing Warrant, hereby
irrevocably elects to exercise the purchase rights represented by such Warrant
for, and to purchase thereunder, _____ shares of Common Stock of Trans World
Gaming Corp. and herewith makes payment of $__________ thereof, and requests
that the certificates for Common Stock be issued in the name(s) of, and
delivered to ____________________________ whose address(es) is (are)
_____________________________________________________.
Dated: _______________________
______________________________
______________________________
<PAGE>
TRANSFER FORM
(To be signed only upon transfer of the Warrant)
For value received, the undersigned hereby sells, assigns, and
transfers unto ________________________ the right to purchase shares of Common
Stock of Trans World Gaming Corp. represented by the foregoing Warrant to the
extent of _______ shares of Common Stock and appoints _________________,
attorney to transfer such rights on the books of _______________________, with
full power of substitution in the premises.
Dated: ______________________
______________________________
(name of holder)
______________________________
Address
______________________________
______________________________
In the presence of:
______________________________
______________________________
<PAGE>
NO PUBLIC OFFERING OF THIS WARRANT OR THE SECURITIES
UNDERLYING THIS WARRANT MAY BE MADE UNTIL
THE EFFECTIVENESS OF A REGISTRATION STATEMENT
OR OF A POST-EFFECTIVE AMENDMENT THERETO
UNDER THE SECURITIES ACT OF 1933 (THE "ACT"),
COVERING THIS WARRANT OR THE SECURITIES UNDERLYING
THIS WARRANT, OR UNTIL THE COMPANY IS IN RECEIPT OF AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
STATING THAT SUCH PUBLIC OFFERING IS EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT. TRANSFER OF
THIS WARRANT IS RESTRICTED UNDER PARAGRAPH 2 BELOW.
WARRANT TO PURCHASE
COMMON STOCK
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 26, 1996
THIS CERTIFIES that Christopher P. Baker (together with his assigns,
the "Holder") is entitled to purchase from Trans World Gaming Corp., a Nevada
corporation ("Company") up to 119,970 shares of the Company's common stock, par
value $.001 per share
<PAGE>
(the "Common Stock"), at a purchase price of $.01 per share of Common Stock,
subject to adjustment as hereafter provided.
This Warrant is issued pursuant to a Subscription Agreement dated
March 25, 1996 (the Subscription Agreement"), among the Company, Trans World
Gaming of Louisiana, Inc., the Holder and certain other subscribers.
1. EXERCISE OF THE WARRANT.
The rights represented by this Warrant may be exercised at any time on
or before 5:00 p.m., New York time, on March 26, 2002, in whole or in part, by
(i) the surrender of this Warrant (with the purchase form at the end of hereof
properly executed) at the principal executive office of the Company (or such
other office or agency of the Company as it may designate by notice in writing
to the Holder at the address of the Holder appearing on the books of the
Company); (ii) payment to the Company of the Exercise Price then in effect for
the number of shares of Common Stock specified in the above-mentioned purchase
form together with applicable stock transfer taxes, if any; and (iii) delivery
to the Company of a duly executed agreement signed by the person(s) designated
in the purchase form to the effect that such person(s) agree(s) to be bound by
the provisions of Paragraph 5 and subparagraphs (b), (c) and (d) of Paragraph 6
hereof. This Warrant shall be deemed to have been exercised, in whole or in
part to the extent specified, immediately prior to the close of business on the
date this Warrant is surrendered and payment is made in accordance with the
foregoing provisions of this Paragraph 1, and the person or persons in whose
name or names the certificates for the Securities shall be issuable upon such
exercise shall become the Holder or Holders of record of such Common Stock at
that time and date. The Common Stock so purchased shall be delivered
2
<PAGE>
to the Holder within a reasonable time, not exceeding ten (10) business days,
after the rights represented by this Warrant shall have been so exercised.
2. TRANSFER.
This Warrant may be assigned in whole or in part by the Holder by
(i) completing and executing the form of assignment at the end hereof and
(ii) surrendering this Warrant with such duly completed and executed assignment
form for cancellation, accompanied by funds sufficient to pay any transfer tax,
at the office or agency of the Company referred to in Paragraph 1 hereof;
whereupon the Company shall issue, in the name or names specified by the Holder
(including the Holder) a new Warrant or Warrants of like tenor and representing
in the aggregate rights to purchase the same number of shares of Common Stock as
are then purchasable hereunder.
3. COVENANTS OF THE COMPANY.
(a) The Company covenants and agrees that all Common Stock and
Common Stock issuable upon exercise of this Warrant will, upon issuance, be duly
and validly issued, fully paid and nonassessable and no personal liability will
attach to the holder thereof by reason of being such a holder, other than as set
forth herein.
(b) The Company covenant and agrees that during the period
within which this Warrant may be exercised, the Company will at all times have
authorized and reserved a sufficient number of shares of Common Stock to provide
for the exercise of this Warrant.
(c) The Company covenants and agrees that for so long as the
Common Stock shall be outstanding, the Company shall use its best efforts to
cause all shares of Common
3
<PAGE>
Stock issuable upon the exercise of the Warrant to be listed on or quoted by
The NASDAQ National Market System or on the NASDAQ Stock Market and the
Boston Stock Exchange.
4. NO RIGHTS OF STOCKHOLDER.
This Warrant shall not entitle the Holder to any voting rights or
other rights as a stockholder of the Company, either at law or in equity, and
the rights of the Holder are limited to those expressed in this Warrant and are
not enforceable against the Company except to the extent set forth herein.
5. REGISTRATION.
(a) From July 1, 1996 until February 15, 1997, upon the written
request of the Holder, and on a one-time basis, the Company shall file and use
its best reasonable efforts to cause to be declared effective by the Securities
and Exchange Commission a registration statement or post-effective amendment
thereto under the Act including such information as may be required to permit a
public offering of this Warrant and all the Warrants issued pursuant to the
Subscription Agreement, and any of the Common Stock issuable under those
Warrants (the "Registerable Securities"). The Company shall supply prospectuses
in order to facilitate the public sale or other disposition of the Registerable
Securities, use its best efforts to register and qualify any of the Registerable
Securities for sale in such states as such Holder reasonably designates and do
any and all other acts and things which may be necessary to enable such Holder
to consummate the public sale of the Registerable Securities, and furnish
indemnification in the manner provided in Paragraph 6 hereof. The Holder shall
furnish information reasonably requested by the Company in accordance with such
post-effective
4
<PAGE>
amendments or registration statements, including its intentions with respect
thereto, and shall furnish indemnification as set forth in Paragraph 6.
(b) The Company will maintain such registration statement or
post-effective amendment current under the Act for a period of at least twelve
(12) months from the effective date thereof.
(c) The Company shall bear the entire cost and expense of any
registration of securities under Paragraph 5 hereof. Notwithstanding the
foregoing, any Holder whose Registerable Securities are included in any such
registration statement pursuant to this Paragraph 5 shall, however, bear the
fees of any counsel retained by him and any transfer taxes or underwriting
discounts or commissions applicable to the Registerable Securities sold by him
pursuant thereto.
6. INDEMNIFICATION.
(a) Whenever pursuant to Paragraph 5 a registration statement
relating to any Registerable Securities is filed under the Act, amended or
supplemented, the Company will indemnify and hold harmless each Holder of the
Registerable Securities covered by such registration statement, amendment or
supplement (such holder hereinafter referred to as the "Distributing Holder"),
each person, if any, who controls (within the meaning of the Act) the
Distributing Holder, and each officer, employee, partner or agent of the
Distributing Holder, if the Distributing Holder is a broker or dealer, and each
underwriter (within the meaning of the Act) of such securities and each person,
if any, who controls (within the meaning of the Act) any such underwriter and
each officer, employee, agent or partner of such underwriter against any losses,
claims, damages or liabilities, joint or several, to which the Distributing
Holder, any
5
<PAGE>
such underwriter or any other person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement or alleged untrue statement of any material fact
contained in any such registration statement or any preliminary prospectus or
final prospectus constituting a part thereof or any amendment or supplement
thereto, or arise out of or are based upon the omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and will reimburse the Distributing Holder
and each such underwriter or such other person for any legal or other
expenses reasonably incurred by the Distributing Holder, or underwriter or
such other person, in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the Company
will not be liable in any such case (i) to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in said
registration statement, said preliminary prospectus, said final prospectus or
said amendment or supplement in reliance upon and in conformity with written
information furnished by such Distributing Holder, any other Distributing
Holder or any such underwriter for use in the preparation thereof, and (ii)
such losses, claims, damages or liabilities arise out of or are based upon
any actual or alleged untrue statement or omission made in or from any
preliminary prospectus, but corrected in the final prospectus, as amended or
supplemented.
(b) Whenever pursuant to Paragraph 5 a registration statement
relating to the Registerable Securities is filed under the Act, or is amended or
supplemented, the Distributing Holder will indemnify and hold harmless the
Company, each of its directors, each
6
<PAGE>
of its officers who have signed said registration statement and such
amendments and supplements thereto, and each person, if any, who controls the
Company (within the meaning of the Act) against any losses, claims, damages
or liabilities to which the Company or any such director, officer or
controlling person may become subject under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue or alleged untrue statement of any
material fact contained in any such registration statement or any preliminary
prospectus or final prospectus constituting a part thereof, or any amendment
or supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent that such untrue statement or
alleged untrue statement or omission was made in said registration statement,
said preliminary prospectus, said final prospectus or said amendment or
supplement in reliance upon and in conformity with written information
furnished by such Distributing Holder for use in the preparation thereof; and
will reimburse the Company or any such director, officer or controlling
person for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action.
(c) Promptly after receipt by an indemnified party under this
Paragraph 6 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying
party, give the indemnifying party notice of the commencement thereof; but the
omission to so notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Paragraph 6.
7
<PAGE>
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnified part to such
indemnified party of its election to so assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Paragraph 6 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
7. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SECURITIES.
(a) The Warrant Price shall be subject to adjustment from time
to time as follows:
(i) In case the Company shall at any time after the date
hereof pay a dividend in shares of Common Stock or make a distribution in shares
of Common Stock, then upon such dividend or distribution the Warrant Price in
effect immediately prior to such dividend or distribution shall forthwith be
reduced to a price determined by dividing:
a. an amount equal to the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution
multiplied by the Warrant Price in effect immediately prior to such dividend or
distribution, by
b. the total number of shares of Common Stock
outstanding immediately after such issuance or sale.
8
<PAGE>
For the purposes of any computation to be made in accordance
with the provisions of this clause (i), the following provisions shall be
applicable: Common Stock issuable by way of dividend or other distribution on
any stock of the Company shall be deemed to have been issued immediately after
the opening of business on the date following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution.
