-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PP2KLNWyQN+evgPUf05ncp5BiKB/yaW5cuVK7IioWEeYfbit2IPIYnqZuVmlf1Xh Bf8FqBsU+ZQllL9RuIjwNw== 0000950136-04-000621.txt : 20040301 0000950136-04-000621.hdr.sgml : 20040301 20040301172635 ACCESSION NUMBER: 0000950136-04-000621 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20040225 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040301 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONNECTIV CORP CENTRAL INDEX KEY: 0001076682 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL- COMPUTER & PRERECORDED TAPE STORES [5735] IRS NUMBER: 061529524 STATE OF INCORPORATION: DE FISCAL YEAR END: 1030 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-70663 FILM NUMBER: 04640336 BUSINESS ADDRESS: STREET 1: 750 LEXINGTON AVENUE STREET 2: 23RD FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2127505858 MAIL ADDRESS: STREET 1: 750 LEXINGTON AVENUE STREET 2: 23RD FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 FORMER COMPANY: FORMER CONFORMED NAME: SPINROCKET COM INC DATE OF NAME CHANGE: 20000502 FORMER COMPANY: FORMER CONFORMED NAME: CDBEAT COM INC DATE OF NAME CHANGE: 19990503 FORMER COMPANY: FORMER CONFORMED NAME: SMD GROUP INC DATE OF NAME CHANGE: 19990113 8-K 1 file001.txt FORM 8-K 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 Date of Report (Date of earliest event reported): February 25, 2004 CONNECTIVCORP (Exact name of registrant as specified in its charter)
Delaware 333-70663 06-1529524 (State or Other Jurisdiction (Commission File Number) (I.R.S. Employer of Incorporation) Identification No.)
160 Raritan Center Parkway, Edison, NJ 08837 (Address of principal executive offices including zip code) (732) 225-8910 (Registrant's telephone number, including area code) N.A. ---- (Former name or former address, if changed since last report) ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE On February 26, 2004, we completed a private placement of securities in which we raised approximately $25.8 million in gross proceeds from a group of institutional and accredited investors. The private placement resulted in net proceeds to us of approximately $22 million after deducting the placement agent fees and other expenses related to the private placement. JMP Securities LLC acted as placement agent in connection with the private placement. In addition, JMP received warrants to purchase up to 268 units, exercisable for five years from the date of issuance. Pursuant to the terms of the private placement, we issued 2,583 units, each unit consisting of (i) one share of our 7% convertible preferred stock, convertible into 10,000 shares of our common stock and (ii) a three year warrant to purchase 10,000 shares of our common stock at an exercise price of $1.00 per share. Each share of 7% preferred stock entitles the holder to receive a 7% cumulative dividend payable solely in shares of common stock, on an annual basis. In addition, the holders of the 7% preferred stock are entitled to share in any dividends paid on the common stock on an "as converted" basis. The holders of the 7% preferred stock are entitled to a liquidation preference equal to the amount invested per share, plus any accrued and unpaid dividends. The 7% preferred stock has voting rights on an "as-converted" basis and votes together with the common stock as one class, except as otherwise required by law. In addition, so long as 51% of the currently outstanding 7% preferred stock remains outstanding, we will not issue any capital stock, or securities convertible into capital stock, that is senior to the 7% preferred stock. Each share of 7% preferred stock will automatically convert into common stock at a conversion price of $1.00 per share at such time as the closing price of our common stock is equal to or greater than $2.50 per share for a 60 consecutive calendar day period, provided that during such 60 consecutive calendar day period, the average daily trading volume for each day is equal to or greater than 75,000 shares, and that the registration statement as to the resale of the common stock underlying the 7% preferred stock and the warrants is in effect. We may call the warrants issued in the private placement for $.001 per share of common stock underlying the warrants upon achievement of similar conditions as identified in the preceding sentence. Pursuant to the terms of the 7% preferred stock, we agreed within 120 days of closing of the private placement to expand the size of our Board of Directors to seven members. Four of the seven members shall be "independent," and two of those independent members shall be nominated by the holders of the 7% preferred stock, so long as 51% of the currently outstanding 7% preferred stock remains outstanding. We plan to use the net proceeds of the private placement as follows: (i) approximately $3.3 million to pay certain creditors, including part of a previously negotiated settlement amount to Atari Interactive, Inc.; (ii) approximately $2.5 million to repay portions of loans previously made to us by Jesse Sutton, our President and Chief Executive Officer, and Joseph Sutton, our Executive Vice President of Research & Development; and (iii) the remainder for working capital purposes. In order to fully satisfy the remaining balance of $1.0 million of the loans previously provided by Jesse Sutton and Joseph Sutton we have agreed to issue to them, in the aggregate, 100 units. In addition, each of them has agreed to reduce his current salary from $350,000 to $225,000. In connection with the private placement, Jesse Sutton and Joseph Sutton, as well as two other Sutton family members, surrendered an aggregate of 352,112 shares of Series A convertible preferred stock to us, which shares were convertible into approximately 25,000,000 shares of common stock. After giving effect to the private placement, we had outstanding 38,178,392 shares of common stock, 572,888 shares of Series A convertible preferred stock and 2,683 shares of 7% convertible preferred stock. Upon the effectiveness of an amendment to our certificate of incorporation authorizing additional shares of common stock, which increase is anticipated to occur during our current fiscal quarter ending April 30, 2004, the Series A preferred stock, the 7% preferred stock and other outstanding obligations will be convertible into an aggregate of approximately 107,683,440 shares of common stock. All of the holders of our Series A convertible preferred stock have agreed not to sell or otherwise dispose of any ConnectivCorp securities held by such persons, subject to certain exceptions and without the consent of the placement agent, for a period of one year commencing upon the effectiveness of the registration statement. Additionally, certain holders of greater than 5% of our outstanding common stock have agreed not to sell or otherwise dispose of any securities of ConnectivCorp held by such persons, subject to certain exceptions and without the consent of the placement agent, for a period of 90 days commencing upon the closing of the private placement. The securities sold in the private placement or issuable upon exercise or conversion of securities sold in the private placement have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States in the absence of an effective registration statement or exemption from registration requirements. We have agreed to file a registration statement with the Securities and Exchange Commission within 90 days following the date of the closing of the private placement to register for resale the common stock underlying the 7% preferred Stock, the warrants, and the securities underlying JMP's warrants. None of the securities issued in the private placement are convertible or exercisable, as applicable, unless and until such time as there are a sufficient number of shares of authorized common stock to allow for all such securities to be converted or exercised, which increase is anticipated to occur during our current fiscal quarter ending April 30, 2004. Our press release dated February 25, 2004 announcing the private placement is incorporated herein by reference and filed as Exhibit 99.1 hereto. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (c) The following exhibits are furnished with this report: Exhibit No. Description 4.1 Certificate of Designations, Preferences and Rights of 7% Cumulative Convertible Preferred Stock, filed with the Secretary of State of the State of Delaware on February 20, 2004. 4.2 Form of investor Subscription Agreement 4.3 Form of warrant issued to investors 4.4 Form of placement agent warrant 99.1 Press Release issued by ConnectivCorp, dated February 25, 2004. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CONNECTIVCORP (Registrant) Dated: March 1, 2004 By: /s/ Jesse Sutton ------------------------ Jesse Sutton President EX-4.1 3 file002.txt CERTIFICATE OF DESIGNATIONS CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF THE 7% CUMULATIVE CONVERTIBLE PREFERRED STOCK OF CONNECTIVCORP (PURSUANT TO SECTION 151 OF THE DELAWARE GENERAL CORPORATION LAW) ConnectivCorp, a Delaware corporation (the "Corporation"), hereby certifies that the following resolution was duly approved and adopted by the Board of Directors of the Corporation (the "Board of Directors") pursuant to a unanimous written consent dated February 13, 2004, which resolution remains in full force and effect on the date hereof: RESOLVED, that pursuant to the authority expressly granted to and vested in the Board of Directors by the provisions of the Certificate of Incorporation of the Corporation, as amended through the date hereof (the "Certificate of Incorporation") and its By-Laws (the "Bylaws"), and in accordance with Section 151 of the General Corporation Law of the State of Delaware (the "DGCL"), there is hereby created, out of the 9,000,000 shares of Preferred Stock, par value $0.001 per share (the "Preferred Stock"), of the Corporation remaining authorized, unissued and undesignated, a series of the Preferred Stock consisting of 3,000 shares, which series shall have the following powers, designations, preferences and relative, optional or other rights, and the following qualifications, limitations and restrictions (in addition to any powers, designations, preferences and relative, optional or other rights, and any qualifications, limitations and restrictions, set forth in the Certificate of Incorporation which are applicable to the Preferred Stock): SECTION 1 Designation of Amount. (a) 3,000 shares of Preferred Stock shall be, and hereby are, designated the "7% Cumulative Convertible Preferred Stock" (the "7% Preferred Stock"), par value $0.001 per share. (b) Subject to the requirements of the DGCL, the Certificate of Incorporation and this Certificate of Designations, the number of shares of Preferred Stock that are designated as 7% Preferred Stock may be increased or decreased by vote of the Board of Directors; provided, that no decrease shall reduce the number of shares of 7% Preferred Stock to a number less than the number of such shares then outstanding plus the number of such shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any other outstanding securities issued by the Corporation that are convertible into or exercisable for 7% Preferred Stock. Any shares of 7% Preferred Stock converted, purchased or otherwise acquired by the Corporation in any manner whatsoever shall, automatically and without further action, be retired and canceled promptly after the acquisition thereof, and shall become authorized but unissued shares of Preferred Stock when the Corporation shall take such action as may be necessary to reduce the number of authorized shares of the 7% Preferred Stock and may be reissued as part of a new series of any class or series of Preferred Stock in accordance with the Certificate of Incorporation and this Certificate of Designations. SECTION 2 Certain Definitions. Unless the context otherwise requires, the terms defined in this Section 2 shall have, for all purposes of this resolution, the meanings specified (with terms defined in the singular having comparable meanings when used in the plural). "Common Stock" shall mean the common stock, par value $0.001 per share, of the Corporation. "DGCL" shall have the meaning set forth in the preamble to this Certificate of Designations. "Original Purchase Price" shall mean the per share purchase price for a share of 7% Preferred Stock of $10,000.00. "person" shall mean any individual, partnership, company, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or agency or political subdivision thereof, or other entity. "Preferred Stock" shall have the meaning set forth in the preamble to this Certificate of Designations. "Recapitalization Event" shall mean any stock dividend, stock split, combination, reorganization, recapitalization, reclassification, or other similar event involving a change in the capital structure of the 7% Preferred Stock. "Requisite Holders" shall mean the holders of at least a majority of the then outstanding shares of 7% Preferred Stock. "Securities Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "7% Preferred Stock" shall have the meaning set forth in Section 1. SECTION 3 Voting Rights. (a) General. Except as otherwise provided by the DGCL and in addition to any voting rights provided by the DGCL or other applicable law, the holders of 7% Preferred Stock shall be entitled to vote (or render written consents) together with the holders of the Common Stock and any other class or series of capital stock of the Corporation entitled to vote together with the holders of the Common Stock as a single class on all matters submitted for a vote of (or written consents by in lieu of a vote as permitted by the DGCL, the Certificate of Incorporation and the Bylaws) holders of Common Stock; and shall have such other voting rights as are specified in the Certificate of Incorporation and this Certificate of Designations. When voting together with the holders of Common Stock, each share of 7% Preferred Stock shall entitle the holder thereof to cast one vote for each vote that such holder would be entitled to cast had such holder converted its 7% Preferred Stock into shares of Common Stock as of the record date for determining the stockholders of the Corporation eligible to vote on any such matter. The holders of 7% Preferred Stock shall be entitled to receive notice of any stockholders' meeting in accordance with the Certificate of Incorporation and Bylaws of the Corporation. -2- (b) Waivers. Except to the extent otherwise provided in this Certificate of Designations or required by the DGCL, the Requisite Holders may, via affirmative vote or written consent in lieu thereof, waive any rights of the holders of the 7% Preferred Stock set forth in this Certificate of Designations. (c) Board of Directors. (i) Within 120 days after the final closing of the offering of the 7% Preferred Stock, there shall be a seven (7) person Board of Directors of the Corporation. Thereafter, the Corporation shall not, without