[Form of Representative's Warrant Agreement]
GRAND COURT LIFESTYLES, INC.
AND
ROYCE INVESTMENT GROUP, INC.
REPRESENTATIVE'S WARRANT AGREEMENT
Dated as of ___________, 1998
REPRESENTATIVE'S WARRANT AGREEMENT dated as of _____________ __, 1998, by and
between GRAND COURT LIFESTYLES, INC., a corporation incorporated under the laws
of the State of Delaware (the "Company"), and ROYCE INVESTMENT GROUP, INC.,
(hereinafter referred to variously as the "Holder" or the "Representative").
WITNESSETH
WHEREAS, the Company proposes to issue to the Representative or its designees
warrants ("Warrants") to purchase up to an aggregate of 300,000 shares of common
stock, par value $.01 per share, of the Company (the "Common Stock"); and
WHEREAS, the Representative has agreed pursuant to the underwriting agreement
dated as of the date hereof between the Company, certain selling stockholders
identified therein and the several Underwriters listed therein (the
"Underwriting Agreement"), to act as the Representative in connection with the
proposed public offering of up to 3,000,000 shares of Common Stock, at an
initial public offering price of $_______ per share of Common Stock (the "Public
Offering"); and
WHEREAS, the Warrants to be issued pursuant to this Agreement will be issued on
the Closing Date (as such term is defined in the Underwriting Agreement) by the
Company to the Representative or its designees in consideration for, and as part
of the Representative's compensation in connection with, the Representative
acting as the Representative pursuant to the Underwriting Agreement;
NOW, THEREFORE, in consideration of the premises, the payment by the
Representative to the Company of $.0001 per Warrant, the agreements herein set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Grant: Subject to the issuance and sale of the Common Stock in
accordance with the Underwriting Agreement on the Closing Date, the
Representative (and/or its designees, which shall include only officers
of the Representative) is hereby granted the right to purchase up to
300,000 Warrants which give the Holder (as herein defined) the right to
purchase, at any time from ________________ __, 199_ [one year from the
effective date of the Registration Statement] until 5:30 P.M., New York
time, on _______________ ____, 200_ [five years from the effective date
of the Registration Statement] ("the Exercise Period"), up to an
aggregate of 300,000 shares of Common Stock at an initial exercise
price (subject to adjustment as provided in Section 8 hereof) of $_____
per share of Common Stock, [165% of the initial public offering price
per share of Common Stock], subject to the terms and conditions of this
Agreement (the "Warrant Shares"). Each Warrant shall initially be
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exercisable for one share of Common Stock. It is expressly understood
that this Agreement entitles the Representative (and/or its designees)
to purchase Warrants in the aggregate amount of ten percent (10%) of
the number of securities offered to the public (excluding the
overallotment option). Except as expressly set forth herein, the shares
issuable upon exercise of the Warrants are in all respects identical to
the shares of Common Stock being purchased by the Underwriter for
resale to the public pursuant to the terms and provisions of the
Underwriting Agreement.
2. Warrant Certificates. The warrant certificates (the "Warrant
Certificates") delivered and to be delivered pursuant to this Agreement
shall be in the form set forth in Exhibit A attached hereto and made a
part hereof, with such appropriate insertions, omissions,
substitutions, and other variations as required or permitted by this
Agreement.
3. Exercise of Warrant.
3.1 Method of Exercise. The Warrants initially are exercisable at
an aggregate initial exercise price (subject to adjustment as
provided in Section 8 hereof) per share of Common Stock as set
forth in Section 6 hereof, payable by certified or official
bank check in New York Clearing House funds, subject to the
adjustments provided in Section 8 hereof. Upon surrender of a
Warrant Certificate with the annexed Form of Election to
Purchase duly executed, together with payment of the Exercise
Price (as hereinafter defined) for the shares of Common Stock
purchased, at the Company's principal executive offices in
Boca Raton, Florida, presently located at 0000 X. Xxxxxxxx
Xxxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000, the registered
holder of a Warrant Certificate ("Holder" or "Holders") shall
be entitled to receive a certificate or certificates for the
shares of Common Stock so purchased. The purchase rights
represented by each Warrant Certificate are exercisable at the
option of the Holder thereof, in whole or in part (but not as
to fractional shares of the Common Stock underlying the
Warrants.) In the case of the purchase of less than all the
shares of Common Stock purchasable under any Warrant
Certificate, the Company shall cancel said Warrant Certificate
upon the surrender thereof and shall execute and deliver a new
Warrant Certificate of like tenor for the balance of the
Common Stock purchasable thereunder.
3.2 Exercise by Surrender of Warrant. In addition to the method of
payment set forth in Section 3.1 hereof and in lieu of any
cash payment required thereunder, the Holder(s) of the
Warrants shall have the right at any time and from time to
time to exercise the Warrants in full or in part by
surrendering the Warrant Certificate in the manner specified
in Section 3.1 in exchange for the number of shares of Common
Stock equal to the product of (x) the number of shares as to
which the Warrants are being exercised multiplied by (y) a
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fraction, the numerator of which is the aggregate Market Price
(as defined below) of such Common Stock less the aggregate
Exercise Price therefor, and the denominator of which is such
aggregate Market Price of the Common Stock. Solely for the
purposes of this paragraph, Market Price shall be calculated
either (i) on the date on which the form of election attached
hereto is deemed to have been sent to the Company pursuant to
Section 13 hereof (the "Notice Date") or (ii) as the average
of the Market Prices for each of the five trading days
preceding the Notice Date, whichever of (i) or (ii) is
greater.
