<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
March 31, 1998
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(Date of earliest event reported)
Trans World Gaming Corp.
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(Exact name of registrant as specified in its charter)
Nevada 0-25244 13-3738518
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
One Penn Plaza, Suite 1503 New York, New York 10119-0002
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(Address of principal executive offices) (Zip Code)
(212) 563-3355
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year, if changed
since last report)
Page 1 of 7 Pages
Exhibit Index appears on Page 4
<PAGE>
ITEM 2. ACQUISITION AND DISPOSITION OF ASSETS
On March 31, 1998, Trans World Gaming Corp. ("TWG" or the "Company"),
acquired substantially all of the voting and non-voting ownership interests of
21st Century Resorts a.s., a Czech Republic joint stock company ("Resorts") and
Resorts' subsidiaries, LMJ Casino Rozvadov a.s., a Czech Republic joint stock
company ("LMJCR"), LMJ Slots s.r.o., a Czech Republic limited liability company
("LMJS") and Atlantic Properties s.r.o., a Czech Republic limited liability
company ("Atlantic") and certain assets of Gameway Leasing Limited, a Gibraltar
company limited by shares ("Gameway") and Monarch Leasing Limited, a Gibraltar
company limited by shares ("Monarch"). The underlying assets acquired primarily
included the voting and non-voting shares of Resorts, LMJCR, LMJS and Atlantic,
contract rights, land, furniture, fixtures, gaming equipment and inventories,
while the primary liabilities assumed included accounts payable and accrued
liabilities related to the ongoing business. The net purchase price for the
acquisition was U.S.$10,340,685.59. The Company obtained the funds for the
acquisition through various financial arrangements, described below.
Prior to the date of the acquisition and subsequent thereto, Resorts,
LMJCR, LMJS and Atlantic were, and continue to be, engaged in the business of
casino gaming in Ceska Kubice and Rozvadov, Czech Republic, and Resorts owns the
land and rights to build a third casino thereon in Znojmo, Czech Republic.
Gameway and Monarch were engaged in the leasing of casino equipment and
providing certain management services to Resorts, LMJCR, LMJS and Atlantic. The
Company has taken over all such operations of Resorts, LMJCR, LMJS and Atlantic
and the assets of Gameway and Monarch.
On March 31, 1998, the Company, with the assistance of Libra Investments,
Inc., Los Angeles, California, acting as placement agent ("Libra"), borrowed
$17.0 million from fourteen sophisticated, accredited investors (the
"Investors") in a private placement. (See Exhibits 2(ii) and 2(iii)). The loan
is represented by 12% Senior Secured Notes (the "Notes") issued pursuant to an
indenture by and among TWG, TWG International U.S. Corporation ("TIUC"), TWG
Finance Corp. ("TFC") (both wholly owned subsidiaries of TWG) and U.S. Trust
Company of Texas, N.A., acting as indenture trustee (the "Indenture Trustee")
(See Exhibit 4(i)). TIUC was recently organized by the Company to hold the
equity interests of Resorts and its subsidiaries and TFC was recently organized
to act as a financing and collateral vehicle for the Investors in order to
facilitate the collateralization of the loan under Czech law (a separate
indenture was entered into between TIUC and the Indenture Trustee pursuant to
which TFC holds a $17.0 million note which represents the same, and not
additional, debt as represented by the Notes. The Notes are secured directly by
a pledge of all of the stock of TIUC and TFC and indirectly by a pledge of 66%
of the stock of certain of TIUC's subsidiaries, including Resorts. See Exhibit
4(iii)). The Notes accrue interest and are payable semi-annually, mature on
March 17, 2005 and rank PARI PASSU with the Company's other outstanding
unsecured and unsubordinated indebtedness. The Notes also require mandatory
prepayments based upon excess cash flow generated by TIUC from the operation of
the Czech casinos.
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In addition to the Notes, each Investor received a proportionate share of
warrants to purchase approximately 7.1 million shares of TWG common stock (the
"Warrants"), representing 40% of the Company's fully diluted outstanding common
stock. The Warrants have an exercise price of $.01 per share and expire on
March 31, 2008 (See Exhibit 4(ii)). The proceeds of the private placement were
used to acquire the equity interests described above and will be used to fund
improvements in the existing casinos and fund plans for the development of a
casino on the Znojmo property (together, $12.6 million), retire a promissory
note ($1.3 million), pay the fees and expenses of the private placement ($1.4
million, including $703,088 to Libra in cash plus warrants to acquire 354,374
shares at $.01 per share to expire on March 31, 2008; see Exhibit 4(x)); and for
working capital ($1.7 million). The indenture contains significant financial
and other restrictive covenants relating to the business of TWG and TIUC.
As a condition to the private placement, TWG was required to renegotiate
the terms and conditions of the $4.8 million Secured Convertible Senior Bonds
(the "Senior Bonds") due June 30, 1999. On March 25, 1998, the Company and the
holders of the Senior Bonds agreed to amend such indebtedness to provide: (i)
the principal and interest obligations will be payable only from excess cash
flow generated primarily from the Louisiana operations and secondarily from the
Bishkek operations; (ii) the maturity date was extended to December 31, 2005;
(iii) the ability to convert the Senior Bonds into TWG common stock at $2.50 per
share through June 30, 1998 and at $3.125 per share from July 1, 1998 to June
30, 1999 was terminated; and (iv) the holders of the Senior Bonds received
warrants replacing the outstanding warrants and warrants issued in consideration
of the termination of the conversion rights to purchase, in the aggregate,
4,160,000 shares of TWG common stock at an exercise price of $1.00 and $1.50 per
share, respectively, to expire on December 31, 2005 (See Exhibits 4(v), 4(vi)
and 4(vii)).
On March 25, 1998, the Company also renegotiated the terms of certain
warrants to purchase 499,895 shares of TWG common stock owned by Mr. Christopher
P. Baker and certain of his affiliates ("Baker"). In consideration of the
elimination of certain anti-dilution provisions in said warrants, the Company
issued to Baker amended warrants to purchase 2,051,912 shares of TWG common
stock at $.01 per share (such warrants include, and are not in addition to, the
original warrants to purchase 499,895 shares of TWG common stock) which warrants
expire on June 30, 2002 (See Exhibits 4(viii) and 4(ix)).
Other than this transaction, prior to the closing thereof, there was no
material relationship between the Company and Resorts or any of the Company's or
Resorts' affiliates.
(The descriptions of the agreements set forth above are, by necessity, only
summaries thereof and do not purport to be complete. Reference is made to the
full texts of such agreements attached hereto as Exhibits.)
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<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
Financial Statements will be filed by amendment on or before May 30, 1998
pursuant to the guidelines set forth in Item 7(a)(4) of the instructions to Form
8-K.
EXHIBITS:
<TABLE>
<CAPTION>
Exhibit Number Description
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<S> <C>
2(i) Stock Purchase Agreement by and
among Trans World Gaming Corp.,
21st Century Resorts a.s., Gameway
Leasing Limited, Monarch Leasing
Limited and the Named Individuals
dated January 20, 1998
(incorporated by reference to
Exhibit 10.30 of the Company's
Form 10-KSB filed with the
Securities and Exchange Commission
on March 31, 1998).
2(ii) Form of Subscription Agreement by
and among Trans World Gaming
Corp., TWG International U.S.
Corporation, TWG Finance Corp. and
a named investor dated March 16,
1998 (incorporated by reference to
Exhibit 10.31 of the Company's
Form 10-KSB filed with the
Securities and Exchange Commission
on March 31, 1998).
2(iii) Escrow Agreement by and among U.S.
Trust Company of Texas, N.A.,
Trans World Gaming Corp., TWG
Finance Corp. and TWG
International U.S. Corporation
dated March 17, 1998 (incorporated
by reference to Exhibit 10.32 of
the Company's Form 10-KSB filed
with the Securities and Exchange
Commission on March 31, 1998).
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<PAGE>
4(i) Indenture by and among Trans World
Gaming Corp., TWG International
U.S. Corporation, TWG Finance
Corp. and U.S. Trust Company of
Texas, N.A. dated March 31, 1998.
4(ii) Form of Series C Warrant to
Purchase Common Stock of Trans
World Gaming dated March 31, 1998.
4(iii) Indenture by and between TWG
International U.S. Corporation and
U.S. Trust Company of Texas, N.A.
dated March 31, 1998.
4(iv) Form of Consent to Amend
Indenture, Bonds and Warrants by
and among Trans World Gaming
Corp., Trans World Gaming of
Louisiana, Inc., U.S. Trust
Company of Texas, N.A. and a named
holder dated March 25, 1998.
4(v) First Amended Indenture by and
among Trans World Gaming Corp.,
Trans World Gaming of Louisiana,
Inc. and U.S. Trust Company of
Texas, N.A. dated March 31, 1998.
4(vi) Form of Series A Warrant to
Purchase Common Stock of Trans
World Gaming Corp. dated March 31,
1998.
4(vii) Form of Series B Warrant to
Purchase Commons Stock of Trans
World Gaming Corp. dated March 31,
1998.
4(viii) Form of Agreement to Amend
Warrants by and between Trans
World Gaming Corp. and a named
holder dated March 25, 1998.
4(ix) Form of Series D Warrant to
Purchase Common Stock of Trans
World Gaming Corp. dated March 31,
1998.
4(x) Form of Series E Warrant to
Purchase Common Stock of Trans
World Gaming Corp. dated March 31,
1998.
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<PAGE>
20(i) Press Release issued by the
Company on January 20, 1998 with
respect to the Agreement.
20(ii) Press Release issued by the
Company on April 1, 1998 with
respect to the Closing.
</TABLE>
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<PAGE>
SIGNATURES
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.
Date: April 14, 1998 By: /s/ Dominick J. Valenzano
-------------------------
Dominick J. Valenzano
Chief Financial Officer
-7-
F<PAGE>
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TRANS WORLD GAMING CORP.
TWG INTERNATIONAL U.S. CORPORATION
TWG FINANCE CORP.
Issuers
and
U.S. TRUST COMPANY OF TEXAS, N.A., as Trustee
INDENTURE
Dated as of March 31, 1998
--------------------
$17,000,000
12% Senior Secured Notes Due March 17, 2005
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<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 1.1 Certain Terms Defined . . . . . . . . . . . . . . . . .
ARTICLE 2 ISSUE, EXECUTION, FORM AND REGISTRATION OF SECURITIES. . . . .
SECTION 2.1 Authentication and Delivery of Securities . . . . . . .
SECTION 2.2 Execution of Securities . . . . . . . . . . . . . . . .
SECTION 2.3 Certificate of Authentication . . . . . . . . . . . . .
SECTION 2.4 Form, Denomination and Date of Securities; Payments of
Interest in Cash . . . . . . . . . . . . . . . . . .
SECTION 2.5 Registration, Transfer and Exchange . . . . . . . . . .
SECTION 2.6 Mutilated, Defaced, Destroyed, Lost and Stolen
Securities . . . . . . . . . . . . . . . . . . . . .
SECTION 2.7 Cancellation of Securities; Disposition Thereof . . . .
SECTION 2.8 Temporary Securities. . . . . . . . . . . . . . . . . .
ARTICLE 3 COVENANTS OF THE ISSUER. . . . . . . . . . . . . . . . . . . .
SECTION 3.1 Payment of Principal and Interest . . . . . . . . . . .
SECTION 3.2 Offices for Payments, Etc.. . . . . . . . . . . . . . .
SECTION 3.3 Appointment To Fill a Vacancy in Office of Trustee. . .
SECTION 3.4 Paying Agents . . . . . . . . . . . . . . . . . . . . .
SECTION 3.5 Officers' Certificates as to Default and as to
Compliance . . . . . . . . . . . . . . . . . . . . .
SECTION 3.6 Mandatory Prepayment. . . . . . . . . . . . . . . . . .
SECTION 3.7 Maintenance of Properties, Etc. . . . . . . . . . . . .
SECTION 3.8 Indebtedness. . . . . . . . . . . . . . . . . . . . . .
SECTION 3.9 Books . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.10 Limitation on Incurrence of Additional Indebtedness . .
SECTION 3.11 Restrictions on Issuance of Stock . . . . . . . . . . .
SECTION 3.12 Restrictions on Asset Sales . . . . . . . . . . . . . .
SECTION 3.13 Distributions . . . . . . . . . . . . . . . . . . . . .
SECTION 3.14 Limitation on Dividends and Other Payment Restrictions
Effecting Subsidiaries . . . . . . . . . . . . . . .
SECTION 3.15 Limitation on Investments . . . . . . . . . . . . . . .
SECTION 3.16 Limitation on Liens . . . . . . . . . . . . . . . . . .
SECTION 3.17 Transactions with Affiliates. . . . . . . . . . . . . .
SECTION 3.18 Change of Control . . . . . . . . . . . . . . . . . . .
SECTION 3.19 Line of Business. . . . . . . . . . . . . . . . . . . .
SECTION 3.20 Payments for Consent. . . . . . . . . . . . . . . . . .
SECTION 3.21 Limitations on Sale and Leaseback Transactions. . . . .
SECTION 3.22 Waiver of Stay, Extension or Usury Laws . . . . . . . .
SECTION 3.23 Non USA Operations. . . . . . . . . . . . . . . . . . .
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SECTION 3.24 Cost of Operations. . . . . . . . . . . . . . . . . . .
SECTION 3.25 Funding Documents . . . . . . . . . . . . . . . . . . .
SECTION 3.26 Payments. . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.27 No Modification of Funding Note . . . . . . . . . . . .
SECTION 3.28 Use of Proceeds . . . . . . . . . . . . . . . . . . . .
SECTION 3.29 Post Closing Cooperation. . . . . . . . . . . . . . . .
ARTICLE 4 SECURITYHOLDERS' LISTS AND REPORTS BY THE ISSUER AND
THE TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.1 Issuer To Furnish Trustee Information as to Names and
Addresses of Securityholders. . . . . . . . . . . . . .
SECTION 4.2 Preservation and Disclosure of Securityholders' Lists .
SECTION 4.3 Reports by the Issuer . . . . . . . . . . . . . . . . .
SECTION 4.4 [Reserved]. . . . . . . . . . . . . . . . . . . . . . .
ARTICLE 5 REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT
OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.1 Event of Default Defined; Acceleration of Maturity;
Waiver of Default . . . . . . . . . . . . . . . . . . .
SECTION 5.2 Collection of Indebtedness by Trustee; Trustee May
Prove Indebtedness. . . . . . . . . . . . . . . . . . .
SECTION 5.3 Application of Proceeds . . . . . . . . . . . . . . . .
SECTION 5.4 Suits for Enforcement . . . . . . . . . . . . . . . . .
SECTION 5.5 Restoration of Rights on Abandonment of Proceedings . .
SECTION 5.6 Limitations on Suits by Securityholders . . . . . . . .
SECTION 5.7 Unconditional Right of Securityholders To Institute
Certain Suits . . . . . . . . . . . . . . . . . . . . .
SECTION 5.8 Powers and Remedies Cumulative; Delay or Omission Not
Waiver of Default . . . . . . . . . . . . . . . . . . .
SECTION 5.9 Control by Securityholders. . . . . . . . . . . . . . .
SECTION 5.10 Waiver of Past Defaults . . . . . . . . . . . . . . . .
SECTION 5.11 Trustee to Give Notice of Default, But May Withhold in
Certain Circumstances . . . . . . . . . . . . . . . . .
SECTION 5.12 Right of Court To Require Filing of Undertaking To Pay
Costs . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.13 Excess Cash Flow. . . . . . . . . . . . . . . . . . . .
ARTICLE 6 CONCERNING THE TRUSTEE . . . . . . . . . . . . . . . . . . . .
SECTION 6.1 Duties and Responsibilities of the Trustee; During
Default; Prior to Default . . . . . . . . . . . . . . .
SECTION 6.2 Certain Rights of the Trustee . . . . . . . . . . . . .
SECTION 6.3 Trustee Not Responsible for Recitals, Disposition of
Securities or Application of Proceeds Thereof . . . . .
SECTION 6.4 Trustee and Agents May Hold Securities;
Collections, Etc. . . . . . . . . . . . . . . . . . . .
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SECTION 6.5 Moneys Held by Trustee. . . . . . . . . . . . . . . . .
SECTION 6.6 Compensation and Indemnification of Trustee and Its
Prior Claim . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.7 Right of Trustee to Rely on Officers' Certificate,
Etc.. . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.8 [Reserved]
SECTION 6.9 Persons Eligible for Appointment as Trustee . . . . . .
SECTION 6.10 Resignation and Removal; Appointment of Successor
Trustee . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.11 Acceptance of Appointment by Successor Trustee. . . . .
SECTION 6.12 Merger, Conversion, Consolidation or Succession to
Business of Trustee . . . . . . . . . . . . . . . . . .
SECTION 6.13 Preferential Collection of Claims Against the Issuer. .
SECTION 6.14 Intervention in Litigation. . . . . . . . . . . . . . .
SECTION 6.15 Appointment of Co-Trustees. . . . . . . . . . . . . . .
SECTION 6.16 Effect of Death, Incapacity, resignation or Removal
of Co-Trustee or Separate Trustee . . . . . . . . . . .
ARTICLE 7 CONCERNING THE SECURITYHOLDERS . . . . . . . . . . . . . . . .
SECTION 7.1 Evidence of Action Taken by Securityholders . . . . . .
SECTION 7.2 Proof of Execution of Instruments and of Holding of
Securities. . . . . . . . . . . . . . . . . . . . . . .
SECTION 7.3 Holders To Be Treated as Owners . . . . . . . . . . . .
SECTION 7.4 Securities Owned by Issuer Deemed Not Outstanding . . .
SECTION 7.5 Right of Revocation of Action Taken . . . . . . . . . .
ARTICLE 8 SUPPLEMENTAL INDENTURES. . . . . . . . . . . . . . . . . . . .
SECTION 8.1 Supplemental Indentures Without Consent of
Securityholders . . . . . . . . . . . . . . . . . . . .
SECTION 8.2 Supplemental Indentures with Consent of
Securityholders . . . . . . . . . . . . . . . . . . . .
SECTION 8.3 Effect of Supplemental Indenture. . . . . . . . . . . .
SECTION 8.4 Documents To Be Given to Trustee. . . . . . . . . . . .
SECTION 8.5 Notation on Securities in Respect of Supplemental
Indentures. . . . . . . . . . . . . . . . . . . . . . .
ARTICLE 9 NO CONSOLIDATION, MERGER, SALE OR CONVEYANCE . . . . . . . . .
ARTICLE 10 SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS. . .
SECTION 10.1 Satisfaction and Discharge of Indenture . . . . . . . .
SECTION 10.2 Defeasance and Discharge of Indenture . . . . . . . . .
SECTION 10.3 Defeasance of Certain Obligations . . . . . . . . . . .
SECTION 10.4 Application by Trustee of Funds Deposited for Payment
of Securities . . . . . . . . . . . . . . . . . . . . .
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SECTION 10.5 Repayment of Moneys Held by Paying Agent. . . . . . . .
SECTION 10.6 Return of Moneys Held by Trustee and Paying Agent
Unclaimed for One Year. . . . . . . . . . . . . . . . .
SECTION 10.7 Reinstatement . . . . . . . . . . . . . . . . . . . . .
ARTICLE 11 MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . .
SECTION 11.1 Incorporators, Shareholders, Officers and Directors of
Issuer Exempt from Individual Liability . . . . . . . .
SECTION 11.2 Provisions of Indenture for the Sole Benefit of Parties
and Securityholders . . . . . . . . . . . . . . . . . .
SECTION 11.3 Successors and Assigns of Issuer Bound by Indenture . .
SECTION 11.4 Notices and Demands on Issuer, Trustee and
Securityholders . . . . . . . . . . . . . . . . . . . .
SECTION 11.5 Compliance Certificates and Opinions of Counsel;
Statements To Be Contained Therein. . . . . . . . . . .
SECTION 11.6 Payments Due on Saturdays, Sundays and Holidays . . . .
SECTION 11.7 [Reserved]. . . . . . . . . . . . . . . . . . . . . . .
SECTION 11.8 Applicable Law; New York Law To Govern. . . . . . . . .
SECTION 11.9 Counterparts. . . . . . . . . . . . . . . . . . . . . .
SECTION 11.10 Effect of Headings. . . . . . . . . . . . . . . . . . .
SECTION 11.11 Waiver of Usury Laws. . . . . . . . . . . . . . . . . .
SECTION 11.12 Value of Securities . . . . . . . . . . . . . . . . . .
ARTICLE 12 REDEMPTION OF SECURITIES . . . . . . . . . . . . . . . . . . .
SECTION 12.1 Right of Optional Redemption; Prices. . . . . . . . . .
SECTION 12.2 Notice of Redemption. . . . . . . . . . . . . . . . . .
SECTION 12.3 Payment of Securities Called for Redemption . . . . . .
SECTION 12.4 Exclusion of Certain Securities from Eligibility for
Selection for Redemption. . . . . . . . . . . . . . . .
ARTICLE 13 RIGHT OF FIRST REFUSAL . . . . . . . . . . . . . . . . . . . .
SECTION 13.1 Option. . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 13.2 Terms . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 13.3 Expiration of Right of First Refusal. . . . . . . . . .
SECTION 13.4 Enforcement of Rights . . . . . . . . . . . . . . . . .
ARTICLE 14 SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 14.1 Pledge and Security Interest. . . . . . . . . . . . . .
SECTION 14.2 Security for Obligation . . . . . . . . . . . . . . . .
SECTION 14.3 Perfection of Security Interest . . . . . . . . . . . .
SECTION 14.4 No Disposition of Collateral; Release of Lien of
Indenture . . . . . . . . . . . . . . . . . . . . . . .
SECTION 14.5 Other Liens . . . . . . . . . . . . . . . . . . . . . .
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SECTION 14.6 Trustee Appointed Attorney-in-Fact. . . . . . . . . . .
SECTION 14.7 Return of Collateral. . . . . . . . . . . . . . . . . .
SECTION 14.8 Default Remedies. . . . . . . . . . . . . . . . . . . .
SECTION 14.9 Proceeds. . . . . . . . . . . . . . . . . . . . . . . .
SECTION 14.10 Deficiency. . . . . . . . . . . . . . . . . . . . . . .
SECTION 14.11 Trustee's Duties. . . . . . . . . . . . . . . . . . . .
SECTION 14.12 Special Trustee Powers Due to Environmental Conditions.
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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<PAGE>
THIS INDENTURE, dated as of March 31, 1998 by and among Trans World
Gaming Corp. ("TWG"), a Nevada corporation, and its wholly-owned subsidiary, TWG
International U.S. Corporation ("TWG International"), a Nevada corporation and
TWG Finance Corp., a DELAWARE corporation ("TWG Finance", which together with
TWG International and TWG are referred to collectively herein as the "Issuer"),
and U.S. Trust Company of Texas, N.A., a national banking association, not in
its individual capacity but solely as trustee (the "Trustee"),
W I T N E S S E T H :
WHEREAS, the Issuer has duly authorized the issue of its 12% Senior
Secured Notes Due March 17, 2005 (the "Securities"); and
WHEREAS, the Securities and the Trustee's certificate of authentication
shall be in substantially the following form:
[FORM OF FACE OF SECURITY]
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES ACT, AND MAY NOT BE TRANSFERRED WITHOUT
REGISTRATION UNDER SUCH ACTS OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER
THAT SUCH REGISTRATION IS NOT REQUIRED.
No. $
TRANS WORLD GAMING CORP.
TWG INTERNATIONAL U.S. CORPORATION
TWG FINANCE CORP.
12% Senior Secured Notes Due March 17, 2005
Date: March 1998
New York, New York
Trans World Gaming Corp. ("TWG"), a Nevada corporation, and its
wholly-owned subsidiaries, TWG International U.S. Corporation ("TWG
International"), a Nevada corporation and TWG Finance Corp., a Delaware
corporation ("TWG Finance", which together with TWG International and TWG are
referred to collectively herein as the "Issuer"), for value received hereby
promise to pay jointly and severally to , or registered
assigns, the principal sum of Dollars at the Issuer's office or agency
for said purpose, on March 17, 2005, in such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts, and to pay interest semi-annually on March
17 and September 17 (each an "Interest Payment Date") of each year, commencing
with September 17, 1998, on said principal sum in like coin or currency at 12%
simple interest per annum at said office or agency from the most recent Interest
Payment Date to which interest on the Securities
Page 1
<PAGE>
has been paid or duly provided for unless the date hereof is a date to which
interest on the Securities is paid or duly provided for, in which case from the
date of this Security, or unless no interest has been paid or duly provided for
on the Securities, in which case from the date of issuance. To the extent
lawful, the Issuer promises to pay interest on any interest payment due but
unpaid on such unpaid principal amount at a rate of 17% per annum compounded
semi-annually.
The interest so payable on any Interest Payment Date will, except as
otherwise provided in the Indenture referred to on the reverse hereof, be paid
to the Person in whose name this Security is registered at the close of business
on March 17 or September 17 whether or not a Business Day (each an "Interest
Record Date") next preceding such Interest Payment Date, whether or not such day
is a Business Day; PROVIDED that interest may be paid, at the option of the
Issuer, by mailing a check therefor payable on the Interest Payment Date to the
registered Holder entitled thereto at his last address as it appears on the
Security register.
If interest on the Securities is in default, the Trustee shall, prior to
the payment of interest, establish a special record date (the "Special Record
Date") for such payment, which Special Record Date shall be not more than
fifteen (15) nor less than ten (10) days prior to the date of the proposed
payment. Payment of such defaulted interest shall then be made by check, as
provided herein and in the Indenture, mailed or remitted to the persons in whose
names the Securities are registered on the Special Record Date at the addresses
or accounts of such persons shown on the security register.
Interest on this Security will be calculated on the basis of a 360-day
year, consisting of twelve 30-day months.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof which further provisions shall for all purposes have
the same effect as if set forth in this place.
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IN WITNESS WHEREOF, each Issuer has caused this instrument to be duly
executed under its corporate seal.
[Seal] TRANS WORLD GAMING CORP.
By:
-----------------------------------------
Its:
----------------------------------------
[Seal] TWG INTERNATIONAL U.S. CORPORATION
By:
-----------------------------------------
Its:
----------------------------------------
[Seal] TWG FINANCE CORP.
By:
-----------------------------------------
Its:
----------------------------------------
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<PAGE>
[FORM OF REVERSE OF SECURITY]
TRANS WORLD GAMING CORP.
TWG INTERNATIONAL U.S. CORPORATION
TWG FINANCE CORP.
12% Senior Secured Notes Due March 17, 2005
This Security is one of a duly authorized issue of debt securities of the
Issuer, with an aggregate principal amount of $17,000,000, issued pursuant to an
indenture dated as of March 31, 1998, (the "Indenture"), duly executed and
delivered by the Issuer to U.S. Trust Company of Texas, N.A., as Trustee (herein
called the "Trustee"). Reference is hereby made to the Indenture and all
indentures supplemental thereto for a description of the rights, limitations of
rights, obligations, duties and immunities thereunder of the Trustee, the Issuer
and the Holders (the words "Holders" or "Holder" meaning the registered holders
or registered holder) of the Securities. The Securities are secured obligations
of the Issuer. Capitalized terms used in this Security and not defined herein
shall have the meaning set forth in the Indenture.
In case an Event of Default (as defined in the Indenture) shall have
occurred and be continuing, the principal and interest in respect of all of the
Securities then outstanding may be declared due and payable in the manner and
with the effect, and subject to the conditions, provided in the Indenture. The
Indenture provides that the Holders of 50% in aggregate principal amount of the
Securities then outstanding, by notice to the Trustee, may on behalf of the
Holders of all of the Securities, waive any existing Default or Event of Default
and its consequences under the Indenture except a continuing Default or Event of
Default in the payment of interest or premium on, or the principal of, the
Securities or in respect of a covenant or provision that cannot be modified or
amended without the consent of all Holders of the Securities. Any such consent
or waiver by the Holder of this Security (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such Holder and upon all future
Holders and owners of this Security and any Security which may be issued in
exchange or substitution therefor, whether or not any notation thereof is made
upon this Security or such other Securities.
The Indenture permits the Issuer and the Trustee, with the consent of the
Holders of not less than 50% in aggregate principal amount of the Securities at
the time outstanding, evidenced as in the Indenture provided, to execute
supplemental indentures adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of any supplemental
indenture or modifying in any manner the rights of the Holders of the
Securities; PROVIDED that no such supplemental indenture shall, without the
consent of each Holder affected thereby (with respect to any Securities held by
a non-consenting Securityholder) (i) reduce the principal amount of Securities
whose Holders must consent to an amendment, supplement or waiver, (ii) reduce
the principal of or change the fixed maturity of any Security or alter the
provisions with respect to the redemption of the Securities, (iii) reduce the
rate of or change the time for payment of interest on any Security, (iv) waive a
Default or Event of Default in the payment of principal of or premium, if any,
or interest on the Securities (except a
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rescission of acceleration of the Securities by the Holders of at least 50% in
aggregate principal amount of the then outstanding Securities and a waiver of
the payment default that resulted from such acceleration), (v) make any Security
payable in money other than that stated in the Securities, (vi) make any change
in the provisions of the Indenture relating to waivers of past Defaults or the
rights of Holders of Securities to receive payments of principal of or interest
on the Securities, (vii) waive a redemption payment with respect to any Security
or (viii) make any change in the foregoing amendment and waiver provisions.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligations of the Issuer, which are
absolute and unconditional, to pay the principal of and the interest on this
Security at the place, times, and rate, and in the currency, herein prescribed.
The Securities are issuable only as registered Securities without
coupons.
At the office or agency of the Issuer referred to on the face hereof and
in the manner and subject to the limitations provided in the Indenture,
Securities may be exchanged for a like aggregate principal amount of Securities
of other authorized denominations.
Upon due presentment for registration of transfer of this Security at the
above-mentioned office or agency of the Issuer, a new Security or Securities of
authorized denominations, for a like aggregate principal amount, will be issued
to the transferee as provided in the Indenture. No service charge shall be made
for any such transfer, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto.
As provided in the Indenture, TWG International shall be required to make
mandatory prepayments equal to Excess Cash Flow until Obligations are fully
defeased pursuant to Section 10.2 or until one hundred percent (100%) of the
principal amount of the Securities, together with accrued and unpaid interest,
is paid. The Securities may also be redeemed by the Issuer, in whole, or in
part, upon mailing a notice of such redemption not less than 30 nor more than 60
days prior to the date fixed for redemption to the Holders of Securities to be
redeemed, at a redemption price equal to 100% of the principal amount of the
Securities redeemed, together with accrued and unpaid interest to the date fixed
for redemption. If there is a Change of Control (as defined in the Indenture),
the Issuer shall be required to offer to purchase all outstanding Securities at
a purchase price equal to 100 % of the principal amount thereof, plus accrued
unpaid interest, if any, through the date of such purchase.
Subject to payment by the Issuer of a sum sufficient to pay the amount
due upon redemption, interest on this Security shall cease to accrue upon the
date duly fixed for redemption of this Security.
The Issuer, the Trustee and any authorized agent of the Issuer or the
Trustee may deem and treat the registered Holder hereof as the absolute owner of
this Security (whether or not this Security shall be overdue and notwithstanding
any notation of ownership or other writing hereon made by anyone other than the
Issuer or the Trustee or any authorized agent of the Issuer or the
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Trustee), for the purpose of receiving payment of, or on account of, the
principal hereof and premium, if any, and subject to the provisions on the face
hereof, interest hereon and for all other purposes, and neither the Issuer nor
the Trustee nor any authorized agent of the Issuer or the Trustee shall be
affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of, premium, if
any, or the interest on this Security, for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Indenture or any indenture
supplemental thereto, against any incorporator, shareholder, officer, employee
or director, as such, past, present or future, of the Issuer or Trustee
or of any successor corporation, either directly or through the Issuer or any
successor corporation, whether by virtue of any constitution, statute or rule of
law or by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issue hereof, expressly waived and released.
Customary abbreviations may be used in the name of a Securityholder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
This Security shall not be valid or obligatory until the certificate of
authentication hereon shall have been duly signed by an authorized signatory of
the Trustee acting under the Indenture.
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the within-mentioned
Indenture.
Dated:
U.S. Trust Company of Texas, N.A. , as
Trustee
By:
------------------------------------
Authorized Signatory
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<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to:
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint _________________________________________ agent to
transfer this Security on the books of Issuer. The agent may substitute another
to act for him.
If you want the Note certificate made out in another person's name, fill in the
form below:
- --------------------------------------------------------------------------------
(insert other person's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type other person's name, address and zip code)
Date:
-------------------- ---------------------------------------------
Your Signature
---------------------------------------------
Signature Guaranty
---------------------------------------------
Notice: Signature must be guaranteed by an
"Eligible Guarantor Institution" as defined
by Securities Exchange Act Rule 17Ad-15.
(Sign exactly as your name appears on the other side of this Security)
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NOW, THEREFORE:
In consideration of the premises and the purchases of the Securities by
the Holders thereof, the Issuer and the Trustee mutually covenant and agree for
the equal and proportionate benefit of the respective Holders from time to time
of the Securities as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 CERTAIN TERMS DEFINED. The following terms (except as
otherwise expressly provided or unless the context otherwise clearly requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section 1.1. All other
terms used in this Indenture which are defined in the Trust Indenture Act of
1939, as amended, or the definitions of which in the Securities Act of 1933, as
amended, are referred to in the Trust Indenture Act of 1939 (except as herein
otherwise expressly provided or unless the context otherwise requires) have the
meanings assigned to such terms in said Trust Indenture Act and in said
Securities Act as in force at the date of this Indenture. The words "HEREIN,"
"HEREOF" and "HEREUNDER" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision. The terms defined in this Article include the plural as well as
the singular.
"ACCELERATION DATE" has the meaning specified in Section 5.1.
"ACCELERATION NOTICE" has the meaning specified in Section 5.1.
"ACQUIRED INDEBTEDNESS" means, Indebtedness of an entity, which entity is
acquired by TWG International or any of its Subsidiaries after the initial
issuance of the Securities.
"AFFILIATE" means any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with any of the
Issuers, including, without limitation, any senior officer, directors or Key
Employees of any of the Issuers. For purposes of this definition, the term
"control" means the power to direct the management and policies of a Person,
directly or through one or more intermediaries, whether through the ownership of
voting securities, by contract, or otherwise, PROVIDED, that, with respect to
ownership interests in the Issuer and its Subsidiaries a beneficial owner of 5%
or more of the total voting power normally entitled to vote in the election of
directors, managers or trustees, as applicable, shall for such purposes be
deemed to constitute control. Affiliate shall not include the initial
Securityholders.
"AFFILIATE TRANSACTION" has the meaning specified in Section 3.17.
"APPLICANTS" has the meaning specified in Section 4.2.
"ASSET SALE" means the sale, lease, conveyance, disposition or other
transfer (including, without limitation, by eminent domain, condemnation or
similar governmental proceeding) of
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any property or assets of TWG International or any of its direct or indirect
Subsidiaries (including a sale and leaseback transaction or the issuance, sale
or transfer of Capital Stock of a direct or indirect Subsidiary except an
acquisition of such Capital Stock by TWG International or its direct or indirect
Subsidiaries)).
"AVERAGE LIFE" means , as of the date of determination, with respect to
any security or instrument, the quotient obtained by dividing (i) the sum of the
products obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity in respect thereof, by (y) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount or liquidation preference, as applicable, of such security or instrument,
as the case may be.
"BOARD OF DIRECTORS" means the Board of Directors of any Issuer, as the
case may be, or any committee of such Board duly authorized to act hereunder.
"BUSINESS DAY" means a day which in the city (or in any of the cities, if
more than one) where amounts are payable in respect of the Securities, as
specified on the face of the form of Security recited above, or in the city in
which either the Corporate Trust Office of the Trustee or Operations office is
located, is neither a legal holiday nor a day on which banking institutions are
required or authorized by law or regulation to close.
"CAPITALIZED LEASE OBLIGATION" means rental obligations under a lease
that are required to be capitalized for financial reporting purposes in
accordance with GAAP, and the amount of Indebtedness represented by such
obligations shall be the capitalized amount of such obligations, as determined
in accordance with GAAP.
"CAPITAL EXPENDITURES" shall mean, for any period, expenditures
(including the aggregate amount of capital lease obligations incurred during
such period) made by TWG International or any of its direct or indirect
Subsidiaries to acquire or to construct fixed assets and equipment (including,
renewals, improvements and replacements, but excluding repairs in the ordinary
course) during such period computed in accordance with GAAP.
"CAPITAL STOCK" means any and all shares, interests (including ownership
interests arising pursuant to association agreements under the laws of the Czech
Republic), participations, rights or other equivalents (however designated) or
corporate stock, whether common or preferred, including, without limitation,
partnership interests, membership interests in limited liability companies and
an ownership interest in joint stock companies
"CASH EQUIVALENT" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) or (ii) time deposits and
certificates of deposit and commercial paper issued by the parent corporation of
any domestic commercial bank of recognized standing having capital and surplus
in excess of $350 million and commercial paper issued by others rated at least
A-2 or the equivalent thereof by
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Standard & Poor's Corporation or at least P-2 or the equivalent thereof by
Moody's Investors Service, Inc. and in each case maturing within one year after
the date of acquisition.
"CHANGE OF CONTROL" means the occurrence of any of the following (unless
consented to by not less than the holders of 50% of the aggregate principal
amount of the Securities then Outstanding) (i) any sale, transfer, conveyance or
other disposition in one or a series of related transactions, of all or
substantially all of the assets of TWG International and its Subsidiaries taken
as a whole or of TWG or TWG Finance to any "person" (as defined in Section
13(d)(3) of the Exchange Act) or "group" (as defined in Section 13(d)(3)) of the
Exchange Act); (ii) the acquisition of beneficial ownership, or the right to
acquire beneficial ownership pursuant to warrants, options or other rights to
acquire, by any "person" or "group" (each as defined above) of more than 35% of
the Capital Stock of TWG (other than Value Partners, Ltd. or Andrew Tottenham
and/or an entity controlled by him); (iii) the adoption of a plan for the
liquidation or dissolution of TWG, TWG Finance or TWG International; or (iv)
TWG, TWG Finance or TWG International consolidates with, or merges with or into,
another "person" (as defined above).
"CHANGE OF CONTROL OFFER" has the meaning specified in Section 3.18.
"CHANGE OF CONTROL PAYMENT" has the meaning specified in Section 3.18.
"CHANGE OF CONTROL PAYMENT DATE" has the meaning specified in Section
3.18.
"COLLATERAL" has the meaning specified in Section 14.1.
"COLLATERAL AGREEMENTS" means any agreements including those executed by
TWG and/or such other Persons necessary to create a Security Interest in favor
of the Trustee and the Security holders in the Collateral.
"COMMISSION" means the U.S. Securities and Exchange Commission.
"CONSOLIDATED" means the consolidated results of TWG International and
its Subsidiaries as determined in accordance with GAAP.
"CONSOLIDATED COVERAGE RATIO" of TWG International on any date of
determination (the "Transaction Date") means the ratio, on a PRO FORMA basis, of
(a) the aggregate amount of Consolidated EBITDA of TWG International
attributable to continuing operations and businesses (exclusive of amounts
attributable to operations and businesses permanently discontinued or disposed
of) for the Reference Period to (b) the aggregate Consolidated Fixed Charges of
TWG International (exclusive of amounts attributable to operations and
businesses permanently discontinued or disposed of, but only to the extent that
the obligations giving rise to such Consolidated Fixed Charges would no longer
be obligations contributing to TWG International's Consolidated Fixed Charges
subsequent to the Transaction Date) during the Reference Period; PROVIDED that
for purposes of such calculation, (i) acquisitions which occurred during the
Reference Period or subsequent to the Reference Period and on or prior to the
Transaction Date shall be assumed to have occurred on the first day of the
Reference Period, (ii)
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transactions giving rise to the need to calculate the Consolidated Coverage
Ratio shall be assumed to have occurred on the first day of the Reference
Period, (iii) the incurrence of any Indebtedness during the Reference Period or
subsequent to the Reference Period and on or prior to the Transaction Date (and
the application of the proceeds therefrom to the extent used to refinance or
retire other Indebtedness) shall be assumed to have occurred on the first day of
such Reference Period, and (iv) the Consolidated Fixed Charges of TWG
International attributable to interest on any Indebtedness bearing a floating
interest rate shall be computed on a PRO FORMA basis as if the average rate in
effect from the beginning of the Reference Period to the Transaction Date had
been the applicable rate for the entire period.
"CONSOLIDATED EBITDA" means, with respect to TWG International, for any
period, the Consolidated Net Income of TWG International for such period
adjusted to add thereto (to the extent deducted from net revenues in determining
Consolidated Net Income), without duplication, the sum of (i) Consolidated
income tax expense (other than corporate income taxes paid in the Czech
Republic), (ii) Consolidated depreciation and amortization expense [and provided
further that amortization of pre-opening expenses for the Czech Casinos may only
be added thereto in an aggregate amount up to $2,000,000 (including all such
amounts added in all previous periods) and (iii) Consolidated Fixed Charges.
"CONSOLIDATED FIXED CHARGES" of TWG International means, for any period,
the aggregate amount (without duplication and determined in each case in
accordance with GAAP) of interest (whether fixed or contingent) expensed or
capitalized, paid, accrued or scheduled to be paid or accrued (including, in
accordance with the following sentence, interest attributable to Capitalized
Lease Obligations) of TWG International and its Subsidiaries during such period,
including (i) original issue discount and non-cash interest payments or accruals
on any Indebtedness, (ii) the interest portion of all deferred payment
obligations, and (iii) all commissions, discounts and other fees and charges
owed with respect to bankers' acceptances and letters of credit, in each case to
the extent attributable to such period. For purposes of this definition, (x)
interest on a Capitalized Lease Obligation shall be deemed to accrue at an
interest rate reasonably determined by TWG International to be the rate of
interest implicit in such Capitalized Lease Obligation in accordance with GAAP
and (y) interest expense attributable to any Indebtedness represented by the
guaranty of TWG International or a Subsidiary of TWG International of an
obligation of another Person shall be deemed to be the interest expense
attributable to the Indebtedness guaranteed.
"CONSOLIDATED NET INCOME" means, with respect to TWG International for
any period, the net income (or loss) of TWG International and its Subsidiaries
(determined on a consolidated basis in accordance with GAAP) for such period,
adjusted to exclude (only to the extent included in computing such net income
(or loss) and without duplication): (a) all gains (but not losses) which are
either extraordinary (as determined in accordance with GAAP) or are nonrecurring
(including any gain from the sale or other disposition of assets outside the
ordinary course of business), (b) the net income or loss of any Person acquired
in a pooling of interests transaction for any period prior to the date of such
acquisition, and (c) the net income, if positive, of any of TWG International's
Subsidiaries to the extent that the declaration or payment of dividends or
similar distributions is not at the time permitted by operation of the terms of
its charter or bylaws
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or any other agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Subsidiary.
"CORPORATE TRUST OFFICE" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date as of which this
Indenture is dated, located at 2001 Ross Avenue, Dallas, TX 75201-2936,
Attention: Corporate Trust Department.
"CYPRUS ENTITY" means an entity to be formed in Cyprus by TWG
International as a direct Subsidiary.
"DEFAULT" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"DEFAULT RATE" means 17% per annum compounded semiannually, subject to
the Maximum Rate.
"EVENT OF DEFAULT" means any event or condition specified as such in
Section 5.1 which shall have continued for the period of time, if any, therein
designated.
"EXCESS CASH FLOW" means, for any period, TWG International's
consolidated net income for such period (as determined by GAAP) adjusted as
follows (in each case without duplication): PLUS (i) non-cash items which
decrease consolidated net income, including, without limitation, depreciation
expense and amortization expense (including amortization of deferred financing
costs and original issue discounts), but only to the extent included in
computing such consolidated net income, PLUS (ii) Undistributed Excess Cash
Flow, MINUS (iii) the amount of Capital Expenditures actually paid during such
period, not to exceed $100,000 in any Fiscal Year (provided that the amount of
Capital Expenditures permitted for the Fiscal Year in which the issuance of the
Securities occurs shall be pro rated based on the number of days remaining in
such Fiscal Year from and after the Issue Date), MINUS (iv) the amount necessary
to establish or maintain a working capital reserve, provided that such amount to
be subtracted from consolidated net income from operations shall not exceed
$100,000 in any Fiscal Year (provided further that such amount retained for
working capital purposes for the Fiscal Year in which the issuance of the
Securities occurs shall be pro rated based on the number of days remaining in
such Fiscal Year from and after the Issue Date), MINUS (v) the amount necessary
to establish or maintain a reserve for acquisitions of assets or capital stock
(or other similar ownership interest) of local casinos located outside the
United States and operations relating thereto, provided that such amount to be
subtracted from consolidated net income from operations shall not exceed
$1,500,000 (less the amount by which the Notes sold in the offer hereby exceeds
$16,000,000) during the period from the Issue Date through the date all
principal, together with all accrued and unpaid interest, is paid in full or is
defeased pursuant to Section 10.2.
"EXCESS PROCEEDS" shall have the meaning specified in Section 3.12.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
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"FISCAL YEAR" means the annual accounting period adopted by each Issuer,
which shall initially be the annual accounting period ending December 31 of each
year.
"FUNDING COLLATERAL AGREEMENTS" means Collateral Agreements, as defined
in the Funding Note.
"FUNDING NOTE" means that certain $17,000,000 12% Senior Secured Note Due
March 17, 2005 and Indenture by and between TWG International, as issuer and
U.S. Trust Company of Texas, N.A., a Trustee, in the form set forth in the
Funding Note Indenture.
"FUNDING NOTE INDENTURE" means that Indenture dated as of the date hereof
by and between TWG International, as issuer, and U.S. Trust Company of Texas,
N.A.,as trustee.
"GAAP" means United States of America generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a significant
segment of the accounting profession, as the same are in effect on the Issue
Date.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness, and "Guaranteed" has a correlative meaning.
"HOLDER," "SECURITYHOLDER" or any other similar term means the registered
holder of any Security.
"INCUR" OR "INCURRED" means to, directly or indirectly, create, incur,
issue, assume, guaranty or otherwise become liable with respect to.
"INCURRENCE DATE" has the meaning specified in Section 3.10.
"INDEBTEDNESS" means, with respect to any Person, without duplication,
any indebtedness of such Person, whether or not contingent, in respect of
borrowed money or evidenced by bonds, notes, debentures or similar instruments
or letters of credit (or reimbursement agreements in respect thereof) or
representing the balance deferred and unpaid of the purchase price of any
property (including pursuant to capital leases), except any such balance that
constitutes an accrued expense, trade payable or winnings payable, if and to the
extent any of the foregoing would appear as a liability upon a balance sheet of
such Person prepared in accordance with GAAP, and also includes, to the extent
not otherwise included, the Guarantee of items that would be included within
this definition and all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien on any asset or property (including, without limitation,
leasehold interests and any other tangible or intangible property) of such
Person, whether or not such Indebtedness is assumed by
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such Person or is not otherwise such Person's legal liability, PROVIDED that if
the obligations so secured have not been assumed in full by such Person or are
otherwise not such Person's legal liability in full, the amount of such
Indebtedness for the purposes of this definition shall be limited to the lesser
of the amount of such Indebtedness secured by such Lien or the fair market value
of the assets or property securing such Lien. Notwithstanding the foregoing,
the term "Indebtedness" shall not include deferred compensation arrangements
that are not evidenced by bonds, notes, debentures or similar instruments.
"INDENTURE" means this instrument as originally executed and delivered
or, if amended or supplemented as herein provided, as so amended or
supplemented.
"INTEREST PAYMENT DATE" has the meaning specified in first paragraph of
Form of Security herein.
"INTEREST RECORD DATE" has the meaning specified in Section 2.4.
"INVESTMENT" by any Person in any other Person means (without
duplication) (a) the acquisition (whether by purchase, merger, consolidation or
otherwise) by such Person (whether for cash, property, services, securities or
otherwise) of capital stock, bonds, notes, debentures, partnership or other
ownership interests or other securities, including any options or warrants, of
such other Person or any agreement to make any such acquisition; (b) the making
by such Person of any deposit with, or advance, loan or other extension of
credit to, such other Person (including the purchase of property from another
Person subject to an understanding or agreement, contingent or otherwise, to
resell such property to such other Person) or any commitment to make any such
advance, loan or extension (but excluding accounts receivable, gaming credits or
deposits arising in the ordinary course of business); (c) the entering into by
such Person of any guarantee of, or other credit support or contingent
obligation with respect to, Indebtedness or other liability of such other
Person; and (d) the making of any capital contribution by such Person to such
other Person.
"ISSUE DATE" means the date on which the Securities are originally issued
under this Indenture.
"ISSUER" means Trans World Gaming Corp., a Nevada corporation, and its
wholly-owned subsidiaries, TWG International U.S. Corporation, a Nevada
corporation and TWG Finance Corp., a Delaware corporation, and, subject to
Article Nine, their successors and assigns, and to the extent required by
Sections 310 to 317 of the Trust Indenture Act of 1939, any other obligor on the
Securities.
"JUNIOR INDEBTEDNESS" means any Indebtedness of the Issuer, whether
outstanding at the date hereof or incurred thereafter, that is subordinate in
right of payment, either pursuant to its terms or by operation of law, to the
Securities, which Indebtedness provides for a fixed date when the principal
thereof (disregarding any mandatory redemptions or pre-payments required in
respect thereof) is due and payable.
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"KEY EMPLOYEE" means persons such as casino managers or sales and
marketing managers, who are not executive officers but who make or are expected
to make significant contributions to the business of the Issuer.
"LIEN" means, with respect to any asset, any mortgage, including without
limitation any multiple indebtedness mortgage, lien, pledge, charge, security
interest or encumbrance of any kind in respect of such asset, whether or not
filed, recorded or otherwise perfected under applicable law (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction).
"MAXIMUM RATE" has the meanings specified in Section 3.1
"NET CASH PROCEEDS" means the aggregate cash proceeds received by TWG
International or any of its Subsidiaries in respect of any Asset Sale, net of
the direct costs relating to such Asset Sale (including, without limitation,
title insurance fees and premiums, filing and recordation fees, permit fees,
landlord consent payments and other amounts required to be paid to transfer the
assets that are the subject of such Asset Sale, sales commissions and legal,
accounting and investment banking fees incurred in respect of such Asset Sale)
and any relocation expenses incurred as a result thereof, taxes paid or payable
as a result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), and amounts required to be applied
to the repayment of Indebtedness secured by a Lien on the asset or assets that
are the subject of such Asset Sale; PROVIDED FURTHER, HOWEVER, that if the
agreement or instrument governing such Asset Sale requires the transferor to
maintain a portion of the purchase price in escrow (whether as reserve for
adjustment in respect of the purchase price or otherwise) or to indemnify the
transferee for specified liabilities in a maximum stated amount for a stated
period of time, the portion of the cash consideration that is actually placed in
escrow or segregated and set aside by the transferor for such indemnification
obligation shall not be deemed to be Net Cash Proceeds until the escrow
terminates or the transferor ceases to segregate and set aside such funds, in
whole or in part, and then only to the extent of the proceeds released from
escrow to the transferor or that are no longer segregated and set aside by the
transferor.
"OBLIGATIONS" has the meaning specified in Section 14.2.
"OFFICERS' CERTIFICATE" means a certificate signed by the Chairman of the
Board of Directors or the President or any Vice President (whether or not
designated by a number or numbers or a word or words added before or after the
title "Vice President") and by the Treasurer or the Secretary or any Assistant
Treasurer or Secretary of the Issuer and delivered to the Trustee. Each such
certificate shall include the statements provided for in Section 11.5.
"OPERATIONS OFFICE" means with respect to the Trustee the office
maintained by the Trustee or an affiliate thereof for the payment of interest
and principal on the Securities.
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"OPINION OF COUNSEL" means an opinion in writing signed by legal counsel
who may be an employee of or counsel to the Issuer or who may be other counsel
satisfactory to the Trustee. Each such opinion shall include the statements
provided for in Section 11.5, if and to the extent required hereby.
"OUTSTANDING," when used with reference to Securities, means, subject to
the provisions of Sections 6.8 and 7.4, as of any particular time, all
Securities authenticated and delivered by the Trustee under this Indenture,
except:
(a) Securities theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation;
(b) Securities, or portions thereof, for the payment or redemption (i)
of which moneys in the necessary amount shall have been deposited in trust with
the Trustee or with any paying agent (other than the Issuer) or shall have been
set aside, segregated and held in trust by the Issuer (if the Issuer shall act
as paying agent) or (ii) of which moneys and/or Government Securities as
contemplated by Section 10.2 in the necessary amount have been theretofore
deposited with the Trustee (or another trustee satisfying the requirements of
Section 6.9) in trust for the Holders of such Securities in accordance with
Section 10.2 and the conditions set forth therein have been satisfied; PROVIDED
that if such Securities are to be redeemed prior to the maturity thereof, notice
of such redemption shall have been given as herein provided, or provision
satisfactory to the Trustee shall have been made for giving such notice; and
(c) Securities in substitution for which other Securities shall have been
authenticated and delivered, or which shall have been paid, pursuant to the
terms of Section 2.6 (unless proof satisfactory to the Trustee is presented that
any of such Securities is held by a Person in whose hands such Security is a
legal, valid and binding obligation of the Issuer).
"PAYMENT DEFAULT" has the meaning specified in Section 5.1.
"PERMITTED INVESTMENT" means (a) any Investment in a Cash Equivalent, and
(b) an aggregate amount not to exceed $1,500,000 for the period commencing on
the Issue Date and concluding on the date one hundred percent (100%) of all the
principal amount of the Securities, together with accrued and unpaid interest
thereon, is paid in full or is defeased pursuant to Section 10.2, to be used
solely for the acquisition of casinos located outside of the United States and
operations related thereto; provided, that (i) no Default or Event of Default
shall have occurred and be continuing at the time of, or would occur after
giving effect on a PRO FORMA basis to, such acquisition and (ii) such acquired
assets will be subject to a first priority Lien for the benefit of the holders
of the Securities pursuant to a security agreement in form and substance
satisfactory to the holders of a majority of the aggregate outstanding principal
amount of the Securities.
"PERMITTED REFINANCING" has the meaning specified in the definition of
Refinancing Indebtedness.
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"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"PRINCIPAL" wherever used with reference to the Securities or any
Security or any portion thereof, shall be deemed to include the face amount of
the Security plus, when appropriate, the premium, if any.
"PROPERTY" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included on the
most recent consolidated balance sheet of such Person in accordance with GAAP.
"REFERENCE PERIOD" with regard to any Person means the four full fiscal
quarters (or such lesser period during which such Person has been in existence)
ended immediately preceding any date upon which any determination is to be made
pursuant to the terms of the Securities.
"REFINANCED INDEBTEDNESS" has the meaning specified in the definition of
Refinancing Indebtedness.
"REFINANCING INDEBTEDNESS" means Indebtedness issued in exchange for, or
the proceeds of which are used to extend, refinance, renew, replace or refund
any Indebtedness permitted to be incurred under the Indenture (the "Refinancing
Indebtedness"); PROVIDED, HOWEVER, that (i) the principal amount of such
Refinancing Indebtedness shall not exceed the principal or accreted amount (in
the case of any Indebtedness issued with original issue discount, as such) of
Indebtedness so extended, refinanced, renewed, replaced, substituted or refunded
(the "Refinanced Indebtedness"), (ii) the Refinancing Indebtedness shall rank in
right of payment relative to the Securities on terms at least as favorable to
the Holders of Securities as those contained in the documentation governing the
Refinanced Indebtedness ("Permitted Refinancing"), and (iii) the Refinancing
Indebtedness shall have a Average Life to Stated Maturity and a Stated Maturity
equal to or greater than the Average Life to Stated Maturity and Stated Maturity
of the Refinanced Indebtedness
"RELATED BUSINESS" means the local casino gaming business outside the
United States of America and other businesses necessary for, incident to,
connected with, arising out of, in support of or developed or operated to permit
or facilitate the conduct or pursuing of the local casino gaming business
outside the United States all as then customarily conducted in the local casino
gaming operations outside the United States.
"RESPONSIBLE OFFICER" when used with respect to the Trustee means any
officer in its Corporate Trust Office, or any other assistant officer of the
Trustee in its Corporate Trust Office customarily performing functions similar
to those performed by the Persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred because of his
or her knowledge of and familiarity with the particular subject.
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"RESTRICTED PAYMENT" means, (i) as to TWG International, (a) any dividend
declared or paid to, or any distribution made for the benefit of, any holders of
TWG International's Capital Stock, including TWG, (b) the purchase, redemption
or other acquisition or retirement for value of any Capital Stock of TWG
International from any holders thereof, including TWG, (c) any purchase,
redemption or other acquisition or retirement for value by TWG International or
any of its Subsidiaries of any Indebtedness of any Issuer or its Subsidiaries
(other than TWG International) or, prior to a scheduled mandatory sinking fund
payment date or maturity date, of any Indebtedness of TWG International or its
Subsidiaries, (ii) as to TWG, (a) any dividend declared or paid to, or any
distribution made for the benefit of, any holders of TWG's Capital Stock as
holders of such Capital Stock and (b) the purchase, redemption or other
acquisition or retirement for value of any Capital Stock of TWG from any holders
thereof as holders of such Capital Stock; and (iii) as to TWG Finance (a) any
dividend declared or paid to, or any distribution made for the benefit of, any
holders of TWG Finance's Capital Stock as holders of such Capital Stock and (b)
the purchase, redemption or other acquisition or retirement for value of any
Capital Stock of TWG Finance from any holders thereof as holders of such Capital
Stock
"RIGHT OF FIRST REFUSAL" has the meaning specified in Section 13.1
"SECURITY" or "SECURITIES" (except as otherwise provided in Section 6.8)
means any of the 12% Senior Secured Notes Due March 17, 2005 authenticated and
delivered under this Indenture.
"SECURITY INTEREST" has the meaning specified in Section 14.1.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SUBSCRIPTION AGREEMENT" means the subscription agreement dated as of
March 16, 1998, by and among TWG, TWG International, TWG Finance and the
Securityholders.
"SPECIAL RECORD DATE" has the meaning specified in paragraph 3 of the
Form of Securities herein.
"STATED MATURITY" means the date which all remaining unpaid principal and
interest of Indebtedness is due and payable pursuant to the terms of document(s)
evidencing such Indebtedness.
"SUBSIDIARY" means any corporation, association or other business entity
of which more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more of the other
Subsidiaries of that Person or a combination thereof.
"TWG" has the meaning specified in the first paragraph hereof.
"TWG FINANCE" has the meaning specified in the first paragraph hereof.
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"TWG INTERNATIONAL" has the meaning specified in the first paragraph
hereof.
"TRUSTEE" means the entity identified as "Trustee" in the first paragraph
hereof and, subject to the provisions of Article Six, shall also include any
successor trustee.
"UNDISTRIBUTED EXCESS CASH FLOW" means, for any period, that portion of
the aggregate Excess Cash Flow from all prior periods which has not been
previously used to repay principal amounts of the Securities.
"WHOLLY OWNED SUBSIDIARY" means, with respect to any Person, a Subsidiary
of such Person, all of the outstanding shares of Capital Stock of which (other
than directors' qualifying shares) are at the time directly or indirectly owned
by such Person or by one or more Wholly-Owned Subsidiaries of such Person or by
such Person and one or more if its Wholly-Owned Subsidiaries.
"ZNOJMO PROPERTY" means the property by Atlantic Properties s.r.o, an
indirect Subsidiary of TWG International, upon which may be constructed a casino
in Znojmo, Czech Republic.
ARTICLE 2
ISSUE, EXECUTION, FORM AND
REGISTRATION OF SECURITIES
SECTION 2.1 AUTHENTICATION AND DELIVERY OF SECURITIES. Securities in
an aggregate principal amount not in excess of $17,000,000 (except as otherwise
provided in Section 2.6) may be executed by the Issuer and delivered to the
Trustee for authentication, and a responsible officer of the Trustee shall
thereupon authenticate and deliver said Securities to the Issuer or upon the
written order of the Issuer, signed by both (a) the Chairman of the Board of
Directors or any Vice Chairman of the Board of Directors, or its President or
any Vice President (whether or not designated by a number or numbers or a word
or words added before or after the title "Vice President") and (b) by its
Treasurer or Secretary or any Assistant Treasurer or Secretary without any
further action by the Issuer.
SECTION 2.2 EXECUTION OF SECURITIES. The Securities shall be signed on
behalf of the Issuer by both (a) its Chairman of the Board of Directors or any
Vice Chairman of the Board of Directors or its President or any Vice President
(whether or not designated by a number or numbers or a word or words added
before or after the title "Vice President") and (b) by its Treasurer or any
Assistant Treasurer or its Secretary or any Assistant Secretary, under its
corporate seal which may, but need not, be attested. Such signatures may be the
manual or facsimile signatures of the present or any future such officers. The
seal of the Issuer may be in the form of a facsimile thereof and may be
impressed, affixed, imprinted or otherwise reproduced on the Securities.
Typographical and other minor errors or defects in any such reproduction of
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the seal or any such signature shall not affect the validity or enforceability
of any Security which has been duly authenticated and delivered by the Trustee.
In case any such officer of the Issuer who shall have signed any of the
Securities shall cease to be such officer before the Security so signed shall
be authenticated and delivered by the Trustee or disposed of by the Issuer, such
Security nevertheless may be authenticated and delivered or disposed of as
though the Person who signed such Security had not ceased to be such officer of
the Issuer; and any Security may be signed on behalf of the Issuer by such
Persons as, at the actual date of the execution of such Security, shall be the
proper officers of the Issuer, although at the date of the execution and
delivery of this Indenture any such Person was not such officer.
SECTION 2.3 CERTIFICATE OF AUTHENTICATION. Only such Securities as
shall bear thereon a certificate of authentication substantially in the form
hereinabove recited, executed by the Trustee by manual signature of one of its
authorized signatories, shall be entitled to the benefits of this Indenture or
be valid or obligatory for any purpose. Such certificate by the Trustee upon
any Security executed by the Issuer shall be conclusive evidence that the
Security so authenticated has been duly authenticated and delivered hereunder
and that the Holder is entitled to the benefits of this Indenture.
SECTION 2.4 FORM, DENOMINATION AND DATE OF SECURITIES; PAYMENTS OF
INTEREST IN CASH. The Securities and the Trustee's certificates of
authentication shall be substantially in the form recited above. The Securities
shall be issuable as registered securities without coupons and in denominations
provided for in the form of Security above recited. The Securities shall be
numbered, lettered, or otherwise distinguished in such manner or in accordance
with such plans as the officers of the Issuer executing the same may determine
with the approval of the Trustee.
Any of the Securities may be issued with appropriate insertions,
omissions, substitutions and variations, and may have imprinted or otherwise
reproduced thereon such legend or legends, not inconsistent with the provisions
of this Indenture, as may be required to comply with any law or with any rules
or regulations pursuant thereto, or with the rules of any securities market in
which the Securities are admitted to trading, or to conform to general usage.
Each Security shall be dated the date of its authentication, shall bear
interest from the applicable date and shall be payable on the dates specified on
the face of the form of Security recited above.
The Person in whose name any Security is registered at the close of
business on any Interest Record Date with respect to any Interest Payment Date
shall be entitled to receive the interest, if any, payable on such Interest
Payment Date notwithstanding any transfer or exchange of such Security
subsequent to the Interest Record Date and prior to such Interest Payment Date,
except if and to the extent the Issuer shall default in the payment of the
interest due on such Interest Payment Date, in which case such defaulted
interest shall be paid to the Persons in whose names outstanding Securities are
registered at the close of business on a subsequent record
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date (which shall be not less than five Business Days prior to the date of
payment of such defaulted interest) established after arrangements for payment
reasonably satisfactory to the Trustee have been made by the Issuer by notice
given by mail by or on behalf of the Issuer to the Holders of Securities not
less than 15 days preceding such subsequent record date. The term "Interest
Record Date" as used with respect to any Interest Payment Date (except a date
for payment of defaulted interest) shall mean the 15th day of the month next
preceding the month in which such interest payment date falls, whether or not
such Interest Record Date is a Business Day.
SECTION 2.5 REGISTRATION, TRANSFER AND EXCHANGE. The Issuer will keep
at each office or agency to be maintained for the purpose as provided in Section
3.2 a register or registers in which, subject to such reasonable regulations as
it may prescribe, it will register, and will register the transfer of,
Securities as in this Article provided. Such register shall be in written form
in the English language or in any other form capable of being converted into
such form within a reasonable time. At all reasonable times such register or
registers shall be open for inspection by the Trustee.
Upon due presentation for registration of transfer of any Security at
each such office or agency, the Issuer shall execute and the Trustee shall
authenticate and deliver in the name of the transferee or transferees a new
Security or Securities in authorized denominations for a like aggregate
principal amount.
Any Security or Securities may be exchanged for a Security or Securities
in other authorized denominations, in an equal aggregate principal amount.
Securities to be exchanged shall be surrendered at each office or agency to be
maintained by the Issuer for the purpose as provided in Section 3.2, and the
Issuer shall execute and the Trustee shall authenticate and deliver in exchange
therefor the Security or Securities which the Securityholder making the exchange
shall be entitled to receive, bearing numbers not contemporaneously outstanding.
All Securities presented for registration of transfer, exchange,
redemption or payment shall (if so required by the Issuer or the Trustee) be
duly endorsed by, or be accompanied by a written instrument or instruments of
transfer in form satisfactory to the Issuer and the Trustee duly executed by,
the Holder or his attorney duly authorized in writing.
The Issuer may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any exchange or
registration of transfer of Securities, provided however, the Issuer shall be
responsible for all costs associated with perfection of the Security Interest in
Collateral as to the transferee and obtaining a search of title prior thereto.
No service charge shall be made for any such exchange or registration
transaction.
The Issuer shall not be required to exchange or register a transfer of
(a) any Securities for a period of 15 days next preceding the first mailing of
notice of redemption of Securities to be redeemed or (b) any Securities
selected, called or being called for redemption.
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All Securities issued upon any transfer or exchange of Securities shall
be valid obligations of the Issuer, evidencing the same debt, and entitled to
the same benefits under this Indenture, as the Securities surrendered upon such
transfer or exchange.
SECTION 2.6 MUTILATED, DEFACED, DESTROYED, LOST AND STOLEN SECURITIES.
In case any temporary or definitive Security shall become mutilated, defaced or
be apparently destroyed, lost or stolen, the Issuer in its discretion may
execute, and the Trustee shall authenticate and deliver, a new Security bearing
a number not contemporaneously outstanding, in exchange and substitution for the
mutilated or defaced Security, or in lieu of or in substitution for the Security
so apparently destroyed, lost or stolen. In every case the applicant for a
substitute Security shall furnish to the Issuer and to the Trustee and any agent
of the Issuer or the Trustee such security or indemnity agreement or bond as may
be reasonably required by them to indemnify and defend and to save each of them
harmless and, in every case of destruction, loss or theft, evidence to their
satisfaction of the apparent destruction, loss or theft of such Security and of
the ownership thereof.
Upon the issuance of any substitute Security, the Issuer and the Trustee
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the reasonable fees and expenses of the Trustee) connected
therewith. In case any Security which has matured or is about to mature shall
become mutilated or defaced or be apparently destroyed, lost or stolen, the
Issuer may, instead of issuing a substitute Security, pay or authorize the
payment of the same with written direction to the Trustee (without surrender
thereof except in the case of a mutilated or defaced Security), if the applicant
for such payment shall furnish to the Issuer and to the Trustee and any agent of
the Issuer or the Trustee such security or indemnity (including a bond) as any
of them may reasonably require to save each of them harmless and in every case
of apparent destruction, loss or theft the applicant shall also furnish to the
Issuer and the Trustee and any agent of the Issuer or the Trustee evidence to
their reasonable satisfaction of the apparent destruction, loss or theft of such
Security and of the ownership thereof.
Every substitute Security issued pursuant to the provisions of this
Section 2.6 by virtue of the fact that any Security is apparently destroyed,
lost or stolen shall constitute an additional contractual obligation of the
Issuer, whether or not the apparently destroyed, lost or stolen Security shall
be at any time enforceable by anyone and shall be entitled to all the benefits
of (but shall be subject to all the limitations of rights set forth in) this
Indenture equally and proportionately with any and all other Securities duly
authenticated and delivered hereunder.
SECTION 2.7 CANCELLATION OF SECURITIES; DISPOSITION THEREOF. All
Securities surrendered for payment, redemption, registration of transfer or
exchange, if surrendered to the Issuer or any agent of the Issuer or the
Trustee, shall be delivered to the Trustee for cancellation or, if surrendered
to the Trustee, shall be cancelled by it; and no Securities shall be issued in
lieu thereof except as expressly permitted by any of the provisions of this
Indenture. The Trustee shall dispose of cancelled Securities held by it in
accordance with its regulations and deliver a certificate to the Issuer with
respect to such disposition from time to time upon written request. If the
Issuer shall acquire any of the Securities, such acquisition shall
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not operate as a redemption or satisfaction of the Indebtedness represented by
such Securities unless and until the same are delivered to the Trustee for
cancellation.
SECTION 2.8 TEMPORARY SECURITIES. Pending the preparation of definitive
Securities, the Issuer may execute and the Trustee shall authenticate and
deliver temporary Securities (printed, lithographed, typewritten or otherwise
reproduced, in each case in form satisfactory to the Trustee). Temporary
Securities shall be issuable as registered securities without coupons, of any
authorized denomination, and substantially in the form of the definitive
Securities but with such omissions, insertions and variations as may be
appropriate for temporary Securities, all as may be determined by the Issuer
with the concurrence of the Trustee. Temporary Securities may contain such
reference to any provisions of this Indenture as may be appropriate. Every
temporary Security shall be executed by the Issuer and be authenticated by the
Trustee upon the same conditions and in substantially the same manner, and with
like effect, as the definitive Securities. Without unreasonable delay the
Issuer shall execute and shall furnish, at its expenses, definitive Securities
and thereupon temporary Securities may be surrendered in exchange therefor
without charge at each office or agency to be maintained by the Issuer for the
purpose pursuant to Section 3.2, and the Trustee shall authenticate and deliver
in exchange for such temporary Securities a like aggregate principal amount of
definitive Securities of authorized denominations. Until so exchanged, the
temporary Securities shall be entitled to the same benefits under this Indenture
as definitive Securities. The Issuer shall not be obligated to issue definitive
Securities until it or the Trustee shall have received such temporary
Securities.
ARTICLE 3
COVENANTS OF THE ISSUER
SECTION 3.1 PAYMENT OF PRINCIPAL AND INTEREST. Each Issuer covenants
and agrees as joint and several obligors that it will duly and punctually pay or
cause to be paid the principal of, and interest on, each of the Securities at
the place or places, at the respective times as required by and in the manner
provided in the Securities. An installment of principal or interest shall be
considered paid on the date it is due if the Trustee or Paying Agent holds on
that date sums sufficient to pay the installment. Anything herein or in the
Securities to the contrary notwithstanding, the obligation of the Issuer
hereunder shall be subject to the limitation that payments of interest to the
Holder shall not be required to the extent that the receipt of any such payment
by such Holder would be contrary to the provisions of law applicable to the
Issuer which limit the maximum rate of interest which may be charged or
collected by the Holder, including as set forth in Section 11.11 (the "Maximum
Rate").
SECTION 3.2 OFFICES FOR PAYMENTS, ETC. So long as any of the Securities
remain outstanding, the Issuer will maintain at such place in the City of New
York and at such other place, if any, as may be designated by the Issuer, the
following: (a) an office or agency where the Securities may be presented for
registration of transfer or for exchange as provided in this Indenture and (b)
an office or agency where notices and demands to or upon the Issuer in respect
of the Securities or of this Indenture may be served. The Issuer will initially
maintain such offices or agencies with the corporate secretary at the Issuer's
principal place of business
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and the Operations office of the Trustee in New York, New York. The Issuer will
give to the Trustee written notice of the location of any such office or agency
and of any change of location thereof. In case the Issuer shall fail to
maintain any such office or agency or shall fail to give such notice of the
location or of any change in the location thereof, presentations and demands may
be made and notices may be served at the Corporate Trust Office.
SECTION 3.3 APPOINTMENT TO FILL A VACANCY IN OFFICE OF TRUSTEE. The
Issuer, whenever necessary to avoid or fill a vacancy in the office of the
Trustee, will appoint, in the manner provided in Section 6.10, a Trustee, so
that there shall at all times be a Trustee hereunder.
SECTION 3.4 PAYING AGENTS. Whenever the Issuer shall appoint a paying
agent other than the Trustee or itself, it will cause such paying agent to
execute and deliver to the Trustee an instrument in which such agent shall agree
with the Trustee, subject to the provisions of this Section 3.4:
(a) that it will hold all sums received by it as such agent for
the payment of the principal of or interest on the Securities (whether
such sums have been paid to it by the Issuer or by any other obligor on
the Securities) in trust for the benefit of the Holders of the Securities
or of the Trustee; and
(b) that it will give the Trustee notice of any failure by the
Issuer (or by any other obligor on the Securities) to make any payment of
the principal of or interest on the Securities when the same shall be due
and payable.
The Issuer will, at least one Business Day prior to each due date of the
principal of or interest on the Securities, deposit with the paying agent a sum
which is in immediately available funds on the due date sufficient to pay such
principal or interest and (unless such paying agent is the Trustee) the Issuer
will promptly notify the Trustee of any failure to take such action.
If the Issuer shall act as its own paying agent, it will, on or before
each due date of the principal of or interest on the Securities, set aside,
segregate and hold in trust for the benefit of the Holders of the Securities a
sum sufficient to pay such principal or interest so becoming due. The Issuer,
or paying agent which is not the Trustee, will promptly notify the Trustee in
writing of any failure to take such action.
Notwithstanding anything in this Section 3.4 to the contrary, the Issuer
may at any time, for the purpose of obtaining a satisfaction and discharge of
this Indenture or for any other reason, pay or cause to be paid to the Trustee
all sums held in trust by the Issuer or any paying agent hereunder, as required
by this Section 3.4, such sums to be held by the Trustee upon the trusts herein
contained.
Notwithstanding anything in this Section 3.4 to the contrary, the
agreement to hold sums in trust as provided in this Section 3.4 is subject to
the provisions of Sections 10.4 and 10.5.
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The Issuer initially appoints the Trustee as paying agent.
SECTION 3.5 OFFICERS' CERTIFICATES AS TO DEFAULT AND AS TO COMPLIANCE.
Each Issuer will, so long as any of the Securities are outstanding:
(a) deliver to the Trustee, forthwith upon becoming aware of any
default or defaults in the performance of any covenant, agreement or
condition contained in this Indenture (including notice of any event
which with the giving of notice, lapse of time or both would become an
Event of Default under Section 5.1 hereof), an Officers' Certificate
specifying such default or defaults; and
(b) deliver to the Trustee within 90 days after the end of each
Fiscal Year of the Issuer beginning with the Fiscal Year ending December
31, 1998, an Officers' Certificate, to the effect that:
(i) a diligent review of the activities of the Issuer
and its Subsidiaries during such year and of performance under
this Indenture has been made under such officers' supervision, and
(ii) to the best of such officers' knowledge, based on
such review, the Issuer has fulfilled all its obligations under
this Indenture throughout such year, or if there has been a
default in the fulfillment of any such obligation, specifying each
such default known to them and the nature and status thereof.
SECTION 3.6 MANDATORY PREPAYMENT.
(a) Within forty-five (45) days of the end of the second and
fourth quarter of each Fiscal Year, the Issuer shall (a) repay an
aggregate principal amount of the Securities equal to the Excess Cash
Flow for the 6-month period ending on the last day of such quarter,
together with accrued and unpaid interest on such principal amount to the
date of repayment, and (b) regardless of whether any repayment of
principal is required under this Section, provide each Securityholder
with a written notice containing in reasonable detail TWG International's
calculation of Excess Cash Flow. Notwithstanding the preceding sentence,
TWG International shall not be required to repay any principal under this
Section unless Excess Cash Flow equals or exceeds the lesser of $250,000
or the aggregate principal amount of the Securities then outstanding, in
which case all Excess Cash Flow then outstanding shall be used to repay
principal in accordance with this Section. Any repayments of principal
required by this Section shall be paid on an equal and ratable basis
among the Securityholders in proportion, as nearly as practicable, to the
respective unpaid principal amounts of the Securities held by each
Securityholder. The reduction in the principal amount of the Securities
effected by repayments made under this Section may be made without
presentation of the Securities and shall be binding on all future
Securityholders. Securityholders shall make the appropriate notation on
the Securities to indicate the amount of any repayments under this
Section.
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(b) The prepayment will be made in the following manner. At
least 15 days prior to the date on which the Issuer proposes to make the
prepayment required by this Section 3.6, the Issuer shall give the
Trustee written notice of such prepayment, which notice shall state the
amount of the prepayment and the date the Issuer has selected that the
prepayment be made, which date may not be later than 45 days from the end
of the second and fourth quarters, as the case may be. The Trustee shall
not be required to send a notice of mandatory redemption to the Holders
with respect to such prepayment. At least one Business Day before the
mandatory prepayment, the Issuer will deposit with the Trustee (or other
paying agent) in immediately available funds the money to be used to
prepay the Securities. When the money to effect the mandatory prepayment
of the Securities is held by the Trustee for the purpose of effecting
such prepayment, interest on that portion of the Securities to be prepaid
shall cease to accrue on the reduction of principal on Securities made a
result of the prepayment, and such notations shall be binding on the
Securityholders and all future Securityholders, even if such holders do
not make such notations on the certificates representing such Securities.
The prepayments will be made by the Trustee in increments of $100.00.
Any Excess Cash Flow which does not meet this requirement will be
returned to the Issuer pursuant to its written instructions.
SECTION 3.7 MAINTENANCE OF PROPERTIES, ETC. Each Issuer shall, and
shall cause each of its Subsidiaries to, maintain its material properties and
assets in working order and condition and make all necessary repairs, renewals,
replacements, additions, betterments and improvements thereto as permitted by
this Indenture, all as in the judgment of the Issuer may be necessary so that
the business carried on in connection therewith may be conducted in the usual
and customary manner.
Each Issuer shall, and shall cause each of its Subsidiaries to, maintain
with insurers that the Issuer believes in good faith to be financially sound and
reputable such insurance as may be required by law and such other insurance, to
such extent and against such hazards and liabilities, as it in good faith
determines is customarily maintained by companies similarly situated with like
properties.
Each Issuer shall, and shall cause each of its Subsidiaries to, do or
cause to be done all things necessary to preserve and keep in full force and
effect its existence, rights and franchises, except to the extent permitted by
this Indenture and except in such cases where the Board of Directors determines
in good faith that failure to do so would not have a material adverse effect on
the business, earnings, properties, assets, financial condition or results of
operation of each such Issuer and its Subsidiaries. Nothing in this provision
shall prohibit TWG from terminating its or its Subsidiaries' operations in the
State of Louisiana, USA.
Each Issuer shall, and shall cause each of its Subsidiaries to, comply in
all material respects with all statutes, laws, ordinances, or government rules
and regulations to which it is subject.
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Each Issuer shall, and shall cause each of its Subsidiaries to, pay prior
to delinquency all taxes, assessments and governmental levies except as
contested in good faith and by appropriate proceedings.
For purposes of this Section, the obligations of this Section shall, as
to TWG, be the obligations of TWG and its non TWG International Subsidiaries,
and as to TWG International, be the obligations of TWG International and its
Subsidiaries.
SECTION 3.8 INDEBTEDNESS. Each Issuer will pay punctually and discharge
when due and payable any Indebtedness heretofore or hereafter incurred or
assumed by it and discharge, perform and observe the covenants, provisions and
conditions to be discharged, performed and observed on the part of the Issuer in
connection therewith, or in connection with any agreement or other instrument
relating thereto.
SECTION 3.9 BOOKS. Issuer will keep at all times proper books of record
and account in which full, true and correct entries will be made of its
transactions in accordance with Generally Accepted Accounting Principles.
SECTION 3.10 LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS.
Except as may be consented in writing by not less than 50% in
aggregate principal amount of the Securities at the time outstanding;
(a) TWG INTERNATIONAL. Except as set forth below, TWG
International will not, and will not permit any of its Subsidiaries to,
Incur any Indebtedness (including Acquired Indebtedness); provided,
however, that TWG International may Incur Indebtedness if, (i) no Default
of this Indenture or Event of Default shall have occurred and be
continuing at the time of, or would occur after giving effect on a PRO
FORMA basis to, such Incurrence of Indebtedness; (ii) on the date of such
Incurrence (the "Incurrence Date"), the Consolidated Coverage Ratio of
TWG International for the Reference Period immediately preceding the
Incurrence Date, after giving effect on a PRO FORMA basis to such
incurrence of such Indebtedness and, to the extent set forth in the
definition of Consolidated Coverage Ratio, the use of proceeds thereof,
would be at least 2.30 to 1; and (iii) such Indebtedness has an Average
Life to Stated Maturity that exceeds the remaining Average Life to Stated
Maturity of the Securities and has a Stated Maturity for its final
scheduled principal payment later than the Stated Maturity for the final
scheduled principal payment of the Securities; (iv) such Indebtedness is
subordinated in right of payment to the prior payment in full of the
Securities pursuant to a subordination agreement in form and substance
satisfactory to the holders of a majority of the aggregate outstanding
principal amount of the Securities; and (v) such Indebtedness is not
secured by the Collateral granted to the holders of the Securities.
Notwithstanding the foregoing:
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(i) TWG International may incur Indebtedness evidenced by the
Securities up to the amounts specified therein as of the date
thereof;
(ii) TWG International may incur at or after the Issue Date additional
indebtedness consisting of:
(A) Indebtedness incurred to fund the construction of
Znojmo Casino, PROVIDED that such Indebtedness is non recourse to
TWG International or any of its Subsidiaries and no Lien securing
such Indebtedness shall extend to or convert any assets or
properties of TWG International or its Subsidiaries other than the
Znojmo Property and the improvements, building equipment and
fixtures located in or on the Znojmo Property;
(B) other purchase money Indebtedness incurred to
purchase personal property for the purpose of engaging in or
developing a Related Business, PROVIDED that the principal amount
of such Indebtedness in the aggregate outstanding at any time
(including any Indebtedness issued to refinance, replace or refund
such Indebtedness) shall not exceed $500,000 and no Lien securing
such Indebtedness shall extend to or cover any assets or
properties other than the assets or property acquired with such
purchase money Indebtedness and improvements thereon; and
(C) Indebtedness for working capital purposes, PROVIDED
that the principal amount of such Indebtedness in the aggregate
outstanding at any time (including any Indebtedness, issued to
refinance, replace or refund such Indebtedness) shall be unsecured
and may not exceed $100,000.
(iii) TWG International may incur Refinancing Indebtedness with respect
to any Indebtedness described in clauses (i) through (iii),
inclusive, of this covenant so long as, in the case of secured
Indebtedness used to refinance, refund or replace secured
Indebtedness, such Refinancing Indebtedness is secured only by the
assets that secured the Indebtedness so refinanced and if such
Indebtedness being Refinanced was unsecured, the related
Refinancing Indebtedness shall be unsecured; and
(iv) TWG International may incur Indebtedness to any of its Wholly
Owned Subsidiaries; PROVIDED, that such obligations shall be
unsecured and subordinated in all respects to TWG International's
obligations pursuant to the Securities.
(v) TWG International shall Incur the Indebtedness pursuant to the
Funding Note.
Indebtedness of any Person which is outstanding at the time such Person becomes
a Subsidiary of TWG International (including by designation) or is merged with
or into or consolidated with TWG International or a Subsidiary of TWG
International shall be deemed to have been Incurred at the time such Person
becomes such a Subsidiary of TWG International or is merged with or
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into or consolidated with TWG International or a Subsidiary of TWG
International, as applicable.
(b) TWG FINANCE. TWG Finance shall Incur no Indebtedness other than
that evidenced by the Securities.
SECTION 3.11 RESTRICTIONS ON ISSUANCE OF STOCK.
(a) TWG International will not issue any additional Capital Stock
and agrees that the Capital Stock of TWG International shall at all times
constitute 100% of the total number of shares of each class of Capital
Stock of TWG International. Furthermore, TWG International will not, and
will not permit any of its direct Subsidiaries to, conduct any business
through or otherwise own any outstanding shares or interests of any class
of Capital Stock of, any other corporation, partnership, limited
liability company or other Person, other than a Wholly Owned Subsidiary.
(b) TWG International will not permit any of its Subsidiaries to
issue any additional Capital Stock and agrees that the Capital Stock of
its Subsidiaries pledged to TWG Finance in the Finance Indenture shall at
all times constitute 100% of its U.S. Subsidiaries, Trans World Leasing
Limited, a Gibraltar Company, and the Cyprus Entity, 66% of 21st Century
Resorts a.s. and 100% of the Capital Stock of any U.S. Subsidiary and of
any foreign Subsidiary, where such pledge shall not create a "deemed
dividend" and 66% Of the Capital Stock of any foreign Subsidiary where a
pledge of more than that percentage would create a "deemed dividend".
Furthermore, TWG International will not permit any of its Subsidiaries to
conduct any business through or otherwise own any outstanding shares or
interests of any class of Capital Stock of, any other corporation,
partnership, limited liability company or other Person, other than a
Wholly-Owned Subsidiary.
(c) TWG FINANCE. TWG Finance will not issue any additional
Capital Stock and agrees that the Capital Stock of TWG Finance which is
pledged to the holders of the Securities pursuant to the Collateral
Agreements shall at all times constitute 100% of the total number of
shares of each class of Capital Stock of TWG Finance. Furthermore, TWG
Finance will not conduct any business through or otherwise own any
outstanding shares or interests of any class of Capital Stock of, any
other corporation, partnership, limited liability company or other
Person, including a partially owned Subsidiary or a Wholly Owned
Subsidiary.
SECTION 3.12 RESTRICTIONS ON ASSET SALES.
(a) TWG International shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, make any Asset Sale, unless (i)
TWG International (or such Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair
market value of the shares or assets sold or otherwise disposed of
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(such determination of fair market value, in the case of an Asset Sale or
a series of related Asset Sales involving assets with an aggregate fair
market value in excess of $1,000,000, being evidenced by a resolution of
the Board of Directors set forth in an Officers' Certificate and an
independent appraisal by an appraiser reasonably acceptable to the
holders of 50% of the outstanding principal amount of Securities
delivered to the Trustee), (ii) at least 85% of the consideration
therefor received by the Issuer or such Subsidiary is in the form of
cash; PROVIDED, HOWEVER, that the amount of (x) any liabilities (as shown
on TWG International's or such Subsidiary's most recent balance sheet or
in the notes thereto) of TWG International or any Subsidiary that are
assumed by the transferee of any such assets without any further recourse
to TWG International or any Subsidiary, including any Indebtedness of a
Subsidiary whose stock is purchased by the transferee, and (y) any notes
or other securities received by TWG International or any such Subsidiary
from such transferee that are immediately converted by TWG International
or such Subsidiary into cash (to the extent of the cash received) shall
be deemed to be cash for purposes of this provision, and (iii) in the
case of an Asset Sale consisting of a sale by TWG International or any
Subsidiary of Capital Stock of any Subsidiary of TWG International, all
of the Capital Stock of such Subsidiary that is owned by TWG
International or such Subsidiary must be sold. This Section shall not
apply to those assets pledged to secure repayment of the 12% Secured
Convertible Senior Bonds Due 1999, issued by TWG and Trans World Gaming
of Louisiana, Inc.
(b) No later than sixty (60) days after the receipt of Net Cash
Proceeds from any such Asset Sale, TWG International may apply such Net
Cash Proceeds to invest (including through Capital Expenditures) in
properties and assets related to the gambling industry, consistent with
other current business activities of TWG International, so long as the
Security holders are granted a first lien and security interest in such
assets and provided that such properties and assets are held by TWG
International or one or more of its Subsidiaries. Any Net Cash Proceeds
that are not applied as permitted by the preceding sentence shall
constitute "Excess Proceeds." Excess Proceeds shall be paid to the
Securityholders within fifteen (15) days of becoming Excess Proceeds in
the same manner as Excess Cash Flow is paid in Section 3.6.
(c) TWG Finance shall not make any Asset Sales other than
pursuant to the Funding Note and Funding Collateral Agreements.
(d) Nothing herein shall be construed to permit a sale of the
Capital Stock of TWG Finance or TWG International.
SECTION 3.13 DISTRIBUTIONS. The Issuers shall not declare or pay, or set
apart any funds for the payment of any Restricted Payment.
SECTION 3.14 LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES. Except as set forth herein, neither TWG International
nor its Subsidiaries shall permit any Subsidiary thereof to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or
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restriction of any kind on the ability of any such Subsidiary to (a) pay
dividends or make any other distributions to TWG International or any Subsidiary
thereof on its Capital Stock, (b) pay any Indebtedness owed to TWG International
or any Subsidiary thereof, (c) make loans or advances to TWG International or
any Subsidiary thereof, (d) transfer any of its properties or assets to TWG
International or any Subsidiary thereof, (e) grant liens or security interests
on the assets of TWG International or its Subsidiaries in favor of the holders
of the Securities or (f) Guarantee the Securities or any renewals or
refinancings thereof.
SECTION 3.15 LIMITATION ON INVESTMENTS. TWG International shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, make any
Investments other than Permitted Investments and except as provided in Section
3.12. TWG Finance shall not, directly or indirectly, make any Investments.
SECTION 3.16 LIMITATIONS ON LIENS. TWG International shall not, and
shall not permit any Subsidiary to, directly or indirectly create, incur, assume
or suffer to exist any Lien on any of their respective assets now owned or
hereafter acquired, or any income or profits therefrom or assign or convey any
right to receive income therefrom, except as provided in Section 3.10, Section
3.11 and Section 3.12. TWG shall not directly or indirectly create, incur,
assume or suffer to exist any Lien on the Capital Stock of TWG International and
of TWG Finance other than as required in Article 14. TWG Finance shall not,
directly or indirectly create, incur, assume or suffer to exist any Lien on any
of its assets other than as required in Article 14.
SECTION 3.17 TRANSACTIONS WITH AFFILIATES.
(a) Except for transactions with Trans World Leasing Limited
and the Cyprus Entity, neither TWG International nor any of its
Subsidiaries shall directly or indirectly, sell, lease, license,
transfer, exchange, or otherwise dispose of any of its properties, assets
or services to, or purchase, lease, or license the use of any property,
assets or services from, or transfer funds to, or enter into any
contract, agreement, understanding, loan, advance or Guarantee with, to,
or for the benefit of, any Affiliate (each of the foregoing, an
"Affiliate Transaction," whether constituting one transaction or a series
of related transactions), unless (a) such Affiliate Transaction is on
terms that are no less favorable to TWG International or the relevant
Subsidiary than those that would have been obtained in a comparable
transaction by TWG International or such Subsidiary with an unrelated
person and (b) TWG International delivers to the Trustee (i) with respect
to any Affiliate Transaction involving aggregate payments in excess of
$100,000, a resolution of the Board of Directors of TWG International
approved by a majority of the disinterested members of the Board of
Directors, certifying that such Affiliate Transaction complies with
clause (a) above, and (ii) with respect to any Affiliate Transaction
involving aggregate payments in excess of $250,000.00, an opinion as to
the fairness of such Affiliate Transaction to TWG International or such
Subsidiary from a financial point of view issued by an independent
investment banking firm of national standing.
(b) This Section does not limit, and shall not apply to, (i)
the payment of reasonable annual compensation to directors or executive
officers of the TWG and TWG
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International, or any Subsidiary of either (other than TWG Finance), (ii)
transactions between TWG International and its Subsidiaries or between
TWG International's Subsidiaries.
(c) TWG Finance shall not enter into any Affiliate Transactions
other than the transaction contemplated by the Funding Note and
Collateral Funding Agreements.
SECTION 3.18 CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder of
Securities shall have the right to require the Issuer to repurchase all
or any part of such holder's Securities pursuant to the offer described
below (the "Change of Control Offer") at a purchase price equal to one
hundred percent (100%) of the aggregate principal amount thereof plus
accrued and unpaid interest, if any, to the date of purchase (the "Change
of Control Payment"). Within 30 days following receipt of any Change of
Control Offer, the Issuer shall mail a notice to each Holder stating: (1)
that the Change of Control Offer is being made pursuant to this Section
and that all Securities tendered will be accepted for payment; (2) the
purchase price and the purchase date, which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed (the
"Change of Control Payment Date"); (3) that any Security not tendered
will continue to accrue interest in accordance with its terms; (4) that,
unless the Issuer defaults in the payment of the Change of Control
Payment, all Securities accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control
Payment Date; (5) that Holders electing to have any Securities purchased
pursuant to a Change of Control Offer will be required to surrender the
Securities, with the form entitled "Option of Holder to Elect Purchase",
on the reverse of the Securities completed, to the paying agent at the
address specified in the notice prior to the close of business on the
third Business Day preceding the Change of Control Payment Date; (6) that
Holders will be entitled to withdraw their election if the paying agent
receives, not later than the close of business on the second Business Day
preceding the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder,
the principal amount of Securities delivered for purchase, and a
statement that such Holder is withdrawing his election to have such
Securities purchased; and (7) that Holders whose Securities are being
purchased only in part will be issued new Securities equal in principal
amount to the unpurchased portion of the Securities surrendered, which
unpurchased portion must be equal to $1,000 in principal amount or an
integral multiple thereof. The Issuer shall comply with the requirements
of Rule 14e-1 under the Exchange Act and any other securities laws and
regulations to the extent such laws and regulations are applicable to the
Change of Control Offer.