the written consent or affirmative vote of the Requisite Holders, given in writing or by vote at a meeting, consenting or voting (as the case my be) separately as a series, increase the maximum number of directors constituting the Board of Directors to a number in excess of seven (7). (ii) So long as at least 51% of the shares of 7% Preferred Stock that are outstanding immediately following the final closing of the offering of the 7% Preferred Stock remain outstanding (subject to an equitable adjustment in the event of any Recapitalization Event), the Requisite Holders shall have the exclusive right to nominate two (2) individuals (each of whom shall be "independent" within the meaning of the regulations promulgated by the Nasdaq National Market System for companies with shares quoted thereon and by the American Stock Exchange for companies with shares traded thereon) to serve on the Board of Directors (each such nominee is referred to as a "7% Nominee"). In each election, the holders of 7% Preferred Stock shall vote together with the holders of the Common Stock, with each share of 7% Preferred Stock having a number of votes equal to the number of shares of Common Stock into which such share is then convertible pursuant to Section 6 hereof. If and when elected as a director, each 7% Nominee shall serve until the annual meeting of stockholders of the Corporation at which the term of other directors expire, unless sooner removed, and until his respective successor shall be elected and shall qualify. If for any reason any 7% Nominee is no longer a director of the Corporation, by reason of death, resignation, retirement, disqualification, removal or otherwise, such vacancy shall be filled in accordance with the nomination and voting procedures set forth in this Section 3(c)(ii). (d) Protective Provision. So long as at least 51% of the shares of 7% Preferred Stock that are outstanding immediately following the final closing of the offering of the 7% Preferred Stock remain outstanding (subject to an equitable adjustment in the event of any Recapitalization Event), the Corporation will not, directly or indirectly, without the affirmative vote (or written consent as permitted by the DGCL, the Certificate of Incorporation and Bylaws), of the Requisite Holders, voting (or consenting) as a separate class, in any manner authorize, create, designate, issue or sell any (A) class or series of capital stock (including shares of treasury stock) or (B) right, options, warrants or other securities convertible into or exercisable or exchangeable for capital stock that, in either case, is senior to the 7% Preferred Stock. SECTION 4 Dividends. (a) Dividend Amount. (i) The holders of the outstanding shares of 7% Preferred Stock shall be entitled to receive, out of any funds legally available therefor, cumulative dividends, at the annual rate of seven percent (7%) of the Original Purchase Price of each such share of 7% Preferred -3- Stock. Such dividends shall be cumulative so that if such dividends in respect of any previous or current annual dividend period shall not have been paid or declared at the annual rate specified above and a number of shares of Common Stock sufficient for payment thereof reserved, the deficiency shall first be fully paid before any dividend or other distribution shall be paid or declared and set apart for the Common Stock or any other class or series of capital stock designated junior to the 7% Preferred Stock with respect to dividends. With respect to each share of 7% Preferred Stock, dividends shall accrue and accumulate, whether or not earned or declared, at the rate specified in the first sentence of this Section 4(a)(i), on a daily basis from the date of original issuance of such share of 7% Preferred Stock until the conversion of such share of 7% Preferred Stock. (ii) Dividends on shares of 7% Preferred Stock shall be payable if, as and when declared by the Board of Directors. Any dividends declared pursuant to this Section 4 shall be payable solely in shares of Common Stock, with the number of shares of Common Stock to be issued to each holder of 7% Preferred Stock to be determined in accordance with Section 4(c) below. Immediately prior to any conversion of the 7% Preferred Stock pursuant to Section 6, all accrued and unpaid dividends on such shares of 7% Preferred Stock to and until the date of conversion shall be due and payable. (b) Participating Dividends. If the Board of Directors shall declare a dividend payable upon the then outstanding shares of Common Stock (other than a stock dividend on the Common Stock distributed solely in the form of additional shares of Common Stock), the holders of the outstanding shares of 7% Preferred Stock shall be entitled to the amount of dividends on the 7% Preferred Stock as would be declared payable on the number of shares of Common Stock into which the shares of 7% Preferred Stock held by each holder thereof could be converted pursuant to the provisions of Section 6 hereof, such number to be determined as of the record date for determination of holders of Common Stock entitled to receive such dividend or, if no such record date is established, as of the date of such dividend. (c) Payment of Dividends. Any dividends, including participating dividends, declared pursuant to this Section 4 shall be payable solely in shares of Common Stock, with the number of shares of Common Stock to be issued to each holder of 7% Preferred Stock to be determined by dividing the amount of the applicable dividend by the fair market value of a share of Common Stock, as determined in good faith by the Board of Directors. No fractional shares of Common Stock shall be issued hereunder. All shares of Common Stock (including fractions thereof) issuable hereunder shall be aggregated for purposes of determining whether the dividend would result in the issuance of any fractional share. If, after such aggregation, there would result the issuance of a fraction of a share of Common Stock to any holder of 7% Preferred Stock, the Corporation shall, in lieu of issuing to such holder any fractional share, pay a sum in cash equal to the fraction multiplied by the fair market value of a share of Common Stock, as determined in good faith by the Board of Directors. All distributions made hereunder shall be made pro rata to the holders of 7% Preferred Stock. (d) Equitable Adjustments. All numbers relating to the calculation of dividends shall be subject to an equitable adjustment in the event of any Recapitalization Event. -4- SECTION 5 Liquidation Preference. (a) Liquidation Preference of 7% Preferred Stock. In the event of any liquidation, dissolution, or winding up of the Corporation, whether voluntary or involuntary, or in the event of its insolvency, the holders of 7% Preferred Stock shall be entitled to have set apart for them, or to be paid, out of the assets of the Corporation available for distribution to stockholders (whether such assets are capital, surplus or earnings) after provision for payment of all debts and liabilities of the Corporation in accordance with the DGCL, before any distribution or payment is made with respect to any shares of Common Stock or any other class or series of capital stock of the Corporation designated to be junior to the 7% Preferred Stock and subject to the liquidation rights and preferences of any class or series of Preferred Stock designated to be senior to, or on a parity with, the 7% Preferred Stock with respect to liquidation preferences, an amount equal to the Original Purchase Price per share of 7% Preferred Stock (which amount shall be subject to an equitable adjustment in the event of any Recapitalization Event) plus all accrued and unpaid dividends thereon, whether or not earned or declared, up to and including the date full payment shall be tendered to the holders of the 7% Preferred Stock with respect to such liquidation, dissolution or winding up. (b) Insufficient Assets. If, upon any liquidation, dissolution, or winding up of the Corporation, whether voluntary or involuntary, the assets legally available for distribution among the holders of the 7% Preferred Stock shall be insufficient to permit payment to such holders of the full preferential amount as provided for in Section 5(a) above, then such holders shall, together with the holders of shares of stock of any class or series ranking on a parity as to dividends or liquidation with the 7% Preferred Stock ("Parity Stock"), share ratably in any distribution of available assets according to the respective amounts which would otherwise be payable with respect to the shares of 7% Preferred Stock held by them upon such liquidating distribution if all amounts payable on or with respect to such shares and such shares of Parity Stock were paid in full, based upon the aggregate liquidation value payable upon all shares of 7% Preferred Stock and the shares of Parity Stock then outstanding. (c) Distributions Other than Cash. Whenever the distribution provided for in this Section 5 shall be payable in any property other than cash, the value of such distribution shall be the fair market value thereof as determined in good faith by the Board of Directors. All distributions (including distributions other than cash) made hereunder shall be made pro rata to the holders of 7% Preferred Stock. (d) Equitable Adjustments. The amounts to be paid or set aside for payment as provided above in this Section 5 shall be proportionately increased or decreased in inverse relation to the change in the number of outstanding shares resulting from any Recapitalization Event. SECTION 6 Conversion Rights. (a) General. Subject to and upon compliance with the provisions of this Section 6, the holders of the shares of 7% Preferred Stock shall be entitled, at their option, at any time, to convert all or any such shares of 7% Preferred Stock into the number of fully paid and nonassessable shares of Common Stock equal to the number obtain by dividing (i) the Original Purchase Price of such 7% Preferred Stock by (ii) the Conversion Price in effect at the close of business on the Conversion Date (determined as provided in this Section 6). The conversion -5- price (the "Conversion Price") shall initially be equal to $1.00, subject to adjustment from time to time in accordance with Section 6(d). (b) Automatic Conversion. All shares of 7% Preferred Stock shall be automatically converted into the number of shares of Common Stock into which such shares of 7% Preferred Stock are then convertible pursuant to Section 6(a) without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent immediately upon the earliest to occur of: (i) such time as the closing price or last reported sale (the "Closing Price") of the Common Stock on the stock exchange or quotation system on which the Common Stock is then traded or quoted is equal to or greater than $2.50 per share for a 60 consecutive calendar day period, provided that during such 60 consecutive calendar day period, the average daily trading volume for each day is equal to or greater than 75,000 shares (the "Market Condition"), and provided further that conversion pursuant to this Section 6(b)(i) shall be conditioned upon there being in effect, on the date of satisfaction of the Market Condition or at any time thereafter, a valid registration statement on Form S-1 or Form S-3 promulgated under the Securities Act or any successor or equivalent forms thereto (the "Registration Statement") covering the resale of all shares of Common Stock into which the shares of 7% Preferred Stock are being converted (it being understood that the shares of 7% Preferred Stock will be automatically converted into shares of Common Stock on the date that the Registration Statement becomes effective if the Market Condition has been previously satisfied, whether or not the Market Condition is satisfied on such date, so long as the Closing Price on such date is equal to or greater than $1.00); or (ii) the election of the Requisite Holders. (c) Fractions of Shares. No fractional shares of Common Stock shall be issued upon conversion of shares of 7% Preferred Stock. If more than one share of 7% Preferred Stock shall be surrendered for conversion at one time by the same holder, the number of full shares of Common Stock to be issued shall be computed on the basis of the aggregate number of shares of 7% Preferred Stock so surrendered. Instead of any fractional shares of Common Stock which would otherwise be issuable upon conversion of any shares of 7% Preferred Stock, the Corporation shall pay a cash adjustment in respect of such fractional share in an amount equal to the product of such fraction multiplied by the fair market value of one share of Common Stock on the Conversion Date as determined in good faith by the Board of Directors. (d) Adjustments to Conversion Price. (i) Upon Stock Dividends, Subdivisions or Splits. If, at any time after the date hereof, the number of shares of Common Stock outstanding is increased by a stock dividend payable in shares of Common Stock or by a subdivision or split-up of shares of Common Stock, then, following the record date for the determination of holders of Common Stock entitled to receive such stock dividend, or to be affected by such subdivision or split-up, the Conversion Price shall be appropriately decreased so that the number of shares of Common Stock issuable on conversion of 7% Preferred Stock shall be increased in proportion to such increase in outstanding shares. (ii) Upon Combinations. If, at any time after the date hereof, the number of shares of Common Stock outstanding is decreased by a combination of the outstanding shares of -6- Common Stock into a smaller number of shares of Common Stock, then, following the record date to determine shares affected by such combination, the Conversion Price shall be appropriately increased so that the number of shares of Common Stock issuable on conversion of each share of 7% Preferred Stock shall be decreased in proportion to such decrease in outstanding shares. (iii) Capital Reorganization or Reclassification. If the Common Stock issuable upon the conversion of the 7% Preferred Stock shall be changed into the same or different number of shares of any class or classes of stock, whether by capital reorganization, reclassification or otherwise (other than a subdivision or combination or shares of stock dividend provided for elsewhere in this Section 6(d), or the sale of all or substantially all of the Corporation's properties and assets to any other person), then and in each such event the holder of each share of 7% Preferred Stock shall have the right thereafter to convert such share into the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification or other change by holders of the number of shares of Common Stock into which such shares of 7% Preferred Stock might have been converted, as the case may be, immediately prior to such reorganization, reclassification or change, all subject to further adjustment as provided herein. (iv) Merger or Sale of Assets. If at any time or from time to time there shall be a merger or consolidation of the Corporation with or into another corporation, or the sale of all or substantially all of the Corporation's properties and assets to any other person, then, as a part of such reorganization, merger, or consolidation or sale, provision shall be made so that holders of 7% Preferred Stock, as the case may be, shall thereafter be entitled to receive upon conversion of the 7% Preferred Stock, the number of shares of stock or other securities or property of the Corporation, or of the successor corporation resulting from such merger, consolidation or sale, to which such holder would have been entitled if such holder had converted its shares of 7% Preferred Stock immediately prior to such capital reorganization, merger, consolidation or sale. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 6(d) with respect to the rights of the holders of the 7% Preferred Stock after the reorganization, merger, consolidation or sale to the end that the provisions of this Section 6(d), including adjustment of the Conversion Price then in effect for the 7% Preferred Stock and the number of shares issuable upon conversion of the 7% Preferred Stock) shall be applicable after that event in as nearly equivalent a manner as may be practicable. (v) Deferral in Certain Circumstances. In any case in which the provisions of this Section 6(d) shall require that an adjustment shall become effective immediately after a record date of an event, the Corporation may defer until the occurrence of such event (1) issuing to the holder of any 7% Preferred Stock converted after such record date and before the occurrence of such event the shares of capital stock issuable upon such conversion by reason of the adjustment required by such event and issuing to such holder only the shares of capital stock issuable upon such conversion before giving effect to such adjustments, and (2) paying to such holder any amount in cash in lieu of a fractional share of capital stock pursuant to Section 6(c) above; provided, however, that the Corporation shall deliver to such holder an appropriate instrument or due bills evidencing such holder's right to receive such additional shares and such cash. -7- (e) Exercise of Conversion Privilege. In order to exercise the conversion privilege, the holder of any share of 7% Preferred Stock shall surrender the certificate evidencing such share of 7% Preferred Stock, duly endorsed or assigned to the Corporation in blank, at any office or agency of the Corporation maintained for such purpose, accompanied by written notice to the Corporation at such office or agency that the holder elects to convert such 7% Preferred Stock or, if less than the entire amount thereof is to be converted, the portion thereof to be converted. 7% Preferred Stock shall be deemed to have been converted immediately prior to the close of business on the date (the "Conversion Date") of (i) the event triggering automatic conversion pursuant to Section 6(b) or (ii) surrender of such shares of 7% Preferred Stock for conversion in accordance with the foregoing provisions, and at such time the rights of the holder of such shares of 7% Preferred Stock as a holder shall cease, and the person or persons entitled to receive the Common Stock issuable upon conversion shall be treated for all purposes as the record holder or holders of such Common Stock as and after such time. As promptly as practicable on or after the Conversion Date, the Corporation shall issue and shall deliver at any office or agency of the Corporation maintained for the surrender of 7% Preferred Stock a certificate or certificates for the number of full shares of Common Stock issuable upon conversion, together with payment in lieu of any fraction of a share, as provided in Section 6(c). In the case of any certificate evidencing shares of 7% Preferred Stock that is converted in part only, upon such conversion the Corporation shall also execute and deliver a new certificate evidencing the number of shares of 7% Preferred Stock that are not converted. (f) Notice of Adjustment of Conversion Price. Whenever the provisions of Section 6(d) require that the Conversion Price be adjusted as herein provided, the Corporation shall compute the adjusted Conversion Price in accordance with Section 6(d) and shall prepare a certificate signed by the Corporation's chief executive officer or chief financial officer setting forth the adjusted Conversion Price and showing in reasonable detail the facts upon which such adjustment is based, and such certificate shall forthwith be filed at each office or agency maintained for such purpose for conversion of shares of 7% Preferred Stock and mailed by the Corporation at its expense to all holders of 7% Preferred Stock at their last addresses as they shall appear in the stock register. (g) Reservation of Common Stock. Notwithstanding any provisions to the contrary contained herein, no shares of 7% Preferred Stock shall be convertible unless and until such time as there are a sufficient number of shares of Common Stock authorized to allow for the conversion of all outstanding shares of 7% Preferred Stock. The Corporation shall thereafter at all times reserve and keep available, free from preemptive rights, out of the authorized but unissued Common Stock or out of the Common Stock held in treasury, for the purpose of effecting the conversion of 7% Preferred Stock, the full number of shares of Common Stock then issuable upon the conversion of all outstanding shares of 7% Preferred Stock. (h) Taxes on Conversions. The Corporation will pay any and all original issuance, transfer, stamp and other similar taxes that may be payable in respect of the issue or delivery of shares of Common Stock on conversion of 7% Preferred Stock pursuant hereto. The Corporation shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock in a name other than that of the holder of the share(s) of 7% Preferred Stock to be converted, and no such issue or delivery shall be made unless and until the person requesting such issue has paid to the Corporation the amount -8- of any such tax, or has established to the satisfaction of the Corporation that such tax has been paid. -9- IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designation, Preferences and Rights to be signed by Jesse Sutton, its President, this 20th day of February, 2004. CONNECTIVCORP By: /s/ Jesse Sutton --------------------------- Name: Jesse Sutton Title: President EX-4.2 4 file003.txt FORM OF INVESTOR SUBSCRIPTION AGREEMENT SUBSCRIPTION AGREEMENT This Agreement dated as of February __, 2004 (the "AGREEMENT") is entered into by and among Connectivcorp, a Delaware corporation (the "COMPANY"), and the individuals and entities listed on Exhibit A hereto (the "PURCHASERS"). BACKGROUND WHEREAS, the Company is offering in a private placement to "accredited investors" (as such term in defined in Regulation D promulgated under the Securities Act of 1933, as amended) a minimum $10,000,000 (the "MINIMUM AMOUNT") and a maximum of up to $25,000,000 (the "MAXIMUM AMOUNT") of units consisting of (i) one share of 7% Convertible Preferred Stock, $0.001 par value per share of the Company (the "7% PREFERRED STOCK") and (ii) a Warrant (the "WARRANT") to purchase, at an exercise price of $1.00 per share, ten thousand (10,000) shares of Common Stock, $0.001 par value per share of the Company (the "COMMON STOCK") (each unit is being sold at an offering price of $10,000.00 per unit (the "UNITS")) (the "OFFERING"); WHEREAS, the Purchaser desires to purchase that number of Units set forth on the signature page hereof on the terms and conditions hereinafter set forth and on the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the premises and the mutual representations and covenants hereinafter set forth, the parties hereto agree as follows: 1. Authorization and Sale of Units. 1.1 Authorization. The Company has, or before the Initial Closing (as defined in Section 2) will have, duly authorized the sale and issuance, pursuant to the terms of this Agreement, of (a) up to 2,500 shares of its 7% Preferred Stock, having the rights, restrictions, privileges and preferences set forth in the Certificate of Designations of 7% Preferred Stock, as filed with the Secretary of State of the State of Delaware (the "CERTIFICATE OF DESIGNATIONS"); and (b) Warrants to purchase up to 10,000 shares of Common Stock in the form attached hereto at Exhibit B. The Company has, or before the Initial Closing will have, adopted and filed the Certificate of Designations with the Secretary of State of the State of Delaware. Notwithstanding anything to the contrary set forth in this Agreement, Purchasers will not be able to convert any shares of the 7% Preferred Stock or exercise any part of the Warrants unless and until the Company has filed an amendment to the Company's Certificate of Incorporation increasing the amount of its authorized shares of Common Stock to allow for such conversion and/or exercise. 1.2 Sale of Units; Subscription for Units. Subject to the terms and conditions of this Agreement, at the applicable Closing the Company will sell and issue to each of the Purchasers, and each of the Purchasers will purchase the number of Units set forth opposite such Purchaser's name on Exhibit A for the purchase price of Ten Thousand Dollars ($10,000.00) per Unit. The shares of 7% Preferred Stock and the Warrants being sold under this Agreement are sometimes collectively referred to as the "SECURITIES." The Company's agreement with each of the Purchasers is a separate agreement, and the sale of Units to each of the Purchasers is a separate sale. To subscribe for Units, this Agreement must be properly completed, executed and delivered to American Stock Transfer and Trust Company, 59 Maiden Lane, New York, NY 10038, Attention: Henry Reinhold, accompanied by a check payable to "American Stock Transfer and Trust Company, Escrow Agent for ConnectivCorp". A purchaser desiring to deliver the purchase price for the Units in the form of wire transfer shall wire to the Escrow Agent at: JP Morgan Chase, 55 Water Street, New York, NY, ABA# 021 000 021, Account # 323-212-069, Attention: Henry Reinhold. The minimum subscription amount is $250,000, although, with the consent of the Placement Agent and the Company, Purchasers may subscribe for, and the Company, in its sole discretion, may accept less than the minimum subscription amount. If the purchase price is paid by wire transfer, the Purchaser shall (i) include the Purchaser's name in the wire transfer instructions; and (ii) request from the bank or other financial institution that is originating the transfer the federal wire number with respect to the subscription and retain that number for future reference. 1.3 Use of Proceeds. The Company will use the proceeds from the sale of the Units as set forth in the Confidential Private Placement Memorandum, dated as of February ___, 2004 (together with all Exhibits thereto, the "Memorandum"). 2. The Closing. The initial closing of the sale and purchase of no less than the Minimum Amount under this Agreement shall take place at the offices of _________________, at 10:00 a.m. on ________ __, 2004, or at such other time and place as the Company may designate (the "INITIAL CLOSING," and the date on which the Initial Closing occurs, the "INITIAL CLOSING DATE"). Following the Initial Closing Date, and up to __________, 2004, the Company may hold additional closings (each, with the Initial Closing, a "CLOSING", and each such date, with the Initial Closing Date, a "CLOSING DATE") at such places and times as designated by the Company until such time as the Company has sold the Maximum Amount. There is no assurance that the Maximum Amount will be sold. At the applicable Closing, the Company shall deliver to each of the Purchasers a certificate for the number of shares of 7% Preferred Stock and warrant agreements for the number Warrants being purchased by such Purchaser, registered in the name of such Purchaser, against payment to the Company of the purchase price therefor by check or wire transfer, as specified in Exhibit A. If on the applicable Closing Date any of the conditions specified in Section 5 shall not have been fulfilled, each of the Purchasers shall, at his or its election, be relieved of all of his or its obligations under this Agreement without thereby waiving any other rights he or it may have by reason of such failure or such non-fulfillment. The Purchaser hereby authorizes and directs the Company to deliver the Securities to be issued to the Purchaser pursuant to this Agreement directly to the residential or business address indicated on the signature page hereto. 3. Representations of the Company. The Company hereby represents and warrants to each of the Purchasers as follows: 3.1 Organization and Standing. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has full corporate power and authority to conduct its business as presently conducted and as presently proposed to be conducted by it and to enter into and perform this Agreement and to carry out the transactions contemplated by this Agreement and the Ancillary Agreements (as defined in Section 3.4 below). The Company is duly qualified to do business as a foreign corporation in the State of New Jersey and in every other jurisdiction in which the failure to so qualify would have a material adverse effect on the operations or financial condition of the Company taken as a whole. 3.2 Capitalization. The authorized capital stock of the Company (immediately prior to the Initial Closing) will consist of 40,000,000 shares of Common Stock, of which 38,178,392 shares are issued and outstanding, and 10,000,000 shares of Preferred Stock, $0.001 par value per share, of which 1,000,000 shares have been designated as Series A Preferred Stock, $0.001 par value per share (the "SERIES A PREFERRED"), [572,888] of which are issued and outstanding and 2,500 of which have been designated 7% Preferred Stock, none of which are issued or outstanding. Immediately prior to the Initial Closing, all of the issued and outstanding shares of Common Stock and Series A Preferred will be duly authorized and validly issued and will be fully paid and nonassessable. Except as set forth in the Memorandum or provided in this Agreement, (i) no subscription, warrant, option, convertible security or other right (contingent or otherwise) to purchase or acquire any shares of capital stock of the Company is authorized or outstanding, (ii) the Company has no obligation (contingent or otherwise) to issue any subscription, warrant, option, convertible security or other such right or to issue or distribute to holders of any shares of its capital stock any evidences of indebtedness or assets of the Company, (iii) the Company has no obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any shares of its capital stock or any interest therein or to pay any dividend or make any other distribution in respect thereof. All of the issued and outstanding shares of capital stock of the Company have been offered, issued and sold by the Company in compliance with applicable Federal and state securities laws. 3.3 Majesco. Majesco Sales Inc., a New Jersey corporation ("MAJESCO" or the "SUBSIDIARY"), the sole operating subsidiary of the Company, is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and has full corporate power and authority to conduct its business as presently conducted and as presently proposed to be conducted by it. Majesco is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the failure to so qualify would have a material adverse effect on the operations or financial condition of the Company taken as a whole. All of the issued and outstanding shares of capital stock of Majesco has been duly authorized and validly issued and are fully paid and nonassessable, and are owned (of record and beneficially) by the Company free and clear of all pledges, claims, liens, charges, encumbrances or security interests of any kind or nature whatsoever. 