3.3 Definition of Market Price. As used herein with respect to the
Common Stock, the phrase "Market Price" at any date shall be
deemed to be the last reported sale price of the Common Stock,
or, in case no such reported sale takes place on such day, the
average of the last reported sale prices for the last three
(3) trading days, in either case as officially reported by the
principal securities exchange on which the Common Stock is
listed or admitted to trading, or, if the Common Stock is not
listed or admitted to trading on any national securities
exchange or quoted by Nasdaq, the average closing bid price as
furnished by the National Association of Security Dealers,
Inc. ("NASD") through Nasdaq or a similar organization if
Nasdaq is no longer reporting such information, or if the
Common Stock is not quoted on Nasdaq, as determined in good
faith (using customary valuation methods) by resolution of the
Board of Directors of the Company, based on the best
information available to it.
4. Issuance of Certificates. Upon the exercise of the Warrants, the
issuance and delivery of certificates for the Common Stock or other
securities, properties or rights underlying such Warrants, shall be
made forthwith (and in any event within three (3) business days
thereafter) without charge to the Holder thereof including, without
limitation, any tax which may be payable in respect of the issuance
thereof, and such certificates shall (subject to the provisions of
Sections 5 and 7 hereof) be issued in the name of, or in such names as
may be directed by, the Holder thereof, provided, however, that the
Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of any
such certificates in a name other than that of such Holder, and the
Company shall not be required to issue or deliver such certificates,
unless or until the person or persons requesting the issuance thereof
shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been
paid.
The Warrant Certificates and the certificates representing the Common
Stock (and/or other securities, property or rights issuable upon the
exercise of the Warrants) shall be executed on behalf of the Company by
the manual or facsimile signature of the person(s) authorized therefor
by the Company's Board of Directors under its corporate seal reproduced
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thereon. Warrant Certificates shall be dated the date of execution by
the Company upon initial issuance, division, exchange, substitution or
transfer. Certificates representing the shares of Common Stock (and/or
other securities, property or rights issuable upon exercise of the
Warrants) shall be dated as of the Notice Date (regardless of when
executed or delivered) and dividend bearing securities so issued shall
accrue dividends from the Notice Date.
5. Restriction On Transfer of Warrants. The Holder of a Warrant
Certificate, by its acceptance thereof, covenants and agrees that the
Warrants are being acquired as an investment and not with a view to the
distribution thereof, and that the Warrants may not be sold,
transferred, assigned, hypothecated or otherwise disposed of, in whole
or in part, for a period of one (1) year from the date hereof, except
to officers of the Representative, subject to compliance with
applicable federal and state securities laws and Interpretations of the
Board of Governors of the National Associates of Securities Dealers,
Inc..
(a) During the Expiration Period, this Warrant shall be freely
transferable, in whole or in part, subject to the other terms
and conditions hereof and to compliance with applicable
federal and state securities laws.
(b) Any transfer of this Warrant permitted by this Section 5 shall
be effected by: (i) surrender of this Warrant for cancellation
(with the annexed Form of Assignment duly executed) at the
office or agency of the Company referred to in Section 3; (ii)
delivery of a certificate (signed, if the Holder is a
corporation or partnership, by an authorized officer or
partner thereof), stating that each transferee designated in
the assignment form is a permitted transferee under this
Section 5; and (iii) delivery of an option of counsel stating
that the proposed transfer may be made without registration or
qualification under applicable Federal and state securities
laws. This Warrant shall be deemed to have been transferred,
in whole or in part to the extent specified, immediately prior
to the close of business on the date provisions of this
Section 5(b) are satisfied, and the transferee(s) designated
in the assignment form shall become the holder(s) of record at
that time and date. The Company shall issue, in the name(s) of
the designated transferee(s) (including the Holder if this
Warrant has been transferred in part) a new Warrant or
Warrants of like tenor and representing, in the aggregate,
rights to purchase the same number of shares of Common Stock
(or such other securities) as are then purchasable under this
Warrant. Such new Warrant or Warrants shall be delivered to
the record holder(s) thereof within a reasonable time, not
exceeding five business days, after the rights represented by
this Warrant shall have been so transferred. As used herein
(unless the context otherwise requires), the term "Holder"
shall include each such transferee, and the term "Warrant
shall include each such transferred Warrant.
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6. Exercise Price.
6.1 Initial and Adjusted Exercise Price. Except as otherwise
provided in Section 8 hereof, the initial exercise price of
each Warrant shall be $______ per share of Common Stock [165%
of the initial public offering price per share of Common
Stock]. The adjusted exercise price of the Warrant shall be
the price which shall result from time to time from any and
all adjustments of the initial exercise price in accordance
with the provisions of Section 8 hereof. Any transfer of a
Warrant shall constitute an automatic transfer and assignment
of the registration rights set forth in Section 7 hereof with
respect to the Common Stock or other securities, properties or
rights underlying the Warrants.
6.2 Exercise Price. The term "Exercise Price" herein shall mean
the initial exercise price or the adjusted exercise price,
depending upon the context or unless otherwise specified.