(b) On the Change of Control Payment Date, the Issuer will, to
the extent lawful, (1) accept for payment Securities or portions thereof
validly tendered pursuant to the Change of Control Offer, (2) deposit
with the paying agent an amount equal to the Change of Control Payment in
respect of all Securities or portions thereof so tendered, and (3)
deliver or cause to be delivered to the Trustee the Securities so
accepted together
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with an Officers, Certificate identifying the Securities or portions
thereof tendered to the Issuer. The paying agent will promptly mail to
each Holder of Securities so accepted payment in an amount equal to the
purchase price for such Securities, and the Trustee shall promptly
authenticate and mail to each Holder a new Security equal in principal
amount to any unpurchased portion of the Securities surrendered, if any;
PROVIDED, HOWEVER, that each such new Security shall be in a principal
amount of $1,000 or an integral multiple thereof. The Issuer will
publicly announce the results of the Change of Control Offer on or as
soon as practicable after the Change of Control Payment Date.
SECTION 3.19 LINE OF BUSINESS. TWG International shall not, and shall
not permit any of its Subsidiaries to, engage in any business other than
acquiring, developing and operating local casinos outside the United States of
America and a Related Business (operated outside the United States of America).
TWG shall not, and shall not permit any of its Subsidiaries, (other than TWG
International and its Subsidiaries) to engage in any business other than
acquiring, developing and operating local casinos inside of the United States
and marketing activities relating thereto, except TWG shall be permitted to do
business in Bishkek. TWG Finance shall not engage in any business other than
performance of its obligations arising under the Funding Note and Funding
Indenture, the Funding Collateral Agreements, the Securities, the Indenture and
all documents related to those two transactions.
SECTION 3.20 PAYMENTS FOR CONSENT. None of the Issuers shall, nor shall
permit any Subsidiary to, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder of
the Securities for or as an inducement to any consent, waiver or amendment of
any terms or provisions of the Securities unless such consideration is offered
to be paid or agreed to be paid to all Holders of the Securities which so
consent, waive or agree in the time frame set forth in solicitation documents
relating to such consent, waiver or agreement.
SECTION 3.21 LIMITATIONS ON SALE AND LEASEBACK TRANSACTIONS. TWG
International shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into any sale and leaseback transaction, provided
that TWG International or any Subsidiaries may enter into a sale and leaseback
transaction if (a) TWG International or such Subsidiary could have incurred the
Indebtedness relating to such sale and leaseback transaction pursuant to
Sections 3.10. hereof and (b) the net proceeds of such sale and leaseback
transaction are at least equal to the fair market value of such property (such
determination of fair market value in the case of a sale and leaseback
transaction, being evidenced by a resolution of the Board of Directors of TWG
International set forth in an Officers' Certificate delivered to the Trustee).
SECTION 3.22 WAIVER OF STAY, EXTENSION OR USURY LAWS. The Issuer
covenants (to the extent that it may lawfully do so) that it shall not at any
time insist upon, or plead, or in any manner whatsoever claim, and shall resist
any and all efforts to be compelled to take the benefit or advantage of, any
stay or extension law or any usury law or other law which would prohibit or
forgive the Issuer from paying all or any portion of the principal of or
interest on the Securities as contemplated herein, wherever enacted, now or at
any time hereafter in force,
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or which may affect the covenants or the performance of this Indenture; and (to
the extent that it may lawfully do so) the Issuer hereby expressly waives all
benefit or advantage of any such law and covenants that it shall not hinder,
delay or impede the execution of any power herein granted to the Trustee but
shall suffer and permit the execution of every such power as though no such law
had been enacted.
SECTION 3.23 NON USA OPERATIONS. All business operations outside of the
United States of America shall be under the control of and inure to the benefit
of TWG International and its Wholly Owned Subsidiaries, except in Bishkek. All
business operations other than those of TWG Finance within the United States and
in Bishkek shall be under the control of and inure to the benefit of TWG. The
business operations of TWG Finance shall be governed by this Indenture and the
Collateral Agreements.
SECTION 3.24 COST OF OPERATIONS. TWG International shall be solely
responsible for all costs of operating TWG Finance, TWG International and TWG
International's direct and indirect Subsidiaries. In addition, TWG
International shall be responsible for costs of administration of TWG in the sum
of $25,000 per month, through June 30, 1999, and for one hundred percent of such
costs of administration upon the earlier of (a) the inability of TWG to pay such
costs from income from its business operations in Louisiana, or (b) after June
30, 1999. TWG shall be solely responsible for (a) costs associated with its
existing operations in the United States, (b) to the extent it has income from
operations, costs of administration of TWG in excess of $25,000 per month
through June 30, 1999, and (c) for no costs of administration from the earlier
of (i) the date TWG no longer has adequate cash from its business operations in
Louisiana to pay such costs, or (ii) June 30, 1999. Income generated from the
Bishkek Facility shall not be used to fund administrative costs. Costs of
administration refer to all costs associated with the TWG corporate headquarters
in New York and London, including rent and salaries and expenses of all officers
and employees at such location (or any successor location). Income from
Bishkek, from Cage Cash in the Louisiana and Bishkek casinos and collateral
pledged to the holders of the $4.8 million Senior Secured Notes of TWG and Trans
World Gaming of Louisiana, Inc. due December 31, 2005 shall not be utilized to
fund the costs of administration.
SECTION 3.25 FUNDING DOCUMENTS. TWG International shall execute the
Funding Note and Funding Collateral Agreements simultaneously with the execution
of the Securities.
SECTION 3.26 PAYMENTS. All sums received by TWG Finance from any
source, including the Funding Note, shall be immediately tendered to the Trustee
for disbursement pursuant to the terms of this Indenture.
SECTION 3.27 NO MODIFICATION OF FUNDING NOTE. The Issuers agree that
those rights granted to TWG Finance as the holder of the Funding Note and the
Funding Collateral shall be exercised at the direction of the Trustee of this
Indenture, including the waiver of any default and the enforcement of any
default, including as against any property pledged to secure the repayment of
the Funding Note. To the extent this Indenture permits the Securityholders to
provide direction to the Trustee, the Securityholders shall be allowed to do so
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as to the Funding Note (including waiver of a default). Such vote necessary
shall be the same as is necessary under this Indenture as to the same issue in
the Funding Note, such as waiver of default, modification of terms, and so
forth.
SECTION 3.28 USE OF PROCEEDS. (a) Notwithstanding any provision
contained herein to the contrary, on the Closing Date the proceeds of the sale
of the Notes hereunder shall be released to TWG Finance and from TWG Finance to
TWG International. TWG International shall then apply the proceeds of the sale
of the Notes as follows: (i) to pay the purchase price of the Czech casinos
pursuant to the Stock Purchase Agreement, certain liabilities assumed by TWG
International in connection therewith and to fund certain obligations
associated with the immediate operation of the Casinos (including cage cash and
a bond) amounting approximately to $11,780,000; (ii) to pay certain indebtedness
in the approximate amount of $1.36 million which was loaned by Value Partners,
Ltd. to TWG; (iii) to pay the fees and expenses of the placement agent for the
Notes incurred in connection with this transaction; (iv) to pay the fees and
expenses of the Issuer, including legal and accounting, associated with the
Casino acquisitions; (v) to pay the fees and expenses of domestic and
international legal counsel of the Issuers and the purchasers of the Notes
incurred in connection with this transaction, which fees and expenses are
estimated in a Closing Statement (the "Closing Statement") delivered at Closing;
(vi) to pay the fees and expenses of the trustee and its counsel incurred in
connection with this transaction, which fees and expenses are estimated in the
Closing Statement; (vii) to reimburse TWG in the amount of $250,000 for expenses
it incurred in connection with the development and acquisition of the Czech
casinos; (viii) to expand the Ceska and Rozvadov casinos in an estimated amount
of $1,100,000; (ix) to reimburse TWG for the reasonable and documented
out-of-pocket costs and expenses that TWG incurs in connection with registering
the Common Stock underlying the warrants issued to the purchasers of the Notes
and warrants issued to other holders; (x) other reasonable incidental
out-of-pocket costs expenses of TWG International incurred in connection with
the transaction contemplated hereby; and (xi) with the remainder of the proceeds
to be used solely by TWG International and its wholly-owned subsidiaries for
working capital and to acquire local casinos located outside of the United
States and operations relating thereto.
(b) Upon release of any funds to TWG International after the closing,
such proceeds shall at all times be kept by TWG International in a separate and
segregated accounts in its own name and shall not be commingled with any
accounts of TWG or any other subsidiaries of TWG.
SECTION 3.29 POST CLOSING COOPERATION. Subsequent to the Issuer Date,
the Issuers shall execute such documents as are necessary to grant the Security
Interest in the Collateral and shall reimburse all reasonable costs and expenses
incurred by counsel for the Securityholder in that process. Such documents
shall be completed by June 1, 1998, unless such deadline is extended in writing
by a majority of the holders of the Securities.
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ARTICLE 4
SECURITYHOLDERS' LISTS AND REPORTS
BY THE ISSUER AND THE TRUSTEE
SECTION 4.1 ISSUER TO FURNISH TRUSTEE INFORMATION AS TO NAMES AND
ADDRESSES OF SECURITYHOLDERS. The Issuer covenants and agrees that it will
furnish or cause to be furnished to the Trustee a list in such form as the
Trustee may reasonably require of the names and addresses of the Holders of the
Securities:
(a) semi-annually and not more than 15 days after each record
date for the payment of interest on the Securities, as hereinabove
specified, as of such record date; and
(b) at such other times as the Trustee may request in writing,
within 30 days after receipt by the Issuer of any such request as of a
date not more than 15 days prior to the time such information is
furnished;
PROVIDED that if and so long as the Trustee shall be the Security registrar,
such list shall not be required to be furnished.
SECTION 4.2 PRESERVATION AND DISCLOSURE OF SECURITYHOLDERS' LISTS.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of
the Holders of Securities contained in the most recent list furnished to
it as provided in Section 4.1 or maintained by the Trustee in its
capacity as Security registrar, if so acting. The Trustee may destroy
any list furnished to it as provided in Section 4.1 upon receipt of a new
list so furnished.
(b) The Security register maintained by the Trustee as register
will be available for inspection by any Holder or its attorney in writing
during normal business hours.
SECTION 4.3 REPORTS BY THE ISSUER. The Issuers covenant:
(a) to cause TWG to file with the Commission, and within 15
days after TWG files the same with the Commission, file with the Trustee,
and mail or furnish copies to the Trustee and cause the Trustee to mail
to the Holders at their addresses as set forth in the register of the
Securities, copies of the annual reports and of the information,
documents, and other reports (or copies of such portions of any of the
foregoing as the Commission may from time to time by rules and
regulations prescribe) which TWG may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act or
which TWG would be required to file with the Commission if the Issuer
then had a class of securities registered under the Exchange Act;
(b) As soon as available and in any event within forty-five
(45) days after the end of the first, second and third quarter of each
Fiscal Year, TWG International will deliver the consolidated unaudited
balance sheet of TWG International and its
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Subsidiaries as at the end of such quarter and the related consolidated
unaudited statements of income, stockholders equity and cash flows for
such quarter and for the portion of the Fiscal Year ended with such
quarter. The financial statements required hereunder shall in each
instance set forth in comparative form the corresponding figures as at
the end of the corresponding quarter of the preceding Fiscal Year.
(c) As soon as available and in any event within ninety (90)
days after the end of each Fiscal Year, TWG International will deliver
(i) the consolidated balance sheet of TWG International and its
Subsidiaries as at the end of such year and the related consolidated
statements of income, stockholders' equity and cash flows for such Fiscal
Year; and (ii) a report with respect to the financial statements from its
independent public accountants, which report shall be unqualified as to
going concern and scope of audit and shall state that (A) such
consolidated financial statements present fairly the consolidated
financial position of the TWG International and its Subsidiaries as of
the dates indicated and the results of the operations and cash flow for
the periods indicated in conformity with GAAP and (B) that the
examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally accepted
auditing standards.
(d) As soon as available and in any event within fifteen (15)
days after the end of each calendar month, TWG International will deliver
unaudited statements of income for each of the casinos located in the
Czech Republic, including in Ceska Kubice, Rozvadov and Znojmo (once
operational) for such month and for the portion of the Fiscal Year ended
with such month. The financial statements required hereunder shall in
each instance set forth in comparative from the corresponding figures as
at the end of the corresponding month of the preceding Fiscal Year.
(e) As soon as available and in any event within seven (7) days
after the end of each calendar week, TWG International will deliver
unaudited statements of net win for each of the casinos located in the
Czech Republic, including Ceska Kubice, Rozvadov and Znojmo (once
operational), for such week.
(f) to cause TWG's annual report to its common stockholders and
any quarterly or other financial reports furnished to its common
stockholders generally to be filed with the Trustee and mailed, no later
than the date such materials are mailed or made available to TWG's
common stockholders to the Holders at their addresses as set forth in the
register of Securities;
(g) [reserved];
(h) If the Issuer is not subject to the requirements of such
Section 13 or 15(d) of the Exchange Act, the Issuer shall nevertheless
continue to cause the TWG annual and quarterly financial statements,
including any notes thereto (and with respect to annual reports, a copy
of an auditors' report by an accounting firm of established national
reputation) and a "Management's Discussion and Analysis of Financial
Condition and
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Results of Operations", comparable to that which would have been required
to appear in annual or quarterly reports filed under Section 13 or 15(d)
of the Exchange Act to be so filed with the SEC for public availability
and the Trustee to be mailed to the Holders within 90 days after the end
of the Issuer's Fiscal Year and within 45 days after the end of each of
the first three quarters of each Fiscal Year. In either case, the Issuer
shall continue to furnish Holders of the Securities with substantially
the same quarterly and annual financial information with respect to the
Issuer as provided in the Issuer's consolidated financial statements,
including the notes thereto, for the year ended 1996;
(i) The Issuer shall provide the Trustee with a sufficient
number of copies of all reports and other documents and information that
the Trustee may be required to deliver to the Holders of the Securities
under this Section 4.3.
SECTION 4.4 [Reserved]
ARTICLE 5
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.1 EVENT OF DEFAULT DEFINED; ACCELERATION OF MATURITY; WAIVER
OF DEFAULT. In case one or more of the following Events of Default (whatever
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body) shall have occurred and be continuing:
(a) default in the payment of any installment of interest on
the Securities as and when the same becomes due and payable, and the
continuance of such default for 15 calendar days; or
(b) default in the payment of all or any part of the principal
on the Securities as and when the same shall become due and payable
either at maturity, upon acceleration or redemption or otherwise; or
(c) failure on the part of any Issuer duly to observe or
perform any covenants or agreements on the part of the Issuer contained
in the Securities, in this Indenture, in the Subscription Agreement, in
any of the Collateral Agreements, in the Funding Note, the Funding
Collateral Agreements or any related documents, and the continuance of
such failure for a period of 15 days after the date on which written
notice specifying such failure, stating that such notice is a "Notice of
Event of Default" hereunder and demanding that the Issuers remedy the
same, is given to the Issuers by the Trustee or to the Issuers and the
Trustee by the Holders of at least 25% in aggregate principal amount of
the Securities at the time outstanding; or
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(d) default under any mortgage, indenture or instrument under
which there may be issued or by which there maybe secured or evidenced
any Indebtedness for money borrowed by any Issuer or any of its
Subsidiaries (or the payment of which is Guaranteed by any Issuer or any
of its Subsidiaries), which default is caused by a failure to pay due
principal or interest on such Indebtedness after any applicable grace
period (a "Payment Default"), and the principal amount of any such
Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been and is continuing a Payment
Default, aggregates $300,000 or more; or
(e) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by any Issuer or any of its
Subsidiaries (or the payment of which is Guaranteed by any Issuer or any
of its Subsidiaries), which default results in the acceleration of such
Indebtedness prior to its express maturity and the principal amount of
any such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been and is continuing a Payment
Default or the maturity of which has been so accelerated and not
rescinded, aggregates $300,000 or more; or
(f) failure by any Issuer or any of its Subsidiaries to pay
final judgments (other than any judgment as to which a reputable
insurance company has accepted coverage without a reservation of rights)
aggregating in excess of $300,000, which judgments are not stayed or
discharged within 15 days after their entry; or
(g) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of any Issuer or any of its
Subsidiaries in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or appointing
a receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of any Issuer or any of its Subsidiaries or for any
substantial part of the property of any Issuer or any of its Subsidiaries
or ordering the winding up or liquidation of the affairs of any Issuer or
any of its Subsidiaries and such decree or order shall remain unstayed
and in effect for a period of 15 consecutive days; or
(h) any Issuer or any of its Subsidiaries shall commence a
voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or consent to the entry of an
order for relief in an involuntary case under any such law, or consent to
the appointment or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of any Issuer or
any of its Subsidiaries or for any substantial part of the property of
any Issuer or any of its Subsidiaries, or any Issuer or any of its
Subsidiaries shall make any general assignment for the benefit of
creditors;
(i) loss by the Issuer or any Subsidiary of any gambling
license related to the Collateral or the legal right to operate any
gaming establishment related to the Collateral including, without
limitation, those necessary to the Ceska Kubice, Rozvadov and
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Znojmo locations, which loss of license is not remedied within ten (10)
days (However, specifically excluding any license in the state of
Louisiana).
(j) indictment of any officer or Key Employee of any Issuer or
any Subsidiary by any governmental authority;
(k) fraud by an officer or Key Employee of any Issuer or any
Subsidiary;
(l) any Issuer does not pay, or shall be unable to pay, or
shall admit in writing its inability to pay its debts as such debts
become due;
(m) any event which, in the reasonable judgment of
Securityholders of 50% in principal amount of the Securities has a
material adverse effect on the condition, operations, prospects or
properties (financial or otherwise) of TWG International, TWG Financing
or any of its Subsidiaries, taken as a whole;
(n) any event or series of events within any one year period
which causes a reduction or may cause a reduction in the value of the
Collateral in excess of $300,000; or
(o) if all or any part of the Collateral shall be further
encumbered, hypothecated, mortgaged or made subject to any other lien or
security interest, except as otherwise provided herein.
then, and in each and every such case (other than an Event of Default specified
in clause (g) or (h) above relating to the Issuer), unless the principal of all
of the Securities shall have already become due and payable, either the Trustee
or the Holders of not less than 50% in aggregate principal amount of the
Securities then outstanding hereunder, by notice in writing to the Issuer (and
to the Trustee if given by Securityholders) (the "Acceleration Notice"), may
declare all the Securities and the accrued interest thereon to be due and
payable immediately (the "Acceleration Date"). If an Event of Default specified
in clause (g) or (h) above relating to the Issuer occurs, all the Securities and
the accrued interest thereon shall be immediately due and payable without any
declaration or other act on the part of the Trustee or any Securityholder.
SECTION 5.2 COLLECTION OF INDEBTEDNESS BY TRUSTEE; TRUSTEE MAY PROVE
INDEBTEDNESS. The Issuer covenants that (a) in case default shall be made in
the payment of any installment of interest on any of the Securities when such
interest shall have become due and payable, and such default shall have
continued for a period of 15 days, or (b) in case default shall be made in the
payment of all or any part of the principal of any of the Securities when the
same shall have become due and payable, whether upon maturity or upon any
redemption or by declaration or otherwise -- then upon demand by the Trustee the
Issuer will pay to the Trustee for the benefit of the Holders of the Securities
the whole amount that then shall have become due and payable on all such
Securities for principal or interest, as the case may be (with interest to the
date of such payment upon the overdue principal and, to the extent that payment
of such interest is enforceable under applicable law, on overdue installments of
interest at the Default Rate); and in addition thereto, such further amount as
shall be sufficient to
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cover the costs and expenses of collection, including such amounts as shall be
due the Trustee and each predecessor Trustee under Section 6.6.
Until such demand is made by the Trustee, the Issuer may pay the
principal of and interest on the Securities to the registered Holders, whether
or not the Securities be overdue.
In case the Issuer shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any action or proceeding at law or in
equity for the collection of the sums so due and unpaid including the
enforcement of its rights under the Collateral Agreements, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Issuer or other obligor upon the Securities
and collect in the manner provided by law out of the Property of the Issuer or
other obligor upon the Securities, wherever situated, the moneys adjudged or
decreed to be payable.
In case there shall be pending proceedings relative to the Issuer or any
other obligor upon the Securities under Title 11 of the United States Code or
any other applicable Federal or state bankruptcy, insolvency or other similar
law, or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or the property of the Issuer or such other
obligor, or in case of any judicial proceedings relative to the Issuer or other
obligor upon the Securities, or to the creditors or property of the Issuer or
such other obligor, the Trustee, irrespective of whether the principal of the
Securities shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section 5.2, shall be entitled and empowered,
by intervention in such proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Securities, and
to file such other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for
reasonable compensation to the Trustee and each predecessor Trustee, and
their respective agents, attorneys and counsel, and for reimbursement of
all expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee, except as a result of negligence
or bad faith) and of the Securityholders allowed in any judicial
proceedings relative to the Issuer or other obligor upon the Securities,
or to the creditors or Property of the Issuer or such other obligor;
(b) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of the Securities in any election of a
trustee or a standby trustee in arrangement, reorganization, liquidation
or other bankruptcy or insolvency proceedings or Person performing
similar functions in comparable proceedings; and
(c) to collect and receive any moneys or other Property payable
or deliverable on any such claims, and to distribute all amounts received
with respect to the claims of the Securityholders and of the Trustee on
their behalf; and any trustee, receiver, or liquidator,
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custodian or other similar official is hereby authorized by each of the
Securityholders to make payments to the Trustee, and, in the event that
the Trustee shall consent to the making of payments directly to the
Securityholders, to pay to the Trustee such amounts as shall be due the
Trustee, and each predecessor Trustee under Section 6.6.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any
Securityholder any plan or reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Securityholder in
any such proceeding except, as aforesaid, to vote for the election of a trustee
in bankruptcy or similar Person.
All rights of action and of asserting claims under this Indenture, or
under any of the Securities, may be enforced by the Trustee without the
possession of any of the Securities or the production thereof on any trial or
other proceedings relative thereto, and any such action or proceedings
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of the Trustee, each predecessor
Trustee and their respective agents and attorneys, shall be for the ratable
benefit of the Holders of the Securities in respect of which such judgment has
been sought.
In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the Holders
of the Securities, and it shall not be necessary to make any Holders of the
Securities parties to any such proceedings.
SECTION 5.3 APPLICATION OF PROCEEDS. Any moneys collected by the
Trustee pursuant to this Article shall be applied in the following order at the
date or dates fixed by the Trustee:
FIRST: To the payment of all amounts due the Trustee and each
predecessor Trustee under Section 6.6;
SECOND: In case the principal of the Securities shall not have become
and be then due and payable, to the payment of interest in default in the order
of the maturity of the installments of such interest, with interest (to the
extent that such interest has been collected by the Trustee) upon the overdue
installments of interest at the Default Rate borne by the Securities, such
payments to be made ratably to the Persons entitled thereto, without
discrimination or preference;
THIRD: In case the principal of the Securities shall have become and
shall be then due and payable, to the payment of the whole amount then owing and
unpaid upon all the Securities for principal and interest, with interest upon
the overdue principal, and (to the extent that such interest has been collected
by the Trustee) upon overdue installments of interest at the Default Rate borne
by the Securities; and in case such moneys shall be insufficient to pay in full
the whole amount so due and unpaid upon the Securities, then to the payment of
such principal and
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interest, without preference or priority of principal over interest, or of
interest over principal, or of any installment of interest over any other
installment of interest, or of any Security over any other Security, ratably to
the aggregate of such principal and accrued and unpaid interest; and
FOURTH: To the payment of the remainder, if any, to the Issuer or any
other Person lawfully entitled thereto.
Whenever moneys are to be applied pursuant to this Section 5.3,
such moneys shall be applied at such times, and from time to time, as the
Trustee shall determine, having due regard for the amount of such moneys
available for application, the likelihood of additional moneys becoming
available for such application in the future, and potential expenses relating to
the exercise of any remedy or right conferred on the Trustee by this Indenture.
Whenever the Trustee shall apply such moneys, it shall fix the date (which shall
be an Interest Payment Date unless it shall deem an earlier date more suitable)
upon which such application is to be made, and upon such date interest on the
amounts of principal to be paid on such date shall cease to accrue. The Trustee
shall give such notice as it may deem appropriate of the deposit with it of any
such moneys and of the fixing of any such date. Whenever the principal of and
interest on all Securities have been paid in full under the provisions of this
Section 5.3 and all expenses and charges of the Trustee have been paid, any
balance remaining in the Trust Estate shall be paid as provided in Section 10.6
of this Indenture.
SECTION 5.4 SUITS FOR ENFORCEMENT. In case an Event of Default has
occurred, has not been waived and is continuing, the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture or the Collateral Agreements by such appropriate judicial proceedings
as the Trustee shall deem most effectual to protect and enforce any of such
rights, either at law or in equity or in bankruptcy or otherwise, whether for
the specific enforcement of any covenant or agreement contained in this
Indenture or the Collateral Agreements or in aid of the exercise of any power
granted in this Indenture or the Collateral Agreements or to enforce any other
legal or equitable right vested in the Trustee by this Indenture or the
Collateral Agreements or by law.
SECTION 5.5 RESTORATION OF RIGHTS ON ABANDONMENT OF PROCEEDINGS. In
case the Trustee shall have proceeded to enforce any right under this Indenture
and such proceedings shall have been discontinued or abandoned for any reason,
then and in every such case the Issuer and the Trustee shall be restored
respectively to their former positions and rights hereunder, and all rights,
remedies and powers of the Issuer, the Trustee and the Securityholders shall
continue as though no such proceedings had been taken.
SECTION 5.6 LIMITATIONS ON SUITS BY SECURITYHOLDERS. No Holder shall
have any right by virtue or by availing of any provision of this Indenture to
institute any action or proceeding at law or in equity or in bankruptcy or
otherwise upon or under or with respect to this Indenture, or for the
appointment of a trustee, receiver, liquidator, custodian or other similar
official or for any other remedy hereunder, unless such Holder previously shall
have given to the Trustee written notice of an Event of Default and of the
continuance thereof, as hereinbefore provided, and unless also the Holders of
not less than 25% in aggregate principal amount of the
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Securities then outstanding shall have made written request upon the Trustee to
institute such action or proceeding in its own name as trustee hereunder and
shall have offered to the Trustee such reasonable indemnity as it may require
against the costs, expenses and liabilities to be incurred therein or thereby
and the Trustee for 30 days after its receipt of such notice, request and offer
of indemnity shall have failed to institute any such action or proceedings and
no direction inconsistent with such written request shall have been given to the
Trustee pursuant to Section 5.9; it being understood and intended, and being
expressly covenanted by the taker and Holder of every Security with every other
taker and Holder and the Trustee, that no one or more Holders of Securities
shall have any right in any manner whatever by virtue or by availing of any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holder of Securities, or to obtain or seek to obtain priority over or
preference to any other such Holder or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all Holders of Securities. For the protection and enforcement
of the provisions of this Section 5.6, each and every Securityholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
SECTION 5.7 UNCONDITIONAL RIGHT OF SECURITYHOLDERS TO INSTITUTE CERTAIN
SUITS. Notwithstanding any other provision in this Indenture and any provision
of any Security, the right of any Holder to receive payment of the principal of
and interest on such Security on or after the respective due dates expressed in
such Security, or to institute suit for the enforcement of any such payment on
or after such respective dates, shall not be impaired or affected without the
consent of such Holder.
SECTION 5.8 POWERS AND REMEDIES CUMULATIVE; DELAY OR OMISSION NOT WAIVER
OF DEFAULT. Except as provided in Section 2.6, no right or remedy herein or
under the Collateral Agreements conferred upon or reserved to the Trustee or to
the Securityholders is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or under the
Collateral Agreements or now or thereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder or
under the Collateral Agreements, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
No delay or omission of the Trustee or of any Holder to exercise any
right or power accruing upon any Event of Default occurring and continuing as
aforesaid shall impair any such right or power or shall be construed to be a
waiver of any such Event of Default or an acquiescence therein; and subject to
Section 5.6, every power and remedy given by this Indenture or under the
Collateral Agreements or by law to the Trustee or to the Securityholders may be
exercised from time to time, as often as shall be deemed expedient, by the
Trustee or by the Securityholders.
SECTION 5.9 CONTROL BY SECURITYHOLDERS. The Holders of 50% in aggregate
principal amount of the Securities at the time outstanding shall have the right
to direct the time, method, and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee by this Indenture; PROVIDED
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that such direction shall not be otherwise than in accordance with law and the
provisions of this Indenture; PROVIDED, FURTHER, that the Trustee is provided
with reasonable indemnification by the Holders prior to taking such action; and
PROVIDED, FURTHER, that (subject to the provisions of Section 6.1) the Trustee
shall have the right to decline to follow any such direction if the Trustee,
being advised by counsel, shall determine that the action or proceeding so
directed may not lawfully be taken or if the Trustee in good faith by its board
of directors, the executive committee or a trust committee of directors or
Responsible Officers of the Trustee shall determine that the action or
proceeding so directed would involve the Trustee in any financial or other
liability or if the Trustee in good faith shall so determine that the actions or
forbearances specified in or pursuant to such direction shall be unduly
prejudicial to the interests of Holders of the Securities not joining in the
giving of said direction, it being understood that (subject to Section 6.1) the
Trustee shall have no duty to ascertain whether or not such actions or
forbearances are unduly prejudicial to such Holders.
Nothing in this Indenture shall impair the right of the Trustee in its
discretion to take any action deemed proper by the Trustee and which is not
inconsistent with such direction by Securityholders.
SECTION 5.10 WAIVER OF PAST DEFAULTS. The Holders of 50% in aggregate
principal amount of the Securities at the time outstanding, by notice to the
Issuer and the Trustee, may on behalf of all Holders, upon providing the Trustee
with reasonable indemnity with respect to any action that might be taken by the
Holders not so consenting, provide forbearances, waive any default or Event of
Default hereunder and its consequences under this Indenture including
acceleration, except a default in the payment of principal of or interest on any
of the Securities or on the Funding Note. In the case of any such waiver, the
Issuer, the Trustee and the Holders of the Securities shall be restored to their
former positions and rights hereunder, respectively; but no such waiver shall
extend to any subsequent or other default or impair any right consequent
thereon.
Upon any such waiver, such default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured, and not to have occurred for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.
SECTION 5.11 TRUSTEE TO GIVE NOTICE OF DEFAULT, BUT MAY WITHHOLD IN
CERTAIN CIRCUMSTANCES. The Trustee shall transmit to the Securityholders, as
the names and addresses of such Holders appear on the registry books, notice by
mail of all defaults actually known to a Responsible Officer of the Trustee,
such notice to be transmitted within 90 days after the occurrence thereof,
unless such defaults shall have been cured before the giving of such notice (the
term "default" or "defaults" for the purposes of this Section 5.11 being hereby
defined to mean any event or condition which is, or with notice or lapse of time
or both would become, an Event of Default); PROVIDED that, except in the case of
default in the payment of the principal of or interest on any of the Securities,
the Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive
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committee, or a trust committee of directors and/or Responsible Officers of the
Trustee in good faith determines that the withholding of such notice is in the
interests of the Securityholders.
SECTION 5.12 RIGHT OF COURT TO REQUIRE FILING OF UNDERTAKING TO PAY
COSTS. All parties to this Indenture agree, and each Holder by its acceptance
thereof shall be deemed to have agreed, that any court may in its discretion
require, in any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.12 shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Securityholder or group of
Securityholders holding in the aggregate more than 25% in aggregate principal
amount of the Securities outstanding, or to any suit instituted by any
Securityholder for the enforcement of the payment of the principal of or
interest on any Security on or after the due date expressed in such Security.
SECTION 5.13 EXCESS CASH FLOW. All references to payments of principal
and interest include Excess Cash Flow payments required by this Indenture.
ARTICLE 6
CONCERNING THE TRUSTEE
SECTION 6.1 DUTIES AND RESPONSIBILITIES OF THE TRUSTEE; DURING DEFAULT;
PRIOR TO DEFAULT. The Trustee, prior to the occurrence of an Event of Default
and after the curing or waiving of all Events of Default which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. In case an Event of Default has
occurred (which has not been cured or waived) the Trustee shall exercise such of
the rights and powers vested in it by this Indenture, and use the same degree of
care and skill in their exercise as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default which may have occurred:
(i) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Indenture, and
the Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be read
into this Indenture against the Trustee; and
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(ii) in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein,
upon any statements, certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but
in the case of any such statements, certificates or opinions which
by any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the
same to determine whether or not they conform to the requirements
of this Indenture;
(b) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Responsible Officers of
the Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(c) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a 50% in principal amount of
the Securities at the time outstanding relating to the time, method and
place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee,
under this Indenture;
(d) the Trustee shall not be charged with knowledge of an Event
of Default unless a Responsible Officer of the Trustee obtains written
notice of such default; and
(e) whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to
the provisions of this Section 6.1.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial or
other liability in the performance of any of its duties or in the exercise of
any of its rights or powers, if repayment of such funds or adequate indemnity
against such liability is not assured to the reasonable satisfaction of the
Trustee.
SECTION 6.2 CERTAIN RIGHTS OF THE TRUSTEE. Subject to Section 6.1:
(a) the Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution,
Officers' Certificate or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture, note,
coupon, security or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) any request, direction, order or demand of the Issuer
mentioned herein shall be sufficiently evidenced by an Officers'
Certificate (unless other evidence in respect thereof be herein
specifically prescribed), and any resolution of the Board of Directors
may be evidenced to the Trustee by a copy thereof certified by the
Secretary or an Assistant Secretary of the Issuer;
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(c) the Trustee may consult with counsel and any advice or
Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted to be
taken by it hereunder in good faith and in accordance with such advice or
Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Indenture at the request, order
or direction of any of the Securityholders pursuant to the provisions of
this Indenture, unless such Securityholders shall have offered to the
Trustee reasonable security and/or indemnity against the costs, expenses
and liabilities which might be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or within
the discretion, rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Event of Default hereunder
and after the curing or waiving of all Events of Default which may have
occurred, the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
appraisal, bond, debenture, note, coupon, security, or other paper or
document unless requested in writing so to do by the Holders of not less
than a majority in aggregate principal amount of the Securities then
outstanding; PROVIDED that if the payment within a reasonable time to the
Trustee of the costs, expenses or liabilities likely to be incurred by it
in the making of such investigation is, in the opinion of the Trustee,
not reasonably assured to the Trustee by the security afforded to it by
the terms of this Indenture, the Trustee may require reasonable indemnity
against such expenses or liabilities as a condition to proceeding; the
reasonable expenses of every such examination shall be paid by the Issuer
or, if paid by the Trustee or any predecessor trustee, shall be repaid by
the Issuer upon demand;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys, custodians or nominees not regularly in its
employ and the Trustee shall not be responsible for any misconduct or
negligence on the part of any such agent, attorney, custodian or nominee
appointed with due care by it hereunder; and
(h) the Trustee makes no representation as to the validity or
adequacy of this Indenture, the Collateral, or the Securities. It shall
not be accountable for the Issuers' use of the proceeds from the sale of
the Securities, and it shall not be responsible for any statement in the
Securities, other than its authentication. Except required by Section
14.6 of this Indenture, the Trustee shall not be responsible for any
recording, re-recording, filing or refiling of this Indenture or other
document to perfect the Trust Estate's security interest in the
Collateral. The Trustee shall not be bound to ascertain or inquire as to
the performance of the obligations of the Issuer under this Indenture or
the Collateral
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Agreements. The Trustee may nevertheless require the Issuer to furnish
information regarding performance of its obligations hereunder and under
the Collateral Agreements, but is not obligated to do so.
SECTION 6.3 TRUSTEE NOT RESPONSIBLE FOR RECITALS, DISPOSITION OF
SECURITIES OR APPLICATION OF PROCEEDS THEREOF. The recitals contained herein
and in the Securities, except the Trustee's certificates of authentication,
shall be taken as the statements of the Issuer, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representation as to the validity or sufficiency of this Indenture or of the
Securities. The Trustee shall not be accountable for the use or application by
the Issuer of any of the Securities or of the proceeds thereof. The Trustee
shall not be accountable or responsible for any information, statement or
recital in any prospectus, private offering memorandum or any other disclosure
material prepared or distributed in connection with the distribution of the
Securities.
SECTION 6.4 TRUSTEE AND AGENTS MAY HOLD SECURITIES; COLLECTIONS, ETC.
The Trustee or any agent of the Issuer or the Trustee, in its individual or any
other capacity, may become the owner or pledgee of Securities with the same
rights it would have if it were not the Trustee or such agent and, subject to
Sections 6.8 and 6.13, if operative, may otherwise deal with the Issuer and
receive, collect, hold and retain collections from the Issuer with the same
rights it would have if it were not the Trustee or such agent.
SECTION 6.5 MONEYS HELD BY TRUSTEE. Subject to the provisions of
Section 10.6 hereof, all moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required by mandatory provisions of law. Neither the Trustee nor any agent of
the Issuer or the Trustee shall be under any liability for interest on any
moneys received by it hereunder.
SECTION 6.6 COMPENSATION AND INDEMNIFICATION OF TRUSTEE AND ITS PRIOR
CLAIM. The Issuer covenants and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to, reasonable compensation (which shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust) and the Issuer covenants and agrees to pay or reimburse the
Trustee and each predecessor Trustee upon its request for all reasonable
expenses, (including, without limitation, expenses incurred in connection with
notices and other communications to Holders) disbursements and advances incurred
or made by or on behalf of it in accordance with any of the provisions of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its counsel and of all agents and other Persons not regularly
in its employ) except any such expense, disbursement or advance as may arise
from its negligence or bad faith. The Issuer also covenants to indemnify the
Trustee, and each predecessor trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of this
Indenture or the trusts hereunder and its duties hereunder, including the costs
and expenses of defending itself against or investigating any
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claim of liability in the premises. The obligations of the Issuer under this
Section 6.6 to compensate and indemnify the Trustee and each predecessor
trustee and to pay or reimburse the Trustee and each predecessor trustee for
expenses, disbursements and advances shall constitute additional indebtedness
hereunder and shall survive the satisfaction and discharge of this Indenture.
Such additional indebtedness shall be a senior claim to that of the Securities
upon all Property and funds held or collected by the Trustee as such, except
funds held in trust for the benefit of the Holders of particular Securities, and
the Securities are hereby subordinated to such senior claim. The Trustee and
Issuer shall enter into a Fee Agreement acceptable to the Trustee and Issuer.
SECTION 6.7 RIGHT OF TRUSTEE TO RELY ON OFFICERS' CERTIFICATE, ETC.
Subject to Section 6.1, whenever in the administration of the trusts of this
Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or suffering or omitting any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of bad faith on the part of the
Trustee, be deemed to be conclusively proved and established by an Officers'
Certificate delivered to the Trustee, and such certificate, in the absence of
bad faith on the part of the Trustee, shall be full warrant and protection to
the Trustee for any action taken, suffered or omitted by it under the provisions
of this Indenture upon the faith thereof.
SECTION 6.8 [Reserved].
SECTION 6.9 PERSONS ELIGIBLE FOR APPOINTMENT AS TRUSTEE. The Trustee
hereunder shall at all times be a corporation organized and doing business under
the laws of the United States of America or of any State or territory or of the
District of Columbia having a combined capital and surplus of at least
$50,000,000 (or being a member of a bank holding system with such an aggregate
combined capital and surplus), and which is authorized under such laws to
exercise corporate trust powers and is subject to supervision or examination by
Federal, State, territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then
for the purposes of this Section 6.9, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. Neither the Issuer nor any
Person directly or indirectly controlling, controlled by or under common control
with the Issuer may serve as Trustee hereunder. In case at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section
6.9, the Trustee shall resign immediately in the manner and with the effect
specified in Section 6.10.
SECTION 6.10 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR TRUSTEE.
The Trustee may resign at any time by so notifying the Issuer in writing, such
resignation to be effective upon the appointment of a successor Trustee. The
Holders of a majority in principal amount of the outstanding Securities may
remove the Trustee by so notifying the Trustee in writing and may appoint a
successor Trustee with the Issuer's consent which consent shall not be
unreasonably withheld. The Issuer may remove the Trustee if:
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(a) the Trustee fails to comply with Section 6.8 or 6.9;
(b) the Trustee is adjudged a bankrupt or an insolvent;
(c) a receiver or other public officer takes charge of the
Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason (the Trustee in such event being referred to herein as
the retiring Trustee), the Issuer shall promptly appoint a successor Trustee
that is reasonably acceptable to the Holders of a majority in principal amount
of the Securities. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the Securities may appoint a
successor Trustee to replace the successor Trustee appointed by the Issuer.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Issuer. Immediately after that, the retiring
Trustee shall transfer all property held by it as Trustee to the successor
Trustee (subject to the senior claim provided in Section 6.6 and upon being paid
the compensation due to it in Section 6.6), the resignation or removal of the
retiring Trustee shall become effective, and the successor Trustee shall have
all the rights, powers and duties of the Trustee under this Indenture. A
successor Trustee shall mail notice of its succession to each Securityholder.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuer or the
Holders of at least 25% in principal amount of the outstanding Securities may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 6.8, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section 6.10,
the Issuer's obligations under Section 6.6 shall continue for the benefit of the
retiring Trustee.
SECTION 6.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR TRUSTEE. Any
successor trustee appointed as provided in Section 6.10 shall execute and
deliver to the Issuer and to its predecessor trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as trustee herein; but, nevertheless, on the written request
of the Issuer or of the successor trustee, the trustee ceasing to act shall upon
being paid the amounts due it under Section 6.6 pay over to the successor
trustee all moneys at the time held by it hereunder and shall
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execute and deliver an instrument transferring to such successor trustee all
such rights, powers, duties and obligations. Upon request of any such successor
trustee, the Issuer shall execute any and all instruments in writing for more
fully and certainly vesting in and confirming to such successor trustee all such
rights and powers. Any trustee ceasing to act shall, nevertheless, retain a
prior claim upon all Property or funds held or collected by such trustee to
secure any amounts then due it pursuant to the provisions of Section 6.6.
No successor trustee shall accept appointment as provided in this Section
6.11 unless at the time of such acceptance such successor trustee shall be
qualified under the provisions of Section 6.8 and eligible under the provisions
of Section 6.9. No Trustee under this Indenture shall be personally liable for
any action or omission of any successor trustee.
SECTION 6.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS
OF TRUSTEE. Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to the corporate trust business of the Trustee, shall
be the successor of the Trustee hereunder, PROVIDED that such corporation shall
be qualified under the provisions of Section 6.8 and eligible under the
provisions of Section 6.9, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Securities shall have been
authenticated but not delivered, any such successor to the Trustee may adopt the
certificate of authentication of any predecessor Trustee and deliver such
Securities so authenticated; and, in case at that time any of the Securities
shall not have been authenticated, any successor to the Trustee may authenticate
such Securities either in the name of any predecessor hereunder or in the name
of the successor Trustee; and in all such cases such certificate shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee to authenticate Securities in the name of
any predecessor Trustee shall have; PROVIDED that the right to adopt the
certificate of authentication of any predecessor Trustee shall apply only to its
successor or successors by merger, conversion or consolidation.
SECTION 6.13 [Reserved].
SECTION 6.14 INTERVENTION IN LITIGATION. In any judicial proceedings
with respect to the Securities to which the Issuer is a party the Trustee may
intervene on behalf of Holders and shall, subject to Section 6.2 of this
Indenture, intervene if requested in writing by Holders owning not less than
fifty percent (50%) in aggregate principal amount of Securities then
Outstanding.
SECTION 6.15 APPOINTMENT OF CO-TRUSTEES. At any time or times, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Collateral may at the time be located, the Issuer (and in case of an
Event of Default has occurred and is
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continuing, the Trustee) shall have the power to appoint one or more persons
approved by the Trustee either to act as co-trustee or co-trustees jointly with
the Trustee of all or any part of the Collateral, or to act as separate trustee
or separate co-trustees of all or any part of the Collateral, and to vest in
such person or persons, in such capacity, such title to the Collateral or any
part of it, and/or such rights, powers, duties, trusts or obligations as the
Issuer and/or the Trustee may consider necessary or desirable subject to the
remaining provisions of this Section 6.15. Upon the request of the Trustee or
of Holder owning not less than fifty percent (50%) in aggregate principal amount
of Securities then Outstanding, the Issuer shall join with the Trustee in the
execution, delivery and performance of all instruments and agreements necessary
or proper to effect such appointment. If the Issuer shall not have joined in
such appointment within 30 days after the receipt by it of a request so to do,
or in case an Event of Default shall have occurred and be continuing, the
Trustee alone shall have the power to make such appointment. The Issuer shall
execute, acknowledge and deliver all such instruments as may be required by any
such co-trustee or separate trustee for more fully confirming such title,
rights, powers, trusts, duties and obligations to such co-trustee or separate
trustee. Every co-trustee or separate trustee shall, to the extent permitted by
law or any applicable contract, be appointed subject to the following terms,
namely:
(i) all rights, powers, trusts, duties and obligations
conferred or imposed upon the trustees shall be conferred or imposed upon
and exercised or performed by the Trustee, or by the Trustee and such
co-trustee, or separate trustee, jointly, as shall be provided in the
instrument appointing such co-trustee or separate trustee, except to the
extent that, under the law of any jurisdiction in which any particular
act or acts are to be performed, the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such act or acts
shall be performed by such co-trustee or separate trustee;
(ii) any request in writing by the Trustee to any co-trustee or
separate trustee to take or to refrain from taking any action under this
Indenture shall be sufficient warrant for the taking, or the refraining
from taking, of such action by such co-trustee or separate trustee;
(iii) any co-trustee or separate trustee to the extent permitted
by law may delegate to the Trustee the exercise of any right, power,
trust, duty or obligation, discretionary or otherwise;
(iv) the Trustee at any time, by an instrument in writing, with
the concurrence of the Issuer evidenced by a resolution, may accept the
resignation of or remove any co-trustee or separate trustee appointed
under this Section 6.15, and, in case an Event of Default shall have
occurred and be continuing, the Trustee shall have power to accept the
resignation of, or remove, any such co-trustee or separate trustee
without the concurrence of the Issuer; upon the request of the Trustee,
the Issuer shall join with the Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to
effectuate such resignation or removal; a successor to any co-trustee or
separate trustee so resigned or removed may be appointed in the manner
provided in this Section 6.15;
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(v) no trustee under this Indenture shall be personally liable
by reason of any act or omission of any co-trustee or separate trustee
under this Indenture.
(vi) any demand, request, direction, appointment, removal,
notice, consent, waiver or other action in writing executed by any Holder
and delivered to the Trustee shall be deemed to have been delivered to
each such co-trustee or separate trustee; and
(vii) any moneys, papers, securities or other items of personal
property received by any such co-trustee or separate trustee under this
Indenture shall forthwith, so far as may be permitted by law, be turned
over to the Trustee.
Upon the acceptance in writing of appointment by any such co-trustee or separate
trustee, it, she or he shall be vested with the pledge and assignment of the
Collateral and with such rights, powers, duties, trusts or obligations as shall
be specified in the instrument of appointment, jointly with the Trustee (except
insofar as local law makes it necessary for any such co-trustee or separate
trustee to act alone), subject to all the terms of this Indenture. Every such
acceptance shall be filed with the Trustee and the Issuer.
SECTION 6.16 EFFECT OF DEATH, INCAPACITY, RESIGNATION OR REMOVAL OF
CO-TRUSTEE OR SEPARATE TRUSTEE. In case any co-trustee or separate trustee
shall die, become incapable of acting, resign or be removed, the pledge and
assignment of the Collateral and all rights, powers, trusts, duties and
obligations of the co-trustee or separate trustee shall, so far as permitted
by law, vest in and be exercised by the Trustee unless and until a successor
co-trustee or separate trustee shall be appointed in the same manner as
provided for with respect to the appointment of a successor Trustee pursuant
to Section 6.10 of this Indenture.
ARTICLE 7
CONCERNING THE SECURITYHOLDERS
SECTION 7.1 EVIDENCE OF ACTION TAKEN BY SECURITYHOLDERS. Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by Securityholders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Securityholders in Person or by agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee. Proof of execution of any instrument or of a writing appointing any
such agent shall be sufficient for any purpose of this Indenture and (subject to
Sections 6.1 and 6.2) conclusive in favor of the Trustee and the Issuer if made
in the manner provided in this Article.
SECTION 7.2 PROOF OF EXECUTION OF INSTRUMENTS AND OF HOLDING OF
SECURITIES. Subject to Sections 6.1 and 6.2, the execution of any instrument by
a Securityholder or his agent or proxy may be proved in accordance with such
reasonable rules and regulations as may be prescribed by the Trustee or in such
manner as shall be satisfactory to the
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Trustee. The holdings of Securities shall be proved by the Security register or
by a certificate of the registrar thereof.
SECTION 7.3 HOLDERS TO BE TREATED AS OWNERS. The Issuer, the Trustee
and any agent of the Issuer or the Trustee may deem and treat the Person in
whose name any Security shall be registered upon the Security register as the
absolute owner of such Security (whether or not such Security shall be overdue
and notwithstanding any notation of ownership or other writing thereon) for the
purpose of receiving payment of or on account of the principal of and, subject
to the provisions of this Indenture, interest on such Security and for all other
purposes; and neither the Issuer nor the Trustee nor any agent of the Issuer or
the Trustee shall be affected by any notice to the contrary. All such payments
so made to any such Person, or upon his order, shall be valid, and, to the
extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for moneys payable upon any such Security.
SECTION 7.4 SECURITIES OWNED BY ISSUER DEEMED NOT OUTSTANDING. In
determining whether the Holders of the requisite aggregate principal amount of
Securities have concurred in any direction, consent or waiver under this
Indenture, Securities which are owned by the Issuer or any other obligor on the
Securities or by any Person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Issuer or any other obligor
on the Securities (other than any holder of Securities on the Issuance Date)
shall be disregarded and deemed not to be outstanding for the purpose of any
such determination, except that for the purpose of determining whether the
Trustee shall be protected in relying on any such direction, consent or waiver
only Securities which the Responsible Officer actually knows are so owned shall
be so disregarded. "Actual knowledge" means the fact of knowing without a duty
to investigate. Securities so owned which have been pledged in good faith may
be regarded as outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Issuer or any other obligor upon the Securities or any
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Issuer or any other obligor of the Securities.
In case of a dispute as to such right, the advice of counsel shall be full
protection in respect of any decision made by the Trustee in accordance with
such advice. Upon request of the Trustee, the Issuer shall furnish to the
Trustee promptly an Officers' Certificate listing and identifying all
Securities, if any, known by the Issuer to be owned or held by or for the
account of any of the above described Persons; and, subject to Section 6.1, the
Trustee shall be entitled to accept such Officers' Certificate as conclusive
evidence of the facts therein set forth.
SECTION 7.5 RIGHT OF REVOCATION OF ACTION TAKEN. At any time prior to
(but not after) the evidencing to the Trustee, as provided in Section 7.1, of
the taking of any action by the Holders of the percentage in aggregate principal
amount of the Securities specified in this Indenture in connection with such
action, any Holder of a Security the serial number of which is shown by the
evidence to be included among the serial numbers of the Securities the Holders
of which have consented to such action may, by filing written notice at the
Corporate Trust Office and upon proof of holding as provided in this Article,
revoke such action so far as concerns such Security. Except as aforesaid, any
such action taken by the Holder of any Security shall be conclusive and binding
upon such Holder and upon all future Holders and owners of
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such Security and of any Securities issued in exchange or substitution therefor,
irrespective of whether or not any notation in regard thereto is made upon any
such Security. Any action taken by the Holders of the percentage in aggregate
principal amount of the Securities specified in this Indenture in connection
with such action shall be conclusively binding upon the Issuer, the Trustee and
the Holders of all the Securities.
ARTICLE 8
SUPPLEMENTAL INDENTURES
SECTION 8.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF SECURITYHOLDERS.
The Issuer, when authorized by a resolution of its Board of Directors, and the
Trustee may from time to time and at any time enter into an indenture or
indentures supplemental heretofor one or more of the following purposes:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Securities in addition to or
in place of certificated Securities;
(c) to provide for the assumption of the Issuer's obligations
hereunder to the Holders in the case of a merger or consolidation
pursuant to Article Nine hereof; or
(d) to make any change that would provide any additional rights
or benefits to the Holders or that does not adversely affect the legal
rights hereunder of any Holder.
The Trustee is hereby authorized to join in the execution of any such
supplemental indenture, to make any further appropriate agreements and
stipulations which may be therein contained and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Trustee shall not be obligated to enter into any such supplemental indenture
which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section
8.1 may be executed without the consent of the Holders of any of the Securities
at the time outstanding, notwithstanding any of the provisions of Section 8.2.
SECTION 8.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF SECURITYHOLDERS.
With the consent (evidenced as provided in Article Seven) of the Holders of not
less than a majority in aggregate principal amount of the Securities at the time
outstanding (including consents obtained in connection with a tender offer or
exchange offer for the Securities), the Issuer, when authorized by a resolution
of the Board of Directors, and the Trustee may, from time to time and at any
time, enter into an indenture or indentures supplemental hereto for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplemental indenture or of modifying in
any manner the rights of the Holders of the Securities; PROVIDED that no such
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supplemental indenture shall, without the consent of each Holder affected
thereby (with respect to any Securities held by a non-consenting
Securityholder), (i) reduce the principal amount of Securities whose Holders
must consent to an amendment, supplement or waiver, (ii) reduce the principal of
or change the fixed maturity of any Security or alter the provisions with
respect to the redemption of the Securities, (iii) reduce the rate of or change
the time for payment of interest on any Security, (iv) waive a Default or Event
of Default in the payment of principal of or premium, if any, or interest on the
Securities (except a rescission of acceleration of the Securities by the Holders
of at least a majority in aggregate principal amount of the then outstanding
Securities and a waiver of the payment default that resulted from such
acceleration), (v) make any Security payable in money other than that stated in
the Securities, (vi) make any change in the provisions of the Indenture relating
to waivers of past Defaults or the rights of Holders of Securities to receive
payments of principal of or interest on the Securities, (vii) waive a redemption
payment with respect to any Security or (viii) make any change in the foregoing
amendment and waiver provisions.
The Issuer may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any indenture
supplemental hereto. If a record date is fixed, then those Persons who were
Holders at such record date (or their duly designated proxies), and only those
Persons, shall be entitled to consent to such supplemental indenture or to
revoke any consent previously given, whether or not such Persons continue to be
Holders after such record date. No such consent shall be valid or effective for
more than 90 days after such record date.
Upon the request of the Issuer accompanied by a copy of a resolution of
the Board of Directors certified by the Secretary or an Assistant Secretary of
the Issuer authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of the required
Securityholders and other documents, if any, required by Section 7.1, the
Trustee shall join with the Issuer in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such
supplemental indenture.
It shall not be necessary for the consent of the Securityholders under
this Section 8.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to the provisions of this Section 8.2, the
Issuer shall mail a notice thereof by first-class mail to the Holders of
Securities at their addresses as they shall appear on the registry books of the
Issuer, setting forth in general terms the substance of such supplemental
indenture. Any failure of the Issuer to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental indenture.
SECTION 8.3 EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and be
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deemed to be modified and amended in accordance therewith and the respective
rights, limitations of rights, obligations, duties and immunities under this
Indenture of the Trustee, the Issuer and the Holders of Securities shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
SECTION 8.4 DOCUMENTS TO BE GIVEN TO TRUSTEE. In connection with the
execution and delivery of any supplemental indenture pursuant to this Article
Eight, the Trustee shall receive an Officers' Certificate and an Opinion of
Counsel and, subject to the provisions of Sections 6.1 and 6.2, may rely thereon
as conclusive evidence that any such supplemental indenture complies with the
applicable provisions of this Indenture. The Opinion of Counsel delivered
pursuant to this Section 8.4 shall include a statement that the execution,
delivery and performance of such supplemental indenture by the Issuer shall not
result in a breach or violation of, or constitute a default under, this
Indenture. Subject to Section 6.1, the Trustee may conclusively rely on an
Opinion of Counsel with respect to the effect a supplemental indenture will have
on a Holder under Section 8.1(d).
SECTION 8.5 NOTATION ON SECURITIES IN RESPECT OF SUPPLEMENTAL
INDENTURES. Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to the provisions of this Article may bear a
notation in form approved by the Trustee as to any matter provided for by such
supplemental indenture or as to any action taken at any such meeting. If the
Issuer or the Trustee shall so determine, new Securities so modified as to
conform, in the opinion of the Trustee and the Board of Directors, to any
modification of this Indenture contained in any such supplemental indenture may
be prepared and executed by the Issuer, authenticated by the Trustee and
delivered in exchange for the Securities then outstanding.
ARTICLE 9
NO CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Except with the prior written consent of each Holder, neither of the
Issuers shall consolidate with, or merge with or into (whether or not such
Issuer is the surviving corporation), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its properties or assets as
an entirety in one or more related transactions to, another corporation, person
or entity. For purposes of this Article 9, the transfer (by lease, assignment,
sale or otherwise), in a single transaction or series of transactions), of all
or substantially all of the properties or assets of one or more Subsidiaries of
the Issuer, the Capital Stock of which constitutes all or substantially all of
the properties and assets of the Issuer, shall be deemed to be the transfer of
all or substantially all of the properties and assets of the Issuer. Nothing
herein shall prohibit TWG or Trans World Gaming of Louisiana, Inc. from selling
or otherwise disposing of assets (other than any interest in TWG International)
to satisfy claims of the holders of those certain 12% Secured Convertible Senior
Bonds due 1999.
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ARTICLE 10
SATISFACTION AND DISCHARGE
OF INDENTURE; UNCLAIMED MONEYS
SECTION 10.1 SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture
shall cease to be of further effect as to all outstanding Securities (except as
to (A) rights of registration of transfer and exchange, and the Issuer's right
of optional redemption, (B) substitution of apparently mutilated, defaced,
destroyed, lost or stolen Securities, (C) rights of Holders to receive payments
of principal thereof and interest thereon, (D) the rights, obligations and
immunities of the Trustee hereunder and (E) the rights of the Securityholders as
beneficiaries hereof with respect to the property so deposited with the Trustee
under the provisions of this Section 10.1) when (a) all outstanding Securities,
except lost, stolen or destroyed Securities which shall have been replaced, as
provided in Section 2.6, or paid have been delivered to the Trustee for
cancellation or (b) the Issuer shall have paid or caused to be paid the
principal of and interest on the Securities outstanding hereunder, as and when
the same shall have become due and payable, or (c) (i) the Securities not
theretofore delivered to the Trustee for cancellation shall have become due and
payable, or are by their terms to become due and payable within one year or are
to be called for redemption under arrangements satisfactory to the Trustee upon
the giving of notice of redemption, and (ii) the Issuer shall have irrevocably
deposited or caused to be deposited with the Trustee, as trust funds, (A) money
in an amount or (B) Government Securities which through the payment of interest
and principal will provide, no later than one day before the due date of
payments in respect of the Securities, money in an amount or (C) a combination
thereof, any one of options (A), (B) or (C) being sufficient in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay the principal of
and interest on the outstanding Securities to the date of maturity or
redemption, as the case may be. The Trustee, on demand of the Issuer
accompanied by an Officers' Certificate and an Opinion of Counsel and at the
cost and expense of the Issuer, shall execute proper instruments acknowledging
such satisfaction of and discharging this Indenture. The Issuer agrees to
reimburse the Trustee for any costs or expenses (including the reasonable fees
of its counsel) there after reasonably and properly incurred, to compensate the
Trustee for any services thereafter reasonably and properly rendered by the
Trustee in connection with this Indenture or the Securities and to indemnify the
trust referred to in Section 10.2(a) for any tax liability and pay any expenses
of such trust not otherwise provided for pursuant to such Section.
SECTION 10.2 DEFEASANCE AND DISCHARGE OF INDENTURE. The Issuer shall be
deemed to have paid and discharged the entire Indebtedness on all the
outstanding Securities on the date of the deposit referred to in subparagraph
(a) hereof, and the provisions of this Indenture, as it relates to such
outstanding Securities, shall no longer be in effect (and the Trustee, at the
expense of the Issuer, shall execute proper instruments acknowledging the same),
except as to: (1) rights of registration of transfer and exchange, and the
Issuer's right of optional redemption, (2) substitution of apparently mutilated,
defaced, destroyed, lost or stolen Securities, (3) rights of Holders to receive
payments of principal thereof and interest thereon, (4) the rights, obligations
and immunities of the Trustee hereunder and (5) the rights of the
Securityholders as
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beneficiaries hereof with respect to the property so deposited with the Trustee
payable to all or any of them; PROVIDED that all of the following conditions
shall have been satisfied:
(a) the Issuer has deposited or caused to be irrevocably
deposited with the Trustee (or another trustee satisfying the
requirements of Section 6.9) as trust funds in trust, specifically
pledged as security for, and dedicated solely to, the benefit of the
Holders of the Securities, (i) money in an amount or (ii) Government
Securities which through the payment of interest and principal in respect
thereof in accordance with their terms will provide not later than one
day before the due date of any payment referred to below money in an
amount, or (iii) a combination thereof, any one of options (i), (ii) or
(iii) being sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge without
consideration of the reinvestment of such interest and after payment of
all federal, state and local taxes or other charges and assessments in
respect thereof payable by the Trustee, the principal of and each
installment of principal and interest on the outstanding Securities as of
the maturity date of such principal or installment of interest;
(b) [reserved];
(c) such deposit shall not result in a breach or violation of,
or constitute a default under, this Indenture or any other agreement or
instrument to which the Issuer is a party or by which it is bound;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit;
(e) the Issuer has delivered to the Trustee an Opinion of
Counsel to the effect that (i) the Holders of the Securities shall not
recognize income, gain or loss for Federal income tax purposes as a
result of such deposits, defeasance and discharge and will be subject to
Federal income tax on the same amount and in the same manner and at the
same times as would have been the case if such deposit, defeasance and
discharge had not occurred, (ii) the creation of the trust will not
violate the Investment Company Act of 1940, as amended, and (iii) Holders
of the Securities will have a valid, first priority lien on the trust
funds; and
(f) the Issuer has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to the defeasance contemplated by this
provision have been complied with.
SECTION 10.3 DEFEASANCE OF CERTAIN OBLIGATIONS. The Issuer may omit to
comply with any term, provision or condition set forth in Article 13 and in
Sections 3.5 to 3.13 inclusive, and will not be subject to the Events of Default
described under clauses (d), (e) and (f) of Section 5.1 hereof, with respect to
the Securities, if all of the following conditions have been satisfied:
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(a) the Issuer has deposited or caused to be irrevocably
deposited with the Trustee (or another trustee satisfying the
requirements of Section 6.9) as trust funds in trust, specifically
pledged as security for, and dedicated solely to, the benefit of the
Holders of the Securities, (i) money in an amount, or (ii) Government
Securities which through the payment of interest and principal in respect
thereof in accordance with their terms will provide not later than one
day before the due date of any payment referred to below money in an
amount, or (iii) a combination thereof, any one of options (i), (ii) or
(iii) being sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge without
consideration of the reinvestment of such interest and after payment of
all federal, state and local taxes or other charges and assessments in
respect thereof payable by the Trustee, the principal of and each
installment of principal and interest on the outstanding Securities on
the maturity date of such principal or installment of principal or
interest;
(b) [Reserved].
(c) such deposit shall not result in a breach or violation of,
or constitute a default under, this Indenture or any other agreement or
instrument to which the Issuer is a party or by which it is bound;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit;
(e) the Issuer has delivered to the Trustee an Opinion of
Counsel to the effect that (i) the Holders of the Securities shall not
recognize income, gain or loss for Federal income tax purposes as a
result of such deposit and defeasance of certain obligations and will be
subject to Federal income tax on the same amount and in the same manner
and at the same times as would have been the case if such deposit and
defeasance had not occurred, (ii) the creation of the trust will not
violate the Investment Company Act of 1940, as amended, and (iii) Holders
of the Securities will have a valid, first-priority lien on the trust
funds; and
(f) the Issuer has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the defeasance contemplated by
this Section 10.3 have been complied with.
SECTION 10.4 APPLICATION BY TRUSTEE OF FUNDS DEPOSITED FOR PAYMENT OF
SECURITIES. Subject to Section 10.6, all moneys and Governmental Securities
deposited with the Trustee pursuant to Sections 10.1, 10.2 and 10.3 shall be
held in trust and applied by it to the payment, either directly or through any
paying agent (including the Issuer acting as paying agent), to the Holders of
the particular Securities for the payment or redemption of which such moneys
have been deposited with the Trustee, of all sums due and to become due
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thereon for principal and interest; but such money and Government Securities
need not be segregated from other funds except to the extent required by law.
SECTION 10.5 REPAYMENT OF MONEYS HELD BY PAYING AGENT. In connection
with the satisfaction and discharge of this Indenture all moneys and Government
Securities then held by any paying agent under the provisions of this Indenture
shall, upon demand of the Issuer, be repaid to the Issuer or paid to the Trustee
and thereupon such paying agent shall be released from all further liability
with respect to such moneys and Government Securities .
SECTION 10.6 RETURN OF MONEYS HELD BY TRUSTEE AND PAYING AGENT UNCLAIMED
FOR ONE YEAR. Any moneys and Government Securities deposited with or paid to
the Trustee or any paying agent for the payment of the principal of or interest
on any Security and not applied but remaining unclaimed for one year after the
date upon which such principal or interest shall have become due and payable
shall, upon the written request of the Issuer and unless otherwise required by
mandatory provisions of applicable escheat or abandoned or unclaimed property
law, be repaid to the Issuer by the Trustee or such paying agent, and the Holder
of such Security shall, unless otherwise required by mandatory provisions of
applicable escheat or abandoned or unclaimed property laws, thereafter look only
to the Issuer for any payment which such Holder may be entitled to collect, and
all liability of the Trustee or any paying agent with respect to such moneys and
Government Securities shall thereupon cease; PROVIDED, HOWEVER, that the Trustee
or such paying agent before being required to make any such repayments may, at
the expense of the Issuer, cause to be published once, in a newspaper published
in the English language, customarily published on each Business Day and of
general circulation in the Borough of Manhattan, the City of New York, notice
that such money remains unclaimed and that after a date specified therein, which
shall not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Issuer. In the event
any Securities are not presented for payment when due, either at maturity or at
the date fixed for redemption thereof or otherwise, if funds sufficient to pay
such Securities shall have been made available to the Trustee or Paying Agent
for the benefit of the Holders thereof, all liability of the Issuer to the
Holders for payment of such Securities shall terminate and be completely
discharged. The Trustee shall hold such segregated funds, without liability for
interest thereon, for the benefit of the Holders, who shall thereafter be
restricted exclusively to such funds for the satisfaction of any claim of
whatever nature on their part under this Indenture or relating to such
Securities.
SECTION 10.7 REINSTATEMENT. If the Trustee or paying agent is unable to
apply any moneys or Government Securities in accordance with this Article Ten by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Issuer's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this Article Ten until such time as the Trustee or paying agent is
permitted to apply all such moneys or Government Securities in accordance with
this Article; PROVIDED, HOWEVER, that if the Issuer has made any payment of
principal of or interest on any Securities because of the reinstatement of its
obligations, the Issuer shall be subrogated to the rights of the
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Holders of such Securities to receive such payment from the moneys or Government
Securities held by the Trustee or paying agent.
ARTICLE 11
MISCELLANEOUS PROVISIONS
SECTION 11.1 INCORPORATORS, SHAREHOLDERS, OFFICERS AND DIRECTORS OF
ISSUER EXEMPT FROM INDIVIDUAL LIABILITY. No recourse under or upon any
obligation, covenant or agreement contained in this Indenture, or in any
Security, or because of any indebtedness evidenced thereby, shall be had against
any incorporator, as such, or against any past, present or future stockholder,
officer, employee, director, or creditor, as such, of the Issuer or the Trustee
or any subsidiary of the Issuer or any successor of the Issuer or the Trustee or
any such subsidiary, whether directly or through the Issuer or any subsidiary of
the Issuer or any successor of the Issuer or any such subsidiary, under any rule
of law, statute or constitutional provision or by the enforcement of any
assessment or by any legal or equitable proceeding or otherwise, all such
liability being expressly waived and released by the acceptance of the
Securities by the Holders thereof and as part of the consideration for the issue
of the Securities.
SECTION 11.2 PROVISIONS OF INDENTURE FOR THE SOLE BENEFIT OF PARTIES
AND SECURITYHOLDERS. Nothing in this Indenture or in the Securities, express or
implied, shall give or be construed to give to any Person, firm or corporation,
other than the parties hereto and their successors and the Holders of the
Securities, any legal or equitable right, remedy or claim under this Indenture
or under any covenant or provision herein contained.
SECTION 11.3 SUCCESSORS AND ASSIGNS OF ISSUER BOUND BY INDENTURE. All
the covenants, stipulations, promises and agreements in this Indenture contained
by or on behalf of the Issuer shall bind its successors and assigns, whether so
expressed or not.
SECTION 11.4 NOTICES AND DEMANDS ON ISSUER, TRUSTEE AND SECURITYHOLDERS.
Any notice or demand which by any provision of this Indenture is required or
permitted to be given or served by the Trustee or by the Holders of Securities
to or on the Issuer shall be given or served by (i) delivery in Person, (ii)
telecopy (confirmed by copy sent by first-class mail) or (iii) certified or
registered mail, return receipt requested (except as otherwise specifically
provided herein), in each case addressed (until another address of the Issuer is
filed by the Issuer with the Trustee) to Trans World Gaming Corp., One Penn
Plaza, Suite 1503, New York, NY 10119, Attention: President (Telecopy No.:
(212) 563-3380). Any notice, direction, request or demand by the Issuer or any
Securityholder to or upon the Trustee shall be deemed to have been sufficiently
given or made, for all purposes, if given or served by one of the methods
described in the first sentence of this Section 11.4, addressed to the Corporate
Trust Office (Telecopy No.: 212-754-1303).
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Where this Indenture provides for notice to Holders, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class postage prepaid, to each Holder entitled thereto, at his
last address as it appears in the Security register. Any notice which is
delivered, telecopied (and confirmed by mail) or mailed in the manner herein
provided shall be conclusively presumed to have been given, whether or not the
addressee receives such notice. In any case where notice to Holders is given by
mail, neither the failure to mail such notice, nor any defect in any notice so
mailed to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case, by reason of the suspension of or irregularities in regular mail
service, it shall be impracticable to mail notice or confirm by mail telecopy
notice to the Issuer and Securityholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
SECTION 11.5 COMPLIANCE CERTIFICATES AND OPINIONS OF COUNSEL; STATEMENTS
TO BE CONTAINED THEREIN. Upon an application or demand by the Issuer to the
Trustee to take any action under any of the provisions of this Indenture, the
Issuer shall furnish to the Trustee (i) an Officers' Certificate stating that
all conditions precedent provided for in this Indenture relating to the proposed
action have been complied with and (ii) an Opinion of Counsel stating that in
the opinion of such counsel all such conditions precedent have been complied
with and (iii) if appropriate, an Accountants' Certificate stating that in the
opinion of such accountants all such conditions precedent have been complied
with, except that in the case of any such application or demand as to which the
furnishing of such documents is specifically required by any provision of this
Indenture relating to such particular application or demand, no additional
certificate or opinion need be furnished.
Each certificate or opinion provided for in this Indenture and delivered
to the Trustee with respect to compliance with a condition or covenant provided
for in this Indenture shall include (a) a statement that the Person making such
certificate or opinion has read such covenant or condition, (b) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based, (c) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with and (d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with.
Any certificate, statement or opinion of an officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of
or representations by counsel, unless such officer knows that the certificate or
opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or in
the
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exercise of reasonable care should know that the same are erroneous. Any
certificate, statement or opinion of counsel may be based, insofar as it relates
to factual matters and information which is in the possession of the Issuer,
upon the certificate, statement or opinion of or representations by an officer
or officers of the Issuer, unless such counsel knows that the certificate,
statement or opinion or representations with respect to the matters upon which
his certificate, statement or opinion may be based as aforesaid are erroneous,
or in the exercise of reasonable care should know that the same are erroneous.
Any certificate, statement or opinion of an officer of the Issuer or of
counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Issuer unless such officer or counsel, as the
case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.
Any certificate or opinion of any independent firm of public accountants
filed with the Trustee shall contain a statement that such firm is independent.
SECTION 11.6 PAYMENTS DUE ON SATURDAYS, SUNDAYS AND HOLIDAYS. If the
date of maturity of interest on or principal of the Securities or the date fixed
for redemption of any Security shall not be a Business Day, then payment of
interest or principal need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the date of
maturity or the date fixed for redemption, and no interest shall accrue for the
period after such date.
SECTION 11.7 [Reserved].
SECTION 11.8 APPLICABLE LAW. NEW YORK LAW TO GOVERN. THIS INDENTURE
AND EACH SECURITY SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE
OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS
(OTHER THAN CHOICE OF LAW RULES) OF SAID STATE. THE ISSUER HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW
YORK STATE COURT SITTING IN NEW YORK CITY IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS INDENTURE OR THE SECURITIES AND THE ISSUER HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN ANY SUCH UNITED STATES FEDERAL OR NEW YORK STATE
COURT. THE ISSUER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDINGS IN SUCH RESPECTIVE JURISDICTIONS. THE ISSUER
IRREVOCABLY CONSENTS TO THE
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SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY
COURT IN OR OF THE STATE OF NEW YORK BY THE DELIVERY OF COPIES OF SUCH PROCESS
TO THE ISSUER, AT ITS ADDRESS SPECIFIED IN SECTION 11.4 HEREOF OR BY CERTIFIED
MAIL DIRECT TO SUCH ADDRESS.
WHENEVER POSSIBLE EACH PROVISION OF THIS INDENTURE SHALL BE INTERPRETED IN
SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY
PROVISION OF THIS INDENTURE SHALL BE PROHIBITED BY OR INVALID UNDER APPLICABLE
LAW, SUCH PROVISION SHALL BE INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR
INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE
REMAINING PROVISIONS OF THIS INDENTURE. WHENEVER IN THIS INDENTURE REFERENCE IS
MADE TO THE ISSUER OR A HOLDER, SUCH REFERENCE SHALL BE DEEMED TO INCLUDE, AS
APPLICABLE, A REFERENCE TO THEIR RESPECTIVE SUCCESSORS AND ASSIGNS. THE
PROVISIONS OF THIS INDENTURE SHALL BE BINDING UPON AND SHALL INURE TO THE
BENEFIT OF SUCH SUCCESSOR AND ASSIGNS. THE ISSUER'S SUCCESSORS AND ASSIGNS
SHALL INCLUDE, WITHOUT LIMITATION, A RECEIVER, TRUSTEE OR DEBTOR IN POSSESSION
FOR THE ISSUER.
SECTION 11.9 COUNTERPARTS. This Indenture may be executed in any number
of counterparts, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
SECTION 11.10 EFFECT OF HEADINGS. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
SECTION 11.11 WAIVER OF USURIOUS INTEREST. All agreements between
Issuer, the Trustee and the Holders, whether now existing or hereafter arising
and whether written or oral, are hereby limited so that in no contingency,
whether by reason of demand or acceleration of the final maturity date of the
Securities or otherwise, shall the interest contracted for, charged, received,
paid or agreed to be paid to Holders exceed the maximum amount permissible under
the laws of the State of New York (hereinafter the "Applicable Law"). If, from
any circumstance whatsoever, interest would otherwise be payable to the Holders
in excess of the maximum amount permissible under Applicable Law, the interest
payable to the Holders shall be reduced to the maximum amount permissible under
Applicable Law, and if from any circumstance the Holders shall ever receive
anything of value deemed interest by the Applicable Law in excess of the maximum
amount permissible under the Applicable Law, an amount equal to the excessive
interest shall be applied to the reduction of the principal hereof and not to
the payment of interest, or if such excessive amount of interest exceeds the
unpaid principal balance of principal hereof, such excess shall be refunded to
Issuer. All interest paid or agreed to be paid to the Holders shall, to the
extent permitted by the Applicable Law, be amortized, prorated, allocated and
spread throughout the full period (including any renewal or extension) until
payment in full of the principal so that the interest hereon for such full
period shall not exceed the maximum
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amount permissible under the Applicable Law. The Holders expressly disavow any
intent to contract for, charge or receive interest in an amount which exceeds
the maximum amount permissible under the Applicable Law. This paragraph shall
control agreements between the Issuer and the Holders.
SECTION 11.12 VALUE OF SECURITIES. To the extent lawful, Warrants
issued pursuant to the Subscription Agreement have a deminimus value and shall
be valued at zero for U.S. income tax purpose, including adjustment to the
Securities.
ARTICLE 12
REDEMPTION OF SECURITIES
SECTION 12.1 RIGHT OF OPTIONAL REDEMPTION; PRICES. Subject to the terms
and conditions of this Indenture, the Issuer at its option may redeem all or any
portion of, the Securities upon payment of the amount redeemed, together with
accrued and unpaid interest to the date fixed for redemption (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date). To exercise this option to redeem the
Securities, the Issuer shall give the Trustee written notice thereof not less
than 30 but not no more than 60 days prior to the redemption date selected by
the Issuer and specified in such notice. If less than all of the Securities are
to be redeemed, then the Issuer shall specify the principal amount of Securities
to be redeemed. The redemption price shall be equal to unpaid principal to be
redeemed and accrued and unpaid interest to the date fixed for redemption.
If less than all of the Outstanding Securities are to be called for redemption,
the Securities shall be redeemed on a reasonably proportionate basis, in minimum
amounts of $100.00, according to the principal amount of securities represented
by such Securities Outstanding
SECTION 12.2 NOTICE OF REDEMPTION. Notice of redemption to the Holders
of Securities to be redeemed as a whole shall be given by mailing notice of such
redemption by first-class mail, postage prepaid, at least 30 and not more than
60 days prior to the date fixed for redemption to such Holders of Securities at
their last addresses as they shall appear upon the registry books. Any notice
which is mailed in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the Holder receives the notice.
Failure to give notice by mail, or any defect in the notice to the Holder of any
Security designated for redemption as a whole or in part, shall not affect the
validity of the proceedings for the redemption of any other Security.
The notice of redemption to each such Holder shall specify the principal
amount of each Security held by such Holder to be redeemed, the date fixed for
redemption, the redemption price, the place or places of payment, that payment
will be made upon presentation and surrender of such Securities, that interest
accrued to the date fixed for redemption to the extent provided in
Section 12.1 will be paid as specified in said notice, that on and after said
date interest thereon will cease to accrue.
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The notice of redemption of Securities to be redeemed shall be given by
the Issuer or, at the Issuer's request, by the Trustee in the name and at the
expense of the Issuer. The Issuer shall notify the Trustee of such redemption
at least 15 days prior to the date the notice of redemption is to be sent to the
Holders and shall specify in such notice whether the Trustee is to give such
notice.
At least one Business Day prior to the redemption date specified in the
notice of redemption given as provided in this Section 12.2, the Issuer will
deposit with the Trustee or with one or more paying agents (or, if the Issuer is
acting as paying agent, set aside, segregate and hold in trust as provided in
Section 3.4) in immediately available funds an amount of money sufficient to
redeem in immediately available funds on the redemption date all the Securities
so called for redemption at the appropriate redemption price, together with
accrued interest to the date fixed for redemption to the extent provided in
Section 12.1.
SECTION 12.3 PAYMENT OF SECURITIES CALLED FOR REDEMPTION. If notice of
redemption has been given as above provided, the Securities shall become due and
payable on the date and at the place stated in such notice at the applicable
redemption price, together with interest accrued to the date fixed for
redemption, and on and after said date (unless the Issuer shall default in the
payment of such Securities at the redemption price, together with interest
accrued to said date to the extent provided in Section 12.1) interest on the
Securities or portions of Securities so called for redemption shall cease to
accrue and, except as provided in Sections 6.5 and 10.6, such Securities shall
cease from and after the date fixed for redemption to be entitled to any benefit
or security under this Indenture, and the Holders thereof shall have no right in
respect of such Securities except the right to receive the redemption price
thereof and unpaid interest to the date fixed for redemption to the extent
provided in Section 12.1. On presentation and surrender of such Securities at a
place of payment specified in said notice, said Securities shall be paid and
redeemed by the Issuer at the applicable redemption price, together with
interest accrued thereon to the date fixed for redemption; PROVIDED that any
semi-annual payment of interest becoming due on the date fixed for redemption
shall be payable to the Holders of such Securities registered as such on the
relevant record date subject to the terms and provisions of Section 2.4 hereof.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal shall, until paid or duly provided for,
bear interest from the date fixed for redemption at the rate borne by the
Security.
SECTION 12.4 EXCLUSION OF CERTAIN SECURITIES FROM ELIGIBILITY FOR
SELECTION FOR REDEMPTION. Securities shall be excluded from eligibility for
selection for redemption if they are identified by registration and certificate
number in an Officer's Certificate and delivered to the Trustee at least 40 days
prior to the last date on which notice of redemption may be given as being owned
of record and beneficially by, and not pledged or hypothecated by, (a) the
Issuer or (b) an entity specifically identified in such written statement as
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Issuer (other than a holder of the Securities on the
Issuance Date).
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SECTION 12.5 PARTIAL REDEMPTION OF SECURITIES. In case part but not all
of an Outstanding Security shall be selected for redemption, upon presentation
and Surrender of such Security by the Holder thereof or its attorney duly
authorized in writing (with due endorsement by, or a written instrument of
transfer in such form satisfactory to the Trustee) the Trustee shall
authenticate and deliver to a, upon the order of such Holder, without change
there for, for the unredeemed portion of the principal amount of the Security so
surrendered, a Security or Securities, at the option of such Holder, of like
tenor. Fully registered Securities so presented and surrendered shall be
canceled in accordance with this Indenture.
ARTICLE 13
RIGHT OF FIRST REFUSAL
13.1 OPTION. In the event either Issuer or any Subsidiary or any
Affiliate thereof, directly or indirectly, is able to obtain an indication of
interest from a bona fide lender of recourse financing for any use related to
any aspect of TWG International's permitted line of business (other than as
related to the development of an opportunity or opportunities in Bishkek), as
set forth in Section 3.19 (a "Qualified Loan Agreement"), the Securityholders
(or permitted assigns) shall be provided the option to act as the lender
pursuant to the terms of such Qualified Loan Agreement (the "Right of First
Refusal").
13.2 TERMS. Not less than five (5) business days (the "Notice Period")
following the documentation of a Qualified Loan Agreement, TWG International
shall provide written notice to each Securityholder of the Qualified Loan
Agreement and enclose a copy thereof. The right of the Securityholders to
participate as a lender under a Qualified Loan Agreement shall be referred to
herein as the "Qualified Offer". Each Securityholder desiring to so participate
as a lender must so notify TWG International in writing, to be received by TWG
International not less than 10 days following the expiration of the Notice
Period. If the Qualified Offer is not accepted in writing by at least one
Securityholder, or a permitted assign thereof, the Qualified Offer shall be
deemed rejected. If at least one Securityholder, but less than all
Securityholders, timely accepts the Qualified Offer, such consenting
Securityholder(s) shall be provided an additional five business days thereafter
to agree, on a pro rata basis, and in any combination of Securityholders, to
fund the nonconsenting Securityholders' commitments under the terms of the
Qualified Loan Agreement. If any combination of consenting Securityholders so
agree, such Securityholders shall become the lender under the Qualified Loan
Agreement. If no combination of Securityholders timely agrees to fund 100% of
the sums required under the Qualified Loan Agreement, such Qualified Offer shall
be deemed rejected. The terms and conditions of any Qualified Loan Agreement
negotiated by the Company shall include terms taking into account the need of
the Issuer to comply with the terms of this Section and shall provide the
accepting Securityholders ten days within which to fund such loan amount
following final acceptance pursuant to the terms hereof.
13.3 EXPIRATION OF RIGHT OF FIRST REFUSAL. This Right of First Refusal
shall expire on the earlier of (a) 18 months from the date of this Indenture,
(b) the date all
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Obligations under this Indenture are defeased pursuant to Section 10.2, and (c)
the date all Obligations are satisfied in full.
13.4 ENFORCEMENT OF RIGHTS. Should the Issuer fails to comply with the
terms of this Section, such failure shall be deemed an Event of Default under
the terms of this Indenture should holders of the majority of the principal
amount of the Securities outstanding deem it as such by written notice to the
Trustee.
ARTICLE 14
SECURITY
SECTION 14.1 PLEDGE AND SECURITY INTEREST. "Collateral" means all of
the capital stock of TWG International and of TWG Finance and all Property of
TWG Finance, including the Funding Note. All references herein to the
"Security Interest" and to the "Lien of this Indenture" shall be deemed to mean
and refer to the Liens granted to the Trustee and the Holders pursuant to the
terms of the Collateral Agreements.
SECTION 14.2 SECURITY FOR OBLIGATION. The Security Interest secures
among other things the payment and performance of all obligations of the Issuer
now or hereafter existing under the Securities, the Collateral Agreements or
this Indenture, including without limitation the prompt payment when due
(whether by acceleration or otherwise) of the principal of or interest on the
Securities (all such obligations of the Issuer being herein called the
"Obligations").
SECTION 14.3 PERFECTION OF SECURITY INTEREST.
(a) The Issuer shall cause this Indenture, the Collateral
Agreements, financing statements, continuation statements, notifications
of secured transactions and other instruments with respect to the
Collateral to be promptly executed, recorded, registered and filed and to
be kept recorded, registered and filed in such manner and in such places
as may be required by law, and take all such other actions as may be
required, including delivery of possession of the Funding Note and of
certificates evidencing the capital stock of TWG International and TWG
Finance to the Trustee, in order to make effective the Security Interest
in all personal property constituting part of the Collateral.
(b) A schedule of the known Collateral Agreements may be
attached hereto as an Exhibit.
SECTION 14.4 NO DISPOSITION OF COLLATERAL; RELEASE OF LIEN OF INDENTURE.
Neither TWG International nor any Subsidiary thereof may sell or otherwise
dispose of Collateral, including the Capital Stock of or an interest in any of
its direct and indirect Subsidiaries, except pursuant to Section 3.12. TWG
Finance may not sell or otherwise dispose of Collateral except at the direction
of the Trustee for the benefit of the Securityholders pursuant to the terms of
the Collateral Agreements and/or the Funding Collateral Agreements.
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SECTION 14.5 OTHER LIENS. The Issuer will not create or permit to exist
any Lien upon or with respect to any of the Collateral, except for any Lien
permitted by the terms hereof or of the Collateral Agreements.
SECTION 14.6 TRUSTEE APPOINTED ATTORNEY-IN-FACT. The Trustee shall take
any action required or permitted to be taken by the Trustee under the Collateral
Agreements if directed in writing to do so by the Holders of at least 50% in
aggregate principal amount of the Securities then outstanding; provided,
however, that no action shall be taken which, in the Opinion of Counsel, impairs
the enforceability, priority or perfection of the Lien of this Indenture as to
the Collateral then subject thereto, unless directed by all Holders.
SECTION 14.7 RETURN OF COLLATERAL. Upon the payment in full of the
obligations or upon satisfaction and discharge of this Indenture in accordance
with Article 10 (and the Trustee receiving written confirmation thereof
satisfactory to the Trustee), the Trustee, subject to the terms of the
Collateral Agreements, shall forthwith take all necessary action to return any
Collateral in the Trustee's possession to the Issuer or its Subsidiaries, as the
case may be, and release the Liens thereon and Security Interests therein.
SECTION 14.8 DEFAULT REMEDIES. The Trustee shall have the rights set
forth in the Collateral Agreements to exercise the remedies to realize upon the
Collateral set forth in the Collateral Agreements.
SECTION 14.9 PROCEEDS. The proceeds of any sale or other disposition of
the Collateral received by the Trustee pursuant to the terms of the Collateral
Agreements shall be applied by the Trustee:
First: to the payment of the costs and expenses of such sale,
including a reasonable compensation to the Trustee, and its agents,
attorneys and counsel, and of all charges, expenses, liabilities and
advances incurred or made by the Trustee under this Indenture;
Second: to the reimbursement of the Trustee for any sum advanced
by the Trustee to the Issuer in order to preserve the Collateral together
with interest at the rate charged publicly announced by Citibank, N.A.
from time to time in New York, New York as its reference rate; and
Third: as provided in Section 5.3.
SECTION 14.10 DEFICIENCY. The Issuer shall remain liable for any
unfulfilled obligations, together with interest thereon, in accordance with and
subject to the provisions of the Securities and this Indenture.
SECTION 14.11 TRUSTEE'S DUTIES. The powers conferred upon the Trustee
by this Article 14 are solely to protect its interest and the interest of the
Holders in the Collateral and
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shall not impose any duty upon the Trustee to exercise any such powers except as
expressly provided in this Indenture or in the Collateral Agreements. The
Trustee shall be under no duty to the Issuer whatsoever to make or give any
presentment, demand for performance, notice of nonperformance, protest, notice
of protest, notice of dishonor, or other notice or demand in connection with any
Collateral or the Obligations, or to take any steps necessary to preserve any
rights against prior parties except as expressly provided in this Indenture or
in the Collateral Agreements. The Trustee shall not be liable to the Issuer for
failure to collect or realize upon any or all of the obligations or Collateral,
or for any delay in so doing, nor shall the Trustee be under any duty to the
Issuer to take any action whatsoever with regard thereto. The Trustee shall
have no duty to the Issuer to comply with any recording, filing, or other legal
requirements necessary to establish or maintain the validity, priority or
enforceability of, or the Trustee's rights in or to, any of the Collateral.
SECTION 14.12 SPECIAL TRUSTEE POWERS DUE TO ENVIRONMENTAL CONDITIONS.
The Trustee shall have the power to settle or compromise at any time any and all
claims against the Trust Estate or the Trustee (either in its corporate
capacity, or in the personal capacity of the individuals serving as trust
officers on behalf of the Trustee), which may be asserted by any governmental
body or private party involving the alleged violation of any applicable
Environmental Laws affecting the Collateral or any other property held in trust
with respect to or in connection with the Collateral. Notwithstanding any
provision in this subparagraph to the contrary, the Trustee may not settle or
compromise any claim against the Trust Estate or the Trustee which may result in
any liability being asserted against Issuer without Issuer having had a
reasonable opportunity to resolve the alleged violation, which reasonable
opportunity shall not exceed 60 days from the date on which Issuer shall have
been notified of such alleged violation by a governmental body or a private
party; provided, however, in the event that Issuer shall be in default under the
Indenture or under the Collateral Agreements, then it shall have none of the
rights afforded to it in this paragraph.
The Trustee shall not be personally liable to the Holders or any other
Person for any decrease in value of the Collateral by reason of the Trustee's
compliance with any Applicable Environmental Laws (as defined in the Collateral
Agreements), specifically including any reporting requirement under such law.
Neither the acceptance by the Trustee of property nor failure by the Trustee to
inspect property shall be deemed to create any inference as to whether or not
there is or may be any liability under any applicable Environmental Laws with
respect to such property.
Notwithstanding anything in this Indenture or the Collateral Agreements
to the contrary, the Trustee shall not be required to initiate foreclosure
proceedings with respect to the Collateral, and shall not otherwise be required
to acquire possession of, or take other action with respect to the Collateral
which could cause the Trustee to be considered an "owner" or "operator" within
the meaning of the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended from time to time, or any other law dealing
with the environmental matters or hazardous substances, unless the Trustee has
sufficient comfort, based on previous determinations by experts on which it can
rely, including environmental report, that:
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(a) there are no circumstances present at the Collateral
relating to the use, management or disposal of any hazardous substances,
hazardous materials, hazardous wastes or petroleum-based materials for
which investigation, testing, monitoring, contaminant clean up or
remedial action could be required under any environmental laws, or that
if any such materials are present for which such action could be
required, that it would be nevertheless in the best economic interest of
the Trustee and the Holders to take such actions with respect to the
Collateral;
(b) if the Trustee has determined that it would be in the best
economic interest of the Trustee and the Holders, the Trustee must be
satisfied that they will suffer no unreimbursed liabilities and will be
adequately reimbursed for all liabilities, expenses and costs from
available funds in Trustee's possession and control; and
(c) if the Trustee has determined that it would be in the best
economic interest of the Trustee and the Holders to take any such action
and its aforementioned liabilities, expenses and costs are adequately
reimbursed, the Trustee has so notified the Holders and has not received,
within 30 days of such notification, instructions from owners of fifty
percent (50%) or more in principal amount of the then outstanding
Securities directing it not to take such action.
If the foregoing conditions are not satisfied and the Trustee is not willing to
waive such conditions and initiate foreclosure proceedings, then the Trustee
shall take such actions as are reasonably necessary or appropriate in order to
facilitate the appointment of a co-trustee, being a person or entity designated
by the Holders of a majority in principal amount of the Securities then
outstanding and to assign to such person or entity (subject, however, to the
trusts created pursuant to the Indenture) the beneficial interest under the
Collateral Agreements which secures the obligations under the Indenture, for the
limited purpose of conducting a foreclosure of such Collateral Agreements and
receiving and holding any title to real property obtained as a result of such
foreclosure. Persons or entities appointed as co-trustees or agents of the
Trustee pursuant to this Section shall not be required to meet the criteria of
Section 6.9 of this Indenture, or any
other criteria, in order to serve as such.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and, where appropriate, their respective corporate seals to be
hereunto affixed and attested, all as of March 31, 1998.
[CORPORATE SEAL] TRANS WORLD GAMING CORP.
