Exhibit 10.26
May 27, 1998
Interactive Magic Inc.
P.O. Box 13491
Research Triangle Park, North Carolina 27708
Ladies and Gentleman:
In connection with the proposed initial public offering (the "IPO") of
shares of Common Stock of Interactive Magic, Inc. (the "Company"), the
undersigned hereby (A) agree that notwithstanding any other provision of the
Articles Supplementary, dated February 3, 1998, of the Company (the "Articles")
and solely for purposes of Section 4 of the Articles, the number of shares of
Common Stock into which the Series B Preferred Stock shall be convertible shall
be 2,045,649 (post-split); provided, that the foregoing agreement shall be
terminated and of no further force and effect (i) if the IPO is not consummated
by August 31, 1998, (ii) if the number of shares of the Company outstanding
immediately prior to the effective date of the registration statement relating
to the IPO shall exceed 8,000,000, (iii) if the initial public offering price
(as set forth on the cover page of the prospectus relating to the IPO filed
pursuant to Rule 424(b) under the Securities Act of 1933, as amended, or, if no
prospectus is required to be filed pursuant to said Rule 424(b), the prospectus
included in the registration statement as amended at the time it was declared
effective) is less than $8.00 or more than $10.00 or (iv) if pages 3, 5, 6, 46,
47 and 49 of the draft IPO prospectus, which pages are attached hereto, as they
relate to capitalization and security ownership of the Company, shall be changed
in any material respect and (B) agree to waive the provisions of Section 2.5(a)
of that certain Investor's Rights Agreement dated as of February 4, 1998 (the
"Agreement") by and between the Company and Vertical Financial Holdings in
consideration for the issuance to the undersigned and its assignees of an
aggregate of 50,000 shares of Common Stock of the Company, it being understood
that such shares are included in the 2,045,649 shares referenced above.
Very truly yours,
VERTICAL FINANCIAL HOLDINGS
By: /s/ Jacob Agam
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Jacob Agam
Chairman
PAMPERO LIMITED
By: /s/ Ullrich Angersbach
-----------------------------
Name: Ullrich Angersbach
Title: Director
LUDWIG RUPPERT
/s/ Ludwig Ruppert
---------------------------------
ULLRICH ANGERSBACH
/s/ Ullrich Angersbach
---------------------------------
SURIEL FINANCIAL CONSULTING
By: /s/ Avi Suriel
------------------------------
Name: Avi Suriel
Title: Consultant
LUPIN INVESTMENTS SERVICES
LIMITED
By: /s/ Jacob Agam
------------------------------
Name: Jacob Agam
Title:
HENILLA FINANCIAL LTD.
By: /s/ Jacob Agam
------------------------------
Name: Jacob Agam
Title:
ACCEPTED AND AGREED TO:
INTERACTIVE MAGIC, INC.
By: /s/ Robert L. Pickens
--------------------------
Robert Pickens
President