7. Registration Rights.
7.1 Registration Under the Securities Act of 1933. The Warrants
have not been registered under the Securities Act of 1933, as
amended (the "Act"). Upon exercise, in part or in whole, of
the Warrants, certificates representing the Common Stock
underlying the Warrants and any of the other securities
issuable upon exercise of the Warrants (collectively, the
"Warrant Shares") shall bear the following legend:
The securities represented by this certificate have
not been registered under the Securities Act of 1933,
as amended ("Act"), and may not be offered or sold
except pursuant to (i) an effective registration
statement under the Act, (ii) to the extent
applicable, Rule 144 under the Act (or any similar
rule under such Act relating to the disposition of
securities), or (iii) an opinion of counsel, if such
opinion shall be reasonably satisfactory to counsel
to the issuer, that an exemption from registration
under such Act is available.
7.2 Piggyback Registration. If, at any time commencing one year
after the date hereof and expiring six (6) years thereafter,
the Company proposes to register any of its securities under
the Act, other than in connection with a merger or acquisition
registered on Form S-4 (or a similar special purpose form) or
with an employee benefit plan registered on Form S-8 (or a
similar special purpose form), it will give written notice by
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registered mail, at least thirty (30) days prior to the filing
of each such registration statement, to the Representative and
to all other Holders of the Warrants and/or the Warrant Shares
of its intention to do so. If the Representative or other
Holders of the Warrants and/or the Warrant Shares notify the
Company within twenty (20) days after receipt of any such
notice of its or their desire to include any such securities
in such proposed registration statement, the Company shall
afford each of the Representative and such Holders of the
Warrants and/or Warrant Shares the opportunity to have any
such Warrant Shares registered under such registration
statement; provided, however, that the Representative and such
Holders of the Warrants and/or Warrant Shares shall furnish
the Company with appropriate information in connection
therewith as the Company may reasonably request in writing.
In the event that the managing underwriting for said offering
advises the Company in writing that in its opinion the number
of securities requested to be included in such registration
exceeds the number which can be sold in such offering without
causing a diminution in the offering price or otherwise
adversely affecting the offering, the Company will include in
such registration (a) first the securities the Company
proposes to sell, (b) second, the securities held by the
entities, if any, that made a demand for registration, (c)
third, the Warrant Shares requested to be included in such
registration statement pursuant to Section 7.2 which, in the
opinion of such underwriter, can be sold, pro rata among all
proposed selling shareholders; provided, that in the event
that any Warrant Shares requested to be included in such
registration statement are not so included pursuant to the
provisions of this Section 7.2(b), the Company will include
such Warrant Shares in a subsequent registration statement to
be filed by the Company with the Securities Exchange
Commission no more than one hundred eighty (180) days
following the effective date of the registration statement in
which such Warrant Securities were not included, and the
Company shall maintain the effectiveness of that subsequent
registration statement for a period of no less than nine (9)
months from its effective date.
Notwithstanding the provisions of this Section 7.2, the
Company shall have the right at any time after it shall have
given written notice pursuant to this Section 7.2
(irrespective of whether a written request for inclusion of
any such securities shall have been made) to elect not to file
any such proposed registration statement, or to withdraw the
same after the filing but prior to the effective date thereof.
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7.3 Demand Registration.
(a) At any time commencing one (1) year after the date
hereof and expiring four (4) years thereafter, the
Holders of the Warrants and/or Warrant Shares
representing a "Super Majority" (as hereinafter
defined) of such securities (assuming the exercise of
all of the Warrants) shall have the right (which
right is in addition to the registration rights under
Section 7.2 hereof), exercisable by written notice to
the Company, to have the Company prepare and file
with the Securities and Exchange Commission (the
"Commission"), on one occasion only, a registration
statement and such other documents, including a
prospectus, as may be necessary in the opinion of
both counsel for the Company and counsel for the
Representative and Holders, in order to comply with
the provisions of the Act, so as to permit a public
offering and sale of their respective Warrant Shares
for the earlier of (i) nine (9) consecutive months or
(ii) until the sale of all the Warrant Shares
requested to be registered by such Holders and any
other Holders of the Warrants and/or Warrant Shares
who notify the Company within ten (10) days after
receiving notice from the Company of such request;
provided, however, the Company shall be entitled to
defer such registration for a period of up to 90 days
if and to the extent that its Board of Directors
shall determine in good faith that such registration
would interfere with a pending corporate transaction,
shall pass a written resolution to that effect and
shall promptly make available to such Holders the
aforementioned written resolution.
(b) The Company covenants and agrees to give written
notice of any registration request under this Section
7.3 by any Holder or Holders to all other registered
Holders of the Warrants and the Warrant Shares within
ten (10) days from the date of the receipt of any
such registration request.
(c) In addition to the registration rights under Section
7.2 and subsection (a) and (b) of this Section 7.3,
at any time commencing one (1) year after the date
hereof and expiring four (4) years thereafter, any
Holder of Warrants and/or Warrant Shares representing
twenty-five percent (25%) of such securities (see
Section 7.4(m) below) shall have the right,
exercisable by written request to the Company, to
have the Company prepare and file, on one occasion
only, with the Commission a registration statement so
as to permit a public offering and sale for such
period of time ending at the earlier of (i) nine (9)
consecutive months from the effective date of an
applicable registration statement, or (ii) until the
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sale of all the Warrant Shares requested to be
registered by any such Holder of its Warrant Shares;
provided, however, that the provisions of Section
7.4(b) hereof shall not apply to any such
registration request and the registration and all
costs incident thereto shall be at the expense of the
Holder or Holders making such request; provided,
however, the Company shall be entitled to defer such
registration for a period of up to 90 days if and to
the extent that its Board of Directors shall
determine in good faith that such registration would
interfere with a pending corporate transaction, shall
pass a written resolution to that effect and shall
promptly make available to such Holders the
aforementioned written resolution.