(ii) In case the Company shall at any time subdivide or
combine the outstanding Common Stock, the Warrant Price shall forthwith be
proportionately decreased in the case of subdivision or increased in the case of
combination to the nearest one cent. Any such adjustment shall become effective
at the time such subdivision or combination shall become effective.
(iii) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which the Warrant Price has been
adjusted as herein provided, the Company shall:
a. Deliver to the Holder a certificate signed by the
President or Vice President of the Company and by the Treasurer or Assistant
Treasurer or the Secretary or an Assistant Secretary of the Company, showing in
detail the facts requiring all such adjustments occurring during such period and
the Warrant Price after each such adjustment.
b. Notwithstanding anything contained herein to the
contrary, no adjustment of the Warrant Price shall be made if the amount of such
adjustment shall be less than $.01, but in such case any adjustment that would
otherwise be required then to be made shall be carried forward and shall be made
at the time and together with the next
9
<PAGE>
subsequent adjustment which, together with any adjustment so carried forward,
shall amount to not less than $.01.
(b) In the event that the number of outstanding shares of Common
Stock is increased by a stock dividend payable in Common Stock or by a
subdivision of the outstanding Common Stock, then, from and after the time at
which the adjusted Warrant Price becomes effective pursuant to Subsection (b) of
this Section by reason of such dividend or subdivision, the number of shares of
Common Stock issuable upon the exercise of each Warrant shall be increased in
proportion to such increase in outstanding shares. In the event that the number
of shares of Common Stock outstanding is decreased by a combination of the
outstanding Common Stock, then, from and after the time at which the adjusted
Warrant Price becomes effective pursuant to Subsection (b) of this Section by
reason of such combination, the number of shares of Common Stock issuable upon
the exercise of each Warrant shall be decreased in proportion to such decrease
in the outstanding shares of Common Stock.
(c) In case of any reorganization or reclassification of the
outstanding Common Stock (other than a change in par value, or from par value to
no par value, or as a result of a subdivision or combination), or in case of any
consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is the
continuing corporation and which does not result in any reclassification of the
outstanding Common Stock), or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety, the holder of each Warrant then outstanding shall thereafter have the
right to purchase the kind and amount of shares of Common Stock and other
securities and property receivable upon such
10
<PAGE>
reorganization, reclassification, consolidation, merger, sale or conveyance
by a holder of the number of shares of Common Stock which the holder of such
Warrant shall then be entitled to purchase; such adjustments shall apply with
respect to all such changes occurring between the date of this Warrant
Agreement and the date of exercise of such Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrants, make any
distribution of its assets to holders of its Common Stock as a liquidating or a
partial liquidating dividend, then the holder of Warrants who exercises his
Warrants after the record date for the determination of those holders of Common
Stock entitled to such distribution of assets as a liquidating or partial
liquidating dividend shall be entitled to receive for the Warrant Price per
Warrant, in addition to each share of Common Stock, the amount of such
distribution (or, at the option of the Company, a sum equal to the value of any
such assets at the time of such distribution as determined by the Board of
Directors of the Company in good faith), which would have been payable to such
holder had he been the holder of record of the Common Stock receivable upon
exercise of his Warrant on the record date for the determination of those
entitled to such distribution.
(e) In case of the dissolution, liquidation or winding-up of the
Company, all rights under the Warrants shall terminate on a date fixed by the
Company, such date to be no earlier than ten (10) days prior to the
effectiveness of such dissolution, liquidation or winding-up and not later than
five (5) days prior to such effectiveness. Notice of such termination of
purchase rights shall be given to the last registered holder of this Warrant, as
the same shall appear on the books of the Company, by registered mail at least
thirty (30) days prior to such termination date.
11
<PAGE>
(f) In case the Company shall, at any time prior to the
expiration of this Warrant and prior to the exercise thereof, offer to the
holders of its Common Stock any rights to subscribe for additional shares of any
class of the Company, then the Company shall give written notice thereof to the
last registered holder thereof not less than thirty (30) days prior to the date
on which the books of the Company are closed or a record date is fixed for the
determination of the stockholders entitled to such subscription rights. Such
notice shall specify the date as to which the books shall be closed or record
date fixed with respect to such offer of subscription and the right of the
holder thereof to participate in such offer of subscription shall terminate if
this Warrant shall not be exercised on or before the date of such closing of the
books or such record date.
(g) Without limiting the foregoing, the Company agrees to make
such additional adjustments to the number of shares to be issued hereunder
(whether required by the issuance of additional Common Stock or otherwise) as
may from time to time be necessary to ensure that the Holder will upon exercise
of this Warrant receive a percentage of the Total Equity of the Company equal to
the percentage of the Total Equity of the Company held by the Holder as of the
time of the original issuance of this Warrant. "Total Equity" shall mean the
sum of (i) the number of shares of Common Stock of the Company outstanding on
the date of determination of Total Equity is made and (ii) the number of shares
of Common Stock issuable upon exercise of options or warrants (not including
this Warrant) to purchase shares of Common Stock or securities convertible into
Common Stock or securities or evidences of indebtedness convertible directly or
indirectly into or exchangeable for Common Stock outstanding on the date the
determination of Total Equity is made.
12
<PAGE>
(h) Any adjustment pursuant to the aforesaid provision shall be
made on the basis of the number of shares of Common Stock which the holder
thereof would have been entitled to acquire by the exercise of the Warrant
immediately prior to the event giving rise to such adjustment.
(i) Irrespective of any adjustments in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or thereafter issued may continue to express the same price and
number and kind of shares as are stated in this Warrant.
(j) The Company may retain a firm of independent public
accountants (who may be any such firm regularly employed by the Company) to make
any computation required under this Section.
(k) If at any time, as a result of an adjustment made pursuant
to this Paragraph 7, the Holder of this Warrant shall become entitled to
purchase any securities other than shares of Common Stock, thereafter the number
of such securities so purchasable upon exercise of each Warrant and the Warrant
Price for such shares shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Common Stock.
8. FRACTIONAL SHARES.
The Company shall not be required to issue fractions of shares of
Common Shares on the exercise of this Warrant; provided, however, that if a
Holder exercises all the Warrants held of record by such Holder, the fractional
interests shall be eliminated by rounding any fraction up to the nearest whole
number of shares.
13
<PAGE>
9. MISCELLANEOUS.
(a) This Warrant shall be governed by and in accordance with the
laws of the State of New York.
(b) All notices, requests, consents and other communications
hereunder shall be made in writing and shall be deemed to have been duly made
when delivered, or mailed by registered or certified mail, return receipt
requested: (i) if to a Holder, to the address of such Holder as shown on the
books of the Company, or (ii) if to the Company, One Penn Plaza, New York, NY
10119.
(c) All the covenants and provisions of this Warrant by or for
the benefit of the Company and the Holders inure to the benefit of their
respective successors and assigns hereunder.
(d) Nothing in this Warrant shall be construed to give to any
person or corporation other than the Company and the registered Holder or
Holders, any legal or equitable right, for the sole and exclusive benefit of the
Company and the Holder or Holders.
IN WITNESS WHEREOF, Trans World Gaming Corp. has caused this Warrant
to be signed by its duly authorized officer and this Warrant to be dated
March , 1996.
TRANS WORLD GAMING CORP.
By:___________________________
Stanley Kohlenberg
President and
Chief Executive Officer
14
<PAGE>
NO PUBLIC OFFERING OF THIS WARRANT OR THE SECURITIES
UNDERLYING THIS WARRANT MAY BE MADE UNTIL
THE EFFECTIVENESS OF A REGISTRATION STATEMENT
OR OF A POST-EFFECTIVE AMENDMENT THERETO
UNDER THE SECURITIES ACT OF 1933 (THE "ACT"),
COVERING THIS WARRANT OR THE SECURITIES UNDERLYING
THIS WARRANT, OR UNTIL THE COMPANY IS IN RECEIPT OF AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
STATING THAT SUCH PUBLIC OFFERING IS EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT. TRANSFER OF
THIS WARRANT IS RESTRICTED UNDER PARAGRAPH 2 BELOW.
WARRANT TO PURCHASE
COMMON STOCK
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 26, 1996
THIS CERTIFIES that David N. Friedson (together with his assigns, the
"Holder") is entitled to purchase from Trans World Gaming Corp., a Nevada
corporation ("Company") up to 66,650 shares of the Company's common stock, par
value $.001 per share
<PAGE>
(the "Common Stock"), at a purchase price of $.01 per share of Common Stock,
subject to adjustment as hereafter provided.
This Warrant is issued pursuant to a Subscription Agreement dated
March 25, 1996 (the Subscription Agreement"), among the Company, Trans World
Gaming of Louisiana, Inc., the Holder and certain other subscribers.
1. EXERCISE OF THE WARRANT.
The rights represented by this Warrant may be exercised at any time
on or before 5:00 p.m., New York time, on March 26, 2002, in whole or in
part, by (i) the surrender of this Warrant (with the purchase form at the end
of hereof properly executed) at the principal executive office of the Company
(or such other office or agency of the Company as it may designate by notice
in writing to the Holder at the address of the Holder appearing on the books
of the Company); (ii) payment to the Company of the Exercise Price then in
effect for the number of shares of Common Stock specified in the
above-mentioned purchase form together with applicable stock transfer taxes,
if any; and (iii) delivery to the Company of a duly executed agreement signed
by the person(s) designated in the purchase form to the effect that such
person(s) agree(s) to be bound by the provisions of Paragraph 5 and
subparagraphs (b), (c) and (d) of Paragraph 6 hereof. This Warrant shall be
deemed to have been exercised, in whole or in part to the extent specified,
immediately prior to the close of business on the date this Warrant is
surrendered and payment is made in accordance with the foregoing provisions
of this Paragraph 1, and the person or persons in whose name or names the
certificates for the Securities shall be issuable upon such exercise shall
become the Holder or Holders of record of such Common Stock at that time and
date. The Common Stock so purchased shall be delivered
2
<PAGE>
to the Holder within a reasonable time, not exceeding ten (10) business days,
after the rights represented by this Warrant shall have been so exercised.
2. TRANSFER.
This Warrant may be assigned in whole or in part by the Holder by
(i) completing and executing the form of assignment at the end hereof and
(ii) surrendering this Warrant with such duly completed and executed assignment
form for cancellation, accompanied by funds sufficient to pay any transfer tax,
at the office or agency of the Company referred to in Paragraph 1 hereof;
whereupon the Company shall issue, in the name or names specified by the Holder
(including the Holder) a new Warrant or Warrants of like tenor and representing
in the aggregate rights to purchase the same number of shares of Common Stock as
are then purchasable hereunder.
3. COVENANTS OF THE COMPANY.
(a) The Company covenants and agrees that all Common Stock and
Common Stock issuable upon exercise of this Warrant will, upon issuance, be duly
and validly issued, fully paid and nonassessable and no personal liability will
attach to the holder thereof by reason of being such a holder, other than as set
forth herein.