Attest: By:
By: ------------------------------------
-------------------------- By:
------------------------------------
[CORPORATE SEAL] TWG INTERNATIONAL U.S. CORPORATION
Attest: By:
By: ------------------------------------
-------------------------- By:
------------------------------------
[CORPORATE SEAL] TWG FINANCE CORP.
Attest: By:
By: ------------------------------------
-------------------------- By:
------------------------------------
U.S. TRUST COMPANY OF TEXAS, N.A. , as Trustee
By:
------------------------------------
------------------------------------
(Name and Title)
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EXHIBIT A TO INDENTURE
USE OF PROCEEDS
Pursuant to Section 3.28 of the Indenture, the proceeds from the Securities will
be used as described below, and to the extent not further or otherwise
instructed by the Issuer in a letter of instructions, the Trustee is authorized
and directed to apply the proceeds as follows:
Payee Amount
----- ------
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THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series C No. 1
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Amir Family Trust (together with its successors or
permitted assigns, the "Holder") is entitled to purchase from Trans World Gaming
Corp., a Nevada corporation ("Company") up 100,058 shares of the Company's
common stock, par value $.001 per share (the "Common Stock"), at a purchase
price of $.01 per share of Common Stock (the "Warrant Price"), subject to
adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Subscription Agreement
dated as of March 16, 1998 (the "Agreement"), between the Company and the
Holder.
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 31, 2008, in whole or in part, by (i)
the surrender of this Warrant (with the purchase form at the end 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 Warrant Price then in effect for the number of
shares of
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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 subparagraph (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 Common Stock 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 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. If at any time this
Warrant is exercised as to less than the total number of shares for which it may
be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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
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those expressed in this Warrant and are not enforceable against the Company
except to the extent set forth herein.
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such
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other documents, as the Holder may reasonably request in order to facilitate the
public sale or other disposition of the securities owned by the Holder;
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
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<PAGE>
(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents or controlling person may
become subject under the Act or otherwise, insofar
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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, employees, partners and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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:
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(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.
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or
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exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable upon conversion, exchange or
exercise of such security) would purchase at the
Market Price per share of Common Stock on such date.
Such adjustment shall be made whenever such shares,
securities, options, warrants or other rights are
issued, and shall become effective retroactively
immediately after the close of business on the
record date for the determination of stockholders
entitled to receive such shares, securities,
options, warrants or other rights; PROVIDED, that
the determination as to whether an adjustment is
required to be made pursuant to this Section 7(a)
shall only be made upon the issuance of such shares
or such convertible or exchangeable securities,
options, warrants or other rights, and not upon the
issuance of the security into which such convertible
or exchangeable security converts or exchanges, or
the security underlying such option, warrant or
other right. Notwithstanding the foregoing, in the
event of such issuance or sale of Common Stock at a
cash price less than the Market Price, no such
adjustment under this Section 7(a) need be made to
the number of shares underlying the Warrant unless
such adjustment would require an increase or
decrease of at least 1% of the number of shares
underlying the Warrant. Any lesser adjustment shall
be carried forward and shall be made at the time of
and together with the next subsequent adjustment
which, together with any adjustment or adjustments
so carried forward, shall amount to an increase or
decrease of at least 1% of number of shares
underlying the Warrant. For the purpose of this
Agreement, the term "Market Price" shall mean (i) if
the Common Stock is traded in the over-the-counter
market or on the National Association of Securities
Dealers, Inc. Automated Quotations System
("NASDAQ"), the average per share closing prices of
the Common Stock on the 20 consecutive trading days
immediately preceding the date in question as
reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common
Stock is traded on a national securities exchange,
the average for the 20
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consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment
by a fraction, the numerator of which shall be the
number of shares of Common Stock purchasable upon
the exercise of each Warrant immediately prior to
such adjustment and the denominator of which shall
be the number of shares of Common Stock purchasable
immediately after such adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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
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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 the 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
reorganization, reclassification, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock which the holder of the 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 or expiration of the Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine holders of Common Stock entitled to receive such distribution
and the holder of this Warrant shall have until 5:00 p.m. EST on the twentieth
(20th) day following the actual receipt of such notice to elect whether to
exercise this Warrant in accordance with the terms herein. In the event of
proper election to exercise the Warrant, the holder of this Warrant shall be
deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he 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 the 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 Warrant 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.
(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 hereof 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
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<PAGE>
the books shall be closed or record date fixed with respect to such offer of
subscription and the right of the holder hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
(j) 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 Stock 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, if the fraction is equal to or greater than
.5, and down if the fraction is less than .5.
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, Suite
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<PAGE>
1503, 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 other than Section 6 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, and this Warrant is
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 31, 1998.
TRANS WORLD GAMING CORP.
By:____________________________
Its: __________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of
$____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a
certificate (or certificates) in denominations of ______________
(___________) shares of Common Stock of the Company hereby purchased be
issued in the name of and delivered to the undersigned or such designee of
the undersigned and, if such shares of Common Stock (together with any shares
issued upon exercise of other Warrants or replacement Warrants) shall not
include all of the shares of Common Stock issuable upon exercise of all
Warrants represented by such Warrant Certificate (or if a new or replacement
Warrant is otherwise to be provided pursuant to the Warrant Certificate),
that a new or replacement Warrant Certificate of like tenor for the number of
Warrants not being exercised (and not being surrendered) hereunder be issued
in the name of and delivered to the undersigned, whose address is
__________________________.
Dated: __________, 199__.
__________________________________
(Signature of Registered Holder)
By:_______________________________
Title:____________________________
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THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series C No. 2
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Michael Amir (together with its successors or
permitted assigns, the "Holder") is entitled to purchase from Trans World Gaming
Corp., a Nevada corporation ("Company") up to 12,507 shares of the Company's
common stock, par value $.001 per share (the "Common Stock"), at a purchase
price of $.01 per share of Common Stock (the "Warrant Price"), subject to
adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Subscription Agreement
dated as of March 16, 1998 (the "Agreement"), between the Company and the
Holder.
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 31, 2008, in whole or in part, by (i)
the surrender of this Warrant (with the purchase form at the end 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 Warrant Price then in effect for the number of
shares of
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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 subparagraph (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 Common Stock 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 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. If at any time this
Warrant is exercised as to less than the total number of shares for which it may
be exercised, and this Warrant shall not have expired, the company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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
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those expressed in this Warrant and are not enforceable against the Company
except to the extent set forth herein.
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such
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other documents, as the Holder may reasonably request in order to facilitate the
public sale or other disposition of the securities owned by the Holder;
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
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(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents or controlling person may
become subject under the Act or otherwise, insofar
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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, employees, partners and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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:
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(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.
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or
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exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable upon conversion, exchange or
exercise of such security) would purchase at the
Market Price per share of Common Stock on such date.
Such adjustment shall be made whenever such shares,
securities, options, warrants or other rights are
issued, and shall become effective retroactively
immediately after the close of business on the
record date for the determination of stockholders
entitled to receive such shares, securities,
options, warrants or other rights; PROVIDED, that
the determination as to whether an adjustment is
required to be made pursuant to this Section 7(a)
shall only be made upon the issuance of such shares
or such convertible or exchangeable securities,
options, warrants or other rights, and not upon the
issuance of the security into which such convertible
or exchangeable security converts or exchanges, or
the security underlying such option, warrant or
other right. Notwithstanding the foregoing, in the
event of such issuance or sale of Common Stock at a
cash price less than the Market Price, no such
adjustment under this Section 7(a) need be made to
the number of shares underlying the Warrant unless
such adjustment would require an increase or
decrease of at least 1% of the number of shares
underlying the Warrant. Any lesser adjustment shall
be carried forward and shall be made at the time of
and together with the next subsequent adjustment
which, together with any adjustment or adjustments
so carried forward, shall amount to an increase or
decrease of at least 1% of number of shares
underlying the Warrant. For the purpose of this
Agreement, the term "Market Price" shall mean (i) if
the Common Stock is traded in the over-the-counter
market or on the National Association of Securities
Dealers, Inc. Automated Quotations System
("NASDAQ"), the average per share closing prices of
the Common Stock on the 20 consecutive trading days
immediately preceding the date in question as
reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common
Stock is traded on a national securities exchange,
the average for the 20
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<PAGE>
consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment
by a fraction, the numerator of which shall be the
number of shares of Common Stock purchasable upon
the exercise of each Warrant immediately prior to
such adjustment and the denominator of which shall
be the number of shares of Common Stock purchasable
immediately after such adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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
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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 the 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
reorganization, reclassification, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock which the holder of the 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 or expiration of the Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine holders of Common Stock entitled to receive such distribution
and the holder of this Warrant shall have until 5:00 p.m. EST on the twentieth
(20th) day following the actual receipt of such notice to elect whether to
exercise this Warrant in accordance with the terms herein. In the event of
proper election to exercise the Warrant, the holder of this Warrant shall be
deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he 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 the 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 Warrant 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.
(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 hereof 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
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<PAGE>
the books shall be closed or record date fixed with respect to such offer of
subscription and the right of the holder hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
(j) 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 Stock 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, if the fraction is equal to or greater than
.5, and down if the fraction is less than .5.
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, Suite
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<PAGE>
1503, 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 other than Section 6 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, and this Warrant is
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 31, 1998.
TRANS WORLD GAMING CORP.
By:____________________________
Its: __________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of
$____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a
certificate (or certificates) in denominations of ______________
(___________) shares of Common Stock of the Company hereby purchased be
issued in the name of and delivered to the undersigned or such designee of
the undersigned and, if such shares of Common Stock (together with any shares
issued upon exercise of other Warrants or replacement Warrants) shall not
include all of the shares of Common Stock issuable upon exercise of all
Warrants represented by such Warrant Certificate (or if a new or replacement
Warrant is otherwise to be provided pursuant to the Warrant Certificate),
that a new or replacement Warrant Certificate of like tenor for the number of
Warrants not being exercised (and not being surrendered) hereunder be issued
in the name of and delivered to the undersigned, whose address is
__________________________.
Dated: __________, 199__.
__________________________________
(Signature of Registered Holder)
By:_______________________________
Title:____________________________
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<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series C No. 3
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Wolens Family Trust (together with its successors or
permitted assigns, the "Holder") is entitled to purchase from Trans World Gaming
Corp., a Nevada corporation ("Company") up to 12,507 shares of the Company's
common stock, par value $.001 per share (the "Common Stock"), at a purchase
price of $.01 per share of Common Stock (the "Warrant Price"), subject to
adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Subscription Agreement
dated as of March 16, 1998 (the "Agreement"), between the Company and the
Holder.
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 31, 2008, in whole or in part, by (i)
the surrender of this Warrant (with the purchase form at the end 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 Warrant Price then in effect for the number of
shares of
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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 subparagraph (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 Common Stock 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 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. If at any time this
Warrant is exercised as to less than the total number of shares for which it may
be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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
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those expressed in this Warrant and are not enforceable against the Company
except to the extent set forth herein.
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such
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other documents, as the Holder may reasonably request in order to facilitate the
public sale or other disposition of the securities owned by the Holder;
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
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(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents or controlling person may
become subject under the Act or otherwise, insofar
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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, employees, partners and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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:
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(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.
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or
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exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable upon conversion, exchange or
exercise of such security) would purchase at the
Market Price per share of Common Stock on such date.
Such adjustment shall be made whenever such shares,
securities, options, warrants or other rights are
issued, and shall become effective retroactively
immediately after the close of business on the
record date for the determination of stockholders
entitled to receive such shares, securities,
options, warrants or other rights; PROVIDED, that
the determination as to whether an adjustment is
required to be made pursuant to this Section 7(a)
shall only be made upon the issuance of such shares
or such convertible or exchangeable securities,
options, warrants or other rights, and not upon the
issuance of the security into which such convertible
or exchangeable security converts or exchanges, or
the security underlying such option, warrant or
other right. Notwithstanding the foregoing, in the
event of such issuance or sale of Common Stock at a
cash price less than the Market Price, no such
adjustment under this Section 7(a) need be made to
the number of shares underlying the Warrant unless
such adjustment would require an increase or
decrease of at least 1% of the number of shares
underlying the Warrant. Any lesser adjustment shall
be carried forward and shall be made at the time of
and together with the next subsequent adjustment
which, together with any adjustment or adjustments
so carried forward, shall amount to an increase or
decrease of at least 1% of number of shares
underlying the Warrant. For the purpose of this
Agreement, the term "Market Price" shall mean (i) if
the Common Stock is traded in the over-the-counter
market or on the National Association of Securities
Dealers, Inc. Automated Quotations System
("NASDAQ"), the average per share closing prices of
the Common Stock on the 20 consecutive trading days
immediately preceding the date in question as
reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common
Stock is traded on a national securities exchange,
the average for the 20
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consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment
by a fraction, the numerator of which shall be the
number of shares of Common Stock purchasable upon
the exercise of each Warrant immediately prior to
such adjustment and the denominator of which shall
be the number of shares of Common Stock purchasable
immediately after such adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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
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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 the 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
reorganization, reclassification, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock which the holder of the 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 or expiration of the Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine holders of Common Stock entitled to receive such distribution
and the holder of this Warrant shall have until 5:00 p.m. EST on the twentieth
(20th) day following the actual receipt of such notice to elect whether to
exercise this Warrant in accordance with the terms herein. In the event of
proper election to exercise the Warrant, the holder of this Warrant shall be
deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he 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 the 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 Warrant 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.
(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 hereof 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
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<PAGE>
the books shall be closed or record date fixed with respect to such offer of
subscription and the right of the holder hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
(j) 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
Stock 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, if the fraction is equal to or greater than .5, and down if
the fraction is less than .5.
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, Suite
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<PAGE>
1503, 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 other than Section 6 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, and this Warrant is
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 31, 1998.
TRANS WORLD GAMING CORP.
By:____________________________
Its: __________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of $
____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of Common
Stock issuable upon exercise of all Warrants represented by such Warrant
Certificate (or if a new or replacement Warrant is otherwise to be provided
pursuant to the Warrant Certificate), that a new or replacement Warrant
Certificate of like tenor for the number of Warrants not being exercised (and
not being surrendered) hereunder be issued in the name of and delivered to the
undersigned, whose address is __________________________.
Dated: __________, 199__.
__________________________________
(Signature of Registered Holder)
By:_______________________________
Title:____________________________
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THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series C No. 4
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Banco Santander Trust & Banking Corporation (Bahamas)
Ltd. (together with its successors or permitted assigns, the "Holder") is
entitled to purchase from Trans World Gaming Corp., a Nevada corporation
("Company") up to 416,909 shares of the Company's common stock, par value $.001
per share (the "Common Stock"), at a purchase price of $.01 per share of Common
Stock (the "Warrant Price"), subject to adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Subscription Agreement
dated as of March 16, 1998 (the "Agreement"), between the Company and the
Holder.
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 31, 2008, in whole or in part, by (i)
the surrender of this Warrant (with the purchase form at the end 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)
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payment to the Company of the Warrant 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 subparagraph (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 Common Stock 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 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. If at any time this
Warrant is exercised as to less than the total number of shares for which it may
be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
4. NO RIGHTS OF STOCKHOLDER.
This Warrant shall not entitle the Holder to any voting rights or other
rights as a
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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) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such
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other documents, as the Holder may reasonably request in order to facilitate the
public sale or other disposition of the securities owned by the Holder;
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
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(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents or controlling person may
become subject under the Act or otherwise, insofar
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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, employees, partners and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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:
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(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.
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or
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exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable upon conversion, exchange or
exercise of such security) would purchase at the
Market Price per share of Common Stock on such date.
Such adjustment shall be made whenever such shares,
securities, options, warrants or other rights are
issued, and shall become effective retroactively
immediately after the close of business on the
record date for the determination of stockholders
entitled to receive such shares, securities,
options, warrants or other rights; PROVIDED, that
the determination as to whether an adjustment is
required to be made pursuant to this Section 7(a)
shall only be made upon the issuance of such shares
or such convertible or exchangeable securities,
options, warrants or other rights, and not upon the
issuance of the security into which such convertible
or exchangeable security converts or exchanges, or
the security underlying such option, warrant or
other right. Notwithstanding the foregoing, in the
event of such issuance or sale of Common Stock at a
cash price less than the Market Price, no such
adjustment under this Section 7(a) need be made to
the number of shares underlying the Warrant unless
such adjustment would require an increase or
decrease of at least 1% of the number of shares
underlying the Warrant. Any lesser adjustment shall
be carried forward and shall be made at the time of
and together with the next subsequent adjustment
which, together with any adjustment or adjustments
so carried forward, shall amount to an increase or
decrease of at least 1% of number of shares
underlying the Warrant. For the purpose of this
Agreement, the term "Market Price" shall mean (i) if
the Common Stock is traded in the over-the-counter
market or on the National Association of Securities
Dealers, Inc. Automated Quotations System
("NASDAQ"), the average per share closing prices of
the Common Stock on the 20 consecutive trading days
immediately preceding the date in question as
reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common
Stock is traded on a national securities exchange,
the average for the 20
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consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment
by a fraction, the numerator of which shall be the
number of shares of Common Stock purchasable upon
the exercise of each Warrant immediately prior to
such adjustment and the denominator of which shall
be the number of shares of Common Stock purchasable
immediately after such adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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
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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 the 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
reorganization, reclassification, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock which the holder of the 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 or expiration of the Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine holders of Common Stock entitled to receive such distribution
and the holder of this Warrant shall have until 5:00 p.m. EST on the twentieth
(20th) day following the actual receipt of such notice to elect whether to
exercise this Warrant in accordance with the terms herein. In the event of
proper election to exercise the Warrant, the holder of this Warrant shall be
deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he 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 the 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 Warrant 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.
(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 hereof 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
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<PAGE>
the books shall be closed or record date fixed with respect to such offer of
subscription and the right of the holder hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
(j) 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 Stock 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, if the fraction is equal to or greater than
.5, and down if the fraction is less than .5.
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, Suite
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<PAGE>
1503, 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 other than Section 6 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, and this Warrant is
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 31, 1998.
TRANS WORLD GAMING CORP.
By:____________________________
Its: __________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of
$____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a
certificate (or certificates) in denominations of ______________
(___________) shares of Common Stock of the Company hereby purchased be
issued in the name of and delivered to the undersigned or such designee of
the undersigned and, if such shares of Common Stock (together with any shares
issued upon exercise of other Warrants or replacement Warrants) shall not
include all of the shares of Common Stock issuable upon exercise of all
Warrants represented by such Warrant Certificate (or if a new or replacement
Warrant is otherwise to be provided pursuant to the Warrant Certificate),
that a new or replacement Warrant Certificate of like tenor for the number of
Warrants not being exercised (and not being surrendered) hereunder be issued
in the name of and delivered to the undersigned, whose address is
__________________________.
Dated: __________, 199__.
__________________________________
(Signature of Registered Holder)
By:_______________________________
Title:____________________________
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<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series C No. 5
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Credit Suisse First Boston Management Corporation
(together with its successors or permitted assigns, the "Holder") is entitled to
purchase from Trans World Gaming Corp., a Nevada corporation ("Company") up to
2,084,545 shares of the Company's common stock, par value $.001 per share (the
"Common Stock"), at a purchase price of $.01 per share of Common Stock (the
"Warrant Price"), subject to adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Subscription Agreement
dated as of March 16, 1998 (the "Agreement"), between the Company and the
Holder.
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 31, 2008, in whole or in part, by (i)
the surrender of this Warrant (with the purchase form at the end 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 Warrant Price then in effect for the number of
shares of
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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 subparagraph (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 Common Stock 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 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. If at any time this
Warrant is exercised as to less than the total number of shares for which it may
be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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
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those expressed in this Warrant and are not enforceable against the Company
except to the extent set forth herein.
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such
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other documents, as the Holder may reasonably request in order to facilitate the
public sale or other disposition of the securities owned by the Holder;
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
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(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents or controlling person may
become subject under the Act or otherwise, insofar
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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, employees, partners and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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:
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(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.
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or
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exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable upon conversion, exchange or
exercise of such security) would purchase at the
Market Price per share of Common Stock on such date.
Such adjustment shall be made whenever such shares,
securities, options, warrants or other rights are
issued, and shall become effective retroactively
immediately after the close of business on the
record date for the determination of stockholders
entitled to receive such shares, securities,
options, warrants or other rights; PROVIDED, that
the determination as to whether an adjustment is
required to be made pursuant to this Section 7(a)
shall only be made upon the issuance of such shares
or such convertible or exchangeable securities,
options, warrants or other rights, and not upon the
issuance of the security into which such convertible
or exchangeable security converts or exchanges, or
the security underlying such option, warrant or
other right. Notwithstanding the foregoing, in the
event of such issuance or sale of Common Stock at a
cash price less than the Market Price, no such
adjustment under this Section 7(a) need be made to
the number of shares underlying the Warrant unless
such adjustment would require an increase or
decrease of at least 1% of the number of shares
underlying the Warrant. Any lesser adjustment shall
be carried forward and shall be made at the time of
and together with the next subsequent adjustment
which, together with any adjustment or adjustments
so carried forward, shall amount to an increase or
decrease of at least 1% of number of shares
underlying the Warrant. For the purpose of this
Agreement, the term "Market Price" shall mean (i) if
the Common Stock is traded in the over-the-counter
market or on the National Association of Securities
Dealers, Inc. Automated Quotations System
("NASDAQ"), the average per share closing prices of
the Common Stock on the 20 consecutive trading days
immediately preceding the date in question as
reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common
Stock is traded on a national securities exchange,
the average for the 20
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<PAGE>
consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment
by a fraction, the numerator of which shall be the
number of shares of Common Stock purchasable upon
the exercise of each Warrant immediately prior to
such adjustment and the denominator of which shall
be the number of shares of Common Stock purchasable
immediately after such adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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
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<PAGE>
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 the 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
reorganization, reclassification, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock which the holder of the 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 or expiration of the Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine holders of Common Stock entitled to receive such distribution
and the holder of this Warrant shall have until 5:00 p.m. EST on the twentieth
(20th) day following the actual receipt of such notice to elect whether to
exercise this Warrant in accordance with the terms herein. In the event of
proper election to exercise the Warrant, the holder of this Warrant shall be
deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he 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 the 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 Warrant 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.
(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 hereof 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
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<PAGE>
the books shall be closed or record date fixed with respect to such offer of
subscription and the right of the holder hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
(j) 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 Stock 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, if the fraction is equal to or greater than
.5, and down if the fraction is less than .5.
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, Suite
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<PAGE>
1503, 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 other than Section 6 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, and this Warrant is
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 31, 1998.
TRANS WORLD GAMING CORP.
By:____________________________
Its: __________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of
$____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a
certificate (or certificates) in denominations of ______________
(___________) shares of Common Stock of the Company hereby purchased be
issued in the name of and delivered to the undersigned or such designee of
the undersigned and, if such shares of Common Stock (together with any shares
issued upon exercise of other Warrants or replacement Warrants) shall not
include all of the shares of Common Stock issuable upon exercise of all
Warrants represented by such Warrant Certificate (or if a new or replacement
Warrant is otherwise to be provided pursuant to the Warrant Certificate),
that a new or replacement Warrant Certificate of like tenor for the number of
Warrants not being exercised (and not being surrendered) hereunder be issued
in the name of and delivered to the undersigned, whose address is
__________________________.
Dated: __________, 199__.
__________________________________
(Signature of Registered Holder)
By:_______________________________
Title:____________________________
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<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series C No. 6
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Value Partners, Ltd. (together with its successors or
permitted assigns, the "Holder") is entitled to purchase from Trans World Gaming
Corp., a Nevada corporation ("Company") up to 3,335,272 shares of the Company's
common stock, par value $.001 per share (the "Common Stock"), at a purchase
price of $.01 per share of Common Stock (the "Warrant Price"), subject to
adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Subscription Agreement
dated as of March 16, 1998 (the "Agreement"), between the Company and the
Holder.
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 31, 2008, in whole or in part, by (i)
the surrender of this Warrant (with the purchase form at the end 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 Warrant Price then in effect for the number of
shares of
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<PAGE>
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 subparagraph (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 Common Stock 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 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. If at any time this
Warrant is exercised as to less than the total number of shares for which it may
be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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
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<PAGE>
those expressed in this Warrant and are not enforceable against the Company
except to the extent set forth herein.
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such
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<PAGE>
other documents, as the Holder may reasonably request in order to facilitate the
public sale or other disposition of the securities owned by the Holder;
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
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<PAGE>
(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents or controlling person may
become subject under the Act or otherwise, insofar
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<PAGE>
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, employees, partners and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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:
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(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.
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or
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exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable upon conversion, exchange or
exercise of such security) would purchase at the
Market Price per share of Common Stock on such date.
Such adjustment shall be made whenever such shares,
securities, options, warrants or other rights are
issued, and shall become effective retroactively
immediately after the close of business on the
record date for the determination of stockholders
entitled to receive such shares, securities,
options, warrants or other rights; PROVIDED, that
the determination as to whether an adjustment is
required to be made pursuant to this Section 7(a)
shall only be made upon the issuance of such shares
or such convertible or exchangeable securities,
options, warrants or other rights, and not upon the
issuance of the security into which such convertible
or exchangeable security converts or exchanges, or
the security underlying such option, warrant or
other right. Notwithstanding the foregoing, in the
event of such issuance or sale of Common Stock at a
cash price less than the Market Price, no such
adjustment under this Section 7(a) need be made to
the number of shares underlying the Warrant unless
such adjustment would require an increase or
decrease of at least 1% of the number of shares
underlying the Warrant. Any lesser adjustment shall
be carried forward and shall be made at the time of
and together with the next subsequent adjustment
which, together with any adjustment or adjustments
so carried forward, shall amount to an increase or
decrease of at least 1% of number of shares
underlying the Warrant. For the purpose of this
Agreement, the term "Market Price" shall mean (i) if
the Common Stock is traded in the over-the-counter
market or on the National Association of Securities
Dealers, Inc. Automated Quotations System
("NASDAQ"), the average per share closing prices of
the Common Stock on the 20 consecutive trading days
immediately preceding the date in question as
reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common
Stock is traded on a national securities exchange,
the average for the 20
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<PAGE>
consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment
by a fraction, the numerator of which shall be the
number of shares of Common Stock purchasable upon
the exercise of each Warrant immediately prior to
such adjustment and the denominator of which shall
be the number of shares of Common Stock purchasable
immediately after such adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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
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<PAGE>
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 the 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
reorganization, reclassification, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock which the holder of the 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 or expiration of the Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine holders of Common Stock entitled to receive such distribution
and the holder of this Warrant shall have until 5:00 p.m. EST on the twentieth
(20th) day following the actual receipt of such notice to elect whether to
exercise this Warrant in accordance with the terms herein. In the event of
proper election to exercise the Warrant, the holder of this Warrant shall be
deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he 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 the 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 Warrant 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.
(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 hereof 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
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<PAGE>
the books shall be closed or record date fixed with respect to such offer of
subscription and the right of the holder hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
(j) 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 Stock 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, if the fraction is equal to or greater than
.5, and down if the fraction is less than .5.
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, Suite
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<PAGE>
1503, 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 other than Section 6 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, and this Warrant is
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 31, 1998.
TRANS WORLD GAMING CORP.
By:____________________________
Its: __________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of
$____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a
certificate (or certificates) in denominations of ______________
(___________) shares of Common Stock of the Company hereby purchased be
issued in the name of and delivered to the undersigned or such designee of
the undersigned and, if such shares of Common Stock (together with any shares
issued upon exercise of other Warrants or replacement Warrants) shall not
include all of the shares of Common Stock issuable upon exercise of all
Warrants represented by such Warrant Certificate (or if a new or replacement
Warrant is otherwise to be provided pursuant to the Warrant Certificate),
that a new or replacement Warrant Certificate of like tenor for the number of
Warrants not being exercised (and not being surrendered) hereunder be issued
in the name of and delivered to the undersigned, whose address is
__________________________.
Dated: __________, 199__.
__________________________________
(Signature of Registered Holder)
By:_______________________________
Title:____________________________
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<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series C No. 7
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Fort Pitt Fund III, L.P. (together with its
successors or permitted assigns, the "Holder") is entitled to purchase from
Trans World Gaming Corp., a Nevada corporation ("Company") up to 312,682 shares
of the Company's common stock, par value $.001 per share (the "Common Stock"),
at a purchase price of $.01 per share of Common Stock (the "Warrant Price"),
subject to adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Subscription Agreement
dated as of March 16, 1998 (the "Agreement"), between the Company and the
Holder.
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 31, 2008, in whole or in part, by (i)
the surrender of this Warrant (with the purchase form at the end 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 Warrant Price then in effect for the number of
shares of
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<PAGE>
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 subparagraph (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 Common Stock 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 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. If at any time this
Warrant is exercised as to less than the total number of shares for which it may
be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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
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those expressed in this Warrant and are not enforceable against the Company
except to the extent set forth herein.
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such
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<PAGE>
other documents, as the Holder may reasonably request in order to facilitate the
public sale or other disposition of the securities owned by the Holder;
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
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<PAGE>
(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents or controlling person may
become subject under the Act or otherwise, insofar
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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, employees, partners and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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:
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(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.
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or
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exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable upon conversion, exchange or
exercise of such security) would purchase at the
Market Price per share of Common Stock on such date.
Such adjustment shall be made whenever such shares,
securities, options, warrants or other rights are
issued, and shall become effective retroactively
immediately after the close of business on the
record date for the determination of stockholders
entitled to receive such shares, securities,
options, warrants or other rights; PROVIDED, that
the determination as to whether an adjustment is
required to be made pursuant to this Section 7(a)
shall only be made upon the issuance of such shares
or such convertible or exchangeable securities,
options, warrants or other rights, and not upon the
issuance of the security into which such convertible
or exchangeable security converts or exchanges, or
the security underlying such option, warrant or
other right. Notwithstanding the foregoing, in the
event of such issuance or sale of Common Stock at a
cash price less than the Market Price, no such
adjustment under this Section 7(a) need be made to
the number of shares underlying the Warrant unless
such adjustment would require an increase or
decrease of at least 1% of the number of shares
underlying the Warrant. Any lesser adjustment shall
be carried forward and shall be made at the time of
and together with the next subsequent adjustment
which, together with any adjustment or adjustments
so carried forward, shall amount to an increase or
decrease of at least 1% of number of shares
underlying the Warrant. For the purpose of this
Agreement, the term "Market Price" shall mean (i) if
the Common Stock is traded in the over-the-counter
market or on the National Association of Securities
Dealers, Inc. Automated Quotations System
("NASDAQ"), the average per share closing prices of
the Common Stock on the 20 consecutive trading days
immediately preceding the date in question as
reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common
Stock is traded on a national securities exchange,
the average for the 20
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consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment
by a fraction, the numerator of which shall be the
number of shares of Common Stock purchasable upon
the exercise of each Warrant immediately prior to
such adjustment and the denominator of which shall
be the number of shares of Common Stock purchasable
immediately after such adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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
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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 the 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
reorganization, reclassification, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock which the holder of the 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 or expiration of the Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine holders of Common Stock entitled to receive such distribution
and the holder of this Warrant shall have until 5:00 p.m. EST on the twentieth
(20th) day following the actual receipt of such notice to elect whether to
exercise this Warrant in accordance with the terms herein. In the event of
proper election to exercise the Warrant, the holder of this Warrant shall be
deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he 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 the 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 Warrant 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.
(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 hereof 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
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<PAGE>
the books shall be closed or record date fixed with respect to such offer of
subscription and the right of the holder hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
(j) 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 Stock 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, if the fraction is equal to or greater than
.5, and down if the fraction is less than .5.
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, Suite
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<PAGE>
1503, 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 other than Section 6 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, and this Warrant is
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 31, 1998.
TRANS WORLD GAMING CORP.
By:____________________________
Its: __________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of $
____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of Common
Stock issuable upon exercise of all Warrants represented by such Warrant
Certificate (or if a new or replacement Warrant is otherwise to be provided
pursuant to the Warrant Certificate), that a new or replacement Warrant
Certificate of like tenor for the number of Warrants not being exercised (and
not being surrendered) hereunder be issued in the name of and delivered to the
undersigned, whose address is __________________________.
Dated: __________, 199__.
__________________________________
(Signature of Registered Holder)
By:_______________________________
Title:____________________________
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<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series C No. 8
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Milfam I, L.P. (together with its successors or
permitted assigns, the "Holder") is entitled to purchase from Trans World Gaming
Corp., a Nevada corporation ("Company") up to 104,227 shares of the Company's
common stock, par value $.001 per share (the "Common Stock"), at a purchase
price of $.01 per share of Common Stock (the "Warrant Price"), subject to
adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Subscription Agreement
dated as of March 16, 1998 (the "Agreement"), between the Company and the
Holder.
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 31, 2008, in whole or in part, by (i)
the surrender of this Warrant (with the purchase form at the end 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 Warrant Price then in effect for the number of
shares of
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<PAGE>
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 subparagraph (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 Common Stock 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 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. If at any time this
Warrant is exercised as to less than the total number of shares for which it may
be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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
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those expressed in this Warrant and are not enforceable against the Company
except to the extent set forth herein.
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such
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other documents, as the Holder may reasonably request in order to facilitate the
public sale or other disposition of the securities owned by the Holder;
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
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(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents or controlling person may
become subject under the Act or otherwise, insofar
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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, employees, partners and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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:
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(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.
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or
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exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable upon conversion, exchange or
exercise of such security) would purchase at the
Market Price per share of Common Stock on such date.
Such adjustment shall be made whenever such shares,
securities, options, warrants or other rights are
issued, and shall become effective retroactively
immediately after the close of business on the
record date for the determination of stockholders
entitled to receive such shares, securities,
options, warrants or other rights; PROVIDED, that
the determination as to whether an adjustment is
required to be made pursuant to this Section 7(a)
shall only be made upon the issuance of such shares
or such convertible or exchangeable securities,
options, warrants or other rights, and not upon the
issuance of the security into which such convertible
or exchangeable security converts or exchanges, or
the security underlying such option, warrant or
other right. Notwithstanding the foregoing, in the
event of such issuance or sale of Common Stock at a
cash price less than the Market Price, no such
adjustment under this Section 7(a) need be made to
the number of shares underlying the Warrant unless
such adjustment would require an increase or
decrease of at least 1% of the number of shares
underlying the Warrant. Any lesser adjustment shall
be carried forward and shall be made at the time of
and together with the next subsequent adjustment
which, together with any adjustment or adjustments
so carried forward, shall amount to an increase or
decrease of at least 1% of number of shares
underlying the Warrant. For the purpose of this
Agreement, the term "Market Price" shall mean (i) if
the Common Stock is traded in the over-the-counter
market or on the National Association of Securities
Dealers, Inc. Automated Quotations System
("NASDAQ"), the average per share closing prices of
the Common Stock on the 20 consecutive trading days
immediately preceding the date in question as
reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common
Stock is traded on a national securities exchange,
the average for the 20
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consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment
by a fraction, the numerator of which shall be the
number of shares of Common Stock purchasable upon
the exercise of each Warrant immediately prior to
such adjustment and the denominator of which shall
be the number of shares of Common Stock purchasable
immediately after such adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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
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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 the 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
reorganization, reclassification, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock which the holder of the 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 or expiration of the Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine holders of Common Stock entitled to receive such distribution
and the holder of this Warrant shall have until 5:00 p.m. EST on the twentieth
(20th) day following the actual receipt of such notice to elect whether to
exercise this Warrant in accordance with the terms herein. In the event of
proper election to exercise the Warrant, the holder of this Warrant shall be
deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he 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 the 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 Warrant 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.
(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 hereof 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
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<PAGE>
the books shall be closed or record date fixed with respect to such offer of
subscription and the right of the holder hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
(j) 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 Stock 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, if the fraction is equal to or greater than
.5, and down if the fraction is less than .5.
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, Suite
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<PAGE>
1503, 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 other than Section 6 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, and this Warrant is
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 31, 1998.
TRANS WORLD GAMING CORP.
By:____________________________
Its: __________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of $
____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of Common
Stock issuable upon exercise of all Warrants represented by such Warrant
Certificate (or if a new or replacement Warrant is otherwise to be provided
pursuant to the Warrant Certificate), that a new or replacement Warrant
Certificate of like tenor for the number of Warrants not being exercised (and
not being surrendered) hereunder be issued in the name of and delivered to the
undersigned, whose address is __________________________.
Dated: __________, 199__.
__________________________________
(Signature of Registered Holder)
By:_______________________________
Title:____________________________
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<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series C No. 9
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Robert Margolis, TTEE, FBO Robert Margolis Living
Trust DTD 04/06/94 (together with its successors or permitted assigns, the
"Holder") is entitled to purchase from Trans World Gaming Corp., a Nevada
corporation ("Company") up to 104,227 shares of the Company's common stock, par
value $.001 per share (the "Common Stock"), at a purchase price of $.01 per
share of Common Stock (the "Warrant Price"), subject to adjustment as hereafter
provided.
This Warrant is issued pursuant to that certain Subscription Agreement
dated as of March 16, 1998 (the "Agreement"), between the Company and the
Holder.
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 31, 2008, in whole or in part, by (i)
the surrender of this Warrant (with the purchase form at the end 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)
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payment to the Company of the Warrant 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 subparagraph (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 Common Stock 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 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. If at any time this
Warrant is exercised as to less than the total number of shares for which it may
be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
4. NO RIGHTS OF STOCKHOLDER.
This Warrant shall not entitle the Holder to any voting rights or other
rights as a
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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) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such
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other documents, as the Holder may reasonably request in order to facilitate the
public sale or other disposition of the securities owned by the Holder;
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
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<PAGE>
(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents or controlling person may
become subject under the Act or otherwise, insofar
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<PAGE>
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, employees, partners and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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:
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(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.
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or
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exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable upon conversion, exchange or
exercise of such security) would purchase at the
Market Price per share of Common Stock on such date.
Such adjustment shall be made whenever such shares,
securities, options, warrants or other rights are
issued, and shall become effective retroactively
immediately after the close of business on the
record date for the determination of stockholders
entitled to receive such shares, securities,
options, warrants or other rights; PROVIDED, that
the determination as to whether an adjustment is
required to be made pursuant to this Section 7(a)
shall only be made upon the issuance of such shares
or such convertible or exchangeable securities,
options, warrants or other rights, and not upon the
issuance of the security into which such convertible
or exchangeable security converts or exchanges, or
the security underlying such option, warrant or
other right. Notwithstanding the foregoing, in the
event of such issuance or sale of Common Stock at a
cash price less than the Market Price, no such
adjustment under this Section 7(a) need be made to
the number of shares underlying the Warrant unless
such adjustment would require an increase or
decrease of at least 1% of the number of shares
underlying the Warrant. Any lesser adjustment shall
be carried forward and shall be made at the time of
and together with the next subsequent adjustment
which, together with any adjustment or adjustments
so carried forward, shall amount to an increase or
decrease of at least 1% of number of shares
underlying the Warrant. For the purpose of this
Agreement, the term "Market Price" shall mean (i) if
the Common Stock is traded in the over-the-counter
market or on the National Association of Securities
Dealers, Inc. Automated Quotations System
("NASDAQ"), the average per share closing prices of
the Common Stock on the 20 consecutive trading days
immediately preceding the date in question as
reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common
Stock is traded on a national securities exchange,
the average for the 20
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<PAGE>
consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment
by a fraction, the numerator of which shall be the
number of shares of Common Stock purchasable upon
the exercise of each Warrant immediately prior to
such adjustment and the denominator of which shall
be the number of shares of Common Stock purchasable
immediately after such adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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
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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 the 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
reorganization, reclassification, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock which the holder of the 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 or expiration of the Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine holders of Common Stock entitled to receive such distribution
and the holder of this Warrant shall have until 5:00 p.m. EST on the twentieth
(20th) day following the actual receipt of such notice to elect whether to
exercise this Warrant in accordance with the terms herein. In the event of
proper election to exercise the Warrant, the holder of this Warrant shall be
deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he 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 the 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 Warrant 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.
(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 hereof 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
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<PAGE>
the books shall be closed or record date fixed with respect to such offer of
subscription and the right of the holder hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
(j) 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 Stock 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, if the fraction is equal to or greater than
.5, and down if the fraction is less than .5.
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, Suite
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<PAGE>
1503, 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 other than Section 6 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, and this Warrant is
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 31, 1998.
TRANS WORLD GAMING CORP.
By:____________________________
Its: __________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of $
____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of Common
Stock issuable upon exercise of all Warrants represented by such Warrant
Certificate (or if a new or replacement Warrant is otherwise to be provided
pursuant to the Warrant Certificate), that a new or replacement Warrant
Certificate of like tenor for the number of Warrants not being exercised (and
not being surrendered) hereunder be issued in the name of and delivered to the
undersigned, whose address is __________________________.
Dated: __________, 199__.
__________________________________
(Signature of Registered Holder)
By:_______________________________
Title:____________________________
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<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series C No. 10
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that The Milner Trust UAD 11/02/73 Reese L. Milner II,
Trustee (together with its successors or permitted assigns, the "Holder") is
entitled to purchase from Trans World Gaming Corp., a Nevada corporation
("Company") up to 41,691 shares of the Company's common stock, par value $.001
per share (the "Common Stock"), at a purchase price of $.01 per share of Common
Stock (the "Warrant Price"), subject to adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Subscription Agreement
dated as of March 16, 1998 (the "Agreement"), between the Company and the
Holder.
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 31, 2008, in whole or in part, by (i)
the surrender of this Warrant (with the purchase form at the end 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)
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payment to the Company of the Warrant 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 subparagraph (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 Common Stock 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 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. If at any time this
Warrant is exercised as to less than the total number of shares for which it may
be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
4. NO RIGHTS OF STOCKHOLDER.
This Warrant shall not entitle the Holder to any voting rights or other
rights as a
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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) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such
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other documents, as the Holder may reasonably request in order to facilitate the
public sale or other disposition of the securities owned by the Holder;
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
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<PAGE>
(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents or controlling person may
become subject under the Act or otherwise, insofar
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<PAGE>
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, employees, partners and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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:
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(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.
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or
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<PAGE>
exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable upon conversion, exchange or
exercise of such security) would purchase at the
Market Price per share of Common Stock on such date.
Such adjustment shall be made whenever such shares,
securities, options, warrants or other rights are
issued, and shall become effective retroactively
immediately after the close of business on the
record date for the determination of stockholders
entitled to receive such shares, securities,
options, warrants or other rights; PROVIDED, that
the determination as to whether an adjustment is
required to be made pursuant to this Section 7(a)
shall only be made upon the issuance of such shares
or such convertible or exchangeable securities,
options, warrants or other rights, and not upon the
issuance of the security into which such convertible
or exchangeable security converts or exchanges, or
the security underlying such option, warrant or
other right. Notwithstanding the foregoing, in the
event of such issuance or sale of Common Stock at a
cash price less than the Market Price, no such
adjustment under this Section 7(a) need be made to
the number of shares underlying the Warrant unless
such adjustment would require an increase or
decrease of at least 1% of the number of shares
underlying the Warrant. Any lesser adjustment shall
be carried forward and shall be made at the time of
and together with the next subsequent adjustment
which, together with any adjustment or adjustments
so carried forward, shall amount to an increase or
decrease of at least 1% of number of shares
underlying the Warrant. For the purpose of this
Agreement, the term "Market Price" shall mean (i) if
the Common Stock is traded in the over-the-counter
market or on the National Association of Securities
Dealers, Inc. Automated Quotations System
("NASDAQ"), the average per share closing prices of
the Common Stock on the 20 consecutive trading days
immediately preceding the date in question as
reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common
Stock is traded on a national securities exchange,
the average for the 20
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<PAGE>
consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment
by a fraction, the numerator of which shall be the
number of shares of Common Stock purchasable upon
the exercise of each Warrant immediately prior to
such adjustment and the denominator of which shall
be the number of shares of Common Stock purchasable
immediately after such adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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
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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 the 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
reorganization, reclassification, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock which the holder of the 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 or expiration of the Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine holders of Common Stock entitled to receive such distribution
and the holder of this Warrant shall have until 5:00 p.m. EST on the twentieth
(20th) day following the actual receipt of such notice to elect whether to
exercise this Warrant in accordance with the terms herein. In the event of
proper election to exercise the Warrant, the holder of this Warrant shall be
deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he 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 the 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 Warrant 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.
(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 hereof 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
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<PAGE>
the books shall be closed or record date fixed with respect to such offer of
subscription and the right of the holder hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
(j) 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 Stock 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, if the fraction is equal to or greater than
.5, and down if the fraction is less than .5.
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, Suite
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<PAGE>
1503, 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 other than Section 6 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, and this Warrant is
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 31, 1998.
TRANS WORLD GAMING CORP.
By:____________________________
Its: __________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of
$____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a
certificate (or certificates) in denominations of ______________
(___________) shares of Common Stock of the Company hereby purchased be
issued in the name of and delivered to the undersigned or such designee of
the undersigned and, if such shares of Common Stock (together with any shares
issued upon exercise of other Warrants or replacement Warrants) shall not
include all of the shares of Common Stock issuable upon exercise of all
Warrants represented by such Warrant Certificate (or if a new or replacement
Warrant is otherwise to be provided pursuant to the Warrant Certificate),
that a new or replacement Warrant Certificate of like tenor for the number of
Warrants not being exercised (and not being surrendered) hereunder be issued
in the name of and delivered to the undersigned, whose address is
__________________________.
Dated: __________, 199__.
__________________________________
(Signature of Registered Holder)
By:_______________________________
Title:____________________________
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<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series C No. 11
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Morgan Stanley & Co. Incorporated (together with its
successors or permitted assigns, the "Holder") is entitled to purchase from
Trans World Gaming Corp., a Nevada corporation ("Company") up to 416,909 shares
of the Company's common stock, par value $.001 per share (the "Common Stock"),
at a purchase price of $.01 per share of Common Stock (the "Warrant Price"),
subject to adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Subscription Agreement
dated as of March 16, 1998 (the "Agreement"), between the Company and the
Holder.
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 31, 2008, in whole or in part,
by (i) the surrender of this Warrant (with the purchase form at the end
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 Warrant Price then in
effect for the number of shares of
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<PAGE>
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 subparagraph (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 Common Stock 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 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. If at
any time this Warrant is exercised as to less than the total number of shares
for which it may be exercised, and this Warrant shall not have expired, the
company shall promptly issue to the Holder a new Warrant identical in form as
to this Warrant as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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
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<PAGE>
those expressed in this Warrant and are not enforceable against the Company
except to the extent set forth herein.
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such
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<PAGE>
other documents, as the Holder may reasonably request in order to facilitate the
public sale or other disposition of the securities owned by the Holder;
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
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<PAGE>
(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents or controlling person may
become subject under the Act or otherwise, insofar
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<PAGE>
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, employees, partners and agents 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.
(d) In case any such action is brought against any
indemnified party, and it notifies an indemnifying party of the commencement
thereof, the indemnified 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 indemnifying party, and after notice from the
indemnified party to such indemnifying 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 WARRANT 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:
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(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.
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or
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exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable upon conversion, exchange or
exercise of such security) would purchase at the
Market Price per share of Common Stock on such date.
Such adjustment shall be made whenever such shares,
securities, options, warrants or other rights are
issued, and shall become effective retroactively
immediately after the close of business on the
record date for the determination of stockholders
entitled to receive such shares, securities,
options, warrants or other rights; PROVIDED, that
the determination as to whether an adjustment is
required to be made pursuant to this Section 7(a)
shall only be made upon the issuance of such shares
or such convertible or exchangeable securities,
options, warrants or other rights, and not upon the
issuance of the security into which such convertible
or exchangeable security converts or exchanges, or
the security underlying such option, warrant or
other right. Notwithstanding the foregoing, in the
event of such issuance or sale of Common Stock at a
cash price less than the Market Price, no such
adjustment under this Section 7(a) need be made to
the number of shares underlying the Warrant unless
such adjustment would require an increase or
decrease of at least 1% of the number of shares
underlying the Warrant. Any lesser adjustment shall
be carried forward and shall be made at the time of
and together with the next subsequent adjustment
which, together with any adjustment or adjustments
so carried forward, shall amount to an increase or
decrease of at least 1% of number of shares
underlying the Warrant. For the purpose of this
Agreement, the term "Market Price" shall mean (i) if
the Common Stock is traded in the over-the-counter
market or on the National Association of Securities
Dealers, Inc. Automated Quotations System
("NASDAQ"), the average per share closing prices of
the Common Stock on the 20 consecutive trading days
immediately preceding the date in question as
reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common
Stock is traded on a national securities exchange,
the average for the 20
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consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment
by a fraction, the numerator of which shall be the
number of shares of Common Stock purchasable upon
the exercise of each Warrant immediately prior to
such adjustment and the denominator of which shall
be the number of shares of Common Stock purchasable
immediately after such adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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
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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 the 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
reorganization, reclassification, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock which the holder of the 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 or expiration of the Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine holders of Common Stock entitled to receive such distribution
and the holder of this Warrant shall have until 5:00 p.m. EST on the twentieth
(20th) day following the actual receipt of such notice to elect whether to
exercise this Warrant in accordance with the terms herein. In the event of
proper election to exercise the Warrant, the holder of this Warrant shall be
deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he 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 the 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 Warrant 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.
(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 hereof 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
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the books shall be closed or record date fixed with respect to such offer of
subscription and the right of the holder hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
(j) 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 Stock 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, if the fraction is equal to or greater than
.5, and down if the fraction is less than .5.
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, Suite
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<PAGE>
1503, 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 other than Section 6 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, and this Warrant is
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 31, 1998.
TRANS WORLD GAMING CORP.
By:____________________________
Its: __________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of
$____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a
certificate (or certificates) in denominations of ______________
(___________) shares of Common Stock of the Company hereby purchased be
issued in the name of and delivered to the undersigned or such designee of
the undersigned and, if such shares of Common Stock (together with any shares
issued upon exercise of other Warrants or replacement Warrants) shall not
include all of the shares of Common Stock issuable upon exercise of all
Warrants represented by such Warrant Certificate (or if a new or replacement
Warrant is otherwise to be provided pursuant to the Warrant Certificate),
that a new or replacement Warrant Certificate of like tenor for the number of
Warrants not being exercised (and not being surrendered) hereunder be issued
in the name of and delivered to the undersigned, whose address is
__________________________.
Dated: __________, 199__.
__________________________________
(Signature of Registered Holder)
By:_______________________________
Title:____________________________
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<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series C No. 12
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Palestra Partners, L.P. (together with its successors
or permitted assigns, the "Holder") is entitled to purchase from Trans World
Gaming Corp., a Nevada corporation ("Company") up to 61,286 shares of the
Company's common stock, par value $.001 per share (the "Common Stock"), at a
purchase price of $.01 per share of Common Stock (the "Warrant Price"), subject
to adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Subscription Agreement
dated as of March 16, 1998 (the "Agreement"), between the Company and the
Holder.
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 31, 2008, in whole or in part, by (i)
the surrender of this Warrant (with the purchase form at the end 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 Warrant Price then in effect for the number of
shares of
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<PAGE>
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 subparagraph (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 Common Stock 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 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. If at any time this
Warrant is exercised as to less than the total number of shares for which it may
be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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
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those expressed in this Warrant and are not enforceable against the Company
except to the extent set forth herein.
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such
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<PAGE>
other documents, as the Holder may reasonably request in order to facilitate the
public sale or other disposition of the securities owned by the Holder;
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
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<PAGE>
(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents or controlling person may
become subject under the Act or otherwise, insofar
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<PAGE>
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, employees, partners and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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:
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(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.
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or
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exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable upon conversion, exchange or
exercise of such security) would purchase at the
Market Price per share of Common Stock on such date.
Such adjustment shall be made whenever such shares,
securities, options, warrants or other rights are
issued, and shall become effective retroactively
immediately after the close of business on the
record date for the determination of stockholders
entitled to receive such shares, securities,
options, warrants or other rights; PROVIDED, that
the determination as to whether an adjustment is
required to be made pursuant to this Section 7(a)
shall only be made upon the issuance of such shares
or such convertible or exchangeable securities,
options, warrants or other rights, and not upon the
issuance of the security into which such convertible
or exchangeable security converts or exchanges, or
the security underlying such option, warrant or
other right. Notwithstanding the foregoing, in the
event of such issuance or sale of Common Stock at a
cash price less than the Market Price, no such
adjustment under this Section 7(a) need be made to
the number of shares underlying the Warrant unless
such adjustment would require an increase or
decrease of at least 1% of the number of shares
underlying the Warrant. Any lesser adjustment shall
be carried forward and shall be made at the time of
and together with the next subsequent adjustment
which, together with any adjustment or adjustments
so carried forward, shall amount to an increase or
decrease of at least 1% of number of shares
underlying the Warrant. For the purpose of this
Agreement, the term "Market Price" shall mean (i) if
the Common Stock is traded in the over-the-counter
market or on the National Association of Securities
Dealers, Inc. Automated Quotations System
("NASDAQ"), the average per share closing prices of
the Common Stock on the 20 consecutive trading days
immediately preceding the date in question as
reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common
Stock is traded on a national securities exchange,
the average for the 20
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consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment
by a fraction, the numerator of which shall be the
number of shares of Common Stock purchasable upon
the exercise of each Warrant immediately prior to
such adjustment and the denominator of which shall
be the number of shares of Common Stock purchasable
immediately after such adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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
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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 the 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
reorganization, reclassification, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock which the holder of the 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 or expiration of the Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine holders of Common Stock entitled to receive such distribution
and the holder of this Warrant shall have until 5:00 p.m. EST on the twentieth
(20th) day following the actual receipt of such notice to elect whether to
exercise this Warrant in accordance with the terms herein. In the event of
proper election to exercise the Warrant, the holder of this Warrant shall be
deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he 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 the 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 Warrant 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.
(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 hereof 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
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the books shall be closed or record date fixed with respect to such offer of
subscription and the right of the holder hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
(j) 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 Stock 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, if the fraction is equal to or greater than
.5, and down if the fraction is less than .5.
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, Suite
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<PAGE>
1503, 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 other than Section 6 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, and this Warrant is
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 31, 1998.
TRANS WORLD GAMING CORP.
By:____________________________
Its: __________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of
$____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a
certificate (or certificates) in denominations of ______________
(___________) shares of Common Stock of the Company hereby purchased be
issued in the name of and delivered to the undersigned or such designee of
the undersigned and, if such shares of Common Stock (together with any shares
issued upon exercise of other Warrants or replacement Warrants) shall not
include all of the shares of Common Stock issuable upon exercise of all
Warrants represented by such Warrant Certificate (or if a new or replacement
Warrant is otherwise to be provided pursuant to the Warrant Certificate),
that a new or replacement Warrant Certificate of like tenor for the number of
Warrants not being exercised (and not being surrendered) hereunder be issued
in the name of and delivered to the undersigned, whose address is
__________________________.
Dated: __________, 199__.
_________________________________
(Signature of Registered Holder)
By:______________________________
Title:___________________________
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<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series C No. 13
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Palestra Partners II, L.P. (together with its
successors or permitted assigns, the "Holder") is entitled to purchase from
Trans World Gaming Corp., a Nevada corporation ("Company") up to 63,787 shares
of the Company's common stock, par value $.001 per share (the "Common Stock"),
at a purchase price of $.01 per share of Common Stock (the "Warrant Price"),
subject to adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Subscription Agreement
dated as of March 16, 1998 (the "Agreement"), between the Company and the
Holder.
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 31, 2008, in whole or in part, by (i)
the surrender of this Warrant (with the purchase form at the end 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 Warrant Price then in effect for the number of
shares of
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<PAGE>
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 subparagraph (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 Common Stock 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 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. If at any time this
Warrant is exercised as to less than the total number of shares for which it may
be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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
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<PAGE>
those expressed in this Warrant and are not enforceable against the Company
except to the extent set forth herein.
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such
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<PAGE>
other documents, as the Holder may reasonably request in order to facilitate the
public sale or other disposition of the securities owned by the Holder;
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
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<PAGE>
(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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
an underwriter or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents or controlling person may
become subject under the Act or otherwise, insofar
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<PAGE>
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, employees, partners and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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:
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(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.
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or
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exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable upon conversion, exchange or
exercise of such security) would purchase at the
Market Price per share of Common Stock on such date.
Such adjustment shall be made whenever such shares,
securities, options, warrants or other rights are
issued, and shall become effective retroactively
immediately after the close of business on the
record date for the determination of stockholders
entitled to receive such shares, securities,
options, warrants or other rights; PROVIDED, that
the determination as to whether an adjustment is
required to be made pursuant to this Section 7(a)
shall only be made upon the issuance of such shares
or such convertible or exchangeable securities,
options, warrants or other rights, and not upon the
issuance of the security into which such convertible
or exchangeable security converts or exchanges, or
the security underlying such option, warrant or
other right. Notwithstanding the foregoing, in the
event of such issuance or sale of Common Stock at a
cash price less than the Market Price, no such
adjustment under this Section 7(a) need be made to
the number of shares underlying the Warrant unless
such adjustment would require an increase or
decrease of at least 1% of the number of shares
underlying the Warrant. Any lesser adjustment shall
be carried forward and shall be made at the time of
and together with the next subsequent adjustment
which, together with any adjustment or adjustments
so carried forward, shall amount to an increase or
decrease of at least 1% of number of shares
underlying the Warrant. For the purpose of this
Agreement, the term "Market Price" shall mean (i) if
the Common Stock is traded in the over-the-counter
market or on the National Association of Securities
Dealers, Inc. Automated Quotations System
("NASDAQ"), the average per share closing prices of
the Common Stock on the 20 consecutive trading days
immediately preceding the date in question as
reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common
Stock is traded on a national securities exchange,
the average for the 20
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consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment
by a fraction, the numerator of which shall be the
number of shares of Common Stock purchasable upon
the exercise of each Warrant immediately prior to
such adjustment and the denominator of which shall
be the number of shares of Common Stock purchasable
immediately after such adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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
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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 the 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
reorganization, reclassification, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock which the holder of the 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 or expiration of the Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine holders of Common Stock entitled to receive such distribution
and the holder of this Warrant shall have until 5:00 p.m. EST on the twentieth
(20th) day following the actual receipt of such notice to elect whether to
exercise this Warrant in accordance with the terms herein. In the event of
proper election to exercise the Warrant, the holder of this Warrant shall be
deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he 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 the 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 Warrant 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.
(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 hereof 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
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the books shall be closed or record date fixed with respect to such offer of
subscription and the right of the holder hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
(j) 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 Stock 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, if the fraction is equal to or greater than
.5, and down if the fraction is less than .5.
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, Suite
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1503, 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 other than Section 6 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, and this Warrant is
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 31, 1998.
TRANS WORLD GAMING CORP.
By:____________________________
Its: __________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of $
____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of Common
Stock issuable upon exercise of all Warrants represented by such Warrant
Certificate (or if a new or replacement Warrant is otherwise to be provided
pursuant to the Warrant Certificate), that a new or replacement Warrant
Certificate of like tenor for the number of Warrants not being exercised (and
not being surrendered) hereunder be issued in the name of and delivered to the
undersigned, whose address is __________________________.
Dated: __________, 199__.
________________________________
(Signature of Registered Holder)
By:_____________________________
Title:__________________________
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<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Section C No. 14
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Ravich Revocable Trust of 1989 dated 1/26/90 Tia P.
Ravich and Jess M. Ravich TTEES (together with its successors or permitted
assigns, the "Holder") is entitled to purchase from Trans World Gaming Corp., a
Nevada corporation ("Company") up to 20,845 shares of the Company's common
stock, par value $.001 per share (the "Common Stock"), at a purchase price of
$.01 per share of Common Stock (the "Warrant Price"), subject to adjustment as
hereafter provided.
This Warrant is issued pursuant to that certain Subscription Agreement
dated as of March 16, 1998 (the "Agreement"), between the Company and the
Holder.
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 31, 2005, in whole or in part, by (i)
the surrender of this Warrant (with the purchase form at the end 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)
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payment to the Company of the Warrant 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 subparagraph (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 Common Stock 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 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. If at any time this
Warrant is exercised as to less than the total number of shares for which it may
be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
4. NO RIGHTS OF STOCKHOLDER.
This Warrant shall not entitle the Holder to any voting rights or other
rights as
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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) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such
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other documents, as the Holder may reasonably request in order to facilitate the
public sale or other disposition of the securities owned by the Holder;
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
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<PAGE>
(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents or controlling person may
become subject under the Act or otherwise, insofar
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<PAGE>
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 or such underwriter for use in the preparation thereof; and will
reimburse the Company or any such director, officer, employees, partners and
agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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:
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(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.
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or
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exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable upon conversion, exchange or
exercise of such security) would purchase at the
Market Price per share of Common Stock on such date.
Such adjustment shall be made whenever such shares,
securities, options, warrants or other rights are
issued, and shall become effective retroactively
immediately after the close of business on the
record date for the determination of stockholders
entitled to receive such shares, securities,
options, warrants or other rights; PROVIDED, that
the determination as to whether an adjustment is
required to be made pursuant to this Section 7(a)
shall only be made upon the issuance of such shares
or such convertible or exchangeable securities,
options, warrants or other rights, and not upon the
issuance of the security into which such convertible
or exchangeable security converts or exchanges, or
the security underlying such option, warrant or
other right. Notwithstanding the foregoing, in the
event of such issuance or sale of Common Stock at a
cash price less than the Market Price, no such
adjustment under this Section 7(a) need be made to
the number of shares underlying the Warrant unless
such adjustment would require an increase or
decrease of at least 1% of the number of shares
underlying the Warrant. Any lesser adjustment shall
be carried forward and shall be made at the time of
and together with the next subsequent adjustment
which, together with any adjustment or adjustments
so carried forward, shall amount to an increase or
decrease of at least 1% of number of shares
underlying the Warrant. For the purpose of this
Agreement, the term "Market Price" shall mean (i) if
the Common Stock is traded in the over-the-counter
market or on the National Association of Securities
Dealers, Inc. Automated Quotations System
("NASDAQ"), the average per share closing prices of
the Common Stock on the 20 consecutive trading days
immediately preceding the date in question as
reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common
Stock is traded on a national securities exchange,
the average for the 20
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consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment
by a fraction, the numerator of which shall be the
number of shares of Common Stock purchasable upon
the exercise of each Warrant immediately prior to
such adjustment and the denominator of which shall
be the number of shares of Common Stock purchasable
immediately after such adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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
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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 the 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
reorganization, reclassification, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock which the holder of the 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 or expiration of the Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine holders of Common Stock entitled to receive such distribution
and the holder of this Warrant shall have until 5:00 p.m. EST on the twentieth
(20th) day following the actual receipt of such notice to elect whether to
exercise this Warrant in accordance with the terms herein. In the event of
proper election to exercise the Warrant, the holder of this Warrant shall be
deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he 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 the 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 Warrant 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.
(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 hereof 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
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the books shall be closed or record date fixed with respect to such offer of
subscription and the right of the holder hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
(j) 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 Stock 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, if the fraction is equal to or greater than
.5, and down if the fraction is less than .5.
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, Suite
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1503, 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 other than Section 6 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, and this Warrant is
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 31, 1998.
TRANS WORLD GAMING CORP.
By:____________________________
Its: __________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of $
____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of Common
Stock issuable upon exercise of all Warrants represented by such Warrant
Certificate (or if a new or replacement Warrant is otherwise to be provided
pursuant to the Warrant Certificate), that a new or replacement Warrant
Certificate of like tenor for the number of Warrants not being exercised (and
not being surrendered) hereunder be issued in the name of and delivered to the
undersigned, whose address is __________________________.
Dated: __________, 199__.
________________________________
(Signature of Registered Holder)
By:_____________________________
Title:__________________________
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- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TWG INTERNATIONAL U.S. CORPORATION
Issuer
and
U.S. TRUST COMPANY OF TEXAS, N.A., as Trustee
INDENTURE
Dated as of March 31, 1998
--------------------
$17,000,000
12% Senior Secured Notes Due March 17, 2005
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 1.1 Certain Terms Defined . . . . . . . . . . . . . . . . . .
ARTICLE 2 ISSUE, EXECUTION, FORM AND REGISTRATION OF SECURITIES. . . . .
SECTION 2.1 Authentication and Delivery of Securities . . . . . . . .
SECTION 2.2 Execution of Securities . . . . . . . . . . . . . . . . .
SECTION 2.3 Certificate of Authentication . . . . . . . . . . . . . .
SECTION 2.4 Form, Denomination and Date of Securities; Payments of
Interest in Cash. . . . . . . . . . . . . . . . . . . . .
SECTION 2.5 Registration, Transfer and Exchange . . . . . . . . . . .
SECTION 2.6 Mutilated, Defaced, Destroyed, Lost and Stolen
Securities. . . . . . . . . . . . . . . . . . . . . . . .
SECTION 2.7 Cancellation of Securities; Destruction Thereof . . . . .
SECTION 2.8 Temporary Securities. . . . . . . . . . . . . . . . . . .
ARTICLE 3 COVENANTS OF THE ISSUER . . . . . . . . . . . . . . . . . . . .
SECTION 3.1 Payment of Principal and Interest . . . . . . . . . . . .
SECTION 3.2 Offices for Payments, Etc.. . . . . . . . . . . . . . . .
SECTION 3.3 Appointment To Fill a Vacancy in Office of Trustee. . . .
SECTION 3.4 Paying Agents . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.5 Officers' Certificates as to Default and as to
Compliance. . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.6 Mandatory Prepayment . . . . . . . . . . . . . . . . . . . . .
SECTION 3.7 Maintenance of Properties, Etc. . . . . . . . . . . . . .
SECTION 3.8 Indebtedness. . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.9 Books . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.10 Limitation on Incurrence of Additional Indebtedness
for Issuer . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.11 Restrictions on Issuance of Stock
SECTION 3.12 Restrictions on Asset Sales. . . . . . . . . . . . . . .
SECTION 3.13 Distributions. . . . . . . . . . . . . . . . . . . . . .
SECTION 3.14 Limitation on Dividends and Other Payment Restrictions. .
Affecting Subsidiaries . . . . . . . . . . . . . . . . .
SECTION 3.15 Limitation on Investments. . . . . . . . . . . . . . . .
SECTION 3.16 Limitation on Liens. . . . . . . . . . . . . . . . . . .
SECTION 3.17 Transactions with Affiliates . . . . . . . . . . . . . .
SECTION 3.18 Change of Control. . . . . . . . . . . . . . . . . . . .
SECTION 3.19 Line of Business . . . . . . . . . . . . . . . . . . . .
SECTION 3.20 Payments for Consent . . . . . . . . . . . . . . . . . .
SECTION 3.21 Limitations on Sale and Leaseback Transaction. . . . . .
SECTION 3.22 Waiver of Stay, Extension or Usury Laws. . . . . . . . .
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SECTION 3.23 Security Interest. . . . . . . . . . . . . . . . . . . . . .
ARTICLE 4 SECURITYHOLDERS' LISTS AND REPORTS BY THE ISSUER AND
THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.1 Issuer To Furnish Trustee Information as to Names and
Addresses of Securityholders. . . . . . . . . . . . . . .
SECTION 4.2 Preservation and Disclosure of Securityholders' Lists . .
SECTION 4.3 Reports by the Issuer . . . . . . . . . . . . . . . . . .
SECTION 4.4 [Reserved]. . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE 5 REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT
OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.1 Event of Default Defined; Acceleration of Maturity;
Waiver of Default . . . . . . . . . . . . . . . . . . . .
SECTION 5.2 Collection of Indebtedness by Trustee; Trustee May Prove
Indebtedness. . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.3 Application of Proceeds . . . . . . . . . . . . . . . . .
SECTION 5.4 Suits for Enforcement . . . . . . . . . . . . . . . . . .
SECTION 5.5 Restoration of Rights on Abandonment of Proceedings . . .
SECTION 5.6 Limitations on Suits by Securityholders . . . . . . . . .
SECTION 5.7 Unconditional Right of Securityholders To Institute
Certain Suits . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.8 Powers and Remedies Cumulative; Delay or Omission Not
Waiver of Default . . . . . . . . . . . . . . . . . . . .
SECTION 5.9 Control by Securityholders. . . . . . . . . . . . . . . .
SECTION 5.10 Waiver of Past Defaults. . . . . . . . . . . . . . . . .
SECTION 5.11 Trustee to Give Notice of Default, But May Withhold in
Certain Circumstances. . . . . . . . . . . . . . . . . .
SECTION 5.12 Right of Court To Require Filing of Undertaking To Pay
Costs. . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE 6 CONCERNING THE TRUSTEE. . . . . . . . . . . . . . . . . . . . .
SECTION 6.1 Duties and Responsibilities of the Trustee; During
Default; Prior to Default. . . . . . . . . . . . . . . .
SECTION 6.2 Certain Rights of the Trustee. . . . . . . . . . . . . .
SECTION 6.3 Trustee Not Responsible for Recitals, Disposition of
Securities or Application of Proceeds Thereof. . . . . .
SECTION 6.4 Trustee and Agents May Hold Securities;
Collections, Etc.. . . . . . . . . . . . . . . . . . . .
SECTION 6.5 Moneys Held by Trustee . . . . . . . . . . . . . . . . .
SECTION 6.6 Compensation and Indemnification of Trustee and
Its Prior Claim. . . . . . . . . . . . . . . . . . . . .
SECTION 6.7 Right of Trustee to Rely on Officers'
Certificate, Etc.. . . . . . . . . . . . . . . . . . . .
SECTION 6.8 [Reserved] . . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.9 Persons Eligible for Appointment as Trustee. . . . . . .
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SECTION 6.10 Resignation and Removal; Appointment of Successor
Trustee. . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.11 Acceptance of Appointment by Successor Trustee. . . . . .
SECTION 6.12 Merger, Conversion, Consolidation or Succession to
Business of Trustee . . . . . . . . . . . . . . . . . . .
SECTION 6.13 [Reserved] . . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.14 Intervention in Litigation . . . . . . . . . . . . . . .
SECTION 6.15 Appointment of Co-Trustees . . . . . . . . . . . . . . .
SECTION 6.16 Effect of Death, Incapacity, etc.. . . . . . . . . . . .
ARTICLE 7 CONCERNING THE SECURITYHOLDERS . . . . . . . . . . . . . . . .
SECTION 7.1 Evidence of Action Taken by Securityholders. . . . . . .
SECTION 7.2 Proof of Execution of Instruments and of Holding of
Securities . . . . . . . . . . . . . . . . . . . . . . .
SECTION 7.3 Holders To Be Treated as Owners. . . . . . . . . . . . .
SECTION 7.4 Securities Owned by Issuer Deemed Not Outstanding. . . .
SECTION 7.5 Right of Revocation of Action Taken. . . . . . . . . . .
ARTICLE 8 SUPPLEMENTAL INDENTURES. . . . . . . . . . . . . . . . . . . .
SECTION 8.1 Supplemental Indentures Without Consent of
Securityholders. . . . . . . . . . . . . . . . . . . . .
SECTION 8.2 Supplemental Indentures with Consent of
Securityholders. . . . . . . . . . . . . . . . . . . . .
SECTION 8.3 Effect of Supplemental Indenture . . . . . . . . . . . .
SECTION 8.4 Documents To Be Given to Trustee . . . . . . . . . . . .
SECTION 8.5 Notation on Securities in Respect of Supplemental
Indentures . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE 9 NO CONSOLIDATION, MERGER, SALE OR CONVEYANCE . . . . . . . . .
ARTICLE 10 SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS . . . . . . . . . . . . . . . . . . . . . . .
SECTION 10.1 Satisfaction and Discharge of Indenture. . . . . . . . .
SECTION 10.2 Defeasance and Discharge of Indenture. . . . . . . . . .
SECTION 10.3 Defeasance of Certain Obligations. . . . . . . . . . . .
SECTION 10.4 Application by Trustee of Funds Deposited for Payment of
Securities . . . . . . . . . . . . . . . . . . . . . . .
SECTION 10.5 Repayment of Moneys Held by Paying Agent . . . . . . . .
SECTION 10.6 Return of Moneys Held by Trustee and Paying Agent
Unclaimed for One Year . . . . . . . . . . . . . . . . .
SECTION 10.7 Reinstatement. . . . . . . . . . . . . . . . . . . . . .
ARTICLE 11 MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . .
SECTION 11.1 Incorporators, Shareholders, Officers and Directors of
Issuer Exempt from Individual Liability. . . . . . . . .
SECTION 11.2 Provisions of Indenture for the Sole Benefit of Parties
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and Securityholders. . . . . . . . . . . . . . . . . . .
SECTION 11.3 Successors and Assigns of Issuer Bound by Indenture. . .
SECTION 11.4 Notices and Demands on Issuer, Trustee and
Securityholders. . . . . . . . . . . . . . . . . . . . .
SECTION 11.5 Compliance Certificates and Opinions of Counsel;
Statements To Be Contained Therein . . . . . . . . . . .
SECTION 11.6 Payments Due on Saturdays, Sundays and Holidays . . . .
SECTION 11.7 [Reserved]. . . . . . . . . . . . . . . . . . . . . . .
SECTION 11.8 New York Law To Govern
SECTION 11.9 Counterparts. . . . . . . . . . . . . . . . . . . . . .
SECTION 11.10 Effect of Headings. . . . . . . . . . . . . . . . . . .
SECTION 11.11 Waiver of Usurious Interest . . . . . . . . . . . . . .
SECTION 11.12 Authority to Act. . . . . . . . . . . . . . . . . . . .
ARTICLE 12 REDEMPTION OF SECURITIES . . . . . . . . . . . . . . . . . . .
SECTION 12.1 Right of Optional Redemption; Prices . . . . . . . . . .
SECTION 12.2 Notice of Redemption . . . . . . . . . . . . . . . . . .
SECTION 12.3 Payment of Securities Called for Redemption. . . . . . .
SECTION 12.4 Exclusion of Certain Securities from Eligibility for
Selection for Redemption . . . . . . . . . . . . . . . .
ARTICLE 13 Deleted
ARTICLE 14 SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 14.1 Pledge and Security Interest . . . . . . . . . . . . . .
SECTION 14.2 Security for Obligation. . . . . . . . . . . . . . . . .
SECTION 14.3 Perfection of Security Interest. . . . . . . . . . . . .
SECTION 14.4 No Disposition of Collateral; Release of Lien of
Indenture. . . . . . . . . . . . . . . . . . . . . . . .
SECTION 14.5 Other Liens. . . . . . . . . . . . . . . . . . . . . . .
SECTION 14.6 Trustee Appointed Attorney-in-Fact . . . . . . . . . . .
SECTION 14.7 Return of Collateral . . . . . . . . . . . . . . . . . .
SECTION 14.8 Default Remedies . . . . . . . . . . . . . . . . . . . .
SECTION 14.9 Proceeds . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 14.10 Deficiency. . . . . . . . . . . . . . . . . . . . . . .
SECTION 14.11 Trustee's Duties. . . . . . . . . . . . . . . . . . . .
SECTION 14.12 Special Trustee Powers Due to Environmental Conditions
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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THIS INDENTURE, dated as of March 31, 1998 by and among TWG International
U.S. Corporation, a Nevada corporation (the "Issuer"), and U.S. Trust Company of
Texas, N.A., a national banking association, not in its individual capacity but
solely as trustee (the "Trustee"),
W I T N E S S E T H :
WHEREAS, the Issuer has duly authorized the issue of its 12% Senior
Secured Note Due March 17, 2005 (the "Securities"); and
WHEREAS, the Securities and the Trustee's certificate of authentication
shall be in substantially the following form:
[FORM OF FACE OF SECURITY]
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES ACT, AND MAY NOT BE TRANSFERRED WITHOUT
REGISTRATION UNDER SUCH ACTS OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER
THAT SUCH REGISTRATION IS NOT REQUIRED.
No. $
TWG INTERNATIONAL U.S. CORPORATION
12% Senior Secured Note Due March 17, 2005
Date: March 1998
New York, New York
TWG International U.S. Corporation, a Nevada corporation (the "Issuer"),
for value received hereby promises to pay to TWG Finance Corp. a Nevada
corporation, or registered assigns, the principal sum of $17,000,000 at the
Issuer's office or agency for said purpose, on March 17, 2005, in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts, and to pay interest
semi-annually on March 17 and September 17 (each an "Interest Payment Date") of
each year, commencing with September 17, 1998, on said principal sum in like
coin or currency at 12% simple interest per annum at said office or agency from
the most recent Interest Payment Date to which interest on the Securities has
been paid or duly provided for unless the date hereof is a date to which
interest on the Securities is paid or duly provided for, in which case from the
date of this Security, or unless no interest has been paid or duly provided for
on the Securities, in which case from the date of issuance. To the extent
lawful, the Issuer promises to pay interest on any
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<PAGE>
interest payment due but unpaid on such unpaid principal amount at a rate of 17%
per annum compounded semi-annually.
The interest so payable on any Interest Payment Date will, except as
otherwise provided in the Indenture referred to on the reverse hereof, be paid
to the Person in whose name this Security is registered at the close of business
on March 17 or September 17 whether or not a Business Day (each an "Interest
Record Date") next preceding such Interest Payment Date, whether or not such day
is a Business Day; PROVIDED that interest may be paid, at the option of the
Issuer, by mailing a check therefor payable on the Interest Payment Date to the
registered Holder entitled thereto at his last address as it appears on the
Security register.
If interest on the Securities is in default, the Trustee shall, prior to
the payment of interest, establish a special record date (the "Special Record
Date") for such payment, which Special Record Date shall be not more than
fifteen (15) nor less than ten (10) days prior to the date of the proposed
payment. Payment of such defaulted interest shall then be made by check, as
provided herein and in the Indenture, mailed or remitted to the persons in whose
names the Securities are registered on the Special Record Date at the addresses
or accounts of such persons shown on the security register.
Interest on this Security will be calculated on the basis of a 360-day
year, consisting of twelve 30-day months.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof which further provisions shall for all purposes have
the same effect as if set forth in this place.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed under its corporate seal.
[Seal] TWG INTERNATIONAL U.S. CORPORATION
By:_____________________________________
Its:____________________________________
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<PAGE>
[FORM OF REVERSE OF SECURITY]
TWG INTERNATIONAL U.S. CORPORATION
12% Senior Secured Note Due March 17, 2005
This Security is the duly authorized issue of a debt security of the
Issuer, with the principal amount of $17,000,000, issued pursuant to an
indenture dated as of March 31, 1998, (the "Indenture"), duly executed and
delivered by the Issuer to U.S. Trust Company of Texas, N.A., as Trustee (herein
called the "Trustee"). Reference is hereby made to the Indenture and all
indentures supplemental thereto for a description of the rights, limitations of
rights, obligations, duties and immunities thereunder of the Trustee, the Issuer
and the Holders (the words "Holders" or "Holder" meaning the registered holders
or registered holder) of the Securities. The Securities are secured obligations
of the Issuer. Capitalized terms used in this Security and not defined herein
shall have the meaning set forth in the Indenture.
In case an Event of Default (as defined in the Indenture) shall have
occurred and be continuing, the principal and interest in respect of all of the
Securities then outstanding may be declared due and payable in the manner and
with the effect, and subject to the conditions, provided in the Indenture. The
Indenture provides that the Holders of 50% in aggregate principal amount of the
Securities then outstanding, by notice to the Trustee, may on behalf of the
Holders of all of the Securities, waive any existing Default or Event of Default
and its consequences under the Indenture except a continuing Default or Event of
Default in the payment of interest or premium on, or the principal of, the
Securities or in respect of a covenant or provision that cannot be modified or
amended without the consent of all Holders of the Securities. Any such consent
or waiver by the Holder of this Security (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such Holder and upon all future
Holders and owners of this Security and any Security which may be issued in
exchange or substitution therefor, whether or not any notation thereof is made
upon this Security or such other Securities.
The Indenture permits the Issuer and the Trustee, with the consent of the
Holders of not less than 50% in aggregate principal amount of the Securities at
the time outstanding, evidenced as in the Indenture provided, to execute
supplemental indentures adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of any supplemental
indenture or modifying in any manner the rights of the Holders of the
Securities; PROVIDED that no such supplemental indenture shall, without the
consent of each Holder affected thereby (with respect to any Securities held by
a non-consenting Securityholder) (i) reduce the principal amount of Securities
whose Holders must consent to an amendment, supplement or waiver, (ii) reduce
the principal of or change the fixed maturity of any Security or alter the
provisions with respect to the redemption of the Securities, (iii) reduce the
rate of or change the time for payment of interest on any Security, (iv) waive a
Default or Event of Default
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in the payment of principal of or premium, if any, or interest on the Securities
(except a rescission of acceleration of the Securities by the Holders of at
least 50% in aggregate principal amount of the then outstanding Securities and a
waiver of the payment default that resulted from such acceleration), (v) make
any Security payable in money other than that stated in the Securities, (vi)
make any change in the provisions of the Indenture relating to waivers of past
Defaults or the rights of Holders of Securities to receive payments of principal
of or interest on the Securities, (vii) waive a redemption payment with respect
to any Security or (viii) make any change in the foregoing amendment and waiver
provisions.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligations of the Issuer, which are
absolute and unconditional, to pay the principal of and the interest on this
Security at the place, times, and rate, and in the currency, herein prescribed.
The Securities are issuable only as registered Securities without
coupons.
At the office or agency of the Issuer referred to on the face hereof and
in the manner and subject to the limitations provided in the Indenture,
Securities may be exchanged for a like aggregate principal amount of Securities
of other authorized denominations.
Upon due presentment for registration of transfer of this Security at the
above-mentioned office or agency of the Issuer, a new Security or Securities of
authorized denominations, for a like aggregate principal amount, will be issued
to the transferee as provided in the Indenture. No service charge shall be made
for any such transfer, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto.
As provided in the Indenture, Issuer shall be required to make mandatory
prepayments equal to Excess Cash Flow until Obligations are fully defeased
pursuant to Section 10.2 or until one hundred percent (100%) of the principal
amount of the Securities, together with accrued and unpaid interest, is paid.
The Securities may also be redeemed by the Issuer, in whole, or in part, upon
mailing a notice of such redemption not less than 30 nor more than 60 days prior
to the date fixed for redemption to the Holders of Securities to be redeemed, at
a redemption price equal to 100% of the principal amount of the Securities
redeemed, together with accrued and unpaid interest to the date fixed for
redemption. If there is a Change of Control (as defined in the Indenture), the
Issuer shall be required to offer to purchase all outstanding Securities at a
purchase price equal to 100% of the principal amount thereof, plus accrued
unpaid interest, if any, through the date of such purchase.
Subject to payment by the Issuer of a sum sufficient to pay the amount
due upon redemption, interest on this Security shall cease to accrue upon the
date duly fixed for redemption of this Security.
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The Issuer, the Trustee and any authorized agent of the Issuer or the
Trustee may deem and treat the registered Holder hereof as the absolute owner of
this Security (whether or not this Security shall be overdue and notwithstanding
any notation of ownership or other writing hereon made by anyone other than the
Issuer or the Trustee or any authorized agent of the Issuer or the Trustee), for
the purpose of receiving payment of, or on account of, the principal hereof and
premium, if any, and subject to the provisions on the face hereof, interest
hereon and for all other purposes, and neither the Issuer nor the Trustee nor
any authorized agent of the Issuer or the Trustee shall be affected by any
notice to the contrary.
No recourse shall be had for the payment of the principal of, premium, if
any, or the interest on this Security, for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Indenture or any indenture
supplemental thereto, against any incorporator, shareholder, officer, employee
or director, as such, past, present or future, of the Issuer or Trustee or of
any successor corporation, either directly or through the Issuer or any
successor corporation, whether by virtue of any constitution, statute or rule of
law or by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issue hereof, expressly waived and released.
Customary abbreviations may be used in the name of a Securityholder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
This Security shall not be valid or obligatory until the certificate of
authentication hereon shall have been duly signed by an authorized signatory of
the Trustee acting under the Indenture.
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the within-mentioned
Indenture.
Dated:
U.S. Trust Company of Texas, N.A. , as Trustee
By:___________________________________________
Authorized Signatory
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ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to:
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint _________________________________________ agent to
transfer this Security on the books of Issuer. The agent may substitute another
to act for him.
If you want the Note certificate made out in another person's name, fill in the
form below:
________________________________________________________________________________
(insert other person's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type other person's name, address and zip code)
Date:_______________________________ _______________________________
Your Signature
_______________________________
Signature Guaranty
_______________________________
Notice: Signature must be
guaranteed by an
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"Eligible Guarantor
Institution" as defined by
Securities Exchange Act Rule
17Ad-15.
(Sign exactly as your name appears on the other side of this Security)
NOW, THEREFORE:
In consideration of the premises and the purchases of the Securities by
the Holders thereof, the Issuer and the Trustee mutually covenant and agree for
the equal and proportionate benefit of the respective Holders from time to time
of the Securities as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 CERTAIN TERMS DEFINED. The following terms (except as
otherwise expressly provided or unless the context otherwise clearly requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section 1.1. All other
terms used in this Indenture which are defined in the Trust Indenture Act of
1939, as amended, or the definitions of which in the Securities Act of 1933, as
amended, are referred to in the Trust Indenture Act of 1939 (except as herein
otherwise expressly provided or unless the context otherwise requires) have the
meanings assigned to such terms in said Trust Indenture Act and in said
Securities Act as in force at the date of this Indenture. The words "HEREIN,"
"HEREOF" and "HEREUNDER" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision. The terms defined in this Article include the plural as well as
the singular.
"ACCELERATION DATE" has the meaning specified in Section 5.1.
"ACCELERATION NOTICE" has the meaning specified in Section 5.1.
"ACQUIRED INDEBTEDNESS" means, Indebtedness of an entity, which entity is
acquired by Issuer or any of its Subsidiaries after the initial issuance of the
Securities.
"AFFILIATE" means any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with either of the
Issuer, including, without limitation, any senior officer, directors or Key
Employees of either of the Issuer. For purposes of this definition, the term
"control" means the power to direct the management and policies of a Person,
directly or through one or more intermediaries, whether through the ownership of
voting securities, by contract, or otherwise, PROVIDED, that, with respect to
ownership interests in the Issuer and its Subsidiaries a beneficial owner of 5%
or more of the total voting power normally entitled to vote
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in the election of directors, managers or trustees, as applicable, shall for
such purposes be deemed to constitute control. Affiliate shall not include the
initial Securityholders.
"AFFILIATE TRANSACTION" has the meaning specified in Section 3.17.
"APPLICANTS" has the meaning specified in Section 4.2.
"ASSET SALE" means the sale, lease, conveyance, disposition or other
transfer (including, without limitation, by eminent domain, condemnation or
similar governmental proceeding) of any property or assets of the Issuer or any
of its direct or indirect Subsidiaries (including a sale and leaseback
transaction or the issuance, sale or transfer of Capital Stock of a direct or
indirect Subsidiary except an acquisition of such Capital Stock by Issuer or its
direct or indirect Subsidiaries)).
"AVERAGE LIFE" means , as of the date of determination, with respect to
any security or instrument, the quotient obtained by dividing (i) the sum of the
products obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity in respect thereof, by (y) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount or liquidation preference, as applicable, of such security or instrument,
as the case may be.
"BOARD OF DIRECTORS" means the Board of Directors of the Issuer, or any
committee of such Board duly authorized to act hereunder.
"BUSINESS DAY" means a day which in the city (or in any of the cities, if
more than one) where amounts are payable in respect of the Securities, as
specified on the face of the form of Security recited above, or in the city in
which either the Corporate Trust Office of the Trustee or Operations office is
located, is neither a legal holiday nor a day on which banking institutions are
required or authorized by law or regulation to close.
"CAPITALIZED LEASE OBLIGATION" means rental obligations under a lease
that are required to be capitalized for financial reporting purposes in
accordance with GAAP, and the amount of Indebtedness represented by such
obligations shall be the capitalized amount of such obligations, as determined
in accordance with GAAP.
"CAPITAL EXPENDITURES" shall mean, for any period, expenditures
(including the aggregate amount of capital lease obligations incurred during
such period) made by TWG International or any of its direct or indirect
Subsidiaries to acquire or to construct fixed assets and equipment (including,
renewals, improvements and replacements, but excluding repairs in the ordinary
course) during such period computed in accordance with GAAP.
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"CAPITAL STOCK" means any and all shares, interests (including ownership
interests arising pursuant to association agreements under the laws of the Czech
Republic), participations, rights or other equivalents (however designated) or
corporate stock, whether common or preferred, including, without limitation,
partnership interests, membership interests in limited liability companies and
ownership interests in joint stock companies.
"CASH EQUIVALENT" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) or (ii) time deposits and
certificates of deposit and commercial paper issued by the parent corporation of
any domestic commercial bank of recognized standing having capital and surplus
in excess of $350 million and commercial paper issued by others rated at least
A-2 or the equivalent thereof by Standard & Poor's Corporation or at least P-2
or the equivalent thereof by Moody's Investors Service, Inc. and in each case
maturing within one year after the date of acquisition.
"CHANGE OF CONTROL" means the occurrence of any of the following (without
the consent of not less than the Holders of 50% of the aggregate principal
amount of the Securities then Outstanding) (i) any sale, transfer, conveyance or
other disposition in one or a series of related transactions, of all or
substantially all of the assets of the Issuer and its Subsidiaries taken as a
whole or of TWG or TWG Finance to any "person" (as defined in Section 13(d)(3)
of the Exchange Act) or "group" (as defined in Section 13(d)(3)) of the Exchange
Act); (ii) the acquisition of beneficial ownership or the right to acquire
beneficial ownership pursuant to warrants, options or other rights to acquire,
by any "person" or "group" (each as defined above) of more than 35% of the
Capital Stock of TWG (other than Value Partners, Ltd. or Andrew Tottenham and/or
an entity controlled by him); (iii) the adoption of a plan for the liquidation
or dissolution of TWG, TWG Finance or the Issuer; or (iv) TWG, TWG Finance or
the Issuer consolidates with, or merges with or into, another "person" (as
defined above).
"CHANGE OF CONTROL OFFER" has the meaning specified in Section 3.18.
"CHANGE OF CONTROL PAYMENT" has the meaning specified in Section 3.18.
"CHANGE OF CONTROL PAYMENT DATE" has the meaning specified in Section
3.18.
"COLLATERAL" has the meaning specified in Section 14.1.
"COLLATERAL AGREEMENTS" means any agreements including those executed by
the Issuer, 21st Century Resorts, a.s., LMJ Slots, s.r.o., LMJ Casino Rozvadov,
a.s., Atlantic Properties, s.r.o., Trans World Leasing Limited and Cyprus Entity
and/or such other Persons necessary to create a Security Interest in favor of
the Trustee and the Securityholders in the Collateral.
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<PAGE>
"COMMISSION" means the U.S. Securities and Exchange Commission.
"CONSOLIDATED" means the consolidated results of the Issuer and its
Subsidiaries as determined in accordance with GAAP.
"CONSOLIDATED COVERAGE RATIO" of Issuer on any date of determination
(the "Transaction Date") means the ratio, on a PRO FORMA basis, of (a) the
aggregate amount of Consolidated EBITDA of Issuer attributable to continuing
operations and businesses (exclusive of amounts attributable to operations
and businesses permanently discontinued or disposed of) for the Reference
Period to (b) the aggregate Consolidated Fixed Charges of Issuer (exclusive
of amounts attributable to operations and businesses permanently discontinued
or disposed of, but only to the extent that the obligations giving rise to
such Consolidated Fixed Charges would no longer be obligations contributing
to Issuer's Consolidated Fixed Charges subsequent to the Transaction Date)
during the Reference Period; PROVIDED that for purposes of such calculation,
(i) acquisitions which occurred during the Reference Period or subsequent to
the Reference Period and on or prior to the Transaction Date shall be assumed
to have occurred on the first day of the Reference Period, (ii) transactions
giving rise to the need to calculate the Consolidated Coverage Ratio shall be
assumed to have occurred on the first day of the Reference Period, (iii) the
incurrence of any Indebtedness during the Reference Period or subsequent to
the Reference Period and on or prior to the Transaction Date (and the
application of the proceeds therefrom to the extent used to refinance or
retire other Indebtedness) shall be assumed to have occurred on the first day
of such Reference Period, and (iv) the Consolidated Fixed Charges of Issuer
attributable to interest on any Indebtedness bearing a floating interest rate
shall be computed on a PRO FORMA basis as if the average rate in effect from
the beginning of the Reference Period to the Transaction Date had been the
applicable rate for the entire period.
"CONSOLIDATED EBITDA" means, with respect to Issuer, for any period,
the Consolidated Net Income of Issuer for such period adjusted to add thereto
(to the extent deducted from net revenues in determining Consolidated Net
Income), without duplication, the sum of (i) Consolidated income tax expense
(other than corporate income taxes paid in the Czech Republic), (ii)
Consolidated depreciation and amortization expense and provided further that
amortization of pre-opening expenses for the Czech Casinos may only be added
thereto in an aggregate amount up to $2,000,000 (including all such amounts
added in all previous periods) and (iii) Consolidated Fixed Charges.
"CONSOLIDATED FIXED CHARGES" of Issuer means, for any period, the
aggregate amount (without duplication and determined in each case in
accordance with GAAP) of interest (whether fixed or contingent) expensed or
capitalized, paid, accrued or scheduled to be paid or accrued (including, in
accordance with the following sentence, interest attributable to Capitalized
Lease Obligations) of Issuer and its Subsidiaries during such period,
including (i) original issue
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discount and non-cash interest payments or accruals on any Indebtedness, (ii)
the interest portion of all deferred payment obligations, and (iii) all
commissions, discounts and other fees and charges owed with respect to
bankers' acceptances and letters of credit, in each case to the extent
attributable to such period. For purposes of this definition, (x) interest on
a Capitalized Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined by Issuer to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP and (y) interest expense
attributable to any Indebtedness represented by the guaranty of Issuer or a
Subsidiary of Issuer of an obligation of another Person shall be deemed to be
the interest expense attributable to the Indebtedness guaranteed.