(d) Notwithstanding anything to the contrary contained
herein, if the Company shall not have filed a
registration statement for the Warrant Shares within
the time period specified in Section 7.4(a) hereof
pursuant to the written notice specified in Section
7.3(a) of a Super Majority of the Holders of the
Warrants and/or Warrant Shares, the Company may, at
its option, upon the written notice of election of a
Super Majority of the Holders of the Warrants and/or
Warrant Shares requesting such registration,
repurchase (i) any and all Warrant Shares of such
Holders at the higher of the Exercise Price and
Market Price per share of Common Stock on (x) the
date of the notice sent pursuant to Section 7.3(a) or
7.3(c) or (y) the expiration of the period specified
in Section 7.4(a), and (ii) any and all Warrants of
such Holders at such Market Price less the Exercise
Price of such Warrant. Such repurchase shall be in
immediately available funds and shall close within
two (2) days after the later of (i) the expiration of
the period specified in Section 7.4(a) or (ii) the
delivery of the written notice of election specified
in this Section 7.3(d).
7.4 Covenants of the Company With Respect to Registration. In
connection with any registration under Section 7.2 or 7.3
hereof, the Company covenants and agrees as follows:
(a) The Company shall use its best efforts to file a
registration statement within sixty (60) days of
receipt of any demand therefor, shall use its best
efforts to have any registration statements declared
effective at the earliest possible time, and shall
furnish each Holder desiring to sell Warrant Shares
such number of prospectuses as shall reasonably be
requested.
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(b) The Company shall pay costs (excluding fees and
expenses of Holder(s)' counsel and any underwriting
or selling commissions on behalf of the Holders),
fees and expenses in connection with all registration
statements filed pursuant to Sections 7.2 and 7.3(a)
hereof including, without limitation, the Company's
legal and accounting fees, printing expenses, blue
sky fees and expenses, if any. The participating
Holder(s) will pay all costs, fees and expenses
(including those of the Company) in connection with
any registration statement filed pursuant to Section
7.3(c).
(c) The Company will use its best efforts to take all
necessary action which may be required in qualifying
or registering the Warrant Shares included in a
registration statement for offering and sale under
the securities or blue sky laws of such states as
reasonably are requested by the Holder(s), provided
that the Company shall not be obligated to execute or
file any general consent to service of process or to
qualify as a foreign corporation to do business under
the laws of any such jurisdiction.
(d) The Company shall indemnify and hold harmless the
Holder(s) of the Warrant Shares to be sold pursuant
to any registration statement and each person, if
any, who controls such Holder(s) within the meaning
of Section 15 of the Act or Section 20(a) of the
Securities Exchange Act of 1934, as amended
("Exchange Act"), from and against any and all
losses, claims, damages, expenses or liabilities
(including all expenses reasonably incurred in
investigating, preparing or defending against any
claim whatsoever) to which any of them may become
subject under the Act, the Exchange Act or otherwise,
arising from such registration statement; provided,
however, that the Company shall not be liable in any
such case to the extent such loss, claim, damage,
expense or liability arises out of or is based upon
an untrue statement or alleged untrue statement or
omission or alleged omission made in such
registration statement, in reliance upon and in
conformity with information furnished in writing by
Holder(s) of the Warrant Shares to be sold pursuant
to such registration statement for use in the
preparation thereof.
(e) The Holder(s) of the Warrant Shares to be sold
pursuant to a registration statement, and their
successors and assigns, shall severally, and not
jointly, indemnify the Company, its officers and
directors and each person, if any, who controls the
Company within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act, from and
against any and all losses, claims, damages or
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expenses or liabilities (including all expenses
reasonably incurred in investigating, preparing or
defending against any claim whatsoever including,
without limitation, the fees and expenses of legal
counsel and accountants) to which they may become
subject under the Act, the Exchange Act or otherwise,
arising from or based upon an untrue statement or
alleged untrue statement or omission made in such
registration statement, in reliance upon and in
conformity with information furnished in writing by
the Holder(s) of the Warrant Securities to be sold
pursuant to such registration statement for use in
the preparation thereof.
(f) Nothing contained in this Agreement shall be
construed as requiring the Holder(s) to exercise
their Warrants prior to the initial filing of any
registration statement or the effectiveness thereof.
(g) Notwithstanding the foregoing, if the Warrant
Securities are to be distributed by means of an
underwritten public offering, to the extent that the
provisions on indemnification contained in the
underwriting agreement entered into in connection
with such underwriter are in conflict with the
provisions of Sections 7.4(d) and 7.4(e), the
provisions of such underwriting agreement shall be
controlling, provided that the Holder is a party to
such underwriting agreement.
(h) The Company shall not permit the inclusion of any
securities other than the Warrant Shares to be
included in any registration statement filed pursuant
to Section 7.3 hereof, or permit any other
registration statement (other than pursuant to Form
X-0, Xxxx X-0 or a comparable registration statement)
to be or remain effective during the one
hundred-eighty (180) day period following the
effectiveness of a registration statement filed
pursuant to Section 7.3 hereof, without the prior
written consent of the Holders of the Warrants and
Warrant Shares representing a Super Majority of such
securities, which consent shall not be unreasonably
withheld.