(b) The Company covenant and agrees that during the period
within which this Warrant may be exercised, the Company will at all times have
authorized and reserved a sufficient number of shares of Common Stock to provide
for the exercise of this Warrant.
(c) The Company covenants and agrees that for so long as the
Common Stock shall be outstanding, the Company shall use its best efforts to
cause all shares of Common
3
<PAGE>
Stock issuable upon the exercise of the Warrant to be listed on or quoted by
The NASDAQ National Market System or on the NASDAQ Stock Market and the
Boston Stock Exchange.
4. NO RIGHTS OF STOCKHOLDER.
This Warrant shall not entitle the Holder to any voting rights or
other rights as a stockholder of the Company, either at law or in equity, and
the rights of the Holder are limited to those expressed in this Warrant and are
not enforceable against the Company except to the extent set forth herein.
5. REGISTRATION.
(a) From July 1, 1996 until February 15, 1997, upon the written
request of the Holder, and on a one-time basis, the Company shall file and use
its best reasonable efforts to cause to be declared effective by the Securities
and Exchange Commission a registration statement or post-effective amendment
thereto under the Act including such information as may be required to permit a
public offering of this Warrant and all the Warrants issued pursuant to the
Subscription Agreement, and any of the Common Stock issuable under those
Warrants (the "Registerable Securities"). The Company shall supply prospectuses
in order to facilitate the public sale or other disposition of the Registerable
Securities, use its best efforts to register and qualify any of the Registerable
Securities for sale in such states as such Holder reasonably designates and do
any and all other acts and things which may be necessary to enable such Holder
to consummate the public sale of the Registerable Securities, and furnish
indemnification in the manner provided in Paragraph 6 hereof. The Holder shall
furnish information reasonably requested by the Company in accordance with such
post-effective
4
<PAGE>
amendments or registration statements, including its intentions with respect
thereto, and shall furnish indemnification as set forth in Paragraph 6.
(b) The Company will maintain such registration statement or
post-effective amendment current under the Act for a period of at least twelve
(12) months from the effective date thereof.
(c) The Company shall bear the entire cost and expense of any
registration of securities under Paragraph 5 hereof. Notwithstanding the
foregoing, any Holder whose Registerable Securities are included in any such
registration statement pursuant to this Paragraph 5 shall, however, bear the
fees of any counsel retained by him and any transfer taxes or underwriting
discounts or commissions applicable to the Registerable Securities sold by him
pursuant thereto.
6. INDEMNIFICATION.
(a) Whenever pursuant to Paragraph 5 a registration statement
relating to any Registerable Securities is filed under the Act, amended or
supplemented, the Company will indemnify and hold harmless each Holder of the
Registerable Securities covered by such registration statement, amendment or
supplement (such holder hereinafter referred to as the "Distributing Holder"),
each person, if any, who controls (within the meaning of the Act) the
Distributing Holder, and each officer, employee, partner or agent of the
Distributing Holder, if the Distributing Holder is a broker or dealer, and each
underwriter (within the meaning of the Act) of such securities and each person,
if any, who controls (within the meaning of the Act) any such underwriter and
each officer, employee, agent or partner of such underwriter against any losses,
claims, damages or liabilities, joint or several, to which the Distributing
Holder, any
5
<PAGE>
such underwriter or any other person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement or alleged untrue statement of any material fact
contained in any such registration statement or any preliminary prospectus or
final prospectus constituting a part thereof or any amendment or supplement
thereto, or arise out of or are based upon the omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and will reimburse the Distributing Holder
and each such underwriter or such other person for any legal or other
expenses reasonably incurred by the Distributing Holder, or underwriter or
such other person, in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the Company
will not be liable in any such case (i) to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in said
registration statement, said preliminary prospectus, said final prospectus or
said amendment or supplement in reliance upon and in conformity with written
information furnished by such Distributing Holder, any other Distributing
Holder or any such underwriter for use in the preparation thereof, and (ii)
such losses, claims, damages or liabilities arise out of or are based upon
any actual or alleged untrue statement or omission made in or from any
preliminary prospectus, but corrected in the final prospectus, as amended or
supplemented.
(b) Whenever pursuant to Paragraph 5 a registration statement
relating to the Registerable Securities is filed under the Act, or is amended or
supplemented, the Distributing Holder will indemnify and hold harmless the
Company, each of its directors, each
6
<PAGE>
of its officers who have signed said registration statement and such
amendments and supplements thereto, and each person, if any, who controls the
Company (within the meaning of the Act) against any losses, claims, damages
or liabilities to which the Company or any such director, officer or
controlling person may become subject under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue or alleged untrue statement of any
material fact contained in any such registration statement or any preliminary
prospectus or final prospectus constituting a part thereof, or any amendment
or supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent that such untrue statement or
alleged untrue statement or omission was made in said registration statement,
said preliminary prospectus, said final prospectus or said amendment or
supplement in reliance upon and in conformity with written information
furnished by such Distributing Holder for use in the preparation thereof; and
will reimburse the Company or any such director, officer or controlling
person for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action.
(c) Promptly after receipt by an indemnified party under this
Paragraph 6 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying
party, give the indemnifying party notice of the commencement thereof; but the
omission to so notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Paragraph 6.
7
<PAGE>
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnified part to such
indemnified party of its election to so assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Paragraph 6 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
7. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SECURITIES.
(a) The Warrant Price shall be subject to adjustment from time
to time as follows:
(i) In case the Company shall at any time after the date
hereof pay a dividend in shares of Common Stock or make a distribution in shares
of Common Stock, then upon such dividend or distribution the Warrant Price in
effect immediately prior to such dividend or distribution shall forthwith be
reduced to a price determined by dividing:
a. an amount equal to the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution
multiplied by the Warrant Price in effect immediately prior to such dividend or
distribution, by
b. the total number of shares of Common Stock
outstanding immediately after such issuance or sale.
8
<PAGE>
For the purposes of any computation to be made in accordance
with the provisions of this clause (i), the following provisions shall be
applicable: Common Stock issuable by way of dividend or other distribution on
any stock of the Company shall be deemed to have been issued immediately after
the opening of business on the date following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution.
(ii) In case the Company shall at any time subdivide or
combine the outstanding Common Stock, the Warrant Price shall forthwith be
proportionately decreased in the case of subdivision or increased in the case of
combination to the nearest one cent. Any such adjustment shall become effective
at the time such subdivision or combination shall become effective.
(iii) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which the Warrant Price has been
adjusted as herein provided, the Company shall:
a. Deliver to the Holder a certificate signed by the
President or Vice President of the Company and by the Treasurer or Assistant
Treasurer or the Secretary or an Assistant Secretary of the Company, showing in
detail the facts requiring all such adjustments occurring during such period and
the Warrant Price after each such adjustment.
b. Notwithstanding anything contained herein to the
contrary, no adjustment of the Warrant Price shall be made if the amount of such
adjustment shall be less than $.01, but in such case any adjustment that would
otherwise be required then to be made shall be carried forward and shall be made
at the time and together with the next
9
<PAGE>
subsequent adjustment which, together with any adjustment so carried forward,
shall amount to not less than $.01.
(b) In the event that the number of outstanding shares of Common
Stock is increased by a stock dividend payable in Common Stock or by a
subdivision of the outstanding Common Stock, then, from and after the time at
which the adjusted Warrant Price becomes effective pursuant to Subsection (b) of
this Section by reason of such dividend or subdivision, the number of shares of
Common Stock issuable upon the exercise of each Warrant shall be increased in
proportion to such increase in outstanding shares. In the event that the number
of shares of Common Stock outstanding is decreased by a combination of the
outstanding Common Stock, then, from and after the time at which the adjusted
Warrant Price becomes effective pursuant to Subsection (b) of this Section by
reason of such combination, the number of shares of Common Stock issuable upon
the exercise of each Warrant shall be decreased in proportion to such decrease
in the outstanding shares of Common Stock.
(c) In case of any reorganization or reclassification of the
outstanding Common Stock (other than a change in par value, or from par value to
no par value, or as a result of a subdivision or combination), or in case of any
consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is the
continuing corporation and which does not result in any reclassification of the
outstanding Common Stock), or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety, the holder of each Warrant then outstanding shall thereafter have the
right to purchase the kind and amount of shares of Common Stock and other
securities and property receivable upon such
10
<PAGE>
reorganization, reclassification, consolidation, merger, sale or conveyance
by a holder of the number of shares of Common Stock which the holder of such
Warrant shall then be entitled to purchase; such adjustments shall apply with
respect to all such changes occurring between the date of this Warrant
Agreement and the date of exercise of such Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrants, make any
distribution of its assets to holders of its Common Stock as a liquidating or a
partial liquidating dividend, then the holder of Warrants who exercises his
Warrants after the record date for the determination of those holders of Common
Stock entitled to such distribution of assets as a liquidating or partial
liquidating dividend shall be entitled to receive for the Warrant Price per
Warrant, in addition to each share of Common Stock, the amount of such
distribution (or, at the option of the Company, a sum equal to the value of any
such assets at the time of such distribution as determined by the Board of
Directors of the Company in good faith), which would have been payable to such
holder had he been the holder of record of the Common Stock receivable upon
exercise of his Warrant on the record date for the determination of those
entitled to such distribution.
(e) In case of the dissolution, liquidation or winding-up of the
Company, all rights under the Warrants shall terminate on a date fixed by the
Company, such date to be no earlier than ten (10) days prior to the
effectiveness of such dissolution, liquidation or winding-up and not later than
five (5) days prior to such effectiveness. Notice of such termination of
purchase rights shall be given to the last registered holder of this Warrant, as
the same shall appear on the books of the Company, by registered mail at least
thirty (30) days prior to such termination date.
11
<PAGE>
(f) In case the Company shall, at any time prior to the
expiration of this Warrant and prior to the exercise thereof, offer to the
holders of its Common Stock any rights to subscribe for additional shares of any
class of the Company, then the Company shall give written notice thereof to the
last registered holder thereof not less than thirty (30) days prior to the date
on which the books of the Company are closed or a record date is fixed for the
determination of the stockholders entitled to such subscription rights. Such
notice shall specify the date as to which the books shall be closed or record
date fixed with respect to such offer of subscription and the right of the
holder thereof to participate in such offer of subscription shall terminate if
this Warrant shall not be exercised on or before the date of such closing of the
books or such record date.
