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Entertainment Gaming Asia Inc. Message Board

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  • pjv2xyw9dww4b5 pjv2xyw9dww4b5 Sep 5, 2007 12:08 PM Flag

    Up to 3.00 discount to 16M Elixir Warrants

    In http://sec.gov/Archives/edgar/data/1004673/000089256907001058/a31070ddef14a.htm#120 is:

    "'2006 Warrants' means the following Common Stock purchase warrants sold by the Company to Elixir pursuant to the 2006 Purchase Agreement, each represented by a written warrant agreement, as amended, and expiring December 31, 2010:
    (i) 6,000,000 shares of Common Stock at $2.65 per share (the '$2.65 Warrants');
    (ii) 4,000,000 shares of Common Stock at $3.00 per share;
    (iii) 2,000,000 shares of Common Stock at $3.50 per share;
    (iv) 1,000,000 shares of Common Stock at $4.00 per share;
    (v) 1,000,000 shares of Common Stock at $4.50 per share;
    (vi) 1,000,000 shares of Common Stock at $5.00 per share; and
    (vii) 1,000,000 shares of Common Stock at $5.50 per share."

    Once there are placement agreements for a total of 3000 EGMs and actual placements of 2000 EGMs, the exercise prices, except for the $2.65 warrants in (i) above, will be $3 less. That will make the exercise price of the 4,000,000 warrants in (ii) zero, for instance.

    Notice that the warrants' expiration date is Dec. 31, 2010.

    The form of the COMMON STOCK PURCHASE WARRANT appearing as Exhibit B of SECURITIES PURCHASE AGREEMENT ( http://sec.gov/Archives/edgar/data/1004673/000114420406047790/v057555_ex10-3.htm ) has:

    "THIS COMMON STOCK PURCHASE WARRANT (the 'Warrant') certifies that, for value received, _____________ (together with its successors or assigns the 'Holder'), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after March 31, 2007 (the 'Initial Exercise Date') and on or prior to the close of business on December 31, 2009 (the 'Termination Date') but not thereafter, ..."

    Vendingdata probably hoped for the 12/31/2009 expiration date when it filed http://sec.gov/Archives/edgar/data/1004673/000114420406047790/v057555_ex10-3.htm , but now it turns out that the expiration date is 12/31/2010. My opinion is that Elixir pushed for the later date since it doesn't want to exercise any of the warrants even one second before expiration--unless the exercise price is zero, of course.

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    • The discount ratchets up 1.00 per 1000 machines to a max of 3 bucks but makes no stipulation as to excluded warrants. Why couldn't Elixir exercise the 2.65 warrants for .65 after 2000 machines are under contract/1000 machines in operation?

      • 1 Reply to kidecar
      • According to the SECURITIES PURCHASE AND PRODUCT PARTICIPATION AGREEMENT ( http://sec.gov/Archives/edgar/data/1004673/000089256907001058/a31070ddef14a.htm#120 ), the 6 million warrants with the exercise price of $2.65 will not have their exercise price reduced:

        "(i) Subject to the Placement of 1,000 EGMs on or before the Closing Date, the Company shall (a) issue to Elixir 25,000,000 shares of Common Stock (referred to herein as the 'Initial Shares') and the Warrants, (b) reduce the exercise price of all of the 2006 Warrants (other than the $2.65 Warrants) by $1.00 and (c) amend the terms of the 2006 Warrants so that they are freely transferable, subject to applicable law;"

        where the meaning of "$2.65 Warrants" is unveiled in,

        "'2006 Warrants' means the following Common Stock purchase warrants sold by the Company to Elixir pursuant to the 2006 Purchase Agreement, each represented by a written warrant agreement, as amended, and expiring December 31, 2010:

        (i) 6,000,000 shares of Common Stock at $2.65 per share (the '$2.65 Warrants');"


        Warrants qualifying for the exercise price reduction of up to $3 are,

        " (ii) 4,000,000 shares of Common Stock at $3.00 per share;
        (iii) 2,000,000 shares of Common Stock at $3.50 per share;
        (iv) 1,000,000 shares of Common Stock at $4.00 per share;
        (v) 1,000,000 shares of Common Stock at $4.50 per share;
        (vi) 1,000,000 shares of Common Stock at $5.00 per share; and
        (vii) 1,000,000 shares of Common Stock at $5.50 per share."

        I think that the 4 million warrants will be exercised after their exercise price has been reduced by $3 to $0.00. Another 2 million shares could then be had for $1 million. Elixir might not have to invest much more to get a majority of the shares.

 
EGT
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