(i) The Company shall furnish to each Holder
participating in the offering and to each
underwriter, if any, a signed counterpart, addressed
to such Holder or underwriter, of (i) an opinion of
counsel to the Company, dated the effective date of
such registration statement (and, if such
registration includes an underwritten public
offering, an opinion dated the date of the closing
under the underwriting agreement), and (ii) a "cold
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comfort" letter dated the effective date of such
registration statement (and, if such registration
includes an underwritten public offering, a letter
dated the date of the closing under the underwriting
agreement) signed by the independent public
accountants who have issued a report on the Company's
financial statements included in such registration
statement, in each case covering substantially the
same matters with respect to such registration
statement (and the prospectus included therein) and,
in the case of such accountants' letter, with respect
to events subsequent to the date of such financial
statements, as are customarily covered in opinions of
issuer's counsel and in accountants' letters
delivered to underwriters in underwritten public
offerings of securities.
(j) The Company shall as soon as practicable after the
effective date of the registration statement, and in
any event within 15 months thereafter, make
"generally available to its security holders" (within
the meaning of Rule 158 under the Act) an earnings
statement (which need not be audited) complying with
Section 11(a) of the Act and covering a period of at
least 12 consecutive months beginning after the
effective date of the registration statement.
(k) The Company shall deliver promptly to each Holder
participating in the offering requesting the
correspondence and memoranda described below and to
the managing underwriters, copies of all
correspondence between the Commission and the
Company, its counsel or auditors and all memoranda
relating to discussions with the Commission or its
staff with respect to the registration statement and
permit each Holder and underwriters to do such
investigation, upon reasonable advance notice, with
respect to information contained in or omitted from
the registration statement as it deems reasonably
necessary to comply with applicable securities laws
or the rules and regulations of the NASD. Such
investigation shall include access to books, records
and properties and opportunities to discuss the
business of the Company with its officers and
independent auditors, all to such reasonable extent
and at such reasonable times and as often as any such
Holder or underwriter shall reasonably request.
(l) In connection with an underwritten offering pursuant
to Section 7.3, the Company shall enter into an
underwriting agreement with the underwriters selected
for such underwriting by the Holders of a Super
Majority of the Warrant Shares requested to be
included in such underwriting, which may be the
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Representative. Such agreement shall be reasonably
satisfactory in form and substance to the Company,
each Holder and such managing underwriter(s), and
shall contain such representations, warranties and
covenants by the Company and such other terms as are
customarily contained in agreements of that type used
by the managing underwriter(s). The Holders shall be
parties to any underwriting agreement relating to the
underwritten sale of their Warrant Shares and may, at
their option, require that any or all the
representations, warranties and covenants of the
Company to or for the benefit of such underwriter(s)
shall also be made to and for the benefit of such
Holders. Such Holders shall not be required to make
any representations or warranties to or agreements
with the Company or the underwriter(s) except as they
may relate to such Holders and their intended methods
of distribution.
(m) In addition to the Warrant Shares, upon the written
request therefor by any Holder(s), the Company shall
include in the registration statement any other
securities of the Company held by such Holder(s) as
of the date of filing of such registration statement,
including without limitation restricted shares of
Common Stock, options, warrants or any other
securities convertible into Common Stock.
(n) For purposes of this Agreement, the term "Super
Majority" in reference to the Holders of Warrants or
Warrant Shares, shall mean in excess of sixty six
point six seven percent (66.67%) of the then
outstanding Warrants or Warrant Shares that (i) are
not held by the Company, an affiliate, officer,
creditor, employee or agent thereof or any of their
respective affiliates, members of their family,
persons acting as nominees or in conjunction
therewith and (ii) have not been resold to the public
pursuant to a registration statement filed with the
Commission under the Act.
8. Obligations of Holders. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Section 7
hereof that each of the selling Holders shall:
(a) Furnish to the Company such information regarding
themselves, the Warrant Securities held by them, the
intended method of sale or other disposition of such
securities, the identity of and compensation to be
paid to any underwriters proposed to be employed in
connection with such sale or other disposition, and
such other information as may reasonably be required
to effect the registration of their Warrant
Securities.
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(b) Notify the Company, at any time when a prospectus
relating to the Warrant Securities covered by a
registration statement is required to be delivered
under the Act, or the happening of any event with
respect to such selling Holder as a result of which
the prospectus included in such registration
statement, as then in effect, includes an untrue
statement of a material fact or omits to state a
material fact required to be stated therein or
necessary to make the statement therein not
misleading in the light of the circumstances then
existing.
9. Adjustments to Exercise Price and Number of Securities.
9.1 Subdivision and Combination. In case the Company shall at any
time subdivide or combine the outstanding Common Stock, the
Exercise Price shall forthwith be proportionately decreased in
the case of subdivision or increased in the case of
combination.
9.2 Stock Dividends and Distributions. In case the Company shall
pay a dividend in, or make a distribution of, Common Stock or
of the Company's capital stock convertible into Common Stock,
the Exercise Price shall forthwith be proportionately
decreased. An adjustment made pursuant to this Section 8.2
shall be made as of the record date for the subject stock
dividend or distribution.