"CONSOLIDATED NET INCOME" means, with respect to Issuer for any
period, the net income (or loss) of Issuer and its Subsidiaries (determined
on a consolidated basis in accordance with GAAP) for such period, adjusted to
exclude (only to the extent included in computing such net income (or loss)
and without duplication): (a) all gains (but not losses) which are either
extraordinary (as determined in accordance with GAAP) or are nonrecurring
(including any gain from the sale or other disposition of assets outside the
ordinary course of business), (b) the net income or loss of any Person
acquired in a pooling of interests transaction for any period prior to the
date of such acquisition, and (c) the net income, if positive, of any of
Issuer's Subsidiaries to the extent that the declaration or payment of
dividends or similar distributions is not at the time permitted by operation
of the terms of its charter or bylaws or any other agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable
to such Subsidiary.
"CORPORATE TRUST OFFICE" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date as of which this
Indenture is dated, located at 2001 Ross Avenue, Dallas, TX 75201-2936,
Attention: Corporate Trust Department.
"CYPRUS ENTITY" means an entity to be formed in Cyprus by TWG
International as a direct Subsidiary.
"DEFAULT" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"DEFAULT RATE" with respect to the Securities means 17% per annum
compounded semiannually, subject to the Maximum rate.
"EVENT OF DEFAULT" means any event or condition specified as such in
Section 5.1 which shall have continued for the period of time, if any,
therein designated.
"EXCESS CASH FLOW" means, for any period, Issuer's consolidated net
income for such period (as determined by GAAP) adjusted as follows (in each
case without duplication): PLUS (i)
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non-cash items which decrease consolidated net income, including, without
limitation, depreciation expense and amortization expense (including
amortization of deferred financing costs and original issue discounts), but
only to the extent included in computing such consolidated net income, PLUS
(ii) Undistributed Excess Cash Flow, MINUS (iii) the amount of Capital
Expenditures actually paid during such period, not to exceed $100,000 in any
Fiscal Year (provided that the amount of Capital Expenditures permitted for
the Fiscal Year in which the issuance of the Securities occurs shall be pro
rated based on the number of days remaining in such Fiscal Year, MINUS (iv)
the amount necessary to establish or maintain a working capital reserve,
provided that such amount to be subtracted from consolidated net income from
operations shall not exceed $100,000 in any Fiscal Year (provided further
that such amount retained for working capital purposes for the Fiscal Year in
which the issuance of the Securities occurs shall be pro rated based on the
number of days remaining in such Fiscal Year from and after the Issue Date),
MINUS (v) the amount necessary to establish or maintain a reserve for
acquisitions of assets or capital stock (or other similar ownership interest)
of local casinos located outside the United States and operations relating
thereto, provided that such amount to be subtracted from Consolidated Net
Income from operations shall not exceed $1,500,000 (less the amount by which
the Securities sold in the offering hereby exceeds $16,000,000) during the
period from the Issue Date through the date all principal, together with all
accrued and unpaid interest, is paid in full or is defeased pursuant to
Section 10.2.
"EXCESS PROCEEDS" shall have the meaning specified in Section 3.12.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FISCAL YEAR" means the annual accounting period adopted by each
Issuer, which shall initially be the annual accounting period ending December
31 of each year.
"GAAP" means United States of America generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting Standards Board
or in such other statements by such other entity as may be approved by a
significant segment of the accounting profession, as the same are in effect
on the Issue Date.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness, and "Guaranteed" has a correlative meaning.
"HOLDER," "SECURITYHOLDER" or any other similar term means the
registered holder of any Security.
"INCUR" OR "INCURRED" means to, directly or indirectly, create, incur,
issue, assume,
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guaranty or otherwise become liable with respect to.
"INCURRENCE DATE" has the meaning specified in Section 3.10.
"INDEBTEDNESS" means, with respect to any Person, without duplication,
any indebtedness of such Person, whether or not contingent, in respect of
borrowed money or evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof) or representing the balance deferred and unpaid of the purchase
price of any property (including pursuant to capital leases), except any such
balance that constitutes an accrued expense, trade payable or winnings
payable, if and to the extent any of the foregoing would appear as a
liability upon a balance sheet of such Person prepared in accordance with
GAAP, and also includes, to the extent not otherwise included, the Guarantee
of items that would be included within this definition and all Indebtedness
of others secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on any
asset or property (including, without limitation, leasehold interests and any
other tangible or intangible property) of such Person, whether or not such
Indebtedness is assumed by such Person or is not otherwise such Person's
legal liability, PROVIDED that if the obligations so secured have not been
assumed in full by such Person or are otherwise not such Person's legal
liability in full, the amount of such Indebtedness for the purposes of this
definition shall be limited to the lesser of the amount of such Indebtedness
secured by such Lien or the fair market value of the assets or property
securing such Lien. Notwithstanding the foregoing, the term "Indebtedness"
shall not include deferred compensation arrangements that are not evidenced
by bonds, notes, debentures or similar instruments.
"INDENTURE" means this instrument as originally executed and delivered
or, if amended or supplemented as herein provided, as so amended or
supplemented.
"INTEREST PAYMENT DATE" has the meaning specified in first paragraph
of Form of Security herein.
"INTEREST RECORD DATE" has the meaning specified in Section 2.4.
"INVESTMENT" by any Person in any other Person means (without
duplication) (a) the acquisition (whether by purchase, merger, consolidation
or otherwise) by such Person (whether for cash, property, services,
securities or otherwise) of capital stock, bonds, notes, debentures,
partnership or other ownership interests or other securities, including any
options or warrants, of such other Person or any agreement to make any such
acquisition; (b) the making by such Person of any deposit with, or advance,
loan or other extension of credit to, such other Person (including the
purchase of property from another Person subject to an understanding or
agreement, contingent or otherwise, to resell such property to such other
Person) or any commitment to make any such advance, loan or extension (but
excluding accounts receivable, gaming credits or
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deposits arising in the ordinary course of business); (c) the entering into
by such Person of any guarantee of, or other credit support or contingent
obligation with respect to, Indebtedness or other liability of such other
Person; and (d) the making of any capital contribution by such Person to such
other Person.
"ISSUE DATE" means the date on which the Securities are originally
issued under this Indenture.
"ISSUER" means TWG International U.S. Corporation, a Nevada
corporation, and, subject to Article Nine, their successors and assigns, and
to the extent required by Sections 310 to 317 of the Trust Indenture Act of
1939, any other obligor on the Securities.
"JUNIOR INDEBTEDNESS" means any Indebtedness of the Issuer, whether
outstanding at the date hereof or incurred thereafter, that is subordinate in
right of payment, either pursuant to its terms or by operation of law, to the
Securities, which Indebtedness provides for a fixed date when the principal
thereof (disregarding any mandatory redemptions or pre-payments required in
respect thereof) is due and payable which is on or after the final maturity
of the Securities.
"KEY EMPLOYEE" means persons such as casino managers or sales and
marketing managers, who are not executive officers but who make or are
expected to make significant contributions to the business of the Issuer.
"LIEN" means, with respect to any asset, any mortgage, including
without limitation any multiple indebtedness mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"MAXIMUM RATE" has the meaning contained in Section 3.1.
"NET CASH PROCEEDS" means the aggregate cash proceeds received by the
Issuer or any of its Subsidiaries in respect of any Asset Sale, net of the
direct costs relating to such Asset Sale (including, without limitation,
title insurance fees and premiums, filing and recordation fees, permit fees,
landlord consent payments and other amounts required to be paid to transfer
the assets that are the subject of such Asset Sale, sales commissions and
legal, accounting and investment banking fees incurred in respect of such
Asset Sale) and any relocation expenses incurred as a result thereof, taxes
paid or payable as a result thereof (after taking into account any available
tax credits or deductions and any tax sharing arrangements), and amounts
required to be applied to the repayment of Indebtedness secured by a Lien on
the asset or assets that are the
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subject of such Asset Sale; PROVIDED FURTHER, HOWEVER, that if the agreement
or instrument governing such Asset Sale requires the transferor to maintain a
portion of the purchase price in escrow (whether as reserve for adjustment in
respect of the purchase price or otherwise) or to indemnify the transferee
for specified liabilities in a maximum stated amount for a stated period of
time, the portion of the cash consideration that is actually placed in escrow
or segregated and set aside by the transferor for such indemnification
obligation shall not be deemed to be Net Cash Proceeds until the escrow
terminates or the transferor ceases to segregate and set aside such funds, in
whole or in part, and then only to the extent of the proceeds released from
escrow to the transferor or that are no longer segregated and set aside by
the transferor.
"OBLIGATIONS" has the meaning specified in Section 14.2.
"OFFICERS' CERTIFICATE" means a certificate signed by the Chairman of
the Board of Directors or the President or any Vice President (whether or not
designated by a number or numbers or a word or words added before or after
the title "Vice President") and by the Treasurer or the Secretary or any
Assistant Treasurer or Secretary of the Issuer and delivered to the Trustee.
Each such certificate shall include the statements provided for in Section
11.5.
"OPERATIONS OFFICE" means with respect to the Trustee the office
maintained by the Trustee or an affiliate thereof for the payment of interest
and principal on the Securities.
"OPINION OF COUNSEL" means an opinion in writing signed by legal
counsel who may be an employee of or counsel to the Issuer or who may be
other counsel satisfactory to the Trustee. Each such opinion shall include
the statements provided for in Section 11.5, if and to the extent required
hereby.
"OUTSTANDING," when used with reference to Securities, means, subject
to the provisions of Sections 6.8 and 7.4, as of any particular time, all
Securities authenticated and delivered by the Trustee under this Indenture,
except:
(a) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(b) Securities, or portions thereof, for the payment or redemption
(i) of which moneys in the necessary amount shall have been deposited in
trust with the Trustee or with any paying agent (other than the Issuer) or
shall have been set aside, segregated and held in trust by the Issuer (if the
Issuer shall act as paying agent) or (ii) of which moneys and/or Government
Securities as contemplated by Section 10.2 in the necessary amount have been
theretofore deposited with the Trustee (or another trustee satisfying the
requirements of Section 6.9) in trust for the Holders of such Securities in
accordance with Section 10.2 and the conditions set forth therein have been
satisfied; PROVIDED that if such Securities are to be redeemed prior to the
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maturity thereof, notice of such redemption shall have been given as herein
provided, or provision satisfactory to the Trustee shall have been made for
giving such notice; and
(c) Securities in substitution for which other Securities shall have
been authenticated and delivered, or which shall have been paid, pursuant to
the terms of Section 2.6 (unless proof satisfactory to the Trustee is
presented that any of such Securities is held by a Person in whose hands such
Security is a legal, valid and binding obligation of the Issuer).
"PAYMENT DEFAULT" has the meaning specified in Section 5.1.
"PERMITTED INVESTMENT" means (a) any Investment in a Cash Equivalent,
and (b) an aggregate amount not to exceed $1,500,000 for the period
commencing on the Issue Date and concluding on the date one hundred percent
(100%) of all the principal amount of the Securities, together with accrued
and unpaid interest thereon, is paid in full or is defeased pursuant to
Section 10.2, to be used solely for the acquisition of casinos located
outside of the United States and operations related thereto; provided, that
(i) no Default or Event of Default shall have occurred and be continuing at
the time of, or would occur after giving effect on a PRO FORMA basis to, such
acquisition and (ii) such acquired assets will be subject to a first priority
Lien for the benefit of the holders of the Securities pursuant to a security
agreement in form and substance satisfactory to the holders of a majority of
the aggregate outstanding principal amount of the Securities.
"PERMITTED REFINANCING" has the meaning specified in the definition of
Refinancing Indebtedness.
"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"PRIMARY INDENTURE" means that certain Indenture dated as of March
31, 1998, pursuant to which the Issuer, TWG and TWG Finance Corporation are
issuers and the Trustee herein is the trustee, as to those certain
$17,000,000 12% Senior Secured Note Due March 17, 2008.
"PRINCIPAL" wherever used with reference to the Securities or any
Security or any portion thereof, shall be deemed to include the face amount
of the Security plus, when appropriate, the premium, if any.
"PROPERTY" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included on
the most recent consolidated balance sheet of such Person in accordance with
GAAP.
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"REFERENCE PERIOD" with regard to any Person means the four full fiscal
quarters (or such lesser period during which such Person has been in existence)
ended immediately preceding any date upon which any determination is to be made
pursuant to the terms of the Securities.
"REFINANCED INDEBTEDNESS" has the meaning specified in the definition of
Refinancing Indebtedness.
"REFINANCING INDEBTEDNESS" means Indebtedness issued in exchange for, or
the proceeds of which are used to extend, refinance, renew, replace or refund
any Indebtedness permitted to be incurred under the Indenture (the "Refinancing
Indebtedness"); PROVIDED, HOWEVER, that (i) the principal amount of such
Refinancing Indebtedness shall not exceed the principal or accreted amount (in
the case of any Indebtedness issued with original issue discount, as such) of
Indebtedness so extended, refinanced, renewed, replaced, substituted or refunded
(the "Refinanced Indebtedness"), (ii) the Refinancing Indebtedness shall rank in
right of payment relative to the Securities on terms at least as favorable to
the Holders of Securities as those contained in the documentation governing the
Refinanced Indebtedness ("Permitted Refinancing"), and (iii) the Refinancing
Indebtedness shall have a Average Life to Stated Maturity and a Stated Maturity
equal to or greater than the Average Life to Stated Maturity and Stated Maturity
of the Refinanced Indebtedness
"RELATED BUSINESS" means the local casino gaming business outside the
United States of America and other businesses necessary for, incident to,
connected with, arising out of, in support of or developed or operated to permit
or facilitate the conduct or pursuing of the local casino gaming business
outside the United States all as then customarily conducted in the local casino
gaming operations outside the United States.
"RESPONSIBLE OFFICER" when used with respect to the Trustee means any
officer in its Corporate Trust Office, or any other assistant officer of the
Trustee in its Corporate Trust Office customarily performing functions similar
to those performed by the Persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred because of his
or her knowledge of and familiarity with the particular subject.
"RESTRICTED PAYMENT" means, (i) as to the Issuer, (a) any dividend
declared or paid to, or any distribution made for the benefit of, any holders
of the Issuer's Capital Stock, including TWG, (b) the purchase, redemption or
other acquisition or retirement for value of any Capital Stock of the Issuer
from any holders thereof, including TWG, (c) any purchase, redemption or
other acquisition or retirement for value by the Issuer or any of its
Subsidiaries, prior to a scheduled mandatory sinking fund payment date or
maturity date, of any Indebtedness of the Issuer or its Subsidiaries, and
(ii) as to TWG, (a) any dividend declared or paid to, or any distribution
made for the benefit of, any holders of TWG's Capital Stock as holders of
such Capital Stock and (b) the purchase, redemption or other acquisition or
retirement for value of any
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Capital Stock of TWG from any holders thereof as holders of such Capital Stock.
"RIGHT OF FIRST REFUSAL" has the meaning specified in Section 13.1
"SECURITY" or "SECURITIES" (except as otherwise provided in Section 6.8)
means any of the 12% Senior Secured Notes Due March 2005 authenticated and
delivered under this Indenture.
"SECURITY INTEREST" has the meaning specified in Section 14.1.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SUBSCRIPTION AGREEMENT" means the subscription agreement dated as of
March 16, 1998, by and among TWG, the Issuer, TWG Finance Corp. and the
Securityholders.
"SPECIAL RECORD DATE" has the meaning specified in paragraph 3 of the
Form of Securities herein.
"STATED MATURITY" means the date which all remaining unpaid principal and
interest of Indebtedness is due and payable pursuant to the terms of document(s)
evidencing such Indebtedness.
"SUBSIDIARY" means any corporation, association or other business entity
of which more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more of the other
Subsidiaries of that Person or a combination thereof.
"TWG" means Trans World Gaming Corp., the parent of the Issuer.
"TRUSTEE" means the entity identified as "Trustee" in the first
paragraph hereof and, subject to the provisions of Article Six, shall also
include any successor trustee.
"UNDISTRIBUTED EXCESS CASH FLOW" means, for any period, that portion
of the aggregate Excess Cash Flow from all prior periods which has not been
previously used to repay principal amounts of the Securities.
"WHOLLY OWNED SUBSIDIARY" means, with respect to any Person, a
Subsidiary of such Person, all of the outstanding shares of Capital Stock of
which (other than directors' qualifying shares) are at the time directly or
indirectly owned by such Person or by one or more Wholly-Owned Subsidiaries
of such Person or by such Person and one or more if its Wholly-Owned
Subsidiaries.
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"ZNOJMO PROPERTY" has the meaning specified in Section 14.5.
ARTICLE 2
ISSUE, EXECUTION, FORM AND
REGISTRATION OF SECURITIES
SECTION 2.1 AUTHENTICATION AND DELIVERY OF SECURITIES. Securities in
an aggregate principal amount not in excess of $17,000,000 (except as
otherwise provided in Section 2.6) may be executed by the Issuer and
delivered to the Trustee for authentication, and a responsible officer of the
Trustee shall thereupon authenticate and deliver said Securities to the
Issuer or upon the written order of the Issuer, signed by both (a) the
Chairman of the Board of Directors or any Vice Chairman of the Board of
Directors, or its President or any Vice President (whether or not designated
by a number or numbers or a word or words added before or after the title
"Vice President") and (b) by its Treasurer or Secretary or any Assistant
Treasurer or Secretary without any further action by the Issuer.
SECTION 2.2 EXECUTION OF SECURITIES. The Securities shall be signed
on behalf of the Issuer by both (a) its Chairman of the Board of Directors or
any Vice Chairman of the Board of Directors or its President or any Vice
President (whether or not designated by a number or numbers or a word or
words added before or after the title "Vice President") and (b) by its
Treasurer or any Assistant Treasurer or its Secretary or any Assistant
Secretary, under its corporate seal which may, but need not, be attested.
Such signatures may be the manual or facsimile signatures of the present or
any future such officers. The seal of the Issuer may be in the form of a
facsimile thereof and may be impressed, affixed, imprinted or otherwise
reproduced on the Securities. Typographical and other minor errors or defects
in any such reproduction of the seal or any such signature shall not affect
the validity or enforceability of any Security which has been duly
authenticated and delivered by the Trustee.
In case any such officer of the Issuer who shall have signed any of
the Securities shall cease to be such officer before the Security so signed
shall be authenticated and delivered by the Trustee or disposed of by the
Issuer, such Security nevertheless may be authenticated and delivered or
disposed of as though the Person who signed such Security had not ceased to
be such officer of the Issuer; and any Security may be signed on behalf of
the Issuer by such Persons as, at the actual date of the execution of such
Security, shall be the proper officers of the Issuer, although at the date of
the execution and delivery of this Indenture any such Person was not such
officer.
SECTION 2.3 CERTIFICATE OF AUTHENTICATION. Only such Securities as
shall bear thereon a certificate of authentication substantially in the form
hereinabove recited, executed
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by the Trustee by manual signature of one of its authorized signatories,
shall be entitled to the benefits of this Indenture or be valid or obligatory
for any purpose. Such certificate by the Trustee upon any Security executed
by the Issuer shall be conclusive evidence that the Security so authenticated
has been duly authenticated and delivered hereunder and that the Holder is
entitled to the benefits of this Indenture.
SECTION 2.4 FORM, DENOMINATION AND DATE OF SECURITIES; PAYMENTS OF
INTEREST IN CASH. The Securities and the Trustee's certificates of
authentication shall be substantially in the form recited above. The
Securities shall be issuable as registered securities without coupons and in
denominations provided for in the form of Security above recited. The
Securities shall be numbered, lettered, or otherwise distinguished in such
manner or in accordance with such plans as the officers of the Issuer
executing the same may determine with the approval of the Trustee.
Any of the Securities may be issued with appropriate insertions,
omissions, substitutions and variations, and may have imprinted or otherwise
reproduced thereon such legend or legends, not inconsistent with the provisions
of this Indenture, as may be required to comply with any law or with any rules
or regulations pursuant thereto, or with the rules of any securities market in
which the Securities are admitted to trading, or to conform to general usage.
Each Security shall be dated the date of its authentication, shall bear
interest from the applicable date and shall be payable on the dates specified on
the face of the form of Security recited above.
The Person in whose name any Security is registered at the close of
business on any Interest Record Date with respect to any Interest Payment
Date shall be entitled to receive the interest, if any, payable on such
Interest Payment Date notwithstanding any transfer or exchange of such
Security subsequent to the Interest Record Date and prior to such Interest
Payment Date, except if and to the extent the Issuer shall default in the
payment of the interest due on such Interest Payment Date, in which case such
defaulted interest shall be paid to the Persons in whose names outstanding
Securities are registered at the close of business on a subsequent record
date (which shall be not less than five Business Days prior to the date of
payment of such defaulted interest) established after arrangements for
payment reasonably satisfactory to the Trustee have been made by the Issuer
by notice given by mail by or on behalf of the Issuer to the Holders of
Securities not less than 15 days preceding such subsequent record date. The
term "Interest Record Date" as used with respect to any Interest Payment Date
(except a date for payment of defaulted interest) shall mean the 15th day of
the month next preceding the month in which such interest payment date falls,
whether or not such Interest Record Date is a Business Day.
SECTION 2.5 REGISTRATION, TRANSFER AND EXCHANGE. The Issuer will
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keep at each office or agency to be maintained for the purpose as provided in
Section 3.2 a register or registers in which, subject to such reasonable
regulations as it may prescribe, it will register, and will register the
transfer of, Securities as in this Article provided. Such register shall be in
written form in the English language or in any other form capable of being
converted into such form within a reasonable time. At all reasonable times such
register or registers shall be open for inspection by the Trustee.
Upon due presentation for registration of transfer of any Security at
each such office or agency, the Issuer shall execute and the Trustee shall
authenticate and deliver in the name of the transferee or transferees a new
Security or Securities in authorized denominations for a like aggregate
principal amount.
Any Security or Securities may be exchanged for a Security or Securities
in other authorized denominations, in an equal aggregate principal amount.
Securities to be exchanged shall be surrendered at each office or agency to be
maintained by the Issuer for the purpose as provided in Section 3.2, and the
Issuer shall execute and the Trustee shall authenticate and deliver in exchange
therefor the Security or Securities which the Securityholder making the exchange
shall be entitled to receive, bearing numbers not contemporaneously outstanding.
All Securities presented for registration of transfer, exchange,
redemption or payment shall (if so required by the Issuer or the Trustee) be
duly endorsed by, or be accompanied by a written instrument or instruments of
transfer in form satisfactory to the Issuer and the Trustee duly executed by,
the Holder or his attorney duly authorized in writing.
The Issuer may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any exchange or
registration of transfer of Securities, provided however, the Issuer shall be
responsible for all costs associated with perfection of the Security Interest in
Collateral as to the transferee and obtaining a search of title prior thereto.
No service charge shall be made for any such exchange or registration
transaction.
The Issuer shall not be required to exchange or register a transfer of
(a) any Securities for a period of 15 days next preceding the first mailing of
notice of redemption of Securities to be redeemed or (b) any Securities
selected, called or being called for redemption.
All Securities issued upon any transfer or exchange of Securities shall
be valid obligations of the Issuer, evidencing the same debt, and entitled to
the same benefits under this Indenture, as the Securities surrendered upon such
transfer or exchange.
SECTION 2.6 MUTILATED, DEFACED, DESTROYED, LOST AND STOLEN SECURITIES.
In case any temporary or definitive Security shall become mutilated, defaced or
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be apparently destroyed, lost or stolen, the Issuer in its discretion may
execute, and the Trustee shall authenticate and deliver, a new Security
bearing a number not contemporaneously outstanding, in exchange and
substitution for the mutilated or defaced Security, or in lieu of or in
substitution for the Security so apparently destroyed, lost or stolen. In
every case the applicant for a substitute Security shall furnish to the
Issuer and to the Trustee and any agent of the Issuer or the Trustee such
security or indemnity agreement or bond as may be reasonably required by them
to indemnify and defend and to save each of them harmless and, in every case
of destruction, loss or theft, evidence to their satisfaction of the apparent
destruction, loss or theft of such Security and of the ownership thereof.
Upon the issuance of any substitute Security, the Issuer and the
Trustee may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the reasonable fees and expenses of the Trustee)
connected therewith. In case any Security which has matured or is about to
mature shall become mutilated or defaced or be apparently destroyed, lost or
stolen, the Issuer may, instead of issuing a substitute Security, pay or
authorize the payment of the same with written direction to the Trustee
(without surrender thereof except in the case of a mutilated or defaced
Security), if the applicant for such payment shall furnish to the Issuer and
to the Trustee and any agent of the Issuer or the Trustee such security or
indemnity (including a bond) as any of them may reasonably require to save
each of them harmless and in every case of apparent destruction, loss or
theft the applicant shall also furnish to the Issuer and the Trustee and any
agent of the Issuer or the Trustee evidence to their reasonable satisfaction
of the apparent destruction, loss or theft of such Security and of the
ownership thereof.
Every substitute Security issued pursuant to the provisions of this
Section 2.6 by virtue of the fact that any Security is apparently destroyed,
lost or stolen shall constitute an additional contractual obligation of the
Issuer, whether or not the apparently destroyed, lost or stolen Security
shall be at any time enforceable by anyone and shall be entitled to all the
benefits of (but shall be subject to all the limitations of rights set forth
in) this Indenture equally and proportionately with any and all other
Securities duly authenticated and delivered hereunder.
SECTION 2.7 CANCELLATION OF SECURITIES; DISPOSITION THEREOF. All
Securities surrendered for payment, redemption, registration of transfer or
exchange, if surrendered to the Issuer or any agent of the Issuer or the
Trustee, shall be delivered to the Trustee for cancellation or, if
surrendered to the Trustee, shall be cancelled by it; and no Securities shall
be issued in lieu thereof except as expressly permitted by any of the
provisions of this Indenture. The Trustee shall dispose of cancelled
Securities held by it in accordance with its regulations and deliver a
certificate to the Issuer with respect to such disposition from time to time
upon written request. If the Issuer shall acquire any of the Securities,
such acquisition shall not operate as a redemption or satisfaction of the
Indebtedness represented by such Securities unless and until the same are
delivered to the Trustee for cancellation.
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SECTION 2.8 TEMPORARY SECURITIES. Pending the preparation of
definitive Securities, the Issuer may execute and the Trustee shall
authenticate and deliver temporary Securities (printed, lithographed,
typewritten or otherwise reproduced, in each case in form satisfactory to the
Trustee). Temporary Securities shall be issuable as registered securities
without coupons, of any authorized denomination, and substantially in the
form of the definitive Securities but with such omissions, insertions and
variations as may be appropriate for temporary Securities, all as may be
determined by the Issuer with the concurrence of the Trustee. Temporary
Securities may contain such reference to any provisions of this Indenture as
may be appropriate. Every temporary Security shall be executed by the Issuer
and be authenticated by the Trustee upon the same conditions and in
substantially the same manner, and with like effect, as the definitive
Securities. Without unreasonable delay the Issuer shall execute and shall
furnish, at its expenses, definitive Securities and thereupon temporary
Securities may be surrendered in exchange therefor without charge at each
office or agency to be maintained by the Issuer for the purpose pursuant to
Section 3.2, and the Trustee shall authenticate and deliver in exchange for
such temporary Securities a like aggregate principal amount of definitive
Securities of authorized denominations. Until so exchanged, the temporary
Securities shall be entitled to the same benefits under this Indenture as
definitive Securities. The Issuer shall not be obligated to issue definitive
Securities until it or the Trustee shall have received such temporary
Securities.
ARTICLE 3
COVENANTS OF THE ISSUER
SECTION 3.1 PAYMENT OF PRINCIPAL AND INTEREST. Issuer covenants and
agrees that it will duly and punctually pay or cause to be paid the principal
of, and interest on, each of the Securities at the place or places, at the
respective times and in the manner provided in the Securities. An
installment of principal or interest shall be considered paid on the date it
is due if the Trustee or Paying Agent holds on that date sums sufficient to
pay the installment. Anything herein or in the Securities to the contrary
notwithstanding, the obligation of the Issuer hereunder shall be subject to
the limitation that payments of interest to the Holder shall not be required
to the extent that the receipt of any such payment by such Holder would be
contrary to the provisions of law applicable to the Issuer which limit the
maximum rate of interest which may be charged or collected by the Holder
including as set forth in Section 11.11 (the "Maximum Rate").
SECTION 3.2 OFFICES FOR PAYMENTS, ETC. So long as any of the
Securities remain outstanding, the Issuer will maintain at such place in the
City of New York and at such other place, if any, as may be designated by the
Issuer, the following: (a) an office or agency where the Securities may be
presented for registration of transfer or for exchange as provided in
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this Indenture and (b) an office or agency where notices and demands to or
upon the Issuer in respect of the Securities or of this Indenture may be
served. The Issuer will initially maintain such offices or agencies with the
corporate secretary at the Issuer's principal place of business and the
Operations office of the Trustee in New York, New York. The Issuer will give
to the Trustee written notice of the location of any such office or agency
and of any change of location thereof. In case the Issuer shall fail to
maintain any such office or agency or shall fail to give such notice of the
location or of any change in the location thereof, presentations and demands
may be made and notices may be served at the Corporate Trust Office.
SECTION 3.3 APPOINTMENT TO FILL A VACANCY IN OFFICE OF TRUSTEE. The
Issuer, whenever necessary to avoid or fill a vacancy in the office of the
Trustee, will appoint, in the manner provided in Section 6.10, a Trustee, so
that there shall at all times be a Trustee hereunder.
SECTION 3.4 PAYING AGENTS. Whenever the Issuer shall appoint a
paying agent other than the Trustee or itself, it will cause such paying
agent to execute and deliver to the Trustee an instrument in which such agent
shall agree with the Trustee, subject to the provisions of this Section 3.4:
(a) that it will hold all sums received by it as such agent for the
payment of the principal of or interest on the Securities (whether such sums
have been paid to it by the Issuer or by any other obligor on the Securities) in
trust for the benefit of the Holders of the Securities or of the Trustee; and
(b) that it will give the Trustee notice of any failure by the Issuer
(or by any other obligor on the Securities) to make any payment of the principal
of or interest on the Securities when the same shall be due and payable.
The Issuer will, at least one Business Day prior to each due date of the
principal of or interest on the Securities, deposit with the paying agent a sum
which is in immediately available funds on the due date sufficient to pay such
principal or interest and (unless such paying agent is the Trustee) the Issuer
will promptly notify the Trustee of any failure to take such action.
If the Issuer shall act as its own paying agent, it will, on or before
each due date of the principal of or interest on the Securities, set aside,
segregate and hold in trust for the benefit of the Holders of the Securities a
sum sufficient to pay such principal or interest so becoming due. The Issuer,
or paying agent which is not the Trustee, will promptly notify the Trustee in
writing of any failure to take such action.
Notwithstanding anything in this Section 3.4 to the contrary, the Issuer
may at any time, for the purpose of obtaining a satisfaction and discharge of
this Indenture or for any other reason,
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pay or cause to be paid to the Trustee all sums held in trust by the Issuer or
any paying agent hereunder, as required by this Section 3.4, such sums to be
held by the Trustee upon the trusts herein contained.
Notwithstanding anything in this Section 3.4 to the contrary, the
agreement to hold sums in trust as provided in this Section 3.4 is subject to
the provisions of Sections 10.4 and 10.5.
The Issuer initially appoints the Trustee as paying agent.
SECTION 3.5 OFFICERS' CERTIFICATES AS TO DEFAULT AND AS TO COMPLIANCE.
The Issuer will, so long as any of the Securities are outstanding:
(a) deliver to the Trustee, forthwith upon becoming aware of any
default or defaults in the performance of any covenant, agreement or
condition contained in this Indenture (including notice of any event
which with the giving of notice, lapse of time or both would become an
Event of Default under Section 5.1 hereof), an Officers' Certificate
specifying such default or defaults; and
(b) deliver to the Trustee within 90 days after the end of each
Fiscal Year of the Issuer beginning with the Fiscal Year ending December
31, 1998, an Officers' Certificate, to the effect that:
(i) a diligent review of the activities of the Issuer
and its Subsidiaries during such year and of performance under
this Indenture has been made under such officers' supervision, and
(ii) to the best of such officers' knowledge, based on
such review, the Issuer has fulfilled all its obligations under
this Indenture throughout such year, or if there has been a
default in the fulfillment of any such obligation, specifying each
such default known to them and the nature and status thereof.
SECTION 3.6 MANDATORY PREPAYMENT.
(a) Within forty-five (45) days of the end of the second and
fourth quarter of each Fiscal Year, the Issuer shall (a) repay an aggregate
principal amount of the Securities equal to the Excess Cash Flow for the
6-month period ending on the last day of such quarter, together with accrued and
unpaid interest on such principal amount to the date of repayment, and (b)
regardless of whether any repayment of principal is required under this Section,
provide each Securityholder with a written notice containing in reasonable
detail the Issuer's calculation of Excess Cash Flow. Notwithstanding the
preceding sentence, the Issuer shall not be required to repay any principal
under this Section unless Excess Cash Flow equals or exceeds the lesser of
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$250,000 or the aggregate principal amount of the Securities then
outstanding, in which case all Excess Cash Flow then outstanding shall be
used to repay principal in accordance with this Section. Any repayments of
principal required by this Section shall be paid on an equal and ratable
basis among the Securityholders in proportion, as nearly as practicable, to
the respective unpaid principal amounts of the Securities held by each
Securityholder. The reduction in the principal amount of the Securities
effected by repayments made under this Section may be made without
presentation of the Securities and shall be binding on all future
Securityholders. Securityholders shall make the appropriate notation on the
Securities to indicate the amount of any repayments under this Section.
(b) The prepayment will be made in the following manner. At
least 15 days prior to the date on which the Issuer proposes to make the
prepayment required by this Section 3.6, the Issuer shall give the
Trustee written notice of such prepayment, which notice shall state the
amount of the prepayment and the date the Issuer has selected that the
prepayment be made, which date may not be later than 45 days from the end
of the second and fourth quarters, as the case may be. The Trustee shall
not be required to send a notice of mandatory redemption to the Holders
with respect to such prepayment. At least one Business Day before the
mandatory prepayment, the Issuer will deposit with the Trustee (or other
paying agent) in immediately available funds the money to be used to
prepay the Securities. When the money to effect the mandatory prepayment
of the Securities is held by the Trustee for the purpose of effecting
such prepayment, interest on that portion of the Securities to be prepaid
shall cease to accrue on the reduction of principal on Securities made a
result of the prepayment, and such notations shall be binding on the
Securityholders and all future Securityholders, even if such holders do
not make such notations on the certificates representing such Securities.
The prepayments will be made by the Trustee in increments of $100.00.
Any Excess Cash Flow which does not meet this requirement will be
returned to the Issuer pursuant to its written instructions.
SECTION 3.7 MAINTENANCE OF PROPERTIES, ETC. The Issuer shall, and shall
cause each of its Subsidiaries to, maintain its material properties and assets
in working order and condition and make all necessary repairs, renewals,
replacements, additions, betterments and improvements thereto as permitted by
this Indenture, all as in the judgment of the Issuer may be necessary so that
the business carried on in connection therewith may be conducted in the usual
and customary manner.
The Issuer shall, and shall cause each of its Subsidiaries to, maintain
with insurers that the Issuer believes in good faith to be financially sound and
reputable such insurance as may be required by law and such other insurance, to
such extent and against such hazards and liabilities, as it in good faith
determines is customarily maintained by companies similarly situated with like
properties.
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The Issuer shall, and shall cause each of its Subsidiaries to, do or
cause to be done all things necessary to preserve and keep in full force and
effect its existence, rights and franchises, except to the extent permitted by
this Indenture and except in such cases where the Board of Directors determines
in good faith that failure to do so would not have a material adverse effect on
the business, earnings, properties, assets, financial condition or results of
operation of the Issuer and its Subsidiaries. Nothing in this provision shall
prohibit Trans World Gaming Corp., the Issuer's parent, from terminating its
operations or its Subsidiaries' operations in the State of Louisiana, USA.
The Issuer shall, and shall cause each of its Subsidiaries to, comply in
all material respects with all statutes, laws, ordinances, or government rules
and regulations to which it is subject.
The Issuer shall, and shall cause each of its Subsidiaries to, pay prior
to delinquency all taxes, assessments and governmental levies except as
contested in good faith and by appropriate proceedings.
SECTION 3.8 INDEBTEDNESS. The Issuer will pay punctually and discharge
when due and payable any Indebtedness heretofore or hereafter incurred or
assumed by it and discharge, perform and observe the covenants, provisions and
conditions to be discharged, performed and observed on the part of the Issuer in
connection therewith, or in connection with any agreement or other instrument
relating thereto.
SECTION 3.9 BOOKS. Issuer will keep at all times proper books of record
and account in which full, true and correct entries will be made of its
transactions in accordance with Generally Accepted Accounting Principles.
SECTION 3.10 LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS FOR
ISSUER. Except as set forth below, Issuer will not, and will not permit any of
its Subsidiaries to, Incur any Indebtedness (including Acquired Indebtedness);
provided, however, that Issuer may Incur Indebtedness if, (i) no Default of this
Indenture or Event of Default shall have occurred and be continuing at the time
of, or would occur after giving effect on a PRO FORMA basis to, such Incurrence
of Indebtedness; (ii) on the date of such Incurrence (the "Incurrence Date"),
the Consolidated Coverage Ratio of Issuer for the Reference Period immediately
preceding the Incurrence Date, after giving effect on a PRO FORMA basis to such
incurrence of such Indebtedness and, to the extent set forth in the definition
of Consolidated Coverage Ratio, the use of proceeds thereof, would be at least
2.30 to 1; and (iii) such Indebtedness has an Average Life to Stated Maturity
that exceeds the remaining Average Life to Stated Maturity of the Securities and
has a Stated Maturity for its final scheduled principal payment later than the
Stated Maturity for the final scheduled principal payment of the
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Securities; (iv) such Indebtedness is subordinated in right of payment to the
prior payment in full of the Securities pursuant to a subordination agreement in
form and substance satisfactory to the holders of a majority of the aggregate
outstanding principal amount of the Securities; and (v) such Indebtedness is not
secured by the Collateral granted to the holders of the Securities.
Notwithstanding the foregoing:
(a) Issuer may incur Indebtedness evidenced by the Securities up to
the amounts specified therein as of the date thereof;
(b) Issuer may incur at or after the Issue Date additional
indebtedness consisting of:
(i) Indebtedness incurred to fund the construction of
Znojmo Casino, PROVIDED that such Indebtedness is non recourse to
Issuer or any of its Subsidiaries and no Lien securing such
Indebtedness shall extend to or convert any assets or properties
of Issuer other than the Znojmo Property and the improvements,
building equipment and fixtures located in or on the Znojmo
Property;
(ii) other purchase money Indebtedness incurred to
purchase personal property for the purpose of engaging in or
developing a Related Business, PROVIDED that the principal amount
of such Indebtedness in the aggregate outstanding at any time
(including any Indebtedness issued to refinance, replace or refund
such Indebtedness) shall not exceed $500,000 and no Lien securing
such Indebtedness shall extend to or cover any assets or
properties other than the assets or property acquired with such
purchase money Indebtedness and improvements thereon; and
(iii) Indebtedness for working capital purposes, PROVIDED
that the principal amount of such Indebtedness in the aggregate
outstanding at any time (including any Indebtedness, issued to
refinance, replace or refund such Indebtedness) shall be unsecured
and may not exceed $100,000.
(c) Issuer may incur Refinancing Indebtedness with respect to any
Indebtedness described in clauses (a) through (c), inclusive, of
this covenant so long as, in the case of secured Indebtedness used
to refinance, refund or replace secured Indebtedness, such
Refinancing Indebtedness is secured only by the assets that
secured the Indebtedness so refinanced and if such Indebtedness
being Refinanced was unsecured, the related Refinancing
Indebtedness shall be unsecured; and
(d) Issuer may incur Indebtedness to any of its Wholly Owned
Subsidiaries; PROVIDED, that such obligations shall be unsecured
and subordinated in all respects to
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Issuer's obligations pursuant to the Securities.
Indebtedness of any Person which is outstanding at the time such Person becomes
a Subsidiary of Issuer (including by designation) or is merged with or into or
consolidated with Issuer or a Subsidiary of Issuer shall be deemed to have been
Incurred at the time such Person becomes such a Subsidiary of Issuer or is
merged with or into or consolidated with Issuer or a Subsidiary of Issuer, as
applicable.
SECTION 3.11 RESTRICTIONS ON ISSUANCE OF STOCK. Issuer will not
permit any of its Subsidiaries to issue any additional Capital Stock and
agrees that the Capital Stock of its Subsidiaries pledged to the holders of
the Securities pursuant to the Collateral Agreements herein shall at all
times constitute 100% of its U.S. Subsidiaries, of Trans World Leasing
Limited and of the Cyprus Entity, 66% of 21st Century Resorts, a.s. and 100%
of the Capital Stock of any U.S. Subsidiary and of any foreign Subsidiary,
where such pledge shall not create a "deemed dividend", and 66% of the
Capital Stock of any foreign Subsidiary where a pledge of more than that
percentage would create a "deemed dividend". Furthermore, Issuer will not
permit any of its Subsidiaries to conduct any business through or otherwise
own any outstanding shares or interests of any class of Capital Stock of, any
other corporation, partnership, limited liability company or other Person,
other than a Wholly-Owned Subsidiary.
SECTION 3.12 RESTRICTIONS ON ASSET SALES.
(a) Issuer shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, make any Asset Sale, unless (i)
Issuer (or such Subsidiary, as the case may be) receives consideration at the
time of such Asset Sale at least equal to the fair market value of the shares
or assets sold or otherwise disposed of (such determination of fair market
value, in the case of an Asset Sale or a series of related Asset Sales
involving assets with an aggregate fair market value in excess of $250,000,
being evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate and an independent appraisal by an appraiser reasonably
acceptable to the holders of 50% of the outstanding principal amount of
Securities delivered to the Trustee), (ii) at least 85% of the consideration
therefor received by the Issuer or such Subsidiary is in the form of cash;
PROVIDED, HOWEVER, that the amount of (x) any liabilities (as shown on
Issuer's or such Subsidiary's most recent balance sheet or in the notes
thereto) of Issuer or any Subsidiary that are assumed by the transferee of
any such assets without any further recourse to Issuer or any Subsidiary,
including any Indebtedness of a Subsidiary whose stock is purchased by the
transferee, and (y) any notes or other securities received by Issuer or any
such Subsidiary from such transferee that are immediately converted by Issuer
or such Subsidiary into cash (to the extent of the cash received) shall be
deemed to be cash for purposes of this provision, and (iii) in the case of an
Asset Sale consisting of a sale by Issuer or any Subsidiary of Capital Stock
of any Subsidiary of Issuer, all of the Capital Stock of such Subsidiary that
is owned by Issuer or such Subsidiary must be sold.
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(b) No later than sixty (60) days after the receipt of Net Cash
Proceeds from any such Asset Sale, Issuer may apply such Net Cash Proceeds to
invest (including through capital expenditures) in properties and assets related
to the gambling industry, consistent with other current business activities of
Issuer, so long as the Securityholders are granted a first lien and security
interest in such assets and provided that such properties and assets are held by
Issuer or one or more of its Wholly Owned Subsidiaries. Any Net Cash Proceeds
that are not applied as permitted by the preceding sentence shall constitute
"Excess Proceeds." Excess Proceeds shall be paid to the Securityholders within
fifteen (15) days of becoming Excess Proceeds in the same manner as Excess Cash
Flow is paid in Section 3.6.
SECTION 3.13 DISTRIBUTIONS. The Issuer shall not declare or pay, or set
apart any funds for the payment of any Restricted Payment.
SECTION 3.14 LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES. The Issuer shall not permit any Subsidiary thereof
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any such Subsidiary to (a) pay dividends or make any other
distributions to Issuer or any Subsidiary thereof on its Capital Stock, (b)
pay any Indebtedness owed to Issuer or any Subsidiary thereof, (c) make loans
or advances to Issuer or any Subsidiary thereof, (d) transfer any of its
properties or assets to Issuer or any Subsidiary thereof, (e) grant liens or
security interests on the assets of Issuer or its Subsidiaries in favor of
the holders of the Securities or (f) Guarantee the Securities or any renewals
or refinancings thereof.
SECTION 3.15 LIMITATION ON INVESTMENTS. Issuer shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, make any Investments
other than Permitted Investments and except as provided in Section 3.12.
SECTION 3.16 LIMITATIONS ON LIENS. Issuer shall not, and shall not
permit any Subsidiary to, directly or indirectly create, incur, assume or suffer
to exist any Lien on any of their respective assets now owned or hereafter
acquired, or any income or profits therefrom or assign or convey any right to
receive income therefrom, except as provided in Section 3.10, Section 3.11 and
Section 3.12 and in Article 14.
SECTION 3.17 TRANSACTIONS WITH AFFILIATES.
(a) Except for transactions with Trans World Leasing Limited and the
Cyprus Entity, neither the Issuer nor any of its Subsidiaries shall directly or
indirectly, sell, lease, license, transfer, exchange, or otherwise dispose of
any of its properties, assets or services to, or purchase, lease, or license the
use of any property, assets or services from, or transfer funds to, or
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enter into any contract, agreement, understanding, loan, advance or Guarantee
with, to, or for the benefit of, any Affiliate (each of the foregoing, an
"Affiliate Transaction," whether constituting one transaction or a series of
related transactions), unless (a) such Affiliate Transaction is on terms that
are no less favorable to Issuer or the relevant Subsidiary than those that would
have been obtained in a comparable transaction by Issuer or such Subsidiary with
an unrelated person and (b) Issuer delivers to the Trustee (i) with respect to
any Affiliate Transaction involving aggregate payments in excess of $100,000, a
resolution of the Board of Directors of Issuer approved by a majority of the
disinterested members of the Board of Directors, certifying that such Affiliate
Transaction complies with clause (a) above, and (ii) with respect to any
Affiliate Transaction involving aggregate payments in excess of $250,000.00, an
opinion as to the fairness of such Affiliate Transaction to Issuer or such
Subsidiary from a financial point of view issued by an independent investment
banking firm of national standing.
(b) This Section does not limit, and shall not apply to, (i) the
payment of reasonable annual compensation to directors or executive officers
of the Issuer or any Restricted Subsidiary, (ii) transactions between Issuer
and its Subsidiaries or between Issuer's Subsidiaries.
SECTION 3.18 CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder of
Securities shall have the right to require the Issuer to repurchase all or
any part of such holder's Securities pursuant to the offer described below
(the "Change of Control Offer") at a purchase price equal to one hundred
percent (100%) of the aggregate principal amount thereof plus accrued and
unpaid interest, if any, to the date of purchase (the "Change of Control
Payment"). Within 30 days following receipt of any Change of Control Offer,
the Issuer shall mail a notice to each Holder stating: (1) that the Change of
Control Offer is being made pursuant to this Section and that all Securities
tendered will be accepted for payment; (2) the purchase price and the
purchase date, which shall be no earlier than 30 days nor later than 60 days
from the date such notice is mailed (the "Change of Control Payment Date");
(3) that any Security not tendered will continue to accrue interest in
accordance with its terms; (4) that, unless the Issuer defaults in the
payment of the Change of Control Payment, all Securities accepted for payment
pursuant to the Change of Control Offer shall cease to accrue interest after
the Change of Control Payment Date; (5) that Holders electing to have any
Securities purchased pursuant to a Change of Control Offer will be required
to surrender the Securities, with the form entitled "Option of Holder to
Elect Purchase", on the reverse of the Securities completed, to the paying
agent at the address specified in the notice prior to the close of business
on the third Business Day preceding the Change of Control Payment Date; (6)
that Holders will be entitled to withdraw their election if the paying agent
receives, not later than the close of business on the second Business Day
preceding the Change of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of Securities delivered for purchase, and a statement that such Holder
is withdrawing his election to have such Securities purchased; and (7) that
Holders
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whose Securities are being purchased only in part will be issued new
Securities equal in principal amount to the unpurchased portion of the
Securities surrendered, which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple thereof. The Issuer shall comply
with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations to the extent such laws and regulations are
applicable to the Change of Control Offer.
(b) On the Change of Control Payment Date, the Issuer will, to
the extent lawful, (1) accept for payment Securities or portions thereof validly
tendered pursuant to the Change of Control Offer, (2) deposit with the paying
agent an amount equal to the Change of Control Payment in respect of all
Securities or portions thereof so tendered, and (3) deliver or cause to be
delivered to the Trustee the Securities so accepted together with an Officers,
Certificate identifying the Securities or portions thereof tendered to the
Issuer. The paying agent will promptly mail to each Holder of Securities so
accepted payment in an amount equal to the purchase price for such Securities,
and the Trustee shall promptly authenticate and mail to each Holder a new
Security equal in principal amount to any unpurchased portion of the Securities
surrendered, if any; PROVIDED, HOWEVER, that each such new Security shall be in
a principal amount of $1,000 or an integral multiple thereof. The Issuer will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
SECTION 3.19 LINE OF BUSINESS. The Issuer shall not, and shall not
permit any of its Subsidiaries to, engage in any business other than acquiring,
developing and operating local casinos outside the United States of America and
a Related Business (operated outside the United States of America).
SECTION 3.20 PAYMENTS FOR CONSENT. Issuer shall not, and shall not
permit any Subsidiary to, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder of
the Securities for or as an inducement to any consent, waiver or amendment of
any terms or provisions of the Securities unless such consideration is offered
to be paid or agreed to be paid to all Holders of the Securities which so
consent, waive or agree in the time frame set forth in solicitation documents
relating to such consent, waiver or agreement.
SECTION 3.21 LIMITATIONS ON SALE AND LEASEBACK TRANSACTIONS. Issuer
shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, enter into any sale and leaseback transaction, provided that Issuer
or any Subsidiaries may enter into a sale and leaseback transaction if (a)
Issuer or such Subsidiary could have incurred the Indebtedness relating to such
sale and leaseback transaction pursuant to Sections 3.10 and 3.11. hereof and
(b) the net proceeds of such sale and leaseback transaction are at least equal
to the fair market value of such property (such determination of fair market
value in the case of a sale and leaseback
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transaction, being evidenced by a resolution of the Board of Directors of Issuer
set forth in an Officers' Certificate delivered to the Trustee).
SECTION 3.22 WAIVER OF STAY, EXTENSION OR USURY LAWS. The Issuer
covenants (to the extent that it may lawfully do so) that it shall not at any
time insist upon, or plead, or in any manner whatsoever claim, and shall resist
any and all efforts to be compelled to take the benefit or advantage of, any
stay or extension law or any usury law or other law which would prohibit or
forgive the Issuer from paying all or any portion of the principal of or
interest on the Securities as contemplated herein, wherever enacted, now or at
any time hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that it may lawfully do so)
the Issuer hereby expressly waives all benefit or advantage of any such law and
covenants that it shall not hinder, delay or impede the execution of any power
herein granted to the Trustee but shall suffer and permit the execution of every
such power as though no such law had been enacted.
SECTION 3.23 SECURITY INTEREST. The Issuer shall, including, to the
extent necessary post-closing, execute, and shall cause such direct and indirect
Subsidiaries as are necessary to execute, such documents as are necessary to
grant the Trustee and the Holder a Security Interest in all assets of Trans
World Leasing Limited and the Cyprus Entity. Such documents shall be prepared,
executed, delivered and filed by no later than June 30, 1998, unless extended in
writing by a majority of the Holders of the securities under the Primary
Indenture. The Issuer shall reimburse all reasonable costs, including attorneys
fees incurred by such of the security holders and Trustee in preparing and
executing such documents.
ARTICLE 4
SECURITYHOLDERS' LISTS AND REPORTS
BY THE ISSUER AND THE TRUSTEE
SECTION 4.1 ISSUER TO FURNISH TRUSTEE INFORMATION AS TO NAMES AND
ADDRESSES OF SECURITYHOLDERS. The Issuer covenants and agrees that it will
furnish or cause to be furnished to the Trustee a list in such form as the
Trustee may reasonably require of the names and addresses of the Holders of the
Securities:
(a) semi-annually and not more than 15 days after each record
date for the payment of interest on the Securities, as hereinabove
specified, as of such record date; and
(b) at such other times as the Trustee may request in writing,
within 30 days after receipt by the Issuer of any such request as of a
date not more than 15 days prior to the
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time such information is furnished;
PROVIDED that if and so long as the Trustee shall be the Security registrar,
such list shall not be required to be furnished.
SECTION 4.2 PRESERVATION AND DISCLOSURE OF SECURITYHOLDERS' LISTS.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of
the Holders of Securities contained in the most recent list furnished to
it as provided in Section 4.1 or maintained by the Trustee in its
capacity as Security registrar, if so acting. The Trustee may destroy
any list furnished to it as provided in Section 4.1 upon receipt of a new
list so furnished.
(b) The registry of Holders shall be available for inspection by
any Holder or its duly authorized attorney or agent, under normal
conditions and upon reasonable notice.
SECTION 4.3 REPORTS BY THE ISSUER. The Issuer covenants:
(a) to cause TWG to file with the Commission, and within 15 days
after TWG files the same with the Commission, file with the Trustee, and
mail or furnish copies to the Trustee and cause the Trustee to mail to
the Holders at their addresses as set forth in the register of the
Securities, copies of the annual reports and of the information,
documents, and other reports (or copies of such portions of any of the
foregoing as the Commission may from time to time by rules and
regulations prescribe) which TWG may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act or
which TWG would be required to file with the Commission if the Issuer
then had a class of securities registered under the Exchange Act;
(b) As soon as available and in any event within forty-five
(45) days after the end of the first, second and third quarter of each
Fiscal Year, Issuer will deliver the consolidated unaudited balance sheet
of Issuer and its Subsidiaries as at the end of such quarter and the
related consolidated unaudited statements of income, stockholders equity
and cash flows for such quarter and for the portion of the Fiscal Year
ended with such quarter. The financial statements required hereunder
shall in each instance set forth in comparative form the corresponding
figures as at the end of the corresponding quarter of the preceding
Fiscal Year.
(c) As soon as available and in any event within ninety (90)
days after the end of each Fiscal Year, Issuer will deliver (i) the
consolidated balance sheet of Issuer and its Subsidiaries as at the end
of such year and the related consolidated statements of income,
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stockholders' equity and cash flows for such Fiscal Year; and (ii) a
report with respect to the financial statements from its independent
public accountants, which report shall be unqualified as to going concern
and scope of audit and shall state that (A) such consolidated financial
statements present fairly the consolidated financial position of the
Issuer and its Subsidiaries as of the dates indicated and the results of
the operations and cash flow for the periods indicated in conformity with
GAAP and (B) that the examination by such accountants in connection with
such consolidated financial statements has been made in accordance with
generally accepted auditing standards.
(d) As soon as available and in any event within fifteen (15)
days after the end of each calendar month, Issuer will deliver unaudited
statements of income for each of the casinos located in the Czech
Republic, including in Ceska Kubice, Rozvadov and Znojmo (once
operational) for such month and for the portion of the Fiscal Year ended
with such month. The financial statements required hereunder shall in
each instance set forth in comparative from the corresponding figures as
at the end of the corresponding month of the preceding Fiscal Year.
(e) As soon as available and in any event within seven (7) days
after the end of each calendar week, Issuer will deliver unaudited
statements of net win for each of the casinos located in the Czech
Republic, including Ceska, Rozvadov and Znojmo (once operational), for
such week.
(f) to cause TWG's annual report to its common stockholders and
any quarterly or other financial reports furnished to its common
stockholders generally to be filed with the Trustee and mailed, no later
than the date such materials are mailed or made available to TWG's
common stockholders to the Holders at their addresses as set forth in the
register of Securities;
(g) [reserved];
(h) If the Issuer is not subject to the requirements of such
Section 13 or 15(d) of the Exchange Act, the Issuer shall nevertheless
continue to cause the TWG annual and quarterly financial statements,
including any notes thereto (and with respect to annual reports, a copy
of an auditors' report by an accounting firm of established national
reputation) and a "Management's Discussion and Analysis of Financial
Condition and Results of Operations", comparable to that which would have
been required to appear in annual or quarterly reports filed under
Section 13 or 15(d) of the Exchange Act to be so filed with the SEC for
public availability and the Trustee to be mailed to the Holders within 90
days after the end of the Issuer's Fiscal Year and within 45 days after
the end of each of the first three quarters of each Fiscal Year. In
either case, the Issuer shall continue to furnish Holders of the
Securities with substantially the same quarterly and
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annual financial information with respect to the Issuer as provided in
the Issuer's consolidated financial statements, including the notes
thereto, for the year ended 1996; and
(i) The Issuer shall provide the Trustee with a sufficient number
of copies of all reports and other documents and information that the
Trustee may be required to deliver to the Holders of the Securities under
this Section 4.3.
SECTION 4.4 [Reserved].
ARTICLE 5
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.1 EVENT OF DEFAULT DEFINED; ACCELERATION OF MATURITY; WAIVER
OF DEFAULT. In case one or more of the following Events of Default (whatever
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body) shall have occurred and be continuing:
(a) default in the payment of any installment of interest on the
Securities as and when the same becomes due and payable, and the
continuance of such default for 15 calendar days; or
(b) default in the payment of all or any part of the principal on
the Securities as and when the same shall become due and payable either
at maturity, upon acceleration or redemption or otherwise; or
(c) failure on the part of the Issuer duly to observe or perform
any covenants or agreements on the part of the Issuer contained in the
Securities, in this Indenture, in the Subscription Agreement or any of
the Collateral Agreements and the continuance of such failure for a
period of 15 days after the date on which written notice specifying such
failure, stating that such notice is a "Notice of Event of Default"
hereunder and demanding that the Issuer remedy the same, is given to the
Issuer by the Trustee or to the Issuer and the Trustee by the Holders of
at least 25% in aggregate principal amount of the Securities at the time
outstanding; or
(d) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced
any Indebtedness for money
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borrowed by TWG, Issuer or any of the Subsidiaries of either (or the
payment of which is Guaranteed by any Issuer or any of its Subsidiaries),
which default is caused by a failure to pay due principal or interest on
such Indebtedness after any applicable grace period (a "Payment
Default"), and the principal amount of any such Indebtedness, together
with the principal amount of any other such Indebtedness under which
there has been and is continuing a Payment Default, aggregates $300,000
or more; or
(e) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by TWG, Issuer or any of the
Subsidiaries of either (or the payment of which is Guaranteed by the
Issuer or any of its Subsidiaries), which default results in the
acceleration of such Indebtedness prior to its express maturity and the
principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness under which there has been and is
continuing a Payment Default or the maturity of which has been so
accelerated and not rescinded, aggregates $300,000 or more; or
(f) failure by TWG, Issuer or any of the Subsidiaries of either
to pay final judgments (other than any judgment as to which a reputable
insurance company has accepted coverage without a reservation of rights)
aggregating in excess of $300,000, which judgments are not stayed or
discharged within 15 days after their entry; or
(g) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of TWG, Issuer or any of the
Subsidiaries of either in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of any Issuer or any of its
Subsidiaries or for any substantial part of the property of any Issuer or
any of its Subsidiaries or ordering the winding up or liquidation of the
affairs of any Issuer or any of its Subsidiaries and such decree or order
shall remain unstayed and in effect for a period of 15 consecutive days;
or
(h) TWG, the Issuer or any of the Subsidiaries of either shall
commence a voluntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or consent to the entry of
an order for relief in an involuntary case under any such law, or consent
to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of any
Issuer or any of its Subsidiaries or for any substantial part of the
property of any Issuer or any of its Subsidiaries, or any Issuer or any
of its Subsidiaries shall make any general assignment for the benefit of
creditors;
(i) loss by TWG, the Issuer or any Subsidiary of either of any
gambling license or
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the legal right to operate any gaming establishment related to the
Collateral including, without limitation, those necessary to the Ceska
Kubice, Rozvadov and Znojmo locations, which loss of license is not
remedied within ten (10) days (However, specifically excluding any
license in the State of Louisiana);
(j) indictment of any officer or Key Employee of any TWG, the
Issuer or any Subsidiary of either by any governmental authority;
(k) fraud by an officer or Key Employee of TWG, the Issuer or any
Subsidiary of either;
(l) TWG, the Issuer or any Subsidiary of either does not pay, or
shall be unable to pay, or shall admit in writing its inability to pay
its debts as such debts become due; or
(m) any event which, in the reasonable judgment of
Securityholders of 50% in principal amount of the Securities has a
material adverse effect on the condition, operations, prospects or
properties (financial or otherwise) of the Issuer or any of its
Subsidiaries, taken as a whole.
(n) any event or series of events within any one year period
which causes a reduction or may cause a reduction in the value of the
Collateral in excess of $ 300,000; or
(o) if all or any part of the Collateral shall be further
encumbered, hypothecated, mortgaged or made subject to any other lien or
security interest, except as otherwise provided herein then, and in each
and every such case (other than an Event of Default specified in clause
(g) or (h) above relating to the Issuer), unless the principal of all of
the Securities shall have already become due and payable, either the
Trustee or the Holders of not less than 50% in aggregate principal amount
of the Securities then outstanding hereunder, by notice in writing to the
Issuer (and to the Trustee if given by Securityholders) (the
"Acceleration Notice"), may declare all the Securities and the accrued
interest thereon to be due and payable immediately (the "Acceleration
Date"). If an Event of Default specified in clause (g) or (h) above
relating to the Issuer occurs, all the Securities and the accrued
interest thereon shall be immediately due and payable without any
declaration or other act on the part of the Trustee or any
Securityholder.
SECTION 5.2 COLLECTION OF INDEBTEDNESS BY TRUSTEE; TRUSTEE MAY PROVE
INDEBTEDNESS. The Issuer covenants that (a) in case default shall be made in
the payment of any installment of interest on any of the Securities when such
interest shall have become due and payable, and such default shall have
continued for a period of 15 days, or (b) in case default shall be made in the
payment of all or any part of the principal of any of the
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Securities when the same shall have become due and payable, whether upon
maturity or upon any redemption or by declaration or otherwise -- then upon
demand by the Trustee the Issuer will pay to the Trustee for the benefit of the
Holders of the Securities the whole amount that then shall have become due and
payable on all such Securities for principal or interest, as the case may be
(with interest to the date of such payment upon the overdue principal and, to
the extent that payment of such interest is enforceable under applicable law, on
overdue installments of interest at the Default Rate borne by the Securities);
and in addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including such amounts as shall be due the
Trustee and each predecessor Trustee under Section 6.6.
Until such demand is made by the Trustee, the Issuer may pay the
principal of and interest on the Securities to the registered Holders, whether
or not the Securities be overdue.
In case the Issuer shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any action or proceeding at law or in
equity for the collection of the sums so due and unpaid including the
enforcement of its rights under the Collateral Agreements, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Issuer or other obligor upon the Securities
and collect in the manner provided by law out of the Property of the Issuer or
other obligor upon the Securities, wherever situated, the moneys adjudged or
decreed to be payable.
In case there shall be pending proceedings relative to the Issuer or any
other obligor upon the Securities under Title 11 of the United States Code or
any other applicable Federal or state bankruptcy, insolvency or other similar
law, or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or the property of the Issuer or such other
obligor, or in case of any judicial proceedings relative to the Issuer or other
obligor upon the Securities, or to the creditors or property of the Issuer or
such other obligor, the Trustee, irrespective of whether the principal of the
Securities shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section 5.2, shall be entitled and empowered,
by intervention in such proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Securities, and
to file such other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for
reasonable compensation to the Trustee and each predecessor Trustee, and
their respective agents, attorneys and counsel, and for reimbursement of
all expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee, except as a result of negligence
or bad faith) and of the
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Securityholders allowed in any judicial proceedings relative to the
Issuer or other obligor upon the Securities, or to the creditors or
Property of the Issuer or such other obligor;
(b) unless prohibited by applicable law and regulations, to vote
on behalf of the Holders of the Securities in any election of a trustee
or a standby trustee in arrangement, reorganization, liquidation or other
bankruptcy or insolvency proceedings or Person performing similar
functions in comparable proceedings; and
(c) to collect and receive any moneys or other Property payable
or deliverable on any such claims, and to distribute all amounts received
with respect to the claims of the Securityholders and of the Trustee on
their behalf; and any trustee, receiver, or liquidator, custodian or
other similar official is hereby authorized by each of the
Securityholders to make payments to the Trustee, and, in the event that
the Trustee shall consent to the making of payments directly to the
Securityholders, to pay to the Trustee such amounts as shall be due the
Trustee, and each predecessor Trustee under Section 6.6.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any
Securityholder any plan or reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Securityholder in
any such proceeding except, as aforesaid, to vote for the election of a trustee
in bankruptcy or similar Person.
All rights of action and of asserting claims under this Indenture, or
under any of the Securities, may be enforced by the Trustee without the
possession of any of the Securities or the production thereof on any trial or
other proceedings relative thereto, and any such action or proceedings
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of the Trustee, each predecessor
Trustee and their respective agents and attorneys, shall be for the ratable
benefit of the Holders of the Securities in respect of which such judgment has
been sought.
In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the Holders
of the Securities, and it shall not be necessary to make any Holders of the
Securities parties to any such proceedings.
SECTION 5.3 APPLICATION OF PROCEEDS. Any moneys collected by the
Trustee pursuant to this Article shall be applied in the following order at the
date or dates fixed by the Trustee:
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FIRST: To the payment of all amounts due the Trustee and each
predecessor Trustee under Section 6.6;
SECOND: In case the principal of the Securities shall not have become
and be then due and payable, to the payment of interest in default in the order
of the maturity of the installments of such interest, with interest (to the
extent that such interest has been collected by the Trustee) upon the overdue
installments of interest at the Default Rate borne by the Securities, such
payments to be made ratably to the Persons entitled thereto, without
discrimination or preference;
THIRD: In case the principal of the Securities shall have become and
shall be then due and payable, to the payment of the whole amount then owing and
unpaid upon all the Securities for principal and interest, with interest upon
the overdue principal, and (to the extent that such interest has been collected
by the Trustee) upon overdue installments of interest at the Default Rate borne
by the Securities; and in case such moneys shall be insufficient to pay in full
the whole amount so due and unpaid upon the Securities, then to the payment of
such principal and interest, without preference or priority of principal over
interest, or of interest over principal, or of any installment of interest over
any other installment of interest, or of any Security over any other Security,
ratably to the aggregate of such principal and accrued and unpaid interest; and
FOURTH: To the payment of the remainder, if any, to the Issuer or any
other Person lawfully entitled thereto.
Whenever moneys are to be applied pursuant to this Section 5.3,
such moneys shall be applied at such times, and from time to time, as the
Trustee shall determine, having due regard for the amount of such moneys
available for application, the likelihood of additional moneys becoming
available for such application in the future, and potential expenses relating
to the exercise of any remedy or right conferred on the Trustee by this
Indenture. Whenever the Trustee shall apply such moneys, it shall fix the
date (which shall be an Interest Payment Date unless it shall deem an earlier
date more suitable) upon which such application is to be made, and upon such
date interest on the amounts of principal to be paid on such date shall cease
to accrue. The Trustee shall give such notice as it may deem appropriate of
the deposit with it of any such moneys and of the fixing of any such date.
Whenever the principal of and interest on all Securities have been paid in
full under the provisions of this Section 5.3 and all expenses and charges of
the Trustee have been paid, any balance remaining in the Trust Estate shall
be paid as provided in Section 10.6 of this Indenture.
SECTION 5.4 SUITS FOR ENFORCEMENT. In case an Event of Default has
occurred, has not been waived and is continuing, the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture or the Collateral Agreements by such appropriate judicial proceedings
as the Trustee shall deem most effectual to protect and enforce any of such
rights, either at law or in equity or in bankruptcy or otherwise, whether for
the
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specific enforcement of any covenant or agreement contained in this Indenture or
the Collateral Agreements or in aid of the exercise of any power granted in this
Indenture or the Collateral Agreements or to enforce any other legal or
equitable right vested in the Trustee by this Indenture or the Collateral
Agreements or by law.
SECTION 5.5 RESTORATION OF RIGHTS ON ABANDONMENT OF PROCEEDINGS. In
case the Trustee shall have proceeded to enforce any right under this Indenture
and such proceedings shall have been discontinued or abandoned for any reason,
then and in every such case the Issuer and the Trustee shall be restored
respectively to their former positions and rights hereunder, and all rights,
remedies and powers of the Issuer, the Trustee and the Securityholders shall
continue as though no such proceedings had been taken.
SECTION 5.6 LIMITATIONS ON SUITS BY SECURITYHOLDERS. No Holder shall
have any right by virtue or by availing of any provision of this Indenture to
institute any action or proceeding at law or in equity or in bankruptcy or
otherwise upon or under or with respect to this Indenture, or for the
appointment of a trustee, receiver, liquidator, custodian or other similar
official or for any other remedy hereunder, unless such Holder previously shall
have given to the Trustee written notice of an Event of Default and of the
continuance thereof, as hereinbefore provided, and unless also the Holders of
not less than 25% in aggregate principal amount of the Securities then
outstanding shall have made written request upon the Trustee to institute such
action or proceeding in its own name as trustee hereunder and shall have offered
to the Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby and the Trustee for
30 days after its receipt of such notice, request and offer of indemnity shall
have failed to institute any such action or proceedings and no direction
inconsistent with such written request shall have been given to the Trustee
pursuant to Section 5.9; it being understood and intended, and being expressly
covenanted by the taker and Holder of every Security with every other taker and
Holder and the Trustee, that no one or more Holders of Securities shall have any
right in any manner whatever by virtue or by availing of any provision of this
Indenture to affect, disturb or prejudice the rights of any other Holder of
Securities, or to obtain or seek to obtain priority over or preference to any
other such Holder or to enforce any right under this Indenture, except in the
manner herein provided and for the equal, ratable and common benefit of all
Holders of Securities. For the protection and enforcement of the provisions of
this Section 5.6, each and every Securityholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
SECTION 5.7 UNCONDITIONAL RIGHT OF SECURITYHOLDERS TO INSTITUTE CERTAIN
SUITS. Notwithstanding any other provision in this Indenture and any provision
of any Security, the right of any Holder to receive payment of the principal of
and interest on such Security on or after the respective due dates expressed in
such Security, or to institute suit for the enforcement of any such payment on
or after such respective dates, shall not be impaired or affected without the
consent of such Holder.
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SECTION 5.8 POWERS AND REMEDIES CUMULATIVE; DELAY OR OMISSION NOT WAIVER
OF DEFAULT. Except as provided in Section 2.6, no right or remedy herein or
under the Collateral Agreements conferred upon or reserved to the Trustee or to
the Securityholders is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or under the
Collateral Agreements or now or thereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder or
under the Collateral Agreements, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
No delay or omission of the Trustee or of any Holder to exercise any
right or power accruing upon any Event of Default occurring and continuing as
aforesaid shall impair any such right or power or shall be construed to be a
waiver of any such Event of Default or an acquiescence therein; and subject to
Section 5.6, every power and remedy given by this Indenture or under the
Collateral Agreements or by law to the Trustee or to the Securityholders may be
exercised from time to time, as often as shall be deemed expedient, by the
Trustee or by the Securityholders.
SECTION 5.9 CONTROL BY SECURITYHOLDERS. The Holders of 50% in aggregate
principal amount of the Securities at the time outstanding shall have the right
to direct the time, method, and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee by this Indenture; PROVIDED that such direction shall not be
otherwise than in accordance with law and the provisions of this Indenture;
PROVIDED, FURTHER, that the Trustee is provided with reasonable indemnification
by the Holders prior to taking such action; and PROVIDED, FURTHER, that (subject
to the provisions of Section 6.1) the Trustee shall have the right to decline to
follow any such direction if the Trustee, being advised by counsel, shall
determine that the action or proceeding so directed may not lawfully be taken or
if the Trustee in good faith by its board of directors, the executive committee
or a trust committee of directors or Responsible Officers of the Trustee shall
determine that the action or proceeding so directed would involve the Trustee in
any financial or other liability or if the Trustee in good faith shall so
determine that the actions or forbearances specified in or pursuant to such
direction shall be unduly prejudicial to the interests of Holders of the
Securities not joining in the giving of said direction, it being understood that
(subject to Section 6.1) the Trustee shall have no duty to ascertain whether or
not such actions or forbearances are unduly prejudicial to such Holders.
Nothing in this Indenture shall impair the right of the Trustee in its
discretion to take any action deemed proper by the Trustee and which is not
inconsistent with such direction by Securityholders.
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SECTION 5.10 WAIVER OF PAST DEFAULTS. The Holders of 50% in aggregate
principal amount of the Securities at the time outstanding, by notice to the
Issuer and the Trustee, may on behalf of all Holders, upon providing the Trustee
with reasonable indemnity with respect to any action that might be taken by the
Holders not so consenting, provide forbearances, waive any default or Event of
Default hereunder and its consequences under this Indenture including
acceleration, except a default in the payment of principal of or interest on any
of the Securities. In the case of any such waiver, the Issuer, the Trustee and
the Holders of the Securities shall be restored to their former positions and
rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
Upon any such waiver, such default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured, and not to have occurred for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.
SECTION 5.11 TRUSTEE TO GIVE NOTICE OF DEFAULT, BUT MAY WITHHOLD IN
CERTAIN CIRCUMSTANCES. The Trustee shall transmit to the Securityholders, as
the names and addresses of such Holders appear on the registry books, notice by
mail of all defaults actually known to a Responsible Officer of the Trustee,
such notice to be transmitted within 90 days after the occurrence thereof,
unless such defaults shall have been cured before the giving of such notice (the
term "default" or "defaults" for the purposes of this Section 5.11 being hereby
defined to mean any event or condition which is, or with notice or lapse of time
or both would become, an Event of Default); PROVIDED that, except in the case of
default in the payment of the principal of or interest on any of the Securities,
the Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee, or a trust committee of directors
and/or Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interests of the Securityholders.
SECTION 5.12 RIGHT OF COURT TO REQUIRE FILING OF UNDERTAKING TO PAY
COSTS. All parties to this Indenture agree, and each Holder by its acceptance
thereof shall be deemed to have agreed, that any court may in its discretion
require, in any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.12 shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Securityholder or group of
Securityholders holding in the aggregate more than 25% in aggregate principal
amount of the Securities outstanding, or to any suit instituted by any
Securityholder for the enforcement of the payment of the principal of or
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interest on any Security on or after the due date expressed in such Security.
SECTION 5.13 EXCESS CASH FLOW. All references to payments of principal
and interest include Excess Cash Flow payments required by this Indenture.
ARTICLE 6
CONCERNING THE TRUSTEE
SECTION 6.1 DUTIES AND RESPONSIBILITIES OF THE TRUSTEE; DURING DEFAULT;
PRIOR TO DEFAULT. The Trustee, prior to the occurrence of an Event of Default
and after the curing or waiving of all Events of Default which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. In case an Event of Default has
occurred (which has not been cured or waived) the Trustee shall exercise such of
the rights and powers vested in it by this Indenture, and use the same degree of
care and skill in their exercise as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default which may have occurred:
(i) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Indenture, and
the Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be read
into this Indenture against the Trustee; and
(ii) in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein,
upon any statements, certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but
in the case of any such statements, certificates or opinions which
by any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the
same to determine whether or not they conform to the requirements
of this Indenture;
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(b) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Responsible Officers of
the Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(c) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a 50% in principal amount of
the Securities at the time outstanding relating to the time, method and
place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee,
under this Indenture;
(d) the Trustee shall not be charged with knowledge of an Event
of Default unless a Responsible Officer of the Trustee obtains written
notice of such default; and
(e) whether or not therein expressly so provided, every provision
of this Indenture relating to the conduct or affecting the liability of
or affording protection to the Trustee shall be subject to the provisions
of this Section 6.1.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial or
other liability in the performance of any of its duties or in the exercise of
any of its rights or powers, if repayment of such funds or adequate indemnity
against such liability is not assured to the reasonable satisfaction of the
Trustee.
SECTION 6.2 CERTAIN RIGHTS OF THE TRUSTEE. Subject to Section 6.1:
(a) the Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution,
Officers' Certificate or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture, note,
coupon, security or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) any request, direction, order or demand of the Issuer
mentioned herein shall be sufficiently evidenced by an Officers'
Certificate (unless other evidence in respect thereof be herein
specifically prescribed), and any resolution of the Board of Directors
may be evidenced to the Trustee by a copy thereof certified by the
Secretary or an Assistant Secretary of the Issuer;
(c) the Trustee may consult with counsel and any advice or
Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted to be
taken by it hereunder in good faith and in accordance with such advice or
Opinion of Counsel;
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(d) the Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Indenture at the request, order
or direction of any of the Securityholders pursuant to the provisions of
this Indenture, unless such Securityholders shall have offered to the
Trustee reasonable security and/or indemnity against the costs, expenses
and liabilities which might be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or within
the discretion, rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Event of Default hereunder and
after the curing or waiving of all Events of Default which may have
occurred, the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
appraisal, bond, debenture, note, coupon, security, or other paper or
document unless requested in writing so to do by the Holders of not less
than a majority in aggregate principal amount of the Securities then
outstanding; PROVIDED that if the payment within a reasonable time to the
Trustee of the costs, expenses or liabilities likely to be incurred by it
in the making of such investigation is, in the opinion of the Trustee,
not reasonably assured to the Trustee by the security afforded to it by
the terms of this Indenture, the Trustee may require reasonable indemnity
against such expenses or liabilities as a condition to proceeding; the
reasonable expenses of every such examination shall be paid by the Issuer
or, if paid by the Trustee or any predecessor trustee, shall be repaid by
the Issuer upon demand;
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents
or attorneys, custodians or nominees not regularly in its employ and the
Trustee shall not be responsible for any misconduct or negligence on the
part of any such agent, attorney, custodian or nominee appointed with due
care by it hereunder; and
(h) the Trustee makes no representation as to the validity or
adequacy of this Indenture, the Collateral, or the Securities. It shall
not be accountable for the Issuer's use of the proceeds from the sale of
the Securities, and it shall not be responsible for any statement in the
Securities, other than its authentication. Except required by Section
14.6 of this Indenture, the Trustee shall not be responsible for any
recording, re-recording, filing or refiling of this Indenture or other
document to perfect the Trust Estate's security interest in the
Collateral. The Trustee shall not be bound to ascertain or inquire as to
the performance of the obligations of the Issuer under this Indenture or
the Collateral Agreements. The Trustee may nevertheless require the
Issuer to furnish information regarding performance of its obligations
hereunder and under the Collateral Agreements,
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but is not obligated to do so.
SECTION 6.3 TRUSTEE NOT RESPONSIBLE FOR RECITALS, DISPOSITION OF
SECURITIES OR APPLICATION OF PROCEEDS THEREOF. The recitals contained herein
and in the Securities, except the Trustee's certificates of authentication,
shall be taken as the statements of the Issuer, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representation as to the validity or sufficiency of this Indenture or of the
Securities. The Trustee shall not be accountable for the use or application by
the Issuer of any of the Securities or of the proceeds thereof. The Trustee
shall not be accountable or responsible for any information, statement or
recital in any prospectus, private offering memorandum or any other disclosure
material prepared or distributed in connection with the distribution of the
Securities.
SECTION 6.4 TRUSTEE AND AGENTS MAY HOLD SECURITIES; COLLECTIONS, ETC.
The Trustee or any agent of the Issuer or the Trustee, in its individual or any
other capacity, may become the owner or pledgee of Securities with the same
rights it would have if it were not the Trustee or such agent and, subject to
Sections 6.8 and 6.13, if operative, may otherwise deal with the Issuer and
receive, collect, hold and retain collections from the Issuer with the same
rights it would have if it were not the Trustee or such agent.
SECTION 6.5 MONEYS HELD BY TRUSTEE. Subject to the provisions of
Section 10.6 hereof, all moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required by mandatory provisions of law. Neither the Trustee nor any agent of
the Issuer or the Trustee shall be under any liability for interest on any
moneys received by it hereunder.
SECTION 6.6 COMPENSATION AND INDEMNIFICATION OF TRUSTEE AND ITS PRIOR
CLAIM. The Issuer covenants and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to, reasonable compensation (which shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust) and the Issuer covenants and agrees to pay or reimburse the
Trustee and each predecessor Trustee upon its request for all reasonable
expenses, (including, without limitation, expenses incurred in connection with
notices and other communications to Holders) disbursements and advances incurred
or made by or on behalf of it in accordance with any of the provisions of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its counsel and of all agents and other Persons not regularly
in its employ) except any such expense, disbursement or advance as may arise
from its negligence or bad faith. The Issuer also covenants to indemnify the
Trustee, and each predecessor trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of this
Indenture or the trusts hereunder and its
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duties hereunder, including the costs and expenses of defending itself
against or investigating any claim of liability in the premises. The
obligations of the Issuer under this Section 6.6 to compensate and indemnify
the Trustee and each predecessor trustee and to pay or reimburse the Trustee
and each predecessor trustee for expenses, disbursements and advances shall
constitute additional indebtedness hereunder and shall survive the
satisfaction and discharge of this Indenture. Such additional indebtedness
shall be a senior claim to that of the Securities upon all Property and funds
held or collected by the Trustee as such, except funds held in trust for the
benefit of the Holders of particular Securities, and the Securities are
hereby subordinated to such senior claim. The Trustee and Issuer shall enter
into a Fee Agreement acceptable to the Trustee and Issuer.
SECTION 6.7 RIGHT OF TRUSTEE TO RELY ON OFFICERS' CERTIFICATE, ETC.
Subject to Section 6.1, whenever in the administration of the trusts of this
Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or suffering or omitting any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of bad faith on the part of the
Trustee, be deemed to be conclusively proved and established by an Officers'
Certificate delivered to the Trustee, and such certificate, in the absence of
bad faith on the part of the Trustee, shall be full warrant and protection to
the Trustee for any action taken, suffered or omitted by it under the provisions
of this Indenture upon the faith thereof.
SECTION 6.8 [Reserved]
SECTION 6.9 PERSONS ELIGIBLE FOR APPOINTMENT AS TRUSTEE. The Trustee
hereunder shall at all times be a corporation organized and doing business under
the laws of the United States of America or of any State or territory or of the
District of Columbia having a combined capital and surplus of at least
$50,000,000 (or being a member of a bank holding system with such an aggregate
combined capital and surplus), and which is authorized under such laws to
exercise corporate trust powers and is subject to supervision or examination by
Federal, State, territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then
for the purposes of this Section 6.9, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. Neither the Issuer nor any
Person directly or indirectly controlling, controlled by or under common control
with the Issuer may serve as Trustee hereunder. In case at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section
6.9, the Trustee shall resign immediately in the manner and with the effect
specified in Section 6.10.
SECTION 6.10 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR TRUSTEE.
The Trustee may resign at any time by so notifying the Issuer in
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writing, such resignation to be effective upon the appointment of a successor
Trustee. The Holders of a majority in principal amount of the outstanding
Securities may remove the Trustee by so notifying the Trustee in writing and may
appoint a successor Trustee with the Issuer's consent which consent shall not be
unreasonably withheld. The Issuer may remove the Trustee if:
(a) the Trustee fails to comply with Section 6.8 or 6.9;
(b) the Trustee is adjudged a bankrupt or an insolvent;
(c) a receiver or other public officer takes charge of the
Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason (the Trustee in such event being referred to herein as
the retiring Trustee), the Issuer shall promptly appoint a successor Trustee
that is reasonably acceptable to the Holders of a majority in principal amount
of the Securities. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the Securities may appoint a
successor Trustee to replace the successor Trustee appointed by the Issuer.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Issuer. Immediately after that, the retiring
Trustee shall transfer all property held by it as Trustee to the successor
Trustee (subject to the senior claim provided in Section 6.6 and upon being paid
the compensation due to it in Section 6.6), the resignation or removal of the
retiring Trustee shall become effective, and the successor Trustee shall have
all the rights, powers and duties of the Trustee under this Indenture. A
successor Trustee shall mail notice of its succession to each Securityholder.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuer or the
Holders of at least 25% in principal amount of the outstanding Securities may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 6.8, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section 6.10,
the Issuer's obligations under Section 6.6 shall continue for the benefit of the
retiring Trustee.
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SECTION 6.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR TRUSTEE. Any
successor trustee appointed as provided in Section 6.10 shall execute and
deliver to the Issuer and to its predecessor trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as trustee herein; but, nevertheless, on the written request
of the Issuer or of the successor trustee, the trustee ceasing to act shall upon
being paid the amounts due it under Section 6.6 pay over to the successor
trustee all moneys at the time held by it hereunder and shall execute and
deliver an instrument transferring to such successor trustee all such rights,
powers, duties and obligations. Upon request of any such successor trustee, the
Issuer shall execute any and all instruments in writing for more fully and
certainly vesting in and confirming to such successor trustee all such rights
and powers. Any trustee ceasing to act shall, nevertheless, retain a prior
claim upon all Property or funds held or collected by such trustee to secure any
amounts then due it pursuant to the provisions of Section 6.6.
No successor trustee shall accept appointment as provided in this Section
6.11 unless at the time of such acceptance such successor trustee shall be
qualified under the provisions of Section 6.8 and eligible under the provisions
of Section 6.9. No Trustee under this Indenture shall be personally liable for
any action or omission of any successor trustee.
SECTION 6.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS
OF TRUSTEE. Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to the corporate trust business of the Trustee, shall
be the successor of the Trustee hereunder, PROVIDED that such corporation shall
be qualified under the provisions of Section 6.8 and eligible under the
provisions of Section 6.9, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Securities shall have been
authenticated but not delivered, any such successor to the Trustee may adopt the
certificate of authentication of any predecessor Trustee and deliver such
Securities so authenticated; and, in case at that time any of the Securities
shall not have been authenticated, any successor to the Trustee may authenticate
such Securities either in the name of any predecessor hereunder or in the name
of the successor Trustee; and in all such cases such certificate shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee to authenticate Securities in the name of
any predecessor Trustee shall have; PROVIDED that the right to adopt the
certificate of authentication of any predecessor Trustee shall apply only to its
successor or successors by
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merger, conversion or consolidation.
SECTION 6.13 [Reserved].
SECTION 6.14 INTERVENTION IN LITIGATION. In any judicial proceedings
with respect to the Securities to which the Issuer is a party the Trustee may
intervene on behalf of Holders and shall, subject to Section 6.2 of this
Indenture, intervene if requested in writing by Holders owning not less than
fifty percent (50%) in aggregate principal amount of Securities then
Outstanding.
SECTION 6.15 APPOINTMENT OF CO-TRUSTEES. At any time or times, for
the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Collateral may at the time be located, the Issuer (and in
case of an Event of Default has occurred and is continuing, the Trustee)
shall have the power to appoint one or more persons approved by the Trustee
either to act as co-trustee or co-trustees jointly with the Trustee of all or
any part of the Collateral, or to act as separate trustee or separate
co-trustees of all or any part of the Collateral, and to vest in such person
or persons, in such capacity, such title to the Collateral or any part of it,
and/or such rights, powers, duties, trusts or obligations as the Issuer
and/or the Trustee may consider necessary or desirable subject to the
remaining provisions of this Section 6.15. Upon the request of the Trustee or
of Holder owning not less than fifty percent (50%) in aggregate principal
amount of Securities then Outstanding, the Issuer shall join with the Trustee
in the execution, delivery and performance of all instruments and agreements
necessary or proper to effect such appointment. If the Issuer shall not have
joined in such appointment within 30 days after the receipt by it of a
request so to do, or in case an Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment.
The Issuer shall execute, acknowledge and deliver all such instruments as may
be required by any such co-trustee or separate trustee for more fully
confirming such title, rights, powers, trusts, duties and obligations to such
co-trustee or separate trustee. Every co-trustee or separate trustee shall,
to the extent permitted by law or any applicable contract, be appointed
subject to the following terms, namely:
(i) all rights, powers, trusts, duties and obligations
conferred or imposed upon the trustees shall be conferred or imposed upon
and exercised or performed by the Trustee, or by the Trustee and such
co-trustee, or separate trustee, jointly, as shall be provided in the
instrument appointing such co-trustee or separate trustee, except to the
extent that, under the law of any jurisdiction in which any particular
act or acts are to be performed, the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such act or acts
shall be performed by such co-trustee or separate trustee;
(ii) any request in writing by the Trustee to any co-trustee or
separate trustee to take or to refrain from taking any action under this
Indenture shall be sufficient warrant
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for the taking, or the refraining from taking, of such action by such
co-trustee or separate trustee;
(iii) any co-trustee or separate trustee to the extent permitted
by law may delegate to the Trustee the exercise of any right, power,
trust, duty or obligation, discretionary or otherwise;
(iv) the Trustee at any time, by an instrument in writing, with
the concurrence of the Issuer evidenced by a resolution, may accept the
resignation of or remove any co-trustee or separate trustee appointed
under this Section 6.15, and, in case an Event of Default shall have
occurred and be continuing, the Trustee shall have power to accept the
resignation of, or remove, any such co-trustee or separate trustee
without the concurrence of the Issuer; upon the request of the Trustee,
the Issuer shall join with the Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to
effectuate such resignation or removal; a successor to any co-trustee or
separate trustee so resigned or removed may be appointed in the manner
provided in this Section 6.15;
(v) no trustee under this Indenture shall be personally liable
by reason of any act or omission of any co-trustee or separate trustee
under this Indenture.
(vi) any demand, request, direction, appointment, removal,
notice, consent, waiver or other action in writing executed by any Holder
and delivered to the Trustee shall be deemed to have been delivered to
each such co-trustee or separate trustee; and
(vii) any moneys, papers, securities or other items of personal
property received by any such co-trustee or separate trustee under this
Indenture shall forthwith, so far as may be permitted by law, be turned
over to the Trustee.
Upon the acceptance in writing of appointment by any such co-trustee or separate
trustee, it, she or he shall be vested with the pledge and assignment of the
Collateral and with such rights, powers, duties, trusts or obligations as shall
be specified in the instrument of appointment, jointly with the Trustee (except
insofar as local law makes it necessary for any such co-trustee or separate
trustee to act alone), subject to all the terms of this Indenture. Every such
acceptance shall be filed with the Trustee and the Issuer.
SECTION 6.16 EFFECT OF DEATH, INCAPACITY, RESIGNATION OR REMOVAL
OF CO-TRUSTEE OR SEPARATE TRUSTEE. In case any co-trustee or separate trustee
shall die, become incapable of acting, resign or be removed, the pledge and
assignment of the Collateral and all rights, powers, trusts, duties and
obligations of the co-trustee or separate trustee shall, so far as permitted by
law, vest in and be exercised by the Trustee unless and until a
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successor co-trustee or separate trustee shall be appointed in the same manner
as provided for with respect to the appointment of a successor Trustee pursuant
to Section 6.10 of this Indenture.
ARTICLE 7
CONCERNING THE SECURITYHOLDERS
SECTION 7.1 EVIDENCE OF ACTION TAKEN BY SECURITYHOLDERS. Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by Securityholders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Securityholders in Person or by agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee. Proof of execution of any instrument or of a writing appointing any
such agent shall be sufficient for any purpose of this Indenture and (subject to
Sections 6.1 and 6.2) conclusive in favor of the Trustee and the Issuer if made
in the manner provided in this Article.
SECTION 7.2 PROOF OF EXECUTION OF INSTRUMENTS AND OF HOLDING OF
SECURITIES. Subject to Sections 6.1 and 6.2, the execution of any instrument by
a Securityholder or his agent or proxy may be proved in accordance with such
reasonable rules and regulations as may be prescribed by the Trustee or in such
manner as shall be satisfactory to the Trustee. The holdings of Securities
shall be proved by the Security register or by a certificate of the registrar
thereof.
SECTION 7.3 HOLDERS TO BE TREATED AS OWNERS. The Issuer, the Trustee
and any agent of the Issuer or the Trustee may deem and treat the Person in
whose name any Security shall be registered upon the Security register as the
absolute owner of such Security (whether or not such Security shall be
overdue and notwithstanding any notation of ownership or other writing
thereon) for the purpose of receiving payment of or on account of the
principal of and, subject to the provisions of this Indenture, interest on
such Security and for all other purposes; and neither the Issuer nor the
Trustee nor any agent of the Issuer or the Trustee shall be affected by any
notice to the contrary. All such payments so made to any such Person, or
upon his order, shall be valid, and, to the extent of the sum or sums so
paid, effectual to satisfy and discharge the liability for moneys payable
upon any such Security.
SECTION 7.4 SECURITIES OWNED BY ISSUER DEEMED NOT OUTSTANDING. In
determining whether the Holders of the requisite aggregate principal amount of
Securities have concurred in any direction, consent or waiver under this
Indenture, Securities which are owned by the Issuer or any other obligor on the
Securities or by any Person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Issuer or any
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other obligor on the Securities (other than any holder of Securities on the
Issuance Date) shall be disregarded and deemed not to be outstanding for the
purpose of any such determination, except that for the purpose of determining
whether the Trustee shall be protected in relying on any such direction,
consent or waiver only Securities which the Responsible Officer actually
knows are so owned shall be so disregarded. "Actual knowledge" means the
fact of knowing without a duty to investigate. Securities so owned which
have been pledged in good faith may be regarded as outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Issuer or any
other obligor upon the Securities or any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Issuer or any other obligor of the Securities. In case of a dispute as
to such right, the advice of counsel shall be full protection in respect of
any decision made by the Trustee in accordance with such advice. Upon
request of the Trustee, the Issuer shall furnish to the Trustee promptly an
Officers' Certificate listing and identifying all Securities, if any, known
by the Issuer to be owned or held by or for the account of any of the above
described Persons; and, subject to Section 6.1, the Trustee shall be entitled
to accept such Officers' Certificate as conclusive evidence of the facts
therein set forth.