3.4 Agreements. Except as disclosed in the Memorandum or provided in this Agreement and all other agreements required to be executed by the Company on or prior to the Closing pursuant to Section 5.4 (the "ANCILLARY AGREEMENTS"), to which the Company is a party, there are no agreements, written or oral, between the Company and any holder of its capital stock, or, to the best of the Company's knowledge, among any holders of its capital stock, relating to the acquisition (including without limitation rights of first refusal or preemptive rights), disposition, registration under the Securities Act of 1933, as amended (the "SECURITIES ACT") or under the securities law of any other country for the purpose of sales to the public, or voting of the capital stock of the Company. 3.5 Issuance of Shares. Except for the need to obtain stockholder approval in order to increase the amount of authorized Common Stock, the issuance, sale and delivery of the Securities in accordance with this Agreement, and the issuance and delivery of the shares of Common Stock issuable upon conversion of the 7% Preferred Stock or exercise of the Warrants, have been, or will be on or prior to the Closing, duly authorized by all necessary corporate action on the part of the Company, and all such shares have been duly reserved for issuance. The Securities when so issued, sold and delivered against payment therefor in accordance with the provisions of this Agreement, and the shares of Common Stock issuable upon conversion of the 7% Preferred Stock or exercise of the Warrants, when issued upon such conversion or exercise, will be duly and validly issued, fully paid and non-assessable. 3.6 Authority for Agreement. The execution, delivery and performance by the Company of this Agreement and the Ancillary Agreements, and the consummation by the Company of the transactions contemplated hereby and thereby, have been duly authorized by all necessary corporate action. This Agreement and the Ancillary Agreements have been duly executed and delivered by the Company and constitute valid and binding obligations of the Company enforceable in accordance with their respective terms. The execution of and performance of the transactions contemplated by this Agreement and the Ancillary Agreements and compliance with their provisions by the Company will not violate any provision of law and will not conflict with or result in any breach of any of the terms, conditions or provisions of, or constitute a default under, or require a consent or waiver under, its Certificate of Incorporation or By-Laws (each as amended to date) or any indenture, lease, agreement or other instrument to which the Company is a party or by which it or any of its properties is bound, or any decree, judgment, order, statute, rule or regulation applicable to the Company. 3.7 Governmental Consents. No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any governmental authority (of any jurisdiction) is required on the part of the Company in connection with the execution and delivery of this Agreement, the offer, issuance, sale and delivery of the Securities, or the other transactions to be consummated at the Closing, as contemplated by this Agreement, except such filings as shall have been made prior to and shall be effective on and as of the Closing. Based on the representations made by each of the Purchasers in Section 4 of this Agreement, the offer and sale of the Securities to each of the Purchasers, and the shares of Common Stock issuable upon conversion of the 7% Preferred Stock or exercise of the Warrants, will be in compliance with and exempt from registration under all applicable Federal and state securities laws. 3.8 Disclosures. Neither this Agreement or any Exhibit hereto, any certificate furnished to any of the Purchasers or their counsel in connection with the transactions contemplated by this Agreement, nor the Memorandum , when read together, contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which they were made, not misleading. The Company knows of no information or fact which has or would have a material adverse effect on the business, assets or condition, financial or otherwise, of the Company or of any of its Subsidiaries which has not been disclosed in this Agreement or the Memorandum. 4. Representations of the Purchasers. Each of the Purchasers severally represents and warrants to the Company as follows: 4.1 Investment. Such Purchaser is acquiring the Securities for his or its own account for investment and not with a view to, or for sale in connection with, any distribution thereof or of the shares of Common Stock into which the Securities may be converted or acquired, nor with any present intention of distributing or selling the same; and, except as contemplated by this Agreement and the Exhibits hereto, such Purchaser has no present or contemplated agreement, undertaking, arrangement, obligation, indebtedness or commitment providing for the disposition thereof. 4.2 Authority. Such Purchaser has full power and authority to enter into and to perform this Agreement in accordance with its terms. Any Purchaser that is a corporation, partnership or trust represents that it has not been organized, reorganized or recapitalized specifically for the purpose of investing in the Company. 4.3 Experience. Such Purchaser has carefully reviewed the representations concerning the Company contained in this Agreement, has carefully read the Memorandum (including the section entitled "Risk Factors") and has made detailed inquiry concerning the Company, its business and its personnel; the officers of the Company have made available to such Purchaser any and all written information which he or it has requested and have answered to such Purchaser's satisfaction all inquiries made by such Purchaser.. The Purchaser hereby acknowledges and represents that (i) the Purchaser has prior investment experience, including investment in unregistered securities, or that the Purchaser has employed the services of an investment advisor, attorney and/or accountant to read all of the documents furnished or made available by the Company both to the Purchaser and to all other prospective investors to evaluate the merits and risks of such an investment on the Purchaser's behalf; (ii) the Purchaser recognizes the highly speculative nature of an investment in the Securities; and (iii) the Purchaser is able to bear the economic risk and illiquidity which the Purchaser assumes by investing in the Securities. 4.4 Accredited Investor. Such Purchaser qualifies as an "accredited investor" for purposes of Regulation D promulgated under the Securities Act and has carefully and accurately completed the Confidential Investor Questionnaire contained in Section 10 hereof. 4.5 Unregistered Securities. Such Purchaser understands and acknowledges that the Securities purchased by such Purchaser hereunder have not been registered under the Securities Act or under state securities laws in reliance upon exemptions under the provisions of the Securities Act and such state securities laws, which exemptions depend upon such investment intention and representations made by such Purchaser herein. The Purchaser hereby acknowledges that the Offering has not been reviewed by the United States Securities and Exchange Commission (the "SEC") because of the Company's representations that this Offering is intended to be exempt from the registration requirements of Section 5 of the Securities Act pursuant to Sections 3(b), 4(2) or 4(6) thereof and Regulation D promulgated under the Securities Act. 4.6 Investment Risk. The Purchaser recognizes that the purchase of Securities involves a high degree of risk in that (i) the Company may require funds in addition to the proceeds of the Offering; (ii) an investment in the Company is highly speculative and only investors who can afford the loss of their entire investment should consider investing in the Company; (iii) the Purchaser may not be able to liquidate its investment; (iv) transferability of the Securities is extremely limited; and (v) in the event of a disposition, the Purchaser could sustain the loss of its entire investment. 4.7 Financial Statements. Such Purchaser acknowledges that prior to the Closing Date, such Purchaser has had access to the audited financial statements of the Company for the fiscal year ended October 31, 2003. 4.8 (a) In making the decision to invest in the Securities, the Subscriber has relied solely upon the information provided by the Company herein and in the Memorandum. To the extent necessary, the Purchaser has retained, at its own expense, and relied upon the advice of appropriate professionals regarding the investment, tax and legal merits and consequences of this Agreement and its purchase of the Securities hereunder. (b) The Purchaser covenants that no Securities were offered or sold to it by means of any form of general solicitation or general advertising, and in connection therewith the Purchaser did not (A) receive or review any advertisement, article, notice or other communication published in a newspaper or magazine or similar media or broadcast over television or radio, whether closed circuit or generally available; or (B) attend any seminar, meeting or industry investor conference whose attendees were invited by any general solicitation or general advertising. 5. Conditions to the Obligations of the Purchasers. The obligation of each of the Purchasers to purchase Units at the applicable Closing is subject to the fulfillment, or the waiver by such Purchaser, of each of the following conditions on or before the applicable Closing: 5.1 Accuracy of Representations and Warranties. Each representation and warranty contained in Section 3 shall be true in all material respects on and as of the date hereof and shall be true on and as of applicable Closing Date with the same effect as though such representation and warranty had been made on and as of the Initial Closing Date (except that (i) any representation or warranty expressly stated to have been made or given as of a specific date need be true only as of such date and (ii) any representation or warranty subject to materiality shall be true on and as of the date hereof and shall be true on and as of the Closing Date). 5.2 Performance. The Company shall have performed and complied with all agreements and conditions contained in this Agreement required to be performed or complied with by the Company prior to or at the Closing. 5.3 No Material Adverse Change. There shall have been no material adverse change in the financial condition, business, assets or operations of the Company nor shall any event have occurred which so far as can reasonably be foreseen on the applicable Closing Date appears reasonably likely materially and adversely to affect the financial condition, business, assets or operations of the Company. 5.4 Other Matters. All corporate and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to the Purchasers, and the Purchasers shall have received all such counterpart originals or certified or other copies of such documents as they may reasonably request. 6. Condition to the Obligations of the Company. The obligations of the Company under Section 1.2 of this Agreement are subject to fulfillment, or the waiver, of the following condition on or before the Closing: 6.1 Accuracy of Representations and Warranties. The representations and warranties of the Purchasers contained in Section 4 shall be true on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of that date (except that any representation or warranty expressly stated to have been made or given as of a specific date need be true only as of such date). 7. Covenants of the Company. 7.1 Registration of Securities. The Company shall, as soon as practicable, but not later than ninety (90) days after the Closing Date (the "FILING DATE"), (i) use its best efforts to file with the SEC a registration statement on Form S-1 (or on such other form on which the Company is eligible) (the "REGISTRATION STATEMENT") with respect to the resale of the Registrable Securities and use its best efforts to have such Registration Statement declared effective by the SEC as soon thereafter as is practical and (ii) cause such Registration Statement to remain effective until the Purchasers have completed the distribution described in the registration statement relating thereto. For purposes of this Agreement, the term "REGISTRABLE SECURITIES" shall mean (i) the shares of Common Stock issuable upon conversion of the 7% Preferred Stock, and (ii) shares of Common Stock issuable upon the exercise of the Warrants; provided, however, that securities shall only be treated as Registrable Securities if and only for so long as they (A) have not been disposed of pursuant to a registration statement declared effective by the SEC, and (B) have not been sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act so that all transfer restrictions and restrictive legends with respect thereto are removed upon the consummation of such sale. 7.2 Failure to File Registration Statement and Other Events. In the event the Company does not file the Registration Statement on or prior to the Filing Date, the Company shall be obligated to pay an amount, as liquidated damages to each Purchaser, equal to 1.5% of such Purchaser's initial investment in the Units for each thirty day period that the Company fails to file the Registration Statement subsequent to the Filing Date. In addition, in the event the Registration Statement is not declared effective by the SEC within 180 days following the date of the final Closing Date (the "Target Effective Date"), the Company shall be obligated to pay an amount, as liquidated damages to each Purchaser, equal to 3.0% of such Purchaser's initial investment in the Units for each thirty day period the Registration Statement is not declared effective subsequent to the Target Effective Date. 7.3 Reservation of Common Stock. After receipt of stockholder approval increasing the amount of authorized shares of Common Stock, the Company shall reserve and maintain a sufficient number of shares of Common Stock for issuance upon conversion or exercise, as applicable, of all of the outstanding Securities. 