(g) Without limiting the foregoing, the Company agrees to make
such additional adjustments to the number of shares to be issued hereunder
(whether required by the issuance of additional Common Stock or otherwise) as
may from time to time be necessary to ensure that the Holder will upon exercise
of this Warrant receive a percentage of the Total Equity of the Company equal to
the percentage of the Total Equity of the Company held by the Holder as of the
time of the original issuance of this Warrant. "Total Equity" shall mean the
sum of (i) the number of shares of Common Stock of the Company outstanding on
the date of determination of Total Equity is made and (ii) the number of shares
of Common Stock issuable upon exercise of options or warrants (not including
this Warrant) to purchase shares of Common Stock or securities convertible into
Common Stock or securities or evidences of indebtedness convertible directly or
indirectly into or exchangeable for Common Stock outstanding on the date the
determination of Total Equity is made.
12
<PAGE>
(h) Any adjustment pursuant to the aforesaid provision shall be
made on the basis of the number of shares of Common Stock which the holder
thereof would have been entitled to acquire by the exercise of the Warrant
immediately prior to the event giving rise to such adjustment.
(i) Irrespective of any adjustments in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or thereafter issued may continue to express the same price and
number and kind of shares as are stated in this Warrant.
(j) The Company may retain a firm of independent public
accountants (who may be any such firm regularly employed by the Company) to make
any computation required under this Section.
(k) If at any time, as a result of an adjustment made pursuant
to this Paragraph 7, the Holder of this Warrant shall become entitled to
purchase any securities other than shares of Common Stock, thereafter the number
of such securities so purchasable upon exercise of each Warrant and the Warrant
Price for such shares shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Common Stock.
8. FRACTIONAL SHARES.
The Company shall not be required to issue fractions of shares of
Common Shares on the exercise of this Warrant; provided, however, that if a
Holder exercises all the Warrants held of record by such Holder, the fractional
interests shall be eliminated by rounding any fraction up to the nearest whole
number of shares.
13
<PAGE>
9. MISCELLANEOUS.
(a) This Warrant shall be governed by and in accordance with the
laws of the State of New York.
(b) All notices, requests, consents and other communications
hereunder shall be made in writing and shall be deemed to have been duly made
when delivered, or mailed by registered or certified mail, return receipt
requested: (i) if to a Holder, to the address of such Holder as shown on the
books of the Company, or (ii) if to the Company, One Penn Plaza, New York, NY
10119.
(c) All the covenants and provisions of this Warrant by or for
the benefit of the Company and the Holders inure to the benefit of their
respective successors and assigns hereunder.
(d) Nothing in this Warrant shall be construed to give to any
person or corporation other than the Company and the registered Holder or
Holders, any legal or equitable right, for the sole and exclusive benefit of the
Company and the Holder or Holders.
IN WITNESS WHEREOF, Trans World Gaming Corp. has caused this Warrant
to be signed by its duly authorized officer and this Warrant to be dated
March , 1996.
TRANS WORLD GAMING CORP.
By:___________________________
Stanley Kohlenberg
President and
Chief Executive Officer
14
<PAGE>
NO PUBLIC OFFERING OF THIS WARRANT OR THE SECURITIES
UNDERLYING THIS WARRANT MAY BE MADE UNTIL
THE EFFECTIVENESS OF A REGISTRATION STATEMENT
OR OF A POST-EFFECTIVE AMENDMENT THERETO
UNDER THE SECURITIES ACT OF 1933 (THE "ACT"),
COVERING THIS WARRANT OR THE SECURITIES UNDERLYING
THIS WARRANT, OR UNTIL THE COMPANY IS IN RECEIPT OF AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
STATING THAT SUCH PUBLIC OFFERING IS EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT. TRANSFER OF
THIS WARRANT IS RESTRICTED UNDER PARAGRAPH 2 BELOW.
WARRANT TO PURCHASE
COMMON STOCK
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 26, 1996
THIS CERTIFIES that C.P. Baker & Co., Ltd. (together with its
assigns, the "Holder") is entitled to purchase from Trans World Gaming Corp.,
a Nevada corporation ("Company") up to 33,325 shares of the Company's common
stock, par value $.001 per share
<PAGE>
(the "Common Stock"), at a purchase price of $.01 per share of Common Stock,
subject to adjustment as hereafter provided.
This Warrant is issued pursuant to a Subscription Agreement dated
March 25, 1996 (the Subscription Agreement"), among the Company, Trans World
Gaming of Louisiana, Inc., the Holder and certain other subscribers.
1. EXERCISE OF THE WARRANT.
The rights represented by this Warrant may be exercised at any time on
or before 5:00 p.m., New York time, on March 26, 2002, in whole or in part, by
(i) the surrender of this Warrant (with the purchase form at the end of hereof
properly executed) at the principal executive office of the Company (or such
other office or agency of the Company as it may designate by notice in writing
to the Holder at the address of the Holder appearing on the books of the
Company); (ii) payment to the Company of the Exercise Price then in effect for
the number of shares of Common Stock specified in the above-mentioned purchase
form together with applicable stock transfer taxes, if any; and (iii) delivery
to the Company of a duly executed agreement signed by the person(s) designated
in the purchase form to the effect that such person(s) agree(s) to be bound by
the provisions of Paragraph 5 and subparagraphs (b), (c) and (d) of Paragraph 6
hereof. This Warrant shall be deemed to have been exercised, in whole or in
part to the extent specified, immediately prior to the close of business on the
date this Warrant is surrendered and payment is made in accordance with the
foregoing provisions of this Paragraph 1, and the person or persons in whose
name or names the certificates for the Securities shall be issuable upon such
exercise shall become the Holder or Holders of record of such Common Stock at
that time and date. The Common Stock so purchased shall be delivered
2
<PAGE>
to the Holder within a reasonable time, not exceeding ten (10) business days,
after the rights represented by this Warrant shall have been so exercised.
2. TRANSFER.
This Warrant may be assigned in whole or in part by the Holder by
(i) completing and executing the form of assignment at the end hereof and
(ii) surrendering this Warrant with such duly completed and executed assignment
form for cancellation, accompanied by funds sufficient to pay any transfer tax,
at the office or agency of the Company referred to in Paragraph 1 hereof;
whereupon the Company shall issue, in the name or names specified by the Holder
(including the Holder) a new Warrant or Warrants of like tenor and representing
in the aggregate rights to purchase the same number of shares of Common Stock as
are then purchasable hereunder.
3. COVENANTS OF THE COMPANY.
(a) The Company covenants and agrees that all Common Stock and
Common Stock issuable upon exercise of this Warrant will, upon issuance, be duly
and validly issued, fully paid and nonassessable and no personal liability will
attach to the holder thereof by reason of being such a holder, other than as set
forth herein.
(b) The Company covenant and agrees that during the period
within which this Warrant may be exercised, the Company will at all times have
authorized and reserved a sufficient number of shares of Common Stock to provide
for the exercise of this Warrant.
(c) The Company covenants and agrees that for so long as the
Common Stock shall be outstanding, the Company shall use its best efforts to
cause all shares of Common
3
<PAGE>
Stock issuable upon the exercise of the Warrant to be listed on or quoted by
The NASDAQ National Market System or on the NASDAQ Stock Market and the
Boston Stock Exchange.
4. NO RIGHTS OF STOCKHOLDER.
This Warrant shall not entitle the Holder to any voting rights or
other rights as a stockholder of the Company, either at law or in equity, and
the rights of the Holder are limited to those expressed in this Warrant and are
not enforceable against the Company except to the extent set forth herein.
5. REGISTRATION.
(a) From July 1, 1996 until February 15, 1997, upon the written
request of the Holder, and on a one-time basis, the Company shall file and use
its best reasonable efforts to cause to be declared effective by the Securities
and Exchange Commission a registration statement or post-effective amendment
thereto under the Act including such information as may be required to permit a
public offering of this Warrant and all the Warrants issued pursuant to the
Subscription Agreement, and any of the Common Stock issuable under those
Warrants (the "Registerable Securities"). The Company shall supply prospectuses
in order to facilitate the public sale or other disposition of the Registerable
Securities, use its best efforts to register and qualify any of the Registerable
Securities for sale in such states as such Holder reasonably designates and do
any and all other acts and things which may be necessary to enable such Holder
to consummate the public sale of the Registerable Securities, and furnish
indemnification in the manner provided in Paragraph 6 hereof. The Holder shall
furnish information reasonably requested by the Company in accordance with such
post-effective
4
<PAGE>
amendments or registration statements, including its intentions with respect
thereto, and shall furnish indemnification as set forth in Paragraph 6.
(b) The Company will maintain such registration statement or
post-effective amendment current under the Act for a period of at least twelve
(12) months from the effective date thereof.
(c) The Company shall bear the entire cost and expense of any
registration of securities under Paragraph 5 hereof. Notwithstanding the
foregoing, any Holder whose Registerable Securities are included in any such
registration statement pursuant to this Paragraph 5 shall, however, bear the
fees of any counsel retained by him and any transfer taxes or underwriting
discounts or commissions applicable to the Registerable Securities sold by him
pursuant thereto.
6. INDEMNIFICATION.
(a) Whenever pursuant to Paragraph 5 a registration statement
relating to any Registerable Securities is filed under the Act, amended or
supplemented, the Company will indemnify and hold harmless each Holder of the
Registerable Securities covered by such registration statement, amendment or
supplement (such holder hereinafter referred to as the "Distributing Holder"),
each person, if any, who controls (within the meaning of the Act) the
Distributing Holder, and each officer, employee, partner or agent of the
Distributing Holder, if the Distributing Holder is a broker or dealer, and each
underwriter (within the meaning of the Act) of such securities and each person,
if any, who controls (within the meaning of the Act) any such underwriter and
each officer, employee, agent or partner of such underwriter against any losses,
claims, damages or liabilities, joint or several, to which the Distributing
Holder, any
5
<PAGE>
such underwriter or any other person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement or alleged untrue statement of any material fact
contained in any such registration statement or any preliminary prospectus or
final prospectus constituting a part thereof or any amendment or supplement
thereto, or arise out of or are based upon the omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and will reimburse the Distributing Holder
and each such underwriter or such other person for any legal or other
expenses reasonably incurred by the Distributing Holder, or underwriter or
such other person, in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the Company
will not be liable in any such case (i) to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in said
registration statement, said preliminary prospectus, said final prospectus or
said amendment or supplement in reliance upon and in conformity with written
information furnished by such Distributing Holder, any other Distributing
Holder or any such underwriter for use in the preparation thereof, and (ii)
such losses, claims, damages or liabilities arise out of or are based upon
any actual or alleged untrue statement or omission made in or from any
preliminary prospectus, but corrected in the final prospectus, as amended or
supplemented.