SECTION 7.5 RIGHT OF REVOCATION OF ACTION TAKEN. At any time prior
to (but not after) the evidencing to the Trustee, as provided in Section 7.1,
of the taking of any action by the Holders of the percentage in aggregate
principal amount of the Securities specified in this Indenture in connection
with such action, any Holder of a Security the serial number of which is
shown by the evidence to be included among the serial numbers of the
Securities the Holders of which have consented to such action may, by filing
written notice at the Corporate Trust Office and upon proof of holding as
provided in this Article, revoke such action so far as concerns such
Security. Except as aforesaid, any such action taken by the Holder of any
Security shall be conclusive and binding upon such Holder and upon all future
Holders and owners of such Security and of any Securities issued in exchange
or substitution therefor, irrespective of whether or not any notation in
regard thereto is made upon any such Security. Any action taken by the
Holders of the percentage in aggregate principal amount of the Securities
specified in this Indenture in connection with such action shall be
conclusively binding upon the Issuer, the Trustee and the Holders of all the
Securities.
ARTICLE 8
SUPPLEMENTAL INDENTURES
SECTION 8.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF SECURITYHOLDERS.
The Issuer, when authorized by a resolution of its Board of Directors, and the
Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto for one or more of the following purposes:
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(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
(c) to provide for the assumption of the Issuer's obligations
hereunder to the Holders in the case of a merger or consolidation
pursuant to Article Nine hereof; or
(d) to make any change that would provide any additional rights
or benefits to the Holders or that does not adversely affect the legal
rights hereunder of any Holder.
The Trustee is hereby authorized to join in the execution of any such
supplemental indenture, to make any further appropriate agreements and
stipulations which may be therein contained and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Trustee shall not be obligated to enter into any such supplemental indenture
which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section
8.1 may be executed without the consent of the Holders of any of the Securities
at the time outstanding, notwithstanding any of the provisions of Section 8.2.
SECTION 8.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF SECURITYHOLDERS.
With the consent (evidenced as provided in Article Seven) of the Holders of not
less than a majority in aggregate principal amount of the Securities at the time
outstanding (including consents obtained in connection with a tender offer or
exchange offer for the Securities), the Issuer, when authorized by a resolution
of the Board of Directors, and the Trustee may, from time to time and at any
time, enter into an indenture or indentures supplemental hereto for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplemental indenture or of modifying in
any manner the rights of the Holders of the Securities; PROVIDED that no such
supplemental indenture shall, without the consent of each Holder affected
thereby (with respect to any Securities held by a non-consenting
Securityholder), (i) reduce the principal amount of Securities whose Holders
must consent to an amendment, supplement or waiver, (ii) reduce the principal of
or change the fixed maturity of any Security or alter the provisions with
respect to the redemption of the Securities, (iii) reduce the rate of or change
the time for payment of interest on any Security, (iv) waive a Default or Event
of Default in the payment of principal of or premium, if any, or interest on the
Securities (except a rescission of acceleration of the Securities by the Holders
of at least a majority in aggregate principal amount of the then outstanding
Securities and a waiver of the payment default that resulted from such
acceleration), (v) make
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any Security payable in money other than that stated in the Securities, (vi)
make any change in the provisions of the Indenture relating to waivers of
past Defaults or the rights of Holders of Securities to receive payments of
principal of or interest on the Securities, (vii) waive a redemption payment
with respect to any Security or (viii) make any change in the foregoing
amendment and waiver provisions.
The Issuer may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any indenture
supplemental hereto. If a record date is fixed, then those Persons who were
Holders at such record date (or their duly designated proxies), and only those
Persons, shall be entitled to consent to such supplemental indenture or to
revoke any consent previously given, whether or not such Persons continue to be
Holders after such record date. No such consent shall be valid or effective for
more than 90 days after such record date.
Upon the request of the Issuer accompanied by a copy of a resolution of
the Board of Directors certified by the Secretary or an Assistant Secretary of
the Issuer authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of the required
Securityholders and other documents, if any, required by Section 7.1, the
Trustee shall join with the Issuer in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such
supplemental indenture.
It shall not be necessary for the consent of the Securityholders under
this Section 8.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to the provisions of this Section 8.2, the
Issuer shall mail a notice thereof by first-class mail to the Holders of
Securities at their addresses as they shall appear on the registry books of the
Issuer, setting forth in general terms the substance of such supplemental
indenture. Any failure of the Issuer to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental indenture.
SECTION 8.3 EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith and the
respective rights, limitations of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Issuer and the Holders of Securities
shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and
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conditions of this Indenture for any and all purposes.
SECTION 8.4 DOCUMENTS TO BE GIVEN TO TRUSTEE. In connection with the
execution and delivery of any supplemental indenture pursuant to this Article
Eight, the Trustee shall receive an Officers' Certificate and an Opinion of
Counsel and, subject to the provisions of Sections 6.1 and 6.2, may rely thereon
as conclusive evidence that any such supplemental indenture complies with the
applicable provisions of this Indenture. The Opinion of Counsel delivered
pursuant to this Section 8.4 shall include a statement that the execution,
delivery and performance of such supplemental indenture by the Issuer shall not
result in a breach or violation of, or constitute a default under, this
Indenture. Subject to Section 6.1, the Trustee may conclusively rely on an
Opinion of Counsel with respect to the effect a supplemental indenture will have
on a Holder under Section 8.1(d).
SECTION 8.5 NOTATION ON SECURITIES IN RESPECT OF SUPPLEMENTAL
INDENTURES. Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to the provisions of this Article may bear a
notation in form approved by the Trustee as to any matter provided for by such
supplemental indenture or as to any action taken at any such meeting. If the
Issuer or the Trustee shall so determine, new Securities so modified as to
conform, in the opinion of the Trustee and the Board of Directors, to any
modification of this Indenture contained in any such supplemental indenture may
be prepared and executed by the Issuer, authenticated by the Trustee and
delivered in exchange for the Securities then outstanding.
ARTICLE 9
NO CONSOLIDATION, MERGER, SALE OR CONVEYANCE
The Issuer shall not consolidate with, or merge with or into (whether or
not such Issuer is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets as an entirety in one or more related transactions to, another
corporation, person or entity. For purposes of this Article 9, the transfer (by
lease, assignment, sale or otherwise), in a single transaction or series of
transactions), of all or substantially all of the properties or assets of one or
more Subsidiaries of the Issuer, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Issuer, shall be deemed to
be the transfer of all or substantially all of the properties and assets of the
Issuer. Nothing herein shall prohibit TWG or Trans World Gaming of Louisiana,
Inc. from selling or otherwise disposing of assets (other than any interest in
Issuer) to satisfy claims of the holders of those certain 12% Secured
Convertible Senior Bonds due 1999.
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ARTICLE 10
SATISFACTION AND DISCHARGE
OF INDENTURE; UNCLAIMED MONEYS
SECTION 10.1 SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture
shall cease to be of further effect as to all outstanding Securities (except
as to (A) rights of registration of transfer and exchange, and the Issuer's
right of optional redemption, (B) substitution of apparently mutilated,
defaced, destroyed, lost or stolen Securities, (C) rights of Holders to
receive payments of principal thereof and interest thereon, (D) the rights,
obligations and immunities of the Trustee hereunder and (E) the rights of the
Securityholders as beneficiaries hereof with respect to the property so
deposited with the Trustee under the provisions of this Section 10.1) when
(a) all outstanding Securities, except lost, stolen or destroyed Securities
which shall have been replaced, as provided in Section 2.6, or paid have been
delivered to the Trustee for cancellation or (b) the Issuer shall have paid
or caused to be paid the principal of and interest on the Securities
outstanding hereunder, as and when the same shall have become due and
payable, or (c) (i) the Securities not theretofore delivered to the Trustee
for cancellation shall have become due and payable, or are by their terms to
become due and payable within one year or are to be called for redemption
under arrangements satisfactory to the Trustee upon the giving of notice of
redemption, and (ii) the Issuer shall have irrevocably deposited or caused to
be deposited with the Trustee, as trust funds, (A) money in an amount or (B)
Government Securities which through the payment of interest and principal
will provide, no later than one day before the due date of payments in
respect of the Securities, money in an amount or (C) a combination thereof,
any one of options (A), (B) or (C) being sufficient in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay the principal
of and interest on the outstanding Securities to the date of maturity or
redemption, as the case may be. The Trustee, on demand of the Issuer
accompanied by an Officers' Certificate and an Opinion of Counsel and at the
cost and expense of the Issuer, shall execute proper instruments
acknowledging such satisfaction of and discharging this Indenture. The
Issuer agrees to reimburse the Trustee for any costs or expenses (including
the reasonable fees of its counsel) there after reasonably and properly
incurred, to compensate the Trustee for any services thereafter reasonably
and properly rendered by the Trustee in connection with this Indenture or the
Securities and to indemnify the trust referred to in Section 10.2(a) for any
tax liability and pay any expenses of such trust not otherwise provided for
pursuant to such Section.
SECTION 10.2 DEFEASANCE AND DISCHARGE OF INDENTURE. The Issuer shall be
deemed to have paid and discharged the entire Indebtedness on all the
outstanding Securities on the date of the deposit referred to in subparagraph
(a) hereof, and the provisions of this Indenture, as it relates to such
outstanding Securities, shall no longer be in effect (and the Trustee, at the
expense of the Issuer, shall execute proper instruments acknowledging the same),
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except as to: (1) rights of registration of transfer and exchange, and the
Issuer's right of optional redemption, (2) substitution of apparently mutilated,
defaced, destroyed, lost or stolen Securities, (3) rights of Holders to receive
payments of principal thereof and interest thereon, (4) the rights, obligations
and immunities of the Trustee hereunder and (5) the rights of the
Securityholders as beneficiaries hereof with respect to the property so
deposited with the Trustee payable to all or any of them; PROVIDED that all of
the following conditions shall have been satisfied:
(a) the Issuer has deposited or caused to be irrevocably
deposited with the Trustee (or another trustee satisfying the
requirements of Section 6.9) as trust funds in trust, specifically
pledged as security for, and dedicated solely to, the benefit of the
Holders of the Securities, (i) money in an amount or (ii) Government
Securities which through the payment of interest and principal in respect
thereof in accordance with their terms will provide not later than one
day before the due date of any payment referred to below money in an
amount, or (iii) a combination thereof, any one of options (i), (ii) or
(iii) being sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge without
consideration of the reinvestment of such interest and after payment of
all federal, state and local taxes or other charges and assessments in
respect thereof payable by the Trustee, the principal of and each
installment of principal and interest on the outstanding Securities as of
the maturity date of such principal or installment of interest;
(b) [reserved];
(c) such deposit shall not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or
instrument to which the Issuer is a party or by which it is bound;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit;
(e) the Issuer has delivered to the Trustee an Opinion of Counsel
to the effect that (i) the Holders of the Securities shall not recognize
income, gain or loss for Federal income tax purposes as a result of such
deposits, defeasance and discharge and will be subject to Federal income
tax on the same amount and in the same manner and at the same times as
would have been the case if such deposit, defeasance and discharge had
not occurred, (ii) the creation of the trust will not violate the
Investment Company Act of 1940, as amended, and (iii) Holders of the
Securities will have a valid, first priority lien on the trust funds; and
(f) the Issuer has delivered to the Trustee an Officers'
Certificate and an Opinion
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of Counsel, each stating that all conditions precedent provided for
relating to the defeasance contemplated by this provision have been
complied with.
SECTION 10.3 DEFEASANCE OF CERTAIN OBLIGATIONS. The Issuer may omit to
comply with any term, provision or condition set forth in Sections 3.5 to 3.13
inclusive, and will not be subject to the Events of Default described under
clauses (d), (e) and (f) of Section 5.1 hereof, with respect to the Securities,
if all of the following conditions have been satisfied:
(a) the Issuer has deposited or caused to be irrevocably
deposited with the Trustee (or another trustee satisfying the
requirements of Section 6.9) as trust funds in trust, specifically
pledged as security for, and dedicated solely to, the benefit of the
Holders of the Securities, (i) money in an amount, or (ii) Government
Securities which through the payment of interest and principal in respect
thereof in accordance with their terms will provide not later than one
day before the due date of any payment referred to below money in an
amount, or (iii) a combination thereof, any one of options (i), (ii) or
(iii) being sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge without
consideration of the reinvestment of such interest and after payment of
all federal, state and local taxes or other charges and assessments in
respect thereof payable by the Trustee, the principal of and each
installment of principal and interest on the outstanding Securities on
the maturity date of such principal or installment of principal or
interest;
(b) [reserved];
(c) such deposit shall not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or
instrument to which the Issuer is a party or by which it is bound;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit;
(e) the Issuer has delivered to the Trustee an Opinion of Counsel
to the effect that (i) the Holders of the Securities shall not recognize
income, gain or loss for Federal income tax purposes as a result of such
deposit and defeasance of certain obligations and will be subject to
Federal income tax on the same amount and in the same manner and at the
same times as would have been the case if such deposit and defeasance had
not occurred, (ii) the creation of the trust will not violate the
Investment Company Act of 1940, as amended, and (iii) Holders of the
Securities will have a valid, first-priority lien on the trust funds; and
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(f) the Issuer has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the defeasance contemplated by
this Section 10.3 have been complied with.
SECTION 10.4 APPLICATION BY TRUSTEE OF FUNDS DEPOSITED FOR PAYMENT OF
SECURITIES. Subject to Section 10.6, all moneys and Governmental Securities
deposited with the Trustee pursuant to Sections 10.1, 10.2 and 10.3 shall be
held in trust and applied by it to the payment, either directly or through any
paying agent (including the Issuer acting as paying agent), to the Holders of
the particular Securities for the payment or redemption of which such moneys
have been deposited with the Trustee, of all sums due and to become due thereon
for principal and interest; but such money and Government Securities need not be
segregated from other funds except to the extent required by law.
SECTION 10.5 REPAYMENT OF MONEYS HELD BY PAYING AGENT. In connection
with the satisfaction and discharge of this Indenture all moneys and Government
Securities then held by any paying agent under the provisions of this Indenture
shall, upon demand of the Issuer, be repaid to the Issuer or paid to the Trustee
and thereupon such paying agent shall be released from all further liability
with respect to such moneys and Government Securities.
SECTION 10.6 RETURN OF MONEYS HELD BY TRUSTEE AND PAYING AGENT UNCLAIMED
FOR ONE YEAR. Any moneys and Government Securities deposited with or paid to
the Trustee or any paying agent for the payment of the principal of or interest
on any Security and not applied but remaining unclaimed for one year after the
date upon which such principal or interest shall have become due and payable
shall, upon the written request of the Issuer and unless otherwise required by
mandatory provisions of applicable escheat or abandoned or unclaimed property
law, be repaid to the Issuer by the Trustee or such paying agent, and the Holder
of such Security shall, unless otherwise required by mandatory provisions of
applicable escheat or abandoned or unclaimed property laws, thereafter look only
to the Issuer for any payment which such Holder may be entitled to collect, and
all liability of the Trustee or any paying agent with respect to such moneys and
Government Securities shall thereupon cease; PROVIDED, HOWEVER, that the Trustee
or such paying agent before being required to make any such repayments may, at
the expense of the Issuer, cause to be published once, in a newspaper published
in the English language, customarily published on each Business Day and of
general circulation in the Borough of Manhattan, the City of New York, notice
that such money remains unclaimed and that after a date specified therein, which
shall not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Issuer. In the event
any Securities are not presented for payment when due, either at maturity or at
the date fixed for redemption thereof or otherwise, if funds sufficient to pay
such Securities shall have been made available to the Trustee or Paying Agent
for the benefit of the Holders thereof, all liability of the Issuer to the
Holders for payment of such Securities
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shall terminate and be completely discharged. The Trustee shall hold such
segregated funds, without liability for interest thereon, for the benefit of the
Holders, who shall thereafter be restricted exclusively to such funds for the
satisfaction of any claim of whatever nature on their part under this Indenture
or relating to such Securities.
SECTION 10.7 REINSTATEMENT. If the Trustee or paying agent is unable to
apply any moneys or Government Securities in accordance with this Article Ten by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Issuer's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this Article Ten until such time as the Trustee or paying agent is
permitted to apply all such moneys or Government Securities in accordance with
this Article; PROVIDED, HOWEVER, that if the Issuer has made any payment of
principal of or interest on any Securities because of the reinstatement of its
obligations, the Issuer shall be subrogated to the rights of the Holders of such
Securities to receive such payment from the moneys or Government Securities held
by the Trustee or paying agent.
ARTICLE 11
MISCELLANEOUS PROVISIONS
SECTION 11.1 INCORPORATORS, SHAREHOLDERS, OFFICERS AND DIRECTORS OF
ISSUER EXEMPT FROM INDIVIDUAL LIABILITY. No recourse under or upon any
obligation, covenant or agreement contained in this Indenture, or in any
Security, or because of any indebtedness evidenced thereby, shall be had against
any incorporator, as such, or against any past, present or future stockholder,
officer, employee, director, or creditor, as such, of the Issuer or the Trustee
or any subsidiary of the Issuer or any successor of the Issuer or the Trustee or
any such subsidiary, whether directly or through the Issuer or any subsidiary of
the Issuer or any successor of the Issuer or any such subsidiary, under any rule
of law, statute or constitutional provision or by the enforcement of any
assessment or by any legal or equitable proceeding or otherwise, all such
liability being expressly waived and released by the acceptance of the
Securities by the Holders thereof and as part of the consideration for the issue
of the Securities.
SECTION 11.2 PROVISIONS OF INDENTURE FOR THE SOLE BENEFIT OF PARTIES AND
SECURITYHOLDERS. Nothing in this Indenture or in the Securities, express or
implied, shall give or be construed to give to any Person, firm or corporation,
other than the parties hereto and their successors and the Holders of the
Securities, any legal or equitable right, remedy or claim under this Indenture
or under any covenant or provision herein contained.
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SECTION 11.3 SUCCESSORS AND ASSIGNS OF ISSUER BOUND BY INDENTURE. All
the covenants, stipulations, promises and agreements in this Indenture contained
by or on behalf of the Issuer shall bind its successors and assigns, whether so
expressed or not.
SECTION 11.4 NOTICES AND DEMANDS ON ISSUER, TRUSTEE AND SECURITYHOLDERS.
Any notice or demand which by any provision of this Indenture is required or
permitted to be given or served by the Trustee or by the Holders of Securities
to or on the Issuer shall be given or served by (i) delivery in Person, (ii)
telecopy (confirmed by copy sent by first-class mail) or (iii) certified or
registered mail, return receipt requested (except as otherwise specifically
provided herein), in each case addressed (until another address of the Issuer is
filed by the Issuer with the Trustee) to Trans World Gaming Corp., One Penn
Plaza, Suite 1503, New York, NY 10119, Attention: President (Telecopy No.:
(212) 563-3380). Any notice, direction, request or demand by the Issuer or any
Securityholder to or upon the Trustee shall be deemed to have been sufficiently
given or made, for all purposes, if given or served by one of the methods
described in the first sentence of this Section 11.4, addressed to the Corporate
Trust Office (Telecopy No.: 212-754-1303).
Where this Indenture provides for notice to Holders, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class postage prepaid, to each Holder entitled thereto, at his
last address as it appears in the Security register. Any notice which is
delivered, telecopied (and confirmed by mail) or mailed in the manner herein
provided shall be conclusively presumed to have been given, whether or not the
addressee receives such notice. In any case where notice to Holders is given by
mail, neither the failure to mail such notice, nor any defect in any notice so
mailed to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case, by reason of the suspension of or irregularities in regular mail
service, it shall be impracticable to mail notice or confirm by mail telecopy
notice to the Issuer and Securityholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
SECTION 11.5 COMPLIANCE CERTIFICATES AND OPINIONS OF COUNSEL; STATEMENTS
TO BE CONTAINED THEREIN. Upon an application or demand by the Issuer to the
Trustee to take any action under any of the provisions of this Indenture, the
Issuer shall furnish to the Trustee (i) an Officers' Certificate stating that
all conditions precedent provided for
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in this Indenture relating to the proposed action have been complied with and
(ii) an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent have been complied with and (iii) if appropriate, an
Accountants' Certificate stating that in the opinion of such accountants all
such conditions precedent have been complied with, except that in the case of
any such application or demand as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or demand, no additional certificate or opinion need be
furnished.
Each certificate or opinion provided for in this Indenture and delivered
to the Trustee with respect to compliance with a condition or covenant provided
for in this Indenture shall include (a) a statement that the Person making such
certificate or opinion has read such covenant or condition, (b) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based, (c) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with and (d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with.
Any certificate, statement or opinion of an officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of
or representations by counsel, unless such officer knows that the certificate or
opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or in
the exercise of reasonable care should know that the same are erroneous. Any
certificate, statement or opinion of counsel may be based, insofar as it relates
to factual matters and information which is in the possession of the Issuer,
upon the certificate, statement or opinion of or representations by an officer
or officers of the Issuer, unless such counsel knows that the certificate,
statement or opinion or representations with respect to the matters upon which
his certificate, statement or opinion may be based as aforesaid are erroneous,
or in the exercise of reasonable care should know that the same are erroneous.
Any certificate, statement or opinion of an officer of the Issuer or of
counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Issuer unless such officer or counsel, as the
case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.
Any certificate or opinion of any independent firm of public accountants
filed with the Trustee shall contain a statement that such firm is independent.
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SECTION 11.6 PAYMENTS DUE ON SATURDAYS, SUNDAYS AND HOLIDAYS. If the
date of maturity of interest on or principal of the Securities or the date
fixed for redemption of any Security shall not be a Business Day, then
payment of interest or principal need not be made on such date, but may be
made on the next succeeding Business Day with the same force and effect as if
made on the date of maturity or the date fixed for redemption, and no
interest shall accrue for the period after such date.
SECTION 11.7 [Reserved].
SECTION 11.8 APPLICABLE LAW. NEW YORK LAW TO GOVERN. THIS INDENTURE
AND EACH SECURITY SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE
OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS
(OTHER THAN CHOICE OF LAW RULES) OF SAID STATE. THE ISSUER HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW
YORK STATE COURT SITTING IN NEW YORK CITY IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS INDENTURE OR THE SECURITIES AND THE ISSUER HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN ANY SUCH UNITED STATES FEDERAL OR NEW YORK STATE
COURT. THE ISSUER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDINGS IN SUCH RESPECTIVE JURISDICTIONS. THE ISSUER
IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY COURT IN OR OF THE STATE OF NEW YORK BY THE DELIVERY
OF COPIES OF SUCH PROCESS TO THE ISSUER, AT ITS ADDRESS SPECIFIED IN SECTION
11.4 HEREOF OR BY CERTIFIED MAIL DIRECT TO SUCH ADDRESS.
WHENEVER POSSIBLE EACH PROVISION OF THIS INDENTURE SHALL BE INTERPRETED IN
SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY
PROVISION OF THIS INDENTURE SHALL BE PROHIBITED BY OR INVALID UNDER APPLICABLE
LAW, SUCH PROVISION SHALL BE INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR
INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE
REMAINING PROVISIONS OF THIS INDENTURE. WHENEVER IN THIS NOTE REFERENCE IS MADE
TO THE ISSUER OR A HOLDER, SUCH REFERENCE SHALL BE DEEMED TO INCLUDE, AS
APPLICABLE, A REFERENCE TO THEIR
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RESPECTIVE SUCCESSORS AND ASSIGNS. THE PROVISIONS OF THIS INDENTURE SHALL BE
BINDING UPON AND SHALL INURE TO THE BENEFIT OF SUCH SUCCESSOR AND ASSIGNS. THE
ISSUER'S SUCCESSORS AND ASSIGNS SHALL INCLUDE, WITHOUT LIMITATION, A RECEIVER,
TRUSTEE OR DEBTOR IN POSSESSION FOR THE ISSUER.
SECTION 11.9 COUNTERPARTS. This Indenture may be executed in any number
of counterparts, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
SECTION 11.10 EFFECT OF HEADINGS. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
SECTION 11.11 WAIVER OF USURIOUS INTEREST. All agreements between
Issuer and Holders, whether now existing or hereafter arising and whether
written or oral, are hereby limited so that in no contingency, whether by reason
of demand or acceleration of the final maturity date of the Securities or
otherwise, shall the interest contracted for, charged, received, paid or agreed
to be paid to Holders exceed the maximum amount permissible under the laws of
the State of New York (hereinafter the "Applicable Law"). If, from any
circumstance whatsoever, interest would otherwise be payable to the Holders in
excess of the maximum amount permissible under Applicable Law, the interest
payable to the Holders shall be reduced to the maximum amount permissible under
Applicable Law, and if from any circumstance the Holders shall ever receive
anything of value deemed interest by the Applicable Law in excess of the maximum
amount permissible under the Applicable Law, an amount equal to the excessive
interest shall be applied to the reduction of the principal hereof and not to
the payment of interest, or if such excessive amount of interest exceeds the
unpaid principal balance of principal hereof, such excess shall be refunded to
Issuer. All interest paid or agreed to be paid to the Holders shall, to the
extent permitted by the Applicable Law, be amortized, prorated, allocated and
spread throughout the full period (including any renewal or extension) until
payment in full of the principal so that the interest hereon for such full
period shall not exceed the maximum amount permissible under the Applicable Law.
The Holders expressly disavow any intent to contract for, charge or receive
interest in an amount which exceeds the maximum amount permissible under the
Applicable Law. This paragraph shall control agreements between the Issuer and
the Holders.
SECTION 11.12 Authority to Act. The Issuer and the Trustee acknowledges
that each is subject to Section 3.27 of the Primary Indenture.
ARTICLE 12
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REDEMPTION OF SECURITIES
SECTION 12.1 RIGHT OF OPTIONAL REDEMPTION; PRICES. Subject to the terms
and conditions of this Indenture, the Issuer at its option may redeem all or any
portion of, the Securities upon payment of the amount of principal redeemed
together with accrued and unpaid interest to the date fixed for redemption
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date). To exercise this
option to redeem the Securities, the Issuer shall give the Trustee written
notice thereof not less than 30 but not more than 60 days prior to the
redemption date selected by the Issuer and specified in such notice. The
redemption price shall be equal to unpaid principal and accrued and unpaid
interest to the date fixed for redemption. If less than all of the Securities
are to be redeemed, then the Issuer shall specify the principal amount of
Securities to be redeemed.
If less than all of the Outstanding Securities are to be called for
redemption, Securities or portions thereof to be redeemed shall be selected by
the Trustee on a reasonably proportionate basis, in minimum amounts of $100.00,
according to the principal amounts of Securities Outstanding.
SECTION 12.2 NOTICE OF REDEMPTION. Notice of redemption to the Holders
of Securities to be redeemed as a whole shall be given by mailing notice of such
redemption by first-class mail, postage prepaid, at least 30 and not more than
60 days prior to the date fixed for redemption to such Holders of Securities at
their last addresses as they shall appear upon the registry books. Any notice
which is mailed in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the Holder receives the notice.
Failure to give notice by mail, or any defect in the notice to the Holder of any
Security designated for redemption as a whole or in part, shall not affect the
validity of the proceedings for the redemption of any other Security.
The notice of redemption to each such Holder shall specify the principal
amount of each Security held by such Holder to be redeemed, the date fixed for
redemption, the redemption price, the place or places of payment, that payment
will be made upon presentation and surrender of such Securities, that interest
accrued to the date fixed for redemption to the extent provided in
Section 12.1 will be paid as specified in said notice, that on and after said
date interest thereon will cease to accrue.
The notice of redemption of Securities to be redeemed shall be given by
the Issuer or, at the Issuer's request, by the Trustee in the name and at the
expense of the Issuer. The Issuer shall notify the Trustee of such redemption
at least 15 days prior to the date the notice of redemption is to be sent to the
Holders and shall specify in such notice whether the Trustee is to give such
notice.
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At least one Business Day prior to the redemption date specified in the
notice of redemption given as provided in this Section 12.2, the Issuer will
deposit with the Trustee or with one or more paying agents (or, if the Issuer is
acting as paying agent, set aside, segregate and hold in trust as provided in
Section 3.4) in immediately available funds an amount of money sufficient to
redeem in immediately available funds on the redemption date all the Securities
so called for redemption at the appropriate redemption price, together with
accrued interest to the date fixed for redemption to the extent provided in
Section 12.1.
SECTION 12.3 PAYMENT OF SECURITIES CALLED FOR REDEMPTION. If notice of
redemption has been given as above provided, the Securities shall become due and
payable on the date and at the place stated in such notice at the applicable
redemption price, together with interest accrued to the date fixed for
redemption, and on and after said date (unless the Issuer shall default in the
payment of such Securities at the redemption price, together with interest
accrued to said date to the extent provided in Section 12.1) interest on the
Securities or portions of Securities so called for redemption shall cease to
accrue and, except as provided in Sections 6.5 and 10.6, such Securities shall
cease from and after the date fixed for redemption to be entitled to any benefit
or security under this Indenture, and the Holders thereof shall have no right in
respect of such Securities except the right to receive the redemption price
thereof and unpaid interest to the date fixed for redemption to the extent
provided in Section 12.1. On presentation and surrender of such Securities at a
place of payment specified in said notice, said Securities shall be paid and
redeemed by the Issuer at the applicable redemption price, together with
interest accrued thereon to the date fixed for redemption; PROVIDED that any
semi-annual payment of interest becoming due on the date fixed for redemption
shall be payable to the Holders of such Securities registered as such on the
relevant record date subject to the terms and provisions of Section 2.4 hereof.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal shall, until paid or duly provided for,
bear interest from the date fixed for redemption at the rate borne by the
Security.
SECTION 12.4 EXCLUSION OF CERTAIN SECURITIES FROM ELIGIBILITY FOR
SELECTION FOR REDEMPTION. Securities shall be excluded from eligibility for
selection for redemption if they are identified by registration and certificate
number in an Officer's Certificate and delivered to the Trustee at least 40 days
prior to the last date on which notice of redemption may be given as being owned
of record and beneficially by, and not pledged or hypothecated by, (a) the
Issuer or (b) an entity specifically identified in such written statement as
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Issuer (other than a holder of the Securities on the
Issuance Date).
SECTION 12.5. PARTIAL REDEMPTION OF SECURITIES. In case of a partial
redemption of Securities, upon presentation and surrender of such Security by
the Holder thereof
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or its attorney duly authorized in writing (with due endorsement by, or a
written instrument of transfer in form satisfactory to the Trustee), the Trustee
shall authenticate and deliver to or upon the order of such Holder, without
change there for, for the unredeemed portion of the principal amount of the
Security or Securities so surrendered, a Security or Securities, at the option
of such Holder, of like tenor. The Trustee shall cancel the Securities
surrendered.
ARTICLE 13
[Reserved]
ARTICLE 14
SECURITY
SECTION 14.1 PLEDGE AND SECURITY INTEREST. "Collateral" means all of
the assets of the Cyprus Entity and Trans World Leasing Limited, a 66 percent
(66%) interest in all of the Capital Stock of 21st Century Resorts, a.s., a
100 per cent (100%) interest in all of the Capital Stock of Trans World
Leasing Limited and the Cyprus Entity, and, as to all other direct
Subsidiaries of the Issuer, whether in existence at the time of the closing
of this Indenture or thereafter formed, reconstituted or otherwise acquired
in any manner, whether or not named herein, a 66 per cent (66%) interest in
any such entity where a pledge of Capital Stock of a greater percentage would
create "deemed dividend" for U.S. tax purposes and 100 per cent (100%)
interest in the Capital Stock where the pledge will not create such a "deemed
dividend", as well as a pledge of all assets of any Subsidiary when such a
pledge will not create a "deemed dividend. All references herein to the
"Security Interest" and to the "Lien of this Indenture" shall be deemed to
mean and refer to the Liens granted to the Trustee and the Holders pursuant
to the terms of the Collateral Agreements.
SECTION 14.2 SECURITY FOR OBLIGATION. The Security Interest secures
among other things the payment and performance of all obligations of the Issuer
now or hereafter existing under the Securities, the Collateral Agreements or
this Indenture, including without limitation the prompt payment when due
(whether by acceleration or otherwise) of the principal of or interest on the
Securities (all such obligations of the Issuer being herein called the
"Obligations").
SECTION 14.3 PERFECTION OF SECURITY INTEREST.
(a) The Issuer shall cause this Indenture, the Collateral
Agreements, financing
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statements, continuation statements, notifications of secured
transactions and other instruments with respect to the Collateral to be
promptly executed, recorded, registered and filed and to be kept
recorded, registered and filed in such manner and in such places as may
be required by law, and take all such other actions as may be required,
including delivery of possession of certificates evidencing the capital
stock of the Issuer's direct Subsidiaries to the Trustee, and shall pay
all taxes and fees incidental thereto.
(b) Because the Issuer cannot ascertain as of the date of
execution of this Indenture the exact documents which the appropriate
governmental authorities in the Czech Republic, Gibraltar and Cyprus may
require for perfection of the Security Interest, the Issuer agrees, at
its cost, to the preparation, execution and filing of any additional
documents necessary to grant and perfect the Security Interest. Because
certain of the entities to be pledged are not yet direct Subsidiaries of
the Issuer or may not yet exist, the Issuer agrees, at its cost
(including reimbursement of costs and expenses incurred by the Trustee
and counsel for the Securityholders), post-closing, to take all steps
necessary to cause those entities to become direct Subsidiaries of the
Issuers (to the extent permissible by applicable law or regulation and so
long as no gambling licenses or other tangible or intangible rights are
jeopardized) and to grant a Security Interest in compliance with Section
3.11 in the sole discretion of the Issuer or to otherwise be created and
to grant and perfect the Security Interest as to a 66 percent (66%)
interest in such entities.
SECTION 14.4 NO DISPOSITION OF COLLATERAL; RELEASE OF LIEN OF INDENTURE.
Neither Issuer nor any Subsidiary thereof may sell or otherwise dispose of
Collateral, including the Capital Stock of or an interest in any of its direct
and indirect Subsidiaries, except pursuant to Section 3.12.
SECTION 14.5 OTHER LIENS. The Issuer will not create or permit to exist
any Lien upon or with respect to any of the Collateral, or upon (a) any of the
real or personal property of such named entities, (b) or in any of the real or
personal property of any current or future direct or indirect Subsidiary of
Issuer, except for any Lien permitted by the terms hereof or of the Collateral
Agreements.
SECTION 14.6 TRUSTEE APPOINTED ATTORNEY-IN-FACT. The Trustee shall take
any action required or permitted to be taken by the Trustee under the Collateral
Agreements if directed in writing to do so by the Holders of at least 50% in
aggregate principal amount of the Securities then outstanding; provided,
however, that no action shall be taken which, in the Opinion of Counsel, impairs
the enforceability, priority or perfection of the Lien of this Indenture as to
the Collateral then subject thereto, unless directed by all Holders.
SECTION 14.7 RETURN OF COLLATERAL. Upon the payment in full of the
obligations or upon satisfaction and discharge of this Indenture in accordance
with Article 10
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(and the Trustee receiving written confirmation thereof satisfactory to the
Trustee), the Trustee, subject to the terms of the Collateral Agreements, shall
forthwith take all necessary action to return any Collateral in the Trustee's
possession to the Issuer or its Subsidiaries, as the case may be, and release
the Liens thereon and Security Interests therein.
SECTION 14.8 DEFAULT REMEDIES. The Trustee shall have the rights set
forth in the Collateral Agreements to exercise the remedies to realize upon the
Collateral set forth in the Collateral Agreements.
SECTION 14.9 PROCEEDS. The proceeds of any sale or other disposition of
the Collateral received by the Trustee pursuant to the terms of the Collateral
Agreements shall be applied by the Trustee:
First: to the payment of the costs and expenses of such sale,
including a reasonable compensation to the Trustee, and its agents,
attorneys and counsel, and of all charges, expenses, liabilities and
advances incurred or made by the Trustee under this Indenture;
Second: to the reimbursement of the Trustee for any sum advanced
by the Trustee to the Issuer in order to preserve the Collateral together
with interest at the rate charged publicly announced by Citibank, N.A.
from time to time in New York, New York as its reference rate; and
Third: as provided in Section 5.3.
SECTION 14.10 DEFICIENCY. The Issuer shall remain liable for any
unfulfilled obligations, together with interest thereon, in accordance with and
subject to the provisions of the Securities and this Indenture.
SECTION 14.11 TRUSTEE'S DUTIES. The powers conferred upon the Trustee
by this Article 14 are solely to protect its interest and the interest of the
Holders in the Collateral and shall not impose any duty upon the Trustee to
exercise any such powers except as expressly provided in this Indenture or in
the Collateral Agreements. The Trustee shall be under no duty to the Issuer
whatsoever to make or give any presentment, demand for performance, notice of
nonperformance, protest, notice of protest, notice of dishonor, or other notice
or demand in connection with any Collateral or the Obligations, or to take any
steps necessary to preserve any rights against prior parties except as expressly
provided in this Indenture or in the Collateral Agreements. The Trustee shall
not be liable to the Issuer for failure to collect or realize upon any or all of
the obligations or Collateral, or for any delay in so doing, nor shall the
Trustee be under any duty to the Issuer to take any action whatsoever with
regard thereto. The Trustee shall have no duty to the Issuer to comply with any
recording, filing, or other legal requirements necessary
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to establish or maintain the validity, priority or enforceability of, or the
Trustee's rights in or to, any of the Collateral.
SECTION 14.12 SPECIAL TRUSTEE POWERS DUE TO ENVIRONMENTAL CONDITIONS.
The Trustee shall have the power to settle or compromise at any time any and all
claims against the Trust Estate or the Trustee (either in its corporate
capacity, or in the personal capacity of the individuals serving as trust
officers on behalf of the Trustee), which may be asserted by any governmental
body or private party involving the alleged violation of any applicable
Environmental Laws affecting the Collateral or any other property held in trust
with respect to or in connection with the Collateral. Notwithstanding any
provision in this subparagraph to the contrary, the Trustee may not settle or
compromise any claim against the Trust Estate or the Trustee which may result in
any liability being asserted against Issuer without Issuer having had a
reasonable opportunity to resolve the alleged violation, which reasonable
opportunity shall not exceed 60 days from the date on which Issuer shall have
been notified of such alleged violation by a governmental body or a private
party; provided, however, in the event that Issuer shall be in default under the
Indenture or under the Collateral Agreements, then it shall have none of the
rights afforded to it in this paragraph.
The Trustee shall not be personally liable to the Holders or any other
Person for any decrease in value of the Collateral by reason of the Trustee's
compliance with any Applicable Environmental Laws (as defined in the Collateral
Agreements), specifically including any reporting requirement under such law.
Neither the acceptance by the Trustee of property nor failure by the Trustee to
inspect property shall be deemed to create any inference as to whether or not
there is or may be any liability under any applicable Environmental Laws with
respect to such property.
Notwithstanding anything in this Indenture or the Collateral Agreements
to the contrary, the Trustee shall not be required to initiate foreclosure
proceedings with respect to the Collateral, and shall not otherwise be required
to acquire possession of, or take other action with respect to the Collateral
which could cause the Trustee to be considered an "owner" or "operator" within
the meaning of the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended from time to time, or any other law dealing
with the environmental matters or hazardous substances, unless the Trustee has
sufficient comfort, based on previous determinations by experts on which it can
rely, including environmental report, that:
(a) there are no circumstances present at the Collateral relating
to the use, management or disposal of any hazardous substances, hazardous
materials, hazardous wastes or petroleum-based materials for which
investigation, testing, monitoring, contaminant, clean up or remedial
action could be required under any environmental laws, or that if any
such materials are present for which such action could be required, that
it would be nevertheless in the best economic interest of the Trustee and
the Holders
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to take such actions with respect to the Collateral;
(b) if the Trustee has determined that it would be in the best
economic interest of the Trustee and the Holders, the Trustee must be
satisfied that they will suffer no unreimbursed liabilities and will be
adequately reimbursed for all liabilities, expenses and costs from
available funds in Trustee's possession and control; and
(c) if the Trustee has determined that it would be in the best
economic interest of the Trustee and the Holders to take any such action
and its aforementioned liabilities, expenses and costs are adequately
reimbursed, the Trustee has so notified the Holders and has not received,
within 30 days of such notification, instructions from owners of fifty
percent (50%) or more in principal amount of the then outstanding
Securities directing it not to take such action.
If the foregoing conditions are not satisfied and the Trustee is not willing
to waive such conditions and initiate foreclosure proceedings, then the
Trustee shall take such actions as are reasonably necessary or appropriate in
order to facilitate the appointment of a co-trustee, being a person or entity
designated by the Holders of a majority in principal amount of the Securities
then outstanding and to assign to such person or entity (subject, however, to
the trusts created pursuant to the Indenture) the beneficial interest under
the Collateral Agreements which secures the obligations under the Indenture,
for the limited purpose of conducting a foreclosure of such Collateral
Agreements and receiving and holding any title to real property obtained as a
result of such foreclosure. Persons or entities appointed as co-trustees or
agents of the Trustee pursuant to this Section shall not be required to meet
the criteria of Section 6.9 of this Indenture, or any ther criteria, in order
to serve as such.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and, where appropriate, their respective corporate seals to be
hereunto affixed and attested, all as of March 31, 1998.
[CORPORATE SEAL] TWG INTERNATIONAL U.S. CORPORATION
Attest: By:
By: --------------------------------
------------------------- By:
--------------------------------
U.S. TRUST COMPANY OF TEXAS, N.A., as Trustee
By:
--------------------------------
(Name and Title)
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CONSENT TO AMEND INDENTURE, BONDS AND WARRANTS
This Consent to Amend Indenture, Bonds and Warrants is entered into as of
March 25, 1998 by and between Trans World Gaming Corp. (the "Parent"), Trans
World Gaming of Louisiana Inc. (the "Subsidiary"), U.S. Trust Company of Texas,
N.A., solely in its capacity as Indenture Trustee (the "Trustee") and the
undersigned (the "Holder"). The Parent and the Subsidiary shall be referred to
herein as the "Company". Exhibits attached hereto are by this reference
incorporated herein.
BACKGROUND
1. Pursuant to that certain Subscription Agreement dated July 1,
1996, those parties listed on Exhibit "A" hereto (collectively the "Holders")
purchased those certain 12% Secured Convertible Senior Bonds in the sum of
$4,800,000.00 (the "1996 Notes") and warrants to purchase Common Stock of the
Parent (the "1996 Warrants") issued by the Company. An Indenture was executed
in association with the 1996 Notes (the "1996 Indenture").
2. The Parent has entered into that certain Subscription Agreement
(the "$17 Million Agreement") dated as of March 16, 1998 pursuant to which it
proposes to issue $15 to $17 million of Notes, together with warrants to
purchase common stock of the Parent. The parties to the $17 Million Agreement
have made it a condition of that $17 Million Agreement that the 1996 Notes, 1996
Warrants and 1996 Indenture (collectively the "1996 Documents") be modified as
set forth herein.
3. Attached hereto as Exhibit "B" is that certain Trans World Gaming
Corp., Trans World Gaming of Louisiana, Inc. First Amended Indenture dated as of
March 31, 1998, as to the $4.8 million 12% Secured Senior Bonds due 2005 (the
"Amended Indenture") and related bonds (the "Amended Bonds"). Attached hereto
as Exhibit "C" is that certain form of amended 1996 Warrant (the "Amended
Warrant"). In addition, a separate warrant to purchase Common Stock of the
Parent is being issued pursuant to the Amended Indenture to replace certain
conversion rights granted to the Holders in the 1996 Indenture (the "Conversion
Warrant"). The Holder, subject to certain conditions as set forth herein, has
agreed that the 1996 Documents shall be amended and restated in form and
substance of the Amended Indenture, Amended Bonds and Amended Warrant as
attached hereto, and the Conversion Warrant attached hereto as Exhibit "D".
TERMS
Intending to be legally bound, in consideration of the mutual covenants
and agreements set forth herein, the parties hereto agree as follows:
1. Amendment
Subject to the terms and conditions set forth herein, the 1996 Documents
shall be amended and restated pursuant to Section 8.2 of the 1996 Indenture
substantially in the form of
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the Amended Indenture, Amended Bonds, Amended Warrant and Conversion Warrant
attached hereto. As to the Amended Bonds, the principal amount thereof shall be
the same as the principal amount of the 1996 Notes owned by the Holder, as shall
the accrued unpaid interest. The number of shares of common stock of the Parent
which may be obtained by the Amended Warrant shall be the number set forth on
Exhibit "A" next to the Holder's names at the same strike price ($1.00) as the
1996 Warrants, with such Amended Warrants to expire December 31, 2005. The
number of shares subject to the Conversion Warrant is also set forth in Exhibit
"A" next to the Holder's name. Such number of shares of common stock issuable
pursuant to both the Amended Warrant and the Original Warrant shall not be
subject to adjustment by virtue of the warrants issued pursuant to the $17
Million Subscription Agreement or any other warrant, right or agreement in
existence as of or as a result the Closing hereof.
2. This amendment of the 1996 Documents as set forth herein shall
occur in the event of the following:
a. In the event the $17 Million Subscription Agreement closes;
and
b. In the event all of the Holders on Exhibit "A" hereto are a
party to this Agreement.
3. Representations and Warranties of Holder.
As of the Closing Date, the Holder represents and warrants as follows:
a. The Holder is the owner, subject to paragraph C below, of
and has not assigned, transferred, sold, pledged, optioned, endorsed or
otherwise conveyed or transferred any interest in the 1996 Note or 1996 Warrant
acquired by such Holder pursuant to the Subscription Agreement and as set forth
opposite such Holder's name on Exhibit "A" hereto.
b. The Holder has all requisite legal power and authority to
enter into this Agreement. This Agreement has been duly authorized by all
necessary action on the part of the Holder, has been duly executed and delivered
by an authorized officer or representative of the Holder, and is a legal, valid
and binding obligation of the undersigned enforceable in accordance with its
terms, regardless of whether such enforceability is considered in a proceeding
in law or in equity.
c. The Holder has reviewed the Investment Representation
Letter attached hereto as Exhibit "E". All information provided therein and in
this Agreement is true and correct as of the date hereof and as of the date of
the Closing hereof, except as modified as follows: New Generation Limited
Partnership ("New Generation"), has entered into a "Put Option Agreement" with
Christopher Baker pursuant to which, under certain conditions, New Generation
can require Mr. Baker to purchase an agreed upon percentage of New Generation's
Amended Bond plus accrued, unpaid interest, plus the Amended Warrants on such
portion of the bond. Also, Fundamental Investors, L.P. ("Fundamental") has
entered into a "Put Option Agreement" with Mr. Baker pursuant to which,
immediately subsequent to the Closing hereof,
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Fundamental has the right to sell Mr. Baker an agreed upon percentage of
Fundamental's Amended Bond and the accrued unpaid interest thereon. Fundamental
has also agreed to sell all Amended Warrants received by it on such bond to Mr.
Baker. Execution of this Agreement shall be deemed execution of the Investment
Representation Letter, as modified in its paragraph.
4. Representations and Warranties of the Company.
As of the Closing Date, the Company represents and warrants to the
Subscriber that:
(a) ORGANIZATION, STANDING, ETC. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Nevada and has all requisite corporate power and authority to own its
assets and carry on its business as presently conducted. The Subsidiary is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Louisiana and has all requisite corporate power and
authority to own its assets and to carry on its business as presently
conducted. Parent and Subsidiary have all requisite corporate power and
authority to (i) execute, deliver, and perform their obligations under this
Agreement, the Amended Indenture and Amended Bonds, the Amended Warrants, the
Conversion Warrants and all other agreements and instruments executed and
delivered pursuant to or in connection with this Agreement, the Amended
Indenture, the Amended Bonds, the Conversion Warrant and Amended Warrants
(collectively the "Operative Agreements"), and (ii) issue the Amended Bonds,
the Conversion Warrants and the Amended Warrants in exchange for the 1996
Notes and 1996 Warrants.
(b) AUTHORIZATION AND EXECUTION; AMENDED BONDS, CONVERSION WARRANTS
AND AMENDED WARRANTS VALIDLY ISSUED. The execution, delivery and performance
by Parent and Subsidiary of this Agreement and the other Operative
Agreements, and the issuance of the Amended Bonds, the Conversion Warrants
and the Amended Warrants hereunder have been duly and validly authorized by
Parent and Subsidiary. This Agreement and the other Operative Agreements
have been duly executed and delivered by Parent and Subsidiary and constitute
valid and binding agreements of Parent and Subsidiary enforceable against
Parent and Subsidiary in accordance with their respective terms. Upon the
Closing, the Amended Bonds will be valid and binding obligations of the
Parent and Subsidiary and the shares of common stock issuable pursuant to the
Amended Warrants and the Conversion Warrants will upon issuance be duly and
validly issued and outstanding, fully paid and nonassessable (other than the
exercise price of the Amended Warrants and Conversion Warrants).
(c) CONTRAVENTION. The execution, delivery and performance of this
Agreement and the other Operative Agreements and the consummation of the
transactions contemplated thereby do not contravene or constitute a default
under or violate (i) any provision of applicable law or regulation the violation
of which would have a material adverse effect on Parent or Subsidiary or on the
Amended Bonds, the Conversion Warrants and the Amended Warrants, (ii) the
Articles of Incorporation and Bylaws of Parent or Subsidiary, or (iii) any
agreements, judgment, injunction, order, decree or other instrument binding upon
Parent or Subsidiary or any of their assets or properties, the violation of
which would have a material adverse effect on Parent or Subsidiary or on the
Amended Bonds, the Conversion Warrants and the Amended Warrants.
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For purposes of this Agreement, a "material adverse effect" means a
material adverse effect on (a) the business, operations, property or condition
(financial or otherwise) of Parent and Subsidiary, (b) the ability of the Parent
or Subsidiary to perform their respective obligations under this Agreement, or
any other Operative Agreement to which any of them is a party, or (c) the
validity, enforceability, perfection or priority of this Agreement or the rights
or remedies of the Trustee or the holder of the Amended Bonds, Amended Warrants
or Conversion Warrants.
(d) GOVERNMENTAL REGULATIONS. Except as required pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and State securities laws,
Parent and Subsidiary are not subject to any foreign, Federal or State law or
regulation limiting their ability to enter into this Agreement or any other
Operative Agreement, to issue the Amended Bonds, the Conversion Warrants and the
Amended Warrants or to perform their obligations required thereby.
5. Surrender of Securities; Value of Securities.
Immediately following the Closing, the Holder shall surrender to the
Indenture Trustee the 1996 Note and the 1996 Warrant, which shall be replaced
with the Amended Bond in the form attached hereto, the Amended Warrant in the
form attached hereto and the Conversion Warrant in the form attached hereto.
The Parties hereby agree that, to the extent lawful, the parties will take the
position, for income tax reporting purposes, that the value of the Amended Bonds
are not greater than the value of the 1996 Notes and that the Amended Warrants
and the Conversion Warrants have no value.
6. Closing.
The closing this Agreement shall be deemed to occur simultaneously with
and only in the event of the closing of the $17 Million Agreement (the
"Closing"). The Holder acknowledges that the Amended Notes, Amended Warrants
and Conversion Warrants shall be delivered subsequent to the Closing and that
the 1996 Notes and 1996 Warrants shall be returned to the Indenture Trustee.
The parties hereto agree to act in good faith and to use their best efforts to
the extent additional documents, actions or information are necessary
post-closing and covenant to cooperate with each other in taking all necessary
actions related thereto.
7. Survival of Representations and Warranties.
All representations and warranties contained in this agreement shall
survive the execution and delivery of this Agreement.
8. Waiver of Jury Trial.
Each of the parties hereto irrevocably and unconditionally waives the
right to trial by jury in any legal or equitable action, suit or proceeding
arising out of or relating to this agreement, the
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units or any other operative agreement or any transaction contemplated hereby or
thereby or the subject matter of any of the foregoing.
9. Notices to the Company.
All notices and other communications provided for herein shall be in
writing and shall be deemed to have been duly given if delivered personally or
sent by registered or certified mail, return receipt requested, postage prepaid,
telex, telecopier or overnight air courier guaranteeing next day delivery:
(a) if to the Company, to it at the following address:
Trans World Gaming Corp.
One Penn Plaza
Suite 1503
New York, New York 10119
Attn: Dominick Valenzano, Chief Financial Officer
(b) if to the Indenture Trustee, to it at the following address:
U.S. Trust Company of Texas
2001 Ross Avenue
Dallas, Texas 75201
Attn: John Stohlmann, Vice President
(c) if to the Holder, to the address set forth on the signature page
hereto, or at such other address as either party shall have
specified by notice in writing to the other.
All notices and communications shall be deemed to have been duly given:
at the time delivered by hand, if personally delivered; five business days after
being deposited in the mail, certified mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is orally acknowledged, if telecopied;
and the next business day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next day delivery.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
10. Notification of Changes.
The Holder and the Company agree and covenant to notify the other
promptly upon the occurrence of any event prior to the Closing which would cause
any representation, warranty, covenant or other statement contained in this
Agreement by such person so notifying to be false or incorrect or of any change
in any statement made herein occurring prior to the Closing Date.
11. Assignability.
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This Agreement is not assignable by the Holder or the Company, and may
not be modified, waived or terminated except by an instrument in writing signed
by the party against whom enforcement of such modifications, waiver or
termination is sought.
12. Binding Effect.
Except as otherwise provided herein, this Agreement shall be binding upon
and inure to the benefit of the parties and their heirs, executors,
administrators, successors, and legal representatives, and assigns, including
any transferee of the Amended Bonds, Amended Warrants and Conversion Warrants,
and the agreements, representations, warranties and acknowledgments contained
herein shall be deemed to be made by and be binding upon such heirs, executors,
administrators, successors, and legal representatives and assigns. If the
Holder is more than one person, the obligation of the Holder shall be joint and
several and the agreements, representations, warranties and acknowledgments
contained herein shall be deemed to be made by and be binding upon each such
person and his heirs, executors, administrators and successors. By entering into
this Agreement, the Holder agrees that this agreement and the amendment to the
1996 Indenture authorized herein shall not constitute a default under the 1996
Indenture.
13. Obligations Irrevocable.
The obligations of the Holder shall be irrevocable, except with the
consent of the Company, until the Closing or earlier termination of the $17
Million Subscription Agreement.
14. Entire Agreement.
This Agreement constitutes the entire agreement of the Holder and the
Company relating to the matters contained herein, superseding all prior
contracts, commitments, or agreements, whether oral or written.
15. Governing Law.
This Agreement shall be governed and controlled as to the validity,
enforcement, interpretations, construction and effect and in all other aspects
by the substantive laws of the State of NEW YORK, without reference to conflicts
of laws principles.
16. Severability.
If any provision of this Agreement or the application thereof to any
Holder or circumstance shall be held invalid or unenforceable to any extent, the
remainder of this Agreement and the application of such provision to other
Holders or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by law.
17. Headings.
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The headings in this Agreement are inserted for convenience and
identification only and are not intended to describe, interpret, define, or
limit the scope, extent or intent of this Agreement or any provision hereof.
18. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which together shall be deemed to be one and the same agreement.
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<PAGE>
IN WITNESS WHEREOF, the undersigned Holder and Company have executed this
Consent to Amend Indenture, Bonds and Warrants this 25 day of March, 1998.
CORPORATE HOLDER:
By: _________________________________
Its: ________________________________
INDIVIDUAL HOLDER:
By: _________________________________
PARTNERSHIP HOLDER:
By: _________________________________
Its: ________________________________
TRANS WORLD GAMING CORP:
By: _________________________________
Its: ________________________________
TRANS WORLD GAMING
OF LOUISIANA, INC.
By: _________________________________
Its: ________________________________
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Exhibit "A"
<TABLE>
<CAPTION>
Name Series # Series # Principal Amount Number of Number of Shares as
of Holder of 1996 of 1996 of Amended Bond Shares as to to Conversion
Note Warrant Amended Warrant
Warrant
<S> <C> <C> <C> <C> <C>
Value Partners, Ltd. $3,000,000 600,000 2,000,000
Anasazi Partners $1,000,000 200,000 666,667
Limited Partnership
New Generation $ 500,000 100,000 333,333
Limited Partnership
Fundamental $ 200,000 40,000 133,333
Investors, L.P.
Kevin Friedson and
Lucille Friedson $ 100,000 20,000 66,667
</TABLE>
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Exhibit "B"
FORM OF AMENDED INDENTURE AND BOND
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Exhibit "C"
FORM OF AMENDED WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series A. No. __
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that _____________ (together with its successors or
permitted assigns, the "Holder") is entitled to purchase from Trans World Gaming
Corp., a Nevada corporation ("Company") up to ________ shares of the Company's
common stock, par value $.001 per share (the "Common Stock"), at a purchase
price of $1.00 per share of Common Stock (the "Warrant Price"), subject to
adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Consent to Amend
Indenture, Bonds and Warrants Agreement dated as of March 25, 1998 (the
"Agreement"), between the Company and the Holder.
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 December 31, 2005, in whole or in part, by
(i) the surrender of this Warrant (with the purchase form at the end 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 Warrant Price then in effect for
the number of shares of Common Stock specified in the above-mentioned purchase
form together with
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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 subparagraph (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 Common Stock 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 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. If at any time this
Warrant is exercised as to less than the total number of shares for which it may
be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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.
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5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such other documents, as the Holder may
reasonably request in order to facilitate the public sale or other disposition
of the securities owned by the Holder;
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(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person for use in the preparation thereof, and
(ii) such losse, 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents 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
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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,
employees, partners and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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.
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For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable
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<PAGE>
upon conversion, exchange or exercise of such
security) would purchase at the Market Price per
share of Common Stock on such date. Such adjustment
shall be made whenever such shares, securities,
options, warrants or other rights are issued, and
shall become effective retroactively immediately
after the close of business on the record date for
the determination of stockholders entitled to
receive such shares, securities, options, warrants
or other rights; PROVIDED, that the determination as
to whether an adjustment is required to be made
pursuant to this Section 7(a) shall only be made
upon the issuance of such shares or such convertible
or exchangeable securities, options, warrants or
other rights, and not upon the issuance of the
security into which such convertible or exchangeable
security converts or exchanges, or the security
underlying such option, warrant or other right.
Notwithstanding the foregoing, in the event of such
issuance or sale of Common Stock at a cash price
less than the Market Price, no such adjustment under
this Section 7(a) need be made to the number of
shares underlying the Warrant unless such adjustment
would require an increase or decrease of at least 1%
of the number of shares underlying the Warrant. Any
lesser adjustment shall be carried forward and shall
be made at the time of and together with the next
subsequent adjustment which, together with any
adjustment or adjustments so carried forward, shall
amount to an increase or decrease of at least 1% of
number of shares underlying the Warrant. For the
purpose of this Agreement, the term "Market Price"
shall mean (i) if the Common Stock is traded in the
over-the-counter market or on the National
Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ"), the average per share
closing prices of the Common Stock on the 20
consecutive trading days immediately preceding the
date in question as reported by NASDAQ or an
equivalent generally accepted reporting service, or
(ii) if the Common Stock is traded on a national
securities exchange, the average for the 20
consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price
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<PAGE>
immediately prior to such adjustment by a fraction,
the numerator of which shall be the number of shares
of Common Stock purchasable upon the exercise of
each Warrant immediately prior to such adjustment
and the denominator of which shall be the number of
shares of Common Stock purchasable immediately after
such adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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 the 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 reorganization, reclassification,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock which the holder of the 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 or expiration of the
Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
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<PAGE>
written notice of such intent not less than thirty (30) days prior to the record
date to determine holders of Common Stock entitled to receive such distribution
and the holder of this Warrant shall have until 5:00 p.m. EST on the twentieth
(20th) day following the actual receipt of such notice to elect whether to
exercise this Warrant in accordance with the terms herein. In the event of
proper election to exercise the Warrant, the holder of this Warrant shall be
deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he 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 the 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 Warrant 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.
(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 hereof 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 hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
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<PAGE>
(i) The Company shall 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.
(j) 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
Stock 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, if the fraction is equal to or greater than .5, and down if
the fraction is less than .5.
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, Suite 1503, 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 other than Section 6 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, and this Warrant is
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 31,
1998.
TRANS WORLD GAMING CORP.
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By: ___________________________
Its: __________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of
$____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a
certificate (or certificates) in denominations of ______________
(___________) shares of Common Stock of the Company hereby purchased be
issued in the name of and delivered to the undersigned or such designee of
the undersigned and, if such shares of Common Stock (together with any shares
issued upon exercise of other Warrants or replacement Warrants) shall not
include all of the shares of Common Stock issuable upon exercise of all
Warrants represented by such Warrant Certificate (or if a new or replacement
Warrant is otherwise to be provided pursuant to the Warrant Certificate),
that a new or replacement Warrant Certificate of like tenor for the number of
Warrants not being exercised (and not being surrendered) hereunder be issued
in the name of and delivered to the undersigned, whose address is
__________________________.
Dated: __________, 199__.
________________________
(Signature of Registered Holder)
By:________________________
Title:_____________________
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Exhibit "D"
FORM OF CONVERSION WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series B. No. __
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that _____________ (together with its successors or
permitted assigns, the "Holder") is entitled to purchase from Trans World Gaming
Corp., a Nevada corporation ("Company") up to ________ shares of the Company's
common stock, par value $.001 per share (the "Common Stock"), at a purchase
price of $1.50 per share of Common Stock (the "Warrant Price"), subject to
adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Consent to Amend
Indenture, Bonds and Warrants and that certain First Amended Indenture dated as
of March 31, 1998 as to the $4,800,000.00 12% Secured Senior Bonds due 2005
dated as of March 25, 1998 (the "Agreement"), between the Company and the
Holder.
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 December 31, 2005, in whole or in part, by
(i) the surrender of this Warrant (with the purchase form at the end 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
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Company); (ii) payment to the Company of the Warrant 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 subparagraph (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 Common Stock 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 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. If at any time
this Warrant is exercised as to less than the total number of shares for which
it may be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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
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those expressed in this Warrant and are not enforceable against the Company
except to the extent set forth herein.
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such other documents, as the Holder may
reasonably request in order to facilitate the public sale or other disposition
of the securities owned by the Holder;
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(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person for use in the preparation thereof, and
(ii) such losse, 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents 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
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<PAGE>
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,
employees, partners and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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.
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For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable
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<PAGE>
upon conversion, exchange or exercise of such
security) would purchase at the Market Price per
share of Common Stock on such date. Such adjustment
shall be made whenever such shares, securities,
options, warrants or other rights are issued, and
shall become effective retroactively immediately
after the close of business on the record date for
the determination of stockholders entitled to
receive such shares, securities, options, warrants
or other rights; PROVIDED, that the determination as
to whether an adjustment is required to be made
pursuant to this Section 7(a) shall only be made
upon the issuance of such shares or such convertible
or exchangeable securities, options, warrants or
other rights, and not upon the issuance of the
security into which such convertible or exchangeable
security converts or exchanges, or the security
underlying such option, warrant or other right.
Notwithstanding the foregoing, in the event of such
issuance or sale of Common Stock at a cash price
less than the Market Price, no such adjustment under
this Section 7(a) need be made to the number of
shares underlying the Warrant unless such adjustment
would require an increase or decrease of at least 1%
of the number of shares underlying the Warrant. Any
lesser adjustment shall be carried forward and shall
be made at the time of and together with the next
subsequent adjustment which, together with any
adjustment or adjustments so carried forward, shall
amount to an increase or decrease of at least 1% of
number of shares underlying the Warrant. For the
purpose of this Agreement, the term "Market Price"
shall mean (i) if the Common Stock is traded in the
over-the-counter market or on the National
Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ"), the average per share
closing prices of the Common Stock on the 20
consecutive trading days immediately preceding the
date in question as reported by NASDAQ or an
equivalent generally accepted reporting service, or
(ii) if the Common Stock is traded on a national
securities exchange, the average for the 20
consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price
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<PAGE>
immediately prior to such adjustment by a fraction,
the numerator of which shall be the number of shares
of Common Stock purchasable upon the exercise of
each Warrant immediately prior to such adjustment
and the denominator of which shall be the number of
shares of Common Stock purchasable immediately after
such adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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 the 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 reorganization, reclassification,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock which the holder of the 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 or expiration of the
Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
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written notice of such intent not less than thirty (30) days prior to the record
date to determine holders of Common Stock entitled to receive such distribution
and the holder of this Warrant shall have until 5:00 p.m. EST on the twentieth
(20th) day following the actual receipt of such notice to elect whether to
exercise this Warrant in accordance with the terms herein. In the event of
proper election to exercise the Warrant, the holder of this Warrant shall be
deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he 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 the 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 Warrant 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.
(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 hereof 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 hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
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<PAGE>
(i) The Company shall 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.
(j) 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
Stock 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, if the fraction is equal to or greater than .5, and down if
the fraction is less than .5.
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, Suite 1503, 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 other than Section 6 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, and this Warrant is
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 31,
1998.
TRANS WORLD GAMING CORP.
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<PAGE>
By:____________________________
Its: __________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of
$____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of Common
Stock issuable upon exercise of all Warrants represented by such Warrant
Certificate (or if a new or replacement Warrant is otherwise to be provided
pursuant to the Warrant Certificate), that a new or replacement Warrant
Certificate of like tenor for the number of Warrants not being exercised (and
not being surrendered) hereunder be issued in the name of and delivered to the
undersigned, whose address is __________________________.
Dated: __________, 199__.
________________________________
(Signature of Registered Holder)
By:_____________________________
Title:__________________________
Exhibit "D"
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Exhibit "E"
INVESTMENT REPRESENTATION LETTER
(Accredited Investor)
March __, 1998
Trans World Gaming Corp
Trans World Gaming of Louisiana
One Penn Plaza, Suite 1503
New York, New York 10119
Attn: Mr. Andrew Tottenham, President
Dear Mr. Tottenham:
This letter is submitted in conjunction with the execution and delivery
of the First Amended Indenture (herein so called) dated as of March_,1998,
between Trans World Gaming Corp. and Trans World Gaming of Louisiana, Inc.
(collectively, the "Company") and U.S. Trust Company of Texas, N.A. ("Trustee")
and the issuance by the Company to the undersigned of its 12% Senior Bonds Due
2005 (the "Bonds") and certain Warrants as described herein, pursuant to the
terms and conditions contained in the Consent to Amend Indenture, Bonds and
Warrants. The undersigned Purchaser is exchanging its 12% Secured Convertible
Senior Bonds Due 1999 (the "1999 Bonds") for the Bonds, its warrants issued in
association with the 1999 Bonds for the "Amended Warrants" and additional
warrants in exchange for the cancellation of certain conversion rights pursuant
to the terms of the First Amended Indenture (the "Conversion Warrants"). In
order to induce the Company issue the Bonds, the Amended Warrants and the
Conversion Warrants (collectively the "Unit") to the Purchaser, the Purchaser
makes the representations and warranties contained herein.
The Company has informed the Purchaser that the Units have not been
registered with the Securities and Exchange Commission nor with the securities
authorities of any state, and that the Units must be held indefinitely unless
they are subsequently registered under the Securities Act of 1933, as amended,
and the appropriate state securities laws, or an exemption from such
registration is available and counsel to the Purchaser provides an opinion
regarding such exemption which is satisfactory to the Company. The Purchaser
understands that the Company is under no obligation to register the Units or to
comply with any such exemption, except as may be set forth in any binding
agreement between the parties. The Purchaser understands that no federal or
state securities authority has made any finding or determination as to the
fairness of investment in, nor any recommendation or endorsement of, the Units.
The Purchaser hereby represents and warrants to the Company that
Purchaser is purchasing the Units for Purchaser's own account for investment and
not with a view to dividing
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<PAGE>
the Units with others, or with a view to or in connection with an offering or
any distribution, and that the Purchaser has no present intention of selling or
otherwise disposing of the Units.
In order to assure the Company with respect to the foregoing, the
Purchaser further represents and warrants the following facts:
(a) Except as specifically noted above, it is the present
intention of the Purchaser to receive and hold the Units for the private
personal investment of the Purchaser for Purchaser's own account. Any sale or
exchange or offer of the Units will be made only if the Units are registered
under the Securities Act of 1933, as amended, or the sale can be made pursuant
to an exemption from the registration requirements of such Act and any
applicable state Securities act and such exception is set forth in an opinion of
Purchaser's counsel satisfactory to the Company.
(b) The Purchaser has no contract, understanding, agreement or
arrangement with any person or entity to sell or transfer to any such persons or
entities, or to anyone, or to have any such person or entity sell for the
Purchaser the Units and the Purchaser is not engaged in, and does not plan to
engage, within the foreseeable future, in any discussion with any person or
entity relating to the sale or transfer of the Units.
(c) Except as specifically noted above, as of the present date,
the Purchaser is not aware of any occurrence, event or circumstance upon the
happening of which Purchaser intends to transfer or sell the Units, or any part
thereof, and the Purchaser does not have any present intention to sell the
Units, or any part thereof, after the lapse of any particular period of time.
Purchaser understands that Purchaser may be required to bear the economic risks
of Purchaser's investment in the Units for an indefinite period of time.
(d) The Purchaser has no present obligation, indebtedness or
commitment and has no knowledge of any circumstances in existence, which would
compel the Purchaser to secure funds by the sale of the Units, nor is the
Purchaser a party to any plans or undertakings requiring funds, which plans or
undertakings can be consummated only by the sale of all or part of the Units.
(e) The Undersigned is an "Accredited Investor" as that term
is defined in Regulation D promulgated by the Securities and Exchange Commission
under the Securities Act of 1933.
(f) The negotiations for the purchase of such Units have been
conducted directly between the Purchaser on the one hand and the Company on the
other. The Purchaser has been given the opportunity to ask questions of, and
receive answers from, the Company and its officers concerning the terms and
conditions of the sale of the Units and other matters pertaining to the
investment in the Company in order for the Purchaser to evaluate the merits and
risks of purchase of the Units. The Purchaser acknowledges that Purchaser has
been furnished all information that Purchaser has requested to the extent that
Purchaser considers necessary and advisable, and such information, along with
the information and advice provided by the Purchaser Representative, is
reasonable upon which to base an investment decision.
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<PAGE>
(g) The Purchaser acknowledges Purchaser's understanding that
the offering and sale of the Units is intended to be exempt from registration
under the Securities Act of 1933, as amended, by virtue of Section 4(2) of that
Act, and that the Company is relying upon the representations made by the
Purchasers herein for the purposes of qualifying such offering thereunder.
(h) Investment in the Units is speculative and involves a high
degree of risk of loss by the Purchaser of the Purchaser's entire investment.
The Purchaser has such knowledge and experience in financial and business
matters that Purchaser is capable of evaluating the merits and risks of the
investment in the Units, can bear the economic risk of losing Purchaser's entire
investment, has adequate means for providing for Purchaser's current needs and
personal contingencies, and has no need for liquidity in an investment in the
Units and is capable of evaluating the merits and risks of the investment in the
Units.
The Purchaser further understands that in the event Purchaser should in
fact resell the Units, or any part thereof, within the foreseeable future,
Purchaser may be deemed to be an underwriter, as that term is defined in the
Securities Act of 1933, as amended. The Purchaser further understands and
agrees that the Units cannot be offered for sale, sold or otherwise transferred
on the register of the Company until Purchaser has notified the Company in
writing of Purchaser's intention to do so and unless and until the Company, if
it deems appropriate, has been furnished with an opinion of counsel for the
Purchaser satisfactory to counsel for the Company that such sale or transfer
does not involve a violation of the Securities Act of 1933, as amended, or the
securities laws of any state having jurisdiction. The Purchaser agrees that the
an appropriate restrictive legend may be placed on the certificates evidencing
any Units issued pursuant hereto.
The Purchaser agrees that transfer of the Units may be refused by the
Company or its transfer agent if, in the opinion of counsel for the Company, any
proposed sale or transfer by the Purchaser of the Units would not be in
compliance with the applicable federal and state securities laws. The Purchaser
has not received any offering materials from the Company and the investment is
not made as a result of any general solicitation or advertisements.
Sincerely,
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<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TRANS WORLD GAMING CORP.
TRANS WORLD GAMING OF LOUISIANA, INC.
Issuer
and
U.S. TRUST COMPANY OF TEXAS, N.A., as Trustee
FIRST AMENDED
INDENTURE
Dated as of March 31, 1998
--------------------
$4,800,000
12% Secured Senior Bonds Due 2005
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- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FORM OF FACE OF SECURITY . . . . . . . . . . . . . . . . . . . . . . . .
FORM OF REVERSE OF SECURITY. . . . . . . . . . . . . . . . . . . . . . .
ARTICLE 1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 1.1 Certain Terms Defined. . . . . . . . . . . . . . . . . 8
ARTICLE 2 ISSUE, EXECUTION, FORM AND REGISTRATION OF SECURITIES. . . . 13
SECTION 2.1 Authentication and Delivery of Securities. . . . . . . 13
SECTION 2.2 Execution of Securities. . . . . . . . . . . . . . . . 13
SECTION 2.3 Certificate of Authentication. . . . . . . . . . . . . 14
SECTION 2.4 Form, Denomination and Date of Securities;
Payments of Interest in Cash and in
Additional Securities . . . . . . . . . . . . . . . . 14
SECTION 2.5 Registration, Transfer and Exchange. . . . . . . . . . 15
SECTION 2.6 Mutilated, Defaced, Destroyed, Lost and Stolen
Securities . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.7 Cancellation of Securities; Destruction Thereof. . . . 17
SECTION 2.8 Temporary Securities . . . . . . . . . . . . . . . . . 17
ARTICLE 3 COVENANTS OF THE ISSUER. . . . . . . . . . . . . . . . . . . 17
SECTION 3.1 Payment of Principal and Interest. . . . . . . . . . . 17
SECTION 3.2 Offices for Payments, Etc. . . . . . . . . . . . . . . 18
SECTION 3.3 Appointment To Fill a Vacancy in Office of Trustee . . 18
SECTION 3.4 Paying Agents. . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.5 Officers' Certificates as to Default and as to
Compliance . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.6 Maintenance of Properties, Etc.. . . . . . . . . . . . 19
SECTION 3.7 Excess Cash Flow Payment. . . . . . . . . . . . . . .
SECTION 3.8 Books. . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.9 Guarantees . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.10 Senior Indebtedness . . . . . . . . . . . . . . . . .
SECTION 3.11 Distributions . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.12 Disposition of Assets . . . . . . . . . . . . . . . . 20
SECTION 3.13 Line of Business. . . . . . . . . . . . . . . . . . .
SECTION 3.14 Payments for Consent. . . . . . . . . . . . . . . . .
SECTION 3.15 Cost of Operations. . . . . . . . . . . . . . . . . .
SECTION 3.16 Reserved. . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.17 Waiver of Stay, Extension or Usury Laws . . . . . . . 21
SECTION 3.18 Bishkek Note. . . . . . . . . . . . . . . . . . . . .
SECTION 3.19 Security Interest . . . . . . . . . . . . . . . . . .
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ARTICLE 4 SECURITYHOLDERS' LISTS AND REPORTS BY THE ISSUER AND
THE TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.1 Issuer To Furnish Trustee Information as to Names
and Addresses of Securityholders . . . . . . . . . . . 22
SECTION 4.2 Preservation and Disclosure of Securityholders'
Lists. . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.3 Reports by the Issuer. . . . . . . . . . . . . . . . . 23
SECTION 4.4 Listing. . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 5 REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT
OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 5.1 Event of Default Defined; Acceleration of Maturity;
Waiver of Default. . . . . . . . . . . . . . . . . . . 24
SECTION 5.2 Collection of Indebtedness by Trustee; Trustee
May Prove Indebtedness . . . . . . . . . . . . . . . . 27
SECTION 5.3 Application of Proceeds. . . . . . . . . . . . . . . . 29
SECTION 5.4 Suits for Enforcement. . . . . . . . . . . . . . . . . 29
SECTION 5.5 Restoration of Rights on Abandonment of Proceedings. . 30
SECTION 5.6 Limitations on Suits by Securityholders. . . . . . . . 30
SECTION 5.7 Unconditional Right of Securityholders To Institute
Certain Suits. . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.8 Powers and Remedies Cumulative; Delay or Omission
Not Waiver of Default. . . . . . . . . . . . . . . . . 31
SECTION 5.9 Control by Securityholders . . . . . . . . . . . . . . 31
SECTION 5.10 Waiver of Past Defaults . . . . . . . . . . . . . . . 31
SECTION 5.11 Trustee to Give Notice of Default, But May
Withhold in Certain Circumstances . . . . . . . . . . 32
SECTION 5.12 Right of Court To Require Filing of Undertaking
To Pay Costs. . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.13 Excess Cash Flow. . . . . . . . . . . . . . . . . . .
ARTICLE 6 CONCERNING THE TRUSTEE . . . . . . . . . . . . . . . . . . . 33
SECTION 6.1 Duties and Responsibilities of the Trustee; During
Default; Prior to Default. . . . . . . . . . . . . . . 33
SECTION 6.2 Certain Rights of the Trustee. . . . . . . . . . . . . 34
SECTION 6.3 Trustee Not Responsible for Recitals, Disposition of
Securities or Application of Proceeds Thereof. . . . . 35
SECTION 6.4 Trustee and Agents May Hold Securities;
Collections, Etc.. . . . . . . . . . . . . . . . . . . 35
SECTION 6.5 Moneys Held by Trustee . . . . . . . . . . . . . . . . 36
SECTION 6.6 Compensation and Indemnification of Trustee and Its
Prior Claim. . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.7 Right of Trustee to Rely on Officers'
Certificate, Etc . . . . . . . . . . . . . . . . . . . 36
SECTION 6.8 [Reserved] . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.9 Persons Eligible for Appointment as Trustee. . . . . . 37
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<PAGE>
SECTION 6.10 Resignation and Removal; Appointment of Successor
Trustee . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.11 Acceptance of Appointment by Successor Trustee. . . . 38
SECTION 6.12 Merger, Conversion, Consolidation or Succession to
Business of Trustee . . . . . . . . . . . . . . . . . 39
SECTION 6.13 [Reserved]. . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.14 Trust Estate May be Vested in Co-Trustee or in a
Sub-Trust . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 7 CONCERNING THE SECURITYHOLDERS . . . . . . . . . . . . . . . 42
SECTION 7.1 Evidence of Action Taken by Securityholders. . . . . . 42
SECTION 7.2 Proof of Execution of Instruments and of Holding of
Securities.. . . . . . . . . . . . . . . . . . . . . . 42
SECTION 7.3 Holders To Be Treated as Owners. . . . . . . . . . . . 42
SECTION 7.4 Securities Owned by Issuer Deemed Not Outstanding. . . 42
SECTION 7.5 Right of Revocation of Action Taken. . . . . . . . . . 43
ARTICLE 8 SUPPLEMENTAL INDENTURES. . . . . . . . . . . . . . . . . . . 43
SECTION 8.1 Supplemental Indentures Without Consent of
Securityholders. . . . . . . . . . . . . . . . . . . . 43
SECTION 8.2 Supplemental Indentures with Consent of
Securityholders. . . . . . . . . . . . . . . . . . . . 44
SECTION 8.3 Effect of Supplemental Indenture . . . . . . . . . . . 45
SECTION 8.4 Documents To Be Given to Trustee . . . . . . . . . . . 46
SECTION 8.5 Notation on Securities in Respect of Supplemental
Indentures . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE 9 NO CONSOLIDATION, MERGER, SALE OR CONVEYANCE . . . . . . . . 46
ARTICLE 10 SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS. . 46
SECTION 10.1 Satisfaction and Discharge of Indenture . . . . . . . 46
SECTION 10.2 Defeasance and Discharge of Indenture . . . . . . . . 47
SECTION 10.3 Defeasance of Certain Obligations . . . . . . . . . . 48
SECTION 10.4 Application by Trustee of Funds Deposited for
Payment of Securities . . . . . . . . . . . . . . . . 49
SECTION 10.5 Repayment of Moneys Held by Paying Agent. . . . . . . 50
SECTION 10.6 Return of Moneys Held by Trustee and Paying Agent
Unclaimed for One Year. . . . . . . . . . . . . . . . 50
SECTION 10.7 Reinstatement . . . . . . . . . . . . . . . . . . . . 50
ARTICLE 11 MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . 51
SECTION 11.1 Incorporators, Shareholders, Officers and Directors
of Issuer Exempt from Individual Liability. . . . . . 51
SECTION 11.2 Provisions of Indenture for the Sole Benefit of Parties
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and Securityholders . . . . . . . . . . . . . 51
SECTION 11.3 Successors and Assigns of Issuer Bound by
Indenture . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 11.4 Notices and Demands on Issuer, Trustee and
Securityholders . . . . . . . . . . . . . . . . . . . 51
SECTION 11.5 Compliance Certificates and Opinions of Counsel;
Statements To Be Contained Therein. . . . . . . . . . 52
SECTION 11.6 Payments Due on Saturdays, Sundays and Holiday. . . . 53
SECTION 11.7 Conflict of Any Provision of Indenture with Trust
Indenture Act of 1939 . . . . . . . . . . . . . . . . 53
SECTION 11.8 New York Law To Govern. . . . . . . . . . . . . . . . 54
SECTION 11.9 Counterparts. . . . . . . . . . . . . . . . . . . . . 54
SECTION 11.10 Effect of Headings . . . . . . . . . . . . . . . . . 54
SECTION 11.11 Board of Directors . . . . . . . . . . . . . . . . .
SECTION 11.12 Waiver of Usury Laws . . . . . . . . . . . . . . . .
ARTICLE 12 REDEMPTION OF SECURITIES . . . . . . . . . . . . . . . . . . 55
SECTION 12.1 Right of Optional Redemption; Prices. . . . . . . . . 55
SECTION 12.2 Notice of Redemption. . . . . . . . . . . . . . . . . 55
SECTION 12.3 Payment of Securities Called for Redemption . . . . . 56
SECTION 12.4 Exclusion of Certain Securities from Eligibility
for Selection for Redemption. . . . . . . . . . . . . 56
SECTION 12.5 Selection of Securities to be Redeemed. . . . . . . .
SECTION 12.6 Partial Redemption of Securities. . . . . . . . . . .
ARTICLE 13 WARRANT
ARTICLE 14 SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 14.1 Pledge and Security Interest. . . . . . . . . . . . . 64
SECTION 14.2 Security for Obligation . . . . . . . . . . . . . . . 64
SECTION 14.3 Perfection of Security Interest . . . . . . . . . . . 64
SECTION 14.4 No Disposition of Collateral; Release of Lien of
Indenture . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 14.5 Other Liens . . . . . . . . . . . . . . . . . . . . . 65
SECTION 14.6 Trustee Appointed Attorney-in-Fact. . . . . . . . . . 65
SECTION 14.7 Return of Collateral. . . . . . . . . . . . . . . . . 65
SECTION 14.8 Default Remedies. . . . . . . . . . . . . . . . . . . 65
SECTION 14.9 Proceeds. . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 14.10 Deficiency . . . . . . . . . . . . . . . . . . . . . 66
SECTION 14.11 Trustee's Duties . . . . . . . . . . . . . . . . . . 66
SECTION 14.12 Special Trustee Powers Due to Environmental
Conditions . . . . . . . . . . . . . . . . . . . . . 66
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
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<PAGE>
THIS FIRST AMENDED INDENTURE, dated as of March 31, 1998 between Trans
World Gaming Corp, a Nevada corporation ("TWG"), and its wholly-owned
subsidiary, Trans World Gaming of Louisiana, Inc., a Louisiana corporation (TWG
Louisiana, which together with TWG shall be collectively, the "Issuer"), and
U.S. Trust Company of Texas, N.A., a national banking association, not in its
individual capacity but solely as trustee (the "Trustee"),
W I T N E S S E T H :
WHEREAS, the Issuer has duly authorized the issue of its 12% Secured
Senior Bonds Due 2005 (the "Securities"); and
WHEREAS, the Issuer authorized and issued its $4,800,000 12% Secured
Convertible Senior Bonds Due 1999 dated as of November 1, 1996 ("Original
Securities"), pursuant to an Indenture dated as of November 1, 1996 ("Original
Indenture"); and
WHEREAS, one hundred percent (100%) of the holders of the issued and
Outstanding Original Securities have agreed to the modification of the Original
Securities and Original Indenture on the terms and conditions set forth herein;
and
WHEREAS, the Securities and the Trustee's certificate of authentication
shall be in substantially the following form:
[FORM OF FACE OF SECURITY]
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES ACT, AND MAY NOT BE TRANSFERRED WITHOUT
REGISTRATION UNDER SUCH ACTS OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER
THAT SUCH REGISTRATION IS NOT REQUIRED.
No. $
TRANS WORLD GAMING CORP.
TRANS WORLD GAMING OF LOUISIANA, INC.
12% Secured Senior Bond Due 2005
Date: March 31, 1998
Trans World Gaming Corp., a Nevada corporation ("TWG"), and its wholly-owned
subsidiary, Trans World Gaming of Louisiana, Inc., a Louisiana corporation (TWG
Louisiana, which together with TWG shall be collectively, the "Issuer"), for
value received hereby promise to pay jointly and severally to ,
or registered assigns, the principal sum of _________ Dollars, with interest
thereon as set forth herein. Interest on the unpaid principal shall accrue the
rate of 12% per annum. Interest shall accrue on this Security from June 30,
1996, the date of the
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Original Security for which this Security is being substituted and the date from
which interest began accruing on the Original Security. The unpaid principal
and accrued unpaid interest shall mature and be due and payable on the Maturity
Date or such earlier date as provided herein. All payments of principal and
interest shall be in such coin or currency of the United States of America as
at the time of payment shall be legal tender for the payment of public and
private debts. Should an Event of Default occur, the unpaid principal (and
unpaid interest, to the extent permitted by applicable law) shall bear interest
at the Default Rate. The Default Rate is 17% per annum compounded semiannually,
subject to the Maximum Rate (as defined in the Indenture) and other limitations
thereon as set forth in this Indenture.
The sum of Excess Cash Flow allocable to this Security shall, except as
otherwise provided in the Indenture referred to on the Reverse hereof, be paid
to the Person in whose name this Security is registered on the Record Date next
preceding such Cash Flow Payment Date, whether or not such is a Business Day;
In the event a Default occurs as to the payment of Excess Cash Flow,
interest shall accrue at the Default Rate from the preceding Record Date for
which there was no such Default.
Interest on this Security will be calculated on the basis of a 360-day
year, consisting of twelve 30-day months.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof which further provisions shall for all purposes have
the same effect as if set forth in this place.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed under its corporate seal.
[Seal] TRANS WORLD GAMING CORP.
By: _____________________________________
By: ___________________________________
[Seal] TRANS WORLD GAMING OF LOUISIANA, INC.
By: _____________________________________
By: ___________________________________
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<PAGE>
[FORM OF REVERSE OF SECURITY]
TRANS WORLD GAMING CORP.
TRANS WORLD GAMING OF LOUISIANA, INC.
12% Secured Senior Bond Due 2005
This Security is one of a duly authorized issue of debt of the Issuer,
with an aggregate principal amount of $4,800,000, issued pursuant to The First
Amended Indenture dated as of March 31, 1998, (the "Indenture"), duly executed
and delivered by the Issuer to U.S. Trust Company of Texas, N.A., as Trustee
(herein called the "Trustee"). Reference is hereby made to the Indenture and all
indentures supplemental thereto for a description of the rights, limitations of
rights, obligations, duties and immunities thereunder of the Trustee, the Issuer
and the Holders (the words "Holders" or "Holder" meaning the registered holders
or registered holder) of the Securities. The Securities are secured obligations
of the Issuer. Capitalized terms used in this Security and not defined herein
shall have the meaning set forth in the Indenture.
In case an Event of Default (as defined in the Indenture) shall have
occurred and be continuing, the debt in respect of all of the Securities then
Outstanding may be declared due and payable in the manner and with the effect,
and subject to the conditions, provided in the Indenture. The Indenture
provides that the Holders of a majority in aggregate principal amount of the
Securities then Outstanding, by notice to the Trustee, may on behalf of the
Holders of all of the Securities, waive any existing Default or Event of Default
and its consequences under the Indenture except a continuing Default or Event of
Default in the payment of interest on, or the principal of, the Securities on
the Maturity Date or in respect of a covenant or provision that cannot be
modified or amended without the consent of all Holders of the Securities. Any
such consent or waiver by the Holder of this Security (unless revoked as
provided in the Indenture) shall be conclusive and binding upon such Holder and
upon all future Holders and owners of this Security and any Security which may
be issued in exchange or substitution therefore, whether or not any notation
thereof is made upon this Security or such other Securities.
The Indenture permits the Issuer and the Trustee, with the consent of (i)
the Holders of not less than a majority in aggregate principal amount of the
Securities at the time Outstanding, and (ii) the holders of 50% in aggregate
principal amount of the 12% Senior Secured Notes due March 2005 of TWG, TWG
International U.S. Corporation, a Nevada corporation ("TWG Finance") (the "Czech
Notes"), issued pursuant to the terms of an Indenture dated March 31, 1998,
among TWG, TWG International and TWG Finance and the Trustee, to execute
supplemental indentures adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of any supplemental
indenture or modifying in any manner the rights of the Holders of the
Securities; PROVIDED that no such supplemental indenture shall, without the
consent of each Holder affected thereby (and the holders of 75% in aggregate
principal amount of the Czech Notes with respect to subsections (i) - (iii) and
subsection (viii) as it relates to subsections (i) - (iii)) (with respect to any
Securities held by a non-consenting Securityholder): (i) reduce the principal
amount of Securities whose Holders must consent to an amendment, supplement or
waiver, (ii) reduce the principal of or change the fixed maturity of any
Security or alter the provisions with respect to the redemption of the
Securities, (iii) reduce
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<PAGE>
the rate of or change the time for payment of interest on any Security, (iv)
waive a Default or Event of Default in the payment of principal of or premium,
if any, or interest on the Securities (except a rescission of acceleration of
the Securities by the Holders of at least a majority in aggregate principal
amount of the then Outstanding Securities and a waiver of the payment default
that resulted from such acceleration), (v) make any Security payable in money
other than that stated in the Securities, (vi) make any change in the provisions
of the Indenture relating to waivers of past Defaults or the rights of Holders
of Securities to receive payments of principal of or interest on the Securities,
(vii) waive a redemption payment with respect to any Security, or (viii) make
any change in the foregoing amendment and waiver provisions.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligations of the Issuer, which are
absolute and unconditional, to pay the principal of and the interest on this
Security at the place, times, and rate, and in the currency, herein prescribed.
The Securities are issuable only as registered Securities without
coupons.
At the office or agency of the Issuer referred to on the face hereof and
in the manner and subject to the limitations provided in the Indenture,
Securities may be exchanged for a like aggregate principal amount of Securities
of other authorized denominations.
Upon due presentment for registration of transfer of this Security at the
above-mentioned office or agency of the Issuer, a new Security or Securities of
authorized denominations, for a like aggregate principal amount, will be issued
to the transferee as provided in the Indenture. No service charge shall be made
for any such transfer, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto.
As provided in, and subject to the terms and conditions of, the
Indenture, the Issuer shall be required to make mandatory prepayments of
principal and interest equal to Excess Cash Flow until the Obligations (as
defined in the Indenture) are fully defeased pursuant to Section 10.2 or until
one hundred percent (100%) of the principal amount of the Securities, together
with accrued and unpaid interest, is paid. The Securities may also be redeemed
by the Issuer at any time or from time to time, in whole, or in part, upon
mailing a notice of such redemption not less than 30 nor more than 60 days prior
to the date fixed for redemption to the Holders of Securities to be redeemed, at
a redemption price equal to 100% of the principal amount of the Securities
redeemed, together with accrued and unpaid interest to the date fixed for
redemption.
Subject to payment by the Issuer of a sum sufficient to pay the
obligations upon redemption, interest on this Security shall cease to accrue
upon the date duly fixed for redemption of this Security.
The Securities shall not be secured by, and the Holders of the Securities
shall have no rights relating to, the Capital Stock or assets of (including
direct and indirect, partially or wholly owned Subsidiaries) of either TWG
International or TWG Finance, until the Czech Notes are fully defeased, fully
redeemed or paid in full.
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The Issuer, the Trustee and any authorized agent of the Issuer or the
Trustee may deem and treat the registered Holder hereof as the absolute owner of
this Security (whether or not this Security shall be overdue and notwithstanding
any notation of ownership or other writing hereon made by anyone other than the
Issuer or the Trustee or any authorized agent of the Issuer or the Trustee), for
the purpose of receiving payment of, or on account of, the principal hereof and
premium, if any, and subject to the provisions on the face hereof, interest
hereon and for all other purposes, and neither the Issuer nor the Trustee nor
any authorized agent of the Issuer or the Trustee shall be affected by any
notice to the contrary.
No recourse shall be had for the payment of the principal of, premium, if
any, or the interest on this Security, for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Indenture or any indenture
supplemental thereto, against any incorporator, shareholder, officer, employee
or director, as such, past, present or future, of the Issuer or Trustee
or of any successor corporation, either directly or through the Issuer or any
successor corporation, whether by virtue of any constitution, statute or rule of
law or by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issue hereof, expressly waived and released.
Customary abbreviations may be used in the name of a Securityholder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
This Security shall not be valid or obligatory until the certificate of
authentication hereon shall have been duly signed by an authorized signatory of
the Trustee acting under the Indenture.
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the within-mentioned
Indenture.