7.4 Authorization of Additional Common Stock. The Company shall take all necessary action to amend its Certificate of Incorporation to increase the number of authorized shares of Common Stock in accordance with the description contained in the Memorandum. 8. Transfer of Securities. The Purchaser consents to the placement of a legend on any certificate or other document evidencing the Securities indicating that such Securities have not been registered under the Securities Act or any state securities or "blue sky" laws and setting forth or referring to the restrictions on transferability and sale thereof contained in this Agreement. The Subscriber is aware that the Company will make a notation in its appropriate records and issue "stop transfer" instructions to its transfer agent with respect to the restrictions on the transferability of such Securities. 9. Miscellaneous. 9.1 Successors and Assigns. This Agreement and any rights and obligations hereunder may not be assigned prior to the Closing and, thereafter, this Agreement and the rights and obligations of each Purchaser hereunder, may be assigned by such Purchaser to any person or entity to which Securities are transferred by such Purchaser, and such transferee shall be deemed a "Purchaser" for purposes of this Agreement. 9.2 Survival. All representations and warranties and all covenants, agreements and obligations made by the Company or the Purchasers in this Agreement, or in any instrument or document furnished in connection with this Agreement or the transactions contemplated hereby, shall survive the Closing and any investigation at any time made by or on behalf of any indemnified party. 9.3 Notices. Any notices or other communications required or permitted hereunder shall be sufficiently given if delivered personally or sent by facsimile or overnight courier or by registered or certified mail, postage prepaid, addressed as follows or to such other address of which the parties may have given notice: If to the Company, at 160 Raritan Center Parkway, Edison, New Jersey 08837, Attention: Jan Chason, or at such other address or addresses as may have been furnished in writing by the Company to the Purchasers; If to a Purchaser, at his or its address set forth on Exhibit A, or at such other address or addresses as may have been furnished to the Company in writing by such Purchaser. Unless otherwise specified herein, such notices or other communications shall be deemed received (a) one business day after delivery, if delivered personally or by facsimile or overnight courier, or (b) seven business days after being sent, if sent by registered or certified mail. 9.4 Entire Agreement. This Agreement and the Ancillary Agreements embody the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings relating to such subject matter. 9.5 Amendments and Waivers. Except as otherwise expressly set forth in this Agreement, any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), with the written consent of the Company and the Purchasers. No waivers of or exceptions to any term, condition or provision of this Agreement, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision. 9.6 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall be one and the same document. 9.7 Section Headings. The section headings are for the convenience of the parties and in no way alter, modify, amend, limit, or restrict the contractual obligations of the parties. 9.8 Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. 9.9 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. 10. CONFIDENTIAL INVESTOR QUESTIONNAIRE 10.1 The Purchaser represents and warrants that he, she or it comes within one category marked below, and that for any category marked, he, she or it has truthfully set forth, where applicable, the factual basis or reason the Subscriber comes within that category. ALL INFORMATION IN RESPONSE TO THIS SECTION 10 WILL BE KEPT STRICTLY CONFIDENTIAL. The undersigned agrees to furnish any additional information which the Company deems necessary in order to verify the answers set forth below. Category A The undersigned is an individual (not a partnership, ---- corporation, etc.) whose individual net worth, or joint net worth with his or her spouse, presently exceeds $1,000,000. Explanation. In calculating net worth you may include equity in personal property and real estate, including your principal residence, cash, short-term investments, stock and securities. Equity in personal property and real estate should be based on the fair market value of such property less debt secured by such property. Category B The undersigned is an individual (not a partnership, ---- corporation, etc.) who had an individual income in excess of $200,000 in each of the two most recent years , or joint income with his or her spouse in excess of $300,000 in each of those years (in each case including foreign income, tax exempt income and full amount of capital gains and losses but excluding any income of other family members and any unrealized capital appreciation) and has a reasonable expectation of reaching the same income level in the current year. Category C The undersigned is a director or executive officer of ---- the Company. Category D The undersigned is a bank; a savings and loan ---- association; insurance company; registered investment company; registered business development company; licensed small business investment company or "SBIC"; or employee benefit plan within the meaning of Title 1 of Employee Retirement Income Security Act or "ERISA" and (a) the investment decision is made by a plan fiduciary which is either a bank, savings and loan association, insurance company or registered investment advisor, or (b) the plan has total assets in excess of $5,000,000 or is a self-directed plan with investment decisions made solely by persons that are accredited investors. -------------------------------------------------- -------------------------------------------------- (describe entity) Category E The undersigned is a private business development ---- company as defined in section 202(a)(22) of the Investment Advisors Act of 1940. -------------------------------------------------- -------------------------------------------------- (describe entity) Category F The undersigned is either a corporation, partnership, ---- Massachusetts business trust, or nonprofit organization within the meaning of Section 501(c)(3) of the Internal Revenue Code, in each case not formed for the specific purpose of acquiring the Securities and with total assets in excess of $5,000,000. -------------------------------------------------- -------------------------------------------------- (describe entity) Category G The undersigned is a trust with total assets in excess ---- of $5,000,000, not formed for the specific purpose of acquiring the Securities where the purchase is directed by a "sophisticated person" as defined in Regulation 506(b)(2)(ii) under the Act. Category H The undersigned hereby certifies that it is an ---- accredited investor because all of its equity owners are accredited investors. The Company, in its sole discretion, may request information regarding the basis on which such equity owners are accredited. Category I The undersigned hereby certifies that it is an ---- accredited investor because it has total assets in excess of $5,000,000 and was not formed for the specific purpose of acquiring the Securities. Category J The undersigned is not within any of the categories ---- above and is therefore not an accredited investor. The Company will notify a prospective Purchaser whether such Purchaser is eligible to purchase Securities pursuant to this Agreement (and the Company, in its sole discretion, retains the right to accept or reject all such purchases). The undersigned agrees that it will notify the Company at any time on or prior to the Closing Date in the event that the representations and warranties in this Investor Questionnaire shall cease to be true, accurate and complete. 10.2 SUITABILITY (please answer each question) (a) For an individual Purchaser, please describe your current employment, including the company by which you are employed and its principal business: - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- (b) For an individual Purchaser, please describe any college or graduate degrees held by you: - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- (c) For all Purchasers, please list types of prior investments: - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- (d) For all Purchasers, please state whether you have participated in other private placements before: YES_______ NO_______ (e) If your answer to question (d) above was "YES", please indicate frequency of such prior participation in private placements of: Software and Public Private Other Gaming Companies Companies Companies * --------- --------- ----------- Frequently --------- --------- ----------- Occasionally --------- --------- ----------- Never --------- --------- ----------- *indicate how many companies, whether public or private, are in the software or other computer gaming sectors. (f) For an individual Purchaser, do you expect your current level of income to significantly decrease in the foreseeable future? YES_______ NO_______ (g) For trust, corporate, partnership and other institutional Purchasers, do you expect your total assets to significantly decrease in the foreseeable future? YES_______ NO_______ (h) For all Purchasers, do you have any other investments or contingent liabilities which you reasonably anticipate could cause you to need sudden cash requirements in excess of cash readily available to you? YES_______ NO_______ (i) For all Purchasers, are you familiar with the risk aspects and the non-liquidity of investments such as the securities for which you seek to subscribe? YES_______ NO_______ (j) For all Purchasers, do you understand that there is no guarantee of financial return on this investment and that you run the risk of losing your entire investment? YES_______ NO_______ 10.3 MANNER IN WHICH TITLE IS TO BE HELD. (circle one) (a) Individual Ownership (b) Community Property (c) Joint Tenant with Right of Survivorship (both parties must sign) (d) Partnership* (e) Tenants in Common (f) Company* (g) Trust* (h) Other *If Securities are being subscribed for by an entity, the attached Certificate of Signatory must also be completed. 10.4 NASD AFFILIATION. Are you affiliated or associated with an NASD member firm (please check one)? YES _________ NO __________ If Yes, please describe:** - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- ** If Purchaser is a Registered Representative with an NASD member firm, have the following acknowledgment signed by the appropriate party: The undersigned NASD member firm acknowledges receipt of the notice required by Article 3, Sections 28(a) and (b) of the Rules of Fair Practice. ---------------------------------- Name of NASD Member Firm By: ---------------------------------- Authorized Officer - Signature ---------------------------------- Authorized Officer - Printed Name Date: ____________________________ , 2004 10.5 COMPANY RELIANCE ON THIS QUESTIONNAIRE The undersigned is informed of the significance to the Company of the foregoing representations and answers contained in this Section 10 and such answers have been provided under the assumption that the Company and its counsel will rely on them. [SIGNATURE PAGE TO FOLLOW] SIGNATURE PAGE DATE SIGNED: __________ , 2004 - --------------------------- NUMBER OF UNITS: ---------------- MULTIPLIED BY OFFERING PRICE PER UNIT: x $10,000 ---------------- EQUALS SUBSCRIPTION AMOUNT: = $ ---------------- - ------------------------- --------------------------------- Signature Second Signature (if purchasing jointly) - ------------------------- --------------------------------- Printed Name Printed Second Name - ------------------------- --------------------------------- Entity Name Entity Name - ------------------------- --------------------------------- Address Address - ------------------------- --------------------------------- City, State and Zip Code City, State and Zip Code - ------------------------- --------------------------------- Telephone-Business Telephone-Business - ------------------------- --------------------------------- Facsimile-Business Facsimile-Business - ------------------------- --------------------------------- Tax ID # or Social Security # Tax ID # or Social Security # Name in which securities should be issued: ____________________________________ ================================================================================ This Subscription Agreement is agreed to and accepted as of ____________, 2004. CONNECTIVCORP By: -------------------------------------- Name: Jesse Sutton Title: Chief Executive Officer CERTIFICATE OF SIGNATORY (To be completed if Securities are being subscribed for by an entity) I,__________________________, am the__________________________ of _____________________________________________ (the "Entity"). I certify that I am empowered and duly authorized by the Entity to execute and carry out the terms of the Subscription Agreement and to purchase and hold the Securities, and certify further that the Subscription Agreement has been duly and validly executed on behalf of the Entity and constitutes a legal and binding obligation of the Entity. IN WITNESS WHEREOF, I have set my hand this___ day of ____, 2004. --------------------------------------- (Signature) EXHIBIT A List of Purchasers Name and Address No. of Units Aggregate of Purchaser ------------ Purchase Price ------------ -------------- $ $ $ $ $ $ $ $ $ TOTALS: $ - ------- EXHIBIT B Warrant EX-4.3 5 file004.txt FORM OF WARRANT ISSUED TO INVESTORS THIS WARRANT AND THE SHARES OF CAPITAL STOCK ISSUED UPON ANY EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED BY ANY PERSON, INCLUDING A PLEDGEE, UNLESS (1) EITHER (A) A REGISTRATION WITH RESPECT TO THERETO SHALL BE EFFECTIVE UNDER THE SECURITIES ACT, OR (B) THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT IS AVAILABLE, AND (2) THERE SHALL HAVE BEEN COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS. No. W2/04- For the Purchase of _________ shares of Common Stock WARRANT TO PURCHASE STOCK OF CONNECTIVCORP (A DELAWARE CORPORATION) CONNECTIVCORP, a Delaware corporation (the "COMPANY"), for value received, hereby certifies that __________ (the "HOLDER"), is entitled, subject to the terms set forth below, to purchase from the Company, at any time or from time to time at or before the earlier of 5:00 p.m. New York City time on February 24, 2007 (the "EXPIRATION DATE") and the termination of this Warrant as provided in Section 8 hereof, _________ shares of Common Stock, par value $0.001 per share, of the Company (the "COMMON STOCK"), at a purchase price per share equal to one dollar($1.00) per share (the "BASE PRICE"), as adjusted upon the occurrence of certain events as set forth in Section 3 of this Warrant. The shares of stock issuable upon exercise of this Warrant, and the purchase price per share, are hereinafter referred to as the "Warrant Stock" and the "Purchase Price," respectively. 