NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND
NONE OF THE FOREGOING MAY BE SOLD, ASSIGNED OR TRANSFERRED EXCEPT (i) PURSUANT
TO A REGISTRATION STATEMENT UNDER THE ACT THAT HAS BECOME EFFECTIVE AND THAT IS
CURRENT WITH RESPECT THERETO, OR (ii) PURSUANT TO A SPECIFIC EXEMPTION FROM
REGISTRATION UNDER THE ACT, BUT ONLY IF THE HOLDER HEREOF FIRST HAS OBTAINED THE
WRITTEN OPINION OF COUNSEL TO THE COMPANY OR THE WRITTEN OPINION OF OTHER
COUNSEL (WHICH COUNSEL AND OPINION (IN FORM AND SUBSTANCE) SHALL BE REASONABLY
SATISFACTORY TO THE COMPANY) THAT THE PROPOSED DISPOSITION COMPLIES WITH ALL
APPLICABLE PROVISIONS OF THE ACT AND ANY AND ALL APPLICABLE "BLUE SKY" OR
SIMILAR SECURITIES LAWS.
_______________, 199__
WARRANT TO PURCHASE SHARES OF
CLASS A COMMON STOCK OF
INTERACTIVE MAGIC, INC.
THIS CERTIFIES THAT for value received, ________________________ (together
with [his] permitted successors and assigns, the "Holder") is entitled to
subscribe for and purchase ______________________ fully paid and non-assessable
shares (as adjusted pursuant to the provisions hereof, the "Shares") of Class A
Common Stock, par value $0.10 per share, of Interactive Magic, Inc., a Maryland
corporation (the "Company"), at an exercise price per share of $______ (such
exercise price, as adjusted from time to time pursuant to the provisions hereof,
the "Exercise Price"), subject to the provisions and upon the terms and
conditions set forth herein.
1. Term. This Warrant is exercisable at any time after ___________________
and prior to ___________________ (the "Exercise Period").
2. Exercise of Warrant.
2.1 This Warrant is exercisable at the option of the Holder hereof, in
whole or in part (but not as to fractional Shares), at any time and from
time to time during the Exercise Period by the surrender hereof (with the
annexed Subscription Form duly executed) at the principal office of the
Company, together with payment to the Company, in cash or by certified or
official bank check, of an amount equal to the Exercise Price multiplied by
the number of Shares then being purchased. Upon the purchase of less than
all of the Shares purchasable hereunder, the Company shall cancel this
Warrant upon the surrender hereof and shall execute and deliver to the
Holder hereof a new Warrant of like tenor for the balance of the Shares
purchasable hereunder.
2.2 In lieu of exercising this Warrant pursuant to Section 2.1 above,
the Company may permit the Holder to convert any then-existing rights to
purchase Class A Common Stock pursuant to this Warrant, in whole or in part
(but not as to fractional Shares), at any time and from time to time during
the Exercise Period into Shares (the "Conversion Right"), upon delivery of
written notice of intent to convert to the Company at the principal office
of the Company, together with this Warrant. Upon exercise of the Conversion
Right, the Company shall deliver to the Holder (without payment by the
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Holder of any Exercise Price) that number of Shares which is equal to the
quotient obtained by dividing (x) the value of the number of Shares with
respect to which the Conversion Right is being exercised (determined by
subtracting the aggregate Exercise Price for the Shares with respect to
which the Conversion Right is being exercised from a number equal to the
product of (i) the fair market value per Share as at such time, and (ii)
the number of Shares with respect to which the Conversion Right is being
exercised) by (y) the fair market value per Share. Any references in this
Warrant to the "exercise" of this Warrant, and the use of the term exercise
herein, shall be deemed to include (without limitation) any exercise of the
Conversion Right.
3. Issuance of Certificates. Upon the exercise of this Warrant, the
issuance of certificates for Shares underlying this Warrant shall be made
promptly without charge to the Holder hereof, and such certificates shall be
issued (subject to the provisions of Section 4 hereof) in the name of, or in
such names as may be directed by, the Holder hereof; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any such certificates in a
name other than that of the Holder, and the Company shall not be required to
issue or deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid. The person or persons in whose name(s) any certificate(s)
representing Shares shall be issued upon exercise hereof shall be deemed to have
become the holder(s) of record of, and shall be treated for all purposes as the
record holder(s) of, the Shares represented thereby, and such Shares shall be
deemed to have been issued, immediately prior to the close of business on the
date(s) upon which this Warrant is exercised.