Dated:
U.S. Trust Company of Texas, N.A. , as
Trustee
By: ____________________________________
Authorized Signatory
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<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to:
______________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint _________________________________________ agent to
transfer this Security on the books of Issuer. The agent may substitute another
to act for him.
______________________________________________________________________________
______________________________________________________________________________
(Print or type other person's name, address and zip code)
Date: _________________________ ____________________________________
Your Signature
____________________________________
Signature Guaranty
____________________________________
Notice: Signature must be guaranteed
by an "Eligible Guarantor Institution"
as defined by Securities Exchange Act
Rule 17Ad-15.
(Sign exactly as your name appears on the other side of this Security)
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<PAGE>
NOW, THEREFORE:
In consideration of the premises and the purchases of the Securities by
the Holders thereof, the Issuer and the Trustee mutually covenant and agree for
the equal and proportionate benefit of the respective Holders from time to time
of the Securities as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 CERTAIN TERMS DEFINED. The following terms (except as
otherwise expressly provided or unless the context otherwise clearly requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section 1.1. The words
"HEREIN," "HEREOF" and "HEREUNDER" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or other
subdivision. The terms defined in this Article include the plural as well as
the singular.
"ACCELERATION DATE" has the meaning specified in Section 5.1.
"ACCELERATION NOTICE" has the meaning specified in Section 5.1.
"ASSET SALE" means the sale, lease, conveyance, disposition or other
transfer (including, without limitation, by eminent domain, condemnation or
similar governmental proceeding) of any property or assets of the Issuer or any
of its direct or indirect Subsidiaries, (other than TWG International or TWG
Finance, or any of their respective Subsidiaries until the Czech Notes are paid
in full) (including a sale and leaseback transaction or the issuance, sale or
transfer of Capital Stock of a direct or indirect Subsidiary (except TWG
International or TWG Finance or any of their respective Subsidiaries until the
Czech Notes are paid in full) except an acquisition of such Capital Stock by TWG
or its direct or indirect Subsidiaries).
"BISHKEK NOTE" means the obligation of TWG to Value Partners, Ltd. or its
assignee evidencing the obligation to repay sums used to acquire, commence
and/or fund operations in the city of Bishkek, in the Republic of Kryrgyz,
including those related to table and slot machine operations (the "Bishkek
Facility")and such documents necessary to grant Value Partners, Ltd. a security
interest in such assets.
"BOARD OF DIRECTORS" means the Board of Directors of the Issuer or any
committee of such Board duly authorized to act hereunder.
"BUSINESS DAY" means a day which in the city (or in any of the cities, if
more than one) where amounts are payable in respect of the Securities, as
specified on the face of the form of Security recited above, or in the city in
which the Corporate Trust Office or the operations office of the Trustee for
payment and transfer of the Securities are located, is neither a legal holiday
nor a day on which banking institutions are required or authorized by law or
regulation to close.
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"CAPITAL STOCK" means any and all shares, interests, participations,
rights or other equivalents (however designated) or corporate stock, whether
common or preferred, including, without limitation, partnership interests.
"CASH FLOW PAYMENT DATE" mean(s) the date(s) Excess Cash Flow is paid
pursuant to Section 3.7.
"CZECH NOTES" means Trans World Gaming Corp., TWG International U.S.
Corporation, and TWG Finance Corp. (as co-obligors) 12% Senior Secured Notes
dated March 31, 1998 in the sum of $17,000,000 Due March 17, 2005.
"CZECH INDENTURE" means that certain Indenture dated as of March 31, 1998
entered into by TWG, TWG International and TWG Finance as co-obligors, in
relation to the Czech Notes.
"COLLATERAL AGREEMENTS" means any agreements executed by the Issuer which
are intended to create a Lien on any Collateral, including without limitation,
appropriate security agreements, multiple indebtedness mortgages and financing
statements.
"COMMISSION" means the Securities and Exchange Commission.
"CORPORATE TRUST OFFICE" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date as of which this
Indenture is dated, located at 2001 Ross Avenue, Dallas, TX 75201-2936,
Attention: Corporate Trust Department.
"DEFAULT" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"DEFAULT RATE" with respect to the Securities means 17% per annum
compounded semiannually, subject to the Maximum Rate and other limitations
thereon as set forth in this Indenture.
"EVENT OF DEFAULT" means any event or condition specified as such in
Section 5.1 which shall have continued for the period of time, if any, therein
designated.
"EXCESS CASH FLOW" means, for any period through December 31, 2005, or in
the event the Obligations are not satisfied in full by the Maturity Date, such
later date on which the Obligations are satisfied in full:
(a) until the Czech Notes are paid in full, Issuer's net income solely
from its U.S. operations and from the Bishkek Facility (as determined by GAAP)
adjusted as follows (in each case without duplication): minus (i) all cash flow
from the operation of Bishkek until the Bishkek Note is paid in full, plus (ii)
all cash flow from the operation of Bishkek after the Bishkek Note is paid in
full; plus (iii) non-cash items relating to the Issuer's U.S. operation and from
the Bishkek Facility which decrease net income, including, without limitation
depreciation expense and
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amortization expense (including amortization of deferred financing costs and
original issue discounts), but only to the extent included in computing such net
income, plus (iv) Undistributed Excess Cash Flow, MINUS (iv) the amount
necessary to establish or maintain a working capital reserve of $250,000 at all
times, PLUS (v) Net Cash Proceeds; MINUS, the cost of administration incurred by
the Issuer pursuant to Section 3.16 and not reimbursed by TWG International or
TWG Finance, MINUS (vi) a one-time reserve of sums disbursed to TWG from the
proceeds of the sales of the Czech Notes to pay post-closing costs of the Issuer
associated with the Czech Notes transaction and related events and to pay the
cost of public registration of Common Stock of TWG, and MINUS (vii) such sums
that TWG determines are reasonably necessary to meet its operating needs in
excess of its working capital reserves.
(b) subsequent to the date the Czech Notes are paid in full; (i) Issuer's net
income from its U.S. and non-U.S. operations, including the Bishkek Facility and
the Czech Casinos (as determined by GAAP) adjusted as follows (in each case
without duplication): minus (i) all cash flow from the operations of Bishkek
Facility until the Bishkek Note is paid in full, plus (ii) all cash flow from
the operation of Bishkek Facility after the Bishkek Note is paid in full; plus
(iii) non-cash items which decrease net income, including, without limitation,
depreciation expense and amortization expense (including amortization of
deferred financing costs and original issue discounts), but only to the extent
included in computing such net income; plus (iv) Undistributed Excess Cash Flow;
MINUS (v) the amount necessary to establish or maintain a working capital
reserve of $250,000 at all times, PLUS (vi) Net Cash Proceeds; and MINUS (vii)
the cost of administration of TWG; MINUS (viii) a one-time reserve of sums
disbursed to TWG from the proceeds of the sale of the Czech Notes to pay
post-closing costs of the Issuer associated with the Czech Notes transactions
and related events and to pay the cost of public registration of Common Stock of
TWG, and MINUS (ix) such sums that TWG determines are reasonably necessary to
meet its operating needs in excess of its working capital reserves.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FUNDING COLLATERAL AGREEMENTS" has the meaning that the term "Collateral
Agreements" has in the Indenture issued pursuant to the Funding Note.
"FUNDING NOTE" means TWG International 12% Senior Secured Notes in the
sum of $17,000,000 Due March 2005.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, as the same are in effect on the Issue Date.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness, and "Guaranteed" has a correlative meaning.
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"HOLDER," "SECURITYHOLDER" or any other similar term means the registered
holder of any Security.
"INCUR" means to, directly or indirectly, create, incur, issue, assume,
guaranty or otherwise become liable with respect to.
"INDEBTEDNESS" means, with respect to any Person, without duplication,
any indebtedness of such Person, whether or not contingent, in respect of
borrowed money or evidenced by bonds, notes, debentures or similar instruments
or letters of credit (or reimbursement agreements in respect thereof) or
representing the balance deferred and unpaid of the purchase price of any
property (including pursuant to capital leases), except any such balance that
constitutes an accrued expense or trade payable, if and to the extent any of the
foregoing would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, and also includes, to the extent not otherwise
included, the Guarantee of items that would be included within this definition
and all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on any asset or property (including, without limitation, leasehold
interests and any other tangible or intangible property) of such Person, whether
or not such Indebtedness is assumed by such Person or is not otherwise such
Person's legal liability, PROVIDED that if the obligations so secured have not
been assumed in full by such Person or are otherwise not such Person's legal
liability in full, the amount of such Indebtedness for the purposes of this
definition shall be limited to the lesser of the amount of such Indebtedness
secured by such Lien or the fair market value of the assets or property securing
such Lien. Notwithstanding the foregoing, the term "Indebtedness" shall not
include deferred compensation arrangements that are not evidenced by bonds,
notes, debentures or similar instruments.
"INDENTURE" means this instrument as originally executed and delivered
or, if amended or supplemented as herein provided, as so amended or
supplemented.
"ISSUE DATE" means the date on which the Securities are issued under this
amended Indenture.
"ISSUER" means Trans World Gaming Corp, a Nevada corporation, and its
wholly-owned subsidiary, Trans World Gaming of Louisiana, Inc., and, subject to
Article Nine, their successors and assigns, and any other obligor on the
Securities.
"KEY EMPLOYEE means persons such as production managers or sales
managers, who are not executive officers but who make or are expected to make
significant contributions to the business of the Issuer.
"LIEN" means, with respect to any asset, any mortgage; including without
limitation any multiple indebtedness mortgage, lien, pledge, charge, security
interest or encumbrance of any kind in respect of such asset, whether or not
filed, recorded or otherwise perfected under applicable law (including any
conditional sale or other title retention agreement, any lease in the
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nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"MAXIMUM RATE" has the meaning contained in Section 3.1.
"MATURITY DATE" means the earlier of the date which is six (6) months
following the date the Czech Notes are fully defeased or paid in full or
December 31, 2005 or such earlier date as provided herein, by acceleration or
otherwise.
"NET CASH PROCEEDS" means the aggregate cash proceeds received by TWG or
any of its Subsidiaries (other than TWG International and TWG Finance, or any of
their Subsidiaries, prior to the payment in full of the Czech Notes) in respect
of any Asset Sale, net of the direct costs relating to such Asset Sale
(including, without limitation, title insurance fees and premiums, filing and
recordation fees, permit fees, landlord consent payments and other amounts
required to be paid to transfer the assets that are the subject of such Asset
Sale, sales commissions and legal, accounting and investment banking fees
incurred in respect of such Asset Sale) and any relocation expenses incurred as
a result thereof, taxes paid or payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements), and amounts required to be applied to the repayment of
Indebtedness secured by a Lien on the asset or assets that are the subject of
such Asset Sale; PROVIDED FURTHER, HOWEVER, that if the agreement or instrument
governing such Asset Sale requires the transferor to maintain a portion of the
purchase price in escrow (whether as reserve for adjustment in respect of the
purchase price or otherwise) or to indemnify the transferee for specified
liabilities in a maximum stated amount for a stated period of time, the portion
of the cash consideration that is actually placed in escrow or segregated and
set aside by the transferor for such indemnification obligation shall not be
deemed to be Net Cash Proceeds until the escrow terminates or the transferor
ceases to segregate and set aside such funds, in whole or in part, and then only
to the extent of the proceeds released from escrow to the transferor or that are
no longer segregated and set aside by the transferor.
"OBLIGATIONS" has the meaning specified in Section 14.2.
"OFFICERS' CERTIFICATE" means a certificate signed by the Chairman of the
Board of Directors or the President or any Vice President (whether or not
designated by a number or numbers or a word or words added before or after the
title "Vice President") and by the Treasurer or the Secretary or any Assistant
Treasurer or Secretary of the Issuer and delivered to the Trustee. Each such
certificate shall include the statements provided for in Section 11.5.
"OPINION OF COUNSEL" means an opinion in writing signed by legal counsel
who may be an employee of or counsel to the Issuer or who may be other counsel
satisfactory to the Trustee. Each such opinion shall include the statements
provided for in Section 11.5, if and to the extent required hereby.
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"OUTSTANDING," when used with reference to Securities, means, subject to
the provisions of Sections 6.8 and 7.4, as of any particular time, all
Securities authenticated and delivered by the Trustee under this Indenture,
except:
(a) Securities theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation;
(b) Securities, or portions thereof, for the payment or redemption (i)
of which moneys in the necessary amount shall have been deposited in trust with
the Trustee or with any paying agent (other than the Issuer) or shall have been
set aside, segregated and held in trust by the Issuer (if the Issuer shall act
as paying agent) or (ii) of which moneys and/or Government Securities as
contemplated by Section 10.2 in the necessary amount have been theretofore
deposited with the Trustee (or another trustee satisfying the requirements of
Section 6.9) in trust for the Holders of such Securities in accordance with
Section 10.2 and the conditions set forth therein have been satisfied; PROVIDED
that if such Securities are to be redeemed prior to the maturity thereof, notice
of such redemption shall have been given as herein provided, or provision
satisfactory to the Trustee shall have been made for giving such notice; and
(c) Securities in substitution for which other Securities shall have
been authenticated and delivered, or which shall have been paid, pursuant to the
terms of Section 2.6 (unless proof satisfactory to the Trustee is presented that
any of such Securities is held by a Person in whose hands such Security is a
legal, valid and binding obligation of the Issuer).
"PAYMENT DEFAULT" has the meaning specified in Section 5.1.
"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"PRINCIPAL" wherever used with reference to the Securities or any
Security or any portion thereof, shall be deemed to include the amount of the
Security plus, when appropriate, the premium, if any.
"PROPERTY" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included on the
most recent consolidated balance sheet of such Person in accordance with GAAP.
"RECORD DATE" has the meaning specified in Section 3.7.
"RELATED BUSINESS" has the meaning specified in the Czech Indenture.
"RESPONSIBLE OFFICER" when used with respect to the Trustee means any
officer in its Corporate Trust Office, or any other assistant officer of the
Trustee in its Corporate Trust Office customarily performing functions similar
to those performed by the Persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred because of his
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or her knowledge of and familiarity with the particular subject.
"SECURITY" or "SECURITIES" means any of the 12% Secured Senior Bonds Due
2005 authenticated and delivered under this Indenture.
"SUBSCRIPTION AGREEMENT" means the subscription agreement dated as of
July 1, 1996, by and among Trans World Gaming Corp., a Nevada corporation, Trans
World Gaming of Louisiana, Inc., a Louisiana corporation, and the
Securityholders.
"SUBSIDIARY" means any corporation, association or other business entity
of which more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more of the other
Subsidiaries of that Person or a combination thereof.
"TWG" means Trans World Gaming Corp.
"TWG INTERNATIONAL" means TWG International U.S. Corporation, and its
direct and indirect Subsidiaries.
"TWG FINANCE" means TWG Finance Corp.
"TWG LOUISIANA" means Trans World Gaming of Louisiana, Inc.
"TRUSTEE" means the entity identified as "Trustee" in the first paragraph
hereof and, subject to the provisions of Article Six, shall also include any
successor trustee.
"UNDISTRIBUTED EXCESS CASH FLOW" means, for any period, that portion of
the aggregate Excess Cash Flow from all prior periods which has not been
previously used to repay accrued unpaid interest or unpaid principal due on the
Securities.
ARTICLE 2
ISSUE, EXECUTION, FORM AND
REGISTRATION OF SECURITIES
SECTION 2.1 AUTHENTICATION AND DELIVERY OF SECURITIES. Securities in
an aggregate principal amount not in excess of $4,800,000 (except as otherwise
provided in Section 2.6) may be executed by the Issuer and delivered to the
Trustee for authentication. After such execution a responsible officer of the
Trustee shall authenticate and deliver said Securities to the Holders, or as
directed by the Issuer upon the written order of the Issuer. Upon surrender of
the certificates representing the Original Securities by the Holders thereof,
the Trustee shall cancel such certificates, and the Issuer shall execute and the
Trustee shall authenticate new certificates in the form required hereby upon the
written instructions or order of the Issuer and
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the Holders. Notwithstanding whether a Holder surrenders its Original
Certificate, after the effective of date of this Indenture, the Original
Securities shall not be Outstanding hereunder, and the Holder thereof shall be
entitled only to receive a certificate(s) representing a Security as provided
herein upon surrender of the Original Security and provided herein.
SECTION 2.2 EXECUTION OF SECURITIES. The Securities shall be signed on
behalf of the Issuer by both (a) its Chairman of the Board of Directors or any
Vice Chairman of the Board of Directors or its President or any Vice President
(whether or not designated by a number or numbers or a word or words added
before or after the title "Vice President") and (b) by its Treasurer or any
Assistant Treasurer or its Secretary or any Assistant Secretary, under its
corporate seal which may, but need not, be attested. Such signatures may be the
manual or facsimile signatures of the present or any future such officers. The
seal of the Issuer may be in the form of a facsimile thereof and may be
impressed, affixed, imprinted or otherwise reproduced on the Securities.
Typographical and other minor errors or defects in any such reproduction of the
seal or any such signature shall not affect the validity or enforceability of
any Security which has been duly authenticated and delivered by the Trustee.
In case any such officer of the Issuer who shall have signed any of the
Securities shall cease to be such officer before the Security so signed shall
be authenticated and delivered by the Trustee or disposed of by the Issuer, such
Security nevertheless may be authenticated and delivered or disposed of as
though the Person who signed such Security had not ceased to be such officer of
the Issuer; and any Security may be signed on behalf of the Issuer by such
Persons as, at the actual date of the execution of such Security, shall be the
proper officers of the Issuer, although at the date of the execution and
delivery of this Indenture any such Person was not such officer.
SECTION 2.3 CERTIFICATE OF AUTHENTICATION. Only such Securities as
shall bear thereon a certificate of authentication substantially in the form
hereinabove recited, executed by the Trustee by manual signature of one of its
authorized signatories, shall be entitled to the benefits of this Indenture or
be valid or obligatory for any purpose. Such certificate by the Trustee upon
any Security executed by the Issuer shall be conclusive evidence that the
Security so authenticated has been duly authenticated and delivered hereunder
and that the Holder is entitled to the benefits of this Indenture.
SECTION 2.4 FORM, DENOMINATION AND DATE OF SECURITIES; PAYMENTS OF
EXCESS CASH FLOW IN CASH. The Securities and the Trustee's certificates of
authentication shall be substantially in the form recited above. The Securities
shall be issuable as registered securities without coupons and in denominations
provided for in the form of Security above recited. The Securities shall be
numbered, lettered, or otherwise distinguished in such manner or in accordance
with such plans as the officers of the Issuer executing the same may determine
with the approval of the Trustee.
Any of the Securities may be issued with appropriate insertions,
omissions, substitutions and variations, and may have imprinted or otherwise
reproduced thereon such legend or legends, not inconsistent with the provisions
of this Indenture, as may be required to comply with any law
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or with any rules or regulations pursuant thereto, or with the rules of any
securities market in which the Securities are admitted to trading, or to conform
to general usage.
Each Security shall be dated the date of its authentication, shall bear
interest from the issue date of the Original Securities (June 30, 1996), and
Excess Cash Flow shall be payable on the dates established pursuant to Section
3.7. Nothing herein shall be construed to require the payment of interest which
was heretofore paid under the Original Securities.
The Person in whose name any Security is registered at the close of
business on any Record Date as provided herein shall be entitled to receive such
Holder's allocation of Excess Cash Flow as provided in Section 3.7, if any,
payable on such Cash Flow Payment Date notwithstanding any transfer or exchange
of such Security subsequent to the Record Date and prior to such Cash Flow
Payment Date, except if and to the extent the Issuer shall default in the
payment due on such Cash Flow Payment Date, in which case such defaulted payment
shall be paid to the Persons in whose names Outstanding Securities are
registered at the close of business on a subsequent Record Date established
after arrangements for payment reasonably satisfactory to the Trustee have been
made by the Issuer by notice given by mail by or on behalf of the Issuer to the
Holders of Securities not less than 7 days preceding such subsequent Record
Date.
SECTION 2.5 REGISTRATION, TRANSFER AND EXCHANGE. The Issuer will keep
at each office or agency to be maintained for the purpose as provided in Section
3.2 a register or registers in which, subject to such reasonable regulations as
it may prescribe, it will register, and will register the transfer of,
Securities as in this Article provided. Such register shall be in written form
in the English language or in any other form capable of being converted into
such form within a reasonable time. At all reasonable times such register or
registers shall be open for inspection by the Trustee.
Upon due presentation for registration of transfer of any Security at
each such office or agency, the Issuer shall execute and the Trustee shall
authenticate and deliver in the name of the transferee or transferees a new
Security or Securities in authorized denominations for a like aggregate
principal amount.
Any Security or Securities may be exchanged for a Security or Securities
in other authorized denominations, in an equal aggregate principal amount.
Securities to be exchanged shall be surrendered at each office or agency to be
maintained by the Issuer for the purpose as provided in Section 3.2, and the
Issuer shall execute and the Trustee shall authenticate and deliver in exchange
therefor the Security or Securities which the Securityholder making the exchange
shall be entitled to receive, bearing numbers not contemporaneously Outstanding.
All Securities presented for registration of transfer, exchange,
redemption or payment shall (if so required by the Issuer or the Trustee) be
duly endorsed by, or be accompanied by a written instrument or instruments of
transfer in form satisfactory to the Issuer and the Trustee duly executed by,
the Holder or his attorney duly authorized in writing.
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The Issuer may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any exchange or
registration of transfer of Securities. No service charge shall be made for
any such transaction.
The Issuer shall not be required to exchange or register a transfer of
(a) any Securities for a period of 15 days next preceding the first mailing of
notice of redemption of Securities to be redeemed or (b) any Securities
selected, called or being called for redemption.
All Securities issued upon any transfer or exchange of Securities shall
be valid obligations of the Issuer, evidencing the same debt, and entitled to
the same benefits under this Indenture, as the Securities surrendered upon such
transfer or exchange.
SECTION 2.6 MUTILATED, DEFACED, DESTROYED, LOST AND STOLEN SECURITIES.
In case any temporary or definitive Security shall become mutilated, defaced or
be apparently destroyed, lost or stolen, the Issuer in its discretion, which
shall not be unreasonably withheld, may execute, and upon the written request of
an officer of the Issuer, the Trustee shall authenticate and deliver, a new
Security bearing a number not contemporaneously Outstanding, in exchange and
substitution for the mutilated or defaced Security, or in lieu of or in
substitution for the Security so apparently destroyed, lost or stolen. In every
case the applicant for a substitute Security shall furnish to the Issuer and to
the Trustee and any agent of the Issuer or the Trustee such security or
indemnity agreement or bond as may be required by them to indemnify and defend
and to save each of them harmless and, in every case of destruction, loss or
theft, evidence to their satisfaction of the apparent destruction, loss or theft
of such Security and of the ownership thereof.
Upon the issuance of any substitute Security, the Issuer may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the
reasonable fees and expenses of the Trustee) connected therewith. In case any
Security which has matured or is about to mature shall become mutilated or
defaced or be apparently destroyed, lost or stolen, the Issuer may, instead of
issuing a substitute Security, pay or authorize the payment of the same with
written direction to the Trustee (without surrender thereof except in the case
of a mutilated or defaced Security), if the applicant for such payment shall
furnish to the Issuer and to the Trustee and any agent of the Issuer or the
Trustee such security or indemnity (including a bond) as any of them may require
to save each of them harmless from all risks, however remote, and in every case
of apparent destruction, loss or theft the applicant shall also furnish to the
Issuer and the Trustee and any agent of the Issuer or the Trustee evidence to
their satisfaction of the apparent destruction, loss or theft of such Security
and of the ownership thereof.
Every substitute Security issued pursuant to the provisions of this
Section 2.6 by virtue of the fact that any Security is apparently destroyed,
lost or stolen shall constitute an additional contractual obligation of the
Issuer, whether or not the apparently destroyed, lost or stolen Security shall
be at any time enforceable by anyone and shall be entitled to all the benefits
of (but shall be subject to all the limitations of rights set forth in) this
Indenture equally and proportionately with any and all other Securities duly
authenticated and delivered hereunder. All
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Securities shall be held and owned upon the express condition that, to the
extent permitted by law, the foregoing provisions are exclusive with respect to
the replacement or payment of mutilated, defaced, or apparently destroyed, lost
or stolen Securities and shall preclude any and all other rights or remedies
notwithstanding any law or statute existing or hereafter enacted to the contrary
with respect to the replacement or payment of negotiable instruments or other
securities without their surrender.
SECTION 2.7 CANCELLATION OF SECURITIES; DISPOSITION THEREOF. All
Securities surrendered for payment, redemption, registration of transfer or
exchange, if surrendered to the Issuer or any agent of the Issuer or the
Trustee, shall be delivered to the Trustee for cancellation or, if surrendered
to the Trustee, shall be cancelled by it; and no Securities shall be issued in
lieu thereof except as expressly permitted by any of the provisions of this
Indenture. The Trustee shall destroy cancelled Securities held by it and
deliver a certificate of destruction to the Issuer from time to time. If the
Issuer shall acquire any of the Securities, such acquisition shall not operate
as a redemption or satisfaction of the Indebtedness represented by such
Securities unless and until the same are delivered to the Trustee for
cancellation. The Securities issued herein shall be delivered to the respective
Holder upon surrender and cancellation of the securities issued pursuant to the
Original Indenture.
SECTION 2.8 TEMPORARY SECURITIES. Pending the preparation of definitive
Securities, the Issuer may execute and the Trustee shall authenticate and
deliver temporary Securities (printed, lithographed, typewritten or otherwise
reproduced, in each case in form satisfactory to the Trustee). Temporary
Securities shall be issuable as registered securities without coupons, of any
authorized denomination, and substantially in the form of the definitive
Securities but with such omissions, insertions and variations as may be
appropriate for temporary Securities, all as may be determined by the Issuer
with the concurrence of the Trustee. Temporary Securities may contain such
reference to any provisions of this Indenture as may be appropriate. Every
temporary Security shall be executed by the Issuer and be authenticated by the
Trustee upon the same conditions and in substantially the same manner, and with
like effect, as the definitive Securities. Without unreasonable delay the
Issuer shall execute and shall furnish definitive Securities and thereupon
temporary Securities may be surrendered in exchange therefor without charge at
each office or agency to be maintained by the Issuer for the purpose pursuant to
Section 3.2, and the Trustee shall authenticate and deliver in exchange for such
temporary Securities a like aggregate principal amount of definitive Securities
of authorized denominations. Until so exchanged, the temporary Securities shall
be entitled to the same benefits under this Indenture as definitive Securities.
The Issuer shall not be obligated to issue definitive Securities until it or the
Trustee shall have received such temporary Securities and until the securities
issued pursuant to the Original Indenture have been surrendered and cancelled.
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ARTICLE 3
COVENANTS OF THE ISSUER
SECTION 3.1 PAYMENT OF PRINCIPAL AND INTEREST. The Issuer covenants and
agrees that it will duly and punctually pay or cause to be paid the principal
of, and interest on, each of the Securities at the place or places, at the
Maturity Date or such earlier date as provided herein and in the manner provided
in the Securities. An installment of principal or interest shall be considered
paid on the Maturity Date or such earlier date as provided herein if the Trustee
or Paying Agent holds on that date sums to pay the installment. Anything herein
or in the Securities to the contrary notwithstanding, the obligation of the
Issuer hereunder shall be subject to the limitation that payments of interest to
the Holder shall not be required to the extent that the receipt of any such
payment by such Holder would be contrary to the provisions of law applicable to
the Issuer which limit the maximum rate of interest which may be charged or
collected by the Issuer, including as set forth in Section 11.12 (the "MAXIMUM
RATE").
SECTION 3.2 OFFICES FOR PAYMENTS, ETC. So long as any of the Securities
remain Outstanding, the Issuer will maintain at such place in the City of New
York and at such other place, if any, as may be designated by the Issuer, the
following: (a) an office or agency where the Securities may be presented for
registration of transfer, for exchange and for conversion as in this Indenture
provided and (b) an office or agency where notices and demands to or upon the
Issuer in respect of the Securities or of this Indenture may be served. The
Issuer will initially maintain such offices or agencies with the corporate
secretary at the Issuer's principal place of business. The Issuer will give to
the Trustee written notice of the location of any such office or agency and of
any change of location thereof. In case the Issuer shall fail to maintain any
such office or agency or shall fail to give such notice of the location or of
any change in the location thereof, presentations and demands may be made and
notices may be served at the Corporate Trust Office.
SECTION 3.3 APPOINTMENT TO FILL A VACANCY IN OFFICE OF TRUSTEE. The
Issuer, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 6.10, a Trustee, so that there
shall at all times be a Trustee hereunder.
SECTION 3.4 PAYING AGENTS. Whenever the Issuer shall appoint a paying
agent other than the Trustee or itself, it will cause such paying agent to
execute and deliver to the Trustee an instrument in which such agent shall agree
with the Trustee, subject to the provisions of this Section 3.4:
(a) that it will hold all sums received by it as such agent for the
payment of the principal of or interest on the Securities (whether such sums
have been paid to it by the Issuer or by any other obligor on the Securities) in
trust for the benefit of the Holders of the Securities or of the Trustee; and
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(b) that it will give the Trustee notice of any failure by the Issuer
(or by any other obligor on the Securities) to make any payment of the principal
of or interest on the Securities when the same shall be due and payable.
The Issuer will, at least one Business Day prior to each due date of the
principal of or interest on the Securities, deposit with the paying agent a sum
which is in immediately available funds on the due date sufficient to pay such
principal or interest and (unless such paying agent is the Trustee) the Issuer
will promptly notify the Trustee of any failure to take such action.
If the Issuer shall act as its own paying agent, it will, on or before
each due date of the principal of or interest on the Securities, set aside,
segregate and hold in trust for the benefit of the Holders of the Securities a
sum sufficient to pay such principal or interest so becoming due. The Issuer,
or paying agent which is not the Trustee, will promptly notify the Trustee in
writing of any failure to take such action.
Notwithstanding anything in this Section 3.4 to the contrary, the Issuer
may at any time, for the purpose of obtaining a satisfaction and discharge of
this Indenture or for any other reason, pay or cause to be paid to the Trustee
all sums held in trust by the Issuer or any paying agent hereunder, as required
by this Section 3.4, such sums to be held by the Trustee upon the trusts herein
contained.
Notwithstanding anything in this Section 3.4 to the contrary, the
agreement to hold sums in trust as provided in this Section 3.4 is subject to
the provisions of Sections 10.4 and 10.5.
The Issuer initially appoints Trans World Gaming Corp. as paying agent.
SECTION 3.5 OFFICERS' CERTIFICATES AS TO DEFAULT AND AS TO COMPLIANCE.
The Issuer will, so long as any of the Securities are Outstanding:
(a) deliver to the Trustee, forthwith upon becoming aware of any
default or defaults in the performance of any covenant, agreement or
condition contained in this Indenture (including notice of any event
which with the giving of notice, lapse of time or both would become an
Event of Default under Section 5.1 hereof), an Officers' Certificate
specifying such default or defaults; and
(b) deliver to the Trustee within 90 days after the end of each
fiscal year of the Issuer beginning with the fiscal year ending December
31, 1996, an Officers' Certificate, to the effect that:
(i) a diligent review of the activities of the Issuer
and its Subsidiaries during such year and of performance under
this Indenture has been made under such officers' supervision, and
(ii) to the best of such officers' knowledge, based on
such review, the Issuer has fulfilled all its obligations under
this Indenture throughout such year, or
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if there has been a default in the fulfillment of any such
obligation, specifying each such default known to them and the
nature and status thereof.
SECTION 3.6 MAINTENANCE OF PROPERTIES, ETC. Subject to Section 3.12,
the Issuer shall, and TWG shall cause TWG Louisiana and each of the Subsidiaries
of TWG Louisiana to, maintain its material properties and assets in working
order and condition and make all necessary repairs, renewals, replacements,
additions, betterments and improvements thereto, all as in the judgment of the
Issuer may be necessary so that the business carried on in connection therewith
may be conducted at all usual and ordinary times.
The Issuer shall, and TWG shall cause TWG Louisiana and each of TWG
Louisiana's Subsidiaries to, maintain with insurers that TWG believes in good
faith to be financially sound and reputable such insurance as may be required by
law and such other insurance, to such extent and against such hazards and
liabilities, as it in good faith determines is customarily maintained by
companies similarly situated with like properties.
Subject to Section 3.12 the Issuer shall, and TWG shall cause TWG
Louisiana and each of TWG Louisiana's Subsidiaries to do or cause to be done
all things necessary to preserve and keep in full force and effect its
existence, rights and franchises, except to the extent permitted by this
Indenture and except in such cases where the Board of Directors determines in
good faith that failure to do so would not have a material adverse effect on the
business, earnings, properties, assets, financial condition or results of
operation of TWG Louisiana and its Subsidiaries taken as a whole.
The Issuer shall, and TWG shall cause TWG Louisiana and each of TWG
Louisiana's Subsidiaries to, comply in all material respects with all statutes,
laws, ordinances, or government rules and regulations to which it is subject.
The Issuer shall, and TWG shall cause TWG Louisiana and each of TWG
Louisiana's Subsidiaries to, pay prior to delinquency all taxes, assessments and
governmental levies except as contested in good faith and by appropriate
proceedings.
SECTION 3.7 EXCESS CASH FLOW PAYMENT. Not less than twenty (20)
days following each two calendar month period, with the first such two month
period commencing April 1, 1998, the Issuer shall (a) deposit in immediately
available funds with the Trustee in a fund which the Trustee may establish for
the benefit of the Securityholders an aggregate amount equal to Excess Cash
Flow, if any, for the prior two month period, and (b) regardless of whether any
repayment of principal is required under this Section, provide the Trustee and
each Securityholder with a written notice containing in reasonable detail the
Issuer's calculation of Excess Cash Flow. Excess Cash Flow shall be applied
first to accrued, unpaid interest on an equal and ratable basis among the
Securityholders in proportion, as nearly as practicable, to the respective
unpaid principal amount due each Securityholder, adjusted for any reduction in
principal as to any Securityholder pursuant to Section 13, so that the sum
distributed accurately reflects the interest accrued by such Securityholder as a
percentage of the total interest paid for in such two month period and the
balance thereof shall be applied to principal as set
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forth herein. Any repayments of principal required by this Section shall be
paid on an equal and ratable basis among the Securityholders in proportion, as
nearly as practicable, to the respective unpaid principal amounts of the
Securities held by each Securityholder without taking into account any reduction
in principal pursuant to Section 13, except to the extent such failure to take
into account such principal reductions pursuant to Section 13 would result in a
payment of an amount in excess of the principal sum due to such Securityholder.
The reduction in the principal amount of the Securities effected by repayments
made under this Section may be made without presentation of the Securities and
shall be binding on all future Securityholders. Securityholders shall make the
appropriate notation on the Securities to indicate the amount of any repayments
under this Section. If there is no Excess Cash Flow, nothing herein shall be
construed to create an obligation to make a payment for such period.
The Excess Cash Flow payment will be made in the following manner. At
least 5 days (or other period of time the Issuer and the Trustee may agree upon)
prior to the date on which the Issuer is required to make such the payment
required by this Section 3.7, the Issuer shall give the Trustee written notice
of such payment, which notice shall state the amount of the payment, certify
that such payment is equal to Excess Cash Flow for the applicable period, and
set forth the date the Issuer has selected that the payment be made ("Cash Flow
Payment Date"). The Record Date (herein so called) to determine the Holders who
shall be entitled to receive the payment shall be 10 Business Days before the
Cash Flow Payment Date selected by the Issuer. The Trustee shall not be
required to send a notice of the prepayment to the Holders with respect to such
payment. When the money to effect the payment of the Securities is held by the
Trustee for the purpose of effecting such payment, interest on that portion of
the Securities to be prepaid shall cease to accrue on the Principal being
reduced by the payment. The Trustee and the Holders shall make notations with
respect to the reduction of principal on Securities made a result of the
payment, and such notations of the Trustee shall be binding on the
Securityholders and all future Securityholders, even if such holders do not make
such notations on the certificates representing such Securities. The payments
will be made by the Trustee in increments of $100.00. Any Excess Cash Flow
which does not meet this requirement will be returned to the Issuer pursuant to
its written instructions and will be Undistributed Excess Cash Flow.
SECTION 3.8 BOOKS. Issuer will keep at all times proper books of record
and account in which full, true and correct entries will be made of its
transactions in accordance with Generally Accepted Accounting Principles.
SECTION 3.9 GUARANTEES. Issuer will not guarantee on a basis senior in
right of payment to the Securities, directly or indirectly, any obligation or
indebtedness of any other Person. Nothing herein shall be construed to (i)
prohibit the issuance of the Bishkek Note, the Czech Notes, or the Funding Note,
or (ii) permit the issuance of any indebtedness that would be secured by the
Collateral granted to the Holders.
SECTION 3.10 SENIOR INDEBTEDNESS. Issuer will not incur, create, assume
or at any time become liable, contingently or otherwise for any borrowed or
other indebtedness that is senior in right of payment to the Securities, other
than the Bishkek Note. Nothing herein shall be
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construed to (i) prohibit the issuance of the Bishkek Note, the Czech Notes, or
the Funding Note; or (ii) permit the issuance of any indebtedness that would be
secured by the Collateral granted to the Holders. Nothing herein shall be
construed to permit the issuance of any indebtedness secured by the Collateral
(this clause shall not be construed to prohibit the Bishkek Note or the Czech
Note).
SECTION 3.11 DISTRIBUTIONS. Issuer will not declare or pay, or set
apart any funds for the payment of, any dividend on any shares of Capital Stock
by reduction of capital surplus or otherwise, or make any distribution in
respect of shares of Capital Stock or redeem, repurchase, or effect any other
sale, or exchange, upon any of its Capital Stock.
SECTION 3.12 DISPOSITION OF ASSETS. Issuer will not sell, assign,
lease, transfer or otherwise dispose of, to any third party, in any transaction
or series of transactions, all or any portion of its properties or assets,
except for sales, assignments, leases, transfers, or dispositions at fair market
value, of properties or assets, where such net proceeds are utilized by the
Issuer to invest in its existing business, except, in the event Issuer
determines in good faith (or to the extent so directed by the holders of 50% of
the Securities) that it is no longer able to operate a gambling facility
(including as a result of a loss of its license to operate such a facility or as
a result of a loss of a premises lease). Upon such determination, Issuer shall
take all actions necessary and appropriate to promptly liquidate such assets
which comprise the facility which has ceased operations in such manner as shall
realize proceeds which reasonably represent the fair market value thereof. This
Section shall not govern the Capital Stock or assets of TWG International, TWG
Finance, or Subsidiaries of either.
SECTION 3.13 LINE OF BUSINESS. TWG shall not permit to TWG
International to, and shall not permit any of TWG International's Subsidiaries
to, engage in any business other than acquiring, developing and operating local
casinos outside the United States of America. TWG shall not, and shall not
permit any of its Subsidiaries, (other than TWG International and its
Subsidiaries) to engage in any business other than acquiring, developing and
operating local casinos inside of the United States and marketing activities
relating thereto, other than the Bishkek Facility, which may be operated by TWG.
TWG Finance shall not engage in any business other than performance of its
obligations arising under the Czech Note, Funding Note, and all documents
related to those two transactions (including indentures).
SECTION 3.14 PAYMENTS FOR CONSENT. None of the Issuers shall, nor shall
permit any Subsidiary to, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder of
the Securities for or as an inducement to any consent, waiver or amendment of
any terms or provisions of the Securities unless such consideration is offered
to be paid or agreed to be paid to all Holders of the Securities which so
consent, waive or agree in the time frame set forth in solicitation documents
relating to such consent, waiver or agreement.
SECTION 3.15 COST OF OPERATIONS. TWG International shall be solely
responsible for all costs of operating TWG Finance, TWG International and TWG
International's direct and indirect Subsidiaries. In addition, TWG
International shall be responsible for costs of
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administration of TWG in the sum of $25,000 per month, through June 30, 1999,
and for one hundred percent of such costs of administration from the earlier of
(a) the date TWG no longer has adequate cash from its business operations in
Louisiana to pay such costs, or (b) after June 30, 1999. TWG shall be solely
responsible for (a) costs associated with its existing operations in the United
States, (b) costs of administration of TWG in excess of $25,000 per month
through the earlier of June 30, 1999 or the date TWG no longer has adequate cash
from its business operations in Louisiana to pay such costs. Income generated
from the Bishkek Facility, as well as cage cash in Louisiana and Bishkek and
assets located in Louisiana subject to the security interest herein on the
Collateral shall not be used to fund administrative costs. Cost of
administration refers to all costs associated with the TWG corporate
headquarters in New York and London, including rent and salaries and expenses of
all officers and employees at such location (or any successor location).
Nothing herein shall prohibit TWG International from reimbursing TWG as to costs
incurred in the acquisition of the Czech Casinos, this Indenture, the Czech
Indenture and the Funding Indenture, up to the sum of $250,000 at the closing of
the Czech Indenture, or directly paying all unpaid costs related to those
transactions.
SECTION 3.16 [Reserved].
SECTION 3.17 WAIVER OF STAY, EXTENSION OR USURY LAWS. The Issuer
covenants (to the extent that it may lawfully do so) that it shall not at any
time insist upon, or plead, or in any manner whatsoever claim, and shall resist
any and all efforts to be compelled to take the benefit or advantage of, any
stay or extension law or any usury law or other law which would prohibit or
forgive the Issuer from paying all or any portion of the principal of or
interest on the Securities as contemplated herein, wherever enacted, now or at
any time hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that it may lawfully do so)
the Issuer hereby expressly waives all benefit or advantage of any such law and
covenants that it shall not hinder, delay or impede the execution of any power
herein granted to the Trustee but shall suffer and permit the execution of every
such power as though no such law had been enacted.
SECTION 3.18 BISHKEK NOTE. All sums earned by TWG's operations at
Bishkek (net of operating costs of such Bishkek Facility) shall be used to repay
the Bishkek Note, until the Bishkek Note is paid in full, and then shall be used
toward the repayment of the Securities.
SECTION 3.19 SECURITY INTEREST. The Issuer shall execute documents
necessary to renew, affirm, reinstate, restate, replace and amend the Securities
and the security interest granted in all real and personal property of the
Issuer in the State of Louisiana. Such documents shall be prepared, executed,
delivered and filed by no later than December 31, 1998, unless extended in
writing by a majority of the holders of the Securities. The Issuer shall
reimburse all reasonable costs, including attorneys fees incurred by the
Securityholders and Trustee in preparing and executing such documents.
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ARTICLE 4
SECURITYHOLDERS' LISTS AND REPORTS
BY THE ISSUER AND THE TRUSTEE
SECTION 4.1 ISSUER TO FURNISH TRUSTEE INFORMATION AS TO NAMES AND
ADDRESSES OF SECURITYHOLDERS. The Issuer covenants and agrees that it will
furnish or cause to be furnished to the Trustee a list in such form as the
Trustee may reasonably require of the names and addresses of the Holders of the
Securities:
(a) semi-annually and not more than 15 days after each record
date for the payment of interest on the Securities, as hereinabove
specified, as of such record date; and
(b) at such other times as the Trustee may request in writing,
within 30 days after receipt by the Issuer of any such request as of a
date not more than 15 days prior to the time such information is
furnished;
PROVIDED that if and so long as the Trustee shall be the Security registrar,
such list shall not be required to be furnished.
SECTION 4.2 PRESERVATION AND DISCLOSURE OF SECURITYHOLDERS' LISTS.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of
the Holders of Securities contained in the most recent list furnished to
it as provided in Section 4.1 or maintained by the Trustee in its
capacity as Security registrar, if so acting. The Trustee may destroy
any list furnished to it as provided in Section 4.1 upon receipt of a new
list so furnished.
(b) The Security register maintained by the Trustee as registrar
will be available for inspection by any Holder or its attorney duly
authorized in writing during normal business hours of the Trustee upon
reasonable prior notice.
SECTION 4.3 REPORTS BY THE ISSUER. The Issuer covenants:
(a) to file with the Commission, and within 15 days after the
Issuer files the same with the Commission, file with the Trustee, and
mail or furnish copies to the Trustee and cause the Trustee to mail to
the Holders at their addresses as set forth in the register of the
Securities, copies of the annual reports and of the information,
documents, and other reports (or copies of such portions of any of the
foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Issuer may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act or
which the Issuer would be required to file with the Commission if the
Issuer then had a class of securities registered under the Exchange Act;
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(b) to file with the Trustee and the Commission, in accordance
with rules and regulations prescribed from time to time by the
Commission, such additional information, documents, and reports with
respect to compliance by the Issuer with the conditions and covenants
provided for in this Indenture as may be required from time to time by
such rules and regulations;
(c) to cause its annual report to securityholders and any
quarterly or other financial reports furnished to its securityholders
generally to be filed with the Trustee and mailed, no later than the date
such materials are mailed or made available to the Issuer's
Securityholders to the Holders at their addresses as set forth in the
register of Securities; and
SECTION 4.4 Listing. The Issuer shall promptly notify the Trustee in
writing if the Securities become listed on any stock exchange and the Trustee
shall within thirty (30) days of receipt of such notice notify the Holders.
ARTICLE 5
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.1 EVENT OF DEFAULT DEFINED; ACCELERATION OF MATURITY; WAIVER
OF DEFAULT. In case one or more of the following Events of Default (whatever
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body) shall have occurred and be continuing:
(a) default in the payment of interest on the Securities as and
when the same becomes due and payable, and the continuance of such
default for 15 days; or
(b) default in the payment of all or any part of the principal on
the Securities as and when the same shall become due and payable either
at maturity, upon acceleration or redemption or otherwise; or
(c) failure on the part of the Issuer duly to observe or perform
any covenants or agreements on the part of the Issuer contained in the
Securities, in this Indenture, or any of the Collateral Agreements and
the continuance of such failure for a period of 15 days after the date on
which written notice specifying such failure, stating that such notice is
a "Notice of Event of Default" hereunder and demanding that the Issuer
remedy the same, is given to the Issuer by the Trustee or to the Issuer
and the Trustee by the Holders of at least 25% in aggregate principal
amount of the Securities at the time Outstanding; or
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(d) failure on the part of the Issuer to appoint a Trustee within
5 days of a written request of the holders of 25% in principal amount of
the securities to appoint a Trustee; or
(e) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by TWG, TWG Louisiana or any
Subsidiaries of TWG Louisiana (or the payment of which is Guaranteed by
TWG, TWG Louisiana or any Subsidiaries of TWG Louisiana), which default
is caused by a failure to pay due principal or interest on such
Indebtedness after any applicable grace period (a "Payment Default"), and
the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has
been and is continuing a Payment Default, aggregates $150,000 or more; or
(f) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by TWG, TWG Louisiana or any
Subsidiaries of TWG Louisiana (or the payment of which is Guaranteed by
TWG, TWG Louisiana or any Subsidiaries TWG Louisiana), which default
results in the acceleration of such Indebtedness prior to its express
maturity and the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there has
been and is continuing a Payment Default or the maturity of which has
been so accelerated and not rescinded, aggregates $150,000 or more; or
(g) failure by TWG, TWG Louisiana or any Subsidiaries of TWG
Louisiana to pay final judgments (other than any judgment as to which a
reputable insurance company has accepted coverage without a reservation
of rights) aggregating in excess of $150,000, which judgments are not
stayed or discharged within 15 days after their entry; or
(h) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of TWG, TWG Louisiana or any
Subsidiaries of TWG Louisiana in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of TWG, TWG Louisiana or any
Subsidiaries of TWG Louisiana or for any substantial part of the property
of TWG, TWG Louisiana or any Subsidiaries of TWG Louisiana or ordering
the winding up or liquidation of the affairs of TWG, TWG Louisiana or any
Subsidiaries of TWG Louisiana and such decree or order shall remain
unstayed and in effect for a period of 15 consecutive days; or
(i) TWG, TWG Louisiana or any Subsidiaries of TWG Louisiana shall
commence a voluntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or consent to the entry of
an order for relief in an involuntary case under any such law, or consent
to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of TWG,
TWG Louisiana or any Subsidiaries of TWG Louisiana or for any substantial
part of the property of TWG, TWG Louisiana or any Subsidiaries of TWG
Louisiana, or TWG, of
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TWG Louisiana or any Subsidiaries of TWG Louisiana shall make any general
assignment for the benefit of creditors;
(j) indictment of any officer or Key Employee of TWG, TWG
Louisiana or any subsidiaries of TWG Louisiana by any governmental
authority;
(k) fraud by an officer or Key Employee of TWG, TWG Louisiana or
any subsidiaries of TWG Louisiana; or
(l) the Issuer does not pay, or shall be unable to pay, or shall
admit in writing its inability to pay its debts as such debts become due.
then, and in each and every such case (other than an Event of Default specified
in clause (h) or (i) above relating to the Issuer), unless the principal of all
of the Securities shall have already become due and payable, either the Trustee
or the Holders of not less than 50% in aggregate principal amount of the
Securities then Outstanding hereunder, by notice in writing to the Issuer (and
to the Trustee if given by Securityholders) (the "Acceleration Notice"), may
declare all the debt evidenced by the Securities to be due and payable
immediately (the "Acceleration Date"). If an Event of Default specified in
clause (h) or (i) above relating to the Issuer occurs, all the Securities and
the accrued interest thereon shall be immediately due and payable without any
declaration or other act on the part of the Trustee or any Securityholder.
SECTION 5.2 COLLECTION OF INDEBTEDNESS BY TRUSTEE; TRUSTEE MAY PROVE
INDEBTEDNESS. The Issuer covenants that (a) in case default shall be made in
the payment of interest on any of the Securities on the date due and such
default shall have continued for a period of 15 days, or (b) in case default
shall be made in the payment of all or any part of the principal of any of the
Securities when the same shall have become due and payable, whether upon
maturity or upon any redemption or by declaration or otherwise -- then upon
demand by the Trustee the Issuer will pay to the Trustee for the benefit of the
Holders of the Securities the whole amount that then shall have become due and
payable on all such Securities for principal or interest, as the case may be
(with interest to the date of such payment upon the overdue principal and, to
the extent that payment of such interest is enforceable under applicable law, on
interest at the rate borne by the Securities); and in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including such amounts as shall be due the Trustee and each
predecessor Trustee under Section 6.6.
Until such demand is made by the Trustee, the Issuer may pay the
principal of and interest on the Securities to the registered Holders, whether
or not the Securities be overdue.
In case the Issuer shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any action or proceeding at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Issuer or other obligor upon the Securities
and collect
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in the manner provided by law out of the Property of the Issuer or other
obligor upon the Securities, wherever situated, the moneys adjudged or decreed
to be payable.
In case there shall be pending proceedings relative to the Issuer or any
other obligor upon the Securities under Title 11 of the United States Code or
any other applicable Federal or state bankruptcy, insolvency or other similar
law, or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or the property of the Issuer or such other
obligor, or in case of any judicial proceedings relative to the Issuer or other
obligor upon the Securities, or to the creditors or property of the Issuer or
such other obligor, the Trustee, irrespective of whether the principal of the
Securities shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section 5.2, shall be entitled and empowered,
by intervention in such proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Securities, and
to file such other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for
reasonable compensation to the Trustee and each predecessor Trustee, and
their respective agents, attorneys and counsel, and for reimbursement of
all expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee, except as a result of negligence
or bad faith) and of the Securityholders allowed in any judicial
proceedings relative to the Issuer or other obligor upon the Securities,
or to the creditors or Property of the Issuer or such other obligor;
(b) unless prohibited by applicable law and regulations, to vote
on behalf of the Holders of the Securities in any election of a trustee
or a standby trustee in arrangement, reorganization, liquidation or other
bankruptcy or insolvency proceedings or Person performing similar
functions in comparable proceedings; and
(c) to collect and receive any moneys or other Property payable
or deliverable on any such claims, and to distribute all amounts received
with respect to the claims of the Securityholders and of the Trustee on
their behalf; and any trustee, receiver, or liquidator, custodian or
other similar official is hereby authorized by each of the
Securityholders to make payments to the Trustee, and, in the event that
the Trustee shall consent to the making of payments directly to the
Securityholders, to pay to the Trustee such amounts as shall be due the
Trustee, and each predecessor Trustee under Section 6.6.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any
Securityholder any plan or reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Securityholder in
any such proceeding except, as aforesaid, to vote for the election of a trustee
in bankruptcy or similar Person.
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All rights of action and of asserting claims under this Indenture, or
under any of the Securities, may be enforced by the Trustee without the
possession of any of the Securities or the production thereof on any trial or
other proceedings relative thereto, and any such action or proceedings
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of the Trustee, each predecessor
Trustee and their respective agents and attorneys, shall be for the ratable
benefit of the Holders of the Securities in respect of which such judgment has
been sought.
In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the Holders
of the Securities, and it shall not be necessary to make any Holders of the
Securities parties to any such proceedings.
SECTION 5.3 APPLICATION OF PROCEEDS. Any moneys collected by the
Trustee pursuant to this Article shall be applied in the following order at the
date or dates fixed by the Trustee and, in case of the distribution of such
moneys on account of principal or interest, upon presentation of the several
Securities and stamping (or otherwise noting) thereon the payment, or issuing
Securities in reduced principal amounts in exchange for the presented Securities
if only partially paid, or upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and each
predecessor Trustee under Section 6.6;
SECOND: In case the principal of the Securities shall not have become
and be then due and payable, to the payment of interest with interest (to the
extent that such interest has been collected by the Trustee) upon the
installments of interest at the Default Rate borne by the Securities, such
payments to be made ratably to the Persons entitled thereto, without
discrimination or preference;
THIRD: In case the principal of the Securities shall have become and
shall be then due and payable, to the payment of the whole amount then owing and
unpaid upon all the Securities for principal and interest, with interest upon
the overdue principal, and (to the extent that such interest has been collected
by the Trustee) upon installments of interest at the Default Rate borne by the
Securities; and in case such moneys shall be insufficient to pay in full the
whole amount so due and unpaid upon the Securities, then to the payment of such
principal and interest, without preference or priority of principal over
interest, or of interest over principal, or of any installment of interest over
any other installment of interest, or of any Security over any other Security,
ratably to the aggregate of such principal and accrued and unpaid interest; and
FOURTH: To the payment of the remainder, if any, to the Issuer or any
other Person lawfully entitled thereto.
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SECTION 5.4 SUITS FOR ENFORCEMENT. In case an Event of Default has
occurred, has not been waived and is continuing, the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture or the Collateral Agreements by such appropriate judicial proceedings
as the Trustee shall deem most effectual to protect and enforce any of such
rights, either at law or in equity or in bankruptcy or otherwise, whether for
the specific enforcement of any covenant or agreement contained in this
Indenture or the Collateral Agreements or in aid of the exercise of any power
granted in this Indenture or the Collateral Agreements or to enforce any other
legal or equitable right vested in the Trustee by this Indenture or the
Collateral Agreements or by law.
SECTION 5.5 RESTORATION OF RIGHTS ON ABANDONMENT OF PROCEEDINGS. In
case the Trustee shall have proceeded to enforce any right under this Indenture
and such proceedings shall have been discontinued or abandoned for any reason,
then and in every such case the Issuer and the Trustee shall be restored
respectively to their former positions and rights hereunder, and all rights,
remedies and powers of the Issuer, the Trustee and the Securityholders shall
continue as though no such proceedings had been taken.
SECTION 5.6 LIMITATIONS ON SUITS BY SECURITYHOLDERS. No Holder shall
have any right by virtue or by availing of any provision of this Indenture to
institute any action or proceeding at law or in equity or in bankruptcy or
otherwise upon or under or with respect to this Indenture, or for the
appointment of a trustee, receiver, liquidator, custodian or other similar
official or for any other remedy hereunder, unless such Holder previously shall
have given to the Trustee written notice of an Event of Default and of the
continuance thereof, as hereinbefore provided, and unless also the Holders of
not less than 25% in aggregate principal amount of the Securities then
Outstanding shall have made written request upon the Trustee to institute such
action or proceeding in its own name as trustee hereunder and shall have offered
to the Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby and the Trustee for
30 days after its receipt of such notice, request and offer of indemnity shall
have failed to institute any such action or proceedings and no direction
inconsistent with such written request shall have been given to the Trustee
pursuant to Section 5.9; it being understood and intended, and being expressly
covenanted by the taker and Holder of every Security with every other taker and
Holder and the Trustee, that no one or more Holders of Securities shall have any
right in any manner whatever by virtue or by availing of any provision of this
Indenture to affect, disturb or prejudice the rights of any other Holder of
Securities, or to obtain or seek to obtain priority over or preference to any
other such Holder or to enforce any right under this Indenture, except in the
manner herein provided and for the equal, ratable and common benefit of all
Holders of Securities. For the protection and enforcement of the provisions of
this Section 5.6, each and every Securityholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
SECTION 5.7 UNCONDITIONAL RIGHT OF SECURITYHOLDERS TO INSTITUTE CERTAIN
SUITS. Notwithstanding any other provision in this Indenture and any provision
of any Security, the right of any Holder to receive payment of the principal of
and interest on such Security on or after the respective due dates expressed in
such Security, or to
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institute suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder.
SECTION 5.8 POWERS AND REMEDIES CUMULATIVE; DELAY OR OMISSION NOT WAIVER
OF DEFAULT. No right or remedy herein conferred upon or reserved to the Trustee
or to the Securityholders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or thereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
No delay or omission of the Trustee or of any Holder to exercise any
right or power accruing upon any Event of Default occurring and continuing as
aforesaid shall impair any such right or power or shall be construed to be a
waiver of any such Event of Default or an acquiescence therein; and subject to
Section 5.6, every power and remedy given by this Indenture or by law to the
Trustee or to the Securityholders may be exercised from time to time, as often
as shall be deemed expedient, by the Trustee or by the Securityholders.
SECTION 5.9 CONTROL BY SECURITYHOLDERS. The Holders of a majority in
aggregate principal amount of the Securities at the time Outstanding shall have
the right to direct the time, method, and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any trust or power conferred
on the Trustee by this Indenture; PROVIDED that such direction shall not be
otherwise than in accordance with law and the provisions of this Indenture;
PROVIDED, FURTHER, that the Trustee is provided with reasonable indemnification
by the Holders prior to taking such action; and PROVIDED, FURTHER, that (subject
to the provisions of Section 6.1) the Trustee shall have the right to decline to
follow any such direction if the Trustee, being advised by counsel, shall
determine that the action or proceeding so directed may not lawfully be taken or
if the Trustee in good faith by its board of directors, the executive committee
or a trust committee of directors or Responsible Officers of the Trustee shall
determine that the action or proceeding so directed would involve the Trustee in
any financial or other liability or if the Trustee in good faith shall so
determine that the actions or forbearances specified in or pursuant to such
direction shall be unduly prejudicial to the interests of Holders of the
Securities not joining in the giving of said direction, it being understood that
(subject to Section 6.1) the Trustee shall have no duty to ascertain whether or
not such actions or forbearances are unduly prejudicial to such Holders.
Nothing in this Indenture shall impair the right of the Trustee in its
discretion to take any action deemed proper by the Trustee and which is not
inconsistent with such direction by Securityholders.
SECTION 5.10 WAIVER OF PAST DEFAULTS. The Holders of a majority in
aggregate principal amount of the Securities at the time Outstanding, by notice
to the Issuer and the Trustee, may on behalf of all Holders, upon providing the
Trustee with reasonable indemnity with respect to any action that might be taken
by the Holders not so consenting, provide forbearances, waive any default or
Event of Default hereunder and its consequences under this
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Indenture including acceleration, except a default in the payment of principal
of or interest on any of the Securities at the Maturity Date. In the case of
any such waiver, the Issuer, the Trustee and the Holders of the Securities shall
be restored to their former positions and rights hereunder, respectively; but no
such waiver shall extend to any subsequent or other default or impair any right
consequent thereon.
Upon any such waiver, such default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured, and not to have occurred for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.
SECTION 5.11 TRUSTEE TO GIVE NOTICE OF DEFAULT, BUT MAY WITHHOLD IN
CERTAIN CIRCUMSTANCES. The Trustee shall transmit to the Securityholders, as
the names and addresses of such Holders appear on the registry books, notice by
mail of all defaults actually known to a Responsible Officer of the Trustee,
such notice to be transmitted within 90 days after the occurrence thereof,
unless such defaults shall have been cured before the giving of such notice (the
term "default" or "defaults" for the purposes of this Section 5.11 being hereby
defined to mean any event or condition which is, or with notice or lapse of time
or both would become, an Event of Default); PROVIDED that, except in the case of
default in the payment of the principal of or interest on any of the Securities,
the Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee, or a trust committee of directors
and/or Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interests of the Securityholders.
SECTION 5.12 RIGHT OF COURT TO REQUIRE FILING OF UNDERTAKING TO PAY
COSTS. All parties to this Indenture agree, and each Holder by its acceptance
thereof shall be deemed to have agreed, that any court may in its discretion
require, in any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.12 shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Securityholder or group of
Securityholders holding in the aggregate more than 10% in aggregate principal
amount of the Securities Outstanding, or to any suit instituted by any
Securityholder for the enforcement of the payment of the principal of or
interest on any Security on or after the Maturity Date expressed in such
Security.
SECTION 5.13 EXCESS CASH FLOW. All references to payments of principal
and interest refer soley to the Excess Cash Flow payments required by Section
3.17 of this Indenture.
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ARTICLE 6
CONCERNING THE TRUSTEE
SECTION 6.1 DUTIES AND RESPONSIBILITIES OF THE TRUSTEE; DURING DEFAULT;
PRIOR TO DEFAULT. The Trustee, prior to the occurrence of an Event of Default
and after the curing or waiving of all Events of Default which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. In case an Event of Default has
occurred (which has not been cured or waived) the Trustee shall exercise such of
the rights and powers vested in it by this Indenture, and use the same degree of
care and skill in their exercise as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default which may have occurred:
(i) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Indenture, and
the Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be read
into this Indenture against the Trustee; and
(ii) in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein,
upon any statements, certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but
in the case of any such statements, certificates or opinions which
by any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the
same to determine whether or not they conform to the requirements
of this Indenture;
(b) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Responsible Officers of
the Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(c) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a majority in principal amount
of the Securities at the time Outstanding relating to the time, method
and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee,
under this Indenture;
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(d) the Trustee shall not be charged with knowledge of an Event
of Default unless a Responsible Officer of the Trustee obtains written
notice of such default; and
(e) whether or not therein expressly so provided, every provision
of this Indenture relating to the conduct or affecting the liability of
or affording protection to the Trustee shall be subject to the provisions
of this Section 6.1.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial or
other liability in the performance of any of its duties or in the exercise of
Any of its rights or powers, if repayment of such funds or adequate indemnity
against such liability is not assured to the reasonable satisfaction of the
Trustee.
SECTION 6.2 CERTAIN RIGHTS OF THE TRUSTEE. SUBJECT TO SECTION 6.1:
(a) the Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution,
Officers' Certificate or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture, note,
coupon, security or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) any request, direction, order or demand of the Issuer
mentioned herein shall be sufficiently evidenced by an Officers'
Certificate (unless other evidence in respect thereof be herein
specifically prescribed), and any resolution of the Board of Directors
may be evidenced to the Trustee by a copy thereof certified by the
Secretary or an Assistant Secretary of the Issuer;
(c) the Trustee may consult with counsel and any advice or
Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted to be
taken by it hereunder in good faith and in accordance with such advice or
Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Indenture at the request, order
or direction of any of the Securityholders pursuant to the provisions of
this Indenture, unless such Securityholders shall have offered to the
Trustee reasonable security and/or indemnity against the costs, expenses
and liabilities which might be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or within
the discretion, rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Event of Default hereunder and
after the curing or waiving of all Events of Default which may have
occurred, the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order,
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approval, appraisal, bond, debenture, note, coupon, security, or other
paper or document unless requested in writing so to do by the Holders of
not less than a majority in aggregate principal amount of the Securities
then Outstanding; PROVIDED that if the payment within a reasonable time
to the Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion of
the Trustee, not reasonably assured to the Trustee by the security
afforded to it by the terms of this Indenture, the Trustee may require
reasonable indemnity against such expenses or liabilities as a condition
to proceeding; the reasonable expenses of every such examination shall be
paid by the Issuer or, if paid by the Trustee or any predecessor trustee,
shall be repaid by the Issuer upon demand; and
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents
or attorneys, custodians or nominees not regularly in its employ and the
Trustee shall not be responsible for any misconduct or negligence on the
part of any such agent, attorney, custodian or nominee appointed with due
care by it hereunder.
(h) the Trustee makes no representation as to the validity or
adequacy of this Indenture, the Collateral, or the Securities. It shall
not be accountable for the Issuers' use of the proceeds from the sale of
the Securities, and it shall not be responsible for any statement in the
Securities, other than its authentication. Except required by Section
14.6 of this Indenture, the Trustee shall not be responsible for any
recording, re-recording, filing or refiling of this Indenture or other
document to perfect the security interest in the Collateral. The Trustee
shall not be bound to ascertain or inquire as to the performance of the
obligations of the Issuer under this Indenture or the Collateral
Agreements. The Trustee may nevertheless require the Issuer to furnish
information regarding performance of its obligations hereunder and under
the Collateral Agreements, but is not obligated to do so.
SECTION 6.3 TRUSTEE NOT RESPONSIBLE FOR RECITALS, DISPOSITION OF
SECURITIES OR APPLICATION OF PROCEEDS THEREOF. The recitals contained herein
and in the Securities, except the Trustee's certificates of authentication,
shall be taken as the statements of the Issuer, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representation as to the validity or sufficiency of this Indenture or of the
Securities. The Trustee shall not be accountable for the use or application by
the Issuer of any of the Securities or of the proceeds thereof. The Trustee
shall not be accountable or responsible for any information, statement or
recital in any prospectus, private offering memorandum or any other disclosure
material prepared or distributed in connection with the distribution of the
Securities.
SECTION 6.4 TRUSTEE AND AGENTS MAY HOLD SECURITIES; COLLECTIONS, ETC.
The Trustee or any agent of the Issuer or the Trustee, in its individual or any
other capacity, may become the owner or pledgee of Securities with the same
rights it would have if it were not the Trustee or such agent and, subject to
Sections 6.8 and 6.13, if operative, may otherwise deal with the Issuer and
receive, collect, hold and retain collections from the Issuer with the same
rights it would have if it were not the Trustee or such agent.
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SECTION 6.5 MONEYS HELD BY TRUSTEE. Subject to the provisions of
Section 10.6 hereof, all moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required by mandatory provisions of law. Neither the Trustee nor any agent of
the Issuer or the Trustee shall be under any liability for interest on any
moneys received by it hereunder.
SECTION 6.6 COMPENSATION AND INDEMNIFICATION OF TRUSTEE AND ITS PRIOR
CLAIM. The Issuer covenants and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to, reasonable compensation (which shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust) and the Issuer covenants and agrees to pay or reimburse the
Trustee and each predecessor Trustee upon its request for all reasonable
expenses, (including, without limitation, expenses incurred in connection with
notices and other communications to Holders) disbursements and advances incurred
or made by or on behalf of it in accordance with any of the provisions of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its counsel and of all agents and other Persons not regularly
in its employ) except any such expense, disbursement or advance as may arise
from its negligence or bad faith. The Issuer also covenants to indemnify the
Trustee, and each predecessor trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of this
Indenture or the trusts hereunder and its duties hereunder, including the costs
and expenses of defending itself against or investigating any claim of liability
in the premises. The obligations of the Issuer under this Section 6.6 to
compensate and indemnify the Trustee and each predecessor trustee and to pay or
reimburse the Trustee and each predecessor trustee for expenses, disbursements
and advances shall constitute additional indebtedness hereunder and shall
survive the satisfaction and discharge of this Indenture. Such additional
indebtedness shall be a senior claim to that of the Securities upon all Property
and funds held or collected by the Trustee as such, except funds held in trust
for the benefit of the Holders of particular Securities, and the Securities are
hereby subordinated to such senior claim. The Trustee and Issuer shall enter
into a Fee Agreement acceptable to the Trustee and Issuer.
SECTION 6.7 RIGHT OF TRUSTEE TO RELY ON OFFICERS' CERTIFICATE, ETC.
Subject to Section 6.1, whenever in the administration of the trusts of this
Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or suffering or omitting any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of bad faith on the part of the
Trustee, be deemed to be conclusively proved and established by an Officers'
Certificate delivered to the Trustee, and such certificate, in the absence of
bad faith on the part of the Trustee, shall be full warrant and protection to
the Trustee for any action taken, suffered or omitted by it under the provisions
of this Indenture upon the faith thereof.
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SECTION 6.8 [Reserved].
SECTION 6.9 PERSONS ELIGIBLE FOR APPOINTMENT AS TRUSTEE. The Trustee
hereunder shall at all times be a corporation organized and doing business under
the laws of the United States of America or of any State or territory or of the
District of Columbia having a combined capital and surplus of at least
$50,000,000 (or being a member of a bank holding system with an aggregate
combined capital and surplus), and which is authorized under such laws to
exercise corporate trust powers and is subject to supervision or examination by
Federal, State, territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then
for the purposes of this Section 6.9, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. Neither the Issuer nor any
Person directly or indirectly controlling, controlled by or under common control
with the Issuer may serve as Trustee hereunder. In case at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section
6.9, the Trustee shall resign immediately in the manner and with the
effect specified in Section 6.10.
SECTION 6.10 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR TRUSTEE.
The Trustee may resign at any time by so notifying the Issuer in writing, such
resignation to be effective upon the appointment of a successor Trustee. The
Holders of a majority in principal amount of the Outstanding Securities may
remove the Trustee by so notifying the Trustee in writing and may appoint a
successor Trustee with the Issuer's consent which consent shall not be
unreasonably withheld. The Issuer may remove the Trustee if:
(a) the Trustee fails to comply with Section 6.8 or 6.9;
(b) the Trustee is adjudged a bankrupt or an insolvent;
(c) a receiver or other public officer takes charge of the
Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason (the Trustee in such event being referred to herein as
the retiring Trustee), the Issuer shall promptly appoint a successor Trustee
that is reasonably acceptable to the Holders of a majority in principal amount
of the Securities. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the Securities may appoint a
successor Trustee to replace the successor Trustee appointed by the Issuer.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Issuer. Immediately after that, the retiring
Trustee shall transfer all property held by it as Trustee to the successor
Trustee (subject to the senior claim provided in Section 6.6 and upon being paid
the compensation due to it in Section 6.6), the resignation or removal of the
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retiring Trustee shall become effective, and the successor Trustee shall have
all the rights, powers and duties of the Trustee under this Indenture. A
successor Trustee shall mail notice of its succession to each Securityholder.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuer or the
Holders of at least 25% in principal amount of the Outstanding Securities may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 6.8, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section 6.10,
the Issuer's obligations under Section 6.6 shall continue for the benefit of the
retiring Trustee.
SECTION 6.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR TRUSTEE. Any
successor trustee appointed as provided in Section 6.10 shall execute and
deliver to the Issuer and to its predecessor trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as trustee herein; but, nevertheless, on the written request
of the Issuer or of the successor trustee, the trustee ceasing to act shall upon
being paid the amounts due it under Section 6.6 pay over to the successor
trustee all moneys at the time held by it hereunder and shall execute and
deliver an instrument transferring to such successor trustee all such rights,
powers, duties and obligations. Upon request of any such successor trustee, the
Issuer shall execute any and all instruments in writing for more fully and
certainly vesting in and confirming to such successor trustee all such rights
and powers. Any trustee ceasing to act shall, nevertheless, retain a prior
claim upon all Property or funds held or collected by such trustee to secure any
amounts then due it pursuant to the provisions of Section 6.6.
No successor trustee shall accept appointment as provided in this Section
6.11 unless at the time of such acceptance such successor trustee shall be
qualified under the provisions of Section 6.8 and eligible under the provisions
of Section 6.9. No Trustee under this Indenture shall be personally liable for
any action or omission of any successor trustee.
SECTION 6.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS
OF TRUSTEE. Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to the corporate trust business of the Trustee, shall
be the successor of the Trustee hereunder, PROVIDED that such corporation shall
be qualified under the provisions of Section 6.8 and eligible under the
provisions of Section 6.9, without the execution or filing of any paper or any
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further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Securities shall have been
authenticated but not delivered, any such successor to the Trustee may adopt the
certificate of authentication of any predecessor Trustee and deliver such
Securities so authenticated; and, in case at that time any of the Securities
shall not have been authenticated, any successor to the Trustee may authenticate
such Securities either in the name of any predecessor hereunder or in the name
of the successor Trustee; and in all such cases such certificate shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee to authenticate Securities in the name of
any predecessor Trustee shall have; PROVIDED that the right to adopt the
certificate of authentication of any predecessor Trustee shall apply only to its
successor or successors by merger, conversion or consolidation.
SECTION 6.13 [Reserved].
SECTION 6.14 TRUST ESTATE MAY BE VESTED IN CO-TRUSTEE OR IN A SUB-
TRUST. It is the purpose of this Indenture that there shall be no violation of
any law of any jurisdiction denying or restricting of the right of banking
corporations or associations to transact business as Trustee in such
jurisdiction. Accordingly, at any time or times and for the purpose of meeting
any legal requirements of any jurisdiction, (i) a sub-trust ("Sub-Trust") may be
created as provided herein pursuant to the terms of which the Settlers of the
Sub-Trust may appoint an individual or financial institution to serve as a
trustee thereunder (Sub-Trustee"), and (ii) the Trustee shall have the power to
appoint, and the Issuer shall for such purpose join with the Trustee in the
execution, delivery and performance of all instruments and agreements necessary
or proper to appoint, one or more persons or entities approved by the Trustee
either to act as co-trustee or co-trustees, jointly with the Trustee, of all or
any part of the property subject to the trust created by this Indenture.
If the appointment of a co-trustee is not sufficient to allow the Trustee
to avoid violating any law of the state jurisdiction denying or restricting the
Trustee's right to transact business as Trustee in such jurisdiction or to
exercise any of its remedies contained herein or any Collateral Document, then
the Trustee may execute, and the Issuer shall for such purpose join with the
Trustee, an instrument permitted by applicable law creating a Sub-trust for all
or a portion of the Trust Estate, including collateral securing the Securities.
Initially, the Issuer and the Trustee shall enter into an Act of Revocable
Donation and Trust in the form attached hereto as Exhibit A. Pursuant to such
instrument, the Issuer and the Trustee shall be the Settlers and John C.
Stohlmann shall serve as the initial trustee ("sub-trustee") pursuant to the
terms thereof.
The Sub-trustee shall be entitled to the same rights, privileges, and
immunities (but not the obligations) of the Trustee contained in Sections 6.1,
6.2, 6.3, 6.5 and 6.7 of this Indenture, in addition to the rights, privileges
and immunities contained in the Sub-trust. Further, the Issuer shall indemnify
the Sub-trustee to the same extent as provided in Section 6.6 of this Indenture.
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The Trustee shall be accountable to the Securityholders for the acts and
omissions of the Sub-trustee in accordance with the standard of care provided in
Section 6.1 hereof, subject to limitations thereon set forth in subsections (a)
through (e) thereof, but only so long as the Sub-trustee is an Affiliate of the
Trustee.
The Sub-trust shall be governed by the terms thereof.
The following provisions relate only to the situation in which a co-
trustee is appointed pursuant to the terms hereof and not to the Sub-trust.
Every co-trustee or separate trustee shall, to the extent permitted by
law, be appointed subject to the following terms:
(a) The Bonds shall be authenticated and delivered, and all
rights, powers, trusts, duties and obligations hereby conferred upon the
Trustee in respect to the custody, control and management of moneys,
papers, securities and other personal property shall be exercised, solely
by the Trustee.
(b) All rights, powers, trusts, duties and obligations
conferred or imposed upon the trustees shall be conferred or imposed upon
and exercised or performed by the Trustee, or by the Trustee and such
co-trustee or co-trustees or separate trustee or separate trustees
jointly, as shall be provided in the instrument appointing such
co-trustee or co-trustees or separate trustee or separate trustees,
except to the extent that, under the law of any jurisdiction in which any
particular act or acts are to be performed, the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such act or acts shall be performed by such co-trustee or co-trustees or
separate trustee or separate trustees.
(c) Any request in writing by the Trustee to any co-trustee or
separate trustee to take or to refrain from taking any action hereunder
shall be sufficient warrant for the taking, or the refraining from
taking, of such action by such co-trustee or separate trustee.
(d) Any co-trustee or separate trustee may, to the extent
permitted by law, delegate to the Trustee the exercise of any right,
power, trust, duty or obligation, discretionary or otherwise.
(e) The Trustee at any time, by any instrument in writing, with
the concurrence of the Issuer, may accept the resignation of or remove
any co-trustee or separate trustee appointed under this Section, and, in
case an Event of Default shall have occurred and be continuing, the
Trustee shall have power to accept the resignation of, or remove, any
such co-trustees or separate trustee without the concurrence of the
Issuer. Upon the request of the Trustee, the Issuer shall join with the
Trustee in the execution, delivery and performance of all instruments and
agreements necessary or proper to effectuate such resignation or removal.
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(f) No trustee hereunder shall be personally liable by reason
of any act or omission of other trustee hereunder, nor will the act or
omission of any trustee hereunder be imputed to any other trustee.
(g) Any demand, request, direction, appointment, removal,
notice, consent, waiver or other action in writing delivered to the
Trustee shall be deemed to have been delivered to each such co-trustee or
separate trustee.
(h) Any moneys, papers, securities or other items of personal
property received by any such co-trustee or separate trustee hereunder
shall forthwith, so far as may be permitted by law, be turned over to the
Trustee.
Upon the acceptance in writing of such appointment by any such co-trustee
or separate trustee, it or he or she shall be vested jointly with the Trustee
(except insofar as local law makes it necessary for any such co-trustee or
separate trustee to act alone) with such title to the property subject to the
trust created by this Indenture or any part thereof, and with such rights,
powers, duties or obligations, as shall be specified in the instrument of
appointment subject to all the terms hereof. Every such acceptance shall be
filed with the Trustee. To the extent permitted by law, any co-trustee or
separate trustee may, at any time by an instrument in writing, constitute the
Trustee its or his or her attorney-in-fact and agent, with full power and
authority to do all acts and things and to exercise all discretion on its or his
or her behalf and in its or his or her own name.
In case any co-trustee or separate trustee shall die, become incapable of
acting, resign or be removed, the title to the pledged property, and all rights,
powers, trusts, duties and obligations of said co-trustee or separate trustee
shall, so far as permitted by law, vest in and be exercised by the Trustee
unless and until a successor co-trustee or separate trustee shall be appointed
in the manner herein provided.
ARTICLE 7
CONCERNING THE SECURITYHOLDERS
SECTION 7.1 EVIDENCE OF ACTION TAKEN BY SECURITYHOLDERS. Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by Securityholders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Securityholders in Person or by agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee. Proof of execution of any instrument or of a writing appointing any
such agent shall be sufficient for any purpose of this Indenture and (subject to
Sections 6.1 and 6.2) conclusive in favor of the Trustee and the Issuer if made
in the manner provided in this Article.
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SECTION 7.2 PROOF OF EXECUTION OF INSTRUMENTS AND OF HOLDING OF
SECURITIES. Subject to Sections 6.1 and 6.2, the execution of any instrument by
a Securityholder or his agent or proxy may be proved in accordance with such
reasonable rules and regulations as may be prescribed by the Trustee or in such
manner as shall be satisfactory to the Trustee. The holdings of Securities
shall be proved by the Security register or by a certificate of the registrar
thereof.
SECTION 7.3 HOLDERS TO BE TREATED AS OWNERS. The Issuer, the Trustee
and any agent of the Issuer or the Trustee may deem and treat the Person in
whose name any Security shall be registered upon the Security register as the
absolute owner of such Security (whether or not such Security shall be overdue
and notwithstanding any notation of ownership or other writing thereon) for the
purpose of receiving payment of or on account of the principal of and, subject
to the provisions of this Indenture, interest on such Security and for all other
purposes; and neither the Issuer nor the Trustee nor any agent of the Issuer or
the Trustee shall be affected by any notice to the contrary. All such payments
so made to any such Person, or upon his order, shall be valid, and, to the
extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for moneys payable upon any such Security.
SECTION 7.4 SECURITIES OWNED BY ISSUER DEEMED NOT OUTSTANDING. In
determining whether the Holders of the requisite aggregate principal amount of
Securities have concurred in any direction, consent or waiver under this
Indenture, Securities which are directly owned by the Issuer (which shall not
include the Securityholders as of the date of Issue), except that for the
purpose of determining whether the Trustee shall be protected in relying on any
such direction, consent or waiver only Securities which the Responsible Officer
actually knows are so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Issuer or any
other obligor upon the Securities or any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Issuer or any other obligor of the Securities. In case of a dispute as to such
right, the advice of counsel shall be full protection in respect of any decision
made by the Trustee in accordance with such advice. Upon request of the
Trustee, the Issuer shall furnish to the Trustee promptly an Officers'
Certificate listing and identifying all Securities, if any, known by the Issuer
to be owned or held by or for the account of any of the above described Persons;
and, subject to Section 6.1, the Trustee shall be entitled to accept such
Officers' Certificate as conclusive evidence of the facts therein set forth.
SECTION 7.5 RIGHT OF REVOCATION OF ACTION TAKEN. At any time prior to
(but not after) the evidencing to the Trustee, as provided in Section 7.1, of
the taking of any action by the Holders of the percentage in aggregate principal
amount of the Securities specified in this Indenture in connection with such
action, any Holder of a Security the serial number of which is shown by the
evidence to be included among the serial numbers of the Securities the Holders
of which have consented to such action may, by filing written notice at the
Corporate Trust Office and upon proof of holding as provided in this Article,
revoke such action so far as concerns such Security. Except as aforesaid, any
such action taken by the Holder of any Security shall be conclusive and binding
upon such Holder and upon all future Holders and owners of
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such Security and of any Securities issued in exchange or substitution therefor,
irrespective of whether or not any notation in regard thereto is made upon any
such Security. Any action taken by the Holders of the percentage in aggregate
principal amount of the Securities specified in this Indenture in connection
with such action shall be conclusively binding upon the Issuer, the Trustee and
the Holders of all the Securities.
ARTICLE 8
SUPPLEMENTAL INDENTURES
SECTION 8.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF SECURITYHOLDERS.
The Issuer, when authorized by a resolution of its Board of Directors, and the
Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto for one or more of the following purposes:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
(c) to provide for the assumption of the Issuer's obligations
hereunder to the Holders in the case of a merger or consolidation
pursuant to Article Nine hereof; or,
(d) With the consent of the holders of 50% of the Czech Notes, to
make any change that would provide any additional rights or benefits to
the Holders or that does not adversely affect the legal rights hereunder
of any Holder.
The Trustee is hereby authorized to join in the execution of any such
supplemental indenture, to make any further appropriate agreements and
stipulations which may be therein contained and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Trustee shall not be obligated to enter into any such supplemental indenture
which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section
8.1 may be executed without the consent of the Holders of any of the Securities
at the time Outstanding, notwithstanding any of the provisions of Section 8.2.
SECTION 8.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF SECURITYHOLDERS.
With the consent (evidenced as provided in Article Seven) of the Holders of (i)
not less than 50% in aggregate principal amount of the Securities at the time
Outstanding, and (ii) the holders of 50% in aggregate principal amount of the
Czech Notes at the time Outstanding, (including consents obtained in connection
with a tender offer or exchange offer for the Securities), the Issuer, when
authorized by a resolution of the Board of Directors, and the Trustee may, from
time to time and at any time, enter into an indenture or indentures
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supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of any
supplemental indenture or of modifying in any manner the rights of the Holders
of the Securities; PROVIDED that no such supplemental indenture shall, without
the consent of each Holder affected thereby and the holders of 75% in aggregate
principal amount of the Czech Notes with respect to subsections (i)-(iii) and
subsection (viii) as it relates to subsections (i)-(iii)) (with respect to any
Securities held by a non-consenting Securityholder), (i) reduce the principal
amount of Securities whose Holders must consent to an amendment, supplement or
waiver, (ii) reduce the principal of or change the fixed maturity of any
Security or alter the provisions with respect to the redemption of the
Securities, (iii) reduce the rate of or change the time for payment of interest
on any Security, (iv) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the Securities (except a
rescission of acceleration of the Securities by the Holders of at least a
majority in aggregate principal amount of the then Outstanding Securities and a
waiver of the payment default that resulted from such acceleration), (v) make
any Security payable in money other than that stated in the Securities, (vi)
make any change in the provisions of the Indenture relating to waivers of past
Defaults or the rights of Holders of Securities to receive payments of principal
of or interest on the Securities, (vii) waive a redemption payment with respect
to any Security, or (viii) make any change in the foregoing amendment and waiver
provisions.
The Issuer may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any indenture
supplemental hereto. If a record date is fixed, then those Persons who were
Holders at such record date (or their duly designated proxies), and only those
Persons, shall be entitled to consent to such supplemental indenture or to
revoke any consent previously given, whether or not such Persons continue to be
Holders after such record date. No such consent shall be valid or effective for
more than 90 days after such record date.
Upon the request of the Issuer accompanied by a copy of a resolution of
the Board of Directors certified by the Secretary or an Assistant Secretary of
the Issuer authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of the required
Securityholders and other documents, if any, required by Section 7.1, the
Trustee shall join with the Issuer in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such
supplemental indenture.
It shall not be necessary for the consent of the Securityholders under
this Section 8.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to the provisions of this Section 8.2, the
Issuer shall mail a notice thereof by first-class mail to the Holders of
Securities provided, however, this section shall not prohibit the pledge or
granting of a security interest to the holders of the Czech Notes in the stock
and assets of TWG International and TWG Finance, and any of their respective
subsidiaries, or the foreclosure on
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such collateral by the holders of the Czech Notes, at their addresses as they
shall appear on the registry books of the Issuer, setting forth in general terms
the substance of such supplemental indenture. Any failure of the Issuer to mail
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such supplemental indenture.
SECTION 8.3 EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith and the
respective rights, limitations of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Issuer and the Holders of Securities
shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
SECTION 8.4 DOCUMENTS TO BE GIVEN TO TRUSTEE. In connection with the
execution and delivery of any supplemental indenture pursuant to this Article
Eight, the Trustee shall receive an Officers' Certificate and an Opinion of
Counsel and, subject to the provisions of Sections 6.1 and 6.2, may rely thereon
as conclusive evidence that any such supplemental indenture complies with the
applicable provisions of this Indenture. The Opinion of Counsel delivered
pursuant to this Section 8.4 shall include a statement that the execution,
delivery and performance of such supplemental indenture by the Issuer shall not
result in a breach or violation of, or constitute a default under, this
Indenture. Subject to Section 6.1, the Trustee may conclusively rely on an
Opinion of Counsel with respect to the effect a supplemental indenture will have
on a Holder under Section 8.1(d).
SECTION 8.5 NOTATION ON SECURITIES IN RESPECT OF SUPPLEMENTAL
INDENTURES. Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to the provisions of this Article may bear a
notation in form approved by the Trustee as to any matter provided for by such
supplemental indenture or as to any action taken at any such meeting. If the
Issuer or the Trustee shall so determine, new Securities so modified as to
conform, in the opinion of the Trustee and the Board of Directors, to any
modification of this Indenture contained in any such supplemental indenture may
be prepared and executed by the Issuer, authenticated by the Trustee and
delivered in exchange for the Securities then Outstanding.
ARTICLE 9
NO CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Except with the prior written consent of each Holder, the Issuer shall
not consolidate with, or merge with or into (whether or not the Issuer is the
surviving corporation), or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets as an entirety
in one or more related transactions to, another corporation, person or entity,
except as permitted in Article 3. For purposes of this Article 9, the transfer
(by lease,
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assignment, sale or otherwise), in a single transaction or series of
transactions), of all or substantially all of the properties or assets of one or
more Subsidiaries of the Issuer, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Issuer, shall be deemed to
be the transfer of all or substantially all of the properties and assets of the
Issuer, provided however, this section shall not prohibit the pledge or granting
of a security interest to the holders of the Czech Notes in the stock and assets
of TWG International and TWG Finance, and of any of their respective
subsidiaries, or the foreclosure on such collateral by the holders of the Czech
Notes.
ARTICLE 10
SATISFACTION AND DISCHARGE
OF INDENTURE; UNCLAIMED MONEYS
SECTION 10.1 SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture
shall cease to be of further effect as to all Outstanding Securities (except as
to (A) rights of registration of transfer and exchange, and the Issuer's right
of optional redemption, (B) substitution of apparently mutilated, defaced,
destroyed, lost or stolen Securities, (C) rights of Holders to receive payments
of principal thereof and interest thereon, (D) the rights, obligations and
immunities of the Trustee hereunder and (E) the rights of the Securityholders as
beneficiaries hereof with respect to the property so deposited with the Trustee
under the provisions of this Section 10.1) when (a) all Outstanding Securities,
except lost, stolen or destroyed Securities which shall have been replaced or
paid, as provided in Section 2.6, have been delivered to the Trustee for
cancellation or (b) the Issuer shall have paid or caused to be paid the
principal of and interest on the Securities Outstanding hereunder, as and when
the same shall have become due and payable, or (c) (i) the Securities not
theretofore delivered to the Trustee for cancellation shall have become due and
payable, or are by their terms to become due and payable within one year or are
to be called for redemption under arrangements satisfactory to the Trustee upon
the giving of notice of redemption, and (ii) the Issuer shall have irrevocably
deposited or caused to be deposited with the Trustee, as trust funds, (A) money
in an amount or (B) Government Securities which through the payment of interest
and principal will provide, no later than one day before the due date of
payments in respect of the Securities, money in an amount or (C) a combination
thereof, any one of options (A), (B) or (C) being sufficient in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay the principal of
and interest on the Outstanding Securities to the date of maturity or
redemption, as the case may be. The Trustee, on demand of the Issuer
accompanied by an Officers' Certificate and an Opinion of Counsel and at the
cost and expense of the Issuer, shall execute proper instruments acknowledging
such satisfaction of and discharging this Indenture. The Issuer agrees to
reimburse the Trustee for any costs or expenses (including the reasonable fees
of its counsel) thereafter reasonably and properly incurred, to compensate the
Trustee for any services thereafter reasonably and properly rendered by the
Trustee in connection with this Indenture or the Securities and to indemnify the
trust referred to in Section 10.2(a) for any tax liability and pay any expenses
of such trust not otherwise provided for pursuant to such Section.
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SECTION 10.2 DEFEASANCE AND DISCHARGE OF INDENTURE. The Issuer shall be
deemed to have paid and discharged the entire Indebtedness on all the
Outstanding Securities on the date of the deposit referred to in subparagraph
(a) hereof, and the provisions of this Indenture, as it relates to such
Outstanding Securities, shall no longer be in effect (and the Trustee, at the
expense of the Issuer, shall execute proper instruments acknowledging the same),
except as to: (1) rights of registration of transfer and exchange, and the
Issuer's right of optional redemption, (2) substitution of apparently mutilated,
defaced, destroyed, lost or stolen Securities, (3) rights of Holders to receive
payments of principal thereof and interest thereon, (4) the rights, obligations
and immunities of the Trustee hereunder and (5) the rights of the
Securityholders as beneficiaries hereof with respect to the property so
deposited with the Trustee payable to all or any of them; PROVIDED that all of
the following conditions shall have been satisfied:
(a) the Issuer has deposited or caused to be irrevocably
deposited with the Trustee (or another trustee satisfying the
requirements of Section 6.9) as trust funds in trust, specifically
pledged as security for, and dedicated solely to, the benefit of the
Holders of the Securities, (i) money in an amount or (ii) Government
Securities which through the payment of interest and principal in respect
thereof in accordance with their terms will provide not later than one
day before the due date of any payment referred to below money in an
amount, or (iii) a combination thereof, any one of options (i), (ii) or
(iii) being sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge without
consideration of the reinvestment of such interest and after payment of
all federal, state and local taxes or other charges and assessments in
respect thereof payable by the Trustee, the principal of and each
installment of principal and interest on the Outstanding Securities as of
the maturity date of such principal or installment of interest;
(b) such deposit shall not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or
instrument to which the Issuer is a party or by which it is bound;
(c) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit;
(d) the Issuer has delivered to the Trustee an Opinion of Counsel
to the effect that (i) the Holders of the Securities shall not recognize
income, gain or loss for Federal income tax purposes as a result of such
deposits, defeasance and discharge and will be subject to Federal income
tax on the same amount and in the same manner and at the same times as
would have been the case if such deposit, defeasance and discharge had
not occurred, (ii) the creation of the trust will not violate the
Investment Company Act of 1940, as amended, and (iii) Holders of the
Securities will have a valid, first priority lien on the trust funds; and
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(e) the Issuer has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to the defeasance contemplated by this
provision have been complied with.
SECTION 10.3 DEFEASANCE OF CERTAIN OBLIGATIONS. The Issuer may omit to
comply with any term, provision or condition set forth in Sections 3.5 to3.19
inclusive, and will not be subject to the Events of Default described under
clauses (d), (e) and (f) of Section 5.1 hereof, with respect to the Securities,
if all of the following conditions have been satisfied:
(a) the Issuer has deposited or caused to be irrevocably
deposited with the Trustee (or another trustee satisfying the
requirements of Section 6.9) as trust funds in trust, specifically
pledged as security for, and dedicated solely to, the benefit of the
Holders of the Securities, (i) money in an amount, or (ii) Government
Securities which through the payment of interest and principal in respect
thereof in accordance with their terms will provide not later than one
day before the due date of any payment referred to below money in an
amount, or (iii) a combination thereof, any one of options (i), (ii) or
(iii) being sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge without
consideration of the reinvestment of such interest and after payment of
all federal, state and local taxes or other charges and assessments in
respect thereof payable by the Trustee, the principal of and each
installment of principal and interest on the Outstanding Securities on
the maturity date of such principal or installment of principal or
interest;
(b) such deposit shall not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or
instrument to which the Issuer is a party or by which it is bound;
(c) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit;
(d) the Issuer has delivered to the Trustee an Opinion of Counsel
to the effect that (i) the Holders of the Securities shall not recognize
income, gain or loss for Federal income tax purposes as a result of such
deposit and defeasance of certain obligations and will be subject to
Federal income tax on the same amount and in the same manner and at the
same times as would have been the case if such deposit and defeasance had
not occurred, (ii) the creation of the trust will not violate the
Investment Company Act of 1940, as amended, and (iii) Holders of the
Securities will have a valid, first-priority lien on the trust funds; and
(e) the Issuer has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the defeasance contemplated by
this Section 10.3 have been complied with.