1. Exercise. 1.1 Manner of Exercise; Payment in Cash. This Warrant may be exercised by the Holder, in whole or in part, by surrendering this Warrant, with the purchase form appended hereto as Exhibit A duly executed by the Holder, at the principal office of the Company, or at such other place as the Company may designate, accompanied by payment in full of the Purchase Price payable in respect of the number of shares of Warrant Stock purchased upon such exercise; provided, that, the Holder may not exercise any part of this Warrant unless and until the Company has filed an amendment to the Company's Certificate of Incorporation increasing the amount of its authorized shares of Common Stock to allow for the exercise of this Warrant and such amendment has been effectively filed (the "Filing Date"). Payment of the Purchase Price shall be in cash or by certified or official bank check payable to the order of the Company. 1.2 Effectiveness. Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which this Warrant shall have been surrendered to the Company as provided in Section 1.1 above. At such time, the person or persons in whose name or names any certificates for Warrant Stock shall be issuable upon such exercise as provided in Section 1.3 below shall be deemed to have become the holder or holders of record of the Warrant Stock represented by such certificates. 1.3. Delivery of Certificates. As soon as practicable after the exercise of this Warrant in full or in part, and in any event within ten (10) business days thereafter, the Company at its sole expense will cause to be issued in the name of, and delivered to, the Holder, or, subject to the terms and conditions hereof, as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct: (a) A certificate or certificates for the number of full shares of Warrant Stock to which such Holder shall be entitled upon such exercise plus, in lieu of any fractional share to which such Holder would otherwise be entitled, cash in an amount determined pursuant to Section 2 hereof, and (b) In case such exercise is in part only, a new warrant or warrants (dated the date hereof) of like tenor, calling in the aggregate on the face or faces thereof for the number of shares of Warrant Stock (without giving effect to any adjustment therein) equal to the number of such shares called for on the face of this Warrant minus the number of such shares purchased by the Holder upon such exercise as provided in Section 1.1 above. 1.4 Right to Convert Warrant into Stock: Net Issuance. (a) Right to Convert. Subject to Section 8, in addition to and without limiting the rights of the holder under the terms of this Warrant, the holder shall have the right to convert this Warrant or any portion thereof (the "Conversion Right") into shares of Common Stock as provided in this Section 1.4 at any time or from time to time during the term of this Warrant. Notwithstanding anything contained in this Warrant to the contrary, only in the event a registration statement under the Securities Act providing for the resale of the Warrant Stock is not then in effect, in lieu of exercising this Warrant by payment of cash, the holder may exercise this Warrant by a cashless exercise in accordance with the provisions of this Section 1.4. Upon exercise of the Conversion Right with respect to a particular number of shares subject to this Warrant (the "Converted Warrant Shares"), the Company shall deliver to the holder (without payment by the holder of any Purchase Price or any cash or other consideration) that number of shares of fully paid and nonassessable Common Stock equal to the quotient obtained by dividing (X) the value of this Warrant (or the specified portion hereof) on the Conversion Date (as defined in subsection (b) hereof), which value shall be determined by subtracting (A) the aggregate Purchase Price of the Converted Warrant Shares immediately prior to the exercise of the Conversion Right from (B) the aggregate fair market value of the Converted Warrant Shares issuable upon exercise of this Warrant (or the specified -2- portion hereof) on the Conversion Date (as herein defined) by (Y) the fair market value of one share of Common Stock on the Conversion Date (as herein defined). Expressed as a formula, such conversion shall be computed as follows: X = B-A --- Y where: X = the number of shares of Common Stock that may be issued to holder Y = the fair market value (FMV) of one share of Common Stock A = the aggregate Warrant Price (Converted Warrant Shares x Purchase Price) B = the aggregate FMV (i.e., FMV x Converted Warrant Shares) No fractional shares shall be issuable upon exercise of the Conversion Right, and, if the number of shares to be issued determined in accordance with the foregoing formula is other than a whole number, the Company shall pay to the holder an amount in cash equal to the fair market value of the resulting fractional share of the Conversation Date (as herein defined). (b) Method of Exercise. The Conversion Right may be exercised by the holder by the surrender of this Warrant at the principal office of the Company together with the Subscription Form in the form attached hereto duly completed and executed and indicating the number of shares subject to this Warrant which are being surrendered (referred to in Section 1.4(a) hereof as the Converted Warrant Shares) in exercise of the Conversion Right. Such conversion shall be effective upon receipt by the Company of this Warrant together with the aforesaid written statement, or on such later date as is specified therein (the "Conversion Date"), and, at the election of the holder hereof, may be made contingent upon the occurrence of any of the events specified in Section 8. Certificates for the shares issuable upon exercise of the Conversion Right and, if applicable, a new Warrant evidencing the balance of the shares remaining subject to this Warrant, shall be issued as of the Conversion Date and shall be delivered to the holder within thirty (30) days following the Conversion Date. (c) Determination of Fair Market Value. For purposes of this Section 1.4(c), "fair market value" of a share of Common Stock as of a particular date (the "Determination Date") shall mean: (i) If the Conversion Right is exercised in connection with and contingent upon a public offering, and if the Company's Registration Statement relating to such public offering ("Registration Statement") has been declared effective by the SEC, then the initial "Price to Public" specified in the final prospectus with respect to such offering. -3- (ii) If the Conversion Right is not exercised in connection with and contingent upon a public offering, then as follows: (1) If traded on a securities exchange, the fair market value of the Common Stock shall be deemed to be the average of the closing prices of the Common Stock on such exchange over the five-day period ending one business day prior to the Determination Date or, if less, such number of days as the Common Stock has been traded on such exchange; (2) If traded over-the-counter, the fair market value of the Common Stock shall be deemed to be the average of the closing bid prices of the Common Stock over the five-day period ending one business day prior to the Determination Date or, if less, such number of days as the Common Stock has been traded over-the-counter; and (3) If there is no public market for the Common Stock, then fair market value shall be determined in good faith by the Board of Directors of the Company. 2. Fractional Shares. The Company shall not be required upon the exercise of this Warrant to issue any fractional shares, but shall make an adjustment therefor in cash on the basis of the fair market value of the Warrant Stock reasonably determined by the Board of Directors of the Company. 3. Certain Adjustments. 3.1 Changes in Common Stock. If the Company shall (i) combine the outstanding shares of Common Stock into a lesser number of shares, (ii) subdivide the outstanding shares of Common Stock into a greater number of shares, or (iii) issue additional shares of Common Stock as a dividend or other distribution with respect to the Common Stock, the number of shares of Warrant Stock shall be equal to the number of shares which the Holder would have been entitled to receive after the happening of any of the events described above if such shares had been issued immediately prior to the happening of such event, such adjustment to become effective concurrently with the effectiveness of such event. The Purchase Price in effect immediately prior to any such combination of Common Stock shall, upon the effectiveness of such combination, be proportionately increased. The Purchase Price in effect immediately prior to any such subdivision of Common Stock or at the record date of such dividend shall upon the effectiveness of such subdivision or immediately after the record date of such dividend be proportionately reduced. 3.2 Reorganizations and Reclassifications. If there shall occur any capital reorganization or reclassification of the Common Stock (other than a change in par value or a subdivision or combination as provided for in Section 3.1), then, as part of any such reorganization or reclassification, lawful provision shall be made so that the Holder shall have the right thereafter to receive upon the exercise hereof the kind and amount of shares of -4- stock or other securities or property which such Holder would have been entitled to receive if, immediately prior to any such reorganization or reclassification, such Holder had held the number of shares of Common Stock which were then purchasable upon the exercise of this Warrant. In any such case, appropriate adjustment (as reasonably determined by the Board of Directors of the Company) shall be made in the application of the provisions set forth herein with respect to the rights and interests thereafter of the Holder such that the provisions set forth in this Section 3 (including provisions with respect to adjustment of the Purchase Price) shall thereafter be applicable, as nearly as is reasonably practicable, in relation to any shares of stock or other securities or property thereafter deliverable upon the exercise of this Warrant. 3.3 Merger, Consolidation or Sale of Assets. Subject to the provisions of Section 8, if there shall be a merger or consolidation of the Company with or into another corporation (other than a merger or reorganization involving only a change in the state of incorporation of the Company or the acquisition by the Company of other businesses where the Company survives as a going concern), or the sale of all or substantially all of the Company's capital stock or assets to any other person, then as a part of such transaction, provision shall be made so that the Holder shall thereafter be entitled to receive the number of shares of stock or other securities or property of the Company, or of the successor corporation resulting from the merger, consolidation or sale, to which the Holder would have been entitled if the Holder had exercised its rights pursuant to the Warrant immediately prior thereto. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 3 to the end that the provisions of this Section 3 shall be applicable after that event in as nearly equivalent a manner as may be practicable. 3.4 Certificate of Adjustment. When any adjustment is required to be made in the Purchase Price, the Company shall promptly mail to the Holder a certificate setting forth the Purchase Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. Delivery of such certificate shall be deemed to be a final and binding determination with respect to such adjustment unless challenged by the Holder within ten (10) days of receipt thereof. Such certificate shall also set forth the kind and amount of stock or other securities or property into which this Warrant shall be exercisable following the occurrence of any of the events specified in this Section 3. -5- 4. Compliance with Securities Act. 4.1 Unregistered Securities. The Holder acknowledges that this Warrant and the Warrant Stock have not been registered under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any successor legislation (the "SECURITIES ACT"), and agrees not to sell, pledge, distribute, offer for sale, transfer or otherwise dispose of this Warrant or any Warrant Stock in the absence of (i) an effective registration statement under the Securities Act covering this Warrant or such Warrant Stock and registration or qualification of this Warrant or such Warrant Stock under any applicable "blue sky" or state securities law then in effect, or (ii) an opinion of counsel, satisfactory to the Company, that such registration and qualification are not required. The Company may delay issuance of the Warrant Stock until completion of any action or obtaining of any consent, which the Company deems necessary under any applicable law (including without limitation state securities or "blue sky" laws). 4.2 Investment Letter. Without limiting the generality of Section 4.1, unless the offer and sale of any shares of Warrant Stock shall have been effectively registered under the Securities Act, the Company shall be under no obligation to issue the Warrant Stock unless and until the Holder shall have executed an investment letter in form and substance satisfactory to the Company, including a warranty at the time of such exercise that the Holder is acquiring such shares for its own account, for investment and not with a view to, or for sale in connection with, the distribution of any such shares. 4.3 Legend. Certificates delivered to the Holder pursuant to Section 1.3 shall bear the following legend or a legend in substantially similar form: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN TAKEN FOR INVESTMENT AND THEY MAY NOT BE SOLD OR OTHERWISE TRANSFERRED BY ANY PERSON, INCLUDING A PLEDGEE, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT AN EXEMPTION FROM REGISTRATION IS THEN AVAILABLE." 5. Reservation of Stock. From and after the Filing Date, the Company will at all times thereafter reserve and keep available, solely for issuance and delivery upon the exercise of this Warrant, such shares of Warrant Stock and other stock, securities and property, as from time to time shall be issuable upon the exercise of this Warrant. The Company covenants that all shares of Warrant Stock so issuable will, when issued, be duly and validly issued and fully paid and nonassessable. 