(b) Whenever pursuant to Paragraph 5 a registration statement
relating to the Registerable Securities is filed under the Act, or is amended or
supplemented, the Distributing Holder will indemnify and hold harmless the
Company, each of its directors, each
6
<PAGE>
of its officers who have signed said registration statement and such
amendments and supplements thereto, and each person, if any, who controls the
Company (within the meaning of the Act) against any losses, claims, damages
or liabilities to which the Company or any such director, officer or
controlling person may become subject under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue or alleged untrue statement of any
material fact contained in any such registration statement or any preliminary
prospectus or final prospectus constituting a part thereof, or any amendment
or supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent that such untrue statement or
alleged untrue statement or omission was made in said registration statement,
said preliminary prospectus, said final prospectus or said amendment or
supplement in reliance upon and in conformity with written information
furnished by such Distributing Holder for use in the preparation thereof; and
will reimburse the Company or any such director, officer or controlling
person for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action.
(c) Promptly after receipt by an indemnified party under this
Paragraph 6 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying
party, give the indemnifying party notice of the commencement thereof; but the
omission to so notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Paragraph 6.
7
<PAGE>
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnified part to such
indemnified party of its election to so assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Paragraph 6 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
7. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SECURITIES.
(a) The Warrant Price shall be subject to adjustment from time
to time as follows:
(i) In case the Company shall at any time after the date
hereof pay a dividend in shares of Common Stock or make a distribution in shares
of Common Stock, then upon such dividend or distribution the Warrant Price in
effect immediately prior to such dividend or distribution shall forthwith be
reduced to a price determined by dividing:
a. an amount equal to the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution
multiplied by the Warrant Price in effect immediately prior to such dividend or
distribution, by
b. the total number of shares of Common Stock
outstanding immediately after such issuance or sale.
8
<PAGE>
For the purposes of any computation to be made in accordance
with the provisions of this clause (i), the following provisions shall be
applicable: Common Stock issuable by way of dividend or other distribution on
any stock of the Company shall be deemed to have been issued immediately after
the opening of business on the date following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution.
(ii) In case the Company shall at any time subdivide or
combine the outstanding Common Stock, the Warrant Price shall forthwith be
proportionately decreased in the case of subdivision or increased in the case of
combination to the nearest one cent. Any such adjustment shall become effective
at the time such subdivision or combination shall become effective.
(iii) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which the Warrant Price has been
adjusted as herein provided, the Company shall:
a. Deliver to the Holder a certificate signed by the
President or Vice President of the Company and by the Treasurer or Assistant
Treasurer or the Secretary or an Assistant Secretary of the Company, showing in
detail the facts requiring all such adjustments occurring during such period and
the Warrant Price after each such adjustment.
b. Notwithstanding anything contained herein to the
contrary, no adjustment of the Warrant Price shall be made if the amount of such
adjustment shall be less than $.01, but in such case any adjustment that would
otherwise be required then to be made shall be carried forward and shall be made
at the time and together with the next
9
<PAGE>
subsequent adjustment which, together with any adjustment so carried forward,
shall amount to not less than $.01.
(b) In the event that the number of outstanding shares of Common
Stock is increased by a stock dividend payable in Common Stock or by a
subdivision of the outstanding Common Stock, then, from and after the time at
which the adjusted Warrant Price becomes effective pursuant to Subsection (b) of
this Section by reason of such dividend or subdivision, the number of shares of
Common Stock issuable upon the exercise of each Warrant shall be increased in
proportion to such increase in outstanding shares. In the event that the number
of shares of Common Stock outstanding is decreased by a combination of the
outstanding Common Stock, then, from and after the time at which the adjusted
Warrant Price becomes effective pursuant to Subsection (b) of this Section by
reason of such combination, the number of shares of Common Stock issuable upon
the exercise of each Warrant shall be decreased in proportion to such decrease
in the outstanding shares of Common Stock.
(c) In case of any reorganization or reclassification of the
outstanding Common Stock (other than a change in par value, or from par value to
no par value, or as a result of a subdivision or combination), or in case of any
consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is the
continuing corporation and which does not result in any reclassification of the
outstanding Common Stock), or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety, the holder of each Warrant then outstanding shall thereafter have the
right to purchase the kind and amount of shares of Common Stock and other
securities and property receivable upon such
10
<PAGE>
reorganization, reclassification, consolidation, merger, sale or conveyance
by a holder of the number of shares of Common Stock which the holder of such
Warrant shall then be entitled to purchase; such adjustments shall apply with
respect to all such changes occurring between the date of this Warrant
Agreement and the date of exercise of such Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrants, make any
distribution of its assets to holders of its Common Stock as a liquidating or a
partial liquidating dividend, then the holder of Warrants who exercises his
Warrants after the record date for the determination of those holders of Common
Stock entitled to such distribution of assets as a liquidating or partial
liquidating dividend shall be entitled to receive for the Warrant Price per
Warrant, in addition to each share of Common Stock, the amount of such
distribution (or, at the option of the Company, a sum equal to the value of any
such assets at the time of such distribution as determined by the Board of
Directors of the Company in good faith), which would have been payable to such
holder had he been the holder of record of the Common Stock receivable upon
exercise of his Warrant on the record date for the determination of those
entitled to such distribution.
(e) In case of the dissolution, liquidation or winding-up of the
Company, all rights under the Warrants shall terminate on a date fixed by the
Company, such date to be no earlier than ten (10) days prior to the
effectiveness of such dissolution, liquidation or winding-up and not later than
five (5) days prior to such effectiveness. Notice of such termination of
purchase rights shall be given to the last registered holder of this Warrant, as
the same shall appear on the books of the Company, by registered mail at least
thirty (30) days prior to such termination date.
11
<PAGE>
(f) In case the Company shall, at any time prior to the
expiration of this Warrant and prior to the exercise thereof, offer to the
holders of its Common Stock any rights to subscribe for additional shares of any
class of the Company, then the Company shall give written notice thereof to the
last registered holder thereof not less than thirty (30) days prior to the date
on which the books of the Company are closed or a record date is fixed for the
determination of the stockholders entitled to such subscription rights. Such
notice shall specify the date as to which the books shall be closed or record
date fixed with respect to such offer of subscription and the right of the
holder thereof to participate in such offer of subscription shall terminate if
this Warrant shall not be exercised on or before the date of such closing of the
books or such record date.
(g) Without limiting the foregoing, the Company agrees to make
such additional adjustments to the number of shares to be issued hereunder
(whether required by the issuance of additional Common Stock or otherwise) as
may from time to time be necessary to ensure that the Holder will upon exercise
of this Warrant receive a percentage of the Total Equity of the Company equal to
the percentage of the Total Equity of the Company held by the Holder as of the
time of the original issuance of this Warrant. "Total Equity" shall mean the
sum of (i) the number of shares of Common Stock of the Company outstanding on
the date of determination of Total Equity is made and (ii) the number of shares
of Common Stock issuable upon exercise of options or warrants (not including
this Warrant) to purchase shares of Common Stock or securities convertible into
Common Stock or securities or evidences of indebtedness convertible directly or
indirectly into or exchangeable for Common Stock outstanding on the date the
determination of Total Equity is made.
12
<PAGE>
(h) Any adjustment pursuant to the aforesaid provision shall be
made on the basis of the number of shares of Common Stock which the holder
thereof would have been entitled to acquire by the exercise of the Warrant
immediately prior to the event giving rise to such adjustment.
(i) Irrespective of any adjustments in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or thereafter issued may continue to express the same price and
number and kind of shares as are stated in this Warrant.
(j) The Company may retain a firm of independent public
accountants (who may be any such firm regularly employed by the Company) to make
any computation required under this Section.
(k) If at any time, as a result of an adjustment made pursuant
to this Paragraph 7, the Holder of this Warrant shall become entitled to
purchase any securities other than shares of Common Stock, thereafter the number
of such securities so purchasable upon exercise of each Warrant and the Warrant
Price for such shares shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Common Stock.
8. FRACTIONAL SHARES.
The Company shall not be required to issue fractions of shares of
Common Shares on the exercise of this Warrant; provided, however, that if a
Holder exercises all the Warrants held of record by such Holder, the fractional
interests shall be eliminated by rounding any fraction up to the nearest whole
number of shares.
13
<PAGE>
9. MISCELLANEOUS.
(a) This Warrant shall be governed by and in accordance with the
laws of the State of New York.
(b) All notices, requests, consents and other communications
hereunder shall be made in writing and shall be deemed to have been duly made
when delivered, or mailed by registered or certified mail, return receipt
requested: (i) if to a Holder, to the address of such Holder as shown on the
books of the Company, or (ii) if to the Company, One Penn Plaza, New York, NY
10119.
(c) All the covenants and provisions of this Warrant by or for
the benefit of the Company and the Holders inure to the benefit of their
respective successors and assigns hereunder.
(d) Nothing in this Warrant shall be construed to give to any
person or corporation other than the Company and the registered Holder or
Holders, any legal or equitable right, for the sole and exclusive benefit of the
Company and the Holder or Holders.
IN WITNESS WHEREOF, Trans World Gaming Corp. has caused this Warrant
to be signed by its duly authorized officer and this Warrant to be dated
March , 1996.
TRANS WORLD GAMING CORP.
By:___________________________
Stanley Kohlenberg
President and
Chief Executive Officer
14
<PAGE>
NO PUBLIC OFFERING OF THIS WARRANT OR THE SECURITIES
UNDERLYING THIS WARRANT MAY BE MADE UNTIL
THE EFFECTIVENESS OF A REGISTRATION STATEMENT
OR OF A POST-EFFECTIVE AMENDMENT THERETO
UNDER THE SECURITIES ACT OF 1933 (THE "ACT"),
COVERING THIS WARRANT OR THE SECURITIES UNDERLYING
THIS WARRANT, OR UNTIL THE COMPANY IS IN RECEIPT OF AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
STATING THAT SUCH PUBLIC OFFERING IS EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT. TRANSFER OF
THIS WARRANT IS RESTRICTED UNDER PARAGRAPH 2 BELOW.
WARRANT TO PURCHASE
COMMON STOCK
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 26, 1996
THIS CERTIFIES that C.P. Baker Partners, Limited Partnership (together
with its assigns, the "Holder") is entitled to purchase from Trans World Gaming
Corp., a Nevada corporation ("Company") up to 13,330 shares of the Company's
common stock, par value $.001
<PAGE>
per share (the "Common Stock"), at a purchase price of $.01 per share of
Common Stock, subject to adjustment as hereafter provided.
This Warrant is issued pursuant to a Subscription Agreement dated
March 25, 1996 (the Subscription Agreement"), among the Company, Trans World
Gaming of Louisiana, Inc., the Holder and certain other subscribers.