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SECTION 10.4 APPLICATION BY TRUSTEE OF FUNDS DEPOSITED FOR PAYMENT OF
SECURITIES. Subject to Section 10.6, all moneys and Governmental Securities
deposited with the Trustee pursuant to Sections 10.1, 10.2 and 10.3 shall be
held in trust and applied by it to the payment, either directly or through any
paying agent (including the Issuer acting as paying agent), to the Holders of
the particular Securities for the payment or redemption of which such moneys
have been deposited with the Trustee, of all sums due and to become due thereon
for principal and interest; but such money and Government Securities need not be
segregated from other funds except to the extent required by law.
SECTION 10.5 REPAYMENT OF MONEYS HELD BY PAYING AGENT. In connection
with the satisfaction and discharge of this Indenture all moneys and Government
Securities then held by any paying agent under the provisions of this Indenture
shall, upon demand of the Issuer, be repaid to the Issuer or paid to the Trustee
and thereupon such paying agent shall be released from all further liability
with respect to such moneys and Government Securities.
SECTION 10.6 RETURN OF MONEYS HELD BY TRUSTEE AND PAYING AGENT UNCLAIMED
FOR ONE YEAR. Any moneys and Government Securities deposited with or paid to
the Trustee or any paying agent for the payment of the principal of or interest
on any Security and not applied but remaining unclaimed for one year after the
date upon which such principal or interest shall have become due and payable
shall, upon the written request of the Issuer and unless otherwise required by
mandatory provisions of applicable escheat or abandoned or unclaimed property
law, be repaid to the Issuer by the Trustee or such paying agent, and the Holder
of such Security shall, unless otherwise required by mandatory provisions of
applicable escheat or abandoned or unclaimed property laws, thereafter look only
to the Issuer for any payment which such Holder may be entitled to collect, and
all liability of the Trustee or any paying agent with respect to such moneys and
Government Securities shall thereupon cease; PROVIDED, HOWEVER, that the Trustee
or such paying agent before being required to make any such repayments may, at
the expense of the Issuer, cause to be published once, in a newspaper published
in the English language, customarily published on each Business Day and of
general circulation in the Borough of Manhattan, the City of New York, notice
that such money remains unclaimed and that after a date specified therein, which
shall not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Issuer. In the event
any Securities are not presented for payment when due, either at maturity or at
the date fixed for redemption thereof or otherwise, if funds sufficient to pay
such Securities shall have been made available to the Trustee or Paying Agent
for the benefit of the Holders thereof, all liability of the Issuer to the
Holders for payment of such Securities shall terminate and be completely
discharged. The Trustee shall hold such segregated funds, without liability for
interest thereon, for the benefit of the Holders, who shall thereafter be
restricted exclusively to such funds for the satisfaction of any claim of
whatever nature on their part under this Indenture or relating to such
Securities.
SECTION 10.7 REINSTATEMENT. If the Trustee or paying agent is unable to
apply any moneys or Government Securities in accordance with this Article Ten by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority
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enjoining, restraining or otherwise prohibiting such application, the Issuer's
obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to this Article Ten until
such time as the Trustee or paying agent is permitted to apply all such moneys
or Government Securities in accordance with this Article; PROVIDED, HOWEVER,
that if the Issuer has made any payment of principal of or interest on any
Securities because of the reinstatement of its obligations, the Issuer shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from the moneys or Government Securities held by the Trustee or paying
agent.
ARTICLE 11
MISCELLANEOUS PROVISIONS
SECTION 11.1 INCORPORATORS, SHAREHOLDERS, OFFICERS AND DIRECTORS OF
ISSUER EXEMPT FROM INDIVIDUAL LIABILITY. No recourse under or upon any
obligation, covenant or agreement contained in this Indenture, or in any
Security, or because of any indebtedness evidenced thereby, shall be had against
any incorporator, as such, or against any past, present or future stockholder,
officer, employee, director, or creditor, as such, of the Issuer or the Trustee
or any subsidiary of the Issuer or any successor of the Issuer or the Trustee or
any such subsidiary, whether directly or through the Issuer or any subsidiary of
the Issuer or any successor of the Issuer or any such subsidiary, under any rule
of law, statute or constitutional provision or by the enforcement of any
assessment or by any legal or equitable proceeding or otherwise, all such
liability being expressly waived and released by the acceptance of the
Securities by the Holders thereof and as part of the consideration for the issue
of the Securities.
SECTION 11.2 PROVISIONS OF INDENTURE FOR THE SOLE BENEFIT OF PARTIES AND
SECURITYHOLDERS. Nothing in this Indenture or in the Securities, express or
implied, shall give or be construed to give to any Person, firm or corporation,
other than the parties hereto and their successors and the Holders of the
Securities, any legal or equitable right, remedy or claim under this Indenture
or under any covenant or provision herein contained, other than the rights
expressly granted to the holders of the Czech Notes.
SECTION 11.3 SUCCESSORS AND ASSIGNS OF ISSUER BOUND BY INDENTURE. All
the covenants, stipulations, promises and agreements in this Indenture contained
by or on behalf of the Issuer shall bind its successors and assigns, whether so
expressed or not.
SECTION 11.4 NOTICES AND DEMANDS ON ISSUER, TRUSTEE AND SECURITYHOLDERS.
Any notice or demand which by any provision of this Indenture is required or
permitted to be given or served by the Trustee or by the Holders of Securities
to or on the Issuer shall be given or served by (i) delivery in Person, (ii)
telecopy (confirmed by copy sent by first-class mail) or (iii) certified or
registered mail, return receipt requested (except as otherwise specifically
provided herein), in each case addressed (until another address of the
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Issuer is filed by the Issuer with the Trustee) to Trans World Gaming Corp., One
Penn Plaza, Suite 1503, New York, NY 10119, Attention: President (Telecopy No.:
(212) 563-3380). Any notice, direction, request or demand by the Issuer or any
Securityholder to or upon the Trustee shall be deemed to have been sufficiently
given or made, for all purposes, if given or served by one of the methods
described in the first sentence of this Section 11.4, addressed to the Corporate
Trust Office (Telecopy No.: 212-754-1303).
Where this Indenture provides for notice to Holders, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class postage prepaid, to each Holder entitled thereto, at his
last address as it appears in the Security register. Any notice which is
delivered, telecopied (and confirmed by mail) or mailed in the manner herein
provided shall be conclusively presumed to have been given, whether or not the
addressee receives such notice. In any case where notice to Holders is given by
mail, neither the failure to mail such notice, nor any defect in any notice so
mailed to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case, by reason of the suspension of or irregularities in regular mail
service, it shall be impracticable to mail notice or confirm by mail telecopy
notice to the Issuer and Securityholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
SECTION 11.5 COMPLIANCE CERTIFICATES AND OPINIONS OF COUNSEL; STATEMENTS
TO BE CONTAINED THEREIN. Upon an application or demand by the Issuer to the
Trustee to take any action under any of the provisions of this Indenture, the
Issuer shall furnish to the Trustee (i) an Officers' Certificate stating that
all conditions precedent provided for in this Indenture relating to the proposed
action have been complied with and (ii) an Opinion of Counsel stating that in
the opinion of such counsel all such conditions precedent have been complied
with and (iii) if appropriate, an Accountants' Certificate stating that in the
opinion of such accountants all such conditions precedent have been complied
with, except that in the case of any such application or demand as to which the
furnishing of such documents is specifically required by any provision of this
Indenture relating to such particular application or demand, no additional
certificate or opinion need be furnished.
Each certificate or opinion provided for in this Indenture and delivered
to the Trustee with respect to compliance with a condition or covenant provided
for in this Indenture shall include (a) a statement that the Person making such
certificate or opinion has read such covenant or condition, (b) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based, (c) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or
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condition has been complied with and (d) a statement as to whether or not, in
the opinion of such Person, such condition or covenant has been complied with.
Any certificate, statement or opinion of an officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of
or representations by counsel, unless such officer knows that the certificate or
opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or in
the exercise of reasonable care should know that the same are erroneous. Any
certificate, statement or opinion of counsel may be based, insofar as it relates
to factual matters and information which is in the possession of the Issuer,
upon the certificate, statement or opinion of or representations by an officer
or officers of the Issuer, unless such counsel knows that the certificate,
statement or opinion or representations with respect to the matters upon which
his certificate, statement or opinion may be based as aforesaid are erroneous,
or in the exercise of reasonable care should know that the same are erroneous.
Any certificate, statement or opinion of an officer of the Issuer or of
counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Issuer unless such officer or counsel, as the
case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.
Any certificate or opinion of any independent firm of public accountants
filed with the Trustee shall contain a statement that such firm is independent.
SECTION 11.6 PAYMENTS DUE ON SATURDAYS, SUNDAYS AND HOLIDAYS. If the
date of maturity of interest on or principal of the Securities or the date fixed
for redemption of any Security shall not be a Business Day, then payment of
interest or principal need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the date of
maturity or the date fixed for redemption, and no interest shall accrue for the
period after such date.
SECTION 11.7 [Reserved]
SECTION 11.8 NEW YORK LAW TO GOVERN. THIS INDENTURE AND EACH SECURITY
SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK, AND
FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS (OTHER THAN
CHOICE OF LAW RULES) OF SAID STATE. THE ISSUER HEREBY IRREVOCABLY SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE
COURT SITTING IN NEW YORK CITY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS INDENTURE OR THE SECURITIES AND THE ISSUER HEREBY IRREVOCABLY
AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
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DETERMINED IN ANY SUCH UNITED STATES FEDERAL OR NEW YORK STATE COURT. THE
ISSUER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDINGS IN SUCH RESPECTIVE JURISDICTIONS. THE ISSUER IRREVOCABLY
CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING
BROUGHT IN ANY COURT IN OR OF THE STATE OF NEW YORK BY THE DELIVERY OF COPIES OF
SUCH PROCESS TO THE ISSUER, AT ITS ADDRESS SPECIFIED IN SECTION 11.4 HEREOF OR
BY CERTIFIED MAIL DIRECT TO SUCH ADDRESS.
WHENEVER POSSIBLE EACH PROVISION OF THIS INDENTURE SHALL BE INTERPRETED
IN SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY
PROVISION OF THIS INDENTURE SHALL BE PROHIBITED BY OR INVALID UNDER APPLICABLE
LAW, SUCH PROVISION SHALL BE INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR
INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE
REMAINING PROVISIONS OF THIS INDENTURE. WHENEVER IN THIS INDENTURE REFERENCE IS
MADE TO THE ISSUER OR A HOLDER, SUCH REFERENCE SHALL BE DEEMED TO INCLUDE, AS
APPLICABLE, A REFERENCE TO THEIR RESPECTIVE SUCCESSORS AND ASSIGNS. THE
PROVISIONS OF THIS INDENTURE SHALL BE BINDING UPON AND SHALL INURE TO THE
BENEFIT OF SUCH SUCCESSOR AND ASSIGNS. THE ISSUER'S SUCCESSORS AND ASSIGNS
SHALL INCLUDE, WITHOUT LIMITATION, A RECEIVER, TRUSTEE OR DEBTOR IN POSSESSION
FOR THE ISSUER.
SECTION 11.9 COUNTERPARTS. This Indenture may be executed in any number
of counterparts, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
SECTION 11.10 EFFECT OF HEADINGS. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
SECTION 11.11 DIRECTORS. Subject to the laws of the State of Nevada and
the Articles of Incorporation and By-Laws of TWG (which TWG shall use its best
efforts to amend to comply with this section), the Holder or Holders of 50
percent of the Outstanding Securities shall have the right to name, at any time,
and from time to time, two of seven members of the Board of Directors of TWG
until such time as the Securities are paid in full or fully defeased pursuant to
Article 10. Such named persons shall, upon direction by the required Holder(s),
be placed upon the Board of Directors and, TWG, at such time as such Board seat
of such appointee is subject to a shareholder vote, shall support and nominate
such named individuals for election to the Board. Such right to name such two
directors shall include, upon a one day written notice, the right to remove and
replace either or both such named directors. During such time period as
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this right exists, TWG will not permit its Board of Directors to exceeds a total
of seven (7) directors.
SECTION 11.12 WAIVER OF USURIOUS INTEREST. All agreements between
Issuer and Holders, whether now existing or hereafter arising and whether
written or oral, are hereby limited so that in no contingency, whether by reason
of demand or acceleration of the final maturity date of the Securities or
otherwise, shall the interest contracted for, charged, received, paid or agreed
to be paid to Holders exceed the maximum amount permissible under the laws of
the State of New York (hereinafter the "Applicable Law"). If, from any
circumstance whatsoever, interest would otherwise be payable to the Holders in
excess of the maximum amount permissible under Applicable Law, the interest
payable to the Holders shall be reduced to the maximum amount permissible under
Applicable Law, and if from any circumstance the Holders shall ever receive
anything of value deemed interest by the Applicable Law in excess of the maximum
amount permissible under the Applicable Law, an amount equal to the excessive
interest shall be applied to the reduction of the principal hereof and not to
the payment of interest, or if such excessive amount of interest exceeds the
unpaid principal balance of principal hereof, such excess shall be refunded to
Issuer. All interest paid or agreed to be paid to the Holders shall, to the
extent permitted by the Applicable Law, be amortized, prorated, allocated and
spread throughout the full period (including any renewal or extension) until
payment in full of the principal so that the interest hereon for such full
period shall not exceed the maximum amount permissible under the Applicable Law.
The Holders expressly disavow any intent to contract for, charge or receive
interest in an amount which exceeds the maximum amount permissible under the
Applicable Law. This paragraph shall control agreements between the Issuer and
the Holders.
ARTICLE 12
REDEMPTION OF SECURITIES
SECTION 12.1 RIGHT OF OPTIONAL REDEMPTION; PRICES. Subject to the terms
and conditions of this Indenture, the Securities shall be subject to redemption
prior the Maturity Date in whole or in part, at the election of the Issuer on
any date for which notice of redemption can be given, at the redemption price of
the principal amount of the Securities to be redeemed together with accrued
interest to the redemption date. To make this election the Issuer shall give
the Trustee at least 60 notice of such election, which notice shall specify the
principal amount of Securities to be redeemed and the date it has fixed for
redemption.
SECTION 12.2 NOTICE OF REDEMPTION. Notice of redemption to the Holders
of Securities to be redeemed as a whole shall be given by mailing notice of such
redemption by first-class mail, postage prepaid, at least 30 and not more than
60 days prior to the date fixed for redemption to such Holders of Securities at
their last addresses as they shall appear upon the registry books. Any notice
which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given, whether or not the Holder receives the notice. Failure to
give notice by mail, or any defect in the notice to the Holder of any Security
designated for
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redemption as a whole or in part, shall not affect the validity of the
proceedings for the redemption of any other Security.
The notice of redemption to each such Holder shall specify the principal
amount of each Security held by such Holder to be redeemed, the date fixed for
redemption, the redemption price, the place or places of payment, that payment
will be made upon presentation and surrender of such Securities, that interest
accrued to the date fixed for redemption to the extent provided in
Section 12.1 will be paid as specified in said notice, that on and after said
date interest thereon will cease to accrue.
The notice of redemption of Securities to be redeemed shall be given by
the Issuer or, at the Issuer's request, by the Trustee in the name and at the
expense of the Issuer.
At least one Business Day prior to the redemption date specified in the
notice of redemption given as provided in this Section 12.2, the Issuer will
deposit with the Trustee or with one or more paying agents (or, if the Issuer is
acting as paying agent, set aside, segregate and hold in trust as provided in
Section 3.4) in immediately available funds an amount of money sufficient to
redeem in immediately available funds on the redemption date all the Securities
so called for redemption at the appropriate redemption price, together with
accrued interest to the date fixed for redemption to the extent provided in
Section 12.1.
SECTION 12.3 PAYMENT OF SECURITIES CALLED FOR REDEMPTION. If notice of
redemption has been given as above provided, the Securities shall become due and
payable on the date and at the place stated in such notice at the applicable
redemption price, together with interest accrued to the date fixed for
redemption, and on and after said date (unless the Issuer shall default in the
payment of such Securities at the redemption price, together with interest
accrued to said date to the extent provided in Section 12.1) interest on the
Securities or portions of Securities so called for redemption shall cease to
accrue and, except as provided in Sections 6.5 and 10.6, such Securities shall
cease from and after the date fixed for redemption to be entitled to any benefit
or security under this Indenture, and the Holders thereof shall have no right in
respect of such Securities except the right to receive the redemption price
thereof and unpaid interest to the date fixed for redemption to the extent
provided in Section 12.1. On presentation and surrender of such Securities at a
place of payment specified in said notice, said Securities shall be paid and
redeemed by the Issuer at the applicable redemption price, together with
interest accrued thereon to the date fixed for redemption. If any Security
called for redemption shall not be so paid upon surrender thereof for
redemption, the principal shall, until paid or duly provided for, bear interest
from the date fixed for redemption at the Default Rate.
SECTION 12.4 EXCLUSION OF CERTAIN SECURITIES FROM ELIGIBILITY FOR
SELECTION FOR REDEMPTION. Securities shall be excluded from eligibility for
selection for redemption if they are identified by registration and certificate
number in an Officer's Certificate and delivered to the Trustee at least 40 days
prior to the last date on which notice of redemption may be given as being owned
of record and beneficially by, and not pledged or hypothecated by, (a) the
Issuer or (b) an entity specifically identified in such written statement as
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directly or indirectly controlling or controlled by or under direct or indirect
common control with the Issuer (other than a holder of the Securities on the
Issue Date.
SECTION 12.5 SELECTION OF SECURITIES TO BE REDEEMED. If less than all
the Securities are to be redeemed, the particular Securities or portions of
Securities to be redeemed in minimum amounts $ 100.00 shall be selected in such
manner as the Trustee in its discretion may deem fair and appropriate so that
Securities are redeemed, as nearly as practicable, from each Holder on a
reasonably pro rata basis according to the principal amount of Securities
represented by each Security Outstanding.
SECTION 12.6 PARTIAL REDEMPTION OF SECURITIES. In case part but not all
of an Outstanding Security shall be selected for redemption, upon presentation
and surrender of such Security by the Holder thereof or his attorney duly
authorized in writing (with due endorsement by, or a written instrument of
transfer in form satisfactory to the Trustee) the Trustee shall authenticate and
deliver to or upon the order of such Holder, without charge therefor, for the
unredeemed portion of the principal amount of the Security so surrendered, a
Security or Securities, at the option of such Holder of like tenor. Fully
registered Securities so presented and surrendered shall be canceled in
accordance with this Indenture.
ARTICLE 13
WARRANT
The conversion feature of the Original Indenture is deleted as a
provision of this Indenture. Each Securityholder shall receive a Warrant to
purchase Common Stock of TWG in the form attached to that certain Consent to
Amend Indenture, Bonds and Warrants, by and between the Issuer, the Trustee and
the Holders as of the date hereof. Such Warrants shall permit the holder
thereof to purchase one share of common stock for each $1.50 of principal owed
to such Securityholder by the Issuer as of the date of this Indenture on the
terms and conditions set forth herein and in such Warrant. The number of shares
purchasable by the Warrant issued shall not be reduced by any subsequent
reduction in principal amount of such holder's Security. Subject to applicable
law, the Warrant is transferable and need not be exercised by a Securityholder.
Should a Securityholder desire to exercise the Warrant in whole or in part, such
Securityholder shall be permitted to, but shall not be required to, pay the
purchase price of the Common Stock acquired by such exercise by a corresponding
reduction in principal and interest owed such Securityholder pursuant to such
Securityholder's Security. The Warrants shall expire December 31, 2005. No
amendment to this Article 13 shall be binding upon a Holder absent that,
Holder's written consent, not withstanding any other provision of this
Indenture.
ARTICLE 14
SECURITY
SECTION 14.1 PLEDGE AND SECURITY INTEREST. "Collateral" means all
Property, including, without limitation, fee and leasehold interests in real
property and all
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personal property of the Issuer in the State of Louisiana, provided, however,
the Securities shall not be secured by, and the holders of the Securities have
no rights relating to, the Capital Stock (including direct and indirect,
partially and wholly-owned Subsidiaries) or assets of either TWG International
or TWG Finance, or of any of their respective Subsidiaries until the Czech Notes
are fully defeased, fully redeemed or paid in full. Pursuant to the terms of
the collateral agreements as executed pursuant to the Original Indenture, the
Issuer has granted to the Trustee Liens on the Collateral for the benefit of
holders of the Securities. This Indenture and the Securities issued pursuant to
this Indenture affirm, reinstate, restate, renew, replace and amend the Original
Indenture and the Securities issued thereunder and continues the Security
Interest of the Trustee for the benefit of the Holders of the Securities as
granted in the Original Indenture and related documents as to such real and
personal Property in the state of Louisiana, and any Security Interest beyond
the scope granted herein shall be deemed terminated. All references herein to
the "Security Interest" and to the "Lien of this Indenture" shall be deemed to
mean and refer to the Liens granted to the Trustee in the Original Indenture and
Collateral Agreements executed pursuant to the Original Indenture, as affirmed,
reinstated, restated, renewed, replaced and amended herein and pursuant to the
terms of the Collateral Agreements.
SECTION 14.2 SECURITY FOR OBLIGATION. The Security Interest secures
among other things the payment and performance of all obligations of the Issuer
now or hereafter existing under the Securities, the Collateral Agreements or
this Indenture, including without limitation the prompt payment when due
(whether by acceleration or otherwise) of the principal of or interest on the
Securities as such documents renew, affirm, reinstate, restate, replace and
amend the security interest granted the Securityholders in the Security arising
pursuant to the Original Indenture, and the collateral documents associated with
such Original Indenture (all such obligations of the Issuer being herein called
the "Obligations").
SECTION 14.3 PERFECTION OF SECURITY INTEREST.
The Issuer shall cause this Indenture, the Collateral Agreements,
financing statements, continuation statements, notifications of secured
transactions and other instruments with respect to the Collateral to be
promptly executed, recorded, registered and filed and to be kept
recorded, registered and filed in such manner and in such places as may
be required by law, and take all such other actions as may be required,
in order to make effective the Security Interest in all personal property
constituting part of the Collateral as a perfected security interest and
in all real property constituting part of the Collateral as a mortgage
lien effective as to third parties, and shall pay all taxes and fees
incidental thereto.
SECTION 14.4 NO DISPOSITION OF COLLATERAL; RELEASE OF LIEN OF INDENTURE.
The Issuer may not sell or otherwise dispose of Collateral, except as provided
in Section 3.13.
SECTION 14.5 OTHER LIENS. The Issuer will not create or permit to exist
any Lien upon or with respect to any of the Collateral, except for any Liens
permitted by the terms hereof or of the Collateral Agreements.
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SECTION 14.6 TRUSTEE APPOINTED ATTORNEY-IN-FACT. Subject to its right
of indemnification, the Trustee shall take any action required or permitted to
be taken by the Trustee under the Collateral Agreements if directed in writing
to do so by the Holders of at least 50% in aggregate principal amount of the
Securities then Outstanding; provided, however, that no action shall be taken
which, in the Opinion of Counsel, impairs the enforceability, priority or
perfection of the Lien of this Indenture as to the Collateral then subject
thereto, unless directed by all Holders, except as provided in Section 3.13.
SECTION 14.7 RETURN OF COLLATERAL. Upon the payment in full of the
obligations or upon satisfaction and discharge of this Indenture in accordance
with Article 10 (and the Trustee receiving written confirmation thereof
satisfactory to the Trustee), the Trustee, subject to the terms of the
Collateral Agreements, shall forthwith take all necessary action to return any
Collateral in the Trustee's possession to the Issuer or its Subsidiaries, as the
case may be, and release the Liens thereon and Security Interests therein.
SECTION 14.8 DEFAULT REMEDIES. The Trustee shall have the rights set
forth in the Collateral Agreements to exercise the remedies to realize upon the
collateral set forth in the Collateral Agreements.
SECTION 14.9 PROCEEDS. The proceeds of any sale or other disposition of
the Collateral received by the Trustee pursuant to the terms of the Collateral
Agreements shall be applied by the Trustee:
First: to the payment of the costs and expenses of such sale,
including a reasonable compensation to the Trustee, and its agents,
attorneys and counsel, and of all charges, expenses, liabilities and
advances incurred or made by the Trustee under this Indenture;
Second: to the reimbursement of the Trustee for any sum advanced
by the Trustee to the Issuer in order to preserve the Collateral together
with interest at the rate charged publicly announced by Citibank, N.A.
from time to time in New York, New York as its reference rate; and
Third: as provided in Section 5.3.
SECTION 14.10 DEFICIENCY. The Issuer shall remain liable for any
unfulfilled obligations, together with interest thereon, in accordance with and
subject to the provisions of the Securities and this Indenture.
SECTION 14.11 TRUSTEE'S DUTIES. The powers conferred upon the Trustee
by this Article 14 are solely to protect its interest and the interest of the
Holders in the Collateral and shall not impose any duty upon the Trustee to
exercise any such powers except as expressly provided in this Indenture or in
the Collateral Agreements. The Trustee shall be under no duty to the Issuer
whatsoever to make or give any presentment, demand for performance, notice of
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nonperformance, protest, notice of protest, notice of dishonor, or other notice
or demand in connection with any Collateral or the Obligations, or to take any
steps necessary to preserve any rights against prior parties except as expressly
provided in this Indenture or in the Collateral Agreements. The Trustee shall
not be liable to the Issuer for failure to collect or realize upon any or all of
the obligations or Collateral, or for any delay in so doing, nor shall the
Trustee be under any duty to the Issuer to take any action whatsoever with
regard thereto. The Trustee shall have no duty to the Issuer to comply with any
recording, filing, or other legal requirements necessary to establish or
maintain the validity, priority or enforceability of, or the Trustee's rights in
or to, any of the Collateral.
SECTION 14.12 SPECIAL TRUSTEE POWERS DUE TO ENVIRONMENTAL CONDITIONS.
The Trustee shall have the power to settle or compromise at any time any and all
claims against the Trust Estate or the Trustee (either in its corporate
capacity, or in the personal capacity of the individuals serving as trust
officers on behalf of the Trustee), which may be asserted by any governmental
body or private party involving the alleged violation of any applicable
Environmental Laws affecting the Collateral or any other property held in trust
with respect to or in connection with the Collateral. Notwithstanding any
provision in this subparagraph to the contrary, the Trustee may not settle or
compromise any claim against the Trust Estate or the Trustee which may result in
any liability being asserted against Issuer without Issuer having had a
reasonable opportunity to resolve the alleged violation, which reasonable
opportunity shall not exceed 60 days from the date on which Issuer shall have
been notified of such alleged violation by a governmental body or a private
party; provided, however, in the event that Issuer shall be in default under the
Indenture or under the Collateral Agreements, then it shall have none of the
rights afforded to it in this paragraph.
The Trustee shall not be personally liable to the Holders or any other
Person for any decrease in value of the Collateral by reason of the Trustee's
compliance with any Applicable Environmental Laws (as defined in the Collateral
Agreements), specifically including any reporting requirement under such law.
Neither the acceptance by the Trustee of property nor failure by the Trustee to
inspect property shall be deemed to create any interference as to whether or not
there is or may be any liability under any applicable Environmental Laws with
respect to such property.
Notwithstanding anything in this Indenture or the Collateral Agreements
to the contrary, the Trustee shall not be required to initiate foreclosure
proceedings with respect to the Collateral, and shall not otherwise be required
to acquire possession of, or take other action with respect to the Collateral
which could cause the Trustee to be considered an "owner" or "operator" within
the meaning of the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended from time to time, or any other law dealing
with the environmental matters or hazardous substances, unless the Trustee has
sufficient comfort, based on previous determinations by experts on which it can
rely, including environmental report, that:
(a) there are no circumstances present at the Collateral relating
to the use, management or disposal of any hazardous substances, hazardous
materials, hazardous wastes or petroleum-based materials for which
investigation, testing, monitoring,
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contaminant, clean up or remedial action could be required under any
environmental laws, or that if any such materials are present for which
such action could be required, that it would be nevertheless in the best
economic interest of the Trustee and the Holders to take such actions
with respect to the Collateral;
(b) if the Trustee has determined that it would be in the best
economic interest of the Trustee and the Holders, the Trustee must be
satisfied that they will suffer no unreimbursed liabilities and will be
adequately reimbursed for all liabilities, expenses and costs from
available funds in Trustee's possession and control; and
(c) if the Trustee has determined that it would be in the best
economic interest of the Trustee and the Holders to take any such action
and its aforementioned liabilities, expenses and costs are adequately
reimbursed, the Trustee has so notified the Holders and has not received,
within 30 days of such notification, instructions from owners of fifty
percent (50%) or more in principal amount of the then Outstanding
Securities directing it not to take such action.
If the foregoing conditions are not satisfied and the Trustee is not willing to
waive such conditions and initiate foreclosure proceedings, then the Trustee
shall take such actions as are reasonably necessary or appropriate in order to
facilitate the appointment of a co-trustee, being a person or entity designated
by the Holders of a majority in principal amount of the Securities then
Outstanding and to assign to such person or entity (subject, however, to the
trusts created pursuant to the Indenture) the beneficial interest under the
Collateral Agreements which secures the obligations under the Indenture, for the
limited purpose of conducting a foreclosure of such Collateral Agreements and
receiving and holding any title to real property obtained as a result of such
foreclosure. Persons or entities appointed as co-trustees or agents of the
Trustee pursuant to this Section shall not be required to meet the criteria of
Section 6.9 of this Indenture, or any other criteria, in order to serve as such.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and, where appropriate, their respective corporate seals to be
hereunto affixed and attested, all as of March 31, 1996.
[CORPORATE SEAL] TRANS WORLD GAMING CORP.
Attest: By: _______________________________________
By: _________________________ By: _______________________________________
[CORPORATE SEAL] TRANS WORLD GAMING OF LOUISIANA, INC.
Attest: By: _______________________________________
By: _________________________ By: _______________________________________
U.S. TRUST COMPANY OF TEXAS, N.A., as Trustee
By: __________________________________
__________________________________
(Name and Title)
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THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series A. No. 1
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Value Partners, Ltd. (together with its successors or
permitted assigns, the "Holder") is entitled to purchase from Trans World Gaming
Corp., a Nevada corporation ("Company") up to 600,000 shares of the Company's
common stock, par value $.001 per share (the "Common Stock"), at a purchase
price of $1.00 per share of Common Stock (the "Warrant Price"), subject to
adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Consent to Amend
Indenture, Bonds and Warrants dated as of March 25, 1998 (the "Agreement"),
between the Company and the Holder.
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 December 31, 2005, in whole or in part, by
(i) the surrender of this Warrant (with the purchase form at the end 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
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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 Warrant 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 subparagraph (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 Common Stock 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 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. If at any time this Warrant is exercised as to less than the total
number of shares for which it may be exercised, and this Warrant shall not have
expired, the Company shall promptly issue to the Holder a new Warrant identical
in form as to this Warrant as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
4. NO RIGHTS OF STOCKHOLDER.
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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) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or post-
effective amendment thereto as permitted under the Securities Act of 1933, as
amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or
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supplement to any prospectus, in conformity with the requirements of the 1933
Act, and such other documents, as the Holder may reasonably request in order to
facilitate the public sale or other disposition of the securities owned by the
Holder;
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
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<PAGE>
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents thereto, and each person, if
any, who controls the Company (within the meaning of the Act) against any
losses,
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claims, damages or liabilities to which the Company or any such director,
officer, employees, partners and agents 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,
employees, partners and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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
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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.
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such
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date plus the number of additional shares of Common
Stock issued (or the maximum number into which such
convertible or exchangeable securities initially may
convert or exchange or for which such options,
warrants or other rights initially may be exercised)
and (B) the denominator of which shall be the sum of
the number of shares of Common Stock outstanding on
such date plus the number of shares of Common Stock
which the aggregate consideration for the total
number of such additional shares of Common Stock so
issued (or into which such convertible or
exchangeable securities may convert or exchange or
for which such options, warrants or other rights may
be exercised plus the aggregate amount of any
additional consideration initially payable upon
conversion, exchange or exercise of such security)
would purchase at the Market Price per share of
Common Stock on such date. Such adjustment shall be
made whenever such shares, securities, options,
warrants or other rights are issued, and shall
become effective retroactively immediately after the
close of business on the record date for the
determination of stockholders entitled to receive
such shares, securities, options, warrants or other
rights; PROVIDED, that the determination as to
whether an adjustment is required to be made
pursuant to this Section 7(a) shall only be made
upon the issuance of such shares or such convertible
or exchangeable securities, options, warrants or
other rights, and not upon the issuance of the
security into which such convertible or exchangeable
security converts or exchanges, or the security
underlying such option, warrant or other right.
Notwithstanding the foregoing, in the event of such
issuance or sale of Common Stock at a cash price
less than the Market Price, no such adjustment under
this Section 7(a) need be made to the number of
shares underlying the Warrant unless such adjustment
would require an increase or decrease of at least 1%
of the number of shares underlying the Warrant. Any
lesser adjustment shall be carried forward and shall
be made at the time of and together with the next
subsequent adjustment which, together with any
adjustment or adjustments so carried forward, shall
amount to an increase or decrease of at least 1% of
number of shares underlying the Warrant. For the
purpose of this Agreement, the term "Market Price"
shall mean (i) if the Common Stock is traded in the
over-the-counter market or on the National
Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ"), the average per share
closing prices of the Common Stock on the 20
consecutive trading days immediately preceding the
date in question as reported by NASDAQ or an
equivalent generally
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accepted reporting service, or (ii) if the Common
Stock is traded on a national securities exchange,
the average for the 20 consecutive trading days
immediately preceding the date in question of the
daily per share closing prices of the Common Stock
on the principal stock exchange on which it is
listed, as the case may be. The closing price
referred to above shall be the last reported sales
price or in case no such reported sale takes place
on such day, the average of the reported closing bid
and asked prices, in either case on the national
securities exchange or automated quotation system on
which the Common Stock is then listed. Whenever the
number of shares of Common Stock purchasable upon
exercise of each Warrant is adjusted, the Warrant
Price for each share of Common Stock payable upon
exercise of each Warrant shall be adjusted by
multiplying such Warrant Price immediately prior to
such adjustment by a fraction, the numerator of
which shall be the number of shares of Common Stock
purchasable upon the exercise of each Warrant
immediately prior to such adjustment and the
denominator of which shall be the number of shares
of Common Stock purchasable immediately after such
adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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
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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 the
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 reorganization, reclassification, consolidation, merger,
sale or conveyance by a holder of the number of shares of Common Stock which the
holder of the 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 or expiration of the Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine holders of Common Stock entitled to receive such distribution
and the holder of this Warrant shall have until 5:00 p.m. EST on the twentieth
(20th) day following the actual receipt of such notice to elect whether to
exercise this Warrant in accordance with the terms herein. In the event of
proper election to exercise the Warrant, the holder of this Warrant shall be
deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he 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 the 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 Warrant 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.
(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 hereof not less than thirty (30) days prior to the date
on
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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 hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
(j) 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
Stock 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, if the fraction is equal to
or greater than .5, and down if the fraction is less than .5.
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
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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, Suite 1503, 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 other than Section 6 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, and this Warrant is
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 31, 1998.
TRANS WORLD GAMING CORP.
By:__________________________
Its: ________________________
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FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of $___________,
consisting of $ ____________ by wire transfer or certified or cashiers' check
at a price of $_____ per share and requests that a certificate (or certificates)
in denominations of ______________ (___________) shares of Common Stock of the
Company hereby purchased be issued in the name of and delivered to the
undersigned or such designee of the undersigned and, if such shares of Common
Stock (together with any shares issued upon exercise of other Warrants or
replacement Warrants) shall not include all of the shares of Common Stock
issuable upon exercise of all Warrants represented by such Warrant Certificate
(or if a new or replacement Warrant is otherwise to be provided pursuant to the
Warrant Certificate), that a new or replacement Warrant Certificate of like
tenor for the number of Warrants not being exercised (and not being surrendered)
hereunder be issued in the name of and delivered to the undersigned, whose
address is __________________________.
Dated: __________, 199__.
______________________________
(Signature of Registered Holder)
By:__________________________
Title:_______________________
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THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series A. No. 2
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Anasazi Partners Limited Partnership (together with
its successors or permitted assigns, the "Holder") is entitled to purchase from
Trans World Gaming Corp., a Nevada corporation ("Company") up to 200,000 shares
of the Company's common stock, par value $.001 per share (the "Common Stock"),
at a purchase price of $1.00 per share of Common Stock (the "Warrant Price"),
subject to adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Consent to Amend
Indenture, Bonds and Warrants dated as of March 25, 1998 (the "Agreement"),
between the Company and the Holder.
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 December 31, 2005, in whole or in part, by
(i) the surrender of this Warrant (with the purchase form at the end hereof
properly executed) at the principal executive
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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
Warrant 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 subparagraph
(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 Common Stock
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 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. If at any time this Warrant is exercised as to
less than the total number of shares for which it may be exercised, and this
Warrant shall not have expired, the Company shall promptly issue to the Holder a
new Warrant identical in form as to this Warrant as to the remaining shares
hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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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) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or post-
effective amendment thereto as permitted under the Securities Act of 1933, as
amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
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(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such other documents, as the Holder may
reasonably request in order to facilitate the public sale or other disposition
of the securities owned by the Holder;
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any,
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for sale pursuant to such registration, from a firm of independent certified
public accountants of recognized standing selected by the Company, addressed to
the underwriters, if any, and to the Holder making such request, covering such
financial, statistical and accounting matters with respect to the registration
in respect of which such letters are being given as the Holder of such
Registrable Securities may reasonably request and are customarily included in
such letters; and
(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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
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Registerable Securities is filed, amended or supplemented under the Act, the
Distributing Holder will indemnify and hold harmless the Company and each
underwriter, each of their respective directors, each of their respective
officers, employees, partners and agents 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,
employees, partners and agents 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, employees, partners
and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT PRICE AND NUMBER OF SECURITIES.
(a) The Warrant Price shall be subject to adjustment from time
to time as follows:
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(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.
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
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benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable upon conversion, exchange or
exercise of such security) would purchase at the
Market Price per share of Common Stock on such date.
Such adjustment shall be made whenever such shares,
securities, options, warrants or other rights are
issued, and shall become effective retroactively
immediately after the close of business on the
record date for the determination of stockholders
entitled to receive such shares, securities,
options, warrants or other rights; PROVIDED, that
the determination as to whether an adjustment is
required to be made pursuant to this Section 7(a)
shall only be made upon the issuance of such shares
or such convertible or exchangeable securities,
options, warrants or other rights, and not upon the
issuance of the security into which such convertible
or exchangeable security converts or exchanges, or
the security underlying such option, warrant or
other right. Notwithstanding the foregoing, in the
event of such issuance or sale of Common Stock at a
cash price less than the Market Price, no such
adjustment under this Section 7(a) need be made to
the number of shares underlying the Warrant unless
such adjustment would require an increase or
decrease of at least 1% of the number of shares
underlying the Warrant. Any lesser adjustment shall
be carried forward and shall be made at the time of
and together with the next subsequent adjustment
which, together with any adjustment or adjustments
so carried forward, shall amount to an increase or
decrease of at least 1% of number of shares
underlying
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the Warrant. For the purpose of this Agreement, the
term "Market Price" shall mean (i) if the Common
Stock is traded in the over-the-counter market or on
the National Association of Securities Dealers, Inc.
Automated Quotations System ("NASDAQ"), the average
per share closing prices of the Common Stock on the
20 consecutive trading days immediately preceding
the date in question as reported by NASDAQ or an
equivalent generally accepted reporting service, or
(ii) if the Common Stock is traded on a national
securities exchange, the average for the 20
consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment
by a fraction, the numerator of which shall be the
number of shares of Common Stock purchasable upon
the exercise of each Warrant immediately prior to
such adjustment and the denominator of which shall
be the number of shares of Common Stock purchasable
immediately after such adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the
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exercise of the 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 record date thereof, the number of shares of Common Stock
issuable upon the exercise of the 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 the 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 reorganization, reclassification,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock which the holder of the 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 or expiration of the
Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine holders of Common Stock entitled to receive such distribution
and the holder of this Warrant shall have until 5:00 p.m. EST on the twentieth
(20th) day following the actual receipt of such notice to elect whether to
exercise this Warrant in accordance with the terms herein. In the event of
proper election to exercise the Warrant, the holder of this Warrant shall be
deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he 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 the 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 Warrant 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
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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.
(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 hereof 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 hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
(j) 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
Stock 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
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nearest whole number of shares, if the fraction is equal to or greater than .5,
and down if the fraction is less than .5.
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, Suite 1503, 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 other than Section 6 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, and this Warrant is
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 31, 1998.
TRANS WORLD GAMING CORP.
By:__________________________
Its: ________________________
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FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of $__________,
consisting of $___________ by wire transfer or certified or cashiers' check at
a price of $_____ per share and requests that a certificate (or certificates)
in denominations of ______________ (___________) shares of Common Stock of the
Company hereby purchased be issued in the name of and delivered to the
undersigned or such designee of the undersigned and, if such shares of Common
Stock (together with any shares issued upon exercise of other Warrants or
replacement Warrants) shall not include all of the shares of Common Stock
issuable upon exercise of all Warrants represented by such Warrant Certificate
(or if a new or replacement Warrant is otherwise to be provided pursuant to the
Warrant Certificate), that a new or replacement Warrant Certificate of like
tenor for the number of Warrants not being exercised (and not being surrendered)
hereunder be issued in the name of and delivered to the undersigned, whose
address is __________________________.
Dated: __________, 199__.
______________________________
(Signature of Registered Holder)
By:_________________________
Title:______________________
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THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series A. No. 3
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that New Generation Limited Partnership (together with its
successors or permitted assigns, the "Holder") is entitled to purchase from
Trans World Gaming Corp., a Nevada corporation ("Company") up to 100,000 shares
of the Company's common stock, par value $.001 per share (the "Common Stock"),
at a purchase price of $1.00 per share of Common Stock (the "Warrant Price"),
subject to adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Consent to Amend
Indenture, Bonds and Warrants dated as of March 25, 1998 (the "Agreement"),
between the Company and the Holder.
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 December 31, 2005, in whole or in part, by
(i) the surrender of this Warrant (with the purchase form at the end 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 Warrant Price then in effect for
the number of
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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 subparagraph (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 Common Stock 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 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. If at any time this
Warrant is exercised as to less than the total number of shares for which it may
be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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
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set forth herein.
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or post-
effective amendment thereto as permitted under the Securities Act of 1933, as
amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such other documents, as the Holder may
reasonably request in order to facilitate the public sale or other disposition
of the securities owned by the Holder;
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(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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<PAGE>
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents 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
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<PAGE>
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, employees, partners and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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
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immediately after such issuance or sale.
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or
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exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable upon conversion, exchange or
exercise of such security) would purchase at the
Market Price per share of Common Stock on such date.
Such adjustment shall be made whenever such shares,
securities, options, warrants or other rights are
issued, and shall become effective retroactively
immediately after the close of business on the
record date for the determination of stockholders
entitled to receive such shares, securities,
options, warrants or other rights; PROVIDED, that
the determination as to whether an adjustment is
required to be made pursuant to this Section 7(a)
shall only be made upon the issuance of such shares
or such convertible or exchangeable securities,
options, warrants or other rights, and not upon the
issuance of the security into which such convertible
or exchangeable security converts or exchanges, or
the security underlying such option, warrant or
other right. Notwithstanding the foregoing, in the
event of such issuance or sale of Common Stock at a
cash price less than the Market Price, no such
adjustment under this Section 7(a) need be made to
the number of shares underlying the Warrant unless
such adjustment would require an increase or
decrease of at least 1% of the number of shares
underlying the Warrant. Any lesser adjustment shall
be carried forward and shall be made at the time of
and together with the next subsequent adjustment
which, together with any adjustment or adjustments
so carried forward, shall amount to an increase or
decrease of at least 1% of number of shares
underlying the Warrant. For the purpose of this
Agreement, the term "Market Price" shall mean (i) if
the Common Stock is traded in the over-the-counter
market or on the National Association of Securities
Dealers, Inc. Automated Quotations System
("NASDAQ"), the average per share closing prices of
the Common Stock on the 20 consecutive trading days
immediately preceding the date in question as
reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common
Stock is traded on a national securities exchange,
the average for the 20 consecutive trading days
immediately preceding the date in question of the
daily per share closing prices of the Common Stock
on the principal stock exchange on which it is
listed, as the case may be. The closing price
referred to above shall be the last reported sales
price or in case no such reported sale takes place
on such day, the average of the reported closing bid
and asked prices, in either case on the national
securities exchange or automated quotation system on
which the Common Stock is then listed.
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Whenever the number of shares of Common Stock
purchasable upon exercise of each Warrant is
adjusted, the Warrant Price for each share of Common
Stock payable upon exercise of each Warrant shall be
adjusted by multiplying such Warrant Price
immediately prior to such adjustment by a fraction,
the numerator of which shall be the number of shares
of Common Stock purchasable upon the exercise of
each Warrant immediately prior to such adjustment
and the denominator of which shall be the number of
shares of Common Stock purchasable immediately after
such adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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 the 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 reorganization, reclassification,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock which the holder of the 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 or expiration of the
Warrant.
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<PAGE>
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine holders of Common Stock entitled to receive such distribution
and the holder of this Warrant shall have until 5:00 p.m. EST on the twentieth
(20th) day following the actual receipt of such notice to elect whether to
exercise this Warrant in accordance with the terms herein. In the event of
proper election to exercise the Warrant, the holder of this Warrant shall be
deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he 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 the 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 Warrant 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.
(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 hereof 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 hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
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<PAGE>
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
(j) 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
Stock 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, if the fraction is equal to
or greater than .5, and down if the fraction is less than .5.
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, Suite 1503, 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 other than Section 6 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, and this Warrant is
for the sole and exclusive benefit of the Company and the Holder or Holders.
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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 31, 1998.
TRANS WORLD GAMING CORP.
By:__________________________
Its: ________________________
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FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of $___________,
consisting of $___________ by wire transfer or certified or cashiers' check at
a price of $_____ per share and requests that a certificate (or certificates)
in denominations of ______________ (___________) shares of Common Stock of the
Company hereby purchased be issued in the name of and delivered to the
undersigned or such designee of the undersigned and, if such shares of Common
Stock (together with any shares issued upon exercise of other Warrants or
replacement Warrants) shall not include all of the shares of Common Stock
issuable upon exercise of all Warrants represented by such Warrant Certificate
(or if a new or replacement Warrant is otherwise to be provided pursuant to the
Warrant Certificate), that a new or replacement Warrant Certificate of like
tenor for the number of Warrants not being exercised (and not being surrendered)
hereunder be issued in the name of and delivered to the undersigned, whose
address is __________________________.
Dated: __________, 199__.
_____________________________
(Signature of Registered Holder)
By:________________________
Title:_____________________
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THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series A. No. 4
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Fundamental Investors, L.P. (together with its
successors or permitted assigns, the "Holder") is entitled to purchase from
Trans World Gaming Corp., a Nevada corporation ("Company") up to 40,000 shares
of the Company's common stock, par value $.001 per share (the "Common Stock"),
at a purchase price of $1.00 per share of Common Stock (the "Warrant Price"),
subject to adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Consent to Amend
Indenture, Bonds and Warrants dated as of March 25, 1998 (the "Agreement"),
between the Company and the Holder.
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 December 31, 2005, in whole or in part, by
(i) the surrender of this Warrant (with the purchase form at the end hereof
properly executed) at the principal executive office of the Company (or such
other office or agency of the
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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 Warrant 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
subparagraph (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 Common Stock 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 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. If at any time this
Warrant is exercised as to less than the total number of shares for which it may
be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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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) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or post-
effective amendment thereto as permitted under the Securities Act of 1933, as
amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
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(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such other documents, as the Holder may
reasonably request in order to facilitate the public sale or other disposition
of the securities owned by the Holder;
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the
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Holder making such request, covering such financial, statistical and accounting
matters with respect to the registration in respect of which such letters are
being given as the Holder of such Registrable Securities may reasonably request
and are customarily included in such letters; and
(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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 reffered to as the Distributing Holder),
each person, if any, contrlos (within the meaning of the Act) the Distributing
Holder, and each officer, director, employee, partner or agent of the
Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the
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Distributing Holder will indemnify and hold harmless the Company and each
underwriter, each of their respective directors, each of their respective
officers, employees, partners and agents 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,
employees, partners and agents 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, employees, partners
and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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
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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.
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of
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shares of Common Stock thereafter purchasable upon
exercise of a Warrant shall be determined by
multiplying the number of shares of Common Stock
theretofore purchasable upon exercise of each
Warrant by a fraction (A) the numerator of which
shall be the sum of the number of shares of Common
Stock outstanding on such date plus the number of
additional shares of Common Stock issued (or the
maximum number into which such convertible or
exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable upon conversion, exchange or
exercise of such security) would purchase at the
Market Price per share of Common Stock on such date.
Such adjustment shall be made whenever such shares,
securities, options, warrants or other rights are
issued, and shall become effective retroactively
immediately after the close of business on the
record date for the determination of stockholders
entitled to receive such shares, securities,
options, warrants or other rights; PROVIDED, that
the determination as to whether an adjustment is
required to be made pursuant to this Section 7(a)
shall only be made upon the issuance of such shares
or such convertible or exchangeable securities,
options, warrants or other rights, and not upon the
issuance of the security into which such convertible
or exchangeable security converts or exchanges, or
the security underlying such option, warrant or
other right. Notwithstanding the foregoing, in the
event of such issuance or sale of Common Stock at a
cash price less than the Market Price, no such
adjustment under this Section 7(a) need be made to
the number of shares underlying the Warrant unless
such adjustment would require an increase or
decrease of at least 1% of the number of shares
underlying the Warrant. Any lesser adjustment shall
be carried forward and shall be made at the time of
and together with the next subsequent adjustment
which, together with any adjustment or adjustments
so carried forward, shall amount to an increase
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or decrease of at least 1% of number of shares
underlying the Warrant. For the purpose of this
Agreement, the term "Market Price" shall mean (i) if
the Common Stock is traded in the over-the-counter
market or on the National Association of Securities
Dealers, Inc. Automated Quotations System
("NASDAQ"), the average per share closing prices of
the Common Stock on the 20 consecutive trading days
immediately preceding the date in question as
reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common
Stock is traded on a national securities exchange,
the average for the 20 consecutive trading days
immediately preceding the date in question of the
daily per share closing prices of the Common Stock
on the principal stock exchange on which it is
listed, as the case may be. The closing price
referred to above shall be the last reported sales
price or in case no such reported sale takes place
on such day, the average of the reported closing bid
and asked prices, in either case on the national
securities exchange or automated quotation system on
which the Common Stock is then listed. Whenever the
number of shares of Common Stock purchasable upon
exercise of each Warrant is adjusted, the Warrant
Price for each share of Common Stock payable upon
exercise of each Warrant shall be adjusted by
multiplying such Warrant Price immediately prior to
such adjustment by a fraction, the numerator of
which shall be the number of shares of Common Stock
purchasable upon the exercise of each Warrant
immediately prior to such adjustment and the
denominator of which shall be the number of shares
of Common Stock purchasable immediately after such
adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a
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subdivision of the outstanding Common Stock, then, from and after the record
date thereof, by reason of such dividend, distribution or subdivision, the
number of shares of Common Stock issuable upon the exercise of the 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 record
date thereof, the number of shares of Common Stock issuable upon the exercise of
the 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 the 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 reorganization, reclassification,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock which the holder of the 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 or expiration of the
Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine holders of Common Stock entitled to receive such distribution
and the holder of this Warrant shall have until 5:00 p.m. EST on the twentieth
(20th) day following the actual receipt of such notice to elect whether to
exercise this Warrant in accordance with the terms herein. In the event of
proper election to exercise the Warrant, the holder of this Warrant shall be
deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he 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 the 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.
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(e) In case of the dissolution, liquidation or winding-up of
the Company, all rights under the Warrant 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.
(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 hereof 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 hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrant
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
(j) 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
Stock 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
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rounding any fraction up to the nearest whole number of shares, if the fraction
is equal to or greater than .5, and down if the fraction is less than .5.
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, Suite 1503, 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 other than Section 6 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, and this Warrant is
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 31, 1998.
TRANS WORLD GAMING CORP.
By:__________________________
Its: ________________________
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FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of $___________,
consisting of $___________ by wire transfer or certified or cashiers' check at
a price of $_____ per share and requests that a certificate (or certificates)
in denominations of ______________ (___________) shares of Common Stock of the
Company hereby purchased be issued in the name of and delivered to the
undersigned or such designee of the undersigned and, if such shares of Common
Stock (together with any shares issued upon exercise of other Warrants or
replacement Warrants) shall not include all of the shares of Common Stock
issuable upon exercise of all Warrants represented by such Warrant Certificate
(or if a new or replacement Warrant is otherwise to be provided pursuant to the
Warrant Certificate), that a new or replacement Warrant Certificate of like
tenor for the number of Warrants not being exercised (and not being surrendered)
hereunder be issued in the name of and delivered to the undersigned, whose
address is __________________________.
Dated: __________, 199__.
___________________________
(Signature of Registered Holder)
By:______________________
Title:___________________
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THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series A. No. 5
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Belvin Friedson and Lucille Friedson (together with
its successors or permitted assigns, the "Holder") is entitled to purchase from
Trans World Gaming Corp., a Nevada corporation ("Company") up to 20,000 shares
of the Companys common stock, par value $.001 per share (the "Common Stock"), at
a purchase price of $1.00 per share of Common Stock (the "Warrant Price"),
subject to adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Consent to Amend
Indenture, Bonds and Warrants dated as of March 25, 1998 (the "Agreement"),
between the Company and the Holder.
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 December 31, 2005, in whole or in part, by
(i) the surrender of this Warrant (with the purchase form at the end hereof
properly executed) at the principal executive
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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
Warrant 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 subparagraph
(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 Common Stock
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 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. If at any time this Warrant is exercised as to
less than the total number of shares for which it may be exercised, and this
Warrant shall not have expired, the Company shall promptly issue to the Holder a
new Warrant identical in form as to this Warrant as to the remaining shares
hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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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) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or post-
effective amendment thereto as permitted under the Securities Act of 1933, as
amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
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(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such other documents, as the Holder may
reasonably request in order to facilitate the public sale or other disposition
of the securities owned by the Holder;
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any,
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<PAGE>
for sale pursuant to such registration, from a firm of independent certified
public accountants of recognized standing selected by the Company, addressed to
the underwriters, if any, and to the Holder making such request, covering such
financial, statistical and accounting matters with respect to the registration
in respect of which such letters are being given as the Holder of such
Registrable Securities may reasonably request and are customarily included in
such letters; and
(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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
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Registerable Securities is filed, amended or supplemented under the Act, the
Distributing Holder will indemnify and hold harmless the Company and each
underwriter, each of their respective directors, each of their respective
officers, employees, partners and agents 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,
employees, partners and agents 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, employees, partners
and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT PRICE AND NUMBER OF SECURITIES.
(a) The Warrant Price shall be subject to adjustment from time
to time as follows:
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(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.
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
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<PAGE>
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable upon conversion, exchange or
exercise of such security) would purchase at the
Market Price per share of Common Stock on such date.
Such adjustment shall be made whenever such shares,
securities, options, warrants or other rights are
issued, and shall become effective retroactively
immediately after the close of business on the
record date for the determination of stockholders
entitled to receive such shares, securities,
options, warrants or other rights; PROVIDED, that
the determination as to whether an adjustment is
required to be made pursuant to this Section 7(a)
shall only be made upon the issuance of such shares
or such convertible or exchangeable securities,
options, warrants or other rights, and not upon the
issuance of the security into which such convertible
or exchangeable security converts or exchanges, or
the security underlying such option, warrant or
other right. Notwithstanding the for
s so carried forward, shall amount to an
increase or decrease of at least 1% of number of
shares underlying the Warrant. For the purpose of
this Agreement, the term "Market Price" shall mean
(i) if the Common Stock is traded in the over-the-
counter market or on the National Association of
Securities Dealers, Inc. Automated
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<PAGE>
Quotations System ("NASDAQ"), the average per share
closing prices of the Common Stock on the 20
consecutive trading days immediately preceding the
date in question as reported by NASDAQ or an
equivalent generally accepted reporting service, or
(ii) if the Common Stock is traded on a national
securities exchange, the average for the 20
consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment
by a fraction, the numerator of which shall be the
number of shares of Common Stock purchasable upon
the exercise of each Warrant immediately prior to
such adjustment and the denominator of which shall
be the number of shares of Common Stock purchasable
immediately after such adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the Warrant shall be decreased
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<PAGE>
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 the 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 reorganization, reclassification,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock which the holder of the 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 or expiration of the
Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine holders of Common Stock entitled to receive such distribution
and the holder of this Warrant shall have until 5:00 p.m. EST on the twentieth
(20th) day following the actual receipt of such notice to elect whether to
exercise this Warrant in accordance with the terms herein. In the event of
proper election to exercise the Warrant, the holder of this Warrant shall be
deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he 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 the 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 Warrant 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.
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<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 hereof 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 hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
(j) 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
Stock 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, if the fraction is equal to or greater than .5, and down if
the fraction is less than .5.
9. MISCELLANEOUS.
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<PAGE>
(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, Suite 1503, 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 other than Section 6 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, and this Warrant is
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 31, 1998.
TRANS WORLD GAMING CORP.
By:__________________________
Its: ________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of $___________,
consisting of $___________ by wire transfer or certified or cashiers' check at
a price of $_____ per share and requests that a certificate (or certificates)
in denominations of ______________ (___________) shares of Common Stock of the
Company hereby purchased be issued in the name of and delivered to the
undersigned or such designee of the undersigned and, if such shares of Common
Stock (together with any shares issued upon exercise of other Warrants or
replacement Warrants) shall not include all of the shares of Common Stock
issuable upon exercise of all Warrants represented by such Warrant Certificate
(or if a new or replacement Warrant is otherwise to be provided pursuant to the
Warrant Certificate), that a new or replacement Warrant Certificate of like
tenor for the number of Warrants not being exercised (and not being surrendered)
hereunder be issued in the name of and delivered to the undersigned, whose
address is __________________________.
Dated: __________, 199__.
__________________________
(Signature of Registered Holder)
By:______________________
Title:___________________
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THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series B No. 1
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Value Partners, Ltd. (together with its successors or
permitted assigns, the "Holder") is entitled to purchase from Trans World Gaming
Corp., a Nevada corporation ("Company") up to 2,000,000 shares of the Company's
common stock, par value $.001 per share (the "Common Stock"), at a purchase
price of $1.50 per share of Common Stock (the "Warrant Price"), subject to
adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Consent to Amend
Indenture, Bonds and Warrants dated as of March 25, 1998 (the "Agreement"),
between the Company and the Holder.
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 December 31, 2005, in whole or in part, by
(i) the surrender of this Warrant (with the purchase form at the end 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 Warrant Price then in effect for
the number of
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<PAGE>
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 subparagraph (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 Common Stock 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 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. If at any time this
Warrant is exercised as to less than the total number of shares for which it may
be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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
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those expressed in this Warrant and are not enforceable against the Company
except to the extent set forth herein.
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such
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other documents, as the Holder may reasonably request in order to facilitate the
public sale or other disposition of the securities owned by the Holder;
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
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(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents or controlling person may
become subject under the Act or otherwise, insofar
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<PAGE>
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, employees, partners and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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
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<PAGE>
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.
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or exchangeable securities initially may convert or
exchange or for
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<PAGE>
which such options, warrants or other rights
initially may be exercised) and (B) the denominator
of which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of shares of Common Stock which the aggregate
consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable upon conversion, exchange or
exercise of such security) would purchase at the
Market Price per share of Common Stock on such date.
Such adjustment shall be made whenever such shares,
securities, options, warrants or other rights are
issued, and shall become effective retroactively
immediately after the close of business on the
record date for the determination of stockholders
entitled to receive such shares, securities,
options, warrants or other rights; PROVIDED, that
the determination as to whether an adjustment is
required to be made pursuant to this Section 7(a)
shall only be made upon the issuance of such shares
or such convertible or exchangeable securities,
options, warrants or other rights, and not upon the
issuance of the security into which such convertible
or exchangeable security converts or exchanges, or
the security underlying such option, warrant or
other right. Notwithstanding the foregoing, in the
event of such issuance or sale of Common Stock at a
cash price less than the Market Price, no such
adjustment under this Section 7(a) need be made to
the number of shares underlying the Warrant unless
such adjustment would require an increase or
decrease of at least 1% of the number of shares
underlying the Warrant. Any lesser adjustment shall
be carried forward and shall be made at the time of
and together with the next subsequent adjustment
which, together with any adjustment or adjustments
so carried forward, shall amount to an increase or
decrease of at least 1% of number of shares
underlying the Warrant. For the purpose of this
Agreement, the term "Market Price" shall mean (i) if
the Common Stock is traded in the over-the-counter
market or on the National Association of Securities
Dealers, Inc. Automated Quotations System
("NASDAQ"), the average per share closing prices of
the Common Stock on the 20 consecutive trading days
immediately preceding the date in question as
reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common
Stock is traded on a national securities exchange,
the average for the 20 consecutive trading days
immediately preceding the date in
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<PAGE>
question of the daily per share closing prices of
the Common Stock on the principal stock exchange on
which it is listed, as the case may be. The closing
price referred to above shall be the last reported
sales price or in case no such reported sale takes
place on such day, the average of the reported
closing bid and asked prices, in either case on the
national securities exchange or automated quotation
system on which the Common Stock is then listed.
Whenever the number of shares of Common Stock
purchasable upon exercise of each Warrant is
adjusted, the Warrant Price for each share of Common
Stock payable upon exercise of each Warrant shall be
adjusted by multiplying such Warrant Price
immediately prior to such adjustment by a fraction,
the numerator of which shall be the number of shares
of Common Stock purchasable upon the exercise of
each Warrant immediately prior to such adjustment
and the denominator of which shall be the number of
shares of Common Stock purchasable immediately after
such adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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
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<PAGE>
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 the 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 reorganization, reclassification,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock which the holder of the 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 or expiration of the
Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine holders of Common Stock entitled to receive such distribution
and the holder of this Warrant shall have until 5:00 p.m. EST on the twentieth
(20th) day following the actual receipt of such notice to elect whether to
exercise this Warrant in accordance with the terms herein. In the event of
proper election to exercise the Warrant, the holder of this Warrant shall be
deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he 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 the 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 Warrant 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.
(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 hereof 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
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<PAGE>
right of the holder hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
(j) 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
Stock 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, if the fraction is equal to or greater than .5, and down if
the fraction is less than .5.
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, Suite 1503, New
York, NY 10119.
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<PAGE>
(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 other than Section 6 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, and this Warrant is
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 31, 1998.
TRANS WORLD GAMING CORP.
By:____________________________
Its: __________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of $__________,
consisting of $ ____________ by wire transfer or certified or cashiers' check
at a price of $_____ per share and requests that a certificate (or certificates)
in denominations of ______________ (___________) shares of Common Stock of the
Company hereby purchased be issued in the name of and delivered to the
undersigned or such designee of the undersigned and, if such shares of Common
Stock (together with any shares issued upon exercise of other Warrants or
replacement Warrants) shall not include all of the shares of Common Stock
issuable upon exercise of all Warrants represented by such Warrant Certificate
(or if a new or replacement Warrant is otherwise to be provided pursuant to the
Warrant Certificate), that a new or replacement Warrant Certificate of like
tenor for the number of Warrants not being exercised (and not being surrendered)
hereunder be issued in the name of and delivered to the undersigned, whose
address is __________________________.
Dated: __________, 199__.
________________________________
(Signature of Registered Holder)
By:_____________________________
Title:__________________________
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<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series B No. 2
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Anasazi Partners Limited Partnership (together with
its successors or permitted assigns, the "Holder") is entitled to purchase from
Trans World Gaming Corp., a Nevada corporation ("Company") up to 666,667 shares
of the Company's common stock, par value $.001 per share (the "Common Stock"),
at a purchase price of $1.50 per share of Common Stock (the "Warrant Price"),
subject to adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Consent to Amend
Indenture, Bonds and Warrants dated as of March 25, 1998 (the "Agreement"),
between the Company and the Holder.
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 December 31, 2005, in whole or in part, by
(i) the surrender of this Warrant (with the purchase form at the end 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 Warrant Price then in effect for
the number of
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<PAGE>
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 subparagraph (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 Common Stock 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 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. If at any time this
Warrant is exercised as to less than the total number of shares for which it may
be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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
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those expressed in this Warrant and are not enforceable against the Company
except to the extent set forth herein.
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such
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other documents, as the Holder may reasonably request in order to facilitate the
public sale or other disposition of the securities owned by the Holder;
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
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(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents or controlling person may
become subject under the Act or otherwise, insofar
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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, employees, partners and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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:
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(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.
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or
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exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable upon conversion, exchange or
exercise of such security) would purchase at the
Market Price per share of Common Stock on such date.
Such adjustment shall be made whenever such shares,
securities, options, warrants or other rights are
issued, and shall become effective retroactively
immediately after the close of business on the
record date for the determination of stockholders
entitled to receive such shares, securities,
options, warrants or other rights; PROVIDED, that
the determination as to whether an adjustment is
required to be made pursuant to this Section 7(a)
shall only be made upon the issuance of such shares
or such convertible or exchangeable securities,
options, warrants or other rights, and not upon the
issuance of the security into which such convertible
or exchangeable security converts or exchanges, or
the security underlying such option, warrant or
other right. Notwithstanding the foregoing, in the
event of such issuance or sale of Common Stock at a
cash price less than the Market Price, no such
adjustment under this Section 7(a) need be made to
the number of shares underlying the Warrant unless
such adjustment would require an increase or
decrease of at least 1% of the number of shares
underlying the Warrant. Any lesser adjustment shall
be carried forward and shall be made at the time of
and together with the next subsequent adjustment
which, together with any adjustment or adjustments
so carried forward, shall amount to an increase or
decrease of at least 1% of number of shares
underlying the Warrant. For the purpose of this
Agreement, the term "Market Price" shall mean (i) if
the Common Stock is traded in the over-the-counter
market or on the National Association of Securities
Dealers, Inc. Automated Quotations System
("NASDAQ"), the average per share closing prices of
the Common Stock on the 20 consecutive trading days
immediately preceding the date in question as
reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common
Stock is traded on a national securities exchange,
the average for the 20
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consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment
by a fraction, the numerator of which shall be the
number of shares of Common Stock purchasable upon
the exercise of each Warrant immediately prior to
such adjustment and the denominator of which shall
be the number of shares of Common Stock purchasable
immediately after such adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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
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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 the 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
reorganization, reclassification, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock which the holder of the 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 or expiration of the Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine holders of Common Stock entitled to receive such distribution
and the holder of this Warrant shall have until 5:00 p.m. EST on the twentieth
(20th) day following the actual receipt of such notice to elect whether to
exercise this Warrant in accordance with the terms herein. In the event of
proper election to exercise the Warrant, the holder of this Warrant shall be
deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he 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 the 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 Warrant 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.
(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 hereof 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
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the books shall be closed or record date fixed with respect to such offer of
subscription and the right of the holder hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
(j) 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
Stock 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, if the fraction is equal to or greater than .5, and down if
the fraction is less than .5.
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, Suite 1503, New
York, NY 10119.
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(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 other than Section 6 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, and this Warrant is
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 31, 1998.
TRANS WORLD GAMING CORP.
By:
---------------------
Its:
--------------------
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FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of
$____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of Common
Stock issuable upon exercise of all Warrants represented by such Warrant
Certificate (or if a new or replacement Warrant is otherwise to be provided
pursuant to the Warrant Certificate), that a new or replacement Warrant
Certificate of like tenor for the number of Warrants not being exercised (and
not being surrendered) hereunder be issued in the name of and delivered to the
undersigned, whose address is __________________________.
Dated: __________, 199__.
_____________________________
(Signature of Registered Holder)
By:__________________________
Title:_______________________
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THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series B No. 3
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that New Generation Limited Partnership (together with its
successors or permitted assigns, the "Holder") is entitled to purchase from
Trans World Gaming Corp., a Nevada corporation ("Company") up to 333,333 shares
of the Company's common stock, par value $.001 per share (the "Common Stock"),
at a purchase price of $1.50 per share of Common Stock (the "Warrant Price"),
subject to adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Consent to Amend
Indenture, Bonds and Warrants dated as of March 25, 1998 (the "Agreement"),
between the Company and the Holder.
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 December 31, 2005, in whole or in part, by
(i) the surrender of this Warrant (with the purchase form at the end 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 Warrant Price then in effect for
the number of
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<PAGE>
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 subparagraph (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 Common Stock 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 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. If at any time this
Warrant is exercised as to less than the total number of shares for which it may
be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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
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those expressed in this Warrant and are not enforceable against the Company
except to the extent set forth herein.
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such
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other documents, as the Holder may reasonably request in order to facilitate the
public sale or other disposition of the securities owned by the Holder;
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
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(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents or controlling person may
become subject under the Act or otherwise, insofar
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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, employees, partners and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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:
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(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.
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or
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exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable upon conversion, exchange or
exercise of such security) would purchase at the
Market Price per share of Common Stock on such date.
Such adjustment shall be made whenever such shares,
securities, options, warrants or other rights are
issued, and shall become effective retroactively
immediately after the close of business on the
record date for the determination of stockholders
entitled to receive such shares, securities,
options, warrants or other rights; PROVIDED, that
the determination as to whether an adjustment is
required to be made pursuant to this Section 7(a)
shall only be made upon the issuance of such shares
or such convertible or exchangeable securities,
options, warrants or other rights, and not upon the
issuance of the security into which such convertible
or exchangeable security converts or exchanges, or
the security underlying such option, warrant or
other right. Notwithstanding the foregoing, in the
event of such issuance or sale of Common Stock at a
cash price less than the Market Price, no such
adjustment under this Section 7(a) need be made to
the number of shares underlying the Warrant unless
such adjustment would require an increase or
decrease of at least 1% of the number of shares
underlying the Warrant. Any lesser adjustment shall
be carried forward and shall be made at the time of
and together with the next subsequent adjustment
which, together with any adjustment or adjustments
so carried forward, shall amount to an increase or
decrease of at least 1% of number of shares
underlying the Warrant. For the purpose of this
Agreement, the term "Market Price" shall mean (i) if
the Common Stock is traded in the over-the-counter
market or on the National Association of Securities
Dealers, Inc. Automated Quotations System
("NASDAQ"), the average per share closing prices of
the Common Stock on the 20 consecutive trading days
immediately preceding the date in question as
reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common
Stock is traded on a national securities exchange,
the average for the 20
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consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment
by a fraction, the numerator of which shall be the
number of shares of Common Stock purchasable upon
the exercise of each Warrant immediately prior to
such adjustment and the denominator of which shall
be the number of shares of Common Stock purchasable
immediately after such adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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
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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 the 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
reorganization, reclassification, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock which the holder of the 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 or expiration of the Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine holders of Common Stock entitled to receive such distribution
and the holder of this Warrant shall have until 5:00 p.m. EST on the twentieth
(20th) day following the actual receipt of such notice to elect whether to
exercise this Warrant in accordance with the terms herein. In the event of
proper election to exercise the Warrant, the holder of this Warrant shall be
deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he 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 the 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 Warrant 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.
(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 hereof 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
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the books shall be closed or record date fixed with respect to such offer of
subscription and the right of the holder hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
(j) 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
Stock 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, if the fraction is equal to or greater than .5, and down if
the fraction is less than .5.
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, Suite
1503, New York, NY 10119.
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(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 other than Section 6 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, and this Warrant is
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 31, 1998.
TRANS WORLD GAMING CORP.
By:____________________________
Its: __________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of
$____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of Common
Stock issuable upon exercise of all Warrants represented by such Warrant
Certificate (or if a new or replacement Warrant is otherwise to be provided
pursuant to the Warrant Certificate), that a new or replacement Warrant
Certificate of like tenor for the number of Warrants not being exercised (and
not being surrendered) hereunder be issued in the name of and delivered to the
undersigned, whose address is __________________________.
Dated: __________, 199__.
________________________________
(Signature of Registered Holder)
By:_____________________________
Title:__________________________
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THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series B No. 4
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Fundamental Investors, L.P. (together with its
successors or permitted assigns, the "Holder") is entitled to purchase from
Trans World Gaming Corp., a Nevada corporation ("Company") up to 133,333 shares
of the Company's common stock, par value $.001 per share (the "Common Stock"),
at a purchase price of $1.50 per share of Common Stock (the "Warrant Price"),
subject to adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Consent to Amend
Indenture, Bonds and Warrants dated as of March 25, 1998 (the "Agreement"),
between the Company and the Holder.
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 December 31, 2005, in whole or in part, by
(i) the surrender of this Warrant (with the purchase form at the end 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 Warrant Price then in effect for
the number of
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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 subparagraph (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 Common Stock 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 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. If at any time this
Warrant is exercised as to less than the total number of shares for which it may
be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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
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those expressed in this Warrant and are not enforceable against the Company
except to the extent set forth herein.
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such
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other documents, as the Holder may reasonably request in order to facilitate the
public sale or other disposition of the securities owned by the Holder;
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
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(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents or controlling person may
become subject under the Act or otherwise, insofar
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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, employees, partners and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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:
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(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.
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or
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exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable upon conversion, exchange or
exercise of such security) would purchase at the
Market Price per share of Common Stock on such date.
Such adjustment shall be made whenever such shares,
securities, options, warrants or other rights are
issued, and shall become effective retroactively
immediately after the close of business on the
record date for the determination of stockholders
entitled to receive such shares, securities,
options, warrants or other rights; PROVIDED, that
the determination as to whether an adjustment is
required to be made pursuant to this Section 7(a)
shall only be made upon the issuance of such shares
or such convertible or exchangeable securities,
options, warrants or other rights, and not upon the
issuance of the security into which such convertible
or exchangeable security converts or exchanges, or
the security underlying such option, warrant or
other right. Notwithstanding the foregoing, in the
event of such issuance or sale of Common Stock at a
cash price less than the Market Price, no such
adjustment under this Section 7(a) need be made to
the number of shares underlying the Warrant unless
such adjustment would require an increase or
decrease of at least 1% of the number of shares
underlying the Warrant. Any lesser adjustment shall
be carried forward and shall be made at the time of
and together with the next subsequent adjustment
which, together with any adjustment or adjustments
so carried forward, shall amount to an increase or
decrease of at least 1% of number of shares
underlying the Warrant. For the purpose of this
Agreement, the term "Market Price" shall mean (i) if
the Common Stock is traded in the over-the-counter
market or on the National Association of Securities
Dealers, Inc. Automated Quotations System
("NASDAQ"), the average per share closing prices of
the Common Stock on the 20 consecutive trading days
immediately preceding the date in question as
reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common
Stock is traded on a national securities exchange,
the average for the 20
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consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment
by a fraction, the numerator of which shall be the
number of shares of Common Stock purchasable upon
the exercise of each Warrant immediately prior to
such adjustment and the denominator of which shall
be the number of shares of Common Stock purchasable
immediately after such adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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
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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 the 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
reorganization, reclassification, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock which the holder of the 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 or expiration of the Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine holders of Common Stock entitled to receive such distribution
and the holder of this Warrant shall have until 5:00 p.m. EST on the twentieth
(20th) day following the actual receipt of such notice to elect whether to
exercise this Warrant in accordance with the terms herein. In the event of
proper election to exercise the Warrant, the holder of this Warrant shall be
deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he 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 the 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 Warrant 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.
(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 hereof 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
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<PAGE>
the books shall be closed or record date fixed with respect to such offer of
subscription and the right of the holder hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
(j) 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
Stock 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, if the fraction is equal to or greater than .5, and down if
the fraction is less than .5.
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, Suite 1503,
New York, NY 10119.
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(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 other than Section 6 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, and this Warrant is
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 31, 1998.
TRANS WORLD GAMING CORP.
By:__________________________
Its: __________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________
(___________) shares of Common Stock of Trans World Gaming Corp. (the
"Company").
The undersigned herewith makes payment therefore in the amount of
$____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of Common
Stock issuable upon exercise of all Warrants represented by such Warrant
Certificate (or if a new or replacement Warrant is otherwise to be provided
pursuant to the Warrant Certificate), that a new or replacement Warrant
Certificate of like tenor for the number of Warrants not being exercised (and
not being surrendered) hereunder be issued in the name of and delivered to the
undersigned, whose address is __________________________.
Dated: __________, 199__.
____________________________
(Signature of Registered Holder)
By:______________________
Title:_____________________
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THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series B No. 5
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Belvin Friedson and Lucille Friedson (together with
its successors or permitted assigns, the "Holder") is entitled to purchase from
Trans World Gaming Corp., a Nevada corporation ("Company") up to 66,667 shares
of the Company's common stock, par value $.001 per share (the "Common Stock"),
at a purchase price of $1.50 per share of Common Stock (the "Warrant Price"),
subject to adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Consent to Amend
Indenture, Bonds and Warrants dated as of March 25, 1998 (the "Agreement"),
between the Company and the Holder.
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 December 31, 2005, in whole or in part, by
(i) the surrender of this Warrant (with the purchase form at the end 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 Warrant Price then in effect for
the number of
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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 subparagraph (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 Common Stock 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 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. If at any time this
Warrant is exercised as to less than the total number of shares for which it may
be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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
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those expressed in this Warrant and are not enforceable against the Company
except to the extent set forth herein.
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such
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other documents, as the Holder may reasonably request in order to facilitate the
public sale or other disposition of the securities owned by the Holder;
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
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(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents or controlling person may
become subject under the Act or otherwise, insofar
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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, employees, partners and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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:
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(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.
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or
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exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable upon conversion, exchange or
exercise of such security) would purchase at the
Market Price per share of Common Stock on such date.
Such adjustment shall be made whenever such shares,
securities, options, warrants or other rights are
issued, and shall become effective retroactively
immediately after the close of business on the
record date for the determination of stockholders
entitled to receive such shares, securities,
options, warrants or other rights; PROVIDED, that
the determination as to whether an adjustment is
required to be made pursuant to this Section 7(a)
shall only be made upon the issuance of such shares
or such convertible or exchangeable securities,
options, warrants or other rights, and not upon the
issuance of the security into which such convertible
or exchangeable security converts or exchanges, or
the security underlying such option, warrant or
other right. Notwithstanding the foregoing, in the
event of such issuance or sale of Common Stock at a
cash price less than the Market Price, no such
adjustment under this Section 7(a) need be made to
the number of shares underlying the Warrant unless
such adjustment would require an increase or
decrease of at least 1% of the number of shares
underlying the Warrant. Any lesser adjustment shall
be carried forward and shall be made at the time of
and together with the next subsequent adjustment
which, together with any adjustment or adjustments
so carried forward, shall amount to an increase or
decrease of at least 1% of number of shares
underlying the Warrant. For the purpose of this
Agreement, the term "Market Price" shall mean (i) if
the Common Stock is traded in the over-the-counter
market or on the National Association of Securities
Dealers, Inc. Automated Quotations System
("NASDAQ"), the average per share closing prices of
the Common Stock on the 20 consecutive trading days
immediately preceding the date in question as
reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common
Stock is traded on a national securities exchange,
the average for the 20
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consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment
by a fraction, the numerator of which shall be the
number of shares of Common Stock purchasable upon
the exercise of each Warrant immediately prior to
such adjustment and the denominator of which shall
be the number of shares of Common Stock purchasable
immediately after such adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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
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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 the 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
reorganization, reclassification, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock which the holder of the 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 or expiration of the Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine holders of Common Stock entitled to receive such distribution
and the holder of this Warrant shall have until 5:00 p.m. EST on the twentieth
(20th) day following the actual receipt of such notice to elect whether to
exercise this Warrant in accordance with the terms herein. In the event of
proper election to exercise the Warrant, the holder of this Warrant shall be
deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he 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 the 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 Warrant 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.
(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 hereof 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
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the books shall be closed or record date fixed with respect to such offer of
subscription and the right of the holder hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
(j) 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
Stock 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, if the fraction is equal to or greater than .5, and down if
the fraction is less than .5.
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, Suite
1503, New York, NY 10119.
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(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 other than Section 6 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, and this Warrant is
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 31, 1998.
TRANS WORLD GAMING CORP.
By:____________________________
Its: __________________________
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FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of
$____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of Common
Stock issuable upon exercise of all Warrants represented by such Warrant
Certificate (or if a new or replacement Warrant is otherwise to be provided
pursuant to the Warrant Certificate), that a new or replacement Warrant
Certificate of like tenor for the number of Warrants not being exercised (and
not being surrendered) hereunder be issued in the name of and delivered to the
undersigned, whose address is __________________________.
Dated: __________, 199__.
________________________________
(Signature of Registered Holder)
By:_____________________________
Title:__________________________
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AGREEMENT TO AMEND WARRANTS
This Agreement to Amend Warrants is entered into as of March 25, 1998 by
and between Trans World Gaming Corp., a Nevada Corporation (the "Company") and
the undersigned (the "Holder"). Exhibits attached hereto are by this reference
incorporated herein.
BACKGROUND
1. The undersigned are the holders of those Warrants to purchase
Common Stock of the Company as set forth under Column 2 on Exhibit "A" (the
"Outstanding Exchange Warrants").
2. The Company has entered into that certain Subscription Agreement
(the "$17 Million Agreement") dated as of March 16, 1998 pursuant to which it
proposes to issue $15 to $17 million of Notes, together with warrants to
purchase common stock of the Company. The parties to the $17 Million Agreement
have made it a condition of that $17 Million Agreement that the Outstanding
Exchange Warrants be modified as set forth herein.
3. Attached hereto as Exhibit "B" is that certain form of amended
warrant to purchase Common Stock of the Company which shall be issued, in the
event this Agreement closes, in exchange for the Outstanding Exchange Warrants,
(the "Amended Warrants") which Outstanding Exchange Warrant shall be cancelled.
TERMS
Intending to be legally bound, in consideration of the mutual covenants
and agreements set forth herein, the parties hereto agree as follows:
1. Amendment
Subject to the terms and conditions set forth herein, each of the
Outstanding Exchange Warrants shall be canceled and each shall be replaced in
its entirety by a newly issued warrant in the form of the Amended Warrant. The
number of shares of common stock of the Company which may be obtained by the
Amended Warrants shall be set at 2,051,912, in the aggregate, and each Holder
shall receive an Amended Warrant for the number of shares next to its name under
column 3 on Exhibit A, at the strike price of one cent ($.01) per share with
such Amended Warrants to expire June 30, 2002. Such number of shares of common
stock issuable pursuant to the Amended Warrants shall not be subject to
adjustment by virtue of the warrants issued pursuant to the $17 Million
Subscription Agreement or any other warrant, right or agreement in existence as
of the date hereof, as of the date of the Closing, or as a result the Closing
hereof (including those issued as a part of that certain Consent to Amend
Indenture, Bonds and Warrants ("Consent Agreement") dated as of March 25, 1998,
pursuant to which certain terms of the 12% Secured Convertible Senior Bonds, and
related Indenture, and certain Warrants issued in
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association therewith under the terms of a Subscription Agreement dated as of
July 1, 1996 (the "1996 Agreement") are amended and pursuant to which additional
warrants are issued.
2. The cancellation of the Outstanding Exchange Warrants and the
issuance of the Amended Warrants as set forth herein shall occur only in the
event of the following:
a. In the event the $17 Million Subscription Agreement closes;
and
b. In the event all of the Holders on Exhibit "A" hereto are a
party to this Agreement.
3. Representations and Warranties of Holder.
As of March 31, 1998 (the "Closing Date"), the Holder represents and
warrants as follows:
a. The Holder is the owner, subject to paragraph C below, of
and has not assigned, transferred, sold, pledged, optioned, endorsed or
otherwise conveyed or transferred any interest in the Outstanding Exchange
Warrants as set forth opposite such Holder's name under Column 2 on Exhibit "A"
hereto. Other than certain warrants acquired pursuant to the 1996 Agreement and
other than as set forth on Exhibit "A", neither the Holder nor any related party
is the holder of, directly or indirectly, any other warrant or right of any kind
or nature to acquire common stock or any other class of stock of the Company.
For purposes of this Agreement, related party is to be broadly defined, and
shall include any direct or indirect subsidiary, affiliate, officer, director,
employee, partner, shareholders, legal or equitable beneficiary, or any person
related to any such individual by blood or marriage or otherwise.
b. The Holder has all requisite legal power and authority to
enter into this Agreement. This Agreement has been duly authorized by all
necessary action on the part of the Holder, has been duly executed and delivered
by an authorized officer or representative of the Holder, and is a legal, valid
and binding obligation of the undersigned enforceable in accordance with its
terms, regardless of whether such enforceability is considered in a proceeding
in law or in equity.
c. The Holder has reviewed the Investment Representation
Letter attached hereto as Exhibit "C". All information provided therein and in
this Agreement is true and correct as of the date hereof and as of the date of
the Closing hereof. All information provided therein and in this Agreement is
true and correct as of the date hereof and as of the date of the Closing hereof,
except as modified as follows: New Generation Limited Partnership ("New
Generation"), has entered into a "Put Option Agreement" with Christopher Baker
pursuant to which, under certain conditions, New Generation can require Mr.
Baker to purchase an agreed upon percentage of New Generation's Amended Bond
plus accrued, unpaid interest, plus the Amended Warrants on such portion of the
bond. Also, Fundamental Investors, L.P. ("Fundamental") has entered into a "Put
Option Agreement" with Mr. Baker pursuant to which, immediately subsequent to
the Closing hereof, Fundamental has the right to sell Mr. Baker an
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agreed upon percentage of Fundamental's Amended Bond and the accrued unpaid
interest thereon. Fundamental has also agreed to sell all Amended Warrants
received by it on such bond to Mr. Baker. Execution of this Agreement shall be
deemed execution of the Investment Representation Letter.
4. Representations and Warranties of the Company.
As of the Closing Date, the Company represents, warrants and covenants to
the Subscriber that:
(a) ORGANIZATION, STANDING, ETC. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada and has all requisite corporate power and authority to own its assets and
carry on its business as presently conducted. The Company has all requisite
corporate power and authority to (i) execute, deliver, and perform its
obligations under this Agreement and the Amended Warrants and all other
agreements and instruments executed and delivered pursuant to or in connection
with this Agreement and Amended Warrant (collectively the "Operative
Agreements"), and (ii) issue the Amended Warrant in exchange for the Outstanding
Exchange Warrants.
(b) AUTHORIZATION AND EXECUTION; AMENDED WARRANTS VALIDLY ISSUED. The
execution, delivery and performance by the Company of this Agreement and the
other Operative Agreements, and the issuance of the Amended Warrant hereunder
have been duly and validly authorized by the Company. This Agreement and the
other Operative Agreements have been duly executed and delivered by the Company
and constitute valid and binding agreements of the Company enforceable against
the Company in accordance with their respective terms. Upon the Closing, the
shares of common stock issuable pursuant to the Amended Warrant will upon
issuance be duly and validly issued and outstanding, fully paid and
nonassessable (other than the exercise price of the Amended Warrant).
(c) CONTRAVENTION. The execution, delivery and performance of this
Agreement and the other Operative Agreements and the consummation of the
transactions contemplated thereby do not contravene or constitute a default
under or violate (i) any provision of applicable law or regulation the violation
of which would have a material adverse effect on the Company or the Amended
Warrant, (ii) the Articles of Incorporation and Bylaws of the Company, or (iii)
any agreements, judgment, injunction, order, decree or other instrument binding
upon the Company or any of its assets or properties, the violation of which
would have a material adverse effect on the Company or on the Amended Warrant.
For purposes of this Agreement, a "material adverse effect" means a
material adverse effect on (a) the business, operations, property or condition
(financial or otherwise) of the Company, (b) the ability of the Company to
perform its obligations under this Agreement, or any other Operative Agreements
to which it is a party, or (c) the validity, enforceability, perfection or
priority of this Agreement or the rights or remedies of the Holder.
-3-
<PAGE>
(d) GOVERNMENTAL REGULATIONS. Except as required pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and State securities laws,
the Company is not subject to any foreign, Federal or State law or regulation
limiting its ability to enter into this Agreement or any other Operative
Agreement, to issue the Amended Warrant or to perform its obligations required
thereby.
(e) BISHKEK CASINO. The Company will fully fund the "Bishkek Casino"
project with a minimum of US $250,000 prior to April 15, 1998 (which US $250,000
shall include the contribution to cage cash).
(f) TERM OF WARRANTS. The terms of the Warrants issued to the persons
and entities listed on Exhibit "A" shall be identical to the terms of the
warrants issued pursuant to the $ 17 Million Agreement, except for the
expiration date of such Warrants. This shall not include the number of warrants
or percentage ownership of the Company, but rather the governing terms. Nothing
herein shall effect the terms of the Warrants as contained in Exhibit "B".
(g) NON-ACCOUNTABLE EXPENSES. The Company will pay C.P. Baker &
Company a one-time non-accountable expense fee of US $15,000 within ten days
following the Closing of this Agreement.
(h) TAX REPORTING. To the extent lawful, the Company agrees that for
tax purposes, it will take the position that the Amended Warrant has no value.
This shall not be deemed an indemnity of the Holder by the Company, unless the
company refuses to take such a position when such position is lawful. Subject
to the limitations in this subparagraph, tax filings by the Company will be
prepared in a manner consistent with this treatment.
5. Surrender of Securities.
Immediately following and in the event of the Closing, the Holder shall
surrender to the Company the Outstanding Exchange Warrants, which shall be
canceled and exchanged for the Amended Warrant in the form attached hereto.
6. Closing.
The closing this Agreement shall be deemed to occur simultaneously with
and only in the event of the closing of the $17 Million Agreement (the
"Closing"). The Holder acknowledges that the Amended Warrants shall be
delivered subsequent to the Closing and that the Outstanding Exchange Warrants
shall be returned to the Company. The parties hereto agree to act in good faith
and to use their best efforts to the extent additional documents, actions or
information are necessary post-closing and convenant to cooperate with each
other in taking all necessary actions related thereto.
7. Survival of Representations and Warranties; Beneficiaries
-4-
<PAGE>
All representations and warranties contained in this Agreement shall
survive the execution and delivery of this Agreement. The parties hereto
acknowledge that the Subscribers to the $17 Million Agreement and the parties to
the Consent Agreement are entitled to rely upon and are beneficiaries of this
Agreement and the representations, warranties, convenants and agreements made
herein.
8. Waiver of Jury Trial.
Each of the parties hereto irrevocably and unconditionally waives the
right to trial by jury in any legal or equitable action, suit or proceeding
arising out of or relating to this agreement, the units or any other operative
agreement or any transaction contemplated hereby or thereby or the subject
matter of any of the foregoing.
9. Notices to the Company.
All notices and other communications provided for herein shall be in
writing and shall be deemed to have been duly given if delivered personally or
sent by registered or certified mail, return receipt requested, postage prepaid,
telex, telecopier or overnight air courier guaranteeing next day delivery:
(a) if to the Company, to it at the following address:
Trans World Gaming Corp.
One Penn Plaza
Suite 1503
New York, New York 10119
Attn: Dominick Valenzano, Chief Financial Officer
(c) if to the Holder, to the address set forth on the signature page
hereto, or at such other address as either party shall have
specified by notice in writing to the other.
All notices and communications shall be deemed to have been duly given:
at the time delivered by hand, if personally delivered; five business days after
being deposited in the mail, certified mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is orally acknowledged, if telecopied;
and the next business day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next day delivery.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
10. Notification of Changes.
The Holder and the Company agree and covenant to notify the other
promptly upon the occurrence of any event prior to the Closing which would cause
any representation, warranty, covenant or other statement contained in this
Agreement by such person so notifying to be false
-5-
<PAGE>
or incorrect or of any material change in any statement made herein occurring
prior to the Closing Date.
11. Assignability.
This Agreement is not assignable by the Holder or the Company, and may
not be modified, waived or terminated except by an instrument in writing signed
by the party against whom enforcement of such modifications, waiver or
termination is sought.
12. Binding Effect.
Except as otherwise provided herein, this Agreement shall be binding upon
and inure to the benefit of the parties and their heirs, executors,
administrators, successors, and legal representatives, and assigns, including
any transferee of the Outstanding Exchange Warrants and the Amended Warrant, and
the agreements, representations, warranties and acknowledgments contained herein
shall be deemed to be made by and be binding upon such heirs, executors,
administrators, successors, and legal representatives and assigns. If the
Holder is more than one person, the obligation of the Holder shall be joint and
several and the agreements, representations, warranties and acknowledgments
contained herein shall be deemed to be made by and be binding upon each such
person and his heirs, executors, administrators and successors.