4. Restrictions on Exercise and Transfer.
4.1 Exercise. The Company may reject any exercise of this Warrant if
the Company determines that the issuance of Shares upon such exercise or
the method of payment of consideration for such shares would constitute a
violation of any applicable securities or other law or regulation. As a
condition to the exercise of the Warrant, the Company may require the
Holder to make any representation and warranty to the Company as may be
required by any applicable law or regulation.
4.2 Holder's Intent. The Holder of this Warrant, by acceptance hereof,
represents and warrants to the Company that such Holder is acquiring this
Warrant and the Shares for investment for the Holder's own account and not
with a view to, or for resale in connection with, any distribution thereof.
4.3 Transfer. Neither this Warrant nor the Shares have been registered
under the Securities Act of 1933, as amended (the "Act"), and none of the
foregoing may be sold or transferred in whole or in part unless the Holder
shall have first given notice to the Company describing such sale or
transfer and furnished to the Company an opinion of counsel (which counsel
and opinion (in form and substance) shall be reasonably satisfactory to the
Company) to the effect that the proposed sale or transfer may be made
without registration under the Act; provided, however, that the foregoing
transfer restriction shall not apply if there is in effect a registration
statement with respect to this Warrant or the Shares, as the case may be,
at the time of the proposed sale or transfer. Each certificate representing
Shares purchased hereunder shall bear a legend to the foregoing effect.
5. Adjustment. The Purchase Price and the number of Shares purchasable
hereunder shall be adjusted as set forth in this Section 5 with the intent that
the rights of the Holder to exercise the
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Warrant shall not be impaired. For purposes of this Section 5, "Original Issue
Date" shall mean the date hereof.
5.1 Subdivision or Combination of Class A Common Stock.
(1) Subdivision. In the event that the Company at any time or
from time to time after the Original Issue Date shall declare or pay
any dividend on the shares of Class A Common Stock payable in shares
of Class A Common Stock or in any right to acquire shares of Class A
Common Stock, or shall effect a subdivision of the outstanding shares
of Class A Common Stock into a greater number of shares of Class A
Common Stock (by stock split, reclassification or otherwise), then the
Exercise Price in effect immediately prior to such event shall,
concurrently with the effectiveness of such event, be decreased
proportionately.
(2) Combination. In the event that at any time or from time to
time after the Original Issue Date the outstanding shares of Class A
Common Stock shall be combined or consolidated into a lesser number of
shares of Class A Common Stock (by reclassification or otherwise),
then the Exercise Price in effect immediately prior to such event
shall, concurrently with the effectiveness of such event, be increased
proportionately.
5.2 Reclassification, Exchange or Substitution. In the event of any
reorganization or any reclassification of the capital stock of the Company,
any consolidation or merger of the Company with or into another entity or
entities or the conveyance of all or substantially all of the Company's
assets to another entity (except for any such transaction that is treated
as a liquidation, dissolution or winding up of the Company), this Warrant
shall thereafter be exercisable for the number of shares of stock or other
securities or property (including cash) to which a holder of the number of
remaining Shares purchasable hereunder would have been entitled upon the
record date of (or date of, if no record date is fixed) such
reorganization, reclassification, consolidation, merger or conveyance; and,
in any case, appropriate adjustment (as determined by the Board of
Directors) shall be made in the application of the provisions herein set
forth with respect to the rights and interests thereafter of the Holder of
this Warrant to the end that the provisions set forth herein shall
thereafter be applicable, as nearly as equivalent as is practicable, in
relation to any shares of stock or the securities or property (including
cash) thereafter deliverable upon the exercise of this Warrant.
5.3 Number of Shares Purchasable Hereunder. Upon each adjustment of
the Exercise Price pursuant to the provisions of this Section 5, the number
of Shares purchasable upon the exercise hereof shall be adjusted to the
nearest whole number of Shares calculated by multiplying the Exercise Price
in effect immediately prior to such adjustment by the number of Shares
purchasable upon the exercise hereof immediately prior to such adjustment
and dividing the product so obtained by the Exercise Price in effect
immediately after such adjustment.