9.3 Adjustment in Number of Securities. Upon each adjustment of
the Exercise Price pursuant to the provisions of this Section
8, the number of Warrant Shares issuable upon the exercise at
the adjusted exercise price of each Warrant shall be adjusted
to the nearest full amount by multiplying a number equal to
the Exercise Price per share of Common Stock purchasable
hereunder in effect immediately prior to such adjustment by
the number of Warrant Shares issuable upon exercise of the
Warrants immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.
9.4 Definition of Common Stock. For the purpose of this Agreement,
the term "Common Stock" shall mean (i) the class of stock
designated as Common Stock in the Certificate of Incorporation
of the Company as may be amended as of the date hereof, or
(ii) any other class of stock resulting from successive
changes or reclassification of such Common Stock consisting
solely of changes in par value, or from par value to no par
value, or from no par value to par value. In the event that
the Company shall after the date hereof issue securities with
greater or superior voting rights than the Common Stock
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outstanding as of the date hereof, any Holder, as its option,
may receive upon exercise of any Warrant either shares of
Common Stock or a like number of such securities with greater
or superior voting rights.
9.5 Merger or Consolidation. In case of any consolidation of the
Company with, or merger of the Company with, or merger of the
Company into, another corporation (other than a consolidation
or merger which does not result in any reclassification or
change of the outstanding Common Stock), the corporation
formed by such consolidation or surviving such merger shall
execute and deliver to each Holder a supplemental warrant
agreement providing that the Holder of each Warrant than
outstanding or to be outstanding shall have the right
thereafter (until the expiration of such Warrant) to receive,
upon exercise of such Warrant, the kind and amount of shares
of stock and other securities and property receivable upon
such consolidation or merger, by a Holder of the number of
shares of Common Stock of the Company for which such Warrant
might have been exercised immediately prior to such
consolidation, merger, sale or transfer. Such supplemental
warrant agreement shall provide for adjustments which shall be
identical to the adjustments provided Section 8. The above
provision of this subsection shall similarly apply to
successive consolidations or mergers.
9.6 No Adjustment of Exercise Price in Certain Cases. No
adjustment of the Exercise Price shall be made:
(a) Upon the issuance or sale of the Warrants or the
Warrant Shares;
(b) Upon the issuance or sale of Common Stock (or any
other security convertible exercisable, or
exchangeable into shares of Common Stock) upon the
direct or indirect conversion, exercise, or exchange
of any options, rights, warrants or other securities
or indebtedness of the Company outstanding as of the
date of this Agreement or granted pursuant to any
stock option plan of the Company; provided, that, in
the case of all such stock option plans, the
aggregate amount of Common Stock issued thereunder
does not exceed 15% of the number of shares of Common
Stock then outstanding after giving effect to the
conversion, exercise or exchange of all securities
convertible, exercisable or exchangeable for Common
Stock;
(c) If the amount of said adjustment shall be less than
five cents ($.05) per Warrant Share, provided,
however, that in such case any adjustment that would
otherwise be required then to be made shall be
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carried forward and shall be made at the time of and
together with the next subsequent adjustment which,
together with any adjustment so carried forward,
shall amount to at least five cents ($.05) per
Warrant Share.
9.7 Form of Warrant After Adjustments. The form of the Warrant
Certificates need not be changed because of any adjustments in
the Exercise Price or number of Warrant Securities, and
warrant securities theretofore or thereafter issued may
continue to express the same Exercise Price and number of
Warrant Securities as are stated in the respective Warrant
Securities, as initially issued.
10. Exchange and Replacement of Warrant Certificates. Each Warrant
Certificate is exchangeable without expense, upon the surrender thereof
by the registered Holder at the principal executive office of the
Company, for a new Warrant Certificate of like tenor and date
representing in the aggregate the right to purchase the same number of
Warrant Shares in such denominations and in such names as shall be
designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant
Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to it, and reimbursement to the
Company of all reasonable expenses incidental thereto, and upon
surrender and cancellation of the Warrant Certificate, if mutilated,
the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
11. Elimination of Fractional Interests. The Company shall not be required
to issue certificates representing fractions of shares of Common Stock
upon the exercise of the Warrants, nor shall it be required to issue
scrip or pay cash in lieu of fractional interests, it being the intent
of the parties that all fractional interests shall be eliminated by
rounding any fraction up to the nearest whole number of shares of
Common Stock or other securities, properties or rights.
12. Reservation and Listing of Securities. The Company shall at all times
reserve and keep available out of its authorized shares of Common
Stock, solely for the purpose of issuance upon the exercise of the
Warrants, such number of shares of Common Stock or other securities,
properties or rights as shall be issuable upon the exercise thereof.
The Company covenants and agrees that, upon exercise of the Warrants
and payment of the Exercise Price therefor, all shares of Common Stock
and other securities issuable upon such exercise shall be duly and
validly issued, fully paid, non-assessable and not subject to the
preemptive rights of any stockholder or other person or entity. As long
as the Warrants shall be outstanding, the Company shall use its best
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efforts to cause all shares of Common Stock issuable upon the exercise
of the Warrants to be listed (subject to official notice of issuance)
on all securities exchanges on which the Common Stock issued to the
public in connection herewith may then be listed and/or quoted on
Nasdaq/NMS.