1. EXERCISE OF THE WARRANT.
The rights represented by this Warrant may be exercised at any time on
or before 5:00 p.m., New York time, on March 26, 2002, in whole or in part, by
(i) the surrender of this Warrant (with the purchase form at the end of hereof
properly executed) at the principal executive office of the Company (or such
other office or agency of the Company as it may designate by notice in writing
to the Holder at the address of the Holder appearing on the books of the
Company); (ii) payment to the Company of the Exercise Price then in effect for
the number of shares of Common Stock specified in the above-mentioned purchase
form together with applicable stock transfer taxes, if any; and (iii) delivery
to the Company of a duly executed agreement signed by the person(s) designated
in the purchase form to the effect that such person(s) agree(s) to be bound by
the provisions of Paragraph 5 and subparagraphs (b), (c) and (d) of Paragraph 6
hereof. This Warrant shall be deemed to have been exercised, in whole or in
part to the extent specified, immediately prior to the close of business on the
date this Warrant is surrendered and payment is made in accordance with the
foregoing provisions of this Paragraph 1, and the person or persons in whose
name or names the certificates for the Securities shall be issuable upon such
exercise shall become the Holder or Holders of record of such Common Stock at
that time and date. The Common Stock so purchased shall be delivered
2
<PAGE>
to the Holder within a reasonable time, not exceeding ten (10) business days,
after the rights represented by this Warrant shall have been so exercised.
2. TRANSFER.
This Warrant may be assigned in whole or in part by the Holder by
(i) completing and executing the form of assignment at the end hereof and
(ii) surrendering this Warrant with such duly completed and executed assignment
form for cancellation, accompanied by funds sufficient to pay any transfer tax,
at the office or agency of the Company referred to in Paragraph 1 hereof;
whereupon the Company shall issue, in the name or names specified by the Holder
(including the Holder) a new Warrant or Warrants of like tenor and representing
in the aggregate rights to purchase the same number of shares of Common Stock as
are then purchasable hereunder.
3. COVENANTS OF THE COMPANY.
(a) The Company covenants and agrees that all Common Stock and
Common Stock issuable upon exercise of this Warrant will, upon issuance, be duly
and validly issued, fully paid and nonassessable and no personal liability will
attach to the holder thereof by reason of being such a holder, other than as set
forth herein.
(b) The Company covenant and agrees that during the period
within which this Warrant may be exercised, the Company will at all times have
authorized and reserved a sufficient number of shares of Common Stock to provide
for the exercise of this Warrant.
(c) The Company covenants and agrees that for so long as the
Common Stock shall be outstanding, the Company shall use its best efforts to
cause all shares of Common
3
<PAGE>
Stock issuable upon the exercise of the Warrant to be listed on or quoted by
The NASDAQ National Market System or on the NASDAQ Stock Market and the
Boston Stock Exchange.
4. NO RIGHTS OF STOCKHOLDER.
This Warrant shall not entitle the Holder to any voting rights or
other rights as a stockholder of the Company, either at law or in equity, and
the rights of the Holder are limited to those expressed in this Warrant and are
not enforceable against the Company except to the extent set forth herein.
5. REGISTRATION.
(a) From July 1, 1996 until February 15, 1997, upon the written
request of the Holder, and on a one-time basis, the Company shall file and use
its best reasonable efforts to cause to be declared effective by the Securities
and Exchange Commission a registration statement or post-effective amendment
thereto under the Act including such information as may be required to permit a
public offering of this Warrant and all the Warrants issued pursuant to the
Subscription Agreement, and any of the Common Stock issuable under those
Warrants (the "Registerable Securities"). The Company shall supply prospectuses
in order to facilitate the public sale or other disposition of the Registerable
Securities, use its best efforts to register and qualify any of the Registerable
Securities for sale in such states as such Holder reasonably designates and do
any and all other acts and things which may be necessary to enable such Holder
to consummate the public sale of the Registerable Securities, and furnish
indemnification in the manner provided in Paragraph 6 hereof. The Holder shall
furnish information reasonably requested by the Company in accordance with such
post-effective
4
<PAGE>
amendments or registration statements, including its intentions with respect
thereto, and shall furnish indemnification as set forth in Paragraph 6.
(b) The Company will maintain such registration statement or
post-effective amendment current under the Act for a period of at least twelve
(12) months from the effective date thereof.
(c) The Company shall bear the entire cost and expense of any
registration of securities under Paragraph 5 hereof. Notwithstanding the
foregoing, any Holder whose Registerable Securities are included in any such
registration statement pursuant to this Paragraph 5 shall, however, bear the
fees of any counsel retained by him and any transfer taxes or underwriting
discounts or commissions applicable to the Registerable Securities sold by him
pursuant thereto.
6. INDEMNIFICATION.
(a) Whenever pursuant to Paragraph 5 a registration statement
relating to any Registerable Securities is filed under the Act, amended or
supplemented, the Company will indemnify and hold harmless each Holder of the
Registerable Securities covered by such registration statement, amendment or
supplement (such holder hereinafter referred to as the "Distributing Holder"),
each person, if any, who controls (within the meaning of the Act) the
Distributing Holder, and each officer, employee, partner or agent of the
Distributing Holder, if the Distributing Holder is a broker or dealer, and each
underwriter (within the meaning of the Act) of such securities and each person,
if any, who controls (within the meaning of the Act) any such underwriter and
each officer, employee, agent or partner of such underwriter against any losses,
claims, damages or liabilities, joint or several, to which the Distributing
Holder, any
5
<PAGE>
such underwriter or any other person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement or alleged untrue statement of any material fact
contained in any such registration statement or any preliminary prospectus or
final prospectus constituting a part thereof or any amendment or supplement
thereto, or arise out of or are based upon the omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and will reimburse the Distributing Holder
and each such underwriter or such other person for any legal or other
expenses reasonably incurred by the Distributing Holder, or underwriter or
such other person, in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the Company
will not be liable in any such case (i) to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in said
registration statement, said preliminary prospectus, said final prospectus or
said amendment or supplement in reliance upon and in conformity with written
information furnished by such Distributing Holder, any other Distributing
Holder or any such underwriter for use in the preparation thereof, and (ii)
such losses, claims, damages or liabilities arise out of or are based upon
any actual or alleged untrue statement or omission made in or from any
preliminary prospectus, but corrected in the final prospectus, as amended or
supplemented.
(b) Whenever pursuant to Paragraph 5 a registration statement
relating to the Registerable Securities is filed under the Act, or is amended or
supplemented, the Distributing Holder will indemnify and hold harmless the
Company, each of its directors, each
6
<PAGE>
of its officers who have signed said registration statement and such
amendments and supplements thereto, and each person, if any, who controls the
Company (within the meaning of the Act) against any losses, claims, damages
or liabilities to which the Company or any such director, officer or
controlling person may become subject under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue or alleged untrue statement of any
material fact contained in any such registration statement or any preliminary
prospectus or final prospectus constituting a part thereof, or any amendment
or supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent that such untrue statement or
alleged untrue statement or omission was made in said registration statement,
said preliminary prospectus, said final prospectus or said amendment or
supplement in reliance upon and in conformity with written information
furnished by such Distributing Holder for use in the preparation thereof; and
will reimburse the Company or any such director, officer or controlling
person for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action.
(c) Promptly after receipt by an indemnified party under this
Paragraph 6 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying
party, give the indemnifying party notice of the commencement thereof; but the
omission to so notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Paragraph 6.
7
<PAGE>
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnified part to such
indemnified party of its election to so assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Paragraph 6 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
7. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SECURITIES.
(a) The Warrant Price shall be subject to adjustment from time
to time as follows:
(i) In case the Company shall at any time after the date
hereof pay a dividend in shares of Common Stock or make a distribution in shares
of Common Stock, then upon such dividend or distribution the Warrant Price in
effect immediately prior to such dividend or distribution shall forthwith be
reduced to a price determined by dividing:
a. an amount equal to the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution
multiplied by the Warrant Price in effect immediately prior to such dividend or
distribution, by
b. the total number of shares of Common Stock
outstanding immediately after such issuance or sale.
8
<PAGE>
For the purposes of any computation to be made in accordance
with the provisions of this clause (i), the following provisions shall be
applicable: Common Stock issuable by way of dividend or other distribution on
any stock of the Company shall be deemed to have been issued immediately after
the opening of business on the date following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution.
(ii) In case the Company shall at any time subdivide or
combine the outstanding Common Stock, the Warrant Price shall forthwith be
proportionately decreased in the case of subdivision or increased in the case of
combination to the nearest one cent. Any such adjustment shall become effective
at the time such subdivision or combination shall become effective.
(iii) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which the Warrant Price has been
adjusted as herein provided, the Company shall:
a. Deliver to the Holder a certificate signed by the
President or Vice President of the Company and by the Treasurer or Assistant
Treasurer or the Secretary or an Assistant Secretary of the Company, showing in
detail the facts requiring all such adjustments occurring during such period and
the Warrant Price after each such adjustment.
b. Notwithstanding anything contained herein to the
contrary, no adjustment of the Warrant Price shall be made if the amount of such
adjustment shall be less than $.01, but in such case any adjustment that would
otherwise be required then to be made shall be carried forward and shall be made
at the time and together with the next
9
<PAGE>
subsequent adjustment which, together with any adjustment so carried forward,
shall amount to not less than $.01.
(b) In the event that the number of outstanding shares of Common
Stock is increased by a stock dividend payable in Common Stock or by a
subdivision of the outstanding Common Stock, then, from and after the time at
which the adjusted Warrant Price becomes effective pursuant to Subsection (b) of
this Section by reason of such dividend or subdivision, the number of shares of
Common Stock issuable upon the exercise of each Warrant shall be increased in
proportion to such increase in outstanding shares. In the event that the number
of shares of Common Stock outstanding is decreased by a combination of the
outstanding Common Stock, then, from and after the time at which the adjusted
Warrant Price becomes effective pursuant to Subsection (b) of this Section by
reason of such combination, the number of shares of Common Stock issuable upon
the exercise of each Warrant shall be decreased in proportion to such decrease
in the outstanding shares of Common Stock.
(c) In case of any reorganization or reclassification of the
outstanding Common Stock (other than a change in par value, or from par value to
no par value, or as a result of a subdivision or combination), or in case of any
consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is the
continuing corporation and which does not result in any reclassification of the
outstanding Common Stock), or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety, the holder of each Warrant then outstanding shall thereafter have the
right to purchase the kind and amount of shares of Common Stock and other
securities and property receivable upon such
10
<PAGE>
reorganization, reclassification, consolidation, merger, sale or conveyance
by a holder of the number of shares of Common Stock which the holder of such
Warrant shall then be entitled to purchase; such adjustments shall apply with
respect to all such changes occurring between the date of this Warrant
Agreement and the date of exercise of such Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrants, make any
distribution of its assets to holders of its Common Stock as a liquidating or a
partial liquidating dividend, then the holder of Warrants who exercises his
Warrants after the record date for the determination of those holders of Common
Stock entitled to such distribution of assets as a liquidating or partial
liquidating dividend shall be entitled to receive for the Warrant Price per
Warrant, in addition to each share of Common Stock, the amount of such
distribution (or, at the option of the Company, a sum equal to the value of any
such assets at the time of such distribution as determined by the Board of
Directors of the Company in good faith), which would have been payable to such
holder had he been the holder of record of the Common Stock receivable upon
exercise of his Warrant on the record date for the determination of those
entitled to such distribution.