13. Obligations Irrevocable.
The obligations of the Holder shall be irrevocable, except with the
consent of the Company, until the Closing or earlier termination of the $17
Million Subscription Agreement.
14. Entire Agreement.
This Agreement constitutes the entire agreement of the Holder and the
Company relating to the matters contained herein, superseding all prior
contracts, commitments, or agreements, whether oral or written.
15. Governing Law.
This Agreement shall be governed and controlled as to the validity,
enforcement, interpretations, construction and effect and in all other aspects
by the substantive laws of the State of NEW YORK, without reference to conflicts
of laws principles.
16. Severability.
If any provision of this Agreement or the application thereof to any
Holder or circumstance shall be held invalid or unenforceable to any extent, the
remainder of this Agreement and the application of such provision to other
Holders or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by law.
-6-
<PAGE>
17. Headings.
The headings in this Agreement are inserted for convenience and
identification only and are not intended to describe, interpret, define, or
limit the scope, extent or intent of this Agreement or any provision hereof.
18. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which together shall be deemed to be one and the same agreement.
-7-
<PAGE>
IN WITNESS WHEREOF, the undersigned Holder and Company have executed this
Agreement to Amend Warrants this 25 day of March, 1998.
CORPORATE HOLDER:
By: ________________________________
Its: ________________________________
INDIVIDUAL HOLDER:
By: ________________________________
PARTNERSHIP HOLDER:
By: ________________________________
Its: ________________________________
TRANS WORLD GAMING CORP:
By: _________________________________
Its: ________________________________
-8-
<PAGE>
Exhibit "A"
<TABLE>
<CAPTION>
1 2 3
- - -
NUMBER OF SHARES NUMBER OF SHARES OF
NAME OF HOLDER OUTSTANDING AMENDED WARRANTS
<S> <C> <C>
1 C.P. Baker Venture Fund I., L.P. 53,320 218,862
2 Christopher P. Baker,
individually 266,600 1,094,309
3 Adrienne Baker 13,333 54,728
4 David Friedson 66,667 273,647
5 C.P. Baker & Co., Ltd. 99,975 410,366
---------------- -------------------
Total 499,895 2,051,912
</TABLE>
-9-
<PAGE>
Exhibit "B"
FORM OF AMENDED WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series D No. __
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that _____________ (together with its successors or
permitted assigns, the "Holder") is entitled to purchase from Trans World Gaming
Corp., a Nevada corporation ("Company") up to ________ shares of the Company's
common stock, par value $.001 per share (the "Common Stock"), at a purchase
price of $.01 per share of Common Stock (the "Warrant Price"), subject to
adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Agreement to Amend
Warrants dated as of March 25, 1998 (the "Agreement"), between the Company and
the Holder.
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 June 30, 2002, in whole or in part, by (i)
the surrender of this Warrant (with the purchase form at the end 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 Warrant 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
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<PAGE>
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 subparagraph (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 Common Stock 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 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. If at any time this Warrant is exercised as to less than the total
number of shares for which it may be exercised, and this Warrant shall not have
expired, the Company shall promptly issue to the Holder a new Warrant identical
in form as to this Warrant as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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.
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<PAGE>
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such other documents, as the Holder may
reasonably request in order to facilitate the public sale or other disposition
of the securities owned by the Holder;
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<PAGE>
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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<PAGE>
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person for use in the preparation thereof, and
(ii) such losse, 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents 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
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<PAGE>
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, employees, partners
and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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.
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<PAGE>
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable
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<PAGE>
upon conversion, exchange or exercise of such
security) would purchase at the Market Price per
share of Common Stock on such date. Such adjustment
shall be made whenever such shares, securities,
options, warrants or other rights are issued, and
shall become effective retroactively immediately
after the close of business on the record date for
the determination of stockholders entitled to
receive such shares, securities, options, warrants
or other rights; PROVIDED, that the determination as
to whether an adjustment is required to be made
pursuant to this Section 7(a) shall only be made
upon the issuance of such shares or such convertible
or exchangeable securities, options, warrants or
other rights, and not upon the issuance of the
security into which such convertible or exchangeable
security converts or exchanges, or the security
underlying such option, warrant or other right.
Notwithstanding the foregoing, in the event of such
issuance or sale of Common Stock at a cash price
less than the Market Price, no such adjustment under
this Section 7(a) need be made to the number of
shares underlying the Warrant unless such adjustment
would require an increase or decrease of at least 1%
of the number of shares underlying the Warrant. Any
lesser adjustment shall be carried forward and shall
be made at the time of and together with the next
subsequent adjustment which, together with any
adjustment or adjustments so carried forward, shall
amount to an increase or decrease of at least 1% of
number of shares underlying the Warrant. For the
purpose of this Agreement, the term "Market Price"
shall mean (i) if the Common Stock is traded in the
over-the-counter market or on the National
Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ"), the average per share
closing prices of the Common Stock on the 20
consecutive trading days immediately preceding the
date in question as reported by NASDAQ or an
equivalent generally accepted reporting service, or
(ii) if the Common Stock is traded on a national
securities exchange, the average for the 20
consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such
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adjustment by a fraction, the numerator of which
shall be the number of shares of Common Stock
purchasable upon the exercise of each Warrant
immediately prior to such adjustment and the
denominator of which shall be the number of shares
of Common Stock purchasable immediately after such
adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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 the 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 reorganization, reclassification,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock which the holder of the 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 or expiration of the
Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine
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holders of Common Stock entitled to receive such distribution and the holder of
this Warrant shall have until 5:00 p.m. EST on the twentieth (20th) day
following the actual receipt of such notice to elect whether to exercise this
Warrant in accordance with the terms herein. In the event of proper election to
exercise the Warrant, the holder of this Warrant shall be deemed to be a holder
of Common Stock as of the record date for such distribution. Should the holder
of the Warrant elect to exercise his Warrant within 20 days after the record
date for the determination of those holders of Common Stock entitled to such
dividend or distribution, he 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 the
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 Warrant 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.
(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 hereof 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 hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
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<PAGE>
(j) 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
Stock 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, if the fraction is equal to or greater than .5, and down if
the fraction is less than .5.
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, Suite 1503, 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 other than Section 6 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, and this Warrant is
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 31,
1998.
TRANS WORLD GAMING CORP.
By:__________________________
Its: ________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of
$____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of Common
Stock issuable upon exercise of all Warrants represented by such Warrant
Certificate (or if a new or replacement Warrant is otherwise to be provided
pursuant to the Warrant Certificate), that a new or replacement Warrant
Certificate of like tenor for the number of Warrants not being exercised (and
not being surrendered) hereunder be issued in the name of and delivered to the
undersigned, whose address is __________________________.
Dated: __________, _____.
________________________
(Signature of Registered Holder)
By:______________________
Title:___________________
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<PAGE>
Exhibit "C"
INVESTMENT REPRESENTATION LETTER
(Accredited Investor)
March __, 1998
Trans World Gaming Corp
One Penn Plaza, Suite 1503
New York, New York 10119
Attn: Mr. Andrew Tottenham, President
Dear Mr. Tottenham:
This letter is submitted in conjunction with and pursuant to the terms
and conditions contained in that certain Agreement to Amend Warrants (the
"Agreement"). The undersigned Purchaser is exchanging all of the issued
outstanding warrants of Trans World Gaming Corp. (the "Company") held by it for
certain new warrants (the "Amended Warrant") issued by the Company pursuant to
the Agreement. In order to induce the Company issue the Amended Warrant (the
"Units") to the Purchaser, the Purchaser makes the representations and
warranties contained herein.
The Company has informed the Purchaser that the Units have not been
registered with the Securities and Exchange Commission nor with the securities
authorities of any state, and that the Units must be held indefinitely unless
they are subsequently registered under the Securities Act of 1933, as amended,
and the appropriate state securities laws, or an exemption from such
registration is available and counsel to the Purchaser provides an opinion
regarding such exemption which is satisfactory to the Company. The Purchaser
understands that the Company is under no obligation to register the Units or to
comply with any such exemption, except as may be set forth in any binding
agreement between the parties. The Purchaser understands that no federal or
state securities authority has made any finding or determination as to the
fairness of investment in, nor any recommendation or endorsement of, the Units.
The Purchaser hereby represents and warrants to the Company that
Purchaser is purchasing the Units for Purchaser's own account for investment and
not with a view to dividing the Units with others, or with a view to or in
connection with an offering or any distribution of the Units, and that the
Purchaser has no present intention of selling or otherwise disposing of the
Units.
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<PAGE>
In order to assure the Company with respect to the foregoing, the
Purchaser further represents and warrants the following facts:
(a) Except as specifically noted above, it is the intention of
the Purchaser to receive and hold the Units for the private personal investment
of the Purchaser for Purchaser's own account. Any sale or exchange or offer of
the Units will be made in only if the Units are registered under the Securities
Act of 1933, as amended, or the sale can be made pursuant to an exemption from
the registration requirements of such Act and any applicable state securities
act and such exception is set forth in an opinion of Purchaser's counsel
satisfactory to the Company.
(b) The Purchaser has no contract, understanding, agreement or
arrangement with any person or entity to sell or transfer to any such persons or
entities, or to anyone, or to have any such person or entity sell for the
Purchaser the Units and the Purchaser is not engaged in, and does not plan to
engage in any discussion with any person or entity relating to the sale or
transfer of the Units.
(c) Except as specifically noted above, as of the present date,
the Purchaser is not aware of any occurrence, event or circumstance upon the
happening of which Purchaser intends to transfer or sell the Units, or any part
thereof, and the Purchaser does not have any present intention to sell the
Units, or any part thereof, after the lapse of any particular period of time.
Purchaser understands that Purchaser may be required to bear the economic risks
of Purchaser's investment in the Units for an indefinite period of time.
(d) The Purchaser has no present obligation, indebtedness or
commitment and has no knowledge of any circumstances in existence, which would
compel the Purchaser to secure funds by the sale of the Units, nor is the
Purchaser a party to any plans or undertakings requiring funds, which plans or
undertakings can be consummated only by the sale of all or part of the Units.
(e) The Undersigned is an "Accredited Investor" as that term
is defined in Regulation D promulgated by the Securities and Exchange Commission
under the Securities Act of 1933.
(f) The negotiations for the purchase of such Units have been
conducted directly between the Purchaser on the one hand and the Company on the
other. The Purchaser has been given the opportunity to ask questions of, and
receive answers from, the Company and its officers concerning the terms and
conditions of the sale of the Units and other matters pertaining to the
investment in the Company in order for the Purchaser to evaluate the merits and
risks of purchase of the Units. The Purchaser acknowledges that Purchaser has
been furnished all information that Purchaser has requested to the extent that
Purchaser considers necessary and advisable, and such information, along with
the information and advice provided by the Purchaser Representative, is
reasonable upon which to base an investment decision.
(g) The Purchaser acknowledges Purchaser's understanding that
the offering and sale of the Units is intended to be exempt from registration
under the Securities Act of 1933, as amended, by virtue of Section 4(2) of that
Act, and that the Company is relying upon the
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<PAGE>
representations made by the Purchasers herein for the purpose of qualifying such
offering thereunder.
(h) Investment in the Units is speculative and involves a high
degree of risk of loss by the Purchaser of the Purchaser's entire investment.
The Purchaser has such knowledge and experience in financial and business
matters that Purchaser is capable of evaluating the merits and risks of the
investment in the Units, can bear the economic risk of losing Purchaser's entire
investment, has adequate means for providing for Purchaser's current needs and
personal contingencies, and has no need for liquidity in an investment in the
Units and is capable of evaluating the merits and risks of the investment in the
Units.
The Purchaser further understands that in the event Purchaser should in
fact resell the Units, or any part thereof, within the foreseeable future,
Purchaser may be deemed to be an underwriter, as that term is defined in the
Securities Act of 1933, as amended. The Purchaser further understands and
agrees that the Units cannot be offered for sale, sold or otherwise transferred
on the register of the Company until Purchaser has notified the Company in
writing of Purchaser's intention to do so and unless and until the Company, if
it deems appropriate, has been furnished with an opinion of counsel for the
Purchaser satisfactory to counsel for the Company that such sale or transfer
does not involve a violation of the Securities Act of 1933, as amended, or the
securities laws of any state having jurisdiction. The Purchaser agrees that an
appropriate restrictive legend may be placed on the certificates evidencing any
Units issued pursuant hereto. The Purchaser hereby agrees to indemnify and hold
the Company and its directors, officers, employees, agents and controlling
persons, harmless from and against any losses, claims, damages or expenses
(including attorneys fees) arising out of or resulting from the untruth of any
representation or the breach of any warranty or covenant herein.
The Purchaser agrees that transfer of the Units may be refused by the
Company or its transfer agent if, in the opinion of counsel for the Company, any
proposed sale or transfer by the Purchaser of the Units would not be in
compliance with the applicable federal and state securities laws. The Purchaser
has not received any offering materials from the Company and the investment is
not made as a result of any general solicitation advertisements.
Sincerely,
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<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series D No. 1
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that C.P. Baker Venture Fund I, L.P. (together with its
successors or permitted assigns, the "Holder") is entitled to purchase from
Trans World Gaming Corp., a Nevada corporation ("Company") up to 218,862 shares
of the Company's common stock, par value $.001 per share (the "Common Stock"),
at a purchase price of $.01 per share of Common Stock (the "Warrant Price"),
subject to adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Agreement to Amend
Warrants dated as of March 25, 1998 (the "Agreement"), between the Company and
the Holder.
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 June 30, 2002, in whole or in part, by (i)
the surrender of this Warrant (with the purchase form at the end 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 Warrant 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
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<PAGE>
by the provisions of Paragraph 5 and subparagraph (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 Common Stock 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 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. If at any time
this Warrant is exercised as to less than the total number of shares for which
it may be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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.
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<PAGE>
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such other documents, as the Holder may
reasonably request in order to facilitate the public sale or other disposition
of the securities owned by the Holder;
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<PAGE>
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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<PAGE>
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, 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 such underwriter or any other person
described above 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 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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents 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
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<PAGE>
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 or such underwriter for use in the
preparation thereof; and will reimburse the Company or any such director,
officer, employees, partners and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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.
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For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable
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<PAGE>
upon conversion, exchange or exercise of such
security) would purchase at the Market Price per
share of Common Stock on such date. Such adjustment
shall be made whenever such shares, securities,
options, warrants or other rights are issued, and
shall become effective retroactively immediately
after the close of business on the record date for
the determination of stockholders entitled to
receive such shares, securities, options, warrants
or other rights; PROVIDED, that the determination as
to whether an adjustment is required to be made
pursuant to this Section 7(a) shall only be made
upon the issuance of such shares or such convertible
or exchangeable securities, options, warrants or
other rights, and not upon the issuance of the
security into which such convertible or exchangeable
security converts or exchanges, or the security
underlying such option, warrant or other right.
Notwithstanding the foregoing, in the event of such
issuance or sale of Common Stock at a cash price
less than the Market Price, no such adjustment under
this Section 7(a) need be made to the number of
shares underlying the Warrant unless such adjustment
would require an increase or decrease of at least 1%
of the number of shares underlying the Warrant. Any
lesser adjustment shall be carried forward and shall
be made at the time of and together with the next
subsequent adjustment which, together with any
adjustment or adjustments so carried forward, shall
amount to an increase or decrease of at least 1% of
number of shares underlying the Warrant. For the
purpose of this Agreement, the term "Market Price"
shall mean (i) if the Common Stock is traded in the
over-the-counter market or on the National
Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ"), the average per share
closing prices of the Common Stock on the 20
consecutive trading days immediately preceding the
date in question as reported by NASDAQ or an
equivalent generally accepted reporting service, or
(ii) if the Common Stock is traded on a national
securities exchange, the average for the 20
consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such
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<PAGE>
adjustment by a fraction, the numerator of which
shall be the number of shares of Common Stock
purchasable upon the exercise of each Warrant
immediately prior to such adjustment and the
denominator of which shall be the number of shares
of Common Stock purchasable immediately after such
adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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 the 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 reorganization, reclassification,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock which the holder of the 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 or expiration of the
Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine
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<PAGE>
holders of Common Stock entitled to receive such distribution and the holder of
this Warrant shall have until 5:00 p.m. EST on the twentieth (20th) day
following the actual receipt of such notice to elect whether to exercise this
Warrant in accordance with the terms herein. In the event of proper election to
exercise the Warrant, the holder of this Warrant shall be deemed to be a holder
of Common Stock as of the record date for such distribution. Should the holder
of the Warrant elect to exercise his Warrant within 20 days after the record
date for the determination of those holders of Common Stock entitled to such
dividend or distribution, he 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 the
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 Warrant 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.
(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 hereof 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 hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
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<PAGE>
(j) 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
Stock 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, if the fraction is equal to or greater than .5, and down if
the fraction is less than .5.
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, Suite 1503, 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 other than Section 6 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 31,
1998.
TRANS WORLD GAMING CORP.
By:____________________________
Its: __________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of
$____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of Common
Stock issuable upon exercise of all Warrants represented by such Warrant
Certificate (or if a new or replacement Warrant is otherwise to be provided
pursuant to the Warrant Certificate), that a new or replacement Warrant
Certificate of like tenor for the number of Warrants not being exercised (and
not being surrendered) hereunder be issued in the name of and delivered to the
undersigned, whose address is __________________________.
Dated: __________, _____.
_______________________________
(Signature of Registered Holder)
By:____________________________
Title:_________________________
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<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series D No. 2
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Christopher P. Baker, individually (together with its
successors or permitted assigns, the "Holder") is entitled to purchase from
Trans World Gaming Corp., a Nevada corporation ("Company") up to 1,094,309
shares of the Company's common stock, par value $.001 per share (the "Common
Stock"), at a purchase price of $.01 per share of Common Stock (the "Warrant
Price"), subject to adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Agreement to Amend
Warrants dated as of March 25, 1998 (the "Agreement"), between the Company and
the Holder.
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 June 30, 2002, in whole or in part, by (i)
the surrender of this Warrant (with the purchase form at the end 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 Warrant 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
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<PAGE>
by the provisions of Paragraph 5 and subparagraph (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 Common Stock 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 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. If at any time
this Warrant is exercised as to less than the total number of shares for which
it may be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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.
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<PAGE>
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such other documents, as the Holder may
reasonably request in order to facilitate the public sale or other disposition
of the securities owned by the Holder;
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<PAGE>
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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<PAGE>
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents 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
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<PAGE>
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, employees, partners
and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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.
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<PAGE>
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable
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<PAGE>
upon conversion, exchange or exercise of such
security) would purchase at the Market Price per
share of Common Stock on such date. Such adjustment
shall be made whenever such shares, securities,
options, warrants or other rights are issued, and
shall become effective retroactively immediately
after the close of business on the record date for
the determination of stockholders entitled to
receive such shares, securities, options, warrants
or other rights; PROVIDED, that the determination as
to whether an adjustment is required to be made
pursuant to this Section 7(a) shall only be made
upon the issuance of such shares or such convertible
or exchangeable securities, options, warrants or
other rights, and not upon the issuance of the
security into which such convertible or exchangeable
security converts or exchanges, or the security
underlying such option, warrant or other right.
Notwithstanding the foregoing, in the event of such
issuance or sale of Common Stock at a cash price
less than the Market Price, no such adjustment under
this Section 7(a) need be made to the number of
shares underlying the Warrant unless such adjustment
would require an increase or decrease of at least 1%
of the number of shares underlying the Warrant. Any
lesser adjustment shall be carried forward and shall
be made at the time of and together with the next
subsequent adjustment which, together with any
adjustment or adjustments so carried forward, shall
amount to an increase or decrease of at least 1% of
number of shares underlying the Warrant. For the
purpose of this Agreement, the term "Market Price"
shall mean (i) if the Common Stock is traded in the
over-the-counter market or on the National
Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ"), the average per share
closing prices of the Common Stock on the 20
consecutive trading days immediately preceding the
date in question as reported by NASDAQ or an
equivalent generally accepted reporting service, or
(ii) if the Common Stock is traded on a national
securities exchange, the average for the 20
consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such
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<PAGE>
adjustment by a fraction, the numerator of which
shall be the number of shares of Common Stock
purchasable upon the exercise of each Warrant
immediately prior to such adjustment and the
denominator of which shall be the number of shares
of Common Stock purchasable immediately after such
adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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 the 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 reorganization, reclassification,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock which the holder of the 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 or expiration of the
Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine
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<PAGE>
holders of Common Stock entitled to receive such distribution and the holder of
this Warrant shall have until 5:00 p.m. EST on the twentieth (20th) day
following the actual receipt of such notice to elect whether to exercise this
Warrant in accordance with the terms herein. In the event of proper election to
exercise the Warrant, the holder of this Warrant shall be deemed to be a holder
of Common Stock as of the record date for such distribution. Should the holder
of the Warrant elect to exercise his Warrant within 20 days after the record
date for the determination of those holders of Common Stock entitled to such
dividend or distribution, he 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 the
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 Warrant 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.
(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 hereof 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 hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
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<PAGE>
(j) 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
Stock 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, if the fraction is equal to or greater than .5, and down if
the fraction is less than .5.
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, Suite 1503, 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 other than Section 6 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, and this Warrant is
for the sole and exclusive benefit of the Company and the Holder or Holders.
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<PAGE>
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 31,
1998.
TRANS WORLD GAMING CORP.
By:__________________________
Its: ________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of
$____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of Common
Stock issuable upon exercise of all Warrants represented by such Warrant
Certificate (or if a new or replacement Warrant is otherwise to be provided
pursuant to the Warrant Certificate), that a new or replacement Warrant
Certificate of like tenor for the number of Warrants not being exercised (and
not being surrendered) hereunder be issued in the name of and delivered to the
undersigned, whose address is __________________________.
Dated: __________, _____.
________________________________
(Signature of Registered Holder)
By:_____________________________
Title:__________________________
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<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series D No. 3
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Adrienne Baker (together with its successors or
permitted assigns, the "Holder") is entitled to purchase from Trans World Gaming
Corp., a Nevada corporation ("Company") up to 54,728 shares of the Company's
common stock, par value $.001 per share (the "Common Stock"), at a purchase
price of $.01 per share of Common Stock (the "Warrant Price"), subject to
adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Agreement to Amend Warrants
dated as of March 25, 1998 (the "Agreement"), between the Company and the
Holder.
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 June 30, 2002, in whole or in part, by (i)
the surrender of this Warrant (with the purchase form at the end 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 Warrant 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
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<PAGE>
by the provisions of Paragraph 5 and subparagraph (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 Common Stock 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 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. If at any time
this Warrant is exercised as to less than the total number of shares for which
it may be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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, for
Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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.
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<PAGE>
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of Common
Stock underlying this Warrant registered as part of the next public offering of
the Common Stock. If no Common Stock offering has occurred by June 30, 1998,
then upon the written request of any combination of the holders of Common Stock
or of Warrants issued by the Company and collectively exercisable into not less
than 100,000 shares of Common Stock (as such number may be adjusted under
Paragraph 7), and on a one-time basis, the Company shall file, within ninety
(90) days after written request such registration, and use its best efforts to
cause to be declared effective ninety (90) days thereafter, by the Securities
and Exchange Commission, a registration statement or post-effective amendment
thereto as permitted under the Securities Act of 1933, as amended (the "Act"),
covering the sale by the Holder of the Common Stock issuable upon exercise of
this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably requested
by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a summary
prospectus or other prospectus, including a preliminary prospectus or any
amendment or supplement to any prospectus, in conformity with the requirements
of the 1933 Act, and such other documents, as the Holder may reasonably request
in order to facilitate the public sale or other disposition of the securities
owned by the Holder;
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<PAGE>
(ii) use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as the Holder shall reasonably request, and do any
and all other acts and things which may be necessary or advisable to enable such
Holder to consummate the public sale or other disposition in such jurisdictions
of the securities owned by such Holder, except that the Company shall not for
any such purpose be required to qualify to do business as a foreign corporation
in any jurisdiction wherein it is not so qualified or to file therein any
general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an underwriting
agreement, if the offering is an underwritten offering, in usual and customary
form, with the managing underwriter or underwriters of such underwritten
offering;
(v) notify the Holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto covered
by such registration statement is required to be delivered under the 1933 Act,
of the happening of any event of which it has knowledge as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date such
Registrable Securities are delivered to the underwriters for sale pursuant to
such registration or, if such Registrable Securities are not being sold through
underwriters, on the date the registration statement with respect to such
Registrable Securities becomes effective, (i) an opinion, dated such date, of
the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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<PAGE>
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents 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
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<PAGE>
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, employees, partners
and agents 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.
(d) In case any such action is brought against any indemnified party,
and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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.
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<PAGE>
For the purposes of any computation to be made in accordance with the
provision 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. Any
such adjustment shall become effective at the time such
subdivision or combination shall become effective.
(iii) In case the Company shall at any time or from time to
time issue or sell shares of Common Stock (or securities
convertible into or exchangeable for shares of Common Stock,
or any options, warrants or other rights to acquire shares
of Common Stock) at a price per share less than the Market
Price per share of Common Stock (treating the price per
share of any security exchangeable or exercisable into
Common Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable into
Common Stock plus any additional consideration payable
(without regard to any anti-dilution adjustments) upon the
conversion, exchange or exercise of such security into
Common Stock divided by (y) the number of shares of Common
Stock initially underlying such convertible, exchangeable or
exercisable security), other than issuance or sales of
Common Stock pursuant to any employee benefit plan, then,
and in each such case, the number of shares of Common Stock
thereafter purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of Common
Stock theretofore purchasable upon exercise of each Warrant
by a fraction (A) the numerator of which shall be the sum of
the number of shares of Common Stock outstanding on such
date plus the number of additional shares of Common Stock
issued (or the maximum number into which such convertible or
exchangeable securities initially may convert or exchange or
for which such options, warrants or other rights initially
may be exercised) and (B) the denominator of which shall be
the sum of the number of shares of Common Stock outstanding
on such date plus the number of shares of Common Stock which
the aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into which
such convertible or exchangeable securities may convert or
exchange or for which such options, warrants or other rights
may be exercised plus the aggregate amount of any additional
consideration initially payable
-7-
<PAGE>
upon conversion, exchange or exercise of such security)
would purchase at the Market Price per share of Common Stock
on such date. Such adjustment shall be made whenever such
shares, securities, options, warrants or other rights are
issued, and shall become effective retroactively immediately
after the close of business on the record date for the
determination of stockholders entitled to receive such
shares, securities, options, warrants or other rights;
PROVIDED, that the determination as to whether an adjustment
is required to be made pursuant to this Section 7(a) shall
only be made upon the issuance of such shares or such
convertible or exchangeable securities, options, warrants or
other rights, and not upon the issuance of the security into
which such convertible or exchangeable security converts or
exchanges, or the security underlying such option, warrant
or other right. Notwithstanding the foregoing, in the event
of such issuance or sale of Common Stock at a cash price
less than the Market Price, no such adjustment under this
Section 7(a) need be made to the number of shares underlying
the Warrant unless such adjustment would require an increase
or decrease of at least 1% of the number of shares
underlying the Warrant. Any lesser adjustment shall be
carried forward and shall be made at the time of and
together with the next subsequent adjustment which, together
with any adjustment or adjustments so carried forward, shall
amount to an increase or decrease of at least 1% of number
of shares underlying the Warrant. For the purpose of this
Agreement, the term "Market Price" shall mean (i) if the
Common Stock is traded in the over-the-counter market or on
the National Association of Securities Dealers, Inc.
Automated Quotations System ("NASDAQ"), the average per
share closing prices of the Common Stock on the 20
consecutive trading days immediately preceding the date in
question as reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common Stock is
traded on a national securities exchange, the average for
the 20 consecutive trading days immediately preceding the
date in question of the daily per share closing prices of
the Common Stock on the principal stock exchange on which it
is listed, as the case may be. The closing price referred
to above shall be the last reported sales price or in case
no such reported sale takes place on such day, the average
of the reported closing bid and asked prices, in either case
on the national securities exchange or automated quotation
system on which the Common Stock is then listed. Whenever
the number of shares of Common Stock purchasable upon
exercise of each Warrant is adjusted, the Warrant Price for
each share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such Warrant Price
immediately prior to such
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<PAGE>
adjustment by a fraction, the numerator of which shall be
the number of shares of Common Stock purchasable upon the
exercise of each Warrant immediately prior to such
adjustment and the denominator of which shall be the number
of shares of Common Stock purchasable immediately after such
adjustment.
(iv) Within a reasonable time after the close of each quarterly
fiscal period of the Company during which the Warrant Price
or number of shares issuable upon exercise of this Warrant
has been adjusted as herein provided, the Company shall
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) In the event that the number of outstanding shares of Common
Stock is increased by a stock dividend or distribution payable in Common Stock
or by a subdivision of the outstanding Common Stock, then, from and after the
record date thereof, by reason of such dividend, distribution or subdivision,
the number of shares of Common Stock issuable upon the exercise of the 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 record
date thereof, the number of shares of Common Stock issuable upon the exercise of
the 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 the 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 reorganization, reclassification,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock which the holder of the 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 or expiration of the
Warrant.
(d) Subject to the provisions of this Section, in case the Company
shall, at any time prior to the exercise of the Warrant, desire to declare a
dividend or make any distribution of its assets to holders of its Common Stock,
whether as a liquidating or a partial liquidating dividend or for any other
purpose, the Company shall provide the holder of the Warrant with written
notice of such intent not less than thirty (30) days prior to the record date to
determine
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<PAGE>
holders of Common Stock entitled to receive such distribution and the holder of
this Warrant shall have until 5:00 p.m. EST on the twentieth (20th) day
following the actual receipt of such notice to elect whether to exercise this
Warrant in accordance with the terms herein. In the event of proper election to
exercise the Warrant, the holder of this Warrant shall be deemed to be a holder
of Common Stock as of the record date for such distribution. Should the holder
of the Warrant elect to exercise his Warrant within 20 days after the record
date for the determination of those holders of Common Stock entitled to such
dividend or distribution, he 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 the
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 Warrant 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.
(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 hereof 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 hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the number
or kind of shares purchasable upon exercise of this Warrant, Warrants previously
or hereafter issued may continue to express the same price and number and kind
of shares as are stated in this Warrant.
(i) The Company shall 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.
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<PAGE>
(j) 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
Stock 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, if the fraction is equal to or greater than .5, and down if
the fraction is less than .5.
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, Suite 1503, 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 other than Section 6 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, and this Warrant is 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 31,
1998.
TRANS WORLD GAMING CORP.
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<PAGE>
By:_________________________
Its: __________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of
$____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of Common
Stock issuable upon exercise of all Warrants represented by such Warrant
Certificate (or if a new or replacement Warrant is otherwise to be provided
pursuant to the Warrant Certificate), that a new or replacement Warrant
Certificate of like tenor for the number of Warrants not being exercised (and
not being surrendered) hereunder be issued in the name of and delivered to the
undersigned, whose address is __________________________.
Dated: __________, _____.
________________________
(Signature of Registered Holder)
By:______________________
Title:_____________________
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<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series D No. 4
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that David Friedson (together with its successors or
permitted assigns, the "Holder") is entitled to purchase from Trans World Gaming
Corp., a Nevada corporation ("Company") up to 273,647 shares of the Company's
common stock, par value $.001 per share (the "Common Stock"), at a purchase
price of $.01 per share of Common Stock (the "Warrant Price"), subject to
adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Agreement to Amend
Warrants dated as of March 25, 1998 (the "Agreement"), between the Company and
the Holder.
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 June 30, 2002, in whole or in part, by (i)
the surrender of this Warrant (with the purchase form at the end 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 Warrant 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
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<PAGE>
by the provisions of Paragraph 5 and subparagraph (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 Common Stock 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 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. If at any time
this Warrant is exercised as to less than the total number of shares for which
it may be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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.
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<PAGE>
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such other documents, as the Holder may
reasonably request in order to facilitate the public sale or other disposition
of the securities owned by the Holder;
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<PAGE>
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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<PAGE>
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents 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
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<PAGE>
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, employees, partners
and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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.
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<PAGE>
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable
-7-
<PAGE>
upon conversion, exchange or exercise of such
security) would purchase at the Market Price per
share of Common Stock on such date. Such adjustment
shall be made whenever such shares, securities,
options, warrants or other rights are issued, and
shall become effective retroactively immediately
after the close of business on the record date for
the determination of stockholders entitled to
receive such shares, securities, options, warrants
or other rights; PROVIDED, that the determination as
to whether an adjustment is required to be made
pursuant to this Section 7(a) shall only be made
upon the issuance of such shares or such convertible
or exchangeable securities, options, warrants or
other rights, and not upon the issuance of the
security into which such convertible or exchangeable
security converts or exchanges, or the security
underlying such option, warrant or other right.
Notwithstanding the foregoing, in the event of such
issuance or sale of Common Stock at a cash price
less than the Market Price, no such adjustment under
this Section 7(a) need be made to the number of
shares underlying the Warrant unless such adjustment
would require an increase or decrease of at least 1%
of the number of shares underlying the Warrant. Any
lesser adjustment shall be carried forward and shall
be made at the time of and together with the next
subsequent adjustment which, together with any
adjustment or adjustments so carried forward, shall
amount to an increase or decrease of at least 1% of
number of shares underlying the Warrant. For the
purpose of this Agreement, the term "Market Price"
shall mean (i) if the Common Stock is traded in the
over-the-counter market or on the National
Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ"), the average per share
closing prices of the Common Stock on the 20
consecutive trading days immediately preceding the
date in question as reported by NASDAQ or an
equivalent generally accepted reporting service, or
(ii) if the Common Stock is traded on a national
securities exchange, the average for the 20
consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such
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<PAGE>
adjustment by a fraction, the numerator of which
shall be the number of shares of Common Stock
purchasable upon the exercise of each Warrant
immediately prior to such adjustment and the
denominator of which shall be the number of shares
of Common Stock purchasable immediately after such
adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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 the 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 reorganization, reclassification,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock which the holder of the 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 or expiration of the
Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine
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<PAGE>
holders of Common Stock entitled to receive such distribution and the holder of
this Warrant shall have until 5:00 p.m. EST on the twentieth (20th) day
following the actual receipt of such notice to elect whether to exercise this
Warrant in accordance with the terms herein. In the event of proper election to
exercise the Warrant, the holder of this Warrant shall be deemed to be a holder
of Common Stock as of the record date for such distribution. Should the holder
of the Warrant elect to exercise his Warrant within 20 days after the record
date for the determination of those holders of Common Stock entitled to such
dividend or distribution, he 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 the
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 Warrant 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.
(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 hereof 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 hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
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<PAGE>
(j) 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
Stock 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, if the fraction is equal to or greater than .5, and down if
the fraction is less than .5.
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, Suite 1503, 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 other than Section 6 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, and this Warrant is
for the sole and exclusive benefit of the Company and the Holder or Holders.
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<PAGE>
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 31,
1998.
TRANS WORLD GAMING CORP.
By:__________________________
Its: ________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of
$____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of Common
Stock issuable upon exercise of all Warrants represented by such Warrant
Certificate (or if a new or replacement Warrant is otherwise to be provided
pursuant to the Warrant Certificate), that a new or replacement Warrant
Certificate of like tenor for the number of Warrants not being exercised (and
not being surrendered) hereunder be issued in the name of and delivered to the
undersigned, whose address is __________________________.
Dated: __________, _____.
________________________
(Signature of Registered Holder)
By:_____________________
Title:__________________
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<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series D No. 5
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that C.P. Baker & Co., Ltd. (together with its successors
or permitted assigns, the "Holder") is entitled to purchase from Trans World
Gaming Corp., a Nevada corporation ("Company") up to 410,366 shares of the
Company's common stock, par value $.001 per share (the "Common Stock"), at a
purchase price of $.01 per share of Common Stock (the "Warrant Price"), subject
to adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Agreement to Amend
Warrants dated as of March 25, 1998 (the "Agreement"), between the Company and
the Holder.
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 June 30, 2002, in whole or in part, by (i)
the surrender of this Warrant (with the purchase form at the end 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 Warrant 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
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<PAGE>
by the provisions of Paragraph 5 and subparagraph (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 Common Stock 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 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. If at any time
this Warrant is exercised as to less than the total number of shares for which
it may be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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.
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<PAGE>
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such other documents, as the Holder may
reasonably request in order to facilitate the public sale or other disposition
of the securities owned by the Holder;
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<PAGE>
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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<PAGE>
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents 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
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<PAGE>
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, employees, partners
and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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.
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<PAGE>
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable
-7-
<PAGE>
upon conversion, exchange or exercise of such
security) would purchase at the Market Price per
share of Common Stock on such date. Such adjustment
shall be made whenever such shares, securities,
options, warrants or other rights are issued, and
shall become effective retroactively immediately
after the close of business on the record date for
the determination of stockholders entitled to
receive such shares, securities, options, warrants
or other rights; PROVIDED, that the determination as
to whether an adjustment is required to be made
pursuant to this Section 7(a) shall only be made
upon the issuance of such shares or such convertible
or exchangeable securities, options, warrants or
other rights, and not upon the issuance of the
security into which such convertible or exchangeable
security converts or exchanges, or the security
underlying such option, warrant or other right.
Notwithstanding the foregoing, in the event of such
issuance or sale of Common Stock at a cash price
less than the Market Price, no such adjustment under
this Section 7(a) need be made to the number of
shares underlying the Warrant unless such adjustment
would require an increase or decrease of at least 1%
of the number of shares underlying the Warrant. Any
lesser adjustment shall be carried forward and shall
be made at the time of and together with the next
subsequent adjustment which, together with any
adjustment or adjustments so carried forward, shall
amount to an increase or decrease of at least 1% of
number of shares underlying the Warrant. For the
purpose of this Agreement, the term "Market Price"
shall mean (i) if the Common Stock is traded in the
over-the-counter market or on the National
Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ"), the average per share
closing prices of the Common Stock on the 20
consecutive trading days immediately preceding the
date in question as reported by NASDAQ or an
equivalent generally accepted reporting service, or
(ii) if the Common Stock is traded on a national
securities exchange, the average for the 20
consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such
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<PAGE>
adjustment by a fraction, the numerator of which
shall be the number of shares of Common Stock
purchasable upon the exercise of each Warrant
immediately prior to such adjustment and the
denominator of which shall be the number of shares
of Common Stock purchasable immediately after such
adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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 the 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 reorganization, reclassification,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock which the holder of the 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 or expiration of the
Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine
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<PAGE>
holders of Common Stock entitled to receive such distribution and the holder of
this Warrant shall have until 5:00 p.m. EST on the twentieth (20th) day
following the actual receipt of such notice to elect whether to exercise this
Warrant in accordance with the terms herein. In the event of proper election to
exercise the Warrant, the holder of this Warrant shall be deemed to be a holder
of Common Stock as of the record date for such distribution. Should the holder
of the Warrant elect to exercise his Warrant within 20 days after the record
date for the determination of those holders of Common Stock entitled to such
dividend or distribution, he 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 the
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 Warrant 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.
(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 hereof 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 hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
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<PAGE>
(j) 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
Stock 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, if the fraction is equal to or greater than .5, and down if
the fraction is less than .5.
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, Suite 1503, 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 other than Section 6 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, and this Warrant is
for the sole and exclusive benefit of the Company and the Holder or Holders.
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<PAGE>
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 31,
1998.
TRANS WORLD GAMING CORP.
By:__________________________
Its: ________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of $
____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of Common
Stock issuable upon exercise of all Warrants represented by such Warrant
Certificate (or if a new or replacement Warrant is otherwise to be provided
pursuant to the Warrant Certificate), that a new or replacement Warrant
Certificate of like tenor for the number of Warrants not being exercised (and
not being surrendered) hereunder be issued in the name of and delivered to the
undersigned, whose address is __________________________.
Dated: __________, _____.
________________________________
(Signature of Registered Holder)
By:_____________________________
Title:__________________________
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<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series D No. 6
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that The Venture Fund (together with its successors or
permitted assigns, the "Holder") is entitled to purchase from Trans World Gaming
Corp., a Nevada corporation ("Company") up to 218,862 shares of the Company's
common stock, par value $.001 per share (the "Common Stock"), at a purchase
price of $.01 per share of Common Stock (the "Warrant Price"), subject to
adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Agreement to Amend
Warrants dated as of March 25, 1998 (the "Agreement"), between the Company and
the Holder.
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 June 30, 2002, in whole or in part, by (i)
the surrender of this Warrant (with the purchase form at the end 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 Warrant 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
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<PAGE>
by the provisions of Paragraph 5 and subparagraph (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 Common Stock 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 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. If at any time
this Warrant is exercised as to less than the total number of shares for which
it may be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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.
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<PAGE>
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such other documents, as the Holder may
reasonably request in order to facilitate the public sale or other disposition
of the securities owned by the Holder;
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<PAGE>
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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<PAGE>
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents 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
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<PAGE>
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, employees, partners
and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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.
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<PAGE>
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable
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<PAGE>
upon conversion, exchange or exercise of such
security) would purchase at the Market Price per
share of Common Stock on such date. Such adjustment
shall be made whenever such shares, securities,
options, warrants or other rights are issued, and
shall become effective retroactively immediately
after the close of business on the record date for
the determination of stockholders entitled to
receive such shares, securities, options, warrants
or other rights; PROVIDED, that the determination as
to whether an adjustment is required to be made
pursuant to this Section 7(a) shall only be made
upon the issuance of such shares or such convertible
or exchangeable securities, options, warrants or
other rights, and not upon the issuance of the
security into which such convertible or exchangeable
security converts or exchanges, or the security
underlying such option, warrant or other right.
Notwithstanding the foregoing, in the event of such
issuance or sale of Common Stock at a cash price
less than the Market Price, no such adjustment under
this Section 7(a) need be made to the number of
shares underlying the Warrant unless such adjustment
would require an increase or decrease of at least 1%
of the number of shares underlying the Warrant. Any
lesser adjustment shall be carried forward and shall
be made at the time of and together with the next
subsequent adjustment which, together with any
adjustment or adjustments so carried forward, shall
amount to an increase or decrease of at least 1% of
number of shares underlying the Warrant. For the
purpose of this Agreement, the term "Market Price"
shall mean (i) if the Common Stock is traded in the
over-the-counter market or on the National
Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ"), the average per share
closing prices of the Common Stock on the 20
consecutive trading days immediately preceding the
date in question as reported by NASDAQ or an
equivalent generally accepted reporting service, or
(ii) if the Common Stock is traded on a national
securities exchange, the average for the 20
consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such
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<PAGE>
adjustment by a fraction, the numerator of which
shall be the number of shares of Common Stock
purchasable upon the exercise of each Warrant
immediately prior to such adjustment and the
denominator of which shall be the number of shares
of Common Stock purchasable immediately after such
adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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 the 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 reorganization, reclassification,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock which the holder of the 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 or expiration of the
Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine
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<PAGE>
holders of Common Stock entitled to receive such distribution and the holder of
this Warrant shall have until 5:00 p.m. EST on the twentieth (20th) day
following the actual receipt of such notice to elect whether to exercise this
Warrant in accordance with the terms herein. In the event of proper election to
exercise the Warrant, the holder of this Warrant shall be deemed to be a holder
of Common Stock as of the record date for such distribution. Should the holder
of the Warrant elect to exercise his Warrant within 20 days after the record
date for the determination of those holders of Common Stock entitled to such
dividend or distribution, he 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 the
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 Warrant 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.
(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 hereof 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 hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
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<PAGE>
(j) 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
Stock 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, if the fraction is equal to or greater than .5, and down if
the fraction is less than .5.
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, Suite 1503, 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 other than Section 6 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, and this Warrant is
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 31,
1998.
TRANS WORLD GAMING CORP.
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<PAGE>
By:__________________________
Its: __________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of
$____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of Common
Stock issuable upon exercise of all Warrants represented by such Warrant
Certificate (or if a new or replacement Warrant is otherwise to be provided
pursuant to the Warrant Certificate), that a new or replacement Warrant
Certificate of like tenor for the number of Warrants not being exercised (and
not being surrendered) hereunder be issued in the name of and delivered to the
undersigned, whose address is __________________________.
Dated: __________, _____.
_______________________________
(Signature of Registered Holder)
By:____________________________
Title:_________________________
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<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series E No. 1
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Libra Investments, Inc. (together with its successors
or permitted assigns, the "Holder") is entitled to purchase from Trans World
Gaming Corp., a Nevada corporation ("Company") up to 106,312 shares of the
Company's common stock, par value $.001 per share (the "Common Stock"), at a
purchase price of $.01 per share of Common Stock (the "Warrant Price"), subject
to adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Subscription Agreement
dated as of March 16, 1998 (the "Agreement"), between the Company and the
Holder.
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 31, 2008, in whole or in part, by (i)
the surrender of this Warrant (with the purchase form at the end 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 Warrant 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
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<PAGE>
by the provisions of Paragraph 5 and subparagraph (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 Common Stock 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 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. If at any time
this Warrant is exercised as to less than the total number of shares for which
it may be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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, for
Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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.
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<PAGE>
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of Common
Stock underlying this Warrant registered as part of the next public offering of
the Common Stock. If no Common Stock offering has occurred by June 30, 1998,
then upon the written request of any combination of the holders of Common Stock
or of Warrants issued by the Company and collectively exercisable into not less
than 100,000 shares of Common Stock (as such number may be adjusted under
Paragraph 7), and on a one-time basis, the Company shall file, within ninety
(90) days after written request such registration, and use its best efforts to
cause to be declared effective ninety (90) days thereafter, by the Securities
and Exchange Commission, a registration statement or post-effective amendment
thereto as permitted under the Securities Act of 1933, as amended (the "Act"),
covering the sale by the Holder of the Common Stock issuable upon exercise of
this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably requested
by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a summary
prospectus or other prospectus, including a preliminary prospectus or any
amendment or supplement to any prospectus, in conformity with the requirements
of the 1933 Act, and such other documents, as the Holder may reasonably request
in order to facilitate the public sale or other disposition of the securities
owned by the Holder;
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<PAGE>
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered by
such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date such
Registrable Securities are delivered to the underwriters for sale pursuant to
such registration or, if such Registrable Securities are not being sold through
underwriters, on the date the registration statement with respect to such
Registrable Securities becomes effective, (i) an opinion, dated such date, of
the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
(vii) take such other actions as shall be reasonably requested
by any Holder to facilitate the registration and sale of the Registrable
Securities.
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<PAGE>
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents 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
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<PAGE>
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, employees, partners
and agents 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.
(d) In case any such action is brought against any indemnified party,
and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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.
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<PAGE>
For the purposes of any computation to be made in accordance with the
provision 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. Any
such adjustment shall become effective at the time such
subdivision or combination shall become effective.
(iii) In case the Company shall at any time or from time to time
issue or sell shares of Common Stock (or securities
convertible into or exchangeable for shares of Common
Stock, or any options, warrants or other rights to acquire
shares of Common Stock) at a price per share less than the
Market Price per share of Common Stock (treating the price
per share of any security exchangeable or exercisable into
Common Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable into
Common Stock plus any additional consideration payable
(without regard to any anti-dilution adjustments) upon the
conversion, exchange or exercise of such security into
Common Stock divided by (y) the number of shares of Common
Stock initially underlying such convertible, exchangeable
or exercisable security), other than issuance or sales of
Common Stock pursuant to any employee benefit plan, then,
and in each such case, the number of shares of Common
Stock thereafter purchasable upon exercise of a Warrant
shall be determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise of each
Warrant by a fraction (A) the numerator of which shall be
the sum of the number of shares of Common Stock
outstanding on such date plus the number of additional
shares of Common Stock issued (or the maximum number into
which such convertible or exchangeable securities
initially may convert or exchange or for which such
options, warrants or other rights initially may be
exercised) and (B) the denominator of which shall be the
sum of the number of shares of Common Stock outstanding on
such date plus the number of shares of Common Stock which
the aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into which
such convertible or exchangeable securities may convert or
exchange or for which such options, warrants or other
rights may be exercised plus the aggregate amount of any
additional consideration initially payable
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<PAGE>
upon conversion, exchange or exercise of such security)
would purchase at the Market Price per share of Common
Stock on such date. Such adjustment shall be made
whenever such shares, securities, options, warrants or
other rights are issued, and shall become effective
retroactively immediately after the close of business on
the record date for the determination of stockholders
entitled to receive such shares, securities, options,
warrants or other rights; PROVIDED, that the determination
as to whether an adjustment is required to be made
pursuant to this Section 7(a) shall only be made upon the
issuance of such shares or such convertible or
exchangeable securities, options, warrants or other
rights, and not upon the issuance of the security into
which such convertible or exchangeable security converts
or exchanges, or the security underlying such option,
warrant or other right. Notwithstanding the foregoing, in
the event of such issuance or sale of Common Stock at a
cash price less than the Market Price, no such adjustment
under this Section 7(a) need be made to the number of
shares underlying the Warrant unless such adjustment would
require an increase or decrease of at least 1% of the
number of shares underlying the Warrant. Any lesser
adjustment shall be carried forward and shall be made at
the time of and together with the next subsequent
adjustment which, together with any adjustment or
adjustments so carried forward, shall amount to an
increase or decrease of at least 1% of number of shares
underlying the Warrant. For the purpose of this
Agreement, the term "Market Price" shall mean (i) if the
Common Stock is traded in the over-the-counter market or
on the National Association of Securities Dealers, Inc.
Automated Quotations System ("NASDAQ"), the average per
share closing prices of the Common Stock on the 20
consecutive trading days immediately preceding the date in
question as reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common Stock is
traded on a national securities exchange, the average for
the 20 consecutive trading days immediately preceding the
date in question of the daily per share closing prices of
the Common Stock on the principal stock exchange on which
it is listed, as the case may be. The closing price
referred to above shall be the last reported sales price
or in case no such reported sale takes place on such day,
the average of the reported closing bid and asked prices,
in either case on the national securities exchange or
automated quotation system on which the Common Stock is
then listed. Whenever the number of shares of Common
Stock purchasable upon exercise of each Warrant is
adjusted, the Warrant Price for each share of Common Stock
payable upon exercise of each Warrant shall be adjusted by
multiplying such Warrant Price immediately prior to such
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<PAGE>
adjustment by a fraction, the numerator of which shall be
the number of shares of Common Stock purchasable upon the
exercise of each Warrant immediately prior to such
adjustment and the denominator of which shall be the
number of shares of Common Stock purchasable immediately
after such adjustment.
(iv) Within a reasonable time after the close of each quarterly
fiscal period of the Company during which the Warrant
Price or number of shares issuable upon exercise of this
Warrant has been adjusted as herein provided, the Company
shall 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) In the event that the number of outstanding shares of Common
Stock is increased by a stock dividend or distribution payable in Common Stock
or by a subdivision of the outstanding Common Stock, then, from and after the
record date thereof, by reason of such dividend, distribution or subdivision,
the number of shares of Common Stock issuable upon the exercise of the 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 record
date thereof, the number of shares of Common Stock issuable upon the exercise of
the 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 the 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 reorganization, reclassification,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock which the holder of the 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 or expiration of the
Warrant.
(d) Subject to the provisions of this Section, in case the Company
shall, at any time prior to the exercise of the Warrant, desire to declare a
dividend or make any distribution of its assets to holders of its Common Stock,
whether as a liquidating or a partial liquidating dividend or for any other
purpose, the Company shall provide the holder of the Warrant with written notice
of such intent not less than thirty (30) days prior to the record date to
determine
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<PAGE>
holders of Common Stock entitled to receive such distribution and the holder of
this Warrant shall have until 5:00 p.m. EST on the twentieth (20th) day
following the actual receipt of such notice to elect whether to exercise this
Warrant in accordance with the terms herein. In the event of proper election to
exercise the Warrant, the holder of this Warrant shall be deemed to be a holder
of Common Stock as of the record date for such distribution. Should the holder
of the Warrant elect to exercise his Warrant within 20 days after the record
date for the determination of those holders of Common Stock entitled to such
dividend or distribution, he 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 the
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 Warrant 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.
(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 hereof 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 hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the number
or kind of shares purchasable upon exercise of this Warrant, Warrants previously
or hereafter issued may continue to express the same price and number and kind
of shares as are stated in this Warrant.
(i) The Company shall 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.
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<PAGE>
(j) 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
Stock 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, if the fraction is equal to or greater than .5, and down if
the fraction is less than .5.
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, Suite 1503, 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 other than Section 6 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, and this Warrant is 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 31,
1998.
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<PAGE>
TRANS WORLD GAMING CORP.
By:______________________
Its:_____________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of
$____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of Common
Stock issuable upon exercise of all Warrants represented by such Warrant
Certificate (or if a new or replacement Warrant is otherwise to be provided
pursuant to the Warrant Certificate), that a new or replacement Warrant
Certificate of like tenor for the number of Warrants not being exercised (and
not being surrendered) hereunder be issued in the name of and delivered to the
undersigned, whose address is __________________________.
Dated: __________, _____.
________________________
(Signature of Registered Holder)
By:______________________
Title:___________________
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<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series E No. 2
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Ravich Revocable Trust of 1989 dated 1/26/90 Tia P.
Ravich and Jess M. Ravich TTEES (together with its successors or permitted
assigns, the "Holder") is entitled to purchase from Trans World Gaming Corp., a
Nevada corporation ("Company") up to 159,468 shares of the Company's common
stock, par value $.001 per share (the "Common Stock"), at a purchase price of
$.01 per share of Common Stock (the "Warrant Price"), subject to adjustment as
hereafter provided.
This Warrant is issued pursuant to that certain Subscription Agreement
dated as of March 16, 1998 (the "Agreement"), between the Company and the
Holder.
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 31, 2008, in whole or in part, by (i)
the surrender of this Warrant (with the purchase form at the end 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 Warrant 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
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<PAGE>
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 subparagraph (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 Common Stock 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 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. If at any time this Warrant is exercised as to less than the total
number of shares for which it may be exercised, and this Warrant shall not have
expired, the Company shall promptly issue to the Holder a new Warrant identical
in form as to this Warrant as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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, for
Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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.
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<PAGE>
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of Common
Stock underlying this Warrant registered as part of the next public offering of
the Common Stock. If no Common Stock offering has occurred by June 30, 1998,
then upon the written request of any combination of the holders of Common Stock
or of Warrants issued by the Company and collectively exercisable into not less
than 100,000 shares of Common Stock (as such number may be adjusted under
Paragraph 7), and on a one-time basis, the Company shall file, within ninety
(90) days after written request such registration, and use its best efforts to
cause to be declared effective ninety (90) days thereafter, by the Securities
and Exchange Commission, a registration statement or post-effective amendment
thereto as permitted under the Securities Act of 1933, as amended (the "Act"),
covering the sale by the Holder of the Common Stock issuable upon exercise of
this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably requested
by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a summary
prospectus or other prospectus, including a preliminary prospectus or any
amendment or supplement to any prospectus, in conformity with the requirements
of the 1933 Act, and such other documents, as the Holder may reasonably request
in order to facilitate the public sale or other disposition of the securities
owned by the Holder;
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<PAGE>
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered by
such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date such
Registrable Securities are delivered to the underwriters for sale pursuant to
such registration or, if such Registrable Securities are not being sold through
underwriters, on the date the registration statement with respect to such
Registrable Securities becomes effective, (i) an opinion, dated such date, of
the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
(vii) take such other actions as shall be reasonably requested
by any Holder to facilitate the registration and sale of the Registrable
Securities.
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<PAGE>
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents 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
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<PAGE>
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 or such underwriter for use in the
preparation thereof; and will reimburse the Company or any such director,
officer, employees, partners and agents 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.
(d) In case any such action is brought against any indemnified party,
and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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.
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<PAGE>
For the purposes of any computation to be made in accordance with the
provision 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. Any
such adjustment shall become effective at the time such
subdivision or combination shall become effective.
(iii) In case the Company shall at any time or from time to time
issue or sell shares of Common Stock (or securities
convertible into or exchangeable for shares of Common
Stock, or any options, warrants or other rights to acquire
shares of Common Stock) at a price per share less than the
Market Price per share of Common Stock (treating the price
per share of any security exchangeable or exercisable into
Common Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable into
Common Stock plus any additional consideration payable
(without regard to any anti-dilution adjustments) upon the
conversion, exchange or exercise of such security into
Common Stock divided by (y) the number of shares of Common
Stock initially underlying such convertible, exchangeable
or exercisable security), other than issuance or sales of
Common Stock pursuant to any employee benefit plan, then,
and in each such case, the number of shares of Common
Stock thereafter purchasable upon exercise of a Warrant
shall be determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise of each
Warrant by a fraction (A) the numerator of which shall be
the sum of the number of shares of Common Stock
outstanding on such date plus the number of additional
shares of Common Stock issued (or the maximum number into
which such convertible or exchangeable securities
initially may convert or exchange or for which such
options, warrants or other rights initially may be
exercised) and (B) the denominator of which shall be the
sum of the number of shares of Common Stock outstanding on
such date plus the number of shares of Common Stock which
the aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into which
such convertible or exchangeable securities may convert or
exchange or for which such options, warrants or other
rights may be exercised plus the aggregate amount of any
additional consideration initially payable
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<PAGE>
upon conversion, exchange or exercise of such security)
would purchase at the Market Price per share of Common
Stock on such date. Such adjustment shall be made
whenever such shares, securities, options, warrants or
other rights are issued, and shall become effective
retroactively immediately after the close of business on
the record date for the determination of stockholders
entitled to receive such shares, securities, options,
warrants or other rights; PROVIDED, that the determination
as to whether an adjustment is required to be made
pursuant to this Section 7(a) shall only be made upon the
issuance of such shares or such convertible or
exchangeable securities, options, warrants or other
rights, and not upon the issuance of the security into
which such convertible or exchangeable security converts
or exchanges, or the security underlying such option,
warrant or other right. Notwithstanding the foregoing, in
the event of such issuance or sale of Common Stock at a
cash price less than the Market Price, no such adjustment
under this Section 7(a) need be made to the number of
shares underlying the Warrant unless such adjustment would
require an increase or decrease of at least 1% of the
number of shares underlying the Warrant. Any lesser
adjustment shall be carried forward and shall be made at
the time of and together with the next subsequent
adjustment which, together with any adjustment or
adjustments so carried forward, shall amount to an
increase or decrease of at least 1% of number of shares
underlying the Warrant. For the purpose of this
Agreement, the term "Market Price" shall mean (i) if the
Common Stock is traded in the over-the-counter market or
on the National Association of Securities Dealers, Inc.
Automated Quotations System ("NASDAQ"), the average per
share closing prices of the Common Stock on the 20
consecutive trading days immediately preceding the date in
question as reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common Stock is
traded on a national securities exchange, the average for
the 20 consecutive trading days immediately preceding the
date in question of the daily per share closing prices of
the Common Stock on the principal stock exchange on which
it is listed, as the case may be. The closing price
referred to above shall be the last reported sales price
or in case no such reported sale takes place on such day,
the average of the reported closing bid and asked prices,
in either case on the national securities exchange or
automated quotation system on which the Common Stock is
then listed. Whenever the number of shares of Common
Stock purchasable upon exercise of each Warrant is
adjusted, the Warrant Price for each share of Common Stock
payable upon exercise of each Warrant shall be adjusted by
multiplying such Warrant Price immediately prior to such
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<PAGE>
adjustment by a fraction, the numerator of which shall be
the number of shares of Common Stock purchasable upon the
exercise of each Warrant immediately prior to such
adjustment and the denominator of which shall be the
number of shares of Common Stock purchasable immediately
after such adjustment.
(iv) Within a reasonable time after the close of each quarterly
fiscal period of the Company during which the Warrant
Price or number of shares issuable upon exercise of this
Warrant has been adjusted as herein provided, the Company
shall 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) In the event that the number of outstanding shares of Common
Stock is increased by a stock dividend or distribution payable in Common Stock
or by a subdivision of the outstanding Common Stock, then, from and after the
record date thereof, by reason of such dividend, distribution or subdivision,
the number of shares of Common Stock issuable upon the exercise of the 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 record
date thereof, the number of shares of Common Stock issuable upon the exercise of
the 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 the 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 reorganization, reclassification,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock which the holder of the 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 or expiration of the
Warrant.
(d) Subject to the provisions of this Section, in case the Company
shall, at any time prior to the exercise of the Warrant, desire to declare a
dividend or make any distribution of its assets to holders of its Common Stock,
whether as a liquidating or a partial liquidating dividend or for any other
purpose, the Company shall provide the holder of the Warrant with written notice
of such intent not less than thirty (30) days prior to the record date to
determine
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<PAGE>
holders of Common Stock entitled to receive such distribution and the holder of
this Warrant shall have until 5:00 p.m. EST on the twentieth (20th) day
following the actual receipt of such notice to elect whether to exercise this
Warrant in accordance with the terms herein. In the event of proper election to
exercise the Warrant, the holder of this Warrant shall be deemed to be a holder
of Common Stock as of the record date for such distribution. Should the holder
of the Warrant elect to exercise his Warrant within 20 days after the record
date for the determination of those holders of Common Stock entitled to such
dividend or distribution, he 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 the
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 Warrant 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.
(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 hereof 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 hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the number
or kind of shares purchasable upon exercise of this Warrant, Warrants previously
or hereafter issued may continue to express the same price and number and kind
of shares as are stated in this Warrant.
(i) The Company shall 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.
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<PAGE>
(j) 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
Stock 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, if the fraction is equal to or greater than .5, and down if
the fraction is less than .5.
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, Suite 1503, 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 other than Section 6 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, and this Warrant is 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 31,
1998.
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<PAGE>
TRANS WORLD GAMING CORP.
By:__________________________
Its: __________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of
$____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of Common
Stock issuable upon exercise of all Warrants represented by such Warrant
Certificate (or if a new or replacement Warrant is otherwise to be provided
pursuant to the Warrant Certificate), that a new or replacement Warrant
Certificate of like tenor for the number of Warrants not being exercised (and
not being surrendered) hereunder be issued in the name of and delivered to the
undersigned, whose address is __________________________.
Dated: __________, _____.
________________________
(Signature of Registered Holder)
By:______________________
Title:___________________
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<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series E No. 3
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Upchurch Living Trust U/A/D 12/14/90 (together with
its successors or permitted assigns, the "Holder") is entitled to purchase from
Trans World Gaming Corp., a Nevada corporation ("Company") up to 35,437 shares
of the Company's common stock, par value $.001 per share (the "Common Stock"),
at a purchase price of $.01 per share of Common Stock (the "Warrant Price"),
subject to adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Subscription Agreement
dated as of March 16, 1998 (the "Agreement"), between the Company and the
Holder.
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 31, 2008, in whole or in part, by (i)
the surrender of this Warrant (with the purchase form at the end 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 Warrant 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
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<PAGE>
by the provisions of Paragraph 5 and subparagraph (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 Common Stock 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 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. If at any time
this Warrant is exercised as to less than the total number of shares for which
it may be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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.
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<PAGE>
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such other documents, as the Holder may
reasonably request in order to facilitate the public sale or other disposition
of the securities owned by the Holder;
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<PAGE>
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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<PAGE>
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents 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
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<PAGE>
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, employees, partners
and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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.
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<PAGE>
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable
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<PAGE>
upon conversion, exchange or exercise of such
security) would purchase at the Market Price per
share of Common Stock on such date. Such adjustment
shall be made whenever such shares, securities,
options, warrants or other rights are issued, and
shall become effective retroactively immediately
after the close of business on the record date for
the determination of stockholders entitled to
receive such shares, securities, options, warrants
or other rights; PROVIDED, that the determination as
to whether an adjustment is required to be made
pursuant to this Section 7(a) shall only be made
upon the issuance of such shares or such convertible
or exchangeable securities, options, warrants or
other rights, and not upon the issuance of the
security into which such convertible or exchangeable
security converts or exchanges, or the security
underlying such option, warrant or other right.
Notwithstanding the foregoing, in the event of such
issuance or sale of Common Stock at a cash price
less than the Market Price, no such adjustment under
this Section 7(a) need be made to the number of
shares underlying the Warrant unless such adjustment
would require an increase or decrease of at least 1%
of the number of shares underlying the Warrant. Any
lesser adjustment shall be carried forward and shall
be made at the time of and together with the next
subsequent adjustment which, together with any
adjustment or adjustments so carried forward, shall
amount to an increase or decrease of at least 1% of
number of shares underlying the Warrant. For the
purpose of this Agreement, the term "Market Price"
shall mean (i) if the Common Stock is traded in the
over-the-counter market or on the National
Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ"), the average per share
closing prices of the Common Stock on the 20
consecutive trading days immediately preceding the
date in question as reported by NASDAQ or an
equivalent generally accepted reporting service, or
(ii) if the Common Stock is traded on a national
securities exchange, the average for the 20
consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such
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<PAGE>
adjustment by a fraction, the numerator of which
shall be the number of shares of Common Stock
purchasable upon the exercise of each Warrant
immediately prior to such adjustment and the
denominator of which shall be the number of shares
of Common Stock purchasable immediately after such
adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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 the 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 reorganization, reclassification,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock which the holder of the 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 or expiration of the
Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine
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<PAGE>
holders of Common Stock entitled to receive such distribution and the holder of
this Warrant shall have until 5:00 p.m. EST on the twentieth (20th) day
following the actual receipt of such notice to elect whether to exercise this
Warrant in accordance with the terms herein. In the event of proper election to
exercise the Warrant, the holder of this Warrant shall be deemed to be a holder
of Common Stock as of the record date for such distribution. Should the holder
of the Warrant elect to exercise his Warrant within 20 days after the record
date for the determination of those holders of Common Stock entitled to such
dividend or distribution, he 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 the
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 Warrant 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.
(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 hereof 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 hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
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<PAGE>
(j) 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
Stock 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, if the fraction is equal to or greater than .5, and down if
the fraction is less than .5.
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, Suite 1503, 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 other than Section 6 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, and this Warrant is
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 31,
1998.
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<PAGE>
TRANS WORLD GAMING CORP.
By:__________________________
Its: ________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of
$____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of Common
Stock issuable upon exercise of all Warrants represented by such Warrant
Certificate (or if a new or replacement Warrant is otherwise to be provided
pursuant to the Warrant Certificate), that a new or replacement Warrant
Certificate of like tenor for the number of Warrants not being exercised (and
not being surrendered) hereunder be issued in the name of and delivered to the
undersigned, whose address is __________________________.
Dated: __________, _____.
________________________________
(Signature of Registered Holder)
By:_____________________________
Title:__________________________
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<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series E No. 4
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Eben P. Perison (together with its successors or
permitted assigns, the "Holder") is entitled to purchase from Trans World Gaming
Corp., a Nevada corporation ("Company") up to 35,437 shares of the Company's
common stock, par value $.001 per share (the "Common Stock"), at a purchase
price of $.01 per share of Common Stock (the "Warrant Price"), subject to
adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Subscription Agreement
dated as of March 16, 1998 (the "Agreement"), between the Company and the
Holder.
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 31, 2008, in whole or in part, by (i)
the surrender of this Warrant (with the purchase form at the end 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 Warrant 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
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<PAGE>
by the provisions of Paragraph 5 and subparagraph (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 Common Stock 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 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. If at any time
this Warrant is exercised as to less than the total number of shares for which
it may be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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.
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<PAGE>
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such other documents, as the Holder may
reasonably request in order to facilitate the public sale or other disposition
of the securities owned by the Holder;
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<PAGE>
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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<PAGE>
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents 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
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<PAGE>
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, employees, partners
and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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.
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<PAGE>
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable
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<PAGE>
upon conversion, exchange or exercise of such
security) would purchase at the Market Price per
share of Common Stock on such date. Such adjustment
shall be made whenever such shares, securities,
options, warrants or other rights are issued, and
shall become effective retroactively immediately
after the close of business on the record date for
the determination of stockholders entitled to
receive such shares, securities, options, warrants
or other rights; PROVIDED, that the determination as
to whether an adjustment is required to be made
pursuant to this Section 7(a) shall only be made
upon the issuance of such shares or such convertible
or exchangeable securities, options, warrants or
other rights, and not upon the issuance of the
security into which such convertible or exchangeable
security converts or exchanges, or the security
underlying such option, warrant or other right.
Notwithstanding the foregoing, in the event of such
issuance or sale of Common Stock at a cash price
less than the Market Price, no such adjustment under
this Section 7(a) need be made to the number of
shares underlying the Warrant unless such adjustment
would require an increase or decrease of at least 1%
of the number of shares underlying the Warrant. Any
lesser adjustment shall be carried forward and shall
be made at the time of and together with the next
subsequent adjustment which, together with any
adjustment or adjustments so carried forward, shall
amount to an increase or decrease of at least 1% of
number of shares underlying the Warrant. For the
purpose of this Agreement, the term "Market Price"
shall mean (i) if the Common Stock is traded in the
over-the-counter market or on the National
Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ"), the average per share
closing prices of the Common Stock on the 20
consecutive trading days immediately preceding the
date in question as reported by NASDAQ or an
equivalent generally accepted reporting service, or
(ii) if the Common Stock is traded on a national
securities exchange, the average for the 20
consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such
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<PAGE>
adjustment by a fraction, the numerator of which
shall be the number of shares of Common Stock
purchasable upon the exercise of each Warrant
immediately prior to such adjustment and the
denominator of which shall be the number of shares
of Common Stock purchasable immediately after such
adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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 the 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 reorganization, reclassification,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock which the holder of the 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 or expiration of the
Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine
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<PAGE>
holders of Common Stock entitled to receive such distribution and the holder of
this Warrant shall have until 5:00 p.m. EST on the twentieth (20th) day
following the actual receipt of such notice to elect whether to exercise this
Warrant in accordance with the terms herein. In the event of proper election to
exercise the Warrant, the holder of this Warrant shall be deemed to be a holder
of Common Stock as of the record date for such distribution. Should the holder
of the Warrant elect to exercise his Warrant within 20 days after the record
date for the determination of those holders of Common Stock entitled to such
dividend or distribution, he 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 the
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 Warrant 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.
(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 hereof 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 hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
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<PAGE>
(j) 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
Stock 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, if the fraction is equal to or greater than .5, and down if
the fraction is less than .5.
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, Suite 1503, 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 other than Section 6 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, and this Warrant is
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 31,
1998.
TRANS WORLD GAMING CORP.
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By:____________________________
Its: __________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of
$____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of Common
Stock issuable upon exercise of all Warrants represented by such Warrant
Certificate (or if a new or replacement Warrant is otherwise to be provided
pursuant to the Warrant Certificate), that a new or replacement Warrant
Certificate of like tenor for the number of Warrants not being exercised (and
not being surrendered) hereunder be issued in the name of and delivered to the
undersigned, whose address is __________________________.
Dated: __________, _____.
________________________________
(Signature of Registered Holder)
By:_____________________________
Title:__________________________
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<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series E No. 5
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Stephen C. Smith (together with its successors or
permitted assigns, the "Holder") is entitled to purchase from Trans World Gaming
Corp., a Nevada corporation ("Company") up to 8,860 shares of the Company's
common stock, par value $.001 per share (the "Common Stock"), at a purchase
price of $.01 per share of Common Stock (the "Warrant Price"), subject to
adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Subscription Agreement
dated as of March 16, 1998 (the "Agreement"), between the Company and the
Holder.
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 31, 2008, in whole or in part, by (i)
the surrender of this Warrant (with the purchase form at the end 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 Warrant 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
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<PAGE>
by the provisions of Paragraph 5 and subparagraph (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 Common Stock 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 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. If at any time
this Warrant is exercised as to less than the total number of shares for which
it may be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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.
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<PAGE>
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such other documents, as the Holder may
reasonably request in order to facilitate the public sale or other disposition
of the securities owned by the Holder;
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<PAGE>
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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<PAGE>
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents 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
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<PAGE>
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, employees, partners
and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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.
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<PAGE>
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable
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<PAGE>
upon conversion, exchange or exercise of such
security) would purchase at the Market Price per
share of Common Stock on such date. Such adjustment
shall be made whenever such shares, securities,
options, warrants or other rights are issued, and
shall become effective retroactively immediately
after the close of business on the record date for
the determination of stockholders entitled to
receive such shares, securities, options, warrants
or other rights; PROVIDED, that the determination as
to whether an adjustment is required to be made
pursuant to this Section 7(a) shall only be made
upon the issuance of such shares or such convertible
or exchangeable securities, options, warrants or
other rights, and not upon the issuance of the
security into which such convertible or exchangeable
security converts or exchanges, or the security
underlying such option, warrant or other right.
Notwithstanding the foregoing, in the event of such
issuance or sale of Common Stock at a cash price
less than the Market Price, no such adjustment under
this Section 7(a) need be made to the number of
shares underlying the Warrant unless such adjustment
would require an increase or decrease of at least 1%
of the number of shares underlying the Warrant. Any
lesser adjustment shall be carried forward and shall
be made at the time of and together with the next
subsequent adjustment which, together with any
adjustment or adjustments so carried forward, shall
amount to an increase or decrease of at least 1% of
number of shares underlying the Warrant. For the
purpose of this Agreement, the term "Market Price"
shall mean (i) if the Common Stock is traded in the
over-the-counter market or on the National
Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ"), the average per share
closing prices of the Common Stock on the 20
consecutive trading days immediately preceding the
date in question as reported by NASDAQ or an
equivalent generally accepted reporting service, or
(ii) if the Common Stock is traded on a national
securities exchange, the average for the 20
consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such
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<PAGE>
adjustment by a fraction, the numerator of which
shall be the number of shares of Common Stock
purchasable upon the exercise of each Warrant
immediately prior to such adjustment and the
denominator of which shall be the number of shares
of Common Stock purchasable immediately after such
adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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 the 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 reorganization, reclassification,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock which the holder of the 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 or expiration of the
Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine
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<PAGE>
holders of Common Stock entitled to receive such distribution and the holder of
this Warrant shall have until 5:00 p.m. EST on the twentieth (20th) day
following the actual receipt of such notice to elect whether to exercise this
Warrant in accordance with the terms herein. In the event of proper election to
exercise the Warrant, the holder of this Warrant shall be deemed to be a holder
of Common Stock as of the record date for such distribution. Should the holder
of the Warrant elect to exercise his Warrant within 20 days after the record
date for the determination of those holders of Common Stock entitled to such
dividend or distribution, he 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 the
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 Warrant 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.
(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 hereof 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 hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
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<PAGE>
(j) 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
Stock 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, if the fraction is equal to or greater than .5, and down if
the fraction is less than .5.
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, Suite 1503, 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 other than Section 6 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, and this Warrant is
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 31,
1998.
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<PAGE>
TRANS WORLD GAMING CORP.
By:__________________________
Its: ________________________
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<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of
$____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of Common
Stock issuable upon exercise of all Warrants represented by such Warrant
Certificate (or if a new or replacement Warrant is otherwise to be provided
pursuant to the Warrant Certificate), that a new or replacement Warrant
Certificate of like tenor for the number of Warrants not being exercised (and
not being surrendered) hereunder be issued in the name of and delivered to the
undersigned, whose address is __________________________.
Dated: __________, _____.
________________________________
(Signature of Registered Holder)
By:_____________________________
Title:__________________________
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THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
ACTS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
Series E No. 6
TRANS WORLD GAMING CORP.
(a Nevada corporation)
Dated: March 31, 1998
THIS CERTIFIES that Greg Bousquette (together with its successors or
permitted assigns, the "Holder") is entitled to purchase from Trans World Gaming
Corp., a Nevada corporation ("Company") up to 8,860 shares of the Company's
common stock, par value $.001 per share (the "Common Stock"), at a purchase
price of $.01 per share of Common Stock (the "Warrant Price"), subject to
adjustment as hereafter provided.
This Warrant is issued pursuant to that certain Subscription Agreement
dated as of March 16, 1998 (the "Agreement"), between the Company and the
Holder.
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 31, 2008, in whole or in part, by (i)
the surrender of this Warrant (with the purchase form at the end 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 Warrant 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
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<PAGE>
by the provisions of Paragraph 5 and subparagraph (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 Common Stock 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 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. If at any time
this Warrant is exercised as to less than the total number of shares for which
it may be exercised, and this Warrant shall not have expired, the Company shall
promptly issue to the Holder a new Warrant identical in form as to this Warrant
as to the remaining shares hereunder.
2. TRANSFER.
Subject to the legend set forth at the top of the first page hereof, 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 9(b), 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,
for Company obligations, attach to the holder thereof by reason of being such a
holder, other than as set forth herein.
(b) The Company covenants 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.
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.
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<PAGE>
5. REGISTRATION.
(a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. If no Common Stock offering has occurred by June
30, 1998, then upon the written request of any combination of the holders of
Common Stock or of Warrants issued by the Company and collectively exercisable
into not less than 100,000 shares of Common Stock (as such number may be
adjusted under Paragraph 7), and on a one-time basis, the Company shall file,
within ninety (90) days after written request such registration, and use its
best efforts to cause to be declared effective ninety (90) days thereafter, by
the Securities and Exchange Commission, a registration statement or
post-effective amendment thereto as permitted under the Securities Act of 1933,
as amended (the "Act"), covering the sale by the Holder of the Common Stock
issuable upon exercise of this Warrant or any portion hereof (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 hereto. The Holder shall furnish information reasonably
requested by the Company in accordance with such post-effective 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 and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until shares
owned by the Holder are eligible for sale without restriction under Rule 144.
(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.
(d) In addition the Company shall:
(i) furnish to the Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such other documents, as the Holder may
reasonably request in order to facilitate the public sale or other disposition
of the securities owned by the Holder;
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<PAGE>
(ii) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(iii) use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
(iv) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(v) notify the Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(vi) furnish, at the request of the Holder on the date
such Registrable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registrable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
(vii) take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registrable Securities.
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<PAGE>
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, director, employee, partner or agent of
the Distributing Holder, 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, director, employee, agent or partner
of such underwriter against any losses, claims, damages or liabilities joint or
several, to which the Distributing Holder, any such underwriter or any other
person described above 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
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 or any other such person 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, amended or supplemented under
the Act, the Distributing Holder will indemnify and hold harmless the Company
and each underwriter, each of their respective directors, each of their
respective officers, employees, partners and agents 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, employees, partners and agents 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
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<PAGE>
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, employees, partners
and agents 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.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnified 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
indemnifying party, and after notice from the indemnified party to such
indemnifying 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 WARRANT 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.
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<PAGE>
For the purposes of any computation to be made in accordance with
the provision 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. Any such adjustment shall become
effective at the time such subdivision or
combination shall become effective.
(iii) In case the Company shall at any time or from time
to time issue or sell shares of Common Stock (or
securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) at a
price per share less than the Market Price per share
of Common Stock (treating the price per share of any
security exchangeable or exercisable into Common
Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration
payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided
by (y) the number of shares of Common Stock
initially underlying such convertible, exchangeable
or exercisable security), other than issuance or
sales of Common Stock pursuant to any employee
benefit plan, then, and in each such case, the
number of shares of Common Stock thereafter
purchasable upon exercise of a Warrant shall be
determined by multiplying the number of shares of
Common Stock theretofore purchasable upon exercise
of each Warrant by a fraction (A) the numerator of
which shall be the sum of the number of shares of
Common Stock outstanding on such date plus the
number of additional shares of Common Stock issued
(or the maximum number into which such convertible
or exchangeable securities initially may convert or
exchange or for which such options, warrants or
other rights initially may be exercised) and (B) the
denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities
may convert or exchange or for which such options,
warrants or other rights may be exercised plus the
aggregate amount of any additional consideration
initially payable
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<PAGE>
upon conversion, exchange or exercise of such
security) would purchase at the Market Price per
share of Common Stock on such date. Such adjustment
shall be made whenever such shares, securities,
options, warrants or other rights are issued, and
shall become effective retroactively immediately
after the close of business on the record date for
the determination of stockholders entitled to
receive such shares, securities, options, warrants
or other rights; PROVIDED, that the determination as
to whether an adjustment is required to be made
pursuant to this Section 7(a) shall only be made
upon the issuance of such shares or such convertible
or exchangeable securities, options, warrants or
other rights, and not upon the issuance of the
security into which such convertible or exchangeable
security converts or exchanges, or the security
underlying such option, warrant or other right.
Notwithstanding the foregoing, in the event of such
issuance or sale of Common Stock at a cash price
less than the Market Price, no such adjustment under
this Section 7(a) need be made to the number of
shares underlying the Warrant unless such adjustment
would require an increase or decrease of at least 1%
of the number of shares underlying the Warrant. Any
lesser adjustment shall be carried forward and shall
be made at the time of and together with the next
subsequent adjustment which, together with any
adjustment or adjustments so carried forward, shall
amount to an increase or decrease of at least 1% of
number of shares underlying the Warrant. For the
purpose of this Agreement, the term "Market Price"
shall mean (i) if the Common Stock is traded in the
over-the-counter market or on the National
Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ"), the average per share
closing prices of the Common Stock on the 20
consecutive trading days immediately preceding the
date in question as reported by NASDAQ or an
equivalent generally accepted reporting service, or
(ii) if the Common Stock is traded on a national
securities exchange, the average for the 20
consecutive trading days immediately preceding the
date in question of the daily per share closing
prices of the Common Stock on the principal stock
exchange on which it is listed, as the case may be.
The closing price referred to above shall be the
last reported sales price or in case no such
reported sale takes place on such day, the average
of the reported closing bid and asked prices, in
either case on the national securities exchange or
automated quotation system on which the Common Stock
is then listed. Whenever the number of shares of
Common Stock purchasable upon exercise of each
Warrant is adjusted, the Warrant Price for each
share of Common Stock payable upon exercise of each
Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such
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<PAGE>
adjustment by a fraction, the numerator of which
shall be the number of shares of Common Stock
purchasable upon the exercise of each Warrant
immediately prior to such adjustment and the
denominator of which shall be the number of shares
of Common Stock purchasable immediately after such
adjustment.
(iv) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which
the Warrant Price or number of shares issuable upon
exercise of this Warrant has been adjusted as herein
provided, the Company shall 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) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in Common
Stock or by a subdivision of the outstanding Common Stock, then, from and after
the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise of
the 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 record date thereof, the number of shares of Common Stock issuable upon the
exercise of the 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 the 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 reorganization, reclassification,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock which the holder of the 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 or expiration of the
Warrant.
(d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or for
any other purpose, the Company shall provide the holder of the Warrant with
written notice of such intent not less than thirty (30) days prior to the record
date to determine
-9-
<PAGE>
holders of Common Stock entitled to receive such distribution and the holder of
this Warrant shall have until 5:00 p.m. EST on the twentieth (20th) day
following the actual receipt of such notice to elect whether to exercise this
Warrant in accordance with the terms herein. In the event of proper election to
exercise the Warrant, the holder of this Warrant shall be deemed to be a holder
of Common Stock as of the record date for such distribution. Should the holder
of the Warrant elect to exercise his Warrant within 20 days after the record
date for the determination of those holders of Common Stock entitled to such
dividend or distribution, he 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 the
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 Warrant 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.
(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 hereof 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 hereof 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) Any adjustment pursuant to the aforesaid provisions 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.
(h) Irrespective of any adjustment in the Warrant Price or the
number or kind of shares purchasable upon exercise of this Warrant, Warrants
previously or hereafter issued may continue to express the same price and number
and kind of shares as are stated in this Warrant.
(i) The Company shall 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.
-10-
<PAGE>
(j) 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
Stock 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, if the fraction is equal to or greater than .5, and down if
the fraction is less than .5.
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, Suite 1503, 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 other than Section 6 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, and this Warrant is
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 31,
1998.
-11-
<PAGE>
TRANS WORLD GAMING CORP.
By:____________________________
Its: __________________________
-12-
<PAGE>
FORM OF
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrants represented hereby)
The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").
The undersigned herewith makes payment therefore in the amount of
$____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of Common
Stock issuable upon exercise of all Warrants represented by such Warrant
Certificate (or if a new or replacement Warrant is otherwise to be provided
pursuant to the Warrant Certificate), that a new or replacement Warrant
Certificate of like tenor for the number of Warrants not being exercised (and
not being surrendered) hereunder be issued in the name of and delivered to the
undersigned, whose address is __________________________.
Dated: __________, _____.
_______________________________
(Signature of Registered Holder)
By:____________________________
Title:_________________________
-13-
<PAGE>
COMPANY CONTACT: DOMINICK J. VALENZANO
CHIEF FINANCIAL OFFICER
212-563-3355
FROM: TRANS WORLD GAMING CORP.
ONE PENN PLAZA
SUITE 1503
NEW YORK, NY 10119
TRANS WORLD GAMING CORP. SIGNS AGREEMENT TO ACQUIRE
21ST CENTURY RESORTS
- COMPANY SECURES $1.7 MILLION IN BRIDGE FINANCING -
- TRANSACTION MARKS FIRST STEP IN INTERNATIONAL EXPANSION -
NEW YORK, NEW YORK, JANUARY 20, 1998: TRANS WORLD GAMING CORP.
("TWG")(OTC BULLETIN BOARD: IBET, IBETW) today announced that it has
signed a stock purchase agreement to acquire 21st Century Resorts, a Czech
joint stock company, which owns exclusive casino licenses in Ceska Kubice,
Rosvadov and Chvalovice. The terms were not disclosed. The Ceska Kubice
and Rozvadov casinos are located on the border of the German State of
Bavaria, one of the wealthiest areas in Germany. The closing of the
acquisition is subject to a number of conditions and is expected to occur
in March 1998.
In conjunction with the transaction, TWG has obtained $1.7 million in
bridge financing from a private investor to be used, in part, for deposits
to secure, among other things, the acquisition of 21st Century Resorts in
the Czech Republic. The financing consists of a one-year, 12% loan for
$1.7 million and up to 291,000 warrants to purchase TWG common stock
exercisable at $0.50 per share through December 31, 2002. The Company is
currently in negotiations to obtain additional financing of up to $16
million to complete the acquisition.
In addition to operating casinos in Ceska Kubice and Rozvadov, TWG
will, as part of the transaction, also obtain land in Chvalovice, on the
Czech-Austrian border, which the Company plans to use as the site for a
third casino. Pending the receipt of appropriate permits and licenses, the
latter site is expected to open in the second half of 1999. Upon
completion of this transaction, Trans World Gaming will operate these
casinos as a wholly owned subsidiary.
<PAGE>
TRANS WORLD GAMING CORP.
PAGE TWO
Commenting on the acquisition, Andrew Tottenham, President & CEO of
Trans World Gaming stated, "We are excited by this significant venture and
view the Czech market as a key component of our growth strategy. This
acquisition provides the Company with the opportunity to enter and expand
the emerging Czech gaming market and takes us one step closer to realizing
our long-term goal of becoming a premier international operator of small
and medium sized casinos. We are confident the combination of our
expertise in operating and expanding turnkey operations, and the location
of the current and future casino sites near the Austrian and German
borders, offer a solid platform for growth."
Trans World Gaming owns and operates two casinos featuring video poker
in Louisiana, and MATS, a casino software company in Colorado. Through its
subsidiary, Tottenham & Company, TWG manages the Boxer Casino in Azerbaijan
and is an international gaming consultancy, serving clients in North and
South America, Europe and the Far East. With offices in New York and
London, the Company plans to specialize in small to medium casinos in local
venues worldwide.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995: The statements contained in this release which are not historical
facts contain forward looking information with respect to plans,
projections or future performance of the Company, the occurrence of which
involve certain risks and uncertainties detailed in the Company filings
with the Securities and Exchange Commission.
# # #
<PAGE>
COMPANY CONTACT: DOMINICK J. VALENZANO
CHIEF FINANCIAL OFFICER
212-563-3355
FROM: TRANS WORLD GAMING CORP.
ONE PENN PLAZA
SUITE 1503
NEW YORK, NY 10119
TRANS WORLD GAMING CORP. ACQUIRES
TWO OPERATING CASINOS IN THE CZECH REPUBLIC
THE COMPANY ANNOUNCES 1997 RESULTS
NEW YORK, NEW YORK, APRIL 1, 1998 -- TRANS WORLD GAMING CORP. ("TWG")
(OTC BULLETIN BOARD: IBET, IBETW) TODAY ANNOUNCED THAT ON MARCH 31, 1998 IT
ACQUIRED TWO OPERATING CASINOS AND PROPERTY UPON WHICH TO BUILD A THIRD
CASINO IN TOWNS THAT BORDER GERMANY AND AUSTRIA IN THE CZECH REPUBLIC.
IN ORDER TO FUND ITS ACQUISITION, THE COMPANY ISSUED $17 MILLION OF 12%
SENIOR SECURED NOTES DUE MARCH 2005 AND TEN YEAR WARRANTS TO PURCHASE
APPROXIMATELY 7.4 MILLION SHARES OF COMMON STOCK REPRESENTING 40% OF THE
COMPANY'S FULLY DILUTED COMMON STOCK AT AN EXERCISE PRICE OF $.01. IN ADDITION,
TRANS WORLD GAMING SUCCESSFULLY RE-NEGOTIATED THE TERMS OF THE COMPANY'S
OUTSTANDING $4.8 MILLION 12% SECURED CONVERTIBLE SENIOR BONDS, THE OUTSTANDING
WARRANTS RELATED TO THE BONDS AND CERTAIN WARRANTS HELD BY OTHER INVESTORS.
ANDREW TOTTENHAM, CHIEF EXECUTIVE OFFICER OF TRANS WORLD GAMING CORP.,
STATED, "THE FINANCING WILL ENABLE THE COMPANY TO BEGIN EXECUTING ITS LONG-TERM
STRATEGIC INITIATIVES, INCLUDING GEOGRAPHIC EXPANSION INTO UNSERVED LEISURE
MARKETS. THE COMPANY'S ACQUISITION OF CASINOS IN THE CZECH REPUBLIC REPRESENTS
AN IMPORTANT MILESTONE IN OUR OVERALL BUSINESS STRATEGY. THESE TRANSACTIONS
WILL ALLOW US TO ESTABLISH A PRESENCE IN THE SMALL TO MEDIUM SIZE CASINO ARENA
AND SIGNIFICANTLY EXPAND OUR OPERATION. WE LOOK FORWARD TO SECURING ADDITIONAL
OPPORTUNITIES IN THE FUTURE, WHICH ALLOW US TO ACHIEVE GREATER MARKET
PENETRATION."
<PAGE>
PAGE 2
THE COMPANY ALSO ANNOUNCED EARNINGS OF $80,000 OR $.03 PER SHARE FOR YEAR ENDED
DECEMBER 31, 1997 COMPARED TO A NET LOSS OF $12.8 MILLION OR $5.02 PER SHARE FOR
THE PRIOR YEAR ENDED DECEMBER 31, 1996. REVENUES FOR THE COMPANY IN 1997 WERE
$6.9 MILLION REPRESENTING AN INCREASE OF $.2 MILLION OVER THE REVENUES FOR 1996
OF $6.7 MILLION. TOTTENHAM SAID, "WE ARE PLEASED TO SHOW POSITIVE RESULTS FOR
THE YEAR AFTER THE DISAPPOINTING PERFORMANCE IN 1996. WE ARE ENCOURAGED BY THE
NUMBERS AND ARE EXCITED ABOUT THE PROSPECTS FOR THE COMING YEAR."
TRANS WORLD GAMING OWNS AND OPERATES TWO CASINOS FEATURING VIDEO POKER IN
LOUISIANA AND SPECIALIZES IN SMALL TO MEDIUM CASINOS AND GAMING PARLORS IN LOCAL
VENUES WORLDWIDE. THROUGH ITS WHOLLY-OWNED SUBSIDIARY, TOTTENHAM AND COMPANY,
AN INTERNATIONAL GAMING CONSULTANCY, THE COMPANY PROVIDES CLIENTS IN THE U.S.
AND ABROAD WITH ASSISTANCE IN CORPORATE STRATEGY DEVELOPMENT, MERGERS AND
ACQUISITIONS, FEASIBILITY STUDIES, COMPANY/OPERATIONAL REVIEWS, GAMING POLICY
GUIDANCE, CASINO DEVELOPMENT AND MANAGEMENT SERVICES AND EXECUTIVE SEARCH. THE
COMPANY MAINTAINS OFFICES IN NEW YORK AND LONDON.
*******
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: THE STATEMENT CONTAINED IN THIS RELEASE WHICH ARE NOT HISTORICAL FACTS
CONTAIN FORWARD LOOKING INFORMATION WITH RESPECT TO PLANS, PROJECTIONS OR FUTURE
PERFORMANCE OF THE COMPANY, THE OCCURRENCE OF WHICH INVOLVE CERTAIN RISKS AND
UNCERTAINTIES DETAILED IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION.
<PAGE>
TRANS WORLD GAMING CORP.
FINANCIAL HIGHLIGHTS
(In thousands except per share data)
<TABLE>
<CAPTION>
Three months ended Year
Ended
December 31, December 31,
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues $ 1,731 $ 1,692 $ 6,901 $ 6,655
Total Costs and Expenses 1,906 13,256 6,821 19,095
-------- -------- -------- --------
Pre-tax income/(loss) (175) (11,564) 80 (12,440)
Tax $ (41) $ 256 $ - $ 320
-------- -------- -------- --------
Net income/(loss) $ (134) $(11,820) $ 80 $(12,760)
-------- -------- -------- --------
Net income/(loss) per share $ (0.05) $ (4.65) $ 0.03 $ (5.02)
-------- -------- -------- --------
Common shares outstanding 2,919 2,544 2,919 2,544
</TABLE>
<TABLE>
<CAPTION>
SELECTED BALANCE SHEET INFORMATION
December 31,
1997 1996
------------ ----
<S> <C> <C>
Total current assets $ 758 $ 1,052
Total assets 3,070 2,351
Total liabilities 6,796 6,453
Long term debt 5,150 4,825
Shareholders' equity/(deficit) $ (3,726) $ (4,103)
</TABLE>