6. Call. Notwithstanding anything herein to the contrary, the Company, at its option, may call up to one hundred percent (100%) of this Warrant by providing the Holder of this Warrant written notice pursuant to Section 11 (the "Call Notice") if at any time following the date hereof, the closing price or last reported sale (the "Closing Price") of the Common Stock on the stock exchange or quotation system on which the Common Stock is then traded or quoted is -6- equal to or greater than $2.50 per share for a 60 consecutive calendar day period, provided that during such 60 consecutive calendar day period, the average daily trading volume for each day is equal to or greater than 75,000 shares (the "Market Condition"), and provided further that the call option pursuant to this Section 6 shall be conditioned upon there being in effect, on the date of satisfaction of the Market Condition or at any time thereafter, a valid registration statement on Form S-1 or Form S-3 promulgated under the Securities Act or any successor or equivalent forms thereto (the "Registration Statement") covering the resale of the Warrant Stock (it being understood that this Warrant will be subject to the call option pursuant to this Section 6 on the date that the Registration Statement becomes effective if the Market Condition has been previously satisfied, whether or not the Market Condition is satisfied on such date, so long as the Closing Price on such date is equal to or greater than $1.00). The rights and privileges granted pursuant to this Warrant with respect to the shares of Warrant Stock subject to the Call Notice (the "Called Warrant Shares") shall expire on the Early Termination Date if this Warrant is not exercised with respect to such Called Warrant Shares prior to such Early Termination Date. In the event this Warrant is not exercised with respect to the Called Warrant Shares, the Company shall remit to the Holder of this Warrant (i) $.001 per Called Warrant Share and (ii) a new Warrant representing the number of shares of Warrant Stock, if any, which shall not have been subject to the Call Notice upon the Holder tendering to the Company the applicable Warrant certificate. 7. Replacement of Warrants. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement (with surety if reasonably required) in an amount reasonably satisfactory to the Company, or (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor. 8. Termination Upon Certain Events. If there shall be a merger or consolidation of the Company with or into another corporation (other than a merger or reorganization involving only a change in the state of incorporation of the Company or the acquisition by the Company of other businesses where the Company survives as a going concern), or the sale of all or substantially all of the Company's capital stock or assets to any other person, or the liquidation or dissolution of the Company, then as a part of such transaction, at the Company's option, either: (a) provision shall be made so that the Holder shall thereafter be entitled to receive the number of shares of stock or other securities or property of the Company, or of the successor corporation resulting from the merger, consolidation or sale, to which the Holder would have been entitled if the Holder had exercised its rights pursuant to the Warrant immediately prior thereto (and, in such case, appropriate adjustment shall be made in the application of the provisions of this Section 8(a) to the end that the provisions of this Section 3 shall be applicable after that event in as nearly equivalent a manner as may be practicable); or (b) this Warrant shall terminate on the effective date of such merger, consolidation or sale (the "TERMINATION DATE") and become null and void, provided that if this Warrant shall not have otherwise terminated or expired, (1) the Company shall have given the Holder written notice of such Termination Date at least ten (10) business days -7- prior to the occurrence thereof and (2) the Holder shall have the right until 5:00 p.m., Eastern Standard Time, on the day immediately prior to the Termination Date to exercise its rights hereunder to the extent not previously exercised. 9. Transferability. Without the prior written consent of the Company, the Warrant shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of the Warrant or of any rights granted hereunder contrary to the provisions of this Section 9, or the levy of any attachment or similar process upon the Warrant or such rights, shall be null and void. 10. No Rights as Stockholder. Until the exercise of this Warrant, the Holder shall not have or exercise any rights by virtue hereof as a stockholder of the Company. 11. Notices. All notices, requests and other communications hereunder shall be in writing, shall be either (i) delivered by hand, (ii) made by telex, telecopy or facsimile transmission, (iii) sent by overnight courier, or (iv) sent by registered mail, postage prepaid, return receipt requested. In the case of notices from the Company to the Holder, they shall be sent to the address furnished to the Company in writing by the last Holder who shall have furnished an address to the Company in writing. All notices from the Holder to the Company shall be delivered to the Company at its offices at 160 Raritan Center Parkway, Edison, New Jersey 08837 or such other address as the Company shall so notify the Holder. All notices, requests and other communications hereunder shall be deemed to have been given (i) by hand, at the time of the delivery thereof to the receiving party at the address of such party described above, (ii) if made by telex, telecopy or facsimile transmission, at the time that receipt thereof has been acknowledged by electronic confirmation or otherwise, (iii) if sent by overnight courier, on the next business day following the day such notices is delivered to the courier service, or (iv) if sent by registered mail, on the fifth business day following the day such mailing is made. 12. Waivers and Modifications. Any term or provision of this Warrant may be waived only by written document executed by the party entitled to the benefits of such terms or provisions. The terms and provisions of this Warrant may be modified or amended only by written agreement executed by the parties hereto. 13. Headings. The headings in this Warrant are for convenience of reference only and shall in no way modify or affect the meaning or construction of any of the terms or provisions of this Warrant. -8- 14. Governing Law. This Warrant will be governed by and construed in accordance with and governed by the laws of the State of Delaware, without giving effect to the conflict of law principles thereof. CONNECTIVCORP By: ------------------------ Name: Jesse Sutton Title: President -9- EXHIBIT A PURCHASE FORM To: CONNECTIVCORP The undersigned pursuant to the provisions set forth in the attached Warrant (No. W-____), hereby irrevocably elects to (check one): _____ (A) purchase ___ shares of the Common Stock, par value $0.001 per share, of CONNECTIVCORP (the "COMMON STOCK"), covered by such Warrant and herewith makes payment of $_____, representing the full purchase price for such shares at the price per share provided for in such Warrant; or _____ (B) convert ___ Converted Warrant Shares into that number of shares of fully paid and nonassessable shares of Common Stock, determined pursuant to the provisions of Section 1.4 of the Warrant. The Common Stock for which the Warrant may be exercised or converted shall be known herein as the "Warrant Stock". The undersigned is aware that the Warrant Stock has not been and will not be registered under the Securities Act of 1933, as amended (the "SECURITIES ACT") or any state securities laws. The undersigned understands that reliance by the Company on exemptions under the Securities Act is predicated in part upon the truth and accuracy of the statements of the undersigned in this Purchase Form. The undersigned represents and warrants that (1) it has been furnished with all information which it deems necessary to evaluate the merits and risks of the purchase of the Warrant Stock, (2) it has had the opportunity to ask questions concerning the Warrant Stock and the Company and all questions posed have been answered to its satisfaction, (3) it has been given the opportunity to obtain any additional information it deems necessary to verify the accuracy of any information obtained concerning the Warrant Stock and the Company and (4) it has such knowledge and experience in financial and business matters that it is able to evaluate the merits and risks of purchasing the Warrant Stock and to make an informed investment decision relating thereto. The undersigned hereby represents and warrant that it is purchasing the Warrant Stock for its own account for investment and not with a view to the sale or distribution of all or any part of the Warrant Stock. The undersigned understands that because the Warrant Stock has not been registered under the Securities Act, it must continue to bear the economic risk of the investment for an indefinite period of time and the Warrant Stock cannot be sold unless it is subsequently registered under applicable federal and state securities laws or an exemption from such registration is available. The undersigned agrees that it will in no event sell or distribute or otherwise dispose of all or any part of the Warrant Stock unless (1) there is an effective registration statement under the Securities Act and applicable state securities laws covering any such transaction involving the Warrant Stock, or (2) the Company receives an opinion satisfactory to the Company of the undersigned's legal counsel stating that such transaction is exempt from registration. The undersigned consents to the placing of a legend on its certificate for the Warrant Stock stating that the Warrant Stock has not been registered and setting forth the restriction on transfer contemplated hereby and to the placing of a stop transfer order on the books of the Company and with any transfer agents against the Warrant Stock until the Warrant Stock may be legally resold or distributed without restriction. The undersigned has considered the federal and state income tax implications of the exercise of the Warrant and the purchase and subsequent sale of the Warrant Stock. Dated: ------------------------- NYC281441v4 2 EX-4.4 6 file005.txt FORM OF PLACEMENT AGENT WARRANT THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL) REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. WARRANT TO PURCHASE UNITS OF CONNECTIVCORP DATED AS OF FEBRUARY ___, 2004 (THE "EFFECTIVE DATE") WHEREAS, pursuant to that certain letter agreement, dated as of February 12, 2004 (the "PLACEMENT AGREEMENT"), between _____________, a _______________ (the "WARRANTHOLDER"), and ConnectivCorp, a Delaware corporation (the "COMPANY"), the Company has engaged the Warrantholder as the Company's lead placement agent to assist the Company with a proposed private placement of a minimum of $10,000,000 and a maximum of $25,000,000 of Units (as defined below) at a price per Unit equal to $10,000.00 (the "OFFERING"); and WHEREAS, the Company desires to grant to the Warrantholder, in consideration for its services as placement agent, the right to purchase ________ Units pursuant to the terms of the Placement Agreement. NOW, THEREFORE, the Company, for value received, hereby certifies and agrees as follows: 1. GRANT OF THE RIGHT TO PURCHASE UNITS. The Company hereby grants to the Warrantholder, and the Warrantholder is entitled, upon the terms and subject to the conditions hereinafter set forth, to purchase, from the Company, up to __________ (_____) Units at a purchase price of Ten Thousand Dollars ($10,000) per Unit (the "EXERCISE PRICE"), subject to Section 9. A "Unit" shall consist of (i) one share of 7% Convertible Preferred Stock of the Company (the "PREFERRED STOCK") and (ii) a Warrant (the "WARRANT") to purchase, at an exercise price of $1.00 per share, ten thousand (10,000) shares of Common Stock, $0.001 par value per share, of the Company (the "COMMON STOCK"), the form of which is attached hereto as EXHIBIT A and incorporated herein by reference. The number and Exercise Price of such Units are subject to adjustment as provided in Section 6 hereof. 2. TERM OF THE WARRANT. Except as otherwise provided for herein, the term of this Warrant and the right to purchase Units as granted herein shall commence on the Effective Date and shall be exercisable for a period ending on the fifth (5th) anniversary of the Effective Date. 3. EXERCISE OF THE PURCHASE RIGHTS. (a) EXERCISE GENERALLY. The purchase rights set forth in this Warrant are exercisable by the Warrantholder, in whole or in part, at any time, or from time to time, prior to the expiration of the term set forth in Section 2 above, by tendering to the Company at its principal office a notice of exercise in the form attached hereto as EXHIBIT B (the "NOTICE OF EXERCISE"), duly completed and executed. Promptly upon receipt of the Notice of Exercise and the payment of the purchase price in accordance with the terms set forth below, and in no event later than thirty (30) days thereafter, the Company shall issue to the Warrantholder the number of shares of Preferred Stock and Warrants as such Warrantholder shall be entitled to receive upon exercise of this Warrant and shall execute the acknowledgment of exercise in the form attached hereto as EXHIBIT C (the "ACKNOWLEDGMENT OF EXERCISE") indicating the number of Units which remain subject to future purchases, if any. (b) EXERCISE PRICE. The Exercise Price for this Warrant may be paid at the Warrantholder's election either (i) by cash or check, or (ii) by surrender of Preferred Stock ("NET ISSUANCE") as determined below. If the Warrantholder elects the Net Issuance method, the Company will issue Preferred Stock in accordance with the following formula: X = Y(A-B) ------ A where: X = the number of shares of Preferred Stock that may be issued to the Warrantholder. Y = the number of shares of Preferred Stock requested to be exercised under this Warrant. A = the fair market value of one (1) share of Preferred Stock at the time the Net Issuance election is made. B = the Exercise Price. For purposes of the above calculation, the current fair market value of the Preferred Stock shall mean with respect to each share of Preferred Stock: (i) if the Common Stock is traded on a securities exchange, the fair market value shall be deemed to be the product of (x) the average of the closing prices over a five (5) day period ending three days before the day the current fair market value of the securities is being determined and (y) the number of shares of Common Stock into which each share of Preferred Stock is convertible at the time of such exercise; -2- (ii) if the Common Stock is traded over-the-counter, the fair market value shall be deemed to be the product of (x) the average of the closing bid prices quoted on the NASDAQ system (or similar system) over the five (5) day period ending one business day prior to the day the current fair market value of the securities is being determined and (y) the number of shares of Common Stock into which each share of Preferred Stock is convertible at the time of such exercise; and (iii) if there is no public market for the Common Stock, then fair market value of the Preferred Stock shall be determined in good faith by the Board of Directors of the Company. Upon partial exercise by either cash or check or the Net Issuance method, the Company shall promptly issue an amended Warrant representing the remaining number of Units purchasable hereunder. All other terms and conditions of such amended Warrant shall be identical to those contained herein, including, but not limited to the Effective Date hereof. (c) FRACTIONAL SHARES. The Company shall, upon the exercise of this Warrant, issue fractional shares of Preferred Stock, as necessary and applicable. 