(e) In case of the dissolution, liquidation or winding-up of the
Company, all rights under the Warrants shall terminate on a date fixed by the
Company, such date to be no earlier than ten (10) days prior to the
effectiveness of such dissolution, liquidation or winding-up and not later than
five (5) days prior to such effectiveness. Notice of such termination of
purchase rights shall be given to the last registered holder of this Warrant, as
the same shall appear on the books of the Company, by registered mail at least
thirty (30) days prior to such termination date.
11
<PAGE>
(f) In case the Company shall, at any time prior to the
expiration of this Warrant and prior to the exercise thereof, offer to the
holders of its Common Stock any rights to subscribe for additional shares of any
class of the Company, then the Company shall give written notice thereof to the
last registered holder thereof not less than thirty (30) days prior to the date
on which the books of the Company are closed or a record date is fixed for the
determination of the stockholders entitled to such subscription rights. Such
notice shall specify the date as to which the books shall be closed or record
date fixed with respect to such offer of subscription and the right of the
holder thereof to participate in such offer of subscription shall terminate if
this Warrant shall not be exercised on or before the date of such closing of the
books or such record date.
(g) Without limiting the foregoing, the Company agrees to make
such additional adjustments to the number of shares to be issued hereunder
(whether required by the issuance of additional Common Stock or otherwise) as
may from time to time be necessary to ensure that the Holder will upon exercise
of this Warrant receive a percentage of the Total Equity of the Company equal to
the percentage of the Total Equity of the Company held by the Holder as of the
time of the original issuance of this Warrant. "Total Equity" shall mean the
sum of (i) the number of shares of Common Stock of the Company outstanding on
the date of determination of Total Equity is made and (ii) the number of shares
of Common Stock issuable upon exercise of options or warrants (not including
this Warrant) to purchase shares of Common Stock or securities convertible into
Common Stock or securities or evidences of indebtedness convertible directly or
indirectly into or exchangeable for Common Stock outstanding on the date the
determination of Total Equity is made.
12
<PAGE>
(h) Any adjustment pursuant to the aforesaid provision shall be
made on the basis of the number of shares of Common Stock which the holder
thereof would have been entitled to acquire by the exercise of the Warrant
immediately prior to the event giving rise to such adjustment.
(i) Irrespective of any adjustments in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or thereafter issued may continue to express the same price and
number and kind of shares as are stated in this Warrant.
(j) The Company may retain a firm of independent public
accountants (who may be any such firm regularly employed by the Company) to make
any computation required under this Section.
(k) If at any time, as a result of an adjustment made pursuant
to this Paragraph 7, the Holder of this Warrant shall become entitled to
purchase any securities other than shares of Common Stock, thereafter the number
of such securities so purchasable upon exercise of each Warrant and the Warrant
Price for such shares shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Common Stock.
8. FRACTIONAL SHARES.
The Company shall not be required to issue fractions of shares of
Common Shares on the exercise of this Warrant; provided, however, that if a
Holder exercises all the Warrants held of record by such Holder, the fractional
interests shall be eliminated by rounding any fraction up to the nearest whole
number of shares.
13
<PAGE>
9. MISCELLANEOUS.
(a) This Warrant shall be governed by and in accordance with the
laws of the State of New York.
(b) All notices, requests, consents and other communications
hereunder shall be made in writing and shall be deemed to have been duly made
when delivered, or mailed by registered or certified mail, return receipt
requested: (i) if to a Holder, to the address of such Holder as shown on the
books of the Company, or (ii) if to the Company, One Penn Plaza, New York, NY
10119.
(c) All the covenants and provisions of this Warrant by or for
the benefit of the Company and the Holders inure to the benefit of their
respective successors and assigns hereunder.
(d) Nothing in this Warrant shall be construed to give to any
person or corporation other than the Company and the registered Holder or
Holders, any legal or equitable right, for the sole and exclusive benefit of the
Company and the Holder or Holders.
IN WITNESS WHEREOF, Trans World Gaming Corp. has caused this Warrant
to be signed by its duly authorized officer and this Warrant to be dated
March , 1996.
TRANS WORLD GAMING CORP.
By:___________________________
Stanley Kohlenberg
President and
Chief Executive Officer
14
<PAGE>
NO PUBLIC OFFERING OF THIS WARRANT OR THE SECURITIES
UNDERLYING THIS WARRANT MAY BE MADE UNTIL
THE EFFECTIVENESS OF A REGISTRATION STATEMENT
OR OF A POST-EFFECTIVE AMENDMENT THERETO
UNDER THE SECURITIES ACT OF 1933 (THE "ACT"),
COVERING THIS WARRANT OR THE SECURITIES UNDERLYING
THIS WARRANT, OR UNTIL THE COMPANY IS IN RECEIPT OF AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
STATING THAT SUCH PUBLIC OFFERING IS EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT. TRANSFER OF
THIS WARRANT IS RESTRICTED UNDER PARAGRAPH 2 BELOW.
WARRANT TO PURCHASE
COMMON STOCK
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 26, 1996
THIS CERTIFIES that C.P. Baker Venture Fund I, Limited Partnership
(together with its assigns, the "Holder") is entitled to purchase from Trans
World Gaming Corp., a Nevada corporation ("Company") up to 53,320 shares of the
Company's common stock, par
<PAGE>
value $.001 per share (the "Common Stock"), at a purchase price of $.01 per
share of Common Stock, subject to adjustment as hereafter provided.
This Warrant is issued pursuant to a Subscription Agreement dated
March 25, 1996 (the Subscription Agreement"), among the Company, Trans World
Gaming of Louisiana, Inc., the Holder and certain other subscribers.
1. EXERCISE OF THE WARRANT.
The rights represented by this Warrant may be exercised at any time on
or before 5:00 p.m., New York time, on March 26, 2002, in whole or in part, by
(i) the surrender of this Warrant (with the purchase form at the end of hereof
properly executed) at the principal executive office of the Company (or such
other office or agency of the Company as it may designate by notice in writing
to the Holder at the address of the Holder appearing on the books of the
Company); (ii) payment to the Company of the Exercise Price then in effect for
the number of shares of Common Stock specified in the above-mentioned purchase
form together with applicable stock transfer taxes, if any; and (iii) delivery
to the Company of a duly executed agreement signed by the person(s) designated
in the purchase form to the effect that such person(s) agree(s) to be bound by
the provisions of Paragraph 5 and subparagraphs (b), (c) and (d) of Paragraph 6
hereof. This Warrant shall be deemed to have been exercised, in whole or in
part to the extent specified, immediately prior to the close of business on the
date this Warrant is surrendered and payment is made in accordance with the
foregoing provisions of this Paragraph 1, and the person or persons in whose
name or names the certificates for the Securities shall be issuable upon such
exercise shall become the Holder or Holders of record of such Common Stock at
that time and date. The Common Stock so purchased shall be delivered
2
<PAGE>
to the Holder within a reasonable time, not exceeding ten (10) business days,
after the rights represented by this Warrant shall have been so exercised.
2. TRANSFER.
This Warrant may be assigned in whole or in part by the Holder by
(i) completing and executing the form of assignment at the end hereof and
(ii) surrendering this Warrant with such duly completed and executed assignment
form for cancellation, accompanied by funds sufficient to pay any transfer tax,
at the office or agency of the Company referred to in Paragraph 1 hereof;
whereupon the Company shall issue, in the name or names specified by the Holder
(including the Holder) a new Warrant or Warrants of like tenor and representing
in the aggregate rights to purchase the same number of shares of Common Stock as
are then purchasable hereunder.
3. COVENANTS OF THE COMPANY.
(a) The Company covenants and agrees that all Common Stock and
Common Stock issuable upon exercise of this Warrant will, upon issuance, be duly
and validly issued, fully paid and nonassessable and no personal liability will
attach to the holder thereof by reason of being such a holder, other than as set
forth herein.
(b) The Company covenant and agrees that during the period
within which this Warrant may be exercised, the Company will at all times have
authorized and reserved a sufficient number of shares of Common Stock to provide
for the exercise of this Warrant.
(c) The Company covenants and agrees that for so long as the
Common Stock shall be outstanding, the Company shall use its best efforts to
cause all shares of Common
3
<PAGE>
Stock issuable upon the exercise of the Warrant to be listed on or quoted by
The NASDAQ National Market System or on the NASDAQ Stock Market and the
Boston Stock Exchange.
4. NO RIGHTS OF STOCKHOLDER.
This Warrant shall not entitle the Holder to any voting rights or
other rights as a stockholder of the Company, either at law or in equity, and
the rights of the Holder are limited to those expressed in this Warrant and are
not enforceable against the Company except to the extent set forth herein.
5. REGISTRATION.
(a) From July 1, 1996 until February 15, 1997, upon the written
request of the Holder, and on a one-time basis, the Company shall file and use
its best reasonable efforts to cause to be declared effective by the Securities
and Exchange Commission a registration statement or post-effective amendment
thereto under the Act including such information as may be required to permit a
public offering of this Warrant and all the Warrants issued pursuant to the
Subscription Agreement, and any of the Common Stock issuable under those
Warrants (the "Registerable Securities"). The Company shall supply prospectuses
in order to facilitate the public sale or other disposition of the Registerable
Securities, use its best efforts to register and qualify any of the Registerable
Securities for sale in such states as such Holder reasonably designates and do
any and all other acts and things which may be necessary to enable such Holder
to consummate the public sale of the Registerable Securities, and furnish
indemnification in the manner provided in Paragraph 6 hereof. The Holder shall
furnish information reasonably requested by the Company in accordance with such
post-effective
4
<PAGE>
amendments or registration statements, including its intentions with respect
thereto, and shall furnish indemnification as set forth in Paragraph 6.
(b) The Company will maintain such registration statement or
post-effective amendment current under the Act for a period of at least twelve
(12) months from the effective date thereof.
(c) The Company shall bear the entire cost and expense of any
registration of securities under Paragraph 5 hereof. Notwithstanding the
foregoing, any Holder whose Registerable Securities are included in any such
registration statement pursuant to this Paragraph 5 shall, however, bear the
fees of any counsel retained by him and any transfer taxes or underwriting
discounts or commissions applicable to the Registerable Securities sold by him
pursuant thereto.
