EXHIBIT 2.2
THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THE REGISTERED
HOLDER OF THIS WARRANT, BY ITS
ACCEPTANCE HEREOF, AGREES THAT IT WILL NOT
SELL, TRANSFER OR ASSIGN THIS WARRANT
AND THE SHARES ISSUABLE HEREUNDER EXCEPT AS
HEREIN PROVIDED.
VOID AFTER 5:00 P.M. EASTERN TIME, OCTOBER 13, 2010
WARRANT
For the Purchase of
150,000 Shares of Common Stock
of
eGAMES, INC.
1. Warrant.
--------
THIS CERTIFIES THAT, in consideration of Seventy-Five Thousand
Dollars
($75,000) upon the exercise hereof and
other good and valuable consideration,
duly paid by or on behalf of Cinemaware,
Inc. ("Holder"), as registered owner of
this Warrant, to eGames, Inc. ("Company"),
Holder is entitled, at any time or
from time to time at or after October 13,
2005 ("Commencement Date"), and at or
before 5:00 p.m., Eastern Time October 13,
2010 ("Expiration Date"), but not
thereafter, to subscribe for, purchase and
receive, in whole or in part, up to
150,000 shares of Common Stock of the
Company ("Common Stock"). If the
Expiration Date is a day on which banking
institutions are authorized by law to
close, then this Warrant may be exercised
on the next succeeding day which is
not such a day in accordance with the terms
herein. This Warrant is initially
exercisable at $.50 per share of Common
Stock purchased; provided, however, that
upon the occurrence of any of the events
specified in Section 5 hereof, the
rights granted by this Warrant, including
the exercise price and the number of
shares of Common Stock to be received upon
such exercise, shall be adjusted as
therein specified. The term "Exercise
Price" shall mean the initial exercise
price or the adjusted exercise price,
depending on the context, of a share of
Common Stock. The term "Securities" shall
mean the shares of Common Stock
issuable upon exercise of this Warrant.
2. Exercise.
---------
2.1 Exercise Form. In order to exercise this Warrant, the exercise
form
attached hereto must be duly executed and
completed and delivered to the
Company, together with this Warrant and
payment of the Exercise Price for the
Securities being purchased. If the
subscription rights represented hereby shall
not be exercised at or before 5:00 p.m.,
Eastern time, on the Expiration Date,
this Warrant shall become and be void
without further force or effect, and all
rights represented hereby shall cease and
expire.
<PAGE>
2.2 Legend. Each certificate for Securities purchased under
this
Warrant shall bear a legend as follows,
unless such Securities have been
registered under the Securities Act of
1933, as amended ("Act"):
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended ("Act")
or
applicable state law. The securities may not be offered for sale,
sold
or otherwise transferred except pursuant to an effective
registration
statement under the Act, or pursuant to an exemption from
registration
under the Act and applicable state law."
2.3 Conversion Right.
2.3.1 Determination of Amount. Upon the terms and subject to
the conditions set forth in this Warrant,
this Warrant may be exercised by
Holder by net issuance as to all or any
part of the shares of Common Stock
covered hereby by surrender of this Warrant
at Company's principal offices at
2000 Cabot Boulevard West, Suite 100,
Langhorne, Pennsylvania 19047-1811 (or
such other address as Company may advise
the registered Holder hereof by notice
given by certified, registered or overnight
mail), with the form of election to
subscribe attached thereto completed and
duly executed and specifying the number
of shares of Common Stock the Holder wishes
to purchase. Effective as of the
Exercise Date, for the shares of Common
Stock acquired pursuant to such exercise
of this Warrant, Holder shall be deemed to
have surrendered to Company the right
to purchase that number of shares of Common
Stock issuable upon exercise of this
Warrant as shall equal (1) the shares of
Common Stock so purchased multiplied by
(2) an amount determined by dividing (A)
the Exercise Price by (B) the
difference between the Market Price and the
Exercise Price. Effective upon the
Exercise Date, this Warrant shall be deemed
to have been exercised and Holder
exercising the same to have become a holder
of record of shares of Common Stock
(or of the other securities or property to
which he, she or it is entitled upon
such exercise) purchased hereunder for all
purposes, and certificates for such
shares so purchased shall be delivered to
Holder within a reasonable time (not
exceeding thirty days) after this Warrant
shall have been exercised as set forth
herein above. In the event of a partial
exercise of this Warrant, Company shall
issue and deliver to Holder, on the
Exercise Date and in substitution of this
Warrant, a new warrant or warrants (at
Holder's option), dated as of the date
hereof and with terms identical to the
terms hereof, except that such new
warrant or warrants shall be exercisable,
in the aggregate, for a number of
shares of Common Stock which shall equal
the number of shares of Common Stock
under this Warrant that have not yet been
exercised, less those used to exercise
as provided herein, subject to adjustment
pursuant to Section 5 hereof. As used
herein, the term "Market Price" at any date
shall be deemed to be the average of
the last reported sale prices for the
thirty (30) business days immediately
preceding the date on which the Conversion
Right is exercised, as officially
reported by the principal securities
exchange on which the Common Stock is
listed or admitted to trading, or, if the
Common Stock is not listed or admitted
to trading on any national securities
exchange or if any such exchange on which
the Common Stock is listed is not its
principal trading market, the last
reported sale price as furnished by the
National Association of Securities
Dealers, Inc. (NASD) through the Nasdaq
National Market or SmallCap Market,
or, if applicable, the OTC Bulletin Board,
or if the Common Stock is not listed
or admitted to trading on any of the
foregoing markets, or similar organization,
as determined in good faith by resolution
of the Board of Directors of the
Company.