13. Notices to Warrant Holders. Nothing contained in this Agreement shall
be construed as conferring upon any Holder the right to vote or to
consent or to receive notice as a stockholder in respect of any
meetings of stockholders for the election of directors or any other
matter, or as having any rights whatsoever as a stockholder of the
Company. If, however, at any time prior to the expiration of the
Warrants and their exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend
or distribution payable otherwise than in cash, or a cash
dividend or distribution payable otherwise than out of current
or retained earnings, or capital surplus (in accordance with
applicable law) as indicated by the accounting treatment of
such dividend or distribution on the books of the Company; or
(b) the Company shall offer to all the holders of its Common Stock
any additional shares of capital stock of the Company or
securities convertible into or exchangeable for shares of
capital stock of the Company, or any option, right or warrant
to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale
of all or substantially all of its property, assets and
business as an entirety shall be proposed;
then, in any one or more of said events, the Company shall give written
notice of such an event at least twenty (20) days prior to the date
fixed as a record date or the date of the closing the transfer books
for the determination of the stockholders entitled to such dividend,
distribution, convertible or exchangeable securities or subscription
rights, or entitled to vote on such proposed dissolution, liquidation,
winding up or sale. Such notice shall specify such record date or the
date of closing the transfer books, as the case may be. Failure to give
such notice or any defect therein shall not affect the validity of any
action taken in connection with the declaration or payment of such
dividend, or the issuance of any convertible or exchangeable
securities, or subscription rights, options or warrants, or any
proposed dissolution, liquidation, winding up or sale.
14. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly
made and sent when delivered, or mailed by registered or certified
mail, return receipt requested:
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(a) If to the registered Holder of the Warrants, to the address of
such Holder as shown on the books of the Company; or
(b) If the Company, to the address set forth in Section 3 hereof
or to such other address as the Company may designate by
notice to the Holders.
(c) If to the Representative, to Royce Investment Group, Inc., 000
Xxxxxxxxx Xxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000, Attention:
General Counsel.
15. Supplements and Amendments. The Company and the Representative may from
time to time supplement or amend this Agreement without the approval of
any Holders of Warrant Certificates (other than the Representative) in
order to cure any ambiguity, to correct or supplement any provision
contained herein which may be defective or inconsistent with any
provisions herein, or to make any other provisions in regard to matters
or questions arising hereunder which the Company and the Representative
may deem necessary or desirable and which the Company and the
Representative deem shall not adversely affect the interests of the
Holders of Warrant Certificates.
16. Successors. All the covenants and provisions of this Agreement shall be
binding upon and inure to the benefit of the Company, the
Representative, the Holders and their respective successors and assigns
hereunder.
17. Termination. This Agreement shall terminate at the close of business on
__________, 2005. Notwithstanding the foregoing, the indemnification
provisions of Section 7 shall survive such termination until the close
of business on ________, 2010.
18. Governing Law: Submission to Jurisdiction. This Agreement and each
Warrant Certificate issued hereunder shall be deemed to be a contract
made under the laws of the State of New York and for all purposes shall
be construed in accordance with the laws of said State without giving
effect to its rules governing the conflicts of laws.
The Company, the Representative and the Holders hereby agree that any
action, proceeding or claim against it arising out of, or relating in
any way to, this Agreement shall be brought and enforced in the courts
of the State of New York or of the United States of America for the
Southern District of New York, and irrevocably submits to such
jurisdiction, which jurisdiction shall be exclusive. The Company, the
Representative and the Holders hereby irrevocably waive any objection
to such exclusive jurisdiction or inconvenient forum. Any such process
or summons to be served upon any of the Company, the Representative and
the Holders (at the option of the party bringing such action,
proceeding or claim) may be served by transmitting a copy thereof, by
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registered or certified mail, return receipt requested, postage
prepaid, addressed to it at the address set forth in Section 13 hereof.
Such mailing shall be deemed personal service and shall be legal and
binding upon the party so served in any action, proceeding or claim.
The Company, the Representative and the Holders agree that the
prevailing party(ies) in any such action or proceeding shall be
entitled to recover from the other party(ies) all of its/their
reasonable legal costs and expenses relating to such action or
proceeding and/or incurred in connection with the preparation therefor.
19. Entire Agreement Modification. This Agreement (including the
Underwriting Agreement to the extent portions thereof are referred to
herein) contains the entire understanding between the parties hereto
with respect to the subject matter hereof and may not be modified or
amended except by a writing duly signed by the party against whom
enforcement of the modification or amendment is sought.
20. Severability. If any provision of this Agreement shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision of this Agreement.
21. Captions. The caption headings of the Sections of this Agreement are
for convenience of reference only and are not intended, nor should they
be construed as, a part of this Agreement and shall be given no
substantive effect.
22. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company
and the Representative and any other registered Holder(s) of the
Warrant Certificates or Warrant Shares any legal or equitable right,
remedy or claim under this Agreement; and this Agreement shall be for
the sole benefit of the Company and the Representative and any other
registered Holders of Warrant Certificates or Warrant Shares.
23. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and such counterparts shall for all purposes
be deemed to be an original, and such counterparts shall together
constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, as of the day and year first above written.
GRAND COURT LIFESTYLES, INC.
By: ___________________________________
Name: _____________________________
Title: ____________________________
[SEAL]
ROYCE INVESTMENT GROUP, INC.