5.4 Certificate. Upon the occurrence of each adjustment or
readjustment of the Exercise Price and the number of Shares purchasable
hereunder pursuant to this Section 5, the Company at its expense promptly
shall compute such adjustments or readjustments in accordance with the
terms hereof, and the Company shall prepare and furnish to the Holder
hereof a certificate setting forth such adjustments or readjustments and
showing in detail the facts upon which such adjustments or readjustments
are based. The Company shall, upon the written request at any time of the
Holder, furnish or cause to be furnished to such Holder a like certificate
setting forth (i) such adjustments and readjustments, (ii) the applicable
Exercise Price at the time in effect, and (iii) the number of Shares and
the amount, if any, of other property that at the time would be received
upon the exercise hereof.
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6. Exchange and Replacement of Certificate.
6.1 This Warrant is exchangeable without expense, upon the surrender
hereof by the registered Holder at the principal office of the Company, for
a new Warrant of like tenor and date representing in the aggregate the
right to purchase the same number of Shares as are purchasable hereunder in
such denominations as shall be designated by the Holder hereof at the time
of such surrender.
6.2 Upon receipt by the Company of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant,
and, in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to the Company, and reimbursement and cancellation
of this Warrant, if mutilated, the Company will make and deliver a new
Warrant of like tenor, in lieu of this Warrant.
7. Elimination of Fractional Interests. The Company shall not be required
to issue certificates representing fractions of Shares on the exercise of this
Warrant, nor shall it be required to issue scrip or pay cash in lieu of
fractional interests, it being the intent of the parties that all fractional
interests shall be eliminated.
8. Withholding Taxes.
8.1 Whenever Shares are to be issued upon the exercise of this
Warrant, the Company shall have the right to require the Holder to remit to
the Company in cash an amount sufficient to satisfy U.S. federal, state and
local withholding tax requirements, if any, prior to the delivery of any
certificate or certificates for such Shares.
8.2 Notwithstanding Section 8.1, at the election of a Holder, subject
to the approval of the Board of Directors of the Company, when Shares are
to be issued upon the exercise of this Warrant, the Holder may tender to
the Company a number of Shares, or the Company shall withhold a number of
such Shares, the fair market value of which is sufficient to satisfy the
tax requirements, if any, attributable to such exercise or occurrence.
9. Reservation of Securities. The Company shall at all times reserve and
keep available out of its authorized but unissued shares of Class A Common
Stock, solely for the purpose of issuance upon the exercise of this Warrant,
such number of shares of Class A Common Stock as shall be issuable upon the
exercise hereof. The Company covenants and agrees that, upon exercise of this
Warrant and payment of the Exercise Price therefor, all Shares issuable upon
such exercise shall be duly and validly issued, fully paid and non-assessable.
10. No Rights as Stockholders. Nothing contained in this Warrant confers or
shall be construed as conferring upon the Holder hereof the right to vote or to
consent or to receive notice as a stockholder in respect of any meetings of
stockholders for the election of directors or any other matter, or as having any
rights whatsoever as a stockholder of the Company.
11. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made when
delivered, when sent by a nationally recognized overnight courier or when mailed
by registered or certified mail, return receipt requested:
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(a) If to the registered Holder of this Warrant, to the address of
such Holder as shown on the books of the Company; or
(b) If to the Company, to ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or to such other address as the Company
may designate by notice to the Holder.
12. Successors. All of the covenants, agreements, representations and
warranties contained in this Warrant shall bind the parties hereto and their
respective heirs, executors, administrators, distributees, successors and
assigns.
13. Headings. The headings in this Warrant are intended for convenience
only and shall have no substantive effect.
14. Law Governing. This Warrant shall be construed and enforced in
accordance with, and governed by, the laws of the State of North Carolina,
without giving effect to conflict of law principles.
15. Amendment. The provisions of this Warrant may only be waived, amended,
supplemented or modified (either prospectively or retroactively) by a written
agreement signed by the Company and the Holder.
INTERACTIVE MAGIC, INC.
By:
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
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SUBSCRIPTION FORM
(To be Executed by the Registered Holder upon Exercise hereof)
The undersigned hereby irrevocably elects to exercise the right to purchase
______________ Shares pursuant to this Warrant and according to the conditions
hereof, and herewith makes payment of the Exercise Price of such Shares in full
in the manner prescribed herein.
___________________________________
Signature
___________________________________
Name (printed)
Date: ___________, 19__ ___________________________________
Social Security Number or
Taxpayer's Identification Number
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