<PAGE>
2.3.2 Exercise of Conversion Right. The Conversion Right may
be exercised by the Holder on any business
day on or after the Commencement Date
and not later than the Expiration Date by
delivering the Warrant with a duly
executed exercise form attached hereto with
the conversion section completed to
the Company, exercising the Conversion
Right and specifying the total number of
shares of Common Stock the Holder will
purchase pursuant to such conversion.
3. Transfer.
---------
3.1 General Restrictions. The registered Holder of this Warrant, by
its
acceptance hereof, agrees that it will not
sell, transfer or assign or
hypothecate this Warrant to anyone who is
not an "accredited investor" as
defined under Rule 501 promulgated under
the Securities Act, without an
exemption from registration under the
Securities Act, and except upon compliance
with, or pursuant to exceptions from, any
other applicable securities laws. In
order to make any permitted assignment, the
Holder must deliver to the Company
the assignment form attached hereto duly
executed and completed, together with
this Warrant and payment of all transfer
taxes, if any, payable in connection
therewith. The Company shall immediately
transfer this Warrant on the books of
the Company and shall execute and deliver a
new Warrant or Warrants of like
tenor to the appropriate assignee(s)
expressly evidencing the right to purchase
the aggregate number of shares of Common
Stock purchasable hereunder or such
portion of such number as shall be
contemplated by any such assignment.
3.2 Restrictions Imposed by the Securities Act. This Warrant and
the
Securities underlying this Warrant shall
not be transferred unless and until (i)
the Company has received the opinion of
counsel for the Holder, in form and
substance reasonably satisfactory to the
Company, that such securities may be
sold to an "accredited investor" pursuant
to an exemption from registration
under the Act, and applicable state law, or
(ii) a registration statement
relating to such Securities has been filed
by the Company and declared effective
by the Securities and Exchange Commission
and compliance with applicable state
law.
3.3 Covenants of Holder. The registered Holder of this Warrant, by
its
acceptance hereof, represents and covenants
that this Warrant and the Common
Stock issuable upon exercise of this
Warrant will be acquired for investment and
not with a view to the sale or distribution
of any part thereof, and the Holder
has no present intention of selling or
engaging in any public distribution of
the Warrant or the Common Stock issuable
hereunder except pursuant to a
registration or exemption pursuant to the
Act. The Holder understands (i) that
the Warrant and the Common Stock issuable
upon exercise of this Warrant are not
registered under the Act or under
applicable state securities laws on the ground
that the issuance contemplated by this
Warrant will be exempt from the
registration and qualifications
requirements thereof pursuant to exemptions
under the Act and any applicable state
securities laws, and (ii) that the
Company's reliance on such exemptions are
predicated on the representations set
forth in this Section 3.3. The Holder
represents that it is an "accredited
investor" within the meaning of Rule 501 of
Regulation D under the Act, as
presently in effect.
<PAGE>
4. New Warrants to be Issued.
--------------------------
4.1 Partial Exercise or Transfer. Subject to the restrictions
in
Section 3 hereof, this Warrant may be
exercised or assigned in whole or in part.
In the event of the exercise or
assignmen