By: ___________________________________
Name: _____________________________
Title: ____________________________
[SEAL]
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EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE 5:30 P.M.,
NEW YORK TIME, ___________, 2003
Warrants to Purchase ________
Shares of Common Stock
No. W-__________
WARRANT CERTIFICATE
This Warrant Certificate certifies that _________________________________, or
registered assigns, is the registered holder of ________ Warrants, each Warrant
to purchase initially, at any time from _______________ __, 1999 [one year from
the effective date of the Registration Statement] until 5:30 p.m. New York time
on _____________ __, 2003 [five years from the effective date of the
Registration Statement] ("Expiration Date"), up to _______ fully-paid and
non-assessable Shares of Common Stock, par value $.01 each ("Common Stock") of
Grand Court Lifestyles, Inc., a corporation organized under the laws of the
State of Delaware (the "Company"), at the initial exercise price, subject to
adjustment in certain events (the "Exercise Price"), of $________ [165% of the
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initial public offering price] per share of Common Stock upon surrender of this
Warrant Certificate and payment of the Exercise Price at an office or agency of
the Company, but subject to conditions set forth herein and in the Warrant
Agreement dated as of ______________ __, 1998 by and between the Company and
Royce Investment Group, Inc., (the "Warrant Agreement"). Payment of the Exercise
Price shall be made by certified or official bank check in New York Clearing
House funds payable to the order of the Company and by surrender of this Warrant
Certificate.
No Warrant may be exercised after 5:30 p.m., New York time, on the Expiration
Date, at which time all Warrants evidenced hereby, unless exercised prior
thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly authorized
issue of Warrants issued pursuant to the Warrant Agreement, which Warrant
Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
Holders (the words "Holders" or "Holder" meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain events the
Exercise Price and the type and/or number of the Company's securities issuable
thereupon may, subject to certain conditions, be adjusted. In such event, the
Company will, at the request of the Holder, issue a new Warrant Certificate
evidencing the adjustment in the Exercise Price and the number and/or type of
securities issuable upon the exercise of the Warrants; provided, however, that
the failure of the Company to issue such new Warrant Certificates shall not in
any way change, alter, or otherwise impair, the rights of the Holder as set
forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant Certificate at
an office or agency of the Company, a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax or other governmental charge
imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the Holder hereof a new
Warrant Certificate representing such numbered unexercised Warrants pursuant to
the terms of the Warrant Agreement.
The Company may deem and treat the registered holder(s) hereof as the absolute
owner(s) of this Warrant Certificate (notwithstanding any notation of ownership
or other writing hereon made by anyone), for the purpose of any exercise hereof,
and of any distribution to the Holder(s) hereof, and for all other purposes, and
the Company shall not be affected by any notice to the contrary.
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All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
IN WITNESS WHEREOF the Company has caused this Warrant Certificate to be duly
executed under its corporate seal.
Dated as of _____________, 0000
XXXXX XXXXX LIFESTYLES, INC.
By: ___________________________________
Name: _____________________________
Title: ____________________________
[SEAL]
Attest:
_______________________________________
Secretary
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[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.1]
The undersigned hereby irrevocably elects to exercise the right, represented by
this Warrant Certificate, to purchase ____________ shares of Common Stock and
herewith tenders in payment for such securities a certified or official bank
check payable in New York Clearing House Funds to the order of GRAND COURT
LIFESTYLES, INC. (the "Company") in the amount of $__________, all in accordance
with the terms of Section 3.1 of the Underwriter's Warrant Agreement dated as of
_______________ __, 1996 between the Company and ROYCE INVESTMENT GROUP, INC.
The undersigned requests that a certificate for such securities be registered in
the name of ______________________________________ whose address is
__________________________________________ and that such Certificate be
delivered to ___________________ whose address is
____________________________________.
Dated:
Signature: _____________________________
(Signature must conform in
all respects to name of
Holder as specified on the
face of the Warrant
Certificate.)
_________________________________________
(Insert Social Security or Other
Identifying Number of Holder)
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[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.2]
The undersigned hereby irrevocably elects to exercise the right, represented by
this Warrant Certificate, to purchase GRAND COURT LIFESTYLES, INC. (the
"Company") Common Stock, all in accordance with the terms of Section 3.2 of the
Underwriter's Warrant Agreement dated as of _____________ __, 1998 between the
Company and ROYCE INVESTMENT GROUP, INC. The undersigned requests that a
certificate for such securities be registered in the name of
______________________________ whose address is
____________________________________ and that such Certificate be delivered to
_________________________ whose address is ______________________________.
Dated:
Signature: _____________________________
(Signature must conform in
all respects to name of
Holder as specified on the
face of the Warrant
Certificate.)
_________________________________________
(Insert Social Security or Other
Identifying Number of Holder)
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[FORM OF ASSIGNMENT]
(To be executed by the registered Holder if such Holder desires to transfer the
Warrant Certificate.)
FOR VALUE RECEIVED, ___________________________ hereby sells, assigns and
transfers unto _________________________________________________________ (Please
print name and address of transferee) this Warrant Certificate, together with
all right, title and interest therein, and does hereby irrevocably constitute
and appoint _________________________________ Attorney, to transfer the within
Warrant Certificate on the books of the within-named Company, with full power of
substitution.
Dated:
Signature: _____________________________
(Signature must conform in
all respects to name of
Holder as specified on the
face of the Warrant
Certificate.)
_________________________________________
(Insert Social Security or Other
Identifying Number of Holder)
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