6. INDEMNIFICATION.
(a) Whenever pursuant to Paragraph 5 a registration statement
relating to any Registerable Securities is filed under the Act, amended or
supplemented, the Company will indemnify and hold harmless each Holder of the
Registerable Securities covered by such registration statement, amendment or
supplement (such holder hereinafter referred to as the "Distributing Holder"),
each person, if any, who controls (within the meaning of the Act) the
Distributing Holder, and each officer, employee, partner or agent of the
Distributing Holder, if the Distributing Holder is a broker or dealer, and each
underwriter (within the meaning of the Act) of such securities and each person,
if any, who controls (within the meaning of the Act) any such underwriter and
each officer, employee, agent or partner of such underwriter against any losses,
claims, damages or liabilities, joint or several, to which the Distributing
Holder, any
5
<PAGE>
such underwriter or any other person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement or alleged untrue statement of any material fact
contained in any such registration statement or any preliminary prospectus or
final prospectus constituting a part thereof or any amendment or supplement
thereto, or arise out of or are based upon the omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and will reimburse the Distributing Holder
and each such underwriter or such other person for any legal or other
expenses reasonably incurred by the Distributing Holder, or underwriter or
such other person, in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the Company
will not be liable in any such case (i) to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in said
registration statement, said preliminary prospectus, said final prospectus or
said amendment or supplement in reliance upon and in conformity with written
information furnished by such Distributing Holder, any other Distributing
Holder or any such underwriter for use in the preparation thereof, and (ii)
such losses, claims, damages or liabilities arise out of or are based upon
any actual or alleged untrue statement or omission made in or from any
preliminary prospectus, but corrected in the final prospectus, as amended or
supplemented.
(b) Whenever pursuant to Paragraph 5 a registration statement
relating to the Registerable Securities is filed under the Act, or is amended or
supplemented, the Distributing Holder will indemnify and hold harmless the
Company, each of its directors, each
6
<PAGE>
of its officers who have signed said registration statement and such
amendments and supplements thereto, and each person, if any, who controls the
Company (within the meaning of the Act) against any losses, claims, damages
or liabilities to which the Company or any such director, officer or
controlling person may become subject under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue or alleged untrue statement of any
material fact contained in any such registration statement or any preliminary
prospectus or final prospectus constituting a part thereof, or any amendment
or supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent that such untrue statement or
alleged untrue statement or omission was made in said registration statement,
said preliminary prospectus, said final prospectus or said amendment or
supplement in reliance upon and in conformity with written information
furnished by such Distributing Holder for use in the preparation thereof; and
will reimburse the Company or any such director, officer or controlling
person for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action.
(c) Promptly after receipt by an indemnified party under this
Paragraph 6 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying
party, give the indemnifying party notice of the commencement thereof; but the
omission to so notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Paragraph 6.
7
<PAGE>
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnified part to such
indemnified party of its election to so assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Paragraph 6 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
7. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SECURITIES.
(a) The Warrant Price shall be subject to adjustment from time
to time as follows:
(i) In case the Company shall at any time after the date
hereof pay a dividend in shares of Common Stock or make a distribution in shares
of Common Stock, then upon such dividend or distribution the Warrant Price in
effect immediately prior to such dividend or distribution shall forthwith be
reduced to a price determined by dividing:
a. an amount equal to the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution
multiplied by the Warrant Price in effect immediately prior to such dividend or
distribution, by
b. the total number of shares of Common Stock
outstanding immediately after such issuance or sale.
8
<PAGE>
For the purposes of any computation to be made in accordance
with the provisions of this clause (i), the following provisions shall be
applicable: Common Stock issuable by way of dividend or other distribution on
any stock of the Company shall be deemed to have been issued immediately after
the opening of business on the date following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution.
(ii) In case the Company shall at any time subdivide or
combine the outstanding Common Stock, the Warrant Price shall forthwith be
proportionately decreased in the case of subdivision or increased in the case of
combination to the nearest one cent. Any such adjustment shall become effective
at the time such subdivision or combination shall become effective.
(iii) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which the Warrant Price has been
adjusted as herein provided, the Company shall:
a. Deliver to the Holder a certificate signed by the
President or Vice President of the Company and by the Treasurer or Assistant
Treasurer or the Secretary or an Assistant Secretary of the Company, showing in
detail the facts requiring all such adjustments occurring during such period and
the Warrant Price after each such adjustment.
b. Notwithstanding anything contained herein to the
contrary, no adjustment of the Warrant Price shall be made if the amount of such
adjustment shall be less than $.01, but in such case any adjustment that would
otherwise be required then to be made shall be carried forward and shall be made
at the time and together with the next
9
<PAGE>
subsequent adjustment which, together with any adjustment so carried forward,
shall amount to not less than $.01.
(b) In the event that the number of outstanding shares of Common
Stock is increased by a stock dividend payable in Common Stock or by a
subdivision of the outstanding Common Stock, then, from and after the time at
which the adjusted Warrant Price becomes effective pursuant to Subsection (b) of
this Section by reason of such dividend or subdivision, the number of shares of
Common Stock issuable upon the exercise of each Warrant shall be increased in
proportion to such increase in outstanding shares. In the event that the number
of shares of Common Stock outstanding is decreased by a combination of the
outstanding Common Stock, then, from and after the time at which the adjusted
Warrant Price becomes effective pursuant to Subsection (b) of this Section by
reason of such combination, the number of shares of Common Stock issuable upon
the exercise of each Warrant shall be decreased in proportion to such decrease
in the outstanding shares of Common Stock.
(c) In case of any reorganization or reclassification of the
outstanding Common Stock (other than a change in par value, or from par value to
no par value, or as a result of a subdivision or combination), or in case of any
consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is the
continuing corporation and which does not result in any reclassification of the
outstanding Common Stock), or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety, the holder of each Warrant then outstanding shall thereafter have the
right to purchase the kind and amount of shares of Common Stock and other
securities and property receivable upon such
10
<PAGE>
reorganization, reclassification, consolidation, merger, sale or conveyance
by a holder of the number of shares of Common Stock which the holder of such
Warrant shall then be entitled to purchase; such adjustments shall apply with
respect to all such changes occurring between the date of this Warrant
Agreement and the date of exercise of such Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrants, make any
distribution of its assets to holders of its Common Stock as a liquidating or a
partial liquidating dividend, then the holder of Warrants who exercises his
Warrants after the record date for the determination of those holders of Common
Stock entitled to such distribution of assets as a liquidating or partial
liquidating dividend shall be entitled to receive for the Warrant Price per
Warrant, in addition to each share of Common Stock, the amount of such
distribution (or, at the option of the Company, a sum equal to the value of any
such assets at the time of such distribution as determined by the Board of
Directors of the Company in good faith), which would have been payable to such
holder had he been the holder of record of the Common Stock receivable upon
exercise of his Warrant on the record date for the determination of those
entitled to such distribution.
(e) In case of the dissolution, liquidation or winding-up of the
Company, all rights under the Warrants shall terminate on a date fixed by the
Company, such date to be no earlier than ten (10) days prior to the
effectiveness of such dissolution, liquidation or winding-up and not later than
five (5) days prior to such effectiveness. Notice of such termination of
purchase rights shall be given to the last registered holder of this Warrant, as
the same shall appear on the books of the Company, by registered mail at least
thirty (30) days prior to such termination date.
11
<PAGE>
(f) In case the Company shall, at any time prior to the
expiration of this Warrant and prior to the exercise thereof, offer to the
holders of its Common Stock any rights to subscribe for additional shares of any
class of the Company, then the Company shall give written notice thereof to the
last registered holder thereof not less than thirty (30) days prior to the date
on which the books of the Company are closed or a record date is fixed for the
determination of the stockholders entitled to such subscription rights. Such
notice shall specify the date as to which the books shall be closed or record
date fixed with respect to such offer of subscription and the right of the
holder thereof to participate in such offer of subscription shall terminate if
this Warrant shall not be exercised on or before the date of such closing of the
books or such record date.
(g) Without limiting the foregoing, the Company agrees to make
such additional adjustments to the number of shares to be issued hereunder
(whether required by the issuance of additional Common Stock or otherwise) as
may from time to time be necessary to ensure that the Holder will upon exercise
of this Warrant receive a percentage of the Total Equity of the Company equal to
the percentage of the Total Equity of the Company held by the Holder as of the
time of the original issuance of this Warrant. "Total Equity" shall mean the
sum of (i) the number of shares of Common Stock of the Company outstanding on
the date of determination of Total Equity is made and (ii) the number of shares
of Common Stock issuable upon exercise of options or warrants (not including
this Warrant) to purchase shares of Common Stock or securities convertible into
Common Stock or securities or evidences of indebtedness convertible directly or
indirectly into or exchangeable for Common Stock outstanding on the date the
determination of Total Equity is made.
12
<PAGE>
(h) Any adjustment pursuant to the aforesaid provision shall be
made on the basis of the number of shares of Common Stock which the holder
thereof would have been entitled to acquire by the exercise of the Warrant
immediately prior to the event giving rise to such adjustment.
(i) Irrespective of any adjustments in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or thereafter issued may continue to express the same price and
number and kind of shares as are stated in this Warrant.
(j) The Company may retain a firm of independent public
accountants (who may be any such firm regularly employed by the Company) to make
any computation required under this Section.
(k) If at any time, as a result of an adjustment made pursuant
to this Paragraph 7, the Holder of this Warrant shall become entitled to
purchase any securities other than shares of Common Stock, thereafter the number
of such securities so purchasable upon exercise of each Warrant and the Warrant
Price for such shares shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Common Stock.
8. FRACTIONAL SHARES.
The Company shall not be required to issue fractions of shares of
Common Shares on the exercise of this Warrant; provided, however, that if a
Holder exercises all the Warrants held of record by such Holder, the fractional
interests shall be eliminated by rounding any fraction up to the nearest whole
number of shares.
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9. MISCELLANEOUS.
(a) This Warrant shall be governed by and in accordance with the
laws of the State of New York.
(b) All notices, requests, consents and other communications
hereunder shall be made in writing and shall be deemed to have been duly made
when delivered, or mailed by registered or certified mail, return receipt
requested: (i) if to a Holder, to the address of such Holder as shown on the
books of the Company, or (ii) if to the Company, One Penn Plaza, New York, NY
10119.
(c) All the covenants and provisions of this Warrant by or for
the benefit of the Company and the Holders inure to the benefit of their
respective successors and assigns hereunder.
(d) Nothing in this Warrant shall be construed to give to any
person or corporation other than the Company and the registered Holder or
Holders, any legal or equitable right, for the sole and exclusive benefit of the
Company and the Holder or Holders.
IN WITNESS WHEREOF, Trans World Gaming Corp. has caused this Warrant
to be signed by its duly authorized officer and this Warrant to be dated
March , 1996.
TRANS WORLD GAMING CORP.
By:___________________________
Stanley Kohlenberg
President and
Chief Executive Officer
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