4. INCREASE OF AUTHORIZED COMMON STOCK. The Company shall take all necessary actions to amend its Certificate of Incorporation to increase the number of authorized shares of Common Stock in accordance with the description contained in the Confidential Private Placement Memorandum dated February 12, 2004. 5. NO RIGHTS AS STOCKHOLDER. This Warrant does not entitle the Warrantholder to any voting rights or other rights as a stockholder of the Company prior to the exercise of the Warrant. 6. ADJUSTMENT RIGHTS. The adjustment rights applicable to the Units underlying this Warrant shall be as follows: (a) The adjustment rights applicable to the Preferred Stock purchasable hereunder are as set forth in the Certificate of Designations. The Company shall promptly provide the Warrantholder with any restatement, amendment, modification or waiver of the Certificate of Designations or the rights and privileges set forth therein. The Preferred Stock purchasable hereunder shall have the benefit of the same antidilution rights applicable to such Preferred Stock as designated in the Certificate of Designations, and the Company shall provide Warrantholder with all notices and information at the time and to the extent it is required to do so to the holders of the Preferred Stock. (b) The adjustment rights applicable to the Warrants shall be as provided in the form of Warrant attached hereto as EXHIBIT A, the provisions of which are incorporated herein by reference. -3- 7. TRANSFERS. Without the prior written consent of the Company, neither this Warrant nor any of the rights granted hereunder shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of this Warrant or of any rights granted hereunder contrary to the provisions of this Section 7, or the levy of any attachment or similar process upon the Warrant or such rights, shall be null and void. Notwithstanding the foregoing, and upon written notice to the Company, (i) this Warrant may be transferred to any member or affiliate of the Warrantholder and (ii) a portion of this Warrant to purchase up to 92 Units may be transferred to Atlantis Equities LLC or its members or affiliates; provided that, any such transferee agrees to be bound by the terms and provisions of this Warrant. 8. REGISTRATION RIGHTS. The Company shall, as soon as practicable, but not later than ninety (90) days after the Effective Date (the "FILING DATE"), (i) use its best efforts to file with the SEC a registration statement on Form S-1 (or on such other form on which the Company is eligible) (the "REGISTRATION STATEMENT") with respect to the resale of the Registrable Securities and use its best efforts to have such Registration Statement declared effective by the SEC as soon thereafter as is practical and (ii) cause such Registration Statement to remain effective until the Warrantholder has completed the distribution described in the registration statement relating thereto. For purposes of this Warrant, the term "REGISTRABLE SECURITIES" shall mean (i) the shares of Common Stock issuable upon conversion of the Preferred Stock in accordance with the conversion provisions contained in the Certificate of Designations, and (ii) the shares of Common Stock issuable upon the exercise of the Warrants; provided, however, that securities shall only be treated as Registrable Securities if and only for so long as they (A) have not been disposed of pursuant to a registration statement declared effective by the SEC, and (B) have not been sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended, so that all transfer restrictions and restrictive legends with respect thereto are removed upon the consummation of such sale. 9. WARRANT ADJUSTMENT FOR UNDERLYING SECURITIES. In the event that all or any portion of this Warrant has not been exercised and (i) the Preferred Stock becomes subject to the automatic conversion provisions of Section 6(b)(i) of the Certificate of Designations, Preferences and Rights of the 7% Cumulative Convertible Preferred Stock and (ii) the Warrant becomes subject to the call provisions of Section 6 of the Warrant, then the Warrantholder hereby agrees that this Warrant shall become exercisable into a number of shares of Common Stock equal to the sum of (a) the number of shares of Common Stock into which the Preferred Stock converts and (b) the number of shares of Common Stock into which the Warrant is exercisable. In addition, the Exercise Price for this Warrant as defined in Section 1 shall be adjusted such that the Warrantholder will have the right to purchase a share of Common Stock at a purchase price per share as would have been in effect on such date of conversion or exercise, as applicable, as if this Warrant had been exercised in full; furthermore, -4- for purposes of a "cashless" exercise under Section 3(b), the words "Preferred Stock" shall be replaced with the words "Common Stock." 10. TERMINATION UPON CERTAIN EVENTS. If there shall be a merger or consolidation of the Company with or into another corporation (other than a merger or reorganization involving only a change in the state of incorporation of the Company or the acquisition by the Company of other businesses where the Company survives as a going concern), or the sale of all or substantially all of the Company's capital stock or assets to any other person, or the liquidation or dissolution of the Company, then as a part of such transaction, at the Company's option, either: (a) provision shall be made so that the Warrantholder shall thereafter be entitled to receive the number of shares of stock or other securities or property of the Company, or of the successor corporation resulting from the merger, consolidation or sale, to which the Warrantholder would have been entitled if the Holder had exercised its rights pursuant to the Warrant immediately prior thereto (and, in such case, appropriate adjustment shall be made in the application of the provisions of this Section 10 to the end that the provisions of Section 6 hereof shall be applicable after that event in as nearly equivalent a manner as may be practicable); or (b) this Warrant shall terminate on the effective date of such merger, consolidation or sale (the "TERMINATION DATE") and become null and void, provided that if this Warrant shall not have otherwise terminated or expired, (1) the Company shall have given the Warrantholder written notice of such Termination Date at least ten (10) business days prior to the occurrence thereof and (2) the Warrantholder shall have the right until 5:00 p.m., Eastern Standard Time, on the day immediately prior to the Termination Date to exercise its rights hereunder to the extent not previously exercised. 11. MISCELLANEOUS. (a) GOVERNING LAW. This Warrant will be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the conflict of law principles thereof. (b) COUNTERPARTS. This Warrant may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (c) NOTICES. All notices, requests and other communications hereunder shall be in writing, shall be either (i) delivered by hand, (ii) made by telex, telecopy or facsimile transmission, (iii) sent by overnight courier, or (iv) sent by registered mail, postage prepaid, return receipt requested. All notices from the Company to the Warrantholder shall be sent to One Embarcadero Center, Suite 2100, San Francisco, CA 94111. All notices from the Warrantholder to the Company shall be delivered to the Company at its offices at 160 Raritan Center Parkway, Edison, New Jersey 08837 or such other address as the Company shall so notify the Warrantholder. All notices, requests and other communications hereunder shall be deemed to have been given (i) by hand, at the time of the delivery thereof to the receiving party at the address of such party described above, (ii) if made by telex, telecopy or facsimile transmission, at the time that receipt thereof has been -5- acknowledged by electronic confirmation or otherwise, (iii) if sent by overnight courier, on the next business day following the day such notices is delivered to the courier service, or (iv) if sent by registered mail, on the fifth business day following the day such mailing is made. (d) SEVERABILITY. In the event any one or more of the provisions of this Warrant shall for any reason be held invalid, illegal or unenforceable, the remaining provisions of this Warrant shall be unimpaired, and the invalid, illegal or unenforceable provision shall be replaced by a mutually acceptable valid, legal and enforceable provision, which comes closest to the intention of the parties underlying the invalid, illegal or unenforceable provision. (e) AMENDMENTS. Any provision of this Warrant may be amended or waived by a written instrument signed by the Company and the Warrantholder. (f) HEADINGS. The headings in this Warrant are for convenience of reference only and shall in no way modify or affect the meaning or construction of any of the terms or provisions of this Warrant. CONNECTIVCORP By: ------------------------------ Name: Jesse Sutton Title: President ACKNOWLEDGED AND AGREED: ___________, hereby acknowledges and consents to the provisions of this Warrant. ______________ By: --------------------------------- Name: Title: -6- EXHIBIT A FORM OF WARRANT EXHIBIT B NOTICE OF EXERCISE TO: ____________________________ (1) The undersigned Warrantholder hereby elects to purchase _______ Units (representing ____ shares of Preferred Stock and a Warrant to purchase _______ shares of Common Stock) of ConnectivCorp (the "Company"), pursuant to the terms of the Warrant dated the ____ day of February, 2004 (the "WARRANT") between the Company and the Warrantholder, and [TENDERS HEREWITH PAYMENT OF THE PURCHASE PRICE FOR SUCH SHARES IN FULL, TOGETHER WITH ALL APPLICABLE TRANSFER TAXES, IF ANY] [ELECTS PURSUANT TO SECTION ____ OF THE WARRANT TO EFFECT A NET ISSUANCE]. (2) Please issue a certificate or certificates representing said Preferred Stock and Warrants in the name of the undersigned or in such other name as is specified below. --------------------------------- (Name) --------------------------------- (Address) WARRANTHOLDER: --------------------------------- By: ------------------------------ Title: --------------------------- Date: ---------------------------- EXHIBIT C I. ACKNOWLEDGMENT OF EXERCISE The undersigned ____________________________________, hereby acknowledge receipt of the "NOTICE OF EXERCISE" from ________________________, to purchase ________ Units (representing _______ shares of Preferred Stock and a Warrant to purchase _______ shares of Common Stock) of ConnectivCorp pursuant to the terms of the Warrant, and further acknowledges that _________ Units remain subject to purchase under the terms of the Warrant. CONNECTIVCORP By: --------------------------- Title: --------------------------- Date: --------------------------- NYC281580v6 EX-99.1 7 file006.txt PRESS RELEASE MAJESCO RAISES APPROXIMATELY $25.8 MILLION IN A PRIVATE PLACEMENT EDISON, NJ, Feb. 25, 2004 - ConnectivCorp (OTCBB:CTTV.OB), the sole operations of which are those of its wholly-owned subsidiary, Majesco Sales Inc., today announced that it raised approximately $25.8 million in gross proceeds from a group of institutional and accredited investors. Net proceeds to ConnectivCorp will be approximately $22.5 million after deducting the fees and other expenses related to the financing. The financing significantly improved ConnectivCorp's balance sheet and will provide funds for future growth of the business. Under the terms of the deal, ConnectivCorp will issue approximately 2,580 Units with each Unit consisting of (i) one share of 7% Convertible Preferred Stock, convertible into 10,000 shares of common stock and (ii) a warrant to purchase 10,000 shares of common stock at any time during the next three years at an exercise price of $1.00 per share. The Company has agreed to file a registration statement with the Securities and Exchange Commission on behalf of these new investors within 90 days following the date of closing, in order to register for resale the common stock underlying both the 7% Convertible Preferred Stock as well as the warrants. JMP Securities LLC acted as placement agent in connection with this transaction. The securities sold in the private placement have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States unless registered under the Securities Act or an applicable exemption from registration is available. This press release does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state. ConnectivCorp intends to file a Current Report on Form 8-K disclosing additional information relating to the financing. ABOUT MAJESCO Majesco Sales Inc. is a developer, publisher and marketer of interactive entertainment software. Majesco has released titles for all major videogame platforms and handhelds, including Sony's Playstation and Playstation 2, Nintendo's N64, SNES, Game Boy, Game Boy Color, Game Boy Advance and GameCube, Microsoft's Xbox, Sega's Dreamcast, Genesis and Game Gear, and the personal computer. Additionally, Majesco Sales Inc. is a manufacturer of a number of accessories licensed by Nintendo. For more information, please visit www.majescosales.com. FORWARD-LOOKING STATEMENTS This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond ConnectivCorp's control. All statements other than statements of historical facts included in this release, including, if any, statements regarding ConnectivCorp's strategy, future operations, financial position, estimated revenues, projected costs, prospects, plans and objectives of management, are forward-looking statements. When used in this release, the words "will," "believe," "anticipate," "intend," "estimate," "expect," "project" and similar expressions are also intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. All forward-looking statements speak only as of the date of this release. ConnectivCorp does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Although ConnectivCorp believes that its plans, intentions and expectations reflected in or suggested by the forward-looking statements made in this release are reasonable, ultimately ConnectivCorp may not achieve such plans, intentions or expectations. CONTACT: Majesco Sales Inc. Jesse Sutton (732) 225-8910 NYC 282285v2 -----END PRIVACY-ENHANCED MESSAGE-----